[Council Communication]  [Attachments]

Council Communication

Title:	Second Reading of an Ordinance Authorizing the Issuance of Bonds to Finance the Ashland Fiber Network
Dept:	Finance Department
Date:	June 15, 2004
Submitted By:	Lee Tuneberg, Finance Director
Approved By:	Gino Grimaldi, City Administrator

Synopsis:	This is the second reading of the Ordinance authorizing the issuance of bonds to finance Ashland Fiber Network (AFN). The ordinance was first read June 1, 2004. This debt restructure avoids future cash flow problems between AFN and the other funds that have loaned money to finance operating cash short falls.
Recommendation:	Staff recommends approval of the attached Ordinance by its second reading.
Fiscal Impact:	Enables the City to sell bonds replacing the existing debt including $7.5 million in bank loans and $7 million in interfund borrowing. The total amount of the bonds will include issue costs and extend the debt service over a twenty year period. The additional interest and fees over the life of the bonds will exceed $2,000,000 by this action.
Background:	The debt restructure has been discussed many times at internal and public meetings and this is the next appropriate step in the accepted process for refinancing. We have chosen a negotiated sale rather than bid in that it will provide the City the most flexibility in getting the lowest rate and terms necessary to structure this debt to the City's benefit. Upon second reading the following schedule will be followed: 0 1. Wait 30 days for the ordinance to be in effect and the referral period to end (these run concurrently). 2. If no referral a resolution will be submitted to Council July 20 requesting that the authority and empowerment to sell bonds and negotiate terms be delegated to the Finance Director with the City Administrator as an alternate. 3. Prepare official statement, file sale with state and price the bonds in late July. 4. Close on negotiated bond sale in early August. If referred to a vote a resolution will be submitted to Council in August authorizing a referendum to be added to November's ballot and that process will be followed and a resolution will be submitted to Council requesting internal borrowings of the requisite amount to fund AFN until an election determines the appropriate course of action. A supplemental budget may be required for the Telecommunications Fund to complete the fiscal year.
Attachments:	•   Proposed Ordinance

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