HomeMy WebLinkAboutItem 6: URA Resolution Delegating to Declare Intent to Reimburse
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.
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AGENCY OPTIONS
The URA may approve or decline to approve the proposed resolution. If the URA declines to approve
the proposed resolution, then the URA will need to have an item on its calendar each time a financing
plan would require an IRS reimbursement declaration.
AGENCY DIRECTOR’S RECOMMENDATION
The Agency Director recommends adoption of the proposed resolution.
SUGGESTED MOTION
Move to adopt Resolution 1042 delegating authority to declare official intent to reimburse expenditures.
ATTACHMENTS
A. Proposed Resolution
FOR MORE INFORMATION
Staff Contact: Sue Cutsogeorge
Telephone: 682-5589
Staff E-Mail: sue.l.cutsogeorge@ci.eugene.or.us
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ATTACHMENT A
RESOLUTION NO. ____
A RESOLUTION DELEGATING AUTHORITY TO
DECLARE OFFICIAL INTENT TO REIMBURSE
EXPENDITURES.
The Urban Renewal Agency of the City of Eugene finds as follows:
A.
From time to time, the Urban Renewal Agency undertakes capital projects
that the Agency intends to finance with tax-exempt obligations.
B.
Federal tax law requires an issuer of tax-exempt obligations to declare its
intention if the issuer expects to spend its funds on a project and later reimburse itself for
those expenditures from the proceeds of tax-exempt obligations.
NOW, THEREFORE, based upon the above findings,
BE IT RESOLVED BY THE URBAN RENEWAL AGENCY OF THE CITY
OF EUGENE, a Municipal Corporation of the State of Oregon, as follows:
The Agency Director is specifically authorized to make declarations of intent to
reimburse expenditures pursuant to Treasury Regulation 1.150-2 and any similar,
replacement provision without additional action by the Urban Renewal Agency.
th
The foregoing resolution adopted the 8 day of January, 2007.
______________________________________
City Recorder