HomeMy WebLinkAboutRevenue Anticipation Note DELARELD&WOOD LLP n MAR - 3 2017
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PHONE(2 2) 820-9300 28 LIBERTY STREET NEW YORK
FAX (212)514-8425 NEW YORK, NY 10005 WASHINGTON
WWW.HAWKINS.COM NEWARK
HARTFORD
LOS ANGELES
(212) 820-9662 February 23, 2017 SANRAMFRANCISCOTO
RECEIVED PORTLAND
L.LI cP ANN ARBOR
Town of Southold,New York
$400,000 Revenue Anticipation Note-2017 �p� - 3 2011
(Our File Designation: 2615/40714 _
Mr.John Cushman Southold To%vn Clerk
Town Comptroller
Town of Southold
53095 Main Road
Southold,New York 11971
Dear John:
Attached hereto is one (1) set of closing documents with respect to the $400,000
Revenue Anticipation Note which closed in our offices on February 7,2017.
Kindly retain these documents in your files, and feel free to contact us at any time
should you have any questions or concerns regarding this note issue.
With best regards, I am
Very truly y ,
jzg�t-
Robert P. Smith
RPS/ml
Enclosures
2766446.1 040714 CLD
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28 LIBERTY STREET
NEW YORK, NY 10005 February 7, 2017
WWW.HAWKINS.COM
The Town Board of the
Town of Southold,in the
County of Suffolk,New York
Ladies and Gentlemen:
We have acted as Bond Counsel to the Town of Southold (the "Town"), in the
County of Suffolk, a municipal corporation of the State of New York, and have examined a
record of proceedings relating to the authorization, sale and issuance of the $400,000 Revenue
Anticipation Note-2017 of the Town(the"Note"), dated and delivered on the date hereof.
In such examination, we have assumed the genuineness of all signatures, the
authenticity of all documents submitted to us as originals and the conformity with originals of all
documents submitted to us as copies thereof.
Based upon and subject to the foregoing, and in reliance thereon, as of the date
hereof,we are of the following opinions:
1. The Note is a valid and legally binding general obligation of the Town for which
the Town has validly pledged its faith and credit and, unless paid from other sources, all the
taxable real property within the Town is subject to the levy of ad valorem real estate taxes to pay
the Note and interest thereon, subject to certain statutory limitations imposed by Chapter 97 of
the Laws of 2011, as amended. The enforceability of rights or remedies with respect to such
Note may be limited by bankruptcy, insolvency, or other laws affecting creditors' rights or
remedies heretofore or hereafter enacted.
2. Under existing statutes and court decisions and assuming continuing compliance
with certain tax certifications described herein, (i) interest on the Note is excluded from gross
income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of
1986, as amended (the "Code") and (ii) interest on the Note is not treated as a preference item in
calculating the alternative minimum tax imposed on individuals and corporations under the
Code; such interest, however, is included in the adjusted current earnings of certain corporations
for purposes of calculating the alternative minimum tax imposed on such corporations.
The Code establishes certain requirements that must be met subsequent to the
issuance and delivery of the Note in order that interest on the Note be and remain excludable
from gross income under Section 103 of the Code. These requirements include, but are not
limited to, requirements relating to the use and expenditure of proceeds of the Note, restrictions
on the investment of proceeds of the Note prior to expenditure and the requirement that certain
earnings be rebated to the federal government. Noncompliance with such requirements may
cause the interest on the Note to become subject to federal income taxation retroactive to their
date of execution and delivery, irrespective of the date on which such noncompliance occurs or is
ascertained.
On the date of issuance of the Note, the Town will execute a Tax Certificate
containing provisions and procedures pursuant to which such requirements can be satisfied. In
executing the Tax Certificate, the Town represents that it will comply with the provisions and
procedures set forth therein and that it will do and perform all acts and things necessary or
desirable to assure that the interest on the Note will, for federal income tax purposes,be excluded
from gross income.
In rendering the opinion in this paragraph 2,we have relied upon and assumed (i)the
material accuracy of the Town's representations, statements of intention and reasonable
expectations, and certifications of fact contained in the Tax Certificate with respect to matters
affecting the status of the interest on the Note, and (ii) compliance by the Town with the
procedures and representations set forth in the Tax Certificate as to such tax matters.
3. Under existing statutes,interest on the Note is exempt from personal income taxes
of New York State and its political subdivisions,including The Town of New York.
Except as stated in paragraphs 2 and 3 above, we express no opinion as to any other
federal, state or local tax consequences arising with respect to the Note or the ownership or
disposition thereof. Furthermore, we express no opinion as to the effect of any action hereafter
taken or not taken in reliance upon an opinion of other counsel on the exclusion from gross
income for federal income tax purposes of the interest on the Note.
We render our opinion under existing statutes and court decisions as of the date of
issuance of the Note, and we assume no obligation to update, revise or supplement this opinion
after the issue date to reflect any action hereafter taken or not taken, or any facts or
circumstances, or any change in law or in interpretations thereof, or otherwise,that may hereafter
arise or occur, or for any other reason.
We give no assurances as to the accuracy, sufficiency or completeness of any
proceedings, reports, correspondence, financial statements or other documents, containing
financial or other information relative to the Town which have been or may hereafter be
furnished or disclosed to purchasers of said Note.
Very truly yours,
f +
CERTIFICATE OF DETERMINATION BY THE
SUPERVISOR RELATIVE TO AUTHORIZATION, SALE,
ISSUANCE, FORM AND CONTENTS OF THE $400,000
REVENUE ANTICIPATION NOTE-2017 OF THE TOWN OF
SOUTHOLD, SUFFOLK COUNTY, NEW YORK
I, Scott A. Russell, Supervisor of the Town of Southold, in the County of Suffolk,
New York (herein called the "Town"), HEREBY CERTIFY that pursuant to the powers and
duties delegated to me, the chief fiscal officer of the Town, by the Town Board of the Town,
pursuant to the resolution duly adopted and as referred to in paragraph 1 hereof, and subject to
the limitations prescribed in said resolution, I have made the following determinations:
1. A revenue anticipation note (the "Note") of the Town in the principal
amount of $400,000 shall be issued pursuant to the revenue anticipation note resolution duly
adopted by the Town Board on June 14, 2016.
2. The terms, form and details of said Note shall be as follows:
Amount and Title: $400,000 Revenue Anticipation Note-2017
Dated: February 7, 2017
Maturity: February 7, 2018
Interest Rate
per annum: 2.25%
Number and
Denomination: Number 1, at$400,000
The place of payment of principal and interest shall be the office of the Town Clerk, Town
Hall, 53095 Route 25, Southold, New York, and the form of note shall be substantially in
accordance with the form prescribed by Schedule B,2 of the Local Finance Law, constituting
Chapter 33-a of the Consolidated Laws of the State of New York, provided that the Note when
issued will be (i) registered in the name of Cede & Co. as nominee of The Depository Trust
Company, New York, New York ("DTC") and (ii) deposited with DTC to be held in trust until
maturity. The purchase of ownership interests in the Note will be in book-entry form in
denominations of$5,000, or any integral multiple thereof. Beneficial owners of the Note will
not receive certificates representing their interests in the Note. Unless the Town determines
otherwise, transfers or exchanges of ownership interests in the Note may be accomplished via
book-entry transactions only, as recorded through the book-entry system established and
maintained by DTC or a successor depository.
3. The amount of revenue anticipation notes heretofore issued pursuant to the
resolution hereinabove cited in paragraph 1 hereof, is $-0-.
2766446,ii040714 CLD
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4. Pursuant to said powers and duties delegated to me, as the Supervisor of
the Town, I DO HEREBY AWARD AND SELL said Note to Oppenheimer & Co. Inc.,
Philadelphia, Pennsylvania, for the purchase price of$400,248.00, plus accrued interest, if any,
from the date of said Note to the date of delivery thereof, and I HEREBY FURTHER
DETERMINE that said Note, as awarded, shall bear interest at the rate of two and twenty-five
hundredths per centum (2.25%) per-annum, payable at maturity.
5. Said Note shall be executed in the name of the Town by its Supervisor and
the corporate seal of the Town or a facsimile thereof shall be affixed, 'impressed, imprinted or
otherwise reproduced thereon and attested by its Deputy Town Clerk.
I HEREBY FURTHER CERTIFY that the powers and duties delegated to me to
issue and sell the Note hereinabove referred to are in full force and effect and have not been
modified, amended or revoked.
IN WITNESS WHEREOF, I have hereunto set my hand as of the 7th day of
February, 2017.
Supervisor
DEPUTY TOWN CLERK'S CERTIFICATE
1, Lynda Rudder, Deputy Town Clerk of the Town of Southold, in the County of
Suffolk, New York, HEREBY CERTIFY that I have compared the foregoing copy of the
Certificate of Determination executed by the Supervisor and the same is a true and complete
copy of the Certificate filed with said Town in the office of the Town Clerk on or before the 7th
day of February, 2017; and
I FURTHER CERTIFY that no resolution electing to reassume any of the powers
or duties mentioned in said Certificate and delegated to the Supervisor by the resolution cited in
said Certificate has been adopted by said Town Board.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed the
corporate seal of said Town as of the 7th day of
February, 2017.
(SEAL) cx r
Deputy Town Clerk
!°
AFFIDAVIT AS TO NO CONFLICT OF INTEREST
STATE OF NEW YORK )
:ss:
COUNTY OF SUFFOLK )
Lynda Rudder, being duly sworn upon her oath deposes and says:
1. 1 am the duly appointed and qualified Deputy Town Clerk of the Town of
Southold, in the County of Suffolk, New York (herein and in Schedule A annexed hereto called
the "Town");
2. That with respect to the contract of sale of the Revenue Anticipation Note-
2017 of the Town described in the Certificate of Determination executed by the Supervisor as of
the 7th day of February, 2017, to the financial institution indicated in such Certificate, I have
made a careful inquiry of each officer and employee of the Town having the power or duty to (a)
negotiate, prepare, authorize or approve the contract or authorize or approve payment thereunder,
(b) audit bills or claims under the contract, or (c) appoint an officer or employee who has any of
the powers or duties set forth above, as to whether or not such officer or employee has an interest
(as defined pursuant to Article 18 of the General Municipal Law) in such contract;
3. That upon information and belief, as a result of such inquiry, no such
officer or employee has any such interest in said contract unless otherwise noted in Schedule A
annexed hereto and by this reference made a part hereof.
eputy Town Clerk
Subscribed and sworn to before me
this 7"7- day of February, 2017.
tary Public, State of New York
'•t;N A CUSliMAN
•'ubft,tkpte of New York
too. 01CW61743;N(
q,.;nfied in Suffolk toynb�,
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SCHEDULE A
I , is a stockholder of the Purchaser owning or
controlling, directly or indirectly, less than five per centum (5%) of the outstanding stock thereof
but no disclosure of such interest by said officer is required pursuant to said Law.
2. , has an interest in the Purchaser solely by
reason of employment as an officer or employee thereof, but the remuneration of such
employment will not be directly affected as a result of said contract and the duties of such
employment do not directly involve the procurement, preparation or performance of any such
part of such contract.
3• , has publicly disclosed the nature and extent
of such interest in writing to the governing board of the Town. Such written disclosure has been
made a part of and set forth in the official record of proceedings of the Town.
2766446 1040714 CLD
CERTIFICATES AS TO SIGNATURES, LITIGATION,
AND DELIVERY AND PAYMENT
WE, the undersigned officers of the Town of Southold, in the County of Suffolk,
a municipal corporation of the State of New York (herein referred to as the "Town"), HEREBY
CERTIFY that on or before February 7, 2017, we officially signed and properly executed,by
manual signature the $400,000 Revenue Anticipation Note-2017 (the "Note") of the Town,
registered in the name of Cede & Co., as Noteowner and nominee for The Depository Trust
Company and otherwise described in Schedule A annexed hereto and by this reference made a
part hereof, and that at the time of such signing and execution and on the date hereof we were
and are the duly chosen, qualified and acting officers of the Town authorized to execute the Note
and holding the offices indicated by the title set opposite our signatures hereto for term expiring
on the date set opposite such titles.
WE FURTHER CERTIFY that no litigation of any nature is now pending or
threatened restraining or enjoining the issuance or delivery of said Note or the levy or collection
of any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the levy or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed,revoked or rescinded.
WE FURTHER CERTIFY that the seal which is impressed upon this certificate
has been affixed, impressed, imprinted or otherwise reproduced upon said Note and is the legally
adopted,proper and only official corporate seal of the Town.
And I, Scott A. Russell, Supervisor, HEREBY FURTHER CERTIFY that on
February 7, 2017, 1 delivered or caused the delivery of said Note to The Depository Trust
Company to be held in trust to maturity for Oppenheimer & Co. Inc., Philadelphia,
Pennsylvania,the purchaser thereof, and that at the time of such delivery of said Note, I received
from said purchaser the amount hereinbelow stated, in full payment for said Note, computed as
follows:
Price...........................................................................................$400,248.00
Interest on said Note accrued to the
date of such delivery............................................................... -0-
AmountReceived.......................................................................$400,248.00
2766446.1 040714 CLD
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IN WITNESS WHEREOF, we have hereunto set our hands and said corporate
seal has hereunto been affixed as of the 7th day of February, 2017.
Term of Office
Signature Expires (date) Title
December 31, 2019 Supervisor
December 31, 2017 Deputy Town Clerk
(SEAL)
Y .1
SCHEDULE A
Amount and Title: $400,000 Revenue Anticipation Note-2017
Dated: February 7, 2017
Mature: February 7,2018
Number No. 1, at$400,000
and Denomination:
Interest Rate 2.25%
per annum:
2766446.1 040714 CLD
r,
.I
y
CERTIFICATES AS TO SIGNATURES, LITIGATION,
AND DELIVERY AND PAYMENT
WE, the undersigned officers of the Town of Southold, in the County of Suffolk,
a municipal corporation of the State of New York (herein referred to as the "Town"), HEREBY
CERTIFY that on or before February 7, 2017, we officially signed and properly executed by
manual signature the $400,000 Revenue Anticipation Note-2017 (the "Note") of the Town,
registered in the name of Cede & Co., as Noteowner and nominee for The Depository Trust
Company and otherwise described in Schedule A annexed hereto and by this reference made a
part hereof, and that at the time of such signing and execution and on the date hereof we were
and are the duly chosen, qualified and acting officers of the Town authorized to execute the Note
and holding the offices indicated by the title set opposite our signatures hereto for term expiring
on the date set opposite such titles.
WE FURTHER CERTIFY that no litigation of any nature is now pending or
threatened restraining or enjoining the issuance or delivery of said Note or the levy or collection
of any taxes to pay the interest on or principal of said Note, or in any manner questioning the
authority or proceedings for the issuance of said Note or for the levy or collection of said taxes,
or relating to said Note or affecting the validity thereof or the levy or collection of said taxes,
that neither the corporate existence or boundaries of the Town nor the title of any of the present
officers thereof to their respective offices is being contested, and that no authority or proceedings
for the issuance of said Note has or have been repealed,revoked or rescinded.
WE FURTHER CERTIFY that the seal which is impressed upon this certificate
has been affixed, impressed, imprinted or otherwise reproduced upon said Note and is the legally
adopted,proper and only official corporate seal of the Town.
And I, Scott A. Russell, Supervisor, HEREBY FURTHER CERTIFY that on
February 7, 2017, I delivered or caused the delivery of said Note to The Depository Trust
Company to be held in trust to maturity for Oppenheimer & Co. Inc., Philadelphia,
Pennsylvania, the purchaser thereof, and that at the time of such delivery of said Note, I received
from said purchaser the amount hereinbelow stated, in full payment for said Note, computed as
follows:
Price...........................................................................................$400,248.00
Interest on said Note accrued to the
date of such delivery............................................................... -0-
Amount Received.......................................................................$400,248.00
2766446 1 040714 CLD
IN WITNESS WHEREOF, we have hereunto set our hands and said corporate
seal has hereunto been affixed as of the 7th day of February, 2017.
Term of Office
zjSignature Expires (date) Title
'1j.Vr 4'9—A�e� December 31, 2019 Supervisor
December 31, 2017 Deputy Town Clerk
(SEAL)
SCHEDULE A
Amount and Title: $400,000 Revenue Anticipation Note-2017
Dated: February 7,2017
Mature: February 7, 2018
Number No. 1, at$400,000
and Denomination:
Interest Rate 2.25%
per annum:
2766446.1 040714 CLD
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}
CERTIFICATE OF TOWN ATTORNEY
I, William M. Duffy, Esq., Town Attorney of the Town of Southold, in the
County of Suffolk, a municipal corporation of the State of New York (the "Town"), HEREBY
CERTIFY that I am an attorney admitted to the practice of law in the State of New York and I
am the duly qualified and acting Town Attorney of the Town and that, to the best of my
knowledge and belief, no litigation of any nature is now pending or threatened restraining or
enjoining the issuance or delivery of the $400,000 Revenue Anticipation Note-2017 (the "Note")
of the Town, registered in the name of Cede & Co., as Noteowner and nominee of The
Depository Trust Company, or the levy or collection of any taxes to pay the interest on or
principal of said Note, or in any manner questioning the authority or proceedings for the issuance
of said Note or for the levy or collection of said taxes, or relating to said Note or affecting the
validity thereof or the levy or collection of said taxes; that neither the corporate existence or
boundaries of the Town nor the title of any of the present officers thereof to their respective
offices is being contested; and that no authority or proceedings for the issuance of said Note has
or have been repealed,revoked or rescinded.
IN WITNESS WHEREOF, I have hereunto set my hand as of the 7th day of
February,2017.
