Agenda - Council - 07/12/2022 - Laserfiche WebLink

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In expressing its opinion, Bond Counsel will rely on an opinion of Dorsey & Whitney LLP, as counsel to the Company,to the effect that,among other things: (i)the Company and the Charter School are Minnesota nonprofit corporations and are organizations described in Section 501(c)(3) of the Code and exempt from federal income taxation under Section 501(a)of the Code;and(ii)to the best of its knowledge after reasonable investigation consisting of interviews with officers of the Company and the Charter School most likely to have relevant information as of the date thereof,no portion of the facilities financed with the proceeds of the Series 2022A Bonds is to be used in or for any unrelated trade or business of the Company or the Charter School, determined by applying Section 513(a) of the Code. The Code establishes certain requirements(the"Federal Tax Requirements")that must be satisfied subsequent to the issuance of the Series 2022A Bonds in order that interest on the Series 2022A Bonds will continue to be excluded from gross income for federal income tax purposes. The Federal Tax Requirements include, but are not limited to, requirements relating to the expenditure of proceeds of the Series 2022A Bonds, requirements relating to the operation of the facilities financed by the Series 2022A Bonds, restrictions on the investment of proceeds of the Series 2022A Bonds prior to expenditure, and the requirement that certain earnings on the "gross proceeds" (as defined in the Code) of the Series 2022A Bonds be paid to the federal government. Noncompliance with the Federal Tax Requirements may cause interest on the Series 2022A Bonds to become subject to federal and State income taxation retroactive to their date of issue irrespective of the date on which such noncompliance occurs or is ascertained. In expressing its opinion, Bond Counsel will assume compliance by the Issuer, the Company, the Charter School, and the Trustee with the tax covenants contained in the Loan Agreement, the Tax Certificate, the Tax Regulatory Agreement, and the Indenture. Other Federal Tax Considerations Interest on the Series 2022A Bonds may be included in the income of a foreign company for purposes of the branch profits tax imposed by Section 884 of the Code.In the case of an insurance company subject to the tax imposed by Section 831 of the Code, the amount which otherwise would be taken into account as losses incurred under Section 832(b)(5) of the Code must be reduced by an amount equal to the applicable percentage of the interest to be paid on the Series 2022A Bonds that is received or accrued during the taxable year. For purposes hereof, the applicable percentage is 5.25% divided by the highest rate in effect under Section I I(b) of the Code. Under the circumstances described in Section 86 of the Code, recipients of certain social security and railroad retirement benefits may be required to take into account interest on the Series 2022A Bonds in determining the taxability of such benefits. Passive investment income, including interest on the Series 2022A Bonds, may be subject to federal income taxation under Section 1375 of the Code for an S corporation that has Subchapter C earnings and profits at the close of the taxable year if greater than twenty-five percent of its gross receipts is passive investment income.The Series 2022A Bonds have not been designated by the Issuer as "qualified tax-exempt obligations" within the meaning of Section 265(b)(3) of the Code. Bond Premium The Series 2022A Bonds having a stated maturity of June 1, 20 (the "Premium Bonds"), have been sold to the public at an amount in excess of the stated redemption price at maturity. Such excess of the purchase price of such Premium Bonds over the stated redemption price at maturity constitutes original issue premium with respect to such Premium Bonds. A purchaser of a Premium Bond must amortize any original issue premium over the term of such Premium Bond using constant yield principles, based on the purchaser's yield to maturity. As original issue premium is amortized, the purchaser's basis in such Premium Bond is reduced by a corresponding amount,resulting in an increase in the gain(or a decrease in the loss)to be recognized for federal income tax purposes upon a sale or disposition of such Premium Bond prior to its maturity. Even though the purchaser's basis is reduced, no federal income tax deduction is 42