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BCC Minutes 07/18/1986 W Naples, Florida, July 18, 1986 LET IT BE REMEMBERED, that the Board of County Commissioners in and for the County of Collier, and also acting as the Board of Zoni.~~ Appeals and as the governing board(s) of such special districts as have been created according to law and having conducted business herein, met on this date at 10:15 A.M. in SPECIAL WORKSHOP SESSION in Building "F" of the Courthouse Complex; East Naples, Florida, with the following memb~r1 present: CHAIRMAN: John A. Pistor VICE-CHAIRMAN: Anne Goodnight Frederick J. Voss Max A. Hasse C. C. "Red" Holland ALSO PRESENT: James C. Giles, Clerk¡ Maureen Kenyon, Deputy Clerk¡ Donald B. Lusk, County Manager; Neil Dorrill, Assistant County Manager I Ken Cuyler, County Attorney; and Tom Crandall, Utilities Adølinistrator. l&a!P.6 variable Rate Capital Improvement Fund FINANCIAL ADVISOR AUTHORIZED TO PROCEED WITH A CAPITAL IMPROVEMENT PROGRAM RBV1!:1nJB BOtm AND REPORT BACK TO THE BCC ON JULY 22, 1986 County Manager Lusk stated that the purpose of this workshóp is to discuss the Multi-purpose Capital Improvement Program Revenue Bonds, Series 1986, adding that this is a bond issue for Utility projects and special assessment projects. He stated that this program goes along with the Infrastructure Committee recommendation, adding that they recommended the pay-as-you-go for Capital Improvement projects from the General Fund and the Enterprise Funds, they knew that there would '. . ~ùJK U95 m.t350· Page 1 '~-'''''''"'''-''''--'''-'_.'''. aOOK 095PACt351 LJ:2" :kU July 18, 1986 be borrowing through the years. He stated that the County is not pledging its credit, noting that all the County is pledging is the money itself until a certain project is started and at that point, the project will have to stand alone and the revenues will have to be shown. He stated that this has ,nothing to do with the Capital Improvement Program for building courthouses which is coming out of the General Fund. He stated th.t these projects are Enterprise Fund projects and are as follows: $ 6,320,000 $ 5,115,000 $ 5,000,000 $ 2,200,000 $ 7,000,000 $ 1,500,000 Pine Ridge Industrial Park MSTU North Naples Roadway MSTU Naples Production Park MSTU , Marco Phase II Sewer MSTU . ' Regional Water Treatment Plant Expansion Golden Gate Wellfield Expansion Manatee Road and Isle of Capri Water System Improvements $ North Naples Wnter Transmission Main $ East Naples Water Systems, Inc. Acquisition $ Isle of Capri Water Distribution Mains $ Davis Blvd. Water Main Extension' $ Lely Wastewater System Acquisition $ Imperial Effluent Spray Irrigation $ North Naples Sewer Treatment Plan Expansion $ North Naples Spray Irrigation $ South County Wastewater Treatment Plant Land Acquisition & Construction S 500,000 5,450,000 5,200,000 90,000 150,000 1,200,000 1,500,000 4,000,000 2,000,000 8.000.000 Crand Total $55,225,000. Mr. Lusk noted that these projects may not be done in the next three years, adding that if ttey are not done, the $55,000,000 will be refunded to the bondholders. He stated that if there is a program the money will go to the project, but the revenues will have' to stand alone, adding that if the Wastewater' Treatment Plant in South Naples , í '!' ,~ t ., ! page, 2 - .. .. ,..,·__..,_,.__·_.....,"'__,_,."'"__"""""';,···.·'"·~"'.·H·,,··,'"^'h"_,_, i. ." ':: ~ July 18, 1986 is done, there will have to be sewer revenues at the time in order to draw the money out of the bank. He noted that the money sits in the bank and it will draw interest above the interest that is being paid, which will pay for the cost of the program. He stated that it is a good deal for the County and in the long-run it will save the County a million dollars rJ,- more. In answer to Commissioner Voss, Mr. Giblin, Bond Counsel, stated that the bonds do not have to be validated, but as the money is drawn down, the projects will be validated. Mr. Dave Fischer, Financial Advisor, stated that this is the most cost efficient way to bond the program. He noted that when the tax law is passed, the word arbi~rage will be eliminated from