HomeMy WebLinkAbout1980-07-25 - City Commission Special Meeting MinutesL -1
5811 NORTHWEST 88TH AVENUE TAMARAC, FLORIDA 33321
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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.
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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.
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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.
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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
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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��
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ATTACHMENT CITY COUNCIL SPECIAL MEETING
July 25, 1980
nN` I5105.EY C-EASE J �, '�S
45-405 20/20 BUFF� NA+-
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