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HomeMy WebLinkAboutMinutes City Council - 10/17/1985 - SpecialPresent Mayor Luther Jones Mayor Pro Tem Jack Best Council Members *David Berlanga, Sr. Leo Guerrero Joe McComb Frank Mendez Bill Pruet Mary Pat Slavik Absent Linda Strong Minutes City of Corpus Christi, Texas Special Council Meeting October 17, 1985 8:30 a.m. City Manager Edward Martin City Attorney Bruce Aycock City Secretary Armando Chapa Mayor Luther Jones called the meeting to order at 8:44 a.m. in the Council Chamber of City Hall. City Secretary Armando Chapa called the roll and stated that a quorum of the Council and the required Charter Officers were present to conduct the meeting. City Manager Martin stated that the purpose of the meeting was to initiate final action for the General Improvement and Refunding Bonds proposal. Mr. Martin then introduced several people who were a part of the refunding procedure. Mr. Martin stated that the Council had authorized the refunding of the outstanding debt and the sale of $13,064,000 in authorized bonds remaining from the 1982-86 program. He stated that there are nine distinct advantages to be addressed in the refunding program: 1. Reduction of the total present outstanding debt when the sale of the additional $13,064,000 in 1982-86 bonds is excluded; 2. As a corollary to the above, maintaining relatively the same principal debt service level even with the inclusion of the additional $13,064,000 in 1982-86 bonds; 3. Direct savings on debt service payments; 4. Rapid repayment of debt; MICROFILMED Butes ,pecial Council Meeting October 17, 1985 Page 2 5. Reduction of the debt ratio; 6. Maintenance of the sinking fund balance; 7. Consolidation of debt payments; 8. Providing room for some future debt at no tax increase; and 9. Maintenance of high bond rating. Both Moody's and Standard and Poors have awarded the AA rating to these new bonds, and the old bonds, which will be the responsibility of the escrow agent to pay, have received a triple A (AAA) rating. Mr. Martin stated that at the time of the initial presentations, an interest rate of 8.8% was projected, and as of October 15, all of the bonds have sold and the true interest cost is 8.49%. He stated that as a result of the lower interest cost, the total savings will be $8,955,000 versus the $6,913,000 that was originally projected. He stated that the savings is in addition to the sale of the new bonds. Mr. Martin stated that he had provided the Council with a comparison of the interest cost on the last five bond issues and how they compare with the refunding issue. He stated that this shows how well the bonds are received in the market. Mr. Martin stated that he had also provided the Council with a comparison of the interest rate on this issue with some other recent refundings in Texas. He stated that Corpus Christi bonds are very attractive in the market and the sale compares very favorably. In summary, Mr. Martin stated that if the five actions listed on the agenda are approved, the City will issue an additional $13 million in bonds without increasing the overall principal debt services; the action, if approved, will directly save the taxpayers approximately $9 million; and the refunding will allow the City to finance some additional debt for the 1987-91 capital improvement program at no tax rate increase. He stated that he strongly recommends approval, and that this is one of the most exciting and advantageous proposals that he has had the opportunity to recommend. A motion was made by Council Member Guerrero that items 1 through 5 be approved, seconded by Mayor Pro Tem Best. City Manager Martin asked that separate votes be taken on the five items. Mayor Jones stated that he would like to abstain from voting on the portion that pertains to MBank. City Manager Martin informed the Mayor that he should abstain from voting on item 2, and Mr. Hobby McCall confirmed this. *Council Member David Berlanga arrived at 9:00 a.m. lutes „pecial Council Meeting October 17, 1985 Page 3 A motion was made by Council Member Guerrero that item 1 be approved; seconded by Mayor Pro Tem Best; and passed as follows: 1. RESOLUTION NO. 19061 APPROVING THE FORM OF THE OFFICIAL STATEMENT PERTAINING TO CITY OF CORPUS CHRISTI, TEXAS GENERAL IMPROVEMENT AND REFUNDING BONDS, SERIES 1985-A, AND AUTHORIZING, RATIFYING AND APPROVING THE OFFICIAL STATEMENT AND THE USE THEREOF IN THE OFFERING AND SALE OF SAID BONDS, AND DECLARING AN EMERGENCY. The Charter Rule was suspended and the resolution passed as follows: Jones, Best, Berlanga, Guerrero, McComb, Mendez, Pruet, and Slavik voting "aye"; Strong absent. A motion was made by Council Member Guerrero that item 3 be approved; seconded by Council Member Frank Mendez; and passed as follows: 3. ORDINANCE NO. 19064 AUTHORIZING AN ESCROW AGREEMENT BETWEEN THE CITY OF CORPUS CHRISTI, TEXAS AND FIRST CITY BANK OF CORPUS CHRISTI, AS ESCROW AGENT, AND OTHER MATTERS PERTAINING THERETO. The Charter Rule was suspended and the resolution passed as follows: Jones, Best, Berlanga, Guerrero, McComb, Mendez, and Pruet voting "aye"; Slavik voting "no"; Strong absent. A motion was made by Council Member Guerrero that item 4 be approved; seconded by Mayor Pro Tem Best; and passed as follows: 4. RESOLUTION 19063 THAT THE MAYOR OF THE