HomeMy Public PortalAboutGEFA- Tax Certificate- Loan No CW2019016- 12/12/19Recipient: CITY OF TYBEE ISLAND
Loan Number: CW2019016
TAX CERTIFICATE
Certain terms that are used herein and that are defined or used in the Internal
Revenue Code of 1986, as amended (the "Code"), or in the Treasury Regulations
issued thereunder are explained in general terms in Exhibit I attached to this Certificate
and made a part hereof. These terms have been marked with an asterisk.
The undersigned officials of CITY OF TYBEE ISLAND (the "Borrower") hereby
certify that we are the duly appointed, qualified, and acting officials of the Borrower set
forth under our respective signatures, and that we have all authority necessary to
execute this Certificate on behalf of the Borrower, and we hereby certify for and on
behalf of the Borrower that:
1. In General
1.1. We are familiar with the loan in the authorized principal amount not to
exceed $500,000 (the "Loan"), being made by the CLEAN WATER STATE
REVOLVING FUND, ADMINISTERED BY GEORGIA ENVIRONMENTAL FINANCE
AUTHORITY (the "Lender") to the Borrower pursuant to the terms of a Loan Agreement,
dated the date hereof, between the Lender and the Borrower, for the purpose of
providing funds that will be used to permanently finance the costs of certain
replacements, additions, extensions, and improvements to the Borrower's
environmental facilities (the "System"). The Loan is a draw -down loan, in which the
Lender will advance loan amounts to the Borrower to pay for eligible costs only after
such costs have been incurred by the Borrower. Proceeds of the Loan will not be
invested before they are used to pay eligible costs. The Borrower reasonably expects
to draw the full amount of the Loan to pay eligible costs within the 3 -year period
beginning on the "issue date."*
2. Private Activity Bond Test
2.1. Either (a) no more than ten percent of the proceeds of the Loan are to be
used for any "private business use"*; or
(b) the payment of the principal of, or the interest on, no more than ten
percent of the proceeds of the Loan is (under the terms of the Loan or any underlying
arrangement) directly or indirectly (1) secured by any interest in (A) property used or to
be used for a "private business use,"* or (B) payments in respect of such property, or (2)
to be derived from payments (whether or not to the Borrower) in respect of property, or
borrowed money, used or to be used for a "private business use."*
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2.2. No proceeds of the Loan are to be used for any "private business use,"*
which use is not related to any "government use"* of such proceeds.
2.3. The proceeds of the Loan that are to be used for any "private business
use"* will not exceed the proceeds of the Loan that are to be used for the "government
use"* to which such "private business use"* relates.
2.4. The amount of the proceeds of the Loan that are to be used (directly or
indirectly) to make or finance loans to persons other than "qualified users"* will not
exceed the lesser of five percent of such proceeds or $5,000,000.
2.5. Without limiting the general nature of the certifications set forth above, the
Borrower certifies as follows:
(1) The Borrower will own and operate the System.
(ii) The System will be available for general public use.
(iii) Use of the System by any person other than a "qualified user"* will be
on the same basis as use by other members of the general public. No portion of
the services, facilities, and commodities provided by the System will be made
available to any one customer (other than a "qualified user*), or limited group of
customers (other than "qualified users"*), on a basis other than the same basis
as such services, facilities, and commodities are made available to the general
public. The Borrower may, however, grant volume discounts to reasonable
classifications of "private users,"* if other "private users"* in the same
classifications are entitled to the same volume discounts.
(iv) The Borrower knows of no facts or circumstances surrounding the
capital improvements to be financed by the Loan that would indicate that the
primary purpose of the capital improvements to be financed by the Loan is to
benefit one "private user* or a limited number of "private users."*
3. Contracts and Other Arrangements
3.1. The Borrower has not entered into and will not enter into any output or take
or take -or -pay contracts or other preferred arrangements with any entity other than a
"qualified user* with respect to the services, facilities, and commodities provided by the
System.
3.2. The Borrower has not entered into and will not enter into any lease or other
contract providing for use of the System with any entity other than a "qualified user."*
3.3. The Borrower has not entered into and will not enter into a "management
contract"* involving the System with any entity other than a "qualified user,"* unless it is
a "qualified management contract."*
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3.4. The Borrower has not entered into and will not enter into any other
arrangements with any entity other than a "qualified user"* that convey special legal
entitlements to the services, facilities, and commodities provided by the System.
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4. Section 149 Matters
4.1. The Loan is not and will not be "federally guaranteed."*
4.2. The Borrower reasonably expects that at least 85 percent of the spendable
proceeds of the Loan will be used to carry out the governmental purposes of the Loan
within the 3 -year period beginning on the "issue date."* Not more than 50 percent of the
proceeds of the Loan will be invested in nonpurpose investments having a substantially
guaranteed yield for 4 years or more.
To the best of our knowledge, information, and belief. there are no other facts,
estimates, or circumstances that would materially change any of the foregoing
certifications_ The representations contained in this Certificate are made for the benefit
of the Lender and may be relied upon by the Lender in determining whether or not the
interest on the Loan is subject to income taxation by the United States under existing
statutes, regulations, and decisions.
