Fort Walton Beach Council agenda — 02-08-05 — reading text

consulting engineers provided revised construction estimates for th~ proposed water system improvements earlier and staff believes these es~ ates are sound. However, the proposed' construction estimates for the wastewater improvements are based on preliminary planning and are not fmn estimates at this time. Once the engineering and design effort is complete, staff will provide Council with more reliable construction cost estimates. Prior to debt issuance the City will likely incur some expenses, namely engineering design work .and a revenue sufficiency study to determine the adequacy of water and sewer rates to support he planned debt service expenses for these improvements. These are costs that are directly attributable to the overall project costs and should be expensed over the life of the project. It is propos'ed that the City would advance" to itself the funds, necessary for certain engineering expenses, and then reimburse itself for these expenses when the fmancing plan has been completed. However, there are certain Florida and IRS regulations that require the City to declare, in advance, its intent to secure permanent financing (borrow money), of a tax-exempt nature for this project, if the City wishes to reimburse itself for expenses that they have incurred before the issuance of debt. Therefore, a resolution has been prepared by the City's bond Counsel making a' declaration of the City's intent to issue debt as a way to fund the City' s water and wastewater improvement proj ects. Generally speaking, this resolution merely permits the City to reimburse itself for expenses that may have occurred, which are directly related to the project, before the issuance of any permanent fmancing and is the very first step in the process. Nothing in this resolution compels the City to proceed with borrowing money if at some point the City no longer decides the projects are feasible. Conversely, the City has eighteen months ( 18) from the date of this resolution to actually complete the fmancing (borrow money) for these projects and reimburse itself for any expenses it may have incurred during that time. If the City does not do so within the I8- month timeframe, it loses the opportunity to reimburse itself for expenses it made prior to the date of debt issuance. . RECOMMENDATION: Staff respectfully requests Council adopt Resolution . 04- 33 declaring the City' s intent to issue debt fmancing for planned water and wastewater improvements and pennitting the City to reimburse itself for expenses associated with the project that it may incur prior to the issuance of permanent financing. Wf~ Michael J. Burton Finance Director Review and Concur Hold for Discussion t~- 11/ 1/ 0 ( o ce hanahan, City Manager Date Docid: c:\ documents and settings~ shanahan.fwb- Ian\my documentsp\ ublic works\ water & sewer issues\bond issue 2004\intentmemo. doc Page 3  1 RESOLUTION NO. 04- 33 2 3 4 A RESOLUTION DECLARING THE INTENTION OF THE CITY 5 OF ~ ORT WALTON BEACH, FLORIDA, TO DESIGN, 6 ACQUIRE, CONSTRUCT AND EQUIP CERTAIN CAPITAL 7 IMPROVEMENTS OF THE ISSUER AND TO FINANCE SUCH 8 CAPITAL IMPROVEMENTS WITH THE PROCEEDS OF TAX- 9 EXEMPT OBLIGATIONS; PROVIDING AN EFFECTIVE DATE. 10 11 BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF FORT WALTON 12 BEACH, FLORIDA, AS FOLLOWS: 13 14 SECTION 1. AUTHORITY FOR THIS RESOLUTION. 15 16 This Resolution is adopted pursuant to the Constitution and laws of the State of Florida, including 17 particularly Chapter 166, Florida Statutes, as amended, and other applicable provisions of law and United 18 States Treasury Regulation, Section 1.150- 2 of the Internal Revenue Code of 1986, as amended ( the 19 Regulation"). 20 21 SECTION 2. FINDINGs. 22 23 For the purposes of complying with the reimbursement rules of the Regulation, it is hereby 24 ascertained, determined and declared as follows: 25 26 A. It is in the interest of the public health, safety and welfare of the citizens and residents of 27 the City of Fort Walton Beach, Florida (the " Issuer") that the Issuer take I prompt and effective action to 28 obtain the benefits of certain capital improvements for the Issuer described in Exhibit " A" attached hereto 29 and by this reference made a part hereof (the " Proj ect"). 