HomeMy WebLinkAbout11/19/2002 Minutes - Regular MeetingROLL CALL: Council Members Herrera, Huff, Zir es,
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, Deputy
City Manager, David Liu, Public Works Director; Linda Magnuson, Finance
Director and Tommye Cribbins, Assistant City Clerk.
APPROVAL OF AGENDA: CM/Lowry pointed out that Cou cil
Members received rewrites of Consent Calendar Items 6.7 and 6.8 Ond
asked that the Library Bond Discussion (Study Session item) continue at Ithe
MINUTES OF THE CITY COUNCIL
REGULAR MEETING OF THE CITY OF DIAMOND BAR
NOVEMBER 19, 2002
STUDY SESSION:
Mayor/Chang called the meeting tc
order
at 4:43 p.m. in SCAQMD/government Center Room CC -8, 21865 E. Copley
Drive, Diamond Bar, CA.
*Lease Revenue Bond Presentation and Review of Documents
*Library Bond Discussion
*"Meet and Greet" with Senator Margett
Present: Council Members Herrera, Huff, Zirbes,
Mayor Pro Tem O'Connor and Mayor Huff.
Also present were: Linda Lowry, City Manager; Mike Jenkins,
City Attorney; James DeStefano, Deputy City Manager; David Doyle, Deputy
City Manager, David Liu, Public Works Director; Linda Magnuson, Finance
Director and Tommye Cribbins, Assistant City Clerk.
ADJOURNMENT: Mayor Chang recessed the Study Session
at 6:47 p.m. and reconvened the Study Session at 10:17 p.m.
CALL TO ORDER: Mayor Chang called the City Cc
uracil
meeting to order at 6:50 p.m. in the Auditorium of the SCAQMD/Governrnent
Center, 21865 E. Copley Drive, Diamond Bar, CA.
M/Chang reported that during the study session, the Council discussed
the
Lease Revenue Bond Presentation and Review of Documents. The matter
will be considered under Agenda Item 7.1. Due to time constraints
the
Library Bond Discussion was deferred to immediately following toni
ht's
regular Council meeting. The Council spent about 30 minutes with State
Senator Margett who is relocating his office to D.B.
PLEDGE OF ALLEGIANCE: Boy Scout Troop 777 led the Pledge
of
Allegiance.
INVOCATION: Tony Nguyen, Diamond Canyon Christian
Center, presented the invocation.
ROLL CALL: Council Members Herrera, Huff, Zir es,
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, Deputy
City Manager, David Liu, Public Works Director; Linda Magnuson, Finance
Director and Tommye Cribbins, Assistant City Clerk.
APPROVAL OF AGENDA: CM/Lowry pointed out that Cou cil
Members received rewrites of Consent Calendar Items 6.7 and 6.8 Ond
asked that the Library Bond Discussion (Study Session item) continue at Ithe
NOVEMBER 19, 2002 PAGE 2 CITY COUNCIL
end of tonight's meeting. She asked if Council would consider completing
Item 8 prior to adjournment back to the Study Session and Closed Session.
She explained that due to technical difficulties, tonight's City Council meeting
may not be broadcast live.
SPECIAL PRESENTATIONS, CERTIFICATES, PROCLAMATIONS:
1.1 Presented Certificates of Appreciation to Volunteer Patrol members
Bill Chisholm, Jim Degnan, Machiko Tanaka and Bob Reppenhagen
for 504 hours of service — presentation by Captain Yim and Lt. Joe
Maxey.
1.2 Presentations made by Nikki Burley, Supervisor Don Knabe's office,
the City of D.B. and Nancy Lyons, Friends of the Library, to "Read
Together Diamond Bar" Essay Content Winners Kimberlee Earnheart,
Benjamin Berk, Jocelyn Hu, Philip Catbagan, Erika Estrada, Monica
Godinez, Edgar Saray, Brian Sandoval, Christine Tran, and Jack
Wong.
1.3. Presentation of awards to Gene Thiel with SEMA; Ana Gonzalez with
the Automobile Club of Southern California (AAA) and Jim and Sandy
Mathers, co -managers of the Walnut Creek Mobile Home Park
Winners of the City's Annual Trash Cutter Awards in recognition of
their efforts in recycling and waste prevention.
1.4 Presentation made by the Diamond Bar Chinese Association of
$15,100 in funds collected for purchase of 107 commemorative tiles
from the D.B. Community Foundation — Presentation by Benny Liang,
President, D.B. Chinese-American Assn. and Andrew Wong,
Chairman, D.B. Community Foundation.