Dated: / (2.--/.1.2.-1/.
CITY OF TYBEE ISLAND
Signature
Print Name:S7-1
Title:j(,n-
(SEAL)
Attest Signature.94--4-4--E
Print Name: ',Lel-' ±
Title: eLL
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EXHIBIT I
DEFINITIONS
The following definitions are furnished only as general guidelines. For complete
definitions, competent tax counsel should be consulted.
"Eligible Expense Reimbursement Arrangement"
"Eligible expense reimbursement arrangement" means a "management contract"*
under which the only compensation consists of reimbursements of actual and direct
expenses paid by the "service provider"* to "unrelated parties"* and reasonable related
administrative overhead expenses of the "service provider."*
"Federally Guaranteed"
(1) An obligation will be considered to be "federally guaranteed" if:
(a) the payment of principal or interest with respect to such obligation is
guaranteed (in whole or in part) by the United States (or any agency or
instrumentality thereof);
(b) such obligation is issued as part of an issue and 5% or more of the
proceeds of such issue are to be -
(i) used in making loans the payment of principal or interest with
respect to which are to be guaranteed (in whole or in part) by the United States
(or any agency or instrumentality thereof), or
(ii) invested (directly or indirectly) in federally insured deposits or
1p accounts; or
(c) the payment of principal or interest on such obligation is otherwise
indirectly guaranteed (in whole or in part) by the United States (or any agency or
instrumentality thereof).
(2) A federally insured deposit or account means any deposit or account in a
financial institution to the extent such deposit or account is insured under federal law by
the Federal Deposit Insurance Corporation, the Federal Savings and Loan Insurance
Corporation, the National Credit Union Administration, or any similar federally chartered
corporation.
(3) An obligation will not be treated as federally guaranteed if the obligation is
guaranteed by:
(a) the Federal Housing Administration, the Veteran's Administration, the
Federal National Mortgage Association, the Federal Home Loan Mortgage
Corporation, or the Government National Mortgage Association; or
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(b) the Student Loan Marketing Association.
(4) The provisions prohibiting an obligation from being federally guaranteed are
inapplicable to:
(a) proceeds of an issue invested for an initial temporary period until such
proceeds are needed for the purpose for which such issue was issued,
(b) investments of a bona fide debt service fund.
(c) investments of a reserve that meets the requirements of Section
148(d) of the Code,
(d) investments in bonds issued by the United States Treasury, or
(e) other investments permitted under regulations.
"Government Use"
"Government use" means any use other than a "private business use."*
"Issue Date"
"Issue date" means the first date on which the aggregate draws under the Loan
exceed the lesser of $50,000 or 5 percent of $500,000.
"Managed Property"
"Managed property" means the portion of facilities or capital projects, including
land, buildings, equipment, or other property, financed in whole or in part with proceeds
of the Loan, with respect to which a "service provider"* provides services.
"Management Contract"
"Management contract" means a management, service, or incentive payment
contract between the Borrower and a "service provider"* under which the "service
provider"* provides services for a "managed property."* A "management contract"*
does not include a contract or portion of a contract for the provision of services before a
managed property is placed in service (for example, pre -operating services for
construction design or construction management).
"Private Business Use"
"Private business use" means use (directly or indirectly) in a trade or business
carried on by any person other than a "qualified user."* For purposes of the preceding
sentence, use as a member of the general public is not taken into account, and any
activity carried on by a person other than a natural person is treated as a trade or
business.
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"Private User"
"Private user" means a person other than a "qualified user."*
"Qualified Management Contract"
"Qualified management contract" means a "management contract * that (1) is an
"eligible expense reimbursement arrangement"* or (2) meets all of the applicable
requirements set forth in (a), (b), (c), (d), (e), and (f) below.
(a) General Financial Requirements.
(1) In general. The payments to the "service provider* under the
contract must be reasonable compensation for services rendered during the
term of the contract. Compensation includes payments to reimburse actual
and direct expenses paid by the "service provider"* and related
administrative overhead expenses of the "service provider."*
(2) No net profit arrangements. The contract must not provide to
the "service provider"* a share of net profits from the operation of the
"managed property."* Compensation to the "service provider"* will not be
treated as providing a share of net profits if no element of the compensation
takes into account, or is contingent upon, either the "managed property's"*
net profits or both the "managed property's"* revenues and expenses for
any fiscal period. For this purpose, the elements of the compensation are
the eligibility for, the amount of, and the timing of the payment of the
compensation. Further, solely for purposes of determining whether the
amount of the compensation meets the requirements of this paragraph (2),
any reimbursements of actual and direct expenses paid by the "service
provider"* to "unrelated parties"* are disregarded as compensation.
Incentive compensation will not be treated as proving a share of net profits
if the eligibility for the incentive compensation is determined by the "service
provider's"* performance in meeting one or more standards that measure
quality of services, performance, or productivity, and the amount and the
timing of the payment of the compensation meet the requirements of this
paragraph (2).
