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HomeMy WebLinkAboutTax Exemption Certificate TAX EXEMPTION CERTIFICATE of CITY OF WATERLOO, BY AND THROUGH ITS BOARD OF TRUSTEES OF THE MUNICIPAL COMMUNICATIONS UTILITY, STATE OF IOWA, ISSUER $60,000,000 Communications Utility Revenue Capital Loan Notes, Series 2025 This instrument was prepared by: Ahlers & Cooney,P.C. 100 Court Avenue, Suite 600 Des Moines, Iowa 50309 (515) 243-7611 TABLE OF CONTENTS This Table of Contents is not a part of this Tax Exemption Certificate and is provided only for convenience of reference. INTRODUCTION - 1 - ARTICLE I DEFINITIONS - 1 - ARTICLE II SPECIFIC CERTIFICATIONS,REPRESENTATIONS AND AGREEMENTS - 4 - Section 2.1 Authority to Certify and Expectations - 4 - Section 2.2 Receipts and Expenditures of Sale Proceeds - 7 - Section 2.3 Purpose of Bonds - 7 - Section 2.4 Facts Supporting Tax-Exemption Classification - 7 - Section 2.5 Facts Supporting Temporary Periods for Proceeds - 8 - Section 2.6 Resolution Funds at Restricted or Unrestricted Yield - 8 - Section 2.7 Pertaining to Yields - 9 - ARTICLE III REBATE - 10 - Section 3.1 Records - 10 - Section 3.2 Rebate Fund - 10 - Section 3.3 Exceptions to Rebate - 10 - Section 3.4 Calculation of Rebate Amount - 10 - Section 3.5 Rebate Requirements and the Bond Fund - 11 - Section 3.6 Investment of the Rebate Fund - 11 - Section 3.7 Payment to the United States - 11 - Section 3.8 Records - 12 - Section 3.9 Additional Payments - 12 - ARTICLE IV INVESTMENT RESTRICTIONS - 12 - Section 4.1 Avoidance of Prohibited Payments - 12 - Section 4.2 Market Price Requirement - 13 - Section 4.3 Investment in Certificates of Deposit - 13 - Section 4.4 Investment Pursuant to Investment Contracts and Agreements - 13 - Section 4.5 Records - 15 - Section 4.6 Investments to be Legal - 16 - ARTICLE V GENERAL COVENANTS - 16 - ARTICLE VI AMENDMENTS AND ADDITIONAL AGREEMENTS - 16 - Section 6.1 Opinion of Bond Counsel; Amendments - 16 - Section 6.2 Additional Covenants,Agreements - 16 - Section 6.3 Internal Revenue Service Audits - 16 - Section 6.4 Amendments - 17 - EXHIBIT A - 17 - i TAX EXEMPTION CERTIFICATE CITY OF WATERLOO, BY AND THROUGH ITS BOARD OF TRUSTEES OF THE MUNICIPAL COMMUNICATIONS UTILITY, STATE OF IOWA THIS TAX EXEMPTION CERTIFICATE made and entered into on December 30, 2025, by the City of Waterloo, by and through its Board of Trustees of the Municipal Communications Utility, State of Iowa(the "Issuer"). INTRODUCTION This Certificate is executed and delivered in connection with the issuance by the Issuer of its $60,000,000 Communications Utility Revenue Capital Loan Notes, Series 2025 (the "Bonds"). The Bonds are issued pursuant to the provisions of the Resolution of the Issuer authorizing the issuance of the Bonds. Such Resolution provides that the covenants contained in this Certificate constitute a part of the Issuer's contract with the owners of the Bonds. The Issuer recognizes that under the Code (as defined below)the tax-exempt status of the interest received by the owners of the Bonds is dependent upon, among other things,the facts, circumstances, and reasonable expectations of the Issuer as to future facts not in existence at this time, as well as the observance of certain covenants in the future. The Issuer covenants that it will take such action with respect to the Bonds as may be required by the Code, and pertinent legal regulations issued thereunder in order to establish and maintain the tax-exempt status of the Bonds, including the observance of all specific covenants contained in the Resolution and this Certificate. ARTICLE I DEFINITIONS The following terms as used in this Certificate shall have the meanings set forth below. The terms defined in the Resolution shall retain the meanings set forth therein when used in this Certificate. Other terms used in this Certificate shall have the meanings set forth in the Code or in the Regulations. • "Annual Debt Service" means the principal of and interest on the Bonds scheduled to be paid during a given Bond Year. • "Bonds" means the $60,000,000 aggregate principal amount of Communications Utility Revenue Capital Loan Notes, Series 2025, of the Issuer issued in registered form pursuant to the Resolution. • "Bond Counsel" means Ahlers & Cooney, P.C., Des Moines, Iowa, or an attorney at law or a firm of attorneys of nationally recognized standing in matters pertaining to the tax-exempt status of interest on obligations issued by states and their political subdivisions, duly admitted to the practice of law before the highest court of any State of the United States of America. - 1 - • "Bond Fund" means the Sinking Fund described in the Resolution. • "Bond Purchase Agreement" means the binding contract in writing for the sale of the Bonds. • "Bond Year" as defined in Regulation 1.148-1(b),means a one-year period beginning on the day after expiration of the preceding Bond Year. The first Bond Year shall be the one-year or shorter period beginning on the Closing Date and ending on a principal or interest payment date,unless Issuer selects another date. • "Bond Yield" means that discount rate which produces an amount equal to the Issue Price of the Bonds when used in computing the present value of all payments of principal and interest to be paid on the Bonds, using semiannual compounding on a 360- day year as computed under Regulation 1.148-4. • "Certificate" means this Tax Exemption Certificate. • "Closing" means the delivery of the Bonds in exchange for the agreed upon purchase price. • "Closing Date" means the date of Closing. • "Code" means the Internal Revenue Code of 1986, as amended, and any statutes which replace or supplement the Internal Revenue Code of 1986. • "Computation Date" means each five-year period from the Closing Date through the last day of the fifth and each succeeding fifth Bond Year. • "Excess Earnings" means the amount