HomeMy WebLinkAbout5B Reimburse Expenditures from Bond ProceedsCITY COUNCIL AGENDA REPORT
MEETING DATE: MARCH 7, 2011
AGENDA #: 513
PREPARED BY: JERILYN ERICKSON, FINANCE DIRECTOR
PRESENTED BY: JERILYN ERICKSON, FINANCE DIRECTOR
AGENDA ITEM: CONSIDER APPROVAL OF A RESOLUTION DECLARING THE
OFFICIAL INTENT OF THE CITY OF PRIOR LAKE TO REIMBURSE
CERTAIN EXPENDITURES FROM THE PROCEEDS OF BONDS TO BE
ISSUED BY THE CITY
DISCUSSION: Introduction
This agenda item asks the City Council to adopt a resolution that declares
the City's intent to bond for certain projects.
History
Annually, the City has declared its intent to bond via several resolutions
throughout the year.
rrent Circumstances
In an effort to streamline the City's bonding process, Staff has implemented
standard resolution formats to be followed annually to ensure compliance
with State Statutes related to bonding.
ISSUES: Approval of this resolution only approves the City's intent to bond. It does
not approve the sale of bonds or projects. Those approvals follow standard
City process and are done on an individual basis. If this resolution is not
adopted, the city may not reimburse itself for certain project related
expenses associated with the Boudins or Arcadia Improvement Projects as
has been done on all other city improvement projects.
FINANCIAL In order to satisfy federal regulations and state statute, the City Council
IMPACT: must adopt a resolution that provides a "notice of intent to bond." The
resolution is necessary if the City intends to reimburse itself for costs
incurred on a project that will be funded by bonds but for which bonds have
yet to be issued.
ALTERNATIVES: 1. Approval of a resolution declaring the official intent to reimburse certain
expenditures from the proceeds of bonds to be issued by the City.
2. Deny this agenda item for a specific reason and provide staff with
direction.
3. Table this item to a certain date in the future.
RECCMI�IIEN D Iter ative #1.
MOTIO
Reviewed by: Fran B yles, City anager
4646 Dakota Street SE
Prior Lake. MN 55372
RESOLUTION 11 -xxx
A RESOLUTION DECLARING THE OFFICIAL INTENT OF THE CITY OF PRIOR LAKE TO REIMBURSE
CERTAIN EXPENDITURES FROM THE PROCEEDS OF BONDS TO BE ISSUED BY THE CITY
Motion By:
Second By:
WHEREAS, The Internal Revenue Service has issued Treasury Reg. 1.150 -2 (the " Reimbursement
Regulations ") providing that proceeds of tax - exempt bonds used to reimburse prior
expenditures will not be deemed spent unless certain requirements are met; and
WHEREAS, The City expects to incur certain expenditures in connection with City Improvement
Projects that it will finance temporarily from sources other than proceeds from bonds
issued for the Projects; and
WHEREAS, Once the City receives the proceeds from the tax - exempt bonds it will reimburse the
appropriate City fund for the previously paid expenditures; and
WHEREAS, The City has determined to make this Declaration of Official Intent ( "Declaration ") to
reimburse certain costs from proceeds of bonds in accordance with the Reimbursement
Regulations; and
WHEREAS, The City anticipates issuing an estimated $2,600,000 in General Obligation Bonds in
2011.
NOW THEREFORE, BE IT HEREBY RESOLVED BY THE CITY COUNCIL OF PRIOR LAKE,
MINNESOTA as follows:
1. The a s se forth above are incorporated herein.
2. T e City proposes to undertake the following projects (the "Projects "):
1. Rutgers /Watersedge /Grayling Circle Streets Reconstruction
2. CR 21 / Arcadia Intersection
3. The City reasonably expects to reimburse the expenditures made for certain costs of the Projects from
the proceeds of bonds in an estimated maximum principal amount of the following:
1. Rutgers /Watersedge /Grayling Circle Streets Reconstruction - $1,690,000
2. CR 21 / Arcadia Intersection - $910,000
The City may declare other separate statements of reimbursement intent in connection with specific
public improvements projects as they are initiated under Minnesota Statutes, Chapters 429 and 444, or
for other capital projects, with the understanding that such additional declarations of reimbursement
intent will supplement this resolution. All reimbursed expenditures will be capital expenditures, costs of
issuance of the bonds, or other expenditures eligible for reimbursement under Section 1.150- 2(d)(3) of
the Reimbursement Regulations.
This Declaration has been made no later than 60 days after payment of any original expenditure to be
subject to a reimbursement allocation with respect to the proceeds of bonds, except for the following
expenditures: a) costs of issuance of bonds; b) costs in an amount not in excess of $100,000 or five
percent of the proceeds of an issue; or c) "preliminary expenditures" up to an amount not in excess of
20 percent of the aggregate issue price of the issue or issues that are reasonably expected by the City
to finance the project for which the preliminary expenditures were incurred. The term preliminary
expenditures" includes architectural, engineering, surveying, bond issuance, and similar costs that are
incurred prior to commencement of acquisition, construction or rehabilitation of a project, other than
land acquisition, site preparation, and similar costs incident to commencement of construction.
5. This Declaration is an expression of the reasonable expectations of the City based on the facts and
circumstances known to the City as the date hereof. The anticipated original expenditures for the
Projects and the principal amount of the bonds described in paragraph 3 are consistent with the City's
budgetary and financial circumstances. No sources other than proceeds of bonds to be issued by the
City are, or are reasonably expected to be, reserved, allocated on a long term basis, or otherwise set
aside pursuant to the City's budget or financial policies to pay such Project expenditures.
6. This Declaration is intended to constitute a Declaration of Official Intent for the purposes of the
Treasury Regulation 1.150 -2, Reimbursement Regulations, issued by the Internal Revenue Service.
PASSED AND ADOPTED THIS 7th DAY OF MARCH, 2011.
YES NO
M ser
M ser
Erickson
Erickson
Hedberg
Hedber
Keeney
Keene
Soukup
Souku
Frank Boyles, City Manager