(3) No bearing of net losses of the "managed property". The
contract must not, in substance, impose upon the "service provider"* the
burden of bearing any share of net losses from the operation of the
"managed property."* An arrangement will not be treated as requiring the
"service provider"* to bear a share of net losses if: (i) the determination of
the amount of the "service provider's"* compensation and the amount of
any expenses to be paid by the "service provider"* (and not reimbursed),
separately and collectively, do not take into account either the "managed
property's"* net losses or both the "managed property's"* revenues and
expenses for any fiscal period; and (ii) the timing of the payment of
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compensation is not contingent upon the "managed property's"* net losses.
For example, a "service provider"* whose compensation is reduced by a
stated dollar amount (or one of multiple stated dollar amounts) for failure to
keep the "managed property's"* expenses below a specified target (or one
of multiple specified targets) will not be treated as bearing a share of net
losses as a result of this reduction.
(b) Term of the Contract and Revisions. The term of the contract,
including all "renewal options,"* is no greater than the lesser of 30 years or 80
percent of the weighted average "reasonably expected economic life"* of the
"managed property."* A contract that is materially modified with respect to any
matters relevant to this definition is retested under this definition as a new
contract as of the date of the material modification.
(c) Control Over Use of the "Managed Property."* The Borrower must
exercise a significant degree of control over the use of the "managed property."*
This control requirement is met if the contract requires the Borrower to approve
the annual budget of the "managed property,"* capital expenditures with respect
to the "managed property,"* each disposition of property that is part of the
"managed property,"* rates charged for the use of the "managed property."* and
the general nature and type of use of the "managed property"* (for example, the
type of services). For this purpose, for example, the Borrower may show
approval of capital expenditures for the "managed property"* by approving an
annual budget for capital expenditures described by functional purpose and
specific maximum amounts, and the Borrower may show approval of dispositions
of property that is part of the "managed property"* in a similar manner. Further,
the Borrower may show approval of rates charged for use of the "managed
property"* by either expressly approving such rates (or the methodology for
setting such rates) or by including in the contract a requirement that the "service
provider"* charge rates that are reasonable and customary as specifically
determined by an independent third party.
(d) Risk of Loss of the "Managed Property."* The Borrower must bear the
risk of loss upon damage or destruction of the "managed property"* (for example,
upon force majeure). The Borrower does not fail to meet this risk of loss
requirement as a result of insuring against risk of loss through a third party or
imposing upon the "service provider"* a penalty for failure to operate the
"managed property"* in accordance with the standards set forth in the
"management contract."*
(e) No Inconsistent Tax Position. The "service provider"* must agree that
it is not entitled to and will not take any tax position that is inconsistent with being
a "service provider"* to the Borrower with respect to the "managed property."*
For example, the "service provider"* must agree not to take any depreciation or
amortization, investment tax credit, or deduction for any payment as rent with
respect to the "managed property."*
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(f) No Circumstances Substantially Limiting Exercise of Rights. The
"service provider"* must not have any role or relationship with the Borrower that,
in effect, substantially limits the Borrower's ability to exercise its rights under the
contract, based on all the facts and circumstances. This requirement is satisfied
if:
(1) no more than 20 percent of the voting power of the governing
body of the Borrower in the aggregate is vested in the directors, officers,
shareholders, partners, members, and employees of the "service provider"*;
(2) the governing body of the Borrower does not include the chief
executive officer of the "service provider"* or the chairperson (or equivalent
executive) of the "service provider's"* governing body; and
(3) the chief executive officer of the "service provider"* is not the
chief executive officer of the Borrower or any of the Borrower's related
parties (as defined in Treasury Regulation Section 1.150-1(b)). For
purposes of the above, the phrase "service provider"* includes related
parties (as defined in Treasury Regulation Section 1.150-1(b)) and the
phrase "chief executive officer" includes a person with equivalent
management responsibility.
"Qualified User"
"Qualified user" means a state or political subdivision of a state or any
instrumentality thereof.
"Reasonably Expected Economic Life"
The average "reasonably expected economic life" of the "managed property"*
shall be determined:
(1) by taking into account the respective costs of such "managed
property"* and
(ii) as of the date on which the "managed property"* is "placed in
service"* (or is expected to be "placed in service"*).
Land is not taken into account. The economic life of assets is to be determined
on a case by case basis (although Revenue Procedure 62-21 and the ADR system
where applicable may be used to establish the economic lives of structures and other
assets, respectively).
"Renewal Option"
"Renewal option" means a provision under which either party has a legally
enforceable right to renew the contract. Thus, for example, a provision under which a
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contract is automatically renewed for 1 -year periods absent cancellation by either party
is not a renewal option (even if it is expected to be renewed).
"Service Provider"
"Service provider" means any person other than a "qualified user* that provides
services to or for the benefit of the Borrower under a "management contract."*
"Unrelated Parties"
"Unrelated parties" means persons other than a related party (as defined in
Treasury Regulation Section 1.150-1(b)) or a "service provider's"* employee.
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