CONTINUING DISCLOSURE

BEST PRACTICES

PRESENTED BY:

The Frazer Lanier Company is an investment banking firm. With over 250 years of

combined experience and an outstanding record, the company clearly demonstrates that

there is strength in numbers.

Our firm is dedicated primarily to municipal finance. Since 1976, our company has served as

an investment banker to cities, counties, states, local boards and agencies throughout the

State.

Our main office is located at 300 Water Street, Montgomery, Alabama. We also have

locations in Birmingham, address 110 Office Park Drive, Suite 210, Birmingham, and

Florence, Alabama, address 402 Cox Creek Parkway, 2nd Floor, Florence, Alabama.

www.frazerlanier.com

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The Frazer Lanier Company

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L. Lee Garrison graduated from the University of Alabama in 1997 with a

Bachelor of Science degree in Finance. Lee was elected to four consecutive terms

on the Tuscaloosa City Council from 1997 to 2013 and served as Finance

Committee Chair from 2001-2013. During those 12 years, the City of Tuscaloosa

had an impeccable financial record, resulting in bond rating upgrades. In 2013,

Lee opted to run and was elected citywide as Chair of the Tuscaloosa City Board of

Education. Pledging to serve only one term and help turn the school system

around, Lee led the Board in adopting a $200MM+ multiyear strategic plan that

addressed curriculum, human resources, technology and facilities. Lee has been

directly involved in many bond issues during his 20 years of elected public service.

Lee currently serves on the Board of Directors of the Business Council of

Alabama.

lee@fralan.com | Cell: 205-792-1794

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Robert H. Young, Jr. graduated from the public schools of Selma, Alabama, and

from Auburn University with a Bachelor of Science degree in 1971. After serving in

the United States Army, he entered the investment banking field in 1972 and joined

The Frazer Lanier Company in 1976. Mr. Young has served as a member of the

Auburn University Business School Advisory Committee, and as a Committeeman

and Vice-Chairman on the District V Business Conduct Committee of the National

Association of Securities Dealers.

bobyoung@fralan.com | Cell: 334-265-8515

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*MSRB (Municipal Securities Rulemaking Board)

What is Continuing Disclosure?

Continuing disclosure consists of important information about municipal

bonds that arises after the initial issuance. This information generally

reflects the financial health or operating condition of the state or local

government as it changes over time, or the occurrence of specific events

that can have an impact on key features of the bonds.

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SEC Rule 15c2-12

U.S. Securities and Exchange Commission (SEC) Rule 15c2-12 requires dealers,

when underwriting certain types of municipal securities, to ensure that the state or

local government issuing the bonds enters into an agreement to provide certain

information to the Municipal Securities Rulemaking Board (MSRB) about the

securities on an ongoing basis. These disclosures are made available to investors

and the public on the MSRB’s Electronic Municipal Market Access (EMMA®)

website. Issuers enter into CDAs at the time of bond issuance to enable their

underwriters to comply with Securities and Exchange Commission (SEC)

Rule 15c2-12. This rule, which is under the Securities Exchange Act of 1934, sets

forth certain obligations of (i) underwriters to receive, review and disseminate

official statements prepared by issuers of most primary offerings of municipal

securities, (ii) underwriters to obtain CDAs from issuers and other obligated

persons to provide material event disclosures and annual financial information on a

continuing basis, and (iii) broker-dealers to have access to such continuing

disclosure in order to make recommendations of municipal securities in the

secondary market.

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Why Are Continuing Disclosures Useful?

Continuing disclosures are intended to assist investors in determining the

suitability of a bond, as well as potential risks associated with the credit of the state

or local government. Each bond issue has its own unique set of continuing

disclosures. The financial information and operating data, which is prepared by the

state or local government that issued the bond, generally reflects the evolving

financial or operating condition of the state or local government. Disclosures also

include notice of specific events occurring after a bond’s issuance that can have an

impact on any of the following:

• The ability of a state or local government to pay investors amounts owed on the

bonds;

• The value of the bonds if they are bought or sold prior to maturity; or

• The timing of repayment of principal. By looking at continuing disclosures,

investors can compare annual financial information about a particular bond from

year to year, or between two similar securities. They can also read event notices to

learn about actions or events that can affect a particular bond.

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What are the Types of Continuing Disclosures?