BUSINESS OF THE MONTH:
1.5 Presented City Tile to Craig Ammon, DDS - Business of the Month.
2. CITY MANAGER REPORTS AND RECOMMENDATIONS: None Offered.
3. PUBLIC COMMENTS: Lt. General Larry Rhodes, M.D., United States
Army Active Reserve, spoke in the past about his concern regarding the left
turn lane from Golden Springs Rd. to Brea Canyon Rd. The Council and
DPW/Liu and his staff have corrected this intersection and it is wonderful. He
further stated that he has a problem with Adelphia. The installer broke a
vase last March and they have not yet resolved this issue. He hoped the City
might intervene on his behalf. He asked the City to promote an amendment
to the State Constitution to clarify who the judges are that the voters are
being asked to select.
NOVEMBER 19, 2002 PAGE 3 CITY �CONCIL
Clyde Hennessee said that, in the past, the City has made hasty decisions
and there was no need to hurry into a decision on item 7.1 without knowing
all of the facts. He felt the Council Members were intelligent and thOL ghtful
about their decisions, and should not vote in favor of something when they
were not comfortable in doing so.
Jeff Koontz spoke regarding Item 6.6. He asked if the Bond Act could be
eliminated if the City decided to bond itself to pay for the Community/Senior
Center. He pointed out that the City is $16,000 over -budget on the L brary
Bond consultant, the reason that an additional $17,000 is needed fro the
City's reserves to cover the architect's cost. He wondered if the City would
be better served to take more money in the D.B. Public Financing Authority
to cover the library than to have two bonds.
Allen Wilson suggested that Council consider installing a closedc pt ion
system to cover Council meetings since there have been so many pro t
with the sound system.
4. RESPONSE TO PUBLIC COMMENT: M/Chang said Dr. Rhodes'
comments regarding proposal of an amendment to the State Constitution
were well taken.
CM/Lowry responded to Mr. Koontz that Council is considering obta ping
funding for construction of the Community/Senior Community Center to
relieve the requirement for tapping general fund reserves. If Mr. Koontz was
proposing that the City should consider borrowing funds to support a new
library would require another discussion entirely since the City does notnow
what the cost of a new library would be. The Council is attempting to pro ess
an application that would garner the City an award of the bond money and
it would be difficult to beat the return on the bond proceeds compared to the
City's investment. The investment could be as high as $200,000 to pre are
the bond application and the City believes it is possible to receive $5 t $6
million of return on the bonds with no debt service cost. The City has already
made a considerable investment in preparing the proposed library site and
has, therefore, created a match for construction funds for the library bo d.
M/Chang indicated to Mr. Wilson that the SCAQMD is working to miti ate
their sound system inefficiencies.
5. SCHEDULE OF FUTURE EVENTS:
5.1 COMMUNITY FOUNDATION MEETING — November 21, 2002 — :00
p.m., SCAQMD/Government Center Rooms CC -3 & 5, 2186 E.
Copley Dr.
5.2 PARKS AND RECREATION COMMISSION MEETING - November
21, 2002 - 7:00 p.m., SCAQMD/Government Center Hearing Bo rd
Room, 21865 E. Copley Dr.
NOVEMBER 19, 2002 PAGE 4 CITY COUNCIL
5.3 PLANNING COMMISSION MEETING — November 26, 2002 — 7:00
p.m., SCAQMD/Government Center Auditorium, 21865 E. Copley Dr.
5.4 THANKSGIVING HOLIDAY — City Offices will be closed in observance
of the Thanksgiving Holiday, Thursday November 28 and Friday,
November 29, 2002. City Offices will reopen on Monday, December
2, 2002.
5.5 CITY COUNCIL MEETING — December 3, 2002 — 6:30 p.m.,
SCAQMD/Government Center Auditorium, 21865 E. Copley Dr.
5.6 D.B. HOLIDAY RIDE PROGRAM — November 29, 2002 through
January 2, 2003.
6. CONSENT CALENDAR: Moved by C/Zirbes, seconded by C/Herrera
to approve the Consent Calendar as presented. Motion carried by the
following Roll Call vote with MPT/O'Connor voting no on Item 6.4 Purchase
Order #12479.
