HomeMy WebLinkAbout1985-12-10 - City Commission Special Meeting Minutes0
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TAMARAC. FLORIDA 33320
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December 6, 1985
NOTICE OF SPECIAL MEETING
CITY COUNCIL
TAMARAC. FLORIDA
Please be advised of a Special City Council Meeting to be held
on Tuesday, December 10, 1985, at 10:00 A.M. in the Council
Chambers of City Hall, 5811 NW 88 Avenue, Tamarac, Florida.
The purpose of this meeting is to discuss and take action on
the following items:
1. AUTHORIZATION RESOLUTION - Temp. Reso. #3942 - Discussion
and possible action to authorize the issuance of up to
15 million dollars of water and sewer utility revenue
and refunding bonds by amending and restating
Authorization Resolution 85-21.
2. AWARD RESOLUTION,- Temp. Reso. #3943 - Discussion and
possible action to provide for the issuance of water
and sewer utility revenue and refunding bonds, pursuant
to Resolution 85-21 as amended and restated.
The public is invited to attend.
Marilyn Bertholf, CMC
City Clerk
Pursuant to Section 286.0105, Florida Statutes
If a person decides to appeal any decision made by the city
Council with respect to any matter considered at such meeting or
hearing, he will need a record of the proceedings and for such
purpose, he may need to ensure that a verbatim record includes
the testimony and evidence upon which the appeal is to be based.
AN EQUAL OPPORTUNITY EMPLOYER
POLICY OF NONDISCRIMINATION ON THE BASIS OF HANDICAPPED STATUS
CITY OF TAMARAC, FLORIDA
SPECIAL CITY COUNCIL MEETING
BONDS
DECEMBER 10, 1985
Tape CALL TO DER: Mayor Philip B. Kravitz called the meeting
1 to order on Tuesday, December 10, 1985 at 10:10 A.M. in the
Council Chambers of City Hall.
ROLL -CALL:
PRESENT: Mayor Philip B. Kravitz
Vice Mayor Helen Massaro
Councilman Arthur H. Gottesman
ABSENT: Councilman Raymond J. Munitz
Councilman Sydney M. Stein
ALSO PRESENT: Acting City Manager Larry Perretti
City Attorney Jon M. Henning
V. Diane Williams, Secretary
MEDITATION AND PLEDGE ,QF ALLEGIANCE,: Mayor Kravitz called for
a Moment of Silent Meditation followed by the Pledge of
Allegiance.
1. Authorization Resolution -- Temp. Reso. #3942 - Discussion
and possible action to"authorize the issuance of up to 15
million dollars of water and sewer utility
revenue and refunding bonds by amending and restating
Authorization Resolution 85-21.
SYNQPgIS OF ACTION:
APPROVED AS AMENDED RESOLUTION NO. 85-436 PASSED
The City Attorney acknowledged Council's receipt of the
resolutions this morning by Gerald Heffernan, Bond Counsel.
Mr. Henning read TemR, Resg,394 by title.
The City Attorney recognized the presence of a number of
experts who have been working diligently to reach the dead-
line necessary for these bonds and acknowledged that they
started work immediately upon being hired a few weeks ago.
He said they were prepared, as staff and consultants, to spend
as much time as Council needed for explanation of these items,
and asked for Council's guidance as to how much of an explana-
tion was needed. The Vice Mayor suggested that a presentation
be made focusing on the pertinent information.
Walter Rekuc, resident, asked how Council could consider
having a public hearing when the resolutions on the agenda
were not available to the citizens of Tamarac in the City
Clerk's Office. The City Attorney said the meeting was not a
public hearing but that copies would be made available.
Mr. Rekuc questioned Council's transaction of twenty-eight
million dollars in bonds and the fact that the public would
not know anything about it until it was presented.
