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HomeMy WebLinkAbout09-15-2000 Called Meeting CALLED MEETING COMMISSION CHAMBERS September 15, 2000 Augusta Richmond County Commission convened at 4:10 p.m., Friday, September 15, 2000, the Honorable Bob Young, Mayor, presiding. . PRESENT: Hons. J. Brigham, Mays, Kuhlke, H. Brigham, Beard, Cheek, Williams and Bridges, members of Augusta Richmond County Commission. . ABSENT: Hons. Colclough and Shepard, members of Augusta Richmond County Commission. Also present: Randy Oliver, Administrator; Lena Bonner, Clerk of Commission; and Jim Wall, Attorney. The invocation was given by the Reverend Williams. The Pledge of Allegiance was recited. Mr. Mayor: Madame Clerk, let’s do Items 1 and 2. 1. Motion to approve and authorize the execution of the Bond Purchase Agreement between A.G. Edwards & Sons, Inc. and SunTrust Equitable Securities Corporation as Underwriters and Augusta, Georgia. 2. Motion to approve Supplemental Bond Resolution pertaining to the Water and Sewerage Revenue Bonds, Series 2000. Mr. Oliver: Let me go over the aspects of the offering and Mr. Wall can go over the legal aspects. Mr. Mayor: Mr. Oliver, Mr. Widener from A.G. Edwards has a brief presentation he’d like to do before you and Mr. Wall get into what you’re going to get into. Mr. Oliver: That would be fine. I can just give a snapshot and then Mark can give the -- Mr. Mayor: Okay. Mr. Widener: As you are aware, just so everyone knows, we had made a presentation to two rating agencies in New York. These bonds are insured, which means that there was insurance bought to bring it up to a AAA rating. However, the underlying ratings, for the benefit of everybody from Moody’s was an A2, and from Standard & Poor’s it was an A+, which I think considering the size of this type of 2 program was very good, particularly on the S&P side, and I think the Moody’s rating can potentially be upgraded the next go-around, when the next series of bonds are put out. We also, to look at the financial part, we tried to weight what the cost of the bonds would be if we sold them on their own rating, versus that with bond insurance. Through A.G. Edwards we got three quotes for bond insurance, and I feel it’s important to read those into the record. We took the lowest quote for bond insurance. FSA bid 16-1/2 basis points for the premium for the insurance and one percent to fund the debt service reserve fund. [inaudible] bid 17-1/4 basis points for the bond insurance and one percent for the debt service reserve fund. [inaudible] bid 21.1 basis points for the insurance and 1.45 percent on the debt service reserve fund. As a result of those bids, we elected to take FSA. When we were in New York, we met with all rating -- all the bond insurers also. Again, with an effort to show them the plan and the overall vision that we had for the utilities. The bonds that are being issued will be $97,080,000 and it will permit us to do the capital improvements that you previously authorized within the utilities system and I think it will go a long way to addressing some of the needs of that utilities system. However, I would point out that this is only the first step in an overall plan and it calls for two subsequent bond issues in future years. The yields, when we priced these bonds, they priced -- we used what’s called wrapped debt service approach, which means we’ve maintained the debt service at a constant level through the whole term, meaning that we had to stagger the maturities to make sure that the debt service remains the same level. The yields on these bonds is the interest rate similar to what you would pay on a house mortgage, if you will, range from 443, 4.43 percent in 2006 to 5.52 in 20030. 5.52 percent. And the average net interest rate for the whole transaction was 5.33 percent. I think that our timing in the market was excellent. There were very few competing issues. This week in the market there was -- kind of ironic -- there was a transportation issue from Polk County, Florida, and then there were a couple of other competing issues in the market, but nothing was really direct competition to us and that makes your bonds more marketable. The comparables are contained within the backup and Mark will discuss that. We are comfortable that this transaction was priced competitively. The original pricing was put out in such a way that it was what’s called over-subscribed, meaning that there were more people that wanted the bonds than there were bonds available, which means the price was a little high, and as a result of that, it was adjusted down two to three basis points, and two to three basis points on $97 million means a lot of difference. As I say, we are very comfortable with the transaction. I would like to comment the project team, particularly Mark and bond counsel. I think that they did an outstanding job. This issue was kept on target. We