MEMORANDUM

TO: Timothy Navarre, Assembly President

Members, Kenai Peninsula Borough Assembly

THRU: Dale Bagley, Mayor

FROM: Jeff Sinz, Finance Director

Colette Thompson, Borough Attorney

DATE: September 28, 2001

SUBJECT: Ordinance 2001-35 authorizing the Kenai Peninsula Borough School District to incur debt on behalf of the borough, subject to certain limitations

The accompanying ordinance is proposed to clarify the authority of the school district to issue debt on behalf of the borough and to establish the general process for approval necessary for such issuance. Currently, the school district is attempting to finance the acquisition of approximately $600,000 worth of copiers and associated equipment. After review of the applicable Internal Revenue Code sections by bond counsel, it was determined that the school district does not satisfy the federal requirements for the issuance of tax-exempt debt. However, the Internal Revenue Code provides that entities such as the school district may issue tax-exempt debt if it does so on behalf of and with approval of an entity with the authority, such as the borough. In order to clarify that the school district has been granted the authority to issue debt on behalf of the borough and to establish a procedure for granting approval of specific instances of debt issuance, the administration requests that the assembly enact this ordinance. It would require the school board and the assembly approve each specific instance involving the issuance by the school district of debt on behalf of the borough.

Hearing on shortened time is requested because the school district is currently attempting to finance the proposed purchase of these copiers. The administration expects to provide the assembly with a resolution approving this specific debt issuance subject to prior approval by the school board at the October 23, 2001 assembly meeting.