1. Resolution 4741 - Reimbursement for Water Bond ProjectsCity of Kalispell
Post Office Box 1997 - Kalispell, Montana 59903-1997 - Telephone (406)758-7700 Fax(406)758-7758
REPORT TO:
Mayor Kennedy and City Council Members
FROM:
Amy Robertson, Finance Director
Chris Kukulski, City Manager
SUBJECT:
Reimbursement Resolution - Water bond projects
MEETING DATE:
September 16, 2002
BACKGROUND:
The City is currently preparing the application for the Board of
Investments financing for the water projects and other equipment
that was approved in the budget. The application will go to the
"Board" on October 31' for their approval and we will adopt the
bond resolutions in November. This resolution allows the City to
proceed with purchasing the meters and hydrants to get started on the
projects while the weather is good. Both these projects have been
bid and will be installed by City crews. 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.
RECOMMENDATION:
Adopt Resolutions 4741
ALTERNATIVES: Not adopting the resolution will delay purchase of the materials until
after the bonds sale.
Amy A. Robertson Chris A. Kukulski
Finance Director City Manager
Report compiled: Sept. 12, 2002
RESOLUTION NO. y2 /
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 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 (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 1.150-2(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
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 $485,000 (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 3. Budsetary 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 he
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 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 16th day of September, 2002.
Mayor
Attest:
City Clerk
EXHIBIT A
Description of Projects
Estimated Cost
Change out residential water meters and installation of $485,000
30 to 35 hydrants
A-1