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HomeMy WebLinkAboutCCM-08-26-91 SPECIALCARMEL CITY COUNCIL SPECIAL MEETING 5:45 P.M. COUNCIL CHAMBERS/ONE CIVIC SQUARE August 26, 1991 The special meeting of the Carmel City Council was called to order by Mayor Dorothy J. Hancock. Council members in attendance were Tom Irvin, Frank Fleming, Alan Potasnik, Lee Lonzo and Annabelle Ogle. City Attorney Steve Andrews and Clerk-Treasurer Susan W. Jones were also in attendance. CIVIC SQUARE CENTRE FINANCING/ REPORT FROM BOND COUNSEL AND FISCAL The mayor opened the meeting by stating that the reason CONSULTANT: for the special meeting was to allow the bond counsel and financial consultant to answer questions that were raised in regard to the Civic Centre building after the suggestion was given about how to go about financing it with a Redevelopment Commission. The mayor then opened the meeting to the Council and stated that Thomas "Buddy" Downs, Lucy Emison of Ice, Miller, Donadio and Ryan and Roger Umbaugh of Umbaugh and Associates were in attendance to answer their questions. Councilor Lonzo asked Buddy Downs to explain why the Redevelopment Commission was the best way to approach this financing and what sort of timetable could the Council expect. Lonzo also wanted Downs to explain what role the Redevelopment Commission would play. Lonzo said he understood that the Plan Commission had to be involved and weren't real sure of what their recommendation would be. Downs stated the general answer is that the Redevelopment Commission has the authority to issue or participate in the financing of the Centre through a lease/financing arrangement so the Council can do a fairly streamlined process under Indiana Statutes. Down said that by using a lease/financing through a Redevelopment Commission it can be done quickly. In fact, Downs stated it can be done more quickly than any other type of bond issue and that basically saves in cost. Lucy Emison outlined the steps the Council, the Redevelopment Commission and the lessor corporation will have to complete. Downs said he understood that the Council had formed a Redevelopment Commission but had yet to make those appointments. Emison stated the Council and the mayor will have to appoint the members of the Commission. Emison said by doing a financing through the Redevelopment Commission, the Council will have to create an economic development area which is an area of the City that is found to be growing rapidly and an area needs to be created to promote growth within the area and make certain statutory findings in that regard. Emison said the Redevelopment Commission actually does that by adopting a resolution, creating that area and preliminarily finding that this area needs to be created. After that, it goes to the Plan Commission. The Plan Commission reviews the resolution and finds that it conforms to the Comprehensive Plan for the City. After the Plan Commission acts then the Council acts for the first time and affirms the Plan Commission's order approving the creation of the area. When these steps are completed, Emison stated the Redevelopment Commission holds a public hearing and confirms its original approval of the area. After that happens, the Council meets again to approve the creation of the economic development area. Once the area is created the procedures for initiating the lease can be initiated. Emison said that the Redevelopment Commission preliminarily approves the form of the lease and sets the date for a public hearing on the lease. The Redevelopment Commission holds the public hearing and then the Building Corporation and Redevelopment Commission approve the lease. The Council then approves the lease and approves the issuance of the bonds by the Building Corporation which will be the lessor. Emison said when all those things are done, bonds can be issued by the Building Corporation through either competitive or negotiated sale and that process, depending on what procedure of sale is used, would take approximately 3 to 6 weeks from the time it decided to sell the bonds. Emison stated she had sent Andrews an 8 page letter which outlined all of these steps in more detail but this was a skeleton of the procedures. Lonzo asked if the Council could direct the Redevelopment Commission to consider factors which they feel are important as they look at this specific building. Downs said certainly. Lonzo asked at what step would that be appropriate to give them direction. Downs said it could be after the area is created or when they are working on the declaratory resolution which is the first step of the Redevelopment Commission. Downs said actually what happens is there are formed resolutions with blanks in them that need to be filled in so that the Redevelopment Commission has something before it in evidence that supports its findings under state law. Downs said anytime in the process is fine to have the Council input. Downs went on to say that these Commissions are usually formed for specific project financing and that input comes in at all times from the time they are appointed both formally and informally. Lonzo stated that throughout this project, the Council has been looking at a generally understood advantage if the City rents to 501C entities. Lonzo asked if the Council will still be able to use those benefits if they use this method. Downs stated yes. Downs said as he understood the project and an opportunity would be made to them to help the Redevelopment Commission as the lessee sublet to these entities as they are ready to move in or to renovate or to take over the quarters. Downs added that while these statutory procedures seem rather complex, the state law procedures are less complex