Loading...
HomeMy WebLinkAbout1996-07-11 EURA MINUTESENGLEWOOD URBAN RENEW AL AUTHORITY JUL y 11, 1996 I. MEETING CONVENED. The meeting of the Englewood Urban Renewal Authority convened at 5 :50 p.m., with the fol- lowing attendance: Present : Absent: Graebner , Dykes, Mulhern Gryglewicz, Executive Director Vormittag, Havens , Smith Also present: Stitt , Community Coordinator A letter of resignation from Mr. Richmond , received via postal service earlier this date , was given to Chairman Mulhern. Notification of the resignation has been transmitted to the City Manager's Office. Inasmuch as no quorum was present , the meeting could not be formally called to order. De- termination was made to proceed with the scheduled interviews of investment banking firms. II. KIRKPATRICK-PETTIS Andy Kane Tom Bishop Mr. Kane addressed the Commission, citing his 10-year legal experience prior to becoming an investment banker ; he has been an investment banker for the past 10 year s . Mr. Bishop then cited his work experience , noting he has been in the investment banking field for 18 years. Kirkpatrick Pettis is a wholly-owned subsidiary of Mutual of Omaha , and is primarily a mid- west firm. The Denver office was opened in 1991. Recent consolidation of banks and bond firms has resulted in a number of personnel from large banks and other bond companies join- ing this firm in recent years. Mr. Kane stated that Kirkpatrick Pettis works with a lot of "special districts ", and cited a number of projects the firm has worked on, including projects in mountain communities such as the Vail Valley. Mr. Bishop noted that the firm is serving as the financial advisor to the Littleton URA ; is working with the Arvada URA to accomplish a refunding on their bond issue; is working with the Westminster URA, Parker Properties , Up- per Cherry Creek , and other entities . A lot of his time is working with bond issues that were done during the 1980 's and early 1990 's. Mr. Bishop stated he understood the EURA is exploring the possibility of restructuring the TIF bonds in an attempt to cure the default. Mr. Bishop stated that it is not economically possible 1 to refund the bonds, and to pay the $30,000,000+ debt off by the year 2005; even lowering the interest rate from 11 % to 83 payoff by 2005 would not be possible. Mr. Bishop discussed the methodology used to develop the recommended course of action. Several steps would have to be taken, including: • Ask bondholders to agree to eliminate their right to "old" interest. • Ask bondholders to agree to a lower interest rate on the new issue. • Ask bondholders to consent to a "no sue" policy if the bonds cannot be repaid under the new terms. If these agreements with the bondholders cannot be secured, the Authority might as well stay in the position it's in regarding the bonds . Mr. Bishop stated that the term of the bonds is 2005, but can be extended to 2007 to coincide with the term of the District with the approval of the City. Under the proposed scenario, an additional payoff time of 8.5 years will be required over and above the year 2007. Also, the additional 8.5 years would make use of sales tax increment only, because use of the property tax increment cannot be extended by the EURA. This extension of payoff for the bonds would have to be agreed to by the City. Mr. Bishop stated that the figures used in calculating the in- terest and payoff time provide for "one-time coverage" on the bonds. Mr . Kane suggested that the one area for "argument" from bondholders/purchasers might be the amount of coverage. Mr. Kane noted that this bond issue has a lot of bondholders. Another concern would be the extension of the payoff time for 8.5 years, inasmuch as the City would have to forego the sales tax increment for that increased period of time. Mr. Bishop stated that it will be a waste of money for the EURA and the effort of the invest- ment banking firm's time unless something is given '.'back" to the bondholders, and the bond- holders agree to go along with the proposal. Mr. Bishop expressed doubt that the bondholders would "move" unless they have some sort of enticement. Does the City see cure of the default to be of sufficient benefit to provide assistance. Mr. Bishop stated that if this firm his hired, they have to determine how far they could get the par amount down, and cautioned the Authority that it will cost money to put out a tender offer to bondholders . Mr. Mulhern questioned the role of the trustee in this scenario . Mr. Bishop stated that the trustee will support and promote the proposal. Kirkpatrick Pettis would represent the EURA as financial advisors. Mr. Kane stated that they can find out who owns the bonds; the owners may be shown as "brokers", and their firm would speak directly to the brokers regarding any proposal to restructure the debt. Discussion ensued . Mr. Kane suggested that there may be some "noise" from bondholders as the payoff term nears and they realize the revenues will cease. The proposed restructuring was further discussed. Mr. Bishop stated that if revenues were to exceed that needed for debt service, the extra revenues could revert to the City or the length of repayment