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TO: Members of the Board <br />of County Commissioners <br />DATE: November 8, 1988 <br />SUBJECT: NORTH BEACH WATER FINANCING <br />FROM: Joseph A. Baird <br />OMB Director <br />Indian River County is in the process of obtaining Financing for <br />the purchase of the North Beach Water Company. Quite some time <br />ago the Board of County Commissioners authorized a Bond <br />Resolution to finance the purchase of the North Beach Water <br />Company using a surcharge as the revenue pledge. The Bond <br />Resolution was drafted anticipating that if we would receive a <br />waiver from the FmHA of lien on surcharges then we could have <br />utilized the surcharge as a senior lien pledge to back the bonds, <br />but without the waiver the surcharges would be a second or junior <br />lien. Due to this change, Indian River County Bond Counsel, <br />Financial Advisor .and staff met with several underwriters and <br />banks to decide what would be the best financing alternative. It <br />was decided because of the timing and complexity that we could <br />finance the purchase through a Bond Pool or a Bond Anticipation <br />Note. <br />We have concluded that, because of the time element involved, <br />that we should proceed in obtaining financing using Bond <br />Anticipation Notes. In addition, staff and the Financial <br />Advisor, Art Diamond of Fishkind and Associates, suggested we use <br />the underwriting firm of Cranston/Prescott since they were <br />instrumental in coming up with the suggestion of using Bond <br />Anticipation Notes. They have indicated that they could do the <br />bond issue for a total underwriters spread (including, takedown, <br />risk, management fee, and expenses) of one percent or less, which <br />is a good rate. <br />Attorney Vitunac explained that the County already has <br />purchased the North Beach Water Company by paying cash from funds <br />on hand in the Utilities Dept. Since Utilities needs the money <br />back, we need a long-term financing mechanism and the <br />recommendation is to issue bond anticipation notes payable in 3-5 <br />years, at which time we will determine the ultimate revenue <br />source. We do know that the revenue is going to be some <br />surcharges and the bond issue could be part of a total program of <br />refinancing the utilities system. Today we are asking that the <br />Board adopt the proposed resolution, which allows us to sell <br />anticipation notes, which is borrowed money. No principal will be <br />repaid until the ultimate bond issue is issued. <br />40 <br />NOV 8 1988 <br />BOOK 75 PAGE 138 <br />