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<br />FC#: .J., <br /> <br />ADOPT REIMBURSEMENT RESOLUTION FOR WATER TOWER #3 <br />By: Diana Lund, Finance Officer <br /> <br />Background: <br /> <br />Construction on the City's third water tower is currently underway. The project was <br />awarded to CB& I for a total cost of $3,057,000. Funding for this project was to come <br />from the water utility fund. <br /> <br />With the possibility of additional costs on the Ramsey Town Center Project area and no <br />current internal or external funding sources, the City is looking at the possibility of <br />bonding for the water tower. The funds that were internally designated for the tower in <br />the water utility fund would then be loaned to the Town Center project to be repaid by <br />future land sales. <br /> <br />If council will recall, when the City was looking at bonding for the purchase of Town <br />Center, the interest rate was at least 7%. This has to do with the fact that there was no <br />known revenue backing of the bond. If we were to issue a bond for the water tower <br />project, the interest rate is estimated at a little over 3% for a twenty-year period. <br /> <br />If the City were to issue debt, the City could take advantage of the Build America Bonds. <br />The net result would be an estimated savings of about $87,000 versus the issuance of tax <br />exempt bonds. A summary sheet is attached. <br /> <br />The attached resolution is what is known as a reimbursement resolution. It allows the <br />City to repay itself for any costs incurred on project prior to the receipt of bond proceeds <br />and it can be adopted no later than 60 days after the first construction payment. The first <br />payment to CB&I was made on August 26,2009. <br /> <br />It is not being requested at this time that council authorize the issuance of debt. Having <br />the reimbursement resolution in place allows the City the possibility of issuing debt at a <br />later date (up to three years after project began construction) and being able to pay itself <br />back for any construction costs already incurred. <br /> <br />Funding: <br />No funding required. <br /> <br />Committee Action: <br /> <br />Motion to recommend to City Council that Council Adopt Resolution #09-09-XXX <br />Establishing Procedures Relating to Compliance With Reimbursement Bond Regulations. <br />