1k. Electing to Designate Certain Bonds Issued in 1986 as Qualified Tax-Exempt Obligations LeFevere
t
I Lefler
Kennedy'
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2000 First Bank Place West r•e. t,• r(.,-. 60 ..1.1.-.1 94
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inneapolis March 22 , 1989 "'�" "'
innesota 55402 /, /**64 At S,
e..•,..? To mow• � G s�v,J'.Lwr
Telephone(612)333-0543 A-6/P.
Telecopier(612)333-0540 City of Chanhassen
Ill. Dennis O'Brien 690 Coulter Drive
John E. Drawz Chanhassen, Minnesota 55317 .3 /zy/P!
David J. Kennedy Attn: Don Ashworth
oseph E. Hamilton City Manager S e..�i7 /e.7'�m'. w`f St..f e.v
ohn B. Dean 4' �yj Ilskc L4, ,c 4 wa.j :.1e«1'. c a! 4
lenn E. Purdue
RichardJ Schieffer Re: $195 ,000 General Obligation Equipment Certificates Yilir,
CharlesL. LeFevere of Indebtedness of 1986
Tames J. Thomson,Jr.
homas R. Galt City of Chanhassen, Minnesota
.teven B Schmidt
John G. Kressel Dear Don: s' 41 4/c boo 6. o . Z3„.1s _/ /98t
mes M. Strommen
a 1 7
onald H. Batty
illiam P Jordan One of the many features of the Federal 1986 Tax Reform
William R. Skallerud Act was a provision dealing with the ability of finan-
CavidD Heine cial institutions owning municipal bonds to deduct a
avid D. Beaudoin
I
g p
even M Tallen percentage of the interest expense connected with such
ary Frances Skala ownership. The new law limited this deduction to those
Leslie M Altman bonds of issuing governmental units that issued less
imothy J awlenty
olfA. Sponheim than $10 million in any calendar year and designated
ulieA. Bergh the bonds for that purpose (bank qualified bonds) .
Darcy L. Hitesman
David C. Roland
I are a n A. Chamerlik When the City issued the above listed Bonds the desig-
ul D. Baertschi nation as bank qualified bonds was made pursuant to
rdenFritz language in the congressional bill under consideration
layton L. Leflevere, Retired
Ierbert P Lefler, Retired at the time, H.R. 3838 , but when the provision was
actually passed with an effective date of August 8,
1986 , the numbering of the relevant section was
changed.
ICongress apparently feels that it is necessary for the
issuers of bank qualified bonds to redesignate the
I bonds under the new code section and a provision to
that effect was in the Technical and Miscellaneous
Revenue Act of 1988.
I Because in the resolution authorizing the sale and
issuance of the Bonds the City promised to do whatever
it could to preserve the tax exempt status of the
I interest on the Bonds and the bank qualified desig-
nation, we think it important that the election to
redesignate be made. A form resolution to that effect
I is included for your use. We recommend that it be
adopted.
I MAR 2 4 1989
CI7_Y-OF CHANHASSEAI
March 22 , 1989
Page Two
The Treasury Department has offered no guidance as to
what to do about the election resolution. Presumably,
it is to be filed with the IRS at some point. In the
meantime, if you will return a certified copy of the
resolution tows we will file it with the bond tran-
script, and if a future filing with the IRS is required
we will notify you asking for your direction to us to
make the appropriate filing. We will not make the
filing without the instruction of the City to do so.
There is no charge for this service or for any future
filing if requested.
Yours very truly,
LeFEV „ LEFLER, KENNEDY, I
O' : 'IENDRAWZ
a P, ofessio 7 Association
By ► /Ma _ 1
Davi . Kennedy
DJK:caw
Enclosure
cc: Andy Merry '
0511RESB.F16
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CITY OF CHANHASSEN
Pursuant to due call and notice thereof, a
' meeting of the City Council of the City of Chanhassen, Minnesota,
was held on the day of , 1989 . The following
' members were present:
and the following members were absent:
* * * * * * * * *
Member introduced the following resolu-
' tion and moved its adoption:
RESOLUTION NO.
RESOLUTION ELECTING TO DESIGNATE
' CERTAIN BONDS ISSUED IN 1986
AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
' BE IT RESOLVED By the City Council of the City of
Chanhassen, Carver and Hennepin Counties, Minnesota (Issuer) as
follows:
' Section 1 . Findings.