30 31 B. There are no funds, accounts or other sources of.funds available to the Issuer for the 32 purposes of permanently paying for certain costs of the Project, and no existing moneys, funds or 33 accounts have been reserved for, allocated on a long term basis to, or otherwise set aside to pursuant 34 budgetary or fmancial policies of the .Issuer to pay for, such costs of the Project. . 35 36 C. As of the date hereof, the Issuer reasonably expects to reimburse itself for the 37 expenditures of the Project with proceeds of debt to be incurred on behalf of the Issuer as described in 38 paragraph D below, which expenditures were or will be paid subs~quent to sixty ( 60) days prior to the 39 date hereof. . 40 41 D. The Issuer hereby declares its intent to provide for the permanent financing of the above- 42 mentioned capital improvements by the issuance of tax- exempt obligations in one or more series ( tbe 43 Obligations"). 44 45 E. The proceeds from the issuance of each series of the Obligations will be applied, and the 46 respective series of Obligations will be secured. by a pledge . of the Issuer' s water and sewer system 47 revenues or such other sources of revenue or specific portions thereof, legally available for such purpose, 48 all as shall be provided in a resolution or resolutions to be approved the Issuer to the issuance of by prior 49 each series of the Obligations. The Issuer has been advised that the total amount of the Obligations 50 expected to be issued to pay the cost of the above-mentioned capital improvements, including issuance 51 costs, will be an amount not in excess of $11, 000, 000. 52 MCPS- IO/ 21/04- 6601- resreimb 1- 53 F. Until the Obligations are issued, the Issuer will temporarily provide for payment of the 54 costs of each component of the Project through the use of funds temporarily advanced for such purposes, 55 which funds are not and will not be reserved for, allocated on a long term basis to, or otherwise set aside 56 pursuant to budgetary or fmancial. policies to pay for, the costs of the Proj ect. 57 58 G. The proceeds of each series of the Obligations will be applied pursuant to the Resolution 59 to reimburse the funds and accounts from which expenditures are made for the costs of the applicable 60 component of the Project prior to the issuance of such Obligations, as provided herein. 61 62 SECTION 3. AUTHORIZATION OF TEMPORARY FINANCING. 63 64 The Issuer declares its intent to provide for the temporary fmancing of the above- mentioned 65 capital improvements from such funds as may be available to the Issuer pending the issuance and sale of 66 the Obligations described above and to reimburse the Issuer and such funds for such temporary financing 67 from the proceeds of such Obligations. 68 69 SECTION 4. USE OF FUNDS AND ACCOUNTS. 70 71 Prior to each disburseIiJ.ent from the funds and accounts from which proceeds are to be 72 temporarily advanced for the expenditure of costs of each component of the Project, an appTopriate 73 notation in furtherance hereof shall be entered by the appropriate employee of the Issuer upon the records 74 for such fund or account. Such notation shall refer to this Resolution and shall reflect the amount of such 75 advance and that such advance is to be repaid from the proceeds of the Obligati9ns. 76 77 SECTION 5. REIMBURSEMENT. 78 79 A. The funds and accounts from which expenditures are paid as provided in' Section 4 above 80 shalJ be reimbursed not earlier than the date upon which the expenditure is made and not later than 81 eighteen ( 18) months after the later of ( i) the date on which the expenditure is paid or ( ii) the date the 82 Project is placed in service or abandoned, but in no event more than three ( 3) years after the original 83 expenditure is paid. Upon each reimbursement to such funds and accounts, the appropriate employee of 84 the Issuer shall enter an appropriate notation upon the records for the fund established for the 85 disbursement of the proceeds of the applicable Obligations, and the appropriate fund or account being 86 reimbursed, reflecting such reimbursement. Such reimbursement shall operate to relieve the proceeds of 87 the applicable Obligations from all restrictions relating to unspent proceeds of such Obligations. 88 89 B. The expenditures described on Exhibit " A"