Get Full Government Meeting Transcripts, Videos, & Alerts Forever!
Get email alerts on the Finance And Bonds topic
No spam. Unsubscribe anytime.
Ada County authorizes $27,600 from contingency to cover bond arbitrage IRS filing and penalties
Summary
Treasurer’s staff told the board that interest on bond‑related contingency funds exceeded tax‑exempt bond limits and triggered IRS reporting and a penalty; the board approved using $27,600 from contingency to pay the liability and calculation costs.
Treasurer’s staff told the board that, because interest on funds held for a coroner’s office CAT scan purchase sat in the bank while the purchase delayed, the county’s interest earnings on those bond‑related funds exceeded the permitted threshold for tax‑exempt bonds and now require an IRS filing and payment.
Staff explained the bond structure and cited the October 2020 bond issuance. They said the excess earnings trigger tax consequences and reported estimated costs: an arbitrage calculation fee of roughly $5,600 and a total contingency request of $27,600 to cover the payment and filing costs.
Commissioners discussed the legal limits on tax‑exempt bond earnings, noting the small permitted margin (repeated in the discussion as 0.125 percentage points) and the complexity of calculating arbitrage. Following discussion, Speaker 2 moved to approve use of contingency funds to pay the IRS liability and associated calculation costs and to authorize the chair to sign related documents. The motion carried by unanimous voice vote.
Treasurer’s staff said the expense results from timing of the bond proceeds and a delay in the CAT scan purchase; they expect the issue will not recur once the purchase is complete and the funds are spent as intended.
