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-4, P I <br />�- ✓a a.�m+fys;a fficTM' . <br />REPOR- <br />t ; <br />To th'# # e ency Bo (� a y� / <br />March 24, 2003 <br />Subject <br />Downtown Culvert Relocation <br />Recommendation <br />It is recommended that the Redevelopment Agency adopt a resolution that will preserve <br />the Agency's ability to finance the culvert relocation project with tax exempt debt. <br />Background <br />The Redevelopment Agency is currently relocating the downtown storm drain culvert that <br />crosses Block No. 2 as part of the construction of an underground public parking structure <br />related to the downtown retail /cinema project. The estimated cost of the culvert relocation <br />project is $3.7 million. <br />Prior to issuing tax exempt debt, the Agency may incur project costs that it may ultimately <br />want to recover from the issuance of tax exempt debt. U.S. Treasury Department <br />regulations require that the governing body of the tax exempt debt issuer adopt a <br />"reimbursement resolution" in advance of expending such amounts should the issuer <br />_ desire to recover those amounts from the issuance of tax exempt debt. Generally, any <br />"soft" costs such as design and engineering costs may be reimbursed from tax exempt <br />debt issued without adopting a reimbursement resolution, while "hard" costs such as <br />construction costs expended before tax exempt debt is issued may only be recovered if a <br />"reimbursement resolution" is adopted prior to their expenditure. <br />To provide the Agency with the maximum flexibility to issue tax exempt debt, the project <br />estimate in the attached resolution has been established at the upper end of the project <br />cost estimate ($4.5 million) and, in fact, exceeds the engineer's estimate of $3.7 million. <br />Alternative <br />The Agency may elect not to adopt this resolution. Should the Agency not adopt this <br />resolution, this project's financing will rely more upon loans from other City funds and less <br />upon tax exempt debt. This, however, might restrict the scope and timing of other projects <br />that the Agency and the City is contemplating. <br />Fiscal Impact <br />There are no additional costs generated by adopting this resolution as the Agency Board is <br />not approving this project by this action. By adopting this resolution, the Agency Board is <br />merely preserving the option to reimburse the Agency for eligible costs that are incurred <br />prior to the issuance of tax ex pt debt, but does not commit the ency to doing so. <br />Brian Ponty Michael Church Edward verett <br />Director of Finance and Executive Director City Manager <br />Financial Planning <br />