earned on all Nonpurpose Investments minus the amount which would have been earned if such Nonpurpose Investments were invested at a rate equal to the Bond Yield,plus any income attributable to such excess. • "Final Bond Retirement Date" means the date on which the Bonds are actually paid in full. • "Governmental Obligations" means direct general obligations of, or obligations the timely payment of the principal of and interest on which is unconditionally guaranteed by the United States. • "Gross Proceeds" as defined in Regulation 1.148-1(b),means any Proceeds of the Bonds and any replacement proceeds (as defined in Regulation 1.148-1(c)) of the Bonds. • "Gross Proceeds Funds" means the Project Fund, Proceeds held to pay cost of issuance, and any other fund or account held for the benefit of the owners of the Bonds or containing Gross Proceeds of the Bonds except the Bond Fund and the Rebate Fund. -2 - • "Issue Price" as defined in Regulation 1.148-1(b)and (f)(2), means the price paid by the Purchaser of the Bonds. The Issue Price is $60,000,000, as set forth in Exhibit A. • "Issuer" means the City of Waterloo,by and through its Board of Trustees of the Municipal Communications Utility, a municipal corporation in the County of Black Hawk, State of Iowa. • "Minor Portion of the Bonds", as defined in Regulation 1.148-2(g), means the lesser of five (5)percent of Proceeds or$100,000. The Minor Portion of the Bonds is computed to be $100,000. • "Nonpurpose Investments" means any investment property which is acquired with Gross Proceeds and is not acquired to carry out the governmental purpose of the Bonds, and may include but is not limited to U.S. Treasury bonds, corporate bonds, or certificates of deposit. • "Proceeds" as defined in Regulation 1.148-1(b),means Sale Proceeds, investment proceeds and transferred proceeds of the Bonds. • "Project" means acquisition, construction, improving, equipping and designing of all or part of the Municipal Communications Utility, including the acquisition, installation and construction of a fiber-to-the-premise communications system and related infrastructure, equipment and facilities, including conduit, fiber, vaults,pedestals, fiber management frame, FDH and splitter cabinets,multiport service terminals, handholes, splice cases, customer premise electronics, customer connections to fiber system infrastructure,the acquisition of vehicles,trucks and construction and maintenance equipment, the construction of a new communications building or the acquisition,reconstruction and remodeling of a communications building, the furnishing and equipping thereof, computer system hardware and software, billing system,related site improvements including parking, and other miscellaneous improvements, extensions and equipment purchases to benefit the Utility as more fully described in the Resolution. • "Project Fund" shall mean the fund required to be established by the Resolution for the deposit of the Proceeds of the Notes. • "Purchasers" means Western Alliance Business Trust, a Delaware statutory trust, and a wholly owned affiliate of Western Alliance Bank, of Phoenix, Arizona, constituting the initial purchasers of the Bonds from the Issuer. • "Rebate Amount" means the amount computed as described in this Certificate. • "Rebate Fund" means the fund to be created, if necessary,pursuant to this Certificate. • "Rebate Payment Date" means a date chosen by the Issuer which is not more than 60 days following each Computation Date or the Final Bond Retirement Date. - 3 - • "Regulations" means the Income Tax Regulations, amendments and successor provisions promulgated by the Department of the Treasury under Sections 103, 148 and 149 of the Code, or other Sections of the Code relating to "arbitrage bonds", including without limitation Regulations 1.148-1 through 1.148-11, 1.149(b)-1, 1.149- d(1), 1.150-1 and 1.150-2. • "Replacement Proceeds" include, but are not limited to, sinking funds, amounts that are pledged as security for an issue, and amounts that are replaced because of a sufficiently direct nexus to a governmental purpose of an issue. • "Resolution" means the resolution of the Issuer adopted on December 22, 2025, authorizing the issuance of the Bonds. • "Sale Proceeds" as defined in Regulation 1.148-1(b), means any amounts actually or constructively received from the sale of the Bonds, including amounts used to pay underwriter's discount or compensation and accrued interest other than pre-issuance accrued interest. • "Sinking Fund" means the Bond Fund. • "SLGS" means demand deposit Treasury securities of the State and Local Government Series. • "Tax Exempt Obligations" means bonds or other obligations the interest on which is excludable from the gross income of the owners thereof under Section 103 of the Code and include certain regulated investment companies, stock in tax-exempt mutual funds and demand deposit SLGS. • "Taxable Obligations" means all investment property, obligations or securities other than Tax Exempt Obligations. • "Verification Certificate" means the Bond Purchase Agreement. ARTICLE II SPECIFIC CERTIFICATIONS, REPRESENTATIONS AND AGREEMENTS The Issuer hereby certifies, represents and agrees as follows: Section 2.1 Authority to Certify and Expectations (a) The undersigned officer of the Issuer along with other officers of the Issuer, are charged with the responsibility of issuing the Bonds. (b) This Certificate is being executed and delivered in part for the purposes specified in Section 1.148-2(b)(2) of the Regulations and is intended (among other purposes)to establish reasonable expectations of the Issuer at this time. -4 - • (c) The Issuer has not been notified of any disqualification or proposed disqualification of it by the Commissioner of the Internal Revenue Service as a bond issuer which may certify bond issues under Section 1.148-2(b)(2) of the Regulations. (d) The