Aye. The ayes are 17; the nays are zero. A majority of all members having voted in the affirmative, the bill passes. The Chief Clerk will please read the title of Bill No. 080152.
An ordinance authorizing transfers in appropriations for Fiscal Year 2008 within the Aviation Fund from the Managing Director to the Managing Director - Office of Fleet Management.
This bill having been read on two different days, the question now is shall the bill pass finally. The Chief Clerk will please call the roll.
Aye. The ayes are 17; the nays are zero. A majority of all members having voted in the affirmative, this bill passes. We will now consider Bill No. 080153. 3/27/08 - STATED - 2ND READING
An ordinance authorizing transfers in appropriations for Fiscal Year 2008 within the Water Fund from the Managing Director to the Managing Director - Office of Fleet Management.
This bill having been read on two different days, the question now is shall the bill pass finally. The Chief Clerk will please call the roll.
Aye. The ayes are 17; the nays are zero. A majority of all members of Council having voted in the affirmative, the bill passes. The final bill to be called is Bill No. 080202.
An ordinance authorizing the issuance of one or more series of general obligation bonds to provide funds to refund certain outstanding general obligation bonds of the City of Philadelphia.
Because this bill, Bill No. 080202, would 3/27/08 - STATED - 2ND READING authorize the incurring of a new general obligation debt, its passage requires the votes of two-thirds of all Councilmembers. I see that Councilman Green would like to be recognized.
Thank you, Madam President. I'd like to be heard on this bill to put on the record the responses I received from the Finance Department that I asked during the Finance Committee hearings on this proposed bond offering. The cost of this offering will be $7.1 million, 5.5 million of which will be related to bond insurance. That is 3.1 percent of the total offering proceeds, which is extremely high for a municipality. It is almost double the costs of the 2003B Dutch auction rate note bond offering. 2.3 million of that amount was -- of the amount paid in 2003 was insurance paid in advance, which is now a sunk cost. 3/27/08 - STATED - 2ND READING The difference in rates is currently half a percent, five percent expected on these 30-year notes versus current auction rate note -- default rate of 5.5 percent or roughly $100,000 a month in cash flow savings to the City. This means it would take seven years for the City to earn back the high costs of this offering. As the Finance Department testified before the Committee, this is not a money-savings effort. The reasons we are increasing the City's debt by $7 million are risk mitigation and reputational. Risk mitigation: The default rate for these notes is 175 percent of the London Interbank Offered Rate, or LIBOR. LIBOR is only 2.6 percent as of March 20th. In fact, the current LIBOR, 2.6 percent, the next default rate would cost the City $80,000 a month less than this proposed bond offering. It would have a rate of 4.55 percent versus five 3/27/08 - STATED - 2ND READING percent. With respect to the City's reputation, we must consider what having Dutch auction rate notes outstanding means in the context of all of our debt, our future proposed offerings and the uncertainty created for the rating agencies and the investors in all of our securities. I would urge the Administration to consider different underwriters than those that put us in the auction rate notes in the first place without a clear explanation of the risks and urge legal action against the underwriters and the insurers in the original auction rate note offerings, to the extent we have a legal position or it is practicable. The Administration testified that if the market conditions stabilize, they would consider leaving the existing notes in place and avoid the 7.1 million in additional offering costs or an increase in the City's debt of 7.1 3/27/08 - STATED - 2ND READING million and the loss of the 2.3 million prepaid insurance and sunk costs from the last offering. Thank you, Madam President.
You're welcome. This bill having been -- I did say that, didn't I -- having been read on two different days, the question now is again shall the bill pass finally. The Chief Clerk will please call the roll.
They're some pretty scary numbers, and I just wonder if this is something that has to move today, and I'm asking the -- I know it's an Administration ordinance.
I don't know if there is an urgency to passing this. Mr. McPherson is placing a 3/27/08 - STATED - 2ND READING call to the Finance Department.
If I may add, Councilman Green didn't ask that it be held, but every one of his statements really called for a little further discussion at least.
I didn't hear him ask that it be held. Did you ask that it be held, Councilman?
No, Madam President. I wanted these facts on the record or the responses on the record. I wanted the Council to understand the high cost of this offering, why we're doing it. It may not be a money-saving measure, and for that to be considered as they voted on this bill. And I wanted to have on the record the Administration's statement that if the market conditions stabilized, they would consider not going through with this offering. I'm prepared to move forward and vote for the Administration's 3/27/08 - STATED - 2ND READING measure. I just wanted everybody to know what they were voting for and have my comments about what proposals the Administration might consider on the record.
Madam Chair, if Councilman Green is comfortable, I'm comfortable. Thank you.
Very well. I would ask the Chief Clerk to please call the roll.
Councilwoman Miller, how are you voting on this bill?
Aye. The ayes are 17; the nays are zero. A majority of all members having voted in the affirmative, the bill passes. That completes our Calendar for today. Are there speeches on the part of the minority? (No response.)
Seeing none, the Chair recognizes Councilman Clarke for a motion to adjourn.
Thank you, Madam President. I move that Council stand adjourned until April the 3rd, 10:00 a.m., 2008.
It has been moved and seconded that Council stand adjourned until Thursday, April 3rd at 10:00 a.m. All in favor will say aye. (Aye.)
The the motion carries. Thank you. (Stated Meeting adjourned at 11:45 a.m.) CERTIFICATE I HEREBY CERTIFY that the proceedings, evidence and objections are contained fully and accurately in the stenographic notes taken by me upon the foregoing matter on March 27, 2008, and that this is a true and correct transcript of same. ______________________________ MICHELE L. MURPHY RPR-Notary Public (The foregoing certification of this transcript does not apply to any reproduction of the same by any means, unless under the direct control and/or supervision of the certifying reporter.)