12151986 Regular Meeting - Laserfiche WebLink

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3 Regular Meeting December 15, 1986 Page 3 Mr. Farr moved for adoption of the Resolution and Mr. Guerra second- ed the motion, which passed unanimously. Mayor Younger introduced for consideration adoption of a Resolution, the caption which was read as follows: RESOLUTION DIRECTING PUBLICATION OF NOTICE OF INTENTION?O ISSUE CERTIFICATES OF OBLIGATION Ms. Kissler moved for adoption of the Resolution and Mr. Guerra second- ed the motion. Mr. Coddington stated he has a problem with the use of Certificates of Obligation. He stated there is already $700,000 in place for the Public Works Complex and that he thinks these Certifi- cates of Obligation would be for the CAD building. He prefers the City set up a non-profit corporation and he has received advice from Dillon, Reed and Company that they see no problem in the City setting up a non-profit corporation. He feels the City could save half the interest in doing so. Mr. Gonzalez advised the Council $500,000 from the Utility Fund fund balance, estimated to be $2,000,000 could be used towards this building. Mr. Coddington stated he feels the use of Certificates of Obligation towards this building is a big commit- ment. Mr. Coddington introduced Eric Samuelson, an attorney for the Texas Association of Taxpayers, who provided the Council with informa- tion pertaining to the Galveston case, wherein the Tax Assessor-Collector alleges his duties have been taken away from him" by the Jones-Peveto Bill. Mr. Gonzalez stated of $20,000,000, some proceeds are earning interest to pay on bonds and a portion is for bond reserves; there is $2,500,000 in capital recovery fees; and there is an undesignated cash balance of $4,000,000 but that the City should not touch the General Fund fund balance of $2,000,000, as the City needs to remain liquid. Mr. Farr asked how the use of the $500,000 from the Utility Fund might affect the City's bond rating. Bill Newman of First Southwest Company advised the Council it should not have an adverse affect but cautioned the Council not to use funds that the City might need to do projects such as drainage. Mayor Younger asked Rick Fisher, the City's bond attorney, if there were excess funds from the issuance of these Certi- ficates of Obligation if the City could use the money on other projects. Mr. Fisher advised the City cannot make the issue designation too broad. Mr. Gonzalez advised the Council the Certificates of Obliga- tion would go for the cost of the building, architectural fees, contin- gency fees, legal fees and rating fees. Mr. Newman advised the use of the $500,000 would change the timing. He stated the use of non-profit corporations by cities is not uncommon and that its use sometimes eli- minates the direct burden on cities. He stated non-profit corporations:: are rated differently, but that it would still be a debt obligation. He stated he would analyze the use of the non-profit corporation if the City so directs. Mr. Fisher advised it would take a little longer to prepare the documents for a non-profit corporatiøn. Mr. Coddington stated he thought the use of the $500,000 would be a better deal for the City. Mayor Younger moved to amend Exhibit "A" of the Resolution to change the amount to $1,400,000 (instead of $1,900,000) and Mr. Farr seconded the motion. On roll call the following vote was recorded: AYE: Brown, Coddington, Farr, Younger, Kissler. NAY: None. ABSTAIN: Guerra. On roll call for adoption of the Resolution, the Council voted unani- mously for adoption of the Resolution.