Harbor Bancorp & Subsidiaries - Page 26

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          Bank to Chase Manhattan Bank and subsequently to Heritage, to the           
          credit of the developer partnerships and then to Unified.                   
          Because the Bonds were issued after December 31, 1985, section              
          148(f) applies.                                                             
               Section 148(f)(1) provides that a bond shall be treated as             
          an arbitrage bond unless the amount described in section                    
          148(f)(2) is paid to the United States.  Such amount is equal to            
          the sum of:                                                                 

                    (A) the excess of--                                               
                         (i) the amount earned on all nonpurpose                      
                    investments (other than investments                               
                    attributable to an excess described in this                       
                    subparagraph), over                                               
                         (ii) the amount which would have been                        
                    earned if such nonpurpose investments were                        
                    invested at a rate equal to the yield on the                      
                    issue, plus                                                       
                    (B) any income attributable to the excess                         
               described in subparagraph (A),                                         

          Sec. 148(f)(2).  Payments required by section 148(f)(2) are                 
          generally required to be made at 5-year intervals.  Each required           
          installment must be in an amount that ensures that 90 percent of            
          the amount described in section 148(f)(2) has been paid, and full           
          payment must be made with the last installment.  Sec. 148(f)(3).9           

               9Sec. 148(f)(3) provides in part:                                      

               Except to the extent provided by the Secretary, the                    
               amount which is required to be paid to the United                      
                                                             (continued...)           



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Last modified: May 25, 2011