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<br />I~ <br />I. CITY OF ARDEN HILLS <br />I MEMORANDUM <br /> DATE: April 11, 1997 <br />I TO: Mayor and City Council <br /> Brian Fritsinger, City Administrat~ <br />I FROM: <br /> SUBJECT: Resolution #97-19, Bond Reimbursements <br />I Background <br />I As the City prepares to undertake the redevelopment of the Gateway Business District, staff has <br /> begun investigating the various items related to the issuance of a General Obligation Tax <br /> Increment Financing Bond. Because of the wide variety of bills which affect the use of TIF <br />I currently being discussed by the State Legislature, staff does not anticipate detailed discussions <br /> on the issuance of bonds to occur until later this spring. <br />I However, the redevelopment of the Gateway Business District is underway with construction of <br /> the Welsh Development project. In order to accommodate Phases II, III and IV, the City will <br /> need to prepare for the relocation of streets and utilities. This process will involve a variety of <br />.. engineering, financial, legal, personnel hours, land acquisitions, and some construction costs. <br /> Many of the costs associated with these activities will be incurred prior to the issuance of any <br /> bonds. <br />I Can the City Reimburse Itself for These Expenditures? <br /> The IRS allows for the proceeds of the bonds to be used to reimburse the City for any <br />I expenditure paid by the City prior to the time of the issuance of those bonds. IRS regulations <br /> require the City to make a prior declaration of its official intent to reimburse itself for such prior <br />I expenditures out ofthe proceeds. <br /> What is the Estimated Size of the ProDosed Bond Issue? <br />I At this time, it is unknown as to what the size of the bond issue will be. Based on the <br /> preliminary numbers provided by Welsh for Phases I, II and III, the type of bond to be issued <br /> (taxable or tax-exempt), and the level of improvements necessary, the bond could be as large as <br />I $4.1 million. The completion of the feasibility study will start to clarify the costs of the project <br /> and approximate bonding needs. <br />I What is the Estimated Amount ofthe Bond to be Expected to be Reimbursed? <br /> It is difficult to determine the amount of expenditures to be incurred prior to the issuance of any <br /> bond. However, based on the status of the project and the activities at the legislature, it is safe to <br />I assume the City will incur fairly large expenditures. Staff would estimate the amount to be <br /> reimbursed not to exceed $500,000. <br />,. <br />I <br />