investment strategies in municipal bonds. He stated that arbitrage is the dif- ference between what it cost to borrow money and what money can be invested at. He stated that the projects total $55,000,000 but the actual issue size by the time there is a reserve account would be about $65,000,000. He reported that at this level $1 million or $l.2 million would be earned a year which would pay for the issuance cost over the three-year period. He stated that there will be a guarantee spread before this money is used so that the County does not have any risk factor. He stated that this is a good, locked in project that will definitely save the County money. He noted that if the tax law was not going to change, the County would wait and do the issues as needed over the next few years, but due to the change in the tax laws, aoO( D95I'A~£ 352 Page 3 -,-","'-_...,...-". J~ ,¡¡" ~T!1~: I:..'OOK 095 r~t353 ."b'· . f. (: /0. ., I.... .' r¡ ~ ~~t ~ ',: t.J\; July 18, 1986 there is a need and an opportunity to save the County money by going forth at this time with the issue. Clerk Giles questioned when the County should switch from a variable rate to a fixed rate, to which Mr. Fischer stated that at the completion of each project would be the best time. Commissioner Voss questioned if the County sells the bonds, then takes the money GO a bank and invests it, does the bank gives a guarantee that says that they will cover the County by a certain number of points over what it cost the County, to which Mr. Fischer replied affirmatively. Commissioner Voss questioned if it makes any difference what the bank invest the money in, to which Mr. Fischer stated that it would have to be a ~riple "A" investment. I~: " : /~~ ~r..·.tt....¡..,.....:..;' " 0( >.. ;; . "~ ;~..t ,.. . .! ~:. 1'.';'. ~;: i~'~ Mr. Fischer stated that Congress has many provisions dealing with municipal bonds in their new tax laws, adding that one of the new laws deals with arbitrage which will be eliminated in September or whenever the law goes into effect. He stated that there are three years that the County can earn money if this issue is done prior to September or when the change becomes law. Commissioner Voss questioned what happens to the money that is earned after three years, to which Mr.: Fisc:her stated that it is rebated back to the Federal Government. He noted that money cannot be . earned above and beyond what,it costíthe County when the new law takes . effect. . ~. ~ ~,¡¡, j ~ ': ;,'", ~ . . :'" ,. - - .. Page 4 t July 18, 1986 Commissioner Voss stated that it seems that the County should go ahead with this issue. Mr. Fischer stated that certain legal action is needed in order to go forward with this matter. He noted that if the Board of County Commissioners decides to go forward with this matter, he would be back in about two weeks with a purchase contract which would be subject to approval. He stated that this date, he needs a go-ahead signal from the Board of CO'I~ty Commissioners in order to proceed and also to have Mr. Giblin explain what needs to be done on Tuesday regarding legal matters to keep the issue moving. County Manager Lusk stated that if the Board of County Commissioners does not go forward with this issue, every four or five months the Utilities Administrator will be back before the Board asking for another bond issue for another project and at that point, all the costs would be paid by the County instead of having interest paying the cost. In answer to Commissioner Pistor, Mr. Fischer stated that any amount can be added to this program prior to September 1, 1986, or another project could be substituted for a project that Is listed in this program. He stated that there is 25' substitution allowed in this issue. Mr. Giblin stated that there is some substitution allowed, but the final percentage has not been determined yet. He noted that this matter will be done under the home rule power which will involve a home 'rule ordinance and will require a 4/5ths vote. 'OD~ 095 PAGt 354 Page 5 ;',o¡~. (." ' .' ,'" ".' ;tl~.'!·' .j~.\~ ~=-"""'r_..'" 1 _..u..." r,"' I'~~; . ;.r ~ ~. if 095,';'355 I, ~. .~ ",'. .