Ordinance 99-72 - Laserfiche WebLink

Home Browse Search

A Determination of Taxability shall not include inclusion of interest on any 1999 Bond in the income of the Bank for purposes of any alternative minimum tax, environmental tax or branch profits tax or on account of the Bank being a "substantial user" or a "related person" within the meaning of Section 147(a) of the Code. In the case of (i) above, no Determination of Taxability shall be deemed to occur unless the City has been given timely written notice by the Bank of such determination by the Internal Revenue Service and afforded an opportunity to participate in and seek at its own expense, a final administrative determination or determination by a court of competent jurisdiction (from which no further right of appeal exists) as to the existence of such Determination of Taxability; provided that the City, at its own expense, delivers to the Bank an opinion of Bond Counsel to the effect that such appeal or action for judicial or administrative review is not without merit and there is a reasonable possibility that the judgment, order, ruling or decision from which such appeal or action for judicial or administrative review is taken will be reversed, vacated or otherwise set aside. In the event of a Determination of Taxability, the City covenants that it shall also pay any interest, additions to tax or penalties, resulting from the interest on the 1999 Bond being includable in the Bank's gross income for federal income tax purposes, and any arrears in interest resulting from such Determination of Taxability. Any such additional amounts (established to the satisfaction of the City) shall be payable by the City to the Bank on the next succeeding Payment Date or, if such amounts become payable after the Maturity Date of the 1999 Bond within 60 days of the date the City is notified by the Bank that such amounts are due. In addition to the foregoing provisions of this section, the interest rate on the 1999 Bond shall be adjusted automatically as of the effective date of any change in the Maximum Corporate Tax Rate (hereinafter defined) or in the Preference Reduction Rate (hereinafter defined), presently 20%, based upon the following calculations; provided, however, that if the 1999 Bond is not a Qualified Tax-Exempt Obligation within the meaning of Section 265(b)(3) of the Internal Revenue Code of 1986, as amended (the "Code"), on the date of its original issuance and delivery, or if the 1999 Bond at any time subsequent to its original issuance and delivery no longer qualifies as a Qualified Tax-Exempt Obligation, then the Preference Reduction Rate shall be adjusted as of the date of original issuance and delivery of the 1999 Bond or as of such subsequent date, as the case may be. Upon the occurrence of any of the foregoing events, the interest rate on the 1999 Bond shall be adjusted to the product obtained by multiplying the interest rate on the 1999 Bond by a fraction, the numerator of which is equal to the sum of: (i) the product of the Fully Taxable Equivalent (hereinafter defined) times one minus the Maximum Corporate Tax Rate in effect as of the day of adjustment, and (ii) the TEFRA Adjustment (hereinafter defined) in effect as of the date of adjustment; and the denominator of which is equal to the sum of: (i) the product of the Fully Taxable Equivalent times one minus the Maximum Corporate Tax Rate in effect as of the date of the original issuance and delivery of the 1999 Bond, and (ii) the TEFRA Adjustment in effect as of the date of the original issuance and delivery of the 1999 Bond. 12