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HomeMy WebLinkAbout11/5/2002 Minutes - Regular MeetingCITY OF DIAMOND BAR CITY COUNCIL STUDY SESSION NOVEMBER 5, 2002 STUDY SESSION. Mayor Chang called the Study Session to order at 4:43 p.m. in the SCAQMD/Governrnent Center, Room CC -8. Present: Council Members Herrera, Huff, Zirbes Mayor Pro Tem O'Connor and Mayor Chang. , Also present Linda Lowry, Jenkins, City Attorney; James DeStefano, Deputy City Manager, Mike Doyle, Deputy City Manager, David Liu, g ,David Magnuson, Finance Director and Lynda Burgess, City ClerkD�recfor, Linda 1 Discussion regarding Capital Improvement Program Financing g Larry Kosmont stated that his presentation would concentrate on the subject of issuing lease revenue bonds .to finance the Community/Senior Center. In response to MPT/O'Connor, Mr. Kosmont explained that tonight's agenda addresses only the description of thet determination by Council' am whether or not to move Proforward. if Council decides to move forward, it would adopt a resolution authorizing this activity to take place. There still is no commitment to move forward with a specific decision about financing. Mr. Kosmont further explained that this is a method of financing capital improvement and economic development activities at a very low cost with no risk to the City. The lease revenue payment program, a mechanical process, offers the City the ability to take a site it owns, lease the site to the newly formed JPFA, and the J would then sublease the site back to the City. PFA MPT/O'Connor asked if the City was allowed to lease parkland and Mr. Kosmont said yes, the City could lease just about anything it owns — streets, tunnels, bridges, etc. C/Zirbes pointed out that the City should look at its deed and title Policy to be certain there were no restrictions to such a program. MPT/O'Connor asked for clarification that Mr. Kosmont was referring to leasing the parkland to build the community center. Mr. Kosmont said he was referring to boththe land and the building. NPT/O'Connor agreed with C/Zirbes that the matter should be researched to determine whether the City was allowed to lease the property. GC,STUDy B£SSION - NOVEMBER 5, 2©Q2 iVlr Kosmont ,said that the package presentatidit tQ the Council. regarding whether the City was allowed would: include information to Iease a ,ste•.._i-Ie beueved,it coutd be done and .rs likely al til IeasQro�'ogr fie" would there were ro reSi ctkoi des . s _ The JPFA not know far certain u he researched the matter. r " would. then use the fbgse"pa�mehts to pay the Iease Erevenue Cry raak�es P�yrr is tq the tree ilk= , F e,Jrusfee bonds The bon th ders get, ty�t rnake a rtalrl tha# RW band tial the 'res .0 aid illt� dtiars a the Yld serper�d they off lr� tf�e to stee geed as guarantee that t "ids are pard ,p, the for eels ark huts �?"int a peetaccoot :The takes the m from the prsect. , a�ccaunt is used tp, F Community/Senior Center: Addi#ioraiiy, the City could repapture ns and, 60days prior'to :the payments under ttiS pts effective, date qn the hd fists ox irrxately: CM/Lowry foresaw the need to provide Council with an ,annual Lose of etc. report detailing balances,yprocpedt proceeds, Mr. Kosmont and his team e aioeti=. hat most municipalities have JPi=A°s because their enjoy broader. powers and more flexibility. fba, have are Corona, For instance, areas,pse to D B. .JRFA's Rialtca, Colton, El Man#ebIlo, 1FVhittier, Duarte and San , Dimas. Mr. Kosmont said that most cities have:a JPFA In addition, over ` development 50°!« of :: cit'�es statewide fund: an . economic 1zation the#her or nat #hey have redevelopment agencies. orga Kosmant explained how, the City could proceed with either a Mr. fixed-rate or variable-rate finance program, once it determines'it wants to..mave forward: Eric Scriven stated that -over a five-year period, the City could save $475,000 to $1,100,000. if the City purchased a 5%o cap on about the :variable rate (variable rate _ 2.8% to 420/6 with- a 5% cap buyout] fixed rats - 56/0: Mr. Kosmont explained the potential for investigating its "own funds He if. #lie Gauncil chose to move forward with the JPFA. reminded would offset the lease Counci{ that the 4nterest from the investment payment: In response to MPTIO'Connor, Mn Kosmont, said the City would be better off to invest in=tax -free structures than #o purchase its own tax-'free structure is higher than it bonds. In addition, the return on is on the bonds. NOVEMBER 5, 2002 PAGE 3 CC STUDY SESSION Responding to C/Herrera's gUestion regarding borrowing $30 or $503040,000, Mr. Kosmont explained that his team looked at D.B's budget (revenues and expenditures) and felt that it would be very comfortable for the City to borrow about $15,000,000: With this additional cash flow, making a net payment of somewhere between $270,000 and $5.60,000 doesn't really stress the budget. Mr. Kosmont explained to M/Chang that if the City financed $30 million, the payment would be $1,500,00.0, an amount that would entirely' deplete the City's profits. C/Zirbes asked if