09/10/1985 Meeting - Laserfiche WebLink

Home Browse Search

stream would be examined. He also said a revenue bond could be sold and - backed with the full faith and credit of the City, which would mean levying a property tax if the income stream was insufficient to pay the debt service on the bond. Mr. Wong said using the full faith and credit of the City generally had been done with voter approval, and the only backing on what was being considered was the income tax on the bonds. He added that the differential between a straight revenue bond backed by an income tax and a revenue bond backed by the full faith and credit of the City was about 25 basis points, or about 1/4 percent, meaning that the income stream was being closely examined. Mr. Hansen asked how the ordinance was drafted, and Mr. Wong said the ordinance did not speak to the type of financing instruments. but everything included was based on a straight revenue bond. He confirmed Mr. Hansen's cOl1l1lent that backing with the full faith and credit of the City would cut 1/4 percent off the interest, with the voter approval req~ired for each bond issue. Mr. Wong continued. saying the City had received an opinion stating that it had the authority to issue any type of bond without a vote, however both bond and legal counsel said that had not been tested in court, and Mr. Wong said a sunset provision would be difficult, financially unwise, and was not recol1l1lended. Mr. Miller asked whether it was possible to include the sunset, pledge the full credit, and still receive a decent rate. Mr. Wong said he would have to check, but he thought that was possible. Ms. Ehrman asked whether payments could be made over 10 or 20 years. Mr. Wong said the airport bond would be a 20-year issue, and any projects started later would go for 20 years beyond that. He added tha t 20-year bonds generally have e been used, but shorter ones were possible. Mr. Hansen said he had assumed the City had been pledged to pay back the $14 million in airport bonds. and he thought it was desirable to cut the 1/4 percent if possible by having a sunset provision. Mr. Gleason said he thought it was necessary to keep separate the decisions on how projects are financed and on the kind of revenue notes issued. He said pledging the full faith and credit of the City was a legal concept that included all assets and traditionally had been done only with voter approval. Mr. Gleason said including a property tax pledge would make the proposal more complex. Mr. Wong added that each ballot measure was constitutionally limited to one item. so two or three proposals would require as many ballot measures. Ms. Ehrman asked whether pledging the property would have to be done every year or only one time. Mr. Wong said the vote was one-time, but each bond issuance would require voter approval, unless approval was sought for the total amount of bonding to be done over the next ten years. Responding to a question from Ms. Schue, Mr. Gleason said an income stream to deal with capital improvements was a possibility, and could be pledged, but he did not recommend blanketing the issue now. Mr. Holmer asked whether the income tax in the proposal was being earmarked only for ca pi ta 1 items. Mr. Wong said it was, adding that specifiC projects also could be included. Staff said replacement and maintenance for capital expenditures also were included. Mr. Holmer said his preference was to avoid earmarking. e MINUTES--Eugene City Council Revenue Work Session September 10. 1985 Page 3