3 Colo. Code Regs. § 704-2-59-8.4

Current through Register Vol. 47, No. 20, October 25, 2024

Section 3 CCR 704-2-59-8.4 - Registration guidelines

If an issuance or distribution of bonds is to be registered under section 11-59-108, C.R.S., the terms of the offering should be substantially consistent with the standards, guidelines and criteria below:

A. Capitalized interest for payments on such bonds should not exceed one year, unless the district issuing the bonds or any other person making a distribution of the bonds demonstrates a compelling economic reason to the contrary;

B. The written appraisal report referred to in Rule 59-8.2.H.7. should be prepared in conformity with prevailing appraisal industry standards by a qualified, independent appraiser and should be dated no earlier than 90 days prior to the date of issuance or distribution of the bonds, whichever is later;

C. Indentures of trust should be provided that contain standard and customary provisions and should contain provisions satisfactory to the Securities Commissioner for the protection of the bondholders in which are delineated the circumstances under which a trustee must take action to protect their interests;

D. With regard to the issuance or distribution of additional bonds on a parity with bonds already outstanding, the following tests may be applied:

1. With regard to the issuance or distribution of any bonds payable in whole or in part from the proceeds of an ad valorem tax, upon issuance, such bonds should be in parity with the highest priority of any other outstanding bonds of the district, unless the district issuing such bonds demonstrates a compelling economic reason for classifying the bonds being issued or distributed as having a higher or lower priority than such outstanding bonds; and

2. With regard to the issuance or distribution of revenue bonds, the ratio of net operating revenue to average annual debt service should be no less that 1.25 on at least one year's historical basis;

E. The official statement should comply substantially with all of the standard and customary disclosure requirements;

F. Absent a showing of reasonable cause why such proposals should not be secured, all contracts and any other arrangements material to the underwriting, issuance or distribution of the bonds should be entered into only after proposals have been solicited in a manner designed to reach a commercially reasonable number of those parties engaged in the business from which bids are sought;

G. The district proposing to issue such bonds or any other person proposing to distribute such bonds certifies in writing to the Securities Commissioner and discloses in the offering statement that:

1. All material contracts or similar arrangements with regard to the issuance of the bonds were entered into in accordance with the procedure set forth in Subsection 59-8.4F.;

2. All compensation to be paid or given under such contracts or arrangements is disclosed in the offering statement;

3. All potential material conflicts of interest between and among those who are parties to the contracts and/or arrangements and the district are disclosed in the offering statement; and

4. There are no potential conflicts of interest between and among those who are parties to the contracts and/or arrangements and the district which would operate to the detriment of the bondholders in a material way; and

H. Underwriter compensation to be paid from the proceeds of the issuance or distribution, or otherwise, should be calculated at a commercially reasonable rate for the services provided for parties engaged in comparable transactions and should be determined after the solicitation of proposals as described in Subsection 59-8.4 F., and examples of compensation paid in comparable transactions should be provided, if available.

3 CCR 704-2-59-8.4