Number
041195
Version
ORIGINAL
Reference
Sponsor
THE CHAIR
Title
Resolution authorizing the issuance of revenue anticipation notes for the purpose of financing the operating budget on an interim basis. (Comptroller)
Analysis
State shared revenue payments comprise about 35% of the City's general fund revenues. The majority of these revenues are received at the end of the year. However, City expenditures occur relatively evenly throughout the year. This causes a cash flow problem where expenses occur prior to the receipt of revenues. This cash flow borrowing permits the City to pay for expenses today in anticipation of receiving the State shared revenue payments later in the year. The Revenue Anticipation Notes are repaid from the November State shared revenue payment.
Body
Whereas, s. 67.12(1), Stats., authorizes any municipality entitled to receive deferred payments from the State to issue municipal obligations in an amount not to exceed 60% of the total actual and anticipated receipt of deferred payments in the fiscal year; and
Whereas, Pursuant to s. 79.02, Stats., the City of Milwaukee is anticipating receipt of shared revenue payments from the State of Wisconsin in 2005 (the "Budget Year") the amounts of $36,036,955 and $204,209,414 in the months of July and November, respectively, of the Budget Year; and
Whereas, The foregoing amounts represent 36% of the City's General Fund operating revenues for the Budget Year; and
Whereas, Operating expenditures are incurred on a uniform basis throughout the year; and
Whereas; The City must finance the operating budget on an interim basis between now and the receipt of State shared revenue payments in July and November of the Budget Year; and
Whereas, The City is interested in borrowing to finance the operating budget on an interim basis and pledges the anticipated revenue included in the budget for the Budget Year due and not yet paid as security for repayment of such obligations; now, therefore, be it
Resolved, By the Common Council of the City of Milwaukee, that it hereby and herewith authorizes and declares its purpose to issue revenue anticipation notes (RANs) pursuant to the provisions of s. 67.12(1), Stats., in an amount not to exceed $125,000,000 for the purpose of financing the operating budget on an interim basis pending receipt of State shared revenue payments in July and November of the Budget Year; and, be it
Further Resolved, That the RANs be sold by the Commissioners of the Public Debt at public competitive sale; or to the Public Debt Amortization Fund for the purpose of investment; or to the Public Debt Amortization Fund for immediate cancellation; and, be it
Further Resolved, That the RANs shall be issued on or before August 31, 2005, and may be issued as one or more series, at one or more times, as determined by the Commissioners of the Public Debt; and, be it
Further Resolved, That the RANs shall be sold at a price of not less 99% of par plus accrued interest thereon; and, be it
Further Resolved, That the RANs shall be dated the date of initial delivery of the RAN, shall have a maturity not to exceed thirteen (13) months, but in no event later than six months from the date the City expects to receive the revenues in anticipation of which the RANs are issued, shall not be subject to optional redemption prior to maturity, and shall be registered in the name CEDE & CO., as nominee of the Depository Trust Corporation, New York, New York, and shall not be subject to redemption prior to maturity; provided however, that should any RAN be owned by the Public Debt Amortization Fund, such RAN may be registered in the name of the Public Debt Amortization Fund; and, be it
Further Resolved, That the RANs shall be designated, and bear interest, payable semi-annually or at maturity, at coupon rates not to exceed 7.5%, with an issue True Interest Cost Rate not to exceed 5.00%, as determined by the Commissioners of the Public Debt; and, be it
Further Resolved, That the Continuing Disclosure Certificate, in substantially the form of the Supplemental Certificate authorized by File Number 031384 adopted on February 10, 2004, is authorized to be executed and delivered by the Comptroller for the RANs; and, be it
Further Resolved, That the City of Milwaukee authorizes and directs the appropriate officers and employees of the City to take all action necessary or appropriate to comply with and carry out all of the provisions of the Continuing Disclosure Certificate as amended from time to time. Notwithstanding any other provision of the resolution, failure of the City to perform in accordance with the Continuing Disclosure Certificate shall not constitute a default under the resolution and the Continuing Disclosure Certificate may be enforced only as provided therein; and, be it
Further Resolved, That the Common Council hereby declares that as security for the repayment of the RANs with interest thereon, the City will pledge and irrevocably segregate upon receipt through December 31, 2005 shared revenue payments due in November, 2005, in an amount sufficient to pay the principal and interest due on the RANs at maturity; and, be it
Further Resolved, That as additional security for the repayment of the RANs and interest thereon, the City hereby declares that it will irrevocably pledge all other general fund revenues included in the budget for the Budget Year which are due the City and not yet paid as of the date of delivery and payment for the RANs and which are not otherwise applied; and, be it
Further Resolved, That if a RAN matures after December 31, 2005, the proper City officers be and hereby are authorized and directed to irrevocably deposit with the City's Fiscal Agent on or before December 31, 2005 general fund revenues to purchase direct obligations of, or obligations guaranteed by, the U.S. Government in an amount sufficient to pay the principal of and interest due on such RAN at maturity; and, be it
Further Resolved, That the RANs shall not constitute an indebtedness for the purpose of determining the municipality's constitutional debt limitation, and no other tax shall be levied to pay such obligations; and, be it
Further Resolved, That with respect to the issuance of the RANs, the City covenants with the holders from time to time of said notes that (i) throughout the term of said RANs and (ii) through the date that the final rebate, if any, must be made to the United States in accordance with Section 148 of the Internal Revenue Code of 1986, as amended (the "Code") it will comply with the provisions of Sections 103 and 141 through 150 of the Code, and the applicable regulations of the Internal Revenue Service adopted thereunder, that must be satisfied in order that interest on the RANs shall be and continue to be excluded from gross income for federal income tax purposes under said Section 103.
Requestor
Comptroller
Drafter
RL
11/23/2004
PD-6896bW.doc