Min 06/01/1992 57
Wichita Falls, Texas
Memorial Auditorium Building
June 1, 1992
Item 1
The City Council of the City of Wichita Falls, Texas, met
in called session on the above date in the Council Room of the
Memorial Auditorium Building at 8: 30 o'clock a.m. , with the
following members present.
Michael Lam - Mayor
David Farabee -
Terrance E. Loughry -
Angus Thompson - Councilors
Paul Hughes -
J. W. Martin -
Harold Hawkins -
James Berzina - City Manager
Gregory Humbach - City Attorney
Wilma J. Thomas - City Clerk
Item 2
Mayor Lam announced that the meeting was called to
determine our financial obligation, and the way we finance our
events center.
Mr. Berzina explained that in order to do any kind of debt
obligation for the City there are some prescribed procedures to
follow which center around certain expertise in the financial
area. The most favorable way is to hire a financial advisor.
They would then proceed to hire a bond underwriter, along with
bond counsel, to make sure bonds have the legal requirements to
stand any challenges. These three entities bring expertise
which we do not have in-house. We have interviewed two
different local firms, and it is recommended that the Council
hire the financial advisor. The committee also encourages that
the Council hire McCall, Parkhurst, and Horton as bond counsel.
The committee was composed of two county commissioners, the
City' s finance director, the city manager, the mayor, and mayor
pro-tem. They recommend engaging Sentry Management as the
financial advisor. Mayor Lam noted the bond counsel they are
recommending is the one the County uses, and which we have used
in the past.
Moved by Councilor Hughes that McCall, Parkhurst, and
Horton be appointed bond counsel.
Motion seconded by Councilor Martin, and carried
unanimously.
Moved by Councilor Hughes that Sentry Management be
appointed as financial advisor for the issuance of Certificates
of Obligation.
Motion seconded by Councilor Martin.
Councilor Loughry asked about debt limits for a city, and
Mr. Berzina explained that he knows of no limit as long as
revenues have been set aside for this purpose. We are nowhere
near the debt ceiling that would be authorized in a city of our
size.
Councilor Thompson asked about the cost to hire bond
counsel. Mr. Berzina noted they are probably looking at one and
one-half to one and three-fourths percentage of the total issue.
Mayor Lam stated they are thinking somewhere around $50 ,000. He
58
Item 2 , cont'd.
explained where the money would come from to pay for the
financing costs. Councilor Martin noted that interest earned
would offset some of these costs.
The motion carried unanimously.
Murphy Davis, of Sentry Management, thanked the Council for
the vote of confidence in hiring this firm as financial advisor.
He stated the only addition he would make that is a variable on
the up front costs is if we apply to get the issuance insured,
it would have a premium. He explained there will be two
distinct issuances of bonds; one for the City, and one for the
County. The debt will not be co-mingled. Mr. Davis also stated
that these bonds will be bank qualified because of the size.
This expands the investor base, which will save some percentage
points. At the direction of the committee they have done some
additional work on criteria for an underwriter. In working very
closely with the underwriter there has to be confidence that the
underwriter can perform. The companies which he considered
during the weekend have the capabilities of performing as an
underwriter. He recommended that they utilize the services of
Southwest Securities out of Dallas. Ken Smith is the person
they would be working with, and has the expertise to do so.
They have the needed capital behind them. He has also talked
with this underwriter because we have a local entity that would
like to be included as part of the underwriting, which is Bank
One. The committee also asked him to consider from the
underwriters prospective what the spread would be. He stated
that the Council would vote on this at the appropriate time.
The City' s and County' s ratings are both about as high as they
can get.
Moved by Councilor Hughes that Southwest Securities be
appointed as bond underwriter.
Motion seconded by Councilor Martin.
