Harbor Bancorp & Subsidiaries - Page 69

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          received if the issuer subsequently used the proceeds for arbitrage         
          revenue.  At a congressional hearing in 1978, Assistant Secretary           
          Lubick was asked whether the Commissioner could change his mind             
          about the nonarbitrage status of a bond after it was issued.  Mr.           
          Lubick replied: "That is a determination which is made as of the            
          issuance date.  The fact that the [issuer] goes on and does                 
          something different from what it proposed originally does not               
          change the status of the bond.  This determination is made ab               
          initio."  Revenue Act of 1978: Hearings on H.R. 13511 before the            
          Senate Comm. on Finance, 95th Cong., 2d Sess. 958-959 (1978).               
               In 1984, Congress reviewed the various remaining provisions            
          that permitted States to collect arbitrage and noted: "Present              
          rules permit issuers to retain any arbitrage earned under these             
          rules".  H. Conf. Rept. 98-861, at 1205 (1984), 1984-3 C.B. (Vol.           
          2) 1, 459 (emphasis supplied).  Congress therefore made the rebate          
          provisions applicable to certain industrial development bonds and           
          to certain student loan bonds.  Sec. 103(c)(6), as added by Deficit         
          Reduction Act of 1984, Pub. L. 98-369, sec. 624(a), 98 Stat. 922.           
               In the Tax Reform Act of 1986, Congress decided to extend the          
          rebate requirements to additional classes of tax-exempt bonds,              
          including those issued to provide multifamily residential housing.5         
          See Tax Reform Act of 1986 (TRA), Pub. L. 99-514, sec. 1314(d), 100         
          Stat. 2664.  With this change came new rules relating to the                


               5    I agree with the majority's conclusion that the date of           
          issuance of the Bonds was not Dec. 31, 1985, but rather Feb. 20,            
          1986.                                                                       



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