HomeMy WebLinkAboutResolution No. 2009-72f{rr, ti(y of
KENA ALASKA
CITY OF KENAI
RESOLUTION NO. 2009 -72
Suggested by: Administration
A RESOLUTION OF THE CITY OF KENAI, ALASKA, REQUESTING THE KENAI
PENINSULA BOROUGH TO ALLOCATE $2,000,000 OF ITS VOLUME CAP OF
RECOVERY ZONE ECONOMIC DEVELOPMENT BONDS TO THE CITY OF KENAI FOR
ISSUANCE TO FUND THE CITY'S LIBRARY EXPANSION PROJECT.
WHEREAS, the American Recovery and Reinvestment Act of 2009 added 1400U -1
through 1400U -3 to the Internal Revenue Code authorizing state and local
governments to issue up to $10 billion in Recovery Zone Economic Development
Bonds "RZEDBs and,
WHEREAS, the Internal Revenue Service has allocated RZEDBs among the states and
counties and large municipalities; and,
WHEREAS, the Internal Revenue Service by Announcement 50 -2009 has allocated
$4,877,000 of RZEDB volume cap to the Kenai Peninsula Borough "Borough and,
WHEREAS, the Internal Revenue Service has determined that counties and large
municipalities to which RZEDB volume cap has been allocated may allocate such
volume cap to ultimate beneficiaries in any reasonable manner as they shall determine
in good faith in their discretion; and,
WHEREAS, the City of Kenai "City is requesting the Kenai Peninsula Borough re-
allocate $2,000,000 of the Borough's RZEDB volume cap to the City for the financing
of the City's library expansion project; and,
WHEREAS, the voters of the City have authorized the City to issue up to $2,000,000 of
general obligation debt to finance the City's library expansion project, it appears that
the project would qualify for financing with RZEDBs, and allocation of $2,000,000 of
the Borough's RZEDB volume cap to the City for that purpose would be in the best
interest of the City and its residents.
NOW, THEREFORE, BE IT RESOLVED BY THE COUNCIL OF THE CITY OF KENAI,
ALASKA:
SECTION 1: The City requests the Borough to allocate S2,000,000 of the Borough's
RZEDB volume cap to the City of Kenai for the financing of the City's
library expansion project.
SECTION 2: The City Manager hereby is authorized, empowered and directed to do all
acts and things and to execute all documents as may be necessary to
carry out and comply with the provisions of this resolution.
SECTION 3: This resolution shall become effective immediately upon adoption.
Resolution No. 2009 -72
Page 2 of 2
PASSED BY THE COUNCIL OF THE CITY OF KENAI, ALASKA, this 16th day of
December, 2009.
ATTEST:
Carol L. Freas, City Clerk
Approved by Finance:
PAT PORTER, MAYOR
New Text Underlined [DELETED TEXT BRACKETED]
From: Terry Eubank, Finance Director
Date: December 7, 2009
Re: Recovery Zone Economic Development Bonds
i
the city of
KENAI, ALASKA
To: Rick Koch, City Manager
"Village with a Past, Gity with a Future
FINANCE DEPARTMENT
210 Fidalgo Avenue, Kenai, Alaska 99611 -7794
Telephone: 907 283 -7535 ext 221 FAX: 907 283 -3014
As part of the American Recovery and Reinvestment Act (ARRA) the Kenai Peninsula Borough
has been allocated the right to issue up to $4,877,000 of Recovery Zone Economic Development
Bonds. The entire State of Alaska was allocated $90,000,000. The allocation areas were
determined by the Internal Revenue Service. As a jurisdiction within the Kenai Peninsula
Borough, the Borough can allocate all or a portion of its bond allocation to City.
Recovery Zone Economic Development Bonds are taxable bonds that governmental entities may
issue on which the Federal Government has promised reimbursement of 45% of the bonds'
interest payments. This structure has proven to reduce the effective interest rate on bonds issued
by governments below that of traditional tax exempt bond issuances.
It appears the City Library Expansion Bonds will be a good fit for this program. In order to
explore this option the City is requesting the Kenai Peninsula Borough allocate $2,000,000 of its
$4,877,000 bond allocation to the City. This will allow the City to move forward with the
project's debt issuance as construction is planned for spring 2010.
Estimated savings to the City for issuance of Recovery Zone Economic Development Bonds
versus traditional tax exempt municipal bonds is $424,640 for a 20 year bond. The present value
of that savings is $265,605 discounted at 5
Attached is a draft resolution, prepared by the City's Bond Counsel, that will be submitted to the
Kenai Peninsula Borough with the passage of this resolution. The draft resolution provides the
necessary legal language for the Borough to allocate the City its desired bond allocation.
Attachment
RESOLUTION 2009-
Introduced by:
Date:
Action:
Vote
KENAI PENINSULA BOROUGH
A RESOLUTION ALLOCATING $2,00 OF RECOVERY ZONE ECONOMIC
DEVELOPMENT BOND VOLUME CAP TO THE CITY OF KENAI
Mayor
WHEREAS, the American Recovery and Reinvestment Act of 2009 added 1400U -1
through 1400U -3 to the Internal Revenue Code authorizing state and local
governments to issue Recovery Zone Economic Development Bonds
"RZEDBs and
WHEREAS, the volume of RZEDBs that may be issued is limited to $10 billion, which the
Internal Revenue Service has allocated among the states and counties and large
municipalities; and
WHEREAS, the Internal Revenue Service by Announcement 50 -2009 has allocated $4,877,000
of RZEDB volume cap to the Kenai Peninsula Borough "Borough and
WHEREAS, the Internal Revenue Service has determined that counties and large
municipalities to which RZEDB volume cap has been allocated may allocate such
volume cap to ultimate beneficiaries in any reasonable manner as they shall
determine in good faith in their discretion; and
WHEREAS, the City of Kenai "City has requested that the Borough allocate $2,000,000 of
the Borough's RZEDB volume cap to the City for the financing of the City's
library expansion project; and
WHEREAS, it appears that the City's library expansion project would qualify for financing
with RZEDBs, and that the allocation of $2,000,000 of the Borough's RZEDB
volume cap to the City for that purpose would be in the best interest of the
Borough and its residents.
NOW, THEREFORE, BE IT RESOLVED BY THE ASSEMBLY OF THE KENAI
PENINSULA BOROUGH:
SECTION 1. The Borough hereby allocates $2,000,000 of the Borough's RZEDB volume cap
to the City of Kenai for the financing of the City's library expansion project.
Resolution 2009
Page 2 of 3
Kenai Peninsula Borough, Alaska
SECTION 2. The Mayor hereby is authorized, empowered and directed to do all acts and things
and to execute all documents as may be necessary to carry out and comply with
the provisions of this resolution.
SECTION 3. This resolution shall become effective immediately upon adoption.
ADOPTED BY THE ASSEMBLY OF THE KENAI PENINSULA BOROUGH THIS
DAY OF DECEMBER 2009.
ATTEST:
Johni Blankenship, Borough Clerk
Yes:
No:
Absent:
Resolution 2009
Page 3 of 3
Milli Martin, Assembly President
Kenai Peninsula Borough, Alaska