TO: Members of the City Council
FROM: Mayor Angela Birney
DEPARTMENT DIRECTOR CONTACT(S):
|
Finance |
Kelley Cochran |
425-556-2748 |
DEPARTMENT STAFF:
|
Finance |
Adam O’Sullivan |
Treasury Manager |
|
Finance |
Blake Ruiz |
Senior Financial Analyst - Capital |
TITLE:
title
Adoption of a Capital Project Bond Reimbursement Resolution
a. Resolution No. 1624: A Resolution of the City of Redmond, Washington, Declaring Its Intent that Certain Capital Expenditures to be Made Shall be Reimbursed from the Proceeds of Tax-Exempt Bonds or Other Obligations
OVERVIEW STATEMENT:
recommendation
Adopt a resolution authorizing the City to reimburse certain capital investment expenditures from the proceeds of a future sale of bonds. The adoption of the resolution permits the City to comply with IRS regulations but does not obligate the City with regard to the sale or structure of the bonds.
☒ Additional Background Information/Description of Proposal Attached
REQUESTED ACTION:
☐ Receive Information ☐ Provide Direction ☒ Approve
REQUEST RATIONALE:
• Relevant Plans/Policies:
N/A
• Required:
Treasury Regulation Section 1.150-2
• Council Request:
N/A
• Other Key Facts:
N/A
OUTCOMES:
A reimbursement resolution allows the City to use its own money to pay for project costs upfront and later reimburse itself with tax-exempt bond proceeds, in compliance with Internal Revenue Service (IRS) requirements. Reimbursement resolutions are necessary because capital projects frequently begin before bonds are issued. Specifically, a reimbursement resolution:
• Preserves the ability to use tax-exempt bond proceeds later
• Provides official documentation of intent
• Helps comply with U.S. Treasury regulations (specifically Treasury Regulation §1.150-2)
If the resolution is not adopted in a timely manner, the City may lose the ability to reimburse itself from future tax-exempt bond proceeds.
The City anticipates expenditures associated with the early phases of these projects, including property and/or right-of-way acquisitions and design work, will occur prior to the issuance of the related bonds. In some cases, these early expenditures have already begun to be incurred.
When expenditures are incurred prior to the issuance of related debt, IRS regulations require the City to formally declare its intent to reimburse those expenditures with future bond proceeds. The proposed resolution satisfies this requirement; however, it does not obligate the City to issue bonds. Additionally, the resolution does not determine or limit the principal amount of bonds that may ultimately be issued. Instead, it establishes a maximum estimated reimbursement amount to preserve flexibility and ensure adequate capacity under a range of potential financing scenarios.
COMMUNITY/STAKEHOLDER OUTREACH AND INVOLVEMENT:
• Timeline (previous or planned):
N/A
• Outreach Methods and Results:
N/A
• Feedback Summary:
N/A
BUDGET IMPACT:
Total Cost:
N/A
Approved in current biennial budget: ☐ Yes ☒ No ☐ N/A
Budget Offer Number:
N/A
Budget Priority:
Strategic and Responsive
Other budget impacts or additional costs: ☐ Yes ☐ No ☒ N/A
If yes, explain:
N/A
Funding source(s):
N/A
Budget/Funding Constraints:
N/A
☐ Additional budget details attached
COUNCIL REVIEW:
Previous Contact(s)
|
Date |
Meeting |
Requested Action |
|
2/24/2026 |
Study Session |
Provide Direction |
|
3/10/2026 |
Committee of the Whole - Finance, Administration, and Communications |
Provide Direction |
Proposed Upcoming Contact(s)
|
Date |
Meeting |
Requested Action |
|
N/A |
None proposed at this time |
N/A |
Time Constraints:
Adoption of this resolution now will ensure that expenses can be reimbursed from a future bond issuance. A delay in adopting the resolution will mean that the recent expenses will not be able to be reimbursed from the bond issue.
ANTICIPATED RESULT IF NOT APPROVED:
Expenses paid will not be reimbursable.
ATTACHMENTS:
Attachment A: Reimbursement Resolution