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Finance staff: arbitrage report shows about $1.9M rebate exposure; options include exceptions and staged payments
Summary
Finance staff told the committee the arbitrage report shows the district earned more interest than permitted on bond proceeds for the covered period and estimated exposure at about $1.9 million; staff discussed exceptions tied to project completion timing, thresholds and that any rebate would be paid from interest earned.
The committee reviewed an arbitrage rebate report prepared for bond proceeds. The chair summarized the issue: the district "earned more money than we should have" and will need to file a report with the IRS; when asked if the amount was $2,000,000, a finance staffer replied, "It's 1.9 and change." The consultant recommended not waiting the full five years to pay and identified possible exemptions if projects finish within statutory thresholds (for example, projects completed within two years may be eligible for relief on that issuance). Staff noted the district typically pays the rebate from interest earnings and that a final reconciliation report will determine the exact amount.
Members also discussed the broader bond program and remaining balances. Staff estimated that after current projects and expected adjustments (including the arbitrage rebate) the bond program would have a little over $55 million remaining for future renovations; the committee debated whether to commit remaining funds to additional new construction or preserve them for renovation needs and contingencies.
