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revenue bond refunding that he had discussed with Council <br />previously, be passed on an emergency basis in order that the <br />refunding bonds be eligible for bank qualification. He explained <br />that in order for the eligibility to take place, the bond issue <br />would have to close by the end of this calendar year. Bank <br />qualification is a marketing advantage to the city. It entails the <br />ability of commercial banks to invest in this type of security <br />pursuant to the tax code, where they might ordinarily not be able <br />to invest in an issuer's tax exempt bond issues, if that issuer, <br />during a single calendar year, sells more than $10 million in tax <br />exempt securities. In this instance, the City of Louisville, if <br />this transaction closes prior to the end of 1993, will not have <br />sold more than $10 million in such securities. Therefore, the <br />investment would be an eligible one for commercial banks. The <br />marketing advantage to the City of Louisville is documented to <br />indicate approximately that on average it would be anticipated that <br />the interest rate or the bank qualified bonds would be <br />approximately 25 basis points less than the interest rate for non- <br />bank qualified bonds. It would be a greater present value savings <br />for the city. <br /> <br />Sisk: <br /> <br />How much money would be saved by <br />virtue of the 25 points to the city? <br /> <br />Cason estimated that the additional or incremental savings would be <br />approximately $160,000. <br /> <br />Mayer wondered if it was in the city's interest to do this at this <br />time, given the possibility of negative arbitrage. <br /> <br />Cason stated that the levels for negative arbitrage in the escrow <br />account, if there is any, will be set at the time that the <br />transaction takes place. There is not any anticipation that the <br />city would incur such great negative arbitrage that this would not <br />still be a highly beneficial refunding transaction. At the time of <br />the 2nd reading they will have priced the bond issue and there will <br />be final numbers of the actual yield for the market and the market <br />for Treasury securities on that day, which they will be presenting <br />to Council. <br /> <br />Davidson stated that the real savings over the life of the bond <br />issue is a little over $1 million. <br /> <br />Howard moved that Council place Ordinance No. 1130, Series 1993, <br />out for publication and set a public hearing for November 16, 1993. <br />Seconded by Mayer. <br /> <br />Sisk offered a friendly amendment that there be a proviso stating <br />that it be an emergency ordinance. <br /> <br />Howard accepted that. Seconder, Mayer, accepted also. <br /> <br />6 <br /> <br /> <br />