Resolution 1987-28
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RESOLUTION NO.
87 - 28
RESOLUTION AUTHORIZING ISSUANCE OF REFUNDING BONDS
EAST NINTH ST. ET AL REFUNDING ASSESSMENT DISTRICT, SERIES 87-1
The City Council of the City of Gilroy resolves:
Section 1. RECITALS. On April 20, 1987, the City Council
of the City of Gilroy adopted its resolution of intention to conduct
reassessment proceedings and issue refunding bonds under the
provisions of the Refunding Act of 1984 for 1915 Improvement Act
Bonds (the "Act"). Proceedings taken under the Act led to the levy
of reassessments by the City Council against parcels of land within
the reassessment district in the total amount of $757,648.00. These
reassessments will be recorded in the office of the County Recorder
of the County of Santa Clara, and thereupon will become a lien upon
each of the reassessment parcels. The refunding bonds are being
issued in the amount of the total reassessment.
Section 2. ISSUANCE OF BONDS. The City Council hereby
authorizes the issuance of refunding bonds under the provisions of
the Act to be secured by the reassessments. The bonds shall be
designated, "Refunding Bond, East Ninth St. Et Al Refunding
Assessment District, City of Gilroy, Santa Clara County, California,
Series No. 87-1, Without Obligation to Advance Funds (Section 8769
(b), Streets and Highways Code)." In all respects not specified in
this resolution, the bonds shall be issued in the manner prescribed
by the Act. Bonds shall be issued in denominations of $5000 or
integral multiples thereof, and shall be dated May 1, 1987. Bonds
shall mature and shall bear interest at the rates set forth in the
table attached as Exhibit A.
Section 3. APPOINTMENT OF PAYING AGENT, REGISTRAR AND
TRANSFER AGENT. The City Council hereby appoints Bank of America
National Trust and Savings Association as paying agent, registrar
and transfer agent for the bonds in accordance with an agreement
between the City and Bank heretofore approved by the City Council.
Section 4. FORM AND EXECUTION. Bonds shall be issued as
fully registered bonds substantially in the form set forth as
Exhibit B to this resolution. The bonds shall be signed by the
Treasurer and the Clerk and the seal of the City shall be affixed.
ORIGINAL
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All signatures and seal may be reproduced on the bonds by facsimile,
but upon its registration or reregistration each bond shall be
authenticated by the manual signature of the registrar.
The paying agent shall assign to each bond authenticated
and registered by it a distinctive letter, or number, or letter and
number, and shall maintain a record thereof which shall be available
to the City for inspection.
Section 5. ESTABLISHMENT OF SPECIAL FUNDS. For
administering the proceeds of the sale of bonds and payment of
interest and principal on the bonds, there are hereby established
five funds to be known as the refunding fund, the redemption fund,
the special reserve fund, the investment earnings fund and the
excess investment earnings fund, respectively, for East Ninth St. Et
Al Refunding Assessment District, Series 87-1.
Section 5.1. REFUNDING FUND. Except as provided in
Section 5.3, proceeds of sale of the bonds, together with the
redemption fund and special reserve fund for the outstanding bonds
for East Ninth St. Et Al Assessment District 83-1 shall be deposited
with the City Director of Finance. Disbursements from the refunding
fund shall be made in accordance with the Reassessment Report for
these proceedings.
Section 5.2. REDEMPTION FUND. The redemption fund shall
be maintained by the Director of Finance. All payments of principal
and interest installments on the reassessments, together with
penalties, if any, shall be deposited in the redemption fund, which
shall be a trust fund for the benefit of the bondholders. Payment
of the bonds at maturity, or at redemption prior to maturity, and
all interest on the bonds shall be made from the redemption fund.
Section 5.3. SPECIAL RESERVE FUND. The special reserve
fund shall be maintained by the Director of Finance. There shall be
deposited into the special reserve fund the amount of $53,039.00
from the proceeds of the sale of refunding bonds. The special
reserve fund shall be administered as follows:
A. During the term of the bonds, the amount in the
special reserve fund shall be available for transfer into the
redemption fund in accordance with Section 8808 of the Streets and
RESOLUTION NO. 87 - 28
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Highways Code. The amount so advanced shall be reimbursed to the
special reserve fund from the proceeds of redemption or sale of the
parcel for which payment of delinquent reassessment installments was
made from the special reserve fund.
