Loading...
06TAX EXEMPTIONANDNONARBITRAGE CERTIFICATE CONCERNING KODIAKISLAND BOROUGH ALASKA $6210000 GENERAL OBLIGATION SCHOOL BOND 2015A AND $1780000 GENERAL OBLIGATION SCHOOL BOND 2015B Karleton Short on behalf of Kodiak Island Borough Alaska the Borough certify as follows General 1.1 Responsible Officer am the Finance Directorofthe Borough and as such am an officerof the Borough responsible for issuing the Boroughs $6210000 par valueGeneral Obligation School Bond 2015A the 2015A Bond and $1780000 par valueGeneral Obligation School Bond 2015B the 2015B Bond and together withthe 2015A Bond the 2015 Bonds dated delivered and paid for on the same date as the date of this certificate the issue date Pursuant tothe provisions of Treasury Regulations Section 1.150-1c4iii the Borough elects to treatthe 2015A Bond and the 201 5B Bond as part of the same issue because all of the 2015Bonds aresecured by pledge of the full faith and creditofthe Borough and all ofthe 2015Bondswere sold and are being issued on the same date and pursuant to single offering document namely the Preliminary Official Statement for the BondBank Bonds definedherein dated August 182015 and the Official Statement for the Bond Bank Bonds dated August 26 2015 1.2 Purpose of Certificate This certificate is executed toestablish the facts estimates and circumstances in existence on the issue date and the bona fide reasonable expectations ofthe Borough on the issue date as to future events in connection with the 2015Bonds for the purposes of the applicable provisions of the Internal RevenueCode of 1986 as amended the Code and applicable Treasury Regulations underSections 103 141 and 148-150 of the Code 1.3 Reasonable Basis for Expectations To the best of my knowledge information and belief thiscertificate accurately summarizes the facts estimates and circumstances in existence on the issue date and the expectations ofthe Borough on the issue dateabout future events in connection with the 2015Bonds are reasonable 1.4 Defined Terms Capitalized words used butnot otherwise defined in this certificate have the meaning setforth in Resolution No FY2016-05 ofthe Borough authorizing the 2015A Bond and Resolution No FY2016-06 authorizing the 2015B Bond together the Bond Resolutions 51466369.2 Purpose of Issuing the 2015 Bonds 2.1 Governmental Purpose The Borough is local government unit of the Stateof Alaska The2015Bonds are being issued by the Borough tothe Alaska Municipal BondBank the Bond Bank to evidence the obligation ofthe Borough to repay twoloans made by the BondBank tothe Borough from the portion of the proceeds ofthe Bond Banks General Obligation Bonds 2015 Series Three allocable to the Borough the Bond Bank Bonds TheBondBank is loaning the proceeds of the BondBank Bonds tothe Borough pursuant to loan agreement the Loan Agreement Pursuant to TreasuryRegulations Section 1.150-1d2iiB the Borough is treated as the obligor on the Bond Bank Bonds 2015A Bond The 2015A Bond is being issued for the purpose of providing the funds necessary to finance part ofthe costs of planningdesigning and constructing school and related capital improvements in the Borough including without limitation the reconstruction and renovation of Kodiak High School referred tothe regular Borough election held on October 2009 as Proposition No the 2015A Improvements and to pay costs of issuance as provided by the Bond Resolutions 2015B Bond The 2015B Bond is being issued for the purpose of providing the funds necessary to finance the renewal and replacement schedule related to Borough-owned school facilities including without limitation those projects listed in Resolution No FY2016-06 referred to the regular Borough election held on October 2014 as Proposition the 2015B Improvements and together with the 2015A Improvements the Improvements 2.2 No lmpermissible Private Business Use No more than 10%$906282 of the proceeds of the 2015Bonds or of corresponding portion ofthe Improvements will be used for any private business use No more than 5%$453141 of the proceeds of the 2015Bonds or of corresponding portion of the Improvements will beused either for any private businessuse that is unrelated to the governmentalpurpose of the 2015 Bonds or for any private businessuse that is related to governmentalpurpose of the 2015Bonds but exceeds the amount of proceeds ofthe 2015Bonds that are expected to beused for that governmental purpose No more than 5%of the proceeds of the 