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1 I I Council Meeting Minutes July 8, 1986 Council Business, continued Proper reviewed staff report concerning the plans and specifica- tions for project 86-10, Seminary Estates streets and utilities. and recommended approval. Brandt noted that part of the proposal is to speed up the pro- cedure for having the permanent roads laid and that it would not allow for a period of settling; Proper stated that issue would be covered in Item VIII-6 of the agenda. Motion by Schmidt, seconded by Williams, to APPROVE A RESOLUTION APPROVING PLANS AND SPECIFICATIONS AND AUTHORIZING THE ADVERTISE- MENT FOR BIDS FOR IMPROVEMENT PROJECT 86-10, SEMINARY ESTATES STREETS AND UTILITIES. 5 Ayes - 0 Nayes, Motion Carried Jim Casserly, Miller & Schroeder Financial, Inc., reviewed his memo of July 1, 1986, regarding Interest Rate Protection Using Cross-Over Bonds. Brandt asked if the proceeds from the investing of the principal of the cross-over bonds would be sufficient to cover not only the interest that would have to be paid on that bond, but the addi- tional costs; Casserly explained that cities cannot now earn the costs of issuance of an advanced refunding bond and that he had broken down those costs separately, showing that as a real cost. Brandt asked, because of the current very favorable interest rate, if there will be sufficient revenues from the variable rate bond to cover the expenses of the cross over bond; Casserly stated as a practical matter there should be, depending on how fast the proceeds are spent. Casserly noted that arbitrage net earnings currently are about $24,000 per month, and the advanced refunding bond is no different than the way a city bonds. In response to Benke's questions, Casserly stated he would come back to the council in August and that the refunding bond place- ment would have no impact on the city's request from Moody's for a new bond rating. Casserly further stated that the key is when you invest the proceeds, you want assurances you can get the rate; he is working very closely with staff; and will try to get more information out. In response to Schmidt's question, Casserly stated he had already produced computer runs with assumptions based on the worst case scenarios, which demonstrate there is enough coverage if the variable rate rises to nine-and-one-half percent. In response to Gunderman's question, Benke stated that both the City Manager and the Finance Director are responsible to be cognizant of the opportunities, and Sinda indicated that Miller & Schroeder is the city's financial consultant and we rely on them Page Three Seminary Estates: Plans and Specs/ Streets and Utilities Report 86-154 Resolution 86-65 Informational Update: Refunding of G.O. and T.I.F. Bonds of 1985 Report 86-155