Mr. Kosmont was p would be due in firoposing 30 -year notes, which ve years. Mr. Kosmont respondedthat 30 -year notes contain a five-year cap with no prepayment penalty. At the end of five years, if D.B. decided it wanted out of the finance business, it could pay off the notes and be done. Additionally, five years would be window of opportunity to determine whether economic development was successful. In response to M/Chang, Mr. Scriven explained that the City could Purchase a 10 -year cap but it would be more expensive. Mr. Kosmont said his team would provide 5-10-15 year cap pricing and rates for the Council's consideration, if they so desired. Mr. Kosmont summarized. His team recommended that the City borrow $15,000,000, select a 30 -year variable with a 5 year and 10 year interest rate cap with no prepayment penalty, and maximize interest earnings to keep. net payments low. Further, the City should use those five years to determine whether or not it wanted to get out of the borrowing business or keep he City would raise up to $15,000,000 in funds through abo d issue and use those monies to pay the project costs. The general fund reserves that would have been . spent on that pro1ect could be invested in a format that maximized interest rate earnings and in compliance with an investment policy that the City would establish and continue to direct. Those interest earnings .would be used to offset the bond payments and make borrowing costs lower. Keeping money in your pocket allows you to invest money, make money and reduce payments on the financing Period" 11 investment fca y, the Cr#y would review its opportunities in order to determine whether a better investment field Y could be realized. Within five years, Council Members and staff could re -assess the results and determine whether or not they wish -to pay off some of it, all of it, or continue with financing and pursue economic development. �an �- for °, in the: bankF Clirbes stated that the Comrnun:itylSenior Center would come on- line whether or not the City borrows to fund it. He heard estimates ranking from,$200",000"Per year-to $5©0;000 per, year to operate the center.. What about the "what if and budget Shortfalls?" He would not like to have the City move into. a number that is sa large based upon current projects There needs to be a comfort level assuring the City that i# it is not cornfc rtable -with this scenario, the loan could be paid off. He could see the benefits of staying with the finance program. However, Phis is a very fiscalty conservatroe community and.that'is. why itis currently in a, good financial-position. Mr. Kosmont suggested. that Council incorporate a policy that it never spends more than X amount of its'reserves. C/Zirbes said he needed to get to a level of comfort that insures him that current and future:obligations (contingencies) could be met NOVEMBER 5, 2002 PAf 5 CC STUDY SESSION and that there would be sufficient funds left over to pay for this loan. He was concerned about over -stretching the. budget. C/Herrera explained that the Community/Senior Center would likely not open until January 2004 and the ongoing costs to run the center would not be known until sometime later. if at that time, the City determines it is in over. its head, it could pay off the bonds or a Portion thereof, and get out of the debt service. CM/Lowry explained that when the numbers are reworked, the Cit has had, over the past five years, a general operating expense overage of about $2.4 million. If the Ci ty paid the maximum loan Payment of $800,000 from the operating fund., there is still a budget surplus of $1.6 million. if $500,000 or $600,000 is expended for the Community/Senior Center operating budget, the City still has an overage of $1,000,000. She explained why she believed that this scenario is prudent city -building. C/Huff asked Mr. Kosmont to tell the Council why ft should consider his team over another team. Mr. Kosmont responded that the City could certainly take time to explore other options with respect to finance teams and he and his team would remain in the remix in this case, a number of his team members have been working with D.B. for some time in economic development matters and therefore have "a leg up." Other team members presented their quaf fication credentials and. why they would likely be selected to participate in. D.B.'s financing program. C/Herrera appreciated Mr. Kosmont's good faith effort ort in bei s -tea bringing m members to brainstorm with staff and Council. She reminded Council Members that the City interviewed numerous firms and chose Kosmont to spearhead economic development and strategic planning. C/Huff felt there were two different issues - economic development and bonding. .M/Chang telt very comfortable with Mr. Kosmont and his ability. When D.B. lost redevelopment, Mr. Kosmont presented an option for economic development. He believed the JPFA tool would allow the City to leverage its money and invest in its future. lie thanked Mr. Kosmont and his team for presenting information to the City .without