BOND ISSUANCE GU IDE FOR SMALL&MID-SIZED MUNICIPALITIES

A GOVERNING INSTITUTE HANDBOOK 2017 CONTENTS

4 New Bond Issuance: Why Issuers Are Investing Now

6 Impact of the Financial Crisis

8 Capital Bouncing Back

10 Issuing Bonds: Competitive vs. Negotiated Sales

12 Should You Engage a Municipal Advisor?

14 Should You Purchase ?

How Will New Financial Regulations 17 Affect Your Issuance?

18 What Makes a Successful Bond Issue? 3 NEW BOND ISSUANCE: WHY ISSUERS ARE INVESTING NOW

4 he municipal has undergone some drastic changes over the past decade. TThe financial crisis that began in 2008 resulted in a significant slowdown of bond issuance as municipalities curtailed new capital projects and deferred maintenance and repair. NEW BOND As the economy has recovered, so too have municipal . If your city is considering a new bond issue, you’re not alone. Continued low rates and strong demand make it an especially good time to ISSUANCE: enter the market. Thomson Reuters reports that through October 2017, new-money municipal bond issuance is WHY ISSUERS ARE up 6.1 percent versus the first 10 months of 2016, and the trend has been accelerating. October’s new-money issuance was up 22.5 percent from the prior year. INVESTING NOW As you prepare, you’ll face key decisions on how to issue new bonds. For example, should you engage a municipal advisor? Should you purchase municipal bond insurance? And how might recent financial regulations affect your issuance? In the pages that follow, you’ll find guidance in these and other critical areas with regard to new municipal bond issuance.

The guide takes an in-depth look at: • How the municipal bond procurement process works • Best practices for municipal bond issuance • The role of municipal bond insurance in achieving efficient market access • The regulatory outlook for the municipal bond market

5 IMPACT OF THE FINANCIAL CRISIS

early a decade ago, the flexible, affordable tool with significant have been cautious about moving Great Recession shook capacity to help meet those needs. forward with new issues. But 2016 Nour nation to its economic Returning to the 2001-2010 annual and 2017 election activity shows the and financial core. Virtually no average of $276 billion in new money tide is starting to turn: Governments segment of the U.S. economy was raised through the municipal bond presented — and voters approved — left untouched, including investment market would represent a major step the greatest of infrastructure in public infrastructure. forward. The good news is that the bond elections in a decade. Between 2001 and 2010, an amount of new money raised via the “From our observations, municipal average of $276 billion a year in new issuance of municipal bonds has bond issuers are really picking up money was raised via the issuance increased in each of the last three the pace of infrastructure spending of municipal bonds, according to years. However, it still remains far and financing,” says Bruce Kimmel, a data provider Thomson Reuters. This below the 2007 peak: $223 billion senior municipal advisor with Ehlers, number peaked in 2007 with $336 in new money was raised via the an independent municipal financial billion in new money raised. However, issuance of municipal bonds in 2016, advisory company that serves public the number plunged to just $177 and the market is on pace for $236 sector entities. billion in 2011 and between 2011 and billion in 2017. Kimmel places municipal bond 2016, the average in new money raised Given the depth and severity of issuers post-recession in two camps. annually dropped to $191 billion. the recession, government entities The first camp believed the economy According to the American Society of Civil Engineers, the faces an annual infrastructure funding According to the American Society shortfall of about $100 billion. As the of Civil Engineers, the United States nation moves forward to address this, faces an annual infrastructure funding it is clear that municipal bonds are a shortfall of about $100 billion.

