5.9. SR 06-07-2004 - Laserfiche WebLink

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Item 5.9. MEMORANDUM TO: Mayor and City Council FROM: Lori johnson, Finance Director DATE: june 7, 2004 SUBJECT: Presentation and Consideration of Utility Bond Consortium The Elk River Municipal Utilities is requesting that the City Council consider joining a joint venture that will allow the Utilities to participate in a bond pool. Attached are the bylaws and articles of incorporation of the Midwest Consortium of Municipal Utilities which is the consortium that is organizing to issue pooled bonds for utilities. I understand that Bryan Adams, Mr. Max Rickter, a representative from the consortium, and a representative from Springs ted, the fmancial advisors who are assisting with the pool, will be at the Council meeting. Also, Utilities Commission member John Dietz will address the Council on this issue. The attached documents have been sent to City Attorney Peter Beck for legal review. Peter has confirmed that there is statutory authority to participate in a consortium for the purpose of issuing pooled bonds. Peter has drafted a resolution which will be distributed on Monday for Council consideration and adoption if the Council chooses to participate in this joint venture. ERMU will not be able to participate in the pool unless the City joins. However, the City does not need to join at this time to participate in future bond issues. The resolution provided by the Consortium also appoints Bryan Adams as a director of the Consortium. As with any joint venture, the Council will want to consider any risks or liability the City may be taking on by being part of the joint venture. Peter will be at the meeting to address your questions about this issue. There are several issues that are usually taken into consideration when deciding if a bond pool has any advantage over issuing bonds on your own. Interest rates, term, and timing are the three main factors. The League of Minnesota Cities had a bond pool for equipment certificates several years ago, but discontinued it because of lack of participation. Although the City issued equipment certificates each of the years that LMC offered the bond pool, the timing did not work and the interest rates were higher than those offered by our local bank.