RPVCCA_CC_SR_2012_08_21_H_San_Ramon_Canyon_Stabilization_Project_Reimburse_ExpendituresCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED BY:
HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL~
DENNIS McLEAN,DIRECTOR OF FINANCE AND INFORMATIO
TECHNOLOGY
AUGUST 21,2012
SAN RAMON CANYON STABILIZATION PROJECT-INTENT TO
REIMBURSE EXPENDITURES WITH BOND PROCEEDS
(Supports City Council 2012 Goal for Public Infrastructure)
CAROLYN LEHR,CITY MANAGER ~
Staff Coordinator:Kathryn Downs,Deputy Director of Finance
and Information Technology lCD
RECOMMENDATION
Adopt Resolution No.2012-, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF RANCHO PALOS VERDES DECLARING OFFICIAL INTENT PURSUANT TO
SECTION 1.150-2 OF THE TREASURY REGULATIONS WITH RESPECT TO THE BOND
FINANCING OF A STORM DRAIN PROJECT.
BACKGROUND AND DISCUSSION
On July 17,2012,the City Council received a status report from Staff for the San Ramon
Canyon Stabilization Project,as well as a Financing Alternatives presentation from the
City's Financial Advisor,Tim Schaefer of Magis Advisors.The City Council directed Staff
to return with a "reimbursement resolution"for Council's consideration.
The proposed resolution (see attached)does not obligate the City to use debt to finance
the San Ramon project;but it does preserve the City's ability to do so.If adopted,the
proposed resolution declares the City's intent to reimburse itself for San Ramon project
expenditures from the proceeds of bonds issued after expenditures are incurred.
Expenditures may include design services,project management services,permitting,
environmental review,and payments to contractors for project construction.To allow the
City the potential to issue tax-exempt bonds to fund a portion of the project,federal tax law
requires that any such expenditures made priorto the issuance of the bonds be considered
in a "reimbursement resolution"such as the one proposed with this report.
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SAN RAMON CANYON STABILIZATION PROJECT -INTENT TO REIMBURSE
EXPENDITURES WITH BOND PROCEEDS
August 21,2012
Page 2 of 2
Although the City continues to pursue other methods offunding for the San Ramon project,
such as additional grant funding and contributions from other agencies, this is a first and
necessary step should the City decide to fund a portion of the project with bond proceeds.
Staff will continue to collaborate with the City Council Subcommittee about funding
alternatives for the San Ramon project and expects to provide an overview about the
process and timeline to the City Council in the near future.
Project Summary
Final design of the San Ramon Canyon Stabilization Project has been completed and
regulatory permits are expected to be approved in the near future.Staff expects that
advertising the project to obtain competitive construction bids is imminent,with construction
tentatively scheduled to begin in late 2012.The estimated construction cost ofthe Project
is $19.4 million.
The project has received a matching grant in an amount up to $9.46 Million from the State
Department of Water Resources Storm Water Flood Management Grant (Prop 1E)
program.The balance of about $10 million remains unfunded.
The current terms of the Prop 1E grant require that construction of the Project be
completed by October 3,2014.Staff estimates that the project has a construction
schedule of about 12 months;which means construction should begin no later than
January 2013 and preferably sooner to allow for unforeseen challenges and close out of
the project (e.g.confirmation that all required mitigation is met,and state audit of
construction records).
Again,the balance of the unfunded portion of the project is expected to be $10 million,
Staff,the City's Financial Advisor and the City Attorney recommend that the reimbursement
resolution be established for $12 million,a greater amount,to allow for unexpected project
costs.The City Council will have the discretion in the future to determine the funding plan
for the project,including funding from the City of Los Angeles,the County,the use of CIP
Reserves,as well as the amount that could be reimbursed from debt proceeds.
Attachments:
Resolution No.2012-,A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES DECLARING OFFICIAL INTENT PURSUANT TO SECTION
1.150-2 OF THE TREASURY REGULATIONS WITH RESPECT TO THE BOND
FINANCING OF A STORM DRAIN PROJECT
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RESOLUTION NO.2012-__
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
RANCHO PALOS VERDES DECLARING OFFICIAL INTENT
PURSUANT TO SECTION 1.150-2 OF THE TREASURY
REGULATIONS WITH RESPECT TO THE BOND FINANCING OF
A STORM DRAIN PROJECT
THE CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES,
CALIFORNIA HEREBY FINDS,RESOLVES,AND ORDERS AS FOLLOWS:
Section 1.This declaration of official intent is made in accordance with
Section 1.150-2 of the Treasury Regulations.Section 1.150-2 governs the
allocation of expenditures of a reimbursement bond.A reimbursement bond is
that portion of an issue of bonds allocated to reimburse an original expenditure
(Le.,an expenditure for a governmental purpose that is originally paid from a
source other than a reimbursement bond)that was paid before the date of issue
of such bonds.Section 1.150-2 provides rules to determine when an allocation
of bond proceeds to reimburse an original expenditure will be treated as an
expenditure of those bond proceeds.In order for such an allocation of bond
proceeds to be treated as an expenditure,the issuer of the bonds must declare
its official intent to reimburse the original expenditure with bond proceeds.
Section 2.The project for which an original expenditure is paid is the
improvement of real property with storm drain facilities.The maximum principal
amount of bonds expected to be issued for the storm drain project is
$12,000,000.
Section 3.The date of this declaration of official intent is not later than 60
days after payment of any original expenditure related to the storm drain project.
Section 4.As of today's date,the City Council has a reasonable
expectation that it will reimburse such original expenditure with bond proceeds.
Section 5.This declaration of official intent is not being made as a matter
of course or in amounts substantially in excess of the amounts expected to be
necessary for the storm drain project.
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PASSED,APPROVED AND ADOPTED this 21 st day of August 2012,by
the following vote to wit:
AYES:(0)
NOES:(0)
ABSENT:(0)
ABSTAIN:(0)
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
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