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Staff recommends holding $340,000 reserve while arbitrage exposure is assessed
Summary
Staff said arbitrage reporting on the 2021 bond is underway and advised against using a $340,000 reserve until obligations are confirmed; staff will obtain vendor estimates for potential arbitrage payments.
Staff member reported outreach to Northland Securities about arbitrage reporting related to the 2021 bond and advised caution before using a $340,000 reserve in the budget, saying, "we should not touch that money right now until we know if we have to pay on it." The staff member said staff will obtain arbitrage calculations in the next two to three weeks and consult with the vendor and Becker, who had recent arbitrage experience.
The staff member also noted previous low interest-rate years (2021–22) and that arbitrage liability could result in a payment (an example figure cited in the discussion was $25,000 in a recent case); members accepted staff's recommendation to delay committing that money until calculations are complete.
