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Minutes 06-15-78MINUTES OP THE SPECIAL CITY COUNCIL MEETING HELD AT CITY HALL, BOYNTON BEACH~ FLORIDA, THURSDAY, JUNE 15, 1978, AT 7:00 P. M. PRESENT Emily M. Jackson, Mayor Edward F. Harmeni~g, Vice Mayor Richard D. Caldwe!l, Councilman Joseph DeMareo, Councilman David Roberts, Councilman Prank Koh!~ City M~na~er Tereesa Padgett~ City-Clerk Mayor Jackson called the meeting to order at 7:00 P. M. and announced it was a special meeting set at the last City Counei! meeting to talk about bonds for sewer and water. Mayor Jackson asked Mr. Kohl if he had any preliminary comments to make and Mr. Kohl repli ed that he has invited another company and tried to get other companies but failed because they would not come here and make a presentation as we requested. Mr. HobertMidd!emas, Kirchner, Moore & Co., came before the Council and introduced his associate, Ms. Linde Kelly, E. F. Hutton & Co. He presented a pmoposat to the Council members and then reviewed it ~ith them. He read the cover letter and explained that in this pro- posal, he would like to examine the City's present debt structure~ bond indebtedness and discuss the possibility of restructuring the present debt. He then explained the illustrations and graphs given in the proposal. He read the situations and explained the comparisons between a 2.2 and 10.5 million dollar bond issue. Mr. Coldwell questioned how a 2.2 million dollar bond issue could require a maxi- mum annual debt service of 1.335 million compared to 10.5 million dollar bond issue requiring an annual debt service of 1.9 million? Mr. Middlemas replied that the present debt service is added and then continued reading the comparisons. He referred to an advance refuddi~g plan and sta~ed they could put together an advanee refund- ing plan now and save the City money. It can reduce the overall debt service. Advance refunding is a possibility. The debt man be restructured so the City starts out with an essentially level debt service. This would allow the issuance of bonds under more favorable conditions. There would not be any years with unduly high payments putting on pressure to r~se taxes. He explained how the refinancing and restructuring should possibly be over a 10 year period instead of 25 years to save on interest. By advance refunding, this man be accomplished. It would probably take a week to ten days to present the final form. If it does not work out that way, then he would suggest on the issuance of these bonds and all future bonds that the City hire a fiscal agent. The City should pay the fiscal agent a fee and this f~scal agent should not be allowed to negotiate for bonds. He truly feels Boynton Beach is groWing and a lot of money could be saved by putting these bonds up for sale. He then continued read- ing the courses of action r~commended. Upon oomp!etion of the revie~ he stated that he feels very strongly about the public sale reeommen- dation. The City is going to be needing to issue more bonds. He thinks once the framework is initially set up, they can go through public sale as easily as a negotiated sale and will save the people some money. MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA JHNE 15, 1978 Mr. DeMarco questioned what the cost to the City would be to retain a fiscal agent and Mr. Middlemas replied that it could be negotiated and explained that it would probably be ~ to ~ of the bond issue or he would think 1/10 of 1% would be a realistic figure. Mr. Roberts referred to the reason for meeting ton/~ht was to talk about 2.9 million ~ollar revenue bonds and stated that we already discussed refunding some time ago, but it did not work out. He is not prepared to mix the two. He also read somewhere that the issu- ance of 2~ million dollars worth of bonds will not affeet our present rate and Mr. Kohl replied that he had said this. Mr. Roberts con- tinued that somewhere alon~ the line, we can handle it without any problem. He is hesitant to buy this new plan unless it is thor- oughly explored. It was explored previously~ but it fell by the way- side. He is hesitant in miminc it with the new issue. Mr. Middlemas replied that the City certainly has ample coverage right now to cover 2.2 mi]l~on dollars and perhaps 10.5 m/!lion dollars. The only thing is that if the debt service were level, they would have a larger margin and who is to say what the debt serviee will be in the next ten years. Mr. Harmen/ng elarified that it depends on the gross revenues and operating expenses. Mr. Middlemas suggested that the best position is to borrow as little in the future as possible. Mm. Harmening peferred to having Hough g Co. for about 20 years as the City's fiscal agents and stated that it has been his experience that we have always received more than adequate service. Their ser- vice has appeared totally in our behalf and in our favor. In re- ference to restructuring the whole revenue bond debt service, he believes it would have been good before the Internal Revenue Ser- vice made the change. He ms not interested~Dlight to go ahead and pursue that part of the picture. We need to pursue some of this work, especially the lift stations and force mains. We need the money in hand. He personally feels the City has been well served and will continue to be best served by Hough g Co. He believes in the State of Florida, Hough g Co.. has an enviable rating and enjoy a larger percentage in the State of Florida. He would be reluctant to change companies at this time. We have had an opportunity to study the Hough & Co. proposal since it was submitted a coupl~ days ago. He moves to authorize Hough g Co. to proceed with the issuance of this revenue bond issue for 2.2 million