RES 19-04RESOLUTION NO. 2019-04
RESOLUTION ESTABLISHING PROCEDURES
RELATING TO COMPLIANCE WITH REIMBURSEMENT BOND
REGULATIONS UNDER THE INTERNAL REVENUE CODE
BE IT RESOLVED by the City Council (the "Council") of the City of Otsego, Minnesota
(the "City"), as follows:
Recitals.
(a) The Internal Revenue Service has issued Treasury Regulations, Section
1.150-2 (as the same may be amended or supplemented, the "Regulations"), dealing with
"reimbursement bond" proceeds, being proceeds of bonds used to reimburse the City for
any project expenditure paid by the City prior to the time of the issuance of those bonds.
(b) The Regulations generally require that the City (as the issuer of or the
primary obligor under the bonds) make a declaration of intent to reimburse itself for such
prior expenditures out of the proceeds of subsequently issued bonds, that such declaration
be made not later than 60 days after the expenditure is actually paid, and that the bonding
occur and the written reimbursement allocation be made from the proceeds of such bonds
within 18 months after the later of (1) the date of payment of the expenditure or (2) the
date the project is placed in service (but in no event more than 3 years after actual
payment).
(c) The City heretofore implemented procedures for compliance with the
predecessor versions of the Regulations and desires to amend and supplement those
procedures to ensure compliance with the Regulations.
(d) The City's bond counsel has advised the City that the Regulations do not
apply, and hence the provisions of this Resolution are intended to have no application, to
payments of City project costs first made by the City out of the proceeds of bonds issued
prior to the date of such payments.
(e) Official Intent Declaration. The Regulations, in the situations in which
they apply, require the City to have declared an official intent (the "Declaration") to
reimburse itself for previously paid project expenditures out of the proceeds of
subsequently issued bonds. The Council hereby authorizes the City Administrator to
make the City's Declarations or to delegate from time to time that responsibility to other
appropriate City employees. Each Declaration shall comply with the requirements of the
Regulations, including without limitation the following.
(f) Each Declaration shall be made not later than 60 days after payment of the
applicable project cost and shall state that the City reasonably expects to reimburse itself
for the expenditure out of the proceeds of a bond issue or similar borrowing. Each
Declaration may be made substantially in the form of the Exhibit A which is attached to
and made a part of this Resolution, or in any other format which may at the time comply
with the Regulations.
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(g) Each Declaration shall (1) contain a reasonably accurate description of the
"project," as defined in the Regulations (which may include the property or program to be
financed, as applicable), to which the expenditure relates and (2) state the maximum
principal amount of bonding expected to be issued for that project.
(h) Care shall be taken so that the City, or its authorized representatives under
this Resolution, not make Declarations in cases where the City doesn't reasonably expect
that reimbursement bonds will be issued to finance the subject project costs, and the City
officials are hereby authorized to consult with bond counsel to the City concerning the
requirements of the Regulations and their application in particular circumstances.
(i) The Council shall be advised from time to time on the desirability and
timing of the issuance of reimbursement bonds relating to project expenditures for which
the City has made Declarations.
0) Reimbursement Allocations. If the City is acting as the issuer of the
reimbursement bonds, the designated City officials shall also be responsible for making
the "reimbursement allocations" described in the Regulations, being generally written
allocations that evidence the City's use of the applicable bond proceeds to reimburse the
original expenditures.
(k) Effect. This Resolution shall amend and supplement all prior resolutions
and/or procedures adopted by the City for compliance with the Regulations (or their
predecessor versions), and, henceforth, in the event of any inconsistency, the provisions
of this Resolution shall apply and govern.
Adopted on January 28, 2019, by the City Council of the City of Otsego, Minnesota.
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CERTIFICATION
The undersigned, being the duly qualified and acting City Clerk of the City of Otsego,
Minnesota, hereby certifies the following:
The foregoing is true and correct copy of a Resolution on file and of official, publicly
available record in the offices of the City, which Resolution relates to procedures of the City for
compliance with certain IRS Regulations on reimbursement bonds. Said Resolution was duly
adopted by the governing body of the City (the "Council") at a regular meeting of the Council
held on January 28, 2019. The Council meeting was duly called, regularly held, open to the
public, and held at the place at which meetings of the Council are regularly held.
Councilmember Tanner moved the adoption of the Resolution, which motion was
seconded by Councilmember Goede . A vote being taken on the motion, the
following members of the Council voted in favor of the motion to adopt the Resolution:
Stockamp, Tanner, Goede
and the following voted against the same:
None
Whereupon said Resolution was declared duly passed and adopted. The Resolution is in full
force and effect and no action has been taken by the Council which would in any way alter or
amend the Resolution.
WITNESS MY HAND officially as the City Cleric of the City of Otsego, Minnesota, on
January 28, 2019.
Tami Loff V
City Cleric
City of Otsego, Minnesota
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EXHIBIT A
Declaration of Official Intent
The undersigned, being the duly appointed and acting City Administrator of the City of
Otsego, Minnesota (the "City"), pursuant to and for purposes of compliance with Treasury
Regulations, Section 1.150-2 (the "Regulations"), under the Internal Revenue Code of 1986, as
amended, hereby states and certifies on behalf of the City as follows:
1. The undersigned has been and is on the date hereof duly authorized by the City
Council of the City to make and execute this Declaration of Official Intent (the "Declaration")
for and on behalf of the City.
2. This Declaration relates to the following project, property or program (the
"Project") and the costs thereof to be financed: the East Wastewater Treatment Facility Solids
Phase I Project to include, regulatory permitting and review, planning, legal, engineering,
architectural, design, land -acquisition, soils testing, pilot testing, and earthwork.
3. The City reasonably expects to reimburse itself for the payment of certain costs of
the Project out of the proceeds of a bond issue or similar borrowing (the 'Bonds") to be issued
after the date of payment of such costs. As of the date hereof, the City reasonably expects that
$15,000,000.00 is the maximum principal amount of the Bonds which will be issued to finance
the Project.
4. Each expenditure to be reimbursed from the Bonds is or will be a capital
expenditure or a cost of issuance, or any of the other types of expenditures described in Section
1.150-2(d)(3) of the Regulations.
5. As of the date hereof, the statements and expectations contained in this
Declaration are believed to be reasonable and accurate.
Date: January 28, 2019.
Adam Flaherty
City Administrator
City of Otsego, Minnesota
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