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HomeMy WebLinkAboutCertificate of City & RedevelopEXHIBIT B CERTIFICATE OF CITY AND REDEVELOPMENT COMMISSION RE: TAX MATTERS We, Robert Waiz and Peggy Wilder, the duly elected, qualified and acting Mayor and Clerk-Treasurer of the City of Jeffersonville, Indiana ("City"), respectively, and Barry Cahill, the duly appointed, qualified and acting President of the Jeffersonville Redevelopment Commission ("Commission") hereby certify that we are the officers under whose jurisdiction the Commission will operate the Leased Premises, as defined in the Lease Agreement ("Lease") between the Jeffersonville Redevelopment Authority ("Authority"), as lessor and the Commission, as lessee, dated as of November 1, 1990, as amended on September 10, 1991 and August 14, 1996 and as further amended on June 23, 2004. We understand that the Authority will be relying on this certificate in connection with the issuance of the Authority's Lease Rental Refunding Revenue Bonds, Series 2004 ("Bonds"), under a Trust Agreement, dated as of August 15, 1996 between the Authority and J.P. Morgan Trust Company, National Association (formerly NBD Bank, N.A.), Indianapolis, Indiana, as trustee ("Trustee"), as supplemented and amended by a First Supplemental Trust Agreement dated as of May 1, 2004, between the Authority and J.P. Morgan Trust Company, National Association, as trustee ("2004 Trustee"), and the completion and execution of the Authority's Arbitrage Certificate ("Arbitrage Certificate"). We farther certify that this certificate is executed for the purpose of supporting the representations and conclusions made in the Arbitrage Certificate which (a) establish that the Bonds are obligations the interest on which is excludable from gross income for federal income tax purposes pursuant to Section 103 of the Internal Revenue Code of 1986, as amended and in effect on this date, and the applicable rulings, judicial decisions and regulations ("Code") and (b) sets forth the facts and estimates upon which the Authority bases its reasonable expectations that the Bonds are not private activity bonds or arbitrage bonds under (i) Sections 141 and 148 of the Code and (ii) Treasury Regulations Sections 1.141-0 through -16, 1.148-0 through -11, 1.149(b)-1, 1.149(g)-1 and 1.150-1 through -2, to the extent applicable on this date ("Regulations"). Unless otherwise indicated by the context in which they are used, words and phrases used herein that are defined in the Code or the Regulations shall have the meanings ascribed to them in the Code or the Regulations, and words and phrases used herein that are defined in the Agreement or the Lease shall have the meaning ascribed to them in the Agreement or the Lease, respectively. We further certify that: 1. Payment of Lease Rentals. The rentals are payable on each June 28 and December 28 out of the Special Benefits Tax (as defined below). Although not pledged, the Commission intends to use Tax Increment (as defined in the final Official Statement dated June 9, 2004), and to the extent Tax Increment is not sufficient, the Commission will levy the Special Benefits Tax. Upon receipt of each semiannual distribution of Tax Increment, the City shall deposit with the Trustee an amount of Tax Increment equal to the next rental payment due under the Lease. To the extent that Tax Increment is not sufficient to pay the lease rentals due under the Lease, the Commission is obligated to levy a tax on all taxable property in the Jeffersonville Redevelopment District ("Special Benefits Tax") in an amount sufficient, with Tax INDY1381450vl Increment to produce the necessary funds with which to pay the rentals provided for in the Lease on their due dates. It is reasonably expected that Tax Increment on deposit in the Allocation Fund and any amounts received from the Special Benefits Tax will not exceed the amount of the lease rentals due under the Lease for that year, which amount will not exceed the principal of and interest on the Bonds and any fiscal agency charges due for that year. 2. No Other Sinking Funds. Other than the funds described above and in the Authority's Arbitrage Certificate, there are no other funds or accounts of the Commission or the City established pursuant to the Lease, or otherwise, which, (i) are reasonably expected to be used directly or indirectly to pay rent due under the Lease or debt service on the Bonds or which are pledged as collateral to secure payment of rent due under the Lease or debt service on the Bonds, (ii) for which there is reasonable assurance that amounts therein will be available to pay rent due under the Lease or debt service on the Bonds, or (iii) for which the Commission or the City has agreed to maintain a particular balance for the direct or indirect benefit of the owner of the Bonds. 3. Rebate Requirement. The Issuer and the City certify that to the extent necessary to preserve the exclusion from gross income of interest on the Bonds for federal tax purposes, it will rebate any arbitrage profits to the United States of America in accordance with Section 148(1) of the Code and the Regulations promulgated thereunder. The Issuer will comply with the Memorandum on Compliance with Section 148(1) attached as Exhibit C to the Arbitrage Certificate. 