Ord 1993-038 - Laserfiche WebLink

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13t>6V OTHER INFORMATION Ratings The insured City of San Marcos Electric Utility System Revenue Refunding Bonds have been rated" Aaa" by Moody's Investors Service, Inc. ("Moody's") and" AAA" by Standard & Poor's Corporation ("S&P"). An explanation of the significance of such ratings may be obtained from the company furnishing the rating. The ratings reflect only the respective views of such organizations and the City makes no representation as to the appropriateness of the ratings. There is no assurance that such ratings will continue for any given period of time or that they will not be revised downward or withdrawn entirely by either or both of such rating companies, if in the judgment of either or both companies, circumstances so warrant. Any such downward revision or withdrawal of such ratings, or either of them, may have an adverse effect on the market price of the Bonds. - Tax Exemption The Bonds, in the opinion of Bond Counsel, will not be "private activity bonds" within the meaning of Section 141(a) of the Internal Revenue Code of 1986 (the "Code"). Accordingly, interest on the Bonds will not be treated as a preference item under the alternative minimum tax provisions of the Code as applicable to individuals and corporations, except that interest on the Bonds will be included in the "adjusted current earnings" of certain corporations for purposes of computing the alternative minimum tax and the environmental tax imposed on such corporations. Furthermore, in the opinion of Bond Counsel, interest on the Bonds will be excludable from gross income under Section IO3(a) of the Code. The statutes, applicable regulations, published rulings of the Internal Revenue Service and court decisions on which such opinions are based are subject to change. These opinions are dependent in part on future compliance by the City with certain post-issuance requirements of the Code, including the arbitrage rebate requirements. Failure to comply with such requirements may cause the interest on the Bonds to be includable in gross income retroactive to the date of issue. In this connection, various covenants and representations will be made by the City in the documents authorizing the issuance of the Bonds that are designed to provide assurance of compliance with such requirements, and for purposes of its opinions, Bond Counsel will assume compliance by the City therewith. In addition such opinions are based upon representations and certifications of the City pertaining to the use, expenditure and investment of the proceeds of the Bonds. Except as described above, Bond Counsel expresses no opinion with respect to any other federal, state or local tax consequences under present law or proposed legislation resulting from the receipt or accrual of interest on, or the acquisition, ownership or disposition of, the Bonds. Prospective purchasers of the Bonds should be aware that the ownership of tax-exempt obligations such as the Bonds may result in collateral federal tax consequences to, among others, financial institutions, property and casualty insurance companies, certain foreign corporations doing business in the United States, individual recipients of Social Security or Railroad Retirement benefits, taxpayers who may be deemed to have incurred or continued indebtedness to purchase or carry tax-exempt obligations, and S corporations with subchapter C earnings and profits. Prospective purchasers should consult their own tax advisors as to the applicability to these and other such collateral consequences to their particular circumstances. The form of Bond Counsel's opinion is set forth in Appendix C hereto. Tax Accounting Treatment of Discount Bonds ' The initial public offering price to be paid for certain Bonds may be less than the principal amount payable on such Bond at maturity (the "Discount Bonds"). An amount equal to the difference between the initial public offering price of the Discount Bond (assuming that a substantial amount of the Discount Bonds of that maturity are sold to the public at such price) and the principal amount payable at maturity constitutes interest, or original issue discount, to the initial purchaser of such Discount Bonds. Original issue discount may also result from an initial purchaser's payment of accrued interest on Bonds which have an initial interest payment period longer than six months. A portion of such interest, allocable to the holding period of such Discount Bonds by the initial purchaser, will, upon the disposition of such Discount Bonds (including by reason of its payment at maturity), be treated as inten~st excludable from gross income, rather than as taxable gain, for federal income tax purposes. Such interest is considered to be accrued actuarially in accordance with the constant interest method over the life of a Discount Bond, taking into account the semiannual compounding of accrued interest, at the yield to maturity on such Discount Bonds. However, such interest may be required to be taken into account in detennining the alternative minimum taxable income of a corporation, for purposes of calculating a corporation's alternative minimum tax imposed by the Tax Reform Act of 1986 and the environmental tax imposed by the Superfund Revenue Act of 1986, and the amount of the branch profits tax applicable to certain foreign corporations doing business in the United States, even though there will not be a corresponding cash payment. In addition, the accrual of such interest may result in certain other collateral federal income tax consequences to, among others, financial institutions, life insurance companies, property and casualty insurance companies, S corporations with subchapter C 18