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HomeMy WebLinkAbout1990-09-13 Minutesy,; l,t 4;a MINUTES OF A SPECIAL MEETING OF THE CITY BOARD OF DIRECTORS A special meeting of the Fayetteville City Board of Directors was held on Thursday, September 13, 1990 at 3:00 p.m. in the Directors' Room of the City Administration Building at 113 West Mountain Street, Fayetteville, Arkansas. • PRESENT: Mayor William Martin; Directors Michael Green, Ernest Lancaster, Russ Kelley, Paul Marinoni, Jr., Shell Spivey,and Fred Vorsanger; City Manager Scott Linebaugh, ,City Attorney Jerry Rose, City Clerk Sherry Thomas; members of the staff, press and visitors. i CALL TO ORDER The meeting was called to, order by, the Mayor with seven Directors present. The Mayor explained the reason for the special Board meeting was to consider adoption of an.ordinance authorizing the issuance of certain sales and use tax Capital Improvement Bonds. Martin reminded the Board that,they were not permitted to take action on any other item during the meeting without unanimous approval and consent of the Board. - - -` •• . City Attorney Jerry Rose read the ordinance. Director Marinoni, seconded by Green, made a motion to suspend the rules and place the ordinance on its second reading. Upon roll call, the motion passed 7 to 0. The ordinance was read. for the second time. Director Marinoni, seconded by Green, made a motion to further suspend the rules and place the ordinance on its third and final reading. Upon roll call,_the motion passed 7 to 0. The ordinance was read for the third and final time. Mayor Martin explained to the audience' that the special meeting was somewhat less formal, however, all rules of order would still apply and anyone wishing to address the Board regarding the Capital Improvement Bond issue was welcomed to do so. Martin invited City Manager Scott Linebaugh or the representatives of the underwriting council to make any opening remarks or comments. Linebaugh explained that the Llama Corporation has agreed to purchase the bonds, setting up approximately thirteen sellers. The average coupon is 7.064. Linebaugh stated that the bonds will be paid out of the sales tax proceeds and explained that the excess above the principal, interest and other requirements of the reserves will be returned to the City. He highlighted some of the projects the bonds would be used for including the following: STREETS & BRIDGES $11 million WATER TRANSMISSION & DISTRIBUTION$10 million DRAINAGE IMPROVEMENTS $1.5 million 2:1 • 1: 29i.. �� PARKS September 13, 1990 SOLID WASTE FACILITIES POLICE FACILITIES FIRE FIGHTING FACILITIES YOUTH CENTER PARKING FACILITIES CITY MAINTENANCE & STORAGE $500,000 $1 million $185,000 $1.5 million $867,000 $1.75 million $500,000 Linebaugh stated that the Board was being asked to sign the bond ordinance and give the Mayor permission to sign the other pertinent documents necessary to follow through with the bond sale. Mike Phillips, representing the Llama Company, first introduced Les Balladge and Gordon Wilburn. Both men are with Rose Law Firm and served as underwriter's council. He also introduced associates Tim Webb and David Hausam, then gave a presentation highlighting the capital improvement bonds in a step-by-step account of how the program had begun and has proceeded since that time. Phillips stated that the Llama Company's proposal to serve as underwriter was originally presented on March 13 and stressed the fact that the company would be available on short notice and the city's financing would be made a priority for the company. It was stated that the company would obtain a good credit rating for the proposed issue and present the City with a competitive financing package. Phillips stated that the company had obtained an "A" rating from Moody's Investor Rating Service and an "A-" rating from Standard & Poor's. He stated that approval was needed now for the program which would provide financing at favorable rates and a fair cost. Phillips explained the sources and uses. Bond proceeds were listed as $33,019,000. He stated that $18,897.19 would be paid from the projected settlement date of October 18. Accrued interest will be placed in an Accrued Interest Fund with a trustee. $28,596,788 will be deposited into the construction fund. Deposit to a debt service fund will be in the amount of $3,302,000 which will be invested with interest to serve as a "stop -gap" protection for the investors in case of temporary problems in the flow of funds. Phillips explained that this money would pay the principal and interest and would become the property of the City when the bonds were paid off in the year 2008. Underwriter's Discount ($13.30 per thousand) amounts