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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 iss...
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