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Home My WebLink AboutNOVEMBER 24,1992 I 1 0110_ "'-0 II.;) Y q.;J c.c 34:0374 CITY COUNCIL PROCEEDINGS ARE TAPE RECORDED AND ON FILE IN THE OFFICE OF THE CITY CLERK ROLL CALL l. LONG TERM FINANCING OPTIONS FOR CAPITAL PROJECTS (Rod Gunn Assoc.lnc.) 03.30 -IV MINUTES CITY COUNCIL OF THE CITY OF ARCADIA ADJOURNED REGULAR MEETING (WORK SESSION) NOVEMBER 24, 1992 The City Council met on Tuesday, November 24, 1992, at 5:30 p.m. in an Adjourned Regular Meeting Work Session in the Conference Room of the City Hall Council Chambers. PRESENT: Councilmen Ciraulo, Harbicht, Lojeski and Fasching Councilman Margett ABSENT: It was MOVED by Mayor Fasching, seconded by Mayor Pro tem Ciraulo and CARRIED to EXCUSE the absence of Councilman Margett. ORAL COMMUNICATIONS None In response to Council's interest in investigating the feasibility of alternative means of financing approximately $9,000,000 of City projects such as Fire Station No.2 on Baldwin Avenue; the Library expansion; and the mall parking lot, Rod Gunn was introduced by the City Manager to present a financing program opt:ion. Mr. Gunn stated in part, that an alternative to expending City reserve funds to construct the aforementioned projects could be a "debt management program". This financial tool is something to be used when conditions are right in two cases, 1) when it is financially advantageous to the City, or 2) out of necessity. In Arcadia's situation, the City is fortunate to be in a position of having the reserve funds. However, there are many times when it is financially advantageous to go out and issue revenue bonds to finance capital projects than to use reserve funds. Basically, when the City has the reserves to finance capital projects, if these funds are invested for a comparable term as the bond, the spread between taxable rates that the City invests at and the tax-exempt rate on bonds will not only pay for the cost of financing the projects but may show a small arbitrage profit. The question to the Council, Mr. Gunn noted, is, "if you can borrow the money at no cost to the City and possibly even realize a financial profit, wouldn't it be better to finance than to spend reserves?" The reserves are then available for emergencies and also for annual cash flow problems, since monies flow to cities at irregular intervals ... property taxes for example. The point spread for all of this is all important - the spread between what the City can invest at and what the City can borrow at. Mr. Gunn's informational letter of November 9, 1992 sets forth the legal authority for bond issues and states that, currently the most common vehicle for issuing bonds supported by a City's General fund is through a Marks-Roos joint powers financing authority. Member public agencies of the Financing Authority typically are the City and the City's Redevelopment Agency. The Financing Authority is formed by the execution of a joint exercise of powers agreement authorized by the California I 11/24/92 2. DOWNTOWN URBAN DESIGN PROPOSAL (Michael Freedman) 3. CITY PARKWAY OBSTRUCTIONS 09/0 _ 5'0 34:0375 Government Code. The City Council and the Agency Board authorize formation of the Financing Authority by resolution. And the City Council may sit as the governing body of both members of the Financing Authority. A Financial Authority is authorized to issue revenue bonds. The repayment of such bonds is secured by a lease between the Financing Authority and the City. The City makes payments to the Financing Authority pursuant to the lease and the Financing Authority assigns such revenues to a trustee for repayment of the bonds. The timing of the sale of bonds and the process involved was explained in detail by Mr. Gunn and is set forth in his informational letter of November 9. Mr. Gunn, in discussion with the Council answered questions and explained in detail the debt program alternative to expending General Fund reserves for the construction of the three proposed projects. Mr. Gunn advised Council that the Internal Revenue Service has issued regulations to the extend that, if the City 1 pursues the alternative financing program to issue revenue bonds, prior to the construction of the project the Council must adopt a "Reimbursement Resolution" which must contain very specific items such as the estimates of construction costs; location of the project, etc., according to the Internal Revenue Service. Mr. Gunn suggested that, because it would not cost the City anything, the Council adopt such a resolution prior to awarding bids for the Fire Station and the parking lot so that Council would