B. If any reassessment is prepaid before final
maturity of the bonds, the amount of principal which the assessee is
required to prepay shall be reduced by an amount which is in the
same ratio to the original amount of the special reserve fund as the
original amount of the prepaid reassessment bears to the total
amount of assessments originally levied in East Ninth St. Et Al
Refunding Assessment District, Series 87-1. This reduction in the
amount of principal prepaid shall be balanced by a transfer from the
special reserve fund to the redemption fund in the same amount.
C. The amounts deposited in the reserve fund will
never exceed 10% of the proceeds or maximum annual debt service,
whichever is less.
D. When the amount in the special reserve fund equals
or exceeds the amount required to retire the remaining unmatured
bonds (whether by advance retirement or otherwise), the amount of
the special reserve fund shall be transferred to the redemption
fund, and the remaining installments of principal and interest not
yet due from assessed property owners shall be cancelled without
payment.
Section 5.4. INVESTMENT EARNINGS FUND. The investment
earnings fund will be administered by the City Director of Finance
in the manner described in Exhibit C.
Section 5.5.. EXCESS INVESTMENT EARNINGS FUND. The
excess investment earnings fund will be administered by the City
Director of Finance in the manner described in Exhibit C.
Section 6. PAYMENT ON BONDS. The principal and interest
on the bonds shall be payable at Bank of America National Trust and
Savings Association, Corporate Agency Division, P.O. Box 37000, San
Francisco, CA 94137. Principal and interest shall be paid by check,
draft or warrant mailed to the registered owner of each bond at the
owner's address appearing on the register maintained by the
registrar on the 15th day preceding the date of interest payment or
RESOLUTION NO. 87 - 28
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maturity of each bond.
Section 7. REREGISTRATION. Any bond may be registered to
a new owner by completing the assignment certificate on the reverse
of the bond and delivering the bond to the registrar. Upon
reregistration, any bond may be replaced by one or more bonds of the
same maturity and aggregate amount in denominations of $5000 or any
integral multiple thereof.
Section 8. COVENANTS. In the event of a default in the
payment of any bond or any installment of interest thereon,
bondholders shall have the remedies set forth in the Act. In
addition, the City Council makes the following covenants, which
shall constitute a contract with the bondholders:
Section 8.1. FORECLOSURE OF LIENS. If any installment of
the principal or interest of any reassessment levied in East Ninth
St. Et Al Refunding Assessment District, Series 87-1 becomes
delinquent, the City Council shall cause an action to be filed in
the Superior Court of the County of Santa Clara to foreclose the
lien of the delinquent reassessment under the authority of Section
8830 and following of the Streets and Highways Code of the State of
California. This action shall be filed not later than one hundred
fifty (150) days after the date of delinquency.
Section 8.2. ARBITRAGE. During the term of the bonds,
the City will make no use of bond proceeds which, if such use had
been reasonably expected at the date the bonds are issued, would
have caused the bonds to be "arbitrage bonds" within the meaning of
Section 148 of the United States Internal Revenue Code of 1986, and
regulations of the Internal Revenue Service authorized thereby, and
further shall rebate to the United States any amounts actually
earned as arbitrage in accordance with the provisions of that Code
and those regulations, all as more particularly set forth in the
detailed arbitrage covenant attached as Exhibit C and incorporated
herein by reference.
Section 8.3. MAINTENANCE OF TAX EXEMPTION. The City will
take all reasonable actions required to maintain the status of the
bonds as bonds exempt from federal income taxes and State of
California personal income taxes.
RESOLUTION NO. 87 - 28
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I HEREBY CERTIFY that the foregoing resolution was duly
and regularly adopted and passed by the City Council of the City of
Gilroy, California, at a regular meeting thereof, held on the 20th
day of April, 1987.
AYES: Councilmembers ALBERT, GAGE, KLOECKER, MUSSALLEM, PALMERLEE,
VALDEZ and HUGHAN.
