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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