MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Authorization to Reimburse Costs for Installment Debt Projects
DATE: April 23, 2001
The attached resolution would declare the Town’s intent to reimburse all expenses incurred in the planned renovations of the Hargraves Center and A. D. Clark Pool and Bathhouse from the proceeds of an installment financing contract proposed for these facilities.
The proposed Capital Improvements Fund budget for 2001-2002 includes projects to be financed by use of installment contracts that will require approval by the Local Government Commission in a manner similar to that required for the purchase of land for a new Public Woks site. Renovations to the Hargraves Center and A.D. Clarke Pool and Bathhouse totaling about $940,000 are among those proposed to be financed in this manner, and are now beginning to get underway.
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 the Hargraves Center and pool renovations in order to reimburse itself for any 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 project from an installment contract in an amount not to exceed $940,000 for this project.
That the Council adopt the attached resolution declaring its intent to reimburse costs associated with renovations to the Hargraves Center and A. D. Clarke Pool project from the proceeds of an installment contract to finance the project.
A RESOLUTION DECLARING OFFICIAL INTENT TO REIMBURSE EXPENSES OF CAPITAL RENOVATION PROJECT (2001-04-23/R-12)
WHEREAS, the Town of Chapel Hill desires to renovate certain Town facilities through use of installment financing contracts; and
WHEREAS, the Town has determined that the Hargraves Recreation Center and A. D. Clark Pool and Bathhouse, “the Project”, are facilities in need a major capital renovations and repair; and
WHEREAS, the Town proposes to finance these renovations through installment contracts that spread 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 $940,000.
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 23rd day of April, 2001.