2. Edward Jones Public Finance
March 5, 2015
Ben McGuire, Managing Director | 333 Albert Avenue, Suite 430, East Lansing, MI | (517) |
Bill Hizar, Principal | Manchester Road, St. Louis, MO | (314) |

3. Disclosure Edward Jones is an Underwriter, Not a Municipal Advisor
Edward Jones is providing the information contained in this document for discussion purposes only in anticipation of serving as underwriter to the borrower. The primary role of Edward Jones, as an underwriter, is to purchase securities, for resale to investors, in an arm’s-length commercial transaction between the borrower and Edward Jones. Edward Jones has financial and other interests that differ from those of the borrower and is acting in its own interests. Edward Jones is not acting as a municipal advisor, financial advisor or fiduciary to the borrower or any other person or entity and does not owe a fiduciary duty pursuant to Section 15B of the Securities Exchange Act of 1934 to the borrower or any other person or entity with respect to the information and material contained in this communication. Except in the limited circumstances where Edward Jones is providing advice pursuant to an exclusion or exemption from Section 15B of the Securities Exchange Act of 1934, Edward Jones is not recommending an action to the borrower or any other person or entity. The information provided is not intended to be and should not be construed as “advice” within the meaning of Section 15B of the Securities Exchange Act of The borrower should consult with its own financial and/or municipal, legal, accounting, tax and other advisors, as applicable, to the extent it deems appropriate before acting on this information or material. If the borrower would like a municipal advisor in this transaction that has legal fiduciary duties to the borrower, then the borrower is free to engage a municipal advisor to serve in that capacity.

4. Agenda
Finance Team
Continuing Disclosure
Market Snapshot
Q&A

5. Finance Team Bond Counsel Underwriter Municipal Advisor
Issuer
Bond Counsel
Underwriter
Municipal Advisor
Other Team Members
Slide 1

6. Finance Team - Issuer Issuer
Establishes goals based on project needs as well as governance/executive preference
Hires professionals to assist with various aspects of bond issuance
Ultimately, the Issuer is responsible for strategic decisions & overall success
Liable for timely repayment of debt as well as adherence to bond covenants (i.e. continuing disclosure, debt limitations, financial/operating ratios)
Slide 2

7. Finance Team – Municipal Advisor
Assists the Issuer with determining an appropriate method of sale
competitive vs. negotiated
public bond sale vs. private placement
In a competitive sale the MA will publish the notice of sale, accept bids at designated time, and calculate/award bonds to lowest bidder
In a negotiated sale the MA can solicit proposals from underwriters, bond counsel, and other professionals to help select the best possible finance team for the Issuer's bond deal
Provides advice and expertise with regards to structure, timing, and terms
Compensated based on a fixed fee rather than based on the size of the transaction
Sample Municipal Advisory Firms:
Stauder Barch
Bendzinski & Co.
PFM
Umbaugh
Slide 3

8. Finance Team – Municipal Advisor (continued)
Municipal Advisor Rule - Adopted by the SEC as required by Dodd Frank legislation and became effective July 1, 2014
The MA Rule requires firms that provide "advice" to municipal entities to register as "municipal advisors" with the SEC and MSRB
Edward Jones is NOT registered as a municipal advisor
A firm that acts as a municipal advisor is subject to a fiduciary duty standard (i.e. must put needs of client ahead of its own interests)
A firm that has acted as a municipal advisor (i.e. provided "advice") to a municipality can't subsequently underwrite bond issue for the same municipality for a period of two (2) years
"Advice" is a recommendation that is particularized to the specific needs, objectives, or circumstances of a municipal entity
Exemptions from MA Rule:
IRMA – municipality has already engaged a municipal advisor related to same issue
RFP/RFQ – in response to a request from municipality sent to three (3) or more firms
Underwriter – a firm engaged to serve as the underwriter of municipality's bond issue
Slide 4

