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<br /> FI RST S øatfuve¿jf;- GO M P ANY <br /> INVESTMENT BANKERS <br /> SOUTHWEST TOWER <br /> 211 E. SEVENTH, SUITE 707 <br /> AUSTIN, TEXAS 78701 <br /> November 29, 1983 l'E:~. (5'2) "76".372 <br /> WILLIAM A. HARRISON, III <br /> VICE PRESIDENT <br /> Mayor and Iv1embers of the City Council <br /> City of San Marcos <br /> San Marcos, Texas <br /> Dear Iv1ayor and Councilmembers: <br /> On November 16, 1983, Iv1r. Earl Williams and I met with Iv1r. John <br /> Dorbandt, President of Hays County National Bank, the City's <br /> depository bank. At that time, negotiations for the sale of <br /> $1,500,000 Waterworks and Sewer System Certificates of Obligation <br /> and $300,000 Combination Tax and Revenue Certificates of Obligation <br /> were discussed. On Iv1onday, November 21, 1983, Mr. Dorbandt in- <br /> formed me that his bank's holding company was unable to handle the <br /> $1,500,000 at this time, but would consider the underwriting of the <br /> $300,000. A meeting has been set for 4:00 p.m., December 5, 1983, <br /> to continue the negotiations on the $300,000 issue. Due to their <br /> short four-year amortization, these proposed certificates should <br /> bear an interest rate somewhere around 8.50%. <br /> Since we were unsuccessful in negotiating the $1,500,000 locally, <br /> the City has two alternatives available in the marketing of the <br /> certificates. The securities can be sold through a negotiated sale <br /> with major underwriters or offered at a competitive public sale with <br /> the use of an offering prospectus. In order to protect the Council, <br /> we are of the opinion that the Council should offer these $1,500,000 <br /> certificates at a competitive sale on December 19, 1983 at 7:30 p.m. <br /> With regard to interest savings, neither approach offers an advantage <br /> over the other on an issue of this size. The negotiated sale approach <br /> lS done in the case of larger issues, especially when the City only <br /> anticipates one or two bids on the sale. <br /> In order to conduct a competitive sale on December 19th, the Council <br /> will need to approve an offering prospectus on December 5th. A <br /> rating trip will be necessary from December 6th through December 8th <br /> to acquire municipal ratings on the proposed offering. The City of <br /> San Marcos does not have an outstanding waterworks and sewer system <br /> revenue rating at this time. We are of the opinion that if the <br /> securities are offered as rated securities, the City would recèive <br /> an interest rate of .75 basis points to a full percentage point better <br />