Assurance of Tax Exemption. In order to assure that the interest on the Subordinate Bonds shall at all times be excluded from gross income for the purposes of federal income taxation, the Borrower represents and covenants with the Issuer, Trustee and all Holders of the Subordinate Bonds as follows: (1) The Borrower will fulfill all continuing conditions specified in Section 142 of the Code and Section 1.103-8(b) of the Regulations, to qualify the Subordinate Bonds as residential rental property bonds thereunder. (2) The Borrower will not use (or permit to be used) the Project or use or invest (or permit to be used or invested) the proceeds of the Subordinate Bonds, or any other sums treated as “bond proceeds” under Section 148 of the Code and applicable federal income tax regulations, including “investment proceeds,” “invested sinking funds” and “replacement proceeds,” in such a manner as to cause the Subordinate Bonds to be classified “arbitrage bonds” under Section 148 of the Code or “federally guaranteed obligations” under Section 149(b) of the Code. (3) At least ninety-five percent (95%) of Net Bond Proceeds will be used to finance costs properly chargeable to the capital account of a qualified residential rental project within the meaning of Section 142(d) and functionally related and subordinate property thereto. (4) The Borrower has not permitted and will not permit any obligation or obligations to be issued within the meaning of Section 103(b) of the Code so as to cause such obligations to become part of the same “issue of obligations” as the Subordinate Bonds, so as to impair the tax-exempt status of the Subordinate Bonds. (5) No portion of the proceeds of the Subordinate Bonds will to be used to provide any airplanes, skybox, or other private luxury box, health club facility, facility primarily used for gambling or liquor store. (6) No portion of the proceeds of the Subordinate Bonds will be used to acquire (a) property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America, (b) any property not part of the residential rental housing portion of the Project, or (c) any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice-skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility or racetrack. (7) No portion of the proceeds of the Subordinate Bonds (including investment earnings) shall be used (directly or indirectly) for the acquisition of land (or an interest therein) to be used for farming purposes, and less than twenty-five percent (25%) of the proceeds of the Subordinate Bond (including investment earnings) shall be used (directly or indirectly) for the acquisition of land to be used for purposes other than farming purposes. (8) The Borrower understands that the Code imposes a penalty for failure to file with the Secretary of the Treasury an annual certification of compliance with low income occupancy requirements, and if the requirements for a “qualified residential rental project” are not met, does not allow deduction for interest paid on the Subordinate Bonds which accrues during the period beginning on the first day of the taxable year in which the Project ceases to meet such requirements and ending on the date the Project again meets such requirements. (9) The Borrower shall provide the Issuer on or prior to the Date of Issuance with all information required to satisfy the informational requirements set forth in Section 149(e) of the Code including the information necessary to complete IRS Form 8038. (10) No money in the Bond Fund or the Project Fund shall be invested in investments which cause the Subordinate Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the moneys in such funds exceed, within the meaning of Section 149(b) of the Code, (i) amounts invested for an initial temporary period until the moneys are needed for the purpose for which the Subordinate Bonds were issued, (ii) investments of a bona fide debt service fund, and (iii) investments of a reserve which meet the requirement of Section 148(c) and (d) of the Code, such excess moneys shall be invested in only those Permitted Investments or Government Obligations, as otherwise appropriate, which are (a) obligations issued by the United States Treasury, (b) other investments permitted under regulations, or (c) obligations which are (a) not issued by, or guaranteed by, or insured by, the United States or any agency or instrumentality thereof or (b) not federally insured deposits or accounts, all within the meaning of Section 149(b)(3)(B) of the Code. (11) The Borrower on behalf of the Issuer shall pay to the United States, as a rebate, an amount equal to the sum of (a) the excess of (i) the aggregate amount earned on all nonpurpose investments (other than investments attributable to an excess described in this clause), over (ii) the amount which would have been earned if all nonpurpose investments were invested at a rate equal to the yield on the Subordinate Bonds, plus (b) any income attributable to the excess described in clause (a), at the times and in the amounts required by Section 148(f) of the Code, all within the meaning of Section 148(f) of the Code. The Borrower and the Trustee shall maintain detailed records of the interest rate borne by the Subordinate Bonds and the investments of the Project Fund and the Bond Fund (and any other fund created under the Indenture) and earnings thereon. The Borrower shall comply with Section
