HomeMy WebLinkAbout1992-07-15 MinutesSPECIAL MEETING OF THE CITY BOARD OF DIRECTORS
A special meeting of the Fayetteville. City Board of Directors was
held on July 15, 1992 at 8:40 a.m. in Room 326 of the City
Administration Building at 113 West Mountain Street, Fayetteville,
Arkansas.
PRESENT:. Mayor Fred Vorsanger; Assistant Mayor Mike Green;
Directors Julie Nash, Ann Henry and Bob Blackston;
City Manager Scott Linebaugh; City Attorney Jerry
Rose; Director of Public Works Kevin Crosson;
Director of Administrative Services Ben Mayes; and
City Clerk Sherry Thomas; members of staff, press
and audience.
ABSENT:
CALL TO ORDER
Directors Shell Spivey and Dan Coody.
Mayor Vorsanger called the meeting to order; 'He explained that the
purpose of the special meeting was to hear -a report from City
Manager Scott Linebaugh regarding progressson_the issuance of the
Water and Sewer Revenue Bond' Issue of 1992. He explained this
involves the refinancing- of a present -"bond issue, and the
additional issuance of bonds°to allow theiCity to move ahead with
the 36" water line.
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CITY MANAGER'S REPORT
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WATER/SEWER REVENUE BOND ISSUE OF 1992
City Manager Scott Linebaugh reported since the last Board meeting
at which the Water/Sewer Revenue Bond Issue of 1992 was discussed
and approved by the Board; Staff has received the requested
information from the Trustee and is rapidly moving forward on this
issue. He announced -a choice had been made on the trustee from
requests received by Worthen National Bank and State First National
Bank.
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Linebaugh reported Staff was recommending, the City proceed with
this bond issue through State'First National Bank of Texarkana due
to their lower overall cost for this bond issue, and their
acceptance of a stipulation regarding trustee. fees. He explained
Staff was recommending providing language -to the trustee which
essentially limits the trustee to $15,000 for.attorneys fees. The
trustee would be required_to.receive permission from the City to
expend further funds on legal°.fees. Linebaugh;explained the reason
for this language was due`'to events associated with the sales tax
issue and incinerator issue where -the associated trustees hired
their own attorneys to be involved in the lawsuits. This action
has resulted in astronomical attorney fees which the City is
eventually responsible for paying and to date have cost
approximately $200,000 for one bond issue lawsuit and over $500,000
July 15, 1992
for the other bond issue lawsuit. Linebaugh stated that attorney
fees will be resolved once the court case is final.
Linebaugh stated that Brown & Wood, the bond counsel, had approved
and agreed to the issue of the water/sewer revenue bonds. Staff
has determined that it will be necessary to obtain a rating on the
bond issue, and has provided Moody's and Standard & Poors with the
necessary information. Moody's and Standard & Poors expressed
concern regarding notable changes since the City last had dealings
with them, namely, the change in the form of government, the sales
tax lawsuit decision and appeal to the Supreme Court, and the
incinerator lawsuit all of which Staff would be reporting on in
detail.
Linebaugh further reported plans remain to complete the necessary
process and begin issuing bonds in August.
Director Green stated in addition, wording had been changed in the
City's favor in the agreement with State First National Bank
regarding the use of "shall" and "may" which created a problem with
the current sales tax issue lawsuit.
City Manager Linebaugh responded the language in the agreement with
State First National Bank has not been finalized. He further
announced David Hausum was present from Llama Company to answer any
questions.
Mayor Vorsanger called for a motion on the approval of State First
National Bank for the Water and Sewer Revenue Bond Issue of 1992.
Blackston, seconded by Henry, made a motion to approve State First
National Bank of Texarkana as Trustee for the bond issue.
Upon roll call, the motion passed 4-0-1, with Director Nash
abstaining.
RESOLUTION 103-92 APPEARS ON PAGE OF ORDINANCE BOOR
Mayor Vorsanger asked Mr. Hausum if the City is going to bank -
qualify $10 million in bonds and what would be the importance of
obtaining Standard & Poors and Moody's to rate the bonds?
Mr. Hausum responded one concern expressed by their trader was
based upon the publicity the bond issue lawsuits have received.
They fear there might not be enough buyers in the state for the
bonds. In that event, they would have to go out-of-state with the
bonds, which requires a bond issue rating. He explained by staying
within the State of Arkansas, it will result in a lower interest
rate and interest cost. Hausum reported Angela Highland, the rate
consultant for a number of years, strongly believes due to the fact
that the rating agencies have stood behind the City over the last
several years with the various lawsuits and without much
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July 15, 1992
downgrading, it is very important to keep them in the loop and
request a rating. More important than the concern with the ability
to sell the bonds within the State, she believes the City needs to
take the opportunity to introduce the agencies to the upcoming
change of government and reassure them this change will not affect
the City's ability to pay off the bond issues.
City Manager Linebaugh reported Ms. Highland has highly recommended
the City obtain the ratings that will cost approximately $10,000 to
$12,000, and do whatever possible to convince the agencies of
Fayetteville's worthiness.
ADJOURNMENT
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The Special Board Meeting adjourned at 8:48 a.m.
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