to $442,454.60. He stated over half of that amount was paid out for the distribution. Expenses for the Underwriter's Council and a ratings expert were also taken from that amount. A Cost of Issuance account will be funded for $139,700 and will pay the City's portion of expenses, including the Brown & Wood Law Firm, printing the official statements, as well as the bonds themselves, the Trustees authentication fees and all other incidental fees involved in closing. Phillips stated that September 13, 1990 any money left in that account after expenses would be placed into the Bond Fund at the end of a reasonable period of time. Phillips stated that the Bond Insurance Premium had a cost of $537,308.57 which was a somewhat higher amount than it was first thought the City would be required to pay, but Phillips stated that this insurance would certainly save the City money in the long run. For sources and uses during the Construction period, amounts ran inthe following: ilk Bond proceeds Accrued interest Construction Project Reserve Fund Account Underwriter's Discount Cost of Issuance Bond Insurance • Balance remaining $33,019,000.00 $ 18,997.19 $28,596,788.00 $ 3,302,000.00 $ 442,454.60, $ 139,700.00 $ 537,308.57 $ 748.83 Linebaugh summarized the steps taken so far to bring the City Board to the present situation.. 1. Public vote to re -dedicate usage of 1% sales tax 2. Vote to allow the City to issue bonds 3. . Pursuing bond issue through Llama company 4. Selection Committee to hire Underwriter's and Bond Council 5. City & Underwriter's composition of the bond issue Linebaugh stated that a presentation was given at the last Board meeting by Mike Phillips which described the usage of Mcllroy Bank as Trustee. He stated that the question before the Board at this meeting was whether or not to issue these bonds on these specific terms discussed. Actual closing would be in one month but Linebaugh stated that the Board must approve the Bond Ordinance. This would allow Linebaugh's office to sign the documents and proceed. Director Green asked if the Construction. Fund would be funded at the date of closing. Phillips explained that it would be funded on the closing date which was projected for October 18. He stated that the funds would be invested and due to projected earnings on the money, there would probably be some rebate due the Federal Government unless there are some regulation changes within the next three years. Tiny Hamilton, Fayetteville, asked if the sale of these bonds would have any of the directors in a conflict of interest situation. Mayor Martin pointed out that any person living in the City would 294 September 13, 1990 directly benefit from the sale of the bonds; therefore, everyone would really have a "conflict of interest", including Mr. Hamilton. Director Kelley stated that Merrill Lynch was a part of the selling group and, although he did not know the company's position at that time, he did sell 50 bonds. He stated further that he did not anticipate any conflict of interests in doing so. Hamilton further questioned the Board as to where the funding would come from and if the school renovations would be affected by the "re -dedication". Linebaugh stated that the re -dedication Hamilton spoke of was for the 1 cent sales tax. He noted that the money being used for the bonds is not the entire amount of the tax and explained that is the reason the wording is as it is. This allows the portion of the money coming in that is not used for paying principal and interest will be returned to the City to be used for future projects. Linebaugh also noted that the City's obligation to the schools would be upheld. He stated that an arrangement had been worked out for deposit of funds into an escrow account for school projects over and above the $10 million voted for. Les Balladge, associate of the Rose Law Firm in Little Rock, addressed the questions regarding the school district improvements and the public's authorization to issue bonds if the City chose to do so. Joe Robson, Fayetteville, addressed the Board regarding the re- dedication and questioned the amount of interest to be paid in the eighteen years the issue is to be financed. Phillips answered that, if there is no refunding, the total amount including projected interest would be $26,681,951.88. City Attorney Jerry Rose pointed out several minor changes in the Bond Purchase Agreement and stated that they needed to be clarified before voting on the ordinance. The changes were read and noted. Upon roll call, the ordinance was adopted by an unanimous vote of 7 to 0. ORDINANCE NO. 3506 APPEARS ON PROEM OF ORDINANCE AND RESOLUTION BOOR XXd ADJOURNMENT The meeting was adjourned at 4:24 p.m.