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03/29/1988 City CouncilTHESE MINUTES SUBJECT TO APRIL 5, 1988 APPROVAL EDMONDS CITY COUNCIL MINUTES March 29, 1988 The regular meeting of the Edmonds City Council was called to order at 7:00 p.m. by Mayor Pro Tem Steve Dwyer, at the Library Plaza Room, 650 Main St., Edmonds. All present joined in the flag salute. PRESENT ABSENT STAFF Steve Dwyer, Mayor Pro,Tem Larry Naughten, Mayor Art Housler, Administrative Laura Hall Bill Kasper Services Director Roger Hertrich Jackie Parrett, City Clerk Jo -Anne Jaech Karin Noyes, Recorder John Nordquist Jack Wilson Martha Dubick, Student Rep. INTERVIEW AND SELECTION OF CITY BOND BROKER Mr. Art Housler discussed the difference between a bond broker and a financial adviser. After pointing out this difference, Mr. Housler advised the Council that they are involved tonight with interviewing bond brokers. Councilmember Hall inquired whether Mary Hughes is still working with the City. Mr. Housler answered that Mary will be working on a team that will include Mary, Mr. Housler, and the bond broker. Mr. Housler explained that Mary has done the work necessary to determine what revenues are necessary to meet the debt requirement. This information needs to be provided to the bond broker. Shearson Lehman Brothers Mr. Bob Campbell, Managing Director of the Foster & Marshall Division of Shearson Lehman Hutton, thanked the Council for the opportunity to interview. Mr. Campbell expressed his company's enjoy- ment of the relationship they have with the City of Edmonds and hoped the service they have given to the City would justify the Council appointing Shearson Lehman Brothers as bond brokers for the City's Sewer Treatment Plant Bond Issue. Mr. Campbell pointed out that his company's responsibility to the City of Edmonds would be sell the bonds at the lowest interest rate. Mr. Campbell suggested that the City use the following criteria in selecting the best investment banking firm. 1. Marketing and Distribution Strengths 2. Experience 3. Economic Forecasting Ability 4. Capital Mr. Campbell explained that Shearson Lehman Brothers recognizes the Marketing and Distribution Strengths as the most important criteria. Mr. Campbell said that municipal bonds are not sold on an exchange, they are sold to individual customers. The municipal market is made up of two seg- ments, the retail sales (individual) and institutional (insurance companies and investment firms). Shearson Lehman Brothers markets their bonds at the local, regional, and national level. Mr. Campbell pointed out that the larger the market area, the better chance the City will have for marketing their bonds at a lower interest rate. Councilmember Jaech inquired if Shearson Lehman Brothers would advocate that the City go out on a public rather than a negotiated sale. Mr. Campbell answered that with a negotiated sale, Shearson Lehman Brothers would decide a date to put the bonds on the market after purchasing them from the City. With a competitive, public sale, the City would decide on a date to market the bonds prior to selling the Bonds. Councilmember Jaech asked how much lead time the City has to advertise the market date. Mr. Campbell replied that in his experience, he would recommend that the City give a public notice at least three weeks prior to the market date on a public sale. This, however, would not allow enough time for Shearson Lehman Brothers to get all of the papers ready. It takes about 60 days to put a bond issue together from start to finish. Councilmember Jaech inquired whether most municipal bond brokers market the bonds by negotiated sale. Mr. Campbell answered that when the market is stable, they use the public sale, when the market is unstable, they use the negotiated sale. He would recommend, at this time, that the bonds be sold in a negotiated sale. Mr. Campbell pointed out that this is an unstable time for municipal bond brokers. The City needs to hire a firm that is committed to the municipal securities business. In conclusion, Mr. Campbell pointed out the following strengths: -Shearson Lehman Brothers is the largest firm in the industry and has the most marketing and distribution experience. -Shearson Lehman Brothers has worked with the City since 1981 and knows the City well. -Shearson Lehman Brothers has more experience in warrants and revenue bonds than anyone else. -Shearson Lehman Brothers has some of the best economic forecasters in the business. -Shearson Lehman Brothers has more capital than anyone in the industry. Mr. Campbell said that Shearson Lehman Brothers have worked with the City and do so because they feel it is part of their responsibility to the City as its investment banker. Mr. Campbell expressed his hope that the Council would judge Shearson Lehman Brothers favorably. Councilmember Hertrich asked how long Shearson Lehman Brothers has been working with the City of Edmonds. Mr. Campbell explained that they meet quarterly with the Mayor and Director of Finance and have attended at least a dozen Council meetings throughout the past year. Councilmember Hertrich asked if Shearson Lehman Brothers has prepared any written information for the