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HomeMy WebLinkAboutGeneral Obligation Refunding Bonds, Series 2012 Rebate Certificate REBATE CERTIFICATE The City of Bozeman, Montana (the "City") acting through its undersigned duly authorized officers, hereby certifies and agrees as follows with respect to the $3,080,000 General Obligation Refunding Bonds, Series 20I2, dated, as originally issued, as of June 14, 2012 (the "Bonds"), issued by the City pursuant to a Resolution adopted by the City Commission of the City on June 4. 2012 (the "Resolution"): Section 1. Undertakings. 1.1 The City, pursuant to Section 5.04 of the Resolution, has covenanted to comply with the requirements of Section 148(f) of the Internal Revenue Code of 1986, as amended (the "Code"), relating to the Bonds. The City covenants that it will consult with nationally recognized bond counsel and undertake to determine what is required with respect to the rebate provisions contained in Section 148(f) of the Code from time to time and will comply with any requirements that may be applicable to the Bonds. The methodology described in this Certificate will be followed, except to the extent inconsistent with any requirements of future regulations or written advice received from bond counsel. This certificate comprises the "Rebate Certificate" referred to in Section 5.04 of the Resolution. 1.2 Detailed records with respect to each and every Nonpurpose Investment attributable to Gross Proceeds of the Bonds shall be maintained by the City including: (i) purchase date, (ii) purchase price, (iii) brokerage or other transaction costs of purchase, (iv) information establishing fair market value on the date such investment became a Nonpurpose Investment, (v) any accrued interest paid, (vi) face amount, (vii) coupon or stated interest rate, (viii) periodicity of interest payments, (ix) disposition price, (x) any accrued interest received, (xi) disposition date, and (xii) brokerage or other transaction costs of disposition. Such detailed recordkeeping is required for the calculation of the Rebatable Arbitrage which, in part, will require a determination of the difference between the actual aggregate earnings of all the Nonpurpose Investments and the amount of such earnings assuming a rate of return equal to the Yield of the Bonds. I.3 For purposes of this Certificate, any gross earnings during a Bond Year on any bona fide debt service fund for the Bonds and amounts earned on such amounts, if allocated to such bona fide debt service fund, shall not be taken into account in calculating the Rebatable Arbitrage. For purposes of this paragraph 1.3, the term "gross earnings" means the aggregate amount earned on the Nonpurpose Investments in which the Gross Proceeds deposited to the bona fide debt service fund are invested, including amounts earned on such amounts if allocated to the bona fide debt service fund. Section 2, Definitions. Unless the context hereof otherwise requires, capitalized terms shall have the same meaning as in the Resolution. In addition, the following capitalized terms have the following meanings: Bond Year shall mean each one-year period (or shorter period from the Closing Date) that ends at the close of business on each July I or, if the last Bond is not paid on a July 1, such shorter period from the last preceding July 2 to the date on which the last Bond is paid. Closing, Date shall mean June 14, 2012, the date of original issuance and delivery of the Bonds. Code shall mean the Internal Revenue Code of 1986, as amended, and the applicable Treasury Regulations (including any proposed or temporary regulations) promulgated thereunder. Computation Date shall mean an installment computation date (the last day of the fifth and each succeeding fifth Bond Year) and the final computation date (the date the Iast Bonds are discharged). If the Bonds are paid on their stated maturities, the installment Computation Date shall be July 1, 2016 and the final Computation Date shall be July 1, 2021. Gross Proceeds shall mean, with respect to the Bonds, all proceeds of the Bonds (including sale proceeds and transferred proceeds) and any funds (other than proceeds) that are part of a reserve or replacement fund for the Bonds, but excluding amounts on hand in the Bond Account and allocated to the Bonds to the extent provided in paragraph 1.3 hereof. Investment Property shall mean any security, obligation (other than a tax-exempt obligation), annuity contract or investment-type property. Nonpurpose Investment shall mean any Investment Property that is not a purpose investment in which Gross Proceeds of the Bonds are invested, including investments allocated to the Bonds. Opinion of Bond Counsel shall mean an opinion of nationally recognized bond counsel selected by the City. Rebatable Arbitrage shall mean, as of any Computation Date, the excess of the future value of all nonpurpose receipts with respect to the Bonds over the future value of all nonpurpose payments with respect to the Bonds. Regulations shall mean the Treasury Regulations applicable to the Bonds and promulgated under the Code, including, without limitation, Treasury Regulations, Sections 1.148-0 through 1.148-11, and Sections 1.149(b)-1, 1.149(d)-1, 1.149(g)-1, 1.150-1 and 1.150-2. Yield, with reference to any obligation, shall mean that discount rate which, when computing the present value of all unconditionally payable payments of principal and interest paid and to be paid on such obligation, produces an amount equal to the present value of the issue price of the obligation. Yield, shall mean, with respect to the Bonds, 1.176669% per annum. 2 Section 3. Rebatable Arbitra}e Calculation and Payment. 3.1 The sale proceeds of the Bonds other than those to be used to pay costs of issuance or pay a portion of interest on the Bonds on January 1, 2013 have been deposited in the escrow account pursuant to the Escrow Agreement, of even date herewith, and, to the extent not held in cash, will be invested in State and Local Government Series securities. Other than sale proceeds used to pay costs of issuance (excluding underwriter's discount) of the Bonds, amounts deposited in the escrow account, and amounts to pay a portion of interest on the Bonds on January 1, 2013, no Gross Proceeds are expected to arise apart from Gross Proceeds deposited in a bona fide debt service fund for the Bonds, as contemplated in paragraph 1.3 hereof. The City expects that amounts in the Debt Service Account for the Bonds will be depleted each year to pay principal of and interest on the Bonds, except for the permissible carryover amount not exceeding one-twelfth of the debt service payable on the Bonds in the preceding Bond Year. For purposes of complying with Section 148(f), the City will prepare or have prepared a calculation of the Rebatable Arbitrage for the Bonds consistent with the rules described in this Section 3. The City will prepare the calculation of the Rebatable Arbitrage within 30 days after each Computation Date and will file a copy of such calculations in the office of the City Finance Director. 3.2 The City shall pay to the United States Department of the Treasury from the Debt Service Account or from other available funds not later than 60 days after the final Computation Date, an amount which, when added to the future value as of the Computation Date of all previous rebate payments, equals 100% of the Rebatable Arbitrage. 3.3 Each payment required to be made pursuant hereto shall be filed with the Internal Revenue Service Center, Ogden, Utah 84201 (or at such other place as the Internal Revenue Service may designate), on or before the date such payment is due, and shall be accompanied by a completed and executed Internal Revenue Service Form 8038-T. The City shall retain records of the calculations required by this Section 3 until six years after the final Computation Date for the Bonds. Section 4. Filing Requirements,. The City shall file or cause to be filed such reports or other documents with the Internal Revenue Service as required by the Code in accordance with an Opinion of Bond Counsel. Section 5. Survival of Defeasance. Notwithstanding anything in this Certificate or any other provisions of the Resolution to the contrary, the obligation to remit the Rebatable Arbitrage to the United States Department of the Treasury and to comply with all other requirements contained in this Certificate shall survive the defeasance of the Bonds. Section 6. Amendments. The City may amend or supplement the provisions of this Certificate by filing an executed copy of such amendment or supplement with the City Clerk accompanied by an opinion of Bond Counsel to the effect that such amendment or supplement is required by, or better complies with, the provisions of Section 148 and applicable Regulations. Dated: June 14, 2012. CITY OF BOZEMAN. MONTANA By T Mayor By Ci Financc i ctor .�� B p �. % Bya -io 1883 o - f�,Co. � 4