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RELATED CONSIDERATIONS <br />• Non -Bank Qualified - because total tax-exempt debt issued by the City in calendar year <br />2013 is expected to be more than $10.0M, the Certificates will not be designated as "bank <br />qualified" obligations pursuant to Federal Tax Law, The impact of this designation may <br />result in slightly higher interest rates. We have adjusted the estimated interest rates <br />accordingly. <br />• Arbitrage Compliance — <br />o Project / Construction Fund — All tax exempt issues are subject to federal rebate <br />requirements which require all arbitrage earned to. be rebated to the U.S. <br />Treasury. A rebate exemption the City expects to qualify for is the 18 month <br />expenditure exemption because the City expects to purchase the equipment and <br />expend the proceeds within that time period. <br />o Debt Service Fund — The City must maintain a bona fide debt service fund for <br />the Certificates or be subject to yield restriction in the debt service fund. A bona <br />fide debt service fund involves an equal matching of revenues to debt service <br />expense with a balance forward permitted equal to the greater of the investment <br />earnings in the fund during that year or 1/12 of the debt service of that year. <br />The City should become familiar with the various Arbitrage Compliance requirements <br />for this issue. The Resolution explains the requirements in greater detail. We are also <br />available to assist the City in meeting these requirements. <br />• Continuing Disclosure —Although this issue is under $1,000,000, the City's outstanding <br />debt exceeds $10.0M and it is subject to the Securities and Exchange Commission's <br />continuing disclosure requirements. Northland Securities is prepared to assist the City <br />in this capacity. <br />Page 4 <br />NORTHLAND <br />SECURITIES <br />