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6.03. Covenant. The City covenants and agrees with the holders from time to time of the <br />Bonds that it will not take or permit to be taken by any of its officers, employees or agents any <br />action which would cause the interest on the Bonds to become subject to taxation under the <br />Internal Revenue Code of 1986, as amended (the "Code"), and Regulations promulgated <br />thereunder (the "Regulations"), as such are enacted or promulgated and in effect on the date of <br />issue of the Bonds, and covenants to take any and all actions within its powers to ensure that the <br />interest on the Bonds will not become subject to taxation under such Code and Regulations. The <br />Improvements are public improvements available for use by members of the general public on a <br />substantially equal basis. The City will not enter into any lease, use agreement or other contract <br />respecting the Improvements which would cause the Bonds to be considered "private activity <br />bonds" or "private loan bonds" pursuant to Section 141 of the Code. <br />6.04. Arbitrage Rebate. For purposes of complying with the requirements of Section <br />148(f)(4)(C) of the Code relating to the exemption of certain small governmental units from the <br />rebate requirements of the Code, the City represents that: <br />(i) the City is a governmental unit with general taxing powers; <br />(ii) the Bonds are not "private activity bonds" as defined in Section 141 of the Code <br />(Private Activity Bonds); <br />(iii) ninety-five percent of the net proceeds of the Bonds are to be used for the local <br />governmental purposes of the City; and <br />(iv) the aggregate face amount of all tax-exempt bonds (other than Private Activity <br />Bonds) issued by the City in calendar year in which the Bonds are to be issued is <br />not reasonably expected to exceed $5,000,000. <br />Therefore, pursuant to the provisions of Section 148(f)(4)(C) of the Code, the City shall <br />not be required to comply with the arbitrage rebate requirements of paragraphs (2) and (3) of <br />Section 148(f) of the Code. <br />6.05. Investment of Money on Deposit in the Bond Fund. The Finance Director shall <br />ascertain monthly the amount on deposit in the Bond Fund. If the amount on deposit therein eves <br />exceeds the aggregate amount of principal and interest due and payable from the Bond Fund <br />through the next following February 1 plus a reasonable carryover as permitted by the <br />Regulations. such excess shall be used to prepay and redeem Bonds or be invested at a yield less <br />than or equal to the yield on the Bonds, based upon their amounts, maturities and interest rates <br />on their date of issue, computed by the actuarial method. The City reserves the right to amend <br />the provisions of this Section at any time, whether prior to or after the delivery of the Bonds, if <br />and to the extent that this Council determines that the provisions of this Section are not necessary <br />in order to ensure that the Bonds are not "arbitrage bonds" within the meaning of Section 148 of <br />the Code and Regulations. <br />6.06. Arbitrage Certification. The Mayor and the City Manager, being the officers of the <br />City charged with the responsibility for issuing the Bonds pursuant to this resolution, are <br />-19- <br />