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Committee renews annual contract for arbitrage earnings calculations
Summary
The committee voted to renew the city's contract with the arbitrage group to perform arbitrage earnings determinations for municipal bond issuances at a rate of $1,500 per issuance, covering roughly seven issuances this year.
The Tuscaloosa City finance committee approved an annual contract with an arbitrage consultant to perform arbitrage earnings calculations for the city's debt issuances.
Carly explained that arbitrage calculations are part of the city's annual audit procedures and determine whether tax-exempt bond proceeds have earned investment returns above allowable interest, potentially requiring rebate payments to the U.S. Treasury. She said the consultant's fee is $1,500 per issuance and the city has about seven issuances to cover this year. Carly also noted the city paid roughly $12,000 in arbitrage rebate to the U.S. Treasury in the last year and that typical payments are drawn from interest earnings rather than the city's operating cash.
The committee approved the contract renewal by voice vote.