6 MUNICIPAL BONDS 101: THE PROCUREMENT PROCESS AND KEY PLAYERS City and state governments issue municipal (or muni) bonds to multimillion-dollar capital improvement projects, such as buildings, roads, bridges and water treatment plants. The government entity is borrowing money from with the promise of paying it back over time with interest. Municipal bond investors consist of individuals and institutions. More than half of the approximately $4 trillion in muni bonds currently in circulation are held by individual investors. The main participants in the municipal bond procurement process are: • The government entity — The city or state government issuing the bond. • Municipal bond investors — Individuals or institutions who purchase municipal bonds. • Municipal advisor — An outside expert who helps municipalities manage the risks of accessing the public capital markets. was slowly recovering but there was • Underwriter — A “middleman” between the government entity and still uncertainty about their tax base investors who actually sells bonds to investors. and other fundamentals. “They realized they had their • Bond counsel — An attorney who reviews the transaction for compliance core infrastructure projects that both with local law, to ensure it’s an enforceable contract with the weren’t going to get any cheaper to government, as well as federal tax law where appropriate, to make sure build or finance, so they needed to the interest on the bonds is federally tax exempt. work on their capital improvement • Rating agency — An independent company (e.g., Moody’s, S&P plans and get these things done,” Global Ratings, Fitch Ratings and Kroll Bond Rating Agency) that rates says Kimmel. “These issuers really municipal bonds based on the likelihood the issuer will , or fail to started making strides again as repay the bond. early as 2011.” In the other camp were issuers • enhancer — A third party — typically a bond insurance company that stayed out of the game for much or a — that agrees to make principal and interest payments if the longer. Even if the fundamentals issuer does not. all made sense — like the need for A municipal bond sale requires a two-step procurement process. First, the project, the cost and attractive the issuer needs to assemble the team of professionals who will bring the financing rates — they were still transaction to market. Then, that team will execute a second sale process to hesitant. And now many of these place the bonds with investors. The underwriter lines up investors for the bond projects are overdue. issue (and occasionally buys bonds itself), earning a fee from the issuer (the “Some of these issuers are “ spread”). Once the underwriting process is complete, the city or now addressing their deferred state will receive the funds for the project and the underwriter will notify the capital needs, so it’s better late paying agent for the bonds. The government agency will make principal and than never,” says Kimmel. interest payments to the paying agent, who distributes payments to investors.

7 CAPITAL INVESTMENT BOUNCING BACK

8 ew-money municipal bond and issuing new municipal bonds is issuance began to increase an effective way to accomplish this.” Nin late 2016 and early Michael Ogburn, senior vice 2017 as interest rates began to rise president of with and city leaders became concerned California , is they would miss an opportunity. a municipal advisor who focuses “I think we’re seeing some delayed primarily on public school districts in projects now that are finally coming California. He says the school districts to the forefront,” says Kimmel. he works with have been active As tax revenues rebound, cities lately in executing insured municipal are also looking to address capital bond transactions to finance both needs that were deferred during the the improvement of old schools and financial crisis. Capital expenditures to construct new school facilities for infrastructure are usually tabled needed to accommodate growth. during a recession as municipalities “As a practical matter, school shift their focus to providing essential districts are in the municipal bond services to citizens. Bond issuance is market when they have capital needs,” one way to help address this need. says Ogburn. “The low “Now we’re seeing infrastructure environment has something to do upgrades, expansion and renewal with the timing, but school districts coming back onto the agenda, and the would be in the marketplace anyway, municipal bond market is financing regardless of interest rates, to meet these increased capital expenditures,” their school facilities’ needs.” says Scott Richbourg, head of public Projects to modernize existing finance for Build America Mutual. schools and build new schools are Michael Stanton, the head of primarily funded through general strategy and communications for obligation bond elections. According Build America Mutual, points out that to Ogburn, more than 200 California spending on infrastructure was a major school districts had general obligation point of emphasis for both presidential bond elections in November 2016, candidates in the 2016 election. and almost 90 percent of them “This wasn’t a coincidence — passed, for over $25 billion in bond they were both responding to the authorization. In addition, another deferred maintenance backlog that $7.6 billion in state matching grants has built up in recent years. I think was approved in the November everyone, from city managers and 2016 election for school districts mayors to citizens, recognizes that our with eligible school modernization infrastructure could use a big facelift, and new construction projects.

“Now we’re seeing infrastructure upgrades, expansion and renewal coming back onto the agenda, and the municipal bond market is financing these increased capital expenditures.” Scott Richbourg, Head of Public Finance, Build America Mutual

