1. Public Finance 101: Issuing Bonds for Your Communities Carol Juang McCoog, Partner, K&L Gates LLP Kieu-Oanh Nguyen, Partner, Western Financial Group Lynn Tsugie Nagasako, Senior Assistant Attorney General, Oregon Department of Justice

2. 1 Public Finance 101: Topics  Legal Basics  Bond Market Basics  Issuer’s Counsel’s Perspective – Oregon AG  Tumbling Through the Great Recession

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4. 3 Public Finance 101: General Legal Basics  State Law – Authority  Sources: State Constitution, State Statutes, Codes and Charters  Vote required; subject to referral; neither  Use of Proceeds

5. 4 Pubic Finance 101: General Legal Basics  Federal Tax Law  Governmental Purpose; Capital Expenditure  Earnings on Bond Proceeds  State Tax Law

6. 5 Public Finance 101: General Legal Basics  Federal Securities Law  Exemption from Registration  Anti-Fraud Provisions  Continuing Disclosure  State Securities Law

7. 6 Pubic Finance 101: Bond Market Basics  Establishing the facts  Projects financed (useful life)/drawdown of funds  Source of repayment  Security  Tax status (taxable or tax-exempt, bank qualification)  Financing options  Short-term debt (lines of credit, notes)  Long-term debt (bonds)  Government loan programs/bank placement/publicly-offered issue

8. 7 Pubic Finance 101: Bond Market Basics  Structuring a bond issue  Security  Amortization  Call provisions  Determine method of sale  Parties involved  Official Statement/Rating process  Bid opening/pricing  Closing  Post-sale

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11. 10 Pubic Finance 101: Issuer’s Counsel’s Perspective – Oregon Attorney General Oregon Revised Statutes (ORS) 180.060(6) states: “The Attorney General shall, when requested, perform all legal services for the state or any department or officer of the state.” ORS 180.060(2) and (3) provide that in the performance of those duties, the Attorney General may not, except in one limited circumstance, issue any legal opinions to third parties.

12. 11 Pubic Finance 101: Issuer’s Counsel’s Perspective – Oregon Attorney General  Role of DOJ During the Issuance of Bonds:  General Obligation Bonds  Revenue Bonds  Conduit Bonds

13. 12 Public Finance 101: Tumbling Through the Great Recession (2008)  Bond Insurers Downgraded  Banks Going Under  Auction Rate/VRDO Markets Freeze  SWAPs terminate  GICs needing to be collateralized  Debt service reserves no longer filled

14. 13 Public Finance 101: Tumbling Through the Great Recession (2009 – 2010)  The Federal Stimulus Act  Build America Bonds (direct subsidy bonds)  Qualified School Construction Bonds (tax credit; direct subsidy)  Recovery Zone Facility Bonds; Recovery Zone Economic Development Bonds (tax-exemption)

15. 14 Public Finance 101: Tumbling Through the Great Recession (2011)  The Recovery  Many programs ended; some continue  Tax overhaul proposals include revival of some programs and ending of traditional tax-exemption  Federal government hitting debt ceiling