on the bonds could be shortened by early retirement. Mr. Kane noted that the re- structuring would have to take the TABOR amendment into account 2 An alternate "B" Plan was discussed . There would be an offer to exchange the bonds, ask for the "no-sue" agreement , and create two levels of bonds: senior and subordinate. This could be a 40/60 split, for instance . Bondholders could be guaranteed payment on 40% of the value of the bonds they have today, and have a possibility of getting half of the 60 % value if reve- nues allow. However, this proposal could be "tough" to sell to bondholders. Mr. Dykes asked if Plan B was similar to bankruptcy . Mr. Bishop said it is not. He empha- sized that extension of the debt year cannot be done without City approval. The EURA is part of the City, and the City would have to be taken into bankruptcy. Mr. Dykes asked if the City is legally responsible for repayment of the bonds. Both Mr. Kane and Mr. Bishop stated the City is not legally responsible. Mr. Kane noted that the Indenture is very clear on this point. He did state that "legally, the City is not responsible ; morally, yes". Mr. Graebner com- mented that the bonds were sold as junk bonds, with a City disclaimer of responsibility. Mr. Kane stated that curing the default could be of great assistance to the City in that the URA might then provide assistance in financing infrastructure projects with the Cinderella City re- development project. Mr. Kane further commented that "if all things were equal, he would say to take our chances ; but if there is a possibility of doing something , we should go through Plan A ". Mr. Mulhern asked how the investment firm will get paid. Mr. Bishop stated the revenue to the investment firm would be based on a successful exchange of the bonds ; fees would range up to 1 % of the bonds exchanged , or $150/hour ; if the bonds are sold to other bond investors the fee would increase to 2 % . Mr. Bi shop stated that the restructuring of the bonds can be ac- complished within 10 months . He suggested the need to determine what the Trustee thinks about "Plan A " and "Plan B"; it is his opinion the Trustee would probably object to "Plan B" because it forces the issue. Plan "A " will have to be "sold" to the City. Mr. Gryglewicz stated that he has attended a meeting with City Council members regarding the issue of bond restructuring . While this body has been adamantly opposed to extending the time on the Tax Increment Financing , Council might be persuaded to at least consider this pro- posal. If the City has no reason to use the EURA , and if the default is not a "shadow" on the redevelopment of the Mall we could wait until closer to the end of the repayment time to do restructuring . The property tax on Cinderella City is part of the tax increment district; at such time as demolition of the Mall occurs , would it be possible for bondholders to stop the project. Mr. Kane stated bondholders would not be able to stop the redevelopment project. Mr. Bishop advised that even though the value of the land might decrease temporarily, the redevelopment would be an "enhancement " to the district. Discussion ensued. Mr. Bishop emphasized we are talking about "exchange of bonds", and not "refunding". He stated he thinks the bondholders are interested in working out an amica- ble solution. Brief discussion ensued . Mr. Mulhern thanked Mr. Bishop and Mr. Kane for their attendance and presentation. Messrs. Bishop and Kane excused themselves from the meeting. 3 III GEORGE K. BAUM & COMPANY Jim Kreidle, Executive Vice President Commissioner Havens entered the meeting, and took his chair with members of the Authority. Mr. Mulhern welcomed Mr. Kreidle to the meeting. Mr. Kreidle stated that he has been in the bond/banking investment business his entire adult life, and has had a lot of experience working with urban renewal authorities and tax increment issues. His firm did the first tax increment financing issue in the State of Colorado in Boulder, and is now working with the city of Northglenn. Mr. Kreidle stated that he has followed the EURA bond issue/default very closely, and was involved in a previous discussion on restructuring the bonds prior to default in the very early 1990's. At the time of the previous discussion, it was the determination of the Authority to do no restructuring, and go to into default. Bondholders were receiving all revenues coming into the Authority, which is what they were promised. Mr. Kreidle stated that unless there is something that has occurred of which he is not aware, or does not under- stand, his recommendation to the Authority is to "do nothing". Mr. Kreidle stated that the EURA has no control over the revenues coming in; cannot increase taxes, and cannot extend the length of the TIF. To accomplish any restructuring would require the assistance of the City of Englewood, which has consistently said "no". Mr. Kreidle advocated that the Author- ity continue to exist, to pay the pledged revenues to the bondholders as agreed upon, let the tax increment district terminate at the cited date, and the issue is over. Mr. Mulhern inquired about the possibility of lawsuit. Mr. Kreidle noted that