9 ISSUING BONDS: COMPETITIVE VS. NEGOTIATED SALES

here are two models for “The culture of competitive bids often will get a broader field of bids.” issuing municipal bonds: is pretty strong here in the Midwest NEGOTIATED SALES. With a Tcompetitive bond sales and we’re seeing really robust bidding negotiated sale, the underwriter is and negotiated bond sales. There from underwriting firms,” he says. “We selected and the terms of sale are are pros and cons with each model, have historical data that shows that in negotiated in advance. A negotiated so choosing the right one depends most situations, a competitive sale of sale is usually accomplished via a on the specific circumstances a general obligation bond is going to team of underwriters referred to faced by each municipality. get you the best result as opposed to as an underwriting syndicate. COMPETITIVE SALES. With a negotiating with just one underwriter.” The California school districts competitive sale, the government Kimmel is also seeing quite Ogburn works with are issuing entity sets the terms of the sale — a few interested in buying negotiated bonds almost exclusively. such as how much money to borrow municipal offerings directly for their “With today’s technology, the advantages and what revenues will be pledged own portfolios. “So between this of a competitive sale can also be realized for repayment — and accepts bids and the route, we’re with a negotiated sale, and there’s from underwriters in an . The certainly not seeing any shortage of much more flexibility in tailoring the underwriter who offers the lowest interest in buying municipal offerings.” financing structure. Competitive sales, is then selected to The par amount of the bond in our judgment, are mostly limited to issue the bonds. Competitive sales issue, the and how very large, well-known bond issuers are typically used for standardized frequently the government entity with simple structures,” he says. transactions from well-known issuers goes to the public market can also where the underwriter has strong be big influences on the decision. TIPS FOR SUCCESS confidence it will be able to re-sell “Competitive sales tend to make According to Thomson Reuters, the bonds quickly. more sense with higher-rated , approximately 40 percent of Kimmel says the vast majority of larger deal sizes and issuers who are bond transactions are sold via a municipalities he’s working with now more frequently in the market,” says competitive sale process, but more are bringing new bond issues to the Kurt Freund, managing director of RBC than 75 percent of the market via competitive offerings. Capital Markets. “In this scenario, you of bonds sold are issued under a

10 TYPES OF MUNICIPAL BONDS There are three main types of municipal bonds used to raise capital for state and local government . They are differentiated mainly by the types of revenue used to repay the bond: negotiated sale process, since those transactions tend to be larger. General Obligation (or GO) Bonds — These are backed by the “full Choosing the right underwriter 1 faith and credit” or the taxing power of the government entity issuing can make or break a municipal bond the bond. In other words, the entity can use whatever revenues are at offering. Therefore, it’s critical to choose its disposal, such as taxes, sales taxes and fees, to repay the an underwriter who has the kind of , and often include an “unlimited tax” pledge, which commits the trading and investor base that lends itself government to raising taxes to whatever rate is necessary to repay the to the type of you’re issuing. debt. GO bonds, which may require voter approval, are used to fund such “Depending on the size of the public projects as schools, roads and municipal buildings. GOs have offering, we sometimes use more historically been viewed as the most creditworthy bonds in the market. than one underwriter to increase the potential investor base,” says Ogburn. Revenue Bonds — These are repaid from funds generated by a specific Kimmel stresses to municipalities 2 revenue source (i.e., water or sewer utility revenues). Some investors he works with that while the prefer this type of debt — particularly when the project financed underwriter is an integral member provides an essential public service. “Dedicated-tax” bonds are a of the bond issuance team, the subset of revenue bonds, where the government pledges proceeds underwriter is not working for them. from a specific tax (i.e., sales tax or gas tax), in place of revenues “There’s an inherent conflict of from operations. In many cases, investors say revenue bonds offer interest between the issuer and the additional protection from the risk of a municipal . underwriter,” he explains. “Underwriters “General Fund” Bonds — This category covers a wide range of debt want to secure the highest reasonable 3 structures (including lease-revenue bonds, certificates of participation interest rate for the bond because that’s and appropriation-backed debt) in which the debt service has to where they make money, while issuers be included in the issuing government’s budget and voted on each want to pay the lowest possible interest year. Because these bonds are part of the political process and rate. Therefore, we usually encourage are not backed by a specific revenue stream, investors generally issuers to interview several different consider them less secure than GO bonds backed by an unlimited underwriters before choosing one.” tax pledge, and issuers may have to pay a higher interest rate.