Town Arrorn'eyl
2766446 1040714 CLD
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SCHEDULE A
Amount and Title: $400,000 Revenue Anticipation Note-2017
Dated: February 7, 2017
Mature: February 7, 2018
Number No. 1, at $400,000
and Denomination:
Interest Rate 2.25%
per annum:
2766446 1 040714 CLD
F -
CERTIFICATE OF THE SUPERVISOR OF THE TOWN
OF SOUTHOLD,NEW YORK AS TO THE BORROWING
POWER OF SUCH TOWN AS OF FEBRUARY 7, 2017
WITH RESPECT TO THE FEMA REIMBURSEMENT TO
BE RECEIVED BY THE FISHERS ISLAND FERRY
DISTRICT
I, Scott A. Russell, Supervisor of the Town of Southold (the "Town"), in the County
of Suffolk,New York,HEREBY CERTIFY as follows:
1. The total amount of FEMA reimbursement estimated in the annual
budget of the Fishers Island Ferry District(FIFD) for the current
2016 fiscal year is.............................................................................................................$472,696
2. The total amount of such FEMA reimbursement received by the
FIFD for the fiscal year 2016 was........................................................................................$31,500
3. The total amount of such FEMA reimbursement collected as of the
dateof this Certificate is ....................................................................................................$31,500
4. The total amount of indebtedness incurred and outstanding in
anticipation of the receipt of the such uncollected FEMA
reimbursement,not including the Note, is ................................................................... $ -0-
5. The amount included in the current budget to offset,in whole or in
part, an anticipated deficiency in the collection of such FEMA
reimbursement before the end of the 2017 fiscal year, is............................................. $ -0-
6. Current borrowing power(lesser of item 1. or item 2. minus the sum
ofitems 3.,4. and 5.) .......................................................................................................$441,196
IN WITNESS WHEREOF, I have hereunto set y hand as of the 7th day of
February,2017.
�pervisor
2766446 1 040714 CLD
TAX CERTIFICATE
I, Scott A. Russell, Supervisor of the Town of Southold (the "Issuer"), HEREBY
CERTIFY and reasonably expect with respect to the issuance-on February 7, 2017 (the"Issue
Date") of the Issuer's $400,000 Revenue Anticipation Note-2017 (the"Notes") as follows in this
Tax Certif cate{the"Tax Certificate").
Unless the context clearly requires otherwise, all capitalized terms not otherwise defined
herein shall have the meanings set forth in Exhibit A or in the Certificate of Determination (as
defined below),the Code or the Treasury Regulations.
ARTICLE I
GENERAL '
1.1. Authorily of Si ngnatorX. I am an officer of the Issuer charged with the
responsibility for the execution, delivery, and issuance of the Notes and I am authorized to act
and I am acting for and on behalf of the Issuer in signing this Tax Certificate.
1.2. Authorization. The Notes are authorized to be issued pursuant to
applicable provisions of the laws of the State of New York, the Local Finance, Law, the
Certificate of Determination relating to the Notes executed as of February 7, 2017 (the
"Certificate of Determination") and the revenue anticipation note resolution (the "Revenue Note
Resolution").
1.3. Description of Notes. The Issuer represents that the Notes are described
as set forth in the Certificate of Determination.
L
1.4. Purpose of Tax Certificate. This Tax"Certificate is made and delivered for
the purpose of establishing evidence of the expectations of the Issuer as of the Issue Date as to
r future events regarding the amount and use of proceeds of the Notes. It is intended and may be
relied upon for purposes of Code §103 and Code §§141 through 150, and as a certification of
expectations described in Treasury Regulations §1.148-2(b)(2). This Tax Certificate is executed
and delivered as part of the record of proceedings in connection with the issuance of the Notes.
1.5. No Hedge Bond. As described in Article II hereof, the proceeds of the
Notes will be used for "new money" purposes. As of the Issue Date (a)the Issuer reasonably
expects that at least eighty-five percent (85%) of the spendable proceeds of the Notes will be
used to carry out the governmental purposes of the Notes within three (3) years of the Issue Date
and(b)not more than fifty percent(50%) of the spendable proceeds of the Notes will be invested
in investment property which (i)would be acquired with the amounts received ,as a result of
investing original proceeds of the Notes and (ii)would have a substantially guaranteed yield for
four(4)years or more.
1.6. Reasonable Expectations: This Tax Certificate sets forth the facts,
estimates and circumstances-now,in existence which form the 'basis for the Issuer's expectation
that the proceeds of the Notes will not be used in a manner that would cause the Notes to be
2778397 1046 14 DD
"arbitrage bonds" under Code §148 or "private activity bonds" under Code §§103 and 141. To
the best of my knowledge and belief, such expectation is reasonable and there are no other facts,
estimates or circumstances that would materially change that expectation.
1.7. Sale of the Notes. The Notes were sold in a competitive sale to
Oppenheimer & Co. Inc., Philadelphia, Pennsylvania (the "Purchaser") on January 26, 2017.
The Notes are being delivered to the Purchaser for resale to the general public. The Purchaser is
delivering good funds in exchange for the Notes on the date hereof.
1.8. Single Issue. All the Notes were sold at the same time, pursuant to the
same plan of financing, and are reasonably expected to be paid from substantially the same
source of funds. No other Tax-Exempt Obligations have been or will be sold within fifteen (15)
days of the sale of the Notes pursuant to the same plan of financing as the Notes that are
reasonably expected to be paid from substantially the same source of funds as the Notes.
Accordingly, the Notes are treated as a single issue of obligations for federal income tax
purposes and no other Tax-Exempt Obligations of the Issuer will be treated as part of the same
issue as the Notes for purposes of complying with federal tax law requirements. For purposes of
this Section, obligations are considered sold on the earlier of the date a commitment letter, bond
purchase agreement or contract of purchase is executed.
1.9. No Federal Guarantee. The Issuer represents that, except for the Gross
Proceeds of the Notes which are (a) invested during the temporary periods referred to in
Article IV, (b) held in any refunding escrow, or (c) invested in obligations of the United States
Treasury or in obligations issued pursuant to Section 2113(d)(3) of the Federal Home Loan Bank
Act, as amended by Section 511(a) of the Financial Institutions Reform, Recovery and
Enforcement Act of 1989, or any successor provision to Section 2113(d)(3) of the Federal Home
Loan Bank Act, as amended:
(a) No portion of the payment of principal of or interest on the Notes is or will
be guaranteed directly or indirectly by the United States or any agency or instrumentality thereof
(herein"Federally Guaranteed"); and
(b) No portion of the Gross Proceeds of the Notes in excess of five percent
(5%) of such Gross Proceeds is or will be (i)used in making loans with respect to which the
payment of principal or interest with is to be Federally Guaranteed, or (ii) invested directly or
indirectly in federally insured deposits or accounts.
For purposes of this Tax Certificate, generally, Gross Proceeds consist of Sale Proceeds,
Transferred Proceeds, if any, Investment Proceeds and Replacement Proceeds, if any, of the
Notes.
1.10. Tax Representation. The Issuer will comply with all the procedures and
provisions set forth herein, and will do and perform all acts and things necessary and within its
reasonable control in order to assure that interest paid on the Notes shall be excluded from gross
income of the owners thereof for the purpose of federal income taxation.
2
2778397.1 040714 DD
1.11. Additional Information. The Issuer will provide such other information as
may be required to assure the exclusion from gross income of interest on the Notes for federal
income taxation purposes.
1.12. Noncompliance. The Issuer shall perform each of the representations
undertaken by it in this Tax Certificate unless, in the written opinion of Bond Counsel,
noncompliance therewith will not cause interest on the Notes to be included in gross income for
purposes of federal income taxation.
1.13. Reliance by Bond Counsel. The representations and certifications of the
Issuer expressed in this Tax Certificate may be relied upon by Bond Counsel in connection with
the rendering of any opinion with respect to the Notes.
1.14. Reliance on Other Parties. In making its representations and certifications
in this Tax Certificate and in establishing its expectations regarding uses of Gross Proceeds of
the Notes to assure compliance with Code §§103 and 141 through 150 generally, the Issuer has
relied on representations and certifications of other parties referenced in this Tax Certificate and
the Exhibits hereto with respect to the certified matters. Based on the various roles and
responsibilities of such other parties with respect to the certified matters, the Issuer�believes that
such reliance is reasonable and prudent. The Issuer is unaware of any fact or circumstance that
would cause it to question the accuracy or reasonableness of any such certification. These
certifications include, without limitation, the certificate of the Purchaser relating to the issue
price of the Notes, attached hereto as Exhibit D.
1.15. IRS Form 8038-G. Certain information provided by the Purchaser and the
Issuer's financial advisor have been provided to the Issuer and Bond Counsel for the purpose of
completing the IRS Form 8038-G. The Issuer represents that the information contained in the
IRS Form 8038-G is consistent with the computations, schedules and information provided by
the Purchaser and the Issuer's financial advisor. The Issuer has reviewed the IRS Form 8038-G
with respect to the Notes and to the best of its knowledge the information contained therein is
true, accurate and complete. The Issuer acknowledges that Bond Counsel prepared the IRS Form
8038-G on behalf of the Issuer based solely on the information contained in this Tax Certificate
and information provided by the Purchaser and/or the Issuer's financial advisor. The Issuer will
arrange for the filing of IRS Form 8038-G with respect to the Notes by the 15th day of the second
month after the calendar quarter in which the Notes are issued.
ARTICLE II
USE OF PROCEEDS
2.1. Purposes) of the Notes. The proceeds of the Notes will be used to
provide moneys for the original financing of various capital projects of the Issuer, including the
repair and replacement of airport lighting, electrical cabling and signage damaged as a result of a
storm (collectively, the "Projects'), as more fully described in the Certificate of Determination
and summarized in Exhibit C attached hereto.
3
2778397 1040714 DD
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A-1
The Issuer will use moneys other than proceeds of Notes or other tax-exempt
obligations to pay costs of issuance of the Notes(including Purchaser's compensation).
2.2. Amount and Application of Sale Proceeds of the Notes. The Sale
Proceeds will be applied as follows:
Sources Total
Par Amount $400,000.00
Original Issue Premium 0.00
Total Sources $400,000.00
Uses:
Project Ex�enditures $400,000.00
Additional Proceeds 0.00
Total Uses 6400,000.00
2.3. Excess or Unused Sale Proceeds of the Notes. The Issuer expects the
costs of the Projects to be not.less than $400,000.00 (including costs of issuance). To the extent
not so used, such proceeds will be (i) used to pay expenditures relating to the Projects; (ii)used
to.pay capitalized interest on the Notes; (iii) applied to the next payment of principal of or
interest on the Notes, or (iv) used for such other purpose as is approved in writing by Bond
Counsel.
ARTICLE III
USE OF PROJECTS AND LIMITATIONS ON PRIVATE ACTIVITY
3.1. Ownership/Lease/Sale. While the Notes remain outstanding, all of the
Projects will be owned by the Issuer or another Governmental Unit and will not be owned by or
leased to any Person who is not a Governmental Unit. The Projects will not(except to the extent
that any,portion of the Projects were financed with grants, if any) be sold or otherwise disposed
of, in whole or in part, except for incidental sales of surplus items the proceeds of which will not
constitute net operating profits or net capital profits to the Issuer, and minor parts or portions as
may be disposed of in the ordinary,course of business due to normal wear and tear, obsolescence
or depreciation.or similar purposes,prior to the final maturity date of the Notes.
1 l
3.2., No Private Loans. While the Notes remain outstanding, none of the
proceeds of the Notes are ,being.or will be used, directly or indirectly, to make loans to Persons
other than a Governmental Unit while the Notes remain outstanding. The Issuer will not make
any private loans from the proceeds of the Notes after the Issue Date unless the Issuer has
received a written opinion of Bond Counsel that such,private loan will not adversely affect the
exclusion of the interest on the Notes from gross income for purposes of federal income taxation.
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3.3. Limitations on Private Use. At all times while the Notes remain
outstanding, less than the lesser of$15,000,000 or ten,percent (10%) of either: (a)the aggregate
amount of the proceeds of the Notes are used or expected to be used, directly or indirectly, in a
trade or business carried on by a Person other than a Governmental Unit ("Private Use") or
(b)the aggregate present value of the debt service on the Notes during the term thereof is
expected to be, under the terms of the Notes or any underlying arrangement, directly or
indirectly, secured by any interest in property used or to be used for Private Use or in payments
in respect of property used or to be used for Private Use or is to be derived from payments,
whether or not to the Issuer, in respect of property or borrowed money used or to be used for
Private Use. Payments by a Person for use of proceeds do not include the portion of any
payment that is properly allocable to the payment of ordinary and necessary expenses (as defined
under Code §162) directly attributable to the operation and maintenance of the financed property
used by that Person. For this purpose, general overhead and administrative expenses are not
directly attributable to those operations and maintenance.
3.4. Unrelated/Related Disproportionate Use. At all times while the Notes
remain outstanding, less than the lesser of$15,000,000 or five percent (5%) of either: (a) the
proceeds of the Notes will be used, directly or indirectly, in the trade or business of a Person
other than a Governmental Unit that is unrelated or related and disproportionate to the
governmental use of the Projects, including any private loan financing described in Section 3.2
hereof which meets this test or (b) the aggregate present value of the debt service on the Notes
during the term thereof is expected to be, under the terms of the Notes or any underlying
arrangement, directly or indirectly, secured by any interest in property used or to be used for
Private Use or in payments in respect of property used or to be used for Private Use or is to be
derived from payments, whether or not to the Issuer, in respect of property or borrowed money
used or to be used for Private Use. Payments by a Person for use of proceeds do not include the
portion of any payment that is properly allocable to the payment of ordinary and necessary
expenses (as defined under Code §162) directly attributable to the operation and maintenance of
the financed property used by that Person. For this purpose, general overhead and administrative
expenses are not,directly attributable to those operations and maintenance. For purposes of this
Tax Certificate, proceeds of the Notes are allocable to a disproportionate related Private Use to
the extent that the proceeds of the Notes which are to be used to finance property used by a___
nongovernmental Person in a trade or business which is related to the governmental use of the
property exceeds the proceeds of the Notes which are to be used for the governmental use to ,
which such Private Use relates.
3.5. Private Use Defined. (a) For purposes of Sections 3.3 and 3.4 hereof,
Private Use consists of any agreement, contract or other arrangement including, without
limitation, leases, management contracts, guarantee contracts, take or pay contracts, put or pay
contracts, output contracts or research contracts which provides for use of any portion of the
Projects by a Person(s) who is not a Governmental Unit on a basis different than the general
public. The Issuer will not enter, into any such contract or arrangement unless the Issuer has
obtained an opinion from Bond Counsel that such contract or arrangement does not adversely
affect the exclusion of interest on the Notes from gross income for purposes-of federal income
taxation. None of the Projects are being financed for use by any specific user (other than the
Issuer).
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(b) Use by State or ,Local Governmental Units. The Projects, including
service or capacity from the Projects, if any, may be used by or on behalf of a Governmental
Unit provided that there is no transfer or flow-through of such use to any Person carrying on any
trade or business that does not constitute General Public Use .(as defined in subsection (c)
below).
(c) General Public Use. The Projects, including service or capacity from the
Projects, if any, may be used by any Person, including any Person or entity carrying on any trade
or business without any Private Use arising therefrom, if such use constitutes General Public
Use. "General Public Use" is any arrangement providing for use that is available to the general
public at either (i) no charge, or (ii) on the basis of rates that are generally applicable and
uniformly applied. For this purpose, rates may be treated as generally applicable and uniformly
applied even if(i) different rates apply to different classes of users, such as volume purchasers, if
the differences in rates are customary and reasonable, or (ii) a specially negotiated rate
arrangement is entered into, but only if the user is prohibited by federal law from paying the
generally applicable rates, and the rates established are as comparable as reasonably possible to
the generally applicable rates. The Issuer imposes generally applicable and uniform rates and
charges, if any, on all users of the facilities, service or capacity of the Projects pursuant to the
schedules of rates and charges adopted by the Issuer from time to time.
(d) No Priority Rights or Other Preferential Benefits. The Projects, including
service or capacity from the Projects, if any, will not be used by any Person under any
arrangement that conveys priority rights or other preferential benefits except as may be permitted
by subsection(b)above.
(e) 200 Days General Public Use,Arranem�ents. An arrangement is not
treated as General Public Use if the term of the use under the arrangement, including all renewal
options, is greater than two hundred(200) days. For this purpose, a right of first refusal to renew
use under the arrangement is not treated as a renewal option if(i) the compensation for the use
under the arrangement is redetermined at generally applicable, fair market value rates that are in
effect at the time of renewal, and (ii) the use of the financed property under the same or similar
arrangements is predominantly by natural Persons who are not engaged in a trade or business.
(f) 100 Days Limited General Public Use Arrangements. The Projects,
including service or capacity from the Projects, if any, may be used by any Person under any
arrangement for use (other than as an owner) for a term (including renewal options) not=-longer,
than one hundred (100) days,provided that the arrangement would be General Public Use except
that it is not available on the same basis for use by natural Persons because generally applicable
and uniformly applied rates are not reasonably available to natural Persons not engaged in a trade
or business and the Projects are not financed for the principal purpose of such Private Use.
(g) 50 Days Negotiated Arm's-Length Use Arrangements. The Projects,
including service or capacity from the Projects, if any, may be used by any Person under any
arrangement (other than as an owner) for a term (including renewal options)not longer than fifty
(50) days, provided the arrangement is negotiated at arm's-length, the compensation paid for the
use is at fair market value and the Projects are not financed for the principal purpose of such
Private Use.
