06/24/2002 Council Minutes - Laserfiche WebLink

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COUNCIL MINUTES JUNE 24, 2002 have the opportunity to opt out of special assessments. He stated, under Federal guidelines, because those three areas are separate from the other areas of the City, they are treated differently and do not qualify for tax-exempt financing. Therefore, the Apollo Drive/Lake Drive project had to be removed from the tax-exempt financing. He indicated this resulted in a higher interest rate and an additional cost to the City of approximately $132,000. Mr. Shannon indicated the principal and interest on both bond issues would be paid through special assessments against the benefited properties and the agreed upon interest rate for the assessments was 7%. He anticipated this spread would more than cover the principal and interest. Mr. Shannon acknowledged the City's bond rating had been improved from A3 to A2. He stated this was a very good rating situation for lower interest rates. He expressed his appreciation to City staff for working with Moody to obtain this higher rating. He indicated this higher rating reflected the City's growing economic base and noted the expectations of the 'ty due to this higher rating. Mr. Shannon congratulated the City on its improved rating, whi ' - e ` was very attractive for the bonds. He noted in the past a rate of 5.25% would have bee for tax-exempt bond issues. Councilmember O'Donnell requested clarification that 1 and interest was anticipated to be more than covered by the special assessments. Mr. S stated this was correct. 00 Regarding the additional cost to the City of $132, uncilmember Carlson noted this tax-exempt issue was related to a City Charter amendment ade in 1993. She asked Mr. Shannon if he would recommend that the City re-examine t endment. Mr. Shannon responded affirmatively. to the City Charter and noted current must be assessed to benefited prop Councilmember Carlson su needs at that time. However, that were anticipated to grow. reconsider this section of the Ci assistance. sed a number of concerns regarding that amendment provision in the Charter that 100 percent of bonds , if this is not the case, there must be a referendum. ps the amendment to the City Charter had met the City's ri ate s the amendment did not address the three areas of the City e felt the Charter Commission and the City Council may wish to Charter. Mr. Shannon supported this action and offered his Mayor Bergeson requested confirmation, if the City did not have a Home Rule Charter, under State Statute this entire bond issue would have been tax-exempt. Mr. Shannon stated this was correct. He noted, however, there are Federal guidelines that must be met and, if there are guarantees by a developer on a project and the developer is receiving a direct benefit, this would be treated differently and the issue would be taxable. Mayor Bergeson congratulated City staff on obtaining a higher bond rating. Councilmember O'Donnell moved to adopt Resolution No. 02-60, Awarding the Sale of $645,000 G.O. Improvement Bonds, Series 2002A. Councilmember Carlson seconded the motion. 4