the Authority has been in default since 1991, and to his knowledge no lawsuits have been filed or threatened. The City has no responsibility for the debt, and the EURA is giving bondholders everything that was promised in the Indenture and Offering Statement. Mr. Gryglewicz inquired about the effect on issuance of General Obligation bonds; the City recently did a refunding, and Standard & Poor asked no questions regarding the EURA de- fault. Mr. Kreidle stated it may have an effect, but this is difficult to predict. He noted that the City has sold several bond issues since the default. Mr. Mulhern stated that from the point of view of the City, the Authority cannot be used for any financing assistance on any projects; is this enough incentive on the part of the City to clear the default and move ahead. Mr. Kreidle stated that the outstanding debt is "enormous", and there is no way to clear it up, particularly by 2005. Mr. Gryglewicz asked about bank- ruptcy, or making a tender offer to exchange bonds with a lower interest rate and an extension of the TIF deadline. Mr. Kreidle stated that he did not think there is a process for the Author- ity to go through bankruptcy at this time. If the Authority is willing, and if the City is willing to provide assistance, restructuring may be worked out. Mr. Graebner asked if Mr. Kreidle anticipated the Authority could face lawsuits when the bonds come due if there is no cure of the default. Mr. Kreidle stated that he did not anticipate lawsuits; he suggested that in 2005, letters be sent to the bondholders stating that they have been paid what was promised them - all revenues coming in to the Authority -that the TIF is expiring, and payments will cease. 4 Mr . Gryglewicz asked if there is any possibility of being sued because of the relationship be- tween the EURA and the City, and the City has a "moral obligation" to extend the TIF . Mr. Kreidle quoted from the Indenture statement which clearly states the obligation is that of the Authority . Mr. Kreidle noted that other authorities are in default, and other bond issues have defaulted. Typically, bondholders sue the underwriters and not the issuing entity. Mr. Havens noted that Mr. Kreidle is recommending no action be taken; he asked how any- thing could be accomplished on the redevelopment of the Mall without the assistance of the Authority to finance infrastructure improvements. Mr. Kreidle stated that the Authority could not sell new bonds while in default. Infrastructure improvements would have to be done through the City issuing bonds, or by financing through current revenues . Mr. Kreidle ex- pressed doubt that any new urban renewal authorities have been formed since the TABOR Amendment was enacted. Mr. Kreidle further suggested that any new bond issues would have to be voter approved. Mr. Dykes asked if voter approval would be required to restructure the bonds. Mr. Kreidle stated that general voter approval would not be required, but the coopera- tion of the bondholders would be needed. He commented that the restructuring would require something like 50 % of the monetary value of the bond issue and 2/3 of the bondholders. Mr. Kreidle suggested that the Authority may have to go to court to get permission to go into bank- ruptcy. Mr. Mulhern stated that the Authority has met with the Trustee; apparently several bondhold- ers have indicated the Authority should take action to cure the default. He asked Mr. Kreidle what his sense is of the Trustee's stand if the Authority chooses to take no action to cure the default at this time. Mr. Kreidle responded that he does not know what the Trustee would do. In his opinion, the Authority is doing a good job by having this meeting to explore options. He acknowledged that the bondholders will want to see City involvement and to tag the City with URA responsibilities for repayment of the bonds. Mr. Kreidle asked if the URA had ac- cess to more money; he answered no. Mr. Kreidle then asked if the URA is paying bondhold- ers all revenues that come in to the Authority; he stated the answer is yes. He stated that he does not know how the Authority can do anything more and pointed out that the revenue stream is continuing to increase . Mr. Dykes asked if the Authority had legal counsel opinion regarding voter approval on bond issues. Mr . Mulhern stated that he would discuss this issue with EURA legal counsel Benedetti. Mr. Gryglewicz stated that he was 95 % sure it would require a vote, but that he could check this issue out with the City Bond Counsel. Mr. Kreidle discussed the involvement of his firm with Northglenn, noting that the bonds were "issued" before the TABOR amendment; however, the funds were placed in escrow until needed. He reiterated that he did not believe any new urban renewal authorities have been formed since the TABOR amendment was approved . Brief discussion ensued. Mr. Gryglewicz expressed doubt that the general public would ap- prove "extension" of the sales tax TIF. 5 Mr . Kreidle suggested that the Authority might be sued if we tried to restructure by using the bond revenues to finance that restructuring. Brief discussion ensued. Mr . Mulhern thanked Mr. Kreidle