Agenda No. 3.
CITY COUNCIL MEMORANDUM
| City Council Meeting: | December 14, 2021 |
| Department: | Finance |
| Subject: | Resolution 21-R-130 - Consideration and approval of a Resolution relating to establishing the city’s intention to reimburse itself for the prior lawful expenditure of funds relating to constructing various city improvements from the proceeds of tax-exempt obligations to be issued by the city for authorized purposes; authorizing other matters incident and related thereto; and providing an effective date. (M. Browne/J. Walters) |
BACKGROUND
This resolution will allow the City to make purchases in advance of upcoming debt issuances and pay itself back once the debt funds have arrived.
With this resolution, the City will be allowed to make expenses on the voter approved Fire Station 4 project and pay itself back later. Funds expensed must be approved by council by a budget adjustment and will come from reserves.
Staff recommends using this to purchase a Fire Apparatus for Station 4 that was included in the bonds. The apparatus is quoted to be $1,298,921 and will see a price increase in January estimated to be $80,000. The construction and delivery time is about 13 months from placing the order putting it after January 2023 before it would arrive.
The City also gets a $40,000 discount for paying the full amount up front. By signing the contract now and using this resolution, the City could save $120,000.
It is for this reason, staff recommends approving this resolution and purchasing the new fire apparatus now.
With this resolution, the City will be allowed to make expenses on the voter approved Fire Station 4 project and pay itself back later. Funds expensed must be approved by council by a budget adjustment and will come from reserves.
Staff recommends using this to purchase a Fire Apparatus for Station 4 that was included in the bonds. The apparatus is quoted to be $1,298,921 and will see a price increase in January estimated to be $80,000. The construction and delivery time is about 13 months from placing the order putting it after January 2023 before it would arrive.
The City also gets a $40,000 discount for paying the full amount up front. By signing the contract now and using this resolution, the City could save $120,000.
It is for this reason, staff recommends approving this resolution and purchasing the new fire apparatus now.
GOAL
To get approval for the City to pay itself back for debt related purchases made before the debt is issued.
COMMUNITY BENEFIT
The community would benefit with additional savings on the apparatus, ensuring the engine is available when the station opens, and the new vehicle could help the city's fleet while the station is built.
SUMMARY OF RECOMMENDED ACTION
Staff recommends approving this resolution which will allow debt purchases to be made now and the funds returned to the city once debt has been issued.
Motion" I Move that the City Council adopt a Reimbursement Resolution"
FISCAL IMPACT
Any funds expended out of the General Fund will be returned once the voter approved debt has been issued. Until then the funds will be fronted by the General Fund reserves. The reserves minimum 26% of operating expenditures' requirement is $10,100,000 and the fund balance is estimated to be at $12,700,000 by the end of FY 2021-22 or $2,600,000 over the requirement. With the payment of the $1,298,000 for the fire engine the city will still be above its minimum fund balance requirement while the city waits for the bond reimbursement.
RECOMMENDATION
Approval of Resolution 21-R-130.