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TO: Mayor Robert J. O’Connor
FROM: Brian W. Caputo, Chief Financial Officer/City Treasurer
DATE: January 9, 2017
SUBJECT:
Resolution Expressing Official Intent Regarding Certain Capital Expenditures to be Reimbursed from the Proceeds of an Obligation
PURPOSE:
To obtain the City Council’s approval of the attached resolution that would declare the city’s intent to obtain reimbursement from a future general obligation bond issue for certain capital costs that will be incurred in early 2017.
BACKGROUND:
The 2017 City Budget anticipates the issuance of $16.5 million of general obligation bonds during 2017 to provide resources for certain capital expenditures. A list of those capital expenditures is included in Exhibit A to the attached, proposed resolution.
In general, a government issuing bonds may only pay costs associated with a bond issue from the proceeds of the bonds after receipt. That is, obtaining reimbursement for costs incurred prior to the issuance of the bonds is not permitted.
As an exception to the cost payment principle described above, U.S. Treasury regulations permit a government to obtain reimbursement for costs incurred prior to the issuance of bonds if the government takes formal action to declare its intent to obtain such reimbursement. If this intent is declared, the government may obtain reimbursement from the proceeds of a future bond issue for costs incurred up to 60 days prior to the date of the declaration.
DISCUSSION:
In accordance with the 2017 City Budget, we expect to issue $16.5 million of general obligation bonds in the spring of 2017. Between now and the spring, we will prepare an official statement (offering document) for the bond sale and complete other tasks that support the issuance of the bonds. The City Council’s adoption of the attached, proposed resolution will permit the city to obtain reimbursement for any costs related to the capital projects concerned that were incurred up to 60 days prior to the issuance of the bonds.
IMPACT STATEMENT:
Not applicable.
RECOMMENDATIONS:
That the City Council adopt the attached resolution that would declare the City’s intent to obtain reimbursement from a future general obligation bond issue for certain capital costs that will be incurred in early 2017.
cc: Alderman O’Connor, Chairman
Alderman Mervine
Alderman Bohman
Alderman Mesiacos, Alternate
CITY OF AURORA, ILLINOIS
RESOLUTION NO. _________
DATE OF PASSAGE ________________
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A Resolution Expressing Official Intent Regarding Certain Capital Expenditures To Be Reimbursed From The Proceeds Of An Obligation.
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WHEREAS, the City of Aurora has a population of more than 25,000 persons and is, therefore, a home rule unit under subsection (a) of Section 6 of Article VII of the Illinois Constitution of 1970; and
WHEREAS, subject to said Section, a home rule unit may exercise any power and perform any function pertaining to its government and affairs for the protection of the public health, safety, morals, and welfare; and
WHEREAS, the City now wishes to advance moneys from available funds to pay the costs of certain capital projects described in Exhibit A attached hereto and made a part hereof (the “Projects”); and
WHEREAS, all or a portion of the expenditures relating to the Projects and to be made from such funds (the “Expenditures”) (i) have been paid within the sixty (60) days prior to the passage of this Resolution, or (ii) will be paid on or after the passage of this Resolution; and
WHEREAS the City reasonably expects to reimburse itself or pay for the Expenditures with the proceeds of an obligation;
NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Aurora, Illinois, as follows:
Section 1. The City reasonably expects to reimburse or pay the Expenditures with proceeds of an obligation.
Section 2. The maximum principal amount of the obligation expected to be issued for the Projects is $16,500,000.
Section 3. All actions of the officers, agents and employees of the City that are in conformity with the purposes and intent of this Resolution, whether taken before or after the adoption hereof, are hereby ratified, confirmed and approved.
Section 4. This Resolution shall be in full force and effect immediately upon its adoption.
Presented, passed, approved and recorded by the City Council of the City of Aurora, Kane, DuPage, Will and Kendall Counties, Illinois,
this ____ day of ____________,2017.
Approved:
_________________________
Mayor
[Seal]
Attest:
_________________________
City Clerk
Ayes:__________
Nays:__________
Absent or Not Voting:__________