1997-09-08 Regular Meeting of City Council

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RAEST FOR CITY COUNCIL AGENDA .M A TT ACHMENT: Letter from Bond Counsel AGENDA DATE September 8.1997 REQUESTED BY John J _ REPORT; XX RESOLUTION; _ ORDINANCE; The Sanitary Sewer Trunk Main and Lift Station Facilities to Southeast La Porte Project is a potential Bond Fund project. The Tax Reform Act of 1986 made changes that severely limited the ability of a City to reimburse itself (from bond funds) for expenses incurred on a project prior to the issuance of bonds for the project. In visiting with the City's Bond Counsel, Mr. M. Paul Martin, we found that amendments to the Internal Revenue Code and State Law now permit the City the option of reimbursing itself for pre-bond issuance expenses if a resolution declaring this intention is passed. The attached resolution meets this requirement. The purpose of the attached resolution is to leave the City with the option of reimbursing itself for expenses incurred prior to issuance of bonds on the above mentioned project. At the time the bonds are sold, the City can decide whether to reimburse itself or not. Staff believes this is a beneficial tool to use with this and other future bond projects. Where it would be especially beneficial is when a project is ready to be started but the bond sale is still several months away. Progress could continue on the project with funds advanced from another source and reimbursed when the bonds are sold. I would like to draw you attention to Section 2 of the resolution. The wording of this section is to imply that the bonds sold may be general obligation or utility revenue and that the total amount of the issue is estimated to be $4,250,000. These funds would be available for several projects, including the above mentioned project. The amount of the total issue is being stated since the actual cost of this project is not known at this time. ACTION REQUIRED BY COUNCIL: Approve resolution declaring intention to reimburse certain expenditures with borrowing proceeds. FUND N/A ACCT NUM: N/A FUNDS AVAILABLE: N/A APPROVED FOR CITY COUNCIL AGENDA GL '[ ~ ROBERT T. HERRERA, CITY MANAGER '1/4 }q, DATE