Copperas Cove council authorizes $142,777.89 arbitrage payment tied to 2020 certificates of obligation

City Manager Ryan Havelot told the council the city issued combination tax and revenue certificates of obligation on Aug. 4, 2020, and that arbitrage calculations are due five years from issuance. He said an arbitrage payment of $142,777.89 is required because the city’s investments earned more interest than permitted under U.S. Treasury rules.

Havelot described the calculation included in the council packet: the allowable amount of interest the city could have earned was $58,100.52, actual interest earned was $200,878.41, and the difference is $142,777.89, which the city must remit. He said the submission deadline is in early October and asked council to authorize the payment.

Councilman Sean Alzona moved to authorize the city manager to submit payment in the amount of $142,777.89 to the Department of the Treasury to comply with the 1993 Treasury regulations related to arbitrage calculations for the Combination Tax and Revenue Certificates of Obligation Series 2020; Councilman John Hale seconded. The motion passed on a voice vote after council members answered “Aye.”

Outcome and context: the payment is required by federal arbitrage regulations when investment earnings on bond or certificate proceeds exceed permitted yields. The city included the calculation and a recommendation in the meeting packet; staff cited a submission deadline in early October.