Some continuing disclosures provide updated financial or operating information

about the state or local government that issued the bond, such as:

• Annual financial information

• Audited financial statements

• Notice of failure to provide annual financial information on or before the date

agreed to by the state or local Government

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Other continuing disclosures provide notification of specific events that may have

an effect on repayment of a bond, such as:

• Principal and interest payment delinquencies

• Non-payment related defaults

• Unscheduled draws on debt service reserves reflecting financial difficulties

• Unscheduled draws on credit enhancements reflecting financial difficulties

• Substitution of credit or liquidity providers, or their failure to perform

• Adverse tax opinions or events affecting the tax-exempt status of the security

• Modifications to rights of security holders

• Bond calls and tender offers

• Defeasances

• Release, substitution or sale of property securing repayment of the securities

• Rating changes (upgrade or downgrade)

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• Bankruptcy, insolvency or receivership

• Merger, acquisition or sale of all issuer assets

• Appointment of successor trustee

• Financial obligation incurrence or agreement (Bank Loans)

• Default, event of acceleration, termination event, modification of terms or other

similar events under the terms of a financial obligation of the obligated person, any

of which reflect financial difficulties.

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What are the Timeframes for Submitting Disclosures Specified

in SEC Rule 15c2-12?

State or local governments or obligated persons must submit annual disclosures

on or before the date specified in the continuing disclosure agreement or provide

notice of failure to do so to the MSRB through the EMMA website. Disclosure of

events must be submitted to EMMA in a timely manner, but not in excess of 10

business days after the occurrence of the event.

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What are the Exemptions from SEC Rule 15c2-12?

Continuing disclosure generally is not required for an issue if:

• The entire issue is for less than $1 million

• The bonds are sold to investors in authorized denominations of $100,000 or

more to no more than 35 sophisticated investors

• The bonds are sold in authorized denominations of $100,000 or more

and mature in nine months or less from initial issuance

• The bonds were issued prior to July 1995 (or prior to December 1, 2010 for

certain “puttable” securities.)

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Where Are Continuing Disclosures Located?

The MSRB’s EMMA website, at emma.msrb.org, publicly displays continuing

disclosure information submitted since July 1, 2009, as part of the MSRB’s

mission to provide access to key municipal market information. The EMMA

website also displays trade data and educational materials about the municipal

securities market.

What Is MSRB Gateway?

MSRB Gateway is the single, secure access point for all market systems operated by the MSRB, including submission services, applications and the associated forms. Gateway users can also perform the following functions:

*Set up secure, password-protected accounts*Manage organization and user account details*Access certain forms used for MSRB submission services*Manage agent designations*Navigate to all MSRB systems for which you have rights, such as EMMA® Dataport and MyEMMA*.

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Digital Assurance Certification, LLC (or "DAC"), formerly an affiliate of Ernst &

Young, LLP, provides post-issuance securities and tax compliance services to

municipal securities market participants, and operates an integrated disclosure

repository for obligors' municipal and direct/taxable bond issues.

To assist our issuer and obligor clients in complying with municipal bond

disclosure requirements under SEC Rule 15c2-12, we provide industry-leading

dissemination and compliance technology services, such as compliance templates

for operating and financial data, reminders of critical filing deadlines, rating change

alerts, and model policies and procedures. Training is also provided through our

CPE-approved webinars, taught by leading experts.

www.dacbond.com

888-824-2663

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*Chronically Late Municipal Bond Audits Further Delayed in FY 2018

Every year since 2007, Merritt Research Services1(Merritt Research) reports the

time it takes for municipal bond borrowers to complete their annual financial

audits. The results of the study consistently show slower reporting relative to

industry standards of the securities markets. By now, it has been well documented

that most municipal audits lag the corporate standard of 60 days by a range of

three to six more months. Slower audit turnaround times increase the likelihood

that analysts will miss signals that may adversely affect municipal bond pricing

and catch investors or other stakeholders off guard. In short, the useful value of

the audits will become either stale or diminished, or potentially not useful at all.

That concern is aggravated by the fact that the Merritt Research study evidenced

that weaker borrowers generally experience longer delays than better quality

credits to complete their audits. This year’s findings are particularly disappointing.

Despite a decade of placing a spotlight on the problem2, audit reporting took

another step down to tie the slowest median audit time recorded over the past

eleven years. By compiling approximately 10,700 different borrowers, Merritt

Research Services found that the median audit time grew to 156 days for Fiscal

Year 2018, two days longer than the previous year. The last time the median audit

time was this slow in the last 11 years was 2015. Over the same time period, the

fastest reported time happened in 2010, when the study’s all sector median

marked 147 days.

