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HomeMy Public PortalAboutCity Council_Minutes_1993-11-16_Special 19931 1 1 CITY OF TEMPLE CITY CITY COUNCIL AND COMMUNITY REDEVELOPMENT AGENCY SPECIAL MEETING MINUTES NOVEMBER 16, 1993 1. CALL TO ORDER: Mayor Manning called the meeting to order at 6:03 p.m. on Tuesday, November 16, 1993. 2. ROLL CALL: PRESENT: Councilmember-Breazeal, McGowan, Wilson, Budds and Manning ABSENT: Councilmember -None 3. UNFINISHED BUSINESS: A. REFINANCING OF AGENCY DEBT FOR THE ROSEMEAD BOULEVARD REDEVELOPMENT PROJECT - Executive Director Ovrom introduced the financing team assisting the City with the Agency refmancing. Scott Sollers of Stone and Youngberg explained the new state law which takes effect on January 1, 1994 and how it affects redevelopment agencies. He stressed that timing was important and the Council and Agency should adopt the ordinances tonight in order to allow enough time to meet the end of the year deadline. Mr. Breazeal asked if it was an annualized pledge and if the tax increment was used to pay for the bonding, would the city continue to take the surplus and put it into the general fund for utilization. If the pledge was changed from 1% to 4% and allocated based upon need, would the City's commitment go beyond the 1 %. Mr. Sollers said it was a long term pledge and any surplus beyond what would be necessary to pay debt service on the bonds, including increment and sales tax, would be released. He explained the pledge was until the extent of the sales tax was available and the state has been consistent in recognizing contracts. If the City continues to use the tax the state would make a payment under an existing contract. Paul Thimmig of Jones Hall Hill & White said the sales tax would be pledged to the bonds and the state had consistently recognized prior contractual obligations. However, if the state continued to have more fiscal trouble, this could change. Mr. Breazeal noted one reason for refinancing is to protect monies which are not bonded. Mr. Sollers said one issue the Council may want to evaluate if they choose the tax exempt concept is how much protection is needed for the amount of tax increment. He said the Council should be aware of the impact of the federal tax fund and how the funds may be spent. The concept would be to borrow approximately 20% more using the same tax flow providing the City with a leverage potential. However, the federal government requires refinancing proceeds be used on public projects or housing. City Council/Agency Special Meeting Minutes November 16, 1993 Page 2 Executive Director Ovrom said eligible expenditures would be capital projects such as public parking facilities, sidewalks, Live Oak Park and street improvements. Mr. Breazeal asked if there was a time frame for spending the money. Mr. Sollers said tax exempt money must be spent within three years. He further explained that the City would not loose the money, but it would be palced in a restricted account. Mr. Thimmig interjected that while the money was in the restricted account the City would continue to pay interest. Mr. Breazeal asked if the Agency chose to do taxable refinancing, would the money become general fund dollars with no time constraint and no restrictions on what the funds could be used for. Executive Director Ovrom said the interest would be higher and less proceeds would be received. She said the collective judgement of the financing team is for tax exempt bonds. Mr. Sollers said about $500,000 less would be received and the Agency would not be bound by redevelopment law. Unless the Agency needed the money for loan purposes or housing, he would advise a tax exempt refinancing. Executive Director Ovrom said the monies would be used first for the lease revenue parking bonds, then Champion Development, then EGS and then the City loan. Mr. Thimmig explained the differences in the taxable and non - taxable refinancing. City Manager Ovrom said the City currently had $1 million in unfunded capital projects which could be funded with monies from the refinancing. Dawn Vincent of Stone and Youngberg provided the costs for refinancing as well as a break down of the loans the Agency could pay off with the proceeds from the refinancing. Mr. Thimmig explained the responsibilities of the Financing Authority. He said a majority of the work would be done through the joint powers authority in order to sell the debt on a negotiated basis rather than competitive basis. He said the Financing Authority would meet once a year and would consist of the City Councilmembers. Mr. Sollers said it is very important for a public agency to be protected and he recommended the Agency engage a pricing consultant. He said a prospectus should be prepared. The majority of the funds would be used to pay off the lease parking revenue bonds and housing set aside account. There would $1.4 million left to take care of the agency debt and the Champion Development debt. Mr. Thimmig said the ability to pledge sales would go down if an ordinance was not in place. He said second reading of the ordinance could take place in a week and the effective date of the ordinance would be prior to the end of the year. He said the Agency is not bound until the debt was marketed and the action taken by the Agency will only pledge the sales tax and the actual mix of pledge amounts would be determined in a few of weeks. 