dollars and to go ahead and prepare the resolution, get together with the bond counsel in Jacksonville and the local attorney. Let's get the ball rolling and proceed with the necessary work. MayorJackson requested him to hold his motion. She then stated that she feels the meeting was for the Council to vote on a bond now and not talk about res=mucturing. We have looked this over and it is a necessity now. She would have misgivings about re- structuring it right now. She understood these were not payable in advance. This is nor what we are here for tonight, but tommake a decision on the 2.2 million dollar bond issue. -2- MiNI/TES - SPECIAL CITY COHNCIL MEETING BOYNTON BEACH, FLORIDA JUNE 15, 1978 Mr. Caldwell stated that he thinks the point Mr. Middlemas is trying to make is valid. Somewhere in the near future, we must sit down, perhaps when not under this pres~s~re with a time sehedule, and give this concept very serious consideration. As he understands the con- cept, it does appear the City could, through proper restructuring of our debt service, save the taxpayers a several thousand dollars immed- iately and over several years. The choice they have now is the 6.5 from Mr. Middlemas or the 6.5 from Hough ~ Co. As hard as it sounds~ it does appear Hough & Co. does have some inside track on this parti- eu!ar issue because they have done it in the past. He wishes this Council would make~a commitment at this time to give serious consid- eration as to the coneept of restructuring the debt"service for the future. Mayor Jackson agreed and stated she would like to look into it, but we need a thorough discussion. Mr. Caldwel! then requested Mr. Middlemas to please not take this as a rejection of his company's services as it is not intended to be such. He definitely wants to look into the concept proposed. However, at this time~ one company is offering 6.5% interest and they have done business with us in the past. The other eompany is offering 6.5% interest and they have not done business with us. Possibly the restructuring of the debt service will be their track in. Mr. DeMarco referred t~o a fiscal agent and stated he didn't feel at this time that it would be suitable to hire a fiscal agent on the basis as mentioned. This particular bond is for our sewer main and Mr. Kohl clarified that it is for both sewer and water. Mr. DeMareo stated it was for the new plant and Mr. Kohl replied that it was also for new wells, etc. Mr. DeMarco stated that the main must be put in to the new plant and Mr. Kohi agreed. Mr. DeMareo stated that this is-necessary right now as it may hold up our getting into the plant with Delray Beach. Mr. Harmening stated that he has no objection to sitting down and studying the present indebtedness. He thinks he had a good under- standing of the process until the Internal Revenue Service changed the rules recently. As far as totally restructuring the debt strae- %~l~e to end up paying more interest to reduce the prineipal payments, at the present time he doesn't think he would ever be in favor of that. He has no objeetion of considering the restructure. Mr. Harmening then made a motion to grant this bond issue to William R. Hough & Co. and authorize them to proceed and draft the official statement and bring in the distribution and marketing activities and resolution and all other necessary parts they perform for the City in the issuance of a bond issue. Mr. Roberts seconded the motion. Under discussion, Mr. Roberts repeated that he is not pre- pared to refund or restructure our debt because it has been brought up before and we did not proeeed with it. At this time, the most important thing is to get going on this particular item we are here to handle tonight. Mayor Jackson added that it has been hanging fire and we will be holding up the regional plant. Motion earried 5-0. -3- MINUTES - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH~ FLORIDA JUNE 15, 1978 Mayor Jackson questioned the time frame on this and Mr. Alfred Shepard appeared before the Council and advised them that he thinks the time frame would be something like duming the next ten days, perhaps there will be at least three conferences with the staff or individual members of the City Council. At the end of the ten day period~ they would have before the Council a proposed bond resolu- tion. In the meantime, they will bring in the bond counsel. He would expect approximately two weeks from today the bond counsel would have the resolution, which by that time would have been worked over by the City staff and them. Inabout two weeks, they should be passing the bond resolution. In approximately three weeks, they should have a date set for the validation. In about six weeks, they may have the validation. In about twelve weeks, they might have the bond sale. Running coneurrent!y with that 'would be a draft 'of the official statement delivered to each of the Council members. There would be a conference about the proposed terms of the bonds, so they would be prepared on voting on the bond issue. Mr. Roberts clarified that the marketing of the bonds takes place within 60 to 90 days and the interest rates should hold. Mr. Shepamd agreed. M~. Shepard added that the d~termination of the interest rate is determined at the time the bonds are marketed. No matter how they are sold, there would be a date see for the determination of the interest rate. Once it is set: it would prevail. It man be set along the line or man be set earlier. It might be somewhere durinc which the appeal period is running. If it looks like the bonds will be delivered after the 30 daysappeal period~ the bonds should be marketed about the time the appeal period expires. In total in talking about a money