Gerald Heffernan, Bond Counsel, summarized that the bonds were
not here for the first time today but the bond resolution was
passed last January and validated by the Circuit Court; he
said the time for appeal of the validation has expired. He
said the citizens were notified of the validation and all the
proper procedures were followed. Mr. Heffernan explained the
resolution was restated, which was passed last January, mainly
to comply with requirements by AMBAC insurance and also be-
cause the underwriters advised that it would be a better
structuring for the transaction. The Bond Counsel stated
that none of the changes were substantive except for the fact
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that the amount was changed from a thirty million -dollar
transaction, at this time, to not to exceed fifteen million
dollars and the purpose was to refund the City's outstanding
water and sewer utility bonds. He said, in essence, they were
substituting the new bonds in debt service for the old bonds,
which are currently outstanding. Mr. Heffernan said that was
the purpose for the new resolution with the only difference
being that they have now provided for the very initial series
of bonds to be refunding bonds only and in an amount not to
exceed fifteen million dollars with the actual amount being
$12.6 million which will be explained in detail when the Award
Resolution is discussed. The Bond Counsel said they hoped,
within the next six months under this resolution, to do a new
series of bonds for new money which is necessary for improve-
ments to the utility. I
Mr. Heffernan reiterated that the bonds have already been
validated for thirty million; therefore, when they do the new
money issue, there would be no need to revalidate. He said an
additional requirement, upon his review of the Charter, was
that the City Manager needed to execute the bonds as well as
the Mayor.
V/M Massaro asked if the resolution provided for the new rate
of funds which must be accumulated to retire the debt service.
She said, originally, 125 per cent was required, and then a
resolution was passed indicating 110 percent which violated
the bond issue of which Council was not cognizant. The Vice
Mayor asked if that correction was included. Mr. Heffernan
said the resolution included a test based on what the
consultants and AMBAC felt was best for the City; he explained
that instead of 125 coverage, they are currently using 110 and
120 coverage. Mr. Heffernan stated that there were two
different covenants: the rate covenant which appeared on page
22, under Section 502, second paragraph. The Vice Mayor
stated that it called for 120 percent. The Bond Counsel said
that was when they used pledged impact fees; he said the net
revenues have to be a minimum of 110 per cent and if there are
pledged impact fees, it could be 120 per cent. V/M Massaro
referred to the title stating that all monies have to come
from rates and questioned why they were pledging something
else. Mr. Heffernan explained that the title indicated that
the City was not pledging any ad valorem taxes but pledging
monies from the utility and pledged impact fees become equi-
valent to revenues at a certain point and time upon eligibi-
lity.
The Vice Mayor said she did not understand why the 120 per
cent was included. The City Attorney referenced the defini-
tion of revenues on page 7, "The term rev— e— nueS shall mean
all monies, fees, charges and other income received by the
City or accrued to the City in connection with or as a result
of its ownership and operation of the water and sewer utility,
and income from investments made under this resolution except
payments on special assessments for water and sewer improve-
ments, contributions -in -aid of construction and income from
investments...". The Vice Mayor said that was the CIAC money.
Mr. Heffernan reiterated impact fees could not be pledged to
pay debt service unless the City reaches the point where the
impact fees are eligible or improvements are being made and
the impact fees are eligible to be used for debt service le-
gally. Mr. Henning said under the definition of revenues the
Bond Counsel has deleted impact fees; Mr. Heffernan concurred.
V/M Massaro said it was the deletion of CIAC money which was
proper.
Mr. Heffernan said 110 has to be the net revenues which was
minus the CIAC funds, and the City could maintain 120 per cent
coverage when impact fees were used which were eligible to be
pledged. He expounded that impact fees were either eligible
or ineligible and, at some point and time, they become eligi-
ble based on the use. Mr. Henning asked if he was saying that
once the City has a plan for those impact fees, CIAC funds,
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and have been identified to go to a particular project, then
they were no longer eligible. The Bond Counsel said impact
fees could be used for determination of rate coverages but it
does not mean that they will be used for anything; he said it
was just a matter of maintaining a certain rate covenant under
this document. He recalled a previous discussion in which the
City decided this was the way to go to be able to use some of
the impact fees to help offset the requirement on their rate
covenant. Mr. Heffernan explained as opposed to having 120
per cent on net revenues and not having any CIAC included in
that and having 120 per cent on net revenues, which was a
higher amount to maintain, the City was maintaining 110 per
cent. The Vice Mayor said there would be no point in refund-
ing if the City had to maintain 120 per cent because the City
was operating the utility, presently, on 110 per cent and dial
not understand why the 120 per cent was included.