AYES: COUNCIL MEMBERS - Herrera, Huff, Zirbes, MPT/O'Connor,
M/Chang
NOES: COUNCIL MEMBERS - None
ABSENT: COUNCIL MEMBERS - None
6.1 APPROVED CITY COUNCIL MINUTES:
6.1.1 Regular Meeting of October 15, 2002 — amended minutes
previously approved on November 5, 2002 — As re -submitted.
6.1.2 Study Session of November 5, 2002 — As submitted.
6.1.3 Regular Meeting of November 5, 2002 — As submitted.
6.2 RECEIVED AND FILED PLANNING COMMISSION MINUTES.
6.2.1 Study Session of October 8, 2002.
6.2.2 Regular Meeting of October 8, 2002.
6.3 RECEIVED AND FILED TRAFFIC AND TRANSPORTATION
COMMISSION MINUTES — meeting of September 12, 2002.
6.4 APPROVED WARRANT REGISTERS - dated November 7 and
November 14, 2002, for a combined total of $758,072.68.
6.5 REJECTED CLAIM — Filed by Michael and Kyung Chung October 23, —
2002.
NOVEMBER 19, 2002 PAGE 5 CITY COUNCIL
6.6 APPROVED AMENDMENT TO CONTRACT NITH
GONZALES{GOODALE ARCHITECTS FOR DESIGN SER ICES
RELATED TO THE PROPOSED LIBRARY BOND ACT
APPLICATION ($35,000) AND APPROPRIATED $17,000 FROM
GENERAL FUND RESERVES.
6.7 APPROVED AWARD OF CONTRACT TO DAVID EVANS &
ASSOCIATES, INC. FOR DESIGN OF ADA IMPROVEMENTS AT
STARSHINE PARK IN THE AMOUNT OF $13,470.
6.8 APPROVED AMENDMENT #3 TO CONTRACT WITH DAVID E ANS
AND ASSOCIATES FOR AS -NEEDED LANDSCAPE ARCHITECT
SERVICES IN THE AMOUNT OF $48,100 FOR IMPROVEMENTS AT
THREE LOCATIONS AND APPROPRIATED $18,000 FROM
GENERAL FUND RESERVES.
6.9 AUTHORIZED EXCEEDING THE CITY MANAGER'S PURCHA ING
AUTHORITY TO PURCHASE NETWORK SERVERS FROM DELL
COMPUTER CORPORATION IN AN AMOUNT NOT -TO -EXCEED
$25,000.
6.10 AUTHORIZED VERIZON TO UPGRADE THE CITY'S TELEPH NE
SYSTEM AND APPROPRIATE NECESSARY FUNDS FROM
GENERAL FUND RESERVES ($16,000).
7. PUBLIC HEARINGS:
7.1 PUBLIC HEARING — ADOPT RESOLUTION NO. 200-77
APPROVING:
a)
THE JOINT EXERCISE OF POWERS AGREEMENT
-LIC
CREATING THE CITY OF DIAMOND BAR PUB
FINANCING AUTHORITY;
b)
SITE LEASE BY AND BETWEEN THE CITY OF DIAMOND
BAR AND CITY OF DIAMOND BAR PUBLIC FINANCING
AUTHORITY;
c)
LEASE AGREEMENT BY AND BETWEEN THE CITY
OF
DIAMOND BAR PUBLIC FINANCING AUTHORITY AND
HE
CITY OF DIAMOND BAR;
d)
BOND PURCHASE AGREEMENT, CITY OF DIAMOND BAR
PUBLIC FINANCING AUTHORITY VARIABLE RATE LEASE
REVENUE BONDS, 2002 SERIES A (COMMUNITY/SEN
OR
CENTER PROJECT);
e)
AUTHORIZING NEGOTIATION AND EXECUTION O
A
REIMBURSEMENT AGREEMENT AND AUTHORIZING THE
TAKING OF CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH.
NOVEMBER 19, 2002 PAGE 6 CITY COUNCIL
Presentation by Larry Kosmont, Kosmont Financial Services.
M/Chang opened the Public Hearing.
Clyde Hennessee felt uncomfortable with a variable rate. Even
though there is a 10 -year cap and the option of refinancing at the end
of that time, what would the rate be at that time. Council could take
a low fixed rate at this time and he wouldn't care if the market went up
or down. He would bet that 10 years from now, the rate would not be
this low. Rates have not been this low since depression era. If it's
true that D.B. has an AAA+ financial rating, it can get a loan
anywhere. The City has not taken the option of shopping for other
lenders. He felt the Council should wait and investigate this matter
more thoroughly.