NOES: Councilmembers None
ABSENT: Councilmembers None
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City Clerk of
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MATURITY SCHEDULE
EAST NINTH ST. ET AL REFUNDING ASSESSMENT DISTRICT
SEPT 2
MATURITY
DATE
PRINCIPAL INTEREST
AMOUNT RATE
1988 $32,648.00 5.25%
1989 55,000.00 5.75
1990 55,000.00 6.25
1991 60,000.00 6.50
1992 65,000.00 6.75
1993 70,000.00 7.00
1994 70,000.00 7.20
1995 80,000.00 7.40
1996 85,000.00 7.50
1997 90,000.00 7.60
1998 95,000.00 7.75
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TOTAL: $757,648.00
EXHIBIT A
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United States of America
State of California
County of Santa Clara
REGISTERED
REGISTERED
Number
$
REFUNDING BOND
CITY OF GILROY
EAST NINTH ST. ET AL REFUNDING ASSESSMENT DISTRICT
SERIES NO. 87-1
Without Obligation to Advance Funds
(Section 8769 (b), Streets and Highways Code)
INTEREST RATE
MATURITY DATE
BOND DATE
CUSIP NUMBER
REGISTERED OWNER:
PRINCIPAL SUM:
Under and by virtue of the Refunding Act of 1984 for 1915
Improvement Act Bonds, Division 11.5 of the Streets and Highways
Code, (the "Act"), the City of Gilroy, County of Santa Clara, State
of California, (the "City"), will, out of the redemption fund for
the payment of the bonds issued upon the unpaid portion of
reassessments made for the refunding of all outstanding 1915 Act
bonds in East Ninth St. Et Al Assessment District, Series 83-1 more
fully described in the Resolution of Intention adopted by the City
Council of the City of Gilroy on the 20th day of April, 1987, pay to
the registered owner stated above or registered assigns, on the
maturity date stated above, the principal sum stated above, in
lawful money of the United States of America and in like manner will
pay interest from the interest payment date next preceding the date
on which this Bond is authenticated, unless this Bond is
authenticated and registered as of an interest payment date, in
which event it shall bear interest from such interest payment date,
or unless this Bond is authenticated and registered prior to March
2, 1988, in which event it shall bear interest from its date, until
payment of such principal sum shall have been discharged, at the
rate per annum stated above, payable semiannually on March 2 and
September 2 in each year commencing on March 2, 1988. Both the
principal hereof and redemption premium hereon are payable at the
principal corporate trust office of Bank of America National Trust
and Savings Association-Corporate Agency Division, or its successor,
as Transfer Agent, Registrar and Paying Agent, in San Francisco,
California, and the interest hereon is payable by check or draft
mailed to the owner hereof at the owner's address as it appears on
the registration books of the Bank, or at such address as may have
been filed with the Bank for that purpose, as of the fifteenth day
immediately preceding each interest payment date.
REFERENCE IS MADE TO THE FURTHER PROVISIONS OF THIS BOND
SET FORTH IN THE REVERSE SIDE HEREOF WHICH SHALL FOR ALL PURPOSES
HAVE THE SAME EFFECT AS THOUGH FULLY SET FORTH HEREIN.
This bond will continue to bear interest after maturity at
the rate above stated, provided, it is presented at maturity and
payment thereof is refused upon the sole ground that there are not
sufficient moneys in said redemption fund with which to pay same.
If it is not presented at maturity, interest thereon will run until
maturity.
This Bond shall not be entitled to any benefit under the
Act or the Resolution Authorizing Issuance of Bonds (the "Resolution
of Issuance"), or become valid or obligatory for any purpose, until
EXHIBIT B
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the certificate of authentication and registration hereon endorsed
shall have been dated and signed by the Bank.
IN WITNESS WHEREOF, said City of Gilroy has caused this
bond to be signed in facsimile by the Treasurer of said City and by
its Clerk, and has caused its corporate seal to be reproduced in
facsimile hereon all as of the 1st day of May, 1987.
