President of Council Randy Danbury called Council to order on August 25, 1999, at 7:00 p.m.
The governmental body and those in attendance recited the pledge of allegiance.
Mr. Knox took roll call. Present were Council members Galster, Manis, McNear, Pollitt, Vanover, Wilson and Danbury.
COMMUNICATIONS - none
COMMUNICATIONS FROM THE AUDIENCE - none
ORDINANCE NO. 42-1999 "AN ORDINANCE PROVIDING FOR THE ISSUANCE AND SALE OF $7,000.00 NOTES, IN ANTICIPATING OF THE ISSUANCE OF BONDS TO PAY COSTS OF CONSTRUCTING, FURNISHING AND EQUIPPING ADDITIONS AND RENOVATIONS TO MUNICIPAL RECREATION FACILITY, AND DECLARING AN EMERGENCY"
Mrs. McNear made a motion to read by title only and Mr. Galster seconded. The motion passed with seven affirmative votes.
Mr. Knox said the ordinance states that Council authorizes the sale of $7,000,000 in notes to construct, furnish and equip the Community Center expansion. The note will have a term of one year. Bonds may, if desired, be issued at the end of that time or another note may be authorized at that time. The notes will have an interest rate of up to 5 Ĺ %. The bonds, if issued a year from now, may have a rate of up to six percent. The proceeds from the note are dedicated to the Community Center expansion. The City pledges the full faith in the credit of the Cityís taxing power, that is the General Fund. If necessary, taxes may be raised to raise funds to repay the note. The current rate is less than four mils. The note shall be structured in such a way that it will qualify as a municipal bond that should be tax free.
Mr. Galster made a motion to adopt and Ms. Manis seconded.
Mrs. McNear said the property taxes are discussed in Section 9. From our discussion last time I was under the impression that we could not raise or had any intention of raising taxes to pay for the Recreation Center.
Mr. Quinn replied that the ordinance levies the tax. It does not require you to collect the tax. I donít think anybody expects you to collect the tax but if there was a default that would be the source of collection.
Mr. Wilson said in the past, if a city has defaulted, what is the average mil?
Mr. Quinn (Legal Counsel to the City in this matter) responded I have never had experience with a default. The City of Cleveland did a few years ago but Iíve not had experience with it.
Mr. Wilson stated the wording appears as those it is going to happen. Mr. Quinn said it is required by statute.
Mr. Schneider said I have talked with Mr. Quinn and I told him itís been forever since weíve had any financing legislation of this nature and it might be a good idea to give us a college 101 course in notes and bond financing so if we run into questions from our constituents, we have an intelligent answer to give back.
Mr. Quinn said one of the last timeís Springdale borrowed money was October 1975. The debt you are acting on this evening is a general obligation debt. The ultimate source, if all other sources fail, is the levy and collection of tax on all the property in the City in an amount equal to what it takes to pay principal and interest in that year. Only general obligation debt levies a tax on property. It does not require the City to collect that tax. It can be paid from any City source. In Ohio it is the most secure tax exempt debt because the purchaser(s) of the bond knows that if all else fails, this tax will be collected. There are two limits to issuing general obligation debt. The first is called the direct debt limit in which you can issue debt up to 5 Ĺ% of the assessed evaluation of the property in the City. The second one is the indirect debt limit which is any given piece of property that is subject to multiple taxation can only be taxed up to ten mils evaluation, such that a property on the street is subject to taxation by the school district, Hamilton County, joint vocational district so you can never get anywhere close to 5 Ĺ% on the direct debit.
Mr. Galster said the purchaser comes above all other debt and they can attach the revenues that come into the City.
Mr. Quinn stated it would be in advance of any mortgage that was on to a bank on the property. It is the first thing that would get collected.
