2002R14- PRIOR LAWFUL EXPENDITURE OF FUNDS
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A RESOLUTION RELATING TO ESTABLISHING THE CITY'S
INTENTION TO REIMBURSE ITSELF FOR THE PRIOR LAWFUL
EXPENDITURE OF FUNDS FROM THE PROCEEDS OF OBLIGATIONS
TO BE ISSUED BY THE CITY FOR AUTHORIZED PURPOSES;
AUTHORIZING MATTERS INCIDENT AND RELATED THERETO; AND
PROVIDING AN EFFECTIVE DATE
WHEREAS, the City Council (the Governing Body) ofthe City of Schertz, Texas (the Issuer)
has entered into or will enter into various contracts pertaining to the expenditure of lawfully
available funds of the Issuer to finance the costs associated with (i) (a) renovating, improving, and
equipping a fire substation, (b) constructing streets and drainage improvements, (c) acquisition of
land for municipal purposes, (d) acquisition of equipment for public safety, drainage, and street
improvement purposes, (e) constructing improvements to the municipal swimming pool,
(t) acquisition of vehicles for animal control and public safety (the Construction Costs); (ii) the
payment of various engineering costs, including design testing, design engineering, and construction
inspection related to the Construction Costs (the Engineering Costs), (iii) the payment of various
architectural costs, including preparation of plans and specifications and various other plans and
drawings related to the Construction Costs (the Architectural Costs), and (iv) the payment of various
administrative costs, including the fees of bond counsel, financial advisor, other professionals, and
bond printer (the Administrative Costs) [the Construction Costs, Engineering Costs, the Architectural
Costs, and Administrative Costs collectively constitute costs of the project (the Project)]; and
WHEREAS, the provisions of Section 1201.042, as amended, Texas Government Code
(formerly Section 7(b) of Texas Revised Civil Statutes Annotated Article 717k-6, as amended)
provide that the proceeds from the sale of obligations issued to finance the acquisition, construction,
equipping, or furnishing of any project or facilities, such as the Project, may be used to reimburse
the Issuer, for costs attributable to such project or facilities paid or incurred before the date of
issuance of such obligations; and
WHEREAS, the United States Department of Treasury (the Department) released Regulation
Section 1.150-2 (the Regulations) which establishes when the proceeds of obligations are spent and
therefore are no longer subject to various federal income tax restrictions contained in the Internal
Revenue Code of 1986, as amended (the Code); and
WHEREAS, the Issuer intends to reimburse itself, within eighteen months from the later of
the date of expenditure or the date the property financed is placed in service (but in no event more
than three years after the original expenditures is paid), for the prior lawful capital expenditure of
funds from the proceeds of one or more series of tax-exempt obligations (the Obligations) that the
Issuer currently contemplates issuing in an approximate amount of$3,750,000 to finance a portion
of the costs of the Project; and
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WHEREAS, under the Regulations, to fund such reimbursement with proceeds of the
Obligations, the Issuer must declare its expectation ultimately to make such reimbursement before
making the expenditures; and
WHEREAS, the Issuer hereby finds and determines that the reimbursement for the prior
expenditure of funds of the Issuer is not inconsistent with the Issuer's budgetary and financial
circumstances; and
WHEREAS, the Governing Body hereby finds and determines that the adoption of this
Resolution is in the best interests of the citizens of the Issuer; now, therefore,
BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF SCHERTZ, TEXAS
THAT:
SECTION 1: This Resolution is a declaration of intent to establish the Issuer's reasonable,
official intent under section 1.150-2 of the Regulations to reimburse itself from certain of the
proceeds ofthe Obligations for any capital expenditures previously incurred (not more than 60 days
prior to the date hereof) with respect to the Project from the Issuer's General Fund.
SECTION 2: The Issuer intends to issue the Obligations and allocate within 30 days after
the date of issue of the Obligations the proceeds therefrom to reimburse the Issuer for prior lawful
expenditures with respect to the Project in a manner to comply with the Regulations.
SECTION 3: The reimbursement expenditure will be a type properly chargeable to a capital
account (or would be so chargeable with a proper election) under general Federal income tax
principles.
