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H3. Resolution 5953 ReimbursementCity of Kalispell Charles A. xarball Office of City Attorney City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 TO: FROM: SUBJECT: MEETING DATE: MEMORANDUM Doug Russell, City Manager Charles Harball, City Attorney Tel 406.758.7709 Fax 406.758.7758 charbaH@kalispell.com Resolution No. 5953 — A Resolution of Intent to Reimburse Certain Allowable Preliminary Expenditures Made by the City on the 4 Mile Drive Water Project from State Revolving Fund Bond Proceeds December 2, 2019 — Regular Council Meeting BACKGROUND: As previously discussed with the City Council at budget discussions and workshops, the city has finished all preliminary designs on the 4 Mile Drive Water Project that has been on the capital improvement plan. The application for financing from the DNRC State Revolving Fund is also complete and the final DEQ review is forthcoming. We anticipate that a resolution approving this financing will come before the City Council as early as the second meeting in December. The purpose of the resolution before the City Council at this meeting is to approve the reimbursement of any allowable preliminary expenditures previously made by the City on the project to be reimbursed by the bond when those funds become available. This resolution is necessary to comply with certain Treasury Regulations that otherwise permit the reimbursement of capital expenditures and the costs of issuance of bonds on a capital project. RECOMMENDATION: It is recommended that Council pass Resolution No. 5953. CERTIFICATE AS TO RESOLUTION AND ADOPTING VOTE I, the undersigned, being the duly qualified and acting recording officer of the City of Kalispell, Montana (the "City"), hereby certify that the attached resolution is a true copy of Resolution No. 5953 entitled: "RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED NEW MONEY PROJECTS; ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE" (the "Resolution"), on file in the original records of the City in my legal custody; that the Resolution was duly adopted by the City Council at a meeting on December 2, 2019, and that the meeting was duly held by the City Council and was attended throughout by a quorum, pursuant to call and notice of such meeting given as required by law; and that the Resolution has not as of the date hereof been amended or repealed. I further certify that, upon vote being taken on the Resolution at said meeting, the following Council Members voted in favor thereof: ; voted against the same: ; abstained from voting thereon: ; or were absent: WITNESS my hand officially this day of December, 2019. City Clerk RESOLUTION NO. 5953 RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED NEW MONEY PROJECTS; ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE BE IT RESOLVED by the City Council of the City of Kalispell, Montana (the "City"), as follows: Section 1. Recitals. 1.01 The United States Department of Treasury has promulgated final regulations governing the use of proceeds of tax-exempt bonds, all or a portion of which are to be used to reimburse the City for project expenditures paid by the City prior to the date of issuance of such bonds. Those regulations (Treasury Regulations, Section 1.150-2) (the "Regulations") require that the City adopt a statement of official intent to reimburse an original expenditure not later than 60 days after payment of the original expenditure. The Regulations also generally require that the bonds be issued and the reimbursement allocation made from the proceeds of the bonds within 18 months (or three years, if the reimbursement bond issue qualifies for the "small issuer" exception from the arbitrage rebate requirement) after the later of (i) the date the expenditure is paid or (ii) the date the project is placed in service or abandoned, but (unless the issue qualifies for the "small issuer" exception from the arbitrage rebate requirement) in no event more than three years after the date the expenditure is paid. The Regulations generally permit reimbursement of capital expenditures and costs of issuance of the bonds. 1.02 The City desires to comply with requirements of the Regulations with respect to certain projects hereinafter identified. Section 2. Official Intent Declaration. 2.01 The City proposes to undertake certain projects, which projects and the estimated costs thereof are generally described on Exhibit A hereto, which is hereby incorporated herein and made a part hereof (the "New Money Projects"). 2.02 Other than (i) expenditures to be paid or reimbursed from sources other than the Bonds (as hereinafter defined), (ii) expenditures permitted to be reimbursed under the transitional provision contained in Section 1.150-20)(2) of the Regulations, (iii) expenditures constituting preliminary expenditures within the meaning of Section 1.150-2(f)(2) of the Regulations, or (iv) expenditures in a "de minimus" amount (as defined in Section 1.150-2(f)(1) of the Regulations), no expenditures for the New Money Projects have heretofore been paid by the City and no expenditures will be paid by the City until after the date of this Resolution. 2.03 The City reasonably expects to reimburse some or all of the expenditures made for costs of the New Money Projects out of the proceeds of debt in an estimated aggregate principal amount of approximately $2,674,000 (the "Bonds") after the date of payment of all or a portion of the costs of the New Money Projects. All reimbursed expenditures shall be capital expenditures, a cost of issuance of the Bonds or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Regulations. This resolution excludes any amount of bonds issued for refunding purposes Section 3. Budgetary Matters. As of the date hereof, the City has no funds reserved, allocated on a long-term basis or otherwise set aside (or reasonably expected to be reserved, allocated on a long-term basis or otherwise set aside) to provide permanent financing for the expenditures related to the New Money Projects, other than pursuant to the issuance of the Bonds and a City contribution to costs related to the New Money Projects, and recognizing grants do not constitute permanent financing. The statement of intent contained in this resolution, therefore, is determined to be consistent with the City's budgetary and financial circumstances as they exist or are reasonably foreseeable on the date hereof. Section 4. Reimbursement Allocations. The City Finance Director or designee shall be responsible for making the "reimbursement allocations" described in the Regulations, being generally the transfer of the appropriate amount of proceeds of the Bonds to reimburse the source of temporary financing used by the City to make prior payment of the costs of the New Money Projects. Each allocation shall be evidenced by an entry on the official books and records of the City maintained for the Bonds or the New Money Projects and shall specifically identify the actual original expenditure being reimbursed. Adopted this 2nd day of December, 2019. Attest: Aimee Brunckhorst, CMC City Clerk Mark Johnson Mayor 2 EXHIBIT A Description of New Money Projects Estimated Cost Designing and engineering upgrades and $2,689,000 improvements to the water system commonly known as the 4-Mile Drive project, including installation of water mains in the City's upper pressure zone and related improvements. in