1 . 01. The Issuer issued its $195 , 000 General Obligation
' Equipment Certificates of Indebtedness of 1986 (the "Bonds" )
while the federal Tax Reform Act of 1986 was pending with a
retroactive effective date , specifically on or after January 1,
1986 , and on or before August 7 , 1986 ; and
1 . 02 . When the Bonds were issued, the Issuer made a desig-
nation that it intended or otherwise declared its intent to
qualify the Bonds under Section 802 (e) (3) of H.R. 3838 of the
99th Congress as passed by the House of Representatives; and
' 1 .03 . The Issuer covenanted to take such actions as are
necessary to effectuate such attempted designation; and
(ii) obligations issued to refund (or which are
part of a series of obligations issued to
refund) obligations issued before August 8,
1986, which were not industrial development
bonds (as defined in Section 103 (b) (2) of the
federal Internal Revenue Code of 1954 , as
amended, as in effect on the day before the
date of the enactment of the federal Tax
Reform Act of 1986) or a private loan bond
(as defined in Section 103 (o) (2) (A) as so in
effect, but without regard to any exemption
from such definition other than Section
103 (o) (2) (A) ) ; '
(c) the Issuer hereby designates the Bonds as "quali-
fied tax-exempt obligations" for purposes of
Section 265 (b) (3) of the Code;
(d) at the time the Bonds were issued, the amount of
tax-exempt obligations (other than private activ-
ity bonds , treating qualified 501 (c) (3) bonds as
not being private activity bonds) which had been
and were to be issued in 1986 by the Issuer (and
all entities treated as one issuer with the
Issuer, and all subordinate entities thereof)
during calendar year 1986 was not reasonably
expected to exceed $10, 000, 000; and
(e) not more than $10 , 000 ,000 of obligations issued by
the Issuer during calendar year 1986 have been
designated for purposes of Section 265 (b) (3) of
the Code.
The motion for adoption of the foregoing resolution was duly I
seconded by Member , and upon vote being
taken thereon, the following voted in favor thereof:
the following voted against or abstained:
whereupon the resolution was declared duly passed and adopted.
0511RESF.F16
STATE OF MINNESOTA )
COUNTIES OF CARVER ) SS .
AND HENNEPIN )
CITY OF CHANHASSEN )
' I , the undersigned, being the duly qualified and appointed
Manager of the City of Chanhassen, Minnesota, hereby certify that
I have carefully compared the foregoing resolution adopted at a
' [regular] [special] meeting of the City Council of said City held
on , 1989 , with the original thereof on file
' in my office, and the same is a full, true and complete
transcription thereof.
WITNESS my hand officially as such Manager and the corporate
seal of the City this day of , 1989 .
Don Ashworth
City Manager
(SEAL)
' 0511RESB.F16
I
CITY OF CHANHASSEN
Pursuant to cue call and notice thereof, a
meeting of the City Council of the City of Chanhassen, Minnesota, '
was held on the day of , 1989 . The following
members were present:
and the following members were absent: 1
* * * * * * * * *
Member introduced the following resolu-
tion and moved its adoption: '
RESOLUTION NO. '
RESOLUTION ELECTING TO DESIGNATE
CERTAIN BONDS ISSUED IN 1986
AS "QUALIFIED TAX-EXEMPT OBLIGATIONS"
BE IT RESOLVED By the City Council of the City of
Chanhassen, Carver and Hennepin Counties , Minnesota (Issuer) as
follows :
Section 1 . Findinas .
