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Section 4 . The Bonds shall be negotiable instruments to <br /> the extent provided by RCW 62A. 8-102 and 62A. 8-105 . <br /> Section 5 . The City covenants that it will take all <br /> actions necessary to prevent the interest on the Bonds from <br /> being included in gross income for federal income tax purposes , <br /> and that it will neither take any action nor make or permit any <br /> use of proceeds of the Bonds or other funds of the City at any <br /> time during the term of the Bonds which will cause the interest <br /> on the Bonds to be included in gross income for federal income <br /> tax purposes . Further , the City covenants that , if all proceeds <br /> of the Bonds have not been spent within six months from the date <br /> of issuance of the Bonds , it will calculate, or cause to be <br /> calculated, and rebate to the United States all earnings from <br /> the investment of Bond proceeds that are in excess of the amount <br /> that would have been earned had the yield on such investments <br /> been equal to the yield on the Bonds , plus all income derived <br /> from such excess earnings , to the extent and in the manner <br /> required by Section 148 of the United States Internal Revenue <br /> Code of 1986 and applicable regulations . In the event the City <br /> shall fail to meet the rebate requirements applicable to the <br /> Bonds under Section 148 of such Code, the City covenants that , <br /> to the extent permitted by that Section, it shall pay the <br /> penalty provided in Subsection 148(f) (7) (C) if required to <br /> prevent a loss of the exclusion from gross income for federal <br /> tax purposes of interest on the Bonds . <br /> - 7 - <br />