The Vendor is required to provide arbitrage rebate services and/or verification agent to the State for its financing programs (“Programs”).
- Arbitrage Rebate Services:
• Consult with the state regarding the nature of the bonding program, the issue, and collect all necessary documentation and investment data.
• Review and confirm (if requested) prior arbitrage rebate reports for the issue, if any.
• Identify, and separately account for, all “gross proceeds” of the issue, including those requiring allocation analyses due to “transferred proceeds” and/or “commingled funds” circumstances (each as defined by the code).
• Review and analyze the investments, funds, and accounts in which the proceeds are held.
• Determine, as needed, the fair market price or present value of investments.
• Calculate the issue's excess investment earnings (cumulative rebate liability), taking into account any other deemed proceeds that are or have become subject to the rebate requirements and all credit and debits required or permitted by the tax regulations.
• Deliver a comprehensive report, acceptable to the internal revenue service (“IRS”), detailing the tax arbitrage rebate calculations, the rebate liability and any yield restriction issues as well as an opinion letter regarding the calculations for the issue.
• The letter shall provide, among other things, that such calculations were performed in compliance with federal tax law.
• Provide an executive summary identifying the methodology employed, major assumptions, conclusions, and any recommendations for changes in the state’s recordkeeping and investment policy.
• Prepare and provide for signing and dating a completed form 8038-t ready for filing with the irs, and any other required forms.
• Assist the state as necessary in the event of an IRS or other inquiry.
• Consult with state’s staff and the state’s bond and tax counsel as necessary to provide tax advice regarding rebate-related matters, record keeping and compliance, strategies to maximize investment earnings (net of rebate) while complying with tax regulations and changes in tax laws and their effects on outstanding issues and future issuances.
• Maintain a database of all issues for the assigned bonding program and advise the state of any upcoming important dates, including, without limitation, spending exceptions, yield restrictions, required calculation dates, required payment dates, and current status of all issues in the program.
- Verification Agent Service
• provide the services listed below in connection with each refunding bond or cash defeasance requested by the State.
• Preparation of reports (defeasance requirements, investment cash flow, escrow sufficiency, bond yield, escrow yield, savings, etc.) and verification of the mathematical accuracy of escrow reports relating to the purchase of securities placed in the escrows to support debt service, including the verification of existing escrows.
• Review source documents (numbers run, official statements, trade confirmations, available SLGS rates, SLG subscription forms, prior verification reports, etc.) and confirm that the assumptions used in the calculations conform to such source documents.
• Coordinate as necessary with the financing team, including the Underwriters, Financial Advisor(s) Bond Counsel (s), and Tax Counsel to ensure that necessary information concerning the Refunding Bonds, the refunded (or defeased) bonds and escrow investments (the “Refunding Bond Information”) is accurately and completely transmitted and included in the verification report.
• Within 12 hours of receiving Refunding Bond or defeasance information provide an email confirmation, and within 7 calendar days (but no later than 2 days prior to closing) provide an opinion letter and report, of the mathematical accuracy of:
1. Sources and Uses of Funds;
2. Debt Service to maturity of the Refunded and Refunding Bonds, including June 30 fiscal year totals;
3. Debt Service Requirements of the Refunding Bonds for Bond Yield calculation purposes;
4. Proof of Bond Yield on the Refunding Bonds;
5. Redemption price on the Refunded Bonds;
6. Defeasance Requirements of the Refunded Bonds;
7. Schedule of Escrow Investments, including required reinvestments, if any;
8. The interest rates on the SLGS subscription is equal to, or less than, the maximum rate available for SLGS on the SLGS subscription date;
9. Cash flow of the Escrow Investments, including reinvestments, if any;
10. Proof of Yield on the Escrow Investments;
11. The Escrow Yield is equal to or lower than the Bond Yield;
12. Escrow Fund Cash Flow Sufficiency;
13. Savings report on a June 30 fiscal year basis, and on an alternative date basis, if requested. Cash flow and Net Present Value basis.
14. Transferred Proceeds Calculations
15. Dollar price of refunding bonds sold on a yield basis (to maturity or call)
16. Accreted value calculations for deep discount term bonds
17. Other schedules needed in support of transaction
• The Provider’s Opinion Letter and reports shall be addressed to and may be relied upon by the State, Financial Advisor(s), Bond Counsel(s), Tax Counsel, Underwriters and Trustee.
- Contract Period/Term: 3 years
- Questions/Inquires Deadline: June 11, 2025