Number: ADMIN 030
Effective: February 17, 2017
Department: Finance and Administration
Last Revision: February 22, 2019


CWI may finance facilities and equipment through the issuance of governmental bonds, qualified 501(c)(3) tax‐ exempt bonds, and certain taxable bonds that are subject to tax‐exempt bond laws and regulations. The purpose of this policy is to facilitate compliance with applicable federal law and IRS regulations related to arbitrage, timing and use of bond proceeds, and other aspects of a bond issue.


This policy applies to all CWI officials, faculty and staff with the responsibility or control over any aspect of the bond issuance, the investment or expenditure of bond proceeds, and the use of bond‐financed assets, including but not limited to those who manage, direct or influence the following:

1. Use and expenditure of bond proceeds;
2. Arbitrage compliance and tax return filings;
3. The use and disposition of all facilities financed by bonds, including use by CWI or by third parties pursuant to leases, management agreements, service agreements, sponsored research agreements, fee‐for‐use or other arrangements;
4. Record retention and management;
5. Continuing disclosure requirements;
6. Compliance monitoring and reporting;
7. Remedial Action; or
8. Continuing education and communication.
This Policy works in conjunction with, and does not amend or replace, the Post Issuance Tax Compliance Procedures for Tax-Exempt Bonds administratively adopted by CWI on September 25, 2018 (the “Compliance Procedures”). CWI officials, faculty and staff shall refer to the Post-Issuance Compliance Procedures (Appendix E) and Post-Issuance Compliance Checklist (Appendix F) in carrying out this Policy.


Applicable Federal Law:  The Internal Revenue Code of 1986, as amended and the regulations promulgated thereunder.

Arbitrage:  Investment earnings on bond proceeds at a yield in excess of the bond yield.)

Defeased Bonds:  Refunded bonds for which the payment of principal and interest has been assured through the structuring of a portfolio of government securities placed into an irrevocable trust to provide for all future debt service payments on old bonds.

Governmental Tax Exempt Bonds:  Bonds issued by a governmental agency or entity on behalf of CWI.

IRS:  Internal Revenue Service.

Private Business Use:  The direct or indirect use of bond proceeds or bond financed property in a trade or business carried on by any person other than the governmental entity.

Revenue Bonds or Lease Revenue Bonds:  A form of long‐term borrowings in which the debt is secured by a revenue stream produced by the project.

Tax Exempt Bonds: A bond usually issued by municipal, county, or state governments, whose interest payments are exempt from federal income tax.

Taxable Bonds:  Taxable governmental bonds which are subject to the federal laws and regulations applicable to tax‐exempt bonds.


CWI will comply with all applicable federal laws and regulations which apply to tax‐exempt and certain taxable bonds issued to finance facilities and equipment owned or used by CWI. The Office of Vice President for Finance and Administration (VPFA) will create and maintain written guidelines and procedures to document the processes to be used to ensure compliance with applicable federal laws and regulations, and will designate the positions and individuals responsible for these processes.


Roles And Responsibilities 

The Vice President for Finance and Administration (VPFA) has primary responsibility for ensuring that processes are in place for maintaining post‐issuance compliance with tax‐exempt bond regulations, delegating and providing oversight of these processes.

A compliance coordinator (the “Compliance Coordinator”)will be designated to coordinate and document post‐issuance compliance monitoring activities and deadlines, and to ensure that compliance tasks are tracked and performed in an appropriate and timely manner, in accordance with the Appendix E - Post-Issuance Procedures and Appendix F – Post-Issuance Compliance Checklist, and any additional covenants required by specific bond agreements.  These responsibilities are currently delegated to the Senior Treasury Analyst.

The VPFA, the designated Compliance Coordinator, and other appropriate CWI personnel shall consult with bond counsel and other legal counsel and advisors, as needed, following issuance of Bonds to ensure that all applicable post issuance requirements are met.

For additional information on roles, responsibilities, and compliance monitoring tasks, reference Appendix A: Role and Responsibility Matrix and Appendix F. Post-Issuance Compliance Procedures and Checklist.