always planned to close this prior to the vote on Tuesday, and we have achieved that. With that, I’d like to turn it over to Mark. Mark, if you’d like to go through your presentation. Mr. Mayor: Mark, again, for the record, if you’d give us your name and your affiliation. Mr. Widener: Mark Widener, A.G. Edwards. I can’t tell you how happy I am to be here today. It’s a lot different than the last time I was up here. As Randy said, 3 we are finished, just about finished with this bond issue. It has been [inaudible] and as Randy said, I comment the entire project team. There were a lot of people that did a lot of work to make this thing work. In front of you are two things that I’ll quickly go over. I know you have a number of things to do today so I won’t be long. These are mostly what we can [inaudible]. The first is a CD rom, which is a copy of our ratings presentation that we did in New York. This we used to quote the rating agencies and the insurance companies, and again, everybody said we did a great job. We got a lot of good things from the rating agencies. I think it’s important to note that the folks on the staff kept -- you were facing a lot of debt over the next years to [inaudible] and a lot of times that could mean down grading from the rating agencies. They’re looking at all the [inaudible] as far as the next ten years. There was no down grading. In fact, Standard & Poor’s gave you an A+ [inaudible] and Moody’s gave you an A2, which is equivalent to an A, mid-A range. There was a lot of good discussion about the [inaudible]. And those ratings reports are actually included in the material so you can read them in your spare time. Again, this is the ratings presentation. If you are bored and want to look at it, you can put it in your computer and double click on it and it will automatically run the presentation, the entire thing. To go over just the book again quickly, there are a couple of things I want to point out. We had under Section I, it’s just a pricing summary. It gives you an idea of the sources and uses, tells you where the money is going to go. The main thing there -- there are two main things that I point out. Number one, the project fund in the amount of $88.4 million, that goes into an account which will earn a lot of interest over the next two to three years while you’re paying for the projects. This will pay for the projects that you all approved back a few months ago. The other number I’ll point out because it’s very painful to us and good for y’all, the underwriter’s discount, which we did at $1.85 per bond, it’s $179,000. Again, I’m proud to say that we got it done for exactly what we told you we’d get it done for, and we were very happy with the interest rate. Under Section II, as Randy mentioned, we wrapped this debt around the existing debt to give you an overall level of debt service. You can see that [inaudible] you achieve roughly an overall level of debt service over the next 30 years. Under Section III is -- and if I go too fast, or if I go too slow, let me know -- there is a look at the bond [inaudible] . The national market index [inaudible] -- Mr. Bridges: Where are you at, Mark? Mr. Widener: Under Section III. It’s extremely important to take a look at this, because what you’ll see is if you notice that from about a year ago, we had the market at the lowest point it’s been in a little over a year. Timing is everything and [inaudible] you guys put us on a schedule and we met it and we just happened to hit the market at the right time. So you can see that over the last 18 years, [inaudible] but over the last year-and-a-half you are at the lowest point, so the market timing was perfect. And that’s one of the things that resulted in such good yield. A couple of pages that follow that simply tell you -- there’s a quote from the bond [inaudible] to give you an idea of what the market conditions looked like when we went to sell the bonds. The most important thing, because I stood here about three months ago and I 4 told you all this is what we would do, is in Section IV. You all are very legitimately concerned about getting the rates that would be competitive [inaudible]. Under tab four are the facts I think that back that up. We told you we’d stand here and do this, and what we’ve done under the first page is compare you four issues that were priced at about the same time we took this issue to market. The Portland, Oregon sewer system deal was almost identical to ours. Smith Barney priced that one [inaudible]. Polk County, Florida deal, as Randy mentioned, went with $65 million. The city of Chattanooga, Tennessee [inaudible] . The state of Wisconsin [inaudible]. All of those Wall Street firms, Solomon Smith Barney, Morgan Stanley, Paine Webber, if you compare our rates -- and what you want to compare is the yield [inaudible]. If you compare our yields to the yields across the board, you can see