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This Policy sets forth specific policies designed to ensure Dartmouth complies with applicable provisions of the Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder applicable to tax-exempt bonds issued to finance or refinance Dartmouth facilities.
POST-ISSUANCE COMPLIANCE POLICY FOR TAX-EXEMPT BOND OBLIGATIONS
[Approved by the Board of Trustees June 8, 2012]
Updated May, 2017
This Post-Issuance Compliance Policy (Policy) sets forth specific policies of Dartmouth College ("Dartmouth") designed to ensure Dartmouth complies with applicable provisions of the Internal Revenue Code of 1986, as amended (the "Code")) and the regulations promulgated thereunder (the "Regulations") applicable to tax-exempt bonds ("Bonds") issued to finance or refinance Dartmouth facilities.
It is Dartmouth's policy to fulfill all requirements that must be satisfied subsequent to the issuance of Bonds in order that interest on such obligations will be excludable from gross income for federal income tax purposes. Dartmouth recognizes that compliance with the applicable provisions of the Code and the Regulations is an on-going process, necessary during the entire terms of Bonds and is an integral component of Dartmouth's debt management. Accordingly, the analysis of those facts and the implementation of this policy will require on-going monitoring and, in certain instances, consultation with bond counsel or counsel to Dartmouth with tax-exempt bond expertise beyond the scope of its initial engagement with respect to the issuance of the Bonds.
The individuals who should be familiar with the specific details of this policy are any Dartmouth staff involved in any aspect of any bond issue with respect to which Dartmouth is the borrower, including but not limited to those who manage, direct, or influence the following:
"Applicable Federal Law" – Includes the Code and the Regulations, including Sections 103 and 141 through 150 of the Code and the related Regulations (Note: IRS publication 4077: Tax-Exempt Bonds for 501(c)(3) Charitable Organizations Compliance Guide provides general guidance and explanation for most areas of tax-exempt financing).
"Arbitrage" – Investment earnings on Bond proceeds in excess of the Bond interest paid to bondholders, adjusted for certain expenses (i.e., investment yield higher than the yield on the Bonds).
"Private Business Use" (Private Use)– Examples of private use include: 1) the unrelated trade or business use of the Bond-financed property by Dartmouth and 2) the use of Bond-financed assets by parties other than Dartmouth or certain other charitable organizations, including use by third parties pursuant to leases, management or service contracts that do not meet IRS requirements, certain sponsored research arrangements, and any other arrangements that provide third parties with special legal entitlements to use or occupy Bond-financed property. Generally, no more than five percent (5%) of the proceeds of tax-exempt bonds may be used for private use. Included in private use is Bond issuance costs financed with Bond proceeds (limited to two percent 2% of the Bond proceeds).
It is the policy of Dartmouth to comply with all applicable laws, regulations, contracts and tax covenants applicable to the Bonds, including Applicable Federal Law, the guidelines with respect to management contracts set forth in Revenue Procedure 2017-13, the guidelines with respect to research agreements set forth in Revenue Procedure 2007-47, as the same may be amended and supplemented from time to time, and the tax certificates and loan agreements executed in connection with the issuance of the Bonds. It is Dartmouth's policy to comply with the recommendations contained in IRS publication 4077: Tax-Exempt Bonds for 501(c)(3) Charitable Organizations and the report of the Advisory Committee on Tax Exempt and Government Entities: After the Bonds are Issued: Then What?
Application of this Policy
Dartmouth shall be responsible for the implementation of the following post-issuance compliance policies with respect to Bonds:
Procedures to facilitate compliance with this Post-Issuance Compliance Policy are documented in a separate Post Issuance Compliance Procedures Manual maintained by the Controller's Office.