for his attendance and participation in the meeting . Mr. Kreidle excused himself from the meeting. IV. CALL TO ORDER. Mr. Mulhern noted that we now have a quorum present, and called the meeting to order . Present: Graebner, Havens , Dykes, Mulhern Gryglewicz, Executive Director Absent: Richmond, Smith, Vormittag Also present: Harold J . Stitt, Community Coordinator V. APPROVAL OF MINUTES. June 5, 1996 Mr. Mulhern stated that the Minutes of June 5, 1996 were to be considered for approval. Graebner moved: Havens seconded: The Minutes of June 5, 1996 be approved as written. The motion carried. VI. 1995 FINANCIAL REPORT A telephone poll was conducted on the 1995 Financial Report, which was distributed to mem- bers at the meeting on June 5, 1996. Members verbally accepted the Financial Report, and this verbal acceptance now needs ratification by formal vote. Graebner moved : Havens seconded: The motion carried . The 1995 Financial Report for the Englewood Urban Renewal Authority be accepted as presented. VII. DIRECTOR'S CHOICE. Mr. Gryglewicz stated he was in receipt of a communication from City Manager Clark re- garding the interest of Mr. Jim Rees in the EURA/City owned property on the southwest cor- ner of the Englewood Parkway/South Broadway intersection . Mr . Gryglewicz stated that Mr . Rees is apparently under the impression there has been a recent appraisal on the site, but staff 6 has not processed payment for such service. The Chamber of Commerce will have to relocate in the near future, and this site would make a good Chamber location. Mr. Stitt noted that this site was discussed a couple of years ago, and the EURA property and the adjoining City property were to be jointly marketed . Mr. Graebner asked if the property is sold, would the proceeds go to pay off bonds, or could the Authority keep the proceeds for op- erating expenses. Mr. Stitt stated that if the EURA property (28.5 feet) were to be given to the City, the development would generate revenue; if the Authority sells the property, the proceeds will have to go to retire the bonds. Mr. Mulhern commented that the EURA parcel has little value on its own , but a combination with the 50 feet owned by the City makes a nice sized par- cel for development. Mr. Stitt pointed out that this corner is one of the primary corners in the downtown area , and needs to provide a good "anchor" for the downtown sector. Mr. Graebner pointed out that if the development of the site is for Chamber of Commerce pur- poses, this will not bring in revenue following development; therefore, the Authority needs to "sell" the site rather than give it to the City. Mr . Mulhern agreed that the disposal of the Authority property is dependent on the buyer/developer. Mr. Gryglewicz stated that he has also had communication from the Englewood Downtown Development Authority expressing interest in acquiring the parking lot on the east side of South Acoma Street in the 3400 block south to provide parking for the downtown . This site, while owned by the Authority, is leased to the City for $10/year and is used for parking pur- poses by those businesses in the 3400 block of South Broadway. Mr. Gryglewicz noted on Page 10 of the Financial Report, Note 4 the fixed asset of $1,494,085 is assigned to the Acoma Parking Lot; based on Arapahoe County Assessor's valuation methods , the actual value is only $476,000. In the 1996 financial report, the Finance Department and the auditors want the figures changed to reflect the assessed value. VIII. PIPER-JAFFRAY Steve Clark Dan Ray Jason Simmons Representatives Clark, Ray, and Simmons from Piper-Jaffray were welcomed to the meeting . The gentlemen introduced themselves: Mr. Clark is the Managing Director for Piper-Jaffray in Denver; Mr. Ray is an Assistant Vice President with Piper-Jaffray for four years; and Mr. Simmons is an Analyst with Piper-Jaffray approximately one month. Mr. Clark distributed a presentation booklet to members of the Authority , and commented that he didn't "know whether anyone can guarantee a restructuring is do-able". Mr. Ray gave background on the firm , noting that the firm has an equity capital of $159 mil- lion, 206 Colorado employees, and 102 Investment Executives in Colorado. 7 Mr. Clark noted that the chart contained in the booklet makes the assumption that the property tax revenues would be constant, and that the sales tax revenue will improve after redevelop- ment; there is too much debt to pay off within the prescribed time limit of the TID at the ex- isting interest rate. The bondholders are expecting to get back their principal investment plus interest. The City wants to end the TIF in 2005 as is cited in the bond documents. The Trus- tee has indicated they have the right to collect revenue beyond the expiration of the TID. The City says is it not their responsibility to repay the bondholders. A complete refunding of the bonds is impossible to do, and if the Authority chooses to take no steps to cure the default, there is the possibility of litigation from bondholders or Trustee. However, a workout is "possible". Areas of commonality between the City and Bondholders/ Authority is avoidance of litigation cost, and