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Pre -Sale Report - 1995A Bonds <br />management demands. Using special assessments for non -debt purposes cannot take <br />away money needed for debt service. We will work with City Staff to create <br />appropriate cash flow monitoring procedures. <br />The City Council must establish the revolving fund by resolution. This resolution will <br />be presented to the Council for adoption at the December 21st meeting. <br />MARKET CONDITIONS <br />This year has been marked by generally rising interest rates. The graph on the following <br />page shows the trends in the Bond Buyer's 20 -Year G.O. Index (BBI) since 1990. <br />While interest rates have risen sharply from historic lows in 1993, current rates still <br />mirror conditions found several years ago. Rates increases in October and November <br />have moderated with the BBI falling the past four weeks. <br />The proposed finance plan is designed, in part, to capture favorable market conditions. <br />In recent years, January has been a favorable time to issue municipal bonds. The <br />demand of tax- exempt debt at the beginning of the year has, in the past, pushed rates <br />down. We are also facing the potential for higher interest rates. The Federal Reserve <br />seems determined to keeping increasing interest rates to prevent inflation. Another rate <br />hike has appears likely in December or January. It is unclear when rates may begin to <br />decline. The factors have been considered in working towards a bond sale in January. <br />Page 4 <br />Page 78 <br />