Appears in 2 contracts
Samples: Subordinate Loan Agreement, Subordinate Loan Agreement
Assurance of Tax Exemption. The Company covenants for the benefit of the Holders of the Bonds and the City that it (a) has not taken, and will not take or permit to be taken on its behalf, any action which would adversely affect the tax-exempt status of the Bonds and (b) will take, or require to be taken, such actions as may, from time to time, be required under applicable law or regulation to continue to cause the Bonds to be tax-exempt. The Company acknowledges that in the event of an examination by the Internal Revenue Service of the exclusion of interest on the Bonds from the gross income of the owners thereof for federal income tax purposes, the City may be treated as the “taxpayer” in such examination and agrees that it will respond, and will direct the City to respond, in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination. The City covenants that it will cooperate with the Company, at the Company’s expense and at its direction, in connection with such examination. In order to assure that the interest on the Subordinate Bonds shall at all times be excluded free from gross income for the purposes of federal income taxation, the Borrower Company represents and covenants with the IssuerCity, Trustee and all Holders of the Subordinate Bonds that it will comply with the applicable provisions of Sections 103 and 141 through 150 of the Code as follows:
(1) The Borrower will fulfill all continuing conditions specified in Section 142 of the Code and Section 1.103-8(b) of the Regulations, to qualify the Subordinate Bonds as residential rental property bonds thereunder.
(2) The Borrower Company will not use (or permit to be used) the Project Equipment or use or invest (or permit to be used or invested) the proceeds of the Subordinate Bonds, Bonds or any other sums treated as “bond proceeds” under Section 148 of the Code and applicable federal income tax regulationsCode, including “investment proceeds,” “invested sinking funds” and “replacement proceeds,” in such a manner as to cause the Subordinate Bonds to be classified as “arbitrage bonds” under Section 148 of the Code or “federally guaranteed obligations” under Section 149(b) of the Code.;
(32) At least ninety-five percent (95%) of Net Bond Proceeds will be used to finance costs properly chargeable In addition to the capital account of a qualified residential rental project within the meaning of Section 142(d) and functionally related and subordinate property thereto.
(4) The Borrower has not permitted and will not permit any obligation Bonds, no other obligations have been or obligations are expected to be issued within the meaning of under Section 103(b103(a) of the Code so for sale at substantially the same time (within 15 days) as the Bonds are sold, pursuant to cause such obligations the same plan of financing, including bonds for the same facility or related facilities, and which are reasonably expected to be paid from substantially the same source of funds, determined without regard to guarantees from unrelated parties, or to otherwise become part of the same “issue of obligations” of the Bonds as the Subordinate Bondsdescribed in Treasury Regulations Section 1.150-(1)(c)(1), so as to impair the tax-exempt status exclusion from gross income under Section 103 of the Subordinate Code of the interest on the Bonds.;
(53) No no portion of the proceeds of the Subordinate Bonds will to be used to provide any airplanes, skybox, or other private luxury box, health club facility, facility primarily used for gambling or liquor store.
(6) No portion of the proceeds of the Subordinate Bonds will be used (i) to acquire (a) property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America, (b) any property not part of the residential rental housing portion of the Project, or (c) otherwise provide any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice-skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility or racetrack.
