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03/07/1990 - 00006422' 6� THE MIN[JTES OF TH8 SPECIAL MEETING OF THE FRIDLEY CITY COIINCIL OF MARC$ 7, 1990 The Speaial Meeting of the Fridley City Council was called to order at 7:35 p.m. by Mayor Nee. ROLL CALL• MEMBERS PRESENT: MEMBERS ABSENT: Mayor Nee, Schneider, Fitzpatrick None Councilwoman Jorgenson, Councilman Councilman Billings and Councilman (arrived at 7:47 p.m.) The purpose of this meeting was to receive the bids and award the sale of general obligation refunding bonds. Mr. Burns, City Manager, stated recent tax increment financing amendments passed by the Legislature have caused a review by the City of tax increment bonds. He stated the impact of these amendments is that no tax increment financing from pre-1979 districts could be used after the year 2001 unless it is needed to pay debt service on bonds issued before April 1, 1990. Mr. Burns stated in order to accomplish the City's redevelopment objectives, and comply with the law, it was deaided the City should � refinance the existing debt. Ae stated that on February 12, 1990 the Council adopted a resolution to proceed with the sale of tax increment refunding bonds. � Mr. Burns stated the purpose of this meeting is to award the sale of these bonds. He stated information before the Council includes a resolution accepting the bid for the sale of these bonds; a bond facsimile; a copy of the Tax Increment Pledge Agreement that will be considered at the Housing & Redevelopment Authority's meeting on March 8, 1990; the City Clerk's certificate attesting to the authenticity and completeness of the minutes of this meeting; a proposed escrow aqreement between the City and First Trust, its proposed escrow agent; and five exhibits that are to be used by the escrow agent in the disposal of bond proceeds. Mr. Burns stated there is a change in the amount of the bonds from $9,445,000 to $9,485,000 which Mr. Casserly will address. He stated Mr. O'Meara will also present information regarding Section 26 of House File No. 2209. Mr. Casserly, Miller & Schroder Financial, Inc., stated the bid for the sale of these bonds was opened at 11 a.m. today. He stated the following bids were received: � � � FRIDLEY CITY COIINCIL MEETING OF MARCH 7 1990 PAGE 2 Bidder Net Interest Cost Norwest Investment Services, Inc. A1lison Williams Company FBS Investment Services, Inc. Merrill Lynch Capital Markets Piper, Jaffray & Hopwood, Inc. American National Bank of St. Paul Cronin & Company, Inc. Robert w. Baird & Company, Inc. Dougherty, Dawkins, Strand & Yost, Inc. John G. Kinnard & Company, Inc. Marquette Bank Minneapolis, N.A. Shearson Lehman Hutton, Inc. Prudential-Bache Capital Dean Witter Reynolds, Inc. Tucker, Anthony & R.L. Day, Zna. Dain Bosworth, Incorporated Edward D. Jones and Co. Miller, Johnson & Kuehn, Inc. Smith Barney, Harris Upham & Co. The Northern Trust Comgany Park Investment Corporation Blunt, Ellis & Loewi, Inc. Clayton Brown & Associates, Inc. Griffin, Kubik, Stephens and Thompson, Inc. 6.9587$ ($10,397,401.73) 6.9850$ ($10,436,681.53) 6.991012$ ($10,445,650.42) 7.D218$ ($10,491,713.00) MOTION by Councilman Schneider to receive the above bids. Seconded by Councilwoman Jorqenson. Upon a voice vote, all voting aye, Mayor Nee declared the motion carried unanimously. Mr. Casserly stated the difference in interest rates of the top three bidders is within .04 percent. He stated the bond buyer has an index o£ rated bonds and their index was 7.25�, and the coupon rate on these bonds is 6.86Y. He stated this all suggests that this is a very high quality bond rated AA. Mr. Casserly stated these bonds are about a half of a percent under the rate of the bonds which will be replaced. Mr. Casserly stated the par amount of the bonds is $9,485,000 with accrued interest from March 1, 1990 to March 28, 1990 of $48,684.75. He outlined the total uses as follows: underwriter�s discount, $139,195.41; costs of issuance, $76,588.57; deposit to debt service fund, $48,684.75; and deposit to escrow fund, $9,268,916.02. 