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HomeMy WebLinkAbout1985-07-18 Minutes228 MINUTES OF A SPECIAL MEETING OF THE BOARD OF DIRECTORS • A special meeting of the Fayetteville City Board of Directors was held on Thursday, July 18, 1985, in Room 326 of City Hall, 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Assistant Mayor Johnson; Directors Bumpass, Lancaster and Martin; City Attorney McCord, City Clerk Kennedy, Finance Director Linebaugh; members of the press and audience ABSENT: Mayor Noland; Directors. Hess and Orton The meeting was called to order at 9:50 A.M. by Assistant Mayor Johnson, with four Directors present. 226.1 The City Attorney explained that the purpose of the special meeting was to consider passage of an ordinance to authorize the financing for the city's Wastewater Treatment Plant system improvements. McCord noted that present on behalf The Rose Law Firm (bond counsel) was Les Baledge; representatives present for the city's underwriter, A. G. Ed- wards, were Chuck Devers, Bill Bonskowski, Don Trumbo and Bill Conrad; and representing the Local Bank Committee was Bill Gould, of Mcllroy Bank. 226.2 McCord noted a review of the financing structure by the Local Bank Committee took place yesterday; that the proposed financing structure comes before the Board with the unanimous recommendation of that committee. 226.3 McCord pointed out that, since only four Board members were present, the ordinance must be read at three separate meetings. 226.4 Les Baledge explained the ordinance would provide for the issuance and sale of $21,725,000 in Sales and Use Tax Capital Improvement Bonds. Baledge explained the ordinance, when adopted, will accept the bid of A. G. Edwards and Sons to purchase the bonds, will authorize the execution and delivery of the Bond Purchase Agreement with A. G. Edwards, will authorize the execution and delivery of the bonds themselves, will ratify the use of a Preliminary Official Statement and Final Official Statement in connection with the offer and sale of the obnds, and will direct disposition of previous sales tax moneys received by the city in a manner consistent with the city's power to use those funds. ,:226.5 Because there were not a sufficient number of, Directors present to adopt an emergency clause as part of the ordinance, and because the ordinance would not be immediately effective after this meeting, Baledge July 18, 1985 proposed that a resolution be adopted authorizing and empowering the Assistant Mayor and City Clerk to execute the Bond Purchase Agreement. Baledge stated he believed the proposed financing to be unique to the State of Arkansas. Baledge stated The Rose Firm had prepared the ordinance, the Trust Indenture and parts of the Official Statement, as well as having reviewed the Bond Purchase Agreement and the balance of the Official Statement. Baledge stated it is the firm's opinion that the transaction will be in compliance with the State. law, including 171 Amendment 62, Act 871 and the previous ordinance of the city; that .O the bonds will be in compliance with federal tax laws and Section 103 of the Internal Revenue Code. Baledge stated the bonds are expected to be. ready for delivery around August 22 and after the expiration of the referendum period. czt • 227 227.1 227.2 Chuck Devers reviewed for the Board the "Market Report and Analysis 227.3 of Pricing" prepared by A. G. Edwards and Sons. Revers reported that Moody's Investors Service had given the Series A bonds an "A" rating. Devers stated the net effective cost of borrowing will be a function of how well the sales tax continues to be collected .in the future, and what kind of returns the city realizes on the "Invested Sinking Fund". Devers reported that it is projected the sales tax will be eliminated and the bonds fully repaid by August of 1991. Devers noted that the net effective cost of borrowing to the City is expected to be approximately 5.98%. In answer to a question from Director Bumpass, Bill Bonskowski explained that, if the sales tax grows at a much faster rate than has been realized, the city will build up more surplus in the sinking fund, there is more money to invest, and conceivably all the bonds could be called in 1990. Devers reviewed Tables which provided models of the anticipated behavior of the Sales and Use Tax and the Bond issue under various economic conditions. Director Johnson raised the point that EPA grants which are anticipated to be received will have an impact on when the sales tax will be lifted. Finance Director Linebaugh explained that, if extra grants are received, those funds must be used to pay off the older water and sewer revenue bond issues. Director Martin asked if the type of financing structure had any effect onthe lower "A" rating which was received. Baledge stated the financing structure did not affect the rating - that it was within the "temporary period investment funds" permitted by the arbitrage regulations. • 227.4 227.5 227.6 227.7 227.8 • 228 July 18, 1985 Chuck Devers pointed out that the rating assigned was within "half a notch" of what the full faith and credit general obligation debt is for the State of Arkansas. In answer to Director Martin, Devers stated limited city obligation bonds are never rated higher than State G.O. obligation bonds. In answer to a question from City Attorney McCord, Devers stated the "A" rating did not have a substantial adverse impact on the interest rate. Devers noted that local support for 'the bond issue was overwhelming and reported that over $6 million of the bonds were sold from Fayetteville. Devers reviewed the proposed terms of the bond sale and a comparison of other issues in the market. Devers pointed out one reason the effective borrowing cost is less than the average coupon interest rate is that the bonds are not expected to be outstanding until 1997, because of the.sinking fund. - Devers reported the proposed Underwriter's Discount to be $18.25 per $1,000 of bonds sold, which he stated is lower than what was initially proposed. The City Attorney read the ordinance for the first time: Director.Bumpass made a motion to pass a resolution authorizing and directing the !acceptance of the purchase offer by A. G. Edwards & Sons., Inc., St. Louis, Missouri, pursuant to the bond purchase agreement, to purchase the Series 1985 bonds at a price of $21,238,518.75, at 98.175 per cent of the principal amount of the issue, plus accrued interest thereon from August 15, 1985 to the date of delivery thereof; further, that the resolution should authorize the execution of the Agreement in substantially the form approved by ordinance by the Assistant Mayor of the City; and that the Assistant Mayor be authorized to execute, acknowledge and deliver the Bond Purchase Agreement, and the City Clerk be authorized to attest the same, and affix the seal of the City thereto; further, that any changes to the Bond Purchase Agreement may be approved by any officers of the City executing such document, their execution and delivery to constitute conclusive evidence of such approval. Director Martin seconded the motion. Upon roll call, the motion passed, 4-0. RESOLUTION NO. 80-85 APPEARS ON PAGE 349 OF ORDINANCE & RESOLUTION BOOK XXII With no other business before the Board, the meeting adjourned at about 11:17 A.M.