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HomeMy WebLinkAbout1985-04-22 - City Commission Special Meeting MinutesMAIL REPLY TO: P.O. BOX 25010 TAMARAC, FLORIDA 33320 5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321 TELEPHONE (305) 722-5900 April 19, 1985 NOTICE OF SPECIAL MEETING CITY COUNCIL TAMARAC, FLORIDA There will be a Special Meeting of the City Council on Monday, April 22, 1985, at 11:30 A.M. in the Council Chambers of City Hall, 5811 NW 88 Avenue, Tamarac, Florida. The purpose of this meeting is discussion and possible action regarding Revenue Bonds for Tamarac Utilities West. The public is invited to attend. �Iynt o f, CMC City Clerk Pursuant to Section 286.0105, Florida Statutes H a person decides to appeal any decision made by the city Council with respect to any matter considered at such rneetirg or hearing, he will need a record of the proceedings and for such Purpose, he may need to ensure that a verbatim record IiPcs'aU; s the testimony and evidence upon which the appeal is to be based. CITY OF TAMARAC, FLORIDA SPECIAL CITY COUNCIL MEETING April 22, 1985 Tape 1 7 ORDER: Mayor Kravitz called the meeting to order on Monday, April 22, 1985, at 11:45 A.M. in the Council Chambers. ROLL CALL: p F� : Mayor Philip B. Kravitz Vice Mayor Helen Massaro Councilman Arthur H. Gottesman Abh9ENT- Councilman Raymond J. Munitz Councilman Sydney M. Stein ALSO P�E�IY� Elly F. Johnson, City Manager Jon M. Henning, City Attorney Marilyn Bertholf, City Clerk Patricia Marcurio, Secretary MEDITATION AND RLMOZ QE ALLEGIANCE: Mayor Kravitz called for a Moment of Silent Meditation followed by the Pledge of Allegiance. Mayor Kravitz read the notice of the meeting which stated that the purpose of the meeting was discussion and possible action concerning the Revenue Bonds for Tamarac Utilities West. The City Manager and City Attorney were authorized to try to validate the bonds at the hearing scheduled today at 4:00 P.M. They are to present a report to Council within one week responding to all questions posed by Council at today's meeting. Mr. Henning said there is a Bond Validation Hearing today at 4:00 P.M. with Judge Andrews on the fifth floor of the Broward County Courthouse. He said this meeting is called to attempt to answer some of the questions to clarify the record. He said in the past several days, there have been some questions about the 30 million dollar validation. He said there was a ballot question of 15 million dollars which was approved. He said there have been questions about how the City got the 15 million dollar amount, why the City asked for 15 million dollars, why the City is retiring the outstanding bonds, and what are the advantages and disadvantages to retiring those bonds. Mr. Henning said Council and the public should be aware that today's hearing at 4:00 P.M., although it is a requirement by law, is just one of the many processes that are involved in getting the City to the stage where the bonds will be sold. He said the Judge is not ordering the City to sell the bonds and the actual number of bonds, the date on the bonds and the interest rate on the bonds will be with Council approval at later dates. He said today's discussion should concern the makeup of the first 15 million dollars that was approved by referendum, the rationale for going to the 30 million dollars and the retirement of the outstanding debt with discussion on the advantages to the City. Mr. Henning noted that staff should direct their comments to Council so that all questions may be addressed. V/M Massaro questioned whether all Council members were informed of this meeting and Mayor Kravitz said yes, they were informed on Friday. 1 4/22/85 /pm ,-/ V/M Massaro said it is important to make sure that there is a sufficient amount of money to cover the City's needs and that it be within the amount of the referendum. She said in discussing some of these subjects with Stanley Ross, Financial Advisor with Dean Witter, she questioned whether the City would be locked in. She said Mr. Ross told her it is necessary for the City to refund this 12--1/2 million dollars that is in the first bond issue because there was an error. She said the error was in the percentage that had to be retained to cover the debt service. She said in the original document, before validation, it said 125% and, after validation, it was determined that that much was not needed and 110% would be adequate. is V/M Massaro said there is a problem now because the attorneys that were consulted about this have indicated that any new bond would have to be at parity and stating the 110% is in error and 125% must be reserved. She said that means an increase in the rate of the water and sewer. She said the Resolution approved by Council last year, will be part of the record as was the first bond issue. Mr. Henning said V/M Massaro is referring to Resolution 85-21 on Page 18, Line 17. V/M Massaro said they refer to impact fees and if they are adequate to pay at least 110%, the City could retain that amount. V/M Massaro asked the Finance Director if there has been a problem with reserving just 110% and Mr. Wood said they have met the 110% coverage requirement, however, increasing this amount makes the issue more marketable. Mr. Henning referred to Page 18 of the Resolution which refers to 120% and 110%. Gerald Heffernan, Bond Counsel from Fine, Jacobson, Schwartz, Nash, Block and England, said what occurred the first time was that the Bond Resolution provided for three different coverage tests: one, for rate coverage, which means how much the rates must cover the debt service. He said the second rate coverage has to do with parity bonds. V/M Massaro asked if parity bonds have to be issued and Mr. Heffernan said no, if parity bonds are not issued, there is a bond issue that is secondary to the first issue in terms of the revenues. He said the bonds were validated under one particular Resolution but when the bonds were sold, it was represented to the public that the rate was 110% but the Resolution was never corrected to show 110%. V/M Massaro asked if there was some way that could be corrected now and Mr. Heffernan said after the bonds were issued, the City amended