certifications, representations and agreements set forth in this Article II are made on the basis of the facts, estimates and circumstances in existence on the date hereof, including the following: (1)with respect to amounts expected to be received from delivery of the Bonds, amounts actually received, (2)with respect to payments of amounts into various funds or accounts,review of the authorizations or directions for such payments made by the Issuer pursuant to the Resolution and this Certificate, (3) with respect to the Issue Price,the certifications of the Purchasers as set forth in the Verification Certificate, (4)with respect to expenditure of the Proceeds of the Bonds, actual expenditures and reasonable expectations of the Issuer as to when the Proceeds will be spent for purposes of the Project, (5)with respect to Bond Yield,review of the Verification Certificate, and (6)with respect to the amount of governmental and qualified 501(c)(3)bonds to be issued during the calendar year,the budgeting and present planning of Issuer. The Issuer has no reason to believe such facts, estimates or circumstances are untrue or incomplete in any material way. (e) To the best of the knowledge and belief of the undersigned officer of the Issuer,there are no facts, estimates or circumstances that would materially change the representations, certifications or agreements set forth in this Certificate, and the expectations herein set out are reasonable. (f) No arrangement exists under which the payment of principal or interest on the Bonds would be directly or indirectly guaranteed by the United States or any agency or instrumentality thereof. (g) After the expiration of any applicable temporary periods, and excluding investments in a bona fide debt service fund or reserve fund, not more than five percent (5%) of the Proceeds of the Bonds will be (a)used to make loans which are guaranteed by the United States or any agency or instrumentality thereof, or(b) invested in federally insured deposits or accounts. (h) The Issuer will file with the Internal Revenue Service in a timely fashion Form 8038-G, Information Return for Tax-Exempt Governmental Obligations with respect to the Bonds and such other reports required to comply with the Code and applicable Regulations. (i) The Issuer will take no action which would cause the Bonds to become "private activity bonds" as defined in Section 141 (a) of the Code, including any use of the Project by any person other than a governmental unit if such use will be by other than a member of the general public. None of the Proceeds of the Bonds will be used directly or indirectly to make or finance loans to any person other than a governmental unit. a) The Issuer will make no change in the nature or purpose of the Project except as provided in Section 6.1 hereof. - 5 - • (k) Except as provided in the Resolution,the Issuer will not establish any sinking fund, bond fund, reserve fund, debt service fund or other fund reasonably expected to be used to pay debt service on the Bonds (other than the Bond Fund and any Reserve Fund), exercise its option to redeem Bonds prior to maturity or effect a refunding of the Bonds. (1) No bonds or other obligations of the Issuer(1)were sold in the 15 days preceding the date of sale of the Bonds, (2)were sold or will be sold within the 15 days after the date of sale of the Bonds, (3)have been delivered in the past 15 days or(4)will be delivered in the next 15 days pursuant to a common plan of financing for the issuance of the Bonds and payable out of substantially the same source of revenues. (m) None of the Proceeds of the Bonds will be used directly or indirectly to replace funds of the Issuer used directly or indirectly to acquire obligations having a yield higher than the Bond Yield. (n) No portion of the Bonds is issued for the purpose of investing such portion at a higher yield than the Bond Yield. (o) The Issuer does not expect that the Proceeds of the Bonds will be used in a manner that would cause them to be "arbitrage bonds" as defined in Section 148(a) of the Code. The Issuer does not expect that the Proceeds of the Bonds will be used in a manner that would cause the interest on the Bonds to be includible in the gross income of the owners of the Bonds under the Code. The Issuer will not intentionally use any portion of the Proceeds to acquire higher yielding investments. (p) The Issuer will not use the Proceeds of the Bonds to exploit the difference between tax-exempt and taxable interest rates to obtain a material financial advantage. (q) The Issuer has not issued more Bonds, issued the Bonds earlier, or allowed the Bonds to remain outstanding longer than is reasonably necessary to accomplish the governmental purposes of the Bonds and in fact,the Bonds will not remain outstanding longer than 120%of the economic useful life of the assets financed with the Proceeds of the Bonds. (r) The Bonds will not be Hedge Bonds as described in Section 149(g)(3) of the Code because the Issuer reasonably expects that it will meet the Expenditure test set forth in Section 2.5(b) hereof and that 50%or more of the Proceeds will not be invested in Nonpurpose Investments having a substantially guaranteed yield for four or more years. Except for costs of issuance, all Sale Proceeds and investment earnings thereon will be expended for costs of the type that would be chargeable to capital accounts under the Code pursuant to federal income tax principles if the Issuer were treated as a corporation subject to federal income taxation. - 6 - Section 2.2 Receipts and Expenditures of Sale Proceeds Sale Proceeds (par)received at Closing are expected to be deposited and expended as follows: (a) $0 representing pre-issuance accrued interest will be deposited into the Bond Fund and will be used to pay a portion of the interest accruing on the Bonds on the first interest payment