40-12 Issuance and and Sale of Notes

Home Browse Search

from the sale of the Notes shall be deposited into the fund in which such proceeds are deposited (and shall not be hansfened to the General Fund). The proceeds from the sale of the Notes and investment earnings on those proceeds are appropriated for the uses described above. Section 8. The par value to be received from the sale of the Bonds or of any renewal notes and any excess funds resulting from the issuance of the Notes shall, to the extent necessary, be used to pay the principal of and interest on the Notes at mahuity and are pledged for that purpose. Section 9. During the year or years in which the Notes are outstanding, there shall be levied on all the taxable property in the City, iu addition to all other taxes, the same tax that would have been levied if the Bonds had been issued without the prior issuance of the Notes. The tax shall be within the ten-mill limitation imposed by law, shall be and is ordered computed, certified, levied and extended upon the tax duplicate and collected by the same officers, in the same manner, and at the same time that taxes for general purposes for each of those years are certified, levied, extended and collected, and shall be placed before and in preference to all other items and for the full amount thereof. The proceeds of the tax levy shall be placed in the Bond Retirement Fund, which is irrevocably pledged for the payment of the principal of and interest on the Notes or the Bonds when and as the same fall due. Section 10. The City covenants that it will use, and will restrict the use and investment of, the proceeds of the Notes in such manner and to such extent as may be necessary so that (a) the Notes will not (i) constitute private activity bonds, arbitrage bonds or hedge bonds under Sections 141, 148 or 149 of the Internal Revenue Code of 1986, as amended (the Code) or (ii) be heated other than as bonds to which Section 103(a) of the Code applies, and (b) the interest on the Notes will not be treated as an item of tax preference under Section 57 of the Code. The City further covenants that (a) it will take or cause to be taken such actions that may be required of it for the interest on the Notes to be and remain excluded from gross income for federal income tax purposes, (b) it will not take or authorize to be taken any actions that would adversely affect that exclusion, and (c) it, or persons acting for it, will, among other acts of compliance, (i) apply the proceeds of the Notes to the governmental purpose of the borrowing, (ii) reshict the yield on investment property, (iii) make timely and adequate payments to the federal government, (iv) maintain books and records and make calculations and reports and (v) refrain from certain uses of those proceeds, and, as applicable, of property financed with such proceeds, all in such manner and to the extent necessary to assure such exclusion of that interest under the Code. The City hereby represents that the Outstanding Note was treated or designated as a "qualified tax exempt obligation" pursuant to Section 265(b)(3) of the Code. The City hereby covenants that it will redeem the Outstanding Note fiom proceeds of, and within 90 days after issuance of, the Notes, and represents that all other conditions are met for treating the principal amount of the Notes not in excess of the Outstanding Note as "qualified tax exempt obligations" and as not to be taken into account under subparagraph (D) of Section 265(b)(3) of the Code, without necessity for further designation, by reason of subparagraph (D)(ii) of Section 265(b)(3) of the Code. Any principal amount of the Notes in excess of the amount of the Outstanding Note, determined in accordance with Section 265(b)(3) of the Code (the "Designated Amount") is hereby designated as a "qualified tax-exempt obligation" for purposes of Section 265(b)(3) of 3