City. Mr. Campbell answered that they have done this type of work for the City in the past. Councilmember Hertrich pointed out that Shearson Lehman Brothers markets their bonds at a ratio of 60 percent institutional and 40 percent individual. In reference to the information distribut- ed to the Council explaining Shearson Lehman Brother's work in marketing $42 million in bonds for the City of Everett,, out of that $42 million, Shearson Lehman Brothers marketed $4 million local- ly, which comes to about 10 percent of the total. He asked how Shearson Lehman Brothers come up with a 40-percent individual ratio. Mr. Campbell answered that the remainder of the 40 percent ratio was retail sales outside of the local community. When the City's bonds are sold, this ratio may be different. Councilmember Hertrich asked where the remaining 60 percent of the Bonds were marketed. Mr. Campbell answered that these were sold to banks and life insurance companies. Councilmember Wilson asked if the $300 million worth of municipal bonds sold by Shearson Lehman Brothers during the past five years represented the largest amount that any local firm has sold as managing underwriter. Mr. Campbell answered that as managing underwriter, this is the largest amount. Councilmember Wilson asked if a financial adviser would save the City some money. Mr. Campbell answered that there are two things the financial adviser is responsible for. First, he helps structure the bond issue. Second, and perhaps the most important, the financial adviser verifies that the bonds broker is obtaining the best interest rates and that the spread is fair. The financial adviser should be someone independent of the bond broker and the City. The financial adviser is useful in making sure that the bond broker is being fair. Councilmember Wilson was bothered by the financial advisers saying that they have to keep the bond brokers honest. Councilmember Wilson sees the financial advisers' work as redundant. Mr. Campbell explained that the Council has enough to worry about without worrying about whether they are being dealt with honestly. Many elected bodies like the assurance from the financial adviser that they are getting the best deal. This protects the elected officials. EDMONDS CITY COUNCIL MINUTES Page 2, March 29, 1988 Councilmember Wilson asked if Shearson Lehman Brothers provided rate development services for sewer treatment systems. Mr. Campbell said that they will help the City determine the rate lev- els necessary to meet the debt requirement and run the utilities properly. They will let the rate specialist do the rest. Councilmember Hall felt that if the bonds broker is honest, there is no need to spend money on duplication by hiring a financial adviser. Mr. Campbell stated that the Council should weigh the benefits against the costs of a financial adviser to determine whether they want to use this type of service. Councilmember Jaech reminded the Council that they are interviewing for bond brokers not seeking suggestions on how to run the City. Councilmember Jaech also pointed out that they are seeking a bond broker to purchase the City's bonds. There may be a conflict of interest in asking their bond broker advice on what the City is going to be doing and how. Ms. Jaech stated that a financial adviser would help the City create an arms -length relationship and avoid the possibility of a conflict of interest. A financial adviser would insure that ques- tions of right or wrong would not arise in the future. Councilmember Wilson pointed out that Shearson Lehman Brothers' maximum and minimum expense has quite a range. Councilmember Wilson inquired why this wide range exists. Mr. Campbell pointed out that there are two elements included in the fee, management fee and expenses. Management expenses are the.same throughout. The variance in the expenses is dependent on how much work is done in selling the bonds. The more you pay the broker, the harder they will work for the City. Mr. Campbell said that it is better to pay a higher commission and lower interest rate than a lower commission and a higher interest rate. The commission will fluctuate with the market condi- tions. Dain Bosworth Mr. Richard Ehlers, Vice President of the Public Finance Department and Mr. David Liddle, First Vice President of the Public Finance Department thanked the Council for the opportunity to come before them with their presentation. Mr. Ehlers introduced himself and briefly pointed out some of his experience in the field of municipal bonds and what his responsibility to the City would be if his company is chosen to market the City's bonds. Mr. Dave Liddle also introduced himself and explained what his role would be in marketing the City's bonds. Mr. Liddle explained the distribution system of Dain Bosworth which is divided into retail and institutional sale of bonds. Dain Bosworth has 26 institutional bonds salesman, which is the largest west of Chicago. Mr. Liddle said that he would be working with others in his company to create a marketing plan that will give the City the lowest interest rate. Mr. Liddle said that municipal financing is very important to Dain Bosworth and the majority of their revenue comes from bond financing for cities similar to Edmonds. Dain Bosworth is commit- ted to providing necessary services in this area. Mr. Ehlers explained that Dain Bosworth has made a commitment to corporate financing. They are going to be in the business when other similar companies are getting out. The Public Finance Department has been consistently profitable for the last two years because of the type of busi- ness they concentrate on. Mr. Ehlers said that Dain Bosworth is committed to doing business in an ethical manner. They make it a practice to give the best service their clients can expect by: 1. Listening and understanding the City's concerns and goals. 