SECTION 4: The Issuer intends to otherwise comply with all the requirements contained
in the Regulations.
SECTION 5: This Resolution may be relied upon by the appropriate officials at the Office
of the Attorney General for the State of Texas and establishes compliance by the Issuer with the
requirements of Texas law and the Regulations.
SECTION 6: With respect to the proceeds of the Obligations allocated to reimburse the
Issuer for prior expenditures, the Issuer shall not employ an abusive device under Treasury
Regulation Section 1.148-10, including using within one year of the reimbursement allocation, the
funds corresponding to the proceeds of the Obligations in a manner that results in the creation of
replacement proceeds, as defined in Treasury Regulation Section 1.148-1, of the Obligations or
another issuer of tax-exempt obligations.
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SECTION 7: The recitals contained in the preamble hereof are hereby found to be true, and
such recitals are hereby made a part ofthis Resolution for all purposes and are adopted as a part of
the judgment and findings of the Governing Body.
SECTION 8: All orders and resolutions, or parts thereof, which are in conflict or
inconsistent with any provision ofthis Resolution are hereby repealed to the extent of such conflict,
and the provisions of this Resolution shall be and remain controlling as to the matters resolved
herein.
SECTION 9: This Resolution shall be construed and enforced in accordance with the laws
ofthe State of Texas and the United States of America.
SECTION 10: If any provision ofthis Resolution or the application thereofto any person or
circumstance shall be held to be invalid, the remainder ofthis Resolution and the application of such
provision to other persons and circumstances shall nevertheless be valid, and the Governing Body
hereby declares that this Resolution would have been enacted without such invalid provision.
SECTION 11: It is officially found, determined, and declared that the meeting at which this
Resolution is adopted was open to the public and public notice ofthe time, place, and subject matter
ofthe public business to be considered at such meeting, including this Resolution, was given, all as
required by Chapter 551, as amended, Texas Government Code.
SECTION 12: This Resolution shall be in force and effect from and after its final passage,
and it is so resolved.
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PASSED, ADOPTED AND APPROVED on this the 13th day of November, 2002.
Mayor
ATTEST:
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City Secretary
(CITY SEAL)
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November 8,2002
To: Mayor and City Council 1Y7_ ./
From: Mark Marquez, City Manager If prvt
Subject: Reimbursement Resolution
The attached reimbursement resolution is intended to recover current costs
associated with several capital projects and equipment purchase in this fiscal
year.
~sws
~ SECURITIES
November 1, 2002
Mr. Mark Marquez
City Manager
City of Schertz
1400 Schertz Parkway (78154)
Post Office Drawer I
Schertz, Texas 78154-0890
Re: City of Schertz, Texas
Certificates of Obligation, Series 2003
Dear Mark:
In accordance with the above, please find enclosed as Exhibit A to this letter the agenda
language to be used in preparing the agenda for the November 13, 2002 meeting of the
City Council. Thank you for ensuring that this agenda item is posted in accordance with
the provisions of the Texas Open Meetings Act.
We are also enclosing a copy of the Reimbursement Resolution for inclusion in the
Agenda Packets of the City Council.
If you have any questions or require additional information, please do not hesitate to call
me at 226-8677.
Mar . McLiney
Senior Vice President
MMMc/rgj
Enclosures
cc: Mr. Michael Spain, City Attorney, City of Schertz
SWS Securities. Inc. . 711 Navarro. Suite 490 . San Antonio. Texas 78205.210.226.8677 . WWW.swst.com
MEMBER: NEW YORK STOCK EXCHANGE
EXHIBIT A
CONSIDERATION AND APPROVAL OF A RESOLUTION RELATING TO
ESTABLISHING THE CITY'S INTENTION TO REIMBURSE ITSELF FOR THE PRIOR
LAWFUL EXPENDITURE OF FUNDS FROM THE PROCEEDS OF OBLIGATIONS TO
BE ISSUED BY THE CITY FOR AUTHORIZED PURPOSES; AUTHORIZING
MATTERS INCIDENT AND RELATED THERETO; AND PROVIDING AN EFFECTIVE
DATE