In early 2006, Jackson City issued $10 million of 6% term bonds to nance a highway construction project. Because of problems related to the Endangered Species Act, the City deferred highway construction that year. In early 2007, the City entered into contracts for construction that will begin in summer 2007 and be completed by summer 2008. When the City realized they would not need the bond proceeds in 2007, they invested the proceeds in risk-free federal government securities bought to yield 7%. What potential arbitrage liability, if any, should the City recognize as a result of the year 2006 transactions?