than most. Downs said there are some federal tax laws that have to be very carefully followed to make sure that the financing is structured to maintain the tax exemption of interest from federal taxes and that is very important. Downs said it was important to keep the debt service in the form of a lease/rental payment loan. Alan Potasnik asked Downs to go over the criteria that was established by statute in order to set this Redevelopment Commission up with regards to the establishment of an area due to rapid growth and explain how that ties in with what is trying to be done with a building that we have. Downs said that generally, any community can establish a Redevelopment Commission and need not use it. Downs said when they do use a Redevelopment Commission, they can use it to redevelop an urban blighted area or to develop what they call an economic development area and that can be for a new manufacturing facility or it can be for a new retail facility or a new commercial facility and once they have decided to form a Commission and that one district in the area serves the purposes of either economic development or the elimination of blight then they go through the above procedures to declare that area. Downs said once that is done it is done on a case by case basis and that is the reason for these resolutions with the plans and reports attached to them that need to be filled in. All types of developments have been done. Downs said this 501C3 aspect idea is the first time they have seen it applied like this. Potasnik asked if what the Council is trying to do is similar to other Redevelopment Commission's projects or is this an unusual use of a Commission. Potasnik asked if the Council could give direction to the Commission and after that direction is given, could the Redevelopment Commission basically ignore their input. Potasnik asked how long would the Commission be in business for. Downs answered Potasnik by stating that if the Commission is a lessee with a lease supporting a bond issue they are in business as long as the bonds are outstanding. Downs stated the Commission is certainly autonomous. Downs said they are appointed by the Mayor and by the Council and they have to exercise independent judgements and findings in making decisions. Legally, Downs said they can be removed after their one year terms. Downs said he would have to check to see if they can be removed without reason. Potasnik again asked Downs if the purpose for the creation of this Redevelopment Commission was unusual. Downs answered by saying bond law has changed so much that the unusual has become usual. Downs said 10 years ago you only had two or three options to finance projects and today there are Redevelopment Commissions taking on all kinds of projects using all types of financing tools and have their firm has basically helped the legislators to draft legislation to allow local government to have flexibility to use the funds they have available to them to accomplish economic development. Councilor Irvin asked Downs to help him with the composition of the Redevelopment Commission members. Downs said it depends on the communities but usually it would be bankers, lawyers and financial people since they would have some knowledge of financing. Downs said there are fairly strict conflict of interest laws that apply and that will have to be carefully watched. Downs said they should have a common Hoosier attribute and that is common sense. Downs again outlined the steps as to the Council's involvement with the Redevelopment Commission for Councilor Irvin. Lonzo asked if it would be appropriate for Council members to serve as members of the Commission as Council appointments. Downs and Emison both agreed that Council members may serve on the Redevelopment Commission since being a member of the Redevelopment Commission is not a lucrative position. Councilor Fleming asked Downs to go over the public hearings that will be held in this process. Downs went over the process again. Potasnik asked if there was public input or a public hearing at Plan Commission level. Downs said the Redevelopment Commission meetings must all be advertised but wasn't aware of the rules of the Carmel Plan Commission. Emison said all meetings were subject to the Open Door Law notice but didn't think there was a public hearing at the Plan Commission level. Potasnik wondered how it came through our Plan Commission. He wanted to know if it was something that was added for the Plan Commission to consider just on a straight on vote or was it something that is added a public hearing. Downs said he believed this issue comes on their agenda like any item would come before the Commission. Downs said he wasn't aware of the specific rules of the Carmel Plan Commission. Andrews said it would come under new business like any other item of business and should be treated in the same way. Potasnik asked how cost effective this method of financing was as compared to more traditional methods. Downs said as a bond lawyer, the more quickly you do things, the more streamlined the process, the less you have to pay bond lawyers. Downs said the most important question is how marketable are these bonds and what is the interest rate. Roger Umbaugh said he had talked with underwriters and investment banking houses and it was his opinion that this issue would sell at the same type of interest rate as has been seen for a good quality GO bond issue or building corporation lease. Umbaugh projected the financing costs would be about the same as doing a building corporation lease through the tax rate versus using the COIT. Umbaugh said the estimated interest rate for a 9 year lease would be in the 6.2~ range for this market. For