City Council Minutes 1992 09 15 - Laserfiche WebLink

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OF ANNUALAD VALOREM TAXES TO PAY THESAME; PRESCRIBING THE FORM OF BONDS; PROVIDING OTHER DETAILS CONCERNINGTHEBOND; AUTHORIZING THE EXECUTION OF AN ESCROW AGREEMENT; AND RATIFYING ALL ACTION HERETOFORE TAKEN IN CONNECTION~TH- 1ST READING - SET PUBLIC HEARING (SPECIAL MEETING 9/29/92) Griffiths read by title only Ordinance No. 1084, Series 1992, "An ordinance providing for the issuance by the City of Louisville, Colorado of its general obligation bonds, Series 1992, issued for the purpose of acquiring a municipal golf course and related equipment; providing for the levy and collection of annual ad valorem taxes to pay the same; prescribing the form of the bonds; providing other details concerning the bonds; authorizing the execution of an escrow agreement; and ratifying all action heretofore taken in connection therewith." Tom Briggs, Kemper Securities Group, Inc., stated that with regard to issuing the bonds on the basis of a rating or with insurance, he contact five (5) insurance companies. Of those Financial Guaranty Insurance Co., Municipal Bond Investors Assurance, and Capital Guaranty wanted to take a look at it. After FGIC looked the material over they felt they could not insure a general obligation transaction, where there was more than a 15% concentration in the property tax base in one (1) taxpayer. Louisville has about a 25% concentration in the property tax base in one major tax payer (Storage Technology). MBIA declined it, because of the concentration of the property tax base and, because they stopped in August insuring any general obligation debt in Colorado until after November 3, 1992. Capital Guaranty made some demands that he thought were too outrageous to even bring to the Council. He went with Moody's, where he was successful in maintaining the City's BAAA1 rating. He was told that an "A" rating can be discussed down the road as employment diversifies in the City and as long as continued increases are shown in wealth indicators and per capita income values in housing. The Golf Course is making payments on the Certificates of Participation, which finance the acquisition and the equipping of the Golf Course. That changes in advance refunding. After the refunding, the Golf Course revenues will continue to pay off bonds, but they will pay off the general obligation bonds, which will be issued in the next few weeks. The proceeds from those bonds are invested in U.S. Government securities, which are placed in escrow on behalf of the holders of the Certificates of Participation. The benefit from a refunding transaction such as this occurs in the decrease in interest rates on the new bonds after the call date of the old Certificates of Participation. He stated that when the transaction was originally discussed, he had anticipated that the Municipal interest rates and obligation of this type would be in the range of 3.85% in 1993 to about a 6.7% in 2007. At that point Treasuries were about 78% of the Municipal rates. In early September interest rates on municipal bonds were 3.50% to 6.50% from 1993 through 2007. The yield on Treasuries has changed. It is now 81% of those rates. He