WHEREAS, the Borough has requested the assistance from the Middlesex County Improvement Authority (the "Authority") in financing the Project; and

Transcription

1 RES: RESOLUTION OF THE BOROUGH OF SPOTSWOOD DECLARING ITS OFFICIAL INTENT TO REIMBURSE EXPENDITURES FOR PROJECT COSTS FROM THE PROCEEDS OF DEBT OBLIGATIONS OF THE BOROUGH, INCLUDING IN CONNECTION WITH ITS PARTICIPATION IN THE MIDDLESEX COUNTY IMPROVEMENT AUTHORITY COUNTY-GUARANTEED CAPITAL EQUIPMENT AND IMPROVEMENT REVENUE BONDS FINANCING, ADOPTING WRITTEN COMPLIANCE PROCEDURES PERTAINING TO THE TAX- EXEMPT OBLIGATIONS ISSUED BY OR ON BEHALF OF THE BOROUGH WHEREAS, the Borough of Spotswood, in the County of Middlesex, New Jersey (the Borough ) desires to (i) acquire and install various communications equipment and systems, including, but not limited to, Motorola radio portables and accessories, mobiles, consolettes, base station and antenna systems, water tank rack, WAVE push-to-talk system, and radio tower, including programming, installation, system management and extended warranty, all as set forth in a proposal from Motorola Solutions dated March 27, 2018 under the State of New Jersey Contract 83909, a copy of which is on file in the office of the Borough Clerk, at an estimated cost (net of vendor discounts) of $1,385,285, (ii) acquire and install Call Works Next Generation equipment for two positions, including installation and system maintenance, at an estimated cost of $120,725, and (iii) acquire a Ford F-150 utility truck at an estimated cost of $52,000 (collectively, the Project ) for municipal purposes; and WHEREAS, the Borough has requested the assistance from the Middlesex County Improvement Authority (the "Authority") in financing the Project; and WHEREAS, the Authority has agreed to finance the Project on behalf of the Borough through the issuance of bonds, and shall, in connection therewith, acquire the Project and simultaneously lease the Project to the Borough pursuant to a Lease and Agreement; and WHEREAS, the Borough reasonably anticipates that obligations, the interest on which is excluded from gross income under Section 103 of the Internal Revenue Code of 1986, as amended (the Code ), will be issued by the Authority to finance the Project on a long-term basis (the MCIA Bonds ); and WHEREAS, the Borough intends to finance the Project with proceeds of the MCIA Bonds but may pay for certain costs of the Project (the Project Costs ) prior to the issuance of the MCIA Bonds with funds of the Borough that are not borrowed funds; and WHEREAS, the Borough desires to preserve its right to treat an allocation of proceeds of the MCIA Bonds to the reimbursement of Project Costs paid prior to the issuance of the MCIA Bonds as an expenditure for such Project Costs to be reimbursed for purposes of Sections 103 and 141 through 150, inclusive, of the Code. NOW, THEREFORE, BE IT RESOLVED by the governing body of the Borough as follows: Section 1. The Borough reasonably expects to reimburse its expenditure of Project Costs paid prior to the issuance of the MCIA Bonds with proceeds from the MCIA Bonds. Section 2. This resolution is intended to be and hereby is a declaration of the Borough's official intent to reimburse the expenditure of Project Costs paid prior to the issuance of the MCIA Bonds with the proceeds of a borrowing to be incurred by the Borough, in accordance with Treasury Regulations Section 3. The maximum principal amount of the MCIA Bonds expected to be issued and allocated to finance the Project is $1,800,000. Section 4. The Project Costs to be reimbursed with the proceeds of the MCIA Bonds will be capital expenditures in accordance with the meaning of Section 150 of the Code.

