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Brentwood City Commission Agenda

Meeting Date:	03/13/2017
Resolution 2017-22 - Authorizing the Reimbursement of Eligible Expenses from the Proceeds of the CY 2017 $4.9 Million GO Bond Issue
Submitted by:	Richard Parker, Finance
Department:	Finance

Information

Subject

Resolution 2017-22 - A Resolution Declaring the Intent of the City to Reimburse Itself for Certain Expenses Related to the Sunset Road/Ragsdale Road Intersection Project from the Proceeds of the Scheduled Calendar Year 2017 $4.9 million General Obligation Bond Issue.

Background

Please find attached a resolution allowing the City to reimburse itself for certain eligible costs for the Sunset Road/Ragsdale Road intersection project with proceeds from a proposed general obligation bond issue of up to $4.9 million, scheduled in the second half of calendar year 2017 (FY 2018.) Proposed improvements provide for relocation of the intersection approximately 800 feet to the east along Sunset Road. The project also includes widening and realignment of approximately three-fourths of a mile of Ragsdale Road back to the Glenellen subdivision to eliminate the sharp horizontal curve where Ragsdale Road crosses Owl Creek, and widening and realignment of approximately one-fourth mile of Sunset Road, including a new bridge over Owl Creek.

The original funding plan for this project, expected to cost just under $10 million was a combination of excess General Fund revenues from the current and prior fiscal years ($4.9 million), a $3.4 million transfer from the General Fund undesignated fund balance in FY 2016, and $1.6 million in road impact fees. The funding plan for the current FY 2017-2022 Capital Improvements Plan includes the issuance of up to $4.9 million in G.O. bonds in fall of 2017 for undesignated road improvements.

At this time in the FY 2018-2023 CIP planning process, staff believes it would be advantageous to consider using the proceeds from the planned 2017 bond issue towards the Sunset Road/Ragsdale Road intersection project that is ready to begin construction in the next 30-60 days, and retain the $4.9 million cash reserves in the Capital Projects Fund to program towards other projects over the next few years. Using the scheduled bond proceeds now allows the City to retain complete flexibility for use of the cash reserves when needed over the next six years instead of trying to coordinate the sequencing of major projects projects around the timing of a bond issue.

As noted above, the construction contract for the Sunset Road/Ragsdale Road intersection project is scheduled to be awarded at the March 13 meeting also. With construction work scheduled to start in the next 30-60 days, there will obviously be costs incurred on the project before the scheduled bond issue this fall. In order for certain costs to be recovered and reimbursed from a future tax-exempt financing, current rules and regulations of the Internal Revenue Service require an affirmative action by the City Commission stating the "intent" to reimburse itself at a future date for such costs and for any similar costs incurred not more than 60 days prior to the date of adoption of such statement of "intent." The resolution is essentially a protective instrument that preserves rights to issue tax-exempt debt in the future to fund the project; however, there is no legal obligation at this point to follow through and issue bonds if circumstances change by late calendar year 2017. Authorization to actually issue bonds will be subject to formal City Commission approval of a separate bond authorization resolution later this year.

Staff recommends approval of the accompanying "intent to reimburse" resolution in order to retain all financing options and flexibility. Should any members of the City Commission have any questions or desire further information, please feel free to contact Richard Parker, Finance Director.

Staff Recommendation

Staff recommends approval of the accompanying resolution.

Previous Commission Action

Similar Intent to Reimburse Resolutions for certain eligible costs have been approved at prior City Commission meetings, including:
Resolution 2008-07, approved on February 11, 2008.
Resolution 2010-07, approved on March 22, 2010.
Resolution 2013-23, approved on March 11, 2013.

Fiscal Impact

Amount :
Source of Funds:	Capital Projects Fund
Account Number:

Fiscal Impact:

Sunset Road/Ragsdale Road project costs will be incurred between now and late calendar 2017, prior to the issuance of up to $4.9 million in G.O. bonds and would be eligible for reimbursement from the bond proceeds under the provisions of this resolution.

Expenditures will be made from the Sunset Road project account within the Capital Projects Fund and the bond proceeds will be deposited in the Capital Projects Fund. Sufficient cash reserves are available in the Capital Projects Fund to cover expected expenditures prior to issuance of the bonds.

This scheduled 2017 bond issue is part of the financial model of the Debt Service Fund and is not projected to create any increase in required General Fund transfers to the Debt Service Fund. The new debt service requirements of the proposed 2017 bond issue will be offset by savings from reduced debt service payments from bonds paid off over the past two years.

Attachments
Resolution 2017-22
Signed Resolution