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1990-03-02 Minutes
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1990-03-02 Minutes
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so warrant. A revision or withdrawal of the rating may have an adverse effect on the market <br />price of the Bonds. <br />• <br />Litigation <br />Neither the Authority nor the Commission is aware of any threatened or pending litigation <br />affecting either the validity of the Issue or the ability of the Authority and. the Commission to <br />meet their financial obligations. <br />Legality <br />The Bonds are subject to approval as to certain matters by Baker & Daniels, Indianapolis, <br />Indiana, as Bond Counsel. Bond Counsel has not participated in the preparation of this Official <br />Statement and will not pass upon its accuracy, completeness, or sufficiency. Bond Counsel <br />has -not examined nor attempted to examine or verify, any of the financial or statistical <br />statements, or data contained in this Official Statement, and will express no opinion with <br />respect thereto. A legal opinion in substantially the form set out in Appendix I herein will be <br />delivered at closing. <br />Tax Matters <br />In the opinion of Baker & Daniels, Indianapolis, Indiana, Bond Counsel, under law existing and <br />in effect on the date of such opinion, and assuming continuing compliance by the Authority <br />with its Tax Covenants (as hereinafter defined), the interest on the Bonds is excludable from <br />gross income for purposes of Federal income taxation pursuant to Section 103 of the Code as <br />• in effect on the date of delivery of the Bonds. In the opinion of Bond Counsel, interest on the <br />Bonds is exempt from income taxation in the State of Indiana under existing law, except that <br />such interest is included for the purpose of computing the adjusted gross income upon which <br />the Indiana franchise tax on financial institutions is imposed. The form of opinion that Bond <br />Counsel proposes to render upon the delivery of the Bonds is attached to this Official <br />Statement as Appendix I. <br />As amended by the Tax Reform Act of 1986, the Code prescribes a number of qualifications <br />and conditions, including continuing issuer compliance, for the interest on state and local <br />government obligations to be and remain excludable from gross income for federal income tax <br />purposes. Under the Trust Agreement, the Authority has made certain covenants (the 'Tax <br />~~ <br />Covenants) not to take any action or to fail to take any action with respect to the proceeds of <br />the Bonds or any investment earnings thereon which would result in constituting the Bonds as <br />"arbitrage bonds" under the Code or would otherwise cause the interest on the Bonds to cease <br />to be excludable from gross income for purposes of Federal income taxation. The Authority <br />shall comply with the arbitrage rebate requirements under Section 148 of the Code to the <br />extent applicable. Noncompliance with the foregoing Tax Covenants may cause the interest on <br />the Bonds to be includable in gross income for federal income tax purposes retroactively to the <br />date of issuance of the Bonds. <br />Further, even assuming compliance by the Authority with its Tax Covenants, certain provisions <br />of the Code may affect certain owners of the Bonds. The Code imposes alternative minimum <br />taxation on corporations (as defined for Federal income tax purposes) and individuals. The <br />Bonds are not "private activity bonds" for the purpose of treatment of interest thereon as a <br />direct preference item in calculating the alternative minimum tax. However, for corporations (as <br />• defined for federal income tax purposes) in tax years beginning after 1986 and before 1990, the <br />alternative minimum tax is determined under the Code at 20% of each corporation's alternative <br />minimum taxable income. Such alternative minimum taxable income includes 50% of the <br />-11 - <br />
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