2015Bonds will be used directly orindirectly to make or financeloans to anyperson other than governmental unit except loan if any whichenables the borrower to finance governmental taxor assessment of general application for specific essential governmental function orthatconstitutes nonpurpose investment withinthe meaning of Section 148 ofthe Code Source and Disbursement of Proceeds 3.1 Purchaser and Purchase Priceof the 2015 Bonds The Borough has entered into the Loan Agreement withthe BondBank to secure payment of the sum of $9037609.41 the Loan Amount Pursuant to the Loan Agreement the BondBank will issue the BondBank Bonds at price equal to the Loan Amount plus an original -2- 51466369.2 issue premium on the Bond Bank Bonds of $1072818.00 less an underwriters discount on the Bond Bank Bonds of $25208.59 3.2 Funds Into Which Proceeds From the Issuance and Sale of the 2015 Bonds and the BondBank Bonds Will Be Deposited The proceeds received by the Borough from theissuance and sale ofthe 2015Bonds will be used and applied as follows $36000.00 will beused to pay costs of issuance of the 2015 Bonds $1609.41 representing the contingency account an amount less than 1%of the sale proceeds ofthe 2015 Bonds will be deposited in an amount used primarily to achieve propermatching of revenues of the Borough with principal and interest payments on the 2015Bonds the Bond Fund andused to pay interest on the 2015 Bonds on April 2016 and $9000000 will be deposited in fund established by the Borough to pay costs ofthe Improvements the Project Fund and used to carry out the Improvements 3.3 Cost ofthe 201 5A Improvements The costof the 201 5A Improvements is estimated to be $76310000 which cost will be paid from the proceeds ofthe issuance and saleof the 201 5A Bond reasonablyexpected investment earnings therefrom in the amount of $7763 proceeds of the Boroughs General Obligation School Bond 2011 Series in the principal amount of $8000000 General Obligation School Bond Series 2013 in the principal amount of 21595000 General Obligation School Bond 2014 in the principal amount of $22660000 grant funding in the amount of $7000000 and other money ofthe Borough legally availableto beused therefor The net amount received by the Borough as resultofthe saleof the 2015A Bond after payment of all expenses of issuing selling and delivering the 2015A Bondand the Bond Bank Bonds is not expected to exceed the amount necessary to pay thecosts of the 2015A Improvements 3.4 Cost ofthe 201 5B Improvements The costof the 201 5B Improvements is estimated to be $1 0230000 whichcost will be paid fromthe proceeds ofthe issuance and sale of the 201 5B Bond reasonably expected investment earnings therefrom in the amount of $4450 and other money ofthe Borough legally available to beused therefor The net amount received by the Borough as resultofthesaleofthe 2015B Bond after payment of all expenses of issuing selling and delivering the 2015B Bond and the BondBank Bonds is not expected to exceed the amount necessary to pay the costs of the 2015B Improvements ConstructionSchedule for the Improvements 4.1 Commencement and Prosecution of Construction ofthe Improvements Construction ofthe Improvements has already commenced and the Borough has entered into contractor otherwise incurredsubstantial bindingobligation toward commencement of the Improvements involving an amount equal toat least 5%of the sale proceeds ofthe 2015 Bonds or will have entered into such contractor other substantial bindingobligation within six months aftertheissue date ofthe 2015Bonds Work on the Improvements and expenditure of the sale proceeds ofthe 2015Bonds are expected to proceed with due diligence to completion -3- 514663692 4.2 Completion of the Improvements It is expected that at least 85%of the sale proceeds ofthe 2015Bonds will be spent for the Improvements by September 16 2018 the date that is three years after the issue date of the 2015 Bonds The expected schedule for expenditure of 2015Bonds proceeds is attached as Exhibit 4.3 No Sale of ImprovementsExpected The Improvements are not expected to be soldor otherwise disposed of in whole or in part prior to maturity of the 2015 Bonds otherthan to dispose of any portion ofthe Improvements that becomes inadequate obsolete worn out unfit or no longernecessary or useful to the operation of the Improvements Payment of 2015 Bonds 5.1 Debt Service Structure 2015A Bond The 2015A Bond is general obligation bond