RES 2021-05 ESTABLISHING PROCEDURES RELATING TO COMPLIANCE WITH REIMBURSEMENT BOND REGULATIONS UNDER THE INTERNAL REVENUE CODECITY OF OTSEGO
COUNTY OF WRIGHT
STATE OF MINNESOTA
RESOLUTION NO: 2021-05
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:
1. 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).
2. 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.
(a) 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.
(b) 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.
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(c) 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.
(d) 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.
3. 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.
4. 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 25, 2021, 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 25, 2021, 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 Darkenwald moved the adoption of the
Resolution, which motion was seconded by Councilmember Goede. A voice vote being taken on the
motion, the following members of the Council voted in favor of the motion to adopt the Resolution:
Stockamp, Darkenwald, Dahl, Goede, and Moore.
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 Clerk of the City of Otsego, Minnesota, on January 25, 2021.
Audra Etzel
City Clerk
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 West Wastewater Treatment Facility Liquid Phase 1 and
Portions of Phase 11(as described in the 2018 Wastewater Master Plan) 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 $30,080,000.00 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 25, 2021,
Adam Flaherty
City Administrator
City of Otsego, Minnesota
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