HomeMy WebLinkAboutReg 2009-12-07 Item 7B - Resolution - Reimburse Various CIP Projects / Flood Response, Mitigation & Other Related Expenses COUNCIL AGENDA SYNOPSIS
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ITEM INFORMATION
1 CAS NUMBER: 09-177 I ORIGINAL AGENDA DATE: DECEMBER 7, 2009
AGENDA ITEM TITLE A resolution authorizing reimbursement from bond proceeds for various CIP projects
and flood response, mitigation and other related expenses.
CATEGORY Discussion Motion Resolution Ordinance Bid Award Public Hearing Other
Mtg Date 12/07/09 Mtg Date Mtg Date 12/07/09 Mtg Date Mtg Date Mtg Date Mtg Date
SPONSOR Council Mayor Adm Svcs DCD Finance Fire Legal P&R Police PW
SPONSOR'S The resolution authorizes reimbursement to the City for disbursements made for the
SUMMARY Strander Boulevard project, Southcenter Parkway project, and flood response, mitigation
and related activities due to conditions at the Howard Hanson Dam. Such reimbursement
shall be from an anticipated bond sale to take place in early 2010.
The Council is being asked to approve the reimbursement resolution.
REVIEWED BY COW Mtg. CA &P Cmte F &S Cmte Transportation Cmte
Utilities Cmte Arts Comm. Parks Comm. Planning Comm.
DA 1E:
RECOMMENDATIONS:
SPONSOR /ADMIN. Finance Department
COMMIT TEE Committee Chair consent to take this item directly to Council Meeting
COST IMPACT FUND: SOURCE
EXPENDITURE REQUIRED AMOUNT BUDGETED APPROPRIATION REQUIRED
Fund Source:
Comments:
MTG. DATE RECORD O F "COUNCIL ACTION
12/07/09
MTG. DATE :ATTACHMENTS
12/07/09 Informational Memorandum dated 12/01/09
Resolution
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TO:
ISSUE
BACKGROUND
DISCUSSION
City of Tukwila
INFORMATIONAL MEMORANDUM
Mayor Haggerton
Rhonda Berry
Finance and Safety Committee
FROM: Shawn Hunstock, Finance Director
DATE: December 1, 2009
SUBJECT: Reimbursement Resolution
Jim Haggerton, Mayor
The City is contemplating a bond issue in 2010 related to the Southcenter Parkway
extension and realignment project in the Tukwila South annexation area. The City may,
at the same time, issue additional bonds for other purposes. The proposed other use of
such bonds is for reimbursement to the City for expenses related to flood planning,
mitigation and response.
The developer's agreement for Tukwila South calls for the City to issue at least $6.0
million in bonds for the Southcenter Parkway realignment and construction project. The
developer also provided a revenue guarantee to cover up to an additional $2.25 million
in bonds, bringing the total for this project up to a possible $8.25 million. In addition to
the Tukwila South project, the City expects to incur expenses in 2010 related to the
Strander Boulevard extension project. These could be for right -of -way acquisition,
arterial street improvements, construction and related expenses. It is expected that
these expenses for the Strander Boulevard project will be as much as $1.9 million in
2010.
Administration is also recommending, to the extent allowable by the Internal Revenue
Service for tax exempt bonds, the inclusion of flood planning, response and mitigation
expenses. These are costs which the City will incur over the next several weeks in
preparation for potential flooding related to conditions at the Howard Hanson dam, and
possible release of a large volume of water into the Green River.
We are working with bond counsel at this time to determine what type and amount of
flood related expenses can be included in the bond sale for reimbursement to the City.
Tax exempt bonds are typically used for capital expenditures, and generally not for
operating and maintenance expenses. The bond counsel's tax attorney is working on
determining what types of expenses are eligible for bond funding. To the extent
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INFORMATIONAL MEMO
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possible, we will maximize the use of bond funding at this time in order to gear -up for
flood response efforts in a timely basis.
The bonds, including those issued for flood expense related purposes, will be typical
ones with repayment over ten to twenty years depending on the terms and rates
available from the market at the time the bonds are sold. The time for repayment on the
bonds for Tukwila South will coincide with the term of the developer's agreement, so
that no bonds are outstanding beyond the expiration of the revenue guarantee from the
developer. Bonds used for other purposes will be sold at terms most advantageous to
the City with respect to the lowest borrowing costs.
If available on the open market at the time bonds are sold, the City will take advantage
of Build America Bonds, which are taxable bonds but come with a 35% subsidy from the
federal government to offset interest costs. This lowers the effective interest rate on the
bonds, which might mean a lower cost of borrowing than selling traditional tax exempt
bonds.
