Consideration and Adoption of Resolution No. 2026-49: A resolution of the Flagstaff City Council, 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 the November 2012 election for Proposition 405, November 2018 election for Propositions 419 and 420, water fund projects, wastewater fund projects, reclaimed water fund projects, and stormwater fund projects, and establishing an effective date.
 
 

1. Read Resolution No. 2026-49 by title only
2. City Clerk reads Resolution No. 2026-49 by title only (if approved above)
3. Adopt Resolution No. 2026-49

This resolution will allow the City to reimburse itself for expenditures made for capital projects that are currently being planned or may be under construction in advance of issuing the debt (bonds) for the projects. Federal regulations provide that the City may reimburse itself for expenditures incurred prior to the issuing of debt so long as this type of resolution is adopted. Without the resolution, only City construction expenditures incurred after the issuance of debt would be allowed. 

This reimbursement resolution does not have any direct financial impact; however, it allows the City to move forward with capital expenditures prior to completion of future financing. 

This resolution does not authorize the issuance of debt. A separate ordinance will need to be adopted by Council to formally issue debt for these projects. 

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Please refer to the Background and History section to follow.

1. Approve the Reimbursement Resolution: This is the best option to allow the City the greatest flexibility to issue debt when it is most advantageous while allowing construction expenditures to occur; or
2. Do not approve the Reimbursement Resolution: If not approved, staff will need to quickly bring back a debt authorization ordinance for Council and would issue debt at the earliest possible opportunity or projects may need to be delayed.

The current City 5-year plans demonstrate a need to issue debt to finance capital projects. This reimbursement resolution allows the City to begin construction on the capital projects prior to completing the financing.  When considering the issuance of debt financing in our 5-year plans, the City also demonstrates that the annual debt service requirements are funded for the length of the financing. This ensures the City can pay our obligations by reserving future revenues.

Proposition 405
On November 6, 2012, a general election was held by the City of Flagstaff whereby the citizens authorized the Investing in the Forest Health and Water Supply Protection Project, also known as the Flagstaff Watershed Protection Project or FWPP, ballot measure. Voters authorized the issuance of $10,000,000 in general obligation debt.  The City will be de-obligating approximately $650,000 from our outstanding WIFA Loan and will replace this with a new General Obligation Debt.  We are doing this to allow the Fire Department to spend the remaining funds in a more efficient and quicker manner than WIFA would allow at this time.   The City will issue the new debt approximately a year from now.  The debt service payments will be made from secondary property taxes.

Proposition 419
On November 6, 2018, a general election was held by the City of Flagstaff whereby the citizens authorized the Continuation of Sales Taxes for Roadway, Pedestrian, Bicycle, and Safety Improvements ballot measure. The ballot measure authorized the issuance of debt to accelerate delivery of the projects. The debt service payments will be made from transportation sales taxes.

Proposition 420
On November 6, 2018, a general election was held by the City of Flagstaff whereby the citizens authorized the Sales Tax – Lone Tree Railroad Overpass from Butler Avenue to Route 66 ballot measure. The ballot measure authorized the issuance of debt to accelerate delivery of the projects. The debt service payments will be made from transportation sales taxes.

Water Services Funds
In the adoption of recent Water Services rates, the financial plans demonstrated the need to issue new debt to fund capital projects in each of the four funds.  Further, the FY 2026-27 adopted budget shows the City may issue debt this fiscal year and the accompanying 5-year plans also demonstrate the need to issue debt for capital projects.  Each fund demonstrates the ability to meet the debt payment obligations with the new issuance of debt.  

• High Performing Governance: Maintain the organization’s fiscal stability through strong financial policies and best practices
• Environmental and Natural Resources: Actively manage and protect all environmental and natural resources.
• Transportation and Other Public Infrastructure: Deliver quality community assets and continue to advocate and implement a highly performing multi-modal transportation system.

• Goal E&C.3. Strengthen community and natural environment resiliency through climate adaptation efforts
• Goal WR.2. Manage a coordinated system of water, wastewater, and reclaimed water utility service facilities and resources at the City level and identify funding to pay for new resources.
• Goal WR.4. Logically enhance and extend the City's public water, wastewater, and reclaimed water services, including their treatment, distribution, and collection systems in both urbanized and newly developed areas of the City to provide efficient delivery of services.
• Goal E&C.3. Strengthen community and natural environment resiliency through climate adaptation efforts.
• Goal PF.2. Provide sustainable and equitable public facilities, services, and infrastructure systems in an efficient and effective manner to serve all population areas and demographics.

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