Jeff Koontz asked for clarification of who is selling the bonds, the City
or the financing agency. Further, is the lease payment variable so
that the payment could be different every month and is there a cap on
the lease payment.
M/Chang responded to Mr. Koontz that the lease payment is based
upon the variable rate. The prime rate will not change on a daily
basis. Therefore, he would not anticipate a large jump in the
payment. The bond issuing agency would provide the City with a
breakdown of each payment. Payments would likely vary each
month. There is a cap on the rate.
Mr. Koontz wondered if the lease payment would come from the City's
General Fund and if the $12.5 million in the General Fund would be
freed up to spend on other projects. He felt that the money was
intended to go to the Redevelopment Agency to provide funding for
economic development programs and expressed concern that the if
the Redevelopment Agency had an opportunity to purchase a
shopping center in D.B. for $10 million and decided to do so, the
general reserve account would be reduced to $2 million. If the City
had to buy out of the loan, there would be no money in reserve and
the City could be in big trouble.
M/Chang said that the borrowed money would be used to finance the
Community/Senior Center. By so doing, the City would not have to
exhaust its present reserves. The reserve funds would be used as
security against the loan. The authority would implement strategies
put forth by the City and the Redevelopment Agency. The City would
pay the bonds under a lease agreement. The reserves would not be
exhausted. The City anticipates having enough funds to cover its
expenditures, including ongoing operations for the Community/Senior
Center. The reserve fund would not have to be used to cover
expenses. The City has about $2.5 million surplus each year. Figuring
NOVEMBER 19, 2002 PAGE 7 CITY CO[
$800,000 for operating costs of the Community/Senior Cent(
City has $1.5 million in remaining surplus on an annual basis
highest possible payment likely on the $12.5 million loan woi
$675,000 to $800,000 per year, which would leave a surplus b€
of $1.5 million. The point of borrowing is to leverage our moi
order to proceed with economic development in order to c
business opportunities that would generate additional tax re,
income to the City. Even if the City did not borrow the funds, it
have sufficient monies to pay for the building and ongoing ope
of the Community/Senior Center.
Allen Wilson commended the City Council for its action. He)A
the federal government would act accordingly to balance the bi
What is the variable rate percentage and the cap rate? What
cities have proceeded in this manner? If D.B. defaults on the
payments, would the lender (US Bancorp) take control c
Community/Senior Center?
Jeff Koontz again asked if it was the City or the Financing
would sell the bonds.
Mr. Kosmont explained that it is the lease revenue payment froi
City that guarantees the payment of the bonds. The City is ca
the bonds to be issued by establishing a lease payment. Bot
Authority and the City have to be recognized as being part of the
issue even though the lead agency and actual issuing agency
financing authority.
Don Hunt, Fulbright & Jaworski, explained that the City wou
required to make the lease payments. If the City did not ma[
annual lease payment, the trustee, on behalf of the bondhol
would bring a lawsuit to attempt to collect the money. If the tri
were unable to collect the money, the trustee would have a ric
terminate the lease and try to re -lease the facility to another us
a remedy of last resort. In terms of the variable rate structure
State has used variable rate bonds for many years because it i
lowest cost of borrowing. Many other cities, including L.A., EI M
West Covina, Rialto, Beaumont, Indio and other cities throughou
California and State have used variable rate bonds, the pref(
form of historically low -rate financing for cities.
NCIL
r, the
The
Id be
lance
ev in
we
uld
ion
shed
dget.
ase
the
that
i the
sing
the
the
be
an
rs,
it to
r as
the
the
So.
There being no further testimony offered, M/Chang closed the P iblic
Hearing.
C/Herrera stated that this is a new venture for the City. Council took
preliminary action at its last meeting to get this ball rolling. While this
subject has not been discussed at length at regular City Co ncil
meetings, the Council has had many study sessions on the matler.
NOVEMBER 19, 2002 PAGE 8 CITY COUNCIL
D.B. is a very prudent City. Through its prudent actions, the City has
managed to accumulate a substantial reserve over the past 13 years.
If the City spends the accumulated reserves on the Community/Senior
Center or some other project, the money is gone. During fiscal
uncertainty cities must find solutions to providing ongoing revenues.
To that end, Mr. Kosmont has assisted the Council toward
establishing an economic development plan.
C/Huff said that during a recent discussion, the focus was on whether
to borrow using a fixed-rate or variable-rate loan. The result was 3-2
in favor of a variable-rate loan. The City should not minimize the effect
of the State's budget cuts on continuing revenues.