6l 0 FR LEY ITY COUNCI EETI f3 OF MA C 7 1990 PAGE 3 � Mr. Casserly presented the debt service schedule of these bonds. He stated the average coupon is 6.86$ and net interest cost is 6.95�. At this time, 7:47 p.m., Councilman Fitzpatrick arrived at the meeting. Mr. Casserly presented the debt service comparison schedule. He stated the net present value would be about $24,000-$25,000. Mr. Casserly stated the bids were close and under the national average, which is usually the case in Minnesota. Mr. O'Meara, Briggs and Morgan Law Offices, stated House File No. 2209 is a bill containing proposed tax increment amendments. He stated it seems the bill takes a dim view of tax increment financing and that local officials are not capable of making intelligent or responsible decisions. He stated the bill is also somewhat punitive in areas. Mr. O'Meara stated when the original tax increment law was passed, the termination date for pre-1979 tax increment districts was 2009. Iie stated two years ago, the Legislature made a change and the tax increment districts were to terminate in the year 2001, the � exception being if increment was needed to pay for bonds which were issued on or before April 1, 1990. He stated the bonds the Council is considering utilizes this provision. Mr. D�Meara stated language contained in House File No. 2209 states the bonds would have to be outstanding on March 1, 1990 and, essentially, moves back the effective date. He stated the City has tax increment districts and can continue to take the tax increment, but increment from bonds issued between March 1, 1990 and April 1, 1990 has to be used to pay for older bond issues. He stated current debt service cannot be paid, but the City must bankroll the funds to pay for debt service by the year 2001. He stated excess increment could not be used for current project costs and, in effect, nothing goes beyond the year 2001. Mayor Nee asked how this impacts the City's redevelopment plans. Mr. Casserly stated the City probably would not be affected until after the year 2001, but was not sure how much of an impact it would mean for Fridley. Mr. O'Meara stated there would be some adverse effect on the total benefit, but he did not feel it would be a total renunciation. Mr. Casserly stated hearings are now being conducted on this � proposed bill. He felt there would be a tax increment bill, however, it would probably not be anything like the one proposed as it was an absolutely vicious bill. He stated the bill � � � � °� FRIDLEY CITY COUNCIL MEETING OF MARCA T. 1990 PAGE 4 eliminates all types of projects and destroys the City's ability to proceed with projects, Ae stated it would eliminate projects like Northco, which the City recently approved. Mr. Casserly stated it is a punitive measure as it impacts the existing districts based on their duration. He stated it is the pre-1979 districts where there is a concern and Center City is the only such district in Fridley. He stated the bill qoes against normal procedures to be accomplished in a redevelopment district. Mr. Burns stated he understands the bill would eliminate land writedowns. Mr. 0'Meara stated Mr. Burns is correct and property would have to be sold at fair market value. Mr. Casserly stated the City of Minneapolis is in the process of calculating how this bill would affect their tax increment districts. He stated he would like to compare this information with Fridley's tax increment districts. He stated if he can obtain this information, he would share it with the Council. Councilman Schneider stated he spoke with Senator Frank and Representative Simoneau regarding tax increment districts. He stated Representative Simoneau stated they would not hurt the little guys. He stated, however, he did not really know if Representative Simoneau truly understands the impact on cities. RESOLUTION NO. 24-1990 ACCEPTING BID ON SALE OF APPROXIMATELY $9.485,000 GENERAL OBLIGATION TAX INCREMENT REFUNDING BONDS OF 199� AND PROVIDING FOR THEIR ISSUANCE: MOTION by Councilman Schneider to adopt Resolution No. 24-1990, accepting the low bid from Norwest Investment Services, Inc. for the sale of these bonds at a net interest cost of 6.9587�. Seconded by Councilwoman Jorqenson. Upon a voice vote, all voting aye, Mayor Nee declared the motion carried unanimously. ADJOURNMENT: MOTION by Councilwoman Jorgenson to adjourn the meeting. Seconded by Counoilman Schneider. Upon a voice vote, all voting aye, Mayor Nee declared the motion carried unanimously and the Special Meeting of the Fridley City Council of March 7, 1990 adjourned at 8:03 p.m. Respectfully submitted, ,1� � �_ s�,..�r�;�,.�, Carole Haddad Secretary to the City Council Approved: !�,, 1 �; C ,vL�.�eL.,�a.,�- � �, �L L— William J. Nee ✓ Mayor