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Home My WebLink AboutAPRIL 21, 1987 MINUTESCity of Virgirzia f3��ch -WORLD'S LARGEST RESORT CITY" Ott YOB�1 G.fONPS. Ailagv CYFFA E. 09tiflNWAF, Ai IDge ALtlLR'f 0.9AX0. Lv JonuA aACM BWh^nm fbnwg�F ., tie[ai [. FervPtESS, Vire,^w 6'^�A Bo....en Iu9CxaxR Ai ire. ervlly, wrµa asmukn NAln.varv. v6ma. A.ar lnouen 1 �N e aocti, x.mfn�n.0.m�gA K 4ERPlea. X ,, lWrg� iollry L , nee kn.gn Fe2x. Pry Mawuo DSII HOIKLti SMITH, fM4 City CIm4 VIRGINIA BEACH CITY COUNCIL AGENDA APRIL 21, 1987 12:00 NOW 281 CITY BALL BL'ILDLVG MUNICIPAL CRNTER VIRGINIA AEA CB VIRGINIA 234569M ITEM IV. FORMAL SESSION - Council Chambers 12: Noon A. CALL TO ORDER 70 RECONVENE REGULAR SESSION RECESSED MAY, April 20, 1987 - Mayor Robert G. Jones B. EL=RONIC ROLL CALL OF CITY CQiNCIL D. LOW BID: Sale of $46 -Million GENERAL OBLIGATION PUBLIC lMPR0VF1flWr BONDS: 1. $24,100,000 1986 Charter Bonds 2. $19,500,000 School Referendum Buds, Series 1986 3. $ 2,400,000 Street and Highway Referendum Buds, Series 1986 F. AWARDING: OF I[bN BID: 1. $46,000,000 General Obligation Public Imprcva t Bonds, Series 1986 �AW% A I19C`uI"Y11 The REGULAR SESSION of 6:04 P.M., Monday, April in the Conference Room, 12:00 NOON. Council Members Present: M I N U T E S VIRGINIA BEACH CITY COUNCIL Virginia Beach, Virginia April 21, 1987 the VIRGINIA BEACH CITY COUNCIL, which RECESSED at 20, 1987, was called to order by Mayor Robert Jones City Hall Building, on Tuesday, April 21, 1987, at Albert W. Balko, John A. Baum, Robert E. Fentress, Harold Heischober, Barbara M. Henley, Mayor Robert G. Jones, Reba S. McClanan, Vice Mayor Oberndorf, Nancy K. Parker and John L. Perry Council Members Absent: John D. Moss - 2 - Item IV -C. RECONVENE ITEM # 27243 Upon motion by Councilman Perry, seconded by Councilwoman Parker, City Council RECONVENED the REGULAR SESSION RECESSED MONDAY, April 20, 1987. Voting: 10-0 Council Members Voting Aye: Albert W. Balko, John A. Baum, Robert E. Fentress, Harold Heischober, Barbara M. Henley, Mayor Robert G. Jones, Reba S. McClanan, Vice Mayor Meyera E. Oberndorf, Nancy K. Parker and John L. Perry Council Members Voting Nay: None Council Members Absent: John D. Moss Anri1 21. 1QR7 -3 - ITEM IV -D. REPORT OF FINANCIAL CONSULTANT ITEM # 27244 Chester Johnson, President of Government Finance Associates, advised the WITHDRAWAL of the OFFERING for Sale of $46 -Million GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS. This action was the result of the recent and rapidly deteriorating market for municipal bonds and the substantial increase in rates in recent weeks. Approximately five weeks ago, a Bond Issue for Virginia Beach could have been sold in the 6% range in terms of the aggregate interest cost. Over this period of time, the interest rates have risen by 1.25%. Yesterday, the market deterioated again. Virtually every major issuer scheduled for sale today, which would have aggregated over $360 -MILLION, WITHDREW their offerings, as a result of essentially this "free -fall" schedule in the Market. Chester Johnson advised the Consultants are in the process of developing a strategy to raise the funds desired. The Consultants are investigating the possibility of a negotiated sale. In times of a rapidly deteriorating market a negotiated sale will protect more than a competitive sale. It involves approximately ten to fifteen business days to get a competitive sale underway. Relative a negotiated sale, if the market is improving and some stability is occuring, the Consultant can move quickly to take advantage of the market. Stephanie