Suzy Ageton George Karakehian KC Becker Tim ... - City of Boulder

COMMUNITY SUSTAINABILITY ASSESSMENTS AND IMPACTS:
Passage of the reimbursement resolution will have no economic, environmental or social impacts
on residents of the city. It is an administrative requirement by the Internal Revenue Service
(IRS) to allow entities to recoup funds spent prior to issues of bonds. The impacts in each of the
areas will be covered when the notice of sale is brought before the city council for action.
OTHER IMPACTS:
Fiscal: The issuance of the bonds will be used to fund various capital improvements and
expenditures. Expenses incurred prior to the issuance of the bonds can be reimbursed from bond
proceeds. This allows start-up costs to be recaptured by the city and minimizes initial cash flow
problems.
Staff time: This is a routine aspect of bond issuance and requires minimal effort. Therefore, the
work will be absorbed as a part of staff’s normal workload.
BACKGROUND AND ANALYSIS:
When the City of Boulder issues bonds they are tax exempt from both state and federal taxes.
However, to maintain this tax exempt status there are strict guidelines on how much time is
allowed to spend tax exempt bond proceeds (85% within three years from date of bond
issuance). The passage of a reimbursement resolution is permitted in the tax code of the IRS.
This conformance process allows the city to incur and recoup expenses made up to sixty days
before the passage of the resolution, and the reimbursed costs count toward the 85% expenditure
rule. It is a common practice used by tax exempt entities who will be issuing debt.
Approved By:
______________________
Jane S. Brautigam,
City Manager
ATTACHMENTS:
A. Resolution
Agenda Item 3G Page 2