RECENT TRENDS AND DEVELOPMENTS
Michael J. Seezen, Esquire
McNair Law Firm, P.A. (803) 799-9800
September 11, 2015
Francenia B. Heizer, Esquire
McNair Law Firm, P.A. (803) 799-9800
Michael W. Burns, Esquire
McNair Law Firm, P.A. (864) 271-4940
Brandon T. Norris, Esquire
McNair Law Firm, P.A. (864) 271-4940
FREEDOM OF INFORMATION ACT
New Agenda Requirements, Case Law Updates,
Pending Legislation and Three Helpful Tips
Tip No. 1
ACT 70 Amendments to FOIA
• Agenda now required for all meetings of public bodies except emergency
meetings – No more “Agenda, if any, for regularly scheduled meetings” language
• Agenda must be posted with notice of meeting at least 24 hours prior to meeting • Agenda posted in a publicly accessible place and on public body’s website.
• Must still also notify persons, organizations, local news media or such other
ACT 70 Amendments (Cont.)
• Requirements for adding action item to agenda after meeting begins: • 2/3 vote of members of public body present and voting
• If final action or if action w/no public comment, 2/3 vote AND finding
Case Law Update
Donohue v. City of North Augusta – 2015 SC Supreme Court opinion regarding announcement of specific purpose of executive session
• Announcement of “proposed contractual matter” insufficient
• Quality Towing v. City of Myrtle Beach – “FOIA is not satisfied merely
because citizens have some idea of what a public body might discuss in private.”
Case Law Update (Cont.)
Glassmeyer v. City of Columbia – 2015 SC Court of Appeals opinion regarding redaction of personal identifying information
• City redacted home addresses, personal telephone numbers and email
addresses in FOIA response regarding applicants for position of City Manager
• Court of Appeals held that home addresses, personal telephone
numbers, and email addresses of applicants were exempt from disclosure under S.C. Code Section 30-4-40(a)(2)
Tip No. 2
Avoid inadvertent
FOIA poetry...It may
get tweeted!
#FOIApoetry
Pending Legislation: H.3191
• Has undergone three readings in the House. Currently in Senate
Subcommittee.
• Fees –
• Reasonable fees not to exceed the actual cost of search
• Not more than hourly salary of lowest paid employee that has the skill
and training to perform
Pending Legislation: H.3191 (Cont.)
• Response time reduced from 15 days to 10 days (or 20 days for records
over 2 years old)
• Records must be furnished or made available w/in 30 days of
determination or deposit (35 days for records more than 24 months old)
Pending Legislation: H.3191 (Cont.)
• FOIA review to occur in Administrative Law Court • Hearing Officers appointed by Chief Judge of ALC
• Chief Judge of ALC to promulgate rules governing practices and procedures • Hearing Officer determinations to be appealed to ALC
• A Hearing Officer determination that records are not subject to disclosure
will bar award of attorney’s fees or other costs in the event of reversal on appeal.
• A Hearing Officer determination that a record is subject to disclosure must
Tip No. 3
Avoid funny emails
about FOIA requests...
Municipal Continuing Disclosure
Cooperation Initiative (MCDC)
• MCDC Initiative established in connection with SEC Rule 15(c)2-12 and anti-fraud
provisions of Securities Act of 1933 and Securities Exchange Act of 1934 (“Securities Acts”). • Rule 15(c)2-12 prohibits underwriters from selling municipal securities unless an issuer has
committed to annual financial and operating disclosure under a Continuing Disclosure Agreement (“CDA”).
• Securities Acts prohibit material misstatements and omissions by an issuer in an Official Statement (“OS”), including material misstatements about prior compliance with disclosure obligations under an existing CDA.
MCDC
Under the initiative, the SEC allowed/encouraged underwriters and
issuers to voluntarily self report any time in the past five years
(2014-2009) when an issue was sold with offering documents that
did not identify recent failures to comply with continuing disclosure
requirements or that contained a false or misleading statement
MCDC
Dealers/underwiters had until September 10, 2014 to self-report
and issuers had until December 1, 2014.
While confirmation from the SEC is unavailable, industry sources
believe most dealers/underwriters and thousands of issuers
MCDC
So far, the SEC has focused on underwriters/dealers.
36 underwriters agreed to pay a total of $9.3 million to settle under MCDC.
Enforcement actions were taken. Firms did not admit or deny SEC findings.
Penalties were based on size of underwritings – maximum of $500,000 for
10 firms; smallest $40,000
MCDC
SEC will turn its attention to issuers.
-
We don’t know who
-
We don’t know when
MCDC
Recommended Settlement Terms for Issuers who participated in MCDC
• Must consent to cease and desist proceeding for violation of Securities Act
of 1933.
• Neither admit nor deny SEC’s findings. • Issuer pays no civil penalty.
MCDC
Recommended Settlement Terms for Issuers (cont.)
• Establish policies and procedures on continuing disclosure. • Comply with existing continuing disclosure undertakings.
• Cooperate with subsequent investigation by SEC Enforcement Division. • Disclose settlement terms in any OS within the next five years.
MCDC
Different Points of View
Mary Jo White, SEC Chair, has been quoted saying: “The MCDC
Initiative has already resulted in significant improvement sto the
municipal seucrities market, including heightened awareness of
issuers’ disclosure obligations and enhanced disclosure policies and
procedures.”
Forward Agreements
Why use Forwards?
•
Current vs. advance refunding
•
Debt capacity
Forward Agreements
Current vs. Advance Refunding
90 days Advance Refunding Current Refunding Redemption Date
Forward Agreements
Documentation
• Term Loan Agreement and/or Rate Lock Agreement
• Typical reps/warranties – authorization, execution and delivery,
enforceability, no litigation, no further approvals/consents, no
proposed/pending legal changes or challenges, accurate information
provided to bank, no funding liability for employee benefit or pension plan – Material Adverse Effect
• Attachments - forms of legal documents, legal opinions, continuing
Timing
Closing Date vs. Funding Date
90 days
+/-TLA Closing Date
Funding Date / Bonds Issued
Redemption Date
Closing Date Deliverables
•
Authorizing resolution/ordinance
•
Legal opinions
•
Financial information
Funding Date Deliverables
•
Executed legal docs/continuing disclosure certificates
•
Legal opinions
•
Bring down on reps/warranties/defaults
•
No adverse ratings change
When is breakage fee owed?
When is breakage fee owed?
“Failure to Launch”
•
Bonds aren’t issued on Funding Date
•
Failure of Funding Date deliverables, except:
•
Lender can’t legally buy bonds
When is breakage fee owed?
TLA is Terminated Following an Event of Default • Payment default
• Reps/warranties • Bankruptcy
• Material litigation
Other Legal Issues
Protective language on payments
•
Breakage fee not a debt/doesn’t count against 8% debt limit
•
Indemnification/Reimbursement
Other Legal Issues
Competitive vs. Negotiated Sale
•
G.O. debt – except as below, must be sold competitively
• Notice of sale specifies delivery date of bonds; include key provisions
that bidders must abide to (breakage, indemnification, terms and conditions, defaults, etc.)
• May result in one bid, no bids or rejected bids