9. Finance Team – Bond Counsel
Law firm hired to ensure bonds are:
appropriately authorized
conform to applicable laws and regulations
issue a legal opinion stating that the bonds are exempt from federal and state income taxes
Draft the documents and agreements that are necessary to authorize, sell and deliver the bonds
Sample Bond Counsel Firms:
Miller Canfield
Dykema Gossett
Dickinson Wright
Varnum
Slide 5

10. Finance Team - Underwriter
The primary role of the underwriter is to assist an issuer with bringing its bonds to the capital markets
Purchases bonds from the issuer and then resells them to investors
The process of "underwriting" entails risk and represents an "arms length" relationship between the issuer and underwriter
Depending on the size of a bond issue, there can be a "sole" underwriter or for larger transactions an underwriting syndicate that includes a "senior manager" as well as "co-manager(s)"
Sample Underwriting Firms:
Edward Jones
Fifth Third Securities, Inc.
Stifel Nicolaus
William Blair
Slide 6

11. Finance Team – Other Team Members
Rating agency – S&P, Moody's, Fitch
Bond Trustee – Bank of New York Mellon, Huntington National Bank, US Bank
Bond insurer – Build America Mutual (BAM) and Assured Guaranty
Local/municipal counsel
Placement agent
Slide 7

12. Continuing Disclosure
The Basics – What Is It?
Pursuant to SEC Rule 15c2-12 an underwriter is obligated to obtain from the issuer an agreement to provide both annual financial information and material event disclosures
An issuer enters into a continuing disclosure agreement (CDA) for the benefit of the underwriter as part of its bond issuance process
Subsequent to 2009 issuers must submit all continuing disclosure filings electronically at the Electronic Municipal Market Access (EMMA) portal (
The SEC believes accurate and timely continuing disclosure is imperative to investors in order to make appropriate investment decisions as evidenced by last year's Municipal Continuing Disclosure Cooperation (MCDC) Initiative
Slide 8

13. Continuing Disclosure (continued)
Two Types of Required Information
Annual Financial Report – By a date specified in your CDA
Audited Financial Statements
Certain operating data (i.e. enrollment, appropriations, direct debt, tuition & fees) designated in the CDA and often times consistent with what was initially disclosed in the Official Statement
Notice for failure to provide annual financial information
Material Event Filings – Within 10 business days of the event
The occurrence of an event or non-financial matter relating to an issuer's outstanding bonds
A full list of events requiring a disclosure filing is listed in the CDA but some of the more common events include: rating changes, bond calls, delinquent principal or interest payments, and non-payment related defaults (if material)
Slide 9

14. Continuing Disclosure (continued)
Best Practices
Understand your responsibilities under the CDA; consult with members of your finance team if you have questions and be sure to explain any unique circumstances that you believe may impact your ability meet the requirements
Adopt procedures to define:
What information is included in annual financial report and events are considered material
When does either the financial report or material event disclosure need to be files on EMMA
Who from your organization is responsible for the appropriate and timely filing of Continuing Disclosure
Hire a dissemination agent (trustees or municipal advisor may provide such services) to assist you with meeting CDA requirements
Review EMMA on a regular basis and set-up a reminder so that you will receive an notification when it is time to submit your annual financial report
Slide 10

15. Current Market Update
Slide 11

16. Current Market Update (continued)
Slide 12

17. Holders of Municipal Debt
Holders of Municipal Debt (as of 9/30/2014)
Individual Investors
43%
Traditional Institutions
41%
Mutual Funds
Money Market Funds
P&C Insurance Companies
Life Insurance Companies
Closed-end Funds
Other Investors
16%
Commercial Banks
Brokers & Dealers
Non-Financial Corporate
Miscellaneous
Only 8% of new issues are purchased by retail investors.
Source: SIFMA website as of 9/30/14
Slide 13

18. Method Of Sale Method of Sale Breakout for 2014 72.3% 21.4% 6.3%
Negotiated Sale Issuance
72.3%
Competitive Sale Issuance
21.4%
Private Placement
6.3%
Source: SIFMA website as of 12/31/14
Slide 14

19. Q&A