Mr. Quinn stated the other kind of debt that is available is revenue debt. Revenue debt is generally that which comes from a project which throws off revenues. I donít think the City has any. Self sustaining debt can be revenue debt but that is, special assessment. If you built sidewalks in a subdivision and assessed the property owners for building that, the amount of money that would come off of that would be sufficient to pay the debt. The tax increment financing transaction under discussion for Pictoria Island would be self sustaining debt. There would be no pledge of the City tax revenue so that would come solely from the service payments which would come off of the development of the City. The reason in this ordinance that it requires that you say you are going to issue bonds, even if thatís not the plan of the City, you have to make the calculation of the ten mil assessment, and the only way you can do that, is to say these bonds will be out for 22 Ĺ years at an assumed interest rate and then you work back to the calculation of what the levy is. Even though it may be the unofficial policy of Council to pay off this facility in a few years from general revenues of the City, thatís the reason it is in the ordinance.
Mr. Danbury said we go out to 22 years. Suppose we get a windfall we didnít anticipate or we were able to realize a cost savings. What is the penalty to the City if we were to pay these off?
Mr. Quinn replied as long as you are in notes, you can pay them off at the end of the one year period.
Mayor Webster said if we want to pay a slight premium we could have a callable bond.
Mr. Quinn responded in the first ten years you are pretty much locked out from paying it. From ten to fourteen years you pay a little bit to pay it off.
Ms. Pollitt asked can you explain to me how you go from a note to a bond?
Mr. Quinn replied a note is a one year instrument. It would be refunded and rolled over after the year is up. If at the time the note is coming due the City decides it wants to lock in permanent financing, it would issue bonds at that time, and the bonds would have a much longer life.
Ms. Pollitt asked at what time do we decide weíre going for a bond?
Mr. Quinn answered you can roll the notes over for five years with doing nothing but paying interest. In the sixth year you have to start paying down the principal at 5% a year. Because notes are short terms instruments, they have a lower rate of interest, but there is also the cost and the inconvenience of rolling them over on an annual basis.
Ms. Pollitt asked whatís our game plan on this debt?
Mr. Wilson said our plan is to hopefully pay it off in a shorter period of time than our initial projection. If we donít get the revenues we have to go to Plan B, which is a longer period.
Ms. Pollitt asked do we have a game plan on what weíd like to pay down each year?
Mayor Webster responded $600,000 each year for the next five years, then weíd probably have to sell a bond, but it would be for substantially less than what we are talking about today.
Mr. Knox said timing is involved in this and there are a lot of factors we canít control, i.e., primarily the interest rate. The plan has been made by the City to pay a certain amount of money over the five year period but it may be timely to depart from that at one certain time.
Mr. Galster said if we have development such as Pictoria Island, that kind of development could have an impact on the income that comes to the City and we, as Council people, need to be aware of the money we are spending so we try to get that down as quickly as we can. When we tried to look at it in the budget format, on some of the street repairs we are going for outside funding even though in our budget we have them with no funding. So with those types of things plus belt tightening, we should be able to come up with the $650,000. Anything we do above that is great but we didnít want to get into something more than five year notes and a ten year bond cycle.
Mr. Wilson stated I think it is important for the public to know that it is not our intention to be cutting City services in order to pay these notes and bonds. Our intent is not to cut services but to take a closer look at the budget. We feel we can handle this with our current expenditures and as other developments come in and bring us more money that gives us more of a cushion.
Ms. Manis asked can you tell me who uses the competitive bid process if 95% of municipalities use the negotiated method? Do other people besides municipalities use issue notes?
Mr. Quinn replied I donít know if that term covers townships and counties, etc. itís a philosophical view. I had to pull out my file to figure out how to do a competitive bid. Up until about eight years ago competitive bidding was required more by statute. When the law changed many went to the negotiated bid.
Ms. Manis asked if you did a competitive bid and you didnít like it, couldnít you go back and do a negotiated bid?
Mr. Quinn replied you could if you knew that they should be thrown out. Thereís certainly the right to reject all bids.
