an interest rate more favorable than a previous interest rate received by Allegheny County four years before. We have calculated that by delaying the opening bids for two weeks along with preparing a full disclosure statement, my County saved approximately $2 million over the 30-year life of the bonds offered. This anecdote is intended to demonstrate before this Subcommittee that local governments can respond effectively to the requirements of full disclosure and remain financially solvent. We realize that the proposals being made regarding fuller disclosure are a direct result of the financial problems of New York City. Although the problems of New York City have had an impact on some cities' and counties' abilities to borrow funds at a reasonable rate, not all governments have been affected or found it more difficult to borrow. In fact, some issuers have found it easier to borrow because their credit ratings were excellent. The National Association of Counties strongly supported federal assistance for New York City on an emergency basis because our members felt that the city's problems were so severe and unique that a federal guarantee was needed for taxable bonds issued by that city. However, our recent experience in Allegheny County seems to show that the bond market has settled down and that by fully disclosing all pertinent information investors will be available for higher quality municipal issues. We believe it is important that the Congress not overreact to the New York City situation and impose a great many requirements and reports on all states, counties and cities-the majority of whom are still able to borrow funds at fair rates. Although strict regulation and registration on a national basis is required of corporate issuers in the private sector, we do not believe that such regulation is required for state, county and city issuers. The specter of paper work, red tape and its attendant costs which would be imposed on states, counties, and cities by such registration is frightening. The right of local self-determination is certainly a fundamental part of our American system. NACo's American County Platform states that national action should be reserved for residual participation where state and local governments are not fully adequate and for the continuing responsibilities that only the national government can undertake. We do not believe that there is a need for federal regulation of all state and local issuers. We believe that counties, cities and states should be free to develop their own operating policies in all programs not financed wholly or substantially by federal or state funds, providing that these policies are set forth in writing. The Allegheny County experience demonstrates that investors in municipal bonds are helping make the system strong by requiring more information and by evaluating local government credit in the same way as they evaluate the credit of private businesses. My recent experience with the bond sale in Allegheny County has shown me that disclosure of more information was beneficial to our county and all its taxpayers. I believe that elected officials at the state, county and city level are ready and willing to provide timely and detailed information concerning bond issues. The National Association of Counties has agreed to join with the Municipal Finance Officers' Association and other concerned groups to develop a meaningful set of disclosure guidelines which can be used by all issuers. We hope that the members of the Subcommittee and their staffs will join with our associations in working together to formulate meaningful workable guidelines for disclosure by all issuers that will not unduly burden our governments or interfere with state and local decisionmaking. We feel this kind of approach could serve as a model for problem solving in many areas where there is concern by federal officials but where operational responsibilities rest solely with state and local officials. It is important to remember that there are a wide variety of state and local government organization and financing mechanisms. We would oppose any national system which might unnecessarily impose restrictions on either local organization or financing. We urge the subcommittee to follow the advice given by Senator Tower that "an approach be taken that preserves, to the maximum extent possible, the rights of state and local governments and the use of market forces." We think these hearings are a good start toward coming up with solutions for disclosure problems that exist now and appreciate this opportunity to be heard. Sealed proposals for the purchase of all, but not less than all, of $27,000,000 par value general obligations coupon bonds of the County of Allegheny, Pennsylvania, will be receieved by the undersigned County Controller or his Deputy at the office of the County Controller, Room 104, Court House, Pittsburgh, Pennsylvania, until 10:00 o'clock A.M., Pittsburgh local time, on Thursday, January 22, 1976, without adjournment of the hour of receipt, and will be opened and considered immediately thereafter by the County Controller or his Deputy and the County Commissioners, in the meeting room of the County Commissioners, 410 Court House, Pittsburgh, Pennsylvania. All of said bonds are registrable as to principal only and are dated March 1, 1976, and are of the denomination of $5,000. The maturities of the series of bonds is as follows: $900,000 on March 1 of the years 1977 to 2006, both inclusive, with interest payable March 1 and September 1 in each year, commencing September 1, 1976. The interest on and principal of the bonds will be payable at the office of the County Controller, Pittsburgh, Pennsylvania. The cost of printing the bonds will be paid by the County of Allegheny. The County will pay or refund any tax (except gift, succession or inheritance tax) which may be legally levied or assessed upon the bonds or upon the debt secured thereby under any present or future law of the Commonwealth of Pennsylvania. The Ordinance authorizing the bonds establishes a sinking fund into which the County shall pay all monies required for debt service and from which the bonds shall be paid. The County of Allegheny reserves the right to call, redeem and pay on March 1, 1986, or on any interest payment date thereafter, in the inverse order of their stated maturity dates, and by lot within a maturity, any or all of the bonds maturing on or after March 1, 1987, or not less than thirty (30) days notice to the holders thereof, upon payment of the applicable redemption price as set forth in the following schedule, in each case together with accrued interest to the date fixed for redemption: If Redeemed During the Following Periods (Both Dates Inclusive) March 1, 1986 to February 29, 1988 March 1, 1992 