The City Attorney asked the Bond Counsel to explain the dif-
ference between eligible and ineligible impact fees because he
had stated that some could be pledged if they were eligible
and some could not be pledged if they were ineligible. The
Vice Mayor stated that Mr. Heffernan had said that the CIAC
was not included and the City would have to maintain 110 per
cent. Mr. Heffernan agreed. V/M Massaro said the CIAC funds
would be kept where they belong for improvements and there
must be a minimum rate of 110 per cent in the rate structure
which would take care of everything; Mr. Heffernan concurred.
She asked where the 120 came into the picture and why. The
Bond Counsel said the 120 per cent was included because the
Financial Adviser felt it would help the City in marketing
the bonds if the City was able to include in the rate cove-
nant not just net revenues but those funds that become
eligible to be concluded in utility as available monies.
Mr. Heffernan said, if the City did a new project and had CIAC
money available, the money can only be expended for the new
project and cannot be used to pay off a previous debt or as a
pledge toward a bond transaction. He said, however, the money
could be bonded for new improvements and use the CIAC toward
the bonding to do the improvements. Mr. Heffernan said the
City`s Financial Adviser felt that when those monies were eli-
gible for a bond transaction involving new improvements that
those monies are available to be bonded and should be included
in the rate covenant. He said it was easier to maintain 120
per cent coverage when the impact fees are used if they are
eligible to be pledged.
The Bond Counsel asked Frank Etheredge, Finance Director, the
coverage of the eligible impact fees.
Mr. Heffernan explained that the Finance Director determines
when those monies are to be used for construction. The Vice
Mayor asked if they were tying up those impact fees in any
way; Mr. Heffernan said they were not. The Finance Director
said the money collected in impact fees, once added to net
revenues, has to be 120% of debt service coverage. He said
Council would not be restricting nor pledging but saying that
when those two numbers are added together, they would exceed
120 per cent. The Vice Mayor asked if that was how they
arrived at the eligible amount.
Mr. Henry Channing, Smith Barney, explained that the question
of eligibility was the result of State statutes and Court
decisions which have been adopted. He exampled that if some
one were doing a project in a certain area who had paid CIAC
funds, and a totally separate project was being done for a
separate part of the utility system in another area, the City
could not use those CIAC funds for this project nor to pay
for bonds. Mr. Channing said, in other words, if someone
has contributed money to the system because they are going to
benefit from improvements, the City could use that money to
construct those improvements or to pay debt service on bonds
that were issued to construct those improvements. The Vice
Mayor acknowledged that the City received CIAC funds for the
entire system and was not pledged for different projects.
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Mr. Channing said all of the CIAC revenues, for the most part,
received in the City of Tamarac were eligible. He said,
however, that the City's existing bonds dictated that 125 per
cent net revenues of debt service must be collected; he said
the City has been operating at 110 which was in violation of
the old bond covenant. Mr. Channing said the idea of doing
the refunding was to restate the rate covenant in order that
the City could operate at 110 whereby they would be asking the
insurance company to accept a change from 125 to 110. In re-
turn for their acceptance, Mr. Channing said since the City
had been collecting the CIAC funds anyway, they would simply
pledge them to the bond issue and stated that they would never
need them because they were getting 110 per cent already from
rates. He said that additional pledge makes up for the fact
that the rate covenant was dropped from 125 to 110. The City
Attorney said it would also allow the City to obtain insu-
rance.
