35-512. Authority to comply with federal income
tax laws
A. The governing body of any department, agency, instrumentality of this state or
any political subdivision may make any covenant, order any rebate, file any tax return,
report any information and order the limitation on the yield of any investment made with
the proceeds from the sale of its bonds or with taxes, revenues or other income pledged,
held in trust or otherwise used to pay principal, interest and premium, if any, on its
bonds in consideration for any federal tax benefits, payments or credits relating to a
bond issued under any provision of law, including federal tax credits, federal subsidy
payments and retention of the exemption from federal income taxes for the interest income
on a bond issued.
B. To induce prospective purchasers to purchase bonds, the governing body of any
department, agency or instrumentality of this state or any political subdivision may
provide in any resolution, ordinance, indenture or contract authorizing or providing for
the issuance of bonds, or in the bonds themselves, that in the event the interest on such
bonds is declared to be subject to federal income taxation in a final decision of a court
having jurisdiction in the matter and on such additional conditions as the governing body
may prescribe, the interest rate, including prior interest paid if applicable, may
increase to a predetermined rate. The predetermined rate may be calculated in any
manner. This subsection shall not be construed to allow interest rates to increase above
the maximum rate that otherwise may be provided by law, election or contractual
agreement.
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