01/21/1981 Meeting - Laserfiche WebLink

Home Browse Search

e e e He introduced Howard Rankin of the Renewal Agency's Bond Counsel to provide additional information. Mr. Rankin stated this is not a new, nor unusual, financing method in Oregon. Multnomah County School District #1 used this in 1977 and it has also been used to finance a hospital in eastern Oregon. The plan would require ERA to convey the legal title to the bank trustee who would then proceed to approve and designate ERA to construct the building as Mr. Tashman had outlined. The described agreement is necessary to carry out this plan. The primary risk for the City would be within its annual local budget. The chief advantage of the plan is its lower interest cost. The owners of such certificates of participa- tion would look to the stability of the City as rationale for purchase of the certificates. The trustee will hold legal title and ERA must reimburse the City for the rent. Mr. Haws arrived at the meeting. Mr. Tashman introduced Jim Gibbs, from the San Francisco office of E. F. Hutton, financial consultants, to provide additional information. Mr. Gibbs stated that the total amount of money to be spent over 20 years would be equal to or less than general obligation financing, which, in turn, is less expensive than tax allocation financing. They are estimating at this time that they can sell the certificates at 9-1/4 percent, and currently tax allocation bonds are being sold at 10 percent. The procedure in marketing is reasonably fast and they could get a schedule for funding with this proposal. Mr. Lindberg stated there are certain assumptions to be made--this is a good market to sell the certificates and City reserve funds would generate revenue to cover expenses. Mr. Gibbs stated that statements he had made were based on current rates. With the new administration, perhaps things will settle down. This is an excellent form of security for financing this project and they are confident they can market it. Ms. Wooten asked how, if ERA takes on the responsibility for this project, it will be included with the long-term project planned for revitalization. Mr. Tashman responded that this has been planned since 1968 and it has been in their plans since that time. Ms. Wooten asked if this would undercut down- town housing. Mr. Tashman stated that it would not. Ms. Wooten asked for clarification of the City's responsibility and if this project would appear in this year's budget. Mr. Gleason stated that it will not show in income, but would show as a capital improvement project, but that he would not antici- pate that the City would have any problems because the tax-increment fund projections are conservative. If tax allocation funds fall short, they would have to transfer Tier 1 moneys to pay for the project. Ms. Wooten asked if the City's ability to service debt through the general fund would be the basis for sales of the certificates. Mr. Gleason responded that the City is in the chain of security and if for some reason the debt would not be paid, the City MINUTES--Eugene City Council January 21, 1981 Page 6