CITY OF GILROY
Clerk
Treasurer
(SEAL)
Certificate of Authentication and Registration
This is one of the Bonds described in the within
mentioned Resolution of Issuance, which has been
authenticated and registered on
BANK OF AMERICA NATIONAL TRUST AND SAVINGS ASSOCIATION
as paying agent, transfer agent and registrar
By
Authorized Officer
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(REVERSE OF BOND)
CITY OF GILROY
EAST NINTII ST. ET AL REFUNDING ASSESSMENT DISTRICT
ADDITIONAL PROVISIONS OF THE BOND
This bond is one of several annual series of bonds of
like date, tenor and effect, but differing in amounts, maturities
and interest rates, issued by the City of Gilroy under the Act and
the Resolution of Issuance, for the purpose of refunding bonds
described in said proceedings, and is secured by the moneys in
said redemption fund and by the unpaid portion of said
reassessments made for the payment of said improvements, and,
including principal and interest, is payable exclusively out of
said fund.
This Bond is transferable by the registered owner
hereof, in person or by the owner's attorney duly authorized in
writing, at said office of the Bank, subject to the terms and
conditions provided in the Resolution of Issuance, including the
payment of certain charges, if any, upon surrender and
cancellation of this Bond. Upon such transfer, a new registered
Bond or Bonds, of any authorized denomination or denominations, of
the same maturity, for the same aggregate principal amount, will
be issued to the transferee in exchange therefor.
Bonds shall be registered only in the name of an
individual (including joint owners), a corporation, a partnership
or a trust.
Neither the City nor the Bank shall be required to make
such exchange or registration of transfer of bonds during the
fifteen (15) days immediately preceding any interest payment date.
The City and the Bank may treat the owner hereof as the
absolute owner for all purposes, and the City and the Bank shall
not be affected by any notice to the contrary.
This bond or any portion of it in the amount of $5,000
or any integral multiple thereof, may be redeemed and paid in
advance of maturity upon the second day of March or September in
any year by giving at least 60 days' notice by registered mail to
the registered owner hereof at such owner's address as it appears
on the registration books of the Bank and by paying principal and
accrued interest together with a premium equal to three (3)
percentum of the principal.
I hereby certify that the following is a correct copy of
the signed legal opinion of STURGIS, NESS, BRUNS ELL & SPERRY a
professional corporation, Emeryville, California, on file in my
office. '
City Clerk
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EXHIBIT C
ARBITRAGE AND REBATE COVENANTS
Section 1. Definitions Applicable to These Covenants
(a) Bonds. The term "Bonds" means the refunding
improvement bonds, issued in the par value of $757,648.00, dated
May 1, 1987, by the City of Gilroy for East Ninth St. Et Al
Refunding Assessment District, Series 87-1.
(b) Bond Year.
month period beginning on
30 of the following year,
on May 1, 1987 and ending
The term "Bond Year" means the twelve
May 1 of each year and ending on April
commencing with the period beginning
on April 30, 1988.
(c) Code. The term "Code" means the Internal Revenue
Code of 1986.
(d) Debt Service. The term "Debt Service" means the
scheduled amount of interest and amortization of principal
payable on the Bonds during the period of computation, excluding
amounts scheduled during such period which relate to principal
which has been retired before the beginning of such period.
(e) Excess Investment Earnings. The term "Excess
Investment Earnings" has the meaning ascribed to it in Section
3(b) hereof.
(f) Excess Investment Earnings Fund. The term "Excess
Investment Earnings Fund" means the account by that name created
by, and held by the City pursuant to this Certificate.