Woody Gossom, 1709 Hursh, suggested that the County look at
this proposal before the City votes on it. He suggested a
recess. Mr. Berzina noted that Mr. Gossom was on the
interviewing committee. After he left the meeting early, the
committee determined they would need to hire the bond
underwriter at this meeting in order to meet the June 17
schedule. Mr. Gossom stated that First Southwest had a proposal
that was supposed to come in this morning. Murphy Davis stated
he had not seen it.
Mayor Lam confirmed the City Manager ' s comments on needing
to have the underwriter on board prior to June 17 to meet the
schedules. Councilor Hughes pointed out that we are not locking
into this, and will have the opportunity to look at it before
the bonds are sold. Mr. Davis stated that Ken Smith knows this
city very well, and his concern is for selecting the underwriter
we know we can work well with. He feels very comfortable and
confident about working with him. The Council will still make
the decision on the rate spread.
Mr. Berzina commented that he has just been handed
information from the people who have not been selected. He
stated they made the selection on who would do the most
expedient work for us. At the time Murphy Davis was with Herb
Smith they used Southwest Securities. Now it seems they want to
turn this into a bidding war. They came away from these
meetings satisfied that the costs were apples to apples. They
felt comfortable at leaving it with the committee' s
recommendation in order to meet some of the deadlines needed.
They are going to see standard rates.
Murphy Davis stated that from their perspective they can
include or exclude some things. He feels selecting an
underwriter who has the integrity and experience in this area
59
Item 2 , cont'd
will be advantageous. Rates will be determined by the Council.
Because of the time, he suggests they select an underwriter who
has unquestioned integrity, been in the business for several
years, has the capital, and is willing to work on the time
schedule they have given.
Councilor Hawkins asked how firm they would be locked into
with Southwest Securities if they came in with rates they cannot
accept? It was again pointed out that the Council will finally
determine the rate. Mr. Davis stated he would come back with a
detailed list of every item associated with it, and the Council
will make the decision on whether to go with it or not.
Councilor Thompson commented that they have done all they wanted
to do today.
Woody Gossom stated he is concerned with tangibles which
are not spelled out today. Mayor Lam stated that somewhere
along the line we will determine the rates recommended, and make
a decision at that time.
The motion to approve Southwest Securities as the bond
underwriter carried unanimously.
Item 3
Consideration was given to adoption of order directing
publication of intention to issue Certificates of Obligation,
Series, 1992, in the maximum principal amount of $4 ,000,000 , in
the form attached to these minutes. Mayor Lam stated they had
determined that monies from West Texas Public Utilities would
fund this $4,000,000.
Moved by Councilor Hughes that an order be adopted
directing publication of intention to issue certificates of
Obligation, Series, 1992 , in the maximum principal amount of
$4, 000,000, for the purpose of the multi events center as
recommended in the report submitted by the committee.
Motion seconded by Councilor Farabee.
Kay Yeager, 2111 Avondale, stated they have proposed a
facility which would be compatible with the City' s needs. She
asked that differences be put aside and work together for the
good of the community.
Councilor Hawkins read a statement of support for the
center, stating they are at a point where we have to make a
decision on whether this center would be beneficial to Wichita
Falls and Wichita County. He stated he is ready to vote for it
and move forward.
Mr. Berzina stated he feels they are locking in a faith
commitment to the community that they will not raise taxes. He
feels they are getting a greater return on using these equities
this way than any other way they could use them. We need to say
to the people of this City that they will not raise taxes. If
private funds cannot be raised they will have to go back to the
architects and downscale it in some way. Councilor Hughes
stated this needs to be a part of our procedure for ratings with
the bonding companies.
Councilor Hawkins feels if they had to leave off something,
it should be the exhibit hall. Councilor Thompson lended his
support to the motion before the Council, stating he would hope
that the public knows that the Council is pledging not to raise
taxes.
The motion carried unanimously.
60
The City Council adjourned at 9: 40 a.m.
PASSED AND APPROVED this the �� day of e/ ,
1992.
Michael Lam, or
ATTEST:
Wilma J. T omas, CMC/AAE
City Clerk