HomeMy WebLinkAbout4.d. Procedures Relating to Compliance with Reimbursement Bond Regulations ! t
CITY OF ROSEMOIINT
EBECIITIVE SIIMMARY FOR ACTION
CITY COUNCIL MEETING DATE: June 1, 1993
AGENDA ITEM: Procedures Relating to Compliance AGENDA SECTION:
with Reimbursement Bond Regulations Consent
PREPARED BY: AGENDA �p � � � D
Jeff May, Fi,nance Director IVI �
ATTACHMENTB: Resolution APP VED BY:
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Attached is a Resolution that allows the City to establi�h proeedures
relating to compliance with Reimbursement Bond Regulations that fall under
the Internal Revenue Code. This Resolution, prepared for us by Briggs and
Morgan, our bond counsel, allows us to incur costs, other than preliminary
development costs like engineering and legal, before debt has actually been
incurred for the project. This is accomplished by the "Declaration of
Official 3ntent" (Exhibit A of the Resolution) . This Declaration states
that it is th� City's intention to issue debt to pay for the costs af the
project stated within the Declaration. Therefore, any costs incurred prior
to that issuance, paid far by the City, will be reimbursed to them through
the bond proceeds. Each project that the City expects to finance through
the issuance of debt would then have a Declaration of Official Tntent
completed and put on file. As part of the process followed for each
project that the City reasonably expects to issue debt for, this
Declaration would be completed.
This process allows the City more flexibility when looking at the timing of
issuing debt. Rather than having small issues for each individual project
or holding up projects waiting for the band proceeds, having the
Declaration of Official Intent on file allows the City ta plan their debt
issues more efficiently and to praceed with projects in a timely fashion.
RECOMMENDED ACTION: :
Motion to approve A RESOLUTION ESTABLISHING PROCEDURES RELATING TO
COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE TNTERNAL
REVENUE CODE.
. COtTNCIL ACTION:
CITY OF ROSEMOUNT
DAROTA COUNTY, MINNFsSOTA
RESOLLTTION 1993 -
A RES.OLIITION ESTABLISHING PROCEDURES
RELATING TO COMPLIANCE WIT� REIMBtTRSII�NT BOND
REGIILATIONS UNDER THE TNTERNAL REVENUE CODE
BE IT RESOLVED by the City Council (the "Council") of the City of
Rosemount, Minnesota (the °City"} , as follows:
1. Recitals.
fa) The Internal Revenue Service has issued final
Treasury Regulations Section 1.103-18 (the "Regulations")
dealing with reimbursement bond proceeds, which would
include those proceeds of the City' s bonds to be used to
reimburse the City for any project expenditure paid by the
City prior to the time of the issuance of those bonds.
(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
subseguent borrowings, that such declaration generally be
made on or before the date the expenditure is actually paid,
that the bonding occur and the reimbursement allocation be
made from the proceeds of such bonds within one year of the
payment of the expenditure (or not later than one year after
the project is pl.aced in service, if that is a longer
period) , and that the expenditure be a capital expenditure.
(c) The City desires to comply with the Regulations
and to establish certain procedures relating thereto.
(d) The City' s bond counsel has advised the City that
the Regulations do not apply, and hence the provisions af
this Resolution are intended to have no application, to
payments of Ci�y project costs first made by the City out -of
the proceeds of bonds issued prior to the date of such
payments.
2 . Official Intent Declaration. The Regulations, in the
situatians in which they apply, require the Cit� to have made an
official declaration of its reasonable intention (hereinafter
referred to as the "Ofticial Intent Declaration° or the
��Declaration") to reimburse itself for previously paid project
expenditures out of the proceeds of subsequent bonds or other
barrowings. The Council hereby authorizes the City Treasurer to
make the City' s Official Intent Declarations or to delegate from
time to time that responsibility �o other appropriate City
employees. Each Declaration shall comply with the requirements
of the Regulations, including without limitation �he following:
(a) Each Declaration shall be ma.de on or before the
date the City pays the applicable project cost and shall
state that the City reasonably intends and expects to
reimburse itself for the expenditure with proceeds of a
borrowing. Eaeh Declaration may be made substantially in
the form of the "Declaration of Official Intent" which is
attached to and made a part of this Resolution.
(b) Each Declaration shall specifically contain the
following statement: "This Declaration is a declaration of
official intent under Treasury Regulations Section 1. 103-18 . "
(c) Each Declaration shall and is hereby deelared to
be made and filed in the pub],icly available official books,
records, or proceedings of the Cit�r, which shall be
reasonably available for public inspeCtion at City Hall
during normal business hours af the City or every business
day during the period beginning on the earlier of 10 days
after the making of the Declaration or the date of issuance
of the reimbursement bonds and ending on the day after the
issuance of such bands.
(d) Each Declaration shall, at a minimum, contain a
general functional descriptian of the property, project, or
program for which the expenditure to be reimbursed is paid
(for example, °1992 Street Improvement Project" or other
specific, identifiable project of the City) or, in the
alternative, shall identify the particular fund or account
of the City from which the expenditure to be reimbursed is
paid, including a description of the general functional
purpose of that fund or account (for example, "park and
recreation fund - recreational facility capital improvement
program" ) .
