Attached is a resolution prepared by the City's bond counsel, Norton Rose Fulbright US L.L.P. that expresses an official intent of the City to reimburse project expenditures with proceeds of tax exempt Waterworks and Sewer System Revenue Bonds.  

Under Treasury Regulations, a city may advance monies for projects and reimburse itself with proceeds from a tax exempt bond issue if the city has officially declared the intent to take such action.   

The City plans to advance an amount that may be approximately $3,500,000 for water and sewer rehabilitation projects. The repairs and replacement are expected to begin prior to the bond proceeds being received in June to pay for the expenditures. The advanced funding would come from the City's Water and Sewer Fund Balance.  

By Treasury Regulations, the City must repay the advance within 18 months. The plan is to make the reimbursements with proceeds from the W&S Revenue Bonds, Series 2018. The W&S Revenue Bonds, Series 2018 will impact the Fiscal Year 2019 Water and Sewer budget.  

The reimbursement maximum shown in the reimbursement resolution is $8,500,000. Bond Counsel and their Tax Attorney advised to show the total amount of the W&S Revenue Bonds, Series 2018 planned to be issued associated with the Waterworks and Sewer System.    

The W&S Revenue Bonds, Series 2018, will include the reimbursement amount shown above plus amounts for future water and sewer rehabilitation projects. Staff anticipates the Series 2018 Bonds will be a total of $8,500,000.

The advance is expected not to exceed $3,500,000 from the City's Water and Sewer Fund. The plan is for the repayment of the advance to occur in June 2018 from bond proceeds received at closing from the W&S Revenue Bonds, Series 2018. The maximum reimbursement amount of $8,500,000 shown in the resolution includes the expected reimbursement in the amount of $3,500,000 and the total of future water and sewer rehabilitation projects. This higher amount is shown on the advice of Bond Counsel and their Tax Attorney.

Staff recommends the City Council adopt a resolution declaring an expectation to reimburse project expenditures with proceeds of future debt in a maximum principal amount of $8,500,000.

I make a motion to adopt Resolution No.__________ declaring an expectation to reimburse project expenditures with proceeds of future debt in a maximum principal amount of $8,500,000.