H6. Res. 6292, Reimbursement for Lead Service Line Replacement Project
TO: Jarod Nygren, Interim City Manager
FROM: Johnna Preble, City Attorney
CC: Susie Turner, P.E., Public Works Director
SUBJECT: Resolution No. 6292 – A Resolution of Intent to Reimburse Certain
Allowable Expenditures Made by the City on the Lead Service Line
Replacement Project from State Revolving Fund Bond Proceeds
MEETING DATE: September 2, 2025
BACKGROUND: As previously discussed with the City Council during budget discussions and
workshops, the city has finished all designs on the capital improvement Lead Service Line
Replacement Project and contractor bids for construction were due August 26, 2025. The
application for financing from the DNRC State Revolving Fund is also complete and the final
DEQ review is completed. We anticipate that a resolution approving this financing will come
before the City Council as early as late September.
The purpose of this resolution before the Council is to approve the reimbursement of any
allowable preliminary expenditures made by the City on the project to be reimbursed by the tax-
exempt 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. 6292.
ACTION REQUESTED: Motion to approve Resolution No. 6292, a resolution declaring the
official intent of the city to reimburse certain original expenditures related to the equipping of the
Lead Service Line Replacement Project from State Revolving Fund Bond proceeds.
ALTERNATIVES: As suggested by the City Council.
ATTACHMENT: Resolution No. 6292
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 WATER SYSTEM (DNRC DRINKING WATER
REVOLVING LOAN PROGRAM) TO PROVIDE FUNDS TO PAY FOR THE COSTS OF WATER
SYSTEM 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 September 2,
2025, 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 ___ day of_____________________, 2025.
(SEAL)
Aimee Brunckhorst
City Clerk
RESOLUTION NO. 6292
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 WATER SYSTEM (DNRC DRINKING WATER REVOLVING
LOAN PROGRAM) TO PROVIDE FUNDS TO PAY FOR THE COSTS OF
WATER SYSTEM 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 water system projects (including replacement of
lead and galvanized required replacement service lines as part of the Environmental Protection Agency’s
outlined Lead and Copper Rule Improvements), 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 “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 $3,200,000 (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.
3
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, MONTANA, THIS 2ND DAY OF SEPTEMBER, 2025.
_______________________________________
Mark Johnson
Mayor
ATTEST:
_________________________________
Aimee Brunckhorst, CMC
City Clerk
EXHIBIT A
Description of Projects Estimated Cost
Street Side of Cost Replacement $ 885,851
Building Side of Cost Replacement 1,826,797
Contingency 293,798
Total $3,006,447