AGENDA #8b
MEMORANDUM
TO: Roger L. Stancil, Town Manager
FROM: Kay Johnson, Finance Director
SUBJECT: Reimbursement Resolution Regarding Proposed Financing for the Community Center
DATE: September 27, 2006
The attached resolution would declare the Town’s intent to reimburse all future expenses incurred in the major renovations for the Community Center from the proceeds of an installment financing contract proposed for this project.
As a part of the Town’s 15-year capital plan, the Capital Improvements Fund budget for 2004-2005 includes funding for design for major repairs to the Community Center. The Community Center is in need of a new roof, new air conditioning and heating systems, replacement pool mechanisms, and new bathrooms and lockers. The capital plan includes a proposal to finance the actual capital improvements, beginning in 2006-07. No debt service was included as a part of the 2006-07 operating budget, since we anticipated that the project would begin in late fall of calendar year 2006, and that the Town would not need to borrow funds for cash flow needs until January 2007. Actual debt service for the project would begin in 2007-08.
U. S. Treasury regulations and guidelines which involve debt financing transactions require that a governmental entity declare its intent to use debt financing for a given project before expenses, other than expenses for design, are incurred. In accord with this requirement, the Town must adopt a resolution of intent to use installment financing for the Community Center renovations in order to reimburse itself for any costs, other than design costs, incurred before the financing is executed from the proceeds of the installment contract.
The attached resolution would satisfy the federal reimbursement requirements by declaring the Town’s intent to finance the Community Center renovations from an installment contract in the amount of $1.75 million as proposed in the 2006-07 capital budget. The Council will have an opportunity to specifically approve or reject the actual bids for the renovations. However, without the reimbursement resolution, we cannot finance costs of the project from this date until the actual financing is in place, should the Council decide to approve the bid or bids and finance the Community Center renovations.
That the Council adopt the attached resolution declaring its intent to reimburse costs associated with the renovations for the Community Center from financing proceeds.