~~. . July l8, 1986 County Attorney Cuyler stated that this matter will be handled on an emergency basis ön Tuesday and ~¡ll, therefore, require a 4/5ths majority. Mr. Giblin stated that closing will have to be by September 1, 1986, or earlier if Congress passes the law prior to that date. In answer to Commissioner pfstor, Mr. Peter Zent of Smith Barney stated that the guaranteed investment contract has to be in place at the time of closing or the bonds cannot be sold. County Attorney Cuyler stated that no action can be taken this date, adding that there will be an emergency ordinance presented to the Board of County Commissioners on Tuesday. He stated that at this time, an informal indication could be given as to what each Commission feels regarding the program. Commissioner Voss and Commissioner Goodnight indicated that the County should go ahead with this program. Commissioner Holland questioned how user fees will pay for the Imperial Effluent Spray program, to which County Manager Lusk stated that it would be part of the sewer bill. County Manager Lusk stated that the effluent will have to start paying for itself, adding that the County will be selling it fçr what it cost the County. Commissioner Holland stated that in December or January, a $24,000,000 water and sewer bond issue was approved and questioned what that was used for, to which County Manager Lusk stated that it wes used for consolidation, adding that all the different bond issues for the utility districts were refunded into one debt service. Page 6 'I - - - ,._..,...._.._......._._·__".""'''''''''''.''.'...''W.ill :- ~. July 18, 1986 Commissioner Holland questioned how the issue went from $50,000,000 to $65,000,000, to which County Manager Lusk stated that when this issue was originally put together, the South Naples Sewer Plant was left out, adding that only $1,000,000 was put in for land acquisition but since then there is hopes of getting a Federal grant to build the plant before the three years are up which was then included within the issue. He stated that another increase in the issue is a reser\e which is required, but that reserve will be used to pay off the issue itself at the end, therefore, that money would not be spent. Mr. Giblin stated that before this money is drawn down, approval must be given. He stated that there may be a list of projects, but before the money can be drawn, the Board of County Commissioners has to authorize the action. County Manager Lusk stated that it really takes two approvals, one from the County Commission and the other from the Bank holding the money as the County is going to have to prove that the rates can stand the test of bringing that money out and being able to pay it off. Commissioner Hasse questioned what happens if the interest is not sufficient, to which Mr. Giblin stated that the guarantee is there, but if for some reason the guarantee was lost, it is the bondholders risk and not the County's. He stated that this is all explained in the Official Statement. Commissioner Hasse questioned if this bond issue could be used for anything other than capital improvements whereby the County is paid aOOK 095p1GE3'56 Page 7 ,t:" \,': ;.~, .) :) ~; . .1 '. ~ ,. _..~.~.......~,_."". '-"~'''''''.",(--,,,,,,,,,-,,,,,,,,"---",,,-_.~_,,,,,,,,,_.,,.~.~,,,,,,,,~~~~. ,\~~: . Ji' I,..·. '/.'" . ;~ ; J~. ' t .":>'\ ~ ¡'¡'" ., .~; ¡ . ", . 'í,~rt,,·. . .!"' " :~ , ,.",!> .~,{; .Ir(~' 'I'~:' '~ j',. f~·· " £: *: fl., 095r~f.t357 July 18, 1986 \ '.' back by user fees, to which Mr. Giblin stated that this program can be tailored anyway the Board of County Commissioners wants, adding that it is basically set up at this time for water and sewer improvements from user charges and assessments. Commissioner Hasse questioned if this will have any impact on the borrowing capacity of the County, to which Mr. Giblin stated that it has no back-up rledge from ad valorem taxes or anything else of that nature, adding that this is strictly; a revenue bond issue. In answer to Commissioner Pistor, County Manager Lusk stated that the County has to feel that the projects can be done in three years in order to have them