that in almost every case we beat them. Almost every case, Augusta, Georgia got lower yields than Chattanooga, Portland, Oregon, Polk County, Florida and Wisconsin state. And again, we’d love to stand up here and take all the credit for that [inaudible], but it went extremely well. Georgia was a state that hasn’t had much supply. The timing was perfect and the market was good. So you can feel good about rates we go. And the second page, this argued further assurances that the rates were good. You compare your two transactions, what we do is we take the last transaction which you did back in 1996 and ’97, which was good pricing. Compare it to the AAA national scale [inaudible], you can see that we range anywhere from -4 to +5 basis points around the national scale that you see [inaudible]. And I also bring up a Henry County water sewer deal which is almost identical to this one, [inaudible] back in June, compared it to the national market scale and you can see again [inaudible]. Hopefully these two pages give anybody who had any doubts to begin with peace of mind that we got as competitive an interest rate as we could for these bonds. Does anybody have any questions about those two pages? Moving on to Section V, again, this is information that may be interesting to you, may not be interesting to you, but you might want to know where your bonds were sold. The pie chart gives you idea of where the bonds went. 14 percent of them went to retail, 15 percent went to bank trusts, and 13 percent went to money managers. Those numbers, the money manager and bank trust, will usually end up in the hands of retail investors, so we’re looking at 14 plus 15 plus 13 which is your, what we call retail, which is a great number. [inaudible] The following pages just give you more statistics. We wrote 121 tickets [inaudible] , the average ticket size I think was in the hundreds of thousands, which is not a large ticket for the average ticket, and then it shows you the states. Distributed across 15 different states, and it gives you an idea on one page what states bought what, how much. You see a lot of it distributed here in Georgia. Most of the [inaudible] was retail. You had instate retail of about $18 million. And then under Section VI, is just so you’ll know who to recognize. This is a listing of all the participants on the management team, every one of the people on this list deserve a lot of credit for the amount of [inaudible]. This was absolutely [inaudible]. And then the last several things I’ve got in here for you are under Tab A. I’ve got a little bit of marketing material, I’ve got PO, a preliminary offering document that we did for you all. You can look through there and get all the information you ever wanted to know. And also, to assure you, our job and one of the things that we hope helped you get 5 low interest rates, cause to get this issue out into the market and the market [inaudible] is things like this flyer that we put out [inaudible] retail [inaudible]. We think helped create the demand on the bond issue. Under Tab B [inaudible] the rating. The rating agency report. Tab C is just a final number [inaudible] more information that you probably ever wanted to have, but it will give you an idea of what all is involved. With that, I tried to be quick and I think I did it. With that, I’ll turn it over to any questions. I’ll be happy to answer any that you have. Mr. Mayor: Thank you for staying within your five minutes. Mr. Oliver: I would note that the paying agent and bond registrar on this is SunTrust and they will be providing those services. The other thing that I failed to mention, I mean Max and Mary have obviously been an integral part to putting this together and I think that their part of the presentation, as well as the Mayor’s, was critical. But I don’t want to omit Mr. Wall because Mr. Wall did a lot of work on this. There’s a lot of work from a legal side to making sure this transaction comes together and this team did work together extremely well to put this issue on the street in a relatively short period of time and I think that they’ve done an exceptional job for the citizens of this county. Mr. Mayor: Mr. Wall, did you want to add anything to the presentation that we need to know about? Mr. Wall: Not insofar as presentation. [inaudible] documents at such time. Mr. Mayor: Gentlemen, are there any questions? We need a motion with respect to Items 1 and 2 to approve and authorize the execution of the bond purchase agreement and to approve the Supplemental Bond Resolution. Mr. Cheek: I so move. Mr. Mayor: Motion, do we have a second? Mr. Kuhlke: Second. Mr. Mayor: Any discussion on the motion, gentlemen? All in favor of the motion, please vote aye. Motion carries 8-0. Mr. Mayor: And the Chair would just like to recognize the staff for the hard work they did on this issue. As been said by Mr. Oliver, it was a team effort to get this bond issue out to market, get this money in-house so we can get to work on the master plan. We’ve got engineering plans already on the shelf so people around here ought to see construction pretty quickly, I think. Wouldn’t they, Mr. Hicks? 