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HomeMy WebLinkAbout12 Donner Lake Water System Agenda Item # Memorandum To: Board of Directors From: Mary Chapman, Administrative Services Manager [late: May 28, 2004 SUBJECT: Consideration of approving a resolution authorizing the reimbursement to the District from a future tax-exempt financing for expenditures made for the completion of the Donner Lake water system projects from internal funds 1. WHY THIS ITEM IS BEFORE THE BOARD Peter and I met with John Murphy to discuss the legal options available to the District to finance the Donner Lake water system expenditures that are over and above the amount that is eligible to be financed by the Department of Water Resources. We discussed the fact that the District had paid some of the expenses from internal funds and that we would probably have to complete the project with internal funds less any reimbursements that we receive from DWR. 2. HISTORY We currently estimate that the total cost of all of the projects will be approximately $15,231,537. The Department of Water Resources has agreed to loan us $12,732,965 leaving $2,498,572 to finance. Most of this amount is ineligible for DWR reimbursement and covers the acquisition cost and the cost of replacement of the intake into Donner Lake. 3. NEW INFORMATION John Murphy has told us if we do a future tax-exempt financing from which we want to reimburse ourselves from loan proceeds, we will need to have the attached resolution in place. This resolution recaps the financing activity to date and states that it is the District's intention to pursue additional tax-exempt financing to pay for the Unfunded Project. It also addresses that it is the District's intent to reimburse itself from the loan proceeds for costs incurred prior to the issuance of the new debt. Although we currently expect the final amount that needs financing to be approximately $2,500,000, I am suggesting that the amount we insert into the resolution should be $3,000,000 in case the final costs go over$2,500,000. e X { RECOMMENDATION: That the Board adopt the attached RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT REGARDING ITS INTENTION TO ISSUE TAX- EXEMPT OBLIGATIONS which will allow the District to reimburse itself for expenditures it makes from internal funds to complete the Donner Lake water system improvement projects from tax- exempt loan proceeds. t S S f RESOLUTION NO. s RESOLUTION OF THE BOARD OF DIRECTORS OF THE TRUCKEE DONNER PUBLIC UTILITY DISTRICT REGARDING ITS INTENTION TO ISSUE TAX-EXEMPT OBLIGATIONS WHEREAS,the Truckee Donner Public Utility District (the "District') has heretofore taken action to finance the costs of acquiring and improving the Donner Lake Water System (the"Project") through the formation of an assessment district, the issuance of bond anticipation notes and the obtaining of a loan from the State of California (collectively, the"Previous Financings"), but the total costs of the Project are expected to exceed the amount of the fiords that will be available from the Previous Financings; WHEREAS, in order to provide additional funding to finance the portions of the Project that will not be financed as a result of the Previous Financings (the "Unfunded Project'),the District intends to issue obligations the interest upon which is excluded from gross income for federal income tax purposes (the "Obligations'); and WHEREAS, the District desires to pay certain costs with respect to the Unfunded Project prior to the issuance of the Obligations from available moneys of the District and to reimburse itself for such costs from a portion of the proceeds of the sale of the Obligations; NOW, THEREFORE, the Board of Directors of the Truckee Donner Public Utility District DOES I IEREBY RESOLVE. ORDER AND DE'l ERMINE AS FOLLOWS: SECTION 1. The District reasonably expects, and hereby states its intention,to reimburse itself for costs of the Unfunded Project incurred prior to the issuance of the Obligations with proceeds of the Obligations_ The recitals hereof describes either the general character, type,purpose, and function of the Unfunded Project or the fund or account from which costs of the Unfunded Project are to be paid and the general functional purpose of the fund or account. SECTION 2. The reasonably expected maximum principal amount of the Obligations that is anticipated to be used for such reimbursement is $3,000,000. SECTION 3. Except as described in Section 7 below,this resolution is being adopted not later than 60 days after the payment of the original expenditures (the"Expenditures Date or Dates"). SECT ION 4. Except as described in Section 7 below,the expected date of issue of the Obligations will be within eighteen months of the later of(a)the Expenditure Date or Dates or(b) the date the Unfunded Project is placed in service; provided, the reimbursement may not be made more than three vears after the Expenditure Date. SECTION 5. Proceeds of the Obligations to be used to reimburse for costs of the Unfunded Project are not expected to be used, within one year of reimbursement, directly or indirectly to pay debt service with respect to any obligation (other than to pay current debt service coming due within the next succeeding one year period on any tax-exempt obligation of the District(other than the Obligations)) or to be held as a reasonably required reserve or replacement fund with respect to an obligation of the District or any entity related in any manner to the District, or to reimburse any DOCSOC/1047121 v U22925-0014 s expenditure that was originally paid with the proceeds of any obligation, or to replace funds that are } or will be used in such manner. SECTION 0. This resolution is consistent with the budgetary and financial circumstances of the District as of the date hereof No moneys from sources other than the Obligation issue are, or are reasonably expected to be,reserved, allocated on a long-term basis, or otherwise set aside by the District(or any related parry) pursuant to their budget or financial policies with respect to the costs of the Unfunded Project. To the best of our knowledge, this Board of Directors is not aware of the previous adoption of official intents by the District that have been made as a matter of course for the purpose of reimbursing expenditures and for which tax-exempt obligations have not been issued. SECTION 7. The limitations described in Section 3 and Section 4 do not apply to (a) costs of issuance of the Obligations, (b) an amount not in excess of the lesser of$100,000 or five percent (5%) of the proceeds of the Obligations, or(c) any preliminary expenditures, such as architectural, engineering, sun eying, soil testing, and similar costs other than land acquisition, site preparation, and similar costs incident to commencement of construction,not in excess of twenty percent(20%) of the aggregate issue price of the Obligations that finances the Unfunded Project for which the preliminary expenditures were incurred. SECTION S. This resolution is adopted as official action of the District in order to comply with Treasury Regulation §1.150-2 and any other regulations of the Internal Revenue Service relating to the qualification for reimbursement of District expenditures incurred prior to the date of issue of the Obligations, is part ofthe District's official proceedings, and will be available for inspection by the general public at the main administrative office of the District. SECTION 9. All the recitals in this Resolution are true and correct and this Board of Directors so finds, determines and represents. ADOPTED and APPROVED by the Board of Directors of the Truckee Donner Public Utility District on June 2004. TRUCKEE DONNER PUBLIC UTILITY DISTRICT By: President of the Board of Directors ATTEST: Clerk of the Board of Directors DOCSOCJ 1047121 v 1/22925-0014