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The term limits described in each of the three foregoing contractual arrangements
(i.e., paragraphs (e), (f) and (g) above) are not required to relate to consecutive days (e.g.,'if the
contract provides for use of a bond-financed facility for ten (10) days per year for six (6) years,
the contract could not comply with the requirements applicable to contractual arrangements set
forth in paragraph(g) above,because the term of the contract would exceed fifty(50) days.) .
(h) Incidental Use Arrangements. The Projects may be used by any Person
where the use is incidental if, except for vending machines, pay telephones, kiosks and similar
uses, the use does not involve the transfer of possession and control of space separated from
other areas of the facility by walls, partitions, barriers and the like, the nonpossessory use is not
functionally related to any other use of such portion of the Project by the same Person(other than
a different nonpossessory use) and all nonpossessory uses do not in the aggregate exceed 2'.5% of
the Projects or such facility.
3.6. Management and Operations Contracts. The Issuer manages and operates
all of the Projects. The Issuer will not enter into any management contract or operating
agreement with any Person for management services or operating activities to be provided at or
with respect to the Projects, while the Notes remain outstanding, except: (a) with respect to
contracts or arrangements which do not constitute Private Use of the Projects under Code
§141(b), (b) with respect to contracts or arrangements which satisfy the requirements set forth in
IRS Rev. Proc. 2017-13, as amended or supplemented from time to time, (c)with respect to
contracts or arrangements that do not give rise to use of Bond-financed property by a'non-
Governmental Unit of more than the amount of such non-qualified use permitted by the Code, as
measured in the aggregate, or (d) in the event that the Issuer receives an opinion of Bond
Counsel that such contracts or arrangements will not adversely affect the exclusion of the interest
on the Notes from gross income for federal income taxation purposes.
3.7. Monitoring and Measurement of Private Activity. (a)The Issuer represents
that it will monitor the amount of Private Use of the Projects to ensure that the aggregate amount
of such use of the Projects will not exceed the applicable limits described in this Article. The
Issuer has established procedures for monitoring the amount of Private Use at the Projects. The
Issuer will consult with Bond Counsel and other legal counsel and advisers as necessary to
determine whether, and to what extent, if as a result of any Private Use of the financed facilities
any remedial action is required under Treasury Regulation §1.141-12.
(b) The amount of Private Use of a Project is determined according to the
average percentage of Private Use of such Project during the measurement period. To the extent
that the Projects are owned by the Issuer, the measurement period with respect to a Project
(i)begins on the later of the Issue Date of the Notes or the placed-in-service date of the Project;
and (ii) ends on the earlier of the expiration date of the economic life of the Project or the last
maturity of the Notes. The average percentage of Private Use is the average of the percentages
of Private Use during the one-year periods within the measurement period and is to be
determined,with appropriate adjustments, as provided in the Treasury Regulations.
(c) The Issuer also agrees to monitor the amount of private payments and
private security at each Project to ensure that the present value of the aggregate_amount of
private payments and private security at the Projects financed with the proceeds of the Notes will
7
2778397.1 040714 DD
not exceed: (i) five percent (5%) with respect to unrelated or related and disproportionate
Private Use described in Section 3.4 above, and (ii) ten percent (10%) with respect to total
Private Use described in Section 3.3 above, of the present value of the aggregate debt service on
the Notes. Such present values are to be determined, with appropriate adjustments, as provided
in the Treasury Regulations.
(d) The Issuer will advise Bond Counsel not less than annually of any change
in the amount of: (i) unrelated or related and disproportionate Private Use described in
Section 3.4 above, (ii) Private Use described in Section 3.3 above, and (iii) the corresponding
amount of private payments and private security arising from any contract or other arrangement
including, without limitation, ownership, leases, management and operation contracts, research
agreements, guarantee contracts, take.or pay contracts, put or pay contracts, or other output
contracts or any other action or event described in this Article.
3.8. No Pooled Loan Financings. None of the proceeds of the Notes will be
used directly or indirectly to make or finance loans to two or more ultimate borrowers (including
loans referred to in Section 3.2 hereof and loans to Governmental Units).
ARTICLE IV
ARBITRAGE
4.1. Issue Price. Based on the representations of the Purchaser, as set forth in
Exhibit D attached hereto, the aggregate issue price of the Notes is $400,000.00 (the"Issue
Price"),representing the stated principal amount of the Notes
4.2. Bond Yield and Investment Yield (a) When used in this Tax Certificate,
the term "yield" refers to yield computed by the actuarial or present value method using a
360-day year and semiannual compounding, and means that discount rate which, when used in
computing the present value of all payments of principal and interest to be paid on an obligation,
produces an amount equal to the Issue Price thereof in the case of the Notes and the purchase
price in the case of Investments purchased with Gross Proceeds of the Notes.
(b) The Notes constitute a Fixed Yield Issue. The Yield on the Notes has
been computed in compliance with Treasury Regulations §1.148-4, to be 2.237484% (the "Bond
Yield"). The Bond Yield will not .be affected by subsequent unexpected events, except to the
extent provided in Treasury Regulations §1.148-4(h) when and if the Issuer enters into a
Qualified Hedge or into any transaction transferring, waiving or modifying any right that is part
of the terms of the Notes. The.Issuer will consult with Bond Counsel prior to entering into any
of the foregoing transactions.
(c) None of the Notes are subject to mandatory, contingent, or optional
redemption.
(d) The Issuer has not entered into any Qualified Hedge with respect to the
Notes.
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1, 1
(e) No amount has been or will be paid-by or on behalf of the Issuer to any
entity as a payment for a Qualified Guarantee with respect to the Notes.
4.3. Temporary Periods. The Issuer will not invest the Gross Proceeds of the
Notes in Investments at Yields that are materially higher, as that term is defined in Treasury
Regulations §1.14'8-2(d) ("Materially Higher'), than the Bond Yield, except as set forth in this
'Section or Article VI below.
(a) Temporary Period for Bond Proceeds Used for Capital Projects. The
Issuer reasonably expects that, as of the date hereof: (i) the Issuer will enter into within six (6)
months after the date hereof a substantial binding obligation to a third party to expend at 'least
five percent(5%) of the Net Sale Proceeds of the Notes on the Projects; (ii)the completion of the
Projects and use of Net Sale Proceeds of the Notes will proceed with due diligence to
completion; and(iii) at least eighty-five percent(85%) of the Net Sale Proceeds of the Notes will
be spent on the Projects within three (3) years of the'date hereof. As a result, proceeds of the
Notes used to finance the costs'of the Projects may be invested without Yield Restriction for a
period not to exceed three(3) years from the date hereof and, thereafter, shall be invested at a
Yield not in excess of the Yield on the Notes plus one-eighth of one percentage point ('/8%).
Investment earnings on obligations acquired with such proceeds may be invested without Yield
Restriction for a period not exceeding three (3) years from the date hereof or one (1) year from
the receipt thereof,whichever is longer, and,thereafter, shall be invested at a Yield not in excess
of the Yield on the Notes plus one-eighth of one percentage point(%%).
(b) Temporary Period for Investment Earnings. Except as otherwise provided
in this Section, investment earnings and all amounts received by the Issuer from the investment
of Gross Proceeds of the Notes may be invested without Yield Restriction for a one (1) year
period beginning on the date of receipt but in no event longer'than the temporary period
applicable to the source of such investment.
(c) Temporary Period for Costs of Issuance. Proceeds of the Notes used to
pay costs of issuance of'the Notes may be invested without Yield Restriction for a temporary
period not to exceed thirteen(13)months from the Issue Date and will be subject to rebate.
(d) Temporary Period for Bona Fide Debt Service Fund. As further discussed
in Section 7.2 below, amounts deposited in a Bona Fide Debt Service Fund may be invested
without Yield Restriction for a period of thirteen (13) months from the date of deposit in such
fund.
(e) Minor Portion. A minor portion of the Gross Proceeds of the Notes may
be invested without Yield Restriction in an amount not exceeding the lesser of(i) $100,000 or
(ii)five percent(5%) of the Sale Proceeds.
4.4. Yield Reduction Payments. Notwithstanding any of the provisions in this
Tax Certificate that require Sale Proceeds of the Notes and .investment earnings thereon to be
invested at a yield not in excess of the Bond Yield, the yield on certain investments acquired
with proceeds of the Notes will not be considered to be higher than,the applicable yield
limitation described herein if the Issuer makes or causes to be made Yield Reduction Payments
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r
to the United States Treasury at the time and in the amounts described in Treasury Regulations
§1.148-5(c). The Issuer will consult with Bond Counsel prior to making any investments in-
reliance
rireliance on its eligibility to make Yield Reduction Payments.
4.5. Yield Restricted Money. Amounts that must be Yield Restricted, if any,
will be invested in either: (i) Nonpurpose Investments at a fair market price which produces a
yield not Materially Higher than the Bond Yield, (ii) SLGS which produce a yield not Materially
Higher than the Bond Yield, or (iii) Tax-Exempt Obligations, which are not "specified private
activity bonds"within the meaning of Code §57(a)(5)(C).
4.6. Universal Cap. The Issuer is advised that, in general, the Universal Cap
provision under Treasury Regulations §1.148-6(b)(2) caps the amount of Gross Proceeds of the
Notes invested in Nonpurpose Investments that remain subject to arbitrage restrictions at the
Value of the outstanding Notes. Except as provided below, on each Valuation Date, the
Institution shall value the Universal Cap, the Nonpurpose Investments allocable to the Notes
thereunder, and make any required reallocations in the manner provided in the Universal Cap
provision. Notwithstanding the foregoing, the Universal Cap need not be applied,on any
otherwise required date of application if its application on that date would not result in a
reduction or reallocation of Gross Proceeds of the Notes because the Value of Nonpurpose
Investments allocated to such Notes on such date does not exceed the Value of the Notes
outstanding on such date. The Universal Cap also need not be applied on any date on which all
the following conditions are met: (i) no Replacement Proceeds are allocated to the Notes (other
than proceeds in a Bona' Fide Debt Service Fund or a Reasonably Required Reserve or
Replacement Fund); (ii) the Sale Proceeds of the Notes qualify for a temporary period and have
been expended prior to the termination of the latest of such temporary periods or have been
deposited into a refunding escrow and are being expended as expected; (iii) the Notes do not
refund a prior issue with unexpended proceeds; (iv) none of the Notes are retired prior to their
respective retirement dates for purposes of computing Yield; and (v) no Proceeds of the Notes
are invested in qualified student loans or qualified mortgage loans.
4.7. No Prohibited Payments. The Issuer has not entered into and will not
enter-into any transaction to reduce the Yield on the Investment of the Gross Proceeds of the
Notes in such a manner that the amount to be rebated to the federal government is less than it
would have been had the transaction been at arm's-length and had the Bond Yield not been
relevant to either party.
4.8. No Overissuance. The proceeds of the Notes, including Investment
Proceeds,will not exceed the amount necessary for the purpose(s) of the Notes.
4.9. Disposition Receipts. The Issuer will consult with Bond Counsel as to
how to invest and dispose of any amounts received from the condemnation, insurance, or
disposition of any part of the Projects.
4.10. No Replacement Proceeds. No Replacement Proceeds (as defined in
Treasury Regulations §1.148-1(c)) are expected to be created as a result of issuing the Notes, as
the weighted average maturity of the Notes as set forth in Exhibit E}attached hereto does not
exceed one hundred twenty percent (120%) of the average economic life of the Projects, as
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shown in Exhibit C attached hereto. The average economic life of the Projects are assumed to
have been assigned the "period of.probable use" as defined under the State of New York Local
Finance laws. The Issuer confirms that the Notes are outstanding for a period that is reasonably
required to accomplish the governmental ,purpose of financing the Projects with the proceeds of
the Notes.
4.11. Fair Market Value. ,The Issuer will not acquire Nonpurpose Investments
at other than an arm's-length, fair market value price.
ARTICLE V
REBATE
5.1. Rebate Compliance. The Issuer understands that the continued exclusion
of interest on the Notes from gross income for purposes of federal income taxation depends, in
part, upon compliance with the arbitrage'limitations imposed by Code §148, including the rebate
requirements described in this Article. The Issuer shall do and perform all acts and things
necessary in order to assure that the arbitrage and rebate requirements of Code §148 are met.
5.2. Calculation of Rebate Amount. Code §148(f) requires the payment to the
United States of the excess of the amount earned on the investment of Gross Proceeds of the
Notes in Nonpurpose Investments over the amount that would have been earned had the amount
so invested been invested at a rate equal to the Bond Yield,together with any income attributable
to su&excess. Except as provided below, all Gross Proceeds of the Notes are subject to this
requirement.. In order to meet the rebate requirement of the Code, the Issuer will take the
following actions:
(a) Record of Investments. The Issuer will record the date of receipt, amount
and source of any Gross Proceeds of the Notes, e.g., Sale Proceeds, Replacement Proceeds, loan
repayments, investment earnings. For each Nonpurpose Investment acquired with or allocated to
Gross Proceeds of the Notes, the Issuer will record the purchase date or allocation date of such
investment, its purchase price (excluding any broker or dealer's commission or discount), or, if
not acquired directly with Gross Proceeds of the Notes, its Value on the date the Nonpurpose
Investment is allocated to Gross Proceeds of the Notes, accrued interest due on its purchase date
or allocation date, its face amount, its coupon rate, its yield, the frequency of its interest
payment, its disposition price (excluding any broker or dealer's commission or discount),, the
accrued interest due on its disposition date and its disposition date. In addition, the Issuer will
record the date and amount of all expenditures made with Gross Proceeds of the Notes, including
the payment of any Rebate Amount(as defined below).
(b) Method for Computing. For each Computation Period, the Issuer
shall determine, if required, the Bond Yield computed as required by Treasury Regulations
§1.148-4(b). When expressed as a decimal, yield will be accurate to at least four (4) decimal
places.
(c) Eligibility of Qualified Guarantee. Payments for a Qualified Guarantee
will be eligible to be taken into account as interest payments for purposes of computing the Bond
11
2778397.1 040714 DD
Yield only if the payment for the guarantee represents a reasonable payment for a Qualified
Guarantee.
(d) Computation of Rebate Amount Subject to the special rules set forth in
paragraph (e) of this Section,the Issuer will determine the Rebate Amount on each Computation
Date. The "Rebate Amount" as of any Computation Date is the excess of the Future Value of all
receipts with respect to Nonpurpose Investments over the Future Value of all payments with
respect to the purchase of Nonpurpose Investments or the allocation of such investments to the
proceeds of the Notes, determined as of each Computation Date. To the extent amounts received
from investments are reinvested, these amounts may be netted against each other and not taken
into account in the Computation of the Rebate Amount. The Issuer shall determine the
nonpurpose receipts and nonpurpose payments as described below.
(i) Receipts. Receipts with respect to Nonpurpose Investments include
(A)actual receipts, which equal amounts actually or constructively received with respect
to an investment,reduced by Qualified Administrative Expenses; (B) disposition receipts,
which equal the Fair Market Value of investments deemed to be sold on the date the
Investment ceases to be allocated to the issue, (except that Present Value- may be
substituted for Fair Market Value with respect to fixed yield investments, investments
required to be Yield Restricted, and investments transferring by virtue of the universal
cap or transferred proceeds rules); (C) Computation Date receipts, which equal the
Market Value (Present Value, in the case of Investment Contracts and fixed rate
investments) of all Nonpurpose Investments allocated to the issue at the close of business
on a Computation Date; and (D)rebate receipts, which equal any recovery of an
overpayment of rebate.
(ii) Payments. Payments with respect to Nonpurpose Investments include
(A) direct payments, which equal the amount of Gross Proceeds of the issue directly used
to purchase the investment, including Qualified Administrative Expenses;
(B) constructive,payments, which equal the Value of an investment allocated to (but not
directly purchased with) Gross Proceeds -on the date so allocated; (C)Nonpurpose
Investments allocated to an issue at the end of the preceding Computation Period, at the
value of the investments at the beginning of the computation period; (D)rebate payments,
payments of Rebate Amounts when due and Yield Reduction Payments on Nonpurpose
Investments; and(E)the Computation Date Credit.
(e) Rebate Exceptions. In connection with the rebate requirement the
following exceptions shall apply to the Notes.
(i) $100,000 Bona Fide Debt Service Fund Gross Earnings Exception to
Rebate. Notwithstanding anything in this Section 5.2 to the contrary, if the gross
earnings from the investments held in a Bona Fide Debt Service Fund for the Bond Year
in question, as determined under paragraph (c) above, are less than $100,000 then any
amount earned on such Bona Fide Debt Service Fund shall not be taken into account in
determining the Rebate Amount. In this regard, the $100,000 earnings limitation is
deemed satisfied if the annual debt service on the Notes does not exceed $2,500,000. For
purposes of this paragraph,the term "gross earnings" means the aggregate amount earned
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2778397.1 040714 DD
1 Sl
on the'Nonpurpose'Investment in which the Gross Proceeds deposited to a Bona Fide
Debt Service Fund are invested, including amounts earned on such amounts if allocated
to a Bona Fide Debt Service Fund.
(ii) Bona Fide Debt Service Fund Exception to Rebate. If the average
maturity of the Notes is at least five (5) years and the rates of interest do not vary during
the term of the Notes, then any amount earned on the Bona Fide Debt Service Fund
(other than amounts representing accrued interest or capitalized interest) shall not be
taken into account in determining the Rebate Amount.