date; and (b) $1,083,030 representing costs of issuing the Bonds will be used within six months of the Closing Date to pay the costs of issuance of the Bonds (with any excess remaining on deposit in the Project Fund); and (c) $58,916,970 will be deposited into the Project Fund($9,021,083.33 of which will be allocated to the Capitalized Interest Fund) and will be used together with earnings thereon to pay the costs of the Project and will not exceed the amount necessary to accomplish the governmental purposes of the Bonds. Section 2.3 Purpose of Bonds The Issuer is issuing the Bonds to provide funds to pay the costs of acquisition, construction, improving, equipping and designing of all or part of the Municipal Communications Utility, including the acquisition, installation and construction of a fiber-to-the- premise communications system and related infrastructure, equipment and facilities, including conduit, fiber,vaults,pedestals, fiber management frame, FDH and splitter cabinets, multiport service terminals, handholes, splice cases, customer premise electronics, customer connections to fiber system infrastructure,the acquisition of vehicles, trucks and construction and maintenance equipment,the construction of a new communications building or the acquisition, reconstruction and remodeling of a communications building, the furnishing and equipping thereof, computer system hardware and software, billing system, related site improvements including parking, and other miscellaneous improvements, extensions and equipment purchases to benefit the Utility. Section 2.4 Facts Supporting Tax-Exemption Classification Governmental Bonds Private Business Use/Private Security or Payment Tests The Bonds are considered to be governmental bonds. The Proceeds will be used for the purposes described in Section 2.3 hereof. These bonds are not private activity bonds because no amount of Proceeds of the Bonds is to be used in a trade or business carried on by a non-governmental unit to the extent which would create excessive private activity over the life of the Bonds so as to cause the Bonds to be private activity bonds. Rather, the Proceeds will be used to finance the general government operations and facilities of the Issuer described in Section 2.3 hereof. None of the payment of principal or interest on the Bonds will be derived from, or secured by, money or property used in a trade or business of a non-governmental unit. In addition, none of the governmental operations or facilities of the Issuer being financed with the Proceeds of the Bonds are - 7 - subject to any lease, management contract or other similar arrangement or to any arrangement for use other than as by the general public. Qualified Equity The Issuer reasonably expects to finance the Project with the Bonds, and with certain qualified equity ("Qualified Equity"), all in accordance with the "mixed use" section of the Regulations as set forth in Section 1.141-6 thereof. The Issuer's Qualified Equity contribution results in additional allowable (or"floating")private use under Regulation 1.141-6. The Issuer intends on declaring the final amount of Qualified Equity no later than when the final allocation of tax exempt proceeds is made with respect to the tax exempt bonds issued to finance the Project. Private Loan Financing Test No amount of Proceeds of the Bonds is to be used directly or indirectly to make or finance loans to persons other than governmental units. Section 2.5 Facts Supporting Temporary Periods for Proceeds (a) Time Test. Not later than six months after the Closing Date,the Issuer will incur a substantial binding obligation to a third party to expend at least 5%of the net Sale Proceeds of the Bonds. (b) Expenditure Test. Not less than 85%of the net Sale Proceeds will be expended for Project costs, including the reimbursement of other funds expended to date, within a three-year temporary period from the Closing Date. (c) Due Diligence Test. Not later than six months after Closing, work on the Project will have commenced and will proceed with due diligence to completion. (d) Proceeds of the Bonds representing less than six months accrued interest on the Bonds will be spent within six months of this date to pay interest on the Bonds, and will be invested without restriction as to yield for a temporary period not in excess of six months. Section 2.6 Resolution Funds at Restricted or Unrestricted Yield (a) Proceeds of the Bonds will be held and accounted for in the manner provided in the Resolution. The Issuer has not and does not expect to create or establish any other bond fund, reserve fund, or similar fund or account for the Bonds. The Issuer has not and will not pledge any moneys or Taxable Obligations in order to pay debt service on the Bonds or restrict the use of such moneys or Taxable Obligations so as to give reasonable assurances of their availability for such purposes. (b) Any monies which are invested beyond a temporary period are expected to constitute less than a major portion of the Bonds or to be restricted for investment at a yield not greater than one-eighth of one percent above the Bond Yield. - 8 - (c) The Issuer has established and will use the Bond Fund primarily to achieve a proper matching of revenues and debt service within each Bond Year and the Issuer will apply moneys deposited into the Bond Fund to pay the principal of and interest on the Bonds. Such Fund will be depleted at least once each Bond Year except for a reasonable carryover amount. The carryover amount will not exceed the greater of (1)one year's earnings on the Bond Fund or(2) one-twelfth of Annual Debt Service. The Issuer will spend moneys deposited from time to time into such fund within 13 months after the date of deposit. Revenues, intended to be used to pay debt service on the Bonds, will be deposited into the Bond Fund as set forth in the Resolution. The Issuer