Mr. Knox stated according to this ordinance as it is written, whether to go competitive or negotiated is mine, but in order to avoid Council saying later on what was I doing, I decided to introduce this early with my recommendation to go with a negotiated bid. Now if Council adamantly wants us to go with competitive I will go that direction, but otherwise my recommendation stands.
Ms. Pollitt said Section 5 says the notes shall be issued in the denominations and numbers as requested by the original purchaser and approved by the Clerk of Council/Finance Director provided that the entire principal amount may be represented by a single note and it shall not have coupons attached; it shall be numbered as determined. Could you elaborate on that?
Mr. Quinn answered if there is one purchaser for the notes, it would be one note. If there are more than one purchaser there would be more than one night. You cannot longer attach coupons to bonds or notes.
Mr. Knox said both of the people I spent the most time talking to suggested we allow this to be set up by book entry because itís most probably going to be one bidder purchasing these bonds and the book entry makes it much simpler on people. Actually, that almost makes that paragraph inoperative if we go to a book entry. We register the bonds with a national registry and we actually pay them and the money goes to the people who purchased it. Thereís no certificate.
Mr. Quinn stated I have been doing this most of my life and I donít understand book entry so I donít want to try to explain it to anybody else.
Mr. Galster asked would it be correct in saying in reference to Section 5, if we were issuing a ton of notes it would be handled more like a share of stock in a company where you get a certificate as opposed to a promissory note if there is one buyer.
Mr. Quinn said there is a physical note that goes to the Depository Trust Company who is deemed to be the holder of the note and they are obligated to make all of the payments.
Mr. Galster said I want to go back to what Mr. Wilson said before, letting the public know that we have no intention of cutting City services and/or raising taxes. However, passing this ordinance says if we have to we will be cutting City services and we will be raising taxes because it is an obligation that comes above and beyond all others. This is our number one issue.
Ms. Manis asked if I think we should go competitive bid then I should vote no on this ordinance?
Mr. Knox replied if you vote no on this ordinance we wonít borrow money and the day will come that we will be out of money.
Ms. Manis asked how can I say I donít want negotiated sales?
Mr. Knox replied we will have to have a consensus of the Council as to which way you want to go. At this time I strongly urge us to go the negotiated process. When Mr. Quinn is done I will show you the two primary presentations we have here.
Ms. Manis responded they are here for us to read. Has Finance Committee met and have they decided what they would recommend.
Mr. Galster said originally the Finance Committee meeting was to discuss that particular issue. It wasnít a discussion about the bond issue.
Mr. Danbury said we have to do something with Ordinance 42.
Mr. Galster said you say, Mr. Knox, that itís up to your discretion which way to go and if, in fact, itís at your discretion, is that for every year that we continue to roll the note?
Mr. Knox replied this is for one year. Next year we need another ordinance. Thatís one of the reasons Iím making my recommendation, because we are only dealing with a one year period. We can take a look at this and see how it works out for the City and if it doesnít, one year from now we can go with the competitive bid.
Mr. Danbury asked suppose nine months into any given year we decide to go to bonds, can we do that?
Mr. Quinn replied you can do it earlier because the holder of the note canít stop you from doing it earlier. Since I drafted the ordinance the intent on the granting discretion was to be as neutral as possible. I didnít know what Council wanted.
Ms. Manis said where it says Clerk of Councilís discretion, could that say City Councilís discretion?
Mr. Quinn replied it is boilerplate language. I assumed that the Clerk would follow the wishes of Council.
Mr. Danbury said you said bonds can go out for 22 years. Can we set a bond for four years?
Mr. Quinn responded it can be anything you want it to have.
Ms. Manis asked is Finance going to make a decision tonight on whom we go with as an underwriter if we decide to go that way?
Mr. Wilson answered we have to make a final decision tonight on whether we pass it and whether we go negotiated or competitive. When I first suggested that Finance Committee get together I assumed it would just be Mr. Galster, the Mayor, Clerk of Council, City Administrator, Assistant City Administrator and me. When other Council members expressed interest and we passed that quorum, it was decided to have a Council meeting.