11 SHOULD YOU ENGAGE A MUNICIPAL ADVISOR?

12 n preparing to issue municipal who charges a reasonable fee, and finances, as well as the details bonds, jurisdictions must this can definitely add value — of the bond financing they’re doing. Idecide whether to engage especially for small and mid-sized “The key is choosing an an independent municipal advisor. issuers who are less experienced underwriting firm that has a sales There are several advantages to in municipal bond offerings. force and an investor network doing so, but perhaps the biggest is Ogburn points out that municipal that a small or mid-sized issuer the fact that a municipal advisor is advisors tend to specialize in working can ,” says Freund. the only party in the bond issuance with specific types of municipal Some municipalities are realizing process who has a fiduciary duty to entities more than underwriters the importance of investor outreach act in the best interest of the issuer. do. This enables them to better and implementing investor relations According to Thomson Reuters, so understand the issuer’s objectives programs similar to those in large far in 2017 85 percent of municipal and the funding tools available to . This is becoming bond transactions are sold with a meet them. The advisor helps the more common as some municipal advisor, a level that has issuer develop both the financing funds and mutual funds are starting been trending upward in recent years. structure and issuance strategy for to trade municipal bonds more “We have always believed it the offering, and then assembles actively like they do . was our fiduciary duty to act in the a team that’s best equipped “They demand a lot more issuer’s best , but now this to implement this strategy. information, so some issuers are is codified in law,” says Kimmel. “We holding quarterly conference calls take this responsibility very seriously TIPS FOR SUCCESS IN and even going out on the road to because there’s really nobody else UNDERWRITER SELECTION talk to investors,” says Stanton. sitting on the issuer’s side of the When it comes to choosing an Right now, though, Kimmel says table. Just having us in the room underwriter, engaging a firm that he doesn’t see a whole lot of direct tends to add value for issuers.” has demonstrated strong distribution investor outreach like this among small A municipal advisor will market capabilities and is well-established in to mid-sized municipal bond issuers. your bond to investment bankers the marketplace is also recommended. “There’s just not that much need and underwriters by getting the Such a firm will leverage its for it,” he says. “The market is liquid word out and helping you put investor-client network to help with enough and competitive enough that your best foot forward with the successful investor outreach. for most of our clients, it doesn’t make rating agencies. The advisor will The underwriter can help develop sense for them to fly out and meet tell your story and help make your effective presentation materials that with prospective investors like Los bond issue more competitive. outline the community’s economy Angeles or New York might.” To derive the most value, issuers should be careful to choose a highly experienced municipal “We have always believed it was our fiduciary advisor who specializes in their duty to act in the issuer’s best interests, specific type of offering. If you but now this is codified in law. We take this engage an experienced municipal responsibility very seriously.” advisor with proven credentials Bruce Kimmel, Senior Municipal Advisor, Ehlers

13 SHOULD YOU PURCHASE MUNICIPAL BOND INSURA NCE?

14 nother important decision always take a close look at bond municipalities must make insurance if I were this kind of issuer.” A is whether to purchase Also, the more complex the municipal bond insurance. This protects transaction, the more value an issuer investors against the risk of default will usually receive by purchasing bond on the part of the bond issuer. The insurance because it makes the offering active bond insurers in today’s market easier to understand for investors are rated AA by S&P Global Ratings, who may not be as sophisticated. and the bonds they insure carry that “If a bond rating is in the A rating. Issuers with lower ratings who range or lower, bond insurance purchase bond insurance will see definitely adds value,” says Ogburn. their bond ratings get an upgrade. Underwriters typically perform It’s important to remember that a cost-benefit analysis to determine default doesn’t just occur when if buying bond insurance is municipalities go bankrupt, like what beneficial for an issuer. Municipal has happened in such high-profile advisors and issuers themselves incidences as Detroit, Mich.; Jefferson often double-check to make sure County, Ala.; and Stockton, Calif. the cost-benefit comparisons Bond insurance is an unconditional, incorporate the planned parameters irrevocable guarantee of timely and the analyses are reasonable. payment of interest and principal, Bond insurance cost-benefit so investors are protected from any calculations should also consider the potential interruptions in payments entire “lifetime cost” of the insurance — even when an issuer simply fails policy. In the majority of cases, issuers to deliver the payment on time. pay a premium upfront to cover the To make the right bond insurance entire life of their transactions. However, decision, you need to do a cost- most municipal bond issues, like home benefit analysis. Buying insurance mortgages, are refinanced to take can improve an issuer’s credit rating advantage of lower interest rates. and reduce the interest rate on the Issuers who analyze the lifetime bonds because investors are protected cost of their bond issues may find against default risk. So if the insurance it attractive to take advantage of premium — typically quoted as a percentage of total debt service on Research has found the bonds — is less than the total debt that buying bond service savings gained by utilizing insurance lowers insurance, then issuers that purchase the insurance come out ahead. overall borrowing “I think using bond insurance costs, even after can be a critical element for small to factoring in the mid-sized and less-frequent issuers as insurance premium, it often gives investors a higher level thus adding value of comfort,” says Freund. “I would to the issuer.