In response to C/Huff's request for an explanation of the City's
financial position, CM/Lowry stated that based upon anticipated
revenues over the next few years and the experience of the past five
years, the City was able to save at the rate of approximately $1 million
per year. If the City funded the Community/Senior Center out of its
current reserves, there would be a little over $13 million left in the
reserve account. The City looked at what it could do if it was not
funding the large capital expenditure out of its reserves and was not
appropriating funds as it has over the last couple of years, into the - -
capital construction account. And, what if the City was not booking
the $3.1 million it invested on the front end of the Redevelopment
Agency that the General Fund had to cover when the agency was
unable to survive. Staff determined that over the past five years, the
City had experienced a higher difference between revenues and
expenditures - closer to $2.3 or $2.4 million. Arriving at those
numbers excluding those major expenditures, caused staff to believe
that the debt service to fund the $12.5 million bond debt service was
okay. The City could live within the $2.4 million and still meet
requirements for operating the new Community/Senior Center, leave
room for cost of living increases for normal City operations and still
leave room for State budget cut impacts and the loss of gas tax
dollars. In order to provide the kinds of improvements that the City
has been able to incorporate during the past five years because of
increased revenues, the City would, from this point forward, have to
dip into its $2.4 million. After considering all of these factors, staff felt
that the City could survive and endure a revenue hit from the state.
The $12.5 million put the City in a position to review its expenditures
without funding the large capital improvements that it had been used
to. Staff was uncomfortable that it had been operating on the premise
that every year the City saves a million dollars. In reality, the City was -
pocketing money out of the general fund and holding in a capital
improvement reserve in anticipation of paying for the Community
Center. Once the pocketed money was put back in the general fund,
the $13 million thumbnail jumped because the City was no longer
paying almost $12 million for the Community/Senior Center.
NOVEMBER 19, 2002 PAGE 9 CITY COUNCIL
C/Huff said that the City was running a $2.3 or $2.4 million SL
rplus
annually. If the City paid cash for the Community/Senior Cen
er, it
would still have general fund cash reserves of $13 million. One
of the
reasons for borrowing is to keep the City's money freed up
for
economic development. Even as healthy as the City's financial
The
situation is today, the nature of cities is that they need to keep d
iving
their economic engines to create ongoing resources in order
to
continue providing amenities sought by the community. However
the
City proceeds this evening, the Council is doing so in a cautiou
and
conservative manner. He disagreed with the way in which the City
is
moving forward because he believed that the City could lock
in a
fixed-rate of under 5% for 30 years, a phenomenon in the financial
community at this point in history. His vote this evening will refle
t this
belief. He wanted to know what the actual costs would be to fin
ance
the loan. Variable rates are slightly lower than fixed rates bu
it is
difficult to lose with that kind of low-cost resource for the ne
30
years. One of the speakers said he would bet that the rate would
be
higher even in the next 10 years. It is a near certainty that rates
will
be higher. When it happens, the City could be in the cat bird seat
with
a fixed outgo and an economic engine in which it has invested
The
problem with the variable rate would not necessarily be realized Nvithin
the first 10 years because of the low -rate cap. The problem would
be
realized in the years beyond the first 10 years. From his standpoint,
he believed a fixed-rate 30 -year loan would be a good move fc
r the
City. As a trade-off, he would rather pay cash for construction of
the
Community/Senior Center than engage in a variable rate loan
The
City would still enjoy a $13 million reserve. The consultant suggested
using $2 or $3 million at a time for economic development. The
City
could still do that using its current general fund reserves. He would
rather err on the conservative side than go with a variable-rate
loan.
He was in favor of the concept, however, his vote will reflet
his
discomfort with a variable-rate loan.
