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because the revenues are clearly pledged, they are not subject in <br />the same fashion as general obligation bonds to the provision of <br />Amendment One that requires reduction in operating and maintenance <br />expenses to continue to pay debt service in the event of a shortage <br />of the mill levy to pay debt service. The sales tax bond from the <br />Amendment One perspective is clear sailing and from a marketing <br />perspective, because of the absence of rating agencies there is the <br />ability to sell a sales tax revenue bond at a very competitive <br />interest rate, because you're bringing a bond into a market where <br />there is a scarce supply. <br /> <br />Howard asked if they were trying to refinance a GO bond, it would <br />be more difficult in the Colorado situation. Cason replied it <br />would depend on how the wording of your initial authorization was <br />structured. <br /> <br />Mayer asked about the cost information item of airfare, is there <br />any' cap on that and what is the anticipated expense. Cason replied <br />that he believed that they capped that at $3,000. <br /> <br />Davidson asked about the maturities being refunded would they <br />res.ult in a positive arbitrage. Cason replied that that situation <br />was, changing on a daily basis and the arbitrage is when you refund <br />the escrow it is so called yield restricted. You fund the escrow <br />with Treasuries, the thing that fluctuates in the positive or <br />neqative arbitrage situation is the relationship of Treasury yields <br />to your restricted yield on the escrow. Recently, the Treasury <br />yields have been going up, so amount of negative arbitrage is being <br />red.uced, but it is a moving target. <br /> <br />Davidson asked that for the maximum cost savings of the City, would <br />it not be in the City's benefit to not refund those maturities and <br />have a negative arbitrage. <br /> <br />Cas. on replied that from the standpoint of this transaction, your <br />better off to refund all the bonds based on the conjecture that <br />interest rates are such a low level that when you may have negative <br />arbitrage prior to the call date of the bonds, the negative <br />arbitrage is significantly made up for by the interest rate <br />differential past the call date. Unless you expect that rate will <br />be at a low level at the call date, you're never going to be able <br />to improve upon the savings that you have here. <br /> <br />Davidson asked about getting the bonds insured and rated double A. <br /> <br />Cas.on replied in terms of the insurance, he felt positively, but <br />co~.ldn't guarantee anything. In talking with NBI, one of the <br />ins.urers, they are interested in seeing this issue, because of the <br />growth and development of Louisville's economy and impact on the <br />debt service coverage. Coverage is an important aspect looked at <br />in sales tax revenue bonds and the other one is the diversification <br />within the revenue base. He brought Standards and Poors analyst to <br /> <br />5 <br /> <br /> <br />