AGENDA #4j
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TO: |
Roger L. Stancil, Town Manager |
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FROM: |
Kay Johnson, Finance Director |
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SUBJECT: |
Reimbursement Resolution Regarding Proposed Financing for the Downtown Economic Development Initiative |
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DATE: |
May 21, 2007 |
The attached resolution would declare the Town’s intent to reimburse all future expenses incurred in the Downtown Economic Development Initiative from the proceeds of an installment financing contract proposed for this project.
On February 12, 2007, the Council approved the terms and conditions of the General Development Agreement between the Town of Chapel Hill and the Ram Development Company, and authorized the Manager to sign the agreement and act as the Town’s representative in connection with implementation of the agreement. In order to further that agreement, the Council authorized a budget amendment on May 6 of $460,000 for environmental remediation, management and legal costs related to the project.
The Council’s plan for the project includes financing the cost of the public underground parking that is a part of the Downtown Economic Development Initiative. The original amount to be financed was $7.245 million. Debt service payments are estimated to begin in 2010-11.
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 construction project before expenses, other than expenses for design, are incurred. Because the original plan was to purchase a completed underground pubic parking facility from RAM, there was no requirement for a reimbursement resolution. However, if the Council would like to include in the financing other costs related to construction of the public parking that the Town would be incurring directly before the financing is put in place, then the Council would need to authorize a reimbursement resolution. That is, a reimbursement resolution would be required if the Council wanted to be able to finance the additional $460,000 in direct costs authorized in the May 6, 2007 budget amendment.
The attached resolution would satisfy the federal reimbursement requirements by declaring the Town’s intent to finance the Downtown Economic Development Initiative from an installment contract in the amount of $7.705 million. Without the reimbursement resolution, we cannot finance the Town’s direct costs for the project from this date until the actual financing is in place.
That the Council adopt the attached resolution declaring its intent to reimburse costs associated with the Downtown Initiative underground public parking from financing proceeds.