(7) No portion of the proceeds of the Subordinate Bonds (including investment earnings) shall be used (directly or indirectly) for the acquisition of , land (or an interest therein) to be used for farming purposes, and less in no event will more than twenty-five percent (25%) (or twenty-five percent (25%), or more in the case of land) of the proceeds of the Subordinate Bond (including investment earnings) shall Bonds, be used to acquire or otherwise provide a facility the primary purpose of which is either retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment, or land, all within the meaning of Sections 144 and 147 of the Code; or (directly ii) to provide any airplane, skybox or indirectly) for the acquisition of land to be other private luxury box, health club facility, facility primarily used for purposes other than farming purposes.gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises, all within the meaning of Section 144 of the Code;
(8) The Borrower understands that 4) the Code imposes a penalty for failure to file with the Secretary average maturity of the Treasury an annual certification of compliance with low income occupancy requirements, and if the requirements for a “qualified residential rental project” are not met, Bonds does not allow deduction for interest paid on the Subordinate Bonds which accrues during the period beginning on the first day exceed one hundred twenty percent (120%) of the taxable year in which average reasonably expected economic life of the Project ceases to meet such requirements and ending on the date the Project again meets such requirements.Equipment;
(95) The Borrower the Company shall provide the Issuer on or prior to City at the Date of Issuance Bond Closing with all information required to satisfy the informational reporting requirements set forth in Section 149(e) of the Code Code, including the information necessary to complete IRS Form 8038.;
(106) No money no portion of the proceeds of the Bonds will be used to acquire property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America; and no moneys in the Bond Fund (or other fund created under the Project Fund Indenture) shall be invested in investments which cause the Subordinate Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the moneys in such funds exceed, within the meaning of Section 149(b149(b)(3)(B) of the Code,
, (i) amounts invested for an initial temporary period until the moneys are needed for the purpose for which the Subordinate Bonds were issued, (ii) investments of a bona fide debt service fund, and (iii) investments of a reserve which meet the requirement of Section 148(c) and (d148(d) of the Code, such excess moneys shall be invested in only those Permitted Investments or Government Obligations, as otherwise appropriate, which are (aA) obligations issued by the United States Treasury, (bB) other investments permitted under regulations, or (cC) obligations which are (a) not issued by, or guaranteed by, or insured by, the United States or any agency or instrumentality thereof or (b) not federally insured deposits or accounts, all within the meaning of Section 149(b)(3)(B) of the Code.;
(117) The Borrower no portion of the Bond proceeds will be used for the acquisition of any property (or any interest therein) unless (i) the first use of such property is pursuant to such acquisition, other than land, or (ii) the property is a building (and the equipment therefore) and rehabilitation expenditures with respect to such building equal or exceed fifteen percent (15%) of the portion of the cost of acquiring such building (and equipment) financed with Bond proceeds, or (iii) the property is a structure other than a building and rehabilitation expenditures with respect to such structure equal or exceed one hundred percent (100%) of the portion of the cost of acquiring such facility financed with Bond proceeds, all within the meaning of Section 147(d) of the Code;
(8) it will not use the proceeds of the Bonds in such a manner as to cause the Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and applicable Treasury Regulations; and to this end, the Company on behalf of the Issuer City shall pay to the United States, as a rebate, an amount equal to the sum of (ai) the excess of (iI) the aggregate amount earned on all nonpurpose investments obligations (other than investments attributable to an excess described in this clause), over (iiII) the amount which would have been earned if all nonpurpose investments obligations were invested at a rate equal to the yield on the Subordinate Bonds, plus (bii) any income attributable to the excess described in clause (a1), at the times and in the amounts required by Section 148(f) 148 of the Code, all within the meaning of Section 148(f) 148 of the Code. The Borrower Company and the Trustee shall maintain detailed records of the interest rate borne by the Subordinate Bonds and the investments of the Project Fund and the Bond Fund and earnings thereon in adequate detail to enable the Company to calculate the amount of any rebate required to be made to the United States. The Company shall pay the rebate to the United States at times and in installments which satisfy Section 148 of the Code and the regulations, at least once every five years and within sixty (60) days after the day on which the last of each of the series of Bonds is redeemed. Calculations of the amount to be rebated shall be made at least every five years, by Bond Counsel or an Independent Accountant selected by the Company, and the City and Trustee shall be furnished with such calculations within sixty (60) days of the time they are made. The records for such calculations shall be retained until six (6) years after the retirement of the Bonds. The rebate shall be calculated as provided in the applicable Treasury Regulations, including taking into account the gain or loss on the disposition of nonpurpose investments. The Company shall acquire nonpurpose obligations at their fair market value;
(9) at least 85% of the spendable proceeds of the Bonds will be used to carry out the governmental purpose of the Bonds within the 3-year period beginning on the date hereof; and
(10) the Company will not otherwise knowingly use Bond proceeds, including earnings thereon, or take, or permit or cause to be taken, any action that would adversely affect the exemption from federal income taxation of the interest on the Bonds, nor otherwise omit to take or cause to be taken any action necessary to maintain such tax exempt status; and, if it should take or permit, or omit to take or cause to be taken, as appropriate, any such action, the Company shall take all lawful actions necessary to rescind or correct such actions or omissions promptly upon having knowledge thereof.
