PRESENTER: Presenter
Jessica Williams, Chief Financial Officer (NBU)
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SUBJECT: Title
Discuss and consider a resolution declaring expectation to reimburse expenditures with proceeds of future debt for the acquisition, construction, and equipping of the new headquarter buildings and facilities to be occupied and used by New Braunfels Utilities. The maximum principal amount of obligations expected to be issued for the project is $190,000,000.
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DEPARTMENT: NBU
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COUNCIL DISTRICTS IMPACTED: All
BACKGROUND INFORMATION:
New Braunfels Utilities (“NBU”) may incur costs for capital projects, such as engineering, land acquisition, and construction, prior to issuing long-term debt. To preserve the ability to reimburse these expenditures with tax-exempt bond proceeds, federal regulations require formally declaring its intent to do so. Specifically, under U.S. Treasury Regulation § 1.150-2, issuers must adopt a resolution generally within 60 days of the original expenditure. This resolution allows the City to later reimburse itself from bond proceeds, provided additional timing and eligibility requirements are met. Reimbursement generally must occur within 18 months after the latter of (1) expenditure date or (2) the date the project is placed in service. This action does not authorize the issuance of debt. The Bond issuance will require separate Council approval.
New Braunfels Utilities (“NBU”) adopted a 2026 Capital Improvement Plan that includes the new headquarters (“HQ”) project and has already begun construction. NBU plans to issue revenue bonds to fund the HQ project. NBU has made and will make certain capital expenditures with respect to the HQ project prior to issuance and desires and expects to reimburse the capital expenditures with proceeds of the revenue bonds. The maximum principal amount of the revenue bonds expected to be issued for the HQ project is $190 million. The target for council approval of the revenue bonds is the May 2026 City Council meeting.
ISSUE:
N/A - the reimbursement resolution is inline with NBU’s financing strategy for this project.
STRATEGIC PLAN REFERENCE:
☐Economic Mobility ☐Enhanced Connectivity ☐Community Identity
☒Organizational Excellence ☐Community Well-Being ☐N/A
FISCAL IMPACT:
There is no immediate financial impact associated with this action. The resolution preserves the ability to reimburse project expenditures from future bond proceeds, subject to subsequent council approval of the debt issuance.
Recommendation
RECOMMENDATION:
NBU staff recommend approval of the resolution.