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1997-014-RES WHEREAS, COP, IN CONNECTION WITH THE SALE AND ISSUANCE NOTES, CERTIFICATES, OR OTHER TAX-EXEMPT OBLIGATIONS RESOLUTION NO. 97-014 WHEREAS, the City of Paris, in connection with the sale and issuance of certain bonds, notes, certificates, or other tax-exempt obligations, will have the need to determine to what extent, if any, it will be required to rebate investment earnings of the proceeds of the bonds to the United States of America pursuant to the provisions of Section 148(f)(2) of the Internal Revenue Code of 1986; and, WHEREAS, First Southwest Asset Management, Inc., an affiliate of First Southwest Company, provides professional services necessary to effect such determination, and the City of Paris is desirous of securing the same; and, WHEREAS, the form of the Agreement for Arbitrage Rebate Compliance Services, attached hereto as Exhibit A, should, in all things, be approved, and the Mayor, Eric S. Clifford, should be authorized to execute the same; NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF PARIS, that the form of the Agreement for Arbitrage Rebate Compliance Services with First Southwest Asset Management, Inc., attached hereto as Exhibit A, for professional services to determine to what extent, if any, the City of Paris will be required to rebate investment earnings of the proceeds of certain bonds, notes, certificates, or other tax-exempt obligations to the United States of America pursuant to the provisions of Section 148(f)(2) of the Internal Revenue Code of 1986, be, and the same is hereby, approved; and, BE IT FURTHER RESOLVED, that the Mayor of the City of Paris, Eric S. Clifford, be, and he is hereby, authorized and directed to execute, on behalf of the City of Paris, the Agreement for Arbitrage Rebate Compliance Services with First Southwest Asset Management, Inc., under the terms and conditions and in the form shown in Exhibit A, attached hereto. PASSED AND ADOPTED this 10th day of February, 1997. ~h___ Eric S. Clifford, ~or ATTEST: ~~~L~~~ Mattie Cunningham, City Cle .,\ . , AGREEMENT FOR ARBITRAGE REBATE COMPLIANCE SERVICES BY AND BETWEEN CITY OF PARIS, TEXAS (Hereinnfter Referred to ns the "Issuer") AND FIRST SOUTHWEST ASSET MANAGEMENT, INC. an affiliate of First Southwest Company (Hereinafter Referred to as "First Southwest") It is understood and agreed that the Issuer, in connection with the sale and delivery of certain bonds, notes, certificates, or other L'lx-exempt obligations (the "Bonds"), will have the need to determine to what extent, if any, it will be required to rebate investment earnings of the proceeds of the Bonds to the United States of America (hereinafter referred to as "Arbitrage Amount") pursuant to the provisions of Section 148(1)(2) of the Internal Revenue Code of 1986 (the "Code"). For purposes of this Agreement, the term" Arbitrage Amount" includes payments made under the election to pay penalty in lieu of rebate for a qualified construction issue under Section 148(D( 4) of the Code. We have been requested to provide professional services to the Issuer as such services may be necessary to effect this determination and we are pleased to submit the following proposal for consideration. This proposal, if accepted by the Issuer, shall become the agreement (the "Agreement") between the Issuer and First Southwest effective at the date of its acceptance as provided for herein below. 1. This Agreement shall apply to all issues of tax-exempt bonds delivered subsequent to the effective date of the rebate requirements, to the extent that any particular issue does not qualify for exceptions to the rebate requirements in accordance with Section 148 of the Internal Revenue Code and related Treasury regulations. Provisions of First Southwest 2. We agree to provide our professional services necessary in the determination of the Arbitrage Amount with regard to the Bonds. The Issuer will assume and pay the fee of First Southwest as such fee is set out in Appendix A attached hereto. First Southwest shall not be responsible for any extraordinary expenses incurred in connection with providing such professional services, including any costs incident to litigation, mandamus action, test case or other similar legal actions; unless First Southwest is a party to such litigation and a claim is asserted against First Southwest for work performed under this Agreement. 3. We agree to perform the following duties in connection with providing arbitrage rebate compliance services: a. To cooperate fully with the Issuer in reviewing the schedule of investments made by the Issuer with (i) proceeds from the Bonds, and (ii) proceeds of other funds of the Issuer which, under Treasury Regulations Section 1.148 or any successor regulations thereto, are subject to the rebate requirements of the Code; b. To perform, or cause to be performed, consistent with the Code and the regulations promulgated thereunder, to determine the Arbitrage Amount under Section 148(1)(2) of the Code; c. To provide a report to the Issuer specifying the Arbitrage Amount based upon the investment schedule, the calculations of bond yield and investment yield, and other information deemed relevant by First Southwest. 1 EXHIBIT A Provisions of the Issuer 4. In connection with the perfonnance of the aforesaid duties, the Issuer agrees to the following: a. The fee and expenses due to First Southwest in providing arbitrage rebate compliance services shall be calculated in accordance with Appendix A attached hereto. The fees will be payable upon delivery of the report prepared by First Southwest for each issue of bonds during the tenn of the Agreement unless tenninated earlier. b. That the Issuer will provide First Southwest, and First Southwest shall be entitled to rely upon, all infonnation regarding the issuance of the Bonds and the investment of the proceeds therefrom, and any other infonnation necessary in connection with calculating the Arbitrage Amount. c. That the Issuer will infonn First Southwest of the retirement, prior to the scheduled maturity, of any Bonds included under the scope of this Agreement within 30 days of such retirement. This notification is required to provide sufficient time to comply with Treasury Regulations Section 1.l48-3(g) which requires final payment of any Arbitrage Amount within 60 days of the final retirement of the Bonds. 