Official Action / Intent
The evidence of official intent of the Issuer (or the conduit borrower if it is a 501(c)(3) organization) to reimburse expenditures with proceeds of the bonds.
bond-basics
Inducement Resolution
A resolution adopted by the Issuer or the Borrower to indicate the preliminary intention to issue the Tax-Exempt Bonds, subject to satisfaction of certain conditions precedent which may be satisfied on or after the adoption of a Bond Resolution. Inducement Resolutions are particularly common in Conduit Financings. In addition, an Inducement Resolution may be used for purposes of Section 1.150-2 of the Treasury Regulations as the “Declaration of Intent” of the parties to use the Tax-Exempt Bond proceeds to reimburse expenditures paid from another source prior to the date the Tax-Exempt Bonds are issued.
Get it in Writing
Learn more about the various documents involved in a municipal securities transaction.
See Also
Start with the Bond Basics
Hundreds of Terms and Concepts
120% Rule
Rule outlined in Section 147(b) of the code that states private activity bonds are not tax-exempt bonds if the weighted average maturity of the bond issue exceeds 120% of the average reasonably expected economic useful life of the facilities financed with the bond proceeds.