ofthe Borough The 2015A Bond matures on October 2036 Principal of the 2015A Bond is payableannually in installments on October of each year from 2016 to 2036 inclusiveInterest on the 2015A Bond is payable semiannually on each April and October commencing on April 2016 The principal installments on the 2015Bondsdue on or beforeOctober 2024 are not subject to prepayment The principal installments on the 2015A Bond due on orafter October 2025 are subject to prepayment in whole or in part at the option ofthe Borough on any date on or after April 2025 at price of 100%ofthe amount thereof to be prepaid plus accrued interest to thedate of prepayment 5.2 DebtService Structure 2015B Bond The 2015B Bond is general obligation bond ofthe Borough The 2015B Bond matures on October 2025 Principal ofthe 2015B Bond is payableannually in installments on October of each year from 2016 to 2025 inclusiveInterest on the 2015B Bond is payablesemiannually on each April and October commencing on April 2016 The principal installments on the 2015Bondsdue on or beforeOctober 2024 are not subject to prepayment The principal installment on the 2015B Bond due on October 2025 is subject to prepayment in whole or in part at the option ofthe Borough on any date on or after April 2025 at price of 100%of the amount thereof to be prepaid plus accrued interest to thedate of prepayment 5.3 Source of Payment The2015Bonds are payable from the proceeds of taxes levied against all of the taxable property locatedwithin the Borough and other funds available therefor Those funds that are expected to be used to pay principal of or interest on the 2015Bonds will be deposited in the Bond Fund and used within 13 months of their deposit in that fund for payment of principal of or interest on the 2015 Bonds The Bond Fund will be used primarily to achieve proper matching oftax revenues of the Borough and debt service on the 2015Bonds within eachbond year It is expected thatthe Bond Fund will be depleted at least once year on each October except for reasonable carryover amount not expected to exceed the greater of one years earnings on that fund or 1/12 of the annualdebt service on the 2015 Bonds -4- 466369.2 5.4 Absence of Other Sinking Funds Except for the Bond Fund the Borough has not created or established and does not expect to create or establish any reserve fund sinking fund or other similar fund that is reasonably expected to be used directly or indirectly to pay debt service on the 2015Bonds or any pledged fund with respect to which there is reasonable assurance that money will be available in that fund to pay debt service on the 2015Bonds even if the Borough were to encounter financial difficulties Restrictions on Investing Proceeds of the 2015Bonds in Higher Yielding Investments 6.1 Calculationof Yield on 2015 Bonds For purposes of this certificate the yield on the 2015Bonds is deemed to be equal to the yield on the BondBank Bonds The yield on the BondBank Bonds has been calculated as the yield that when used in computing the present worth of all payments of principal of and interest on the Bond Bank Bonds produces an amount equal to the issue price ofthe BondBank Bonds The issue price ofthe BondBank Bonds is the initial offeringprice ofthe BondBank Bonds including original issue discount or premium if any at which substantial amount at least 10%of each maturity ofthe BondBank Bonds has been sold tothe public not including bond houses brokers or other intermediaries The yield on the BondBank Bonds has been calculated to be 3.698396%Such determination as to yield has been made by Western Financial Group LLC attachedhereto as Exhibit based on representations made by RBC Capital Markets LLC underwriter of the Bond Bank Bonds attachedhereto as Exhibit In determining this yield no adjustments were made for underwriters discount orother costs of issuance ofthe 2015Bonds However pursuant to the specialyield calculationrule provided by Treasury Regulations Section 1.148-4b3iiB for the purposes of determining the yield on the BondBank Bonds the Bond Bank Bondsdue in 2025 through 2036 inclusive were treated as redeemed on April 2025 because such redemptions would produce the lowest yield on the BondBank Bonds 6.2 Restrictions on Investment of Proceeds in Higher Yielding Investments Construction Fund The proceeds ofthe BondBank Bonds loaned to the Borough pursuant to the Loan Agreement and the 2015Bonds and used to carry outthe Improvements will