Ms. Manis asked are you going to make a decision on whom to go with?
Mr. Wilson replied yes, we would have to make that decision tonight. Is that right, Mr. Osborn?
Mr. Osborn responded I would defer to the Finance Director on that, but if Council can reach consensus it would be a good opportunity. The next Council meeting is a week from tonight and the longer we postpone this the longer it will be until we get the money from the sale. Our expenses at the Center are escalating very rapidly. The last settlement for the month of June was $275,000, and that was before the steel people got on site. I am anticipating that we are going to have a July request for payment in excess of that. We canít continue taking hits like that without eventually running out of money this fall.
Mr. Wilson asked from the moment we make the decision to go negotiated versus competitive and get the notes issued, what is the time frame?
Mr. Quinn stated if you are going to go competitive we need to prepare an official statement which is a disclosure document like a prospectus for a stock offer. That would take a while, then you have to get the notices out to the bidders. A negotiated bid would take one to two weeks.
Mr. Knox stated I would object most strongly to Council telling me which companies to place this with. The question I originally asked is whether Council would agree whether it would be best to go negotiated versus competitive. There are many other things that bear on this and I donít think we could finish talking about it tonight. We in the Finance Department spent a lot of time on this and there are a lot of things that bear on it. Which company is used I would like to reserve as my decision. I donít really want other people making that decision and I believe itís proper that I make that decision.
Mr. Galster said as far as a Finance Committee recommendation, I have no problem going with the negotiated route as opposed to the competitive route. I think we can save some money and it speeds up the process. In reference to which company we would go with, the packages we have here now are like bank resumes as opposed to bids that we thought we were going to try to put together. We were hoping to see a hint of a number. Mr. Quinn, will you be involved in reviewing the different proposals if we do it as a negotiated bid?
Mr. Quinn, if I am asked I will do it? I would like to do some guidelines to the various underwriters saying this is what weíre looking for. Make sure itís quoted in round numbers.
Mr. Galster asked Mr. Knox, are you familiar with the bidding document he is talking about?
Mr. Knox replied no.
Mr. Quinn said one thing I think is the underwriters want to be hired and then they will go out and find the purchaser.
Mr. Galster asked when we go out and get these bids, do we get a rate quote at that point or do we select one based on quote qualifications?
Mr. Quinn replied I donít know what fees they will charge.
Mr. Galster said weíll understand what their services are, what the rate of their services are and then weíll hire them prior to actually getting a quote on the rate these notes will be issued.
Mr. Danbury said so we hire a company based on the company, not the rate.
Mr. Knox said I have a list of things I thought we should cover and Mr. Quinn has admirably covered the first two. I would be very happy for Mr. Quinn to review these as an individual but I have contacts outside of this state to get an objective opinion and if we care to hire another financial firm, I have one ready to review the entire thing. There is a small expense of $10,000 to $20,000. I feel quite comfortable that Mr. Quinn with his experience will be able to see that the City is well served.
Mr. Wilson said I feel the Finance Committee of which you are a member should be involved in the final decision making. Council has input to the Finance Committee and the Finance Committee gives direction. I feel very uncomfortable with one person having sole discretion on where to invest. I think weíre all intelligent enough to be able to review the material and ask questions, and have you, because of the work youíve done and the job you hold here, give us some direction, then the committee makes the decision and you proceed. For you to feel that you are the person to make the final decision negates the responsibility of the Finance Committee. All of us elected officials are ultimately responsible for this because we all vote on it.
Mr. Knox replied you are the Finance Committee. I am the Finance Director. If you do what you are saying, you are taking my job and doing it, and thatís why I object to it. I want to do my job; I donít want somebody else to do it for me. I will wholeheartedly react and probably agree with your findings but I donít want you taking over my job. People have tried that in the last few years and it didnít work. I want to stop it right now.
