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the date hereof been amended or repealed.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