03-14-1988 - Agenda Packet City Council - regular meeting

Home Browse Search

One might say, "The consultants are all listed in the Red Book, and they all promise the same results, so • how can we say one is worth more than another?" You don't have to. The low fee firm says it for you. It says, that "we think we are worth less," establishing its own low self esteem. Governing bodies must consider the magnitude and seriousness of a financing to determine whether price or service is the minor, major or controlling factor. Draw on some analogous questions: Would you hire the cheapest surgeon to carry out a complex, serious operation? The cheapest lawyer if you had a serious legal problem? The administrator with the lowest salary expectation? The consequences of a cheap fiscal advisor can be as serious and far-reaching as those involving a physician, a lawyer, or any other professional - where fees are secondary. Most bond issues are large end complex. Small factors can have large effects. For example, on a $10 million, 20-year bond issue, a 5/100 of 1% (.0005) difference in the interest rate adds $75,000 to the total interest cost. Deleys in ;gassing a bond issue (because the low fee fiscal advisor was not on hand at a critical time) ,::an add $500,000 to the initial cost and $1 million to the total debt service. It is incorrectly said: "You get what you pay for." Incorrect in that it is possible to not get what you pay for, but it is almost certain that you don't get what you don't pay for. When considering the impact of even small lapses on a large financing, a governing body should seriously consider hiring the financial advisor with the higher fee - - in return for superior results. The advisor whose chief attraction is his cheap fee, obviously doesn't v 3lue himself as the best. EHLERS NOTES Carolyn Drude participated in a seminar at the recent NAHRU convention on how Minnesota's property • tax revisions will affect tax increment districts. She also spoke to school business officials at Hibbing on the mechanics of tax and aid anticipation financing. Steve Apfelbacher and Mike Grossman developed a revclving loan fund concept which enables small communities to effectively compete for economic development. CONVENTION NEWS It was great seeing many of you at recent conventions, renewing acquaintances, and learning of your needs and concems. We particularly appreciate the positiee feedback about the firm, our staff, and the things we do. See you at upcoming conventions: Minnesota Rural Water Association -- March 1-3. Iowa Association of Municipal Utilities - March 6-8 Minnesota Municipal Clerks and Finance Officers -- Harch 23-25. Minnesota Association of School Administrators -- April -1-8. Wisconsin Association of School Administrators - Ma✓ 2-3 AEHLNCO)A O ' S N(rs 0692i4