(iii) Six-Month Spending Exception'to Rebate. Notwithstanding anything in
this,Section to the contrary, if all of the Gross Proceeds of the Notes held,in any fund or
account (other than the Gross Proceeds held in a Bona Fide Debt Service Fund or any
reasonably required reserve fund), including investment earnings received with respect to
such Gross Proceeds but excluding investment earnings received with respect to such
Gross Proceeds held in the Bona Fide Debt Service Fund, have been expended for the
governmental purpose of the Notes within six (6) months (or ninety-five percent (95%)
within six (6) months and one hundred percent (100%) within one year) after the Issue
Date, then the only Nonpurpose Investments to be taken into account in the calculation of
the Rebate Amount are Nonpurpose Investments acquired with or allocated to Gross
Proceeds of the Notes held in any reasonably required reserve fund and to any Gross
Proceeds of the Notes arising after such six (6) months which were not reasonably
anticipated as of the Issue Date. The existence of sinking fund or pledged fund proceeds
or the expectation that such proceeds will arise within six (6) months of the Issue Date
will make the six-month spending exception to rebate inapplicable. For purposes of this
exception, Gross Proceeds used to pay principal of the Notes are not treated as expended
on the governmental purpose of the Notes. This exception is available for the Gross
Proceeds of the Notes and the Issuer expects the requirements of this exception to rebate
to be met with respect to the Gross Proceeds of the Notes.
(iv) Eighteen-Month Spending Exception to Rebate. The Notes are treated as
meeting the rebate requirement if Gross Proceeds of the Notes qualify for the initial
temporary period under Treasury Regulations §1.148-2(e)(2) and if the Gross Proceeds of
the Notes (other than the Gross Proceeds held in a Bona Fide Debt Service Fund or any
reasonably required reserve fund and any Gross Proceeds of the Notes arising after
eighteen (18) months after the Issue Date which were not reasonably anticipated as,of the
Issue Date), including investment earnings received with respect to such Gross Proceeds
but excluding investment earnings received with respect to such Gross Proceeds held in a
debt service fund, have been expended for the governmental purpose of the Notes in
accordance with the following schedule measured from the Issue Date: (i) at least fifteen
percent (15%) within six (6) months; (ii) at least sixty percent (60%) within twelve (12)
months; and (iii) one hundred percent (100%) within eighteen (18) months; then the only
Nonpurpose Investments to be taken into account in the calculation of the Rebate
Amount with respect to,the Notes are Nonpurpose Investments acquired with or allocated
to Gross Proceeds of the Notes held in any reasonably required reserve fund (there are
none with respect to the Notes), and to any Gross Proceeds of the Notes arising after such
eighteen (18) months which were not reasonably anticipated as of the Issue Date. This
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2778397.1 040714 DD
eighteen month spending exception to rebate may not be used if Gross Proceeds of the
Notes are held in any fund such as a sinking fund or pledged fund (other than a Bona
Fide Debt Service Fund or any reasonably required reserve fund) as of the Issue 'Date or
if such Gross Proceeds of the Notes are expected to arise within eighteen (18) months of
the Issue Date. For purposes of this exception, Gross Proceeds of the Notes used to pay
principal of the Notes are not treated as expended on the governmental purpose of the
Notes. ,For purposes of determining compliance with the first two spending periods, the
amount of Investment Proceeds included in Gross Proceeds of the Notes is determined
based on the Issuer's reasonable expectations on the Issue Date. The spending
requirement for the third spending period is nevertheless satisfied if the Reasonable
Retainage is allocated to expenditures within thirty (30)months of the Issue Date.
(v) Two-Year Construction Bond Exception to Rebate. (A) A Construction
Issue is treated as meeting the rebate requirement for Available Construction Proceeds of
the Notes if those proceeds are allocated to expenditures for governmental purposes of
the issue in accordance with the following schedule, measured from the Issue Date of the
Notes: (i) ten percent (10%) within six (6) months; (ii) forty-five percent (45%) within
twelve (12) months; (iii) seventy-five percent (75%) within eighteen (18)'months; and
-(iv) one hundred percent (100%) within twenty-four (24) months. The two-year '
construction bond exception to rebate is deemed satisfied if the unexpended amount does
not exceed the lesser of three percent (3%) of the Issue Price of the Notes or $250,000.
The fourth spending requirement is considered satisfied if the unexpended amount is
attributable to a'Reasonable Retainage and if such amount is allocated to expenditures
within three (3)years of the Issue Date. Expenditures for the governmental purpose of an
issue include.payments for interest, but not principal, on the issue, and for-principal or
interest,on another issue of obligations, unless those payments cause the issue to be a
refunding issue. For purposes of determining compliance with the spending requirements
as of the close of each of the first three (3) spending periods, Available Construction
Proceeds include the amount of future earnings that the Issuer reasonably expected as of
the Issue Date of the)Notes. 'The spending requirement with respect to the fourth and
final spending period is measured by reference to actual earnings.
(B) In the event the Issuer fails to expend the Available Construction .
Proceeds in accordance with the schedule set forth in (A) above, unless an election has
been made to pay the one and one half percent (lV2%) penalty and/or the three percent
(3%) penalty, all Gross Proceeds of the Notes, not otherwise exempted from the
calculation of the Rebate Amount, will be taken into account in the calculation of the
Rebate Amount starting from the Issue Date. If an election has been made to bifurcate
the issue into a Construction Issue and a non-Construction Issue,the two (2)portions will
be treated as separate issues for purposes of computing the Rebate Amount as provided in
Section 5.2 hereof. An issue may,not-'be bifurcated into a Construction Issue and an issue
which satisfies the eighteen month spending exception to rebate. In addition, an issue
may not be bifurcated to include Construction Expenditures in the non-Construction
Issue. An issue which comprises both refunding bonds and new money bonds is
considered to be bifurcated by operation of'law.
> 14
2778397.1 040714 DD
(C) In connection with the two-y_ear construction bond exception to
rebate, the Issuer hereby makes the following elections: (a) the Issuer reasonably expects
that at least seventy-five percent (75%) of the Available Construction Proceeds will be
applied in respect of Construction Expenditures for property which is owned by a
Governmental Unit or a Tax-Exempt Organization; (b) the Issuer does not elect to
bifurcate the Notes into a Construction Issue and a non-Construction Issue; (c) the Issuer
does not elect to pay the one and one-half percent (1'/z%).penalty or the three percent
(3%) penalty at the-close of each semi-annual spending period in respect of which the
spending requirement has not been satisfied; (d)the Issuer does not elect to.include in the
two-year expenditure requirement investment earnings on any reserve fund as there is no
such reserve fund with respect to the Notes; (e) the Issuer elects to include in Available
Construction Proceeds the amount of earnings reasonably expected as of the Issue Date
of the Notes to be received for the entire two-year period, for purpose of calculating
whether the relevant semi-annual expenditure requirements have been satisfied; and
(f)the Issuer elects to measure Available Construction Proceeds, for purposes of meeting
the spending requirements for the first three spending periods set forth above, by
reference to the amount of earnings the Issuer reasonably expects.as of the Issue Date of
the Notes for the entire,two-year spending period, in lieu of actual earnings and expected
earnings as of the end of each spending period.
(D) - The Issuer acknowledges that it may only avail itself of one of the
exceptions to rebate set forth in Subsections 5.3(e)(iv)and(v) above.
5.3. Rebate Options. With respect to the investment of the proceeds of the
Notes,the Issuer will:
(a) comply with a rebate exception set forth in Section 5.2, and if it is unable
to comply with any of such exceptions, rebate arbitrage earnings in accordance with the
provisions of this Article;
n
(b) invest all Gross Proceeds of the Notes at all times from the Issue Date
until expended in investments not constituting investment property for purposes of Code §148 of
the Code, such as obligations of a state or of a political`subdivision of a state the interest on
which is excluded from gross income for purposes of federal income taxation under Code §103
and is not a preference item for purposes of the alternative minimum tax imposed by Code §55;
(c) invest all Gross Proceeds of the Notes in obligations having a yield that
does not exceed the Bond Yield; or
(d) comply with the rebate provisions described in this Article.
! 5.4. Payment to the United States. (a) Unless the Notes are redeemed prior to
such time, the Issuer will pay to the United States, not later than sixty (60) days after each
Installment Computation Date, an amount which, when added to previous rebate payments made
with respect to the Notes, is equal to not less than ninety percent (90%) of the Rebate Amount.
' The Issuer will pay to the United States, not later than sixty (60) days after the Notes are fully
paid or redeemed, one, hundred percent (100%) of the Rebate Amount. If the final rebate
15
2778397.1,040714 DD
.1
payment is not made within sixty (60) days after the Final Computation Date, interest on the
Rebate Amount will be deemed to accrue at the underpayment rate under Code §6621, beginning
on the date the Rebate Amount is due and ending on the date ten(10) days before it is paid.
(b) The Issuer will mail each payment to the Internal Revenue Service Center,
Ogden, Utah 84201 or such other address as the Treasury Regulations may require. Each
payment shall be accompanied by the Form 8038-T (or other prescribed form) and such
information and documents as the Treasury Regulations may require. -
5.5. Engagement of Experts. The Issuer shall, before the date which is the
earlier of(i) the fifth (5h) anniversary of the Issue Date or (ii) the date of the last redemption of
the Notes, engage Hawkins Delafield & Wood LLP or another firm nationally recognized in the
calculation of rebate to perform the calculations necessary to comply with the rebate
requirements of the Code with respect to the Notes, including any exceptions thereto.
ARTICLE VI
ACCOUNTING FOR EXPENDITURES
6.1. Tax Accounting for Expenditures of Bond Proceeds. In general, any
reasonable, consistently applied accounting method may be used to account for expenditures of
proceeds of the Notes for arbitrage and private activity bond compliance purposes under
Treasury Regulations §§1.148-6(d) and 1.141-6. Allocations for these two purposes must be
consistent with each other. Reasonable accounting methods for allocating funds from different
sources to expenditures for the same governmental purpose include any of the following methods
if consistently applied: a specific tracing method; a gross proceeds spent first method; a first-in,
first-out method; or a ratable allocation method. Subject to more restrictive special rules that
may apply to proceeds of the Notes, such as the more restrictive special rules applicable to
expenditures of proceeds for Restricted Working Capital Expenditures (see, Bond-Proceeds-
Spent-Last Accounting Method), and except as otherwise noted in the immediately succeeding
sentence, the Issuer will use a specific tracing method, consistently applied, to account for
expenditures of proceeds of the Notes for purposes of Code §§148 and 141. The expenditure of
money deposited to the Bona Fide Debt Service Fund shall be accounted for on the basis of the
first-in, first-out method of accounting.
(a) Extraordinary Working Capital Items. Gross Proceeds of an issue used for
expenditures for extraordinary, non-recurring items that are not customarily payable from current
revenues, such as casualty losses or extraordinary legal judgments in amounts in excess of
reasonable insurance coverage, or the payments of Extraordinary Working Capital Items. The
exception set forth above shall apply only if the Issuer or a related party does not otherwise
maintain a reserve for such items or set aside other available amounts for such expenses. No
portion of the proceeds of the Notes will be used to pay Extraordinary Working Capital Items.
(b) Grants. Gross Proceeds of an issue used to make a grant (i.e., a transfer of
money by the Issuer to a transferee that is neither a member of the Issuer's Controlled Group nor
an agent of the Issuer) that imposes on the transferee no obligation or condition to repay any
16
2778397 1040714 DD
a ')
amount to the Issuer. In this regard, obligations or conditions intended solely to assure the
expenditure of transferred money in accordance with the governmental purpose of the transfer do
not prevent a transfer from qualifying as a grant. The Issuer understands that in the unexpected
event that a repayment is made with respect to a bond-financed grant, the repaid amount is
treated as unspent proceeds of the bonds as of the repayment date unless expended within sixty
(60) days of the repayment. The amount of grants not meeting the definition above will not be
considered expended until expended by the ultimate recipient. No portion of the proceeds of the
Notes will be applied to finance a grant. -
(c) Costs of Issuance and De Minimis Working Capital Items. Gross
Proceeds of an issue used for costs of issuance, administrative costs; qualified guarantees or
hedges; payments of interest on the issue for a period commencing the date hereof and ending on
the later of three'(3) years from the date hereof or one (1) year after the date the Projects are
placed in service; rebate or penalty or yield reduction payments;payments of principal or interest
on an issue paid from unexpected excess sale or investment proceeds; and principal or interest on
an issue paid from investment earnings on a reserve or replacement fund that are deposited in a
Bona Fide Debt Service Fund, and Gross Proceeds of an issue used for working capital not in
excess of five percent (5%) of the Sale Proceeds of the Notes that are directly related to the
Capital Expenditures financed by the Notes may be considered spent for arbitrage purposes on a
specific tracing accounting method.
(d) Exception for Commingled Investment Proceeds. Investment proceeds of
the Notes that are deposited into the Issuer's General Fund or other funds and that are
commingled with substantial tax or other revenues from the governmental operations of the
Issuer may be treated as allocated to expenditures for a governmental purpose if such Investment
Proceeds are expected to be spent within six (6)months from the date of commingling.
(e) Allocations of Proceeds to Expenditures. It is understood that any
allocations of the proceeds of the Notes to expenditures herein are preliminary. Pursuant to
Treasury Regulations §§1.141-6(a) and 1.148-6(d)(1)(iii), within eighteen (18) months after the
later of the date on which an expenditure of proceeds of the Notes is made or, if later in the case
of an expenditure for a Capital Project, if any, the Capital Project is placed in service, the Issuer
will make a final allocation of the actual amount of proceeds used for that expenditure by the
Issuer. In any event, such allocation must be made by the date sixty (60) days after the fifth(5t')
anniversary of the Issue Date or the date sixty, (60) days after the retirement of the Notes, if
earlier. The Issuer reserves the authority to change any allocation of proceeds to expenditures
and the authority to change the method of accounting of proceeds for the entire period permitted
under Treasury Regulations §§1.141-6 and 1.148-6 and other applicable Treasury Regulations.
6.2. Related Parties and Expenditures. In general, for purposes of tracking
investments and expenditures of Gross Proceeds of the Notes to ensure compliance with the
arbitrage restrictions under Code §148 and the Treasury Regulations, the Issuer will continue to
track investments of proceeds of the Notes and expenditures of the proceeds of the Notes until
paid to parties that are not Related Parties. The Issuer understands that, for arbitrage purposes
under Treasury Regulations §1.148-6(d)(7), unless otherwise within Section 6.3 of this Tax
Certificate, any payment of Gross Proceeds of the Notes to a Related Party of the payer is not an
expenditure of those Gross Proceeds for arbitrage investment tracking purposes. Further in this
17 2778397 1040714 DD
regard, for purposes of determining whether the Issuer and another entity are Related Parties, a
special rule under Treasury Regulations §1.150-1(e)(3) provides that a general purpose
governmental entity with its own substantial taxing, eminent domain, and police powers is an
uncontrolled entity (e.g., a city possessing substantial amounts of each of the referenced
sovereign powers is not a controlled entity of a state).
6.3. Expenditures on a Reimbursement Basis of Eligible Original Expenditures
Paid Before Issue Date. As described in Exhibit G, a portion of the proceeds of the Notes, in the
amount of $75,950, will be used to reimburse the Issuer for expenditures incurred and paid
thereby with respect to the Projects in anticipation of the issuance of the Notes. Treasury
Regulations §1.150-2 provides that proceeds of Tax-Exempt Obligations may be spent on a
"reimbursement"basis to reimburse certain eligible types of original expenditures originally paid
before the date of issuance of bonds from other funds. To qualify for reimbursement, the
following requirements must be satisfied:
(a) Official Intent. Not later than sixty(60) days after payment of the original
expenditure, the Issuer must adopt an "official intent" that satisfies the reimbursement rules (a
"Declaration of Official Intent"). The Declaration of Official Intent may be made in any
reasonable form, including a resolution, an action by an appropriate representative of the Issuer
(e.g., a person authorized or designated to declare official intent on behalf of the Issuer), or
specific legislative authorization for the issuance of the Notes for a particular project. The
Declaration of Official Intent generally must describe the project for which the original
expenditure is paid and state the maximum principal amount of the Notes to be issued for that
project. A project includes any property,project, or program (e.g., school building construction).
The Issuer's Declaration of Official Intent is attached at Exhibit H.
,(b) Reimbursement Period. Any reimbursement of original expenditures from
proceeds of the Notes must be made not later than eighteen (18) months after the later of(i) the
date the original expenditure is paid; or(ii)the date the project is placed in service or abandoned,
but in no event later than three (3) years after the original expenditure is paid.
(c) Eligible Types of Reimbursement Expenditures. Types of expenditures
eligible for reimbursement include expenditures for a Capital Project, De Minimis Working
Capital Items, Extraordinary Working Capital Items and Grants (but not Restricted Working
Capital Expenditures).
(d) Exception for De Minimis Amounts. Proceeds of the Notes in an amount
not to exceed the lesser of$100,000 or five percent (5%) may be used to reimburse costs of the
Projects,notwithstanding the limitations set forth in Section 6.3(a) and (b).
(e) Preliminary Expenditures. Treasury Regulations §1.150-2(f)(2)provides a
special exception to the official intent requirement for reimbursing certain prescribed
"preliminary expenditures." Preliminary expenditures include architectural, engineering,
surveying, soil testing, reimbursement bond issuance, and similar costs that are incurred prior to
commencement of acquisition, construction, or rehabilitation of a Capital Project, but
preliminary expenditures do not include land acquisition, site preparation, and similar costs
18
2778397.1 040714 DD
incident to commencement of construction. Eligible preliminary expenditures cannot exceed
twenty percent(20%) of the Issue Price of the Notes.
