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HomeMy WebLinkAboutMINUTES - 03301993 - 2.3 2 -3 TO: BOARD OF SUPERVISORS' Contra FROM: L (� Phil Batchelor, County Administrator `-'�Sta County DATE: March 30, 1993 SUBJECT: 1993-1994 Tax and Revenue Anticipation Note Borrowing Program SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATIONS: 1. Authorize and direct the County Administrator to initiate the actions necessary to proceed with the 1993 Tax and Revenue Anticipation Note borrowing program. 2 . Direct the County Administrator to proceed with a competitive sale process for the 1993 notes as has been very successfully utilized for the past two years. 3 . Acknowledge that the Note Program is an essential tool for financial management and is necessary for the cash flow needs of the County. 4 . Acknowledge that while the revenue potential of the program has decreased from past years, the program still generates substantial revenue while providing for essential cash flow needs. 5 . Acknowledge the need for continuity in the presentations to. the rating agencies in view of the State and County financial conditions. 6 . Approve the recommendation to continue with Arnold .Mazotti as the Financial Advisor at a fixed fee unchanged for the last two note borrowing programs. CONTINUED ON ATTACHMENT: YES SIGNATURE: Giy��l RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE l UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERVISORS" N�f THE DATE SHOWN. ATTESTED � ` Contact: D. Bell 646-4093 PHIL BATCHELOR,CLERK OF THE BOARD OF CC: SUPERVISORS AND COUNTY ADMINISTRATOR County Administrator Treasurer-Tax Collector Auditor-Controller Or- County Counsel BY DEPUTY -2- 7 . Acknowledge that the County Administrator requested proposals from six bond counsel firms and received three responses with the least costly proposal being from Orrick, Herrington & Sutcliffe. 8 . Approve the recommendation to contract with Orrick, Herrington & Sutcliffe for bond and tax counsel services for a fixed flat fee for the 1993 Note Borrowing program. 9 . Authorize the County Administrator and appropriate County staff and officials to travel to New York on May 26, 1993 meet with the rating agencies on the 1993 Note Borrowing rating. r= FINANCIAL IMPACTS: The annual program for Tax and Revenue Anticipation Note borrowing has become an essential part of the cash management for the County. It is required in order to meet the cash flow needs during the fiscal year. The expenses of the program are paid from revenues generated by the program and excess revenues are available to the General Fund. ; a BACKGROUND: The County has issued Notes for cash flow borrowing needs every year since 1979 . The 1992 issue was for;,$117,000,000. The falling interest rates have reduced borrowing c'bsts while at the same time the revenue over expenses has also declined. Despite the changes in the interest rate market the Coupty was able to sell the 1992 issue at competitive bid at a favorable rate and reinvest the proceeds not immediately needed for cash flow at sufficient rates to pay all expenses and generate approximately $600,000 in earnings . t The past practice of using a financial advisor to assist in planning and structuring a program with assistance from a leading bond and tax counsel firm ;and a competitively bid issue for underwriting has resulted iri the lowest cost and most effective program for the County. Arnold Mazotti, with the firm of Prager, McCarthy & Sealy has once again quoted a fee of $25,000 to accomplish the financial advisor services. His fee has not increased for two years. Mr. Mazotti has extensive knowledge of the County, the investment market and the rating agencies . He has over 40 years experience in the business and has never failed to assist the County with a favorable rating and successful issue. A request for proposals for bond counsel services for the note issue was sent to six firms . Three responded with very low cost, highly qualified proposals . Orrick, Herrington & Sutcliffe provided the lowest overall cost. The firm has consistently done excellent work for the County for very competitive fees . The request for proposal process allows us to verify that the County is obtaining the services for the least cost with a fixed fee. A tax opinion from a leading bond counsel firm is required in order to receive a rating andrto market the notes. The continuation of the same financial team making the presentation to the rating agencies in New York is important in demonstrating the continuity of !the County financial management in these difficult times . The continuity of County staff and consultants has been an important factor in the confidence accorded the County and in the consistent receipt of the highest rating available. Meetings have been scheduled with the rating agencies in New York for May 27 , and 28 . !The meetings are scheduled so that the County can obtain a rating early and be able to sell the securities at the beginning of the fiscal year. -2- 7 . Acknowledge that the County Administrator requested proposals from six bond counsel firms and received three responses with the least costly proposal being from Orrick, Herrington & Sutcliffe. 8 . Approve the recommendation to contract with Orrick, Herrington & Sutcliffe for bond and tax counsel services for a fixed flat fee for the 1993 Note Borrowing program. 9 . Authorize the County Administrator and appropriate County staff and officials to travel to New York on May 26, 1993 to meet with the rating agencies on the 1993 Note Borrowing rating. FINANCIAL IMPACTS: The annual program for Tax and Revenue Anticipation Note borrowing has become an essential part of the cash management for the County. It is required in order to meet the cash flow needs during the fiscal year. The expenses of the program are paid from revenues generated by the program and excess revenues are available to the General Fund. BACKGROUND: The County has issued Notes for cash flow borrowing needs every year since 1979 . The 1992 issue was for $117,000,000 . The falling interest rates have reduced borrowing costs while at the same time the revenue over expenses has also declined. Despite the changes in the interest rate market the County was able to sell the 1992 issue at competitive bid at a favorable rate and reinvest the proceeds not immediately needed for cash flow at sufficient rates to pay all expenses and generate approximately $600,000 in earnings . The past practice of using a financial advisor to assist in planning and structuring a program with assistance from a leading bond and tax counsel firm and a competitively bid issue for underwriting has resulted in the lowest cost and most effective program for the County. Arnold Mazotti, with the firm of Prager, McCarthy & Sealy has once again quoted a fee of $25,000 to accomplish the financial advisor services . His fee has not increased for two years. Mr. Mazotti has extensive knowledge of the County, the investment market and the rating agencies. He has over 40 years experience in the business and has never failed to assist the County with a favorable rating and successful issue. A request for proposals for bond counsel services for the note issue was sent to six firms . Three responded with very low cost, highly qualified proposals. Orrick, Herrington & Sutcliffe provided the lowest overall cost. The firm has consistently done excellent work for the County for very competitive fees . The request for proposal process allows us to verify that the County is obtaining the services for the least cost with a fixed fee. A tax opinion from a leading bond counsel firm is required in order to receive a rating and to market the notes. The continuation of the same financial team making the presentation to the rating agencies in New York is important in demonstrating the continuity of the County financial management in these difficult times. The continuity of County staff and consultants has been an important factor in the confidence accorded the County and in the consistent receipt of the highest rating available. Meetings have been scheduled with the rating agencies in New York for .May 27, and 28. The meetings are scheduled so that the County can obtain a rating early and be able to sell the securities at the beginning of the fiscal year.