17. Resolution 4963 - Reimbursement Resolution - Water Meters/Hydrants Project'C"ity of Kalispell
post offic,: Box . 997 - Miiswfl.:`'tor an:a 59903-1997 (406)",n._7700 Fax t4W758_77 g
REPORT TO: Mayor Kennedy and City Council Members
FROM: Array Robertson, Finance Director
James I-l. Patrick, City Manager
SUBJECT: Reimbursement Resolution -- Water meter/hydrants Phase Ili
MEETING DATE: December 6, 2004
BACKGROUND: The City was approved for the Board of Investments financing for
the Phase III of the water meter and hydrant replacement program.
The costs, outlined in the budget, include 5360,000 for replacement
of approximately 1.700 meters and S 110,000 for installation of 30 to
35 hydrants. This is the final phase of a three part project. Funding
includes borrowing to meet bond reserve requirements, 10%.
This resolution, prepared by Bond Counsel, is necessary under IRS
rules in order to reimburse the city for expenditures made before the
bond proceeds are received. Boards of Investment programs are
always a reimbursement and since there are other outstanding bonds
we must meet parity requirements of those bonds as well as IRS
requirements.
RECOMMENDATION: Adopt Resolution
ALTERNATIVES: none
Amy 14. Robertson
Finance Director
Report compiled: November 30, 2004
Jaynes H. Patrick
City manager
RESOLUTION NO.4963
RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED PROJECTS;
ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS
UNDER THE INTERNAL REVENUE CODE
BE 1T 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 "Projects").
2.02 Other than (1) 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 l .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. 1 50-2(f)(1)
of the Regulations), no expenditures for the 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 Projects out of the proceeds of debt in an estimated maximum aggregate principal
amount of $517,000 (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.
Section I 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 pern-lanent financing
for the expenditures related to the Projects, other than pursuant to the issuance of the Bonds and
certain grant and bond proceeds identified on Exhibit A hereto. 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 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.
Adopted this 6th day of December, 2004.
Pamela B. Kennedy
Mayor
ATTEST:
Theresa White
City Clerk
EXHIBIT A
Description of Projects Estimated Cost
Phase III water meter replacement
Program and hydrant installation. $517,000
The program anticipates replacing
Approximately 1700 meters — the final
Phase of the project. $360,000
The program also includes installing
30 to 35 fire hydrants in areas that need
fire protection. $ 110,000
Funding includes 10% for bond reserve.
A-1