(f) Anti-Abuse Rules. None of the proceeds of the Notes are being used in a
manner that employs an abusive arbitrage device under Treasury Regulations §1.148-10 to avoid
the arbitrage restrictions or to avoid the restriction under Code §§142 through 147. No portion
of the reimbursed funds may used by the Issuer or any Related Party thereto, within one (1)
year of the reimbursement allocation, to create Replacement Proceeds for any tax-exempt
obligations of the Issuer (e.g., the Issuer cannot deposit the reimbursement amounts in a"sinking
fund" or"pledged fund" for any outstanding bond issue).
6.4. Segregated Accounts, Investment Records, and Documentation of
Expenditures. The Issuer will segregate or cause the segregation of all proceeds in one or more
segregated accounts and will maintain necessary investment and expenditure records in order to
assure compliance with the federal tax requirements for the Notes and will segregate or cause the
segregation of proceeds prior to expenditures for governmental purposes in segregated accounts
and will maintain necessary investment and expenditure records for such purposes, including,
without limitation,the following:
(a) investment records necessary to show compliance with any applicable
restrictions as to Yield, to compute the Rebate Amount, and to demonstrate compliance with any
applicable spending exceptions or other requirements under Code §148; and
(b) expenditure records necessary to show the times, amounts and purposes
for which the proceeds are spent on Capital Projects for governmental purposes or otherwise.
ARTICLE VII
DEBT SERVICE
7.1. Source of Repayment of Notes. The principal of and interest on the Notes
(to the extent not paid from proceeds of other Tax-Exempt Obligations of the Issuer) will be paid
from the Issuer's taxes and revenues.
7.2. Debt Service Fund. The taxes and revenues used to pay principal and
interest on the Notes, whether or not deposited in a Bona Fide Debt Service Fund, will be
expended within thirteen (13) months of the date of deposit in such fund, or the date of their
accumulation. Any amounts received from the investment of such deposit or accumulation will
be expended within one (1) year of receipt. The Bona Fide Debt Service Fund, if any, will be
used to achieve a proper matching of revenues and debt service and will be depleted at least
annually except for a reasonable carryover amount which will not exceed .the greater of the
earnings on such fund for the immediately preceding bond year or one-twelfth of the debt service
on the Notes for the immediately preceding bond year. So long as the foregoing conditions are
satisfied, amounts in the Bona Fide Debt Service Fund may be invested until expended without
Yield Restriction.
7.3. Sinking Funds. Except for the Bona Fide Debt Service Fund described
herein, the Issuer has not created or established, and does not expect to create or establish, any
19
2778397 1040714 DD
sinking fund, debt service reserve fund, pledged fund or other similar fund which the Issuer
reasonably expects to use to pay principal or interest on the Notes, including without limitation,
any arrangement under which money, securities or obligations pledged directly or indirectly to
secure the Notes or any contract securing the Notes or any arrangement providing for
compensating balances to be maintained by the Issuer with any holder of the Notes.
.,d � 7.4._ No Negative Pledges. There are no amounts held under any agreement to
maintain amounts at a particular level for the direct or indirect benefit of the holders of the Notes
or guarantor of the Notes, if any, excluding for this purpose amounts in which the Issuer (or a
substantial beneficiary) may grant rights that are superior to the rights of the holders of the Notes
or guarantor of the Notes, if any, and amounts that do not exceed reasonable needs for which
they are maintained and as to which the required level is tested no more frequently than every six
(6) months and that may be spent without any substantial restriction other than a requirement to
replenish the amount by the next testing date.
ARTICLE VIII
MISCELLANEOUS
8.1. Recordkeeping. The Issuer shall maintain records to support the
representations, certifications and expectations set forth in this Tax Certificate until the later of
the date three (3) years after the Notes are retired or if the Notes are refunded with proceeds of
Tax-Exempt Obligations, the date three (3) years after the last of such refunding Tax-Exempt
Obligations are retired. The records the Issuer will retain include, but are not limited to:
(a) basic records and documents related to the Notes, including the Certificate
of Determination,this Tax Certificate and the opinion of Bond Counsel,
(b) documentation evidencing the expenditure of the proceeds of the Notes,
(c) documentation evidencing all sources of payment or security for the
Notes,
(d) documentation pertaining to any investment of the Gross Proceeds of the
Notes, including the purchase and sale of securities, SLGS subscriptions, yield calculations for
each class of investment of the proceeds of the Notes and guaranteed investment contracts,
(e) documentation evidencing determinations made pursuant to Articles IV
and V hereof and records of all amounts paid to the United States pursuant to Sections 4.4 and
5.5 hereof, and
(f) documentation evidencing determinations made pursuant to Article III
hereof as to the use of the Projects.
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2778397 1040714 DD
n
ARTICLE IX
POST ISSUANCE TAX COMPLIANCE
9.1. Post-Issuance Written Compliance Policies and Procedures. The Issuer
represents that it has adopted written post-issuance tax compliance policies and procedures to
ensure compliance with applicable requirements of federal tax law with respect to the Notes.,
Such policies and procedures include, among other things, procedures for instituting remedial
actions in the event of any failure to comply with Code §141 relating to "private activity" and
Code §148 relating to arbitrage, Yield Restriction and rebate, and designation of the official
responsible for monitoring compliance with such requirements and to act as its compliance
officer. See Exhibit F attached hereto.
[Signature page follows.]
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2778397.1 040714 DD
.i
IN WITNESS WHEREOF, I have hereunto set my hand on the 7th day of
February, 2016.
Name: Scott A. Russell
Title: Supervisor
2766551 1 040714 TAGMT
Table of Exhibits
Exhibit A — Definitions
Exhibit B — Form 8038-G
Exhibit C — Economic Lives and Private Use of Projects Financed with Proceeds of the Notes
Exhibit D — Certificate of the Purchaser
Exhibit E — Financing Schedules
Exhibit F — Post-Issuance Tax Compliance Procedures
Exhibit G — Summary of Reimbursement Expenditures
Exhibit H — Reimbursement Resolution
2778397.1 040714 DD
0 9
EXHIBIT A
DEFINITIONS
"Available Construction Proceeds" means the issue price of the Notes (i)plus earnings
on the issue price and on amounts in any reserve fund not funded from bond proceeds, and
earnings on such earnings and (ii) less the amount of the issue price representing a reasonably
required reserve or replacement fund and costs of issuance funded with proceeds received from
the sale of the Notes. For purposes of this definition earnings include earnings on any
Tax-Exempt Obligation, If only a portion of the Notes constitutes a Construction Issue,.a pro-
,rata portion of the above-described amount will constitute Available Construction Proceeds.
Pre-issuance accrued interest and earnings thereon may be disregarded.
"Bona Fide Debt Service Fund" means a fund, which may include proceeds of an issue,
that is used primarily to achieve a proper matching of revenues with principal and interest
payments within each Bond Year and is depleted at least once each Bond Year except for a
reasonable carry over amount (not in excess of the earnings on the fund for the immediately
preceding Bond Year or one-twelfth of the principal and interest payments on the issue for the
immediately preceding Bond Year).
"Bond Counsel" means Hawkins Delafield & Wood LLP, or any nationally recognized
attorney or firm of attorneys knowledgeable in the requirements of the Code and the Treasury
Regulations and retained by the Issuer.
"Bond-Proceeds-Spent-Last Accounting Method" shall mean the required accounting
method for spending proceeds of an issue on Restricted Working Capital Expenditures under
Treasury Regulations §1.148-6(d)(3), which treats proceeds as spent on a date only to the extent
that the Working Capital Expenditures exceed available amounts, taking into account the
treatment of a reasonable working capital reserve as unavailable, with the determination of
available amounts and reasonable working capital reserves being made in the manner set forth in
the Treasury Regulations.
"Bond Year" means each one (1) year period that ends on the day selected by the Issuer.
The first Bond Year and the last Bond Year may be short periods. If the Issuer has not selected a
day before the earlier of the final maturity date of the issue or five (5) years after the Issue Date,
Bond Year shall mean any year ending on the anniversary of the Issue Date and on the final
maturity date.
"Bond Yield" means the yield on the Notes as defined in Section 4.2 of this Tax
Certificate.
"Capital Expenditure" means any cost of a type that is property chargeable to the
capital account (or would be so chargeable with a proper election or with the application of the
definition of placed in service under Treasury Regulations §1.150-2(c)) under general federal
income tax principles. Capital Expenditures include amounts used for construction,
reconstruction or rehabilitation of buildings or other inherently permanent structures, including
items that are structural components of such buildings or structures, and architectural and
A-1
2778397 1040714 DD
t Y
engineering fees, site survey fees, legal expenses, insurance premiums and development fees to
the extent such fees and expenses directly relate to other construction costs.
"Capital Project" shall mean all Capital Expenditures, plus related working capital
expenditures to which the de minimis rule under Treasury Regulations §1.148-6(d)(3)(ii)(A)
applies,that carry out the governmental purposes of an issue.
"Code"means the Internal Revenue Code of 1986, as amended.
"Computation Date" means each Installment Computation Date and the Final
Computation Date.
"Computation Date Credit" means, for any issue of obligations, an amount equal to the
Future Value of$1,670 for each Bond Year during which there are gross proceeds of the Notes
on a Computation Date other than the Final Computation Date, and $1,670 on the Final
Computation Date. The foregoing computation credit is subject to an annual inflation-based
adjustment announced by the IRS.
"Computation Period" shall mean the period between Computation Dates. The first
Computation Period begins on the Issue Date and ends on the first Computation Date; each
succeeding Computation Period begins on the date immediately following the Computation Date
and ends on the next Computation Date.
"Construction Expenditures" shall mean, except as otherwise provided, Capital
Expenditures allocable to the cost of real property or constructed personal property.
Construction Expenditures do not include expenditures for acquisitions of interests in land or
other existing real property, unless the contract between the seller and the Issuer requires the
seller to build or install the property (e.g., a "turnkey contract"), but only to the extent that the
property has not been built or installed at the time the parties enter into the contract.
For purposes of this definition "constructed personal property" means tangible personal
property (or, if acquired pursuant to a single acquisition contract, properties) or so-called
"specially developed computer software" if. (A) a substantial portion of the property or
properties is completed more than six (6) months after the earlier of the date construction or
rehabilitation commenced or the date the Issuer entered into an acquisition contract; (B)based on
reasonable expectations of the Issuer, if any, or representations of the person constructing the
property, with the exercise of due diligence, completion of construction or rehabilitation (and
delivery to the Issuer) could not have occurred within that six (6) month period; and (C) if the
Issuer itself builds or rehabilitates the property, not more than seventy-five percent (75%) of the
capitalizable cost is attributable to property acquired by the Issuer (e.g., components, raw
materials, and other supplies). "Specially developed computer software"means any programs or
routines used to cause a computer to perform a desired task or set of tasks, and the
documentation required to describe and maintain those programs, provided that the software is
specially developed and is functionally related and subordinate to the real property or other
constructed personal property.
A-2
2778397 1040714 DD
e 1
For purposes of this definition "real property" means land and improvements to land,
such as buildings or other inherently permanent structures, including interests in real property;
e.g., "real property" includes wiring in a building, plumbing systems, central heating or air-
conditioning systems, pipes or ducts, elevators, escalators installed in a building, paved parking
areas, roads,wharves and docks,bridges and sewage lines.
For purposes of this definition "tangible personal property" means any tangible property
other than real property, including interests in tangible personal property; e.g., "tangible personal
property" includes machinery that is not a structural component of a building, subway cars, fire
trucks, automobiles, office equipment,testing equipment, and furnishings.
"Construction Issue" means for purposes of the two-year construction bond exception
to rebate, any issue (or portion thereof) that is not a refunding issue in which all of the bonds are
either (i) Governmental Bond; (ii) Qualified 501(c) (3) Bond, or (iii) Qualified Private Activity
Bond to finance property owned by a Governmental Unit or a 501(c)(3) organization, if at least
seventy-five percent (75%) of the net proceeds of the issue are to be used for expenditures for
construction, reconstruction and rehabilitation of property which is owned by a Governmental
Unit or a 501(c)(3) organization.
"Controlled Group" means a group of entities controlled directly or indirectly by the
same entity or group of entities. In general, "direct control" exists while a controlling entity
possesses either of the following rights or powers and such rights or powers are discretionary and
non-ministerial: the right or power(i)both to approve and to remove without cause a controlling
portion of the governing body of the controlled entity, or (ii)to require the use of funds or assets
of the controlled entity for any purpose of the controlling entity. If one entity (the "Controlling
Entity") directly controls another (the "_Controlled Entity"), then the Controlling Entity indirectly
controls any entity controlled directly or indirectly by such Controlled Entity. However, an
entity is not a Controlled Entity if it possesses substantial taxing, eminent domain and police
powers.
"De Minimis Amount" shall mean: (a) in reference to original issue discount (as defined
in Code §1273(a)(1)) or premium on an obligation: (i) an amount that does not exceed two
percent (2%) multiplied by the stated redemption price at maturity; plus (ii) any original issue
premium that is attributable exclusively to reasonable underwriters' compensation; and (b) in
reference to market discount (as defined in Code §1278(a)(2)(A)) or premium on an obligation,
an amount that does not exceed two percent (2%) multiplied by the stated redemption price at
maturity.
"De Minimis Working Capital Items" shall mean Working Capital Expenditures
eligible for the de minimis exception to the Bond-Proceeds-Spent-Last Accounting Method in
Treasury Regulations §1.148-6(d)(3)(ii)(A), and includes:
(a) issuance costs of an issue and Qualified Administrative Costs;
(b) Qualified Guarantee fees and Qualified Hedge payments;
A-3
2778397 1040714 DD
e
(c) interest on an issue for a period starting on the Issue Date and ending on
the date that is the later of three (3) years from the Issue Date or one (1) year after the
date on which any financed Capital Project is placed in service;
(d) certain Rebate Amounts and Yield Reduction Payments;
(e) other costs that do not exceed five percent (5%) of the Sale Proceeds of an
issue and that are directly related to any Capital Expenditures financed with the issue;
(f) principal or interest on an issue paid from unexpected excess Sale
Proceeds or Investment Proceeds; or
(g) principal or interest on an issue paid from investment earnings on a
reserve or replacement fund that are deposited in a Bona Fide Debt Service Fund.
"Extraordinary Working Capital Item" shall mean Working Capital Expenditures
eligible for the exception to the Bond-Proceeds-Spent-Last Accounting Method in Treasury
Regulations §1.148-6(d)(3)(ii), which covers extraordinary, nonrecurring items that are not
customarily payable from current revenues, such as casualty losses or extraordinary legal
judgments in amounts in excess of reasonable insurance coverage, and for which no reserve has
been maintained.
"Fair Market Value" of an Investment shall have the following meanings:
(a) In General. Except as elsewhere specifically stated below,the Fair Market
Value of an Investment is the price at which a willing buyer would purchase the
Investment from a willing seller in a bona fide, arm's-length transaction.
(b) United States Treasury Obligation The Fair Market Value of a United
States Treasury Obligation that is purchased directly from the United States Treasury is
its purchase price. The Fair Market Value of a SLG on any date other than the purchase
date is the redemption price for redemption on that date.
(c) Certificate of Deposit The Fair Market Value of a certificate of deposit
with a fixed interest rate, a fixed payment schedule, and a substantial penalty for early
withdrawal is its purchase price provided the yield on the certificate of deposit is not less
than (i) the yield on reasonably comparable direct obligations of the United States and
(ii)the highest yield published by the provider and currently available from the provider
on reasonably comparable certificates of deposit offered to the public.
(d) Guaranteed Investment Contracts and Yield Restricted Defeasance
Escrows. The Fair Market Value of a guaranteed investment contract or an investment
purchased for a yield restricted defeasance escrow is its purchase price, provided the
issuer of the Notes makes a bona fide solicitation for such contract that satisfies all of the
following requirements:
(A) The bid specifications are in writing and are timely disseminated to
potential providers. For this purpose, a writing may be in electronic form
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and may be disseminated by fax, email, an internet=based website,or other
electronic medium that is, similar to an intemet-based website and
regularly used to post bid specifications.
(B) The bid specifications include all material terms of the bid; material terms
are defined as terms that may directly or indirectly affect the yield or cost
of the investment.
(C) The bid specifications include a statement notifying potential providers
that submission of a bid is a representation that the potential provider did
not consult with any other potential provider about its bid, that the bid was
determined without regard to any other formal or informal agreement that
the potential provider has with the issuer or any other person (whether or
not in connection with the bond issue), and that the bid is not being
submitted solely as a courtesy to the issuer or any other person for
purposes of satisfying the requirements of the applicable provisions of the
Treasury Regulations.
(D) The terms of the bid specifications are commercially reasonable, i.e., there
is a legitimate business purpose for the term other than to increase the
purchase price or reduce the yield of the investment (for example, for
solicitations of investments for a yield restricted defeasance escrow, the
hold firm period must be no longer than the.issuer reasonably requires).
(E) With respect to purchases of guaranteed investment contracts only, the
terms of the solicitation take into account the issuer's reasonably expected
deposit and drawdown schedule for the amounts to be invested.
(F) All potential providers have an equal opportunity to bid. If the bidding
process affords any opportunity for a potential provider to review other
bids before providing a bid, then providers have an equal opportunity to
bid only if all potential providers have an equal opportunity to review
other bids. Thus, no potential provider-may be given an opportunity to
review other bids that is not equally given to all potential providers (that
is,no exclusive"last look").
(G) At least three reasonably competitive providers are solicited for bids;
reasonably competitive provider is a provider that has an established
industry reputation as a competitive provider of the investments being
purchased.