encouragement of economic development. Liquidity of the bonds is also important. The possible workout scenario would be a plan of "senior bonds" and "subordinate bonds". Assuming an outstanding debt of $30 million, approximately $18 million of the debt would be "senior" and $12 million would be "subordinate". This would entail a trade of existing bonds for the new senior bonds, or for cash plus a subordinate bond. New bonds would be tractable; the bondholder can sell the senior bond for cash, and still have the possibility of getting some- thing else after all senior bonds are paid off. To accomplish this, 1003 approval of bondhold- ers is required, or sufficient approval percentage to defease the hold-outs. The need to com- municate with bondholders was emphasized. The Authority may have to go to Court, ask for bankruptcy to force holdouts to accept the restructuring. Mr. Clark emphasized this is a "possible solution", but not guaranteed that it is "do-able". Mr. Clark discussed the proposal further, noting that Phase I, which includes survey of critical items such as reading documents, evaluating the financial situation, and summarizing a work- out option; surveying parties such as the trustee, bondholders, city, and legal counsel could be done by Piper-Jaffray on a pro-bono basis. On Phase II, the trustee would be asked to pay them a fee to work out a plan for presentation to bondholders, assist in getting the bondholders vote on the proposal, and obtaining Court approval for dissenting bondholders. Phase III would be underwriting the Senior Bonds. The fees for underwriting could be up to 3 3 of the bond value, or a fixed fee could be established. Mr. Clark emphasized the willingness of the company to put 10 to 15 hours of work into the project initially on the pro-bono basis; they are willing to invest this time to convince the Trustee it will work and that we should proceed with Phases II and III. Mr. Clark emphasized that Piper-Jaffray has no historical interest in this bond issue, and reiterated their willingness to do the initial work for free with the option to realize a substantial fee down the road. Mr. Mulhern asked if there has been any communication/reaction from the Trustee on discus- sions with Piper-Jaffray. Mr. Ray stated that the Trustee has indicated they will consider a proposal, and will serve as financial advisor if they were convinced it was a realistic opportu- nity to work out the restructuring. Mr. Mulhern inquired about risk of using revenue to finance the restructuring when the reve- nues are pledged and payable to the bondholders. Does the Authority incur additional risk us- 8 ing those revenues in an attempt to resolve the default. Mr. Clark stated that in his opinion , this would be a responsibility and risk of the Trustee; they represent the bondholders, and he does not feel the Authority would have any more legal liability than we now have. Mr . Ray stated this is the reason the Trustee wants to be reassured that any proposal for restructuring and curing the default is feasible. Brief discussion ensued. Mr. Gryglewicz commented that "Council isn't looking at the City giving up anything". If there is a reasonable proposal made , he felt that Council would at least look at it. He com- mented that he felt City Council does want the "cloud " of default removed if at all possible . Mr. Clark commented it would better to survey the bondholders and have a scenario of possi- bilities before City Council is approached. There are a lot of Amendment #1 (TABOR Amendment) issues that need to be taken into account . Mr. Mulhern asked if the firm would be receiving money from the Trustee , who is the client they are serving? He commented that there are different motivations for the Authority and the Trustee in this issue . Mr . Clark stated if their firm is chosen , they would be the principal underwriter ; full disclo- sure would be m ade to the Trustee , to the Authority , and to City Council. Mr. Stitt noted that Mr. Clark had stated the Court would have to get involved ; is this in terms of bankruptcy. Mr . Clark responded affirmatively. Mr. Graebner asked if bankruptcy was a possible consideration. Mr. Clark stated that the law isn 't clear , and a lot depends on the issue of "jurisdiction "; is the Authority a "political subdivision ". The powers to declare bankruptcy are pretty broad , and if an entity has the power to deal with financial resources , they can de- clare bankruptcy , in his opinion . Mr . Graebner as ked about bondholders relinquishing the right to sue if the bond issue is re- structured. Discussion ensued . Mr. Clark stated that under the scenario they have proposed , there cannot be a default on the "B " Bonds (subordinate bonds), but there could be a default on the "A" (Senior) bond s . Mr . Stitt inquired about the TABOR amendment ; would an election be required to extend the pay-off on the bonds. Mr. Clark stated that an election "could " be required . Mr. Ray dis- cussed the resolution of problems for the Arvada URA , noting that this did not require an election. Mr . Dykes asked if the bondholders would have to waive their right to sue on exchanged bonds. Mr . Ray stated