a longer lease, approximately 13 years, it would be somewhere around the 6.50% range. Umbaugh said markets are very favorable right now and are much more favorable for short-term paper. Umbaugh said anything under the 10 year limit is very attractive. Potasnik asked if the longer the City waits will it cost more. Umbaugh said he could not forecast what interest rates will do but right now the market is at a 10 year low on short-term paper. Umbaugh used the example of an issue that was sold in Portage last week and the term was for about 6 years and the interest rate was 5.5% and there were 9 bids. Umbaugh said a few weeks earlier they were selling an issue for 20 to 21 years and had very few bids. Umbaugh said that he hoped Carmel would be able to maintain their A-l rating from Moodys. Downs said one of the keys to streamlining this process was to get to a favorable market as quickly as possible. Lonzo asked Umbaugh if he was involved in the recommendation that the City simply bond the actual cost of the building and try to take the renovation money out of the operating funds. Umbaugh said he didn't believe he was and that was someone else's decision. Umbaugh said his first pass at this was financing everything and his second set of instructions was to try and look at doing the financing without using COIT funds for repayment of the BAN. Andrews stated that the purchase price was $1.1 million on the building and then there was a S650,000 credit line and as he recalled they were making the recommendation of paying the payoff plus the interest and not finance the credit line and just come back at a later date a appropriate that money from wherever. Andrews thought that was the recommendation to the Council. Andrews said he thought Umbaugh was looking at doing it both ways. One issue for $1.1 million and another for $1.75 million. APPOINTMENTS TO REDEVELOPMENT COMMISSION: At this time the Mayor stated that instructions from a previous Council meeting was that the Council was to proceed with this and she had people who were willing to serve on the Commission and asked the Council if they were ready to make their appointments and then give them their instructions. The mayor asked the Council if they were prepared to go ahead with the Redevelopment Commission after everything they heard tonight. Lonzo stated that everything he heard tonight reinforced the fact the Council should go ahead with this. Lonzo said if he heard Buddy Downs correctly the Council would draw a redevelopment circle around that building and the Council could give the Redevelopment Commission specific direction as to what the Council thought was appropriate as they begin to examine the feasibility and then after that the final decision will be left up to the Council and if those assumptions are correct he was ready to go ahead with the Redevelopment Commission. Irvin seconded that motion and then asked if it was a motion. Lonzo stated it was a motion. All members voted aye. Motion carried. The mayor stated there will be five members on the Commission. Three will be appointed by the Mayor and two will be appointed by the Council. The term of office will be to January 1, 1993. Potasnik nominated Dr. Tim Story as a member of the Commission as a Council appointment. Irvin seconded that motion. Clerk-Treasurer Jones asked Parliamentarian Lonzo if this action could be taken since it was not on the notice of the meeting that was sent to the press nor was it on an agenda. Lonzo stated it was a special meeting and parliamentarian procedures would not apply. Lonzo directed the clerk's question to Andrews. Andrews said it was his impression that this was part of what tonight was all about. Jones stated the only thing that was published in the paper was the item that the bond counsel and the fiscal consultant would be in attendance to answer questions of the Council. Andrews said if he recalled from his last meeting that number one we were instructed to go ahead and proceed and number two, Council was supposed to come back with its appointments. Andrews said he didn't see any reason why they couldn't do that tonight and that was the agenda item they were considering. Irvin asked if the Council could appoint one of its own members. The mayor stated the Council needed to vote on the motion that was presently on the floor. All members voted aye. The appointment of Dr. Story was unanimous. Irvin nominated Lonzo. Lonzo respectfully declined. Lonzo then nominated Potasnik. Irvin asked about Potasnik serving on the Plan Commission also and wondered if that wasn't a conflict of interest. Lonzo said he didn't see it as one. Andrews said since Potasnik doesn't have a financial interest he didn't see it as a problem. Irvin then seconded the motion to nominate Potasnik. All members voted aye. Motion carried. The mayor stated her appointments were Rick Wood, Mike Comparato and Jim Garretson. The mayor stated the next step would be set-up a first meeting and get organized. Potasnik asked if any of this can go before the Plan Commission. Andrews said that would be later. Andrews said he would call the meeting and send notice. Lonzo said that even though Rick Wood was on the Civic Centre Use Committee he would offer any of his records or input from the Use Committee to the Redevelopment Commission. The mayor then asked since it was 6:30 P.M. could the Council go ahead and do the final action on the budget. Andrews said that since the notice was for 7:00 P.M. it had to be done at 7:00 P.M. The mayor stated the budget meeting would be in the Caucus Room rather than Council Chambers. There being no further business before the Council the meeting was adjourned. Respectfully submitted, Approved, Attest