listed on the issue. Commissioner Holland stated that he feels that this is short notice to decide anything, to w~ich County Manager Lusk stated that everyone of these projects is in the Utilities Master Plan that was ,approved a few months ago. Commissioner Pi.tor stated that no action is going to be taken this date, noting that action will be taken at the regular Board of County Commissioners' meeting. Commissioner Voss stated that the priorities are best established by the Staff, but the purpose of this ,bond issue is to try and save money. . . Commissioner Holland stated that he would like some assurance that this list of projects is what is going to be done with the money because there is no doubt that these ,projects are needed. ~; r , . ~.'" . '.. '~,:; ~:, 'I' Page 8 - - - ,., '. ,-..,""...._.,.____..._¡_"'...."·"""""._N".."""~_.c..,.."_.,,.....~,,,,_~"_~,,,,,,,,,,",,,._,..,,., ," t: ~ ,'. . ,,~- ... .¡. i -'.j,."' ;~/"'; t: ,,! ~;.'~',~"...' ·:tf·:-<' , ~~I. ""(. July 18, 1986 Mr. Lusk stated that a requirement could be put into the bond issue where the only changes that could be made would exchange of utility projects only. Mr. Giblin stated that this could be built into the Home Rule Ordinance and the only way that this could be changed would be through another ordinance that would require a 4/5ths approval. Commissioner Holland stated that he has no problem in using excess money for somothing else, adding that he would like to feel that thes. projects are going to be done if he votes for this issue. Commissioner Holland questioned what the estimates to the water and sewer rates will be if all these projects are built, to which Utilities Administrator Crandall stated that he has a rate study that is due in on Monday and he will have the information for the Board at the regular meeting on Tuesday. Commissioner Holland stated that if the rate study comes in and it is within reason, he could support the issue. Commissioner Hasse stated that these programs are in order, adding that he does not like the idea of a possible change. County Manager Lusk stated that they would put in a requirement that it must be a utility project or an MSTU. Commissioner Pistor stated that he is for the project, adding that the general consensus is to move forward with this matter and report back to the Board on Tuesday at the regular meeting. Mr. John Cashell, resident of Naples, stated that there is a lack of communication in this County ,and he feels that this issue is going BOOK 095 PAGt a5S Page 9 u~ . .-q.-,,,,,,,,,,,,,,,,_._".-_.- . lOOK 095 PAGE 359 . p.n '\ ~ ~ ~... . ~f ' -J' July l8, 1986 ahead too fast. He stated that he has no objection to improving Collier County, but the Board .hould weigh the decision very carefully. Commissioner Pistor stated that the Federal Government has been talking for a long time about t~x reform, adding that there will be a change and arbit~age is one of the possible items that may be cut. He stated that if the bond issue i~ done at this time, it is not going to cost the County. Commissioner Hasse stated that the $10,000,000 reserve should be noted in the backup material so the total amount of the bond issue is known. Commissioner Holland stated that the public is told that $55,000,000 will be sold in bon::Js and then when it comes before the Commissioners, it is a $65,000,000 pond issue which includes a $lO,OOO,OOO reserve, which makes it quest~onable to the pUblic, even though the reserve is required by la~. Clerk Giles stated that the reserve was included in the $50,000,000 figure, adding that at first there was talk about $40,000,000 in projects, subje:t to a demand survey, but there was $10,000,000 for the reserves at:that time. He stated that the demand survey was conducted over the past several weeks and the exact pro- jects and figures were listed, which brought it up to $55,000,000, plus the reserve which totals $65,000,000. There being no further business, the meeting was adjourned by Order of the Chair - Time: 11:35 A.M. I ' Page 10 - - .. :; - .~.--.._,~,-~._"-~,---,----,..~,.,~,""~.,..,--~~-",,,....._,,,"""- ""',",,~.,-.._"--""'--'"->""""""""-"-'-~'