will spend interest earned on moneys in such fund not more than 12 months after receipt. Accordingly,the Issuer will treat the Bond Fund as a bona fide debt service fund as defined in Regulation 1.148-1(b). Investment of amounts on deposit in the Bond Fund will not be subject to arbitrage rebate requirements as the Bonds are expected to meet one or more of the spending exemptions from rebate as provided in Section 3.3 hereof. (d) The Minor Portion of the Bonds will be invested without regard to yield. Section 2.7 Pertaining to Yields (a) The purchase price of all Taxable Obligations to which restrictions apply under this Certificate as to investment yield or rebate of Excess Earnings, if any, has been and shall be calculated using(i)the price taking into account discount,premium and accrued interest, as applicable, actually paid or(ii)the fair market value if less than the price actually paid and if such Taxable Obligations were not purchased directly from the United States Treasury. The Issuer will acquire all such Taxable Obligations directly from the United States Treasury or in an arm's length transaction without regard to any amounts paid to reduce the yield on such Taxable Obligations. The Issuer will not pay or permit the payment of any amounts (other than to the United States)to reduce the yield on any Taxable Obligations. Obligations pledged to the payment of debt service on the Bonds, or deposited into any reserve fund after they have been acquired by the Issuer will be treated as though they were acquired for their fair market value on the date of such pledge or deposit. Obligations on deposit in any reserve fund on the Closing Date shall be treated as if acquired for their fair market value on the Closing Date. (b) Qualified guarantees have not been used in computing yield. (c) The Bond Yield has been computed as not less than 5.1510109 percent. This Bond Yield has been computed on the basis of a purchase price for the Bonds equal to the Issue Price. - 9 - ARTICLE III REBATE Section 3.1 Records Sale Proceeds of the Bonds will be held and accounted for in the manner provided in the Resolution. The Issuer will maintain adequate records for funds created by the Resolution and this Certificate including all deposits,withdrawals,transfers from,transfers to, investments, reinvestments, sales, purchases,redemptions, liquidations and use of money or obligations until six years after the Final Bond Retirement Date. Section 3.2 Rebate Fund (a) In the Resolution,the Issuer has covenanted to pay to the United States the Rebate Amount, an amount equal to the Excess Earnings on the Gross Proceeds Funds, if any, at the times and in the manner required or permitted and subject to stated special rules and allowable exceptions. (b) The Issuer may establish a fund pursuant to the Resolution and this Certificate which is herein referred to as the Rebate Fund. The Issuer will invest and expend amounts on deposit in the Rebate Fund in accordance with this Certificate. (c) Moneys in the Rebate Fund shall be held by the Issuer or its designee and, subject to Sections 3.4, 3.5 and 6.1 hereof, shall be held for future payment to the United States as contemplated under the provisions of this Certificate and shall not constitute part of the trust estate held for the benefit of the owners of the Bonds or the Issuer. (d) The Issuer will pay to the United States from legally available money of the Issuer(whether or not such available money is on deposit in any fund or account related to the Bonds)any amount which is required to be paid to the United States. Section 3.3 Exceptions to Rebate The Issuer does not currently reasonably expect that the Bonds are eligible for one or more exceptions from the arbitrage rebate rules set forth in the Regulations. The Issuer will comply with the provisions of this Article III. The Issuer shall comply with the arbitrage rebate requirements of the Code, unless the Issuer becomes eligible for an exception to the arbitrage rebate rules. Section 3.4 Calculation of Rebate Amount (a) As soon after each Computation Date as practicable,the Issuer shall, if necessary, calculate and determine the Excess Earnings on the Gross Proceeds Funds (the "Rebate Amount"). All calculations and determinations with respect to the Rebate Amount will be made on the basis of actual facts as of the Computation Date and reasonable expectations as to future events. - 10- (b) If the Rebate Amount exceeds the amount currently on deposit in the Rebate Fund,the Issuer may deposit an amount in the Rebate Fund such that the balance in the Rebate Fund after such deposit equals the Rebate Amount. If the amount in the Rebate Fund exceeds the Rebate Amount,the Issuer may withdraw such excess amount provided that such withdrawal can be made from amounts originally transferred to the Rebate Fund and not from earnings thereon, which may not be transferred, and only if such withdrawal may be made without liquidating investments at a loss. Section 3.5 Rebate Requirements and the Bond Fund It is expected that the Bond Fund described in the Resolution and Section 2.6(c) of this Certificate will be treated as a bona fide debt service fund as defined in Regulation 1.148-1(b). As such, any amount earned during a Bond Year on the Bond Fund and amounts earned on such amounts, if allocated to the Bond Fund,will not be taken into account in calculating the Rebate Amount for the reasons outlined in Section 2.6(c) hereof. However, should the Bond Fund cease to be treated as a bona fide debt service fund,the Bond Fund will become subject to the rebate requirements set forth in Section 3.4 hereof. Section 3.6 Investment of the Rebate Fund (a) Immediately upon a transfer to the Rebate Fund,the Issuer may invest all amounts in the Rebate Fund not already invested and held in the Rebate Fund,to the extent possible, in(1) SLGS, such investments to be