in the bank situation~ it would be somewhere between 75 and 120 days. Of course, money in the bank is not all that important~ but to establish the cost of the money and to insure you have it. When the interest rate has been estab- lished and the bonds validated~ the~ they can move with the award of eonstruction contracts. Mr. Roberts referred to the day to day interest rates changing and stated that there is reference to shortage of money. He hopes we donft run into some drastic change and Mr. Shepard agreed. Mr. Shepard continued that there has been an amazing steadiness in the Flomida bond market in the past year except for the last two months when theme was a tremendous rise in the interest rates. On a day to day basis, they can tell what's happening, but do not know what 60 to 120 days will bring. Mr. DeMarco asked how long it would take to get the force main ~into the plant and Mr. Joe Swan informed him that the job is advertised now to receive bids on July 3_1 and with E.P.A.~s ooncurrenee~ the tightest schedule they eanwork out i~ award on September 18. The contract calls for completion in365 days. Mm. DeMarco oommented that this was another year. Mr. Shepamd stated thatthe bond pro- meeds have been available well in advance to pay out on construction. MINUTES - SPECIAL CITY COUNCIL MEETING BOYN~0N BEACH, FLORIDA JUNE 15, 1978 Mr. DeMareo asked if he was saying it will take the contractor at least a year to finish the force main and Mr. Swan replied that they originally started out with 500 days, but about a year ago they trimmed it down to 365 days. Mayor Jackson clairiffed that this means we cannot'use the plant ourselves and means Delray Beach shouldntt be. Mr. DeMarco asked if it would hold up Delray Beach and Mr. Swan replied that the construction money could not possi- bly be dee before October. Mayor Jackson requested Mr. Paul Startzman to fully explain this as she thinks we should be aware of the effect of this delay. Mr. Startzman referred to the engineers stating that 'the earliest time that Beynton Beach eon participate in the operation of the re,lena! plant would be September 18~ 1979 as it stands now and stated that-the plant will be ready to operate no later than early J~nuary, 1979. It is ahead of schedule at the moment. This after- noon~ he had two long oonversations on this very subject, one with De!may Beach and the matter of the operations agreement and the matter of when the plant'would start because as part of the opera- tions agreement, they would be reluctant to start 'until we can:join them. He explained how their influenE force main must be cut over sin~ltaneous!y with the effluent force main. The dilemma is that we have a plant and eaoh City has their fixed costs on which they pay the debt service. In the ease of Delray Beach, they will reap a benefit because they have not been treating the sewage at allJ Volum-ewise, De!ray Beach will be producing about four million gal- lons daily at the present time. Boynton Beach wil! not quite do that. Mayer Jackson asked if it ine!uded Highland Beach ~nd Mr. Startzma~ replied affirmatively since Highland Beach is coupled to Delray Beach. Mm. Startzman oontinued that the matter of the plant operating of course will be of considerable more cost and it is to~ally unfair to expect Delray Beach to pay it or expect Boynton Beach to make up the differenee espeeial!y when they 'would have to pay two operating costs, in order t~ get this rolling, they plan to have an interval time to train the troups. He has met their new chief plant operator and he is a very fine man. What they are trying to oome up with is some type of percentage. The engineers are supposed to come up with this in time for a meeting tomorrow morning. The Board deoided the right thin~ to do would be to certainly ask E.P.A. for some type of startup assis- tance because fundamentally the problem lies completely in getting the population figures mixed up. We could not get two state agen- cies to agree to the same figures. It is finally done and they are exploring the situation in regard to the training time for the plant personnel. ;Mr. DeMarco clarified that he was saying they wilt possibly start operation when they are set without Boynton Beach and Mm. Startzman replied that they will operate when it is ready to ~o. Mayor Jackson added that it would be a testing labor- atory. Mr. Startzman added that they will try to work it out. -5- ~IN~/TES - SPECIAL CI~f CO%INC!L MEETING BOYNTON BEACH, FLORIDA 07dNE 15, 1978 Mayor Jackson stated according to the Interlocal Agreement, we are supposed to be joint tenants and if we are not using it, we don~t expect to pay ~or it and they should not pay either exoept for their own use. Theyshould not be penalized for us not using it. Mr. Roberts referred to money being allocated for the stamtup service and Mm, Startzman informed him that there is an application for a grant which goes to the engineers being the teachers but not to pay the operational costs. They will try to womkthis out. He has been in eonversation with Russell $ Axon over the phone ~or over an hour today .and they will be back with him in the moI~ning and he will meet with ~. Mariott in the morning. MK. Swan stated that with a 365 day allowance for final oompletion, the date would be September 18~ 1979: which means all the sod placed~ pavement patched, ete. It ~s entimely possible if the main line is built fimst, theme could be effluent going southin late June or July. ADJOIiP, NM~NT Mr. Harmen/ng moved to adjourn, seconded by Mr. kobemts. Motion oa~- mied 5-0!and the meeting was pmoperly adjourned at 7:55 P. M. CITY OF ~BOYNTON BEACH, FLORIDA ATTEST: City Clemk (One Tape) ~./ Mayor Councilman Councilman -6-