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HomeMy WebLinkAbout6.j. Police Department and Public Works Campus Reimbursement Resolution EXECUTIVE SUMMARY City Council Regular Meeting: February 7, 2023 AGENDA ITEM: Police Department and Public Works Campus Reimbursement Resolution AGENDA SECTION: Consent PREPARED BY: Teah Malecha, Finance Director AGENDA NO. 6.j. ATTACHMENTS: Resolution APPROVED BY: LJM RECOMMENDED ACTION: Motion to approve a resolution to reimburse prior capital expenditures from bond proceeds BACKGROUND The City has been planning and designing the new Police Department and Public Works Campus and is nearing the construction phase of the project. The funding for this project will come from the issuance of tax-exempt bonds. The bond issuance is currently planned for this summer. The City will incur project costs prior to the issuance of the bonds. The Internal Revenue Service (IRS) has issued Treasury Regulations to allow for reimbursement of prior capital expenditures. It is generally required that the city declare its intent to reimburse itself for such expenditures out of proceeds of a subsequent issue of bonds within 60 days after the payment of expenditures. To comply with the IRS Regulations, the City is officially declaring the intent to reimburse capital expenditures incurred prior to issuance through the attached resolution. RECOMMENDATION Staff recommends approving the attached Resolution Declaring the Official Intent to Reimburse Certain Capital Expenditures from the Proceeds of Tax-Exempt Bonds and Establishing Compliance with Reimbursement Bond Regulations under the Internal Revenue Code. RESOLUTION 2023-___ RS125-26-784729.v1 City of Rosemount Dakota County, Minnesota Resolution 2023-__ Resolution Declaring the Official Intent to Reimburse Certain Capital Expenditures From the Proceeds of Tax-Exempt Bonds and Establishing Compliance With Reimbursement Bond Regulations Under the Internal Revenue Code WHEREAS, the Internal Revenue Service has issued Treasury Regulations, Section 1.150-2 (the “Reimbursement Regulations”) under the Internal Revenue Code of 1986, as amended (the “Code”), providing that proceeds of tax-exempt bonds used to reimburse prior capital expenditures will not be deemed spent unless certain requirements are met; and WHEREAS, the City of Rosemount, Minnesota, municipal corporation and a political subdivision of the State of Minnesota (the “City”), expects to incur certain expenditures that may be financed temporarily from sources other than tax-exempt bonds, and later reimbursed from the proceeds of tax-exempt bonds; and WHEREAS, the City has determined to make a declaration of its official intent (the “Declaration”) to reimburse certain capital costs from the proceeds derived from the sale of tax-exempt bonds issued by the City or another political subdivision in accordance with the Reimbursement Regulations. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Rosemount, Minnesota, as follows: 1. The City may incur certain capital expenditures in connection with construction of a new public works and public safety facility in the City (collectively, the “Project”). 2. The City reasonably expects to reimburse the expenditures made for certain costs of the Project from the proceeds of tax-exempt bonds in a principal amount currently estimated not to exceed $20,000,000. All reimbursed expenditures related to the Project will be capital expenditures, costs of issuance of the tax-exempt bonds or other expenditures eligible for reimbursement under Section 1.150-2(d)(3) of the Reimbursement Regulations. 3. This Declaration has been made not later than 60 days after payment of any original expenditure to be subject to a reimbursement allocation with respect to the proceeds of tax-exempt bonds, except for the following expenditures: (a) costs of issuance of tax-exempt bonds; (b) costs in an amount not in excess of the lesser of $100,000 or 5% of the proceeds of the tax-exempt bonds; or (c) “preliminary expenditures” up to an amount not in excess of 20% of the aggregate issue price of the tax-exempt bonds that are reasonably expected by the City to finance the Project. The term “preliminary expenditures” includes architectural, engineering, surveying, soil testing, bond issuance and similar costs that are incurred prior to commencement of acquisition, construction, or rehabilitation of the Project, excluding land acquisition, site preparation, and similar costs incident to commencement of construction. 4. A reimbursement allocation with respect to tax-exempt bonds will be made not later than 18 months after the later of: (i) the date the original expenditure is paid; or (ii) the date the Project is placed in service or abandoned, but in no event more than 3 years after the original expenditure. RESOLUTION 2023-___ 2 RS125-26-784729.v1 5. This Declaration is an expression of the reasonable expectations of the City based on the facts and circumstances known to the City as of the date hereof. The anticipated original expenditures for the Project and the principal amount of the tax-exempt bonds described in paragraph 2 are consistent with the City’s budgetary and financial circumstances. No sources other than proceeds of tax-exempt bonds 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 expenditures for which bonds are issued. 6. The action is intended to constitute a declaration of official intent for purposes of the Reimbursement Regulations. ADOPTED this 7th day of February, 2023. ______________________________________ Jeffery D. Weisensel, Mayor ATTEST: Erin Fasbender, City Clerk RESOLUTION 2023-___ RS125-26-784729.v1 CERTIFICATION STATE OF MINNESOTA ) COUNTY OF DAKOTA ) ss CITY OF ROSEMOUNT ) I am the duly appointed, acting and qualified City Clerk of the City of Rosemount, Dakota County, Minnesota do hereby certify that I have examined the City of Rosemount records and the Minute Book of said City for the meeting of the 7th of February, 2023 A RESOLUTION DECLARING THE OFFICIAL INTENT TO REIMBURSE CERTAIN CAPITAL EXPENDITURES FROM THE PROCEEDS OF TAX-EXEMPT BONDS AND ESTABLISHING COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODE was approved and is a true and correct copy of the City Proceedings relating to said Resolution. IN WITNESS WHEREOF, I have hereunto set my hand and seal of said City this 7th day of February, 2023. City Clerk City of Rosemount Dakota County, Minnesota