HomeMy WebLinkAbout2001-07-16 City Council (6)City of Palo Alto
City Manager’s Report
TO:
FROM:
HONORABLE CITY COUNCIL
CITY MANAGER DEPARTMENT:
3
ADMINISTRATIVE
SERVICES
DATE:JULY 16, 2001 CMR: 310:01
SUBJECT:APPROVAL OF A RESOLUTION DECLARING INTENTION
TO REIMBURSE EXPENDITURES RELATED TO CAPITAL
PROJECTS FROM THE PROCEEDS OF BONDS TO BE
ISSUED BY THE CITY FOR WATER AND GAS FUND
CAPITAL IMPROVEMENTS
RECOMMENDATION
Staff recommends that Council approve a resolution declaring the City’s intention to
reimburse expenditures made for related capital projects from the proceeds of bonds to be
issued by the City for water and gas fund capital improvements (Attachment A).
BACKGROUND
On June 11, 2001, Council adopted the Water and Gas Fund’s capital budgets for 2001-
02 and conceptually approved a capital expenditure plan for 2002-03 through 2005-06.
This plan included issuing debt to fund such improvements as water and gas main
replacements, building a reservoir and pump station, and existing well rehabilitation.
DISCUSSION
At this time, staff anticipates selling Utility Revenue Bonds around the middle of October
2001. Before that time, staff.will be conducting design and other work on Water and Gas
Fund capital projects. To pay for certain pre-construction costs from bond proceeds, it is
necessary for Council to approve a resolution declaring the City’s intent to reimburse
those expenditures. Staff recommends that Council approve the attached resolution
(Attachment A).
RESOURCE IMPACT
It is estimated that the principal amount of bonds to be issued is $23.7 million, $13.0
million for the Water Fund and $10.7 million for the Gas Fund. This amount does not
include necessary reserves or the costs of issuing bonds. The annual debt service
payment for each fund depends upon prevailing interest rates at the time of the bond sale.
CMR:310:01 Page 1 of 2
POLICY IMPLICATIONS
This action is consistent with prior Council direction.
TIMELINE
September 16 Council approves resolution authorizing the issuance and sale
of Utility Revenue Bonds
October 3 Bids received on bonds from underwriters
October 18 Proceeds from bonds received
ENVIRONMENTAL ASSESSMENT
This report does not require California Environmental Quality Act (CEQA) review.
Individual projects, however, will be subject to environmental review as they are further
developed or have received an appropriate review as indicated in the City’s 2001-03
Adopted Budget document.
ATTACHMENTS
Attachment A:A Resolution Declaring Intention To Reimburse Expenditures From The
Proceeds Of Bonds To Be Issued By The City
PREPARED BY:
JOE~AC~IO
Dep@ Director, Administrative Services
DEPARTMENT HEAD APPROVAL:
CITY MANAGER APPROVAL:
~ YEATS ~
Director, Admin~drative Services
EMILY HARRISON
Assistant City Manager
CMR:310:01 Page 2 of 2
RESOLUTION NO.
RESOLUTION DECLARING INTENTION TO REIMBURSE
EXPENDITURES FROM THE PROCEEDS OF BONDS
TO BE-ISSUED BY THE CITY
RESOLVED, by the City Council of the City of Palo Alto (the "City"):
WHEREAS, the City proposes to undertake the project referenced below, to issue its revenue bonds (the "Bonds") for such project and
to use a portion of the proceeds of the Bonds to reimburse expenditures made for the project prior to the issuance of the Bonds;
WHEREAS, United States Income Tax Regulations section 1.150-2 provides generally that proceeds of tax-exempt bonds are not
deemed to be expended when such proceeds are used for reimbursement of expenditures made prior to the date of issuance of such bonds unless
certain procedures are followed, one of which is a requirement that (with certain exceptions), prior to the payment of any such expenditure, the issuer
declares an intention to reimburse such expenditure; and
WHEREAS, it is in the public interest and for the public benefit that the City declares its official intent to reimburse the expenditures
ieferenced herein.
NOW, THEREFORE, it is hereby DECLARED and ORDERED, as follows:
I. The City intends to issue its revenue bonds (the "Bonds") for the purpose of paying the costs of acquiring and constructing various
improvements to the City’s Gas System and the City’s Water System (together, the "Project’S.
2. The City hereby declares that it reasonably expects (i) to pay some portion of the costs of the Project prior to the date of issuance of
the Bonds, and (ii) to use a portion of the proceeds of the Bonds for reimbursement of expenditures for the Project that are paid before the date of
issuance of the Bonds.
oftheBonds.
The estimated principal amount of the Bonds is expected to be $23,700,000, plus needed reserves and payment of costs of issuance
PASSED AND ADOPTED this 16th day of July, 2001, by the following vote:
AYES:
NOES:
ABSENT:
ABSTENTIONS:
ATTEST:
City Clerk
APPROVED AS TO FORM:
Mayor
APPROVED:
Senior Assistant City Attorney City Manager
010711 cl 0032474
Director of Administrative Services