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. II . " -, the cost of money was going to exceed the investment) the maximum exposure would be about $11,000, total. Mr. Euphrat said the principal was protected in LAIF, unless - something unthinkable occurred, and he didn't think that was likely to happen. In response to Couneil Member Hartnett's questions regarding private sector input, City Manager Everett and Director Ponty said that in the summer of 1996, the Treasurer from Oracle, Bruce Lang, Bay Area Bank CEO Frank Bartoldo, two of the City's Auditors from Maze and Associates, and the Council's Investment Subcommittee reviewed this program and all agreed that it made sense for the City. Couneil Member Hartnett explained that City Hall construction costs had already been paid, "we are not taking money from the bank to pay for City Hall, but if this program were enacted, we are simply leveraging our resources." Couneil Member Claire said the City had issued similar bonds in the past and it had worked out well. In response to Mayor Howard's questions, Direetor Ponty described how the Council Investment Subcommittee would work with Mr. Euphrat, the City Attorney, and bond counsel to review all the details and projections, and achieve the goals of the Council's established investment policy. Couneilman Ira advised that San Mateo County had recently approved issuance of - similar bonds. Couneilman Leipzig said it was important to remember the difference between private sector investments and public sector financing. He said, "We are talking about the tax payers here. And I think we have to take an even more cautious approach than someone at Oracle or Bay Area Bank, or I would as an individual investor. I'm not sure this is the right way to go.... I'm not comfortable going forward tonight. We are very good at looking at one side of the ledger... there are two sides to the ledger, the revenue and the expenses. We don't seem to look at the expenses too often as much as we do the revenue. I have a problem moving forward with this." In response to Couneil Member Hartnett's questions regarding other jurisdictions issuing floating variable bonds, Mr. Euphrat described how these bonds have been issued to raise money for projects due to their low interest rate. He said Redwood City is different ftom other jurisdictions in that the City has liquid assets on the other side of the ledger. "Right now it is tied up in this building, but you are going to be paid back.... at the end of the (bond program).... you will have spent that money in one way or another to reimburse the General Fund for its payment of debt service.... In the intervening years you have managed to hang on to your money for a period of time, and you are $750,000 richer in 1998 dollars. That is what's different about this transaction." - ADJOURNED REGULAR COUNCIL MEETING MINUTE BOOK NO. 56 DECEMBER 18, 1997 MINUTES Page No. 127 PAGE 22