be deposited in the account ofthe Borough allocated to paying costs of the Improvements the Construction Fund and may be invested in higher yielding investments for temporary period not exceeding three years from the issue date ofthe 2015 Bonds Proceeds Used for Costs of Issuance Proceeds ofthe 2015Bonds to beused to pay costs of issuance ofthe BondBank Bonds are expected to be spent for that purpose on the issue date and not invested Bond Fund Proceeds ofthe 2015Bonds representing the contingency amounts deposited in the Bond Fund and other amounts treated as replacement proceeds of the 2015Bondsbecause they are held in the Bond Fund may -5- 54663692 be invested in higher yielding investments for temporary period not exceeding 13 months from the date of their deposit in the Bond Fund Investment Earnings Investment proceeds ofthe 2015Bonds for which no other temporary period is available may be invested in higher yielding investments for temporary period of one year from thedate of receipt of those investment earnings RestrictedYield Investments Proceeds and amounts treated as replacement proceeds ofthe 2015Bonds that may not be invested in higher yielding investments will be invested only in obligations purchased at fair marketvalue in bona fide arms-length transactions in an established market for those obligations and having yields not materially higher than the yield on the 2015Bonds when calculated using the same frequency intervalof compounding interest as used for the 2015 Bonds ii obligations theinterest on which is excluded from gross income underSection 103 of the Code that are not private activity bonds underSection 141 of the Code or obligations treated as tax-exempt obligations under Section 103 of the Code e.g obligations issued by certain qualified regulated investment companies that invest to theextent practicable all of their assets in tax-exempt governmental bonds and meet certainother conditions and Demand Deposit Securities issued by theUnited States Treasurypursuant to the State and Local Government Series program or iii other UnitedStates Treasury ObligationsState and Local Government Series having yields not materially higher than the yield on the 2015 Bonds Compliance With Arbitrage Rebate Requirement TheBondBank Bonds are subject to the rebate requirement imposed by Section 148f of the Code Because proceeds of the BondBank Bonds used pursuant tothe Loan Agreement to acquire the 2015Bonds from the Borough are not treated as spent until those proceeds are used to carry out the Improvements those proceeds continue to be treated as proceeds ofthe Bond Bank Bonds until spent for that purpose and the Borough on behalf of the Bond Bank in the manner and to theextent required by that Section will calculate and rebate to the United States any investment earnings on gross proceeds ofthe BondBank Bonds and the 2015 Bonds plus any income attributable to such excess earnings Investment earnings on amounts held in the Bond Fund will not betaken into account for this purpose at any time even if the amount earned is $100000 or more in 2015Bonds year because the 2015Bonds bear interest at fixed rates i.e ratesthat do not vary during the term ofthe 2015 Bonds and have an average maturity of at least years If the Borough for any reason fails to comply with therebate requirement totheextent applicable to the Bond Bank Bonds and the 2015 Bonds the Borough to the extent permitted and required by Section 148f7 of the Code will pay any penalty that may be necessary to preserve the tax exemption for interest on the 2015 Bonds -6- 51466369.2 2015BondsMeets Other Arbitrage Requirements 8.1 No Other Governmental Obligations Partof This Issue There are no other obligations ofthe Borough that are being sold at substantially the same time less than 15 days apart as the 2015Bonds pursuant to the same plan of financing and that are reasonablyexpected to be paid from substantially the same source of funds 8.2 No Replacement of Funds Invested in Higher Yielding Investments No portion ofthe proceeds ofthe 2015Bonds will beused directly or indirectly to replace funds ofthe Borough invested in higher yielding investments 8.3 No Abusive Arbitrage Device The primary bona fide governmental purposes of issuing the 2015Bonds are to finance the costs of the Improvements No action is being taken or will be taken in connection with theissuance of the 2015Bonds that has theeffectof enabling the Borough to