2. Actively identifying potential problems and concerns. 3. Providing innovative and creative solutions. In regard to the proposed financing, Mr. Ehlers said that Dain Bosworth will strive to minimize the impact on the rate payers. Rather than a traditional 20 year financing, the City might con- sider going to a 30 year. Mr. Ehlers said that there is not a large penalty for extending the EDMONDS CITY COUNCIL MINUTES Page 3, March 29, 1988 bond issue to 30 years with the provision that the bond can be called in early. The annual pay- ment would be lower, and if the money becomes available, the bonds could be payed off early. Mr. Ehlers stated that they would also analyze bond insurance/debt service reserve insurance to determine whether this option would be profitable to the City. Mr. Ehlers discussed the commitment of Dain Bosworth to structure the escrow so that in case of future law changes, any economic benefit will .come back to the City. In conclusion, Mr. Ehlers feels that Dain Bosworth has a unique distribution system that can meet all of the potential markets when the time comes to sell the bonds. Mr. Ehlers commented that the City of Edmonds is important to Dain Bosworth. They depend on municipal bonds from cities such as Edmonds. Councilmember Wilson asked if Dain Bosworth was the largest managing underwriter in the north- west. Mr. Ehlers answered that they are not the largest, but they are the best. They have been doing public financing work in the northwest for three and a half years. Dain Bosworth has made a major commitment to the area. A number of their brokers came from Foster & Marshall. Councilmember Wilson inquired if they .have any problem working with a financial adviser and if Dain Bosworth feels that financial advisers are necessary. Mr. Liddle answered that they have no problem working with financial advisers and feel that a financial adviser would provide the councilmembers with political insurance. Councilmember Hertrich asked, in regard to the national and local sales, how they are going to market the bonds. Mr. Liddle said that some of the retail bonds would be marketed to individuals with the nucleus starting in Washington and moving out to national. Dain Bosworth would market the bonds nationally through a selling group including salesmen from other investment companies to broaden the market. Mr. Liddle added that the majority of the institutions that would pur- chase the City's bonds are located on the east coast. Councilmember Hertrich asked if Dain Bosworth has had any prior dealings with the City of Edmonds. Mr. Ehlers answered that they worked on an LID issue that was sold about a year ago. They placed a bid on the issue but were not chosen to be the underwriter. Since that time, they have been back to the City recently to talk with Mr. Housler. Several years ago, they did some work with the Chamber of Commerce involving community development. Councilmember Hertrich asked what type of services Dain Bosworth would provide the City after the bonds are sold. Mr. Liddle answered that they would have to talk with clients and provide ongo- ing service and advice on debt service, rate structuring, etc. Dain Bosworth wants to work with the City again; if there are special things such as rate studies that are not covered by rate consultants, they will work with the City and provide continuing service. Councilmember Jaech inquired whether they would recommend a negotiated sale or a public bid sale. Mr. Liddle pointed out that there are advantages to both, but given the current market, he would recommend a negotiated sale. With a negotiated sale, there is more time to work with the issue and you can usually get a better interest rate. Councilmember Jaech asked how many municipalities have chosen to use the public bid sale as com- pared to a the negotiated sale. Mr. Liddle answered that about 80 to 85 percent of their clients choose to use the negotiated sale at this time. Councilmember Jaech pointed out that in a negotiated sale, the bond broker buys the bonds from the City for a price that is negotiated between the City and the Bond broker. The difference between what they sell the bonds for and what they purchase the bonds for becomes their profit. Drexel Burnham Lambert Mr. John Urbina, Vice President and Manager of Public Finance - Seattle, referred the Council to the booklet that was included in their Council Packet, and he reviewed the background of his company. Mr. Urbina noted that there was an error on the cover