IV.4. Declaring the Official Intent of the City of Hopkins to Reimburse Certain Expenditures from the Proceeds of Bonds to be Issued by the City; Harkess (CR2016-066) 1
June 21, 2016 Council Report 2016-066
DECLARING THE OFFICIAL INTENT OF THE
CITY OF HOPKINS TO REIMBURSE
CERTAIN EXPENDITURES FROM THE PROCEEDS
OF BONDS TO BE ISSUED BY THE CITY
Proposed Action
Staff recommends approval of the following motion: Move approve Resolution 2016-049
Declaring the official intent of the City of Hopkins to reimburse certain expenditures from the
proceeds of bonds to be issued by the City.
Overview
On October 15, 2013 the City entered into a 15-year agreement with SEH Design/Build, Inc for
the purpose of maintaining the Blake and Moline Water Tower. This includes a number of
maintenance items such as an annual inspection, pressure washing, coating testing, spot repairs
and in 2016 the repainting of both water towers. The cost of the work in 2016 is budgeted at
$340,000 for the Blake Tower and $650,000 for the Moline Tower and is included in the 2016-
2020 Capital Improvement Plan. The original plan was to pay for this work from available
funds, however with the number of projects we have scheduled staff feels it’s more prudent to
bond for the water rehabilitation project given the advantageous bond market.
The bonds will be water revenue bonds and will tag onto the bonds currently being offered for
sale. There should be no significant increased cost for this bond sale as the preliminary work for
the offering statement has been completed. Because the work on this project will commence
prior to the bonds being sold we need to do a reimbursement resolution advising the bond market
that costs will be incurred on this project prior to the bond sale.
Supporting Documents
Resolution 2016-049
______________________________________
Christine M. Harkess, CPA, CGFM
Finance Director
Financial Impact: $ $1,000,000 Budgeted: Y/N X N Source: Bond Proceeds
Related Documents (CIP, ERP, etc.): __CIP _________ Notes: __________________
481096v1 JAE HP110-1
CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2016-049
DECLARING THE OFFICIAL INTENT OF THE
CITY OF HOPKINS TO REIMBURSE
CERTAIN EXPENDITURES FROM THE PROCEEDS
OF BONDS TO BE ISSUED BY THE CITY
WHEREAS, the Internal Revenue Service has issued Treas. Reg. § 1.150-2 (the “Reimbursement
Regulations”) providing that proceeds of tax-exempt bonds used to reimburse prior expenditures will not be
deemed spent unless certain requirements are met; and
WHEREAS, the City of Hopkins, Minnesota (the “City”) expects to incur certain expenditures that
may be financed temporarily from sources other than bonds, and reimbursed from the proceeds of a
tax-exempt bond;
WHEREAS, the City has determined to make this declaration of official intent (“Declaration”) to
reimburse certain costs from proceeds of bonds in accordance with the Reimbursement Regulations.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
HOPKINS AS FOLLOWS:
1. The City proposes to finance the construction of water tower improvements in the City (the
“Project”).
2. The City reasonably expects to reimburse the expenditures made for certain costs of the
Project from the proceeds of bonds in an estimated maximum principal amount of $1,000,000. All
reimbursed expenditures will be capital expenditures, costs of issuance of the bonds, or other expenditures
eligible for reimbursement under Section 1.150-2(d)(3) of the Reimbursement Regulations.
3. This Declaration has been made not later than 60 days after payment of any original
expenditure to be subject to a reimbursement allocation with respect to the proceeds of bonds, except for
the following expenditures: (a) costs of issuance of bonds; (b) costs in an amount not in excess of $100,000
or 5 percent of the proceeds of an issue; or (c) “preliminary expenditures” up to an amount not in excess of 20
percent of the aggregate issue price of the issue or issues that finance or are reasonably expected by the City
to finance the project for which the preliminary expenditures were incurred. The term “preliminary
expenditures” includes architectural, engineering, surveying, bond issuance, and similar costs that are
incurred prior to commencement of acquisition, construction or rehabilitation of a project, other than land
acquisition, site preparation, and similar costs incident to commencement of construction.
4. This Declaration is an expression of the reasonable expectations of the City based on the
facts and circumstances known to the City as of the date hereof. The anticipated original expenditures for
the Project and the principal amount of the bonds described in paragraph 2 are consistent with the City’s
budgetary and financial circumstances. No sources other than proceeds of bonds to be issued by the City
are, or are reasonably expected to be, reserved, allocated on a long-term basis, or otherwise set aside
pursuant to the City’s budget or financial policies to pay such Project expenditures.
5. This Declaration is intended to constitute a declaration of official intent for purposes of
the Reimbursement Regulations.
481096v1 JAE HP110-1 2
Approved this 21st day of June, 2016, by the City Council of the City of Hopkins, Minnesota.
Molly Cummings, Mayor
Attest:
Amy Domeier, City Clerk