C2irbes said he was the second "no" vote at the last meeting. When
the Council first considered this option, it was for the purpose of
saving the City's money in order to have it available to invest. As a
businessperson, he appreciates the opportunity a low-interest variable
loan brings. However, as a guardian of the City, he better appre iates
the stability a fixed-rate loan would bring. He was more concerned
with the long-term and it seemed to him that a fixed rate would offer
that opportunity better than a variable rate. He also focused on future
Councils and where the City might be 10 years from now. He would
agree that in 10 years, interest rates would be much higher than they
are now. He was not sure the City could make an investment that
would return even a 5% interest rate. If the City locked in a low-
interest fixed-rate, there could come a time when the City might be
able to realize 10%. If the City still had the $10 million which ithe
amount he would prefer to borrow, it could make one million doll rs a
NOVEMBER 19, 2002 PAGE 10 CITY COUNCIL
year in interest, pay the $670,000 payment and be able to put
$300,000 in reserves. If interest rates could generate 10%, the
borrowing rate would likely be 15%. 10 years from now, the City has
to pay this loan in full. If the money isn't available, what will the new
payment be? He has a very good understanding of the presentation
made by the City's financial consultants and he has every confidence
in their recommendation. He still believed that the City should be
certain about what it is borrowing, what the payment will be, whether
it can afford the payment, and what a future Council might be able to
do. If the future Council had a huge emergency and was forced to
spend its reserve dollars, could it afford the payment. He believed
they could if the Council engaged in a fixed-rate loan and grabbed
onto the certainty at this time. The Sheriff's contract is coming up for
renewal. The State is reducing monies to the cities. "Grim Reports
Seen — Huge State Deficit" was a heading in this weekend's Los
Angeles Times. The article predicts that it will take 7 to 14 years for
the State to pull out of this hole. What does that do to D.B.? Council
recently received a report that D.B. sales tax revenues are down.
Unemployment is holding steady, but no one knows what next year
will bring. He would like Council to take a very cautious approach to
this matter and hoped that this discussion might be postponed for two
weeks or even to the second week in December. This all began when
the City asked Mr. Kosmont to take a look at properties that were not
generating revenue to D.B. As a result, Mr. Kosmont made a
recommendation that Council consider taking out a loan in order to
hold on to reserves and use the money for economic investment. So
far, he has not seen a plan that says D.B. will make money. So, if the
Council is going to do this, it should be done very conservatively and
very cautiously.
MPT/O'Connor asked Mr. Hunt to clarify whether all of the cities that
have taken advantage of a bond program chose variable rates.
Mr. Hunt said he believed all of the cities chose variable rates. The
State did a significant amount of variable rate bonds just in the past
couple of weeks because they were able to garner such favorable
interest rates. In the last few years, it has become extremely popular
for cities to choose variable rate financing.
MPT/O'Connor asked if the fixed-rate of 4.5 or 5% includes costs.
Mr. Hunt said that today's fixed rate is about 4.7 or 4.8% including
costs. The variable rates are 2.4 to 2.8% including all costs. The cap
would be somewhere between 4.5 and 5% for 10 years.
MPT/O'Connor said that Council Members received their packets on
Friday night. She spent most of the weekend perusing hundreds of
pages of documentation and two and one-half hours with the City
NOVEMBER 19, 2002 PAGE 11 CITY COU ClL
Manager on Monday going over her questions. The questions were
forwarded to the consultant and the answers were provided to her this
evening just prior to this meeting. Based on tonight's study session,
the consultants felt that most of the questions would lead to changes
in the documents that were provided.
C/Herrera said that in her opinion, the City should not place the City
in debt for a 30 -year period. She felt the bonds should be pa d off
sooner (10 years). If, at the end of 10 years, rates have skyrocketed,
D.B. would still have the millions in its reserve to pay off the bonds.
If the State budget financing becomes unbearable, D.B. can p y off
the bonds any time with a variable rate loan. When you have a fixed
rate, you cannot payoff the bonds anytime. You're locked in o 30
years paying off the bonds. There is a 5- or 10- year cap and it costs
extra money. With a fixed rate of 4.75 or 5.00%, why would th City
want to pay the loan at a rate of $100,000 or $200,000 more per ear?
That option did not make sense to her. If the City had diff culty
making payments or chose to use its money on something else, it
could always pay off the bonds and get out of debt. She askep Mr.
Hunt or Mr. Kosmont to list the cities that currently have fixe -rate
loans.
Mr. Hunt said that currently, he is working on fixed-rate financinc with
the cities of Carson, Beverly Hills (although Beverly Hills decided to
pursue a variable-rate program at its next option date), L.A. County,
and Lake Elsinore. Many cities do both fixed-rate and variable-rate
financing.
C/Herrera asked what the complexity to the City would be if it cose
to go with a fixed rate rather than a variable rate.
Mr. Hunt said that if the City desired to pursue fixed rate financin 3, he
would produce a new set of documents that would provide for f xed-
rate financing. There are minor errors and corrections in the current
documents. However, if the City chose to go with fixed rate finar ting,
he would come back to the Council with entirely new documen s for
adoption.
