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07-05-1988 - Special .. o Q CITY COUNCIL OF EDGEWATER SPECIAL MEETING JULY 5, 1988 MINUTES Mayor Baugh called the meeting to order at 1:05 P.M. in the Community Center. He stated the purpose for the meeting was to act on necessary documents to close the Farmers Home Administration loans. ROLL CALL Mayor Earl Baugh Councilman Louis Rotundo Councilman Russell Prater Councilman Neil Asting Councilman David Mitchum Present Present Present Excused Present City Attorney Jose'B.Alvarez Arrived Later Interim City Manager Dennis Kelly Present Acting City Clerk Susan Wadsworth Present Chief Lawrence 'Schumaker Present Mayor Baugh suggested that Chief Schumaker be excused and there was no objection from Council members. Chief Schumaker left the meeting at 1:06 P.M. Mayor Baugh recessed the meeting at 1:06 P.M. to await the arrival of Mr. Arnold Schneider of Arch W. Roberts & Co. City Attorney Alvarez arrived at 1:10 P.M., during the recess. Mayor Baugh called the recessed meeting back to order at 1:30 P.M. Arnold Schneider, Arch W. Roberts & Co., Orlando, presented a resolution for Council's consideration with a note attached to provide the bridge financing to payoff the Farmers Home Administration loans the next day pending approval and final borrowing from Gulf Breeze by September 1. He stated the amount is $590,287.61 which is equal to the amount owed to FmHA with 7% interest per annum until maturity and can be prepaid at any time without penalty. He pointed out there were no closing costs, or other legal fees, or other costs. He stated that if the note is approved, he'll Federal Express it to St. Petersburg and they will wire transfer to FmHA in Ocala the next day. He added that when Gulf Breeze closes the loan in 30 to 45 days, they will repay the note from the proceeds from that loan and will get back the 5% good faith deposit. Councilman Rotundo questioned where the money comes from and Mr. Kelly replied the water and sewer fund. Mr. Schneider stated it's a 90 day ad valorem tax anticipation note and Financial Guarantee Insurance Corporation was not concerned with a junior lien pledge of the City and it will close out no later than September 1st. He then explained the oversight on the part of FmHA regarding notice to the City of eligibility for refunding which caused a two-month delay. Mr. Kelly asked about the interest for the 30 to 45 days and Mr. Schneider replied it's about $1,000. There was discussion regarding the $54,000 savings. City Attorney Alvarez requested an explanation of bridge financing. Mr. Schneider explained they will relay funds the next morning to FmHA in the amount of the face value of the note and when the Gulf Breeze loan is completed, the loan will pay back the $45,000 to the City and also Arch Roberts will be paid back the $590,287.61, and the note will be returned at that time marked paid in full. City Attorney Alvarez questioned the possibility of Gulf Breeze not going through with the loan and Mr. Schneider replied it's practically nil as the President of FCIG didn't see any problems. There was discussion about the concern with the junior lien. City Attorney Alvarez questioned the role of FGIC and Mr. Schneider replied Gulf Breeze bonds are insured by FGIC to guarantee an AAA rating, and they determined the City is an excellent credit risk. Mr. Schneider stated they saved about $55,000 in this process because they are buying the loan at 66C on a dollar and there are no issuance expenses and the payments are the same as what they are paying now and they're shortening the life of the loan at the end. Mayor Baugh asked the interest rate and Mr. Schneider replied FmHA is 5% and the new loan is 7.9% but it's offset because they made the purchase price on 66C on a dollar and have the same debt service every year to 2013 plus 5 years of payments were eliminated. He added the total savings over time is $244,000 and it's not contingent on future loans, such as the CIP programs. o C) City Attorney Alvarez asked what would happen if there were something unexpected and Mr. Schneider replied they'd have to refinance through some other note but it doesn't require referendum because it's less than one year in duration. Mr. Kelly asked about the junior lien if the first lien is released and Mr. Schneider replied it goes automatically to senior lien. Mr. Kelly asked if it has to come back to the City Council for action when the bridge financing expires and the money comes back to us. Mr. Schneider replied there will be one resolution authorizing them to execute the subsequent loan agreements but it will be routine and can be on a regular agenda. City Attorney Alvarez stated the bridge financing isn't costing the City anything except the interest and Mr. Schneider agreed that's right and it will be about $1,000. City Attorney Alvarez again asked the savings by going through Gulf Breeze and Mr. Schneider replied $55,000 in present value and $244,000 actual savings over the time. City Attorney Alvarez asked the costs associated with Gulf Breeze and Mr. Schneider replied there's a placement fee of $1,575 to Arch Roberts and a residual insurance premium of $3,645, or about $6,000 total, and they're shortening the life of the loan by about 7 years and not changing the payments in the interim. City Attorney Alvarez pointed out it's a financial resolution and Mr. Schneider explained bond counsel for Gulf Breeze did this and it's a standard type of document. City Attorney Alvarez reviewed Section 2. B. and asked the time limit. Mr. Schneider replied September 1st at the latest and the note matures October 1. Councilman Prater asked the City Attorney if he has a problem with it and if he's satisfied. City Attorney Alvarez replied yes, and what's missing will be on the record with the guarantee of no problems with refinancing by Gulf Breeze and the deadline of September 1st, what would happen in the event the refinancing doesn't take place, and the only other question is paragraph C. Mr. Schneider explained it's Chapter 218.385, Florida Statutes, which requires they make a public determination about going for negotiated financing as opposed to taking public bids in a conventional manner and time was the primary criteria and their relationship with Gulf Breeze which allows them to follow through. He said the amount of $590,287.61 is the exact amount FmHA determined was the payoff as of the next day. He added they wanted to get it done expeditiously so they didn't lose out on the good faith deposit and cost savings because public bid processes take time. Councilman Rotundo questioned the Charter language requiring bids and City Attorney Alvarez replied they have authority by State Statutes to go other ways. There was discussion about the marketing of the bonds. Mayor Baugh suggested all the Council members sign the documents, if approved. City Attorney Alvarez read Resolution 88-R-33. RES. 88-R-33 - A RESOLUTION PRO- VIDING FOR THE ISSUANCE OF NOT EXCEEDING $590,287.61 GENERAL OBLIGATION NOTES OF THE CITY OF EDGEWATER, FLORIDA; CONTAINING OTHER PROVISIONS RELATING TO SUCH NOTES; AWARDING SALE OF THE NOTES; AND PROVIDING AN EFFECTIVE DATE. He stated that the note is attached to the Resolution. Councilman Mitchum moved they adopt 88-R-33. Councilman Rotundo seconded the motion. Motion CARRIED 4-0. Mayor Baugh requested a motion to adjourn. Councilman Mitchum so moved. Councilman Prater seconded the motion. Meeting was adjourned at 2:07 P.M. Minutes submitted by: Lura Sue Koser ATTEST: "~I;/~ ACTING CIuf CLERK AP~d this 19 day of , 198~. V~ & ~ .1-- YOR OU CILMAN - ZONE T 0 JJ,;~~ COU~~ HR COUNCILMAN - ZONE FOUR J/~~ F- 1lo ~0 , -2- Council Special Meeting Minutes July 5, 1988 )