CITY COUNCIL AGENDA ITEM
ACTION REQUESTED:
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Adopt the resolution of Official Intent for Reimbursement of Capital Projects
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DEPARTMENT: Finance Department
SUBMITTED BY: Rachel Mayer, Finance Director
BOARD/COMMISSION REVIEW:
N/A
BACKGROUND:
The planned 2021 bond issuance has one component which is the standard capital borrowing and includes investment in technology, infrastructure, equipment, and buildings.
At the workshops held on October 26, 2020, November 9, 2020, and November 23, 2020 the City Council reviewed the proposed 2021-2025 Capital Improvement Program (CIP). The current unfunded projects for the 2021 CIP total $35,215,488.
DISCUSSION:
The 2021 budget approved by the City Council authorized staff to spend dollars associated with capital projects starting January 1, 2021. Additionally, as part of the same budget approval, staff was tentatively authorized to pursue issuing bonds for the payment of any and all unfunded capital projects, with the Council having final approval on any bond sale.
This tight timeframe between budget adoption and the start date of the budget means the City does not have the opportunity to issue bonds before expenditures begin on capital projects. To ensure all 2021 capital projects can be included in any future bond issuance, the City needs to file an "Official Intent of Reimbursement Resolution." This resolution does not provide authorization to borrow, it only reserves the ability to fund current projects with future issuance of City debt.
This practice is typical among tax-exempt borrowers and federal guidelines have been developed to govern the practice of reimbursing an organization's prior expenditures using bond proceeds. The use of bond proceeds to reimburse prior expenditures is governed by Treasury Department regulation Section 1.150-2. To satisfy the federal regulation the reimbursement needs to meet three (3) requirements:
1. Nature of Expenditure
For the City's purposes, the expenditure to...
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