CC Minutes - 02/09/05 WS - Laserfiche WebLink

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to sell bonds, one must make a firm commitment that the revenue will be in place to pay the bonds. He had assumed on behalf of the council that it did not want to make more of a commitment than was necessary. Mr. Lidz recalled that when the original IGA was entered into, it was signed at a time when the facility was operating under a loan from the federal government. The IGA required the individual jurisdictions to comply with a specific federal regulation in setting user rates. He did not think that was ever an issue since the user rates were always more than the federal regulation required because MWMC was doing more things with the rates than were needed to pay off the loan. Continuing, Mr. Lidz said, in this case, another way to consider the issue was if the City itself was deciding whether to construct the facilities that the MWMC would build on its own rather than through an intergov- ernmental entity and had to issue revenue bonds, which kind of commitments would it have to make? He said it would have to set user rates and adopt SDCs at a level that could pay off the bond debt and maintain the facilities in a condition that the bond holders knew they could continue to keep operating and generate revenue. Mr. Lidz said bond counsels take a more paranoid view of things as it was their job to assure the bond market that the bonds were secure. They will look to translate those general commitments into a number of specific promises. He assumed the target would be to secure an A rating for the bonds to reduce the interest expense or the cost of insuring the bonds. He said the better the bond rating, the less it cost. However, to get that good bond rating, one must make specific commitments. In this case, the City was not selling the bonds, MWMC was, and it does not set user rates or establish SDCs. When MWMC wants to sell bonds, the underwriters and the potential purchasers of the bonds would want to know where the revenues would come from, and would look to the terms of the IGA to determine the strength of the commitment of the parties to the IGA. Mr. Lidz indicated that staff would return to the council with the IGA in the near future. Mayor Piercy invited questions and comments. Ms. Taylor commended the staff presentation for its clarity. She determined from Mr. Lidz that the City of Springfield would sign the same agreement. Mr. Lidz said the County would sign the IGA as well. Ms. Taylor asked if the County was involved in the guarantee. Mr. Lidz reiterated the County would sign the IGA. However, he pointed out the County neither imposed SDCs nor adopted user rates, but was a party to the agreement. He attributed that to the County's historic involvement and the fact the board believed it had an interest in representing the rate payers who reside in the county but pay the user rates set by the two cities. Mr. Pryor asked who would be responsible if the revenues to repay the loan were not available. Mr. Lidz said the bond holders had no other recourse, which was why those who market the bonds want to ensure there is a strong commitment to the IGA. The bonds were not backed by the general obligation of the City. The City had no obligation to back the bonds with revenue as long as it complied with the terms of the IGA. Ms. Bettman suggested the IGA was another reason special service districts were a bad idea. They created such conflicts, and the City could not be consistent in the same way as it could if it had ultimate authority and was not sharing it with another body. MINUTES--Eugene City Council February 9, 2005 Page 5 Work Session