|
REGULAR MEETING September 24, 2018
<br /> have their money but we can take a look at it. Or we can just go ahead, if my colleagues feel safe
<br /> enough, I'm ok with your wisdom, with their wisdom, and look at a ten (10) year deal and not a
<br /> twenty(20)year deal. I'm even ok wit that but if somebody wants to look at those numbers, I think
<br /> we are ok, I just prefer we look at a ten (10) year deal and make an addendum to that resolution
<br /> for ten(10) years instead of twenty (20). I would be greatly in support of that.
<br /> Mr. Rompola replied, As Herschel has said, the way it is set up it is only set up in parameters. So,
<br /> certainly, there is nothing stopping the City from issuing bonds at less than a twenty (20) year
<br /> term. The issue would be exactly what that should be. If rates were to go up a little bit and we lock
<br /> in a ten(10) year term,that might not be fiscally prudent, but...
<br /> Councilmember Oliver Davis interjected, But we don't know those numbers right now.
<br /> Mr. Rompola interjected,And we won't know them,and I'm sorry to interrupt,but we won't know
<br /> the actual interest rate until we sell bonds. So we have to have some parameters and that is what
<br /> this bill sets out to do. Again, at the six percent(6%)interest rate,we certainly would never expect
<br /> the tax exempt bond rate to be at six percent (6%). That would take us back to the 1980s but the
<br /> term is the same way. If it is a twenty (20) year term and the bonds end up being eighteen (18) or
<br /> seventeen (17) years or something less than that,that gives the Controller and the Administration
<br /> the flexibility, based on what Herschel has said, all of the other parameters that we are focused on
<br /> the coming years. It isn't next year or the year after it is the tenth (10th), the twelfth (12th), the
<br /> thirteenth (13th) the fifteenth (15th) of whatever year of that financing know that the cash flow is
<br /> there to make the debt service without reducing revenues.
<br /> Councilmember Oliver Davis interjected, Granted but, Mr. Palmer, if we wanted to keep that and
<br /> vote on it toni ht, is there some type of language that we could have? Because to me, if we just
<br /> leave it where it is at twenty (20), there is no incentive to get it done at the ten (10) years or
<br /> whatever or the five (5) years or whatever from that standpoint. I'm cautious to just say twenty
<br /> (20) years from that standpoint. I would like to see this at a ten (10) year standpoint or a shorter
<br /> amount of time so we can work on that. Do you see where my head is on that?
<br /> Bob Palmer, Council Attorney with offices on the 4th floor of the County-City Building, South
<br /> Bend, IN, replied, I do. I think the incentive would be the Controller's Office and the
<br /> Administration to make the best economic decision on behalf of the City. If they look at the
<br /> numbers and determine ten (10) years is a better fiscal decision for the City, they have the
<br /> opportunity to do that, already, as it is written now.
<br /> Councilmember Oliver Davis asked, As it's written now they would do that?
<br /> Mr. Palmer replied, Yes, all this bill sets is the maximum term to be twenty (20) years. When it
<br /> comes time to sell the bonds, we anticipate the Controller's Office, with the advice of Counsel, to
<br /> determine the most economically beneficial term.They have the authority to do that based on what
<br /> is in the bill as written.
<br /> Councilmember Oliver Davis interjected, One (1) last thing and then I'm done. You said that they
<br /> won't know that information?
<br /> Mr. Rompola replied, Well, no. What Herschel referred to, we can look at different terms and
<br /> different estimates of interest rates and predict what the rate might be at a particular maturity. So
<br /> you would know whether ten (10), twelve (12) or fourteen (14) years, what the annual payment
<br /> would be over the life of the bond at each of those maturities. So before the bonds are sold, the
<br /> Controller's Office, with Herschel's advice, can determine what the economics would look like
<br /> based on an assumed interest rate for each of those maturities. The idea is that we come to you,
<br /> and this is very common for all types of bonds, with parameters so that the Controller's Office
<br /> would have that authority,just prior to the bond sale, to work with Herschel to come up with the
<br /> best economic deal for the City.
<br /> Councilmember Oliver Davis interjected, And so when that comes up, will you all be able to
<br /> provide us written documents of which one (1) you went with and why you chose that option that
<br /> we can get to our public and we can see that? It would say we were able to handle a ten (10) or
<br /> fifteen(15) and we handled it this way and that kind of stuff. I would like to know we are not just
<br /> locked into a twenty (20)without any kind of parameters,that is my issue.
<br /> 21
<br />
|