Council Minutes
1
June 25, 2007
PROCEEDINGS OF THE CITY COUNCIL
OF THE CITY OF GRAND FORKS, NORTH DAKOTA
June 25, 2007
The city council of the city of Grand Forks, North Dakota met in special session in the council chambers in City Hall on Monday, June 25, 2007 at the hour of 7:00 o’clock p.m. with Vice President Glassheim presiding. Present at roll call were Council Members Brooks, McNamara, Gershman (teleconference), Christensen, Bakken (teleconference), Kreun, Glassheim - 7; absent: none.
Vice President Glassheim announced that anyone wishing to speak to any item may do so by being recognized prior to a vote being taken on the matter, and that the meeting is being televised.
ADOPT RESOLUTION AUTHORIZING ISSUANCE AND
AWARDING SALE OF $3,490,000 GENERAL OBLIGATION
PUBLIC BUILDING BONDS, SERIES 2007A, CREATING A
SINKING FUND THEREFOR, AND LEVYING TAXES FOR
THEIR PAYMENT
Brenda Krueger, Springsted, Inc. acting as the City's financial advisor on the sale of the two bond issues being considered this evening, stated bids were taken this morning on two series of bonds, 2007A for the Public Building and the 2007B for the Mosquito Control Project. Bid tabulations for each issue were presented: Series 2007A the City received 4 bids, winning bidder was UBS Securities out of Dallas, TX at a 4.631% ands the cover bid was from Wells Fargo at a 4.636%; that UBS bid with FSA insurance (bonds will be insured, UBS purchase the insurance themselves and will be Triple Aaa rated as they trade on the market); 2007B, Mosquito Control Reserve Revenue Bonds, received 3 bids, underwriter with the best bid was Wells Fargo at a 4.69%, cover bid was D.A.Davidson & Co. at a 4.86%. Wells Fargo is out of Minneapolis and D.A.Davidson out of Montana. She stated the Mosquito Control Revenue Bonds received a Double Aa3 rating which is the same as the General Obligation Public Building Bonds and nice result in terms of the rating process. She noted that they did not take to market the 2007C which were the Refunding Improvement Refunding Bonds, the market moved significantly and savings went down, that they were proposing to do an advance refunding, advance of the call, and only get one chance at that and didn't feel that the market warranted doing that refunding at this time. The interest rates are higher than anticipated, market has been going up 4 out of the past 6 weeks and has gone up 40 basis points which is about .40%, this week is unchanged; that they received very competitive bids today.
Ms. Krueger stated that Beth Weber, Moody's Investors Service, visited the city, was taken on a tour, given a book with pictures and map, and were able to make 3 stops during the morning - Greenway, Lincoln Park, and she was very impressed with the dike construction and how beautiful it is; LM Glasfiber and Canad Inns, then visited with the auditor and Mr. Duquette; want to get past the flood and are visioning and looking forward and a lot to look forward to., and accomplished that; Ms. Weber was glad that she had that invitation to come to see the city. She stated they made a pitch for an upgrade, the City is a Double Aa3, retained that rating, but they declined to give an upgrade to the general credit rating of the community, the two major points that were relayed to her were as compared to other Double A credits, your Double Aa3 credit rating is excellent, but they are looking at other comparables and saying that the overall valuation of the community really isn't where it should be compared to other communities that have a higher rating, the debt load still tends to be a little high, that in looking at trends see that the valuation continues to climb and has gone up an average of about 8% over the past 5 years and that is moving in the right direction and is expected to continue, perhaps not at that pace, but the valuation increases are going to continue and are planning for the future debt loads, that the last of the dike financing will probably occur in 2008 and probably peak in terms of the debt load at that time and Moody's is aware that we will be looking at the debt load declining, and things will be moving in the direction for an upgrade but not just going to happen at this point in time.
Council Member Christensen stated he would be interested in a presentation from Springsted as to rating system, and wants to see ratios; if the City's goal is to increase its rating from Double Aa3 to higher rating, what would be our anticipated interest savings in the future and what have to do to maintain it, when look at financial statement we collect over $4.2 to $4.5 million year in interest on our cash reserves, that they had conversation as to whether we should use our reserves and pay for the mosquito facility or not, but we are bonding for it, that it is his understanding that the Double Aa3 rating on Mosquito Reserve is our underlying rating because the revenue collected on the mosquito facility isn't sufficient to pay for it and the City has to, so G.O. steps into place.