page. The figure for the average size of the bond issues should be changed from $800,000 to $20 million. Mr. Urbina pointed out that two things that will affect the rate of interest the City will re- ceive on their bonds are: 1. Service 2. Cost (affected by the underwriter spread) EDMONDS CITY COUNCIL MINUTES Page 4, March 29, 1988 Mr. Urbina pointed out that if the bonds are sold institutionally, the charge will only be $9.50 per bond. If the bonds are sold individually, the spread is going to have to be at least $13 per bond. The amount of the spread will make a large difference on the rate of interest. Mr. Daniel Dill, Vice President of Public Finance - Seattle, said that one thing that Drexel Burnham Lambert will do for the City is evaluate to determine if it will be cost effective to purchase bond insurance. Mr. Dill explained to the Council how they will determine whether the bond insurance would pay for itself. Mr. Dill said that they have had experience with water and sewer issues in the past and know how to structure these particular issues. Drexel Burnham Lambert would guarantee the best price on the bonds and the best service possible. They would form a selling group that would include people from the local area to obtain a wider marketing range. Mr. Urbina stated that all of the people the Council would be interviewing tonight are capable firms and can do the job. The Council should look at the services that will be provided and the cost. Councilmember Jaech commented on the selling group. If they are selected, would they recommend, given the current market, a negotiated sale or a public bid sale. Mr. Urbina said they would recommend a negotiated sale. Councilmember Jaech asked what the statistics were for those municipalities that market their bonds on a negotiated sale compared to those that market their bonds on a public bid sale. Mr. Urbina answered that 60 percent of the municipalities use the negotiated sale compared to 40 percent who use the public bid sale. Many of those that use the public bid sale do so because they are required by law to do it that way. Councilmember Hertrich asked if they offer secondary markets. Mr. Urbina answered that his compa- ny is the largest in that respect. Councilmember Hertrich inquired how this would affect their ability to negotiate with the City for the lowest price as compared to a company that sells its own bonds. Mr. Urbina explained that Drexel Burnham Lambert can form a selling group and each member of the group will be given a percentage of the bond issue to sell if they decide to participate. If a company decides to sell the entire bond issue, they get to keep all of the profit. That doesn't mean that they are going to get the best price. If you have a selling group, you will be able to price the bond issue more aggressively. Councilmember Hertrich asked how this would affect the timing. Mr. Urbina answered that the timing would be the same either way. Councilmember Wilson asked if they would be going out and forming a selling group. Mr. Urbina answered that would depend on the type of bond and the timing. Councilmember Wilson asked how long Drexel Burnham Lambert has been operating in the Northwest. Mr. Dill answered that they were established in in 1983 and acquired by Drexel Burnham Lambert in 1984. Councilmember Wilson inquired how Drexel Burnham Lambert competes with other municipal bond bro- kers in the Northwest. Mr. Dill answered that they are about in the middle. Councilmember Hall asked if the company has had any prior dealings with the City of Edmonds. Mr. Urbina answered that they have not. Prudential-Bache Mr. Alec Fisken explained that the marketing strategies of Prudential-Bache places them in the top three in the country. They are also one of the largest financial organizations in the world. There is very little question as to their ability to market municipal bonds. Mr. Carl McCarthy stated that marketing municipal funds is not a problem at this time. They have a commitment to the Edmonds area and are currently looking at downtown Edmonds for possible relo- cation of their north Seattle office. Mr. Fisken explained that they are experienced in working with.both city staff and elected offi- cials in putting together a bond issue and marketing it at advantageous rates. Their goal is to meet the overall needs of the community. EDMONDS CITY COUNCIL MINUTES Page 5, March 29, 1988 Mr. Fisken reviewed with the Council the kinds of things they look at in putting together a bond issue and passed out a general outline of what the Edmonds Bond Issue might be like. Mr. Fisken reviewed this plan with the Council. Councilmember Hall asked since Mr. McCarthy had been a financial consultant for various firms, would that mean that the City would not need a financial adviser. Mr. McCarthy answered that he did not mean to infer this. The purpose of a financial adviser is to save more money than is paid for his fee. Mr. McCarthy's history is in the advising and consulting field and that is how he approaches each bond issue. When municipalities deal with him, they receive a consulting job. Mr. McCarthy pointed out that sometimes, in the political atmosphere, it