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• but the Cit ma contest the validit or a licabilit of an <br /> Y Y Y PP Y Y <br /> law or regulation so long as the System is not thereby subject <br /> to unreasonable penalties or risk of damage or forfeiture. The <br /> City shall construct the improvements or extensions ultimately <br /> determined to be necessary to comply with applicable laws or <br /> regulations so that the System may be used and operated as a <br /> revenue-producing utility, and the City may issue additional <br /> obligations secured by a parity lien on and ratably payable <br /> from the net revenues of the System, as provided in Section 6 <br /> hereof, for the purpose of providing money for said necessary <br /> improvements or extensions . <br /> SECTION 8 . MISCELLANEOUS. <br /> 8 . 01. The City covenants and agrees with the owners <br /> of the Bonds that the investments of proceeds of the Bonds, <br /> including the investment of any revenues pledged pursuant to <br /> Section 6 hereof, any grant proceeds or any other revenues <br /> pledged to the Bonds which are considered proceeds under the <br /> applicable regulations, and accumulated sinking funds , if any, <br /> shall be limited as to amount and yield in such manner that the <br /> Bonds shall not be arbitrage bonds within the meaning of <br /> Section 148 of the Internal Revenue Code of 1986 (the "Code" ) , <br /> and regulations thereunder. On the basis of the existing <br /> • facts, estimates and circumstances, including the foregoing <br /> findings and covenants, the City Council hereby certifies that <br /> it is not expected that the proceeds of the Bonds will be used <br /> in such manner as to cause the Bonds to be arbitrage bonds <br /> under Section 148 of the Code and regulations thereunder . The . <br /> City Council also finds that the e�ception for small <br /> governmental units available under Section 148(f) (4) (C) is <br /> applicable to the Bonds because (i) the City has general taxing <br /> powers, (ii) the Bonds are not private activity bonds under <br /> Section ,.141(a) of the Code, (iii) ninety-five percent or more <br /> of the' net proceeds of the Bonds are to be used for local <br /> governmental activities of the City and (iv) the aggregate face <br /> amount of all tax-exempt bonds (other than private activity <br /> bonds) during the current calendar year is not reasonably <br /> expected to exceed $5, 000, 000 . The City Clerk shall furnish an <br /> arbitrage certificate to the Purchaser embracing or based on <br /> the foregoing certification at the time of delivery of the <br /> Bonds to the Purchaser . <br /> 8 • 02 . The City Council hereby designates the Bonds to <br /> be "qualified tax-exempt obligations" for the purposes of <br /> Section 265 of the Code and finds that the reasonably . <br /> anticipated amount of qualified tax-exempt obligations (other <br /> than private activity bonds) which will be issued by the City <br /> during the current calendar year does not exceed $10, 000, 000 . <br /> • � 8 . 03 . The City Clerk is hereby authorized and <br /> directed to certify a copy of this Resolution and to cause the <br /> -15- <br />