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Copperas Cove council authorizes $142,777.89 arbitrage payment for 2020 certificates of obligation
Summary
Council authorized the city manager to submit $142,777.89 to the U.S. Treasury to satisfy arbitrage rules stemming from the 2020 combination tax and revenue certificates of obligation.
The City of Copperas Cove City Council on Oct. 6 authorized the city manager to submit payment of $142,777.89 to the U.S. Department of the Treasury to comply with federal arbitrage rules tied to the city’s Combination Tax and Revenue Certificates of Obligation, Series 2020.
City Manager Ryan Havelot explained that city staff issued the 2020 certificates on Aug. 4, 2020, and that Treasury calculations extend five years from that date. “We earned interest of $200,878.41,” Havelot said, “we can only earn interest of $58,100.52,” and the difference—$142,777.89—must be remitted to the Treasury.
Staff asked the council to authorize the payment because the city faces a submission deadline in October. Councilman Sean Alzona moved to authorize the payment and Councilman John Hale seconded; the motion carried on a unanimous voice vote.
The payment is required under Treasury regulations governing tax-exempt debt arbitrage, which limit the yield a municipality may earn on bond proceeds invested above the permitted rebate calculation. City staff described the payment as the final compliance step for the 2020 certificates.