Mr. Channing informed that Mr. Etheredge had spoken with AMBAC
this morning because they had been waiting for them to commit
for insurance on this issue; he reported AMBAC has committed
but have listed a couple of changes they want within the docu-
ment, none of which are anything other than cosmetic except
that they have asked that the rate covenant be 115 instead of
110. V/M Massaro asked the Finance Director if the rates the
City had now would cover 115. Mr. Etheredge answered that
they would cover 115 for this issue. Mr. Channing said he
would call AMBAC and negotiate with them to accept the 110 but
stated that he could not guarantee that he would be successful
in those negotiations. He said the existing rates as far as
these bonds were concerned were more than adequate to support
115 coverage; Mr. Channing said as far as the fifteen million
dollars in new money, which Council is contemplating doing
next year, 115 as a requirement would be a little short and
the City may not be able to issue the entire fifteen million
at once.
The Vice Mayor said she was not happy with pledging the CIAC
money and asked Mayor Kravitz to recess the meeting so that
she could confer with the City Attorney. Mayor Kravitz calle
a ten-minute recess at 10:40 a.m.
Tape Mayor Kravitz reconvened the meeting at 10:50 a.m..
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The City Attorney said during the recess there was discussion
on the term of pledged impact fees and its connection with the
CIAC fund; he said it was suggested, to alleviate confusion,
that the term "pledged impact fees" should be changed to read
"available impact fees" at the top of page 7. Mr. Heffernan
said the change was acceptable and that he would advise AMBAC
of the change. Mr. Henning acknowledged that the correction
would be effective throughout the resolution. The Bond
Counsel said the word "unpledged" on the top of page 8 would
be changed to read "unavailable". Mr. Heffernan said he was
certain that AMBAC would have other minor adjustments for the
resolution and that he would probably have to return for
Council's consideration of those changes before closing.
Mr. Heffernan said Council needed to award the bonds today
because they have to make an application to the federal
government for securities to be placed in the escrow and to-
day was the last day it could be made within the 20-day
period. The Vice Mayor indicated that a special meeting could
be called for Council to consider any requests for changes by
AMBAC.
C/M Gottesman MOVED that TeMpRgsox_#3942 be ADOPTED AS
AMENDED. SECONDED by V/M Massaro.
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2. Award Resolution - Temp. Reso. #3943 - Discussion and
ion to provide for the issuance of water and
sewer utility revenue and refunding bonds, pursuant to
Resolution 85-21 as amended and restated.
ayNOPSIS QF,,,A9T1QHe
APPROVED as submitted RESOLUTION NO. R-85-437
PASSED
Mr. Henning read T s 3 4 by title.
Mr. Heffernan referenced page 3, Section 1, which showed the
bond size as $12,600,000. He cautioned Council that the
numbers they have were "last-minute numbers" prepared by Smith
Barney to get the City the best interest rate possible and
also to obtain the best debt service schedule.
Mr. Henry Channing, Smith Barney representative, recapped the
purpose of their engagement which was to get the refunding
completed before the end of the year and was to replace the
existing debt with new debt and, hopefully, to do it at the
same cost to the City and to perform those services at a
reasonable cost to the City. Mr. Channing acknowledged that
they have accomplished all those things. He explained the
first schedule as providing information as to the sources and
uses of funds. Mr. Channing said the City was issuing $12.6
million in bonds, at this time; the bulk of the proceeds would
be deposited into an escrow account that will serve to pay off
the outstanding bonds. Mr. Channing advised that the deposit
would need to be made to the bond reserve account, and there
was some accrued interest which has to go into the debt
service account, then, the cost of the insurance policy, the
City's cost of issuance and the underwriters' discount,
Mr. Channing referenced the next page of the schedule which
depicted the bonds maturing from 1986 to 2010 and the interest
rate on the bonds range from 5.25 per cent for the first year
up to 9.1 per cent in 2010. He said it would provide an
effective interest cost on the bond issue of 9.09 per cent.
