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City of Santa Ana, California Proposal for Municipal Financial Advisory Services March 12, 2020 • Monitoring of SEC Rule 15c2-12(b)(5): UFI is consistently called on by the industry to serve as educator for changes in regulations or best practices. This means that we are constantly abreast of the latest developments. As an industry leader, we are on the front lines of implementing changes as they evolve. For example, the SEC recently made amendments to Rule 15c2-12 which expanded the list of reportable events from 14 to 16 for any continuing disclosure agreement entered into on or after February 27, 2019. UFI conferred with various Bond Counsels and participated in educational panels so that we may provide expert guidance to our clients. • Notification of Deadlines and Material Events: UFI will draft and filethe required notices to EMMA should a significant/material event occur. There are a total of 16 material events which may be reportable to the MSRB: Eight of these events must always be reported, while eight of the events are reportable as they rise to a level of being "material." These events must typically be reported to the MSRB (EMMA) within 10 business days of the event. Deadlines and material events are covered through a four -pronged approach that ensures that every event and deadline is captured, conveyed, and processed: a. Immediately alert City staff of the deadline or event. In the case of a rating change event, the Bloomberg notification is also forwarded to City staff. Check -in with City staff on a regular basis to discuss occurrences of other material events; b. Post notification of material event to EMMA within the required 10 business days; c. Send posting confirmation from EMMA to City staff, d. Send posting confirmation to the City's trustee(s). Annual Debt Transparency Reporting— Background Pursuant to Senate Bill 1029, state and local issuers are required to submit an Annual Debt Transparency Report ("ADTR") to the California Debt and Investment Advisory Commission ("CDIAC") for all bond issues which have submitted a Report of Final Sale on or after January 21, 2017. The purpose of the new reporting requirements is to track how bond proceeds are spent after issuance. Our comprehensive understanding of the new reporting requirements was achieved by training directly with CDIAC staff during the initial reporting period. As a result, we have been able to provide complete and accurate reports for 29 municipalities over the last three Fiscal Years. Annual Debt Transparency Reporting Scope of Services The scope of services for Annual Debt Transparency Reporting includes: • Assembly of Reports: Collect the necessary information relating to bond proceeds from City staff or the assigned Trustee for each issue. Assemble each report in compliance with the requirements set forth by CDIAC. • Filing of Reports: File each ADTR with CDIAC through their online reporting system on or before January 31 of each year. Arbitrage Rebate - Background Due to abuses associated with tax-exempt financings, the Federal Government issued regulations to minimize the benefit of investing bond proceeds. The Internal Revenue Code of 1986 Section 148 created the Yield Restriction Rules and the Rebate Rules. The Yield Restriction Rules restrict the investment yield that may be earned on bond proceeds. Unless certain exceptions apply, bonds are arbitrage bonds if the issuer invests all or part of the bond proceeds at a yield materially higher than the bond yield. The Arbitrage Rebate Rules state that certain arbitrage earnings must be paid, or "rebated," to the U.S. Treasury. This means that even if an issuer is permitted to invest in higher yielding investments under the yield restriction rules, it may have to rebate those arbitrage earnings to the U.S. Treasury. A rebate computation and payment to the Federal Government, if applicable, is generally required to be made at 9/ UFI 15 ® 25F-34