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HomeMy Public PortalAbout08/28/2012 * Special MeetingMAYOR: COMMISSIONER: Joan K. Orthwein Muriel J. Anderson W. Garrett Dering Robert W. Ganger Thomas M. Stanley August 24, 2012 SPECIAL MEETING BEING HELD BY THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, AT THE CALL OF THE COMMISSIONERS, ON TUESDAY, AUGUST 28, 2012 AT 3:00 P.M., IN THE COMMISSION CHAMBERS OF THE TOWN HALL, 100 SEA ROAD, GULF STREAM, FLORIDA. AGENDA I. Call to Order. II. Pledge of Allegiance. III. Roll Call. IV. Resolution No. 012 -7; A RESOLUTION OF THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, FLORIDA SUPPLEMENTING RESOLUTION NO. 011 -12; AUTHORIZING A LOAN IN THE AMOUNT OF $2,427,895.54; AUTHORIZING THE EXECUTION OF A PROMISSORY NOTE AND A LOAN AGEEMENT; PROVIDING A SEVERABILITY CLAUSE, A CONFLICTS CLAUSE AND AN EFFECTIVE DATE; AND FOR OTHER PURPOSES. V. Adjournment. SHOULD ANY INTERESTED PARTY SEEK TO APPEAL ANY DECISION MADE BY THE TOWN COMMISSION WITH RESPECT TO ANY MATTER CONSIDERED AT THIS MEETING, SAID PARTY WILL NEED A RECORD OF THE PROCEEDINGS, AND FOR SUCH PURPOSE, MAY NEED TO INSURE THAT A VERBATIM RECORD OF THE PROCEEDINGS IS MADE, WHICH RECORD INCLUDES THE TESTIMONY AND EVIDENCE UPON WHICH THE APPEAL IS TO BE BASED. F.S.S. 286.0105 MINUTES OF THE SPECIAL MEETING HELD BY THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, AT THE CALL OF THE COMMISSIONERS, ON TUESDAY, AUGUST 28, 2012 AT 3:00 P.M. IN COMMISSION CHAMBERS OF THE TOWN HALL, 100 SEA ROAD, GULF STREAM, FLORIDA. I. Call to order. Mayor Orthwein called the Meeting to order at O3:03 P.M. II. Pledge of Allegiance. The Pledge of Allegiance was led by Mayor Orthwein. III. Roll Call. Present and Participating Also Present and Participating Joan K. Orthwein Muriel J. Anderson Robert Ganger Tom Stanley W. Garrett Dering (Via Telephone) William H. Thrasher Rita L. Taylor Mark Raymond IV. Resolution No. 012 -7. Mayor Commissioner Commissioner Commissioner Commissioner Town Manager Town Clerk Bond Counsel A RESOLUTION OF THE TOWN COMMISSION OF THE TOWN OF GULF STREAM, FLORIDA, SUPPLEMENTING RESOLUTION NO. 011 -12; AUTHORIZING A LOAN IN THE AMOUNT OF $2,427,895.44; AUTHORIZING THE EXECUTION OF A PROMISSORY NOTE AND A LOAN AGREEMENT; PROVIDING A SEVERABILITY CLAUSE, A CONFLICTS CLAUSE AND AN EFFECTIVE DATE; AND FOR OTHER PURPOSES. Commissioner Ganger noted that the loan amount in the Agenda's Resolution title differs from the amount in the Resolution. Clerk Taylor said the amount is correct as stated in the Resolution, which is $2,427,895.44. Attorney Mark Raymond introduced himself as Bond Counsel for the Town. He said he issued an RFP to 12 banks in July that provide loans to municipalities, four banks responded, Northern Trust declined and the remaining three banks submitted proposals. Each Joffered proposals for 10 -year and 15 -year loans, with interest rates as follows: SunTrust - 2.09% for 10 years and 2.17 for 15 years; Branch Banking and Trust - 2.24 for 10 years and 2.77 for 15 years; and, Capital Bank - 3.39 for both scenarios. Mr. Raymond said SunTrust offered the lowest interest rates, but he said there is a significant difference in the terms SunTrust is offering between the 10 -year and 15 -year proposals. He said there is Special Meeting at the Call of the Commissioners Town Commission - August 28, 2012 Page 2 a provision in the 15 -year proposal only which states that if the corporate income tax rate in the United States goes down, the interest rate on the loan will go up, depending on how much the corporate income tax rate goes down. Mr. Raymond gave the mathematic formula by using a 20% decrease in the corporate income tax rate as an example. He said the provision was included because it will be a tax exempt loan and the value of a tax exempt loan depends on the amount of tax you do not have to pay. Mr. Raymond said, if a bank makes a conventional loan at 10 %, paying 35% income tax, they would make the exact same loan on a tax exempt basis at 6.5% because 10% minus 35% income tax is 6.5. He said if the income tax rate was 20 %, a 10% taxable loan equals 8% tax exempt. Mr. Raymond said both presidential candidates want to decrease the corporate income tax rate and there is bi- partisan support in Congress to decrease it down to 25 %. He said he feels that the Town would go with the 10 -year rate to avoid being exposed to that risk. The annual payment for the 10 -year loan will be $269,168.00, which is 42% higher than the annual payment of $189,612.00 for the 15 -year loan. Mr. Raymond said there are about 250 residents who did not prepay their assessment and if the Town goes with the higher 10 -year term payment the average assessment will be around $1,000. The loan will be a debt of the Town and, therefore, the Town will back the loan with a covenant to budget and appropriate, meaning if someone did not pay their assessment on time the Town would dip into the general fund to make the payment to avoid a default on the loan. The Tax Collector would pursue the tax certificate sale process, which hopefully would result in collection of the assessment and then the Town would reimburse the general fund. Mayor Orthwein said she would prefer a 10 -year loan in order to get the loan paid off sooner and to avoid an increase in the interest rate due to a possible decrease in the corporate income tax rate. Commissioner Anderson and Commissioner Stanley agreed that the 10- year loan would be best. Mr. Raymond said the interest rate is significantly lower than the interest rate used in the projections. Commissioner Ganger said the residents had quite a challenge to understand the project and to decide whether or not they would ,1 support