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<br />preference to all other items and for the full amount thereof. The proceeds
<br />of the tax levy shall be placed in the Bond Retirement Fund, which is
<br />irrevocably pledged for the payment of the debt charges on the Notes or the
<br />Bonds when and as the same fall due. All special assessments collected for
<br />the improvement described in Section 1 and any unexpended balance remaining in
<br />the improvement fund after the cost and expenses of the improvement have been
<br />paid shall be used for the payment of the principal of and interest on the
<br />Notes until paid in full. In each year to the extent the income from the levy
<br />of the special assessments for the improvement is available for the payment of
<br />the principal of and the interest on the Notes and Bonds and is appropriated
<br />for that purpose, the amount of the tax shall be reduced by the amount of the
<br />income so available and appropriated.
<br />Section 10. The City covenants that it will use, and will restrict
<br />the use and investment of, the proceeds of the Notes in such manner and to
<br />such extent as may be necessary so that (a) the Notes will not (i) constitute
<br />private activity bonds, arbitrage bonds or hedge bonds under Section 141, 148
<br />or 149 of the Internal Revenue Code of 1986, as amended (the Code), or (ii) be
<br />treated other tkian as bonds to which Section 103(a) of the Code applies, and
<br />(b) the interest on the Notes will not be treated as an item of tax preference
<br />under Section 57 of the Code.
<br />The City further covenants that (a) it will take or cause to be taken
<br />such actions that may be required of it for the interest on the Notes to be
<br />and remain excluded from gross income for federal income tax purposes, (b) it
<br />will not take or authorize to be taken any actions that would adversely affect
<br />that exclusion, and (c) it, or persons acting for it, will, among other acts
<br />of compliance, (i) apply the proceeds of the Notes to the governmental
<br />purposes of the borrowing, (ii) restrict the yield on investment property,
<br />(iii) make timely and adequate payments to the federal government, (iv)
<br />maintain books and records and make calculations and reports, and (v) refrain
<br />from certain uses of those proceeds and, as applicable, of property financed
<br />with such proceeds, all in such manner and to the extent necessary to assure
<br />such exclusion of that interest under the Code.
<br />The Director of Finance, as the fiscal officer, or any other officer
<br />of the City having responsibility for issuance of the Notes is hereby autho-
<br />rized (a) to make or effect any election, selection, designation, choice,
<br />consent, approval, or waiver on behalf of the City with respect to the Notes
<br />as the City is permitted or required to make or give under the federal income
<br />tax laws, for the purpose of assuring, enhancing or protecting favorable tax
<br />treatment or status of the Notes or interest thereon or assisting compliance
<br />with requirements for that purpose, reducing the burden or expense of such
<br />compliance, reducing the rebate amount or payments of penalties, or making
<br />payments of special amounts in lieu of making computations to determine, or
<br />paying, excess earnings as rebate, or obviating those amounts or payments, as
<br />determined by that officer, which action sha11 be in writing and signed by the
<br />officer, (b) to take any and all other actions, make or obtain caiculations,
<br />make payments, and make or give reports, covenants and certifications of and
<br />on behalf of the City, as may be appropriate to assure the exclusion of
<br />interest from gross income and the intended tax status of the Notes, and (c)
<br />to give one or more appropriate certificates of the City, for inclusion in the
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