(g) Gross Proceeds. The term "Gross Proceeds" means
the sum of the following amounts:
(i) original proceeds, namely, net amounts (after
payment of all expenses of issuing the Bonds) received
by or for the City as a result of the sale of the Bonds,
excluding original proceeds which become transferred
proceeds (determined in accordance with applicable
Regulations) of obligations issued to refund in whole
or in part the Bonds;
(ii) investment proceeds, namely, amounts received
at any time by or for the City, such as interest and
dividends, resulting from the investment of any original
proceeds (as referenced in clause (i) above) or investment
proceeds (as referenced in this clause (ii) in Nonpurpose
Obligations, increased by any profits and decreased (if
necessary, below zero) by any losses on such investments,
excluding investment proceeds which become transferred
proceeds (determined in accordance with applicable
Regulations) of obligations issued to refund in whole
or in part the Bonds;
(iii) transferred proceeds, namely, original proceeds
of the Prior Bonds, and interest earnings and profits
less losses resulting from investment of such original
proceeds in Nonpurpose Obligations, which are deemed to
become proceeds of the Bonds ratably as original proceeds
of the Bonds and interest earnings and profits resulting
from investment of such original proceeds in Nonpurpose
Obligations, discharge the outstanding principal of the
Prior Bonds, all on the date of such ratable discharge;
(iv) sinking fund proceeds, namely, amounts, other
than original proceeds, investment proceeds or transferred
proceeds (as referenced in clauses (i) through (iii) above
of the Bonds, which are held in the Redemption Fund and
any othe~ fund to the extent that the City reasonably
expects to use such other fund to pay Debt Service on the
Bonds;
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(v) amounts in the Reserve Fund and in any other fund
established as a reasonably required reserve or replacement
fund;
(vi) Investment Property pledged as security for payment
of Debt Service on the Bonds by an ultimate obligor or
a related person or by the City;
(vii) amounts received with respect to loans made with
original proceeds of the Bonds, financing leases entered
into for property acquired with original proceeds of the
Bonds and other obligations acquired to carry out the
governmental purposes of the Bonds;
(viii) amounts, other than as specified in this
definition, used to pay Debt Service on the Bonds; and
(ix) amounts received as a result of investing amounts
described in this definition.
(h) Investment Earnings Fund. The term "Investment
Earnings Fund" means the account by that name created by, and
held by the City pursuant to the provisions hereof.
(i) Investment Property. The term "investment
property" means any security (as said term is defined in section
l65{g) (2) (A) or (B) of the Code), obligation, annuity or
investment-type property, excluding, however, obligations the
interest on which is exempt from income tax under section 103 of
the Code.
(j) Nonpurpose Obligation. The term "Nonpurpose
Obligation" means any Investment Property which is acquired with
the Gross Proceeds of the Bonds and is not acquired in order to
carry out the governmental purpose of the Bonds.
(k) Prior Bonds. The term "Prior Bonds" means the
prescribed portion of the improvement bonds of City of Gilroy
which are being refunded and called for redemption on July 2,
1987, in the total principal amount of $757,648 as a result of
issuance of the Bonds.
(I) Purchase Price. The term "Purchase Price," for
the purpose of computation of the Yield of the Bonds, has the
same meaning as the term "issue price" in sections l273{b) and
1274 of the Code, and, in general, means the initial offering
price to the public (not including bond houses and brokers, or
similar persons or organizations acting in the capacity of
underwriters or wholesalers) at which price a substantial amount
of the Bonds are sold or, if the Bonds are privately placed, the
price paid by the first buyer of the Bonds or the acquisition
cost of the first buyer. The term "Purchase Price," for the
purpose of computation of the Yield of Nonpurpose Obligations,
means the fair market value of the Nonpurpose Obligations on the
date of use of Gross Proceeds of the Bonds for acquisition
thereof, or if later, on the date that Investment Property
constituting a Nonpurpose Obligation becomes a Nonpurpose
Obligation of the Bonds.
(m) Regulations. The term "Regulation" means
temporary and permanent regulations promulgated under section
148 of the Code.
(n) Resolution. The term "Resolution" means the
Resolution Authorizing Issuance of Bonds adopted by the City
Council of the City on April 20, 1987.
(o) Treasurer. The term "Treasurer" means the Finance
Director - Treasurer of the City of Gilroy.
