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HomeMy WebLinkAboutNonarbitrage Certificate CITY OF COLUMBIA HEIGHTS, MINNESOTA NON ARBITRAGECERTIFICA TE Section 1. In General. 1.1. This Nonarbitrage Certificate has been prepared, and is being execu- ted and delivered, in compliance with Sections 1.103-13, 1.103-14 and 1.103-15 of the Income Tax Regulations promulgated by the Internal Revenue Service of the United States Department of the Treasury pursuant to Section 103(c) of the Internal Revenue Code of 1954, as amended, for the purpose of establishing the reasonable expectations of the City of Columbia Heights, Minnesota (the "City"), as to future events regarding the $810,000 Commercial Development Revenue Note (Ruvelson & Associates, Incorporated Project) (the "Note"), being issued, sold and delivered on the date of execution of this Nonarbitrage Certificate. 1.2. The undersigned is the Mayor of the City, and has been authorized by resolution of the City adopted on February 22, 1981, to actually issue and deliver the Note. 1.3. Some of the facts and estimates contained in Section 2 of this certificate are based on representations made to the City by Ruvelson & Associates, Incorporated (the "Developer"). Neither the City nor the employees or agents of the City are aware of any facts or circumstances which would cause the City to question the accuracy of the representations made by the Developer. 1.4. To the best of the knowledge and belief of the undersigned the expectations contained in this certificate are reasonable. 1.5. The City has not been notified of any listing or proposed listing of the City in the Internal Revenue Bulletin as an issuer that has been disqualified from certifying its bonds or other obligations. Section 2. Reasonable Expectations. The City reasonably expects, as of the date of execution of this Nonarbitrage Certificate, that: 2.1. The City is issuing and delivering the Note simultaneously with the delivery of this Nonarbitrage Certificate. The Note is dated as of the date hereof, and is being issued pursuant to a resolution adopted by the City Council of the City on the 22nd day of February, 1982. The Note is being sold to the Unionmutual Stock Life Insurance Co. of America (the "Lender"). 2.2. The City will loan the proceeds from the sale of the Note to the Developer. In exchange for the original proceeds from the sale of the Note, the City will receive the obligation of the Developer to repay such loan pursuant to the terms and conditions of the Loan Agreement. The Loan Agreement obligates the Developer to make payments of principal, premium (if any), and interest on the loan which are equal to the payments of principal, premium (if any), and interest due on the Note. In addition, payments of principal, premium (if any), and interest 'I which will be loaned to the Developer pursuant to the Loan Agreement, dated as of the date of the Note and executed by the Developer and the City of Columbia Heights, will be used only to pay the costs described in Section 1 hereof on the date hereof said proceeds will be disbursed as follows: American National Bank and Trust to pay the outstanding principal amount of and Interest due on the City of Columbia Heights $775,000 Commercial Development Revenue Note (Ruvelson & Associates, Incorporated Project), Series 1981 $ Loan Brokerage Fee Special Counsel for Lender Bond Counsel Attorney Fees, City's Legal Counsel Attorney Fees, Borrower's Counsel Incidental Fees including title Insurance, mortgage registration tax, recording fees, certified copies, printing expenses Ruvelson & Associates for reimbursement for Project Costs TOTAL 751,978.12 8,100.00 5,000.00 6,618.00 2,000 3,500 1,300.00 31,503.88 $ 810,000.00 that: 4. Ruvelson & Associates, Incorporated DOES FURTHER CERTIFY a. Neither the Developer nor any related person to the Developer (a related person is a parent, child, spouse or sibling, or a corporation or partner of which the Developer owns or controls more than 50%), nor any tenant of the Project Is the principal user (a principal user of a facility Is a person who uses 10% or more, by value, of the facility) of a facility (other than the Project) which Is located In the City of Columbia Heights, Minnesota, and was acquired or constructed within the last three years with the proceeds of an obligation of the City of Columbia Heights the interest on which Is exempt from federal income taxation pursuant to Section 103(b)(6) of the Internal Revenue Code of 1954, as amended (the "Code"); b. Substantially all of the proceeds of the Note will be used for the acquisition, construction, reconstruction or