M/Chang felt that the matter of whether to select a variable or fixed
rate was not the only concern of Council. Some attention shou d be
paid to whether or not the City wants to pursue econ Dmic
development. One option is to pay cash. However, at this po nt in
history, interest rates are historically low and it may behoove thE City
to take advantage of this situation. That is the number one decision
and the Council seems to agree on this issue. Either a fixed rate or
a variable rate would allow the City to go forward. Council already
decided in a 3-2 vote to go with a variable rate loan and there is no
longer reason to debate that issue. In the short term, the variable rate
NOVEMBER 19, 2002 PAGE 12 CITY COUNCIL
would cost the City far less - $1.5 to 2 million in 10 years. At the end
of 10 years, the City would have the option to refinance the loan or
pay off the loan. If the City chose a 30 -year fixed rate, it would be tied
to the loan for that period of time. And, there is more flexibility in the
variable rate. Since D.B. lost the Redevelopment Agency, Council
knows that D.B. is not in a good position to attract business.
Additionally, the City does not get a return on any of its property tax
monies. Other cities get 49% back. That was a significant amount of
money for the City to lose out on. Therefore, this Council has to
consider other means of pursuing economic development in order to
create a better income stream (tax revenue) for D.B.
C/Herrera asked MPT/O'Connor to elaborate on the group of
documents she questioned.
MPT/O'Connor said she had concerns about the bylaws, but that she
had greater concern about the Preliminary Official Statement. She
also stated that she has not changed her mind on her earlier vote in
favor of a variable rate program. She was not okay with 4.01 on Page
5 of the Joint Powers Agreement.
C/Herrera pointed out that Paragraph 4.01 was found in each of the
documents that would be approved for the City, the Redevelopment
Agency and the Financing Authority. She suggested that the third line
be changed to read: 'The Chairperson may be the Mayor of the City
and the Vice Chairperson may be the Mayor Pro Tem of the City.
MPT/O'Connor felt the Finance Authority wording should mimic the
RDA wording. In Resolution R-96-02, Section 3, it says that "the terms
of office of Chairman and Vice Chairman of the Agency shall be for
one year, or until their successors have been chosen." She wanted
this language inserted in 4.01 on the Joint Powers Agreement. She
assumed that if the Council approved such a change, a Chairman and
Vice Chairman would be appointed tonight so that the Chairman of the
Financing Authority could sign the documents.
Mr. Hunt responded to C/Herrera that generally, that provision would
be in the Joint Exercise of Powers Agreement. If the Council chose
to remove the provision and add it to the bylaws, his firm would
comply with the Council's direction.
CA/Jenkins suggested the Council leave the substituted language in
the Joint Powers Agreement.
MPT/O'Connor explained that she submitted several questions that
resulted in changes, none of which are substantive. However, when
the motion is made, it should indicate that the changes will be
incorporated in the documents.
NOVEMBER 19, 2002 PAGE 13
CITY COUNCIL
C/Herrera moved, MPT/O'Connor seconded, to adopt Resolutio
2002-77 as corrected. In addition, amend the Joint Powe
Exercise Agreement, page 5 Section 4.01 by deleting the sena
"the Chairperson shall be the Mayor of the City; the Vice Chairp(
shall be the Mayor Pro Tem of the City" and inserting the folio
'The terms of office of Chairman and Vice Chairman of the Autl
shall be for one year or until their successors have been chosen
Chairman and Vice -Chairman of the Authority shall be appointed
among the members of the governing board of the Authority am
at the same time the Council of the City of Diamond is reorgan€
Motion carried by the following Roll Call vote:
AYES: COUNCIL MEMBERS - Herrera, MPT/O'
M/Chang
NOES: COUNCIL MEMBERS - Huff, Zirbes
ABSENT: COUNCIL MEMBERS - None
i No.
's of
once
!rson
ving.
iority
The
from
ually
!ed."
inor,
ADJOURN TO REDEVELOPMENT AGENCY MEETING: M/Chang adjorned
the City Council Meeting to the Redevelopment Agency Meeting at 9:17 p.m.
RECONVENE REGULAR CITY COUNCIL MEETING: M/Chang reconvened
the regular City Council meeting at 10:00 p.m.