(q) Yield. The term "Yield" means that yield which,
when used in computi~g the present worth of all payments of
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principal and interest (or other payments in the case of
Nonpurpose Obligations which require payments in a form not
characterized as principal and interest) on a Nonpurpose
Obligation or on the Bonds, produces an amount equal to the
Purchase Price of such Nonpurpose Obligation or the Bonds, all
computed as prescribed in applicable Regulations. For the
purpose hereof, the yield on a Nonpurpose Obligation that
consists of variable rate Investment Property shall be
determined as of the date the Nonpurpose Obligation is acquired
and as of the first day of each Bond Year by assuming that the
rate of interest will be the weighted average rate of interest
for such Investment Property during the preceding one-year
period (or portion thereof in which the Nonpurpose Obligation
was outstanding). With respect to a Nonpurpose Obligation
purchased on its date of issue, the Yield for the first Bond
Year shall be determined by assuming that the rate of interest
will be the initial rate of interest for such Nonpurpose
Obligation as determined under the prescribed formula on such
date of issue (without regard to any fixed rate initially
applicable to such Nonpurpose Obligation).
Section 2. No Arbitrage Covenant.
The City shall not take, nor permit nor suffer to be taken by
any other person, any action with respect to the Gross Proceeds
of the Bonds which if such action had been reasonably expected
to have been taken, or had been deliberately and intentionally
taken, on the date of the issuance of the Bonds would have
caused the Bonds to be "arbitrage bonds" within the meaning of
section l48(a) of the Code and Regulations promulgated
thereunder. At no time will the amounts deposited in or
credited to the Improvement Fund, the Redemption Fund, the
Reserve Fund, the Investment Earnings Fund, and the Excess
Investment Earnings Fund be invested in any form of investment
which produces a yield greater than the bond yield.
Section 3. Rebate Covenant.
(a) Creation of Funds. There are hereby created, to
be held by the Treasurer as separate funds distinct from all
other funds and accounts held by the Treasurer under the
Resolution, the Investment Earnings Fund and the Excess
Investment Earnings Fund. All interest earnings and profits on
amounts in all funds established under this Certificate, other
than interest earnings on the Redemption Fund and any other
funds referenced in subsection (c) (5) hereof if such earnings in
any Bond Year are less than $100,000, shall, upon receipt by the
City, be deposited in the Investment Earnings Fund. In
addition, all interest earnings and profits on Gross Proceeds in
funds held by the City shall upon receipt, be deposited in the
Investment Earnings Fund. Annually, on the last day of each
Bond Year or on the preceding business day in the event that
such last day is not a business day, the Treasurer shall
transfer from the Investment Earnings Fund to the Excess
Investment Earnings Fund for purposes of ultimate rebate to the
United States an amount equal to Excess Investment Earnings, all
as more particularly described in this Section. Following the
transfer referenced in the preceding sentence, the Treasurer
shall transfer all amounts remaining in the Investment Earnings
Fund to the Redemption Fund to be used for the payment of Debt
Service on the Bonds on the next interest payment date and for
such purpose, Debt Service due from the City on such date shall
be credited by an amount equal to the amount so transferred.
(b) Definition of Excess Investment Earnings. The
City shall calculate Excess Investment Earnings in accordance
with subsection (b) and shall assure payment of an amount equal
to Excess Investment Earnings to the United States in accordance
with subsections (c) and (d). The term "Excess Investment
Earnings" means an amount equal to the sum of:
(i) the excess of
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(A) the aggregate amount earned from the date of
delivery of the Bonds on all Nonpurpose Obligations in
which Gross Proceeds of the Bonds are invested (other
than amounts attributable to an excess described in
this paragraph (i), over
(B) the amount that would have been earned if the
Yield on such Nonpurpose Obligations (other than amounts
attributable to an excess described in this paragraph (i))
had been equal to the Yield on the Bonds, plus
(ii) any income attributable to the excess described
in paragraph (i).
