HomeMy WebLinkAbout10/14/2002 Minutes - Special MeetingMINUTES OF THE CITY COUNCIL
SPECIAL MEETING OF THE CITY OF DIAMOND BAR
OCTOBER 14, 2002
CAL TO ORDER: Mayor Chang called the special meeting
to or er at 4:00 p.m. in the Room CC -8 of the South Coast Air Quality
Management District, 21865 E. Copley Drive, Diamond Bar, CA.
PLEDGE OF ALLEGIANCE: Mayor Chang
ROLL CALL: Council Members Herrera, Huff, Zirbes,
Mayoj Pro Tem O'Connor, Mayor Chang
Also present were: Linda Lowry, City Manager; Mike Jenkins,
City Attorney; David Doyle, Deputy City Manager; Linda Magnuson, f=inance
Director; Lynda Burgess, City Clerk, April Blakey, Public Information Manager
and K m Crews, Sr. Management Analyst.
2. COUNCIL CONSIDERATION:
2.1 AWARD OF CONTRACT FOR CONSTRUCTION OF THE
COMMUNITY/SENIOR CENTER — Report by DCM/Doyle.
Staff's recommendation: Discuss options available for completion of
the project and direct staff as appropriate.
In response to ClZirbes, DCM/Doyle explained that staff could use a
cost -estimator to establish a change order reduction amount.
However, the general contractor could estimate the change order at
a lesser amount.
Huff was concerned about putting the project out to bid again,
fisting another three months and possibly receiving a higher bid. He
is concerned about the additional million dollars, but he was not
rtain another bid process would result in a better price.
)CM/Doyle said that either option is a gamble. He felt that, based
pon changes that would be identified through the scope of work, the
id likely would not be higher. It is possible, but he would not envision
ie cost being higher. He did not believe that Council would get to the
ollar amount they were striving to reach. It depends upon the
iarketplace.
10 response to C/Herrera, DCM/Doyle said that the revised list reflects
tlhe Council's input from its September meeting.
I PT/O'Connor pointed out that deferring costs is not the same as
aving costs. Ultimately, deferred costs would be included in the
verall project.
(,,'M/Lowry stated that staffs recommendation to reject the current bids
OCTOBER 14, 2002 PAGE 2 CITY COUNCIL
and go out to bid once again, is a very conservative recommendation.
Part of the recommendation is based upon the fact that staff believes
that because of what has occurred, it could make a better
presentation at the second go around by requesting line item bids that
would allow for an apples to apples comparison.
MPT/O'Connor stated that, in this case, the low bidder is known to be
a good contractor and the City would risk losing that bidder in the
second go around.
ClZirbes felt the low bidder would come in with a comparable bid. The
benefit would be that Council could then deal with a line -item bid to
more accurately determine what items might be eliminated or
changed.
C/Herrera said that it was a gamble either way. She would rather
gamble by taking the low bid and proceeding with change orders.
Perhaps once the contract is let, the general might be in a better
position to suggest various trade outs that might result in cost savings.
Responding to ClZirbes, DCMIDoyle indicated that between 15-20
general contractors s attended the pre-bid conference. About half
responded with bids. He was told that a select few contractors go
after these types of projects.
ClZirbes again stated that it would be better to go back out to bid and
delay the project for two to three months. Economic times are
uncertain and the Council should do everything possible to ensure the
best price for the best project possible.
2.2 PRESENTATION REGARDING ECONOMIC DEVELOPMENT
ROUNDTABLE WORKSHOP HELD SEPTEMBER 4, 2002 AND
FACILITATED BY KOSMONT PARTNERS — Presentation by Larry
Kosmont, Kosmont Partners.
CM/Lowry explained that this presentation is staff's first step toward
placing this matter on a Council Meeting agenda for consideration.
Mr. Kosmont said that in order to create a budget for the Council, he
would need a contact approval.
ClZirbes said that while he was not entirely sold on the concept, he felt
it was intriguing and interesting. There would be a great deal more
the Council needs to know in order to move forward. Economic
Development is certainly foremost on the minds of the Council
Members. A decision cannot be made without the proper input and
Council could not expect the consultants to hand over the information
without a contract. He would like to see this matter placed on an
agenda for consideration.
OCTOBER 14, 2002 PAGE 3 CITY COUNCIL
C/Herrera said as the City has discovered; options for Economic
Development have been greatly diminished. Kosmont has the
expertise and she would be willing to give them the go ahead to move
forward.
Mr. Kosmont continued with his presentation. He stated that any
proposal presented to the Council would be very conservative in
I nature. This is a time for cities to hold onto their cash reserves and
responsibly leverage the monies in order to accomplish things that are
important.
Eric Scriven, U.S. Bank, presented a report on the elements of
financing potentials for the City.
C/Herrera asked if the selling of $12 million sale of bonds refers to
certificates of participation.
Mr. Scriven responded that certificates of participation would be the
most likely structure accepted in the marketplace.
Mr. Kosmont said that some projects would fund the design and
development because they would not have the cash to fund as they
proceed.
C/Herrera asked if the City would sell bonds if an Economic
Development Corporation were formed.
M/Lowry responded affirmatively.
:/Herrera asked if the developer would have to borrow money to
omplete the project and what interest rate he would pay. Is it
Ilowable for the developer to get the money through the Economic
evelopment Corporation? Can the Economic Development
orporation charge the developer a higher interest rate and still
iaintain a lower interest rate than a bank?
r. Kosmont explained how a developer could save money by
)rrowing tax exempt money at a lower rate from the Economic
evelopment Corporation to complete a project. In the case of the
ommunity Center, the City would borrow its own financing. The
3ntractor would draw on the funds to complete the project.
CA/Jenkins pointed out that one of the criteria for borrowing would be
to look at future projects and determine how much the City might have
to borrow in the future to complete those projects, even if future
Borrowing was based on dedicated sales tax for repayment.
OCTOBER 14, 2002 PAGE 4 CITY COUNCIL
CM/Lowry asked if the loan could be negotiated for a portion at a fixed
rate and a portion at a variable rate.
Mr. Scriven responded that, in order to get the best deal with $12
million being on the small loan side, a better deal would be available
at one or the other. If the loan was split, the rate might be prohibitive.
Mr. Kosmont responded to C/Herrera that if engaged, his team would
present a full package for consideration, including potential loan
terms.
C/Zirbes offered that if the City left the $6 million in the bank, the
earned interest could offset the $400,000 annual payment on the $6
million loan.
Mr. Kosmont stated that the City could look at more aggressive
investing contracts. The point is that the City can make money on its
reserves and obtain a lower rate on the $6 million note. The rates and
scenarios offered this evening are "worst case" scenario.
In response to M/Chang, Mr. Kosmont explained that if the Council
were seeking a $6 million loan on the Community/Senior Center, it
would not have to place funds in reserve to insure the loan, the
payments would be made out of future tax resources. The City's
credit is on the line in borrowing against the building. If the Council
wanted to borrow for Economic Development City assets could be
used as collateral.
MlChang felt that the City should borrow against something that would
generate a return. It would be better to go for Economic Development
than to borrow for the Community/Senior Center.
The Council concurred to have Kosmont provide a draft proposal with
respect to Economic Development and ultimately, financing
opportunities.
10. ADJOURNMENT: There being no further business to conduct,
MlChang adjourned the Special meeting at 6:00 p.m.
TTA
LYNDA BURGESS, City Clerk
ATTEST:
C
WEN HANG, Mayor