Straling did confirm that the city is exempt from reporting those.
So, as you may remember and what kind of lead up to this is that the previous clerk attempted to receive a following exemption from the IRS, like many other cities to have.
Unfortunately, that did not work in our favor, there was a period where the IRS was not granting these exemptions, and so we fell in that period.
So, other corporations, like from the state of previously came from signal, it does not need to file these forms because they do have that exemption.
And so, Straling is both attempt to file another request for exempt being exempted from the 995 file.
Okay, so what I'm saying is that from what I'm seeing from other cities is that we're supposed to be following the 8038G, like Palo Alto is doing.
And that the 90 isn't the right form to be indicating that on.
And yeah, so that's really an issue here, and we've got like fiduciary duties, so I want to have somebody that knows these certificates and what tax forms need to be filed.
And I also know that called to be directing us because I feel uncomfortable about it because what I'm reading it's it's that we haven't been doing the right form.
And yeah, and we do we all have responsibility here that fiduciary duty, we're directors and we've had 10 years pass without any filing whatsoever.
And we also don't know anything about the bank account, which holds the money, so that's like 2.6 million dollars, it goes through this account and then goes and pays.
And I looked at that when I first saw and I thought, well, this is, this is a problem because we don't we don't as far as I know we don't have eyes on that account to know who who is in charge of it.
Has it ever been audited, are they paying there certain times on their supposed to be paying.
For for the certificates, maybe it was twice a year, I'd read something like that.
Is that actually being done properly?
Because I'm not sure that when we're giving a lump sum to that account, it's then that brings up the interest fairing issue as well.
And what's going on with it, and all of this kind of falls into who's actually auditing this entity.
And when I thought in terms of Jennifer Chang, feeling the person who the last person who had filed, she did the embezzlement, was there any possibility that they'd be left and kind of an opening for any funds to be, you know, skimmed off of that account, no matter how small.
But is there some any possibility there that that over the years could have happened, because this is going back to 2014 and.
Yeah, so I can I can kind of understand how it how it happened and people's understandings with the with the IRS filings, but because it's certificates of participation and each has the Q set number.
And they're for all intents and purposes, they they are their bonds, they work life bonds and.
Trying to kind of.
Wave it away as a is the 990 the right form for that that's it's we're in a different situation because these are tax exempt certificates.
We had left our tax exempt status and from what I've been reading that if people had those tax exempt bonds at that time certificates during that time that they they too had lapsed on the ability to claim them as being tax exempt and that there could be a scenario where they would come after the city because of that.
So I I would want some kind of a tax attorney who specializes in certificates of participation to be advising us and I don't think that didn't the 990 might be okay for the IRS to be.
The status but I don't feel like they were given the full picture of what we're doing here because we're not just like a PTA that's got you know a bunch of money that's come into it and we're spending it we're issuing tax exempt certificates which is.
It's a whole another you know arena of of activity that we need to be really careful about.
And anyway, so I said that so I don't feel comfortable with the 990 being the the form that's being filed there especially after seeing looking at what other cities are doing.
And I I also have another question is whether or not we have an opportunity and I don't know if I'm allowed to ask this do we have an opportunity to issue any more of these moving forward or is our.
Our structural deficit or you know is our financial situation such that we cannot do that or is there with their possibly be an opportunity there and then on the flip side are we in any sort of arbitrage interest.
This scenario where we have loaned this money out at 4% and we for a period of time we're making a little bit more than that and for also from what I read is that if you've made a little more on that the IRS actually wants that money.
So perhaps in the aggregate we have money that's making less than 4% some that's making more more than 4 and you can make an argument that in the aggregate we're just we're just equalizing we're not making money off of this tax exempt.
The funds which is what the IRS is trying to grab you'd like you can't issue all this money and then go out and grab a 7% interest rate somehow and make money on it.
So anyway that was something that it's kind of getting into the weeds there.
Let me answer a couple of your questions and then I'll pass as long as far as the reassuring of that.
These the accounts that you're referencing they're clearing accounts money to come in money goes out to pay for that the debt whether it's interest or the principal.
So it's like you said two years two times out of the year the principal payments made principal and interest and then the six months later they've been interest made and then.