(c) Calculation of Excess Investment Earnings. Prior
to the last day of the first Bond Year, the City shall calculate
the Excess Investment Earnings referenced in paragraph (i) of
subsection (b). Thereafter, prior to the last day of each Bond
Year and on the date of the retirement of the Bonds, the City
shall calculate the amount of Excess Investment Earnings
referenced in paragraphs (i) and (ii) of subsection (b). Said
calculations shall be made or caused to be made by the City in
accordance with the following:
(1) Except as provided in (2), in determining the
amount described in paragraph (i) (A) of subsection (b),
the aggregate amount earned on Nonpurpose Obligations
shall include (i) all income realized under federal
income tax accounting principles (whether or not the
person earning such income is subject to federal income
tax) with respect to such Nonpurpose Obligations and
with respect to the reinvestment of investment receipts
from such Nonpurpose Obligations (without regard to
the transaction costs incurred in acquiring, carrying,
selling or redeeming such Nonpurpose Obligations),
including, but not limited to, gain or loss realized
on the disposition of such Nonpurpose Obligations
(without regard to when such gains are taken into
account under Section 453 of the Code relating to
taxable year of inclusion of gross income), and
income under Section 1272 of the Code (relating
to original issue discount) and (ii) any unrealized
gain or loss as of the date of retirement of the Bonds
in the event that any Nonpurpose Obligation is retained
after such date.
(2) In determining the amount described in
paragraph (i) of subsection (b), Investment Property
shall be treated as acquired for its fair market value
at the time it becomes a Nonpurpose Obligation, so that
gain or loss on the disposition of such Investment
Property shall be computed with reference to such fair
market value as its adjusted basis.
(3) In determining the amount described in paragraph
(i) (B) of subsection (b), the Yield on the Bonds shall be
determined based on the actual Yield of the Bonds during
the period between the date of issuance of the Bonds and
the date the computation is made (with adjustments for
discount or premium).
(4) In determining the amount described in paragraph
(ii) of subsection (b), all income attributable to the
excess described in paragraph (i) of subsection (b)
must be taken into account, whether or not that income
exceeds the Yield on the Bonds, and no amount may be
treated as "negative arbitrage".
(5) In determining the amount described in subsection
(b), there shall be excluded any amount earned on any fund
or account which is used primarily to achieve a proper
matching of revenues and Debt Service within each Bond
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Year and which is depleted at least once a year except for
a reasonable carryover amount not in excess of the greater
of one year's earnings on such fund or account or
one-twelfth of annual Debt Service as well as amounts
earned on said earnings if the gross earnings on all such
funds and accounts for the Bond Year is less than $100,000.
(d) Payment to United States. The Treasurer shall pay
from the Excess Investment Earnings Fund an amount equal to
Excess Investment Earnings to the United States in installments
with the first payment to be made not later than thirty (30)
days after the end of the fifth Bond Year and with subsequent
payments to be made not later than five (5) years after the
preceding payment was due. The Treasurer shall assure that each
such installment is in an amount equal to at least 90 percent of
the Excess Investment Earnings with respect to the Bonds as of
the close of the computation period. Not later than sixty (60)
days after the retirement of the Bonds, the Treasurer shall pay
from the Excess Investment Earnings Fund to the United States
100 percent of the theretofore unpaid Excesi Investment Earnings
of the Bonds. In the event that there are any amounts remaining
in the Excess Investment Earnings Fund following the payment
required by the preceding sentence, the Treasurer shall pay said
amounts to the City to be used for any lawful purpose of the
City. The Treasurer shall remit payments to the United States
at the address prescribed by the Regulations as the same may be
in time to time in effect with such reports and statements as
may be prescribed by such Regulations. In the event that, for
any reason, amounts in the Excess Investment Earnings Fund are
insufficient to make the payments to the United States which are
required by this subsection (d), the Treasurer shall assure that
such payments are made to the United States, on a timely basis,
from any funds lawfully available therefor.
(e) Further Obligation of Treasurer. The Treasurer
shall assure that Excess Investment Earnings are not paid or
disbursed except as required herein. To that end, the Treasurer
shall assure that investment transactions are on an arm's length
basis. In the event that Nonpurpose Obligations consist of
certificates of deposit or investment contracts, investment in
such Nonpurpose Obligations shall be made in accordance with the
procedures described in applicable Regulations as from time to
time in effect.
(f) Maintenance of Records. The Treasurer shall keep,
and retain for a period of six (6) years following the
retirement of the Bonds, records of the determinations made
pursuant to the provisions hereof.
(g) Independent Consultants. In order to provide for
the administration of these Arbitrage and Rebate Covenants, the
Treasurer may provide for the employment of independent
attorneys, accountants and consultants compensated on such
reasonable basis as the Treasurer may deem appropriate.
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