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