AgdaPkt 2003-07-28 - Laserfiche WebLink

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L?. A -53 Bonds. Legislative and court calendar delays and other factors may prolong any uncertainty regarding the effects of Proposition 218. C=* ,,, The legal opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, San Francisco, California. Bond Counsel, approving the validity of the 2003 Bonds will be made available to purchasers at the time of original delivery of the 2003 Bonds. The form of such opinion is attached hereto as Appendix F, and will be attached to each 2003 Bond. Jones Hall, A Professional Law Corporation, San Francisco, California is serving as Disclosure Counsel. Stan Yamamoto, Esq., City Attorney will also pass upon certain legal matters for the District and the City as counsel to these entities. Payment of the fees and expenses of Bond Counsel and Disclosure Counsel Is contingent upon the sale and delivery of the 2003 Bonds. Tax Exemption In the opinion of Stradling Yocca Carlson & Rauth, a Professional Corporation, Bond Counsel ( "Bond Counsel "), under existing statutes, regulations, pilings and judicial decisions, and assuming certain representations and compliance with certain covenants and requirements described herein, the interest on the 2003 Bonds is excluded from gross income for federal income tax purposes, and is not an item of tax preference for purposes of calculating the federal alternative minimum tax imposed on individuals and corporations. In the further opinion of Bond Counsel, the interest on the 2003 Bonds is exempt from State of California personal income tax. Bond Counsel notes that with respect to corporations, the interest on the 2003 Bonds may be included as an adjustment in the calculation of alternative minimum taxable income which may affect the alternative minimum tax liability of such corporations. In addition, the difference between the issue price of a 2003 Bond (the first price at which a substantial amount of the 2003 Bonds of a maturity is to be sold to the public) and the stated redemption price at maturity with respect to a 2003 Bond constitutes original issue discount, and the amount of original issue discount that accrues to a 2003 Bond owner is excluded from the gross income of such owner for federal income tax purposes, is not an item of tax preference for purposes of the federal alternative minimum tax imposed on individuals and corporations, and is exempt from State of California personal income tax. A complete copy of the proposed opinion of Bond Counsel is set forth in "APPENDIX F -Form of Opinion of Bond Counsel." Bond Counsel's opinion as to the exclusion from gross income of the interest on the 2003 Bonds (and original issue discount) is based upon certain representations of fact and certifications made by the City and others and is subject to the condition that the City complies with all requirements of the Internal Revenue Code of 1986, as amended (the "Code"), that must be satisfied subsequent to the execution and delivery of the 2003 Bonds to assure that the interest on the 2003 Bonds (and original issue discount) will not become includable in gross income for federal income tax purposes. Failure to comply with such requirements of the Code might cause the interest on the 2003 Bonds (and original issue discount) to be included in gross income for federal income tax purposes retroactive to the date of execution and delivery of the 2003 Bonds. The City has covenanted to comply with all such requirements. Although Bond Counsel has rendered an opinion that the interest on the 2003 Bonds (and original issue discount) is excluded from gross income for federal income tax purposes provided that the City continues to comply with certain requirements of the Code, the ownership of the 2003 Bonds and the accrual or receipt of interest (and original issue discount) with respect to the 2003 Bonds may otherwise affect the tax liability of certain persons. Bond Counsel expresses no opinion regarding any -36-