the Resolution and that is technically illegal because the Resolution is the legal binding document and not an official statement. He said there are two ways to change something as important as the rate coverage: first, all of the bond holders must be contacted for their consent and, to do that with a bond that was not registered, because it was not required to be reg- istered, is a very difficult process. He said technically, an investor has an obligation to read the Resolution as well and should have seen the discrepency. He said this Resolution reads that the rate coverage for now will be 110% but will be 120% if the impact fees are added. Stanley Ross of Dean Witter, Financial Consultant to the City, said when the net revenues plus the impact fees are added, the coverage must be 120%. He said in addition, the net revenues alone must equal 110% to prevent a case where there would be a large amount of impact fees in one year. He said when additional bonds are needed, the City could reduce the need for net revenues by taking 10% of this coverage from impact fees. He said the insuring companies, rating agencies and buyers need to be insured that the City's net revenues will cover the debt service by themselves with a 10% cushion. 2 4/22/85 /pm V/M Massaro asked Mr. Wood if this has been checked to see how this will affect the CIAC's and Mr. Wood said this is a "paper test" since the money does not actually come out of CIAC's to be used somewhere else. He said this is just to insure that the net revenues of the system plus some monies from CIAC will make that number greater than 120%. He said if the money is not there than rates must be increased to get to the 120% and for the last few years the City has been over the 1.10 coverage. V/M Massaro asked if the CIAC's have ever been used for this purpose before and Mr. Wood said they have never been counted into the formula for coverage. V/M Massaro asked how much it will be affecting the CIAC coverage and Mr. Wood said that money will still be available for Capital construction but this would only be counted in the formula to satisfy the rate covenant. Mr. Henning asked if the City is tying up the connection charges and Mr. Ross said it would only be required in the event that the City's revenues fell short and the City could not pay the debt. Mr. Henning asked if it is legal to pay the debt with impact fees and Mr. Ross said perhaps it is not legal at this particular point with the City's old bonds because it did not provide in there that that was the case. He said there have been several cases in Florida on this subject recently and if it is provided in there for the actual lien on those in the particular year they come in, and they are then released, it can be used to pay debt service on bonds that were issued for the purpose of providing capital improvements. C/M Gottesman asked if this must be done by a lien and Mr. Ross said yes, there will be a lien on these revenues until the City gets the amount to pay the current debt service. V/M Massaro asked if the first bond issue has to be refunded and Mr. Heffernan said these would have to take a secondary position to the first issue if the first issue is not refunded. He said the problem with the first issue is the Resolution which was enacted and requires 125% coverage. V/M Massaro asked what effect if any would be made if these bonds were validated today with these provisions and a determination is made as to what the costs are on the refunding, what it means to the City to have the 125%, etc. Mr. Heffernan said they are trying to give 120% coverage to give the bond holders more comfort as well as give the City some flexibility by not having to meet the 110% minimum. V/M Massaro said she is not happy without getting more answers to this and Mayor Kravitz said there is a deadline for the 4:00 P.M. meeting. Mr. Henning said the City has an obligation to be in Court at 4:0.0 P.M. and could ask for a continuance or deferral. He said Council could discuss this further today to try to re- solve some of the concerns. Mayor Kravitz said he agrees with V/M Massaro that if possible, more time is needed to study this further. Mr. Heffernan said they can ask for a continuance. Mr. Henning asked if today's hearing will burn any bridges for the City if, at the validation, it is approved, could the City take a voluntary dismissal on this case and go back to the parity bonds or second issue. He asked if the Resolution could be amended at a later date before the bonds are issued. Mr. Heffernan said the City could always validate bonds and then not act on that validation. He said the City could always amend the Resolution and this should be done before it is publicized in an official or preliminary statement. 4/22/85 /pm U Mr. Henning asked if the City must go back to Court if the Resolution is revised. Mr. Heffernan said no, if that is all that is done; however, if the stucture is changed in terms of what the bonds are calledr refunding as opposed to a secondary issuance, etc. then the City will have to revalidate. Mr. Henning said if the Council authorizes the staff to proceed today, they could get a validated bond, presuming it is approved. He said they must wait 30 days for the appeal time anyway and that would give considerable time to review this line by line and make some changes without having a revamp of the entire Resolu tion. He -said he does not see the advantage of delaying the validation at this time. Mayor Kravitz asked what the disadvant age would be to waiting and Mr. Henning said a delay of time and increased interest rates. City Manager Johnson said under this program, two of these are on grants. Mr. Henning said there is always a 30-day delay after the final action and, if the City must notify Tallahassee that Tamarac is prepared to commit match- ing funds to a grant, they must know that the City will commit $2,086,000. V/M Massaro said perhaps the.City should move forward and City Manager Johnson should be held responsible to make sure that the City Council has figures on everything within the next few days so that it is clear what the City is up against in the refunding. She said Mr. Henning should be charged