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HomeMy WebLinkAbout1980-07-25 - City Commission Special Meeting MinutesL -1 5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321 TELEPHONE (305) 722-5900 NOTICE OF SPECIAL MEETING CITY COUNCIL 'lease be advised of a Special Meeting of the City Council to be held on Friday, July 25, 1980 at 5:00 P.M. in Council Chambers of City Hall. The matter to be discussed is: Tamarac Utilities - West Discussion and Possible Action Concerning financing of water & sewer matters. MB/mt I CALL TO ORDER: The Friday, July 25th at Hall by Mayor Falck. ROLL CALL: CITY CF TAMARAC, FLORIDA CITY COUNCIL SPECIAL MEETING TAMARAC UTILITIES WEST July 25, 1980 Special Meeting was called to order on 5:10 P.M. in Council Chambers of City PRESENT: ALSO PRESENT: C/W M. Kelch C/M I. Zemel C/M I. Disraelly V/M H. Massaro Mayor W. Falck City Manager, Ed Gross City Attorney, A. Birken City Clerk, M. Bertholf Finance Director, S. Wood Mayor Falck read the notice of the meeting into the record, stating the purpose of the meeting is to discuss Tamarac Utilities West - Financing of water and sewer matters. The City Attorney reviewed the history of events since the signing of the Purchase and Sale Agreement for Tamarac Utilities in July, 1979. The bonds for the utility were to be sold by the middle of July, which date was extended to accept an offer from the Marmon Group to sell the bonds to them. A response to this acceptance has not been received. Mr. Birken stated that the City has the.. option of selling the bonds publicly or continuing to try to get Marmon to buy the bonds. He indicated that he did not believe Marmon is interested in purchasing the bonds; therefore, the next step would be litigation. He was aware of an oral offer from Marmon to purchase seven million dollars of the bonds. Mr. Gross, City Manager, presented ten Bonding Alternatives which the Council may wish to consider. (attachment) Number 1 - Marmon purchase - a) $7,325,000 - 7.81% net interest cost for 15 years with annual debt service of $840,000. First Boston has made the same offer with a slightly lower interest cost of 7.75%. First Boston does not recommend the City accept either of the above 2 alternatives. Number 3 -- is the balance of the bonds to be sold to provide the full $14 million needed. it would be a 30 year bond. The first 15 years'payments would be interest only, the 16th through 30th year involves interest with principal. This alternative is the same as number 2 except First Boston feels there is no reason for them to guarantee the City a price when they could sell the bonds and get a much lower price at market within 2 weeks. This would also lower the debt service slightly. Number 4 - is the sale of the total of $14 million at a guaranteed price of today of $8.78 net interest cost for 30 years with annual debt service of $1,350,000. Number 5 - is for the full issue, not a guaranteed price, but one that would be sold in the market within 2 weeks at 8.48% for 30 years with an annual debt service of $1,290,000.00. This is the lowest average annual debt service rate. it was pointed out that the interest rates are today's rates and subject to change. The starred figures are guaranteed. Number 6 - is the second half of the issue with an interest rate of 8.60% with a debt service of $600,000 for the first 15 years and $850,000 for the second 15 years. Number 8 - is a full issue of $14,200,000 with an interest rate of 8.49% with a debt service of $1,170,000 for the first 5 years for payment of interest only and $1,375,000 for the 6th through 30th year for payment of interest and principal. -1- July 25, 1980 /pe Number 9 - is also years @$1,1830,000 $1,315,000. a full issue at 8.53% with the first five and an extended payment to 35 years of Number 10 - is the full issue @8.52% with annual debt service of $1,270,000 for 35 years. Mr. Gross stated that it is the opinion of both himself and First Boston that numbers 5 and 8 are best. Item 8 provides the lowest cost to the consumer for the next 5 years. Item 5 provides the lowest average cost over a 30 year period. Mr. Gross explained the combination items of numbers 2 and 3 and 1 and 3. First Boston does not recommend either of these methods. Mayor Falck stated that he does not feel the City should continue negotiations with the Marmon Group. He does not believe the City should tie into a specific rate, that it should remain open. C/M Disraelly stated that he didn't want to be involved with the Marmon Group, nor did he want to litigate the matter. The City should take an alternative involving one figure debt service for 30 years. C/M Disraelly MOVED that the annual Debt Service be one figure for 30 years. C/W Kelch SECONDED the motion. The Council discussed the merits of the various alternatives. The feeling was expressed that the City would be paying more in the long run by taking a higher guaranteed interest rate. Mayor Falck, C/W Kelch and C/M Zenel indicated their preference for alternative #5. Mr. Alan Bernstein repudiated the annual debt service figures