The bids received must meet all of the following requirements:
(A) The issuer receives at least three bids from providers that the issuer
solicited under a bona fide solicitation, which bids meet the requirements'
set forth 'immediately above and that do not have a material financial
interest in the ,issue. A lead underwriter in a negotiated underwriting
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transaction is deemed to have a material financial interest in the issue until
fifteen (15) days after the issue date of the-issue. In addition, any entity
acting,as financial advisor with respect to the purchase of the investment
at the time the,bid specifications are forwarded to potential providers has a
material financial interest in the issue. A provider that is a related party to
a person that has a material financial interest .in the issue is deemed to
have a material financial interest in the issue.
l
(B) At least one ,of the three bids received is from a reasonably competitive
provider of such_types of investments, as described in paragraph (G)
above.
(C) If the issuer uses an agent to conduct the bidding process,the agent did not
bid to provide the investment.
The winning bid must be:
(A) In the context of a guaranteed investment contract, the highest yielding
bona fide bid(determined net of any broker's fees).
(B) In the context of investments other than guaranteed investment contracts,
the lowest cost bona fide bid (including any broker's fees). The lowest
cost bid is either the lowest cost bid for the portfolio or if the issuer
compares the bids on an investment by investment basis,-,the aggregate
cost of a portfolio comprised of the lowest cost for each investment. Any
payment received by the issuer from a provider at the time the investment
is purchased (e.g, an escrow float contract) for a yield restricted
defeasance escrow,under a bidding.procedure meeting the requirements of
this definition is taken into account in determining the lowest cost bid.
In general, the lowest cost bona fide bid (including any broker's fee) may not be
greater than the cost of the most efficient portfolio comprised exclusively of SLGS
available for purchase from the Bureau of Public Debt. The cost of the most efficient
portfolio of SLGS is to be determined-at the time that bids are required to be submitted
pursuant to the terms of the bid specifications. This requirement to compare,to the most
efficient SLGS portfolio does not apply if SLGS are not available for purchase on the
date that bids are required to be submitted because sales of those securities have been
suspended.
The provider of the investments or the obligor on the guaranteed investment
contract certifies the administrative costs that it pays (or expects to pay), if any, to third
parties in connection with supplying the investment.
The issuer must'retain the following records with the bond documents until three
years after the'last outstanding bond is redeemed:
(A) For guaranteed investment contracts, a copy of the contract, and for other
types of purchases,the purchase agreement or confirmation.
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(B) The receipt or other record of the amount actually paid by the issuer for
the investment, including a record of any administrative costs paid by the
issuer to third parties and the certification of such costs.
(C) For each bid that is submitted, the name of the person and entity
submitting the bid,the time and date of the bid and the bid results.
(D) The bid solicitation form and, if the terms of the purchase agreement or
the guaranteed investment contract deviated from the bid solicitation form
or a submitted bid is modified, a brief statement explaining the deviation
and stating the purpose of the deviation. If the issuer replaces an
investment in the winning bid portfolio with another investment, the
purchase price of the investment must be bid under a bidding procedure
meeting the requirements of this definition.
(E) For purchases of investments other than guaranteed investment contracts,
the most efficient portfolio of SLGS, determined at the time that the bids
were required to be submitted pursuant to the terms of the bid
specifications.
"Final Computation Date" means the day the last obligation that is part of the Notes is
discharged.
"Fixed Yield Bond" means any obligation whose'yield is fixed and determinable on its
issue date using the assumptions and rules set forth in Treasury Regulations §1.148-4(b).
"Fixed Yield Investment" shall mean any Investment, the Yield on which is fixed and
determinable on its issue date.
"Fixed Yield Issue" means any issue at any time that each bond included in it and still
outstanding is a Fixed Yield Bond.
"Future Value" or "FV" of a payment or receipt means the amount, determined by
using the economic accrual method (the method of computing yield based on the compounding
of interest at the end of each compounding period), equal to the value of such payment or receipt
at the time.it is paid or received (or treated as paid or received), plus interest assumed to be
earned and compounded over the period at a rate equal to the Yield on the issue, using the same
compounding interval and financial conventions used to compute Yield.
"Governmental Bond" means a bond or other obligation issued as part of an issue the
interest on which is excluded from gross income for federal income tax purposes under Code
§103(a) and which is not a Qualified Private Activity Bond.
"Governmental Unit" means a state or local governmental unit as defined in Treasury
Regulations §1.103-1 or any instrumentality thereof, excluding the United States or any agency
or instrumentality thereof.
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"Gross Proceeds" shall mean Sale Proceeds, Investment Proceeds, Transferred Proceeds
and Replacement Proceeds. The term "Gross Proceeds" does not include Qualified
Administrative Costs,nor does it include amounts properly within the applicable yield allowance
for acquired purpose investments (one-eighth of one percentage point ('/8%)) or for acquired
program investments (one-and-one-half percentage points(1'/2%)).
"Higher Yielding Investment" shall mean a Nonpurpose Investment, the Yield on a
which exceeds the Yield on the Notes by more than the spread permitted by the Code and
Treasury Regulations.
"Installment Computation Date" shall mean any date with respect to a Fixed Yield
Bond Issue; with respect to a Variable Yield Bond Issue, the Issuer may treat the last day of any
Bond Year ending on or before the latest date as.of which the first Rebate Amount is required to
be paid (Le., as of not later than the fifth anniversary date of the date of issuance of the Notes) as
a Computation Date,but may not change that treatment after the first payment date; and, after the,
firstrequired payment date,the Issuer must consistently treat either the end of each Bond Year or
the end of each fifth Bond Year as a Computation Date and may not change these Computation
Dates after the first required payment date. Notwithstanding any of the foregoing,the first rebate
installment payment must be made on a Computation Date that is not later than five (5) years
after the Issue Date. Subsequent rebate installment payments must be made for a Computation
Date that is not later than five (5) years after the previous Computation Date for which an
installment payment was made (until and excluding the Final Computation Date). The
references herein to the date on which rebate is required to be paid allude to the actual date as of
which the Rebate Amount is required to be calculated and not the 60-day grace period following
such date during which the Rebate Amount;if any, is to be paid.
"Investment" means (i) any security (within the meaning of Code §165(g)(2)(A) or(B));
(ii) any obligation (other than Tax-Exempt Obligations which are not "specified private activity
bonds" within the meaning of Code §57(a)(5)(C)), (iii) any annuity contract within the meaning
of Code §72, (iv) any residential real property for family units not located within the jurisdiction
of the Issuer and which is not-required to implement a court-ordered or approved housing
desegregation plan or (v) any investment-type property that is held as a passive vehicle for the
production of income, including any prepayment for property or services if a principal purpose
of prepayment is to receive an investment return'from the time the prepayment is made until the
time payment would otherwise have.been made.
"Investment Proceeds" means any amounts actually or constructively received from
investing proceeds of the Notes.
"Issue Price" shall mean the initial offering price to the public at which price a
substantial amount of each maturity of the Notes was sold. Ten percent (10%) is a substantial
amount. For this purpose, the term "the public" does not include 'bond houses, brokers, or
similar Persons or organizations acting in the capacity of underwriters or wholesalers. The Issue
Price generally is the first price at which the Notes were sold to the public and the Issue Price
will not change if part of the issue is subsequently sold at a different price. The Issue Price of
bonds that are not substantially identical is determined separately. The Issue Price of a 'bond
issue for which a bona fide public offering is made is determined as of the sale date based on
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f
reasonable expectations regarding the initial public offering price. The Issue Price of-the Notes
may not exceed their Fair Market Value as of their sale date. If the Notes are privately placed',
the Issue Price is the price.paid for them by the first buyer.
"Multipurpose Issue" means an issue the proceeds of which are used for two or more
separate purposes determined in accordance with Treasury Regulations §1.148-9(h).
1h -
"Net Sale Proceeds" means sale proceeds less the portion of those sale proceeds
invested in a reasonably required reserve or replacement fund,or as part of a minor portion.
"Nonpurpose Investment" means any Investment in which Gross Proceeds are invested
and which is not acquired to carry out the governmental purpose of the issue.
"Nonpurpose Receipt" shall mean those receipts of moneys as described in Subsection
5.2(d) of this Tax Certificate.
"Official Statement" means the Official Statement, if any, of the Issuer relating to the
Notes.
"Person" means any individual, corporation, partnership,joint venture, association,joint
stock company, trust, unincorporated organization or government or any agency or political
subdivision thereof.
"Plain Par Bond" means a qualified tender bond or a bond that(i) is issued with original
issue discount equal to not more than two percent(2%) of the stated redemption price at maturity
plus the amount of original issue premium attributable exclusively to underwriters'
compensation, (ii) is issued for a price that does not include pre-issuance accrued interest,
(iii)bears interest from the issue date at a single,stated fixed rate or is a variable rate obligation
under Code §1275, in either case, that pays interest unconditionally payable at least annually;
and (iv)has a lowest stated redemption price not less than its outstanding stated principal
amount.
"Plain Par Investment" means an investment that is an obligation that (i) is issued with
original"-issue discount (or if acquired on a date other than the issue date, acquired with market
discount or premium) equal to not more than two percent of the stated redemption price at
maturity, (ii)is issued for a price that does not include pre-issuance accrued interest, (iii)bears
interest from the issue date at a single stated fixed rate oris a variable rate obligation under Code
§1275 that pays interest unconditionally payable at least annually, and (iv) has a lowest stated
redemption price not less than its outstanding stated principal amount.
"Present Value"or"PV"means the amount determined by using the following formula:',
PV= FV
(1+i)°
where'i equals the discount rate divided by the number of compounding intervals in a
year and n equals the sum of (i) the number of whole compounding intervals for the
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period beginning on the date as of which Present Value is computed and ending on the,
date the amount is to be received or paid or on a Computation Date and (ii) a fraction the
numerator of which is the length of any short compounding interval during such .period
and the denominator of which is the length of a whole compounding interval.
"Private Activity Bond" means a bond which meets the definition contained in Code
§141(a)and that is not a"qualified bond" as defined in Code §141(e).
"Qualified 501(c)(3)Bond"means a bond which,meets the defmition contained in Code
§145.
"Qualified Administrative Costs"mean:
(i) In General. All reasonable, direct administrative costs, other than carrying
costs, such as separately stated brokerage or selling commissions, but not legal and
accounting fees, record keeping, custody, and similar costs. General overhead costs and
similar indirect costs of the Issuer such as employee salaries and office expenses and
costs associated with computing the Rebate Amount are not qualified administrative
costs. In general, administrative costs are not reasonable unless they are comparable to
administrative costs that would be charged for the same investment or a reasonably
comparable investment if acquired with a source of funds other than gross proceeds of
Tax-Exempt Obligations.
(ii) Regulated Investment Companies and External Commingled Funds. For
publicly offered regulated investment companies (as defined in Code §67(c)(2)(13)) and
commingled funds in which the Issuer and any Controlled Entity,do not own more than
ten percent (10%) of the beneficial interest in the-fund, Qualified Administrative Costs
are all reasonable administrative costs, without regard to the limitation on indirect costs
described in the preceding paragraph.
(iii) GICs and Investments Purchased for a Yield Restricted Defeasance
Escrow. An amount paid for u broker's commission,or similar fee paid with respect to a
guaranteed investment contract or investments purchased for a yield restricted defeasance
escrow will be considered reasonable if(i) the fee does not exceed the lesser of$39,000
or 0.2 percent of the "computational base", or, if more, $4,000, where "computational
base" means (A) for a guaranteed investment contract, the amount reasonably expected',
as of the date the contract is acquired, to be deposited in the guaranteed investment
contract over the term of the contract and (B) for yield restricted defeasance escrows, the
amount of proceeds initially invested in those investments; and (ii)for any issue, the fees
paid, do not exceed $111,000 in the aggregate. In the case of a calendar year after 2017,
each of the dollar amounts set forth above shall be increased by an amount equal to;such
dollar amount multiplied by the cost of living adjustment for such calendar( year as
described in Treasury Regulations §1.1 48-5(e)(2)(iii)(B).
(iv) Purpose Investments. Qualified Administrative Costs include costs or
expenses paid, directly or indirectly, to purchase, carry, sell, or retire the investment,
costs of issuing, carrying, or repaying the issue, and any underwriters' discount, any of
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which are .paid by the conduit borrower, even if such payments merely reimburse the
Issuer, but only to the extent the Present Value of those payments does not exceed the
Present Value of the reasonable administrative costs paid by the Issuer using the Bond
Yield as the discount rate.
(v) Program Investments. Qualified Administrative Costs include only costs
of issuing, carryings or repaying the issue, and any underwriters' discount, subject to the
limitation contained in the preceding paragraph.
"Qualified Guarantee" means, with respect to a bond, an unconditional transfer, in any
form, of substantially all of the credit risk for all,or part of the payments,,such as payments for
i principal -and interest, redemption prices or tender prices, on the guaranteed bonds. The
guarantor must not expect to make any payments other than those pursuant to a direct-pay letter
of, credit or similar arrangement for which the guarantor will be immediately reimbursed.
Reasonable procedural or administrative requirements or, in the case of a guarantee against l
failure to remarket a qualified tender bond, commercially reasonable limitations based on credit
risk, will not cause the guarantee to be conditional. The guarantor may not be a co-obligor, nor
may the obligor and any related parties combined use more than ten percent of proceeds of the
guaranteed portion of the bonds. The guarantee fee must not exceed a reasonable arm's-length
charge solely for the transfer of the credit risk. A guarantee will not be qualified unless, as of the
date the guarantee is obtained, the Issuer reasonably expects that the present value of all fees for
the guarantee will be less than the present value of'the expected interest savings on the issue as a
result of the guarantee. For this purpose,present value is computed using the yield on the issue,
determined with regard to the guarantee fees, as the discount rate.
"Qualified Hedge" means, with respect to the Notes,,a contract'between the Issuer and
any unrelated party entered into to modify the Issuer's risk of interest rate changes with respect
to the Notes that meets the requirements of Treasury Regulations §1.148-4(h). The'contract may
be an interest rate swap, an interest rate cap, a futures contract, a forward contract, an option or
may take another form.
"Qualified Private Activity Bond"means a bond or other obligation issued as part of an
issue the interest on which is excluded from gross income for federal income tax purposes under
Code §103(a), which meets the definition contained in Code §141(a), and that is a "qualified
bond"as defined in Code §141(e).
"Rebate Amount" means with respect to the Notes, the amount computed as described
in Section 5.2(d) of this Tax Certificate.
"Replacement Proceeds" means amounts which have a sufficiently direct nexus to the
issue or the governmental purpose of the issue to conclude that the'amounts would have been
used for that governmental purpose if the proceeds of, the issue were not used for that
governmental purpose. The governmental purpose of a bond issue includes the expected use of
amounts for the payment of debt service on a particular date. For this purpose, ,the mere
availability or preliminary earmarking of amounts for a purpose does not in and of itself establish
a sufficient nexus to cause those amounts to be'Replacement Proceeds. Replacement Proceeds
include funds and amounts held by the Issuer including:
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+S
3
(i) sinking funds, such as debt service funds, redemption funds,reserve funds,
replacement funds, or any other fund, ,to the extent reasonably expected to be used
directly or indirectly to pay principal oninterest on the Notes;
(ii) pledged funds, any amount directly or indirectly pledged to pay principal
or interest on the Notes, cast in any form but providing reasonable assurance that such
amount will be'available to pay principal or interest on the Notes, even if the Issuer
encounters financial difficulty;
(iii) negative pledges, amounts held under an agreement to maintain such
amount at a particular level for the direct or indirect benefit of holders or a guarantor of
the Notes, excluding amounts .the Issuer, or a Controlled Entity of the Issuer may grant
rights in l superior to the rights of the bondholders or the guarantor and amounts not in
excess of the-reasonable needs for which it is maintained, the required level of which is
tested no more frequently than every six (6)months and which may be spent without any
substantial restriction other than a requirement to replenish such amount by the next
testing date; and
(iv) other replacement proceeds, including amounts arising during a period
that the Notes,to the extent reasonably expected by the Issuer as of,the issue date, remain
outstanding longer than necessary
"Restricted Working Capital Expenditures" means Working Capital Expenditures
subject to the Bond-Proceeds-Spent-Last Accounting Method in Treasury Regulations
§L 148-6(d)(3)(i) and that are ineligible for any exception to that rule.
"Sale Proceeds" means any amounts actually or constructively received from the sale-of
the Notes, including amounts used to pay underwriters' discount or compensation, accrued
interest other than pre-issuance accrued interest, or derived from the sale of a right associated
with a bond as further described in Treasury Regulations §1.148-4(b)(4).
"SLGS" means U.S. Treasury Book Entry Securities, State and Local Government
Series.
"Tax Certificate" shall mean this Tax Certificate, as the same may be amended;
modified or supplemented from time to time in accordance with the terms hereof.
"Tax-Exempt Obligation" means any Governmental Bond and any Qualified Private
Activity Bond.
"Transferred Proceeds" means unexpended original or investment proceeds of a
refunded issue which,transfer and become proceeds of the refunding issue when proceeds of the
refunding issue are applied to pay.principal of the refunded issue.
"Treasury"-means the United States Department of Treasury.
"Treasury Regulations" means the Income Tax Regulations promulgated under Code
§§103 and Code §§141 through 150 -and related provisions ,of the Code applicable to
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i
Tax-Exempt Obligations, as amended from time to time, and any applicable predecessor
provisions of the Code, as amended from time,to time.
