1997-11-24 Regular Meeting of City Council

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REOUE.FOR CITY COlJNCrL AGENDA IT" Agenda Date Requested: November 24. 1997 Requested By: John Joems Department: Assistant City Manager _ Report -X-- Resolution _ Ordinance Exhibits: Resolution 97- SUMMARY & RECOM"Ml:NUA TION The City will soon be spending budgeted fimds for acquisition of property (mId potentially other costs) in support of the FIO I Drainage Project, The FIOI Drainage Project in the Lomax area is a potenlial Bond Fund Project. The Tax Reform Act of 1986 made changes that severely limited the ability of a City t.o reimburse itself (from bond funds) for expcnses 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 Cily the option of reimbursing itself for pre-bond issuance expcnses if a resolution declaring this intention is passed. The :~Uached 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 the issuance of bonds on the above mentioned project. AI the time the bonds are sold. the City can decide whether to reimburse itself or not Staff believes this is a bcnefici:ll tool to use with this and other future bond projects. Where it would be especially beneficial is when a project is re.1dy Lo be sl~lrted but the bond sale is still several months away. Progress could continue on the project with funds Cldvanced from another source and reimbursed when the bonds are sold. I would like to dmw your allention to Section 2 of the Resolution. The wording of this section is t.o imply that the bonds sold may be general obligation or utility revenue and that the lotal amount of the issne is estimaled to be $2,000,000. These funds would be available for several projects, including the above-mentioned project. The amount of lhe total issue is being Slaled since the actual cost of this project is not known at this time. Action RCl,uircd hy Cuuncil: Approve Resolution declaring intention to reimburse certain expendilures wilh borrowing proceeds. Availability of Funds: General Fund Water/\\l~'stewater _ Capitallmprovement_ Genenll Revenue Sharing Other Account Number: Funds Av~,ilahle: YES NO Approved for City Council A2enda R4.= City Manager 1I/:Z0 If 7 I f Date