made at a yield of not more than one-eighth of one percent above the Bond Yield, (2) Tax Exempt Obligations, (3) direct obligations of the United States or(4) certificates of deposit of any bank or savings and loan association. All investments in the Rebate Fund shall be made to mature not later than the next Rebate Payment Date. (b) If the Issuer invests in SLGS,the Issuer shall file timely subscription forms for such securities (if required). To the extent possible, amounts received from maturing SLGS shall be reinvested immediately in zero yield SLGS maturing on or before the next Rebate Payment Date. Section 3.7 Payment to the United States (a) On each Rebate Payment Date,the Issuer will pay to the United States at least ninety percent(90%) of the Rebate Amount less a computation credit of$1,000 per Bond Year for which the payment is made. (b) The Issuer will pay to the United States not later than sixty (60) days after the Final Bond Retirement Date all the rebatable arbitrage as of such date and any income attributable to such rebatable arbitrage as described in Regulation 1.148-3(0(2). (c) If necessary, on each Rebate Payment Date,the Issuer will mail a check to the Internal Revenue Service Center, Ogden, UT 84201. Each payment shall be accompanied by a copy of Form 8038-T, Arbitrage Rebate, filed with respect to the Bonds or other information reporting form as is required to comply with the Code and applicable Regulations. - 11 - Section 3.8 Records (a) The Issuer will keep and retain adequate records with respect to the Bonds,the Gross Proceeds Funds,the Bond Fund, and the Rebate Fund until six years after the Final Bond Retirement Date. Such records shall include descriptions of all calculations of amounts transferred to the Rebate Fund, if any, and descriptions of all calculations of amounts paid to the United States as required by this Certificate. Such records will also show all amounts earned on moneys invested in such funds, and the actual dates and amounts of all principal, interest and redemption premiums (if any)paid on the Bonds. (b) Records relating to the investments in such Funds shall completely describe all transfers, deposits, disbursements and earnings including: (1) a complete list of all investments and reinvestments of amounts in each such Fund including, if applicable, purchase price,purchase date, type of security, accrued interest paid, interest rate, dated date,principal amount, date of maturity, interest payment dates, date of liquidation, receipt upon liquidation, market value of such investment on the Final Bond Retirement Date if held by the Issuer on the Final Bond Retirement Date, and market value of the investment on the date pledged to the payment of the Bonds or the Closing Date if different from the purchase date. (2) the amount and source of each payment to, and the amount, purpose and payee of each payment from, each such Fund. Section 3.9 Additional Payments The Issuer hereby agrees to pay to the United States from legally available money of the Issuer(whether or not such available money is on deposit in any fund or account related to the Bonds) any amount which is required to be paid to the United States, but which is not available in a fund related to the Bonds for transfer to the Rebate Fund or payment to the United States. ARTICLE IV INVESTMENT RESTRICTIONS Section 4.1 Avoidance of Prohibited Payments The Issuer will not enter into any transaction that reduces the amount required to be deposited into the Rebate Fund or paid to the United States because such transaction results in a smaller profit or a larger loss than would have resulted if the transaction had been at arm's length and had the Bond Yield not been relevant to either party. The Issuer will not invest or direct the investment of any funds in a manner which reduces an amount required to be paid to the United States because such transaction results in a small profit or larger loss than would have resulted if the transaction had been at arm's length and had the Bond Yield not been relevant to the Issuer. In particular, notwithstanding anything to the contrary contained herein or in the Resolution,the - 12 - Issuer will not invest or direct the investment of any funds in a manner which would violate any provision of this Article IV. Section 4.2 Market Price Requirement (a) The Issuer will not purchase or direct the purchase of Taxable Obligations for more than the then available market price for such Taxable Obligations. The Issuer will not sell, liquidate or direct the sale or liquidation of Taxable Obligations for less than the then available market price. (b) For purposes of this Certificate, United States Treasury obligations purchased directly from the United States Treasury will be deemed to be purchased at the market price. Section 4.3 Investment in Certificates of Deposit (a) Notwithstanding anything to the contrary contained herein or in the Resolution,the Issuer will invest or direct the investment of funds on deposit in the Reserve Fund, any other Gross Proceeds Fund,the Bond Fund, and the Rebate Fund, in a certificate of deposit of a bank or savings bank which is permitted by law and by the Resolution only if the purchase price of such a certificate of deposit is treated as its fair market value on the purchase date and if the yield on the certificate of deposit is not less than(1)the yield on reasonably comparable direct obligations of the United States; and (2)the highest yield that is published or posted by the provider to be currently available from the provider on reasonably comparable certificates of deposit offered to the public. (b) The certificate of deposit described in paragraph 4.3(a) above must be executed by a dealer who maintains an active secondary market in comparable certificates of deposit and must be based on actual trades adjusted to reflect the size and term of that