(11) the Company hereby makes an irrevocable election (binding on it and any other fund created under successors in interest in this Bond Lease) not to claim any depreciation or investment credit with respect to the Indenture) and earnings thereon. The Borrower shall comply Equipment financed with Sectionthe proceeds of the Series 2008 Bonds.
Appears in 1 contract
Assurance of Tax Exemption. The Company covenants for the benefit of the Holders of the Bonds and General Obligation Bonds and the County that it (a) has not taken, and will not take or permit to be taken on its behalf, any action which would adversely affect the tax-exempt status of the Bonds or General Obligation Bonds and (b) will take, or require to be taken, such actions as may, from time to time, be required under applicable law or regulation to continue to cause the Bonds and the General Obligation Bonds to be tax-exempt. The Company acknowledges that in the event of an examination by the Internal Revenue Service of the exclusion of interest on the Bonds or General Obligation Bonds from the gross income of the owners thereof for federal income tax purposes, the County may be treated as the “taxpayer” in such examination and agrees that it will respond, and will direct the County to respond, in a commercially reasonable manner to any inquiries from the Internal Revenue Service in connection with such an examination. The County covenants that it will cooperate with the Company, at the Company’s expense and at its direction, in connection with such examination. In order to assure that the interest on the Subordinate Bonds and General Obligation Bonds shall at all times be excluded free from gross income for the purposes of federal income taxation, the Borrower Company represents and covenants with the IssuerCounty, Trustee and all Holders of the Subordinate Bonds and General Obligation Bonds that it will comply with the applicable provisions of Sections 103 and 141 through 150 of the Code as follows:
(1) The Borrower will fulfill all continuing conditions specified in Section 142 of the Code and Section 1.103-8(b) of the Regulations, to qualify the Subordinate Bonds as residential rental property bonds thereunder.
(2) The Borrower Company will not use (or permit to be used) the Project Equipment or use or invest (or permit to be used or invested) the proceeds of the Subordinate Bonds, Bonds or General Obligation Bonds or any other sums treated as “bond proceeds” under Section 148 of the Code and applicable federal income tax regulationsCode, including “investment proceeds,” “invested sinking funds” and “replacement proceeds,” in such a manner as to cause the Subordinate Bonds or General Obligation Bonds to be classified as “arbitrage bonds” under Section 148 of the Code or “federally guaranteed obligations” under Section 149(b) of the Code.;
(32) At least ninety-five percent (95%) of Net Bond Proceeds will be used to finance costs properly chargeable In addition to the capital account of a qualified residential rental project within the meaning of Section 142(d) and functionally related and subordinate property thereto.
(4) The Borrower has not permitted and will not permit any obligation Bonds, no other obligations have been or obligations are expected to be issued within the meaning of under Section 103(b103(a) of the Code so for sale at substantially the same time (within 15 days) as the Bonds are sold, pursuant to cause such obligations the same plan of financing, including bonds for the same facility or related facilities, and which are reasonably expected to be paid from substantially the same source of funds, determined without regard to guarantees from unrelated parties, or to otherwise become part of the same “issue of obligations” of the Bonds as the Subordinate Bondsdescribed in Treasury Regulations Section 1.150-(l)(c)(l), so as to impair the tax-exempt status exclusion from gross income under Section 103 of the Subordinate Code of the interest on the Bonds.;
(53) No no portion of the proceeds of the Subordinate Bonds will to be used to provide any airplanes, skybox, or other private luxury box, health club facility, facility primarily used for gambling or liquor store.