(e) Each Declaration shall also contain a statement of
the maximum principal amount of debt expected to be issued
for the subject project.
(f) Care shall be taken sa that the City, or its
authorized representatives under this Resolution, not make
Declarations in cases where the City does not reasonably
`expect that it will ultimately issue reimbursement bonds to
provide long term financing for the subject project costs,
and the City officials are hereby authorized to consult with
bond counsel to the City concerning the requirements of the
Regulations in general and their application in particular
circumstances. It is the Council' s intention that
Declarations not be made (i) when availab7.e funds of the
City have been or are reasonably expected to be dedicated or
otherwise reserved to fund on a long term basis the
particular expenditures involved or (ii) when it is not
reasonably expected that reimbursement bonding will occur.
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(g) The Council shall be advised from time to time on
the desirability and timing of the issuance of reimbursement
bonds relating to project e�cpenditures for which the City
has made Official Intent Declarations, including
recommendations on the timing of the issuance of such bonds
so that the "reimbursement allocation" described in the
Regulations and � in paragraph 3 below can be made within the
1 year time limits prescribed in the Regulations.
(h) This Resolution shall supplement and amend all
prior determinations and policies adopted by the City in
regard to complying with the Regulations, as initially
proposed, and in the event of any inconsistency between the
terms provided in this Resolution and said prior
determinations or policies, the provisions of this
Resolution shall govern.
3 . Reimbursement Allocations . The designated City officials
shall also be responsible for making the "reimbursement
allocations" described in the Regulations, being generally the
transfer of the appropriate amount of reimbursement bond proceeds
to reimburse the source of temporary financing used by the City to
make payment of the prior expenditure. Each allocation shall be
evidenced by an entry on the official books or records of the City
maintained for such reimbursement bonds; shall specifically
identify the actual prior expenditure being reimbursed or, in the
case of the reimbursement of a particular fund or aecount, the fund
or account from which the expenditure was paid; and shall be
effective to relieve the bond proceeds involved from any
xestriction under the bond resolution or other relevant legal
documents for those bonds and under any applicable state statute
applicable to unspen� proceeds of such bond issue.
ADOPTED this ist day of June, 1993 .
E.B. McMenomy, Mayor
ATTEST.:
Susan M. Walsh, City Clerk
Motion by: Seconded by:
Voted in favor•
Voted Against•
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EXFiIBTT A
Declaration of Official Intent
The undersigned, being the duly appointed and aGting City
Treasurer of the City of Rosemount, Minnesota (the "Cit�r") ,
pursuant to and for purposes of compliance with Treasury
Regulations, Section 1.103-18 (the "Regulatians") , under the
Internal Revenue Code of 1986, as amended, hereby states and
certifies as follows:
1. The undersigned has been and is on the date hereof duly
authorized by the governing body of the City, the City Council, to
ma.ke and execute this Declaration of Official Intent (the
"Declaration") for and on behalf of the City. This Declaration is
a declaration of official inten� under Treasury Regulations Section
1. 103-18 . �
[Note: the following paragraphs 2A and 2B are
alternatives; one or the other of those paragraphs
must be completed, both mav be, if applicable. ] ,
2 .A. The property, project, or program to which this
Declaration relates is generally and functionally described as
follows:
2 .B. The specific fund or account of the City from which the
expenditure to be reimbursed will be paid, and the general
functional purpose of that fund or account, are as follows :
3 . The ma.ximum principal amount of the debt e.xpected to be
issued by the City for the purpose of reimbursing the expenditures
to which this Declaration relates (the "Expenditures") is on this
date hereof reasonabiy estimated to be $ Each of
the Expenditures is (or wauld be with a proper election,) •a capital
expenditure under federal tax iaw principles, as described in the
Regulations.
4 . The City intends and reasonably expects to reimburse
itself for the payment of the Expenditures out of the proceeds of
the borrowing (the "Bonds") to be made by the City after the date
of payment of the Expenditures.
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5 . As of the date hereof, there are no sources of City funds
which have been or are reasonably expected to be allocated or
available on a long-term basis, reserved, or otherwise set aside to
provide permanent financing for the Expenditures, other than ,
pursuan� to the subsequent issuance of the Bonds. On the basis of '
the foregoing, the statements and certifications con�ained in this
Declaration are believed ta be reasonable and accurate, and this
Declaration is believed to be consistent with the City' s budgetaLy
and financial circumstances as they exist or are reasonably
foreseeable on the date hereof, all within the meaning and content
of the Regulations.
6 , This Declaration is and shall remain a part of the
publicly available official books, records, or proeeedings of the
City and shall be continuously available for inspection by the
General public at the City offices during the regular City hours
for a period ending not earlier than the day after the issuance of
the Bonds.
IN WITNESS WHEREOF, the undersigned has executed this
`Declaration and placed it on file in the official City records
this day of , 199
CTTY OF ROSEMOUNT
By
City Treasurer
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