exploit thedifference between tax-exempt and taxable interestrates to obtainmaterialfinancial advantage by investing any portion ofthe gross proceeds ofthe 2015Bonds over any period of time and ii overburdening the tax-exempt bond market as resultof issuing the 2015 Bonds in higher amount issuing the 2015Bonds earlier or allowing the 2015Bonds to remain outstandinglonger than is otherwise reasonably necessary to finance the Improvements 8.4 No Intent To Earn Impermissible Arbitrage Profit The Borough will not take any intentionalaction to earn any impermissible arbitrage profit from the investment of gross proceeds ofthe 2015 Bonds 2015BondsMeets Other Requirements for Tax Exemption 9.1 2015Bonds In Registered Form The2015Bonds areissued only in registered form 9.2 No Federal Guaranty Except as otherwise permitted by the Code payment of the principal of or interest on the 2015Bonds is not guaranteed in whole or in part by the UnitedStates or anyagency or instrumentality thereof 9.3 Information Return ToBe Filed The Borough will cause Form8038-G Information Return respecting the 2015Bonds to be timely filed withtheInternal Revenue Service 9.4 2015Bonds Not Hedge Bonds The Borough reasonably expects that atleast 85%ofthe spendableproceeds ofthe 2015Bonds will be used to carry out the governmentalpurposes ofthe 2015Bonds withinthe three-year period beginning on the issue date and ii not more than 50%ofthe proceeds ofthe 2015Bonds will be invested in nonpurpose investments having substantially guaranteed yield for years or more -7- 51466369.2 9.5 Post-Issuance Compliance Procedures The Borough has previously established written procedures attached as Exhibit to ensure that any portion of the 2015Bonds that becomes nonqualified is remediated in accordance withthe requirements under TreasuryRegulations Section1.141-12 and ii monitor the requirements of Sections 141 and 148 ofthe Code after the issue date 10 2015BondsTax Exempt and Not Arbitrage Bonds The Borough expects that bond counsel to the Borough will rely upon the foregoing facts estimates and circumstances in existence on theissue date and the reasonable expectations of the Borough as to future events respecting the 2015 Bonds to enable them to conclude that it is not expected that proceeds of the 2015 Bonds will beused in any manner that would cause the 2015Bonds to be arbitrage bonds and to provide their opinion that the 2015Bonds are governmental obligations theinterest on which is excluded from gross income for federal income tax purposes underSection 103 of the Code DATED September 16 2015 KODIAKISLAND BOROUGH ALASKA By__________ Karleton Short Finance Director Exhibit Draw Down Schedule ExhibitCertificate of Western Financial Group LLC Exhibit Certificateof RBC Capital Markets LLC Exhibit Post-Issuance Compliance Procedures for Tax-Exempt Bonds -8- 1466369.2 KHS Monthly ConstructionCost $6500000.00 $6000000.00 $5500000.00 $5000000.00 $4500000.00 $4000000.00 $3500000.00 $3000000.00 $2500000.00 $2000000.00 $1500000.00 $1000000.00 $500000.00 $-771/i 9/15/2015 $3500000 $3000000 $2500000 $2000000 $1500000 $1000000 $500000 $- KIB Renewaland Replacement Projects Antidpated CashFlow $3150612 $1507792 $1695882 $1369401 $747874 $21024.00 9/15/2015 EXHIBIT CERTIFICATE OF THE FINANCIAL ADVISOR LAWRENCE PIERCE as financial advisor for the Alaska Municipal Bond Bank the Bank hereby certify with respect to the Banks General Obligation Bonds 2015 SeriesThree the Bonds as follows have no reason to believethat the financialinformation found in Appendix ofthe Preliminary Official Statementdated August 192015 and the final Official Statementdated August 26 2015 relating to the Bonds contains an untrue statement ofmaterialfact or omits to statematerial fact necessary to make the statements therein in light ofthe circumstanceunderwhich they were made not misleading in any material respects Payment of the Bonds is secured by reserve fund based on my calculations and affirmed by the Trustee have determined the reservefund requirement to be $58705591.41 as of the date hereof Theamount of the reserve fund requirement is reasonable amount to facilitate marketing of the Bonds at the most favorable interestrates available have computed the yield on the Bonds to be not less than 3.6984% based on the representations made tothe Bank by RBC Capital Markets LLC on behalf of itself and as representative of the underwriters named in the bond purchase contract dated