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Minutes 03-14-90MINUTES OF THE SPECIAL CITY COMMISSION MEETING HELD IN COMMISSION CHAMBERS, CITY HALL, BOYNTON BEACH, FLQRIDA, WEDNESDAY, MARCH 14, 1990 AT 5:00 P. M. PRESENT Gene Moore, Mayor Robert Olenik, Jr., Vice Mayor ~illian Artis, Commissioner Arline weiner, Commissioner Lee Wische, Commissioner J. Scott Miller, City Manager Sue Kruse, City Clerk Mayor Moore called the meeting to order at 5:00 P. Canvass and Accept General Election Returns from March 13, 1990 Sue Kruse, City Clerk, announced that Lillian R. Artis was the winner in District II with a total of 3,546 votes. Robert Olenik, Jr. was the winner in District IV with a {otal of 4,061 votes. There was loud applause. Commissioner Wische moved, seconded by Commissioner Weiner, to accept the report of the City Clerk and to declare the general election returns finalized. Motion carried 5-0 ~ayor Moore congratulated the winners and announced their installation would be on March 29, 1990 at 6.00 P. M. ~inancing for Tradewinds Settlement iity Manager Miller had proposals from SunBank, Barnett ank, and William R. Hough & Co. He noted they were looking ~t a short and long term financial package for the payment of the City's debt in the amount of $8,000,000. They were ooking at a financing alternative that would not necessitate alidation and referendum, and which would yield a lower ~ercentage than the 12% stated pursuant to the judgment. The Commission had a memorandum and letter from the City's ~ond Counsel, Mark Raymond of Moyle, Flanigan, Katz, itzgerald & Sheehan, P. A., West Palm Beach, FL dated arch 14, 1990. City Manager Miller called attention to the paragraph in the memorandum relative to the use of the ~ublic services utility tax as a pledge. With a pledge of this, he said the City would not go through the validation ~nd referendum, and the City could yield a better yield than ~he 12% pursuant to the judgment. 35% of the public service Utility tax is now pledged to the 1986 bond issue. That is MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 14, 1990 pledged to the 1986 bond issue. That is approximately 1.112 million dollars a year. The balance of the public utility tax goes into the General Fund, and that is the part they were working on at this point. There was discussion about the three proposals. SunBank's proposal would be a one year bond anticipation note (BAN) %t an interest rate of 8.25% fixed or 80% of SunBank's prime ~ate changing from day to day. City Manager Miller informed 9ice Mayor Olenik this would be the City's choice. The ~ecurity noted on their proposal was a pledge of the proceeds 6f public service revenue bonds to be issued by March 28, 1991 with a lien on the public service taxes. This would be a one year BAN. During that time, the City could make a ~eclslon on how it wants to refinance this over a longer eriod of time. Mayor Moore asked if this would be the 8,000,000. City Manager Miller answered affirmatively. If the City decides in that one year to get involved with a bond issue or refinancing on a rollover with the 1986 issue, ~e thought the City would fall under the guidelines of being qualified for a loan with a better interest rate. Commissioner Weiner questioned how the interest rate could ~ot affect the City's budget. She asked how the City could pay off the interest rate on the short term borrowing. ~ity Manager Miller replied that the interest on the one year BAN will be due on a monthly basis, and he agreed it ~ill have an effect on the City's budget. ity Manager Miller told Mayor Moore he received most of he propoals between 4:15 P. M. and 5:00 P. M. Mayor Moore ~tressed that $5,000,000 had to be paid by March 24, 1990 or ~he interest will be retroactive back to the date of the ~udgment. City Manager Miller confirmed Commissioner Weiner's ~tatement that the other $3,000,000 will not have to be paid ~or another sixty days. She asked if they could just borrow ~he $5,000,000. Mayor Moore answered affirmatively. City anager Miller added they must have the $5,000,000 by the 24th of March. As the 24th is on a Saturday, he assumed ~hey should have it by the 23rd of March. City Manager ~iller stated $8,000,000 is the total now. It would be hard Go say $5,000,000 now and in 60 days the additional $3,000,000 because SunBank is allowing the City to exercise its options relative to whether they would wish to appeal he decision of the CircUit Court or get involved with a re- financing of the 1986 issue or a new bond issue. ~ayor Moore advised that the appeal was not a viable issue tonight. He thought the issues involved in the appeal were 2 MINUTES - SPECIAL CITY COMMISSION MEETING BOYi~TON BEACH, FLORIDA MARCH 14, 1990 moot at this point. Mayor Moore felt they should have a plan to adopt whatever legislative action is necessary to float an $8,000,000 bond issue and refund the existing franchise tax outstanding bonds at the earliest possible date. There was discussion about the three proposals. Vice Mayor 01enik did not think Barnett Bank was the best way to go, and he called attention to the prepayment penalties. ~lark D. Bennett, First Vice President, William R. Hough & Co., 100 Second Avenue South, Suite 