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<br />~84 <br /> <br />TUESDAY <br /> <br />DECEMBER 11, 1984 <br /> <br />as advertising costs, preparation of the prospectus, financial and legal services, to <br /> <br />amount to some $15,000.00.) A motion was then offered by Councilman Groden, seconded <br /> <br />by Vice-Mayor Severt and Councilman Oakes, that Council adopt the proposed bond ordi- <br /> <br />nance (with emergency clause attached). At this point and in the discussing of this <br /> <br />motion, Mr. Irving M. Groves, Jr., (President and Chief Executive Officer of Piedmont <br /> <br />Trust Bank, Martinsville, Virginia), indicating that he was appearing before Council <br /> <br />and speaking to this matter as a private citizen, strongly urged Council to <br /> <br />give <br /> <br />serious. consideration to meeting the water system financing requirements <br /> <br />through "private borrowing", i.e., by negotiating a loan with a bank, which loan <br /> <br />might be payable and amortized over the twenty-year period and the interest thereon <br /> <br />might be at a "floating" rate, based on a percentage of "prime" rates in effect at <br /> <br />the times interest becomes due. Such an approach--to which Mr. Howe and City Manager <br /> <br />Edmonds indicated that consideration has been given and discussed with local bankers-- <br /> <br />Mr. Groves suggested might be more attractive to investors (than the "public" investor <br /> <br />approach) and could result in reduction of the City's interest costs. But, as was <br /> <br />pointed out by Mr. Howe and Mr. Edmonds, Mr. Groves' suggestion would expose the <br /> <br />City to "variables" and "unknowns" whereas the level annual debt service cost concept <br /> <br />would enable the City to budget fixed debt service costs annually for which current <br /> <br />water rates are designed to finance. In the ensuing discussion of these approaches <br /> <br />and concepts (i.e., "fixed" vs. "floating" interest rates and "fixed" vs. "variable" <br /> <br />maturities), both Councilman Groden and Councilman Oakes expressed favor for the <br /> <br />fixed debt service level as opposed to a non-fixed level, the latter being described <br /> <br />as akin to "playing the market" which they were opposed to doing with public funds. <br /> <br />Meanwhile, in response to an inquiry, and depending upon what structure approach the <br /> <br />Council wishes to consider and adopt, Mr. Howe indicated that a suggested week's <br /> <br />delay to enable him, Mr. Groves, and City Manager Edmonds to explore further the <br /> <br />"private borrowing" concept will not adversely effect the current time schedule; <br /> <br />whereupon Councilman Groden withdrew his motion and Council continued this matter <br />