August 26 2015 as tothe offeringprices at which at least 10%of each maturity ofthe Bondswere sold or reasonablyexpected to be sold For purposes of this certificate the term yield means that yield which is computed as described in Section1.148-4 ofthe Treasury Regulations have computed the weighted average maturity of the Bonds to be 17.7084 years The weighted average maturity ofthe Bonds is the sum of the products ofthe issue price and the par amount of each group ofidentical bonds and the number of years to maturity determined separately for each group ofidentical bonds and taking into account mandatory redemption if any divided by the aggregate sale proceeds of the Bonds DATED this 16th day of September 2015 WESTERN FINANCIAL GROUP LLC cEW.IERCE EXHIBIT UNDERWRITERREPRESENTATIONS Alaska Municipal BondBank General Obligation Bonds 2015 SeriesThree This certificate is being delivered by RBC Capital Markets LLC on behalfof itself and as representative ofthe underwriters named in the bond purchase contract dated August 26 2015 the Underwriter in connection with theissuance by theAlaska Municipal BondBank the Bond Bank of the Bond Banks General Obligation Bonds 2015 Series Three the Bonds Each capitalized term used herein but not defined herein shall have the meaning specified for such term in the Federal Tax Certificate dated the date hereof and relating to the Bonds The undersigned is authorized to execute thiscertificate on behalfofthe Underwriter which certifications are not necessarily based on personal knowledge but may instead be based on either due inquiry deemed adequateby the undersigned or institutional knowledge or both regarding the matters setforth herein The Underwriter has made bona fide publicoffering of the Bonds at the prices or the prices corresponding to the yields setforth on the inside cover of the Official Statement On the sale date of the Bonds August 26 2015 at least 10%of each maturity ofthe Bonds except as set forth in the following paragraph were sold to the public at initial offeringprices not greater than the respectiveprices corresponding to the yields shown on the inside cover ofthe Official Statement In the case of the Bonds maturing on October in the years 201620192024 2025 and 2026 the Underwriter herebyrepresents that the actualsales price of such Bonds is consistentwith the Underwriters reasonable expectations that at least 10%of the Bonds ofthat maturity would be soldat the respective initial offeringprice as shown on the inside cover ofthe Official Statement The term public as used herein does not include bond houses brokers dealers and similar persons or organizations acting in the capacity ofunderwritersor wholesalers Theamount of the ReserveFund Requirement as defined in the 2005 General Bond Resolution as amended is reasonable amount to facilitate marketing of the Bonds at the most favorable interest rates available The statementscontained in the Official Statement under the heading Underwriting are true and correct in all material respects These representations are provided to Wohlforth Brecht Cartledge Wohlforth and the Alaska Municipal BondBank to provide them withinformation concerning the Bonds ii Wohlforth to provide them withinformation concerning the municipal bond ofthe University of Alaska iii KL Gates LLP to provide them with information concerning the municipal bond of the Haines Borough and iv Foster Pepper PLLC and Levesque Law Group LLC to provide them withinformation concerning the municipal bonds of the City of King Cove and the Kodiak Island Borough for purposes of formulating their opinions with respect to such municipal bonds and are notto be used or relied upon by any other person The Underwriter expresses no view regarding the legalsufficiency or the correctness of any legal interpretation made by bond counsel nothing herein represents our interpretation of any laws and in particular regulations under the Code and the Underwriter expresses no view regarding the legalsufficiency of any representations made herein DATED this 16th day of September 2015 RBC CAPITAL MARKETS LLC By_________ Authorized Si tory AMBB/General Obligation Bonds 2015 SeriesThree Underwriter Representations Page i\Docs\37421 742\Underwriter Representations.Docx EXHIBIT POST-ISSUANCE COMPLIANCE PROCEDURES FOR TAX-EXEMPT BONDS Kodiak Island Borough Alaska the Borough issues governmental tax-exempt bonds subject to ongoingcompliance obligations that must be met