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Hundley explained that this Ordinance would <br />authorize the issuance of up to $1.6 million in <br />bonds to finance improvements relating to the Via <br />Appia construction. This is a critical project <br />inasmuch as it would provide a major link from the <br />north to the south parts of the City. <br />Russ Caldwell, the City's financial advisor, and <br />Blake Jordan, the C'ity's bond counsel, spoke to <br />Council regarding this Ordinance. <br />Caldwell stated that in order to deliver the bonds <br />to the bond purchasers and proceed on time with <br />the project, it is :his recommendation that Second <br />Reading and Public Hearing be set for April 22, <br />1986, at the Special Council Meeting approved <br />during the consideration of Resolution #20. This <br />will allow the clo:aing to occur on May 6, 1986. <br />Caldwell explained that a Special Improvement <br />District is somewhat different than other <br />securities issued by the City in that the City has <br />no responsibility for the repayment of these <br />bonds. The bonds are repaid by an assessment on <br />the land and as each lot is sold, the assessment <br />will be clear so that no property owner comes in <br />and carries some assessment that they were not <br />aware of. These bonds are less secure than a <br />normal revenue bondl of the City. These are being <br />used throughout the State and there will probably <br />be a proliferation of them due to what is <br />currently happening with revenue sharing and other <br />Federal grant and aid with Graham Rudman. <br />Caldwell stated that there was good acceptance of <br />these bonds as the entire Kirchner Moore sales <br />force reviewed the project and were satisfied that <br />both the market was here and the developer had the <br />where-with-all to ~>roceed with the project. These <br />bonds will carry a higher interest rate than other <br />obligations of the City at 9.4~. <br />Anderson asked if there were a down side to these <br />bonds should anything happen with McStain. <br />Caldwell explained that put into this was pre- <br />funded interest is the amount of $101,000. In <br />addition to this, anticipated is construction <br />interest of approximately $54,000 which means that <br />for the next two years, anticipating a fairly slow <br />development schedule, nothing has to be built on <br />the project. What happens on default should a <br />foreclosure occur, the land is worth three times <br />the value of the bonds, $8 million in land vs. <br />$1.6 million in boxids. <br />3 <br />