SAN JOSÉ, CALIFORNIA TUESDAY,
SEPTEMBER 12, 2000
The Financing Authority of the City of San Jose convened in Regular Session at 3:01 p.m., for a joint meeting with the City Council in Council Chambers at City Hall.
Present: Council Members: Chavez, Dando, Diaz, Diquisto, Fiscalini, LeZotte, Powers, Shirakawa Jr., Woody; Gonzales
Absent: Council Members: None.
Vacant: District 4
GENERAL GOVERNMENT
2 (a) Adoption
of a resolution of the City Council approving an exception to the City’s
Investment Policy to implement a pilot program for the use of guaranteed
investment agreements for the investment of certain bond proceeds and directing
staff to report back on the results of this pilot program in the Spring of 2002
to the Finance & Technology Committee.
(b) Adoption
of a resolution of the City of San José Financing Authority authorizing the
Acting Treasurer to put out to bid one or more Investment Agreements for the
investment of certain bond proceeds and to award the Investment Agreement(s) to
the highest bidder(s).
(Finance)
[Finance
and Technology Committee referral 8/23/00 – Item 7c(5)]
(Deferred
from 9/5/00)
Documents Filed: (1) Memorandum from Acting Director of Finance, Mark Burton, dated August 29, 2000, recommending the City Council and the Financing Authority adopt said resolutions. (2) Hard copies of the staff presentation on the Guaranteed Investment Agreements.
Discussion/Action: Acting Director of Finance Mark Burton presented background information on the proposed use of guaranteed investment agreement for the investment of bond proceeds on a pilot basis, illustrated the advantages to the City and the benefits of using guaranteed investment agreements, and identified jurisdictions in the state of California utilizing the agreements. He stated the Finance Department is proposing actions related to the implementation of the pilot program for the use of guaranteed investment agreements and is recommending approval of the exception to the Investment Policy to implement the pilot program for the use of the agreements for the investment of bond proceeds in the Civic Center Phase I Project Fund and Capitalized Interest Fund and in the Tuers-Capitol Golf Course Project Fund. In addition to the Council action, he stated Staff is recommending that the Financing Authority authorize the placing out to bid one or more investment agreements with criteria requiring Aaa/AAA rated provider by both Moody’s and Standard & Poor’s, fully collateralized security, ability to draw on the funds weekly, and downgrade provisions if rating falls below established threshold. He stated Staff is scheduled to return to the Finance & Technology Committee with a report on the results of the pilot program in the Spring of 2002. Council Member Dando commended the Administration on the excellent job of researching the issue and providing Council with vast quantities of information on the measures of financing and advice necessary to make informed decisions on debt issuance matters. She stated the concept does provide a viable alternative for financing, however, the New City Hall development is not the project that should be used for the investment of the bond proceeds, albeit on a pilot basis, and that she preferred the Tuers Golf Course as the pilot. Predicated on the recommendations in specific areas identified by the City Auditor and the Auditor’s position that this type of investment would bring credit risks that were nonexistent previously, she declined her support of the staff recommendation. William J. Garbett spoke against the proposed action. Upon motion by Council Member Woody, seconded by Council Member LeZotte and carried, Resolution No. 69897, entitled: “A Resolution of the Council of the City of San José Approving an Exception to the City’s Investment Policy to Implement a Pilot Program for the Use of Guaranteed Investment Agreements for the Investment of Certain Bond Proceeds, and Directing Staff to Report Back on the Results of This Pilot Program in the Spring of 2002 to the Finance & Technology Committee”; and Resolution No. SJFA-45, entitled: “Resolution of the City of San José Financing Authority Authorizing the Acting Treasurer to Put Out to Bid One or More Investment Agreement(s) to the Highest Bidder(s)”, were adopted. Vote: 9-1-0-0-1. Noes: Dando. Vacant: District 4.
The Financing Authority of the City of San José adjourned at 3:20 p.m.
RON GONZALES, MAYOR
ATTEST:
PATRICIA L. O’HEARN, CITY CLERK