(6) No portion of the proceeds of the Subordinate General Obligation Bonds will be used (i) to acquire (a) property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America, (b) any property not part of the residential rental housing portion of the Project, or (c) otherwise provide any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice-skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility or racetrack.
(7) No portion of the proceeds of the Subordinate Bonds (including investment earnings) shall be used (directly or indirectly) for the acquisition of , land (or an interest therein) to be used for farming purposes, and less in no event will more than twenty-five percent (25%) (or twenty-five percent (25%), or more in the case of land) of the proceeds of the Subordinate Bond (including investment earnings) shall Bonds or General Obligation Bonds, be used to acquire or otherwise provide a facility the primary purpose of which is either retail food and beverage services, automobile sales or service, or the provision of recreation or entertainment, or land, all within the meaning of Sections 144 and 147 of the Code; or (directly ii) to provide any airplane, skybox or indirectly) for the acquisition of land to be other private luxury box, health club facility, facility primarily used for purposes other than farming purposes.gambling, or store the principal business of which is the sale of alcoholic beverages for consumption off premises, all within the meaning of Section 144 of the Code;
(8) The Borrower understands that 4) the Code imposes a penalty for failure to file with the Secretary average maturity of the Treasury an annual certification of compliance with low income occupancy requirements, Bonds and if the requirements for a “qualified residential rental project” are not met, General Obligation Bonds does not allow deduction for interest paid on the Subordinate Bonds which accrues during the period beginning on the first day exceed one hundred twenty percent (120%) of the taxable year in which average reasonably expected economic life of the Project ceases to meet such requirements and ending on the date the Project again meets such requirements.Equipment;
(95) The Borrower the Company shall provide the Issuer on or prior to County at the Date of Issuance Bond Closing with all information required to satisfy the informational reporting requirements set forth in Section 149(e) of the Code Code, including the information necessary to complete IRS Form 8038.;
(106) No money no portion of the proceeds of the Bonds or General Obligation Bonds will be used to acquire property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America; and no moneys in the Bond Fund (or other fund created under the Project Fund Indenture) shall be invested in investments which cause the Subordinate Bonds or General Obligation Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the moneys in such funds exceed, within the meaning of Section 149(b149(b)(3)(B) of the Code,
, (i) amounts invested for an initial temporary period until the moneys are needed for the purpose for which the Subordinate Bonds and General Obligation Bonds were issued, (ii) investments of a bona fide debt service fund, and (iii) investments of a reserve which meet the requirement of Section 148(c) and (d148(d) of the Code, such excess moneys shall be invested in only those Permitted Investments or Government Obligations, as otherwise appropriate, which are (aA) obligations issued by the United States Treasury, (bB) other investments permitted under regulations, or (cC) obligations which are (a) not issued by, or guaranteed by, or insured by, the United States or any agency or instrumentality thereof or (b) not federally insured deposits or accounts, all within the meaning of Section 149(b)(3)(B) of the Code.;
(117) The Borrower no portion of the Bond or General Obligation Bond proceeds will be used for the acquisition of any property (or any interest therein) unless (i) the first use of such property is pursuant to such acquisition, other than land, or (ii) the property is a building (and the equipment therefore) and rehabilitation expenditures with respect to such building equal or exceed fifteen percent (15%) of the portion of the cost of acquiring such building (and equipment) financed with Bond or General Obligation Bond proceeds, or (iii) the property is a structure other than a building and rehabilitation expenditures with respect to such structure equal or exceed one hundred percent (100%) of the portion of the cost of acquiring such facility financed with Bond or General Obligation Bond proceeds, all within the meaning of Section 147(d) of the Code;
