Discussion and possible action on any and all matters regarding Resolution No. 2283. A Resolution of the Mayor and City Council of the City of San Luis, Arizona, an Arizona Municipal Corporation 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 water and wastewater capital improvement projects. (Monica Castro, Director of Finance)

Resolution No. 2283 is a resolution adopted by the Council to comply with Internal Revenue Service (IRS) regulations that limit the use of the proceeds of a tax-exempt borrowing (like a WIFA loan) to reimburse a governmental issuer for certain types of expenses incurred prior to the issuance of the tax-exempt borrowing.  The regulations were put into place because the IRS did not want governmental issuers to issue tax-exempt bonds and use the proceeds for “old and cold” expenditures.  An example of what the IRS is attempting to prevent would be building a City Hall in 2023 with cash and then issuing bonds in 2033 to reimburse the general fund for the expenditures.  The IRS regulations require the municipality to declare its official intent to be reimbursed with the proceeds of a tax-exempt borrowing.  That is the purpose of Resolution No. 2283: it declares the official intent, gives a general project description and it includes an estimated amount.  Adoption of this resolution does not commit the City to a future borrowing – it only preserves the ability of the City to reimburse itself for “hard costs” (for example, acquisition, construction, land acquisition, similar costs) expended 60 days prior to the adoption of the reimbursement resolution and at any time thereafter.  There are no restrictions on the reimbursement of “soft” costs (for example, architectural, engineering, surveying, soil testing, and similar costs incurred prior to the commencement of construction or rehabilitation of projects).