Friday, October 3, 2008

IGA Between The City of CPN and CPN Metro District

For comments on the new CPN City and Metro District IGA please blog here.
Posted by CPN Homeowners for a Solid Foundation at 5:07 AM

3 comments:

  1. AnonymousOctober 3, 2008 at 2:06 PM

    The City's press release on this topic stated that City Council and the Metro District Board have "unanimously voted" to enter into an intergovernmental agreement. The press release did not mention that a board member of the CPN Metro District resigned his post prior to the vote. Perhaps support for the IGA wasn't as unanimous as it seems.

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  2. AnonymousOctober 6, 2008 at 6:54 PM

    Questions posed from a homeowners to the Metro District and City Councilafter the IGA Meeting. The Council has not responded; below is the response from the Metro District Attorney.

    1. Councilperson Coppola asked if the original 86 mills the District had after the bankruptcy had been “de-Bruced”. I believe I heard the answer was yes. After reading the second whereas on page 2 of the IGA my question is - Does this mean that the District can reinstate all or part of those 86 mills? Do they need voter authorization or can the board approve?

    Response - The District currently collects two separate mill levies. One is for 19 mills and is for the operation of the District. The other mill levy is 24 mills and is used to pay historical debt. This “Debt Service” mill levy can be adjusted as needed by the Board of the District to pay historical debt, in other words, the debt that is currently outstanding. Over the years, as home values have increased and more and more homes have been built, the District has in fact lowered the mill levy down to the current level of 24 mills. Mr. Coppola did ask the District Bond attorney if the District could raise the mill levy up to a maximum rate. The answer to that question is yes, but only if necessary to pay the debt that is currently outstanding. The District could not use those mills to pay any new debt without voter authorization to approve both the new debt and new mill levy authorization. In 2009 the maximum mill levy rate for the payment of historical debt is 66.95 mills. It is important to note that the proceeds from the 24 mills can only be used for the payment of historical debt and cannot be used for any other purpose.

    2. There was discussion about the current policy by the District of using their 24 mill assessment to pay and prepay the $25,000,000 debt service which possibly could be paid off by the end of 2013. If the District transfers mill levy to the City, thus reducing the amount used for prepayment when would the debt be paid off? Please provide the years based on a transfer of 9.5 mills as listed in the IGA, and 19 mills as listed in the First Ballot issue.

    Response - Before answering this question several statements must be corrected. On December 31, 2008 the District’s historical debt will have $23,495,000 balance. When the debt was originally issued in May 2006 that balance stood at $31,010,000. It should be noted that the bonds issued in may 2006 “Refunded” several other bonds that had their roots back to the bankruptcy workout in 1994. Since May 2006 the District has reduced debt by $7,516,000. This reduction in principal is the result of prepaying $4.3 million dollars in debt and making $3,216,000 in required principal payments.
    In 2006 the District issued three separate bonds as follows:
    Series Name Amount Year of Maturity
    2006A $14,310,000 2018
    2006B $5,700,000 2027
    2006C $11,000,000 2024*
    *These bonds are variable interest rate bonds and can therefore be prepaid without financial penalty at any time. The interest rate, which resets weekly, has been in the 2% range until recently. The 2006A and 2006B bonds can also be prepaid, however, the process by which that can be accomplished is quite complex and is currently under review by the District’s financial advisor and bond attorney . Also it should be pointed out that only one of our issues is variable. This is the 2006C bonds which we have reduced from $11,000,000 to 6,700,000. The other two series (2006A and 2006B) are fixed rate bonds and carry interest rates in the 4% range.
    If the District were to transfer 9.5 mills to the City without prepayment the earliest the any of the three series of bonds could be paid off is 2018 rather than 2013 which is the District’s current plan, but that plan is subject to market interest rates, changes in assessed value, and other factors, and it could take longer. The 19 mills is a theoretical number and was the number contained in the previous Ballot question voted on in November 2007. Clearly this number cannot ever be obtained unless the most of the District’s 2006 debt has been eliminated, given the District’s assessed valuation, but is a theoretical maximum.

    3. The First Ballot issue requests a transfer of up to 19 mills, (probably the $2.7 million shortfall referred to by citizens) but the IGA states 9.5 mills ($1.4 million amount required by the City) is workable for the City and the District at this time. If either or both ballot issues pass, can the remaining 9.5 mills be transferred at a later date? Would that require voter authorization or District Board approval?

    Response - The District would also like to know the answer to this question. We believe that this question should be posed to the City.

    4. Regarding Page 3 of the IGA, Section 2 C: Does this mean mill levy transferred to the City, stays with the City and cannot be transferred back to the District….but the City could use a mill levy reduction to secure funds from another source (bonds or notes) to support an increase in the District’s mill levy? Would the District’s mill levy increase require voter authorization?

    Response - Paragraph 3 of the IGA was drafted in such a manner as to afford the City three options for paying to the District any amounts which are needed by the District either (1) to complete the District’s renewable water acquisition and development or (2) to pay debt. The first option is to separately secure bonds in the name of the City, and transfer the proceeds of those bonds to the District. The second option is to simply appropriate any available funds derived from any source and pay them to the Metro District. The third option is to reduce the mill levy authorized by the First Ballot Issue and allow the Metro District to re-impose that mil levy up to the District’s legally authorized and voter approved limits. Because the District has already obtained voter authorization and approval to impose a mill levy up to 80 - 90 mills to pay existing debt, no further voter authorization would be required to impose that mill levy. However, any additional debt and resultant mill levy increase would require separate and additional voter approval.

    5. I believe it was Councilperson Coppola who stated that if one or both Ballot issues do not pass, the City has an alternate budget based on revenues that do not include the or $1.413,000 9.5 mill levy transfer. Will the City share that budget with the public?

    Response - The District has not seen the alternative budget nor have we actually been given a copy of the proposed 2009 City Budget. We have seen copies of the budget but in reality we do not have any more detail than what was presented to the public on September 29, 2008.

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  3. AnonymousNovember 12, 2008 at 1:30 AM

    This is great info to know.

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