Improvement of land or property of a character subject to the allowance for depreciation, within the meaning of Section 103(b)(6)(A) of the Code; and at least ninety percent (90%) of the cost as described In ,paragraph 1 hereof to be financed by the proceeds of the Note were paid or Incurred subsequent to September 8, 1980; c. Developer will not permit any person or entity to become a principal user of the Project, within the meaning of Section 103(b)(6)(E) of the Code, If, under'the provisions of Section 103(b)(6) of the Code and the applicable regulations, such action would cause the interest on the Note to become subject to federal income taxes in the hands of the holder thereofl d. Developer will not lease any portion of the Project to the United States or any agency or instrumentality thereof; e. Developer will' not use the proceeds of the Note or any funds of Developer in such a manner as to cause the Note to be classified as an arbitrage bond within the meaning of Section 103(c) of the Code. 2 2.5. The proceeds of the Note described in Section 2.4(a) and 2.4(c) hereof will be expended for Project costs immediately and will not be invested by the City or the Developer. The proceeds of the Note described in Section 2.4(b) hereof could, under Treasury Regulations, Section 1.103-14(e)(3)(viii) be invested for a temporary period of one year, by Developer at an unrestricted yield prior to Developer using them to pay the issuance costs of the Note. However, it is expected that Developer will expend such proceeds immediately upon receipt without investing them. In any event Developer will expend all such proceeds within two months. 2.6. The Developer will make monthly payments of principal and interest on the outstanding principal balance due on the Note, in accordance with the rates and other terms of the Loan Agreement. The Developer will pay the entire outstanding principal balance due on the Note by the date which is twenty-nine years from the date of the Note. The payments made by the Developer pursuant to the Loan Agreement will equal the amounts due from the City to the Lender under the terms of the Note. The Developer's payments under the Loan Agreement will be paid directly to the Lender on account of the City. All payments received by the Lender will be immediately applied to payments due on the Note. No bond fund or reserve fund will be established or maintained for receiving, holding, or investing such payments. 2.7. The actual work of acquiring, constructing and equipping the Project has been completed. 2.8. The City will not issue or sell any additional bonds or other obligations to finance any other facilities for the Developer in the City. 2.9. Except as hereinabove provided, there will be no unspent proceeds of the Note. The term "unspent proceeds" means the proceeds of an issue minus expenditures made with such proceeds other than amounts expended on acquired purpose or nonpurpose obligations. 2.10. No sinking fund will be held or maintained for, or with respect to, the Note. The term "sinking fund" means a debt service fund, redemption fund, reserve fund, replacement fund, or any similar fund, to the extent that the issuer reasonably expects to use the fund to pay principal or interest on the issue. 2.11. No securities or obligations (as such terms are defined in Section 1.103-13(b)(4)(ii) and (iii) of the Regulations), that may be expected to produce a yield over the term of the Note that is in excess of the yield on the Note, are pledged as collateral for the Note. No funds other than those specifically referred to in this Certificate can be considered as pledged as security for the Note because there will be no reasonable assurance that such amounts will be available to meet. debt service on the Note if Developer encounters financial difficulties. 2.12. The Note is not and will not be part of a transaction or series of transactions that attempts to circumvent the provisions of Section 103(c) of the Internal Revenue Code, as amended, or the regulations promulgated thereunder, (a) enabling the City to exploit the difference between tax-exempt and taxable 3 interest rates to gain a material financial advantage and (b) increasing the burden on the market for tax-exempt obligations. day of March, 1982. Dated this --- By Bruce G. Nawrocki Mayor The undersigned represents that to the best of the knowledge, information, and belief of Ruvelson &. Associates, Incorporated, the expectations contained in this Nonarbitrage Certificate are reasonable. RUVELSON &. ASSOCIATES, INCORPO}tATED ,~ / / :~)' ,,'" ." /;:?r // 2 ,7 ~;? '-, '(/ ~~~- James J. Ituve1son President By c 4