with checking into it to be absolutely sure that it is the only thing that the City can possibly do with a determination made by.City Manager Johnson of what that extra percentage would mean if the City chose to retain the first fund. V/M Massaro asked Mr. Heffernan if, when the City enters into another bond issue does it have to be the same 25% or could this Resolution be used. Mr. Heffernan said if the City wants this new bond issue to be on a parity with the old one, the same provisions of the old Resolution must be used. He said if the old Resolution had said 110%, they would have been able to pro- ceed with no problem. V/M Massaro asked when refunding is dis- cussed, will this money be taken to pay these bonds off. Mr. Heffernan said the amount of money necessary to defease the bonds is taken and an Investment Agreement or Escrow is undertaken to invest those bonds to have enough money when they become due. V/M Massaro asked how the City can be sure there will be enough interest gathered and Mr. Heffernan said because there are cer- tain Government Securities that are observed in advance that will earn the City that kind of interest. C/M Gottesman asked the difference between the redemption of bonds and a recall on a bond and Mr. Heffernan said on a defeasance, the bonds will be paid as they would become due and the money is available. Mr. Ross said the City has two major options: the money can be put aside in the Escrow Account and let them run out to maturity in the year 2010. He said the rate on the bulk of these bonds is 9-1/4% and, when they are refunded, if the rate happens to be 8- 1/2%, it would be advantageous to the City to call them on the first call date and there would be a savings in interest rate. V/M Massaro said she would expect the City Manager and City Attorney will have all the answers in writing to every question that was asked this morning. Vickie Beechr resident, asked what grant Mr. Johnson is referring to and City Manager Johnson said he is referring to the grant called Sludge Dewatering Composting and a grant called Deep Injection Well. Mrs. Beech suggested this be deferred until all ramifications are considered. 4 4/22/85 /pm is V Hyman Fox, resident, said the suggestion of going with 110% plus 10% could cause another problem and Mr. Heffernan said the last time the problem was because they were changed after the bonds were sold. He said after the sale of the bonds, the Bond Counsel had an amendment to the Resolution changing the rate covenant to 110%. He said now, before they are being offered on an official statement, any changes will be done now. Mr. Henning suggested that staff move forward at the 4:00 P.M. hearing and pursue these bonds and validation. Tape 2 V/M Massaro asked Bill Greenwood, Utilities Director/City Eng- ineer, if this might affect the grant within the next 30 days and Mr. Greenwood said on the deep injection well it will probably be approximately June because that project has not been upgraded to the fundable portion. He said the sludge dewatering project has been upgraded to the fundable portion and D.E.R. may elect to act on it before June but that is uncertain. C/M Gottesman asked Mr. Henning if a continuance would be a problem and Mr. Henning said he does not think the Court's calendar will be clear in 10 days and he questioned the advertising requirements necessary for the new hearing. He said he felt it would be a minimum of 30 days before the City could get back on the calandar of the Court. Mr. Wood said Council must be concerned on the sludge dewatering grant that if the State sends the City a letter requesting the City provide a financial capability statement, part of that statement must be that the bonds have been validated. He said if this is delayed 30 days and in the interim the State wants the grant, the City will have to reject the grant, which is $900,000. V/M Massaro MOVED that the City Attorney be authorized to try to validate the bonds and Council must receive the reports that were requested within one week's time. C/M Gottesman SECONDED the MOTION and asked Mr. Henning if this could be accomplished within one week. Mr. Henning said for clarification: 1. Council wants to know if the City went parity or second issue and there had to be 125% coverage, what kind of cost would that be as impact to the consumer on the rates. How much is the City saving by not using the 125% coverage and using the 110% plus 10%. V/M Massaro said she would also like to know what kind of percentage the City would have today if it were all used for that purpose. Mr. Henning continued: 2. Are we presently meeting the 125% rate specification? 3. Are there any particular administrative costs or commissions for floating this 30 million dollars over the 15 million. In the mechanics of floating this are there additional signifi- cant expenses that the City should be aware of. Morris Haber, Charter Board Chairman, said the only authorization Council has by referendum is for 15 million dollars. Mr. Heffernan said the reason they requested 30 million dollars was to have a cushion. He said the voters in Tamarac in 1980 author- ized 15 million dollar bond issue for water and sewer and they have authorized another 15 million dollars in 1984. He said that is a legal authorization by referendum of 30 million dollars. He said it is unlikely that 30 million dollars will be used. 5 4/22/85 /pm C/M Gottesman said V/M Massaro, in her MOTION, put a week's limitation on accummulating all the answers to these questions and he questioned whether that would be enough time. V/M Massaro said this should be done within one week with no problem. Mr. Ross said there should be no problem as far as the refunding is concerned and an assumption can be made concerning the new money. He said this could be done within the next two or three days. VOTE ALL YMD—AY1 Mayor Kravitz adjourned the meeting at 12:45 P.M. ATTEST: CITY CLERK This public document was promulgated at a cost of $55.60 or $1.54 per copy to inform the general public and public officers and employees about recent opinions and considerations by the City Council of the City of Tamarac. 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