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1996.07.23_TC_Minutes_SpecialS + , TOWN OF HIGHLAND BEACH TOWN COMMISSION MINUTES - SPECIAL MEETING Tuesdav, Julv 23, 1996 ____ 1:30 P.M. Mayor Arlin G. Voress called the Special Meeting to order in Commission Chambers at 1:30 P.M., stating its purpose was to discuss Town Hall Renovation/Expansion. Town Clerk Doris Trinley called the roll. The Mayor, Vice Mayor John F. Rand, and Commissioners Arthur Eypel, David Augenstein and Thomas J. Reid were present. Town Attorney Thomas E. Sliney and Town Manager Mary Ann Mariano were also present, as were members of the general public. Charles F. Schoech, Esq. of Caldwell & Pacetti, and Peter Czajkowski of Stifel, Nicolaus & Co. were in attendance to answer questions regarding legal and financial aspects respectively, pertaining to Certificates of Participation (COP) method as a alternative vehicle to having to go to referendum as set forth in Section 2.01(41) of the Town Charter, should the Commission decide to go forward with the project. Mayor Voress first asked Town Manager Mariano to distribute and review revised construction and referendum timeframes, which was done. Ms. Mariano noted that the revisions consisted only of additional information in the construction award timeframe, advising that there was but one architectural firm (Stofft), which had submitted the necessary materials to be placed in consideration for the project. Regarding the funding timeline, previously transmitted, Ms. Mariano said all dates were on target. (Copies of timeframes attached to and made part of these Minutes.) Ms. Mariano then advised that the Financial Advisory Board, in a meeting held this date at 9:30 A.M., had recommended that if the Town Commission decided in favor of the project, the total cost of approximately $1 million, plus financing costs, be borrowed, using the Certificates of Participation method for a 15-year period rather than a 10-year period. Town Attorney Sliney noted for the record that the Town Commission had basically two (2) options, i.e., go to referendum under the Section 2.01(41) of the Charter, or use a Certificates of Participation method in lieu thereof. He then requested Attorney Schoech to explain the legalities of the COP method. Attorney Schoech concurred with the Town Attorney's remarks, first addressing legal requirements of general obligation bonds (referendum). He said that because financing would continue in Town Commission Special Meeting - Minutes July 23, 1996 Page 2 of 6 excess of one (1) year, the law requires that if you pledge the "full faith and credit of the community" (the bonds), then a referendum would be required and citizens would have to deliver a favorable vote on the issue. Regarding the wording of the bond ballot question, Mr. Schoech said the nature, amount and purpose of the financing must be identified; other issues, which have already been addressed in the proposed draft question, include the length of time of financing and the interest rate (usually "not to exceed the maximum rate allowed by law"). Mr. Schoech noted that all this information must by law be included in ballot language of 75 words maximum, and gave an example of how it might be done. However, referring to the Charter language, which specifically speaks to any expenditure over $350,000 in any given fiscal year having to go to referendum, he said this might have to be considered as another, separate ballot question which would have to be put to the voters, because the 75-word constraint would not allow this specific question to be included in the draft ballot language. Mr. Schoech's example was, "Shall the Town expend in excess of $350.000 in fiscal year 96/97 for the Municipal Complex expansion?" • The problem with having to add this second specific question, Mr. Schoech advised, would be the possibility of only one of the questions receiving majority favorable vote, thus creating a "Catch 22" situation, i.e., the $1 million bond issue might be the sole approved ballot question, and become revenue for the Town, but only $350,000 would be allowed to be spent in any fiscal year. It was Mr. Schoech's recommendation that two (2) questions not be considered, saying that there would be no purpose in approving the bond issue if the monies could not be expended. He further said that if the Commission decided to go to referendum, the draft ballot language could be amended to make it clear that if the bond issue were approved, the monies were planned to be spent in fiscal year 1996/1997. Attorney Schoech noted that if the Commission wanted to go forward with the project, but did not wish to take the time to go through the electorate process, then the Certificates of Participation method was a viable alternative to be considered. Under the COP method, Mr. Schoech advised, because the "full faith and credit" (general obligation bonds) of the municipality would not be pledged, a referendum would not be needed; also, because in any given fiscal year the lease/purchase payments to a not-for- profit public building corporation, which will own the facilities, would be less than the $350, 00, the terms of Section 2.01 (41) would not be violated. • Town Commission Special Meeting - Minutes July 23, 1996 Page 3 of 6 Mr. Schoech assured the Commission that both procedures are done routinely throughout the State. Under the COP method, a legal method of financing approved by the IRS, it would be necessary to create a not-for-profit corporation which would own the facilities and to which the lease/purchase payments would be made. Mr. Schoech advised that the Palm Beach County Governmental Center was built using the COP. Lengthy discussion followed Mr. Schoech's remarks, with the Commission posing numerous legal, financial and technical questions. During this time, Ms. Mariano advised that the proposed 1996/1997 fiscal budget included appropriate expenditure, revenue and expense figures to accommodate the project should the Commission decide to employ the COP method; however, should the Commission decide to go to referendum, the budget would simply be amended to reflect this action. Also during discussion, it was suggested by Mr. Czajkowski that should the Town consider the COP method, it be done on a "lease/lease back" basis, rather than a "lease/purchase," as this would eliminate the need of title transfer. Commissioner Reid then gave an outline of the COP method, as • presented by Mr. Czajkowski