MINUTES JENKS AQUARIUM AUTHORITY MONDAY, MARCH 17,2014,6:00 P.M. JENKS CITY HALL, COUNCIL CHAMBERS, 211 NORTH ELM The Agenda for the Jenks Aquarium Authority was posted m the City Hall and sent electronically to the Jenks Journal at 2:00p.m. on March 14, 2014. The meeting was called to order by at 6:00 p.m. on March 17, 2014. City Clerk Josh McCorkle recorded attendance as follows: JoshRoby Request to approve minutes of February 17, 2014. made a motion to approve the minutes of February 17, 2014. Seconded by. A roll call vote of members was as follows: Business. 1. Consider and discuss refinancing of certain outstanding indebtedness of the Authority. Josh McCorkle addressed the Authority and explained that the proposal is to refinance the 2004 Revenue Bonds of the Aquarium. Josh McCorkle then turned the floor over to Greg Nieto. Greg Nieto with The Baker Group addressed the Authority and explained
that they started looking at the outstanding debt on the Aquarium about two and a half years ago and have monitored it. Greg Nieto said the market is lining up, the 10 year call is coming up on July 1, and The Baker Group felt it was time to act. Greg Nieto covered what they can do, what they can accomplish, and the parameters. Greg Nieto said they looked at extending, shortening, changing, sloping, and after Administration input with keeping the term the same as with the existing bonds and reducing the annual debt service for the remaining 20 years. Greg Nieto said that what has happened in the market the past several years is that the reserve fund has not been earning, and what we have been able to do is plug a big portion of that reserve fund back into the transaction and pay off a big chunk of bonds. Greg Nieto went through the numbers and cash flows contained in the Agenda. Greg Nieto explained that they took the existing debt service, refinanced the outstanding bonds, plugged $1.1 million of that reserve fund to pay off higher rate bonds, and set aside a 90 day reserve. Greg Nieto further explained that there is a window here that needs to be worked with in regard to interest rates, so they wanted to get everything approved in order to be able to move as it gets closer to July 1 on locking in interest rates. Greg Nieto said that any time at least a two to three percent net present value savings, it is a worthwhile transaction that is worth doing and right now we are up over seven percent in present value savings right now. Greg Nieto said the Budget Committee recommended that a $2 million floor be put on the PB Debt Service Savings. Greg Nieto further said we have an underwriter, and we have a replenishment agreement. Greg Nieto then said if the market holds we would love to close on this in June, because it shortens some losses in then escrow, and if the market starts to move prior to that we would like to do something quicker. Greg Nieto explained that one thing that was critical to the Budget Committee was we will incorporate the ability to pay off these bonds early as well. Greg Nieto pointed out that in the event of a sale if we close one day and somebody writes a check the next, we put a provision in the legal documents that we can at any point in time if we sell the facility that we can pay off the bonds immediately. asked if the principal was reduced because the fees were reduced, to which Greg Nieto answered yes. then asked if the $3.7 million savings on Page 14 is using our $1 million that we have in reserve. Greg Nieto said that is correct. Greg Nieto also said you are not saving your own $1 million, because you are using that $1 million to pay off five and one quarter percent bonds so the total reduction in debt service is the $3,839,000.00 and then your savings are net of the $1 million of your reserve fund leaving a savings of $1.2 million on the net present value benefit. asked normally do we make our bond payment July 1? Josh McCorkle answered it is twice a year and we actually make monthly payments from July through December and then the County with Vision 2025 makes one payment under agreement in June which takes care of the second half of the fiscal year. asked how many years of that do we have left from the County? Josh McCorkle answered 2016. asked is that amount of payment going to change if our debt service goes down or are we going to have a surplus