RECOMMENDATION
The Council is being asked to approve the attached resolution providing for
reimbursement to the City from bonds to be issued during 2010 for expenses incurred
prior to the bond sale.
This item is scheduled to be discussed at the December 7, 2009 Regular Meeting.
ATTACHMENT
Resolution
1 84 W:12009 CAS\ReimbursementResolution.doc
City of Tukwila
Washington
Resolution No.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, DECLARING ITS OFFICIAL INTENT TO REIMBURSE
CAPITAL EXPENDITURES IN CONNECTION WITH 1) THE COSTS OF
THE SOUTHCENTER PARKWAY CONSTRUCTION AND REALIGNMENT
IN THE TUKWILA SOUTH ANNEXATION AREA, TOGETHER WITH
RELATED IMPROVEMENTS; 2) COSTS OF RIGHT -OF -WAY
ACQUISITION, ARTERIAL IMPROVEMENTS, EXTENSION OF
STRANDER BOULEVARD AND RAILROAD CROSSING, TOGETHER
WITH RELATED IMPROVEMENTS; AND 3) THE COSTS OF FLOOD
CONTROL FACILITIES, EQUIPMENT, MATERIALS AND SUPPLIES FROM
PROCEEDS OF A FUTURE BORROWING.
WHEREAS, the City of Tukwila, Washington (the "City") intends to make
expenditures for the Project (identified below) from funds that are available but that are
not (and are not reasonably expected to be) reserved, allocated on a long -term basis, or
otherwise set aside for those expenditures, and reasonably expects to be reimbursed for
those expenditures from proceeds of bonds or other obligations "bonds issued to
finance those expenditures; and
WHEREAS, certain federal regulations (the "federal reimbursement regulations
relating to the use of proceeds of tax exempt bonds to reimburse the issuer of the bonds
for expenditures made before the issue date of the bonds require, among other things,
that not later than 60 days after payment of the original expenditure the City (or any
person designated by the City to do so on its behalf) declare a reasonable official intent
to reimburse those expenditures from proceeds of bonds;
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUKWILA,
WASHINGTON, HEREBY RESOLVES AS FOLLOWS:
Section 1. Description of Project for which Expenditures are to be Made. The City
intends to make (and /or, not more than 60 days before the date of this declaration, has
made) expenditures and reasonably expects to reimburse itself for those expenditures
from proceeds of bonds for the following project, property, or program (the "Project
1) Costs of Southcenter Parkway construction and realignment in the Tukwila
South annexation area, together with related improvements; and
2) Costs of right -of -way acquisition, arterial improvements, extension of Strander
Boulevard and railroad crossing, together with related improvements; and
3) Costs of flood control facilities, equipment, materials and supplies.
Section 2. Maximum Principal Amount of Obligations Expected to be Issued for
the Project. The City expects the maximum principal amount of bonds that will be
issued to finance the Project will be $15,500,000.
Section 3. Declaration Reasonable. The City Council has reviewed its existing and
reasonably foreseeable budgetary and financial circumstances and has determined the
City reasonably expects to reimburse itself for expenditures for the Project from
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proceeds of bonds because the City has no funds available that already are or are
reasonably expected to be reserved, allocated on a long -term basis or otherwise set
aside by the City for those expenditures on the Project.
Section 4. Limitations on Uses of Reimbursement Amounts. The City will not,
within one year after the expected reimbursement, use amounts corresponding to
proceeds received from bonds issued in the future to reimburse the City for previously
paid expenditures for the Project in any manner that results in those amounts being
treated as replacement proceeds of any tax exempt bonds, i.e., as a result of being
deposited in a reserve fund, pledged fund, sinking fund or similar fund (other than a
bona fide debt service fund) that is expected to be used to pay principal of or interest on
tax exempt bonds. Nor will the City use those amounts in any manner that employs an
abusive arbitrage device to avoid arbitrage restrictions.
Section 5. Date of Declaration. This declaration of official intent shall be dated as of
the date of adoption of this resolution.
Section 6. Ratification and Confirmation. Any actions of the City or its officers
prior to the date thereof and consistent with the terms of this resolution are ratified and
confirmed.
PASSED BY THE CITY COUNCIL OF THE CITY OF TUKWILA, WASHINGTON, at
a Regular Meeting thereof this day of 2009.
ATTEST/ AUTHENTICATED:
Christy O'Flaherty, CMC, City Clerk
APPROVED AS TO FORM BY:
Office of the City Attorney
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Joan Hernandez, Council President
Filed with the City Clerk:
Passed by the City Council:
Resolution Number:
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