4.8.5 Yield Restriction; Yield Reduction Payments

To the extent that bond proceeds of an issue remain unexpended at the end of the respective temporary periods, such unexpended proceeds may generally not be invested at a yield in excess of 1/8 of 1% above the yield of the issue. Alternatively, in certain circumstances an issuer may be eligible to make “yield reduction payments” to the U.S. Treasury Department. By making yield reduction payments, an issuer may continue to invest the proceeds of the bonds above the yield on the issue after the expiration of the temporary period as long as any earnings on the proceeds before expenditure in excess of the bond yield are paid as yield reduction payments to the U.S. Treasury Department at the same time and in the same manner as under the general rebate requirement.