Council Member Kreun stated there are several kinds of debt involved and what seems to create our problem is the levy system, and if that is looked on differently than public works type of facilities and if difference between those two kinds of debt when they are looking at us for rating; wouldn't have inordinate amount of debt except for the dike system. Ms. Krueger stated they look at the source of revenue to repay the debt - the Alerus is the sale tax and the Mosquito Control is coming from a fee source, and when do the debt ratio they are looking at that debt that is supported by tax levy and not from another source. Dike is general tax levy money. - not looking at what is used to fund, they are looking at the source of revenue to repay it. It was noted we have 3 sources of money to pay debt - sales tax, fees and property tax - special assessments are looked at as a tax because collect as do a tax. Christensen stated they would be interested in seeing how it works, because we have the dike issue coming up and whether to pay it off sooner or not. Ms. Krueger stated she would be happy to work with staff.
The city auditor reported that the protest period ended on June 25, 2007 and no written protests were received against that bond issue.
An affidavit was presented showing publication in the official newspaper of the City of the Official Terms of Offering of $3,490,000 General Obligation Public Building Bonds, Series 2007A (the "Bonds") of the City, bids for which were to be considered at this meeting as provided by resolution adopted June 4, 2007. The affidavit was examined and approved and ordered placed on file.
It was reported that four (4) sealed bids for the purchase of the Bonds had been received from the following institutions at or before the time stated in the Official Terms of Offering, and the bids were then opened and publicly read and considered, and were all found to conform to the Official Terms of Offering and to be accompanied by the required security, and the purchase price, interest rates and net interest cost under the terms of each bid were found to be as follows: Document No. 9053 - Bids.
Council Member Brooks introduced the following resolution and moved its adoption, which motion was seconded by Council Member Kreun: Document No. 9054 - Resolution (Authorizing, Selling and Establishing Terms, etc.)
Upon vote being taken thereon, the following voted in favor thereof: Council Members Brooks, McNamara, Gershman, Christensen, Bakken, Kreun, Glassheim - 7; and the following voted against the same: none; whereupon the resolution was declared duly passed and adopted.
ADOPT RESOLUTION AUTHORIZING THE ISSUANCE AND
AWARDING SALE OF MOSQUITO CONTROL RESERVE
REVENUE BONDS, SERIES 2007B TO FINANCE THE UNDER-
TAKING OF EXPANSION AND IMPROVEMENT OF MUNICIPAL
MOSQUITO CONTROL UTILITY
The city auditor presented an affidavit showing publication in the official newspaper of the City of the Notice of Bond Sale of $1,360,000 Mosquito Control Reserve Revenue Bonds, Series 2007B (the "Bonds") of the City, bids for which were to be considered at this meeting as provided by resolution adopted June 4, 2007. The affidavit was examined and approved and ordered placed on file.
The city auditor reported that one sealed bid and two electronic bids for the purchase of the Bonds had been received from the following institutions at or before the time stated in the Notice of Bond Sale, and the bids were then opened and publicly read and considered, and were all found to conform to the Notice of Bond Sale and to be accompanied by the required security, and the purchase price, interest rates and net interest cost under the terms of each bid were bound to be as follows: Document No. 9055 - Bid.
Council Member Brooks introduced the following resolution and moved its adoption, which motion was seconded by Council Member Kreun: Document No. 9056 - Resolution (Authorizing Issuance and Awarding Sale , Selling and Establishing Terms, etc.).
Upon vote being taken thereon, the following voted in favor thereof: Council Members Brooks, McNamara, Gershman, Christensen, Bakken, Kreun, Glassheim - 7; and the following voted against the same: none; whereupon the resolution was declared duly passed and adopted.
PULL MATTER OF ADVANCE REFUNDING OF
REFUNDING IMPROVEMENT BONDS, SERIES 1999B
AND 2000A (SERIES 2007C)
The staff report from the finance department relating to Advance Refunding of Refunding Improvement bonds, series 1999B and 2000A, with recommendation to approve the resolution authorizing the issuance of and award the sale of Refunding Improvement Refunding Bonds, Series 2007C.
The city auditor reported this matter was pulled from the agenda because of changes in the market.
ADJOURN
It was moved by Council Member Brooks and seconded by Council Member Gershman that we adjourn. Carried 7 votes affirmative.
Respectfully submitted,
John M. Schmisek
City Auditor
Approved:
_______________________________________
Eliot Glassheim, Vice President of City Council