Minutes-4 /21/1964

Minutes of Special Council Meeting, April 21, 1964, Tiffin, Iowa Present: Ted Spivey, Glenn Potter, Bill Verry, Wayne Stratton, Bob Svatos Absent: None The meeting was called to order by Mayor O'Toole, for the purpose of noting Mr. Tucker's conclusions after studying Mr. Ellender's report and minutes of the special meeting. Mr. Tucker had told the Mayor some time ago that he did not think that Carlton Beh could come in and handle a project this size for less than 10%. It would seem that the $8,000 collateral cushion would be received by Carlton Beh in addition to their $3,000 financing costs. This was discussed at some length, along with alternatives. Chapman & Cutler has not replied to Mr. Tucker's inquiry. The Mayor called the Community Facilities Administration in Chicago and talked to Mr. Hagerstrom, who handled the papers on our preliminary loan application. They discussed the possibility of Tiffin's receiving a Federal loan for the sewer construction. Mr. Hagerstrom explained that the preliminary loan application would not affect in any way our new application. If the project is acceptable, those revenue bonds we issue (roughly 5\( \frac{1}{2} \)), the government gives us a loan on this thing for a rate which is less than 5\( \frac{1}{2} \). At the current time, it is 3-7/8% and it is reviewed every July 1. Last year it was 3-3/4%. He said if applications is not completed by July 1, it might go to 4%. You have a much more liberal payment plan. If you are approved, they pick up your revenue bonds and pay you for them and you pay the government on the basis of that percentage. At the time you have the bond sale, you have to throw it open for bidders, and if you have someone who bids for the bonds at or below the government price, you have to sell to them. Mr. Hagerstrom suggested that we fill out the application before the Mayor should come to Chicago to talk with them personally. In any case, we have to obtain a bonding attorney. This is required by law. Mayor said another thing we have to be aware of is this: if we go the full limit on general obligation bonds, we're stuck, with nothing left if an emergency should come up. If we issue general obligation bonds, we should issue no more than 5 mills. If we get government help on this, it will be on the revenue bond and special assessment bonds. General obligation bonds we would be able to sell for 3\( \frac{1}{2} \) or 3.2%, but even so, if we are able to get revenue bonds and special assessment bonds for 3-3/4%, we're doing well. In Plan 2, instead of issuing $16,000, we would issue $12,000 and then issue revenue bonds for $26,000 instead of $22,000. That would mean that our sewer rentals would rise 1/6 because a part of that is going to be actual cost. Revenue bonds do not constitute indebtedness because they are self-liquidating. General obligation bonds are indebtedness because you collect taxes for them. If a property is sold for taxes, the general obligation bonds are paid first and then what's left will pay for the assessment. The more money we get pledged to be paid in cash, the fewer bonds we will have to issue. They are getting nicked twice--once for the special assessment bonds and then they have to pay the interest on their delinquent assessments. If everyone paid cash, we wouldn't have to sell the special assessment bonds.