1 1 1 1 1 1 City Council/Agency Special Meeting Minutes November 16, 1993 Page 3 Vice Chairman Budds asked what the length of pay off was for the current debt. Agency Counsel Parrington said the existing bonds for the K -Mart parking lot are payable in installments until 1999 and there are no reserve funds. He said the note to Champion Development is payable when the tax increment becomes available which may not be available for three years. Vice Chairman Budds said compared to the proposed bond issue of 30 years, the pay off in six years did not seem that long. He asked if calculations had been done including insurance on reserve funds and whether the Agency would be saving money. Mr. Hollis said the Champion note is structured so that it will take all of the cash flow from now until the year 2008 and the Agency will not have any funds to do other activities in the project area nor would the Agency have the ability to raise funds because the Champion note has the superior lien. He said the refmancing would raise additional funds to meet the housing obligation and provide funds to be used for improvements. Mr. Breazeal moved to introduce for first reading by title only Ordinance No. CRA 93-001, AN ORDINANCE OF THE TEMPLE CITY COMMUNITY REDEVELOPMENT AGENCY ENACTING A SALES AND USE TAX, adopt Resolution No. CRA 93 -526, A RESOLUTION OF THE TEMPLE CITY COMMUNITY REDEVELOPMENT AGENCY APPROVING CERTAIN AGREEMENTS WITH THE STATE BOARD OF EQUALIZATION FOR THE ADMINISTRATION OF ITS SALES AND USE TAX AND AGREEMENT WITH THE CITY OF TEMPLE CITY FOR REIMBURSEMENT OF SUCH TAXES and authorize the Chairman to sign the Agreement for Preparation to Administer and Operate a Uniform Sales Tax, the Agreement for State Administration of Local Sales and Use Taxes and the Agreement Regarding Reimbursement of Sales and Use Taxes and Transfer of Appropriations Limit, seconded by Mr. Budds and unanimously carried. Mayor Pro Tem Budds moved to introduce for first reading by title only Ordinance No. 93 -757, AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY ADDING SECTION 5308 TO THE TEMPLE CITY MUNICIPAL CODE RELATING TO THE UNIFORM LOCAL SALES AND USE TAX ORDINANCE TO PROVIDE CREDIT FOR PAYMENT OF SALES AND USE TAXES PAID TO THE TEMPLE CITY COMMUNITY REDEVELOPMENT AGENCY, adopt Resolution No. 93 -3292, A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TEMPLE CITY APPROVING AGREEMENT WITH THE TEMPLE CITY COMMUNITY REDEVELOPMENT AGENCY FOR REIMBURSEMENT OF ITS SALES AND USE TAXES and authorize the Mayor to sign the Agreement Regarding Reimbursement of Sales and Use Taxes and Transfer of Appropriations Limit, seconded by Councilmember Wilson. B. AGREEMENT WITH KEYSER MARSTON ASSOCIATES, INC. FOR FISCAL CONSULTANT SERVICES - Councilmember Breazeal asked what services the firm would provide. Cal Hollis of Keyser Marston said the services included a feasibility analysis reviewing the various debts to determine if it is fmancially feasible to refinance. He said he would City Council/Agency Special Meeting Minutes November 16, 1993 Page 4 prepare a fiscal consultants report that would be a disclosure document relative to tax increment generated within the project area. He said he would be investigating assessment appeals, tax delinquency in the area, history of the tax increment and project tax increment and identify major assessees for the bond holders. It is a disclosure document which provides prospective buyers a clear picture of what is being offered. Executive Director Ovrom said Keyser Marston has an advantage that they have previously worked with the City and have a basis to start the analysis. Councilmember Breazeal asked what services would be provided by the bonding company. Mr. Sollers said the bond underwriter evaluates the tax. He said his company wants to remain neutral and therefore it is in the Agency's best interest to obtain a bond underwriter. Mayor Pro Tem Budds moved to approve the agreement with Keyser Marston Associates Inc. and amend the Redevelopment Agency budget in the amount of $15,000, seconded by Councilmember Wilson and unanimously carried. 4. NEW BUSINESS: NONE 5. TIME FOR THOSE IN THE AUDIENCE WHO WISH TO SPEAK: NONE 6. MATTERS FROM CITY OFFICIALS: NONE 7. ADJOURNMENT: At 7:23 p.m., it was moved, seconded and unanimously carried to adjourn. ATTEST: 1 1 1