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HomeMy WebLinkAbout1985-12-18 MinutesMINUTES OF A SPECIAL MEETING OF THE FAYETTEVILLE BOARD OF DIRECTORS AND THE NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY A special meeting of the Fayetteville Board of Directors and the Northwest Arkansas Resource Recovery Authority was held on Wednesday, December 18, 1985 at 3:00 P.M. in Room 326 of City Hall, 113 West Mountain Street, Fayetteville, Arkansas. PRESENT: Mayor Noland; City Directors Bumpass, Hess, Johnson, Lancaster and Orton (for the City Board and for the Authority); County Judge Charles Johnson (proxy for Peg Anderson, member of the Authority), Butch Bartholomew (for the Authority); Acting City Manager Murphy, City Attorney McCord, City Finance Director Linebaugh, Project Director Louis Watts; members of the press and audience. ABSENT: Director Martin The meeting was called to order by Marion Orton (Chairperson for the Northwest Arkansas Resource Recovery Authority), for the purpose of considering a resolution appropriating City of Fayetteville Sanitation Fund's surplus monies for a loan to the Northwest Arkansas Resource Recovery Authority to be pledged for the payment of principal and interest on Solid Waste Revenue bonds issued by the Authority. City Attorney Jim McCord reported that, following a meeting on December 13 at which the rate of interest on invested bond proceeds could not be confirmed, the underwriters had put together a financing package under which there would be no potential "shortfall" to the Authority, in the event the Solid Waste project does not go forward at the end of a one-year escrow period. McCord explained that the structure which has been developed would have the underwriters buying the bonds, to be remarketed by them, at an interest rate on the bonds of 6.375%. McCord noted there would be no bank origination fee, and no bank counsel fee but there would be some sales commissions. McCord pointed out that the main reason there would be no potential shortfall is because the underwriters and attorneys reduced their fees. McCord added that there could be an excess, of approximately $900 at most, based upon investment figures and the bond coupon rate. McCord explained that, if the Board wished to proceed with the financing, a resolution should be passed by the Authority, approving the issuance and sale of the bonds, the execution of the trust indenture, execution, delivery and issuance of the official'statement and other closing documents; and the City Board should make an appropriation of an amount equivalent to the issuance costs, to be pledged toward payment of principal and interest in the event of a Treasury ruling requiring mandatory early 415 415.1 415.2 415.3 416 December 18, 1985 416.1 redemption before expiration of the one-year escrow period. McCord noted that yesterday the House of Representatives passed the Tax Reform Act, under which this tax-exempt financing for the proposed project could not be done after December 31, 1985, if the Bill, in its current form, is approved by the Senate. 416.2 Director Orton asked, in the event of refinancing at the end of year, if costs would be greater as a result of the proposed financing. Charles Crow, speaking for Stephens, Inc., underwriters, explained there would be some additional expense but that the size of the bond issue already anticipates most of those costs. City Attorney McCord added that, if the project goes forward under existing IRS rules, there is a three-year 'temporary period" during which bond proceeds can be invested at an unrestricted yield, meaning all issuance expenses would be recouped, including additional issuance expenses on remarketing. 416.3 Chuck Devers, speaking for A. G. Edwards underwriters, explained that a trust account would be established to hold the proceeds of the issue. Devers added that the trust account is invested in direct U.S. Treas- ury obligations. In answer to a question from Director Bumpass, Devers stated the total cost of the issuance would be $241,413. He noted the bonds are 28 -year bonds with a one-year "mandatory put". 416.4 Director Johnson, seconded by Hess, made a motion to adopt a resolution approving an appropriation equivalent to the issuance costs for the financing, to be loaned to the Authority to be pledged towards principal and interest on the bonds issued by the Authority, in the amount of approximately up to $250,000. Upon roll call, the motion passed, 5-1, with Bumpass voting in the minority and with Martin absent. RESOLUTION NO. 135-85 APPEARS ON PAGE 200 OF ORDINANCE & RESOLUTION BOOK XXIII 416.5 City Attorney McCord explained that a Certificate has been filed with the Secretary of State to increase the membership of the Authority to include all seven City Directors. 416.6 It was moved by Butch Bartholomew and seconded by Charles Johnson (as proxy for Peg Anderson) to change the bylaws of the Authority to reflect the increase in the membership of the Authority to nine members. Upon roll call, the motion passed unanimously. 416.7 It was moved by Marilyn Johnson and seconded by Butch Bartholomew, to adopt a resolution of the Authority to approve the issuance and sale of the bonds, the execution of a bond purchase agreement, the execution of a trust indenture and the preparation, execution and delivery of an Official Statement. Upon roll call, the motion passed, 7-1, with Bumpass voting in the minority and with Martin absent. • • December 18, 1985 Director Bumpass congratulated the underwriters on a fine job and commented that his vote was made based on ideas stated by him at previous meetings. City Attorney McCord stated that closing was anticipated to take place on December 31. There being no further business, the meeting adjourned at about 3:48 P.M. 417 417.1 417.2 417.3 418 MINUTES OF A SPECIAL MEETING OF THE FAYEPIEVILLE CITY BOARD OF DIRECTORS AND NORTHWEST ARKANSAS RESOURCE RECOVERY AUTHORITY 418.1 A joint meeting of the Fayetteville City Board of Directors and the Northwest Arkansas Resource Recovery Authority was held on Tuesday, December 24, 1985 at 1:00 P.M. in Room 326 of City Hall, 113 West Mountain Street, Fayetteville, Arkansas PRESENT: Mayor Noland; City Directors Hess, Johnson, Lancaster and Martin (present for the City Board and the Authority); Acting City Manager James Murphy (as proxy for Marion Orton), Finance Director Scott Linebaugh, City Attorney Jim McCord; Authority Members Butch Bartholomew and Roger Hainey (as proxy for Peg Anderson); Project Director Louis Watts, members of the press and audience. ABSENT: Directors Orton and Bumpass. 