1. 01 . The Issuer issued its $4, 615, 000 General Obligation
Improvement Bonds of 1986, dated July 1 , 1986 (the "Bonds") while
the federal Tax Reform Act of 1986 was pending with a retroactive
effective date, specifically on or after January 1 , 1986 , and on
or before August 7 , 1986; and
1 . 02. When the Bonds were issued, the Issuer made a desig-
nation that it intended or otherwise declared its intent to
qualify the Bonds under Section 802 (e) (3) of H.R. 3838 of the
99th Congress as passed by the House of Representatives; and
1 . 03. The Issuer covenanted to take such actions as are
necessary to effectuate such attempted designation; and
I
1 . 04 . For the Bonds to receive the benefit of being
J
designated as "qualified tax-exempt obligations" under Section
' 265 (b) (3) of the federal Internal revenue Code of 1986 , as
amended (the "Code") , it is necessary that the Issuer make an
election under subparagraphs (C) of Section 1009 (b) (3) of the
U federal Technical and Miscellaneous Revenue Act of 1988 ("TAMRA")
and designate the Bonds pursuant to subparagraph (B) of Section
1009 (b) (3) of TAMRA and Section 265 (b) (3) of the Code; and
1 . 05 . The Bonds qualify for such designation because they
are not private activity bonds (or, if private activity bonds ,
are qualified 501 (c) (3) bonds, or refunded bonds which were not
industrial development bonds or private loan bonds) ; the Issuer
with respect to bonds issued in 1986 is a "qualified small
issuer" of $10, 000 ,000 or less of bonds; and not more than
' $10, 000 , 000 of bonds issued in 1986 have been designated:
Section 2 . Election: Designation.
' 2 . 01 . Election. The Issuer hereby makes an election with
respect to the Bonds under Section 1009 (b) (3) (C) of the federal
Technical and Miscellaneous Revenue Act of 1988 .
' 2. 02. Designation of Qualified Tax-Exempt Obligations. In
order to qualify the Bonds as "qualified tax-exempt obligations"
' within the meaning of Section 265 (b) (3) of the Code, the Issuer
hereby makes the following factual statements and representa-
tions:
' (a) the Bonds are treated as issued on August 8 , 1986,
because:
(i) the Bonds were issued on or after January 1 ,
1986 , and
(ii) when the Bonds were issued, the Issuer made a
designation or otherwise declared that it
intended to qualify the Bonds under Section
802 (e) (3) of H.R. 3838 of the 99th Congress
' as passed by the House of Representatives,
and
(iii) the Issuer, in paragraph 1 above, has made
an election under Section 1009 (b) (3) (C) of
TAMRA; and
' (b) the Bonds are not "private activity bonds" as
defined in Section 141 of the Code , or, if private
activity bonds, they are:
I (i) qualified 501 (c) (3) bonds as defined in
Section 145 of the Code, or
(ii) obligations issued to refund (or which are
part of a series of obligations issued to
refund) obligations issued before August 8,
1986 , which were not industrial development
bonds (as defined in Section 103 (b) (2) of the
federal Internal Revenue Code of 1954 , as
amended, as in effect on the day before the
date of the enactment of the federal Tax
Reform Act of 1986) or a private loan bond
(as defined in Section 103 (o) (2) (A) as so in
effect, but without regard to any exemption
from such definition other than Section
103 (o) (2) (A) ) ;
(c) the Issuer hereby designates the Bonds as "quali-
fied tax-exempt obligations" for purposes of
Section 265 (b) (3) of the Code;
(d) at the time the Bonds were issued, the amount of
tax-exempt obligations (other than private activ-
ity
bonds, treating qualified 501 (c) (3) bonds as
not being private activity bonds) which had been
and were to be issued in 1986 by the Issuer (and
all entities treated as one issuer with the
Issuer, and all subordinate entities thereof)
during calendar year 1986 was not reasonably
expected to exceed $10, 000 , 000; and I
(e) not more than $10, 000, 000 of obligations issued by
the Issuer during calendar year 1986 have been
designated for purposes of Section 265 (b) (3) of
the Code.
The motion for adoption of the foregoing resolution was duly '
seconded by Member , and upon vote being
taken thereon, the following voted in favor thereof: '
the following voted against or abstained:
1
whereupon the resolution was declared duly passed and adopted.
0511RESB.F16
---T- `
11.
STATE OF MINNESOTA )
)
I COUNTIES OF CARVER ) SS .
AND HENNEPIN )
IICITY OF CHANHASSEN )
1 I , the undersigned, being the duly qualified and appointed
Manager of the City of Chanhassen, Minnesota, hereby certify that
I have carefully compared the foregoing resolution adopted at a
II [regular] [special] meeting of the City Council of said City held
on , 1989, with the original thereof on file
Iin my office, and the same is a full, true and complete
transcription thereof.
IIWITNESS my hand officially as such Manager and the corporate
II seal of the City this day of , 1989 .
1
IIDon Ashworth
City Manager
II
(SEAL)
II
I
I
I0511RESB .F16
II
II