Mr. Wilson responded Iím not trying to take your job away from you but I want more involvement than a paper signature saying go for it. Initially this meeting was just going to be Finance Committee but because others on Council wanted to be involved that tells us that this decision is such a magnitude that we want more involvement.
Mr. Knox said I suggest we proceed and the next things I would like to cover are the costs by the individuals who have given us costs and their predicted range of interest, and also take a look at the past performance of those companies. When you see the numbers that I have looked at I think we will end up at the same place.
Mr. Danbury said I took that as a challenge as well and I donít think that was the intention you had. Iím sure there are reasons and rationale as to why you are going to make the decision. It is your job but Mr. Wilson did touch on the fact that it is $7 million and we are going to have to live with the repercussions and weíd like to have some input. It is your final decision and I donít think anybody is trying to take away your power.
Mr. Knox said I remind you again that I raised this thing. If the ordinance had passed the way it was without me saying a word, I would have been making all those decisions I was talking about. Iím trying to be as open as I can be with Council.
Mr. Galster stated Councilís input is happening based on voting on this ordinance. We have a cap and I think itís unrealistic of us to expect anyone to have a concrete number of what this rate is going to be based on the way the market fluctuates. Councilís input is to vote on Ordinance 42 that says he is going to issue notes not to exceed 5 Ĺ% a year. I know Mr. Knox and I donít think heís done a $7 million note either. My comments to Mr. Quinn is to letís make sure we are getting good quality apples to apples bids and good evaluations on the people who are going to be executing the additional ends of these notes. Even if we bid on a fire truck, we get the bids back, evaluate the bids and make a recommendation to Council so I think Finance Committee would like to see some kind of evaluation. I donít think we should expect any more input or up-to-dateness or reporting from Mr. Knox.
Mayor Webster said first I want to say to Mr. Knox, that I appreciate all the work that you and Mrs. Burton have done on this, but I would like to remind you to take a look at the Charter, Article 7, Section C under borrowing. It doesnít mention the Finance Director at all. It says the "Council of the Municipality may borrow money for any municipal purpose valid under the Constitution of Ohio or this Charter to the extent and maximum debt limitations imposed by this Charter and the Constitution and may create debt in any form under any procedure not in conflict with or express prohibition of the constitutional laws of Ohio and/or this Charter." I really think the ordinance should state that Council makes that decision. Back to Mr. Galsterís comment about purchasing a fire truck, the Administration in conjunction with your office advertises for bids, evaluates the bids and makes a recommendation to Council. Council does not have to follow any of those recommendations. Itís Councilís sole authority as to whom they want to buy that fire truck from. Ultimately Council holds the purse strings. I think that ordinance should be changed to read "Council" and I hope Council would ask for and appreciate any advice and work you have done on this, but they could reject it just like on the fire truck. Council has the authority to borrow the money and also to determine whether they want to go competitive or negotiated, and they have the ultimate authority to determine whom they want to go with.
Mr. Knox replied I disagree. Seven B talks about borrowing. It says Council borrows the money. It doesnít say anything other than that. They created the debt. How it is handled later on talks about the Clerk of Council/Finance Director, "no expenditure of municipal funds shall be made except by proper warrant drawn against an appropriated fund." It doesnít really say who actually makes that decision. Thatís what weíre discussing right now. I brought this up so that Council could say what they really wanted. If you folks want it a certain way weíll do it that way, but I would really like to have the decision with the input of the Finance Committee as to which organizations to go with. As I said before, if we look at what we have before us I think the answer is going to be fairly obvious.
Ms. Pollitt asked Mr. Osborn, can you tell me how the last bond was issued in 1975? Was it negotiated or competitive?
Mr. Osborn replied we had rolled a note and 1975 was the year we stopped rolling the note and issued the bond. Mr. Webster was Finance Director at the time and I think so I think he would be better suited to respond.
