1998-10-21-PEDC - Laserfiche WebLink

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381 City Attorney Foster asked if any other previous commitments would become subordinate to the bonds? Mr. Posharsky said that it should be stated in the paperwork that they are subject to the bond's availability of funds. Mr. Posharsky said that the Board may have to go back and qualify some commitments stating that the Board has issued bonds and that the commitment will be subordinate to -- the bonds. Mr. Vest stated that this is one of the things that had been done when Mr. Almon looked at the Board's budget. Mr. Posharsky stated that under the documents proposed, the Board is allowed to pledge revenues. He said initially the only thing that the resolution is going to contain would be a pledge of the sales tax, which in the future can be used for leverage purposes and the Board can also pledge payments made under any loans. He said the reason the Board might want to consider this item is that the Board has an additional bond test related to any subsequent issue which would require a certificate from your certified public accountants reflecting that out of the last eighteen months, or the last fiscal year, the Corporation had coverage of its outstanding bond together with any new bonds issued, of 1.5 times. He said that if the Corporation had another project six months to a year from now that required a substantial loan, these other payments could be made out of pledged revenues that would help with the additional bonds test to leverage the Corporation into another bond issue or another loan for another entity coming to town. Mr. Almon stated that the reason that you would not do that now is that you do not need to do it now, and once you do it will preclude you from doing tax exempt things, and there are a few projects out there that you could do tax exempt. The Board discussed the possibility of redeeming the bonds prior to their scheduled redemption date after ten years without penalty. Mr. Almon advised the Board that if funds became available prior to the ten year call date, then the Board would have to commission someone such as Southwest Securities to see if they could get a list from the financial registrar and contact the holders depending on rates. Mr. Almon stated that since this is being done taxable the Board would be in a better position by keeping the money and reinvesting it and possibly making a little arbitrage. Mr. Posharsky stated that the bonds could be diffused if you have the formula in there, and you would have to set up an escrow account like you do with other city bonds when we were refunding. He said that you would inform the paying agent that you are going to call the bonds at the first call date and you would give them enough proceeds which together with investments would produce a revenue stream to pay them off at that time. Boardmember Amis stated that the Board needed to be aware that this is the difference between bond financing and bank financing. President Rhodes asked about the cost of underwriting these bonds and Mr. Almon stated it was a little over one percent. Mr. AImon stated that there would be various fees involved such as their fee, bond counsel fee, Moody's Bond -- Rating Fee, Attorney General's charges, printing the preliminary and final official statement and the notice of sale. President Rhodes stated that the Board had previously been authorized to proceed with the issuance of the bonds earlier in the year. After discussion by the boardmembers, it was their consensus to proceed with the issuance of the bonds.