"Universal Cap" means the maximum value of Nonpurpose Investments which may be
allocated to the Notes and is determined by reference to the Value of all outstanding Notes of the
issue. Nonpurpose Investments shall be taken into account as Nonpurpose Receipts at their
Value on a Valuation Date.
"Valuation Date" means_the date on which the value of the Universal Cap and the
Nonpurpose Investments allocable to the Notes thereunder are determined. With respect to new
money issues,the first Valuation Date shall be-the second year anniversary date of the Issue Date
of the Notes; thereafter, the first day of each Bond Year shall constitute a Valuation Date. With
respect to -a refunding issue, each date on which proceeds of the refunded issue would become
transferred proceeds of the refunding issue, e.g., each date on which principal of the refunded
issue is paid with proceeds of the refunding bonds, shall constitute a Valuation Date. In addition,
the first date of each Bond Year shall also be a Valuation Date.
"Value" means, in the case of a bond, the Value of the bond and in the case of an
Investment,the Value of the Investment.
"Value,of a Bond" means, in the case of a Plain Par Bond, its outstanding stated
principal amount, plus accrued unpaid interest or in the case of a Plain Par Bond actually,
redeemed, or treated as.redeemed, its stated redemption price on the redemption date plus
,accrued unpaid interest. In the case of a bond other than a Plain Par Bond,the value on a date of
such a bond is its Present Value on that date, using the yield on the issue of which the bonds are
a part as the discount factor. In determining the Present Value of a variable rate bond, the initial
interest rate on the bond established by the index or other rate setting mechanism is used to
determine the interest payments on that bond.
"Value of an Investment" means, on any date means, as permitted or required, the
Present Value or the Fair Market Value of the Investment or its outstanding principal amount:
Paragraphs (a) through (f) below specify the valuation methods required or permitted to be used
for the Investments listed:
(a) Fixed Rate Investments. A Fixed Rate Investment may be valued at its
Present Value or at its Fair Market Value on any date unless it is required to be invested
at a restricted yield.
(b) Plain Par Investments. A Plain Par Investment may be valued at its
outstanding stated principal amount on any date (plus interest accrued but unpaid on that
date)unless it-is required-to be invested at a restricted yield.
(c) Any Investment Any Investment may be valued at its Fair Market Value
on any date unless it is required to be invested at a restricted yield.
(d) Yield Restricted Investments. An Investment required to be invested at a
restricted yield (for example, an Investment held after the expiration of the applicable
investment temporary period) must be valued at its Present Value as of any date unless
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the Investment is required to be valued at Fair Market Value as provided in paragraph (e)
below.
(e) Mandatory Valuation at Fair Market Value. Subject to paragraph (d)
above, Investments deemed to be acquired or disposed of with respect to bonds (as a
result, for example, of sinking fund deposits or withdrawals) must be valued on the
deemed acquisition or disposition date at Fair Market Value unless (i)the Investment was
allocated from an issue of Tax-Exempt Obligations to another issue of obligations
(whether or not such obligations are Tax-Exempt Obligations) as Transferred Proceeds or
as a result of the application of the Universal,Cap rule in which case it may be valued at
Present Value or (ii) the Investment is held in a commingled fund (other than a bona fide
debt service fund or a commingled fund that operates exclusively as a reserve fund,
sinking fund or replacement fund for two or more issues of the Issuer) unless it is an
investment being initially deposited in or withdrawn from a commingled fund.
(f) Special Rule for Transferred Proceeds. Notwithstanding any matter stated
above, the Value of any Nonpurpose Investment allocable to Transferred Proceeds of an
issue'of refunding obligations may not exceed the Value of that Investment used for
purposes of applying the arbitrage restrictions to the refunded obligations on the date
proceeds of the refunding obligations are used to redeem the refunded obligations.
"Working Capital Expenditure" means any cost of a type that does not constitute a
Capital Expenditure.
"Yield" means, as of any Computation Date, the yield computed on an issue of
obligations under Treasury Regulations §1.148-4 and on an Investment under Treasury
Regulations §1.148-5 in either case by compounding interest at the end of each compounding
interval as further described in paragraphs (a) and (b)below:
(a) When used with respect to a Fixed Yield Issue, yield means that discount
rate that, when used in computing the Present Value of (i) all unconditionally payable
payments of principal and interest of or on the bonds included in such Fixed Yield Issue;
(ii) all unconditionally payable fees for ,Qualified Guarantees and Qualified Hedges on
such bonds and (iii) all fees expected to be paid for Qualified Guarantees and Qualified
Hedges, produces an amount equal to the sum of the Present Value of the aggregate issue
prices of the bonds comprising the issue (determined using the same discount rate used to
determine the Present Value of payments;for principal, interest and Qualified Hedges and
Qualified Guarantees). The Yield is computed as of the issue date of the Fixed Yield
Issue by treating each bond included in ,the issue that is either subject to mandatory or
contingent early redemption or to certain optional redemption provisions as being
redeemed on its expected early redemption date for an amount equal to its Value on that
date. If a Fixed Yield Issue includes a Fixed Yield Bond that (i)is subject to optional
redemptions within five (5) years of its issue date and the yield not taking into account
the optional redemption is more than'one-eighth of one percent (0.125%) above its yield
assuming the early redemption, (ii) is issued at an issue price that exceeds the stated
redemption price at maturity by,more than one-quarter of one,percent (0.25%) multiplied
by the product of the stated redemption price to maturity and the number of complete
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years to the first optional redemption date for the bond, or(iii),bears interest at increasing
interest rates, the yield on the Fixed Yield Issue, which includes such Fixed Yield Bond
is computed by treating each such Fixed Yield Bond as redeemed at its stated redemption
price on the optional 'redemption date that produces the lowest yield on such Fixed Yield
Bond. No adjustment will be made on any Computation Date to the yield on a Fixed
Yield Issue as computed on its issue date unless redemption rights are subsequently
transferred to a third party or termination payments are received with respect to Qualified
Hedges. The yield on a Fixed Yield Bond is calculated in the same manner as yield on a
Fixed Yield Issue.
(b) When used with respect to any Investment allocated to an Issue, yield
means the yield on the Investment computed using the same compounding interval and
financial conventions used to calculate the yield on the issue of obligations to which it is
allocated. The yield on an Investment allocated to an issue is the discount rate that,when
used on the date the Investment is first purchased with Gross Proceeds or allocated to
Gross Proceeds of the issue to compute the Present Value on that date of all
unconditionally,payable Nonpurpose Receipts from the Investment, produces an amount
equal to the Present Value on that date of all unconditionally payable Nonpurpose
Payments for the Investment.
"Yield Reduction Payments" means periodic payments made on Installment
Computation Dates with respect to certain Investments subject to yield restriction which are
treated as a payment for such Investments that reduces the Yield on such Investment,made to the
United States under Treasury Regulations §1.148-5(c). Yield reduction payments may be made
with respect to (a) Investments allocable to proceeds eligible for a temporary period after such
temporary period has expired, (b) investments allocable to a Variable Yield Issue during any,
Computation Period in which at least five percent (5%) of the issue is represented by variable
yield bonds, (c) Nonpurpose Investments allocable to Transferred Proceeds of a current
refunding issue to the extent necessary to satisfy yield restriction or of an advance refunding to
the extent that investment in zero yielding Nonpurpose Investments fails to properly restrict the
Yield, (d)purpose investments allocable to qualified student loans and qualified mortgage loans;
-(e) Nonpurpose Investments allocable to a reasonably required reserve or replacement fund that
but for its size would be treated as a reasonably required reserve or replacement fund, to the,
extent that certain other size constraints are satisfied, (f) Nonpurpose Investments allocable to,
Replacement Proceeds by virtue of the Universal Cap, (g) amounts eligible for transitional relief,;
(h) Nonpurpose Investments allocable to an issue, including an advance refunding issue, if, on
the date the issuer enters into the agreement to purchase such investments, the issuer is unable to
subscribe for SLGS because the U.S. Department of the Treasury, Bureau of the Fiscal Service,
has suspended sales of those securities, and (i)Nonpurpose Investments allocable to proceeds of
certain variable rate advance refunding issues..
"Yield Restricted" or "Yield Restriction" shall mean required to be invested at a yield'
that is not materially higher than the Yield on the Notes of the applicable issue under Code §14
and Treasury Regulations §1.148-2.
A-15
2778397.1 040714 DD
•
Form 8038-G Information Return for Tax-Exempt Governmental Obligations
(Rev.September 2011) ►Under Internal Revenue Code section 149(e) OMB No.1545-0720
Department of the Treasury 10-See separate instructions.
Internal Revenue Service Caution:if the issue pace is under$100,000,use Form 8038-GC.
Reporting Authority If Amended Return,check here 0-
1 Issuer's name 2 Issuer's employer identification number(EIN)
Town of Southold 11-6001939
3a Name of person(other than issuer)with whom the IRS may communicate about this return(see instructions) 3b Telephone number of other person shown on 3a
4 Number and street(or P.O box if mail is not delivered to street address) Room/suite 5 Report number(For IRS Use Only)
53095 Main Road I Q 1g -1
6 City,town,or post office,state,and ZIP code 7 Date of issue
Southold,New York 11971 02/07/2017
8 Name of issue 9 CUSIP number
$400,000 Revenue Anticipation Note-2017 None
10a Name and title of officer or other employee of the issuer whom the IRS may call for more information(see 10b Telephone number of officer or other
instructions) employee shown on 10a
Scott A.Russell,Supervisor 631 765-1889
FUM Type of Issue (enter the issue price).See the instructions and attach schedule. -
11 Education . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
12 Health and hospital . . . . . . . . . . . . . . . . . . . . . . . . . . 12
13 Transportation . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 400 000.00
14 Public safety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
15 Environment(including sewage bonds) . . . . . . . . . . . . . . . . . . . . 15
16 Housing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
17 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
18 Other. Describe ► 18
19 If obligations are TANS or RANs, check only box 19a . . . . . . . . . . . . . ► KI
If obligations are BANS,check only box 19b . . . . . . . . . . . . . . . . ► ❑
20 If obligations are in the form of a lease or installment sale, check box . . . . . . . . ► ❑
Description of Obligations. Complete for the entire issue for which this form is being filed.
a Final mature date (c)Stated redemption (d)Weighted (e)( ) maturity (b)Issue price price at maturity average maturity a Yield
21 02/07/2018 $ 400 000.00 $ 400 000.00 1.0000 years 2.2374%
Uses of Proceeds of Bond Issue(including underwriters' discount)
22 Proceeds used for accrued interest . . . . . . . . . . . . . . . . . . . . . 22 0.00
23 Issue price of entire issue(enter amount from line 21,column (b)) . . . . . . . 23 400,000.00
24 Proceeds used for bond issuance costs(including underwriters'discount). . 24 0.00
25 Proceeds used for credit enhancement . . . . . . . . . . . . 25 0.00.
26 Proceeds allocated to reasonably required reserve or replacement fund . 26 0.00
27 Proceeds used to currently refund prior issues . . . . . . . . . 27 0.00 '
28 Proceeds used to advance refund prior issues . . . . . . . . . 28 0.00
29 Total(add lines 24 through 28) . . . . . . . . . . . . . . . . . . . . . . . 29 0.00
30 Nonrefunding proceeds of the issue(subtract line 29 from line 23 and enter amount here) . . . 30 400 000.00
Description of Refunded Bonds. Complete this part only for refunding bonds.
31 Enter the remaining weighted average maturity of the bonds to be currently refunded . . . . 111`- N/A years
32 Enter the remaining weighted average maturity of the bonds to be advance refunded . . . . 1110- N/A years
33 Enter the last date on which the refunded bonds will be called(MM/DD/YYYY) . . . . . . ► N/A
34 Enter the date(s)the refunded bonds were issued►(MM/DD/YYY`) N/A
For Paperwork Reduction Act Notice,see separate instructions. Form 8038-G(Rev.9-2011)
ISA
ii
Form 8038-G(Rev.9-2011) Page 2
Miscellaneous
35 Enter the amount of the state volume cap allocated to the issue under section 141(b)(5) . . . . 35
36a Enter the amount of gross proceeds invested or to be invested in a guaranteed investment contract
(GIC)(see instructions) . . . . . . . . . . . . . . . . . . . . . . . 36a
fi Enter the final maturity date of the GIC►
c Enter the name of the GIC provider►
37 Pooled financings: Enter the amount of the proceeds of this issue that are to be used to make loans
to other governmental units . . . . . . . . . . . . . . . . . . . . . . . . 37
38a If this issue is a loan made from the proceeds of another tax-exempt issue,check box'► Eland enter the following information:
b Enter the date of the master pool obligation 0-
c
c Enter the EIN of the issuer of the master pool obligation► '
d Enter the name of the issuer of the master pool obligation►
39 If the issuer has designated the issue under section 265(b)(3)(13)(1)(III)(small issuer exception),check box . . . . ► ❑
40 If,the issuer has elected to pay a penalty in lieu of arbitrage rebate, check box . . . . . . . . . . . . . ► ❑
41a If the issuer has identified a hedge,check here► ❑ and enter the following information:
b Name of hedge provider►
c Type of hedge►
d Term of hedge 0-
42
42 If the issuer has superintegrated the hedge,check box . . . . . . . . . . . . . . . . . . . . . . ► ❑
43 If the issuer has established written procedures to ensure that all nonqualified bonds of this issue are remediated
according to the requirements under the Code and Regulations(see instructions),check box . . . . . . . . ► ]
44 If the issuer has established written procedures to monitor the requirements of section 148,check box . . . . . ► ]
45a If some portion of the proceeds was used to reimburse expenditures,check here► ❑ and enter the amount
of reimbursement . . . . . . . . . ►
b Enter the date the official intent was adopted I',-
Under
Under penalties of penury,I declare that I have examined this return and accompanying schedules and statements,and to the best of my knowledge
Signature and belief,they are true,correct,and complete.I further declare that I consent to the IRS's disclosure of the issuer's return information,as necessary to
and process this return,to the person that 1 have authorized above.
Consent ' 'Scott A.Russell,Supervisor
Signature of issuer's authorized representative Date Type or print name and title
Print/Type preparer's name Preparer's signature Date PTIN
Paid Check ❑ if
Preparer Robert P.Smith self-employed I P01085234
Use Only Firm's name ►Hawkins Delafield&Wood LLP Firm's EIN ►13-55133990
Firm's address Do-28 Liberty Street NY NY 10005 Phone no. 212 820-9400
Form 8038-G(Rev.9-2011)
1 � ,
Z
EXHIBIT C
Economic Lives and Private Use of Protects Financed with Proceeds of the Notes
(see attached)
2778397 1040714 DD
D(HIBIT C
Tom of Southold-$400,000 Revenue Anticipation Note-2017
(1) Cost ofProlat assets to be -
refinanced with proceeds of theNote $ 400,000 00
(2) Face Amount of Note $ 400,000 00
Delivery Date L7/2017
B C D E E K & M
Acquisition or
Ratio of Financed Cost of Bond Proceeds Period in Construction
Each Asset(B)to Total Allocable to Asset(C)x Tax Economic Service Prior Period Following Adjusted Remaimng
Cost of Each Protect Cost of All Financed Assets Face Amount of Bonds PPU Life•(in Life•" to Issue Date Issue Date Economic Life Weighted Life Private Private Activity Amount
Prouxt(s) Refinanced with Bonds (from ltem(1)) (from Itern(2)) yrs) (mors) Basis ofDetennmahon (in yrs)"' (mvrs) (F-Hor F+B (DXA "Activity% (BxL)
repair and replacement of airport lighting,cabling and signage $ 400,000 00 10000 S 400,000 00 500 500 Distnct Estimate 000 000 500 2,000,000 00 000%
Total $ 400,000 00 10000 $ 400,000 00 2,000,000 00
"Asset life allowed under State Finance Law
•'Asset life allowed for tax purposes pursuant to bond counsel's analysis
"•*Based on Bond Resolution
Average Economic Life= Total K 500 yearsApgrega[e Pnvate = Total M = 0 000%
Total D Actin Total B-1
2413652 - Page 1 of 1 Useful Life Spreadsheet
EXHIBIT D
CERTIFICATE OF PURCHASER
(see attached)
2778397 1040714 DD
Issue Price Certificate
February 7,2017
TOWN OF SOUTHOLD
("Issuer")
RE: $400,000 Revenue Anticipation Note-2017
The undersigned, acting on behalf of•Oppenheimer & Co. Inc., Philadelphia, Pennsylyania,
hereby represents as of the date hereof that:
(1) On January 26, 2017 (the "Sale Date"), all maturities of the $400,000 Revenue
Anticipation Note the "Note" of the Issuer have been the subject of an initial offering to the
general public at the initial.reoffering price(s), the initial reoffering yield(s), and the stated
interest rate(s) listed below
Initial Reoffering Initial Reoffering Stated Interest
Lot.Par Amount Price Yield Rate _
(2) On the Sale Date, we reasonably'expected that the first price or yield at which at
least ten percent(10%)of the Note would be sold to the,general public at a.price not greater than
the respective price,or at a yield not lower than the respective yield,shown above. s
(3) Based on the price(§) and yield(s) provided in paragraph (1) above, the initial
offering price of the Note is equal to$400,000, which represents the aggregate par amount of the
Note.
(4) On the Sale Date, based on our assessment of the then prevailing market
conditions, we had no reason to believe that any portion of the Note would be initially sold.to.the
,general public at prices greater than the prices,or yields lower than the yields,shown above.
(6) The prices and yields of the Note shown above, represented our best judgment of
the fair market value of the Note.
(6) All compensation received for underwriting services in connection with the
issuance of the Note is being paid on the date hereof in the form of a purchase discount in the
amount of$ L1,?CU , and no part or such coinpensation includes any payment for any
property or services other than'underwriting services relating to the sale and issuance and
delivery of the Note.
