TRANSMITTAL LETTER FOR THE BOARD MEETING OF FEBRUARY 5, 2026
COMMITTEE ON FINANCE
Mr. John P. Murray, Executive Director
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Authority to remit Arbitrage Rebate payment of $543,069.84 to the Internal Revenue Service for Capital Improvement Bonds, Series of December 2021, under Section 148(f) of the Internal Revenue Code of 1986, Account 401-11000-430610
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Dear Sir:
Authority is requested to remit payment of $543,069.84 to the Internal Revenue Service (“IRS”) to fulfill the District’s Arbitrage Rebate obligation. This payment represents the District liability for excess earnings from investment of the proceeds and subsequently applied revenues for Capital Improvement Bonds, Series of December 2021. Payment and accompanying Form 8038-T are due to the IRS by March 1, 2026.
The December 2021 bonds were sold on December 7, 2021. The original total par value for the four tax-exempt series of the bond issue was $341,670,000, with a net interest cost of 1.41%. Arbitrage rebate calculations have been performed by BLX Group LLC, under the supervision of the District’s General Legal Advisory consultant Katten Muchin Rosenman LLP. The investment portfolio yield was 1.58%, earning interest income of $4.9 million through December 31, 2025. The District is allowed to retain interest income earned equal to the interest cost on the bonds, while excess earnings represent the rebate due to the IRS. The difference between the interest cost on the bonds and the portfolio yield is the rebate amount due to the IRS.
The bond issue proceeds and revenues have been expended. Per the opinion letter by BLX Group LLC accompanying their December 31, 2025, Rebate Calculation Report, payment of $543,069.84 to the IRS by March 1, 2026, will satisfy the District arbitrage rebate obligation for the issue, assuming that no changes occur in the existing maturity schedule for the outstanding bonds. No change in the bond maturities is expected at this time.
Funds are available in 401-11000-430610.
Requested, Steven J. Lux, Treasurer, SJL:vb
Respectfully Submitted, Marcelino Garcia, Chairman Committee on Finance
Disposition of this agenda item will be documented in the official Regular Board Meeting Minutes of the Board of Commissioners for February 5, 2026
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