Agenda - Council - 08/13/2013 - Laserfiche WebLink

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In expressing its opinion, bond counsel will assume compliance by the Issuer, the Company, the School, and the Trustee with the tax covenants contained in the Loan Agreement, the Tax Regulatory Agreement, and Indenture. No provision has been made for an increase in the interest rate on the Series 2013A Bonds in the event that interest on the Series 2013A Bonds becomes subject to federal or Minnesota income taxation; however, upon the occurrence of a Determination of Taxability with respect to the Series 2013A Bonds, the Series 2013 Bonds are subject to mandatory redemption, at par plus accrued interest, plus with respect to the Series 2013A Bonds, a 3% premium. See "THE SERIES 2013 BONDS - Redemption of Series 2013 Bonds - Mandatory Redemption Upon Determination of Taxability" herein. Legislative Proposals Bond Counsel's opinion is given as of its date and Bond Counsel assumes no obligation to update, revise, or supplement suc-h opinion to reflect any changes in facts or circumstances or any changes in law that may hereafter occur. Proposals are regularly introduced in both the United States House of Representatives and the United States Senate that, if enacted, could alter or affect the tax-exempt status of municipal bonds. For example, legislation has been proposed by President Obama that would, among other things, limit the amount of exclusions (including tax-exempt interest) or deductions that certain higher -income taxpayers could use to reduce their tax liability. The likelihood of adoption of this or any other such legislative proposal relating to tax-exempt bonds cannot be reliably predicted. If enacted into law, current or future proposals may have a prospective or retroactive effect and could affect the value or marketability of tax- exempt bonds (including the Series 2013A Bonds). Prospective purchasers of the Series 2013A Bonds should consult their own tax advisors regarding the impact of any such change in law. Branch Profits Tax A tax is imposed on any foreign corporation in an amount equal to thirty percent (30%) of the "dividend equivalent amount" for the taxable year. The "dividend equivalent amount" is the foreign corporations' "effectively connected earnings and profits" reduced for increases (or increased for decreases) in "United States Net Equity." According to the Conference Committee Report provided in connection with the adoption of the Tax Reform Act of 1986, "the conferees intend that a branch's earnings and profits include income that would be effectively connected with a United States trade or business if such income were taxable, such as tax-exempt municipal bond interest." Foreign Insurance Companies The Federal Budget Reconciliation Act of 1986, subjects foreign companies carrying on an insurance business in the United States to a tax on income which is effectively connected with their conduct of any trade or business in the United States. According to the conference report accompanying the law such income includes tax-exempt interest. Passive Investment of S Corporation Proposed regulations state that "passive investment income" also includes tax-exempt interest. Passive investment income, including interest on the Series 2013A Bonds, may be 34