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d. Types of Remedial Action. <br />(i) Redemption of Non - Qualified Bonds. The "non - qualified bonds" <br />are the portion of the Obligations allocable to the Deliberate Action that causes <br />the Obligations to exceed the Private Business Limits or the Private Loan Limit. <br />In general, within 90 days after the Deliberate Action, either the nonqualified <br />Obligations must be redeemed or an escrow that defeases the nonqualified <br />Obligations to their earliest redemption date must be established. A defeasance <br />escrow may not be used, however, if the period between the Issuance Date and the <br />earliest redemption date of the non - qualified Obligations is more than 10.5 years; <br />in such case, a closing agreement with the IRS may be necessary. If a defeasance <br />escrow is established, the City must notify the IRS within 90 days of its <br />establishment. Notwithstanding the general requirement stated above that all non- <br />qualified Obligations must be redeemed or defeased, if the disposition Proceeds <br />consist exclusively of cash, it is sufficient that the disposition Proceeds be used to <br />redeem or defease a pro rata portion of the nonqualified Obligations. <br />(ii) Alternative Use of Disposition Proceeds. The Obligations satisfies <br />the requirements of this remedial action if: <br />(a) all disposition Proceeds consist exclusively of cash; <br />(b) the City reasonably expects to spend the disposition <br />Proceeds within two years after the date of the Deliberate Action; <br />(c) the disposition Proceeds are treated as Proceeds for <br />purposes of the Private Business Limits and the Private Loan Limit, the <br />use of the disposition Proceeds does not cause the Obligations to exceed <br />these limits, and the City does not take a subsequent Deliberate Action <br />that causes either of these limits to be exceeded; <br />(d) any unspent disposition Proceeds must be used to redeem <br />all or a portion of the Obligations; and <br />(e) if the disposition Proceeds are to be used by a 501(c)(3) <br />Organization, from the date of the Deliberate Action, the non - qualified <br />Obligations must constitute Qualified 501(c)(3) Obligations and be treated <br />as reissued for that purpose. <br />(iii) Alternative Use of Project. The City satisfies the requirements of <br />this remedial action if: <br />(a) the portion of the project that is transferred or disposed of <br />could have been financed by another type of Tax- Exempt Obligation; <br />(b) the Deliberate Action taken by the City did not involve a <br />purchase financed by another series of Tax - Exempt Obligations; and <br />10 <br />