(8) it will not use the proceeds of the Bonds or General Obligation Bonds in such a manner as to cause the Bonds or General Obligation Bonds to be “arbitrage bonds” within the meaning of Section 148 of the Code and applicable Treasury Regulations; and to this end, the Company on behalf of the Issuer County shall pay to the United States, as a rebate, an amount equal to the sum of (ai) the excess of (iI) the aggregate amount earned on all nonpurpose investments obligations (other than investments attributable to an excess described in this clause), over (iiII) the amount which would have been earned if all nonpurpose investments obligations were invested at a rate equal to the yield on the Subordinate BondsBond or General Obligation Bond, as the case may be, plus (bii) any income attributable to the excess described in clause (a1), at the times and in the amounts required by Section 148(f) 148 of the Code, all within the meaning of Section 148(f) 148 of the Code. The Borrower Company and the Trustee shall maintain detailed records of the interest rate borne by the Subordinate Bonds and General Obligation Bonds and the investments of the Project Fund and the Bond Fund and earnings thereon in adequate detail to enable the Company to calculate the amount of any rebate required to be made to the United States. The Company shall pay the rebate to the United States at times and in installments which satisfy Section 148 of the Code and the regulations, at least once every five years and within sixty (60) days after the day on which the last of each of the series of Bonds and General Obligation Bonds is redeemed. Calculations of the amount to be rebated shall be made at least every five years, by Bond Counsel or an Independent Accountant selected by the Company, and the County and Trustee shall be furnished with such calculations within sixty (60) days of the time they are made. The records for such calculations shall be retained until six (6) years after the retirement of the Bonds and General Obligation Bonds. The rebate shall be calculated as provided in the applicable Treasury Regulations, including taking into account the gain or loss on the disposition of nonpurpose investments. The Company shall acquire nonpurpose obligations at their fair market value;
(9) at least 85% of the spendable proceeds of both the Bonds and General Obligation Bonds will be used to carry out the governmental purpose of the Bonds within the 3-year period beginning on the date hereof; and
(10) the Company will not otherwise knowingly use Bond or General Obligation Bond proceeds, including earnings thereon, or take, or permit or cause to be taken, any action that would adversely affect the exemption from federal income taxation of the interest on the Bonds or General Obligation Bonds, nor otherwise omit to take or cause to be taken any action necessary to maintain such tax exempt status; and, if it should take or permit, or omit to take or cause to be taken, as appropriate, any such action, the Company shall take all lawful actions necessary to rescind or correct such actions or omissions promptly upon having knowledge thereof.
(11) the Company hereby makes an irrevocable election (binding on it and any other fund created under successors in interest in this Lease) not to claim any depreciation or investment credit with respect to the Indenture) and earnings thereon. The Borrower shall comply Equipment financed with Sectionthe proceeds of the Series 2007 Bonds.
Appears in 1 contract
Assurance of Tax Exemption. In order to assure that the interest on the Subordinate Bonds shall at all times be excluded from gross income for the purposes of federal income taxation, the Borrower represents and covenants with the Issuer, Trustee and all Holders of the Subordinate Bonds as follows:
(1) The Borrower will fulfill all continuing conditions specified in Section 142 of the Code and Section Regulation 1.103-8(b) of the Regulationspromulgated thereunder, to qualify the Subordinate Bonds as residential rental property bonds thereunder, and the Borrower shall fulfill its obligations under the Regulatory Agreement.
(2) The Borrower will not use (or permit to be used) the Project Project, any funds provided by the Issuer hereunder, or any other funds of the Borrower, or use or invest (or permit to be used or invested) ), directly or indirectly, the proceeds of the Subordinate Bonds, Bonds or any other sums treated as “bond proceeds” under Section 148 of the Code and applicable federal income tax regulations, including “investment proceeds,” ”, “invested sinking funds” and “replacement proceeds,” ”, in such a manner as which would, or enter into, or allow any Related Person to enter into, any arrangement, formal or informal, for the purchase of the Subordinate Bonds that would, or take or omit to take any action that would, to the knowledge of the Borrower, cause the Subordinate Bonds to be classified an “arbitrage bondsbond” under within the meaning of Section 148 of the Code or “federally guaranteed obligationsguaranteed” under within the meaning Section 149(b) of the CodeCode and the applicable regulations promulgated from time to time thereunder. The Borrower further covenants to comply with the covenants and procedures set forth in the Tax Certificate and Article 6 of the Subordinate Indenture and to deposit in the Rebate Fund such amount as may be necessary to maintain the deposit in the Rebate Fund as the Rebate Requirement. Finally, the Borrower covenants to pay to the Trustee on demand all sums necessary to retain or pay the fees and expenses of the Rebate Analyst.