418.2 Mayor Noland called the special meeting of the Fayetteville Board of Directors to order, with five Directors present. 418.3 City Attorney McCord stated that the purpose of the meeting was to consider final approval of the documents necessary for the financing of the solid waste project. He noted that the bond lawyers have requested the City Board and the Authority to approve the 28 year amortization schedule for the permanent financing. McCord stated it will not be necessary to pledge sanitation surplus funds toward debt service on the bonds. To enable the project to go forward, McCord stated, in the event that a construction contract is executed before expiration of the one year escrow period, the. tax counsel and bond counsel is requiring that $1 million in sanitation surplus revenues be deposited in the Construction Account under the Trust Indenture. The reason for this, said McCord, is that if the contract is executed prior to the one year escrow period, there would be cash funds in hand to make the monthly draw payments to the contractor. 418.4 McCord noted the action being requested today of the Authority is to adopt an amended resolution which does the following: (1) Approves the Official Statement; (2) Approves the Construction Draw Down Schedule; and (3) Designates Louis Watts and Scott Linebaugh as authorized representatives of the Authority. 418.5 McCord further noted that the action requested of the City Board is to adopt a resolution appropriating S1 million for a loan to the Authority to be deposited by the Authority with the Trustee into the Construction Account under the Indenture to be used to make construction payments if the project is undertaken before the one year escrow period expires. Director Lancaster questioned what will happen if, at the end of the one year escrow period, there is no construction contract. McCord stated that, pursuant to the Mandatory Redemption Provision, the bonds would be redeemed from the net proceeds plus 'investment earnings and there will be a CPA verification of escrow to the effect that the amount will be sufficient to redeem all of the bonds. The City would then be repaid the ,$1 million plus accrued interest said McCord. Lancaster asked where the $1 million will come from. Finance Director Linebaugh stated the money would be taken from the Sanitation Fund surplus Lancaster stated the $1 million loan could he used only for construction. McCord concurred. Director Martin questioned whether the $1 million loan is irrevocable. McCord answered "no" stating the loan would be repaid from bond proceeds when the "put" bonds are tendered and the long term bonds are remarketed. Martin questioned whether this loan was an "up -front investment by the City to improve the economics of some of the projects which were proposed in the past". McCord answered negatively. Martin further questioned whether the Draw Doan Schedule involving MK/Volund implies that they (Volund) have been chosen, and if not, why should the Board then approve a Draw Doan Schedule relating to them. McCord stated the project, as presently contemplated, does envision MK/Volund as the contractor, and Volund has submitted a Draw Down Schedule. The closing documents need to include as much specificity as possible to disclose to bond purchasers the potential structure of this financing and the associated risks. McCord noted that this does not commit the Authority to MK/Volund and further stated that if a different vendor is selected, the Official Statement for the permanent financing would reflect the Draw Doan Schedule submitted by that vendor. McCord further pointed out to the Board that if a project is not put together within a year, there will be no out-of-pocket expense to the City. Director Johnson, seconded by Hess, made a motion to adopt a resolution appropriating $1 million from the Sanitation Rind surplus for a loan to the Northwest Arkansas Resource Recovery Authority to be deposited in the Construction Account under the Authority's Trust Indenture. Upon roll call, the motion passed 4-0-1 with Director Martin abstaining and Directors Bumpass and Orton absent. RESOLUTION NO. 136-85 APPEARS ON PAGE 201 OF ORDINANCE & RESOLUTION BOOK XXIII 419.1 419.2 419.3 Authority Vice -Chairman Butch Bartholomew called the meeting of the 419.4 Northwest Arkansas Resource Recovery Authority to order. Ernest Lancaster noted that during the first, second and third months on the Draw Down Schedule there are no funds noted. Project Director Watts stated this reflects an agreement with MK/Volund under which there would be three months of construction work done prior to the Authority making any payment. At the end of the third month, Watts stated, a total of $248,000 would come due. 419.5 420 420.1 Paul Noland, seconded by Marilyn Johnson, made a motion to adopt an amended resolution which would approve the Official Statement, approve the Construction Draw Down Schedule, and designate Louis Watts and Scott Linebaugh as authorized representatives of the Authority. Upon roll call, the motion passed 7-0-1 with William Martin abstaining. 420.2 Noland questioned whether the Authority wished to discuss a Remarketing Agreement submitted today by A.G. Edwards & Sons, Inc. Linebaugh noted that it is advisable for the Authority to name only one firm. Authority member Johnson stated she would prefer to wait until a later date to give the City Attorney and Finance Director a chance to review the proposed agreement more thoroughly. 420.3 There being no further business, the meeting adjourned at about 1:35 P.M. •