A: The regulations provide for certain exceptions related to the size of the issue and period of time over which the proceeds are spent. The exceptions are described below.
Small Issuer Exception. This exception applies to municipalities with general taxing powers that issue $5 million or less of tax-exempt debt during a calendar year. Beginning in 1998, it also applies to schools with general taxing powers that issue $10 million or less of tax-exempt debt during a calendar year, provided $5 million or less is spent for purposes other than constructing or renovating public school facilities. Certain additional requirements apply in the case of refunding bonds.
6-Month Exception. To qualify for exemption from the rebate requirements, all gross proceeds and investment earnings must be spent within 6 months of the issue date.
18-Month Exception. To qualify for the 18-month exception requires that all proceeds and investment earnings must be spent as follows:
15% within 6 months of the issue date
60% within 12 months of the issue date
100% (less "reasonable retainage") within 18 months of the issue date.
24-Month Exception. To qualify for the 24-month exception applies only to construction issues, and requires that all Available Construction Proceeds be spent as follows:
10% within 6 months of issue date
45% within 12 months of issue date
75% within 18 months of issue date
100% (less "reasonable retainage") within 24 months of issue date.
For additional information, see the Arbitrage Primer under Investor/Participant Resources on this website, or contact your bond counsel.