What kind of internal controls are there on that to make sure if it's like somebody isn't.
I don't know if it's making interest what happens to that interest or just is there any way that somebody could be.
You know pulling out of that account we we don't have control of the account that the the the funds go into bank New York melon.
And then so we don't have any kind of control other than initiating the the ACH.
So that's the NY melon account.
Correct.
Okay.
Then as far as the the lapsing of the tax exempt tax status tax.
The IRS retroactively.
The restored the the tax to all the way to 2040.
Correct.
So thank goodness.
And so we so that's one and then as far as the the form 8038 G I will reach out to to our consultant and ask that and see if that is the more appropriate form and then we'll move forward with that.
Okay wonderful.
And I would also just want to add to that before we get into can we issue more debt is that certainly is a bond council so we pick them for that reason they're a bond council on these particular participation last we find that we did so they do have an expertise.
To your point one to somebody kind of knows what's happening they have the full history provided that to them of what happened with the laughs in the exempt status.
So then you all of that going in and dealing with the IRS so just as a clarification point.
And when you ask could you find out how much is like left.
You mean for payments.
Yeah, how where we what are we paid down to.
So we are in the budget but it's in the budget book currently.
I think I think 20 30 is when we'll I think it's a tune or we could tune to 20 30 is only finished paying off the debt.
Okay, so that would be something that I would like.
For you to weigh in on.
Okay, so that's a reason why or why not be with one pay that also when we're looking at our.
So they're actually not callable so we're not allowed to go in and pay the.
Okay, the muffin advance.
All right.
That's the short.
If I not answer you I'd be able to show it answered.
I found the whole thing very interesting conceptually that this you know this is a way that you can you don't have to go out for the bond the two thirds vote and what not.
You can do it and I was seeing when I looked at Palo.
I'll take a hundred million in instruments to get a new police station.
But that was kind of interesting and I know people have asked for XYZ out there and so.
Oh, so what was the answer to that about issuing.
So I think we have to look at it.
So right now we're structurally deficit.
All right, we can see that in our forecast that's going to be difficult.
We're talking to the folks that might want to buy our bonds.
They want a city that looks like it's going to be solvent and in good shape.
We still have I think double a plus credit rating.
So that's working in our favor.
I think the bigger thing is we have to be able to show the ability to pay the debt over the long term, which proves a bit difficult currently with our structural deficit.
But as we so right now it right now it'd be even more difficult because we have our current outstanding debt that we need to pay off.
If we were to do a certificate of participation need to find the facilities that we would use to lease.
It's a kind of a loop.
So you basically put up the buildings.
Right.
As all against collateral against the debt.
So if we already have art, which I think are two biggest buildings, which is community hall.
Community hall library in Quinland.
I believe are the ones.
That's pretty long.
Yeah, they have an interesting discussion about seismic situation.
Yeah.
So I think it would.
We could this something council of the corporation would like us to look into the council.
We could definitely look into that.
I think they're just some hurdles right now that would likely make that difficult.
Okay.
And lastly.
When we on board it never heard about this one.
So this what when I started reading about it, I just out of.
Fury Austin.
I thought what what is this even then we have.
And then so just I found it very it's very interesting kind of story.
And and that other cities and the like the water district they're all issuing.
Like tons of these all over the place.
And I don't think people generally know that that much debt issuance is happening.
Okay.
And then.
Oh, so the point there was is there.
Could there be a simplified way to.
Introduce new council members to their.
role that you your your your director of this corporation.
Here's what this corporation is.
And then that the funky lease lease back part.
There's there's a there's a diagram somewhere which kind of explains it.
It's complicated but.
I think that would help because this is it kind of comes as a surprise to us.
But I think particularly in the past when they could re issue more debt and they were doing that.
That that would if it might not be as useful now because we're just kind of.
Grabber stamping the minutes at this point.
But yeah, if that they could know a little back.
Maybe we can put that as part of the company.
Can I did orientation.
Yeah.
What idea.
So.
Okay.
So.
I don't know much about all these.
So very basic question.
So does this need any debt that the city has.
This meeting.
I mean, I'm trying to understand what is the normal agenda item this.
Cooperation is supposed to talk about is because it seems the previous meeting is just.
I mean, it's.
