AGENDA #4c
MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Reimbursement Resolution Regarding Proposed Installment Financing Contract for Roof Repair Projects Included in the Adopted Capital Improvements Fund Budget for 2003-04
DATE: October 27, 2003
The attached resolution would declare the Town’s intent to reimburse all expenses incurred in the planned roof repair projects in the current year’s adopted Capital Improvements Fund budget.
The current year’s adopted Capital Improvements Fund budget includes funding for planned roofing repairs to the Town Hall and to Fire Stations #2 and #3. We propose the use of an installment purchase contract to finance these projects that would require approval by the Local Government Commission in a manner similar to installment projects executed in past years.
We have now received bids for these three separate projects totaling about $323,000 including a 5% contingency. For the purposes of financing, we recommend combining the three projects into one installment purchase contract of $323,000 that would require one approval by the Local Government Commission. Funding for the installment contract payments is included in the current year’s Capital Improvement Fund budget.
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 any expenses are incurred. In accord with this requirement, the Town must adopt a resolution of intent to use installment financing for these roof repair projects in order to be reimbursed from the proceeds of the installment contract for any costs incurred before the financing contract is finalized.
The attached resolution would satisfy the federal reimbursement requirements by declaring the Town’s intent to finance the project from an installment contract in an amount not to exceed $323,000 for the total project.
That the Council adopt the attached resolution declaring its intent to reimburse costs associated with roofing repairs to the Town Hall and Fire Stations #2 and #3 from the proceeds of an installment contract to finance the project.
A RESOLUTION DECLARING OFFICIAL INTENT TO REIMBURSE EXPENSES OF CAPITAL RENOVATION PROJECT (2003-10-27/R-3)
WHEREAS, the Town of Chapel Hill desires to renovate certain Town facilities through use of an installment financing contract; and
WHEREAS, the Town has determined that the roofs of the Town Hall and Fire Stations #2 and #3 are in need a major capital renovations and repair; and
WHEREAS, the Town proposes to finance these renovations through an installment contract that spreads the cost of the Project over a ten year period;
NOW, THEREFORE, BE IT RESOLVED by the Council of the Town of Chapel Hill that, pursuant to the requirements of the United States Treasury Regulations Section 1.150-2, that the Council intends this resolution to constitute a Declaration of Official Intent to Reimburse under such Treasury Regulations Section.
BE IT FURTHER RESOLVED that:
1 Expenditures to be incurred. The Issuer anticipates incurring expenditures (the “Expenditures”) for the capital renovation and repairs to the Project.
2 Plan of Finance. The Issuer intends to finance the costs of the Project with the proceeds of debt to be issued by the Issuer (the “Borrowing”) the interest on which is to be excluded from gross income for federal income tax purposes.
3 Maximum Principal Amount of Debt to be Issued. The maximum principal amount of the Borrowing to be incurred by the Issuer to finance the Project is $323,000.
4 Declaration of Official Intent to Reimburse. The Issuer hereby declares its official intent to reimburse itself with the proceeds of the Borrowing for any of the Expenditures incurred by it prior to the issuance of the Borrowing.
BE IT FURTHER RESOLVED that the Council authorizes the Town Clerk to certify a copy of this resolution for the Local Government Commission.
This the 27th day of October, 2003.