certificate of deposit and the stability and reputation of the bank or savings bank issuing the certificate of deposit. Section 4.4 Investment Pursuant to Investment Contracts and Agreements The Issuer will invest or direct the investment of funds on deposit in the Gross Proceeds Funds,the Bond Fund, and the Rebate Fund pursuant to an investment contract(including a repurchase agreement) only if all of the following requirements are satisfied: (a) The Issuer makes a bona fide solicitation for the purchase of the investment. A bona fide solicitation is a solicitation that satisfies all of the following requirements: (1) The bid specifications are in writing and are timely forwarded to potential providers. (2) The bid specifications include all material terms of the bid. A term is material if it may directly or indirectly affect the yield or the cost of the investment. - 13 - (3) The bid specifications include a statement notifying potential providers that submission of a bid is a representation that the potential provider did not consult with any other potential provider about its bid,that the bid was determined without regard to any other formal or informal agreement that the potential provider has with the issuer or any other person(whether or not in connection with the Bonds), and that the bid is not being submitted solely as a courtesy to the issuer or any other person for purposes of satisfying the requirements of paragraph(d)(6)(iii)(B)(1)or(2)of Section 1.148-5 of the Regulations. (4) The terms of the bid specifications are commercially reasonable. A term is commercially reasonable if there is a legitimate business purpose for the term other than to increase the purchase price or reduce the yield of the investment. (5) For purchases of guaranteed investment contracts only,the terms of the solicitation take into account the Issuer's reasonably expected deposit and drawdown schedule for the amounts to be invested. (6) All potential providers have an equal opportunity to bid and no potential provider is given the opportunity to review other bids (i.e., a last look) before providing a bid. (7) At least three reasonably competitive providers are solicited for bids. A reasonably competitive provider is a provider that has an established industry reputation as a competitive provider of the type of investments being purchased. (b) The bids received by the Issuer meet all of the following requirements: (1) The Issuer receives at least three bids from providers that the Issuer solicited under a bona fide solicitation meeting the requirements of paragraph (d)(6)(iii)(A) of Section 1.148-5 of the Regulations and that do not have a material financial interest in the issue. A lead underwriter in a negotiated underwriting transaction is deemed to have a material financial interest in the issue until 15 days after the issue date of the issue. In addition, any entity acting as a financial advisor with respect to the purchase of the investment at the time the bid specifications are forwarded to potential providers has a material financial interest in the issue. A provider that is a related party to a provider that has a material financial interest in the issue is deemed to have a material financial interest in the issue. (2) At least one of the three bids described in paragraph (d)(6)(iii)(B)(1) of Section 1.148-5 of the Regulations is from a reasonably competitive provider,within the meaning of paragraph(d)(6)(iii)(A)(7) of Section 1.148-5 of the Regulations. - 14 - (3) If the Issuer uses an agent to conduct the bidding process,the agent did not bid to provide the investment. (c) The winning bid meets the following requirements: (1) , Guaranteed investment contracts. If the investment is a guaranteed investment contract,the winning bid is the highest yielding bona fide bid (determined net of any broker's fees). (2) Other investments. If the investment is not a guaranteed investment contract,the winning bid is the lowest cost bona fide bid(including any broker's fees). (d) The provider of the investments or the obligor on the guaranteed investment contract certifies the administrative costs that it pays (or expects to pay, if any)to third parties in connection with supplying the investment. (e) The Issuer will retain the following records with the bond documents until three years after the last outstanding bond is redeemed: (1) For purchases of guaranteed investment contracts, a copy of the contract, and for purchases of investments other than guaranteed investment contracts, the purchase agreement or confirmation. (2) The receipt or other record of the amount actually paid by the Issuer for the investments, including a record of any administrative costs paid by the Issuer, and the certification under paragraph (d)(6)(iii)(D) of Section 1.148-5 of the Regulations. (3) For each bid that is submitted,the name of the person and entity submitting the bid,the time and date of the bid, and the bid results. (4) The bid solicitation form and, if the terms of the purchase agreement or the guaranteed investment contract deviated from the bid solicitation form or a submitted bid is modified, a brief statement explaining the deviation and stating the purpose for the deviation. (5) For purchases of investments other than guaranteed investment contracts,the cost of the most efficient portfolio of State and Local Government Series Securities, determined at the time that the bids were required to be submitted pursuant to the terms of the bid specifications. Section 4.5 Records The Issuer will maintain records of all purchases, sales, liquidations, investments, reinvestments, redemptions, disbursements, deposits, and transfers of amounts on deposit. - 15 - Section 4.6 Investments to be Legal All investments required to be made pursuant to this Certificate shall be made to the extent permitted by law. In the event that any such investment