(3) At least ninety-five percent (95%) of Net Bond Proceeds will be used to finance costs properly chargeable to the capital account of a qualified residential rental project within the meaning of Section 142(d) and functionally related and subordinate property thereto.
(4) The Borrower has not permitted and will not permit any obligation or obligations other than the Senior Bonds, the Governmental Note, and the Equity Bridge Bonds to be issued within the meaning of Section 103(b) of the Code so as to cause such obligations to become part of the same “issue of obligations” as the Subordinate Bonds, so as to impair the tax-exempt status of the Subordinate Bonds.
(5) No portion of the proceeds of the Subordinate Bonds will to be used to provide any airplanes, skybox, or other private luxury box, health club facility, facility primarily used for gambling or liquor store.
(6) No portion of the proceeds of the Subordinate Bonds will be used to acquire acquire
(a) property to be leased to the government of the United States of America or to any department, agency or instrumentality of the government of the United States of America, ,
(b) any property not part of the residential rental housing portion of the Project, or (c) any private or commercial golf course, country club, massage parlor, tennis club, skating facility (including roller skating, skateboard and ice-skating), racquet sports facility (including any handball or racquetball court), hot tub facility, suntan facility or racetrack.
(7) No portion of the proceeds of the Subordinate Bonds (including investment earnings) shall be used (directly or indirectly) for the acquisition of land (or an interest therein) to be used for farming purposes, and less than twenty-five percent (25%) of the proceeds of the Subordinate Bond Obligations (including investment earningsearnings thereon) shall be used (directly or indirectly) for the acquisition of land to be used for purposes other than farming purposes.
(8) The Borrower understands that the Code imposes a penalty for failure to file with the Secretary of the Treasury an annual certification of compliance with low income occupancy requirements, and if the requirements for a “qualified residential rental project” are not met, does not allow deduction for interest paid on the Subordinate Bonds which accrues during the period beginning on the first day of the taxable year in which the Project ceases to meet such requirements and ending on the date the Project again meets such requirements.
(9) The average maturity of the Obligations does not and will not exceed 120% of the average reasonably expected remaining economic life of the Project within the meaning of Section 147(b) of the Code.
(10) The Borrower shall provide the Issuer on or prior to the Date of Issuance with all information required to satisfy the informational requirements set forth in Section 149(e) of the Code including the information necessary to complete IRS Form 8038.
(1011) No money in the Bond Fund or the Project Fund shall be invested in investments which cause the Subordinate Bonds to be federally guaranteed within the meaning of Section 149(b) of the Code. If at any time the moneys in such funds exceed, within the meaning of Section 149(b) of the Code,
, (i) amounts invested for an initial temporary period until the moneys are needed for the purpose for which the Subordinate Bonds were issued, (ii) investments of a bona fide debt service fund, and (iii) investments of a reserve which meet the requirement of Section 148(c) and (d) of the Code, such excess moneys shall be invested in only those Permitted Investments or Government Obligations, as otherwise appropriate, which are (a) obligations issued by the United States Treasury, (b) other investments permitted under regulations, or (c) obligations which are (a) not issued by, or guaranteed by, or insured by, the United States or any agency or instrumentality thereof or (b) not federally insured deposits or accounts, all within the meaning of Section 149(b)(3)(B) of the Code.
(11) The Borrower on behalf of the Issuer shall pay to the United States, as a rebate, an amount equal to the sum of (a) the excess of (i) the aggregate amount earned on all nonpurpose investments (other than investments attributable to an excess described in this clause), over (ii) the amount which would have been earned if all nonpurpose investments were invested at a rate equal to the yield on the Subordinate Bonds, plus (b) any income attributable to the excess described in clause (a), at the times and in the amounts required by Section 148(f) of the Code, all within the meaning of Section 148(f) of the Code. The Borrower and the Trustee shall maintain detailed records of the interest rate borne by the Subordinate Bonds and the investments of the Project Fund and the Bond Fund (and any other fund created under the Indenture) and earnings thereon. The Borrower shall comply with Section,
Appears in 1 contract
Samples: Subordinate Loan Agreement
