Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Bonds Arbitrage topic
No spam. Unsubscribe anytime.
ACSA authorizes executive director to address arbitrage rebate liability from 2020C VRA bond; board cites about $46,000
Summary
The Amherst County Service Authority on March 4 authorized its executive director to handle an arbitrage rebate liability tied to the Virginia pool financing program Series 2020C bond. Staff said the liability — interest earned on bond proceeds exceeding permitted yield — is roughly $46,000 and will be budgeted in the upcoming fiscal year.
The Amherst County Service Authority voted March 4 to authorize the authority’s executive director to act on an arbitrage rebate liability tied to the Virginia pool financing program Series VPFP 2020C bond.
Staff included correspondence from the Virginia Resources Authority indicating the authority may owe an arbitrage rebate on interest earned while bond proceeds sat in a pooled account. Mr. Castillo explained the funds accrued interest in the account and if that interest exceeds IRS-allowed yields the authority is required to return the excess; staff reported the amount at roughly $46,000.
A motion by Mr. Perra (identified in the meeting transcript as a board member) authorized the executive director to proceed with the necessary actions, including allowing the Virginia Resources Authority to withdraw the required rebate from the account. The motion passed on a voice vote.
Board members clarified that the rebate represents excess interest the authority cannot retain rather than an out-of-pocket expense drawn from currently spent funds. ‘‘We’re not able to keep all of the interest that the extra interest that we had earned,’’ Mr. Castillo said, and another board member said the situation does not directly affect ratepayers because the money had not been spent. Staff said the authority had budgeted interest-income assumptions for the fiscal year and expected to exceed a previously budgeted $200,000 in interest income.
Staff told the board the rebate and any payment will be budgeted in the upcoming fiscal year (November 2025 was mentioned as the timing for the related budget). The board authorized the executive director to execute what the Virginia Resources Authority requested to resolve the arbitrage issue.
Staff said the authority will work with its financial advisors on overall rate and budget implications but that the arbitrage rebate itself stems from how bond proceeds were held before they were spent and is a required reconciliation under federal rules.