But then I looked at the article in of incorporation.
It talks a lot about.
The.
A lot of city finance.
So what are the normal items that's.
Historically for this corporation has mostly met to either issue debt or refinance debt.
That's historically when you look at what's happened in all of the previous.
And you can see the house.
And in addition to that there's been an easement and a couple of ground least antenna that have also come before.
That we have on the library.
So I think we have.
That's three or four.
So now we just have one.
One.
Okay.
The woman.
I think in 2020 we refinance the.
The debt right there.
Member of the public has been asking about why did we refinance.
It seems that interest rates is was become higher.
It's that the decision made by this or.
So it's a decision.
So it happens.
Both this board and the council.
So this board.
I believe I'm getting my order of operations correct.
This increase correct.
With Margaret this board vote for it first.
Then it goes for the council for the final vote.
So it has to come to the finance anything.
This board would first.
Because I'm logistic.
So whether we should refinance.
And.
And make a decision.
And that goes to the council to confirm it.
They have to approve the decision to issue the board makes recommendation.
I believe that it's going back exactly how the minute work.
But I think it's almost the recommendation.
If I remember correctly or almost.
Exactly the same, which is when you do it as the public facility board.
And then when you do it as a case.
If you want to issue another.
So long.
And this board that will have to approve.
It has to come back to this for determining what will be the terms and interest.
For that.
So.
But you know.
Sorry.
Decide that first.
Yes.
So what happens is.
Well, we work with outside consultant solution.
That is not an easy task for work with outside consultant.
So we'll go look at the market.
Almost and give you an estimate of like if you were to go out now.
Based on what we're seeing.
Here's an estimate kind of a good faith estimate of what we're seeing.
What we're going to return.
And so they come back to the council.
Here's what we think we can get.
Or you know, you could within these parameters to issue the debt.
in the decades issued and we find out what apps that kicks back from the market.
And then the council with a post that long first and then this corporation or proof that
or it's based in the council for a new debt, new loan for a new debt. Let me give me a second
I'll look to see the order of operations they did it in last time. I don't know,
Kristina, if you were a qualified, I don't recall. I think which was first the public facility
of the council. When we were issued in debt in 2020, which one can be first?
I generally council to get this right. They want to then come back to the home market.
I mean in this last year, 2020, was at the end of the council meeting.
I can know. Yeah, it was. So in 2020, we did the refinance. That was council decide
they want to refinance. And actually the council has to look at the condition, whether it's appropriate
to refinance. Correct. So that way it comes to this corporation. Decision is already made.
What would this council does not have the ability to issue debt? So this comes to here. So council says,
yes, we want to issue debt. Yes, we want to issue debt. It's council, we have to issue debt
as the corporation. So it comes here for the corporation to say yes, please continue to issue the debt.
So I read the file also says that there should be a treasurer and a secretary. So always supposed
to appoint that every year. So no, there was an agenda item that went. Sure, that was correctly.
I think it was on April 17, 2012. It was the resolution of appointing the council as members of the
board and directors. And then it named the mayor as the president, the vice mayor as the vice president,
the secretary, as the city clerk and the treasurer as the director of administrative service. Okay.
So then we don't have to act good. And so you said that last time we didn't qualify to be exempt from filing
from 1990. So what was the condition we didn't qualify on?
In that situation, the IRS took a different position in terms of the exemptions. So like I said earlier,
if there are some cities that are exact from filing form, because the purpose of the corporation
is strictly to issue debt not. Okay. So they took a different position on whether this type of
corporation can be exempt. And then they change that position now. We're attempting to
reasonable, we'll be resimitating another request to be exempt. And so that's the water.
Does that have to do with whether we filed a CRF on time or late? It doesn't affect our state of
something that's really good. Okay. One question. This is the only debt that we carry.
It's just so that's pretty concerned for city of the car side, sir. I have to look to see what
so we're a bit of a, we're unique in that we're not a full service city. So it would be kind of
find able to find apples apples. So I can't definitively say, I do believe we do hear it carry a very
debt, low debt ratio. Right. No. City has generally been conservative on that. The city issues
debt for the Blackberry farm purchase. And they've got up to four million. Yeah. And then also I
had to build the city hall originally or do you think sort of up three to five years? Yeah. And then
so they comes solidly to now it's one consolidated. Yeah. I think we had a particular participation
A and B. And then those were consolidated into one of them we would bring financing those dollars.
