Item 6: URA Resolution Delegating to Declare Intent to Reimburse

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EURA UGENE RBAN ENEWAL GENCY AIS GENDA TEM UMMARY Action: Resolution 1042 Delegating Authority to Declare Official Intent to Reimburse Expenditures Meeting Date: January 8, 2007 Agenda Item Number: 6 Department: Central Services Staff Contact: Sue Cutsogeorge www.eugene-or.gov Contact Telephone Number: 682-5589 ISSUE STATEMENT The Urban Renewal Agency (URA) is asked to delegate authority to sign reimbursement resolutions for the Internal Revenue Service (IRS) on behalf of the URA to the Agency Director. BACKGROUND The Internal Revenue Service has a requirement that governments declare their official intent to reim- burse expenditures made prior to a bond issue, with certain exceptions. The purpose for the IRS requirement is to prohibit what are called “pyramid bonds.” The name comes from the possibility that, in the absence of this rule, bonds could be issued by the government of Egypt to reimburse itself for the cost of constructing the pyramids. It is meant to limit governments from issuing more tax-exempt bonds than are reasonably necessary, and thereby reduce the opportunity for governments to earn arbitrage profits. Signing a reimbursement resolution prior to making expenditures for a project allows the URA to retain an option to fund a project with tax-exempt bond proceeds. The requested action is to delegate this declaration authority to the Agency Director. This delegation is proposed because this reimbursement resolution is more of an administrative matter than a policy issue. Bond counsel has recommended this action to the URA and has implemented similar delegations for many of their other Oregon clients. The City Council approved a similar delegation of authority for the City Manager to sign reimbursement resolutions in 2002. If the Agency Director signs a reimbursement resolution, the URA is not required to issue bonds for a particular purpose or project. If the Agency Director signs a reimbursement resolution, the Agency Director has not authorized the issuance of any bonds. The URA is the only body that can authorize the issuance of bonds. There are no projects that would require a reimbursement resolution at this time. The delegation is requested to be put in place in the event that a future project would require such a delegation. RELATED CITY POLICIES None. L:\CMO\2007 Council Agendas\M070108\S0701086.doc