1998-11-16 Redevelopment Authority Minutes

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• The South Bend Redevelopment Authority November 16, 1998 Meeting Minutes City Securities Corporation. The net interest rate, including the discount, is 4.703%, and is a very good rate. Since rates are low more U.S. Treasuries needed to be purchased to pay off the 1992 bonds, but low interest rates also mean lower bond rates. Crowe Chizek tentatively signed a purchase agreement to buy the U.S. Treasuries the day of the bond sale, but if the rate of the treasuries improves, Crowe Chizek will amend the purchase agreement in order to increase the savings. Crowe Chizek will determine that the end of this week. The financing is scheduled to close on November 24, 1998. Resolution No: 131 authorizes the execution of the Addendum to the Lease and approves the award of the bonds. Page three of Resolution No. 131 shows the final bond maturities schedule of the $6,135,000 along with interest rates. The Lease Addendum contains the new lease rental schedule which reflects the new, lower interest rates on the bonds. $6,000,000 of the bond proceeds will be used to acquire U.S. Treasury Securities deposited with Norwest. The principal from the bonds, along with interest earned, will be used to pay off the 1992 bonds until the year 2001, at which time the 1992 bonds will be redeemed. Mr. Alvarez asked if the $471,000 had any relation to a treasury rate. Mr. Rompola • stated the two components to savings are: the reduction in the interest rate on the new bonds, and the rates on the Treasuries. Because the Treasury rates are lower, more must be purchased, so the savings is smaller, but because the interest rates on the refunding bonds are equally low approximately $471,000 will be saved. Mrs. Kolata stated that she asked Crowe Chizek how we would know if we were saving enough money on refinancing to make the refinancing worth it. Crowe Chizek replied that a 3% or more savings was worth refinancing. Our actual savings is 5.5% of the current issue, which is a good savings. Mr. Alvarez asked if the rate of savings could drop or rise. Mr. Rompola stated that the savings could not go down but could go up. If U.S. Treasury rates go down, we are locked in, but if the rates go up, we could increase our' savings. The purchase agreement can be amended to allow for more savings. Mr. Alvarez asked if there was a fee for locking in the treasury rate. Mr. Rompola stated there was no fee that he was aware of. Upon a motion by Mr. Kahn, seconded by Mr. Alvarez and unanimously carried, the Authority approved Resolution 131 approving the Award of the South Bend Redevelopment Authority Lease Rental Revenue Refunding Bonds of 1998 (Blackthorn Golf Course Project) and approving the execution of an Addendum to the Lease between the Authority and the South Bend Redevelopment Commission and other related matters. H:\WPDATA\AUTHORTY\111698.MIN 2