8717-14 Adopting post-issuance compliance procedures

Home Browse Search

b. the amount of Proceeds that are to be used to make or finance loans to any Private Person, in the aggregate, to exceed the lesser of 5% of such Proceeds or $5,000,000 ( "Private Loan Limit "). An action by the City is not a Deliberate Action if the action was (i) the result of an involuntary conversion of all or a portion of the project, or (ii) an action that was taken in response to a regulatory directive made by the federal government (see Regulations §1141- 2(d)(3)(ii)). 2. Timely Reallocation. If a Deliberate Action occurs, the City may reallocate the Proceeds that had been allocated to a project or portion thereof as to which the Deliberate Action occurred to other permitted uses not later than 18 months after the later of (i) the date of the expenditure to which the Proceeds were originally allocated or (ii) the placed in service date of the project or portion thereof to which such Proceeds were originally allocated, but not later than 60 days after the fifth anniversary of the Issuance Date or the retirement of the Obligations, if earlier (see Regulations § §1.141 -6(a) and 1.148- 6(d)(1)(iii)). 3. Remedial Action. a. Effect. A "remedial action" cures the use of Proceeds that caused the Private Business Use limit or the Private Loan Limit to be exceeded. A remedial action will not impact the amount of Private Security or Payments. b. Ability to Use. In order to achieve either or both of the effects set forth in Section 3(a), five conditions must be satisfied (see Section 3(c)) and one of three alternative remedial actions must be taken (see Section 3(d)). C. Conditions. The City may use a "remedial action" only if the following five conditions are satisfied: (i) On the Issuance Date, the City did not reasonably expect either the Private Business Limits or the Private Loan Limit to be exceeded at any time while any portion of the Obligations was outstanding. (ii) On the Issuance Date, the weighted average maturity of the Obligations did not exceed 120% of the weighted average of the reasonably expected economic lives of the assets comprising the project. (iii) Unless the project is being used for an alternative use (as described in Section 3(d)(i) below), the new user of all or any portion of the project must have paid fair market value therefor. (iv) The City must treat any "disposition Proceeds," which are all Proceeds received from the sale, transfer or other disposition of all or a portion of the project, as Gross Proceeds for arbitrage (Section 148 of the Code) purposes. (v) Prior to the Deliberate Action, the Proceeds were used for a governmental purpose unless the remedial action to be taken is described in Section 3(d)(i). 9