Minutes 05/25/1999 - Laserfiche WebLink

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May 25, 1999 Financial Impact: · QZABs will be general obligation debt of the City. The repayment period for these bonds is estimated at 14 years. · The issuance of the bonds for school construction projects would be considered an "advance" of future CIP authorizations. · As these bonds are "interest free," the amount of debt service will be less than that normally projected on general obligation bonds. This will have a favorable impact on the City's goals with respect to debt service as a percent of operating revenues, while accomplishing the same level of debt funding. Motion by Mr. Benn, and seconded by Mr. Griffin, to adopt the following resolution, and was adopted by the following vote: "A RESOLUTION AUTHORIZING THE ISSUANCE AND SALE OF QUALIFIED ZONE ACADEMY BONDS. 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 to improve 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; 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 the QZAB issuer certify that it has written assurances that the private business contribution requirement of Section 1397E(d)(2) of the Tax Code will be met with respect to the academy; and A requirement that the eligible local education agency specify the type and quality of contributions from private entities acceptable to be counted as "qualified contributions" for purposes of the private business contribution requirement; and WHEREAS, for purposes of this resolution: The term "qualified purpose" means, with respect to any qualified zone academy, (I) rehabilitating or repairing the public school facility in which the academy is established, and (ii) providing equipment for use at such academy.