to February 28, 1994 Redemption Price (Percentage of Principal Amount) 102 % 101 %% 100 The Each bid shall specify a single rate of interest which all of the bonds offered for sale are to bear, expressed in a multiple of one-eighth of one per centum. Proposals must be unconditioned and for the total of the issue, aggregating $27,000,000, and must be upon blank forms which will be furnished by the County Controller upon application. Each bid shall be enclosed in a sealed envelope marked on the outside "Proposal for Allegheny County Bonds" and must be accompanied by a certified check or official bank check payable to the order of the County of Allegheny, Pennsylvania, for $540,000 as security for the performance of such bid. No bid for less than par and accrued interest will be accepted. The bonds will be awarded to the highest responsible bidder, who shall be the one, who having complied with the conditions of sale, offers to take all of the bonds at the lowest net interest cost to the County, calculated by the street method as defined in Section 709 of the "Local Government Unit Debt Act", Act 185 of 1972, as amended. The sale of these bonds is subject to the approval of the proceedings authorizing the bonds by the Department of Community Affairs of the Commonwealth of Pennsylvania. In the event that prior to the delivery of the bonds, the interest received by private holders from bonds of the same type and character shall be taxable by the terms of any Federal income tax law, the successful bidder, may at his election, be relieved of his obligation under the contract to purchase the bonds and in such case the deposit accompanying his bid shall be returned. The successful bidder will be furnished with the unqualified approving opinion of Messrs. Baskin, Boreman, Wilner, Sachs, Gondelman & Craig, Pittsburgh, Pennsylvania, to the effect, inter alia, that the bonds are valid general obligations of the County of Allegheny, and that the County of Allegheny, pursuant to Act No. 185 approved July 12, 1972, has covenanted with the holders, from time to time, of the bonds and the coupons, that the County shall include the amount of the debt service charges, for each fiscal year in which said sums are payable, in its budget for each year and shall appropriate such amount to the payment of such debt service, and shall duly and punctually pay the principal of every bond and the interest thereon at the dates and places and in the manner stated on the bonds and coupons, according to the intent and meaning thereof, and that the County of Allegheny pledges its full faith, credit and taxing power, and that the covenant shall be specifically enforceable. A copy of the text of such opinion will be printed on the reverse of each bond. The County of Allegheny will also furnish the usual closing papers, including a certificate that there is no litigation pending affecting the validity of the bonds. These bonds will be delivered to the purchaser of the same at Pittsburgh, Pennsylvania, or New York City, New York, or other mutually agreeable location on or about March 1, 1976 as may be agreed upon by the said purchaser and the authorities of the County, against payment in immediately available federal funds in Pittsburgh. The right is reserved to deliver a temporary bond or bonds, the same to be exchanged for definitive bonds as soon as same are prepared and executed. The County of Allegheny reserves the right to reject any and all bids. Alexander J. Jaffurs, Solicitor County of Allegheny Jones Law Building Annex Ross Street Pittsburgh, Pennsylvania 15219 JOHN P. LYNCH Debt Statement of the County of Allegheny as of December 31, 1975 As Required By Local Government Unit Debt Act No. 185 of 1972 Budget 1975..$99,247,409.84 $4,030,528.07 $2,975,460.13 $35,161,432.85 $3,778,191.16 $14,211,000.00 $159,404,022.05 1. This capacity not needed for this issue; a portion was used for an earlier bond issue. 2. November 30, 1975 balances used-Final year-end balances unavailable until year-end audit completed. 3. This represents the amount awarded under third party contracts. The County's ultimate longrange commitment of $52,348,940.00 for Phases I, II, and III of the Early Action Program would mature into debt only as work progresses over the years. Moreover, one-half of the County's commitment will be offset by Commonwealth of Pennsylvania's contributions as authorized by the General Assembly in the 1971 Session. 4. Non-electoral debt of the County as of December 31, 1975 for capital costs of the Community College is $5,455,000.00. The subsidized portion of this debt, or $2,727,500.00 was not recognized as an offsetting credit. This portion of debt could be excluded as subsidized debt under Section 204 of the Local Government Unit Debt Act but application for this exclusion has not been made. REMARKS There is no litigation pending or threatened concerning the validity of these bonds. All legal details pertaining to said bonds have been passed upon by Messrs. Baskin, Boreman, Wilner, Sachs, Gondelman & Craig, of Pittsburgh, Pa., Bond Counsel, and the Solicitor for Allegheny County, and the successful bidder will be furnished with a certified copy of Bond Counsel's written opinion stating that the bonds are valid and binding general obligations of said County of Allegheny, payable from its revenues including ad valorem taxes levied on all taxable property within the county, and that the county has power to levy taxes on the taxable real property therein for the payment of these bonds without limitation of rate or amount, and has covenanted to pay same as provided by Section 404 of the Local Government Unit Debt Act, No. 185 of 1972, which covenant is specifically enforceable. The bond issue is for the purpose of providing funds to retire bond anticipation notes, dated August 28, 1975, in the amount of $14,000,000, and to partially finance the 1975-76 Capital Improvement Program. The interest on and principal of the bonds will be payable at the office of the Controller of the County of Allegheny, Pittsburgh, Pennsylvania. NOTE: In Submitting Bid use Proposed Blank on reverse side of this sheet. 69-141 O-76 - 12 Subject to all the conditions set forth in the offering of bonds hereto attached, we submit the following bid for the above Allegheny County Bonds, aggregating $27,000,000. This bid is based upon an interest rate of........%. The bid for all or none of the bonds above mentioned is $. together with accrued interest thereon to date of delivery computed on a basis of 360 days to the year. We enclose herewith a duly certified check or official bank check, For the information of the County only, and not as part of this proposal, Said bonds are to be duly and legally executed and issued as evidenced Signature of Bidder Amount $27,000,000 |