is determined to be ultra vires, it shall be liquidated and the proceeds thereof shall be invested in a legal investment,provided that prior to reinvesting such proceeds,the Issuer shall obtain an opinion of Bond Counsel to the effect that such reinvestment will not cause the Bonds to become arbitrage bonds under Sections 103, 148, 149, or any other applicable provision of the Code. ARTICLE V GENERAL COVENANTS The Issuer hereby covenants to perform all acts within its power necessary to ensure that the reasonable expectations set forth in Article II hereof will be realized. The Issuer reasonably expects to comply with all covenants contained in this Certificate. ARTICLE VI AMENDMENTS AND ADDITIONAL AGREEMENTS Section 6.1 Opinion of Bond Counsel;Amendments The various provisions of this Certificate need not be observed and this Certificate may be amended or supplemented at any time by the Issuer if the Issuer receives an opinion or opinions of Bond Counsel that the failure to comply with such provisions will not cause any of the Bonds to become "arbitrage bonds" under the Code and that the terms of such amendment or supplement will not cause any of the Bonds to become "arbitrage bonds" under the Code, or otherwise cause interest on any of the Bonds to become includable in gross income for federal income tax purposes. Section 6.2 Additional Covenants,Agreements The Issuer hereby covenants to make, execute and enter into (and to take such actions, if any, as may be necessary to enable it to do so) such agreements as may be necessary to comply with any changes in law or regulations in order to preserve the tax-exempt status of the Bonds to the extent that it may lawfully do so. The Issuer further covenants (1)to impose such limitations on the investment or use of moneys or investments related to the Bonds, (2)to make such payments to the United States Treasury, (3)to maintain such records, (4)to perform such calculations, and(5)to perform such other lawful acts as may be necessary to preserve the tax- exempt status of the Bonds. Section 6.3 Internal Revenue Service Audits The Internal Revenue Service has not audited the Issuer regarding any obligations issued by or on behalf of the Issuer. To the best knowledge of the Issuer,no such obligations of the Issuer are currently under examination by the Internal Revenue Service. - 16 - Section 6.4 Amendments Except as otherwise provided in Section 6.1 hereof, all the rights,powers, duties and obligations of the Issuer shall be irrevocable and binding upon the Issuer and shall not be subject to amendment or modification by the Issuer. IN WITNESS WHEREOF,the Issuer has caused this Certificate to be executed by its duly authorized officer, all as of the day first above written. Treasurer,Board of Trustees of the Municipal Communications Utility, State of Iowa (SEAL) - 17 - EXHIBIT "A" CITY OF WATERLOO, STATE OF IOWA MUNICIPAL COMMUNICATIONS UTILITY $60,000,000 COMMUNICATIONS UTILITY REVENUE CAPITAL LOAN NOTES, SERIES 2025 CERTIFICATE OF THE PURCHASER The undersigned, on behalf of Western Alliance Business Trust, a Delaware statutory trust, and a wholly owned affiliate of Western Alliance Bank(the "Purchaser"), hereby certifies as set forth below with respect to the purchase of the above-captioned obligations (the "Bonds"). 1. Purchase of the Bonds. On the date of this certificate,the Purchaser is purchasing the Bonds for the amount of$60,000,000. The Purchaser is not acting as an Underwriter with respect to the Bonds. The Purchaser has no present intention to sell,reoffer or otherwise dispose of the Bonds (or any portion of the Bonds or any interest in the Bonds). The Purchaser has not contracted with any person pursuant to a written agreement to have such person participate in the initial sale of the Bonds and the Purchaser has not agreed with the Issuer pursuant to a written agreement to sell the Bonds to persons other than the Purchaser or a related party to the Purchaser. 2. Defined Terms. a) Public means any person(including an individual,trust, estate, partnership, association, company, or corporation) other than an Underwriter or a related party. The term "related party" for purposes of this certificate generally means any two or more persons who have greater than 50 percent common ownership, directly or indirectly. b) Underwriter means (i)any person that agrees pursuant to a written contract with the Issuer(or with the lead underwriter to form an underwriting syndicate) to participate in the initial sale of the Bonds to the Public, and (ii) any person that agrees pursuant to a written contract directly or indirectly with a person described in clause(i) of this paragraph to participate in the initial sale of the Bonds to the Public (including a member of a selling group or a party to a retail distribution agreement participating in the initial sale of the Bonds to the Public). The representations set forth in this certificate are limited to factual matters only. Nothing in this certificate represents the Purchaser's interpretation of any laws, including specifically Sections 103 and 148 of the Internal Revenue Code of 1986, as amended, and the Treasury Regulations thereunder. The undersigned understands that the foregoing information will be relied upon by the Issuer with respect to certain of the representations set forth in the Tax Exemption Certificate and with respect to compliance with the federal income tax rules affecting the Bonds, and by Ahlers & Cooney,P.C. in connection with rendering its opinion that the interest on the Bonds is excluded from gross income for federal income tax purposes,the preparation of the Internal Revenue Service Form 8038-G, and other federal income tax advice that it may give to the Issuer from time to time relating to the Bonds. WESTERN ALLIANCE BUSINESS TRUST By: Name: Jake Smith Dated: December 30, 2025 4919-7393-4211-1\24268-001