for number 8 and 9 indicated by the City Manager. The City Manager re -verified the figures with First Boston Corp. and explained the method used to arrive at the figures shown. Mr. Bernstein quoted alternatives he has obtained which he believes to be better for the residents of the City than thorn offered by First Boston. V/M Massaro indicated that the City should, at this point, request a proposal from First Boston and to make sure that all those things that are supposed to be done by the City, are done so that the City doesn't have any problems selling the bonds. The City Attorney reviewed those steps taken at the direction of Council. He informed Council of the schedule and time frames involved for those things that need to be done prior to the sale; revise the official statement, printing, submission to the rating agency and marketing the bonds. C/M Disraelly pointed out that a letter was received from a representative of E. F. Hutton that the firm was withdrawing its offer to serve as underwriter. C/W Kelch expressed the feeling that the City should stay with First Boston in view of the tight schedule. VOTE TAKEN: ALL VOTED AYE The City Attorney stated that the next item to be decided is coverage. The current percentage is 120% by Pesol.ution, which figure could be reduced to 1150 or 1100. V/M Massaro asked if the insurance people have to agree with the figure, to which the City Manager stated that they do. He added that 115% is adequate. -2- July 25, 1980 /pe V/M Massaro MOVED that the debt coverage be set at 115%. C/M Disraelly SECONDED the motion. Tony Nolan, Consulting City Engineer, was asked his opinion as to which percentage of coverage the City should choose. Mr. Nolan stated that the City is obliged to collect from revenues the bare minimum figure. However, after the fact, the City could collect something in excess of that figure, but could not reduce it in the future. Mayor Falck and V/M Massaro indicated that 110% should be adequate, based on Mr. Nolan's response. Mr. Nolan added that the revenues projected coming into the system, based on a flat growth curve, would require a 4% rate increase at 115% in 1985. Based on Mr. Nolan's presentation, V/M Massaro and C/M Disraelly withdrew their motion and second. V/M Massaro then MOVED that the reserve for the annual debt service be set at 110%. C/M Disraelly SECONDED the motion. VOTE TAKEN: ALL VOTED AYE. The City Attorney informed Council that a meeting would have to be held in August to amend the Bond Resolution, to approve or reject a contract with First Boston, approve the Official State- ment and perhaps consider other matters that may require Council action. Discussion was held concerning execution of a contract with First Boston or another company to act as the City's agent to make the offering of the bonds on the City's behalf. The City Attorney explained that the City has a contract with First Boston, Underwriter for the City. They have a right to tell the City how much they'll offer to buy the bonds. When they make that offer, the City is obliged to consider the offer in good faith. If, in good faith, the City decides it is not a proper quotation, they would be told and the City could try to negotiate downward or reject it. If it is rejected, the City can proceed to open discussion with other companies. Discussion was held concerning the amount of time remaining and what still needs to be done in order to effectuate the sale of the bonds. The actual, final amount of the bond issue cannot be determined until the time. C/M Disraelly pointed out that the exact amount of money could not be indicated exactly because when the "red herrings" are put out an amount is mentioned; however expenses vary which affects the total cash figure. V/M Massaro asked what determines the amount for M.B.I.A. The City Attorney responded that the cost of issuance will include printing, insurance, etc. C/M Disraelly MOVED that the amount of the bond issue be $14,100,000.00. C/W Kelch SECONDED the motion. VOTE TAKEN: ALL VOTED AYE -3 July 25, 1980 /pe Ed Gross, City Manager, asked whether the City should respond to the Marmon Group, to which a consensus of opinion of Council was negative. C/M Disraelly MOVED that the City Manager, the City Attorney and the Mayor be instructed to, as expediously as possible, have the printing of the Official statement done, including the debt coverage at 110%, bond of $14,100,000.00 and whatever other activity must be done in order to expedite it for delivery to Council including whatever papers are to be signed, authorization for the proper individuals. C/W Kelch SECONDED the motion. VOTE TAKEN: ALL VOTED AYE. Meeting Adjourned 6:45 P.M. ATTEST: This public document was promulgated at a cost of $22.11 or $1.10 per copy, to inform the general public and public officers and employees about recent opinions and considerations by the City C ouncil of the City of Tamarac. APPROVE BY COY COUNCIL ON�� -4- July 25, 1980 /pe ATTACHMENT CITY COUNCIL SPECIAL MEETING July 25, 1980 nN` I5105.EY C-EASE J �, '�S 45-405 20/20 BUFF� NA+- ' 1 7