Consideration and Adoption of Resolution No.  2012-037:  A resolution of the Mayor and Council of the City of Flagstaff, Arizona declaring, for purposes of section 1.150-2 of the Federal Treasury Regulations, official intent to be reimbursed in connection with certain capital expenditures relating to Street and Utility Improvements, and FUTS and Open Space purchases.

Approval of this resolution will allow the City to reimburse itself for expenditures made on current voter approved bonded projects for expenditures made in advance of issuing the debt.

These expenditures will be reimbursed from proceeds of the sale of obligations or other financing mechanisms to be used in the future by or on behalf of the City.

Effective governance.

Yes.  The May 2004 bond election authorized the Open Space/FUTS project.  The November 2010 bond election authorized the Street/Utility improvements.

Approve the reimbursement resolution as this allows the City the greatest flexibility in assuring expenditures are reimbursed and debt can be issued when it is most advantageous to the City.
Do not approve the reimbursement resolution and require that bonded debt be issued in advance of the proposed capital projects. 

On May 18, 2004, a general election was held by the City of Flagstaff whereby the citizens authorized obligations to be issued in relation to ten capital projects.  Question 302 authorized a total of $7,600,000 for 'Neighborhood Open Space and FUTS Land Acquisition'.  To date, we have issued $2.4 million of this authority, leaving a remaining balance of $5.2 million.  It is anticipated the City will have additional opportunity to purchase open space and FUTS lands prior to the end of the fiscal year.  In particular, the Picture Canyon acquisition is anticipated to be completed on or around October 30, 2012.

On November 2, 2010, a general election was held by the City of Flagstaff whereby the citizens authorized obligations to be issued in relation to two capital projects.  Question 404 authorized a total of $16,500,000 for 'Streets and Utilities Improvements'.  To date, we have issued $10,040,000 of this authority, leaving a remaining balance of $6,460,000.  These projects are anticipated to be complete by late summer/early fall 2013.

The dollar amounts shown above indicate the maximum that will be issued.  The City will wait for the contracted amounts to be determined and will also aim for the most favorable market conditions to issue the debt at low interest rates.  The City generally does not want to issue debt and incur interest expense if the proceeds are not needed in the immediate future.

IRS regulations are very specific as to what capital expenditures are eligible for reimbursement.  These expenditures must be any cost of a type that is properly chargeable to a capital account (or would be so chargeable with a proper election) under general federal income tax guidelines.

This resolution allows capital project timing to not be hampered by bond issuance timing.

Empower - the final decision making was in the hands of the public.

Bonding and project approval was received at the general elections held May 18, 2004 and November 2, 2010.

Approve the reimbursement resolution as this allows the City the greatest flexibility in assuring expenditures are reimbursed and debt can be issued when it is most advantageous to the City.
Do not approve the reimbursement resolution and require that bonded debt be issued in advance of the proposed capital projects.