HomeMy WebLinkAbout1991-04-08 91-147 ORDERDate April 8. 1991 Item No.91-147
Item/Subject: Establishment of Reserve Accounts for Arbitrage Payable
Responsible Department Finance
Commentary:
Order the Tax before Act of 1986, state and local governments most rebate
to the federal gwerament the arbitrage earned on tax exempts bond issues,
with certain exceptions. The city's 1989 and 1990 bond issue do not qualify
to the exceptions, therefore the city most track the arbitrage earned (interest
earned in excess of the cost of borrowing) and rebate that amount to the federal
government every five years. Further, the federal arbitrage payable must
be segregated and any interest earned on that amont moat be rebated to the
federal governmeenta well. A r f to segregate these montes is
needed sin" these monies are not regularly paid t/lthln the fiscal year.
The State of Maine Department of Education and Cultural Services has adopted
regulations whereby, interest earned on borrowed funds which are approved
for state debt participation must be paid over
r to the state. The normal practice
is to settle the answers due the state at the close of the project. A reserve
account to segregate these funds is needed since those monies ar
regularly paid within the fiscal year.
This item was reviewed by the Finance Ccraittee April I, 1991 a faxed [o the
City Council for action."
pntlmenl l/m N rr
Manager's Comments: p s �. assadowf
twA A'' cl...:le...65 Sre�i a+d Fa.di r.4 tnd.�a�'e e..vd
L„
chy,M.mx<.
Asson ted Intmmation:0��
Budget Appmval: N+ -
Finance D;rxQ1
Legal Approval:
;tysW;nmr
Ingdduced For CVgIW
Passage
❑First Heading Page of
❑ Referral
91-14]
Ae®gmedto Cawdor Baldacci, April 8, 1991
CITY OF BANGOR
(TITLE.) (DrbgTl...Eatabllehment-of-&3a rve Announce for Arbitrage Payable -----
By tAe city council of the City Of Bagger;
ORDERED,
THAT the Finance Director establish within the General Fund and each
Enterprise Fund a reserve account for Federal Arbitrage Payable, and within
the General Fund only a reserve account for State Arbitrage Payable, and
that these accounts be used to segregate the compared arbitrage due to
the federal and state governments against tax-exempt bond issues per applicable
statutes and regulations, and
that the FidaIl a Director -1s'authorized to release these funds to the state
and federal government as requird by law, Y_
91_149
ORDER
In City council April 8,1991 Moved to New Business
Passed
Title,
Betstliatmant of Reserve Accounts for Arbitrage
Psyatle ..............................
City Clerk
.......... I ...........................
[,�t.VAned W,14{.
M�ip,dto[s
....... ............ .
✓✓✓ Councilmen