The last time we pulled money out was to build the Blackberry. Oh, okay. So we have six years to go.
And then this loan will be paid and full. And also we had to need to we need to meet annually.
So in that orientation if somebody could bring that up that that's a requirement to wear that
for our friends. So Dave's time next. Third Monday and November.
That's that. I could not locate the resolution for some reason. And yeah, if you could
use add that in and I'm trying to throw the documents into the communications and I did just
add the one that mentions the 838 and I did pull that as well. But it looks that
with when you look at it, you'll see it's got like neat places to put all the
the information where the 990 look like Jennifer was kind of forcing the the information into that form
where the the other forms more appropriately tailored to it looks better. So Amanda,
over the property brought this up again that for the refinance that was done in 2020.
It seems the interest rate might be more after the refinance it might be different terms. So
I think it's not on the agenda if I think there are the influencers that I think they were coerced.
It is complicated that font financing is not in what the the the public for that member
have are confusing is true interest cost versus could buy rate. Yeah. And so
in short what the city pays in interest. Yeah, if I can get I think I won't forget.
So just if I can get something written, not quite exactly because the way this spent 330,000
to do that really by this and you that if we can have clear explanation here is why and it's just a
five this way by this. I think probably they just understand the terms differently.
Okay, if there are no other questions, we can fill this is it. Yeah.
So I think if I can do this offline there was I was reading through the meeting and information
back from 2020 and there was a paragraph in there and it does talk about interest.
I read it three times over made no sense all through times. So if I can and I think that goes into
your true interest versus coupon answer there as well. And I can pull that up and then to understand it.
So I don't know how the council members need through that paragraph before just not that they're heads.
So we'll be get an information on
that we wish to know what it is. Do we need to have information on just the email clarification?
What? People making them all mail is right because someone keeps going needs up just have that
to have something we can want to. Yeah. There is a valid point.
Do we do we? Do we have a clear ask from the council members? Yes. Okay.
In language that come on people understand it. We'll try that.
Okay, there are no other questions. Is there more? If it's at all possible we have to
me over. If it doesn't jump. If it doesn't jump. If it doesn't jump. If it doesn't jump.
If it doesn't jump. Is there any other questions? Yeah look it actually has to be.
We totally that might be in charge of it. Yeah but if too much work that they'll know.
Are there any public comments? No, my RFC and my RFC. And my RFC says for just someone to reiterate the topic of
the informational memo.
Distinguishing the difference between a coupon or an entry into this cost?
For that one.
20, 20, 25. Explain. Explain. Justify justification for the 20, 20, 20,
refinance. I don't know if that was the intent of the informal. I think Jonathan had a different take.
That's clarify what's the, what was the topic of the informal? I think because someone's the
public, public keep bringing up that the 20, 20 refinance, which cost $3, 30,000 to do the refinance.
And the interest rate on the surface seems to be more than after the refinance is like 4% before
it's 3%. I think the public must understand the different terms. So if we can have
an explanation for the two rates for the two different rates before and after refinance and say that after
refinance, it's way it's a saving cost.
We'd add your whole paragraph on the information.
Thank you. Yeah, we are clear.
Okay, is there a motion to accept the management report for the Cupertino public's facilities
cooperation?
So moved.
Is there a second?
Second, do we, since we're just receiving a report, do we need to?
That's wrong.
I don't think the motion is necessary, but council can accept the reporting such as this.
So we accept it report.
Okay, let's move.
Princess, Princess, do you think this is what we don't have to do?
I'm just clarifying it, doesn't it's like?
So I guess the question is whether, whether the motion is being withdrawn or whether
it's not necessary or whether council wants to move on.
Is there a question to vote?
Yes, there's a one thing.
There's a second to accept an appointment on a familiar C.I.
Bye.
Okay, so that, that is this meeting, this meeting is a joke.
Okay, so you, council member wait, I will end the meeting for us.
And then if you could just use the previous link to log back in?
Okay, I'll try that.
I'm using myself on the Zoom, everything in.
Okay, I'll do that right now.
Thank you.