that a plan to show stability and growth will have to be established for insurers to review. Mr. Ray stated the firm is working with the City of Thornton on a possible refunding of bonds , and he understands what the insurers are looking for. Mr. Dykes asked if the insurers would require a waiver of right-to-sue . Mr. Clark commented that he was not sure that such a waiver is enforceable. Mr. Dykes clarified that he is not talking about "misrepresentation ", but about waiving the right to sue to get the principal and interest on the bonds. Mr. Clark questioned that bonds would be sold if buyers had to waive the right to sue. 9 Mr . Ray stated that the investment banker would want to make full disclosure of all risk fac- tors, but typically they do not try to indemnify; he stated that he did not think investors would want to give up their rights on something that may happen 10 years from now . Mr. Mulhern asked what rating could be achieved on the "senior bonds". Mr. Clark stated that the Senior Bonds could get a Triple A rating . Mr. Dykes asked if additional security would be required, or would the rating be based on cash flow. Mr. Ray cautioned that it is not easy to get insurable ratings, and would be a difficult transaction. Brief discussion ensued. Mr. Mulhern thanked the gentlemen for their attendance; they excused themselves from the meeting. Discussion ensued among the members of the Authority. Mr . Gryglewicz suggested the need to determine how much the City wants to get rid of the default. If this is a major priority, Kirkpatrick Pettis representatives were more "positive" the restructuring could be accom- plished, and Piper-Jaffray were more "iffy". Mr. Gryglewicz commented that when he first talked to Mr. Kreidle from George K. Baum , Mr. Kreidle asked if there was an underlying agenda to clear the default, and unless there was something to make it worthwhile don't do it. Mr. Dykes stated that a couple of issues need to be clarified: Will it take a vote of the public if there is a reissuance of the bonds; and how sure is the Trustee that the bondholders can sue the City. Mr. Mulhern commented that the Trustee is "coy"; as time for repayment of the bonds runs out , someone will "hit the panic button" and what the Authority is attempting to do now is preventative. He commented on several rumors he has heard, one that the City has ex- posure on the issue as well as the Authority. Mr . Gryglewicz stated that when one looks at the Official Statement, it is clear that the bonds are not a debt of the City . Mr . Stitt pointed out that the function of the EURA is set aside if the defaulted debt continues to exist. The City will have to look at the situation, determine the role of the URA, if any . Does the City have the ability to pay for infrastructure improvements without assistance of the URA financing tools. Mr. Gryglewicz expressed the opinion that there are people in the City who would like to use the URA, but is it worth extending the TIF another 8 .5 to 10 years to enable this use. The impact of Amendment #1 (TABOR Amendment) was discussed. Mr. Stitt commented that if an election is required, the City and Authority need to strategize to promote the issue as "payment of improvements" rather than "bailing out the URA." Brief discussion ensued. Mr. Mulhern asked what the next step for the Authority should be. Mr. Dykes stated that the first step is to get an answer regarding the impact of the TABOR amendment on the reissuance or new issuance of bonds, or extension of the TIF. Secondly, do we want to go any further on the liability of the City from the point of view of the Trustee. Mr. Gryglewicz reiterated that he has sat in on meetings with the City Council, and the opinion of the members is that the bondholders purchased unrated, uninsured, high risk bonds , and that the Indenture and Offer- ing Statement clearly state that the repayment of the bonds is NOT a responsibility of the City. 10 Mr. Stitt advised on the need to separate one's feelings about the bondholders versus the value of using the abilities of the URA on future projects. The value of the effort to cure the default isn't in bailing out the bondholders, but in having the URA available for use on other projects. Mr. Stitt suggested that we must also weigh the cost of possible litigation in reaching a deci- sion. Mr. Mulhern agreed. Can the URA be of benefit to the City; if we are a "defunct en- tity" because of the TABOR Amendment the members of the URA need to be so informed. The possibility of a study session/meeting with the City Council was discussed. Mr. Graebner pointed out the need for communication with the City on this issue. Mr. Stitt said he would be interested in a legal opinion on the liability of the City and the EURA after the expiration of the TIF in 2005. Mr. Gryglewicz commented that the Authority, the City, and the Trustee have done everything in accordance with the Indenture; the bondholders took a big risk but they knew the risks when they purchased the bonds. Brief discussion ensued . The meeting was declared adjourned at 9: 15 P.M. \ \$nds\. eng_ ch_ sys. cicyhall . englewood\dept\nbd\group\boards\ura \uram0796.doc 11