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Most of the provisions of these policies and procedures are not applicable to governmental <br />bonds the interest on which is includable in gross income for federal income tax purposes. <br />However, if an issue of taxable governmental bonds is later refunded with the proceeds of an issue <br />of tax-exempt governmental refunding bonds, then the uses of the proceeds of the taxable <br />governmental bonds and the uses of the facilities financed with the proceeds of the taxable <br />governmental bonds will be relevant to the tax-exempt status of the governmental refunding bonds. <br />Therefore, if there is any reasonable possibility that an issue of taxable governmental bonds may <br />be refunded, in whole or in part, with the proceeds of an issue of tax-exempt governmental bonds <br />then, for purposes of these policies and procedures, the Finance Director shall treat the issue of <br />taxable governmental bonds as if such issue were an issue of tax-exempt governmental bonds and <br />shall carry out and comply with the requirements of these policies and procedures with respect to <br />such taxable governmental bonds. The Finance Director shall seek the advice of Bond Counsel as <br />to whether there is any reasonable possibility of issuing tax-exempt governmental bonds to refund <br />an issue of taxable governmental bonds. <br />7. Qualified 501(c)(3) Bonds. <br />If the City issues bonds to finance a facility to be owned by the City but which may be <br />used, in whole or in substantial part, by a nongovernmental organization that is exempt from <br />federal income taxation under Section 501(a) of the Code as a result of the application of Section <br />501(c)(3) of the Code (a "501(c)(3) Organization"), the City may elect to issue the bonds as <br />"qualified 501(c)(3) bonds" the interest on which is exempt from federal income taxation under <br />Sections 103 and 145 of the Code and applicable Treasury Regulations. Although such qualified <br />501(c)(3) bonds are not governmental bonds, at the election of the Finance Director, for purposes <br />of these policies and procedures, the Finance Director may treat such issue of qualified 501(c)(3) <br />9 <br />4553512v1 <br />