HomeMy WebLinkAbout2019-10-16 19-392 Resolve
10/16/201919-392
10/16/2019
19-392
Finance
Resolve
N/A
Title, Resolve
Declaration of Official Intent to Redeem or Defease Bonds
On September 9, 2019, the Council authorized the issuance of taxable general obligation bonds to
refund the outstanding Arena bonds on the first available call date. Because the original bonds were
issued on a tax exempt basis, the City had certain restrictions and limitations on arrangements it
could enter into such as management contracts, leases, licenses, and naming rights. If this city does
not adhere the restrictions, the bonds could lose their tax exempt status.
It is possible in the future, the City could enter into such agreements that could impact the status of
the the existing tax exempt bonds. Therefore, this Order states that it is the City's intent to take
action to re mediate any potential impact on the tax exempt status of the existing bonds, should the
City execute any agreement prior to the call date of the tax Arena exempt bonds, that could
negatively impact the tax exempt status of the existing bonds.
This order is recommended for approval by the City's bond attorney.
Finance Committee
10/16/2019
Recommend for passage
50
This action as allowed under the IRS Code of 1986, as amended, has been recommended by the City's Bond
Counsel.
Consent
10/16/201919-392
CITY OF BANGOR RESOLVE
10/16/2019
19-392
Weston
Declaration of Official Intent to Redeem or Defease Bonds
WHEREAS, the City of Bangor, Maine (the “City”) previously issued its $53,800,000 2012 General Obligation
Bonds, Series B (Bangor Arena Project) dated as of August 15, 2012 (the “Prior Bonds”), to finance the
Bangor Arena Project at 515 Main Street, Bangor, Maine (the “Arena Project”); and
WHEREAS, the Prior Bonds were issued on a Federally tax-exempt basis under the Internal Revenue Code of
1986, as amended (the “Code”); and
WHEREAS, as Federally tax-exempt obligations, applicable provisions of the Code, and the Treasury
Regulations promulgated with respect thereto, restrict and limit the arrangements that the City can enter into
regarding management contracts, leases, licenses, naming rights agreements and other use arrangements of
the Arena Project, in order that the interest on the Prior Bonds be and remain excluded from the gross income
of the holders thereof for purposes of Federal income taxation; and
WHEREAS, at the time the Prior Bonds were issued, the City reasonably expected on the issue date of the
Prior Bonds that the Prior Bonds would meet neither the private business tests nor the private loan financing
test under Section 141 of the Code for the entire term of the Prior Bonds; and
WHEREAS, the City expects that it may enter into, in the future, management contracts or other leases,
licenses, naming rights agreements and other use arrangements with respect to the Arena Project that would
constitute a subsequent deliberate action that would cause in the private business test or the private loan
financing test under Section 141 of the Code to be met (a “Subsequent Deliberate Action”); and
WHEREAS, the City desires to take anticipatory remedial action under Treasury Regulation Section 1.141-12
(d)(3) and to declare its official intent to defease and redeem the Prior Bonds as described therein;
Now, therefore, by the City Council of the City of Bangor be it hereby RESOLVED:
1. Declaration of Intent to Redeem or Defease Prior Bonds. The City hereby takes this anticipatory remedial
action as described in Treasury Regulation Section 1.141-12(d)(3) with respect to the Prior Bonds and the
Arena Project, and declares its official intent to defease and redeem all of the Prior Bonds that will become
nonqualified bonds in the event of a Subsequent Deliberate Action (described above) which will cause the
private business tests or the private loan financing test under Section 141 of the Code to be met.
2. Anticipated Defeasance of Prior Bonds. In furtherance of its anticipatory remedial action, City also currently
expects that it will issue its taxable general obligation bonds to defease all of the Prior Bonds within 90 days
of the date hereof, and that the Prior Bonds will thereafter be redeemed on the first call date.
3. Public Availability of Official Intent. This Declaration of Official Intent to Redeem or Defease Prior Bonds
shall be maintained as a public record of the Issuer.
IN CITY COUNCIL
OCTOBER 16,2019
CO 19-392
PASSED
CI Y LE