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Rockwall County to remit roughly $1.3 million in arbitrage rebate; court approves $1.339 million in claims
Summary
Rockwall County Treasurer David Peake told the commissioners court the county must remit about $1.3 million to the IRS under federal arbitrage rules tied to 2020 permanent improvement bonds. The court approved unpaid claims totaling $1,338,942.94, including the arbitrage payment and a fee to Broadus and Associates, by unanimous consent.
Rockwall County Commissioners Court agreed to pay an estimated $1.3 million to the Internal Revenue Service to satisfy federal arbitrage rebate rules tied to the county's Permanent Improvement Bonds, Series 2020, and approved $1,338,942.94 in unpaid claims to cover that payment and related fees.
"This is the first time again, in well over a decade that there has been any arbitrage profit that has been calculated," said David Peake, Rockwall County treasurer, during a special meeting called to discuss yield reduction reporting and an arbitrage payment for the installment computation period ending 06/11/2025. Peake said Hilltop Securities, the county's financial advisor, prepared the arbitrage report and that federal rules limit how much of the investment earnings the county may keep.
Peake said the county's road bond fund investments have earned roughly $5.5 million in interest over about 15 years and that Hilltop's five-year lookback showed the county must remit about $1.3 million to the IRS to "true up" the arbitrage calculation. "There's nothing that the county did wrong. There's nothing that's out of compliance," Peake said.
During the discussion, a representative from the auditor's office told the court the auditor had reviewed the accounts and "there is unencumbered funds in these accounts to pay for the interests." The treasurer said he had reviewed the information from Hilltop and recommended approval when the payment came forward during the approval of claims.
When the auditor's office presented unpaid claims in the amount of $1,338,942.94, the court moved to approve them. The auditor's representative said the total included an additional check to Broadus and Associates to meet a filing deadline. A commissioner moved and a second was offered; the motion "passes by unanimous consent of all those present," the court recorded.
The discussion was confined to the arbitrage calculation, the required IRS remittance, and whether the county had available funds; no legal noncompliance or other penalties were reported. Peake and Hilltop Securities calculated the rebate under federal rules governing arbitrage on tax-exempt bond proceeds. Peake and the auditor confirmed the county has funds available to make the payment.
In other business during the short meeting, a commissioner noted the Rockwall County Historical Foundation will hold an event Thursday at Rosini Vineyards and invited colleagues to attend. The court did not go into executive session and adjourned shortly after approving the claims.