during the FAB meeting held this morning. Responding to Vice Mayor Rand's question regarding how monies raised by the Library Foundation toward the cost of the Library's share of renovation/expansion, at this time an unknown amount, could be differentiated from the $1 million proposed to be borrowed through a COP, Mr. Czajkowski said that one series of bond could be made to have an earlier prepayment right, or a series of the lease could be taken to allow for a prepayment of up to a certain amount. Regarding this possible scenario, Attorney Sliney reminded that the Town, in any event, would be the ultimate guarantor. Concluding discussion, the Commission first voted on the project itself upon MOTION by Vice Mayor Rand/Commissioner Augenstein: THE TOWN COMMISSION APPROVES THE PROPOSED RENOVATION/EXPANSION PROJECT OF THE TOWN HALL COMPLEX. Roll call met with unanimous favorable vote. Before the next Motion was called for, Vice Mayor Rand stated for the record that he was uncomfortable with the COP method and personally favored going to referendum, saying he felt the townspeople should decide whether or not the Commission should spend $1 million on this project. Vice Mayor Rand said that while he thought the $350,000 spending limitation set forth in the • Town Commission Special Meeting - Minutes July 23, 1996 Page 4 of 6 Charter was unfortunate and foolhardy, nevertheless it was a law that Mr. Schoech had advised was enforceable by any resident of the Town who might question the Town's actions in this regard. The Vice Mayor said he felt it would be a sad state of affairs if the townspeople failed to see the merit of the project; however, it was the Commission's obligation to educate and convince them that they should support the project, as it made a great deal of sense. Commissioner Reid stated for the record that he supported the COP method of funding as presented. Mayor Voress said a case could be made for either approach; however, having been elected to represent their fellow citizens and being closer to the issues than the general citizenry by virtue of dealing with them, the Commission is at the point where it must be acknowledged that they have looked at the issue and made a decision relative to what they think is best for the Town. And, the Mayor added, if the townspeople don't like that decision, then they have the right to elect a new set of officials to more appropriately address the issues that they think represent their interests. Further, Mayor Voress said while he completely understood Vice • Mayor Rand's sentiments, he thought not waiting for a referendum would be a more expeditious decision, with the townspeople being asked for their support as they are made aware of the dilemma the Commission had faced in this regard. Commissioner Augenstein referred to the possibility of a referendum being defeated, thus necessitating housing the Police Department, now located in temporary quarters, in what is now Library space. He asked that serious thought be given to the fate of the Library if this should happen and, noting its popularity, the Commissioner suggested that it would be best to ensure the Library remains intact as it now enjoyed by so many residents. Therefore, Commissioner Augenstein said that because the townspeople look to it for guidance, he felt the Commission should make the ultimate decision in this regard. Commissioner Augenstein then stated he was in favor of the COP approach to the project. Commissioner Eypel said that while he, too, understood Vice Mayor Rand's position, he reminded that when the Police Department was displaced to a trailer in order to renovate the new fire station, and the Library Foundation was created, these actions supported at least the Commission's intention to do something in the way of renovation/expansion of the municipal complex. Therefore, Commissioner Eypel said he supported the COP method of funding, as in his opinion the die had been cast and he perceived the need to proceed as quickly as possible. n ~..J • Town Commission Special Meeting - Minutes Julv 23, 1996 Page 5 of 6 Speaking to the real possibility of facing huge problems if a referendum failed, including displacing the Library in order to house the Police Department, Commissioner Reid reiterated his favorable position toward the COP method of funding. Ending discussion on the merits of going to referendum versus employing a Certificates of Participation method, the Commission voted on the funding approach for the project upon MOTION by Commissioner Reid/Commissioner Eypel: THE TOWN COMMISSION MOVES TO PROCEED WITH THE RENOVATION/EXPANSION PROJECT OF THE MUNICIPAL COMPLEX WITHOUT A REFERENDUM. Roll call vote was as follows: Commissioner Eype1.........Aye Commissioner Augenstein....Aye Commissioner Reid..........Aye Vice Mayor Rand............Nay Mayor Voress ...............Aye • The following Motion was then made by Commissioner Reid/Commissioner Augenstein: THE TOWN COMMISSION DIRECTS THE TOWN MANAGER TO INVESTIGATE THE PROCEDURES NECESSARY FOR THE TOWN TO ENGAGE IN A CERTIFICATES OF PARTICIPATION FUNDING METHOD FOR THE RENOVATION/EXPANSION PROJECT OF THE MUNICIPAL COMPLEX. Roll call vote was as follows: Commissioner Augenstein....Aye Commissioner Reid..........Aye Commissioner Eypel.........Aye Vice Mayor Rand............Nay Mayor Voress ...............Aye At this time, Vice Mayor Rand requested to clarify his position for the record. He said he was totally in favor of the project and had no objection to it, having made the Motion to approve it. However, the Vice Mayor stated he did object to the way the Commission was going about it and said he felt a referendum would be approved if the need for the project was made clear to the voters. • Brief discussion followed, which included making the voting public aware of why the Commission voted to approve COP funding and the • Town Commission Special Meeting - Minutes July 23, 1996 Paae 6 of 6 length of funding time being possibly reduced to 10 years rather than the Financial Advisory Board's recommendation of 15 years. There being no further business to come before the Commission at this time, the Special Meeting was adjourned by Mayor Voress at 3:00 P.M. upon Motion by Commissioner Reid/Commissioner Eypel. dmt ~~ Arlin G. Voress, Mayor i~~2~~ ~~ ~ C.=._ ' ~~ John F. Rand, Vice Mayor Arthur Eypel,~ om issioner David Augenst Commissioner .-- ~ Thomas J. Reid, Commissioner Attest : ~-- ~- Date : / ~~- ~~