If You Go
What: Boulder City Council
When: 6 p.m. Tuesday.
Where: Boulder Municipal Building, 1777 Broadway
Info: To read the memo on negotiated bond sales and see the complete agenda, go to http://bit.ly/1gzzTce
Boulder officials are seeking permission from the City Council to use a negotiated rather than a competitive bond sale process the next time the city sells open space bonds.
If the City Council signs off, this would be the first time the city has used the negotiated bond sale process since Boulder voters approved a charter amendment in November that allows for such sales. That charter amendment passed with 75 percent of the vote.
Previously, the city charter required competitive bond sales.
The charter amendment was sold to voters based on the idea that a new municipal utility without a track record— financial or otherwise — might see higher interest rates and relatively little interest in its revenue bonds if the utility had to sell them on the open market. A negotiated bond sale process would allow the city to "tell the story" behind the bonds and line up environmentally conscious investors in advance of the sale.
A negotiated bond sale process also makes it easier for local investors to buy municipal bonds, and that's the rationale the city is giving for using the process for open space bonds.
"In the past, there has been a high level of local interest in purchasing open space bonds," City Manager Jane Brautigam wrote in a memo to the City Council. "With the competitive method of sale that was required prior to last year's charter change, it was not possible to provide preference to local buyers who wished to purchase some of the bonds. Under the new charter language, this would be possible by using the negotiated sale process. Prior to the bonds being sold to anyone anywhere in the world, they could be made available to people in the Boulder area for one day by isolating certain zip codes."
Boulder Finance Director Bob Eichem said the city would use a request for proposal process to find an underwriter for the bonds and ensure the city gets a good interest rate on the bonds.
The underwriter would be a different person than the city's financial advisor for its bond sales, Eichem said. That is considered a "best practice" in public finance to reduce the opportunities for kickbacks or "pay-to-play" abuses that sometimes occur with negotiated bond sales.
Eichem said "a strong retail presence" that makes it easier for individual investors to buy open space bonds will be one of the requirements in the request for proposals. The city's financial advisor would play a key role in negotiating the price with the underwriter to make sure the city gets a good deal on the bonds, he said.
The bonds would be used to finance future land purchases to help Open Space and Mountain Parks complete its "vision plan."
Linda Jourgensen, a board member of Friends of Boulder Open Space, said she thinks there will be a lot of interest in purchasing open space bonds, though it's not an issue that has generated much discussion in the past.
"I think it would have a lot of appeal," she said. "People often talk about open space as one of the reasons they live in Boulder."