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5.1.1 c Financing Options for New Town Hall Construction • Reordered to permit additional time for discussion. Presentation to follow Item 10 Presentations from the Floor. Administrative Services Director Sarah Joiner introduced this item to Council. She noted that the City Council had discussed methods of financing the new Town Hall project at the Special Meeting of January 29, 2004 and at the Regular Meeting of February 5, 2004. Several methods were considered: paying for the project out of reserves,paying for all or a portion of the project with the issuance of Certificates of Participation or by means of a lease/purchase agreement, and paying for the project with reserves and approving a Reimbursement Resolution. On February 5, 2004, Council approved a Reimbursement Resolution by which it reserved the right to issue either Certificates of Participation or a financing lease to pay for the new Town Hall project. At the meeting of June 16, 2004, Council scheduled this matter for further consideration. Joiner introduced Mr. Bill Fawell to Council, explaining that he had agreed to provide information to Council concerning Certificates of Participation and lease/purchase arrangements. Mr. Fawell is President of W. J. Fawell Co., a financial advisory firm specializing in arranging privately placed and publicly issued tax exempt financing for local government agencies. Mr. Fawell addressed Council. He presented a brief overview of his background, qualifications and company profile. He noted that two of his northern California clients included the Town of Woodside and the Town of Portola Valley. He explained that the information he was presenting this evening was for general discussion purposes of the financing options being evaluated by Council. Council had before them an outline for tax exempt financing prepared by Fawell. He reviewed the two major forms of tax-exempt financing - private placement and public sale explaining the advantages and disadvantages of each and the issuance cost comparison. Fawell estimated that the public sale .scenario would cost approximately $125,000 and the private placement would cost an estimated $27,000. Both estimates did not include any legal review by the City Attorney. Fawell noted that the private placement would be easier to restructure in the event of a major disaster. He explained the debt service schedules for private placement for amounts of $2 million, $3 million and $4 million with fifteen (15) and twenty (20) year terms, adding that the interest rates are very competitive at this time. Fawell clarified for Council the prepayment option for private placement, noting that generally it is a five (5) year "no call period" with a prepayment initial premium of 2 % that would reduce to approximately .5%. Fawell explained that a private placement could be funded in approximately thirty days from the date of City Council approval. OPENED PUBLIC COMMENT Jean Mordo, Planning Commissioner, commented that he would evaluate the option of borrowing to pay for the new Town Hall by comparing the difference between what the Town is earning on their reserve funds to the cost of borrowing. The cost of borrowing • could be considered an insurance premium. Mordo noted that a perspective that no one 4 City Council Meeting Minutes July 15,2004