A. Scope: When tax exempt governmental bonds are used to refund other bonds ("refunded bonds"), the new bonds ("refunding bonds") will be treated as having financed the property originally financed with the refunded bonds (or any bonds refunded by the refunded bonds), such that financed property must be tracked until the last bonds (whether refunded bonds or refunding bonds) attributable to that property are retired. The Oversight Officer or other appropriate department head or designee will continue reviewing the use of the any bond financed property until the last bonds attributable to that property are retired; except to the extent that tracking is no longer required due to the economic life of the property coming to an end.
B. Advance Refunding Bonds: Refunding bonds, the proceeds of which are used to retire refunded bonds more than ninety (90) days after the issue date of the refunding bonds, are "advance refunding bonds". Advance refunding bonds have additional Federal tax requirements in order to be tax exempt governmental bonds. In order to comply with these additional requirements, the Oversight Officer will:
1. Limit On Advance Refundings: Confirm directly, or in conjunction with a financial advisor and/or bond counsel, that the issuer does not issue advance refunding bonds that would violate the limit on the number of advance refundings for any of its tax exempt governmental bonds;
2. Proper Call Date: Confirm directly, or in conjunction with a financial advisor and/or bond counsel, that the refunded bonds are being redeemed on their earliest call date or other allowable date;
3. Mixed Escrows: Confirm directly, or in conjunction with a financial advisor and/or bond counsel, that all nonbond proceeds amounts going into any refunded bond escrow comply with the rules relating to mixed escrows (meaning escrows which are funded with bond proceeds and nonproceeds) (see Treasury Regulations section 1.148-9(c)(2));
4. Non-SLGs Investments: To the extent that investments other than United States Treasury Securities - State and Local Government Series (SLGs) will be placed in an escrow, confirm directly, or in conjunction with a financial advisor and/or bond counsel, that SLGs were not a more efficient investment on the date of the bidding of any other type of investment; or, to the extent that SLGs sales have been suspended on such date, confirm that the safe harbors for determining the fair market value of yield restricted defeasance escrows have been met (see Treasury Regulations section 1.148-5(d)(6)(iii)). To the extent that SLGs are unavailable and the issuer cannot obtain at least three (3) bids to provide other investments, the issuer will consult with bond counsel and its financial advisor on how to proceed;
5. Monitoring Zero Percent SLGs: To the extent that an escrow funded with advance refunding bond proceeds requires future purchases of zero percent (0%) SLGs in order to comply with the applicable yield restrictions, the issuer will purchase the zero percent (0%) SLGs directly or, by written agreement, cause an escrow agent to purchase such SLGs. If the SLGs are to be purchased by an escrow agent, the issuer will confirm that such SLGs have actually been purchased, or, to the extent SLGs sales are suspended, comply with alternate procedures (which currently are provided in Rev. Proc. 95-47); and
6. Private Use Measurement Period: Determine whether it will measure private business use using a combined measurement period (meaning starting with the issue date of the refunded bonds and ending with the final retirement of the refunding bonds) or separate measurement periods for the refunded bonds and the refunding bonds; provided, that the issuer may not use separate measurement periods if the refunded bonds were not in compliance with the private business use limits measured from their date of issuance to the date of issuance of the refunding bonds. (2019 Compilation)