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Minutes 04-29-85MINUTES OF THE SPECIAL CITY COUNCIL MEETING HELD AT CITY HALL, BOYNTON BEACH, FLORIDA, APRIL 29, 1985 PRESENT Nick Cassandra, Mayor Robert Ferrell, Vice Mayor James R. Warnke, Councilman -C-art--~i~erman, Councilman Peter L. Cheney, City Manager Betty S. Boroni, City Clerk Mayor Cassandra called the meeting to order at 7:00 P. M. and announced it was a Special Meeting to interview the financial consultants recommended for the capital improvement projects. Mr. Cheney told about thirteen financial consult- ants responding with interest with six being chosen for rank- ing by the City Council and four being agreed upon by the City Council for interviews. He explained that each firm will give a 20 to 25 minute presentation followed'by a question period. The purpose is to choose one firm to work with us on the capital improvement projects. Presentation~by Dean Witter Reynolds, Inc. Mr. Craig Dunlap, Senior Vice President,. Dean Witter Reynolds, Inc., told about his credentials to serve the City of Boynton Beach. He told about their service to clients throughout the state with/about one-half of their business being financial advisory in nature and one-half serving as underwriter. He added if they are retained, it would be with the understanding they would not bid on the bonds unless given specific apprOval to do that in a competitive sale. Mr. Dunlap then referred to the city's particular projects and gave several reasons for recommending a competitive sale of bonds. He told about recent bond sales and how competitive bids were successful. He added that another consideration would be whether to go with bond anticipation notes for short term financing and told about one recently sold for Leon County. He also explained how this could be used to phase in. millage. Mr. Dunlap then referred to the water and sewer expansion pro- jects and stated these certainly should not be a general obli- gation of the city and there should not be any problem of selling that debt. He referred to the utility tax being in- creased and explained how that was a potential source of funding or could be used as a bondable source of revenue. Councilman Zimmerman asked if they had an office closer than Tallahassee and Mr. Dunlap replied that they have a public finance office in Miami and brokerage offices throughout the state. SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA APRIL 29, 1985 Mayor Cassandra questioned the competitive and negotiated bid concepts and Mr. Dunlap explained how the interest rates have been relatively stable, he feels it is in the city's best interest to issue this general obligation bond competi- tively primarily because of the interest activity and bid~ potential of banks. After further discussion about market rates and bond sales, Mr. Dunlap expressed his appreciation for being able to give the presentation and stated that he hopes they will have the chance to serve the city. Mr. Cheney told about the bond issues for the beach and golf course and some~discussion followed. Presentation by Prudential-Bache Securities, Inc. Mr. Robert S. Middlemas, Vice President, Prudential-Bache Securities, Inc., referred to submitting arproposal and dis- tributed an addendum. He told about the staff's experience and history of the company. He explained howl'the company had unique qualifications with having statewide syndication, staff throughout the world, etc. He told abou.t their research de- partment conducting a.full credit analysis before going to bond rating~agencies. As financial advisor, he explained how timing an issue would~be given consideration. He told about contact with major bidders and conferences for discussion of an issue. Mr. Middlemas continued that another thing to be considered is developing a book entry system for the bonds and he explained how this could be accomplished. He further enum- erated the savings which could be realized with such a system. Mr. Middlemas further explained how basically the financial advisor role is different than the investment banker. Councilman Warnke referred to the book entry system and Mr. Middlemas explained how it was basically a computerized sys- tem. Mayor Cassandra asked whether they recommended negotiated or competitive bidding and Mr. Middlemas replied that right now, with a general obligation issue, he would definitely recommend competitive sale and explained there would be more bidders and the market has been fairly, stable. Mayor Cassandra asked if they would bid and Mr. Middlemas replied they would only do so if the City Council requested them to as many people may see it as a conflict of interest. - 2 - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA APRIL 29, 1985 Presentation by William R. Hough & Company Mr. Anthony C. Sov±ero, Vice President, William R. Hough & Company, distributed an updated.addendum in addition to their proposal. He reviewed the various sections of the'addendum. He told about the firm's participation and representation of various cit±es in this area. Mr. Gray Dunlap referred to public finance becoming more com- plicated every day and explained how a financial advisor was needed to be sure the city is getting the best terms, best interest rate and best package in financing of public improve- ments. He stressed the importance of knowledge of market con- ditions. Councilman Warnke asked if they would recommend negotiated-or competitive sale and Mr. Soviero replied that if the market continues stable, they would recommend a competitive sale as a negotiated bid is best with an unstable market. Mayor Cassandra referred to their staff and Mr. Soviero told about the indiViduals comprising their staff with specialties and expertise in. certain areas. Mayor Cassandra asked if North Palm Beach is a satellite office and Mr. Soviero explained that their main office is in St. Petersburg, but have instant communication in the North Palm Beach office. Mr. Dunlap distributed a brochure listing the ratings of vari- ous companies and pointed out their, rating. Mr. Cheney ques- tioned the average size and Mr. Dunlap replied that he believes they did 90 issues last year ranging from $6,000,000 to $20,000,000. Mr. Soviero told about various ones handled recently. Mr. 