5. In providing the services set forth in this Agreement, it is agreed that First Southwest shall not incur any liability for any error of judgment made in good faith by a responsible officer or officers thereof, unless it shall be proved that such error of judgment was a result of the gross negligence or willful misconduct of said officer or officers. In the event a payment is assessed by the Internal Revenue Service due to an error by First Southwest, the Issuer will be responsible for paying the correct Arbitrage Amount and First Southwest will be liable for any penalty or interest imposed on the Arbitrage Amount as a result of such error of judgment. Bonds Issued Subsequent to Initial Contract 6. The services contracted for under this Agreement will automatically extend to any additional financing bonds (including financing lease obligations) issued during the stated term of this Agreement, if such bonds are subject to the rebate requirements under Section 148(Q(2) of the Code. In connection with extending the scope of this Agreement to additional financing bonds, the Issuer agrees to the following: a. The Issuer will notify First Southwest of any tax-exempt financing (including financing lease obligations) issued by the Issuer during any calendar year of this Agreement, and will provide First Southwest with such information regarding such other bonds as First Southwest deems necessary in connection with its performance of the arbitrage rebate services contracted for hereunder. b. At the option of the Issuer, any additional financing bonds issued subsequent to the execution of this Agreement may be excluded from the services provided for herein. The Issuer must notify First Southwest of their intent to exclude any specific financing bonds from the scope of this Agreement. Effective Dates of Agreement 7. This Agreement shall become effective at the date of acceptance by the Issuer as set out herein below and remain in effect thereafter for a period of five (5) years from the date of acceptance, provided, however, that this Agreement may be tenninated with or without cause by the Issuer or First Southwest upon thirty (30) days' written notice. In the event of such termination, it is understood and agreed that only the amounts due to First Southwest for services provided and expenses incurred to and including the date of termination will be due and payable. No penalty will be assessed for tennination of this Agreement. In the event this Agreement is tenninated prior to its stated tenn, all records provided to First Southwest with respect to the investment of monies by the Issuer shall be returned to 2 the Issuer as soon as practicable if so requested. In addition, the parties hereto agree that upon tennination of this Agreement First Southwest shall have no continuing obligation to the Issuer regarding any service contemplated herein. Acceptance of Agreement 8. This Agreement is submitted in duplicate originals. When accepted by the Issuer, it, together with Appendix A attached hereto, will constitute the entire Agreement between the Issuer and First Southwest for the purposes and the consideration herein specified. Acceptance will be indicated on both copies and the return of one executed copy to First Southwest. Respectfully submitted, FIRST SOUTHWEST ASSET MANAGEMENT, iNC. Au horized Representative Date I {q{fl ISSUER'S ACCEPTANCE CLAUSE The above and foregoing is hereby in all things accepted and approved by City Council of the City of Pariqon this the 10th day of February, 19.1l. By Authorized Representative Eric S. Clifford Mayor of the City of Paris Title ArnST: Mattie Cunningham, City Clerk APPROVED AS TO FORM: T. K. Haynes, City Attorney 3 APPENDIX A - FEES The Bonds to be initially covered under tins contract include all issues of ta,x-exempt bonds delivered subsequent to the effective dates of the rebate requirements, to tile extent tIlat any particular issue does not qualify for exceptions to tile rebate requirements in accordance witIl Section 148 of tile Internal Revenue Code and related Treasury regulations. The fee for all bonds included in tIllS contract shall be: Annual Fees Description Per Computation Year (1) Base Fee For First Computation Year (General Obligation) $1,800 Base Fee For First Computation Year (Revenue) $2,300 Subsequent Year Fees: General Obligation $600 Revenue $750 (1) A "Computation Year" represents a one year period from the delivery date of the issue to the date that is one year after the delivery date, and each subsequent one-year period thereafter. Therefore, if a calculation is required that covers more than one "computation year," the annual fee is multiplied by the number of computation years contained in the calculation being performed. For example, if the first calculation performed for an issue covers three computation years, the fee for that calculation would be three times the annual fees stated above. The fee for any Bonds under this contract shall only be payable if a computation is required under Section 148(1)(2) of tile Internal Revenue Code of 1986, as amended. In the event that any of the Bonds, comply with an exclusion to the computation requirement as defined by Section 148 of the Internal Revenue Code or related regulations and no calculations were required by First Southwest to make that determination, the specified fee will be waived by First Southwest. For example, certain bonds are excluded from the rebate computation requirement if the proceeds are spent within specific time periods. In the event one of the above-captioned Bonds fulfill the exclusion requirements of the Internal Revenue Code or related regulations, the specified fee will be waived by First Southwest if no calculations were required to make the determination. First Southwest's fees are payable upon delivery of the report prepared by First Southwest, commencing one year after the date of delivery of the Bonds and on each computation date thereafter during the term of tile Agreement, unless terminated earlier. The fees for computations of Arbitmge Amount which encompass more, or less, than one full year of investment data performed during the same computation period shall be prorated to reflect the longer, or shorter, period of work performed during that period. 4