He said the first column of the table labeled Calculation of
Pro osed Bond Issue provided the outstanding debt service
which is the City's obligation for the 1980 bonds and noted
that they calculated the debt service on this issue. He said
the City would save $1041000 in Paymentsr the
issue after all costs have been paid. EVenethoughlife the of the
of doing this refunding was not to achieve savings becausepose
interests are basically the same now as they were in 1980, he
said there was the benefit to the City of $104,000 in reduced
debt service costs. Mr. Channing said Section II indicated
market conditions and included a graph for 1985 which depicted
that the rates are now lower than they have been this year so
it is a good time to get into the market. He said he antici-
pated rates dropping even further after the first of the year
so that when the City is ready to do the new money issue, they
should do equally as well,
The Smith Barney representative indicated a breakdown of ex-
penses including their underwriters' discount. He said the
detail resolution will be completed from the information out-
lined in the schedules. Mr. Heffernan said a form of a Bond
Purchase Agreement was also attached to the Award Resolution
and a form of the Official Statement and would be completed by
staff before closing. He said the Bond Purchase Agreement was
an agreement to award the bonds to the underwriters which he
and the City Attorney have reviewed and required execution by
the Mayor today,
Mr. Channing said he contacted AMBAC by phone and informed
that AMBAC has agreed, upon review of past impact fees, to
accept the 110 on net revenues with the stipulation that, if
at some time in the future, those available impact fees fall
below a very minimum level and cannot generate 120 with the
impact fees, the rote covenant would increase to 115.
Council agre-ed with--,,AMBAC's proposal, Mr. Heffernan said the
resolution- would be -adjusted and presented to Council at a
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special meeting. The City Attorney indicated that the
11/10/85 Summary and Analysis of Bond Sale prepared by Smith
Barney would be an exhibit to the Award Resolution.
Mr. Heffernan identified the Smith Barney Summary as Schedules
I and II as stipulated in the Award Resolution. The City
Attorney indicated the following as exhibits to the Award
Resolution:
Exhibit A - Disclosure Letter
Exhibit B -- Bond Purchase Agreement
Exhibit C - Official Statement
Exhibit D - Escrow Deposit Agreement
Smith Barney's Schedules I and II
Mr. Henning referenced a letter from Touche Ross regarding
their proposed fee of $8500 to be paid at closing for them to
prepare the calculations to verify and audit the figures pro-
posed by Smith Barney. The City Attorney said he was assured
that this was a competitive rate as compared to other bond
closings but asked for clarification as to who was responsible
for payment. Mr. Channing said there were a group of fees
called "Costs of Issuance" which are the City's fees to pay
for professional services and the Touche Ross expense would be
one of those. He said their experiences, recently, have been
that verification fees have ranged from $7500 to $15,000 and
felt that $8500 was very reasonable. Mr. Channing said be-
cause Touche Ross was involved with the City as its auditor,
it would be a good idea to use them. The City Attorney sug-
gested that Council agendize by consent the Touche Ross item
at tomorrow's regular meeting. V/M Massaro MOVED the ADOPTION
of Temp. Reso. #3943 as presented with attachment of exhibits.
SECONDED by C/M Gottesman.
VQTE:
ALL VOTED AYE
The City Attorney asked the experts present to place their
names and firms on the record so there would be an indication
of who was present to assist Council.
Clark Bennett, William R.
writers;
Paul Goldberg, Counsel to
Melissa McDonnell, Smith
Jim David, Smith Barney
Hough & Company, joint under -
the Underwriters;
Barney
Mayor Kravitz adjourned the meeting at 11:20 a.m.
NCITY
CLERK
This public document was promulgated at a cost of $58.63 or ,
$ 1�_ 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.
CITY OF TAMARAC
APP OVED AT ME ,11G UE
Ci*- Clerk
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