02-12-2014 Council Minutes - Laserfiche WebLink

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MINUTES CITY COUNCIL FEBRUARY 12, 2014 upgraded the City's bond rating from AA to AA +, which is just one step below the highest rating of AAA. Ruff reported that AA+ is the same rating that the State of Minnesota and the Federal Government has. Ruff reported that a higher bond rating typically results in more bids for a bond sale and lower interest costs. He also pointed out the value of a review by a third party of the City's management practices and financial policies. Ruff encouraged the City to put the Standard & Poor's report on its Web site for review by the public. With regard to the bids received relative to the bond sale, Ruff reported that five bids were received. The low bid was from UBS Financial Services out of New York in the amount of 2.9779% for 20 year bonds. Of the five bids received there was only a difference of .05% from the highest to the lowest bid. Ruff reported that bond holders are also proposing to pay a premium of $100,000 for this bond. Ruff indicated that rates dipped slightly over the last 30 days and are about %z% lower than estimate, with the cost of issuance lower as well. Ruff recommended the award of the $3.4 million in bonds to UBS. Blesener reported that he has questions for Ruff that are recommended by the Government Finance Officers Association (GFOA). The first had to do with the City providing access to information as part of the bond sale process. Ruff reported that Ehlers & Associates did not encounter any difficulties with access to information and was very satisfied with the information provided. The second question related to the nature of the transaction and whether Ehlers was confident that the City Council understood the transaction. Ruff felt that the transaction was explained in detail and that the Council had a good understanding of the nature of this transaction and resulting bond sale. The third question related to whether or not Ehlers and /or Ruff had a conflict of interest in this transaction. Ruff replied that there were no conflicts of interest. The fourth question was whether Ehler's review of the City's financial statements identified any concerns. Ruff replied that Ehlers has no concerns, other than the fact that the project has not yet been bid. He noted, however, that if costs come in higher, the City has the ability to pay cash for costs over the bond sale amounts. The final question related to whether the Council or City staff has not complied with the appropriate procedures relative to the City's financial statements. Ruff indicated that no inconsistencies were discovered and there was no lack of disclosure. Montour asked for clarification that UBS provided the best bid. Ruff reported that when an underwriter reviews the bids, there are two facets that are considered. The first is the fee that is charged and the second is the interest rate over time. Based on this review, UBS has submitted the most advantageous bid for the City. 6