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Indiana financial institutions tax and the Indiana inheritance tax. Bond Counsel expresses no other opinion regarding • any other tax consequences. As amended by the Tax Reform Act of 1986, the Code prescribes a number of qualifications and conditions, including continuing issuer compliance, for the interest on state and local government obligations to be and remain excludable from gross income for federal income tax purposes. Under the Indenture, the Authority has made certain covenants (the "Tax Covenants") not to take any action or to fail to take any action with respect to the proceeds of the Bonds or any investment earnings thereon which would result in constituting the Bonds as "arbitrage bonds" under the Code or would otherwise cause the interest on the Bonds to cease to be excludable from gross income for purposes of federal income taxation. The Authority also has made certain covenants to comply with the arbitrage rebate requirements under Section 148 of the Code to the extent applicable. Noncompliance with the foregoing Tax Covenants may cause the interest on the Bonds to be includable in gross income for federal income tax purposes retroactive to the date of issuance of the Bonds, in which case the market value of the Bonds would be materially and adversely affected. The Bonds are not "private activity bonds" for the purpose of treatment of interest thereon as a direct preference item in calculating the alternative minimum tax. However, for corporations (as defined for federal income tax purposes), interest on the Bonds would be includable in the "adjusted current earnings" of a corporation for purposes of such alternative minimum tax. .The accrual or receipt of interest on the Bonds may otherwise affect a Bondholder's federal income tax or state tax liability; however, the nature and extent of such other tax consequences will depend upon a Bondholder's particular tax status and such Bondholder's other items of income or deduction. The taxpayers who may be affected by such other consequences include, without limitation, S corporations, financial institutions, property and casualty insurance companies, individual recipients of Social Security or Railroad Retirement benefits and taxpayers who may be deemed to have incurred (or continued) indebtedness to purchase or carry tax-exempt obligations. • No provision has been made for redemption of the Bonds, or for an increase in the interest rate on the Bonds, in the event that interest on the Bonds becomes subject to income taxation. The foregoing does not purport to be a comprehensive discussion of the tax consequences of owning the Bonds. Prospective owners of the Bonds should consult their own tax advisors with respect to the foregoing and other tax consequences of owning the Bonds. LEGAL MATTERS Certain legal matters incident to the authorization and issuance of the Bonds by the Authority are subject to the approval of Baker & Daniels, South Bend, Indiana, Bond Counsel, whose approving opinion will be delivered with the Bonds. A form of the opinion which Bond Counsel proposes to render is attached to this Official Statement as Appendix B. Bond Counsel will render a further opinion that the Bonds, the Indenture and the Lease conform as to form and tenor with the terms and provisions thereof as summarized in this Official Statement. Bond Counsel has not been requested to review any information contained in this Official Statement or the appendices hereto, and expresses no opinion thereon and assumes no responsibility in connection therewith, other than the information under theheadings "INTRODUCTION," "THEBONDS," "LETTER OF CREDIT," "RENEWAL CREDIT FACILITIES; ALTERNATE CREDTT FACILITIES, " "SECURITY AND SOURCES OF PAYMENT FOR THE BONDS, " "TAX MATTERS," "APPENDIX B--FORM OF BOND COUNSEL OPINION" and "APPENDIX C--SUMMARY OF CERTAIN LEGAL DOCUMENTS". Certain legal matters will be passed on for the Authority and the Commission by the corporation counsel for the City, and for the Underwriters by their counsel, Barnes & Thornburg, South Bend, Indiana. 1~ u -20-