04/10/1989 Meeting (2) - Laserfiche WebLink

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. June 30, 1989. It would be necessary to project what the market rate will be at that time. He anticipated receiving a general obligation bond rate of 7 to 7.5 percent. At this point in the meeting, Mayor Miller called for another five-minute break. Mr. Bennett continued by asking whether Bancroft Bonds are always sold on a 100 percent finance basis or if they can be sold with a small down payment required of the individual properties supporting the bond issue, and if doing so would make a difference in terms of the bond rating. Mr. Wong responded that cities do allow that, but usually the total assessment is financed or payment is made in cash. He added that it would not affect the bond rating. Answering Mr. Holmer's request for clarification, Mr. Wong said the line of credit will expire in the summer and bonds should be sold in June to provide the cash to payoff or extend that line of credit. He added that, based on market forecasts, the City's Financial Advisor's recommendation is to proceed at this time. Responding to Mr. Boles's statement that Bancroft Bonds are backed by the full faith and credit of the City, Mr. Wong said the assessment contracts become liens against a property and if those contracts become delinquent, the City proceeds with foreclosure against the property liened. He pointed out that as of today, there is more cash in the fund than outstanding Bancroft Bonds because of the City's conservative financial approach of reinvesting those funds accrued in the late 1970s and early 1980s by pre-assessment. He described this as additional security to preclude a property tax levy. e In reply to Mr. Boles's further questions, Mr. Wong explained that the City restricted the use of Bancrofting several years ago and most Bancrofting occurs in already-developed areas. It was previously possible to use the Bancroft Act to develop raw land by putting in infrastructure for subdivisions on a speculative basis. He said that was the source of the majority of foreclosed property. Under the present ordinance, the City provides improvements if the value of the improvement is at least equal to the value of the land; but, if that is not the case, the developer is required to provide additional financial security to meet the improvement-to-land ratio. Mr. Wong said the negotiation process is continuing on foreclosed property referred to by Mr. Holmer. Mr. Gleason announced that a $200,000 agreement had been signed earlier in the day and he anticipated another would be finalized soon, with approximately 230 lots sold. Mr. Wong reported a high level of interest in acquiring the Bancroft lots in question. Ms. Bascom asked Mr. Bennett to comment further on the concerns he raised earlier regarding the timing of the bond issue. Mr. Bennett responded that while he does not object to Bancrofting as a financing mechanism, he - MINUTES--Eugene City Council April 10, 1989 Page 8