Use And Expenditure Of Bond Proceeds 

Bond proceeds are disbursed to pay project costs, capitalized interest, if applicable, and costs of issuing the bonds, in accordance with the tax rules and the restrictions of the bond documents. The expenditure of bond proceeds and related investment earnings will be tracked to ensure they are used only for qualified purposes.

As more fully set out in the Compliance Procedures (Appendix E – Post-Issuance Compliance Procedures), for each tax‐exempt bond financed project, accounting records detailing the receipt and expenditure of bond proceeds must be maintained. Such accounting records must reflect the date, the purpose, and the recipient of the expenditure. At the conclusion of a project when all bond proceeds have been exhausted, a final allocation will be compiled, documenting the use of all bond proceeds and related investment earnings. The data will detail all of the expenditures posted to the specific fund/project. This documentation will be part of the permanent records for the particular bond transaction.

When appropriate, records showing an allocation of bond proceeds and equity or taxable debt to certain project expenditures must be maintained. If CWI is reimbursed for project expenditures made prior to the bond closing, the reimbursement resolution or official statement of intent and the records showing such expenditures and the reimbursement to CWI must be maintained.

The Business Office must keep copies of all charges posted to the fund/project established for the bond proceeds. The bank statements detailing the bond proceeds’ bank account are reconciled by the Business Office monthly.

The statements are stored to meet record retention requirements.  

Arbitrage Yield Restriction And Rebate 

Arbitrage arises when proceeds from a bond issue are invested and the yield on the investments is greater than the yield on the bonds. The Internal Revenue Code contains two separate sets of requirements relating to arbitrage (yield restriction and rebate), which must be satisfied to ensure that the bonds do not lose tax‐exempt status.

Arbitrage rebate calculations must be made as required by applicable federal law and, if necessary, the appropriate federal arbitrage tax returns will be prepared and filed with the IRS together with any rebate amount owed. Accounting records tracking the investment of bond proceeds and the investment earnings must be maintained as required by this policy.

Yield Restriction: the arbitrage rules generally prohibit proceeds of a bond issue from being invested in a yield in excess of the bond yield.

Rebate: even if an exception to yield restriction applies, if arbitrage is earned on an issue, the excess earnings must be remitted to the U.S. Treasury Department unless an exception to rebate applies. CWI will engage the services of an outside vendor to perform arbitrage and rebate (and, as applicable, yield reduction) functions. The vendor performs rebate calculations annually based on the bond issue date, and again at the time all bond proceeds have been spent (or at the time that the bond issue is retired, if earlier). The vendor also measures CWI’s bond proceeds spending rate to determine whether an applicable “spending exception” to rebate is satisfied. The designated Compliance Coordinator is responsible for a) obtaining and supplying relevant investment and spending data to the vendor to allow it to perform these calculations, and b) coordinating with the vendor and the bond issuer to ensure that any rebate owed is paid to the U.S. Treasury Department (and Form 8038‐T filed) by the deadline applicable to the computation period in question.

The College is responsible for the timely payment to the U.S. Treasury of all arbitrage rebate installments and payments (including yield reduction payments if applicable) when due (generally (i) every fifth year and (ii) within 60 days of the final payment of all principal and interest on the bonds, as further described in the tax agreements relating to the bonds).

The VPFA is responsible for contracting with a third party to perform the required arbitrage and rebate calculations. The reports and schedule for the calculation will be maintained by the designated Compliance Coordinator, as well as documentation verifying compliance.

Private Business Use 

The private business use of facilities or equipment financed with bond proceeds must be monitored for the life of the bond issue and for the life of any bonds issued to refund the original issue. Private business use of bond proceeds and facilities and equipment financed with bond proceeds is limited by applicable federal law. Tax exempt status of a bond issuance is in jeopardy if more than 10 percent of the proceeds are used for private business use. Applicable federal law sets forth some categories of private business use including the following:

  1.  Actual and beneficial use by a non-governmental user;
  2. Ownership by non-governmental users;
  3. Lease to non-governmental users;
  4. Management contracts; 
  5. Research agreements; and
  6. Other actual or beneficial use.

An annual survey of the use of bond financed facilities and equipment must be conducted by the Compliance Coordinator to determine if there is any private business use of such property. Copies of any leases, management contracts, research agreements and any other documents involving private business use of such property must be attached to the survey and reviewed by the Compliance Coordinator.

