FY 2017 Budget Highlights

IX. X. U.S. Treasury STRIPS (Separate Trading in Registered Interest and Principal Securities) and, in particular, the County may invest in STRIPS in connection with its agricultural land preservation program. 2. A swap is an interest rate exchange transaction. While not specifically excluded, County policy is to refrain from entering into swap agreements. Refunding A. The County, in conjunction with its Financial Advisor, will monitor its outstanding debt in light of current debt market conditions and will refund any qualifying debt when sufficient savings can be realized. B. Article 31, Section 24 of the Annotated Code of Maryland, as amended (the "Refunding Act"), authorizes the County to issue bonds for the purpose of refunding any of its outstanding bonds. Refunding bonds may be issued for the public purpose of (a) realizing savings to the County in the aggregate cost of debt service on either a direct comparison or present value basis, or (b) a debt restructuring that (i) in the aggregate effects such a reduction in the cost of debt service or (ii) is determined by the County to be in the best interest of the County, to be consistent with the County's long-term financial plan and to realize a financial objective of the County including improving the relationship of debt service to a source of payment such as taxes, assessments or other charges. At least one of these public purposes shall be realized when a refunding occurs. Advance refundings and current refundings should typically show net cost savings of at least three percent, inclusive of all costs of issuance. C. In the event of advance refundings, policy dictates that State and Local Government Series (SLGS) securities must be used for advance refundings escrow accounts. Post-Issuance Administration/Arbitrage A. In connection with each issuance of debt the interest on which will qualify for exemption from federal income tax, the County will execute such certificate(s) and file such information returns as Bond Counsel advises are necessary and appropriate to establish qualification for such exemption. B. Subsequent to the issuance of any issue of tax-exempt debt the County will comply with such requirements for the maintenance of the tax-exempt status of the interest payable on the debt (including without limitation restrictions related to arbitrage yield restrictions, rebate of arbitrage profits, and private business use) as are contained in the certificate(s) referenced in paragraph X.A or as may otherwise become applicable to the debt subsequent to its issuance. C. The County intends that its tax-exempt debt be issued in such amounts and at such times relative to the expected expenditure of proceeds as to reasonably expect, as of the time of issuance, that the expenditure of proceeds will qualify for an exception to the arbitrage rebate and yield restriction rules of federal income tax law. D. The investment of unspent bond proceeds shall be in accordance with the County's Investment Policy, the tax certificate executed by the County in connection with the issuance of such debt, and the trust indenture or other documents, if any, entered into by the County in connection with the issuance of the debt and imposing restrictions on such investment. 6

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