8.2 SR 04-19-2021 - Laserfiche WebLink

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STRUCTURINGIn consultation with ERMUUtility, the Bonds have been structured to provide for SUMMARY:approximately level annual debt service over a term of 20 years. SCHEDULESSchedules attached include (i) sources and uses, and (ii) debt service, given the current interest rate environment. ATTACHED: RISKS/SPECIALThe outcome of this financing will rely on the market conditions at the time of the sale. Any CONSIDERATIONS:projections included herein are estimates based on current market conditions SALE TERMS ANDVariability of Issue Size:A specific provision in the sale terms permits modifications to the MARKETING:issue size and/or maturity structure to customize the issue once the price and interest rates are set on the day of sale. Prepayment Provisions:Bonds maturing on or after August1, 2031may be prepaid at a price of par plus accrued interest on or after August1, 2030. Bank Qualification:The City expects to issue more than $10 million in tax-exempt obligations in 2021; therefore the Bonds are not designated as bank qualified. Post Issuance Compliance POST ISSUANCEThe issuance of the Bonds will result in post-issuance compliance responsibilities. The responsibilities arein two primary areas: (i)compliance with federal arbitrage COMPLIANCE: requirements and (ii)compliance with secondary disclosure requirements. Federal arbitrage requirementsinclude a wide range of implications that have been taken into account as thisissue has been structured. Post-issuance compliance responsibilities for thistax-exempt issue include both rebate and yield restriction provisions of the IRS Code. In general terms the arbitrage requirements control the earnings on unexpended bond proceeds, including investment earnings, moneys held for debt service payments (which are considered to be proceeds under the IRS regulations), and/or reserves. Under certain circumstances any “excess earnings” will need to be paid to the IRS to maintain the tax-exempt status of the Bonds.Any interest earnings on gross bond proceeds or debt service funds should not be spent until it has been determined based on actual facts that they are not “excess earnings” as defined by the IRS Code. The arbitrage rules provide for spend-down exceptions for proceeds that are spent within either a 6-month, 18-month or, for certain construction issues, a 24-month period each in accordance with certain spending criteria. Proceeds that qualify for an exception will be exempt from rebate. These exceptions are based on actual expenditures and not based on reasonable expectations, and expenditures, including any investment proceeds will have to meet the spending criteria to qualify for the exclusion. The Utility expects to meet the 24-month spending exception. Regardless of whether the issue qualifies for an exemption from the rebate provisions, yield restriction provisions will apply to Bond proceeds (including interest earnings) unspent after three years and the debt service fund throughout the term of the Bonds. These moneys should be monitored until the Bonds are retired. Page 3