For purposes of this certificate, the tenn ",general public" means the general public of
investors who are purchasing Note for their own account as ultimate purchasers without a view
to resell and does not include bond houses,brokers and similar persons or organizations acting in
the capacity of underwriters or wholesalers.
t
We understand that the representations contained herein may be relied upon by the issuer
in making certain of the representations contained in the Tax Certificate executed by the Issuer in
connection,with the issuance of the Note, and we further understand that H w1dns Delafield &
Wood LLP, Bond Counsel to the Issuer, may rely upon this certificate,.among-other things, in
providing an opinion with respect to the Oxclusion from gross income of'the interest on the Note
pursuant to Section 103 of the Internal Revenue Code of 19$5; as amended.
The undersigned is authorized to ;execute this certificate on behalf of the Purchaser,
which certifications are-not necessarily based on;personal knowledge, but may instead be based
on ,either inquiry deemed adequate by the undersigned or institutional knowledge (or both)
regarding the matters set forth herein.
Oppenheimer&.Co. Inc.
New Fork,New fork
B',",
x�
Title: ' �t Yc'cr
J
i
EXHIBIT E
FINANCING SCHEDULES
(see attached)
2778397.1 040714 DD
,L �t
7
� L
$400,000
Town of Southold,'New York
Revenue Anticipation Note-2017
'New Structure Summary And Results
Dated Date February 7,2017
'Issue Date February-7,2017
Final,Maturity February 7,2018
'Optional Redemptions Call Dates Call Price
N/A N/A
N/A N/A
N/A N/A
Arbitrage Yield 2.237484%
N.I.C. 2.250000%
(Net Interest Cost)
i
W.A.M. 1.0000 Years
(Weighted Average Maturity In Years)
Arbitrage Yield Target
Par Amount + 400,000.00
OIP/(OID) , + -
Credit Enhancement + -
Accrued Interest + -
Total 400,000.00
Adjusted Total for N.I.0
Total Interest Cost + 9,000.00
OIP/(OID) - -
Accrued Interest - -
Adjusted Total 9,000.00
27665681 As 1/26/2017 5 02 PM 1 of 3
$400,000
Town of Southold,New York
Revenue Anticipation Note-2017
s
Arbitrage Yield Analysis
Present
Value to
Maturity Principal Total Annual 02/07/17
Date Amount Coupon Interest* Debt Service Debt Service 2.237484%
}
02/07/17
02/07/17
02/07/18 400,000.00 2.250% 9,000.00 409,000 00 409,000 00 400,000 00
Totals 400.000.00 9.000.00 409.000.00 409,000.00 400.000.00
Arbitrage Yield Target
,ParAmount + 400,00000 Target: 400,000.00
OIP/(OID) + - Variance: 0.00
,Credit Enhancement + -
Accrued Interest + -
Total 400,000.00
Notes
*Interest calculations are based on 30/360 day basis.
r
2766568 1.xls 1/26/2017 5 02 PM 2 of 3
it
$400,000
Town of Southold,New York
Revenue Anticipation Note-2017
Price/Yields,Weighted Average Maturity and Net Interest Cost
,Maturity Principal Priced Years to Bond Yield To Call
Date Amount Coupon Yield Price to— Issue Price Maturity Years Note?
02/07/17
02/07/17
02/07/18 400,000 00 2.250% 2250% 100 000 Maturity 400,000 00 1.00 400,000 -
Totals 400.000.00 400.000.00 400,000.00
Total Interest Cost + 9,00000 W.A.M. = 1 0000
OIP/(OID) - (Weighted Average Matunty)
Accrued Interest - N.I.C. = 2250000%
Adjusted Total 9,000.00 (Net Interest Cost)
2766568_1 As 1/26/2017 5 02 PM 3 of 3
EXHIBIT F
PROCEDURES FOR POST-ISSUANCE
COMPLIANCE WITH FEDERAL TAX LAW
r
State and local governmental entities, including cities, towns, villages and school
districts, that borrow money on a tax-exempt basis are required to report to the Internal Revenue
Service whether they have established written procedures to comply with applicable
requirements of federal tax law for all issues of federally tax-exempt bonds, bond anticipation
notes, tax anticipation notes, revenue anticipation notes, financing leases, energy performance
contract financings, and any other instruments evidencing the borrowing of money (collectively
the "Obligations'). The procedures set forth herein will assist the Town of Southold,New York
(the "Issuer") in meeting the post-issuance requirements of federal tax law necessary to preserve
the tax-exempt status of interest on Obligations issued,by the Issuer.
These procedures address Obligations issued for physical facilities and equipment for the
Issuer (the "Capital Obligations') and Obligations issued to finance cash-flow operating
requirements of the Issuer(the"Cash-Flow Obligations').
I. GENERAL PROCEDURES
A. Responsible Official. The Supervisor of the Issuer (herein referred to as the
"Responsible Official") will identify such officers and employee(s), including the Supervisor,
who will be responsible for each of the procedures listed below, and will notify such officers and
employee(s) of the responsibilities, and provide those persons with a copy of these procedures.
Upon employee transitions, the Responsible Official will advise the new personnel of their
responsibilities under these procedures and will ensure they understand the importance of these
procedures. If employee positions are restructured or eliminated, the Supervisor of the Issuer
will reassign responsibilities as necessary.
J
2778397.1 040714 DD
B. Issuance of Obligations.
1. Bond Counsel. The Issuer will retain a firm of nationally-recognized bond
counsel ("Bond Counsel") to deliver a legal opinion in connection with the issuance of all
Obligations. The Responsible Official will consult with Bond Counsel and other legal counsel
and advisors, as needed, following the issuance of Obligations to ensure that applicable post-
issuance requirements are met, so that interest on each issue of Obligations will be excluded
from gross income for federal income tax purposes.
2. Documentation of Tax Requirements. The federal tax requirements
relating to each issue of Obligations will be set forth in a Tax Certificate (the "Tax Certificate")
executed in connection with each issue of Obligations, which will be included in the closing
transcript for each issue of Obligations. The Tax Certificate will contain certifications,
representations, expectations and factual statements relating to the restriction on use of the
facilities financed with Obligations by persons or entities other than the Issuer, changes in use of
the facilities financed or refinanced with the proceeds of Obligations, restrictions applicable to
the investment of the proceeds of any Obligations and other moneys relating to the Obligations,
and arbitrage rebate requirements. The Responsible Official will review the Tax Certificate prior
to the date of issue of each issue of Obligations.
3. Information Reporting. In connection with each issue of Obligations, the
Issuer is required to file, or shall cause to be filed by Bond Counsel, an IRS Form 8038-G (or, if
applicable, IRS Form 8038-GC). Any such IRS Form filed with the IRS,together with a proof of
filing, will be included as part of the closing transcript for each issue of Obligations, or kept in
the records maintained by Bond Counsel related to the appropriate issue of Obligations. The
Responsible Official shall ascertain that such form has been filed in connection with each issue
of Obligations.
C. Record Retention.
1. General. Copies of all relevant documents and records sufficient to
support that the tax requirements relating to all Obligations have been satisfied, including the
following documents and records, should be maintained by the Issuer:
27783971 040714 DD
(a) Closing transcript;
(b) All records of investments, arbitrage reports, returns filed with the IRS
and underlying documents;
(c) Construction contracts, purchase orders, invoices and expenditure and
payment records;
(d) Documents relating to costs reimbursed with the proceeds of Capital
Obligations;
(e) All contracts and arrangements involving Private Use of the property
financed with Capital Obligations;
(f) All reports relating to the allocation of the proceeds of Obligations and
Private Use of property financed with Capital Obligations;
(g) Itemization of property financed with the proceeds of Capital Obligations;
and
(h) In connection with Cash-Flow Obligations, information regarding the
Issuer's revenue, expenditures and available balances sufficient to support
the Issuer's prospective and actual maximum cumulative cash-flow deficit
calculations.
2. Duration of Record Retention. All of the foregoing documents and
records should be retained for the term of the Obligations, plus three (3) years, or if the
Obligations are refunded with the proceeds of a subsequent Obligation, the date three (3) years
after the last of such refunding Obligations are refunded.
D. Capital Obligations.
1. Timely Expenditure of Proceeds of Capital Obligations. At the time of
issuance of Capital Obligations issued to fund original expenditures, the Issuer must reasonably
expect to spend at least 85% of all proceeds within three (3) years of the date of issuance of the
2778397.1 040714 DD
♦ 1 I
Obligations. In addition, for Capital Obligations, the Issuer must have incurred or expect to
incur within six months after issuance original expenditures of not less than 5% of the amount of
such proceeds, and must expect to complete the project financed with Capital Obligations (the
"Project") and expend the proceeds of such Capital Obligations to pay Project costs with due
diligence. Satisfaction of these requirements allows the proceeds of Capital Obligations issued
for the Project to be invested at an unrestricted yield for three (3) years. Failure to satisfy these
requirements could subject the Issuer to rebate of investment income, and other penalties. The
Responsible Official will monitor the appropriate capital project accounts to ensure that the
proceeds of Capital Obligations are spent within the time period(s) required under federal tax
law.
Capital Obligations issued to refinance outstanding Capital Obligations are
subject to separate expenditure requirements, which shall be outlined in the Tax Certificate
relating to such Obligations. In connection with the issuance of any Capital Obligations issued
to refinance outstanding Capital Obligations, the Responsible Official will confirm that any
rebate obligation due with respect to the original issue and any subsequent refinancing thereof
has been met.
2. Use of Proceeds of Capital Obligations. In general, proceeds (including
investment income on original sale proceeds) of Capital Obligations, other than proceeds used to
pay costs of issuance, should be spent on capital expenditures. For this purpose, capital
expenditures generally mean costs to acquire, construct, or improve property (land,buildings and
equipment). Capital Expenditures include design and planning costs related to the Project, and
include architectural, engineering, surveying, soil testing, environmental, and other similar costs
incurred in the process of acquiring, constructing, improving or adapting the property. Capital
Expenditures do not include operating expenses of the Project.
3. Use of Facilities Financed with Capital Obligations._ For the life of all
Capital Obligations, the Project must be owned and operated by the Issuer. At all times while
Capital Obligations issued for a Project are outstanding, no more than 10% of the proceeds of
such Capital Obligations may used, directly or indirectly, in a trade or business carried on by a
person other than a state or local governmental unit ("Private Use"). Generally, Private Use
2778397.1 040714 DD
,J liu
t
consists of any contract or,other arrangement, including leases, management contracts (for
example, contracts relating to the operation of a school cafeteria or to food service providers),
operating agreements and guarantee contracts which provides for use of the facilities financed
with Capital Obligations by a person who is not,a state or local government on a basis different
than the general public. The Project may be used by any person,:or entity, including any person
or entity carrying on any trade or business, if such use constitutes"General Public Use". General
Public Use is any arrangement providing for use that is available to the general public at either
no charge or on the basis of rates that are generally applicable and uniformly applied.
4. Management or Operating Agreements for Facilities Financed with
vital Obligations. Any management, operating or service contracts,whereby a non-exempt
entity is using facilities financed or refinanced with the proceeds of Capital Obligations must
relate to portions of the Project that fit within the above-mentioned 10% allowable Private Use,
or the contracts must meet the IRS safe harbor for management contracts (Rev. Proc. 2017-13).
Any renewals of or changes to 'such contracts should be reviewed by Bond Counsel. The
Responsible Official shall contact Bond Counsel if there may be a lease, sale, disposition or
other change in use of facilities financed or refinanced with the proceeds of Capital Obligations.
E. Cash-Flow Obligations.
1. Proper Sizing of Cash-Flow Obligations.
(a) If the Issuer is not subject the small issuer exemption from rebate, at the
time,of issuance of Cash-Flow Obligations, the Issuer must anticipate that it will incur an actual
maximum cumulative cash-flow deficit on a date on or before the close of the six-month period
commencing on the issue date of the Cash-Flow Obligations equal to at least 90% of the issue
price of the,Cash-Flow Obligations.
(b) If the Issuer is subject to the small issuer exemption from rebate, at the
time of issuance of Cash-Flow Obligations, the Issuer must anticipate that it will incur an actual
maximum cumulative cash-flow deficit on a date on or before the close of the twelve-month
period commencing on the issue date of the Cash-Flow Obligations equal to at least 100% of the
2778397 1040714 DD
issue price of the Cash-Flow Obligations (which may include taking into account the Issuer's
"reasonably required working capital reserve").
(c) The Responsible Official will determine the appropriate amount of Cash-
Flow Obligations to issue.
(d) With respect to Issuers not subject to the small issuer exemption from
rebate, the Responsible Official shall determine whether or not the Issuer has met its requisite
maximum cumulative cash-flow deficit within six months following the date of issuance of the
Cash-Flow Obligations, and shall, to the extent necessary, obtain assistance from the Arbitrage
Rebate Consultant, referred to below.
F. Investment Restrictions; Arbitrage Yield Calculation; Rebate.
1. Investment Restrictions. Investment restrictions relating to the proceeds
of Obligations and other moneys relating to the Obligations are set forth in the Tax Certificate.
The Responsible Official will monitor the investment of the proceeds of Obligations to ensure
compliance with yield restriction rules.
2. Arbitrage Yield Calculation. Investment earnings on the proceeds of
Obligations should be tracked and monitored to comply with applicable yield restrictions and/or
rebate requirements. The Issuer'is responsible for calculating (or causing the calculation of)
rebate liability for each issue of Obligations, and for making any required rebate payments. Any
funds of the Issuer set aside or otherwise pledged or earmarked to pay debt service on the
Obligations should be analyzed to assure compliance with the tax law rules on arbitrage, invested
sinking funds and pledged funds (including gifts or donations linked to facilities financed with
Capital Obligations). The Responsible Official will consult with Bond Counsel to confirm that
all relevant arbitrage yield requirements are met.
3. Rebate. On or before the date of any required rebate payment (see below),
the Issuer will retain a nationally recognized arbitrage rebate consultant (the "Arbitrage Rebate
Consultant") to perform rebate calculations that may be required to be made from time to time
with respect to any issue of Obligations. The Responsible Official shall provide the Arbitrage
Rebate Consultant with requested documents and information on a prompt basis, reviewing
2778397 1040714 DD
applicable rebate reports and other calculations and generally interacting with the Arbitrage
Rebate Consultant to ensure the timely preparation of rebate reports and payment of any rebate.
The reports and calculations provided by the Arbitrage Rebate Consultant will
assure compliance with rebate requirements, which require the Issuer to make rebate payments,
if any, no later than the fifth(5th) anniversary date and each fifth (5th) anniversary date thereafter
through the final maturity or redemption date of a Capital Obligation. A final rebate payment, if
due, must be made within sixty (60) days of the final maturity or, redemption date of all
Obligations.
Rebate spending exceptions for Capital Obligations are available for periods of 6
months, 18 months and 21 years. The Responsible Official will confer and consult with the
Arbitrage Rebate Consultant to determine whether any rebate spending exception may, be met.
In the case of Cash-Flow Obligations, within 60 days of the maturity date of such
Cash-Flow Obligations, if there is concern as to whether the Issuer has met its requisite
maximum cumulative cash-flow deficit, a rebate analyst should be promptly engaged to
determine whether either the six-month spending exception or the statutory safe harbor exception
to the rebate rules was met (in which case no rebate would be owed) or whether the investment
income derived from the proceeds of the Cash-Flow Obligations is subject, in whole or in part,to
rebate.
Copies of all arbitrage rebate reports, related return filings with the IRS (i.e., IRS
Form 8038-T), copies of cancelled checks with respect to any rebate payments, and information
statements must be retained as described above. The Responsible Official will follow the
procedures set forth in the Tax Certificate that relate to compliance with the rebate requirements
with respect to any Obligations.
II. ADDITIONAL PROCEDURES.
A. Periodic Monitoring. The Responsible Official will conduct periodic reviews of
compliance with the foregoing procedures to determine whether any violations have occurred so
that such violations can be remedied through the "remedial action" regulations (Treas. Reg.
Section 1.141-12) or the Voluntary Closing Agreement Program (VCAP) described in IRS
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Notice 2008-31 (or successor guidance). If any changes to the terms or provisions of any
Obligations are contemplated, the Responsible Official will consult with Bond Counsel, because
such modifications could jeopardize the tax-exempt status of interest on the Obligations after
they are modified.
B. Use of Facilities. The Responsible Official will maintain records identifying any
Private Use of the facilities or portion of facilities that are financed or refinanced with proceeds
of Capital Obligations. Such records may be kept in any combination of paper or electronic form.
In the event the use of the proceeds of Capital Obligations of the facilities financed or refinanced
with the proceeds of Capital Obligations differs from the representations or factual statements in
the Tax Certificate, the Responsible Official will promptly contact and consult with Bond
Counsel to ensure that there is no adverse effect on the tax-exempt status of the Capital
Obligations and, where appropriate, will remedy any violations through the "remedial action"
regulations (Treas. Reg. Section 1.141-12), the Voluntary Closing Agreement Program (VCAP)
described in IRS Notice 2008-31 (or successor guidance), or as otherwise prescribed by Bond
Counsel.
i
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I
EXHIBIT G
SUMMARY OF REIMBURSEMENT EXPENDITURES
Type of Expenditure Amount Date I Purpose
Contractor $35,000 02/2016 Design Engineering
Contractor $40,950 11/2016 Project Management and Administration
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EXHIBIT H
REIMBURSEMENT RESOLUTION
(see Revenue Note Resolution dated June 14,2016)
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