HomeMy WebLinkAboutREP FC 358 05/06/1987 1984-1988 411 REPORT OF THE 41/
COMMITTEE ON FINANCE
Date: April 21 , 1987 Re: Comm . 1065
Place: Councilroom
Time: 9 :00 a .m .
Chairman and Members
Hawaii County Council
Hilo, Hawaii 96720
Your Committee on Finance , to which was referred Bill 356 , reports
as follows:
The purpose of Bill 356 is to authorize the issuance of public
improvement bonds of the County of Hawaii for the purpose of
refunding certain outstanding bonded indebtedness of said county;
fixing the form, denomination , and certain other features of such
bonds; providing for the payment of said bonds; providing for the
retirement of the bonds being refunded; and providing for the sale
of said bonds .
The administration is proposing to refinance the following bonds to
effectuate a present value savings estimated to be in excess of
$1 million .
Bond Issue Amount Issued Outstanding Balance
July 1 , 1987
1980 $7 ,500 ,000 $5 ,820 ,000
1982 S7 ,000 ,000 S6 ,230 ,000
1984 .57 ,000 ,000 S7 ,000 ,000
The proposed refunding issue will involve $15 ,500 ,000 to be
designated "Public Improvement Refunding Bonds , Series 1987A" .
First maturities will begin five years after the date of issuance
and the last maturity will be no later than 25 years from the date •
of issue . Interest rate is not to exceed 7 .00 percent per annum.
Proceeds from the 1987A bond issue is to be deposited as follows:
A. An adequate amount shall be deposited with the Director of
Finance for application to the payment of interest on the
Refunding Bonds due on the first interest payment date for
the Refunding Bonds .
B. An amount designated by resolution shall be deposited
under the Refunding Trust Agreement with the deposit being
irrevocable .
FC REPORT No, 358
ADOPTED : a '.!Y 6 1 �_.. _..__.._
410 411
FC-358 Page 2 April 21 , 1987
C. The balance of the proceeds shall be deposited with the
Director of Finance to be used to pay expenses incurred in
conjunction with the issuance of the Refunding Bonds and
the refunding of the Outstanding Bonds .
Your committee heard from the administration that changes in the
bond market have altered the anticipated savings such that refunding
is no longer lucrative. The administration is still recommending
the approval of the bill on first reading so that it can be placed
in a position which will allow the bill to be passed expeditiously
on second reading should the bond market again present a situation
in favor of refunding.
Corporation Counsel was asked if there are any prohibitions against
the Council having control over issuance of bonds . Corporation
Counsel recited the authority of Section 47-7 , Hawaii Revised
Statutes , as to the County ' s ability to issue bonds . It was
requested that he be given the opportunity to research the issue,
including the Council 's ability to negotiate and he would be
submitting a memo as to his legal findings .
Your committee also was made aware that Bill 356 was not drafted by
the Corporation Counsel but by an attorney familiar with bond
issuance. Said attorney is considered a consultant , not a bond
counsel , whose compensation will be determined only if the bond
issuance is authorized . Bill 356 provides for the authorization and
direction for the employment of bond counsel .
It was suggested during committee discussion that Sections 2 and 6
of Bill 356 be amended to provide Council with control over the
issuance of the bonds . Such amendment would allow the Council to
take immediate action to issue the bonds when market conditions
become favorable for refunding consideration. Your committee was
reminded that it was through Council 's initiative in seeking
competitive bids that the Keaau Homestead Improvement District bonds
were issued in an expeditious manner .
Another concern raised by your committee pertained to the approval
of blank authorization . Your committee heard that the County would
realize a cash flow advantage in the early years and that
anticipated real property tax collection increases should cover the
increased debt service obligation in later years . However , your
committee was concerned that there is no assurance that our real
property tax base would be adequate to cover such obligations ,
especially in light of increasing government costs . It was felt
that the Council should be presented with a full awareness of the
impact of any financial commitment .
FC- 358 Page 3 April 21 , 1987
Your committee recommends that Bill 356 be approved on first reading
and be referred back to the Committee on Finance in order to
consider the Corporation Counsel 's recommendation and clarification
of issues raised during the committee discussion .
FRANK DE LUZ III, CHAIRMAN
411111fttilerANNAlegLus.adik,
LORRAI�K R. CHAKU-INe YE , j .C. JAME . K. DAHLBERG, MEMBER
111/1
� J
41211444.0‘
TAKASHI DOMING6 , MEMBE RUSSELL S. KOKUBUN, MEMBER
/ 141,
„01 -
- -41:00
MER ' K. LAI , MEMBER SPEN K. SCHUTTE, MEMBER
LA/HAT