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240 RESOLUTION 1987-lllR A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SAN MARCOS, TEXAS, REQUESTING THAT THE CENTRAL TEXAS HIGHER EDUCTION AUTHORITY RESOLVE TO ISSUE NO FURTHER BONDS, AMEND ITS ARTICLES OF INCORPORATION AND PREPARE A PRIVATE LETTER RULING REQUEST FOR SUBMISSION TO THE INTERNAL REVENUE SERVICE REGARDING THE EFFECT ON THE TAX EXEMPT STATUS OF ITS BONDS IF CERTAIN PAYMENTS ARE MADE TO THE CITY; RESOLVING THAT THE CITY WILL APPROVE NO FUTURE ISSUANCE OF BONDS BY SAID CORPORATION; CONTAINING OTHER PROVISIONS RELATING TO THE SUBJECT AND DECLARING AN EFFECTIVE DATE. WHEREAS, prior to passage of the Tax Reform Act of 1986 (the "Act--), Sec. 103(e) of the Internal Revenue Code of 1954, as amended (the "1954 Code") provided that qualified scholarship funding bonds were: "bonds issued by a corporation which: (1) is a corporation not for profit established and operated exclusively for the purpose of acquiring student loan notes incurred under the Higher Education act of 1965, and (2) is organized at the request of the State or one or more political subdivisions thereof or is requested to exercise such power by one or more political subdivisions and required by its corporate charter and bylaws, or required by State law, to devote any income (after payment of expenses, debt service, and the creation of reserves for the same) to the purchase of additional student loan notes or to pay over any income to the State or a political subdivision thereof. I' WHEREAS, Section 1301 of the Act, amended the provisions of Section 103(e) that are now contained in Sec.150{d) of the Internal Revenue Code of 1986, as. amended (the "1986 Code") and provides: "The term 'qualified scholarship issued by a corporation which- funding bond' means a bond (A) is a corporation not for profit established and operated exclusively for the purpose of acquiring student loan notes incurred under the Higher Education Act of 1965, and (B) is organized at the request of the State or 1 or more political subdivisions thereof or is requested to exercise such power by 1 or more political subdivisions and required by its corporate charter and bylaws, or required by State law, to devote any income (after payment of expenses, debt service, and the creation of reserves for the same) to the purchase of additional student loan notes or to pay over any income to the United States." however, Section 1311 of the Act further provides "the amendments made by Section 1301 shall apply to bonds issued after August 15, 1986¡" WHEREAS, Central Texas Higher Education Authority ("CTHEA") is a higher education authority, created under the provisions of Sec. 53.47(e), V.T.C.A. Ed. Code, as amended, sponsored by the City of San Marcos, Texas (the "City"), which prior to August 15, 1986, issued bonds under the provisions of Sec. 103 of the 1954 Code for the purpose of acquiring student loans guaranteed by the United States Government¡ WHEREAS, CTHEA has issued no bonds subsequent to August 15, 1986¡ WHEREAS, prior to passage of the Act, CTHEA's articles of incorporation and bylaws provided, in part, "any and all income of the Corporation after payment of expenses, debt service, and the creation of reserves for the same shall be utilized for the purchase of additional student loan notes or shall be paid over to the City of San