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Finance Committee Meeting Commission Chamber- 3/25/2013- 12:55 PM
FINANCE
1. Discuss the city's criteria for depositing ARC monies in
financial institutions and banks doing business with the City of
Augusta. (Requested by Commissioner Marion Williams)
Attachments
2. Motion to authorize the Finance and Utility departments to
begin the process for issuing approximately $20,000,000 in
taxable bonds in order to meet the debt service reserve
requirements for the existing 2004 and 2007 Water and
Sewerage Bonds, with such bonds to be issued through a
competitive bid process with Murray Barnes Finister LLP
serving as bond/disclosure counsel.
Attachments
3. Motion to approve the minutes of the Finance Committee held
on March 11, 2013.
Attachments
Finance Committee Meeting
3/25/2013 12:55 PM
Bank Deposits
Department:
Caption:Discuss the city's criteria for depositing ARC monies in financial
institutions and banks doing business with the City of Augusta.
(Requested by Commissioner Marion Williams)
Background:
Analysis:
Financial Impact:
Alternatives:
Recommendation:
Funds are Available
in the Following
Accounts:
REVIEWED AND APPROVED BY:
Cover Memo
Item # 1
Finance Committee Meeting
3/25/2013 12:55 PM
Issue Water And Sewer Revenue Bond - Series 2013
Department:Finance and Utilites
Caption:Motion to authorize the Finance and Utility departments to begin
the process for issuing approximately $20,000,000 in taxable
bonds in order to meet the debt service reserve requirements for
the existing 2004 and 2007 Water and Sewerage Bonds, with such
bonds to be issued through a competitive bid process with Murray
Barnes Finister LLP serving as bond/disclosure counsel.
Background:Augusta has two outstanding water and sewerage bond issues
from 2004 and 2007. The debt service reserve requirements for the
2004 and 2007 bonds were funded with debt service reserve surety
bonds. The master bond resolution under which these two series
of bonds were issued provides that if the ratings of the provider of
the surety bonds falls below the rating on the 2004 and 2007
bonds, the debt service reserve fund must be funded with cash
over a 24-month period or with a debt service reserve surety bond
having a “AAA” rating. There are no providers of surety bond
policies that meet the “AAA” rating requirement of the master
bond resolution. Consequently, the debt service reserve fund must
be funded with cash. Prior to the issuance of the 2012 bonds,
Dianne McNabb, Augusta’s financial advisor, explained to the
Commission that a combination of the Utilities continued positive
bond rating and the probable downgrade of the surety bond
provider might trigger a need for a cash reserve. The total
reserve requirement is approximately $28,000,000. Currently, the
debt service reserve fund contains $8 million in addition to the
2004 and 2007 debt service reserve surety bonds. The reserve
must begin to be funded April 1, 2013. Utilities has sufficient
other funds to make the monthly payments necessary through the
July 1, 2013 payment, provided AUD can be reimbursed these
monthly payments. If moving forward with the bonds is
approved, in addition to this motion, the Commission will be
asked to take action in June, 2013 (June 4 Commission meeting)
to approve a parameters resolution and again in July, 2013 (July
16 Commission meeting) to approve the final pricing of the bonds.
.The reserve may be eliminated in whole or in part if the
Commission elects to refund the 2004 and/or 2007 bonds in
future.. This is an industry wide issue that was created with the
Cover Memo
Item # 2
financial crisis in 2008. Prior to the financial crisis it was a cost
effective industry practice to purchase “bond insurance” to
improve the bond rating and thereby reduce the interest costs of
bonds.
Analysis:The issuance of revenue bonds to fund the reserve requirements
for the Water and Sewer Revenue Bonds Series 2004 adn 2007 is
both econmically feasable and fiscally prudent.
Financial Impact:Water and Sewer is an enterprise fund and debt service will be
funded from operation.
Alternatives:A) Bond/borrow the necessary funds for the reserve. B) Fund the
reserve fromt he General Fund. C) Default on the obligations
under the existing bonds.
Recommendation:Authorize the financing team to take the necessary steps to issue
the bonds
Funds are Available
in the Following
Accounts:
Debt service will be funded by operations
REVIEWED AND APPROVED BY:
Finance.
Law.
Administrator.
Clerk of Commission
Cover Memo
Item # 2
Finance Committee Meeting
3/25/2013 12:55 PM
Minutes
Department:Clerk of Commission
Caption:Motion to approve the minutes of the Finance Committee held on
March 11, 2013.
Background:
Analysis:
Financial Impact:
Alternatives:
Recommendation:
Funds are Available
in the Following
Accounts:
REVIEWED AND APPROVED BY:
Cover Memo
Item # 3
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Item # 3
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Item # 3
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Item # 3