Agenda Item # 12
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Date: |
August 30, 2004 |
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Committee Meeting Date: |
September 16, 2004 |
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Board Meeting Date: |
October 7, 2004 |
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ACTION
X
DISCUSSION
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| INFO
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BOARD MEMORANDUM
| TO: |
Administration and Finance Committee |
| | Santa Clara Valley Transportation Authority |
| | Board of Directors |
| | | | THROUGH: | Peter M. Cipolla |
| | General Manager |
| | | | FROM: | Roger Contreras |
| | Chief Financial Officer |
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| SUBJECT: |
Reimbursement Resolution |
RECOMMENDATION:
Adopt a resolution to preserve the right to use tax-exempt bond proceeds to reimburse the Santa Clara Valley Transportation Authority (VTA) for costs incurred for capital projects and equipment purchases, if VTA, at a future date, decides to issue bonds.
BACKGROUND:
Treasury Regulations Section 1.150-2 regulates the use of proceeds of bonds issued after June 30, 1993 to reimburse costs paid before the issue date of such bonds. Generally, a cost may be reimbursed only if it is extraordinary working capital expenditure and only if the cost is described in a proper declaration of official intent as further discussed below.
The declaration must be adopted no later than 60 days after the cost to be reimbursed is paid. Bond proceeds must be used to reimburse a cost no later than 18 months after the later of: 1) the date the cost is paid, or 2) the date the project is placed in service (but in no event more than 3 years after the cost is paid).
Previous reimbursement resolutions were adopted in March 1997, May 1999, October 2000, and most recently in June 2002. With these reimbursement resolutions, VTA was able to issue tax-exempt sales tax bonds in 1998, 2000 and 2001 to finance expenditures incurred after the reimbursements resolutions were adopted.
DISCUSSION:
Expenditures made before the issuance of bonds are generally not eligible for reimbursement from the proceeds of such bonds unless such expenditures were made in anticipation of being reimbursed with such process. The primary purpose of the “reimbursement resolution” is to evidence such anticipation and intent.
The resolution does not compel VTA to issue bonds or to take any other action. The resolution merely preserves VTA’s right to issue bonds later and recapture the funds advanced in anticipation of bond issuance.
ALTERNATIVES:
The Board could opt not to adopt a reimbursement resolution; however, this would preclude us from being able to recover expenditures incurred in support of the capital improvements program or the advancement of Valley Transportation Plan 2030 Transit Projects.
FISCAL IMPACT:
There are no budget or fiscal impacts associated with approving the reimbursement resolution. If it appears advantageous to issue bonds, that action will come to the Board for separate consideration and approval.
CONTACT THE OFFICE OF THE BOARD SECRETARY FOR ATTACHMENT.
| Prepared by: | Kimberly Koenig |
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