15 WHAT ARE BOND CREDIT RATINGS — AND SHOULD YOU OBTAIN ONE? alternative pricing structures offered by Build America Mutual. In one One of the key decisions government entities must make scenario, the issuer can pay an when issuing municipal bonds is whether obtaining one upfront premium that covers only or more bond credit ratings will enhance the marketability the first 10 years of the transaction, of their issue and reduce the interest cost they will pay. with additional payments due There are four active rating agencies that provide credit ratings on muni annually thereafter. If the bonds are bonds that are designed to measure likelihood of default and, in some cases, refunded, no additional premium is the potential for investors to recover their losses after a default: S&P Global due. Alternatively, for transactions Ratings, Moody’s Investors Service, Fitch Ratings and Kroll Bond Rating where the full premium is paid Agency. Broadly, ratings are considered “investment grade” or “speculative upfront, Build America Mutual can grade” — the vast majority of muni bond ratings are investment grade. allow its issuers to reapply a portion S&P, Fitch and Kroll use a scale that maxes out at AAA. The lowest of their initial upfront premium as a investment-grade rating is BBB-minus. Between those poles, bonds can earn credit against the cost of insurance ratings of AA-plus, AA, AA-minus, A-plus, A, A-minus, BBB-plus and BBB. for a future refunding bond issue. Moody’s scale is similar, but is written differently. The top rating is Aaa, Recognition of the benefits and the lowest investment-grade rating is Baa3. Other ratings include: Aa1, of bond insurance is starting to Aa2, Aa3, A1, A2, A3, Baa1 and Baa2. spread throughout the municipal Each of the rating agencies uses its own criteria when issuing bond bond marketplace. ratings, but all four look closely at three factors in particular: “We have seen a big movement The stability of the issuer’s revenue stream — The more robust of retail buyers back to using bond 1 and predictable the revenue stream that will be used to repay the bond, insurance to protect their municipal the higher the bond rating will usually be. For example, property taxes bond holdings,” says Richbourg. are usually a more reliable revenue stream than revenue from more “And in the last six to 12 months speculative projects (e.g., convention centers). we’ve seen much more activity with the larger, more sophisticated The demographics of the jurisdiction — Bonds issued by institutional investors as well. They 2 municipalities with growing populations and wealthy residents usually have placed more value in the earn better ratings than bonds issued by municipalities with stagnant protections of bond insurance.” populations and less-affluent residents. A significant amount of research The issuer’s financial management and governance practices — has been done on the economics 3 The rating agencies like to see that issuers produce their financial and ROI of buying municipal bond reports on time, maintain an emergency reserve fund, manage insurance. The general finding is flows effectively, have a clear capital budgeting plan and have policies to that buying bond insurance lowers prepare for financial contingencies. overall borrowing costs, even after Improving your bond’s credit rating by even one notch can potentially factoring in the insurance premium, save hundreds of thousands of dollars in borrowing costs. However, the thus adding value to the issuer. decision to obtain one or more bond ratings isn’t always a no-brainer. There’s Stanton points out that not only a cost involved in obtaining a bond rating, so the decision usually comes does the issuer get better rates due down to a cost-benefit analysis: Will the potential savings in borrowing costs to default protection for investors, outweigh the cost of obtaining the rating? but buying insurance commoditizes Also, if you’re a small or mid-sized issuer, having an attractive bond bonds and increases their liquidity. rating could open up doors to potential investors that might otherwise “This is especially important remain closed. This is because some investors, including many of the mutual to smaller municipalities that don’t funds that hold approximately 25 percent of all outstanding municipal bonds, have a lot of name recognition, only consider buying bonds with a minimum rating from one of the primary because it helps broaden the base rating agencies. of potential investors,” he says.

