04-14-2021 Council Packet - Laserfiche WebLink

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33 and equitable principles affecting remedies and by bankruptcy or insolvency or other laws, decisions and equitable principles affecting creditors’ rights generally. While the Series 2021D Bonds are secured or payable pursuant to the Indenture, the Loan Agreement, the Subordinate Mortgage and the Guaranty, the practical realization of payment from any security will depend upon the exercise of various remedies specified in the respective instruments. These and other remedies are dependent in many respects upon judicial action, which is subject to discretion and delay. Accordingly, the remedies specified in the above documents may not be readily available or may be limited. APPROVAL OF LEGAL PROCEEDINGS Legal matters incident to the issuance and sale of the Series 2021D Bonds and with regard to the tax-exempt status of interest on the Series 2021D Bonds under existing laws are subject to the approving legal opinion of Taft Stettinius & Hollister LLP, as Bond Counsel. Certain legal matters will be passed on for the Corporation and the Guarantor by Taft Stettinius & Hollister LLP. The Underwriter has been represented in this transaction by Dorsey & Whitney LLP, Minneapolis, Minnesota. TAX EXEMPTION In the opinion of Bond Counsel, under existing laws, regulations, rulings, and decisions, and assuming continuing compliance with all requirements of the Internal Revenue Code of 1986, as amended, interest on the Series 2021D Bonds is not includable in gross income for federal income tax purposes or in taxable net income of individuals, estates, or trusts for Minnesota income tax purposes. Interest on the Series 2021D Bonds is subject to the Minnesota franchise tax measured by income and imposed on corporations and financial institutions. Interest on the Series 2021D Bonds is not an item of tax preference for purposes of determining the federal alternative minimum tax and for the purposes of determining the Minnesota alternative minimum tax on individuals, estates and trusts. No opinion will be expressed by Bond Counsel regarding other state or federal tax consequences caused by the receipt or accrual of interest on the Series 2021D Bonds or arising with respect to the ownership of the Series 2021D Bonds. The Code establishes certain requirements (the “Federal Tax Requirements”) that must be met subsequent to the issuance of the Series 2021D Bonds in order that, for federal income tax purposes, interest on the Series 2021D Bonds not be included in gross income pursuant to Section 103 of the Code. The Federal Tax Requirements include, but are not limited to, requirements relating to the expenditure of proceeds of the Series 2021D Bonds, requirements relating to the operation of the facilities financed by the Series 2021D Bonds, restrictions on the investment of proceeds of the Series 2021D Bonds prior to expenditure and the requirement that certain earnings on the “gross proceeds” of the Series 2021D Bonds be paid to the federal government. Noncompliance with the Federal Tax Requirements may cause interest on the Series 2021D Bonds to become subject to federal and Minnesota 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 Corporation and the Trustee with their respective tax covenants contained in each of the Loan Agreement, the Indenture and the Tax Exemption Agreement. OTHER TAX CONSIDERATIONS General Interest on the Series 2021D Bonds may be included in the income of a foreign corporation for purposes of the branch profits tax imposed by Section 884 of the Code. Deductions for losses incurred by property and casualty insurance companies must be reduced by 15% of the interest received or accrued on the Series 2021D Bonds. In addition to the collateral tax consequences set forth above, prospective purchasers of the Series 2021D Bonds should be aware that the ownership of tax-exempt obligations may result in collateral federal income tax consequences to individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations. Certain corporations may have a tax imposed on passive income, including tax-exempt interest, such as interest on the Series 2021D Bonds. Prospective purchasers of the Series 2021D Bonds should consult their tax advisors as to the applicability and impact of these and other potential collateral tax consequences of owning and disposing of the Series 2021D Bonds.