mandag 6. januar 2014

Shutdown impacts EDA refinancing By LAUREL BEAGER Editor | Updated 2 months ago Repercussions of a 16-day partial federal government shutdown that ended more than two weeks ago are being felt locally. The International Falls Economic Development Commission took the advice of its bond counsel and took no action Monday to refinance bonds sold to pay for construction of the Voyageurs National Park headquarters. Refinancing the bonds could save more than $400,000. The bonds secured in 2010 for the construction of the Voyageurs National Park headquarters building have 18 years left to mature at a current interest rate of 6.17 percent. A May motion to move forward with refinancing the bonds, should an analysis show savings, was contingent upon Northland Securities and Briggs and Morgan providing the EDA with letters stating they will share in the risk of this action and will not bill the EDA for expenses incurred if the market condition proves to be unfavorable for refinancing. Just hours before the EDA Commission meeting was set to begin, Steven J. Mattson, executive vice president and co-founder of Northland Securities, said in an email that its bond salesmen contacted dozens of buyers of these types of bonds and have been told that “at the moment they will not look to purchase these refunding bonds due to the credit of the federal government. The country just went through a shutdown and the scars have not healed as of yet.” Mattson said the concern of the market caught Northland Securities by surprise. “We had indications of interest for most of the bonds as of last week, but when the calls were made to the banks this morning they said they had little interest in the International Falls bonds,” he wrote Monday. Mattson said the delay may be a blessing. He reminded the commission that the existing bonds are not callable until October 2014. “If we refunded in early 2014, we will not spend as much on the government escrow and will save money because we have less negative arbitrage,” he wrote. That, he said, could save the EDA another $100,000 if interest rates do not rise over the next three months. He said Moody’s, a company that provides credit ratings and other investment services , would only charge the EDA a “nominal fee” for a fresh rating. Commissioner Bob Anderson asked for a definition of nominal, and Shawn Mason, he city’s economic and community development director, provided an email early Tuesday morning from Mattson, stating that the nominal fee will depend on how far past 90 days the action is delayed, but said from one to 45 days past 90 days and the fee may be in the $4,000 to $5,000 range above the initial rating fee ranging from $12,000 to $14,000 . “Again, within 90 days we are free and if we go past 90 days and trigger a nominal fee it would only be if we intended to save hundreds of thousands of dollars,” wrote Mattson. “We will test the market on the credit problems we found today before we enter the market again.” Other action Meanwhile, a motion at the Sept. 23 meeting raised concern with Anderson. He said he believed the motion to cease providing ledgers in the monthly packets provided to the commissioners and members of the public should have been ruled out of order. The motion said ledgers would be provided as requested at least on a quarterly basis to commissioners who request them. Anderson Monday voted against acceptance of the minutes, with Commissioners Cynthia Jaksa and Pete Kalar voting for approval, saying they were an accurate reflection of the action. Commissioners Gail Rognerud and Paul Eklund were absent from the meeting. The commission is made up of members of the Falls City Council. A later motion calling for the ledgers to be provided at each meeting as a part of the financial report was approved unanimously. But Mason, in emails sent Tuesday morning to the commission, said she needed to ask Anderson, who serves as Falls mayor, why he does not require public presentation and disclosure of financial reports from any other department or organization of which the city is the fiscal agent. She said the only time such detail is presented is during budget time. “Is fiduciary responsibility defined differently depending upon which department or organization we are speaking of?” she asked in the email. “It is my belief that the administrator’s position needs to follow the city charter and I have continually discussed with the members of the council that financial reporting needs to occur at the city council meeting,” replied Anderson in an email. “The administration office is presently working shorthanded and is providing a monthly report on fund balances and most, if not all expenditures of the departments through the regular claims. The airport, library and recreation boards have citizens serving on them that have the same fiduciary responsibility to expend the citizens tax dollars with the same care. Should the city council get their financial reports? My belief is yes. Not to second guess them, rather to look for trends and understand the needs of these operations.”

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