03/10/2008 Meeting Minutes - Laserfiche WebLink

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Special Council Meeting 3-10-08 Page 7 Council President Buckholtz said that just taking their language and throwing it back at the time, they were basing everything on growing their revenues. They have not grown. Mayor Rinker agreed adding that he does not see a whole lot of difference in terms of they will still be looking to 50% but how we peg this thing will be something that will have to be renegotiated. There are some material elements that have to be addressed. Dr. Parker said that at this point we really can't count on anything. Mayor Rinker said we are not. Dr. Parker asked when we will either approach them or when we will get approached and figure out what has happened there. It is very difficult to plan long term without really knowing where things are going. Mayor Rinker replied that he does not think we need to approach them. We are making an assumption that they have the current facilities that they have and we will have a sense of how those revenues are generated. We have nothing else to do in terms of infrastructure until they make a room. For us it is going to be a question of adapting to what that revenue stream will be. Dr. Paxker said we need to base what we do based on the current revenue as opposed to any additional revenue. Mr. Brett stated that is what we are doing. Council President Buckholtz stated that if that is satisfactory in teims of revenue, everyone should be aware of what is going on with municipal bonds, maybe we should discuss that and how it will impact us presently or in the future. Is there anyone who does not know about municipal bonds, that the ratings connected with the subprime. Mr. Brett explained that he received notice Friday and he researched this today with bond counsel. XL Capital Assurance Inc., the bond insurer, either had their ratings dropped or lost their ratings. Bond insurance is done for the benefit of investors. Because we have less than a billion dollars of assessed valuation, there is really no way Moody's is going to give us above an A1 which he wishes they would have pulled up a long time ago. That could have saved a lot. In any event, to cement or make bonds more attractive, the underwriter, not the Village, pays for an insurance policy called a bond insurance which essentially tells the potential investor even though Mayfield Village has an A1 rating, we will guarantee that these will be as safe as AAA's, so you get essentially the AAA rating. They pay an insurance premium and they won't pay that premium unless they can gather from the tea leaves that the interest savings on the bond will surpass the amount of insurance premiums to guarantee that rating. The insurer in this case, Assurance Capital, like other bond insurers, decided that the municipal bonds were not enough for them so they started to invest in mortgage backed securities. As a result of the fallout from the mortgage crisis, their rating has now been downgraded. As a result, the rating on Mayfield Village's long term bonds which are already sold have been reduced as well. Since we have already sold these, it really does not impact us because we have already received the money from these. This will be more of an issue for people who are purchasing our bonds on the secondary markets. Mr. Brett is required as the Chief Financial Officer to file this notice that we became aware of this downgrade. This has to be filed with the SEC and the Clearing House which bond counsel did this morning at 10:30. We have put all potential investors on