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EXHIBIT B <br />Tax Covenants <br />The City acknowledges that proceeds provided by the County for the Project may be <br />proceeds of Bonds subject to certain requirements of the Tax Code. The City will take all <br />actions with respect to the Project, and proceeds received for the Project, necessary to <br />assure the exclusion of interest on the Bonds from the gross income of the owners of the <br />Bonds, including but not limited to the following: <br />(a) Expenditure of Proceeds. The City will expend proceeds of the Bonds <br />received from the County for capital expenditures for federal income tax purposes within <br />the meaning of Section 1.150-1(b) of the Tax Code. Bond proceeds may be expended to <br />pay, or reimburse the City for, Project capital expenditures or to repay interim indebtedness <br />incurred for capital expenditures of the Project. <br />(b) Notice. The City will provide notice of action taken or planned to issue any <br />tax-exempt indebtedness, including bonds, bank loans, or other tax-exempt indebtedness, <br />to finance Project costs. <br />(c) Treatment as Grant. <br />(1) The City is a governmental entity possessing substantial taxing, <br />eminent domain and police powers and constituting a political <br />subdivision of the State. <br />(2) The City is not acting as an agent of the County. <br />(3) The grant of proceeds for the Project does not impose any obligation <br />or condition to directly or indirectly repay any amount to the County <br />(excluding obligations or conditions intended solely to assure <br />expenditure of the transferred moneys in accordance with the <br />governmental purpose of the transfer). <br />(4) The grant is required to be used for open space as required under <br />Article II but does not impose any conditions relating to the use of the <br />Project or other property of the City by the County or any of its <br />agencies or authorities. <br />(5) <br />This agreement is a grant agreement. <br />(d) Limitations on Disposition of Project. The City will not sell or otherwise <br />dispose of any components of the Project without prior approval by the County and <br />compliance with timeframes for completion of land replacement or cash reimbursement as <br />provided in Section 6.4. <br />(e) Record Retention. The City will retain its records of all accounting and <br />monitoring it carries out with respect to the Bond proceeds received and with respect to the <br />15 <br />