*By Richard A. Ciccarone, President of Merritt Research Services, an

Investortools, Inc. Company

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Differential among AuditorsGovernments or agencies audited by state auditor rather than private CPAs often have slower times in their sectors. For example, in the county sector, state audits in Alabama, Indiana, Washington, Minnesota, Oklahoma and Iowa had median audit times of over 200 days, which compares unfavorably to the national county median of 181 days. Slower state auditor reporter may have more to do with adequate audit staff available at the state level to handle so many large, medium, small and micro sized governments.Although the Merritt Study reviewed the median audit time grouped by the independent auditor, the governmental sectors completed by larger, big name private sector auditors didn’t appear to show much of an advantage over smaller auditing firms. However, in the hospital sector, several large accounting firms, with at least 10 audit clients in the Merritt study, beat the sector medians by significant margins. PricewaterhouseCoopers, LLP had a median hospital sector time of 97 days versus the total sector median of 114 days.

Although a 60-day deadline is the SEC standard for most regulated corporate bond markets, no municipal credit sector has historically come close to the 60-day mark and few reach the secondary goal (90 days) for smaller companies. The municipal bond market and the Government Finance Officers Association has held to the convention of completing audits within 120 days or less. Lending credibility to the notion that this is an achievable goal, Merritt studies showcase a significant number of accomplished borrowers who have met the 120-day standard. This timeframe for financial audits is well within reach and should be set as an objective for every governmental and not-for-profit borrower.

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*Issuers oppose broad interim disclosure

Issuers are pushing back against analysts and regulators seeking more frequent

financial disclosures and say they want to know what specifically investors and

analysts are looking for in their finances. At a Government Finance Officers

Association debt committee meeting Monday, issuers aired concerns about

being asked to provide financial documents on a more frequent basis. Some said

groups like the National Federation of Municipal Analysts are asking for too much.

The NFMA wants interim financials from municipalities in order to get a good idea

of their fiscal direction. Securities and Exchange Commission Chair Jay Clayton

has said he is focused on both more timely annual financial reporting and interim

unaudited financial information to improve municipal disclosure. Some analysts

also say issuers take too long to get out their audited financial information and

want information on a more frequent basis.

*Sarah Wynn, Bond Buyer (1/28/2020)

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The SEC recommended in its 2012 Report on the Municipal Securities Market that

it be given additional authority to initiate changes to improve municipal securities

disclosures made by issuers. The recommendations stated that this could be done

within the confines of the Tower Amendment.

The Tower Amendment, named for former Texas Senator John Tower, restricts the

commission as well as the Municipal Securities Rulemaking Board from directly or

indirectly requiring issuers to file documents with them before their securities are

sold. Regulators have instead placed certain burdens on the underwriters of the

bonds, such as requiring underwriters to ensure that issuers agree to ongoing

secondary market disclosure before underwriting. But the Tower Amendment

doesn't restrict the SEC from placing additional requirements on secondary market

disclosures, though the SEC has historically declined to do so because of a lack of

explicit statutory authority to take those steps.

*Sarah Wynn, Bond Buyer (1/22/2020)

SEC unlikely to require more timely disclosure

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*Issuer disclosure timeliness on tap at FIMSAC meeting

Two topics of muni market interest — disclosure and ratings — will be on the docket

when the Securities and Exchange Commission's Fixed Income Market Structure

Advisory Committee meets next week. FIMSAC will meet Feb. 10 at the SEC's

Washington headquarters, the commission announced Thursday. The agenda

includes a discussion of a draft recommendation related to the timeliness of issuer

disclosure, an increasingly hot topic that has created tension between groups

representing issuers and the major group representing municipal analysts.

According to the agenda, that discussion will take place in the early afternoon and

panelists will include former SEC chair Elisse Walter, Government Finance Officers

Association Federal Liaison Emily Brock, Akiko Mitsui of Vanguard, and Fidelity's

Hannah Sullivan. FIMSAC is an outside advisory committee, formed in 2017 to

provide the SEC with external expertise on various fixed-income issues. It has

made a variety of recommendations to the SEC, but the SEC is not bound by

FIMSAC's suggestions.

The 1 p.m. discussion about the timeliness of municipal disclosure comes as the

Municipal Securities Rulemaking Board appears set to add to EMMA a timer which

would track how many days after the close of a financial reporting period an issuer

filed its audited report for that time.

*Kate Glazier, Bond Buyer (2/6/2020)

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Rating Agencies

*Untimely filing of Audits may have serious consequences relative to your credit

rating (Your rating may be withdrawn)

*Rating agencies have various time requirements, so make sure you know where

you stand and be proactive if you feel in doubt

*Withdrawal of your rating may prevent an issuer from refunding existing debt at

lower rates and/or issuing new debt

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The Frazer Lanier Company, Incorporated (FLCO) is providing the information contained

in this document for discussion purposes only in anticipation of serving as an underwriter.

The primary role of FLCO, as an underwriter, is to purchase, or arrange for the placement

of, securities in an arm’s-length commercial transaction between the Issuer and FLCO

and FLCO has financial and other interests that differ from the Issuer.