Louis, Vice President - Government Finance Associates; Joseph Magnus, Associate - Government Finance Research Center, and Ben Mays - Research Assistant - Government Finance Research Center were also in attendance to respond to City Council inquiries. -4 - ITEM IV -E. CITY MANAGERIS RECOMMENDATION ITEM # 27245 The City Manager distributed his letter of RECOMMENDATION. Said copy is hereby made a part of the proceedings. The City Manager advised, based upon recommendations of the financial advisors, he WITHDREW the offering of $46,000,000 GENERAL OBLIGATION PUBLIC IMPROVEMENT BONDS to be sold at 11:00 a.m. April 21, 1987 -4a- f=O4 �2 U _ City of Virgiriia Beac l" yg9r .. 0EV 5 S U, OUR NP"OM OFFICE OF THE CITY MANAGER (W4) 4274242 April 21, 1987 MUNICIPAL CENTER VIRGINIA BEACH, VIRGINIA 234W9 02 The Honorable Mayor Members of the City Council Dear Council Members: This morning, based upon recommendations of our financial advisors, I withdrew the offering of $46,000,000 General Obligation Bonds to be sold at 11:00 a.m. This action was taken as a result of the recent and rapidly deteriorating market for municipal bonds and the substantial increase in rates in recent weeks. Our financial advisor has indicated that over the last four-six weeks, rates for municipal bonds have risen by more than 1.25%. This morning alone, rates rose another 1/5th of 1%. To put this in proper perspective, virtually every major issuer scheduled for sale today, which would have aggregated over $360 million, withdrew their offerings. This deterioration in the market has occurred from the confluence of two way factors. First the substantial decline in the value of the dollar has refueled inflationary expectations, which lead to higher rates. In addition, in light of this change in perception, many large holders of tax-exempt bonds have been selling substantial amounts of their holdings, leading to a surge in tax-exempt bond volume. We have been told that demand for tax-exempt securities has essentially evaporated. In fact, one bond trader at a major New York investment house was quoted by Dow Jones this morning as saying, "No one has any cash left". With us this morning are the city's financial advisors to discuss the reasons for the actions taken and to discuss the next steps for the city. We are hopeful that this market condition is only temporary. Sincerely, / N.r�y D Thomas H. Mue lenbeck City Manager -5 - Item IV -F. ACCEPTANCE OF WITHDRAWAL ITEM # 27246 Upon motion by Councilman Baum, seconded by Vice Mayor Oberndorf, City Council SUPPORTED the action of WITHDRAWAL of $46 -MILLION GENERAL OBLIGATION PIIBLIC IMPROVEMENT BONDS for sale and AUTHORIZED the Financial Advisors and City Staff to commence the reoffering of the $46—MILLION GENERAL OBLIGATION PIIBLIC IMPROVEMENT BONDS whether it be by Public Offering or Negotiated Sale. $24,100,000 1986 Charter Bonds $19,500,000 School Referendum Bonds, Series 1986 $ 2,400,000 Street and Highway Referendum Bonds, Series 1986 Voting: 10-0 Council Members Voting Aye: Albert W. Balko, John A. Baum, Robert E. Fentress, Harold Heischober, Barbara M. Henley, Mayor Robert G. Jones, Reba S. McClanan, Vice Mayor Meyers E. Oberndorf, Nancy K. Parker and John L. Perry Council Members Voting Nay: None Council Members Absent: John D. Moss Anril P1. 1QR7 -6 - Item IV -G. ADJOURNMENT ITEM # 27247 Upon motion by Councilman Heischober, and BY ACCLAMATION, City Council ADJOURNED the Meeting at 12:25 P.M. Beverly"D. Hooks' Chief Deputy City Clerk iRtXa uth Hod s Smith, CMC City Clerk City of Virginia Beach Virginia April 21, 1987