have the flexibility of reimbursing the City at a later date, if Council should choose to do so for certain costs. This step would preserve the City's option in the event the Council chooses to issue revenue bonds rather than using General Fund reserves. Further, the resolution would not obligate the City if the projects were not constructed with bond funds. Mayor Fasching, Mayor Pro tem Ciraulo and Councilman Lojeski agreed that as long as the City would not be obligated in any way, the reimbursement resolution should be adopted for the Fire Station and the parking lot. Councilman Harbicht was not convinced that he would want to go into debt for $9,000,000. The City Manager said that staff would prepare the resolution for Council's consideration in January or February, and Council could decide whether or not to adopt it at that time. Michael Freedman, scheduled to give a presentation of a downtown revitalization program, had been confirmed, however, he did not arrive as expected for the meeting. Currently the Arcadia Municipal Code Section 7230 prohibits structural obstructions in City parkway areas. Some obstructions, such as brick mailboxes, planter walls, ,steps, and fences/walls currently exist in some parkway areas at various locations in the City. Each obstruction was constructed in violation of Code Section 7230 at an unknown date, unless specifically exempted from Section 7230 by the City Council. I Current practice, which is in consonance with past practice of many years, is to not attempt to force removal of an existing obstruction unless it presents a potential safety hazard. However, obstructions which are observed to be under construction in the parkway in violation of Code Section 7230 are required to be removed. The main reasons for prohibiting structural obstructions in the City parkway area are: 1 - To avoid risk of potential litigation regarding injury or damage caused by the obstruction; 2 - To provide the City with flexibility now and in the future to construct certain roadway improvements; relocation of water and 2 11/24/92 I 1 4. 5. CLOSED SESSION , OttO - "HJ ADJOURNMENT ATTEST: 34:0376 sewer lines, or allow undergrounding of utilities; to plant trees or widen the roadway; 3 - To avoid conflict and potential litigation with current and future property owners if and when the City needs to remove the obstructions. As suggested by the City Manager, if the City Council wishes to allow construction of structural obstructions in the parkway area, the property owner could be required to execute an agreement which would provide for the cost of removal to be borne by him(her. The agreement would be recorded and would run with the land. Municipal Code Section 7230 could be revised to allow the aforementioned construction. At the conclusion of the staff report considerable discussion ensued. These type of improvements are common within the City, especially where there are no sidewalks. Council questioned whether or not to inform all residents of the ordinance and that the City may have to demolish this type of construction in order to put in City improvements. Also, if City staff becomes aware of construction in parkway areas, to allow the property owner to sign an agreement that, if City construction occurs into the parkway areas, to allow the property owner to sign an agreement that they would bear the cost of replacing those improvements demolished by the City. It was also suggested that the property owner sign a release at the time of requesting a permit for certain types of construction. Staff suggested deleting Section 7230 from the Code and the City Attorney advised that he would be concerned with just obviating completely the prohibition on obstructions in public property. What if there is a safety problem created? This is why the prohibition was probably created. The City Manager commented that Council's direction is clear... let staff take it and see where we are ... The peacock informational brochure was not available for presentation. ITEMS FROM COUNCIL MEMBERS None The City Attorney announced that, "Council will adjourn to a Closed Session pursuant to Government Code Section 54956.8 to give instructions to City negotiators regarding potential easement acquisition of certain property at Baldwin and Huntington Drive, Mall property, relative to City negotiations with Hahn Company and Santa Anita Realty Enterprise". At 6:38 p. m. the City Council ADJOURNED to the CLOSED SESSION, RECONVENED AND ADJOURNED at 7:04 to 7:00 p. m. Tuesday, December 1, 1992 in the Conference Room of the City Hall Council Chambers. e Fasching, Mayor Ju 3 11/24/92