it. He said they were given examples of what their assessment would be for both 10 and 20 -year scenarios and now, in either case, their payment will be less. Commissioner Ganger said residents will have other assessments on their tax bill, such as Solid Waste, and some would prefer to pay less over 15 years, but he said it would be best to get the debt paid off sooner. Commissioner Dering said there would be no risk if the Town registered with Moody's or AAA, but he said either way is reasonable. Special Meeting at the Call of the Commissioners Town Commission - August 28, 2012 Page 3 Commissioner Ganger asked if a small percentage is built in just in case someone does not pay their assessment. Mr. Raymond explained saying the amount of the assessment equals the amount of the loan. If anyone fails to pay their assessment on time it would result in a shortfall, it would be subsidized by the general fund and the general fund would not be repaid until the tax certificate process can be completed. Mr. Raymond said the Town would not be able to get the loan without it. He said the debt service is paid on April 1st, which is the date of delinquency of taxes and the Tax Collector will not sell tax certificates for 60 days, which will be in June. Mayor Orthwein said this was not discussed previously, but she said she did not see a problem for the Town. Mr. Thrasher agreed with the Mayor. Commissioner Stanley said trim notices just came out and he asked what assumption the Town used. Mr. Raymond said the annual interest on the trim notice is $221,000 at a 6% interest rate, and he said the payment will be a lot less. He said the trim notice data had to be submitted before the RFP responses were received and the Town aimed high because you can always decrease, but you cannot increase once the notice is out. Commissioner Dering asked if the Town is comfortable with what the costs will be and if they are confident that a shortfall will be covered. Mayor Orthwein said the consultant attended last month's meeting and this was discussed, and she said he did not change his estimates because he was confident that costs will come in lower than estimated. Commissioner Dering said he comes up with three costs and a shortfall. Mr. Thrasher said the audit may be short because the figure used at that time was an estimate. He said there was a migration of estimates provided to the Town in this process and the consultant did modified his estimates at some point in time; however, he said we are relying on the consultants we are paying to estimate construction costs. Mayor Orthwein said, to the best of our knowledge and the consultants' knowledge, this is the right number. Mr. Raymond said the amount of the assessment that was levied last year in the assessment proceedings was the figure that would generate enough money to pay for the cost of the project. The loan is that assessment amount, minus the amount of the prepayments, and that figure is what the Town is borrowing. Mr. Thrasher said a contingency of about $600,000 or $700,000 is built into the construction estimate provided by Danny Brannon. Mr. Raymond asked when the Town will be in a position to create an RFP and solicit bids. Mr. Thrasher said we are still working on construction drawings, but he said as far as bids are concerned it will be around the 4th quarter. Mr. Raymond said one of the requirements for tax exempt loans is that within six months you will Special Meeting at the Call of the Commissioners Town Commission - August 28, 2012 Page 4 enter into a substantial binding commitment for at least 5% of the loan amount towards the costs of the project. He said the Town is looking at a $130,000 commitment within six months and he asked Mr. Thrasher if he is comfortable making that statement. Mr. Thrasher confirmed that. Mr. Raymond said he prepared the resolution and it complies with all applicable legal requirements, and he said if there are no questions, a motion is in order. Commissioner Ganger moved and Commissioner Anderson seconded to approve Resolution No. 012 -7 for a 10 -year loan with SunTrust. There was no discussion. Roll Call: Commissioner Ganger, AYE; Commissioner Anderson, AYE; Commissioner Stanley, AYE; Commissioner Dering, AYE; Mayor Orthwein, AYE. The motion passed by a unanimous vote of 5 - 0. Mr. Raymond said Mayor Orthwein will sign the commitment letter to SunTrust, and he said although the commitment is open until September 18th, the loan closing will be September 6, 2012 to accommodate Wildan in getting the trim notice out. In closing, Mr. Raymond said this is a small loan and he had some concerns that there would be no response to the RFP, and he said the Town is fortunate to have this great proposal. Mayor Orthwein said it is a great proposal and it will be a solid loan. Commissioner Ganger said this is a milestone and thanked Mr. Raymond for a great job. Commissioner Dering asked Mr. Thrasher if there are any changes in the proposed budget. Mr. Thasher said he did not make changes and he asked Commissioner Dering if there was something that needed to be changed. Commissioner Dering said he thought they were going to see some comparisons to what the neighboring towns are doing. Mr. Thrasher said Chief Ward will provide some comparison information with regard to salaries. Commissioner Ganger pointed out that all towns are on the same budget schedule, they are all having workshops, all first readings will be held at the same time, and he said it would be difficult to provide valid comparisons at this time. V. Adjournment. Commissioner Stanley moved and Commissioner Ganger seconded to adjourn the Meeting. The Meeting was adjourned at 3:32 P.M.�) Gail C. Abbale Administrative Assistant