CR 2012-032 Approve Resolution 2012-019 Declaring the Official Intent of the City of Hopkins to Reimburse Certain Expenditures from the Proceeds of Bonds to be Issued by the cityApril 3, 2012-Oca
Council Report 2012-032
City Of llopkiws
APPROVE RESOLUTION 2012-019
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 adoption of the following motion: Move to adopt Resolution 2012-019 Declaring the
Official Intent of the City to Reimburse Certain Expenditures from the Proceeds of Bonds to be Issued by the
CAL
Approval of this motion will allow the city to move forward with items in the Equipment Replacement Plan
while preserving a funding mechanism should we need it.
Overview
The Equipment Replacement Plan as currently set forth will be short the funding we need for anticipated
equipment needs. The funding shortfall has arisen due to decreased income as a result of changes in state aid
and the recent downturn of the economy. In 2002 revenue to the ERP was about $500,000 and was
decreased by 50% following elimination of LGA. Over the subsequent years we have attempted to increase
the revenue which comes primarily from the General Fund; however that has proven difficult as budget
challenges have arisen. Currently the ERP has revenue of approximately $316,000 which is less than what is
needed to fund equipment needs. This issue has now come to the forefront as existing cash reserves have
been exhausted. We have identified a number of larger ticket items with useful lives exceeding 15 years that
could be funded with equipment certificate bonds. Not all of the items will necessarily need to be funded
with bonds; however we have identified potential items to give us the flexibility in the bond amount. As we
get closer to the date to sell bonds we will identified the exact items to be included and that information will
be presented to the council for approval before moving forward with the bonds.
Primary Issues to Consider
• Financial health of the Equipment Replacement Plan
Supportinz Information
• Resolution 2012-019
• Cash Flow of the ERP
Christine M. Harkess, CPA, CGFM
Finance Director
Financial Impact: $ 1,215,900 Budgeted: Y/N X N Source: Bond Proceeds
Related Documents (CIP, ERP, etc.): ERP Notes:
CITY OF HOPKINS, MINNESOTA
RESOLUTION NO. 2012-019
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 purchase various items of capital equipment (the "Project") as defined
in Exhibit A.
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 $1,215,900. 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.
400649v1 SJB HPl 10-1
Approved this 3rd day of April, 2012, by the City Council of the City of Hopkins, Minnesota.
CITY OF HOPKINS, MINNESOTA
Eugene Maxwell, Mayor
Attest:
Kristine Luedke, City Clerk
400649v1 SJB HP110-1
Exhibit A
Fire Department
Quick Attack Pumper
Public Works
4x4'/4 Ton Truck
One Ton Dump Truck
One Ton Traffic Boom Truck
Single Axel Dump Truck
Front End Loader
Sweeper
Backhoe Loader
Pavilion
Ice Resurfacer
Total
400649vl SJB HPI 10-1
$250,000
$70,000
$40,000
$82,500
$130,000
$172,000
$156,400
$135,000
$180,000
$1,215,900
Impact on General Fund
Rate Change
Working Capital Begin Year
Revenues from charges
Transfer In - Pavilion - Capital Lease
Transfer In - Pavilion - Hockey Loan
Interest earnings
Other revenues (sale of assets)
Lease Financing
Total Revenues
Expenditures (excludes Depr.) (1)
Fire Truck Financing Pymnts (2009-2018)
Finance 6 items - annual finance cost
Eliminate 2 copiers in 2013 and lease
Capital Outlay - Equipment
Working Capital Ending Balance
Cash balance
EQUIPMENT REPLACEMENT FUND (602)
06/30/2011
(1) Expenditures included copier and engineering scanner lease up until 2011.
Beginning in 2011 for the copiers and 2012 for the scanners the responsible fund and department budgets for the lease.
14,591
18,830
23,288
24,916
26,662
0%
2%
3%
5%
6%
7%
7%
7%
ACTUAL
ACTUAL
BUDGET
BUDGET
BUDGET
BUDGET
BUDGET
BUDGET
2009
2010
2011
2012
2013
2014
2015
2016
1,033,705
1,161,011
921,830
919,117
510,595
(100,447)
(306,971)
(462,136)
287,463
292,867
301,653
316,736
335,740
359,242
384,388
411,296
20,000
20,000
20,000
20,000
15,609
3,143
3,143
3,143
3,143
3,143
3,142
18,519
6,719
9,293
9,266
5,180
(930)
(2,995)
(4,547)
10,258
13,760
25,000
25,000
25,000
30,000
30,000
30,000
391,928
336,489
359,089
374,144
384,672
391,454
411,393
436,749
25,248
24,743
25,485
18,250
18,798
19,361
19,942
20,541
53,907
53,891
54,217
54,217
54,217
54,217
54,217
54,217
77,000
77,000
77,000
77,000
(35,000)
185,467
497,036
282,100
710,200
880,700
447,400
415,400
415,200
264,622
575,670
361,802
782.667
995,714
597,978
566,559
566,957
1,161,011
921,830
919,117
510,595
(100,447)
(306,971)
(462,136)
(592,345)
1,172,437
929,273
926,560
518,038
(93,004)
(299,528)
(454,694)
(584,902)
(1) Expenditures included copier and engineering scanner lease up until 2011.
Beginning in 2011 for the copiers and 2012 for the scanners the responsible fund and department budgets for the lease.