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City of Lino Lakes, Minnesota <br />Management Report, Page 23 <br />Arbitrage Regulations <br />Federal law prohibits excess earnings on bond proceeds maintained in construction or debt <br />service funds. The regulations are complex and for "large issuers" (over $5 million of bonds <br />issued in one year) there are rebate requirements. If the City of Lino Lakes issues over $5 million <br />of bonds in one year, they will be required to comply with arbitrage regulations. <br />Reimbursement Bond Regulations <br />The Treasury Regulations Section 1.103 -17 pertains to "reimbursement bonds." Areas <br />affected by these regulations are; all governmental bonds, all qualified 501(c)(3) or nonprofit <br />borrowings issued after September 7, 1991 and which apply to reimbursement of previously paid <br />expenditures. With the new regulations, the City will not be allowed to issue tax exempt bonds for <br />expenditures it has previously paid unless it meets certain regulations. We recommend the City <br />confer with the fiscal consultant and bonding attorney to monitor compliance with these <br />regulations. <br />