1. Issuing Bonds – The Process and the Role of the Registered Municipal Advisor 2013 Michigan Community College Business Officers Association July 25, 2013 Presented By: Robert J. Bendzinski, CIPFA, President Bendzinski & Co. Municipal Finance Advisors Copyright © 2013

2. The Process Define the Project(s) Define the Project(s) –How much will it cost? How will the College pay for the cost of the project(s)? How will the College pay for the cost of the project(s)? –Identify security or revenue sources to repay the cost of the project(s) –Will the College receive any grants or state money to help pay for the cost of the project(s)? F Copyright © 2013

3. The Process (Continued) Financing options Financing options –Cash/Funds on Hand Reduce par amount of borrowing Reduce par amount of borrowing Pay cash for the project - No debt issuance Pay cash for the project - No debt issuance –Issue Debt Bonds or Notes Bonds or Notes Copyright © 2013

4. How to proceed now that the College has determined that it will need to issue debt....... Copyright © 2013 The Process (Continued)

5. Definitions 1. Municipal Securities Rulemaking Board (the “MSRB”) 2. Securities and Exchange Commission (the “SEC”) Copyright © 2013

6. MUNICIPAL ADVISORS REQUIRED TO BE REGISTERED The recent enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") requires that beginning October 1, 2010, Section 15B(a)(1)(B) of the Securities and Exchange Act of 1934, makes it unlawful for a municipal advisor to provide advice to, or on behalf of, a municipal entity or obligated person with respect to financial products, or the issuance of municipal securities, or to undertake a solicitation of a municipal entity or obligated person unless the advisor is registered with the Securities and Exchange Commission. The term "Municipal Advisor" is defined by the Securities and Exchange Commission as follows: A person (who is not a municipal entity or an employee of a municipal entity) that (i) provides to or on behalf of a municipal entity or obligated person with respect to municipal financial products or the issuance of municipal securities including advice with respect to the structure, timing, terms, and other similar matters concerning such financial products or issues; or (ii) undertakes a solicitation of a municipal entity. Includes financial advisors, guaranteed investment contract brokers, third-party marketers, placement agents, solicitors, finders, and swap advisors, if such persons are described in any of the clauses (i) through (ii) above; and Does not include a broker, dealer, or municipal securities dealer serving as an underwriter (as defined in section 2(a)(11) of the Securities Act of 1933) (15 U.S.C. 77b(a) (11)), any investment advisor registered under the Investment Advisors Act of 1940, or persons associated with such investment advisors who are providing investment advice, any commodity trading advisor registered under the Commodity Exchange Act or persons associated with a commodity trading advisor who are providing advice related to swaps, attorneys offering legal advise or providing services that are of a traditional legal nature, or engineers providing engineering advice. You should be certain your advisors are registered when issuing municipal securities.

7. Role of the Registered Municipal Advisor 1. Preparation and Review of the Municipality in cooperation with the officials, auditors, architects and/or engineers. Arrive at the amount, nature and terms of the issue. Arrive at the amount, nature and terms of the issue. Recommend all types of financing to be considered. Recommend all types of financing to be considered. Copyright © 2013

8. Role of the Registered Municipal Advisor 2. Assist College attorney and bond counsel to assure all possible provisions are made which will benefit the sale of bonds. 3. Assist the College with required Michigan Department of Treasury applications for approval. Qualifying Statement is required to be filed annually. Copyright © 2013

9. Role of the Registered Municipal Advisor 4. Prepare a comprehensive Official Statement, outlining all the details of the proposed financing, based on the information provided by the issuer in a form acceptable to prospective bidders. 5. Distribute the Preliminary Official Statement to prospective bidders, financial institutions and individuals known to purchase municipal bonds. Copyright © 2013

10. Role of the Registered Municipal Advisor 6. Furnish complete information to recognized bond rating agencies in order to have advantageous ratings established. 7. Advise the issuer of the condition of the municipal bond market and the time for marketing its bonds, in order to get the best rates and terms available. Copyright © 2013

11. Role of the Registered Municipal Advisor 8. Attend the bond sale and verify the interest cost on the submitted bids. A representative will be prepared to provide information on the status of the general bond market and the current interest cost of comparable bonds sold. A representative will be prepared to provide information on the status of the general bond market and the current interest cost of comparable bonds sold. This information aids in determining what action to take with respect to the submitted bids. This information aids in determining what action to take with respect to the submitted bids. Copyright © 2013

12. Role of the Registered Municipal Advisor 9. After the bond sale, the advisor will assist with the delivery of the bond proceeds, and furnish a schedule of principal and interest requirements based on the specific coupon rates of the purchaser. 11. After delivery, the advisor will remain available (within reason) to assist in any way. For example: Advise on investing bond proceeds. Advise on investing bond proceeds. Help the issuer comply with continuing disclosure requirements. Help the issuer comply with continuing disclosure requirements. Copyright © 2013

13. Process Summary 1. Determine project(s), cost, and revenues 2. File necessary documents with Michigan Department of Treasury – Required to be filed annually 3. Pass Bond Authorizing Resolution 4. Municipal Advisor prepares Preliminary Official Statement 5. Rating Agency presentation 6. Bond Sale 7. Bond Delivery (approx. 2 weeks following sale) 8. Begin Construction 9. 9. Copyright © 2013

14. Staying informed and helpful websites –State of Michigan, Michigan Department of Treasury – Municipal Finance http://www.michigan.gov/treasury/0,1607,7- 121-1751_8013---,00.html http://www.michigan.gov/treasury/0,1607,7- 121-1751_8013---,00.html http://www.michigan.gov/treasury/0,1607,7- 121-1751_8013---,00.html http://www.michigan.gov/treasury/0,1607,7- 121-1751_8013---,00.html –Qualifying Statement http://www.michigan.gov/documents/treasury/ 5047_416349_7.pdf http://www.michigan.gov/documents/treasury/ 5047_416349_7.pdf http://www.michigan.gov/documents/treasury/ 5047_416349_7.pdf http://www.michigan.gov/documents/treasury/ 5047_416349_7.pdf –Municipal Securities Rulemaking Board –State and Local Governments http://www.msrb.org/MSRB-For/Issuers.aspx http://www.msrb.org/MSRB-For/Issuers.aspx http://www.msrb.org/MSRB-For/Issuers.aspx Copyright © 2013

15. Robert J. Bendzinski, CIPFA 615 Griswold Street, Suite 1225 Detroit, Michigan 48226-3997 Phone: (313) 961-8222 Fax: (313) 961-8220 Email: rjb@bendzinski.com