Arbitrage Rebate
GILMORE & BELL
A PRQF'"ESS10NAL CORPORATION
816-221-1000
f"AX: BI6-~21.10IB
WWW.GILMORE:BCLL.COM
ATTORNEYS AT LAW
2405 GRANO BOULEVARD. SUITE 1100
KANSAS CITY, MISSOURI 64108-2521
ST. LOUIS, MISSOURI
WICHITA, KANSAS
L.INCOL.N, NEBRASKA
September 6, 2007
Mr. Rod'Franz, Finance Director
City of Salina
City Hall- 300 West Ash
Salina, Kansas 67402
Re: Arbitrage Rebate Reqnirements and Proposal for City of Salina, Kansas - Multiple
Issues (see Exhibit A attached)
Dear Mr. Franz:
Gilmore & Bell is named as the Rebate Analyst for the financings listed on Exhibit A. The
purpose of this letter is to discuss the procedures we propose to follow in fulfilling our duties as Rebate
Analyst.
Rebate Computations
Typically we recommend performing annual rebate computation updates along with an
"installment computation" in conjunction with the fifth annual update. However, certain situations can
arise that allow us to deviate from this recommendation and determine more suitable procedures for
complying with the appropriate regulations. We suggest the following procedures for the referenced
financings:
Series 2006-1 Notes
The Series 2006-1 Notes mature on August I, 2009. We suggest that an interim computation be
completed as of August I, 2007. This will enable the City to anticipate and make provisions for payment
of rebate should it be due. A final installment computation for the Notes will be necessary as of August 1,
2009.
Series 2006-2 Notes
The Series 2006-2 Notes mature on August I, 2007. We suggest that a computation be completed
as of that date. This will be the final installment computation for the Notes.
Series 2006-A Bonds and Series 2006-B Bonds
It is not necessary to complete a rebate computation if there are no funds that potentially could be
invested at an unrestricted interest rate. In these situations, rather than produce a rebate computation, we
will simply issue a letter stating compliance with rebate regulations after confirming that any proceeds
allocated to unrestricted funds were spent on or shortly after the issue date. We do not charge for this
service. We believe both the Series 2006.A and Series 2006.B Bonds can be handled this way.
According to the Federal Tax Certificates, a portion of the proceeds of each of these issues was
deposited into each respective Improvement Fund. We will need for you to provide us with records so
that we can confirm that all proceeds within each of these funds were spent and that either there were no
investment earnings on this fund, or that any earnings were nominal. Upon receipt, we will issue letters
as described above.
Our fees for acting as Rebate Analyst will be as follows:
. Series 2006-1 Notes - $1 ,500 for the first computation as of August I, 2007
and $1,000 for the subsequent installment computation.
. Series 2006-2 Notes -$1,500 for the final computation on August 1,2007.
All fees are payable at the time each computation is completed. As mentioned above, we do not
charge for only confmning compliance with rebate regulations, as we believe we will be able to do with
the Series 2006-A Bonds and Series 2006-B Bonds. In the event a rebate computation is required, we
will contact you and provide a fee quote before proceeding with the calculation.
Records
We understand that the City is to provide us with copies of the account statements for all Series
2006-1 Notes and Series 2006-2 Notes. We will need statements and investment records for the
Improvement Fund, the Principal and Interest Account, and the Rebate Fund in relation to each series.
We typically will need the following information related to the investment of these funds: type of
investment (e.g., treasury security, CD, money market, tax-exempt investment, etc.), purchase date and
purchase price (including amounts paid as accrued interest), face amount, interest rate, frequency of
interest payments, and sale or disposition price and date. We also need to know a date and general
purpose (e.g., project costs, debt service, costs of issuance, etc.) of any expenditure of proceeds of your
financing. We have found that these records are usually already available from one or more sources and
it is NOT necessary to create special financial reports in order to get us the information we will need.
Investment records can be provided electronically bye-mail totaxcomDliance@gilmorebell.com.
If records are provided in hard copy form, please send them to Gilmore & Bell, P.C., Attention: Tax
Compliance Group, 2405 Grand Boulevard, Suite 1100, Kansas City, MO 6410&.
If you have any questions or concerns abo~t the foregoing, please call me.
Very truly yours,
71~n~
Marc McCarty
MCM:sg
cc: Randy Irey
Gina Riekhof
Nancy Morris
GILMORE & BELL, P.C.
Accepted by:
CITY OF SALINA, KANSAS
A
GU.MORE & BELL, P.C.
EXHIDIT A
. $1,800,000 City of Salina, Kansas, General Obligation Temporary Notes, Series 2006-1
(the "2006-1 Notes")
. $5,200,000 City of Salina, Kansas, General Obligation Temporary Notes, Series 2006-2
(the "2006-2 Notes")
. $2,200,000 City of Salina, Kansas, General Obligation Internal Improvement Bonds,
Series 2006-A (the "2006-A Bonds")
. $885,000 City of Salina, Kansas, General Obligation Internal Improvement Bonds, Series
2006-B (the "2006-B Bonds")