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HomeMy WebLinkAbout2009-09-14 09-300 RESOLVECOUNCIL ACTION Item No. `� 300 Date: 9/14/2009 Item/Subject: Resolve, Declaration of Official Intent to Reimburse Expenditures on the Penobscot River Coal Tar Remediation Project from Tax -Exempt Obligations Responsible Department: Finance Commentary: In June 2009, the City Council authorized the execution of a construction contract with RMT for remediation of the Penobscot River coal tar. The contract with RMT is based upon their estimated actual cost, which is $6.86 million. The contract is incentive based and, therefore, may increase or decrease depending upon the actual costs incurred and conditions encountered once work gets underway. In addition to the construction costs, it is anticipated that the City will incur the following additional costs related to the project: environmental insurance premiums of $504,000, inspection and DEP oversight costs approximating $150,000, and legal costs of approximately $50,000. Since the estimated total cost of the project exceeds the currently identified and available resources by nearly $1.3 million, staff recommends that the Council approve a declaration of intent to issue bonds in an amount not to exceed $1.5 million. The additional authorization of $200,000 provides a cushion should costs increase due to conditions during the project. Please note that in the end, due to final third party settlements and the actual work encountered, there may be adequate resources available to pay the total cost of the project and, in that case, no bonds will be issued. However, in order to use a borrowing to reimburse ourselves for past costs, the City must be on record with its intent to issue bonds for this purpose within 60 days of the expenditures occurring; hence, the attached resolve. Department Head Manager's Comments: This item was reviewed by the Finance Committee on 9/9/09 City Manager Associated Information: Budget Approval: Mance Director Legal Approval: City Solicitor Introduced for X Passage First Reading Referral Page _ of _ A 300 Assigned to Councilor— Stone September 14, 2009 CITY OF BANGOR (TME.) Resolve, Declaration of Official Intent to Reimburse Expenditures on the Penobscot River Coal Tar Remediation Project from Tax -Exempt Obligations WHEREAS, the City of Bangor, Maine (the "Issuer'l currently intends to proceed with the remediation of the Penobscot River coal tar contamination (the "Project'j; and WHEREAS, the Issuer intends to finance the costs of the Project through the issuance of tax- exempt bonds and notes in anticipation thereof, to the extent other funds are not available therefore; and WHEREAS, Treasury Regulation § 1.150-2 requires that an Issuer declare its official intent to reimburse expenditures with proceeds of tax-exempt obligations prior to the date of such expenditures; Now, therefore, by the City Council of the City of Bangor be it hereby RESOL VEP. 1. Declaration of Intent. The Issuer intends to reimburse itself from the proceeds of its tax-exempt obligations in an amount not to exceed $1,500,000 for expenditures made or incurred by it on the Project prior to the issuance of such tax-exempt obligations. 2. General Description of Property to Which Reimbursement Relates. Set forth above is a reasonably accurate general functional description of the Project with respect to which reimbursements will be made; provided that the Issuer reserves the right to make such changes, substitutions, additions, and deletions as are necessary for the efficient operation of the Issuer and the completion of the Project. 3. Identification of Source of Funds. Expenditures made prior to the issuance of tax-exempt obligations issued to finance such costs are expected to be funded either with operating and non-operating revenues of the Issuer or with the proceeds of an interim loan. 4. Status of Bonds and/or Notes. The bonds and/or notes to be issued to finance the costs of the Project described above are intended to be tax-exempt obligations as described in Section 103(a) of the Internal Revenue Code of 1986, as amended. 5. Public Availability of Official Intent. This Declaration of Official Intent shall be maintained as a public record of the Issuer. IN CITY COUNCIL September 14, 2009 Notion Made and Seconded for Passage Passed 4�,Ty CLERK 1 RESOLVE (TITLE,) Declaration of Official al Intent to Reimburse Expenditures on the Penobscot River Coal'Tar Remediation Project from Tax -Exempt Obligations Assigned to Councilor__ S&4