Agenda - Council - 08/27/1991 - Laserfiche WebLink

Home

the expenditures actually paid by the issuer for which official intent was declared during the three year period prior to the bond issue, the issuer will meet the safe harbor. An exception is made for extraordinary circumstances beyond the control of the issuer and not reasonably expected to occur. The issue may exclude from the 75% calculation expenditures subject to official intent which the issuer expects to reimburse within the one-year reimbursement period. 4. Economic Life. The expenditure must be incurred with respect to property having a reasonably expected economic life of at least one year. If a project which would have had a life of at least one year is abandoned, expenditures are deemed to have a life of one year. B. Anti-abuse Rule. Notwithstanding the reimbursement rules, an issuer cannot treat proceeds as spent if the proceeds are used directly or indirectly to refund another issue, to create a sinking fund or reserve or replacement fund, or to reimburse an expenditure originally paid with proceeds of a tax-exempt obligation of an issuer (e.g. an interfund borrowing). Exceptions are made for bona fide debt service funds and where the proceeds of the original financing were not reasonably expected to be used as of the date of the original financing to finance the expenditures. C. Effective Date and Transition Rule 1. Effective Date. The new reimbursement rules apply to bonds issued after September 7, 1991. 2. Transition Rule. If bonds are issued after September 7, 1991 to reimburse expenditures made after September 8, 1989 and before September 8, 1991, the official intent requirement and the official intent period requirement do not apply if there is objective evidence that at the time the expenditure was paid, the issuer reasonably expected to reimburse the expenditure with proceeds of a taxable or tax-exempt borrowing. IV. Private Activity Bonds. A. Anti-abuse rules. Proposed Tres. Reg. S 1.103-18 provides that, in addition to existing official action requirements, exempt facility bonds and small issue bonds are subject to the anti-abuse rules described above relating to sinking funds and reserve or replacement 'funds. B. Governmentally owned exempt facilities. Governmentally owned exempt facilities are, however, subject to all of the reimbursement rules applicable to governmental bonds. C. Effective Date. The private activity bond rules are effective for bonds issued after September 7, 1991. D. Transition Rule. For governmentally owned exempt facilities, the official intent and official intent period requirements do not apply to expenditures paid after September 8, 1989 and before September 8, 1991, if there is objective