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HomeMy WebLinkAboutCOUNCIL - AGENDA ITEM - 04/06/2004 - RESOLUTION 2004-047 DECLARING THE OFFICIAL INTENT ITEM NUMBER: 21 AGENDA ITEM SUMMARY DATE: April 6, 2004 FORT COLLINS CITY COUNCIL STAFF: Alan Krcmarik SUBJECT Resolution 2004-047 Declaring the Official Intent of the City to Use Proceeds of Tax-Exempt Obligations to Reimburse Itself for Certain Capital Expenditures Made from Other Sources. RECOMMENDATION Staff recommends adoption of the Resolution. FINANCIAL IMPACT Approximately$55 million of land acquisition and capital improvements have been identified by various City departments and component units. Use of long-term tax-exempt financing is the most efficient means by which to pay for the land acquisition and capital improvements. Council is not committed to completing the tax-exempt financial transaction listed in the Reimbursement Resolution. The Reimbursement Resolution merely provides the City with increased financial accounting flexibility and allows the matching of proceeds from tax-exempt financing with the land and improvements being financed. This Resolution does not,in itself, authorize the expenditure of any funds for the projects listed below. EXECUTIVE SUMMARY This item facilitates for proper accounting of capital projects that the City may finance through tax- exempt financing. It is essentially a "house-keeping" action. Based on discussions with Service Areas and the Downtown Development Authority, the Finance Department has identified five potential tax-exempt financial transactions that may need to be completed in 2004. The projects to be financed include acquisition of property and constructions of the new Police Services Building ($28 million), land conservation for natural areas and community separators ($15 million), improvements in the Downtown Development area($6 million),a Transportation Facilities Building ($1.3 million)and participation in a southeast branch of the Fort Collins Library($5 million). The various projects may require the City to spend money in advance of the financial transactions being completed. Federal tax laws and regulations allow the City to reimburse itself for such costs provided that the Council adopts a reimbursement resolution. Resolution 2004-047 declares the Council's official intent to use proceeds of tax-exempt financing to reimburse the City for expenditures made in conjunction with the projects. April 6, 2004 -2- Item No. 21 BACKGROUND Open Space The Natural Resources Department has identified several open space acquisitions that fit into the master plan. Currently, interest rates are at or near historic lows. As the availability of parcels cannot be guaranteed in the future and it is likely that interest rates will not remain as favorable as they are now, it would be prudent for the City to use a tax-exempt lease-purchase financing to acquire selected sites. Based on the amount of money expected from the quarter cent sales tax levy and other commitments for the Open Space program,staff estimates the optimal size of the financing to be approximately$15 million. Police Services Buildine The City has been planning for the new Police Services Building for more than seven years. A portion of the project financing was approved in the Building Community Choices capital project list in 1997. In recent budget processes,the City has been reserving funds and earmarking additional funds in the base budget to cover the cost of a $28 million Police Services Building. The project managers have identified a tentative completion date of late 2007-early 2008. To meet this objective, land acquisition would need to begin in 2004. Downtown Development Authority District Projects During recent meetings,the Downtown Development Authority Board has identified the possibility of Downtown Development Authority("DDA")participation in several new projects,including the Cortina project,Home Deport,Pine Street Lofts,Mason Street North, a downtown hotel, and other projects. Staff estimates the DDA commitment to such projects to be $6 million based on preliminary discussions. The most recent projections of DDA tax increment indicates that even with $6 million of new commitments, the DDA will have additional reserves for other projects. Transportation De-ice Storage Facility A recent inspection of the de-icing storage facility shows that it is failing and probably has less than three years of useful life. The Transportation Services Area has identified funding for a portion of the replacement facility and has sufficient revenue in future years to support a financing of approximately $1.3 million. The new facility will also mitigate current environmental concerns about the storage of de-icing materials. Southeast Fort Collins Library The City has been working toward a partnership solution for Library needs. The most likely scenario is a cooperative relationship with Poudre Health Systems("PHS"). Similar to the Harmony Library, the City would incur some capital costs and ongoing operating costs. PHS would share the cost of building the facility. While there is some uncertainty about the size of the facility and the City's share, the capital cost will probably not be less that $5 million. April 6, 2004 -3- Item No. 21 Council approval of the Reimbursement Resolution does not commit the City to any of the potential projects listed in this Agenda Item Summary. The Reimbursement Resolution allows the City to reimburse itself for planning,design,and preliminary costs should the projects be completed. If the projects are not completed, the various City departments will not be able to reimburse themselves for preliminary costs. RESOLUTION 2004-047 OF THE COUNCIL OF THE CITY OF FORT COLLINS DECLARING THE OFFICIAL INTENT OF THE CITY TO USE PROCEEDS OF TAX-EXEMPT OBLIGATIONS TO REIMBURSE ITSELF FOR CERTAIN CAPITAL EXPENDITURES MADE FROM OTHER SOURCES WHEREAS, the City of Fort Collins, Colorado ("City") reasonably expects that within the next ensuing year the City will issue certain tax-exempt obligations in one or more series in the maximum aggregate principal amount of$55,000,000 ("Obligations") in order to provide for the acquisition, construction, installation and improvement of certain public improvements for the City, including, but not limited to a police services building, land conservation for natural areas and community separators, improvements in the Downtown Development Authority District, a library and a transportation facility(collectively, the 'Projects"); and WHEREAS, the City reasonably expects that prior to the issuance of the Obligations the City will make certain expenditures for or in connection with the Projects with the expectation of reimbursing itself from proceeds of the Obligations. NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF FORT COLLINS, COLORADO, that the City Council hereby declares the official intent of the City to use proceeds of the Obligations to reimburse itself for certain capital expenditures made for or in connection with the Projects, provided that (a) the Obligations will not be used to reimburse any expenditure made more than 60 days prior to the present date; (b) the Obligations will not be issued more than 18 months after the later of (i) the date of the first expenditure to be reimbursed with the proceeds of the Obligations or (ii) the date the Projects are placed into service; and (c) in no event may the Obligations be issued more than three years after the date of the first expenditure to be reimbursed with the proceeds of the Obligations, and provided further that the limitations hereof will not apply to qualified "preliminary expenditures" as permitted by Treasury Regulations § 1.150-2(f). Passed and adopted at a regular meeting of the City Council held this 6th day of April, A.D., 2004. Mayor ATTEST: City Clerk