4. Tax Covenants. In order to preserve the exclusion from gross income of interest on the Bonds under federal law, the City and the Commission represent and agree that: (a) The Project is available for use by members of the general public. Use by a member of the general public means use by natural persons not engaged in a trade or business. No person or entity, other than the Authority, the Commission, the City or another state or local governmental unit, will use more than 10% of the proceeds of the Bonds or property financed by the bond proceeds other than as a member of the general public. The Project consists of certain public improvements in the Falls Landing Riverfront Economic Development Area. No person or entity other than the Authority, the Commission or the City or another state or local governmental unit will own property financed by bond proceeds or will have actual or beneficial use of such property pursuant to a lease, a management, service or incentive payment contract, an arrangement including a take-or-pay or other type of output contract or any other type of arrangement that conveys other special legal entitlements and differentiates that person's or entity's use of such property from the use by the general public, unless such uses in the aggregate relate to no more than 10% of the proceeds of the Bonds. If the Issuer enters into a management contract for the Project, the tenns of the contract will comply with the Regulations and IRS Revenue Procedure 97-13, as amended, supplemented or superseded from time to time, so that the contract will not give rise to private business use under the Code and the Regulations, unless such use in the aggregate will not relate to more than 10% of the proceeds of the Bonds. (b) No more than 10% of the principal of or interest on the Bonds will (under the terms of the Bonds, the Lease or any underlying arrangement), directly or indirectly, be secured by an interest in property used or to be used for a private business use or payments in respect of -2- INDY 1381450vl such property or to be derived from payments in respect of such property or borrowed money used or to be used for a private business use. (c) No more than 5% of the Bond proceeds will be loaned to any entity or person other than a state or local governmental unit. No more than 5% of the Bond proceeds will be transferred, directly or indirectly, or deemed transferred to a nongovernmental person in any manner that would in substance constitute a loan of the Bond proceeds. (d) The City and the Commission reasonably expect, as of the date hereof, that the Bonds will not meet either the private business use test described in paragraph (a) and (b) above or the private loan test described in paragraph (c) above during the entire term of the Bonds. (e) No more than 5% of the proceeds of the Bonds will be attributable to private business use as described in (a) and private security or payments described in (b) attributable to unrelated or disproportionate private business use. For this purpose, the private business use test is applied by taking into account only use that is not related to any government use of proceeds of the issue (Uurelated Use) and use that is related but disproportionate to any governmental use of those proceeds (Disproportionate Use). (f) Neither the City nor the Commission will take any action nor fail to take any action with respect to the Bonds that would result in the loss of the exclusion from gross income for federal income tax purposes of interest on the Bonds pursuant to Section 103 of the Code. (g) The Bonds are not private activity bonds as defined in Section 141 of the Code 5. The City has designated the Bonds as qualified tax exempt obligations for purposes of Section 265(b)(3) of the Code, reasonably expects not to issue or have issued on its behalf in the calendar year hereof tax exempt obligations in an amount which, when added to the principal amount of the Bonds, would exceed $10,000,000. 6. To the best of our knowledge, information, and belief, the above expectations are reasonable and there are no other facts, estimates or circumstances that would materially change any of the foregoing certifications or conclusions. We understand that this certificate will be relied upon by the Authority, the purchasers of the Bonds and Ice Miller in rendering its opinion as to various legal issues, including the excludability from gross income of interest on the Bonds for federal tax purposes. We further understand that the facts contained in this certificate will be used by the Authority, Ice Miller and the Authority's financial adviser to prepare or review the offering materials and disclosure documents to be distributed in connection with the sale of the Bonds. The representations contained in this Certificate may be relied upon by Ice Miller and others in determining whether the Bonds constitute arbitrage bonds within the meaning of Section 148 of the Code and whether the interest on the Bonds is subject to inclusion in gross income for federal income tax purposes or is subject to income taxation by the State of Indiana under existing statutes, regulations, and decisions. -3- INDY1381450vl Dated: June 23, 2004 CITY Mayor NVILLE, INDIANA -4- INDYI381450vl