'Dunlap added that a good job must be done to get into these.national rankings and in the State of Florida, they 'have more public finance professionals than any other firm. Mr. Cheney asked if they have offices outside of Florida and Mr. Dunlap replied negatively. Presentation ~by Arch W. Roberts & Company Mr. Arnold W. Schneider, Vice President, Arch W. Roberts & Company, outlined the status of their firm and told about their experience. He showed charts outlining ~he approach they plan to take, market indications, .development of the proper finance vehicle, financing methods with yield~curves, wrap around, etc. He added that there are many alternatives and these illustrate just a few and he will be glad to give any additional explanation. - 3 - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA APRIL 29, 1985 Councilman Warnke asked .if the present market indicated that it was better to go competitive than negotiated and Mr. Schneider replied affirmatively, since the interest rates are down and with not much going on in Florida, a lot of people could focus on Florida. Mayor Cassandra referred to the window wrap-around presentation using the water and sewer bonds as an example and asked if this would be the same on a small sale of $6,500,000 and Mr. Schneider replied that what is impor.tant is the relationship of new money to old money and stated 'it would be explored. He is sure there could be saving, but it would be minimal. He told about recent bond issues completed with significant savings. Mayor Cassandra asked if it would be very receptive to munici- pal type bonds with many bidders and Mr. Schneider replied affirmatively. General Discussion Mayor Cassandra suggested.that possibly the staff 'should submit recommendations. Councilman Warnke stated that he is leaning.towards Pruden- tial-Bache Securities and Arch' W. Roberts &'Company, since Prudential-Bache has everything here and Arch Roberts is experienced in our city affairs~ Vice Mayor Ferrell stated he would lean towards Arch Roberts b.ased on their ~experience. Councilman Warnke commented that in the past, Arch Roberts has become volatile in their personnel~and possibly Prudential- Bache may be more stable. Mayor Cassandra requested an opinion on the two. Mr. Cheney stated he was very concerned and somewhat upset with Arch Roberts the last time when'they were in New York and told about them not being prepared. He referred to never working with Prudential-Bache, but told about changes made recently in their municipal finance operation. In reference to Willian R. Hough & Company, he has not been happy with them for a long time. Dean Witter Reynolds, Inc. is a different kind of operation ~and their offices in Miami and Tallahassee specialize in municipal financing with national backup. They are used by a lot of cities. Mr. Grady Swarm agreed with Mr. Cheney that Arch Roberts was not prepared in New York. Mr. Cheney added that Arch Roberts did come forth with the idea of refunding the golf course issue and put together the package to refund the water issue. There are Pros and cons to be considered. Prudential-Bache has a national 'operation and Arch Roberts has a large Florida operation. - 4 - SPECIAL CITY COUNCIL MEETING BOYNTON BEACH, FLORIDA APRIL 29, 1985 Mayor Cassandra referred to the City Manager giving a report and suggested that first and second choices be submitted by the Council members prior to May 7. Councilman Zimmerman added that after hearing the discussion and having been in New York and seen-the confusion with re- financing, he-would be willing to take a chance on Prudential- Bache, Mr. Cheney responded that obviously this doesn't happen every time or they would not be in business. Council- man Zimmerman referred to the bonds not being'printed correctly also and Mr. Cheney replied that was a mistake made by the bond printing company. Mayor Cassandra asked if it was recommended that the financial advisor for the $6,500,000 issue automatically become the financial advisor for the water and sewer issue and Mr. Cheney suggested that should be left open, as the two will be coming close together and we should have the sa~e one for about five years. Councilman Zimmerman suggested that the door be left open and if difficulty is encountered, a change could be made. After further comments, Mr. Cheney advised that we can work with either one and Mayor Cassandra suggested recommendations to be submitted prior to May 7. Adjournment Councilman Warnke moued to adjourn, seconded by Councilman Zimmerman. Motion carried 4-0 and the meeting was properly adjourned at 9:20 P. M. ATTE ST: ~~~~ Clerk ~ Recording Se~cretary (Two Tapes) CITY OF BOYNTON BEACH, FLORIDA X - - Mayor - '~cilman -- CoCci lman - 5 -