Engineering Exclusion
Firms may provide advice on engineering aspects of a new issuance. The municipal entity can then use this information to structure the related issuance, including the timing and use of bond proceeds. But the engineering firm itself cannot give advice on the structure, timing, terms, or other similar matters of an issuance of securities.
Examples of information about which an engineer can give advice include:
•New project specifications (cost, projected construction schedule, anticipated funding requirements, and an in-service date)
•Engineering feasibility studies, including projections of output capacity, utility project rates, project market demand, or project revenues that are based on engineering aspects of a project
•Projected gross revenues that are derived from the physical connections to the project (e.g., water and sewer system)
•Projected operating and maintenance expenses and net revenues for a project
•Reporting on compliance with bond covenants that involve engineering (can report on whether the proposed rate structure is sufficient or whether an increase is necessary to achieve compliance)
Examples of information about which an engineer cannot give advice include:
•How to structure a municipal issue, including the timing and terms of debt service payments
•Length of any capitalized interest period