HomeMy WebLinkAboutBudget/Finance Committee Minutes 08.18.2000 MINUTES
BUDGET/FINANCE COMMITTEE
AUGUST 18, 2000 6:00 P.M.
DPW OFFICE
MEMBERS PRESENT:
Chairman Bud JOhnson
Gay Easton
Ken Olson
Chuck Rodgers
Mark Mace
OTHERS PRESENT:
Mary Embleton Larry McCann
Nathan Tubergen of MMIA
Nathan Tubergen, former Administrative Services Director for the City of
Billings, and current comptroller for the MMIA, attended the meeting to provide
information to the committee regarding bond issues and other financing options
for city projects. The main project discussed was the city's sidewalks, curbs and
gutters, which pose a potential liability exposure. Nathan stated that the first
thing the city must do is hire an engineer to determine costs. He suggested basing
the engineering fees on the project, sale and passage of the bond issue. The city
may also be able to do this with the fees to bond counsel. The city would like to
replace existing sidewalks. Depending on the size of the project identified, the
city could use either the warrant process or bond issue. With the warrant process,
the city would have to sell warrants to a local bank and collect on taxes. This
method is not preferred. Bond issues should be for at least $100,000 and then the
city has to find a buyer. A fifteen-year bond issue is very much like a special
improvement district (SID). Nathan recommended that construction costs (bids)
be determined two weeks before opening bids on the bonds, and make sure the
construction award of bid is contingent upon the sale of the bonds. The city can
charge an additional 1/2% for delinquencies and a 5% contribution to a revolving
fund.
To summarize: 1. Choose an engineer via Request for Proposal. This is key to
the whole project. 2. Identify the geographic areas of the project and determine
the cost. 3. Issue the bond and determine a delinquency percentage. Market
values and S1D values should be examined.
Nathan also stated that the bonds should be backed by a Revolving Fund. For
example, if the city wants to do a $250,000 bond issue, then $25,000 should be in
the Revolving Fund. Underwriters like the 10% backing. The city has a
Revolving Fund in place which can be used for all SID's.
Another important factor in the bond process is timing. Nathan recommended
that the city make sure the tax payments are coming in to the city before the first
bond payment is due.
General Obligation (G.O.) Bonds were also discussed as the method to be used
for financing the city's need for more room/buildings. Nathan stressed that since
these types of bonds require approval through a vote of the people, public safety
should be the focus of the bond issue. Bond counsel's legal opinion is important
in this process. He recommended starting with a space study, followed by a
review committee for an RFP. This needs to be timed so that the GO. Bond goes
before the voters at a general election.
Other discussion followed. The committee thanked Nathan.
The meeting adjourned at 7:45 p.m.
Respectfully submitted,
Clerk-Treasurer