HomeMy WebLinkAbout08/24/2004 Adjourned Meeting 322
ADJOURNED MEETING
AUGUST 24, 2004 - 9:00 A.M.
COUNCIL CHAMBERS - CITY HALL
1. RoII Call
Present:
Council: Mayor Paul George, presiding, Council Members Ron Bonlender, Dave
Edler, Neil McClure, Mary Place, Bernard Sims, and Susan Whitman
Staff: City Manager Zais, City Attorney Paolella, and Acting City Clerk Watkins
2. Consideration of Resolution authorizing the execution and delivery of a contract
for purchase of the City's Irrigation System Revenue Bonds, 2004, in the
aggregate principal amount of $5,215,000, fixing certain terms of the bonds, and
approving the form of the official statement, insurance and surety bond.
City Manager Zais introduced this as a milestone event as it was 50 years ago that the
first study identified the need to repair and rebuild this irrigation system. This is the step
that moves us forward on the financing of the repairs.
Rita Anson, Director of Finance and Budget, explained that these being irrigation bonds
made for a difficult bond sale but with a good team of people they got a great result.
They were able to issue the irrigation bonds for $5,215,000 yesterday. This will net
approximately $5 million for the actual project. They received a total interest rate equal
to 4.85% when including the issuance cost, insurance, legal fees, etc.
Lindsay Sovde, Vice President of Seattle Northwest Securities, commended the staff
that worked on this bond sale. She explained that these smaller bonds sales that have
never been issued before are very complicated and much more difficult than the large
bond sales. What helped on this sale was the successful presentation they did with
bond insurers. As a result they were able to save an estimated $344,000 in interest
costs.
Council Member Bonlender asked specific questions about buying these bonds and
commented that he had advised his broker to purchase some for him.
Nancy Neraas, Preston, Gates & Ellis, advised that the only action needed today was to
approve the sale of the bonds to Seattle Northwest. That will also authorize the
insurance.
Tim Jensen, Treasury Services Officer, spoke about the complexities of the sale. He
also explained that this does not pay for the total 308 system replacement, just gets it
started.
Dave Brown, Water & Irrigation Manager, explained this covers what is referred to as
Phase 2, starting with the transmission main by the 40 Avenue and Highway 12
Interchange. He described the work that will be covered for the next three years at
which point they will be ready to issue more bonds to cover the replacement of the
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ADJOURNED MEETING
neighborhood pipes. He said that, other than adjusting for inflation, this rate increase
will cover the capital improvement charge. By getting such a good rate, they will be
able to replace some of the non -308 system a little faster than anticipated. The repair
work they will be doing in the next three years will not be improving the pressure
problems but will start reducing the river diversion so we won't need as much water. He
warned that increasing the pressure to the neighborhood systems prior to repair would
cause a catastrophic failure of the system and we wouldn't be able to recover. They
are anticipating the pressure increase will be toward the end of the whole project in
phase 4, in the 2008 -2009 timeframe.
The Acting City Clerk read the resolution by title only; SIMS MOVED AND WHITMAN
SECONDED TO ADOPT THE RESOLUTION. City Manager Zais said there is a
potential legal issue to address about who can buy the bonds. Any resident of the City
of Yakima can buy the bonds as well as any individual across the country. But certain
standards for public contracts and procedures must be followed. He requested the
opinion of available counsel. Nancy Neraas advised there is a statute that general
council members and other decision makers are not supposed to have an interest in a
contract where they approve the terms. The distinction can come once these bonds are
sold. People can sell them later and the terms are set at that point. Buying a bond that
was issued a year or two ago is different than buying something for which you are
approving the rate. The general rule is to either not buy the bonds or recuse yourself
from the vote. It is fine for City employees that do not have any influence on the terms
of the bond to purchase them. The question was called for a vote on the motion.
The motion carried by a 5 -0 roll call vote. Council Member Bonlender recused himself
and Council Member Place temporarily absent.
Mayor George acknowledge citizens in the audience who have been active in this
irrigation issue for many years; Betty Gaudette, Maud Scott, and Bev Luby Bartz.
3. Adjournment
SIMS MOVED AND McCLURE SECONDED TO ADJOURN. The motion carried by
unanimous voice vote; Place absent.
The meeting adjourned at 9:25 a.m.
READ AND CERTIFIED ACCURATE BY I. 04 .r ✓ � �S
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COUNCIL MEM R
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a_tcf CITY CLERK PAUL P. GEORGE, MAYO'
Minutes prepared by Linda Watkins. An audio and video tape of this meeting are available in the City Clerk's Office
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