2 Section 5. No reimbursement allocation will employ an abusive arbitrage device under Treasury Regulations to avoid the arbitrage restrictions or to avoid the restrictions under Sections 142 through 147, inclusive, of the Code. The proceeds of the MCIA Bonds used to reimburse the Borough for Project Costs, or funds corresponding to such amounts, will not be used in a manner that results in the creation of replacement proceeds, including sinking funds, pledged funds or funds subject to a negative pledge (as such terms are defined in Treasury Regulations ), of the MCIA Bonds or another issue of debt obligations of the Borough, other than amounts deposited into a bona fide debt service fund (as defined in Treasury Regulations ). Section 6. All reimbursement allocations will occur not later than 18 months after the later of (i) the date the expenditure from a source other than the MCIA Bonds is paid, or (ii) the date the Project is placed in service (within the meaning of Treasury Regulations ) or abandoned, but in no event more than 3 years after the expenditure is paid. Section 7. To enable the Borough to more fully comply with the requirements of the Code and other provisions of federal tax law applicable to governmental obligations, the interest on which is excluded from gross income for federal tax purposes, issued by or on behalf of the Borough to finance public purposes of the Borough, the Borough hereby adopts Written Compliance Procedures with respect to Remediation of Nonqualified Bonds and Arbitrage Rebate Compliance in the form attached hereto as Exhibit A, made a part hereof and hereby adopted in its entirety. Section 8. This resolution shall take effect immediately. DATED: August 13, 2018 ATTEST: MARGARET DROZD Council President PATRICIA DESTEFANO, RMC Municipal Clerk Recorded Vote AYE NO ABSTAIN ABSENT The foregoing is a true copy of a resolution adopted by the governing body of the Borough of Spotswood, in the County of Middlesex, New Jersey on August 13, Municipal Clerk

3 EXHIBIT A

4 WRITTEN COMPLIANCE PROCEDURES of THE BOROUGH OF SPOTSWOOD, NEW JERSEY with respect to REMEDIATION OF NONQUALIFIED BONDS and ARBITRAGE REBATE COMPLIANCE Adopted by the Borough of Spotswood, New Jersey on August 13, 2018

5 I. GENERAL A. Purpose of, and Compliance with, Procedures 1. These Written Compliance Procedures ( Procedures ) have been adopted to enable the Borough of Spotswood, New Jersey (the Borough ) to better comply with requirements of the Internal Revenue Code of 1986, as amended (the Code ) and other provisions of federal tax law applicable to governmental obligations, the interest on which is excluded from gross income for federal tax purposes, issued by or on behalf of the Borough to finance public purposes of the Borough ( Tax-Exempt Obligations ). 2. The purpose of these Procedures is to (a) minimize the likelihood that Tax- Exempt Obligations will become Nonqualified Obligations (defined below) and to ensure that any Tax-Exempt Obligations that become Non-Qualified Obligations are remediated according to federal tax law requirements applicable to such Tax-Exempt Obligations (the Use of Proceeds Requirements ) and to monitor the arbitrage and rebate requirements applicable to such Tax-Exempt Obligations (the Arbitrage Requirements ). 3. The Borough will utilize the services of GluckWalrath, LLP or other firm with expertise related to Tax-Exempt Obligations in connection with the issuance of its Tax-Exempt Obligations ( Bond Counsel ). 4. The Borough may choose to comply with these Procedures itself or, in the alternative, may elect to retain or rely upon outside consultants (including Bond Counsel) to comply with any or all components of these Procedures. 5 The Borough recognizes that it need not follow these Procedures in connection with obligations issued by or on behalf of the Borough that are not Tax-Exempt Obligations or if the Borough obtains an opinion of Bond Counsel that these Procedures do not apply to a particular issuance of Tax-Exempt Obligations. 6. The Borough will assign one or more persons to act as Compliance Person with respect to each issue of Tax-Exempt Obligations, and each such Compliance Person will have responsibility to ensure that these Procedures are complied with in connection with such issue of Tax-Exempt Obligations. 7. Each Compliance Person is or will be familiar with the requirements of federal tax law applicable to the Tax-Exempt Obligations, which requirements include, but are not limited to, restrictions on use of proceeds of Tax-Exempt Obligations, use of facilities financed with proceeds of Tax-Exempt Obligations, restrictions on percentage of Tax-Exempt Obligations that may be used in a private business, and change in use of Projects financed with proceeds of Tax-Exempt Obligations to a use that violates (or exceeds) the federal tax law limitations. 8. The Borough has instructed its officials charged with the responsibility for following these Procedures to seek assistance from GluckWalrath, LLP or other Bond Counsel in ensuring compliance. B. Definitions For purposes of these Procedures, the following words or terms will have the following definitions: Arbitrage Books and Records means the books and records described in Section III.D, below, although there may be some overlap among Arbitrage Books and Records, General Books and Records and Use of Proceeds and Projects Books and Records. Arbitrage Restrictions means the provisions of the Code and Regulations applicable to the Tax-Exempt Obligations that must be satisfied to prevent the Tax-Exempt Obligations from becoming arbitrage bonds under the Code and Regulations. Arbitrage Specialist means the entity skilled in such matters, retained by the Borough (or other issuer of Tax-Exempt Obligations issued on behalf of the Borough) to calculate rebate on the Tax-Exempt Obligations.

6 Bond Counsel means GluckWalrath, LLP, or other firm with expertise related to Tax- Exempt Obligations. Bond Year means the bond year defined for each issue of Tax-Exempt Obligations in the applicable Tax Certificate. Change in Use means a change in the use of a facility (or asset) financed with proceeds of Tax-Exempt Obligations to a use that is not a qualified use under the Code and Regulations, which use may threaten to cause the Tax-Exempt Obligations to become Non-Qualified Obligations. Code means the Internal Revenue Code of 1986, as amended. Compliance Person means the officer, official, staff member or other personnel of the Borough responsible for the issuance of Tax-Exempt Obligations and the Borough s compliance with the procedures set forth herein. General Books and Records means the books and records described in Section I.C, below, although there may be some overlap among General Books and Records, Arbitrage Books and Records and Use of Proceeds and Projects Books and Records. Investment Monitoring Entity means the entity with which the Borough (or other issuer of Tax-Exempt Obligations, the proceeds of which are being used by the Borough) has contracted to ensure compliance with the arbitrate requirements set forth in the Code and Regulations. Issue Date means the date on which the Tax-Exempt Obligations are to be issued. New Money Bonds means Tax-Exempt Obligations issued to finance costs of new Projects. New Money Construction Bonds means Tax-Exempt Obligations, at least 75% of the proceeds of which is to be used for construction (as opposed to acquisition) expenditures. Nonqualified Obligations means bonds or notes issued by the Borough or on the Borough s behalf, the interest on which is not excluded from gross income of the owners thereof for federal income tax purposes pursuant to Section 103 of the Code. Private Use Limitation means the ten (10%) percent (or, in certain circumstances, five (5%) percent) limitation on the amount of private use that may be financed with proceeds of Tax- Exempt Obligations. Project means the particular facility, asset or governmental purpose financed with proceeds of a particular series of Tax-Exempt Obligations. Rebate Amount means the amount owed, if any, as determined under the Rebate Requirement that may be applicable to an issue of Tax-Exempt Obligations. Rebate Exception means one or more of the exceptions to the Rebate Requirement contained in the Code or Regulations and covered in Section III.A of these Procedures, satisfaction of which would exempt an issue of Tax-Exempt Obligations from the necessity of complying with the Rebate Requirement. Rebate Requirement means the requirement contained in Section 148 of the Code and the applicable Regulations with respect to the rebate to the federal government of certain amounts, as specified in the Code and Regulations. Refunding Bonds means Tax-Exempt Obligations, the proceeds of which are being used to refund outstanding obligations. Regulations means the regulations promulgated by the United States Treasury in connection with the Code or the Internal Revenue Code of 1954, as amended.

7 Reimbursement Resolution means a declaration of intent or form of official action required by Regulations Section Tax Certificate means the agreement or certificate the Borough will be required to execute in connection with the issuance of the Tax-Exempt Obligations that will set forth all federal tax law requirements that will have to be met in order for the Borough s obligations to qualify as Tax-Exempt Obligations on the date of issuance thereof and thereafter throughout the life of the Tax-Exempt Obligations. Tax-Exempt Obligations means obligations the interest on which is excluded from gross income of the holders of such obligations. Temporary Period means the period beginning on the Issue Date during which certain amounts will not be subject to investment restrictions. Use of Proceeds and Projects Books and Records means the books and records described in Section II.E, below, although there may be some overlap among Use of Proceeds and Projects Books and Records, Arbitrage Books and Records and General Books and Records. C. Retention of General Records and Documents 1. The Compliance Person will ensure that the Borough retains the following documents and records (collectively, the General Books and Records ) in connection with each series of Tax-Exempt Obligations until three (3) years after such series of Tax-Exempt Obligations has been retired: (a) (c) (d) (e) (f) (g) (h) (i) (j) Transcripts compiled in connection with issuance, containing resolutions, indentures, tax certificates, approvals, opinions, etc.; Official Statements or other offering documents; Publications, brochures and newspaper articles related to issuance; Legal opinions; Audited Financial Statements; Tax forms filed in connection with Tax-Exempt Obligations; Appraisals, demand surveys or feasibility studies related to Projects; Correspondence related to Tax-Exempt Obligations; Documents related to government grants associated with the construction, renovation or acquisition of Projects; and Amendments or supplements to any documents executed in connection with Tax- Exempt Obligations or the Projects. 2. The Borough will retain reports of any examinations by the Internal Revenue Service (the IRS ) related to the Borough or any issuance of Tax-Exempt Obligations. II. PRIVATE ACTIVITY BOND COMPLIANCE PROCEDURES A. Prior to issuance of Tax-Exempt Obligations 1. Prior to the date of issuance of the Tax-Exempt Obligations, the Compliance Person will do the following: (a) Determine which assets will be financed with proceeds of the Tax-Exempt Obligations; Determine the amount of proceeds to be allocated to each asset;

8 (c) (d) (e) Confirm that the amount of proceeds of the issue will not exceed the costs of the Projects, other anticipated uses of the proceeds (e.g., reserve funds, capitalized interest) and costs related to the issuance of the Tax-Exempt Obligations; Assess the intended use of the Projects and discuss with Bond Counsel, if necessary, to ensure that such is a qualified use and will not cause the Tax- Exempt Obligations to be private activity bonds under the Code; Work with Bond Counsel to complete the Tax Certificate and provide all information required thereby in connection with the Tax-Exempt Obligations and the Projects. 2. To the extent that a Compliance Person is unclear whether a particular series of Tax-Exempt Obligations is (or may be) in violation of a provision of federal tax law, the Compliance Person will confer with Bond Counsel to determine the status. 3. To the extent that any proceeds of Tax-Exempt Obligations are intended to be used to reimburse the Borough for expenditures made prior to issuance of a particular series of Tax-Exempt Obligations, which expenditures are subject to the Reimbursement Regulations set forth in Regulations Section , the Borough will pass the requisite inducement resolution or other official action required under the Reimbursement Regulations and ensure that proceeds of each series of Tax-Exempt Obligations are expended to reimburse only such expenditures that satisfy the requirements of the Reimbursement Regulations. B. After Issuance, Use and Expenditure of Proceeds of Tax-Exempt Obligations 1. The Compliance Person will review the actual use of proceeds of the issue of Tax- Exempt Obligation to ensure that the proceeds are actually expended in a manner that conforms to the anticipated use of proceeds set forth in the Tax Certificate and will not cause the Tax- Exempt Obligations to become Nonqualified Obligations by reason of becoming private activity bonds under Section 141 of the Code. 2. The Compliance Person will perform the review described in paragraph 1 no less frequently than once every six (6) months, beginning no later than the date six (6) months after the date of issuance of the Tax-Exempt Obligations. If necessary, the Compliance Person will review his or her findings with Bond Counsel. 3. The Compliance Person will make an allocation of all proceeds of the Tax- Exempt Obligations to expenditures (e.g., construction, renovation, acquisition, costs of issuance, etc.) not later than 18 months after the later of the date the expenditure is paid or the Project, if any, that is financed by the Tax-Exempt Obligations is placed in service. This allocation will be made, in any event, no later than the earlier of the date that is sixty (60) days after (a) the fifth (5 th ) anniversary of the date of issue of the Tax-Exempt Obligations or the retirement date of the Tax-Exempt Obligations. 4. Upon the earlier to occur of (a) expenditure of all proceeds of the Tax-Exempt Obligations, completion of the particular Project(s) for which the Tax-Exempt Obligations were issued or (c) redemption of Tax-Exempt Obligations with unexpended proceeds, the Compliance Person will compile a final use of proceeds schedule ( Final Schedule ) and assess such Final Schedule s compliance with the requirements of the Code, or provide such Final Schedule to Bond Counsel for assessment, or both. 5. If, in the preparation of the Final Schedule, the Compliance Person determines that the expenditure of proceeds has caused the Tax-Exempt Obligations to exceed the private use limitation set forth in Section 141 of the Code (the Private Use Limitation ), the Borough will notify Bond Counsel and take the steps set forth under Remediation of Nonqualified Obligations in IV, below. C. Use of Project(s) Financed with Tax-Exempt Obligations 1. No less frequently than once per year throughout the life of the Tax-Exempt Obligations, the Compliance Person will review the use being made of the Project (the Post- Issuance Project Use Review ) to ensure that such use does not cause the Tax-Exempt Obligations to exceed the Private Use Limitation.

9 2. If necessary, the Compliance Person will consult with Bond Counsel with respect to any use of the Project discovered as part of the Post-Issuance Project Use Review that may cause the Tax-Exempt Obligations to exceed the Private Use Limitation. The first Post-Issuance Project Use Review will be made no later than one (1) year after the earlier to occur of (a) expenditure of all proceeds of the Tax-Exempt Obligations or placement in service of a Project. 3. If, during any Post-Issuance Project Use Review, the Compliance Person discovers that a series of Tax-Exempt Obligations has exceeded the Private Use Limitation, the Borough will notify Bond Counsel and work with Bond Counsel in taking the appropriate steps set forth under Remediation of Nonqualified Obligations in IV, below. 4. The Compliance Person will review any management contracts or operating agreements with respect to any portion of a Project financed with proceeds of Tax-Exempt Obligations entered into by the Borough to ensure compliance with the Management Contract Guidelines (a copy of which is attached hereto as Appendix I) and, if necessary, review same with Bond Counsel. 5. The Compliance Person will review any use of a Project that involves research that may be sponsored by a nongovernmental entity and discuss same with Bond Counsel. 6. To the extent that any portion of a Project is leased or subleased to, or otherwise made available for use by, individuals or groups in connection with their private business use, the Compliance Person will review such use (and, if necessary, discuss with Bond Counsel) to ensure that such use, when aggregated with any other private use being made of the Project, does not cause the Private Use Limitation to be exceeded with respect to such issue of Tax-Exempt Obligations. D. Sale or Other Disposition of Project(s) 1. The Compliance Person will monitor any sale, lease, transfer or other disposition of any Projects financed with proceeds of Tax-Exempt Obligations while such Tax-Exempt Obligations are outstanding (not including disposition of Projects due to ordinary wear and tear). 2. The Borough will notify Bond Counsel in the event of the disposition of any Projects. E. Retention of Records and Documents The Compliance Person will ensure that the Borough retains the following documents and records (the Use of Proceeds and Projects Books and Records ) in connection with each series of Tax-Exempt Obligations until three (3) years after such series of Tax-Exempt Obligations has been retired: (a) (c) (d) (e) (f) (g) (h) Documentation of allocations of proceeds to expenditures; Documentation of allocations of proceeds to costs of issuance; Copies of requisition draw schedules, draw requests, invoices, bills and cancelled checks related to expenditures of proceeds; Copies of contracts for construction, renovation or acquisition related to the Projects; Records of expenditures made prior to issuance, reimbursed with proceeds of Tax-Exempt Obligations; Listing of all Projects financed with the Tax-Exempt Obligations; Depreciation schedules for depreciable property financed with proceeds; Documents and computations relating to the economic lives of Projects;

10 (i) (j) (k) (l) Copies of any management or other service or operating agreements with respect to the operation of any portion of the Projects; Any agreements involving naming rights or research agreements with respect to a Project; Copies of leases, subleases, or use of any portion of the space of a Project; and Copies of any joint venture agreement with respect to any Project. III. ARBITAGE REBATE COMPLIANCE A. Prior to Issuance 1. Anticipated Expenditure of Proceeds The Compliance Person will: (a) (c) (d) (e) (f) Assess the anticipated expenditure timetable for proceeds of the Tax-Exempt Obligations. Discuss with Bond Counsel whether it is expected that, based upon such expenditure timetable, the Tax-Exempt Obligations are expected to qualify for a Rebate Exception, as further described in Section III.B, below. Confirm that the Borough has incurred (or expects to incur within six (6) months after the date of issuance of the Tax-Exempt Obligations) a binding obligation to an unrelated third party to spend on the costs of the Projects, proceeds of the Tax- Exempt Obligations equal to five (5%) percent of the portion of the Tax-Exempt Obligations allocable to the Projects. Confirm that each Project is expected to proceed with diligence to completion. Except as described in (f), confirm that all proceeds of the issue of Tax-Exempt Obligations are expected to be expended within three (3) years of the date of issue. If it is anticipated that the Projects will take more than three (3) years to complete, discuss with Bond Counsel whether it may be able to obtain the requisite documentation to entitle the Tax-Exempt Obligations to a longer Temporary Period. 2. Rebate Exceptions The Compliance Person will work with Bond Counsel in determining whether the Tax- Exempt Obligations are expected to satisfy one of the Rebate Exceptions set forth in this Section III.B. (a) Six-Month Exception (applicable to New Money Bonds and Refunding Bonds The Compliance Person will determine whether all proceeds of the Tax-Exempt Obligations are expected to be expended on the Projects within six months of the Issue Date. If so, the Compliance Person will inform Bond Counsel and ensure that the representations in the Tax Certificate reflect that expectation. 18-Month Exception (applicable to New Money Bonds) The Compliance Person will determine whether all proceeds of the Tax-Exempt Obligations are expected to be expended on the Projects according to the following timetable, all measured from the Issue Date: (i) (ii) At least 15% within 6 months; At least 60% within 1 year; and

11 (iii) 100% within 18 months If so, the Compliance Person will inform Bond Counsel and ensure that the representations in the Tax Certificate reflect that expectation. (c) 2-Year Exception (applicable to New Money Construction Bonds) The Compliance Person will determine whether all proceeds of the Tax-Exempt Obligations are expected to be expended for construction expenditures that constitute the Projects according to the following timetable, all measured from the Issue Date: (i) (ii) (iii) (iv) At least 10% within 6 months; At Least 45% within 1 year; At least 75% within 18 months; and 100% within 2 years. If so, the Compliance Person will inform Bond Counsel and ensure that the representations in the Tax Certificate reflect that expectation and discuss with Bond Counsel which elections need to be made and reflected in the Tax Certificate. B. After Issuance 1. The Compliance Person will keep records of the following information with respect to such issue of Tax-Exempt Obligations on the Arbitrage Books and Records (defined below): (a) (c) The yield on the Tax-Exempt Obligations; The yield at which proceeds of the Tax-Exempt Obligations are invested prior to expenditure and the amount earned on such investments; The yield at which amounts to be used to pay debt service on the Tax-Exempt Obligations are being invested and the amounts earned on such investments: (i) (ii) For Tax-Exempt Obligations with fixed rates of interest, the determinations of yield and investment earnings will be made each Bond Year. For Tax-Exempt Obligations with variable rates of interest, the determinations of yield will be made according to the rules set forth in the Regulations, and determinations of investment earnings will be made each Bond Year. (d) (e) The assets on which all proceeds of the Tax-Exempt Obligations are spent; and The date(s) on which the Projects are completed and placed in service. 2. The Compliance Person will inform Bond Counsel if proceeds of the Tax-Exempt Obligations remain unexpended more than three (3) years after the Issue Date and if so, work with the trustee with respect to the Tax-Exempt Obligations to ensure that the investment restrictions set forth in the Code and Regulations are complied with from and after the end of such three-year period; 3. The Compliance Person will monitor compliance of the proceeds of the Tax- Exempt Obligations with Rebate Exception applicable to the Tax-Exempt Obligations, if any, and notify Bond Counsel if the selected Rebate Exception is not satisfied. 4. The Compliance Person will ensure (or work with the Investment-Monitoring Entity) to ensure that investments made with proceeds of the Tax-Exempt Obligations are purchased at their fair market value in accordance with the provisions of the Regulations and satisfy all statutory, regulatory and other (state, federal and local) requirements applicable to the Borough and the Tax-Exempt Obligations.

