04-18-1989 Meeting - Laserfiche WebLink

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• • Page Two Minutes April 18, 1989 5. An amended resolution authorizing the issuance and sale of four million eight hundred thousand dollar ($4,800,000.00) contract revenue bonds was discussed. Authority Attorney John Armstrong stated bond counsel felt the need to restate the resolution. After bond counsel forwarded the completed package to the Attorney General and funding had already occurred, the Texas Water Development Board indicated they needed one change in the resolution. Mr. Armstrong reported there is one new section relating to the investment of arbitrage and has no impact on current funds. Bob Herrera discussed arbitrage. Vice President Richard Matthews made motion to approve an amended and restated resolution authorizing the issuance and sale of $4.8 million contract revenue bonds, Series II 1888 and authorizing an agreement with the paying agent/registrar, seconded by Member Mike Wadsworth. The motion was unanimous. 6. A resolution appointing a trustee for the Authority was discussed. General Manager Bob Herrera reported he had visited with Bayshore National Bank and they were inquiring how the transactions were going to be handled, what type of collateral is going to be required by the Authority, and how investments will be managed. Mr. Herrera discussed the need for a trustee (City of La Porte Finance Director), someone who is in the banking industry profession. Mr. Herrera stated there are several things that are going to take place in order to keep the Authority monitoring any arbitrage dilemma. Right now the Authority is doing that under the guise of the City of La Porte, Mr. Herrera reported. Mr. Herrera introduced Jeff Litchfield, Finance Director for the City of La Porte. Mr. Litchfield talked about arbitrage. He explained in the past, governmental entities could sell tax-exempt bonds at a low interest rate, pay 5~ in and after receiving their money could go out and invest it at 7% and 8~ and catch a nice interest gap. Mr. Litchfield reported the Authority presently has bonds at a 6.48 rate and will be unable to invest at an interest rate that exceeds that figure. Mr. Litchfield stated the City of La Porte has a depository agreement with Bayshore National Bank for 2.5 million dollars of collateral (securities purchased) and all of the City~s money is covered under that umbrella. He stated Bayshore National Bank would not allow the Finance Director to put the Authority"s money under this umbrella without a resolution. The present resolution is for two (2) years with an option. Mr. Litchfield stated this could change if the depository is switched. One method of investment discussed would be SLGS (State and Local Government Securities) which can be ordered at any interest rate.