remuneration, 1 CITY OF DIAMOND BAR CITY COUNCIL REGULAR MEETING November 5, 2002 STUDY SESSION: Mayor/Chang called the meeting to order at 4:43 p.m. in SCAQMD/Government Center Room CC-8, 21865 E. Copley Drive, Diamond Bar, CA, *Discussion regarding Capital Improvement Program Financing Options Present: Council Members Herrera, Huff, Zirbes, Mayor Pro Tern O'Connor and Mayor Huff. Also present were: Linda Lowry, City Manager; Mike Jenkins, City Attorney; James DeStefario, Deputy City Manager; David Doyle; Deputy City Manager; David Liu, Public, Works Director; Linda Magnuson, Finance Director and Lynda Burgess, City Clerk- ADJOURNMENT: Mayor Chang adjourned the Study Session at 6:13 p.m.. SPECIAL CLOSED SESSION: Mayor Chang called the Closed Session to order at 6:15 p.m. ADJOURNED CLOSED SESSION:. Mayor Chang adjourned the Special Closed Session at 6:4.6 p.m. CALL TO ORDER: Mayor Chang called the meeting to order at 6:50 p.m. in the Auditorium of the SCAOMD/Government Center, 21865 E. Copley Drive, Diamond Bar, CA. M/Chang reported that during the study session, the Council discussed Capital; Improvement Program financing, options. This matter will be considered under regular meeting Agenda item 8.1. CA/Jenkins reported that during the evening's Closed Session; Council considered possible . initiation of litigation. By a unanimous- vote,. Council authorized filing of litigation against the Mountains Recreation Conservation Authority for violation of the Brown Act. PRESENTATION OF COLORS: 4th ' Low` Altitude Air Defense Battalion PLEDGE OF ALLEGIANCE: Torn Ortiz led the Pledge of Allegiance. INVOCAT19N: USAF Chaplain (Capt_) Alan Madera the invocation, presented 1 NOVEMBER 5,2002" 'PAGE 2 ": CITY COUNCIL ROLL CALL: Council Members Herrera, Huff, Zirbes,. Mayor Pro Tem O'Connor, Mayor Chang. Also present were: =" Linda :Lowry; City Manager; Mike" Jenkins, City Attorney, James DeStefano, Deputy „City Manager; David Doyle, platy 'City Manager, f3avrd" Liu,' Pimllrc Works Director; Lunda Magnuson,. FinanceDirector and Lynda .Burgess, City Clerk. APPR0V-AL OF -AGENDA: As presented 1. SPECIAL PRESENTATIONS, CERTIFICATES; PROCLAM;ATIONS: 1".1 : " lrttroduced Frad� Alamrrolhoda Senior Engineer, f3earment of Public 1Norks. 1.2 Introduced Christopher.O'Hearn, newly appointed Mount San Antonio Corp president. : 1.3. Recognized. Veterans a. Presentation delivered by Thomas M. Vetter, Lt. Colonel; Retired.;. U.S. Marine Corps b. Distributed "Plaques to Veterans RECESS/RECEPTION. M/Chang recessed the City Council meeting at "7:35 pm. RECONVENE:. M1Chang reconvened the meeting at 7:57 p.m. 2. CITY "MANAGER "REPORTS AIVD RECOMMENDATIONS: ' Norge Offered. 3. PUBLIC COMMENTS: Don Karlin, Phillips Ranch, President-elect, D.B. Rotary Club, ann6tinced that the Club's Tea and'°Fashion show would be held - Sunday,'Novemt November 17 from. " 12 noon to 3:00 pari. at aIle Shila Inn.: 4. RESPONSE TO PUBLIC COMMENT. None Offered. 5: SCHEDULE'OF FUTURE EVENTS 5.1 VETERAN'S DAY - November 11, 2002 —City Offices will be closed. Offices will reopen Tuesday; November`12, 2002 at 7:30 a.m. 5.2 PLANNING COMMISSION MEETING - November 12, 2002 - 7:00 p.m., SCAQM /Government Center Auditotitrm,"2#'365 E_ Copley Dr. NOVEMBER 5; 2002 PAGE 4 'CITY COUNCIL 1 NOVEMBER 5, 2002 PAGE 5 CITY COUNCIL following Roil Call vote: AYES: COUNCIL MEMBERS - Herrera, Huff, Zirbes, NOES- MPT/O'Connor Minh COUNCIL MEMBERS - None ally. ABSENT: COUNCIL MEMBERS - None 9 COUNCIL SUB-COMMfTTEE REPORTS/ COUNCIL MEMBER COMMENTS: C/Zrbes thanked all veterans for their service to the U.S. and thanked the veterans who participated in this evening's ceremonies. C/Herrera appreciated the ceremony honoring veterans this evening. Because of their commitment to the service of their country, residents are able to maintain a safe homeland: Her son serves in the military and she is concerned for him during this time of uncertainty i #h veterans as well as everyone who currently serves in the militarya mess all C/Huff thanked the veterans and staff members who Participated in tonight's ceremony. He encouraged everyone to pause on Veterans' Day in honor all who have served this great:country and protected its freedoms. MPT/O'Connor thanked veterans for providing the freedoms to the citizens of the U. S. She appreciated the work staff did in providing the forum honor the veterans. She thanked the veterans who came to participate this evening. She asked staff to pay particular attention to abuses of the City's Sign Ordinance during, political campaigns. She suggested the Council consider moving the first meeting in November to the first Monday or Wednesday in order to avoid having meeting occur on Election Days. M/Chang paid his respects to focal veterans and all veterans who have served this nation. He also asked for recognition of all veteranswho gave their lives in service to protect the nations' freedoms. 10. ADJOURNMENT; Mayor Chang adjourned the meeting in memory of Georgette Plovanich, mother of Community Volat Patrol Member Glen Plovanich. L DA BURGESS, ity Clerk ATTEST: