RES 02047 - Laserfiche WebLink

Legal Opinion Nossaman, Guthner, Knox & Elliott, LLP, Irvine, California, Bond Counsel, will render an opinion substantially in the form of Appendix E hereto with respect to the validity and enforceability of the City's obligations under the indenture and the validity of the Bonds. Except with respect to certain legal matters, Bond Counsel undertakes no responsibility for the accuracy, completeness or fairness of the official statement. Bond Counsel's fee for delivery of its opinion is contingent on successful execution and delivery of the Bonds. Certain matters will passed upon for the City by the city attorney. Tax Matters In the opinion of Nos sam an, Guthner, Knox & Elliott, LLP, Irvine, California, Bond Counsel, based on existing statutes, regulations, rulings and court decisions, interest on the Bonds is excluded from gross income for federal income tax purposes. In the further opinion of Bond Counsel, interest on the Bonds is, under existing law, exempt from State of California personal income taxes. A copy of the proposed opinion of Bond Counsel are set forth in Appendix E hereto. The Internal Revenue Code of 1986 (the "Code"), imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax pur- poses of interest with respect to obligations such as the Bonds. The City has covenanted to comply with certain restrictions designed to assure that interest on the Bonds will not be included in federal gross incorne, Failure to cornply with these covenants may result in interest on the Bonds being included in federal gross income, possibly from the date of issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants, Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may affect the value of, or the tax status of interest on the Bonds. Further, no assurance can be given that pending or future legislation or amend- ments to the Code will not adversely affect the value of. or the tax status of, interest with respect to, the Bonds. Prospective owners are urged to consult their own tax advisors with respect to proposals to restructure the federal income tax. Bond Counsel is further of the opinion that interest on the Bonds is not a specific prefer- ence item for purposes of the federal individual or corporate alternative minimum taxes, although Bond Counsel observes that it is included in adjusted current earnings in calcu- lating corporate alternative minimum taxable income. Prospective purchasers of the Bonds should be aware that (i) with respect to insurance companies subject to the tax imposed by Section 83 I of the Code. Section 832(b)(5)(B)(i) reduces the deduction for loss reserves by 15 percent of the sum of certain items, including interest on the Bonds; (ii) interest on the Bonds earned by certain foreign corporations doing business in the United States could be subject to a branch profits tax imposed by Section 884 of the Code: (iii) passive investment income. including interest on the Bonds, may be subject to federal income taxation under Section 1375 of the Code for subchapter S corporations having subchapter C earnings and profits at the close of the taxable year and 20