06-13-77 Council Meeting Minutes

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5 REGULAR MEETING JUNE 13, 1977 REGULAR MEETING RECONVENED (CONTINUED) due July 1, 1977, to and including July 1, 1986, (iii) the redemption premiums which will be payable on January 1, 1986, and July 1, 1986, and (iv) costs of refunding thereby procuring the full release and discharge of the Trust Indenture dated as of November 1, 1975, to The National Bank and Trust Company of South Bend, Trustee (hereinafter referred to as the "1975 Trost Indentu pursuant to which the 1975 Bonds were issued, all as provided by Article XIII of the 1-975 Trust Indenture; NOW THEREFORE it is agreed by and between the Authority and the City that the lease dated August 27, 1975, made and executed between them (which lease was duly recorded in the office of the Recorder of St. Joseph County, Indiana, on November 21, 1975, and appears in Miscellaneous Record Book 295 on pages 102 and 123) shall be amended as follows effective with the issuance and delivery by the Authority of the Civic Center Refunding Bonds and the full release and dis- charge of the 1975 Trust Indenture: 1. Section 9 of said lease dated August 27, 1975, is amended by adding at the end thereof new paragraphs reading as follows: "Notwithstanding the foregoing provisions of this Section 9 and the provisions of Section 10, the lease rental payable on June 28, 1978, and semi - annually there- after on June 28 and December 28 during the term of this lease shall be the lesser of: (i) Two Hundred Twenty -eight Thousand Dollars ($228,000), or (ii) Two Thousand Five Hundred Dollars ($2,500) plus an amount which when added to (a) the amount then in the Sinking Fund created by Section 4.01 of the Trust Indenture dated as of June 1, 1977, between the Authority and The National Bank and Trust Company of South Bend, as Trustee (hereinafter in this lease referred to as the '1977 Trust indenture') and (b) the amount payable into such Sinking Fund on or before January 1 or July 1 following such June 28 or December 28 from interest to be received from the investment of the pro- ceeds of the Civic Center Refunding Bonds issued pursuant to the 1977 Trust Indenture, equals the balance required in such Sinking Fund to pay unpaid principal and interest due on or before the January 1 or July 1 following such June 28 or December 28 on such Civic Center Refunding Bonds. "All rentals shall be paid by City to The National Bank and Trust Company of South Bend, Indiana, as Trustee under the 1977 Trust Indenture or to such other bank or trust company as may from time to time succeed The National Bank and Trust Company of South Bend as Trustee under the 1977 Trust Indenture. All payments so made by the City shall be considered as payment to the Authority of the rentals payable hereunder." 2. IT IS HEREBY FURTHER AGREED that all other provisions of mid lease dated August 27, 1975, shall remain in effect. Dated as of the 1st day of June, 1977. SOUTH BEND CIVIC CENTER BUILDING AUTHORITY BY ATTEST: A public hearing was held at this time on the resolution. Mr. Warren Deahl, attorney for the Civic Center Building Authority, indicated that this would result in a savings of $293,000 over the life of the refunding issue. He said the principal amount of these refunding bonds is $8,495,000, and they bear an interest of 5.51 %. He said the refunding bonds will be used to pay the outstanding 1975 bond in the amount of $5,390,000, bearing an interest rate of 5.9 %. He said the 1975 bond cannot be prepaid it must be paid not earlier than 1986. He said funds will come from the re- funding, as well as pay the refundngbonds. He read the following statement: "The terms of the original $5,390,000 Civic Center Bond Issue establish certain conditions which must be met if those bonds are to be refinanced prior to their original maturity dates. Among other requirements is a stipulation that cash or United States Government securities must be in hand equal to the entire total of principal, accrued interest, and any premiums due at the time of retirement. The earliest possible retirement of this original issue is January 1, 1986. Any new bond issue must be of sufficient size to equal: The remainder of the original issue $5,390,000, interest due through January 1, 1986, of $3,143,122, premium due on January 1, 1986 of $225,750, needed from new bond issue $8,758,872. Money from the new $8,485,000 bond issue plus available escrowed funds on hand is to be invested in special U.S. Government securities, issued for this purpose. The earned interest from these investments will be used to retire the excess $3,403,233 from the new bond issue over the final 15 year life of the issue. The City of South Bend has a 25 year lease obligating it to make payments semi - annually to the Building Authority. The terms of this lease will not be changed except to reduce the rental payments from the realized savings of the refundinc_ The refunding process is simply a means of taking advantage of today's lower interest rates and using more of the City's annual ease payments for furnishings at Century Center, instead of using this money for the previous higher interest costs. Approximately $190,000 will be available when this refunding is completed to reduce the first semi - annual payment due June 28, 1978. It is further anticipated that an additional $100,000 of savings will be realized over the full period of bond maturities that can ultimately be placed at the disposition of the City from the Building Authority. Council Member Szymkowiak made a motion to adopt this resolution, seconded by Council Member Taylor. Council President Parent indicated that a number of questions were raised about this refunding, however, a meeting was held and all his questions were answered. Council Member Kopczynski indicated he would vote for this tonight because it is a financially sound proposition. He said it was unfortunate the Council was not informed in advance of some of these things, and this was a classic example of handling an issue very poorly with the Council. The resolution was adopted by a roll call vote of eiaht aves.