01/25/1984 Meeting - Laserfiche WebLink

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- e e IX. RESOLUTION re: ADVANCED REFUNDING OF CERTIFICATES OF PARTICIPATION (memo, resolution distributed) City Manager Micheal Gleason introduced the agenda item. Warren Wong of Finance presented the staff report, reviewing his January 20, 1984, memorandum to the City Council. He stated that five proposals were received for the RFP and that an underwriter has been selected. He said staff is asking permission of the council to attempt the refinancing, the refinancing to take place only if the market condition is such to realize savings and if it is in conformity with ORS and Internal Revenue code provisions. Ms. Wooten said she had questions about the program when she first joined the council in 1981. She said she found a letter from the City Attorney's Office on the issue and she continues to be concerned with that type of finan- cial relationship. In response to a question, Mr. Wong stated that the City's original underwriter was E. F. Hutton and the underwriters selected for this project are a consortium of Kidder/Peabody, Foster & Marshall/American Express, and Seattle Northwest. He explained that the original funding came from the Urban Renewal Agency from the tax increment revenues, those funds being paid to the City and then in turn to the trustee, First Interstate Bank. He explained that the trustee is responsible for paying any interest or principal due to the certificate holders. He said the relationship between the City and the trustee is a lease arrangement which, in theory, can be broken at any time, which is why the full faith and credit of the City is not behind it and why it does not count toward the City's bond indebtedness ceiling. Mr. Holmer temporarily left the meeting at this time. Ms. Wooten believed, at the time the financing was made, that the relationship would have to be re-examined if the City was unable to make payments for the Conference Center through operating income. Mr. Wong said the Renewal Agency pays the City approximately $900,000 each year for debt service. The income from the Conference Center is within the City system to be used to pay main- tenance expenses and is not being used to payoff the debt. Mr. Holmer returned to the meeting. ln response to a question on a sale/lease-back option, Mr. Wong said the feasibility of this option has been discussed with financial consultants and underwriters. He stated that everything is on hold until the Dole/Pickle Bill in Congress has been decided. He said the bill would remove any tax incentive for private investors to use that method. In response to another question, Mr. Wong stated that the tax increment financing flows through the City at the rate of $900,000 per year. He clarified that at a point when the revenue stream does not continue, the City can make the decision whether to pay the lease payments to the trustee or not and either come up with the money at that time or lose the use of the Confernce Center. Mr. Ball said the only way for the City not to be obligated would be to break the lease--an unacceptable alternative. In response to another question, Mr. Wong stated that he was not sure of the conditions of the lease agreement. Mr. Gleason said the City is MINUTES-Eugene City Council January 25, 1984 Page 8