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3. Resolution 4900 - Sewer ReimbursementCity of Kalispell Post Office Box 1997 Kalispell, Montana - Telephone (4016)758-7700 Fax (106)758-7758 REPORT TO: Mayor Kennedy and City Council Members FROM: Array Robertson, Finance Director Chris Kukulski, City Manager SUBJECT: Sewer Reimbursement Resolution MEETING BATE: June 21, 2004 BACKGROUND: The City has determined that we can save money by borrowing from the Department of Natural Resources (DNRC) rather than the traditional Sewer Revenue Bond. Since we did not except a bid on the sewer bonds we are delayed in getting our financing in place. In order to cover the expenses which we have already paid (engineering inspection services) with the proceeds from DNRC we need to adopt a reimbursement resolution. We have adopted reimbursement resolutions in the past as it is common practice to want to include the preliminary costs associated with a project in the financing RECOMMENDATION: Adopt Reimbursement Resolution. ALTERNATIVES: At Council 's discretion. Amy H. Robertson Finance Director Report compiled: June 16, 2004 �l qq f Chris A. Kukulski City Manager RESOLUTION NO.4900 RESOLUTION RELATING TO FINANCING OF CERTAIN PROPOSED 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 IS 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 sen�ice 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 (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. 1 50-2(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 no expenditures will be paid by the City until after the date of this Resolution, except that the City has made certain construction management expenditures in the amount of approximately $79,000, $67,000 of which have been paid not more that 60 days prior to the date hereof and $12,000 of which fall within the exception for expenditures in a "de minimus" amount. 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 $1,600,000 (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. 1 50-2(d)(3) of the Regulations. 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 -tern 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 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 reirnburse 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 16TH DAY OF TUNE, 2004. ATTEST: Theresa White City Clerk EXHIBIT A Description of Project Pamela B. Kennedy Mayor Estimated Cost The proposed project will consist of the installation of $1,600,000 approximately 2.13 miles of sewer main piping, 39 manholes, 1 pumping station, 1.73 miles of sewer force main piping, I sewage pumping station and appurtenant items and related improvements along U.S. Highway 93 South.