STATEMENT OF ISSUE

The State of Florida Department of Environmental Protection has awarded to the City of Tallahassee a $2,646,000 low interest loan from the State Revolving Loan Fund (SRF). The loan is to partially fund preconstruction of an advanced wastewater treatment facility. While the approval and details of the loan remain to be finalized, the City may reasonably expect to expend related funds prior to receipt of any funds from the SRF. This resolution formally declares the City’s intent to expend funds on the specified project costs prior to receipt of SRF monies and the City’s intent to reimburse itself from the proceeds of such a loan.

RECOMMENDED ACTION

Option 1. Approve Resolution 09-R-12, allowing the City to be reimbursed from Revolving Loan Fund proceeds up to an amount of $3 million because it is reasonably expected that some or all of the total project costs will be incurred prior to the financing.

FISCAL IMPACT

None other than administrative costs associated with the loan.

Mike Tadros, General Manager – Underground Utilities

Gary Herndon, City Treasurer-Clerk

For information, please contact: Jim Oskowis; 891-1090

SUPPLEMENTAL MATERIAL/ISSUE ANALYSIS
HISTORY/FACTS & ISSUES

The U.S. Treasury Department issued regulations, which took effect in March 1992, requiring any issuer of governmental bonds to make a “declaration of official intent” for any expenditure for which it anticipates being reimbursed through the subsequent issue of tax-exempt bonds. The rules allow for expenditure of the monies to be reimbursed if the following four general requirements are satisfied:

• Before or within 60-days of the date the expenditure to be reimbursed is paid, the issuer must declare a reasonable official intent to reimburse the expenditure;
• The allocation of the bond proceeds to the reimbursement must occur within 18-months after payment of the expenditure or 18-months after property resulting from the expenditure was placed in service, whichever is later;
• The expenditure must be a capital expenditure; and
• Certain “anti-abuse” rules are not violated.

In July 2007, the City Commission gave approval to proceed with various capital projects related to advanced wastewater treatment. Since the approval of the advanced wastewater treatment projects, staff from Underground Utilities have worked with staff from the Treasurer-Clerk to identify funding sources. A significant portion of the project was considered when issuing CUS bonds in 2007. More recently, the State of Florida Department of Environmental Protection has awarded a low interest loan from the State Revolving Loan Fund (SRF) in the amount of $2,646,000 for advanced wastewater treatment preconstruction funding. While the approval and details of the loan remain to be finalized, the City may reasonably expect to expend related funds prior to receipt of any funds from the SRF. This resolution formally declares the City’s intent to expend funds on the specified project costs prior to receipt of SRF monies and the City’s intent to reimburse itself from the proceeds of such a loan. The project costs expected to be reimbursed include engineering and design services for advanced wastewater treatment improvements performed by Hazen & Sawyer, P.C. The current rate for SRF borrowings is 2.51%. The rate varies until closing, but is fixed when the loan closes. The rate at closing will remain fixed for the duration of the 20-year loan.

Passage of this resolution does not obligate the City to undertake the project or to finance the project in any specific manner. It merely positions the City to reimburse itself from Revolving Loan Fund Proceeds should the project proceed as planned.

CHARITABLE CONTRIBUTIONS

N/A

OPTIONS

Option 1. Approve Resolution 09-R-12, allowing the City to be reimbursed from Revolving Loan Fund Proceeds up to an amount of $3 million because it is reasonably expected some or all of the total project costs will be incurred prior to the financing.

Option 2. Provide staff with other direction.

ATTACHMENTS/REFERENCES

Resolution 09-R-12