|
<br />Section 10. The City covenants that it will use, and will restrict
<br />the use and investment of, the proceeds of the Bonds in such manner and to
<br />such extent as may be necessary so that (a) the Bonds will not (i) constitute
<br />private activity bonds, arbitrage bonds or hedge bonds under Sections 141, 148
<br />or 149 of the Internal Revenue Code of 1986, as amended (the Code), or (ii) be
<br />treated other than as bonds to which Section 103(a) of the Code applies, and
<br />(b) the interest thereon 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 Bonds to be
<br />and to remain excluded from gross income for federal income tax purposes, (b)
<br />it will not take or authorize to be taken any actions that would adversely
<br />affect that exclusion, and (c) it, or persons acting for it, will, among other
<br />acts of compliance, (i) apply the proceeds of the Bonds to the governmental
<br />purpose 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 Bonds 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 Bonds
<br />as t.he City is permitted or required to make or give under the federal income
<br />tax laws, including, without limitation thereto, any of the elections provided
<br />for in Section 148(f)(4)(C) of the Code or available under Section 148 of the
<br />Code, for the purpose of assuring, enhancing or protecting favorable tax
<br />treatment or status of the Bonds 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 shall be in writing and signed by the
<br />officer, (b) to take any and all other actions, make or obtain calculations,
<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 Bonds, and (c)
<br />to give one or more appropriate certificates of the City, for inclusion in the
<br />transcript of proceedings for the Bonds, setting forth the reasonable expecta-
<br />tions of the City regarding the amount and use of all the proceeds of the
<br />Bonds, the facts, circumstances and estimates on which they are based, and
<br />other facts and circumstances relevant to the tax treatment of the interest on
<br />and the tax status of the Bonds.
<br />Each covenant made in this section with respect to the Bonds is also
<br />made with respect to all issues any portion of the debt service on which is
<br />paid from proceeds of the Bonds (and, if different, the original issue and any
<br />refunding issues in a series of refundings), to the extent such compliance is
<br />necessary to assure exclusion of interest on the Bonds from gross income for
<br />- 10 -
<br />
|