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6.H. - Page 2 of 28 ANALYSIS SEC Rule 15c2-12 generally prohibits any underwriter from purchasing or selling municipal securities unless the issuer has committed to providing continuing disclosure regarding the security and issuer, including information about its financial condition and operating data. Rule 15c2-12 also generally requires that any final official statement prepared in connection with a primary offering of municipal securities contain a description of any instances in the previous five years in which the issuer failed to comply, in all material respects, with any previous commitment to provide such continuing disclosure. In 2018, the SEC adopted amendments to the continuing disclosure provisions of Rule 15c2-12 to address concerns that investors in publicly offered debt do not have adequate or timely information about privately placed obligations. The Amendments also added a definition of "financial obligation" to the Rule. Essentially, a "financial obligation" is a privately placed obligation, such as a bank loan or a direct placement of securities. The Rule 51c2-12 amendments define "financial obligation" to mean a: (a) Debt obligation; (b) Derivative instrument entered into in connection with, or pledged as security or a source of payment for, an existing or planned debt obligation; or (c) Guarantee of an obligation or instrument described in paragraph (A) or (B). Undertakings entered into prior to February 27, 2019, are not impacted. For undertakings entered into on or after February 27, 2019, issuers must also agree to post an Event Notice to EMMA within 10 business days of the occurrence. EMMA is a website funded and operated by the Municipal Securities Rulemaking Board and is designated by the SEC as the official source for municipal securities data and disclosure documents. The Debt Disclosure Policies and Procedures attached address this change in the Policy under Attachment 1 Continuing Disclosure filings, and in Exhibit A, Listed Events, numbers 15 and 16. The City's disclosure policy and procedures continue to address four core components of good disclosure policies: 1. A description of the types of disclosures to investors that are covered by the policy; 2. A clear statement of the process by which each type of disclosure to investors will be undertaken, drafted, reviewed, and approved, as well as how compliance with the process will be documented; 3. The process for adequate supervision and reasonable disbursement of responsibilities; and 4. The steps for training of officials and employees While most of the responsibility related to continuing disclosure falls on City staff, bond counsel, disclosure counsel and municipal advisors, the disclosure policies and procedures contains specific responsibilities for the City Council. These responsibilities include review of the preliminary official statement for any proposed debt issuance and adoption of a resolution authorizing staff to deem the official statement as final, and participation in disclosure training as appropriate. City of Redwood City 1017 Middlefield Road, Redwood City, CA. 94063 Tel: 650-780-7000 www.redwoodcity.ore 298