Staff Report

MEMORANDUM

TO:                  City Council

FROM:            David J. Deutsch
                        City Manager

SUBJECT:    City Hall – General Obligation Bond Issue

DATE:             February 19, 2009

            The City’s Financial Advisor (Davenport & Company LLC) and Bond Counsel (Funk & Bolton) will provide an overview of the bond issuance process to the City Council on Monday, February 23rd.  This joint presentation will describe the necessary actions to be taken in connection with the issuance of general obligation bonds.

            One of the first action items will be the passage of a resolution declaring the City’s official intent to reimburse from bond proceeds prior expenditures made in connection with the construction of the new City Hall.  In other words, passage of the Declaration of Official Intent (DOOI) allows the City to reimburse itself from bond proceeds for expenditures incurred prior to the actual sale of the bonds.  This is a customary action to be taken when contemplating a bond issue and has been recommended by bond counsel.

            The DOOI will state a maximum principal amount expected to be issued for the project, however, the resolution does not commit the City to the issuance of general obligation bonds or the final amount of bonds to be sold.  A subsequent bond ordinance will be introduced in May 2009 which will authorize the issuance of general obligation bonds and establish the maximum amount to be borrowed.  The DOOI simply provides the City the opportunity of reimbursing itself from the proceeds of the bonds for expenditures incurred on the project prior to the issuance of the bonds.  Typically, the amount listed in the DOOI is larger than the final amount borrowed.  Adoption of the DOOI resolution will be requested on the City Council’s agenda of March 2, 2009.

            In addition to discussion of the Declaration of Official Intent resolution, the presentation will also provide a tentative financing schedule, including dates for the preparation of the preliminary and final official statements, bond rating presentations, and a projected bond sale date.

            No action will be requested of City Council at the conclusion of the presentation.  Appropriate resolutions and ordinances will be introduced at subsequent Council meetings.

DJD/rsp