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R-01-69 A RESOLUTION AUTHORIZING THE ISSUANCE OF UP TO $885,054 IN CITY OF PORTSMOUTH, VIRGINIA GENERAL OBLIGATION QUALIFIED ZONE ACADEMY BONDS AND SETTING FORTH THE FORM, DETAILS AND PROVISIONS FOR THE PAYMENT THEREOF. WHEREAS, the Council (the "Council") of the City of Portsmouth. Virginia (the "City"), has determined that it is necessary to finance a portion of the pubhc school building renovation, rehabilitation and repair and public school equipment acquisition projects constituting a portion of the City's Long-Term Capital Improvement Program for the Portsmouth Public Schools (the "School Projects"), and that it is necessary and expedient to borrow up to $885,054 and to issue general obligation bonds of the City to provide funds to pay the costs of the School Projects; and WHEREAS, a public hearing on the general obligation bonds has been held after notice was published in accordance with the requirements of Section 15.2-2606 of the Code of Virginia of 1950, as amended (the "Virginia Code"); and WHEREAS, the federal Taxpayer Relief Act of 1997 added a new section, Section 1397E, to the Internal Revenue Code of 1986, as amended (the "Tax Code"), to authorize a new type of debt instrument known as a qualified zone academy bond ("QZAB"); and WHEREAS, QZABs are taxable bonds issued by a state or local government the proceeds of which are to be used for qualified purposes with respect to certain eligible public schools; and WHEREAS, in lieu of receiving all or a portion of periodic interest payments from the issuer, an eligible holder of a QZAB receives a federal income tax credit for each year the QZAB is outstanding; and WHEREAS, the federal income tax credits provided by Section 1397E of the Tax Code are designed to compensate the QZAB holder for lending money to the issuer and to function as payments of interest on the QZAB, and the intent of the federal tax credits is to permit the QZAB to be issued with little or no stated interest or original issue discount; and WHEREAS, Section 1397E of the Tax Code sets forth a number of certification and similar requirements to be satisfied for a valid issuance of QZABs, including, without limitation, the following: A requirement that 95 percent of the proceeds of a QZAB issue be used for a qualified purpose with respect to a qualified zone academy established by an eligible local education agency; A requirement that thc QZAB issuer certify that it has written assuranccs that the private business contribution requirement of Section 139TE(d)(2) of the Tax Code will be met with respect to the academy; and