is desirable to have a independent financial adviser to advise the Council at the time that things are all coming together to see that the underwriters are pursuing a logical and prudent course. When the under- writer comes in with the proposal, the consultant can say whether it is a reasonable offer or not. Councilmember Hall inquired if they were familiar with the mini bonds and would that be a wise route for the City of Edmonds to pursue. Mr. Fisken answered that part of that would depend on what the City is trying to accomplish. With mini bonds, somebody is bound to come out short, whether it is the City or the small inves- tor who wants to buy $500,000 or less in bonds and then needs to get his money back six months later. The question is, "Who is going to carry the burden of that?" Prudential-Bache has sold mini bonds in communities before. Mr. Fisken continued to discuss ways in which mini bonds could be sold. Mr. Fisken said that in looking at mini bonds, if you have people in the community who are in the position to buy only $1,000 or $2,000 in bonds, you are doing them a disservice because they would be better off buying Certificates of Deposit. Councilmember Wilson inquired whether, being the largest firm, they give some of the action to other firms in the northwest or do they handle it all themselves. Mr. Fisken said that they would hope to establish a selling group that would include other firms within the state. That would allow them to get a wider market. Mr. McCarthy .said that they do not need anybody to help them get rid of the money, but they form these groups because they are part of a financial community. Councilmember Wilson asked if Prudential-Bache was the largest water sewer type broker in the northwest. Mr. Fisken answered that they were not. Councilmember Wilson asked how long Prudential-Bache has been in existence. Mr. Fisken answered that Prudential has been in Seattle for six years. Bache has been in the area since 1952. Councilmember Hertrich requested a description of where they would find the bond market today. Mr. Fisken said that the market changes every day. It depends on the effort made to sell the bonds. If they marketed within the City and a large portion of the bonds are sold to retail, the better the price will be. Councilmember Hertrich asked how long it would take to get the bond issue to market. Mr. Fisken said that, ideally, it would take 6 weeks. If there are particular market issues this could be longer. If the City is anxious for cash, they can sell the bonds more quickly. Councilmember Hertrich inquired whether a 30-year sell was advantageous or not. Mr. Fisken said that he would not sell 30-year bonds because of the current market. The question is, "How badly does the City need immediate cash?" Mr. Hertrich inquired if the best way to sell is on a 20-year basis. Mr. Fisken answered that there may be other options available to the City. The shorter the issue, the lower the net inter- est cost. There are several issues to look at when deciding the length of the bond. Councilmember Jaech asked if Prudential-Bache would recommend a negotiated or public bid sale. Mr. McCarthy answered they would recommend a negotiated sale because they feel they can do the job and get the competitive rate this way. Councilmember Jaech stated that if the City were going with a negotiated sale and Prudential- Bache is hired as the underwriter, they will be buying the bond issue from the City. Where Pru- dential-Bache makes the profit is the spread between what they pay for the bonds and what they sell them for. Therefore, she asked if Prudential-Bache should dictate to the City the price they will pay to the City for the bonds. Councilmember Jaech inquired whether a financial advis- er would be appropriate and helpful. EDMONDS CITY COUNCIL MINUTES Page 6, March 29, 1988 Mr. McCarthy said that they would not object to working with a financial adviser. Mr. Fisken added that if the City has a concern, they should hire an adviser. They are experienced in work- ing with financial advisers. Seattle Northwest Securities Mr. James S. Hattori, Assistant Vice President, introduced himself and gave the Council a brief introduction to his company. Mr. Hattori pointed out that his company has underwritten more northwest bond issues than any other firm in the area. Municipal financing is the only thing his company is interested in do- ing. They are not going to abandon municipal financing. They are an employee -owned company, so they are very interested in serving the cities in the northwest. Mr. Hattori explained that his company would sell the bonds to both institutions and to retail individuals. The most efficient way to sell the bonds is to sell them to institutions. His company, however, can develop ways to make bonds available to residents of Edmonds. They would do this by creating a selling group to sell bonds to firms and residents of Edmonds. Mr. Hattori reviewed some options available to the City for the bond issue and how this particu- lar bond issue can be structured. Mr. Hattori explained that the timing of the bond issue is very important. Some considerations in when deciding the timing of the bond issue are: L Economic indicators (They work with prominent economists.) 