2005/02/22 Resolution 4979 - Airport Bonds ReimbursementCity of Kalispell
ost Offxx Box 199 Fax 406)759-7758
REPORT TO: Mayor Kennedy and City Council Members
FROM: Amy Robertson, Finance Director
James H. Patrick, City Manager
SUBJECT: Reimbursement Resolution — Airport Urban Renewal Bonds
MEETING DATE: February 22, 2005
BACKGROUND: The City is preparing to sell Airport Urban Renewal Bonds funded
by the Airport Tax Increment District. The bond sale will take place
in April with proceeds available in May. 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. This allows us to proceed with the projects.
RECOMMENDATION: Adopt Resolution
ALTERNATIVES: none
Amy H. Robertson
Finance Director
Report compiled: February 17, 2005
4ames H. Patrick
City Manager
RESOLUTION NO.4979
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 (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 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 $1,700,000 (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. 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 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 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 22nd day of February, 2005.
Pamela B. Kennedy
Mayor
Attest:
Theresa White
City Clerk
EXHIBIT A
PHASE I OF KALISPELL CITY AIRPORT MASTER PLAID'
Estimated
Cast
Purchase of Red Eagle Aviation Property & Improvements $600,000
Construction of northwest ramp and taxiways $880,000
Installation of northwest utilities $141,672
Construction of internal vehicle access road (16' wide) $ 60,800
Purchase & installation of automatic vehicle security gate $ 1.6,408
Total
Ten Percent Bond Reserve Requirement
$1,698,880
$ 169,888
Costs of Bond Sale and Issuance $ 30,000