Loading...
02-04-93 v CITY OF ATLANTIC BEACH CITY COMMISSION WORKSHOP THURSDAY, FEBRUARY 4, 1993, 7: 15 P.M. 1 . Discussion relating to financing alternatives for water/wastewater capital improvement plan projects (Joe Welch) Adjournment MINUTES OF ATLANTIC BEACH CITY COMMISSION MEETING OF THE COMMITTEE OF THE WHOLE HELD IN ATLANTIC BEACH CITY HALL, AT 7: 15 PM ON THURSDAY, FEBRUARY 4, 1993 Present: William I . Gulliford, Jr. , Mayor Glenn A. Edwards Lyman T. Fletcher Adelaide R. Tucker, and J. Dezmond Waters, III, Commissioners And: Kim D. Leinbach, City Manager Alan C. Jensen, City Attorney ( Entered meeting at 8: 15 PM) Maureen King, City Clerk Jim Jarboe, Deputy City Manager Bob Kosoy, Public Works Director Also: Joe Welch, Purvis Gray & Company Stan Livengood, Raymond James & Associates Phil Hunt, Gardnyr Michael Capital, Inc. The meeting, which had been called for the purpose of hearing reports regarding financing options available to the city for proposed water and sewer improvements, was called to order by Mayor Gulliford. Joe Welch reported he had reviewed the city' s water and sewer infrastructure needs and had considered options available for financing the work. He felt the city may wish to consider refinancing the Gulf Breeze loan at a lower interest rate and indicated new monies could also be borrowed at favorable rates. Mr. Welch introduced Phil Hunt of Gardnyr Michael Capital, Inc. and Stan Livengood of Raymond James & Associates. A schedule of the proposed water and sewer projects totaling $11, 445, 279 and potential bond refundings was distributed. The projects were scheduled for construction through FY 1994 . Phil Hunt introduced himself and indicated he represented Gardnyr Michael Capital, Inc. and Prudential Securities who were both the underwriters for the refunding bond issue for Gulf Breeze. He provided a Bond Issue Cost Comparison handout which was discussed at length. He explained Gulf Breeze was a pooled loan and unlike a bond issue the city would be prepaying a loan rather than a bond refunding. He also explained in the event the city refinanced the Gulf Breeze loan there would still be ongoing administration costs related to the original loan for which the city would be responsible. Mr. Hunt recommended the city borrow $5 million of new money for the water improvements and refund the Oak Harbor and Buccaneer bonds which would result in a savings to the city. Mr. Jarboe explained the city had made application for a DER loan for sewer Page Two Minutes - February 4, 1993 improvements. Mr. Hunt indicated the target date for refunding the Gulf Breeze loan was March 1 and discussion ensued regarding what must be done to meet that deadline. Mr. Hunt explained an engineer ' s report would be required and Mr. Kosoy indicated the city had not yet contracted with an engineer for this service and it would be impossible to meet the March 1 deadline. Mr. Hunt felt there may be a backup date of approximately April 15. Mayor Gulliford inquired in the event the city pledged water and sewer revenues to repay both a new loan and refund the Gulf Breeze loan, who would have the first lien on the future revenues. Mr. Hunt felt it would be possible to have different pledges for the loans or the city could designate one as a senior lien and the other as a junior lien. Stan Livengood, introduced himself and explained he had considerable experience with the Gulf Breeze loan as he had served as a financial advisor to six or seven entities who had borrowed monies from the Gulf Breeze pool . He explained it was not possible to "get out" of the existing obligation to the Gulf Breeze loan because of continuing administrative costs. He said he understood from the administrator of the pool that the new loan agreement would not contain any non asset bond liability. He said that from his current knowledge of the new Gulf Breeze pool he would advise his clients to refund the loan. He felt it would result in considerable savings to the city, but even if there was no reduction in payments, it would be advisable to proceed with the refinancing if it would allow the city to eliminate the contingent liability. However, Mr. Livengood said he had not seen the new loan agreement and would not be prepared to make any specific recommendations at this time. Since the city had not yet hired a consulting engineer, he felt it would be impossible to meet the March 1 Gulf Breeze deadline. Jim Jarboe explained Atlantic Beach was the only small city so far on the list for DER monies for sewer projects so he felt hopeful that the city would receive those funds. Discussion ensued regarding whether it would be better to hire one consulting engineer to handle all matters related to the water and sewer capital improvements. Mr. Livengood felt it would be cumbersome and time consuming to hire a different engineer for each task; Alan Potter, however, was opposed to dealing exclusively with one consulting engineer. He said the city had spent much less on consulting engineers since the water and sewer committee was formed and he preferred to continue to select engineers based on their qualifications for each specific project. Following further discussion it was decided the three options available to the city were: to pursue the DER loan for the sewer Page Three Minutes - February 4, 1993 improvements, to refund the Gulf Breeze loan, and to borrow $5 million of new money. It was agreed that one of the primary considerations should be the hiring of an engineer or engineers. Further discussion ensued and Mr. Welsh asked Mr. Hunt to explain what would be needed from the city for the refunding portion of the Gulf Breeze Loan or for the new money application. Mr. Hunt said he would provide the City Attorney with a copy of the loan agreement. He said the only other action he would need would be a motion of the City Commission at the next regular meeting to approve participation in the new pool to refinance the old debt, and this could be made contingent upon this refinancing resulting in savings to the city. Mr. Livengood reminded the Commission that the amount of savings could not be determined until the interest rates and costs were finalized on the new Gulf Breeze loan. Mr. Welsh then asked Mr. Livengood to explain to the City Commission what they could be working on in preparation for going into the bond market. He indicated a finance team including an engineer and bond counsel could be hired. Other professionals who would be helpful, depending on the method by which the bonds would be sold, would include a financial advisor and an investment banker. Commissioner Fletcher indicated the water and sewer committee was anxious to get the financing taken care of so the projects could get under way and asked whether there was anything the city could do to expedite this. Mr. Livengood felt that since the interest rate on the DER loan was so good, the city should make sure that attention was paid to detail on this so as not to miss any deadlines that could delay that funding. He indicated it was always advisable to have a professional in public finance to negotiate the financing and this individual could also be helpful with the DER loan. He estimated the cost of this service at $10, 000.00. Following further discussion, Mayor Gulliford thanked Mr. Livengood and Mr. Hunt for their presentations . * * * * * * * * * * The City Manager inquired whether the City Commission wished to schedule a goal setting session. He recommended using an outside consultant at a cost of $1 , 500.00 for this service. Following Page Four Minutes - February 4, 1993 brief discussion it was consensus that a goal setting session should be scheduled and Mayor Gulliford suggested inviting the consultant to attend a Commission meeting to explain his program. There being no further discussion, the Mayor declared the meeting adjourned at 9 : 30 PM. Maureen King, City Cler'