2. Calendar of the northwest bond issues (They keep a calendar of all of the bond issues in the state and when they will begin.) ' 3. Cashflow needs (There are several options available, depending on cashflow needs.) Mr. Hattori said that his company worked with Tacoma when they did their first bond issue for a sewer treatment plant. This was the first sewer treatment plant bond issue in the state. 'Even . though there was a considerable amount of uncertainty, they were able to meet their financial needs. Mr. Hattori presented the Council with some background on both himself and Mr. John Rose, who will also be working on the bond issue if their company is chosen. In summary, Mr. Hattori said that he believes that Seattle Northwest is the best choice to sell the City's bonds because: -They are the leading firm in selling municipal bonds. They are only involved with selling municipal bonds. -They are an employee -owned firm. -They have the experience necessary in working with the structuring involved with this issue. Mr. Hattori would like to work with the City of Edmonds. He has heard favorable comments about the City. Councilmember Jaech asked if Mr. Hattori would recommend that the City go out on negotiated or public bid. Mr. Hattori said that he would currently recommend a negotiated sale. A negotiated sale would give some flexibility to meet the objectives. Councilmember Jaech asked, given the past year with its ups and downs in the market, what percent- age of municipalities have gone with a negotiated sale over a public sale. Mr. Hattori answered that approximately 60 percent of the sales have been negotiated. Councilmember Jaech inquired, if Seattle Northwest were hired, would they use the concept of a group to sell the bonds. Mr. Hattori replied that they would put together a selling group which would include all of the local investment brokerage firms. Councilmember Hertrich asked where the bonds would be marketed. Mr. Hattori said that bonds would be priced based on what the institutions want. If the local individuals want to buy them, they can, but the price will be based on what the institutions pay for them. EDMONDS CITY COUNCIL MINUTES Page 7, March 29, 1988 Councilmember Hertrich inquired if Mr. Hattori anticipates a large amount of individual inves- tors. Mr. Hattori replied that the number of individual investors would not determine the invest- ment rate. Councilmember Hertrich asked if the firm has had any dealings with the City of Edmonds. Mr. Hattori said that his company worked with the City in the late 1970's. Councilmember Hertrich asked Mr. Hattori how long it takes to get the bond issue to market. Mr. Hattori said that all depends on how much information is available and the state of that informa- tion. This usually takes about four to six weeks. Councilmember Hall asked about the profitability of the mini bonds. Mr. Hattori said that he would not recommend mini bonds if the City is interested in getting the lowest interest rate. There are many alternative costs involved with the mini bond program. Harper. McLean & Compan Mr. Stuart Sierer, Executive Vice President, began with a profile of the firm and some of the projects they have financed. Mr. Sierer pointed out that his company has added staff at a time when some other similar compa- nies have withdrawn from public financing. Mr. Sierer said that this company is locally owned and staffed. They are not one of the largest firms, but consider themselves one of the best. They are particularly experienced with sewertreatment projects. Mr. Michael Mulcahy, Vice President, gave some background on himself and the other people who would be responsible for working with the City should they be hired. Mr. Mulcahy briefly explained the company's plan for marketing and preparing the bonds for sale. Mr. Mulcahy explained that bond insurance can be purchased by the issuers which would name the .. investors in the bond as beneficiaries. The company will pay the investors if the City does not. Because of the City's high bond rating, it would probably not be profitable to purchase this insurance. Councilmember Dwyer asked if the insurance premium had to be paid up front. Mr. Sierer answered that the City would have to pay the premium up front. This cost could be paid for at the time of the bond issue and then distributed throughout the length of the bond. Councilmember Hertrich asked how many of the past issues Mr. Mulcahy has worked on have included this insurance. Mr. Mulcahy said that about 18 to 20 percent of the issues have insurance. This is because of a lower bond rating. It will probably not be cost effective for the City of Edmonds to purchase this insurance because of their high bond rating. Mr. Sierer explained two ideas that his company has for distributing the bonds. If the bonds are bank certified, the banks can use the bonds as a deduction and the bonds can be issued easily and will receive a lower interest rate. They will be more attractive to institutions. To be bank certified, a bond issue must not be over $10 million. If the bonds are not bank