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POMM b. amounts invested in a bona fide debt service fund, within the meaning of § 1.148- <br />1(b) of the Regulations; and <br />amounts deposited in any reasonably required reserve or replacement fund to the <br />extent such amounts do not exceed the least of maximum annual debt service on <br />the Obligations, 125% of average annual debt service on the Obligations, or 10 <br />percent of the stated principal amount (or, in the case of a discount, the issue <br />price) of the Obligations; <br />20. the Obligations must include a provision requiring the City take all necessary steps to <br />comply with the requirement that certain amounts earned on the investment of gross <br />proceeds of the Obligations be rebated to the federal government in order to satisfy the <br />requirements of § 148 of the Code. The Obligations must provide that the City will: <br />a. account for all Gross Proceeds, as defined in the Code and Regulations, <br />(including all receipts, expenditures and investments thereof) on its books of <br />account separately and apart from all other funds (and receipts, expenditures and <br />investments thereof) and retain all records of such accounting for at least six years <br />after the final Computation Date. The City may, however, to the extent permitted <br />by law, commingle Gross Proceeds of its loan with other money of the City, <br />provided that the City separately accounts for each receipt and expenditure of <br />such Gross Proceeds and the obligations acquired therewith; <br />b. calculate the Rebate Amount, as defined in the Code and Regulations, with <br />respect to its loan, not less frequently than each Computation Date, in accordance <br />with rules set forth in § 148(f) of the Code, § 1.148-3 of the Regulations, and the <br />rulings thereunder. The City shall maintain a copy of such calculations for at least <br />six years after the final Computation Date; <br />as additional consideration for the making of the loan, and in order to induce the <br />making of the loan by measures designed to ensure the excludability of the <br />interest on the TWDB's Source Series Bonds from the gross income of the <br />owners thereof for federal income tax purposes, pay to the United States the <br />amount described in paragraph (b) above within 30 days after each Computation <br />Date; <br />d. exercise reasonable diligence to assure that no errors are made in the calculations <br />required by paragraph (b) and, if such error is made, to discover and promptly to <br />correct such error within a reasonable amount of time thereafter, including <br />payment to the United States of any interest and any penalty required by the <br />Regulations; <br />21. the Obligations must include a provision prohibiting the City from taking any action that <br />"am would cause the interest on the Obligations to be includable in gross income for federal <br />income tax purposes; <br />TWDB Commitment No. L1000600 <br />Exhibit A, Page 6 of 10 <br />