Item 38 - Water Revenue Bonds - Laserfiche WebLink

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disruptions worldwide. The negative effects of the COVID-19 pandemic and its aftermath on global, national, and local economies may continue at least for some period of time. Future pandemics and other widespread public health emergencies may arise from time -to -time and can impact broader economic conditions in the affected region and potentially worldwide. Reduced economic activity and its associated impacts, including as a result of the outbreak of infectious disease, such as job losses, income losses, business closures and housing foreclosures or vacancies, and any prolonged recession that may occur, could have a variety of adverse effects on the City, the Water System operations, and the region. Non-payment of utility bills and generalized reduced water usage from customers resulting from the economic disruption may negatively affect the City and the Water System operations. A protracted disruption in the manufacturing and processing of supplies and equipment may affect supply chains or delay construction schedules for, or the implementation of, Water System capital improvement programs and projects, and may increase the costs of such projects or programs or the Water System's operations. Future pandemic and other widespread public health emergencies may arise from time -to -time and can impact broader economic conditions in the affected region. Reduced economic activity and its associated impacts, including as a result of the outbreak of infectious disease, such as job losses, income losses, business closures and housing foreclosures or vacancies, and any prolonged recession that may occur, could have a variety of adverse affects on City and in the region. Declines in assessed valuations in City service area and/or increases in property tax delinquencies or non-payment resulting from the economic disruption may negatively affect property tax collections and reduce tax levy receipts. Economic conditions affect aggregate levels of retail water use and may reduce demands in the region and City's water transactions and revenues. A protracted disruption in the manufacturing or construction industry may affect supply chains or delay construction schedules for, or the implementation of, City's capital improvement programs and projects, and may increase the costs of such projects or program or City's operations. A sustained deterioration in global stock market values may impact the market value of assets held in fund City's pension and other post -employment benefit plans, which could result in future increases in required plan contributions. The City cannot predict whether another national or localized outbreak of highly contagious or epidemic disease in the future could negatively impact the City's operations and finances and/or the economy of the regions it serves. TAX MATTERS In the opinion of Bond Counsel, based upon an analysis of existing laws, regulations, rulings and court decisions, and assuming, among other matters, compliance with certain covenants, interest on the Bonds is excluded from gross income for federal income tax purposes under Section 103 of the Internal Revenue Code of 1986 (the "Code") and is exempt from State of California personal income taxes. Bond Counsel is of the further opinion that interest on the Bonds is not a specific preference item for purposes of the federal individual or corporate alternative minimum taxes, provided however, that for the purpose of calculating federal corporate alternative minimum tax imposed on corporations (as defined for federal income tax purposes), such interest is taken into account in determining certain income and earnings. The Code imposes various restrictions, conditions and requirements relating to the exclusion from gross income for federal income tax purposes of interest on obligations such as the Bonds. The Authority has covenanted to comply with certain restrictions designed to insure that interest on the Bonds will not be included in federal gross income. Failure to comply with these covenants may result in interest on the Bonds being included in federal gross income, possibly from the date of original issuance of the Bonds. The opinion of Bond Counsel assumes compliance with these covenants. Bond Counsel has not undertaken to determine (or to inform any person) whether any actions taken (or not taken) or events occurring (or not occurring) after the date of issuance of the Bonds may adversely affect the value of, or the tax status of interest on, the Bonds. Current and future legislative proposals, if enacted into law, clarification of the Code or court decisions may cause interest on the Bonds to be subject, directly or indirectly, to federal income taxation or to be subject to or exempted from state income taxation, or otherwise prevent Bond Owners from realizing the full current benefit of the tax status of such interest. For example, legislative proposals are announced from time to time which generally would limit the exclusion from gross income of interest on obligations like the Bonds to some extent 37