8. COUNCIL SUB -COMMITTEE REPORTS/ COUNCIL MEMBER
COMMENTS: C/Huff attended a COG transportation meetin g on
November 7. On November 11, the COG officers met with the editorial board
of the San Gabriel Valley Tribune, to make certain all parties were on the
same page regarding pending matters. Mentoring was an exc llenfi
experience at D.B.H.S. Pathways Academy. He attended a m bility
conference yesterday in downtown L.A. Many transportation and el cted
officials convened to discuss the problem. It is hoped that the confer nce
created a single voice for the region so that the amount of tax dollars paid
into gas tax or some other tax would be returned to the region. On Sunday,
the 210 Freeway will open onto the 15 Freeway. Hopefully, this chang will
decrease the congestion on local freeways.
C/Zirbes continued to work with staff and residents on neighbor lood
improvement issues and pushing forward on a market for the south e id of
town. He hoped to make a good announcement to that end in the near
future. He wished everyone a Happy Thanksgiving. Everyone shou d be
thankful for their family and friends and take time to remember those who
have been lost to us. He was thankful for the opportunity to represent the
citizens of D.B. as a City Council Member.
C/Herrera pointed out that tonight was historic for Council. She believec that
the Council took forward steps toward being able to accomplish dynamic
things for the City in the future. All five Council Members are focused on the
NOVEMBER 19, 2002 PAGE 14 CITY COUNCIL
goal of providing economic development and leverage the City's investments
to the extent possible.
She was excited about the future possibilities.
MPT/O'Connor said that on November 6, the Wildlife Corridor Conservation
Authority held its meeting. D.B. residents should be very proud that their City
Manager, City Attorney, Council Member Herrera and a resident challenged
WCCA Governing Board and staff on actions that they had taken. On
November 17, she attended the D.B. Rotary fashion show and modeled. It
was a fun and exciting afternoon. Congratulations to the D.B. Rotary Club
for sponsoring this fine event. Last night, the Coordinating Committee met.
The Lions Club will sponsor a Rose Parade float entitled "One World, One
Heart." The Club is selling polo shirts, sweatshirts, pins and T-shirts. All of
the proceeds go toward construction of the float. She thanked the D.B.
Chinese-American Assn. for their support of the Community Foundation's tile
project. Other groups such as the Indian Community, the D.B. Seniors, the
Diamond Age Seniors, the D.B. Breakfast Lions Club, Deane Homes Swim
Club, and Chamber of Commerce have supported the tile project. The
project provides a great opportunity for organizations to participate and
benefit their group. She congratulated the Diamond Ranch football team for
winning their league title. She asked staff to monitor the team's progress so T"
that they could receive recognition by the Council. She wished everyone a
Happy Thanksgiving.
M/Chang congratulated AAA and SEMA on the grand opening of the auto
research center and smog check facility. Congratulations also to the New
England Financial regional office on their grand opening. Both businesses
are located in the Gateway Corporate Center. He echoed C/Herrera's
comments on tonight's historic decision to move forward to provide financial
opportunities to the City. He also thanked the D.B. Chinese-American Assn.
and other community organizations for their support of the D.B. Community
Foundation. He wished everyone a happy and fruitful Thanksgiving and.
family gathering.
ADJOURNED REGULAR MEETING: M/Chang adjourned the Regular Meeting
to Study Session at 10:17 p.m. in memory of a student who recently lost his life in
an accident on Brea Canyon Road.
RECONVENED STUDY SESSION: M/Chang reconvened the Study Session to
discuss the Library Bond Act at 10:17 p.m.
Following a presentation by DCM/Doyle, Council directed staffto continue on
the same path as previously discussed.
ADJOURNED TO CLOSED SESSION: M/Chang adjourned the Study Session to
Closed Session at 10:55 p.m.
[7
1
NOVEMBER 19, 2002 PAGE 15 CITY COUNCIL
► Conference with Legal Counsel - Existing Litigation - Government
Code Section 54956.9(a):
Los Angeles County Superior Court, Case No. BS079642, City of Dimond
Bar, et al v. Mountains Recreation Conservation Authority. (Based on deice
from the City
Attorney, the City Council determined that receipt of advice from legal
counsel regarding this matter of pending litigation in open session NOUld
prejudice the position of the City in the litigation.)
ADJOURNED CLOSED SESSION: M/Chang adjourned the Closed Sesion at
11:10 P.M.
RECONVENED TO REGULAR MEETING: M/Chang reconvened the Rgular
Meeting at 11:10 p.m.
CA/Jenkins reported that there was no reportable action taken during the
Closed Session. II
9. ADJOURNMENT: There being no further business to condi cted,
M/Chang adjourned the meeting at 11:12 p.m
T M4 -MA F.�CR18BINS,
Assistant City Clerk
ATTEST:
WEN CHANG, Mayor