HomeMy WebLinkAboutMINUTES - 05031994 - 1.54 TO: BOARD OF SUPERVISORS ?�:5...... _ Contra
FROM:
Costa
Phil Batchelor; County Administrator Z 's
4 County
DATE: May 3, 1994
SUBJECT: 1994-1995 Tax and Revenue Anticipation Note Borrowing Program
SPECIFIC REOUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION
RECOMMENDATIONS:
1. Approve and authorize the County Administrator to carry out
the necessary actions- to proceed with the 1994-1995 Tax and
Revenue Anticipation Note borrowing program for cash flow
purposes .
2 . Direct the County Administrator to proceed with a competitive
sale process for the Notes as was done in prior years with
excellent results.
3 . Acknowledge that the Note Program is an essential tool for
financial management and is required to meet the cash flow
needs of the County during the fiscal year.
4 . Acknowledge that changes in federal regulations will restrict
the borrowing for the County to a lessor amount than 1993-94 .
5 . Acknowledge'_:that while the borrowing is essential to meet cash
flow needs, `. it also generates substantial revenues above the
cost of borrowing.
6 . Acknowledge the need for continuity in the management team
making the presentations to the rating agencies in New York.
7 . Approve continuation of the use of Arnold Mazotti as the
Financial Advisor at a fixed fee for the issue plus
reimbursement of expenses for the cost of issuance and other
expenses advanced for the issue. ,
CONTINUED ON ATTACHMENT: IJ YES SIGNATURE:
RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE
APPROVE OTHER
SIGNATURE(S):
ACTION OF BOARD ON Ma 3Z ' _ 1 9 q 4 APPROVED AS RECOMMENDED X OTHER
VOTE OF SUPERVISORS
I HEREBY CERTIFY THAT THIS IS A TRUE
X UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN
AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD
ABSENT: ABSTAIN: OF SUPERVISORS ON THE DATE SHOWN.
ATTESTED May 3 , 19 9 4
Contact: PHIL BATCHELOR,CLERK OF THE BOARD OF
CC: SEE, PAGE, 2 SUPERVISO AND COUNTY ADMINISTRATOR
BY 'DEPUTY
-2-
8. Approve the use of Orrick, Herrington & Sutcliffe for bond and
tax counsel services for a fixed flat fee including expenses.
9 . Authorize the County Administrator and appropriate County
staff and officials to travel to New York on May 25, 1994 to
meet with the rating agencies on the 1994 Note Borrowing
Program ratings .
10. Authorize the County Administrator or his designee to execute
all contracts and documents necessary for the issue.
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. There is an even greater need to cover the cash needs
for 1994-95 as result of the Pension Obligation Bond Issue which
requires full payment of the annual debt service on the bonds in
July. The expenses of the program are paid from revenues generated
by the program and revenues above that are available to the General
Fund.
BACKGROUND:
The County has issued Notes for cash flow borrowing needs every
year since 1979 During 1993 a $125,000,000 Series A and a
$15,000,000 Series B issue were completed. Changes in federal law
applicable for 1994 will reduce the amount the County will be
permitted to issue but preliminary indications are that the issue
will be in the range of $100,000,000 . The recent, rapid changes in
the short-term interest rates make it difficult to estimate
potential returns from the proposed issue, but it is expected that
revenues above expenses in the range of $500,000 to $1,000,000 can
be realized.
The past practice of using a financial advisor to assist in
planning and structuring a program with assistance from a
nationally recognized bond and tax counsel firm and a competitive
sale of the Notes has resulted in the lowest cost and most
effective program for the County. Arnold Mazotti, with the firm of
Prager, McCarthy, & Sealy, has provided excellent service for the
issues in the past at a very low fee. The firm of Orrick,
Herrington & Sutcliffe has provided an excellent proposal for
counsel services "covering the tax and note requirements . Orrick,
Herrington & Sutcliffe attorneys are providing critical assistance
in the evaluation of County options for the Los Medanos Hospital
and valuable input in responding to the federal court case
requesting an injunction to stop the Hospital Replacement Project.
The changes in federal law will require particular care in the tax
analysis for 1994 to assure compliance and to avoid errors that
could lead to tax complications. The Orrick firm has nationally
recognized tax staff assigned to assist the County in this area.
Information from the rating agencies in the past has indicated that
the strength and consistency of County management has been an
important factor in the rating process . It is important that the
same management team make the presentations in New York to
reinforce those factors. The rating agency presentations are
scheduled for May 26 and 27, 1994 .
Contact: D. Bell ( 646-4093)
cc: County Administrator
Auditor-Controller
Treasurer-Tax Collector
County Counsel