Resolution - #91-08-198 - 08/27/1991

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Councilmember Hardin introduced the following resolution and moved for its adoption: RESOLUTION #91-08- 198 DECLARING THE OFFICIAL INTENT OF THE CITY OF RAMSEY TO REIMBURSE CERTAIN EXPENDITURES FROM THE PROCEEDS OF TAXABLE OR TAX-EXEMPT BONDS TO BE ISSUED BY THE CITY BE IT RESOLVED by the City Council of the City of Ramsey, Minnesota (the "City") as follows: Section 1. Recitals. 1.01 The Internal Revenue Service has issued proposed new Tres. Reg. fi 1.103-17 (the "Reimbursement Rules") providing that proceeds of tax-exempt bonds used to reimburse prior expenditures will not be deemed spent unless certain requirements are met. 1.0 2 The City has incurred certain expenditures since September 8, 1989 and expects to incur certain additional expenditures, all of which may be financed temporarily from sources other than taxable or tax-exempt bonds, and reimbursed from the proceeds of a taxable or tax-exempt bond. 1.0 3 The new reimbursement rules will apply to bonds issued after September 7, 1991. 1.0 4 The Reimbursement Rules require that the allocation of proceeds of the bonds to be issued to reimburse any expenditures will be made not later than the later of one year after the expenditure was paid or one year after the property was placed in service. 1.0 5 The expenditures to be reimbursed must have a reasonably expected economic life of at least one year, in that they are, or are to be incorporated in or become a part of, a facility, are properly changeable to or may be capitalized as part of the basis of the facility, and if the City were subject to federal income taxation, would be depreciable over the facility's economic life. 1.06 Expenditures made between September 8, 1989 and September 7, 1991, may be reimbursed as described in Section 1.02 herein only if there is objective evidence that, at the time the expenditures were paid, the City reasonably expected.to reimburse such expenditures with proceeds of a taxable or tax exempt borrowing. 1.0 7 If any future expenditure to be reimbursed.is not made within two years of the date of this Resolution, this Resolution may be updated to the extent such expenditure is still expected to be reimbursed with bond proceeds at a later date. 1.0 8 Proceeds of the bonds issued to reimburse the expenditures described in Exhibit A will be deemed spent only when (1) an allocation entry is made on the books or records of the City with respect to the bonds; (2) the entry specifically identifies an actual expenditure to be reimbursed; and (3) the allocation is effective to relieve the bond proceeds from restrictions on unspent proceeds under applicable documents and state laws. 1.0 9 None of the proceeds of the bonds issued to reimburse the City for expenditures will be used (i) to refund another tax-exempt governmental issue or (ii) to create or increase the balance in a sinking fund or replace funds used for such purpose, or (iii) to create or increase the balance in a reserve or replacement fund or replace funds used for such purposes, or (iv) to reimburse an expenditure originally paid with the proceeds of another tax-exempt bond obligation; unless (i) such amounts are deposited in a bona fide debt service fund, or (ii) the original tax exempt ~ssue was not reasonably expected to be used to finance the expenditure.