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RES 2024025
City of Pleasanton
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CITY CLERK
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RES 2024025
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5/10/2024 4:29:09 PM
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5/10/2024 4:27:36 PM
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CITY CLERK
CITY CLERK - TYPE
RESOLUTIONS
DOCUMENT DATE
5/7/2024
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<br /> <br /> <br />45 <br />Future Parity Debt <br /> <br />As described in “SECURITY FOR THE 2024 BONDS – Parity Debt” above, the <br />Installment Sale Agreement permits the City to issue Parity Debt in the future that is secured <br />and payable on parity with the payment of the Installment Payments securing the 2024 Bonds. <br />In the event of a decline in Net Revenues available to pay the Installment Payments securing <br />the 2024 Bonds, the existence of additional Parity Debt could adversely affect the City’s ability <br />to timely pay the Installment Payments securing the 2024 Bonds. <br /> <br /> <br />TAX MATTERS <br /> <br />Federal Tax Status. In the opinion of Jones Hall, A Professional Law Corporation, San <br />Francisco, California, Bond Counsel, subject, however to the qualifications set forth below, <br />under existing law, the interest on the 2024 Bonds is excluded from gross income for federal <br />income tax purposes and such interest is not an item of tax preference for purposes of the <br />federal alternative minimum tax. Interest on the 2024 Bonds may be subject to the corporate <br />alternative minimum tax. <br /> <br />The opinions set forth in the preceding paragraph are subject to the condition that the <br />Authority and the City comply with all requirements of the Internal Revenue Code of 1986, as <br />amended (the “Tax Code”) that must be satisfied subsequent to the issuance of the 2024 Bonds <br />in order that the interest thereon be, and continue to be, excludable from gross income for <br />federal income tax purposes. The Authority and City have made certain representations and <br />covenants in order to comply with each such requirement. Inaccuracy of those representations, <br />or failure to comply with certain of those covenants, may cause the inclusion of such interest in <br />gross income for federal income tax purposes, which may be retroactive to the date of issuance <br />of the 2024 Bonds. <br /> <br />Tax Treatment of Original Issue Discount and Premium. If the initial offering price to <br />the public at which a 2024 Bond is sold is less than the amount payable at maturity thereof, then <br />such difference constitutes “original issue discount” for purposes of federal income taxes and <br />State of California personal income taxes. If the initial offering price to the public at which a <br />2024 Bond is sold is greater than the amount payable at maturity thereof, then such difference <br />constitutes “original issue premium” for purposes of federal income taxes and State of California <br />personal income taxes. De minimis original issue discount and original issue premium are <br />disregarded. <br /> <br />Under the Tax Code, original issue discount is treated as interest excluded from federal <br />gross income and exempt from State of California personal income taxes to the extent properly <br />allocable to each owner thereof subject to the limitations described in the first paragraph of this <br />section. The original issue discount accrues over the term to maturity of the 2024 Bond on the <br />basis of a constant interest rate compounded on each interest or principal payment date (with <br />straight-line interpolations between compounding dates). The amount of original issue discount <br />accruing during each period is added to the adjusted basis of such 2024 Bonds to determine <br />taxable gain upon disposition (including sale, redemption, or payment on maturity) of such 2024 <br />Bond. The Tax Code contains certain provisions relating to the accrual of original issue <br />discount in the case of purchasers of the 2024 Bonds who purchase the 2024 Bonds after the <br />initial offering of a substantial amount of such maturity. Owners of such 2024 Bonds should <br />consult their own tax advisors with respect to the tax consequences of ownership of 2024 Bonds <br />with original issue discount, including the treatment of purchasers who do not purchase in the
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