05-B Arbitrage Rebate Contract - Laserfiche WebLink

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permitting the commingling of tunds, require that bond proceeds be `carved-out" for purposes of calculating rebate. Interest must be allocated to the portion of the commingled Tund tha[ represents bond proceeds of [he issue in question. 3. Transferred Proceeds Calcularions. When a bond issue is refmanced (refunded) by another issue, special services relating to "transferred proceeds" calculations may bave to be performed. ~Under the regulations, when proceeds of a refunding issue aze used to pay principal on a prior issue, a pro rata portion of the refunded bond proceeds are treated as "transferred" ro the refunding issue. Although no funds aze physically transferred from one issue to another, it is often necessary to perform these calculations for rebate purposes. 4. Debt Service Fund Residual Calcularions. Because tax rates aze established using an eslimated collection percentage, the balance in the debt service fund (often referred to as the Interest & Sinking Fund) may exceed the aznount necessary to pay the current yeaz's debt service requirements. Any such excess amounts in a debt service fund must be treated as a"reserve fund," thereby subjecting the excess balance to the rebate requirements. To the extent that any amounts deposited in the debt service fund remain for more than thirteen months on a first-in, fust-out 6asis, tha[ excess is classified as a"reserve fund portion" un[il used for payment of debt service. Special services are requued ro complete these debt service fund residual calculations. Variable/Floating Rate Bond Issues. Special services are also required to perform the azbiuage rebate calculations for variable ra[e bonds. A bond is a variable rate bond if [he interest rate paid on the bond is dependent upon an index which is subject to changes subsequent to the issuance of the bonds. The computational requirements of a variable rate issue are more complex than those of a fixed rate issue and, accordingly, require signiFicantly more time ro calculate. For example, it is necessary to evaluate both a five-year yield as well as one-year yield increments [o determine which yield is most beneficial to the issuer. 6. Yield Restriction Analysis/Yield Reduction Computations. The Code provides that proceeds of a bond issue may not be invested above the yield on the bond unless an applicab(e exception applies which provides a temporary period during which prceeeds are not yield restricted. First Southwest provides analysis to determine the aznount of proceeds which must be yield restricted and provides computations ro verify that the proceeds have been properly restricted. In addition, the 1993 Treasury Regulations provide that a yield reduction payment may be made in lieu of yield restricting prceeeds. First Southwest will provide [he necessary computations to determine the amount of yield reduction payment which must be made. The fee for any Bonds under this contract shall only be payable if a computation is required under Section 148(f)(2) of the Code. In the event that any of the Bonds, fall within an exclusion to the computation requirement as defined by Section 148 of the Code or related regulations and no calculations were required by Ficst Southwest to make that detetxnination, no fee will be charged for such issue. For example, certain bonds are excluded from the rebate computation requirement if [he proceeds are spent within specific tune periods. In the event a particulaz issue af Bonds fulfills the exclusion requiremenLS oF the Code or related regulations, the specified fee will be waived by Fiist Southwest if no calculations were required to make [he deteanination. Recogni2ing that computational complexities are reduced when all or the majority of [he gtoss proceeds of an issue ue expended, it is Fust SouthwesYs policy to reduce fees to the following levels, as appropriate: Per issue fees for each circumstance i[emized below shall be: ❑ Proceeds expended in prior yeaz. Liability updated and report issued. $500 ❑ Debt Service Residual Calculation only. $1,250 ❑ Reserve Fund calculation only. $1,250 ❑ Escrow Fund only. $500 ❑ Rebate Fund only. $500 ❑ Yield RestricriodYield Reduction Computation only. $2,000