1995 JT MIN JUL 10 - Laserfiche WebLink

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Member Bennett said she had called several brokers for their opinion on the avenue the City is taking. She said they all agreed with the recommendation of E. J. DeLa Rosa; they felt this was the most prudent avenue to take. Member Bennett said the City should be looking at a requirement for an engineer's report and that the electric system financing not be completed prior to the substantial completion of the hospital. Member Bennett said one of the brokers referred to the performance bonds as "Disney Dollars". She said the money was fun to spend but it couldn't be used outside the program and that made her nervous. She asked what if it doesn't perform. Director Clarke responded that it would perform; that staff has talked to both Smith Barney and to Prager McCarthy. He said that both have large industrial investors that pick up bonds of this nature, the bonds would not be traded to the general public and they are presold and negotiated with the investor so they know exactly what they are getting into. Director Clarke stated that under the terms of the sale, there is full disclosure as to terms and conditions of the sale, conditions of the City, how the bonds are structured and repayment terms. The underwriter then comes back with any conditions they want included in the sale and that is then presented to the Council, once the underwriter is hired. Director Clarke stated staff needs the money up front because purchases are being made now to build the substation. He said construction is done in phases; the transmission line is built separately as is the distribution line and materials and land are " purchased separately. Director Clarke said they have a date when the facilities must be heated up to serve the hospital and that is approximately a year away. He said the sale of bonds puts the money with the trustee and it is drawn down as the construction schedule is designed by the engineer and this has already been done by Black and Veatch. Member Bennett asked when payments would begin. Director Clarke said discussion has been underway to capitalize the interest; therefore, payments would not start until the hospital was in place. Councilmember Bennett stated that many times there are rumors about various issues and that she has heard a rumor and would like some clarification. She asked if Electric Utility Director Clarke had gone to Seattle as a guest of Prager, McCarthy. Director Clarke replied he attended the APPA Conference at the expense of the City. Councilmember Bennett asked if at any time he was guest of Prager, McCarthy. Director Clarke said he attended a dinner at which 50 others were present. Motion carried. Councilmember Bennett voted "no". Mayor Fulp abstained. Councilmember Sandoval inquired as to the reason for the abstention. He asked if there was a possible conflict. Mayor Fulp stated he did not have to give a reason for abstaining. 2 JUL 10 1995