CITY IS HEREBY AUTHORIZED AND DIRECTED TO CAUSE TO BE PUBLISHED, IN THE MANNER REQUIRED BY THE ORDINANCE AUTHORIZING THE ISSUANCE OF THE SERIES 1981 BONDS, A WRITTEN NOTICE OF REDEMPTION SUBSTANTIALLY IN THE FORM ATTACHED TO THIS RESOLUTION, AND SUCH BONDS AS DESCRIBED IN SUCH NOTICE SHALL BE REDEEMED ON JULY 15, 1991 FOR THE PRINCIPAL AMOUNT THEREOF, PLUS A PREMIUM OF 2-1/2% OF SUCH PRINCIPAL AMOUNT. The Charter Rule was suspended and the resolution passed as follows: Jones, Best, Berlanga, Guerrero, McComb, Mendez, and Pruet voting "aye"; Slavik voting "no"; Strong absent. An affidavit signed by the Mayor and relating to item 2 was City Secretary Chapa from Jay Doegey, Assistant City Attorney. A motion was made by Council Member Guerrero that item 2 seconded by Council Member Pruet; and passed as follows: presented to be approved; lutes .,pecial Council Meeting October 17, 1985 Page 4 2. ORDINANCE NO. 19062 AN ORDINANCE PROVIDING FOR THE ISSUANCE OF $108,231,312.30 GENERAL IMPROVEMENT AND REFUNDING BONDS, SERIES 1985A, OF THE CITY OF CORPUS CHRISTI, TEXAS BEARING INTEREST THE RATES HEREINAFTER SET FORTH, AND PROVIDING FOR THE LEVY, ASSESSMENT AND COLLECTION OF A TAX SUFFICIENT TO PAY THE INTEREST ON SAID BONDS AND TO CREATE A SINKING FUND FOR THE REDEMPTION THEREOF AT MATURITY; REPEALING ALL ORDINANCES IN CONFLICT HEREWITH; DECLARING AN EMERGENCY; AND ALL OTHER MATTERS RELATED THERETO. The Charter Rule was suspended and the resolution passed as follows: Best, Berlanga, Guerrero, McComb, Mendez, and Pruet voting "aye"; Slavik voting "no"; Jones abstaining, Strong absent. A motion was made by Mayor Pro Tem Best, seconded by Council Member Guerrero, that the following motion be approved: 5. APPROVING THE CITY MANAGER TO TAKE SUCH ACTIONS AND TO EXECUTE SUCH OTHER DOCUMENTS AS NECESSARY TO CARRY OUT THE ISSUANCE AND SALE OF THE GENERAL IMPROVEMENT AND REFUNDING BONDS, SERIES 1985A, THE REDEMPTION OF BONDS AND OTHER OBLIGATIONS, AND APPROVING AND AUTHORIZING THE CITY MANAGER TO EXECUTE A LETTER AGREEMENT AUTHORIZING THE CITY TO PURCHASE OPEN MARKET GOVERNMENT OBLIGATIONS FROM SALOMON BROTHERS, INC. AND TEXAS COMMERCE BANK NATIONAL ASSOCIATION AND TO PERMIT SUBSTITUTIONS OF OTHER GOVERNMENT OBLIGATIONS UNDER CONDITIONS WHICH PROTECT THE CITY. City Secretary Chapa polled the Council for their vote on the motion and it passed as follows: Jones, Best, Berlanga, Guerrero, McComb, Mendez, and Pruet voting "aye"; Slavik voting "no"; Strong absent. Mr. Bob Howell, Texas Commerce Bank, presented a check in the amount of $1 million. He stated that the refinancing went very well; the greatest amount of interest in the bonds was from institutions; when institutions go into the market they are making a long term commitment; and the institutions have good faith in the bonds. He stated that since so much interest was shown in the bond sale, they were able to lower the interest rates between five and ten basis points. He stated that Corpus Christi is perceived very well in the market. Discussion followed regarding the bond rating, and City Manager Martin stated that two or three of the Council Members should be involved in this aspect of future bond sales. Council Member Guerrero inquired if Mr. Howell could disclose who bought the bonds, and Mr. Howell stated that he could not until allocations were made. Council Member Berlanga inquired if minority bids were included in the sale of bonds, and Mr. Howell stated that special allocations were made for certain firms. nutes .,pecial Council Meeting October 17, 1985 Page 5 Council Member Pruet inquired as to how the City could achieve a triple A (AAA) rating. City Manager Martin stressed that everything has been done to increase the rating to AAA, but the City would not see an AAA rating as long as there is an artificial tax rate limitation. He stated that in order to get AAA rating there needs to be no risk. In response to a question from Council Member Pruet, Mr. Martin stated that the difference between AA and AAA rating is approximately 10 basis points, which on this issue would result in savings of a couple of million dollars. Council Member Pruet stated that the rating is very significant, and Mr. Martin stated that the Council will have the opportunity to talk to the rating agencies. Discussion followed regarding ratings of other cities. Council Member Pruet asked for an estimate of the staff time in preparing this issue, and City Manager Martin elaborated on the amount of time and the staff involved. Mr. Hobby McCall, McCall, Parkhurst and Horton, gave a detailed report on how his firm was involved in the refunding issue. Mayor Jones expressed appreciation to the staff for their efforts in the bond refunding and noted that the staff has saved the City $8.9 million. There being no further business to come before the Council, on motion by Council Member Guerrero, seconded by Council Member Mendez, the meeting was adjourned at 9:30 a.m., October 17, 1985. /td I HEREBY CERTIFY that the foregoing is a true and correct copy of the Minutes of the Special Council Meeting of the City of Corpus Christi of October 17, which were approved by the City Council on October 29, 1985. WITNESSETH MY HAND AND SEAL, this the 8th day of November, 1985. Armando Chapa City Secretary City of Corpus Christi, Texas Luther Jones, MAYOR