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H5. Res. 6014, Reimbursement Resolution Charles A. Harball City Attorney City of Kalispell Office of City Attorney 201 First Avenue East P.O. Box 1997 Kalispell, MT 59903-1997 _______________________ Tel 406.758.7709 Fax 406.758.7758 charball@kalispell.com MEMORANDUM TO: Doug Russell, City Manager FROM: Charles Harball, City Attorney SUBJECT: Resolution No. 6014 – A Resolution of Intent to Reimburse Certain Allowable Preliminary Expenditures Made by the City on the Regional Storm Water Facility Project in Section 35 from State Revolving Fund Bond Proceeds MEETING DATE: February 1, 2021 – Regular Council Meeting BACKGROUND: As discussed with the City Council at previous budget discussions and workshops, the City’s regional storm water facility project located in the area north of Quarter Horse Estates, south of Reserve Drive and bounded by West Spring Creek Road and Stillwater Road to the west and east, is scheduled to begin construction this spring. All the necessary property needed for the facility shall be acquired in the next couple of weeks. The project shall be financed through bonding from the Montana State Revolving Fund. We anticipate that a resolution approving this financing will come before the City Council sometime in the month of March. 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. 6014, a resolution relating to financing of certain proposed projects; establishing compliance with reimbursement bond regulations under the Internal Revenue Code in advance of the proposed issuance of Revenue Bonds by the City of Kalispell to provide funds to pay for the costs of Stormwater Infrastructure Improvement Projects. ATTACHMENT: Resolution 6014 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 a Resolution entitled: “RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED PROJECTS; ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE IN ADVANCE OF THE PROPOSED ISSUANCE OF REVENUE BONDS BY THE CITY OF KALISPELL TO PROVIDE FUNDS TO PAY FOR THE COSTS OF STORMWATER INFRASTRUCTURE IMPROVEMENT PROJECTS” (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 of the City at a regular meeting on February 1, 2021, 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 City Council members voted in favor thereof: voted against the same: abstained from voting thereon: or were absent: WITNESS my hand and seal officially this 1st day of February, 2021. (SEAL) Aimee Brunckhorst, CMC City Clerk 1 RESOLUTION NO. 6014 RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED PROJECTS; ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE IN ADVANCE OF THE PROPOSED ISSUANCE OF REVENUE BONDS BY THE CITY OF KALISPELL TO PROVIDE FUNDS TO PAY FOR THE COSTS OF STORMWATER INFRASTRUCTURE IMPROVEMENT PROJECTS. 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 stormwater improvements in the area north of Quarter Horse Estates, south of Reserve Drive and bounded by West Spring Creek Road and Stillwater Road to the west and east, which projects are generally described on Exhibit A hereto, which is hereby incorporated herein and made a part hereof (the “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 1.150-2(j)(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 Projects have heretofore been paid by the City and, other than preliminary expenditures, no expenditures for the Projects 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 Projects out of the proceeds of debt in one or more series or of one or more kinds in an estimated maximum aggregate principal amount of up to $4,100,000 (the “Bonds”) after the date of payment of all or a portion of the costs of the 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. 2 Section 3. Budgetary Matters. As of the date hereof, there are no City 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 Projects, other than pursuant to the issuance of the Bonds. 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 Administrative Services Director 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 Projects. Each allocation shall be evidenced by an entry on the official books and records of the City maintained for the Bonds or the Projects and shall specifically identify the actual original expenditure being reimbursed. PASSED AND APPROVED BY THE CITY COUNCIL AND SIGNED BY THE MAYOR OF THE CITY OF KALISPELL, THIS 1ST DAY OF FEBRUARY, 2021. Mark Johnson Mayor ATTEST: Aimee Brunckhorst, CMC City Clerk EXHIBIT A A Stormwater Facility Master Plan, adopted by City Council in 2008, identified key locations for regional stormwater infrastructure improvements. The Stormwater Infrastructure Project will address regional stormwater needs within the West Study Area. The West Study Area (generally, west of Stillwater Road and north of Three Mile Drive) drains southeast toward West Spring Creek. West Spring Creek flows through the west parts of the City and has FEMA regulated floodplain. The City of Kalispell recognized the need for regional stormwater management due to rapid development and existing flooding issues within the West Study Area tributary. The City of Kalispell intends to construct a series of regional stormwater detention facilities to mitigate existing drainage issues and prevent increases in flooding. The infrastructure for the stormwater regional project includes: o Three regional detention facilities providing flood control for approximately 590 acres o Approximately 9,000 linear feet of 24-inch storm drain serving 860 acres, conveying runoff to West Spring Creek o A new outfall to a drainage way easement which will convey water to West Spring Creek just west of Quarter Horse Estates.