6 Mr. Hicks: Yes, sir. Mr. Mayor: Very quickly. We’re building for the future and I’m glad that we’re able to take another step in that direction today. Next item of business, I think what we want to do is take up our legal meeting next, and we have a personnel issue to discuss in the legal meeting, so we would have motion that we go into executive session to discuss it. 4. Legal Meeting ? Discuss personnel matter. Mr. Beard: I so move. Mr. Bridges: Second. Mr. Mayor: We have a motion and a second. Mr. Williams: I got a question, Mr. Mayor, please, sir. Item No. 3 says request by Mayor Pro Tem Willie Mays. I’d like to get some clarification from the Attorney. For this called meeting, I’m not clear on the ability of the Commission to be able to put a agenda item on the agenda. Last time at a called meeting there was some misunderstanding I would say. I tried to put a [inaudible] on and the Attorney, Mr. Wall, told me that the guidelines said we couldn’t do that. I’d like to get a clarification from Mr. Wall as to who can or can ‘t. Are we allowed to as Commissioners to bring something in the proper amount of time? I know you can’t just waltz in without getting [inaudible] consent, but if you’ve got time enough to get it to the Clerk to put it on, what’s the rule on that, Jim? Mr. Wall: A Commissioner, including the Mayor Pro Tem, would not have the right to put an item onto a Special Called meeting that is called by the Mayor without the Mayor’s consent, and that’s my opinion. Mr. Williams: That’s your opinion? What’s the legal? Mr. Wall: The City ordinance provisions that you have before you, which I furnished to you, and the interpretation of that statute that I believe supports the opinion that I have, that it’s not proper for any Commissioner to add it on. And I’ll be glad to read that in and explain my reasoning. Mr. Mayor: This discussion is not germane to the motion that’s on the floor, which is to go into executive session. Mr. Williams: Yes, Mr. Mayor, I understand that. 7 Mr. Mayor: You’re making a point of inquiry, and I think this is matter, in all due respect, Mr. Williams, that you and Mr. Wall could take up outside the scope of the debate, the discussion on the motion to go into executive session. Mr. Williams: Mr. Mayor, I understand the motion is on the floor, but I also understand that I tried to put something on before and I was not allowed to do that, and I feel that as a Commissioner and this legal document -- Mr. Mayor: Mr. Williams, I’m going to rule your discussion out of order, and we’re going to proceed with the vote to go into executive session. All in favor of going into executive session, please vote aye. Motion carries 8-0. Mr. Mayor: We’ll move into executive session. [LEGAL MEETING 4:35 - 5:10 P.M.] Motion to approve authorizing the Mayor to sign an affidavit of compliance with Georgia’s Open Meetings Act. Mr. Mayor: We need a motion to adopt the affidavit for the meeting we just come out of. Mr. Cheek: So moved. Mr. Kuhlke: Second. Mr. Mayor: Motion and second. Please vote aye if you’re in favor of that. Clerk: To add it and approve it? Mr. Mayor: To add it and approve it, yes, ma’am. Motion carries 8-0. Mr. Mayor: I think most people know the purpose for which we were meeting. We were discussing the status of our City Administrator, Mr. Randy Oliver. There’s been some conversation in the local press about Mr. Oliver’s future, and indeed he is considering an offer from another community. We certainly value the service Mr. Oliver provides to this community. We believe in the management structure we have set up for this consolidated government. What we are going to do is to in a very structured way talk to Mr. Oliver and see if we can establish a dialog at this time to see indeed what his interest is in remaining in Augusta or moving on to another community. So I’ve asked the Mayor Pro Tem and our Finance Chairman, 8 Mr. Steve Shepard, to join with me, and we will act as emissaries of this Commission to go to Mr. Oliver and to pursue this matter with him further and explore renegotiations of the contract with Augusta-Richmond County. Gentlemen, is there any other business to come before the Commission, this afternoon? Mr. Beard: I move we adjourn. Mr. Mayor: Motion to adjourn. Second? Mr. H. Brigham: Second. Mr. Mayor: We are adjourned without objection. [MEETING ADJOURNED] Lena Bonner Clerk of Commission CERTIFICATION: I, Lena J. Bonner, Clerk of Commission, hereby certify that the above is a true and correct copy of the minutes of the Called Meeting of Augusta Richmond County Commission held on September 15, 2000. _________________ Clerk of Commission