City Council Minutes 1993 10 06 - Laserfiche WebLink

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Louisville, recently, and in terms of bond insurance, one of the considerations is whether the credit is investment grade, I felt the minimum rate for Louisville will be at investment grade level. The insurers are not saying, at this point, that the investment grade is absolutely conditional for insurance. Davidson asked if the insurance is depended upon the length of time the sales tax source has been in and if Louisville is not able to obtain insurance at this, somewhat likely as time is added on to the experience of Louisville collecting sales tax from this new shopping center, that insurance becomes more likely. Caslon replied that anything the increases the debt service coverage an~, just shows general help in the economy improved the chance for ins.urance and ratings upgrade. How much longer history might be required, he was not able to easily quantify that for him, but his sense was that, because of the multiple sources of sales tax revenue generation that Louisville would be a strong candidate to have the bonds insured. Carson thanked the Council for the opportunity to present this refunding bond issue. Davidson thanked him. Then, he told the Council that when the Finance Committee held discussions, would they take this conditional upon the City getting insurance and they said they wou. ld. The Finance Committee decided, because the savings were so much greater under the insurance that that would be a condition of the refunding. The investment banking firm is the one that takes the risks, it doesn't really cost the City much in the way of money, if they go forward and nothing happens. The Finance Committee, after looking at the history and the sales tax base, felt strongly that the history increased the likelihood of ins.urance becomes greater and in about a year there are two new shopping centers, so the sales tax base is even more diversified an~. the likelihood of getting insurance is strong and all indicators are that interests are going to remain stable and you are dependent upon the arbitrage between Treasuries and tax free municipals and not the individual rate. The recommendation of the Finance Committee was to go ahead with the refunding with this firm un~.er the condition that the bonds be insured. Mayer asked, when the call date was on the sales tax bonds. Davidson replied that they start as early as 1989 and go on through 20].3. Cas, on said that the first call is 1989, so when you have an optional redemption structure, you have a premium at first call date and then that premium declines to par in 1999. Howard moved that the City of Louisville authorize the refunding of the Sales Tax Revenue Bonds, Series 1989, with the amendment that such refinancing will only take place, if insurance is obtained 6