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RESOLUTION AUTHORIZING INTERFUND LOAN FROM THE GENERAL FUND TO THE CAPITAL IMPROVEMENT FUND IN AN AMOUNT OF $1,963,768 TO PROVIDE FINANCING FOR LAKE FRONT RESTORATION PROJECTS.
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CITY PROPOSAL:
BE IT RESOLVED, by the city council (the “Council”) of the city of Duluth, St. Louis County, Minnesota (the “City”), as follows:
Section 1. Purpose.
1.01 The City has received approval from the U.S. Department of Commerce, Economic Development Administration, for a grant in the amount of $4,938,067 for the reconstruction of the seawall adjacent to the Duluth Entertainment Convention Center (the “EDA Grant”).
1.02 The City has also been awarded a grant in the amount of $13,500,000 from the State of Minnesota pursuant to Minnesota Laws 2020, 5th Special Session, Chapter 3, Article 1, Section 21, Subdivision 16 for seawall and lakewalk infrastructure with related surface improvements, along the shore of Lake Superior (the “State Grant”).
1.03 The City has appropriated $700,000 of the 2023 Budgeted Street Preservation Projects in the Street Improvement Fund (the “Street Improvement Fund”) to fund improvements to Harbor Drive which is a portion of the Project, as hereinafter defined.
1.04 The estimated cost to finance the City’s Lake Front restoration project, which includes (i) the seawall restoration adjacent to the Duluth Entertainment and Convention Center and the Great Lakes Aquarium and related adjacent surface improvements; (ii) Brighton Beach restoration and related adjacent improvements and (iii) additional lakewalk restoration (collectively, the “Project”), is $21,101,835 to be funded with the proceeds of the EDA Grant, the State Grant, the Street Improvement Fund, and additional City funds in the amount of $1,963,768 (the “Additional City Funds”).
1.05 The City’s plan of finance for its share of the costs of the Project represented by the Additional City Funds is (i) to provide construction financing through an interfund loan as set forth in Section 2 hereof and (ii) to provide long term financing through the City’s issuance of general obligation bonds issued pursuant to Minnesota Laws 1974, Chapter 130 to be issued prior to December 31, 2023.
Section 2. Authorization of Interfund Loan.
2.01 The Council hereby authorizes and directs an interfund loan from the General Fund, undesignated fund balance, to a lake fund restoration account in the capital improvement fund (the “Project Fund”) in the amount of $1,963,768. Funds in the Project Fund may only be used for costs of the Project. The General Fund shall be repaid with proceeds of the general obligation bonds described in Section 1.05.
2.02 This resolution and the interfund loan shall be effective as of the date of approval of this resolution.
Statement of Purpose
STATEMENT OF PURPOSE: This resolution authorizes a short-term interfund loan from the General Fund undesignated fund balance to a lake front restoration account in the capital improvement fund to provide the City’s construction financing for the lake front restoration projects. The plan is to issue general obligation bonds to provide long term financing for the City’s share of the Project Costs; such issuance to occur later in 2023. Proceeds of the bond issue will repay the outstanding balance of the interfund loan by year-end 2023.