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HomeMy WebLinkAboutA001 - Council Action Form dated July 25, 1995 � t ITEM DATE July 25, 1995 COUNCIL ACTION FORM SUBJECT: REIMBURSEMENT RESOLUTION FOR GENERAL OBLIGATION BONDS TO BE ISSUED FALL, 1995 BACKGROUND: The 1995-96 Budget includes several CIP projects which will be funded through the issuance of general obligation bonds. Those projects have received City Council approval in the resolutions adopting the budget and the CIP. Implicit in those actions was approval to reimburse City funds for payment on projects begun before the bonds are issued. In action at the July 11 , 1995, meeting, the City Council approved a special assessment project for South 16th Street paving and delayed action on a special assessment alley paving. The initial funding for these projects will also be general obligation bonds. To satisfy federal arbitrage reporting requirements, action is needed authorizing the City to use bond funds to reimburse City funds for payments made on these projects prior to receipt of the bond funds. On recommendation of bond counsel, all projects have been included in the attached resolution, even those previously approved in the CIP and budget. ALTERNATIVES: 1 . Adopt the resolution authorizing reimbursement of capital project expenditures with anticipated general obligation bond funds. 2. Reject the resolution and request additional information from staff. MANAGER'S RECOMMENDED ACTION: It is the recommendation of the City Manager that the City Council adopt Alternative #1 , adopting the resolution authorizing reimbursement of capital project expenditures with anticipated general obligation bond funds. COUNCIL ACTION: Ames/419370-15/RRR RESOLUTION NO. 95-314 Resolution relating to financing of certain proposed projects to be undertaken by the City of Ames, Iowa; establishing compliance with reimbursement bond regulations under the Internal Revenue Code BE IT RESOLVED by the City Council (the "Council") of the City of Ames, Iowa (the "City"), as follows: Section 1. Recitals. (a) The Internal Revenue Service has issued Section 1.150-2 of the Income Tax Regulations (the "Regulations") dealing with the issuance of bonds, all or a portion of the proceeds of which are to be used to reimburse the City for project expenditures made by the City prior to the date of issuance. (b) The Regulations generally require that the City make a prior declaration of its official intent to reimburse itself for such prior expenditures out of the proceeds of a subsequently issued borrowing and that the borrowing occur and the reimbursement allocation be made from the proceeds of such borrowing within a certain period after the payment of the expenditure or the date the projects are placed in service; and (c) The City desires to comply with requirements of the Regulations with respect to certain projects hereinafter identified. Section 2. Official Intent Declaration. (a) The City proposes to undertake the following project or projects and to make original expenditures with respect thereto prior to the issuance of bonds, notes or other obligations (the 'Bonds") and reasonably expects to issue the Bonds for such project or projects in the maximum principal amounts shown below: f -1- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA � w r . Ames/419370-15/RRR Maximum Amount of Bonds Project Expected to be Issued for Project Streets: U.S. 69 Improvements $ 674,000 Hyland/Sheldon $1,000,000 Airport Road $ 600,000 R-50 Widening $ 115,000 Bloomington Road Paving $ 795,000 South 16th Paving $ 277,000 Alley paving $ 20,360 Annual Low Point Drainage $ 100,000 South Duff Storm Sewer $ 500,000 Fire Truck - 100' Aerial Ladder $ 220,000 TOTAL $4,301,360 (b) Other than (i) expenditures to be paid or reimbursed from sources other than the Bonds (as hereafter defined) or (ii) expenditures made not earlier than sixty days prior to the date of this Resolution or (iii) expenditures amounting to the lesser of $100,000 or 5% of the proceeds of the Bonds or (iv) expenditures constituting preliminary expenditures as defined in Section 1.150-2(f)(2) of the Regulations, no expenditures for the aforesaid projects have heretofore been made by the City and no expenditures will be made by the City until after the date of this resolution. (c) This declaration is a declaration of official intent adopted pursuant to Section 1.150-2 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. 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, all within the meaning and content of the Regulations. -2- (Rev.) DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA a Ames/419370-15/RRR Section 4. Reimbursement Allocations. The City's financial officer 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 payment of the prior 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, shall specifically identify the actual prior expenditure being reimbursed or, in the case of reimbursement of a fund or account, the fund or account from which the expenditure was paid, and shall be effective to relieve the proceeds of the Bonds from any restriction under the bond resolution or other relevant legal documents for the Bonds, and under any applicable state statute, which would apply to the unspent proceeds of the Bonds. Passed and approved July 25, 1995. Attest: Mayor r U City Clerk -3- DORSEY & WHITNEY P.L.L.P., ATTORNEYS, DES MOINES, IOWA