HomeMy WebLinkAbout03/18/2003, C6 - WATER REUSE PROJECT-REIMBURSEMENT OF EXPENDITURES 1
council 3/ 1S/03
j aGEnaa Report
CITY OF SAN LUIS O B I S P O
FROM: John Moss, Utilities Director
Prepared By: David Pierce, ater Projects Manager
SUBJECT: WATER REUSE PROJECT—REIMBURSEMENT OF EXPENDITURES
CAO RECOMMENDATION
Adopt a resolution stating the City's intent to reimburse expenditures for the Water Reuse project
from Project Funds provided by the state Water Resources Control Board.
DISCUSSION
State Revolving Fund (SRF) loans, are financed by the sale of bonds that are exempt from federal
income taxes. The State Water Resources Control Board (SWRCB) wants assurance that the
money raised by the sale of these bonds will be spent in a manner that will not jeopardize the tax
exempt status of the bonds. Therefore the SWRCB asks each agency receiving funds to adopt
the attached resolution. The SWRCB disperses money from the loan after work has been
completed. In most cases the City will make payments to the contractor before funds are
received from the SWRCB. The Resolution addresses two key issues: 1) when the City pays the
contractor for approved work, the City is expecting to reimburse the City funds when money is
received from the SWRCB; 2) the funds are being spent for capital expenditures that are
permissible uses of tax exempt bond money. The 60 days mentioned in Section 3 pertains to
expenditures for the construction project. The allowances for design and planning are considered
soft costs that are awarded as specified percentages of the construction cost. The 60 day
condition does not apply to these costs.
FISCAL IMPACT
There are no expenditures associated with this action.
ATTACHIIIENT
Resolution
\\879_MORRO\SYS\GROUPS\UTIL\Council Agenda Repons\2003 Council Agenda Reports\WRP_Capital Reserve
Account_CAR.doc
Attachment 1
RESOLUTION NO. (2003 Series)
A RESOLUTION OF THE COUNCIL OF THE CITY OF SAN LUIS OBISPO
PERTAINING TO THE REIMBURSEMENT OF EXPENDITURES
FOR THE WATER REUSE PROJECT
WHEREAS, the City of San Luis Obispo (the "City") desires to finance the costs of
constructing and/or reconstructing certain public facilities and improvements relating to its water
and wastewater system, including certain treatment facilities, pipelines and other infrastructure
(the "Project"); and
WHEREAS, the City intends to finance the construction and/or reconstruction of the Project
or portions of the Project with moneys ("Project Funds") provided by the State of California,
acting by and through the State Water Resources Control Board(the 'Board"); and
WHEREAS, the Board may fund the Project Funds with proceeds from the sale of
obligations the interest upon which is excluded from gross income for federal income tax
purposes (the "Obligations"); and
WHEREAS, prior to either the issuance of the Obligations or the approval by the Board of
the Project Funds, the City desires to incur certain capital expenditures (the 'Expenditures") with
respect to the Project from available moneys of the City; and
WHEREAS, the City has determined that those moneys to be advanced on and after the date
hereof to pay the Expenditures are available only for a temporary period and it is necessary to
reimburse the City for the Expenditures from the proceeds of the Obligations.
NOW, THEREFORE, BE IT RESOLVED by the Council of the City of San Luis Obispo
as follows:
SECTION 1. The City hereby states its intention and reasonably expects to reimburse
Expenditures paid prior to the issuance of the Obligations or the approval by the Board of the
Project Funds.
SECTION 2. The reasonably expected maximum principal amount of the Project Funds is
$13,000,000.
SECTION 3. This resolution is being adopted no later than 60 days after the date on which
the City will expend moneys for the portion of the Project costs to be reimbursed with Project
Funds.
SECTION 4. Each Expenditure by the City will be of a type properly chargeable to a capital
account under general federal income tax principles.
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Resolution No. (2003 Series) Attachment 1
Page 2
SECTION 5. To the best of the City's knowledge, the City is not aware of the previous
adoption of official intents by the City that have been made as a matter of course for the purpose
of reimbursing expenditures and for which tax-exempt obligations have not been issued.
SECTION 6. This resolution is adopted as official intent of the City in order to comply with
Treasury Regulation § 1.150-2 and any other regulations of the Internal Revenue Service relating
to the qualification for reimbursement of Project costs.
SECTION 7. All the recitals in this Resolution are true and correct and the City so finds,
determines and represents.
On motion of , seconded by , and on the
following roll call vote:
AYES:
NOES:
ABSENT:
The foregoing Resolution was passed and adopted on this day of March , 2003.
Mayor David F.Romero
ATTEST:
APPROVED AS TO FORM:
Lee Price, City Clerk
Gilbert A. Trujillo,
Interim City Attorney
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