from the payment from the County? Josh McCorkle said the $923,000.00 would continue because that is separate from this and it will reduce what we have to pay out of the operating budget. Kevin Rowland said while we have a savings in the debt service of roughly $120,000.00 per year, the intent is that it is still going to be budgeted for repairs and so forth and we are not necessarily taking that money out and starting another fund, we are going to use it for maintenance on the Aquarium. asked if the next payment is due July 1, 2015. Greg Nieto said the way this works is that with monthly payments, you normally pay interest twice a year and principle once a year, so nothing is changing. Greg Nieto explained the scenarios that were researched and how they came up with the best case scenario. There was discussion about the rating of A Plus and whether or not it could go higher, the cost of paying for a rating, etc. Kevin Rowland addressed Josh McCorkle and stated that it is his understanding that when the County stops paying in 2016 it is the intent to start taking the portion we need out of water funds. Josh McCorkle replied correct. There was then discussion of how monies would be used for maintenance and what those maintenance issues could be. 2. Consider and adopt a Resolution, Resolution No. 46, authorizing the incurring of indebtedness by the Authority; authorizing the sale thereof at a discount: and waiving competitive bidding thereon. Greg Nieto addressed the Authority and stated that this is just a Resolution with "not to exceed" parameters. Greg Nieto said this is the last action the Authority has to take to proceed with this, then we maintain with Staff and Management as far as the progress. Mike Tinker reminded the Authority that this would take an extraordinary vote of the Authority, six of the seven members to approve waving competitive bidding. said the Resolution says "not to exceed 179.9" and the principle amount I've seen is 171.8. Greg Nieto said that is correct, and the reason we do that is if we have some extraordinary provision where we get a better rate out of what is called original issue discount it has to be documented as to the benefit of our financing and we might have to go up some. Greg Nieto also said we do not anticipate changing from the 171, but we always put a buffer in there. Greg Nieto continued that it is the same with the interest rate which is not to exceed 4.5. Greg Nieto spoke of the existing debt and how parameters are set as a marketing tool for buyers. asked don't we also have a floor on the savings? Greg Nieto answered yes. There was discussion of having a floor of $2 million. Mike Tinker said that could be made a part of the motion. Steve Oakley was asked by if the $2 million floor could just be written into the Resolution. Steve Oakley said rather than having them redraft the Resolution you can make that motion under Item 4 and make that a part of the Contingency Agreement. made a motion to adopt Resolution No. 47. Seconded by. A roll call vote of members was as follows:
3. Consider and adopt a Resolution, Resolution No. 47. approving The Jenks Aquarium Authority and The Jenks Public Works Authority entering into a Replenishment Agreement with respect to indebtedness to be incurred by The Jenks Aquarium Authority. Greg Nieto addressed the Authority and said this is the backstop I've made reference to, and what it says is that in the event of a shortfall that JPW A will step up to the plate and replenish from a fund that has been set aside in the event that the Aquarium cannot make a payment. Greg Nieto continued that the JPWA is saying we'll be there to backstop in the event of potential default. addressed Josh McCorkle and asked this is where it's intended that if we do have a shortfall we have those funds set aside to support that? Josh McCorkle answered yes. made a motion to adopt Resolution No. 47. Seconded by. A roll call vote of members was as follows: 4. Consider and adopt a Resolution. Resolution No. 48. authorizing and directing The Baker Group LP. as Financial Advisor to the Authority and Johanning and Byrom. P.C.. as Bond Counsel to the Authority; respectively, to proceed with taking all necessary actions to obtain the refinancing of the Authority's Series 2004 Revenue Bonds. made a motion to adopt Resolution No. 48 modifying the language to read "Authority Series 2004 Revenue Bonds not to be below $2,000,000.00 floor of gross printed value debt savings". Seconded by. A roll call vote of members was as follows: -s-
Other Business. 1. Request to approve encumbrances and expenditures for FY 2013-2014. made a motion to approve encumbrances and expenditures for FY 2013-2014. Seconded by. A roll call vote of members was as follows: 2. Monthly Reports. Monthly reports were contained in the Agenda packet. 3. Chief Operating Officer's Report. Teri Bowers gave the Chief Operating Officer's Report which was contained in the Agenda packet. Adjournment. made a motion to adjourn. Seconded by. A roll call vote of members was as follows: JoshRoby
The Jenks Aquarium Authority adjourned at 6:57p.m. -7-