16 HOW WILL NEW FINANCIAL REGUL ATIONS AFFECT YOUR ISSUA NCE?

ot surprisingly, the against issuers and underwriters for the ability of issuers to raise money. regulatory environment for missing material events,” says Kimmel. Most issuers weren’t affected by Nmunicipal bond issuance In addition, the Municipalities the initiative, but it raised awareness has gotten considerably stricter since Continuing Disclosure Cooperation and due diligence among issuers the financial crisis and passage of the (MCDC) Initiative has brought a lot in terms of making sure all their Dodd-Frank Wall Street Reform and of awareness. This initiative allowed continuing disclosure obligations are Consumer Protection Act of 2010. both issuers and their underwriters to being met — and among underwriters, Municipal bond issuers today self-report failures to comply with their who will decline to bid on bond are subject to stringent federal continuing disclosure undertakings in issues from issuers when they are not regulations when it comes to their exchange for more lenient penalties confident their obligations are satisfied. financial statements. The post- than the SEC would impose in cases Kimmel says that many issuers transaction disclosure obligations where it discovered a lapse on its own. are trying to make it easier for the are also quite extensive. The program was intended to address investment community to find their In particular, regulators have potentially widespread violations of financial documents. For example, come out much more forcefully federal securities laws by municipal issuers are putting an investor against false, misleading or incomplete issuers and underwriters in connection relations or city financials tab on their offering documents. Continuing with certain representations about homepage so analysts can readily disclosure undertaking requirements continuing disclosures in their locate current and complete financials. and responsibilities have always been bond offering documents. Insured bonds from Build America there for issuers, but they have been The MCDC increased compliance Mutual are also accompanied with a ramped up considerably. Regulators with continuing disclosure “BAM Credit Profile,” a three-page, are also paying especially close requirements. Many municipalities have easy-to-digest summary of key financial attention to material event notices. had to turn to consultants for help data that investors can use to learn “There’s a very window to comply because of the complexity about an issuer’s finances and monitor for filing these, and we’ve seen of the requirements and the volume them over time. BAM’s surveillance the U.S. Securities and Exchange of historical data that needs to be staff updates the Credit Profiles using Commission (SEC) make findings reviewed. However, this hasn’t affected publicly available data annually.

17 WHAT MAKES A SUCCESSFUL BOND ISSUE?

18 ue to the pent-up demand caused by years of delays in new capital projects and deferred Dmaintenance and repairs, and a recovering economy, the time is ripe for new municipal bond issues. But what would define a successful muni bond issue? In general, a successful bond issue helps municipalities meet their investment and debt-service cost objectives, is completed on time and obtains the lowest cost of capital. The best way to accomplish this is by having a high degree of transparency. “In my experience, small and mid-sized issuers routinely achieve this result. But they have to do their homework on the front end to engage experienced and knowledgeable professionals,” says Freund. A successful bond issue is also about achieving the structural objectives of the financing initiative. This means getting the financing in place in a way that works for the community’s needs so they get the money for the project when they need it and the payment terms and timing meet their longer-term objectives.

A successful bond issue helps municipalities meet their investment and debt-service cost objectives, is completed on time and obtains the lowest cost of capital.

“One of the most gratifying aspects of my job is that I get to help small and mid-sized issuers understand their capacity to access capital markets and obtain financial solutions for their specific needs,” Kimmel adds. “Sometimes it’s a matter of informing them that they actually have more options than they thought in terms of structuring a deal or getting strong bids.” Kimmel concludes: “Even though there are regulatory and statutory issues that need to be addressed, issuers should feel good about their public financing options in the current environment.”

This piece was developed and written by the Governing Institute Content Studio, with information and input from Build America Mutual.

19 Produced by: For:

The Governing Institute advances better government Build America Mutual has guaranteed more than by focusing on improved outcomes through research, $40 billion of municipal bonds for more than 2,700 decision support and executive education to help public- communities across the United States. BAM’s AA/Stable sector leaders govern more effectively. With an emphasis credit rating helps issuers improve the credit quality on state and local government performance, innovation, of their municipal bond sales and reduce their interest leadership and citizen engagement, the Institute costs. BAM insurance makes U.S. infrastructure more oversees Governing’s research efforts, the Governing affordable and municipal bond investments safer. Public Official of the Year Program, and a wide range of events to further advance the goals of good governance. For more information, visit www.buildamerica.com or contact [email protected]. www.governing.com

The material in this handbook is written for issuers of municipal bonds but is not intended to provide legal or financial advice. Issuers should consult with qualified legal counsel, registered broker-dealers, or municipal advisors to learn more about the subjects covered in these pages.

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