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