CC MINS 19860225 ADJM I N U T E S
RANCHO PALOS VERDES CITY COUNCIL
ADJOURNED REGULAR MEETING
FEBRUARY 25, 1986
The meeting was called to order at 7:30 P.M. by Mayor Hinchliffe, notice
having been given with.affidavit thereto on file.
PRESENT: BACHARACH , HUGHES, McTAGGART , RYAN & MAYOR
HINCHLIFFE
ABSENT: NONE
Also present were City Manager Donald F. Guluzzy, Finance Director Greg
Beaubien, and Public Works Director George Wentz,
CERTIFICATE OF PARTICIPATION WORKSHOP
Workshop Moderator: Donald F. Guluzzy, City Manager
Workshop Discussion Leaders: John C. Fitzgerald
Manager Director
Western Region, Merrill Lynch
Municipal Finance Underwriter:
California Cities Financing Corp.
Mr. Guluzzy introduced Mr. Fitzgerald to discuss Certificates of Participa-
tion (COPs) as a means of financing city capital projects. He said that
Mr. Fitzgerald was one of two underwriters with California Cities Financing
Corporation, a group formed to allow cities to get together and pool their
financing needs, to share the cost that way, and to market the COPs to
enable the cities to buy equipment and finance facilities and projects.
Mr. Fitzgerald reviewed the history of this method of financing and said
the first issue was brought out in December 1979. Since that time there
has been about $2.6 billion issued just out of his office in Los Angeles.
Over a period of time it has become one of the most acceptable forms of
financing.
Mr. Fitzgerald listed the ways in which the certificates differed from
other methods of financing. He said that borrowing for a municipality is
a lot different than the corporation or home environment. He described the
various types of financing authorized by such legislation as the 1941 Reve-
nue Bond Act, and said that in looking at the spectrum, there are not too
many ways capital projects can be financed in California and that most of
them require approval by the voters.
705CP /MIN4.1 -1- February 25, 1986
He elaborated on the steps involved in connection with the structuring of
COP f inanc ing , including the costs._ of such items as bond insurance, print-
ing, bond counsel, trustee services, rating fee, title insurance and admin-
istration. Through California Cities Financing Corporation, it is possible
to combine several issues into one, and two or more governmental agencies
could combine issues to save on the structuring costs, He further stated
that basically it is a concept of leasing or a lease- purchase arrangment
and has been used to acquire computer systems, fire trucks, police cars,
radio equipment, city halls and many other capital items.
Mr. Fitzgerald said that Certificates of Participation give a city almost
total flexibility. There are no restrictions on lease financing, no inter-
est rate restrictions, voter approval is not needed, there is no "after the
fact" referendum period, there is complete flexibility in marketing the is-
sue, and it can be structured in many different ways.
Mr. Fitzgerald answered questions regarding the responsibilities of the
various consultants, arbitrage and the possible effects of proposed legis-
lation (HR 3838)0
Councilmembers and Mr. Guluzzy discussed the various aspects of Certifi-
cates of Participation financing and stated their appreciation for Mr.
Fitzgerald's presentation.
ADJOURNMENT
k
ATTEST:
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a
CITY CLERK
At 9:40 P.M. the meeting. was ad-
journed by Mayor Hinch l i f f e.
705CP /MIN4.2 -2- February 25, 1986