HomeMy WebLinkAboutRes2021-104 CITY OF SEWARD,ALASKA Sponsored by: Bower
RESOLUTION 2021-104
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SEWARD,
ALASKA, DECLARING ITS INTENTION TO REIMBURSE ITSELF
FROM PROCEEDS OF ONE OR MORE TAX-EXEMPT FINANCINGS
FOR CERTAIN EXPENDITURES MADE/OR TO BE MADE IN
CONNECTION WITH THE ACQUISITION, CONSTRUCTION AND
EQUIPPING OF CERTAIN ELECTRIC SYSTEM CAPITAL
IMPROVEMENTS
WHEREAS,the City of Seward,Alaska("City")owns,operates,and maintains an electric
system ("System") which needs certain additions, improvements and extensions, as more fully
described in Appendix A attached hereto, ("Capital Projects"); and
WHEREAS,the City will pay on and after the date hereof(or has paid beginning no earlier
than the 60 days prior to adoption of this resolution) certain expenditures ("Expenditures") in
connection with the Capital Projects; and
WHEREAS,the City Council has determined that the money to be advanced on and after
the date hereof (or previously advanced no more than the 60 days prior to adoption of this
resolution) to pay Expenditures are available only for a temporary period and it is necessary to
reimburse the City for the Expenditures from proceeds of one or more issues of tax-exempt bonds
("Bonds").
NOW,THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF SEWARD,ALASKA that:
Section 1. The City hereby officially declares its intent under Treas. Regs. Section 1.150-
2 to reimburse the City with proceeds of the Bonds for Expenditures with respect to the Capital
Projects made no more than 60 days prior to the date hereof. The City reasonably expects on the
date hereof that it will reimburse the Expenditures with proceeds of Bonds.
Section 2. Each Expenditure was and will be of a type properly chargeable to a capital
account under general federal income tax principles(determined in each case as of the date of the
Expenditure).
Section 3. The maximum cost of the Capital Project is expected to be no greater than $18
million.
Section 4.This resolution shall take effect immediately upon adoption.
PASSED AND APPROVED by the City Council of the City of Seward, Alaska, this 13'1'
day of September,2021.
CITY OF SEWARD, ALASKA
RESOLUTION 2021-104
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risty Terry, r111111.r
AYES: Seese, Baclaan, Casagranda, McClure, DeMoss, Osen_., :-••
NOES: None
ABSENT: None
ABSTAIN: None
ATTEST:
Brenda J. Ballo M
City Clerk
(City Seal)
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City Council Agenda Statement ' F M
Meeting Date: September 13, 2021 -
To: City Council
From: Janette Bower, City Manager
Agenda Item: Resolution 2021-104 Declaring Its Intention to Reimburse Itself from
Proceeds of One or More Tax-Exempt Financings for Certain
Expenditures Made/Or to be Made in Connection with the
Acquisition, Construction and Equipping of Certain Electric System
Capital Improvements
Background and justification:
On July 26, 2021, the Electric Department delivered a presentation to City Council which
demonstrated the condition of the deteriorating electrical transmission system. In order to address
the critical infrastructure needs, a major capital improvement project has been identified.
All costs for the project, including labor and material, have been identified and evaluated by an
engineer. The total cost of the project is estimated to be $19.4 million, which includes labor.
Funding sources have been researched by Finance and it has been determined that a revenue bond is
the best financing option for funding the large project due to the long-term debt structure of the
bond. The City has applied for a revenue bond,through the Alaska Municipal Bond Bank Authority,
in the amount of$18 million to fund the project.
Prior to the approval of the City's application,the City's Bond Counsel recommends the City pass a
resolution declaring the intention to seek reimbursement for qualifying preliminary project costs
with bond proceeds for expenses incurred before the bond is issued. The Internal Revenue Code
provides the ability for reimbursement of qualifying preliminary expenditures. However, any
prolonged delay in issuing the bond could result in project costs being solely paid for by the City
without reimbursement. This reimbursement resolution provides a mechanism to allow for
reimbursement of certain costs to be paid with proceeds of the City's tax-exempt bond.
Consistency checklist:
Comprehensive Plan: N/A
Strategic Plan: N/A
Other: N/A
Fiscal note: There is no cost associated with this resolution.Preliminary expenditures will be spent
out of Electric Fund reserves with the intent of reimbursement after the issuance of the bond.
Finance Department approval: 1�
Attorney Review:
Yes M No ❑ Not applicable ❑
Recommendation
City Council adoption of Resolution 2021-104.
APPENDIX A
Description of Capital Projects
Each project referenced below constitute capital improvements, which are, or will be, owned,
operated and maintained by the City of Seward.
• Nash Road transmission upgrades and extensions, including addition of 1.3
miles of under-build to connect Nash Road distribution to SMIC substation and
replacement of tangent poles.
• Seward Highway transmission equipment replacement and upgrades.
• Lawing, Fort Raymond and SMIC substations transmission replacements and
upgrades.
• Primrose transformer replacement and upgrades.
• Victor Creek transformer replacement and upgrades.
• Spring Creek substation upgrades.
• Harbor substation upgrades.