05-13-2020 Council Packet - Laserfiche WebLink

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27 Compliance with the Code The Series 2020 Bonds could lose their tax-exempt status as a result of, among other things, the loss by the Borrower of its status as a Tax-Exempt Organization. Following a Determination of Taxability, the Series 2020 Bonds will be subject to mandatory redemption as described herein, at the outstanding principal amount thereof, plus accrued interest. The opinion of Bond Counsel will be obtained as described in “TAX MATTERS” and as set forth in “APPENDIX E - FORM OF BOND COUNSEL OPINION” in this Official Statement. However, a ruling or determination from the Internal Revenue Service regarding the tax-exempt status of the Series 2020 Bonds has not and will not be made, and an opinion of counsel is not binding upon the Internal Revenue Service. The laws, regulations, court decisions and administrative interpretations upon which the conclusions stated in the opinion of Bond Counsel are based on and subject to change by the United States Congress, the United States Treasury Department and later judicial and administrative decisions. Moreover, such opinion of Bond Counsel will be based in part upon the accuracy of the opinion of General Counsel of Presbyterian Homes and Services, as counsel to the Borrower, that the Borrower is a Tax-Exempt Organization and assumes continuing compliance by the Borrower with covenants and agreements contained in the Loan Agreement, and the accuracy of representations, covenants and requirements made by the Borrower in the Loan Agreement. If the Borrower fails to comply with these representations, covenants or agreements, or these representations are incorrect, interest on the Series 2020 Bonds could become subject to federal income taxation. There is no assurance that interest on the Series 2020 Bonds will not become includable in gross income for purposes of federal income tax as a result of such future changes or actions on behalf of the Borrower. See “TAX MATTERS” in this Official Statement. It is not possible to predict the scope or effect of future legislative or regulatory actions with respect to taxation of nonprofit corporations. There can be no assurance that future changes in the laws and regulations of federal, state or local governments will not materially adversely affect the operations and financial condition of the Borrower by requiring it to pay the income taxes. Interest on the Series 2020 Bonds may become subject to inclusion in gross income for purposes of federal income taxes retroactively to the date of issuance or the date of the breach of certain tax covenants in the Loan Agreement. In either case, the Bondholders may be liable for the payment of federal income taxes for prior years during which interest on the Series 2020 Bonds was paid. Environmental Matters The Project, like other types of commercial real estate, may be subject to such environmental risks which can result in substantial costs to the Borrower from any mandatory clean-up, damages, fines or penalties that might be ordered with respect thereto. Any environmental problems discovered with respect to the Project could have an adverse effect on the collateral value thereof. At the request of the Borrower, a Phase One Environmental Site Assessment (the “Phase I Report”) with respect to the site of the Project was conducted by American Engineering Testing, Inc. (“AET”). The Phase I Report is dated _________, 2018. The Borrower has owned the site of the Project since 1984. According to the Phase I Report, AET concluded that there were no recognized environmental conditions, historical recognized environmental conditions or controlled recognized environmental conditions were identified in connection with the property. Management of the Borrower believes that the Project is in material compliance with applicable Environmental Laws for the site.