2021.08.02 CC Packet - Laserfiche WebLink

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Page 3 Prepayment Provisions: Bonds maturing on or after February 1, 2032 may be prepaid at a price of par plus accrued interest on or after February 1, 2031. Bank Qualification: The City does not expect to issue more than $10 million in tax-exempt obligations that count against the $10 million limit for 2021; therefore, the Bonds are designated as bank qualified. Premium Pricing: Any excess proceeds generated as original issue premium and/or unused discount will be used to reduce the principal amount of the borrowing. Bid Parameters: The Bonds are being marketed with a minimum bid requirement of par. Par bidding requires underwriters bid not less than 100% of the face amount of an issue and take their compensation from the additional proceeds generated as original issue premium. In order to stay within the authorized par amount, the premium cannot exceed 2.0% of the authorized amount of the Bonds; therefore, the Bonds are also being marketed with a not to exceed bid amount. Post Issuance POST ISSUANCE COMPLIANCE: The issuance of the Bonds will result in post-issuance compliance responsibilities. The responsibilities are in two primary areas: (i) compliance with federal arbitrage requirements and (ii) compliance with secondary disclosure requirements. Federal arbitrage requirements include a wide range of implications that have been taken into account as this issue has been structured. Post-issuance compliance responsibilities for this tax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. Under certain circumstances any “excess earnings” will need to be paid to the IRS to maintain the tax-exempt status of the Bonds. Any interest earnings on gross bond proceeds or debt service funds should not be spent until it has been determined based on actual facts that they are not “excess earnings” as defined by the IRS Code. The arbitrage rules provide for spend-down exceptions for proceeds that are spent within either a 6-month, 18-month or, for certain construction issues, a 24-month period each in accordance with certain spending criteria. Proceeds that qualify for an exception will be exempt from rebate. These exceptions are based on actual expenditures and not based on reasonable expectations, and expenditures, including any investment proceeds will have to meet the spending criteria to qualify for the exclusion. The Bonds are expected to meet the 24-month spending exception, which will require the City to comply with the following spend-down schedule: • 10% spent within 6 months • 45% spent within 12 months • 75% spent within 18 months • 100% spent within 24 months