If the potential for private business use exists, any lease, management contract, or other arrangement must be reviewed in advance by the Compliance Coordinator. Research agreements must be reviewed by Grants and Contracts.

An annual survey will be distributed by the Business Office to each department responsible for facility or equipment financed by tax exempt bonds.

See Appendix B - Private Use Questionnaire

Change Of Use

The VPFA must be notified before there is a change in use or a sale or disposition of any facility financed with tax‐exempt debt to ensure compliance with applicable federal law.  Documentation of such change in use must be maintained by the designated Compliance Coordinator.

Record Retention

As more fully set out in the Compliance Procedures, records relating to tax‐exempt bonds must be maintained for the term of the bond issue plus at least an additional five years, or, in the case of an issue refunded by one or more subsequent bond issues, for the combined term of the issues plus at least an additional five years. Records to be retained include, but are not limited to the following:

  1. Bond transcript;
  2. Expenditure records;
  3. Investment Records;
  4. Arbitrage rebate calculations and records;
  5. Records of use of bond financed property;
  6. Annual private business use survey and materials;
  7. A copy of each IRS filing in regard to the bond issue; and
  8. Any other records relating to the bond issue or bond financed property

See Appendix C - Records Retention

Disclosures And Filings 

CWI will remain in compliance with Security and Exchange Commission Rule 15c2‐12 by filing its annual financial statements and other financial and operating data for the benefit of its bondholders within 180 days of the close of the fiscal year.

CWI will provide financial statements, official statements, and periodic financial information under the Electronic Municipal Market Access System (“EMMA”) created by the Municipal Securities Rulemaking Board. Any notice of material events will also be filed under EMMA.

CWI will comply with continuing disclosure requirements as stated in the bond documents. Each bond issuance will have its own Information Reporting Agreement, Continuing Disclosure Agreement or similar document that sets forth CWI’s continuing disclosure requirements with respect to that issuance. Information regarding CWI’s financial condition must be provided annually to nationally‐recognized securities information repositories. Other required filings include:

  1. Tax Forms. Tax‐exempt debt obligation issuers are required by the IRS to file the appropriate 8038 series of forms (8038, 8038‐G, 8038‐B, 8038‐T, and 8038‐R).
  2. Continuing Disclosure Requirements. Certain material events must be reported on a case‐by‐case basis or annually as outlined in each bond document appendix.
  3. See Appendix D. Material Events Checklist for a list of condition events that trigger additional reporting requirements.
  4. Arbitrage Certificates. Within five years of the anniversary of the debt issue (to close out the issue) and within 60 days of retirement or refunding of the bonds, CWI must calculate any arbitrage on the debt in a final accounting, and make any required rebate payment to the Internal Revenue Service (IRS).

Responsibility For Maintaining Compliance

The Office of Vice President for Finance and Administration is responsible for implementing this policy and monitoring compliance with its requirements.  A Post‐Issuance Compliance Checklist will be completed for each facility financed with tax‐exempt bonds upon completion of the project and must be updated annually thereafter so long as the bonds are outstanding. The Post‐Issuance Compliance Checklist is maintained in the Business Office, and completed by the designated Compliance Coordinator.

See Appendix E - Post-Issuance Compliance Checklist

Remedial Action

CWI will seek the advice of bond counsel in the event that remedial action may be required. To the extent a potential violation arises that cannot be corrected through remedial action, or in the event of a potential arbitrage violation, CWI will seek the advice of bond counsel concerning its alternatives, which may include contacting the IRS under the Voluntary Closing Agreement Program (VCAP).

Continuity And Training

In furtherance of the policies set forth above, the VPFA will maintain a Tax‐Exempt Bond Compliance Handbook and will take such steps as necessary to ensure that the CWI staff responsible for complying with requirements applicable to tax‐exempt bonds are trained to complete their responsibilities relating to the procedures set forth above. Such training will cover the purposes and importance of these procedures, as well as the details of the particular staff member’s responsibilities.


The Business Office is authorized to adopt procedures consistent with this Policy to further implement the goals and purposes of this Policy.


26 U.S. Code § 141

IRS Publication 4079 Tax-Exempt Governmental Bonds