04-14-2021 Council Packet - Laserfiche WebLink

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21 EMPLOYEE RELATIONS, TAXES, GOVERNMENTAL CONTROLS, CHANGES IN APPLICABLE GOVERNMENTAL REGULATION, CHANGES IN DEMOGRAPHIC TRENDS, CHANGES IN THE RETIREMENT LIVING AND HEALTH CARE INDUSTRIES, AND GENERAL ECONOMIC CONDITIONS. Limitation on Acceleration of the Series 2021D Bonds As long as the Senior Notes are outstanding, the Series 2021D Bonds cannot be accelerated upon an Event of Default. Taxation of the Series 2021D Bonds The interest on the Series 2021D Bonds may be includable in gross income for purposes of federal income taxation retroactive to the date of issuance of the Series 2021D Bonds for a variety of reasons. The exclusion from gross income is dependent upon, among other things, continuing compliance with certain restrictions regarding investment of Series 2021D Bonds proceeds, a requirement that certain investment earnings on Series 2021 Bond proceeds be paid periodically to the United States, a requirement that the Issuer file an information return with the IRS, and certain restrictions on the use of Series 2021 Bond proceeds and the facilities financed therewith, including income limits with respect to the Project. In addition, the Corporation must be and remain an organization treated as a 501(c)(3) organization at all times while any Series 2021D Bonds remain outstanding in order for the Series 2021D Bonds to retain their tax-exempt status. Failure of the Issuer or the Corporation to comply with the terms and conditions of the Indenture, the Loan Agreement or other documents as described herein may result in the loss of the tax-exempt status of the interest on the Series 2021D Bonds retroactive to the date of issuance of the Series 2021D Bonds. See “TAX MATTERS” herein. The Corporation has covenanted to take all action necessary to cause interest on the Series 2021D Bonds to remain tax-exempt. The IRS has recently expanded tax forms for exempt organizations to include information on outstanding bonds. Such forms provide additional detailed information to the IRS that may result in increased enforcement actions, the effect of which cannot be determined at this time. Neither the Issuer nor the Corporation has sought to obtain a private letter ruling from the IRS with respect to the exempt status of interest on the Series 2021D Bonds, and the opinion of bond counsel is not binding on the IRS. If interest on the Series 2021D Bonds should become included in gross income for federal income tax purposes, the market for and value of the Series 2021D Bonds would be adversely affected. Moreover, there can be no assurance that the present advantageous provisions of the Code, or the rules and regulations thereunder, will not be retroactively adversely amended or modified, thereby resulting in the inclusion in gross income of the interest on Series 2021D Bonds for Federal income tax purposes or otherwise eliminating or reducing the benefits of the present advantageous tax treatment of the Series 2021D Bonds. While no such legislation has been adopted, there can be no assurance that Congress would not adopt legislation applicable to the Series 2021D Bonds or to the Corporation and that the Project would be able to comply with any such future legislation in a manner necessary to maintain the tax-exempt status of the Series 2021D Bonds. The Corporation is required under the Loan Agreement to use its best efforts to comply with any other future federal income tax law requirements in order to maintain the tax-exempt status of the Series 2021D Bonds to the extent that any such other requirements are made applicable to the Project. There is no assurance, however, that the Corporation would be able to comply with any such other requirements. Interest earned on the principal amount of the Series 2021D Bonds may or may not be subject to state or local income taxes under applicable state or local tax laws. Each purchaser of the Series 2021D Bonds should consult his or her own tax advisor regarding the taxable status of the Series 2021D Bonds in a particular state or local jurisdiction. 501(c)(3) Status of Corporation Loss by the Corporation of the benefits of certain provisions of the federal income tax law could adversely affect its financial position as well as jeopardize the tax-exempt status of the Series 2021D Bonds. The IRS has determined that the Corporation is an organization described in Section 501(c)(3) of the Code, and therefore is exempt from federal income taxation under Section 501(a) of the Code. Maintenance of this tax-exempt status depends on compliance with general rules regarding the organization and operation of tax-exempt entities, including the Corporation’s operation for charitable purposes and avoidance of transactions that may cause the Corporation’s earnings or assets to inure to the benefit of private individuals. Changes in the Code or Treasury Regulations or the