800, St. Petersburg, FL 3~-~1, said they proposed they would buy from the City the $8,000,000 net proceeds of bonds necessary to satisfy the City's debt. If they are unable to close that issue within the nine days the Commission discussed, they will purchase ~rom the City a BAN and close the $8,000,000 transaction within 45 days (June 1, 1990). A BAN of 7½ was quoted to the City. Mayor Moore asked whether the ad valorem taxes Were involved in this. Mr. Bennett answered that they were hot. Mr. Bennett informed the Commission his company spoke this afternoon with the Municipal Bond Insurance Association MBIA), as they would be the insurers on the outstanding lssue. Mayor Moore asked if the City would anticipate bond insurance. City Manager Miller answered it would not be on ~he BAN. ~ayor Moore thought SunBank looked like a better deal at ~his point and time with the proviso that Mark Raymond, the City's Attorney, could proceed immediately and draw whatever is necessary to do that and the Commission would adopt it ~ext Tuesday, March 20, 1990. The secondary thing would be qoming through simultaneously to refinance the outstanding bonds. ~ommissioner Weiner did not understand why SunBank's offer Was better than the offer from William R. Hough & Co. Vice ~ayor Olenik wondered what Smith Barney said. City Manager iller answered that if the City gets involved with refinan- Cing the 1986 issue next year, Smith Barney advised the bonds will be marketable. ~ice Mayor Olenik did not want to accept William R. Hough & Co. without any guidelines or any proposals. City Manager Miller explained that he contacted them about 2:30 P. M. today but did not feel he had the oPtion to say they should MINUTES SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 14, 1990 not come to the meeting. He commented that SunBank is a lot lower than 12%, and there is no penalty. Consensus re Bond Attorneys Mayor Moore asked if the Commission agreed, no matter which- ever way they would go, they would want the Bond Attorneys to proceed as quickly as possible to get the finalized ~efunding and get the lower interest rate. This was agree- able with the Commission. Continuation of Discussion re Three Proposals Mark Raymond, Attorney, Moyle, Flanigan, had one concern about SunBank's proposal. That was that it said interest would be paid monthly. Typically, at a bank, all of the interest is due at maturity, and you do not have to make any durrent payments. Mr. Raymond did not think the City would ~ant to make monthly payments, and he explained. Discussion ensued about the impact on the budget, the interest, validation, the long term solution, sewer bonds, SunBank, prepayment of the loan, and options the City had. Commissioner Weiner asked if City Manager Miller was ~ecommending SunBank. City Manager Miller replied that SunBank's terms were far better than Barnett. William R. ~ough had a good proposal. However, this was not opened up ~o any other investment companies, and one or two may have Wanted to come in. The SunBank proposal would allow the ~ity to go forth with the other type of proposal. Since it ~s only a short term proposal, it buys the City time to investigate other alternatives and work with other brokers. As a lawyer, Mr. Raymond did not think it would be ~ppropriate for him to recommend. He asked Commissioner Weiner if there were any questions. Mayor Moore said if Commissioner Weiner wanted time, they would take time, but he reminded her they did not have much time left. Mayor Moore thought SunBank was the best. Grady Swann, ~inance Director, agreed with Mayor Moore and City Manager ~iller that SunBank's proposal was the best for the short %erm situation they were now looking at. It will still give them an opportunity to do a take down through William R- Hough & Co. or any other company, investment banker, or Underwriter allowed to participate in it. 4 MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 14, 1990 Motion Vice Mayor Olenik moved, seconded by Commissioner Wische, %o authorize City Manager Miller to proceed with nego- tiations to handle the short term matter with SunBank and Come back with final recommendations after that point. ~ommissioner Weiner thought a Financial Advisor should be present. A representative from Prudential-Bache was present but since they had not seen the proposals, he said they Would be unqualified to give an opinion. Commissioner Weiner wanted their input. A vote was taken on the motion, and the motion carried 5-0. Vice Mayor Olenik asked if there would be a Resolution at the ~ext meeting. City Manager Miller answered affirmatively. Vice Mayor Olenik stated there is another type of revenue ~ource bond, where you are not necessarily pledging a speci- lic revenue source. Sarasota County did it last year, and alm Beach County is doing it this year with the Courthouse. This would allow the City more flexibility to use the service ~ax money. Mayor Moore agreed with Commissioner Weiner that all of this funnels into the General Fund. He also agreed With Vice Mayor Olenik that there are many other revenue ~ources the City can utilize. A~DJOURNMENT ~he meeting properly adjourned at 5:35 P. ATTEST: Recording Secretary /z~ (One Tape) Mal -~ ~mmissioner~~ Commissioner 5