A. For any tax-exempt bond deemed to be an “arbitrage bond” under Section 148 of the Internal Revenue Code of 1986, as amended (the “Code”), and the regulations promulgated thereunder, the bond issuer is required to pay a rebate to the United States and file with the Internal Revenue Service (the “IRS”) Form 8038-T with such rebate payment. Accordingly, the Contractor will be required to perform the following calculations and services: 1. Annual Rebate Estimates for Financial Statements and Reserve Requirements Beginning with the fiscal year ending June 30, 2022, estimate the arbitrage rebate, if any, due on each of the Administration’s then-outstanding bond series for (1) financial statement purposes and (2) for purposes of estimating amounts to be reserved with the Pledged Revenues Fund or deposited into the Rebate Fund before annually releasing funds to the Administration. Beginning in 2022, each of these calculations must be completed no later than August 15 and compiled in an “interim” report in PDF form for each outstanding bond series. In connection with each of these calculations, the Contractor agrees to: a) Verify that the issue is an “arbitrage bond” subject to the rebate payment requirement under Section 148(f) of the Code (the “Rebate Requirement”); b) Prepare a statement of the arbitrage rebate calculation methodology, including information on assumptions, conclusions, and the treatment of certain earnings, if any, as earnings on a bona fide debt service fund; c) Verify bond yield; d) Identify and account separately for all gross proceeds, transferred proceeds, and commingled funds, if any; e) Calculate the issue’s excess investment earnings (cumulative arbitrage rebate liability), taking into account any proceeds that are or have become subject to the yield restriction requirements; f) Deliver appropriate documentation to the Administration required to support arbitrage rebate calculations; g) Assist the Administration as necessary in the event of an IRS inquiry; h) Assist the Administration in identifying and recovering overpayments, if any, of previously paid arbitrage rebate amounts; i) Consult with the Administration as necessary regarding arbitrage rebate- related matters; j) Provide assistance and consultation as necessary to retain records and documentation at least six years after each issue’s final maturity; and k) Provide a legal opinion or a representation signed by a partner or principal of the firm that the arbitrage rebate determinations and calculations comply with the Rebate Requirements.
