MEMORANDUM
TO: Mayor and Town Council
FROM: W. Calvin Horton, Town Manager
SUBJECT: Authorization to Reimburse Costs for Installment Debt Projects
DATE: September 9, 2002
The attached resolution would declare the Town’s intent to reimburse all expenses incurred in the planned renovations of the IFC Shelter for the Homeless and roof repairs to the Chapel Hill Museum from the proceeds of an installment financing contract proposed for these facilities.
The adopted Capital Improvements Fund budget for 2002-2003 includes two projects this year to be financed by use of installment contracts. These contracts will require approval by the Local Government Commission, in a manner similar to that required for the renovations to the Hargraves Recreation Center and A. D. Clarke Pool. These two projects include interior and exterior renovations to the IFC Shelter (estimated cost of $340,000) and roof repairs to the Chapel Hill Museum (estimated cost of $60,000). For the purposes of financing, we propose combining these two projects into one financing contract totaling $400,000 that would require one approval by the Local Government Commission. We are now ready to begin the two projects.
We plan to execute both projects by using in-house project management staff as the general contractor. In the case of the museum roof, we expect to award a contract to one roofing contractor. In the case or the IFC Shelter, we expect to award multiple contacts and purchase orders including a roofing contract, a painting contract and multiple purchase orders for various smaller elements of the work. Architectural and engineering support for these projects will be limited to some engineering design work associated with the slate roof on the IFC Shelter. We expect to award this work to the engineering services firm that emerges from our current selection process for a value engineering and general engineering services contractor. Under the proposed contract, general engineering services would be provided to various Town departments on an on-call, as-needed basis.
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 order to reimburse those expenses. In accord with this requirement, the Town must adopt a resolution of intent to use installment financing for renovations to the IFC Shelter and museum 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 $400,000 for the combined projects.
That the Council adopt the attached resolution declaring its intent to reimburse costs associated with renovations to the IFC Shelter and museum from the proceeds of an installment contract to finance the project.
A RESOLUTION DECLARING OFFICIAL INTENT TO REIMBURSE EXPENSES OF CAPITAL RENOVATION PROJECT (2002-09-09/R-5)
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 IFC Shelter and Chapel Hill Museum, “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 $400,000.
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 9th day of September, 2002.