to preserve the tax-exempt status of the bonds Inaddition to loss of tax-exemption adverse consequences can result from failure to comply with Internal Revenue Service IRS restrictions relating to arbitragetiming and use of bond proceeds and other aspects of bond issue However issuers that discover noncompliance as result of the adoption and adherence to written post-issuance compliance policy are eligible for significantly more favorabletreatment when remediating the noncompliance through the IRSs Voluntary Closing Agreement Program Accordingly the Borough has adopted these procedures to assist in identifying and correcting noncompliance in timely manner Responsibility for Maintaining Compliance The Assembly of Borough hasthe overall final responsibility for monitoring whether the Borough is in compliance with post-issuance federaltax requirements for its tax-exempt bonds However the Assembly has delegated to the Finance Director the primary operating responsibility for implementing and monitoring compliance with this policy document The Finance Director shouldconsult with bond counsel when there are questions or concerns about the application of applicable federal law to tax-exempt bond financing or post-issuance tax compliance issue Expenditures of Tax-Exempt Bond Proceeds For each project financed in whole or part with tax-exempt bond proceeds the FinanceDirector will monitor the expenditure of both tax-exempt bond proceeds and funds that are not proceeds of tax-exempt bonds and will track allocations of tax-exempt bond proceeds and funds that are not proceeds of tax-exempt bonds to projectexpenditures For expenditures of tax-exempt bond proceeds the Finance Director will record the date purpose property financed and vendor associated with each expenditure of bond proceeds and identify which expenditures are for the purpose of reimbursing the Borough for prior expenditures Use of Property Financed with Tax-Exempt Bond Proceeds For each issue of tax-exempt bonds the Finance Director will monitor the use of property financed with tax-exempt bond proceeds for the term of the bond issue and for the term of any bonds issued to refund the original issue or issued to refund an issue that refunded the original issue The Finance Director will monitor suchuse no less frequently than once year Arbitrage Yield Restriction andRebate For each issue of tax-exempt bonds the FinanceDirector will monitor the interest earned on investment of tax-exempt bond proceeds on an annualbasis and will cause arbitrage rebate calculations to be made as required by applicable federal law If necessary the FinanceDirector also will cause the appropriate federal arbitrage taxreturns to be prepared and timely filed with the IRS together with any rebate amount owed 51352843 IdentificationofPotentialViolations If at any time during the term of an issue of tax-exempt bonds the Borough discovers that violation of federaltax requirementsapplicable tothat issue may have occurred the Finance Director will consult with bond counsel to determine whether any such violation actually has occurred and if so take prompt action to accomplish an available remedial actionunder applicable IRS regulations or enter into closing agreement with the IRSunder the Voluntary Closing AgreementProgram describedunder Notice 2008-31 or otherfuture published guidance Record Retention Records relating to tax-exempt bonds must be maintained as required by the State Auditors Office However notwithstanding the recordretention requirements set forth by the State Auditors Office records relating to tax-exempt bondsmust be maintained for the term of the bond issue plus three years or in the case of an issuerefunded by one or more subsequent bond issues for the combined term of the issues plus three years Training It is the policy of Borough that the Finance Director and his or her staff as well as the principal operating officials of those departments of the Borough for which property is financed with tax-exempt bonds should be provided with education and training on federaltax requirements applicable to tax-exempt bonds The Borough therefore will enable and encourage those personnel to attend and participate in educational and training programs offered by among others bond counsel the Washington Municipal Treasurers Association and the Washington Finance Officers Association with regard to the federal tax requirements applicable to tax-exempt bonds 51352843