February 16, 2011
To Whom It May Concern:
The Securities and Exchange Commission (SEC) has proposed Rules 15Ba 1-1 through 15Ba1-7 (the Proposed Rules) that would establish new registration requirements for municipal advisors. It is my understanding that these rules provide for a broader definition of "municipal advisor" that currently exists. Under this definition, municipal advisors would include appointed board members for boards that can issue debt as well as consultants to such boards who provide any advice that might remotely relate to the issuance of debt. The definition specifically excludes elected officials and employees of municipal government.
This rule would have a severely negative effect on the City of League City's ability to attract private citizens from all walks of life to serve as a board member for any of a number of important municipal entities. The City has a 4B Industrial Development Corporation and a management district, each of which has the legal authority to issue debt. The boards for these municipal entities include businesspeople, retirees, professionals, and citizens who volunteer their time for the betterment of the community.
The boards have minimal administrative expenses, rely on qualified outside professional advice when appropriate, including financial, engineering and development advice. They are governed by state statues that require public meetings, open records access for citizens, annual financial audits and compliance with municipal securities laws and regulations. Additionally, each non-elected board member must be reappointed by the Mayor of the City of League City and confirmed by the City Council every two years when their terms of office expire. In addition, the 4B and management district boards cannot issue debt without the approval of the City Council.
Under the new rule, each of these board members (1) would be required to register with the SEC, (2) would have to provide personal information to the SEC through a disclosure process that would be part of the public domain, (3) would have to certify that they had met certain requirements yet to be defined by the SEC and the Municipal Securities Rulemaking Board, (4) would have to make and keep records for at least a five year period, (5) would be subject to criminal or civil penalties and (6) would be required to pay a $600 annual registration fee.
It is entirely conceivable that this set of requirements would effectively eliminate involvement by non-elected officials on these important boards. Only citizens already registered as municipal advisors would participate along with elected officials as members of these boards. This would have the opposite effect intended in establishing the boards.
Please consider this a resounding "NO" vote on these unnecessary, proposed regulations.
Mike Loftin
Assistant City Manager
Management Services