certified, they may be sold 50 percent to institutions and 50 percent to individuals. Mr. Sierer gave thoughts on how the individual market plan may be structured. Mr. Mulcahy pointed out that he has lived in the City of Edmonds for 22 years. Until now, they have never had the pleasure of participating in an Edmonds bond issue. Mr. Mulcahy expressed support in selling bonds in Edmonds. Mr. Mulcahy explained how his company would market the bonds to Edmonds residents. The remainder of the bonds would be sold through a no -risk selling group agreement. Mr. Sierer pointed out that because three fourths of these bonds will be sold to institutions, it is important that they know and trust the company that is selling your bonds. Harper, McLean and Company have a good reputation with these types of institutions. Mr. Sierer explained to the Council how his company would determine when the best time to market the bonds would be. As it was 10:00 P.M., COUNCILMEMBER HALL MOVED, SECONDED BY COUNCILMEMBER WILSON, THAT THE CITY COUNCIL EXTEND THE MEETING TO 10:15 PM. MOTION CARRIED. EDMONDS CITY COUNCIL MINUTES Page 8, March 29, 1988 Mr. Mulcahy pointed out that the interest rate is 64 percent more important than the fee for selling the bond. The Council should be more interested in the interest rate they will receive than in the price they will be paying the company to sell the bonds. Mr. Mulcahy pointed out that the longer it takes his company to sell the bonds, the better inter- est they will receive. His company will test the bonds at the lowest interest rate possible. The City should be interested in obtaining an underwriter who is willing to work to get them the lowest interest possible. Mr. Sierer commented that an extra incentive to their salesmen would be the people in Edmonds who would be interested in purchasing the bonds. Councilmember Wilson asked how the company obtained such a large profit with such a small compa- ny. Mr. Mulcahy answered that they don't have to have hundreds of offices and sales people. What they have to have is people who are committed to the company. They schedule themselves so that they can explain the sales to potential investors. They compensate for size with time and more detail. Councilmember Wilson commented that their company has been in business for almost 100 years. Councilmember Wilson thought this was remarkable. Councilmember Hall asked if Harper, McLean & Company has done business with the City of Edmonds in the past. Mr. Mulcahy answered that they had not; however, they did all of the financial work for the Port of Edmonds. Mayor Pro tem Dwyer asked Mr. Housler what direction they should take. Mr. Housler answered that he would like the Council to make a decision as soon as possible because the market may go down in a month or two. It will take about 6 weeks to prepare this issue. Mr. Housler would like a decision next week. Mayor Pro tem Dwyer asked if anyone on the Council would need more than 30 minutes at the next meeting to come to a decision. Councilmember Hall was concerned that Councilmember Kasper may want a brief synopsis of tonight's proceedings. Mayor Pro tem Dwyer pointed out that Councilmem- ber Kasper would not be at a Council meeting until April 18. That is too long to let the issue rest. Councilmember Jaech wanted to know what they are hiring the bond broker to do. A discussion of this type may be appropriate along with the decision. The Council agreed to discuss this issue for one hour at the next meeting. Councilmember Hertrich asked if they will have the opportunity to talk with Mary Hughes, the City's financial adviser. Councilmember Wilson did not feel it was appropriate for her to advise them on who they should hire. The Council decided that Ms. Hughes would not be asked to attend the meeting. APPROVAL OF LIQUOR LICENSES p The following liquor license applications were recommended to be approved: Fishhouse Charlie's oCG�N formerly Bumbershoots), Class H license; Jackpot Food Mart, Class E and F license; and Portofino's (formerly Clark's), Class H license. A request for transfer of liquor license was also received for the Main Place Restaurant, but the Planning Division Manager had indicated that the staff could not recommend approval because the building is not in compliance with Section 17.50.070 of the Edmonds Community Development Code pertaining to in -lieu parking provisions. Some of the Council questioned whether that was a proper reason to deny approval of the liquor license transfer. Mayor Pro tem Dwyer indicated he would obtain more information and bring this item back at the next council meeting. COUNCILMEMBER NORDQUIST MOVED, SECONDED BY COUNCILMEMBER HERTRICH, THAT THE MEETING BE ADJOURNED AT 10:15. MOTION CARRIED. These minutes are subject to April 5, 1988 approval. JACQUELINE G. PARRETT, City Clerk STEVE �. DWYER, Mayor Pro Tem EDMONDS CITY COUNCIL MINUTES Page 9, March 29, 1988 AGENDA EDMONDS CITY COUNCIL PLAZA MEETING ROOM -LIBRARY BUILDING 7:00 -- 10:00 P.M. MARCH 29, 1988 CALL TO ORDER FLAG SALUTE 1. INTERVIEW AND SELECTION OF CITY BOND BROKER 2. MAYOR 3. COUNCIL THE PUBLIC IS INVITED TO ATTEND PARKING AND MEETING ROOMS ARE HANDICAPPED ACCESSIBLE