Minutes 09/09/1997 - Laserfiche WebLink

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TUESDAY, SEPTEMBER 9, 1997 been strong competition, with six proposals submitted, and that the Patrick Henry National Bank, 4 East Cowxnonwealth Boulevard, Martinsville, Virginia had offered the most competitive proposal. The Patrick Henry Bank proposal consisted of an offer to issue Bank Qualified Bonds to the City in the amount of $2,000,000 at an interest rate of 4%, with no pre-payment penalty, interest to be paid in arrears. In addition, the proposal stated that the funds on hand would be invested at an interest rate of 6%, on the City's behalf, with no handling fees for this service. When asked by Vice-Mayor Crabtree as to whether the City would then be able to take advantage of this interest point difference Mr. Reynolds responded in the affirmative, stating that the City would, indeed, be able to take advantage of arbitrage provisions with a 2% spread between the loan and the investment, whereby the City might earn as much as $40,000 during the term that the loan and investment are in place. He also reminded Council that this was much the same process as that used to create very significant savings in the recent Middle School project finance process. Mr. Reynolds also stated that the results of the solicitation process for this financing spoke well for the City and its financial health, in that so many strong lending institutions sought to compete for the City's business. Mayor Adams then observed that, if the process of expenditures for these School needs is handled carefully, and draw downs against the loan are kept to a minimum during the course of the work, by making optimum use of the City and School System's existing fmancial resources, it might be possible to fully maximize the City' s potential for interest earnings. Again, Mr. Reynolds responded in the affirmative. Councilmember Haskell then asked how long the needs that these funds would address had been outstanding. School Superintendent Dr. Ira Trollinger responded that some had existed for sixteen to twenty years. Mrs. Haskell then stated that the need to take action on these issues was long overdue, and pleased to see it occur. She then expressed her appreciation to Mr. Worth Carter, of Patrick Henry National Bank, for his favorable proposal and his confidence in the City of Martinsville. Dr. Trollinger then proceeded to review the various technology needs that the funds in question would address, in some detail. When questioned by Mrs. Haskell as to where this effort will place the School System in comparison to other progressive systems Dr. Trollinger stated "We are getting there" in terms of being competitive, and that this was a significant step forward. Dr. Trollinger then