12 5. In the event that the restrictions of the Code and Regulations have not been complied with, the Compliance Person will notify Bond Counsel and, if necessary, work with Bond Counsel to take the remedial actions described in Section IV, below. C. Rebate Compliance 1. At the end of the fifth Bond Year, or upon redemption of the Tax-Exempt Obligations (unless the Tax-Exempt Obligations have been determined to qualify for a Rebate Exception), the Compliance Person will obtain from its Arbitrage Specialist the Rebate Amount. 2. After confirming with Bond Counsel that the Tax-Exempt Obligations do not qualify for a Rebate Exception and reviewing the computations of the Arbitrage Specialist with Bond Counsel, the Compliance Person will ensure that the Borough pay the Rebate Amount to the federal government, pursuant to the provisions of the Code and Regulations. D. Retention of Arbitrage Books and Records The Compliance Person will ensure that the Borough retains (or arranges for another entity to retain on its behalf) the following documents and records relating to arbitrage and rebate (the Arbitrage Books and Records ) in connection with each issue of Tax-Exempt Obligations until three (3) years after such issue of Tax-Exempt Obligations has been retired: 1. Bank statements for all funds and accounts funded with proceeds of the Tax- Exempt Obligations; 2. Bank statements for all funds and accounts from which monies are: (a) (c) withdrawn to pay debt service on the Tax-Exempt Obligations: withdrawn to make payments to a letter of credit provider (or bond insurer) in connection with the Tax-Exempt Obligations, or otherwise pledged to pay or guarantee the payment of debt service on the Tax-Exempt Obligations; 3. Documentation relating to the bidding for investments with respect to any fund or account and certifications provided by any bidding agent or any investment provider; 4. Documentation relating to the provision of bond insurance, letters of credit or any other credit enhancement with respect to the Tax-Exempt Obligations; 5. Documentation relating to any swaps or similar hedging transactions; 6. Documents relating to investment in United States Securities (State and Local Government Series ( SLGs ) or investments pursuant to guaranteed investment contracts; 7. Computations of the yield on the Tax-Exempt Obligations and the yield on investments purchased with proceeds of Tax-Exempt Obligations or otherwise allocable to the Tax-Exempt Obligations (e.g., sinking fund proceeds); and 8. Any other records or documentation relating to investments, yields, payments or receipts with respect to investment of any amounts related to the Tax-Exempt Obligations. IV. REMEDIATION OF NONQUALIFIED OBLIGATIONS A. Change in Use or Other Disposition If the Compliance Person discovers that the use of a Project has changed from what had been authorized at the time of issuance of the Tax-Exempt Obligations, or if the property financed with proceeds of the Tax-Exempt Obligations has been sold or otherwise disposed of (a Disposition ) the Compliance Person will notify and cooperate with Bond Counsel, as described in this Section IV. B. Excess Private Use

13 If the Compliance Person discovers that use has been made of the Project by a person or entity that created Private Use in excess of the Private Use Limitation, the Compliance Person will notify and cooperate with Bond Counsel, as described in this Section IV. C. Arbitrage Violation If the Compliance Person discovers that investments related to the Tax-Exempt Obligations may have caused the Tax-Exempt Obligations to violate the Arbitrage Restrictions, the Compliance Person will notify and cooperate with Bond Counsel, as described in this Section IV. D. Determination and Confirmation of Violation The Compliance Person will cooperate with Bond Counsel to determine whether, by virtue of a potential violation described in A, B or C of this Section IV, the Tax-Exempt Obligations have become Nonqualified Obligations and, if so, to ensure that the remediation requirements with respect to the Tax-Exempt Obligations under applicable Treasury Regulations (the Remediation Requirements ) will be satisfied. E. Remedial Action If Bond Counsel confirms that a violation described in this Section IV has occurred with respect to the Tax-Exempt Obligations, the Compliance Person will cooperate with Bond Counsel in following the remediation requirements contained in the Regulations to ensure that all Tax-Exempt Obligations that have become Nonqualified Obligations are remediated pursuant to the timeframe set forth in the Regulations.