Mayor Webster stated it was competitive bids. Back then we had no choice. I recommended that we go with Peck, Williams and Shaeffer as our bond counsel and brought in legislation and again, it was Councilís decision whether they wanted to go with them or someone else. Council adopted the ordinance and they did the paperwork for us and held our hand during the bidding process.
Ms. Pollitt said if Council elects to go with a competitive bid we would be expending more money. Is there a reason why we are even looking at a competitive bid if weíre going to spend $15,000 on a yearly basis?
Mr. Galster replied there is no guarantee what kind of rates you are going to get on either one. The $15,000 savings is my reason for recommending a negotiated bid.
Mayor Webster said you may get a better rate going competitive and you may not, and youíre never going to know. I donít think you want to do both. I donít think it would be prudent to spend all the time and money on competitive bids and then throw them out. The only reason to go competitive is maybe itís the politically correct thing to do. No one can accuse you of giving the business to somebody.
Mr. Wilson said Mr. Knox has some points to bring up. Then I think we need to decide whether to go competitive or negotiated. Itís my understanding that we can go competitive or negotiated each year for the note so we are talking about one year.
Mr. Knox stated there is some information you donít have because the folks I was talking to wanted to wait until today. I would like to direct your attention to Section 2 of the Seasongood & Mayer presentation and at the same time to page 11 of the Fifth Third presentation. The Seasongood & Mayer presentation talks about an approximate sale date of September 8 and gives a range of interest rate. Mr. Stebbens says they expect a rate between 3.60 and 3.75. Mr. Erickson of Fifth Third expects a rate between 3.60 and 4 percent. Of course, this is going to be decided by the pool of people they contact for this. The cost of issuance is the OMAC (Ohio Munipal Advisory Council) with a set fee on each $1,000 that must be paid. The State of Ohio tracks these things. The CUSIP is a number that is assigned to the securities. This is so they can be tracked nationwide. Each individual note will have its own number. Seasongood & Mayer is charging $50 for the CUSIP. There is no charge by Fifth Third. The DTC (Depository Trust Company) is the organization we were alluding to earlier that holds the book entry. The PSA is the Public Securities Association. In the Fifth Third bid if you add it up it doesnít look right. Under the underwriting fee per thousand dollars they have a take down or concession of 45 cents. Then they have a subtotal of $1. The 45 cents is actually part of that dollar. You can basically ignore the 45 cent figure. They are saying that their total proposed cost is $1.25 per thousand which works out to $8,750. The Seasongood & Mayer does not have the total proposed cost. Mr. Stebbens said it would be between $1.25 and $1.50. In sum total it really is almost a wash. Weíd probably get the same thing out of each company and they are the two best. Iíve checked outside the state and those people say these are the ones to go to. Iím not demeaning Connors & Co. but they didnít give us a whole lot of information to go with. On the very last page of the Fifth Third presentation this is tracking weeks of the year on maturities for notes for Fifth Third and Seasongood & Mayer. I told all three companies who the other companies involved were. If you check everything in 1999 itís almost even. Thereís only so much maneuvering room these folks have and that is controlled by the people who are buying the bonds. It comes down to whom do we think we should be doing business with. Our developer for Pictoria Island has shown a preference for Seasongood & Mayer and Seasongood & Mayer is already working on the $2 million bond issue. They are looking at the various things they need for a later issue. I would recommend that we stay with Seasongood & Mayer for the $2 million Pictoria Island TIF. We can save a little money and I think it would be good to develop a working relationship with Fifth Third. Weíre beginning to get into an area where we are borrowing quite a bit of money and I would like to spread the contact we have with the major banking firms in the City. Fifth Third has been trying to get our business for 1 Ĺ years. They really want the business and I think they will do good for us. For the $7 million issue I would like to recommend that we go with Fifth Third. After a year we will know more than we know now and we could change if we see that it desirable to do that. That is most of why I wanted to have control so we can do this but if Council wants to vote another way Iíll do exactly what Council says.
Mr. Danbury said they way I see it, it should be a recommendation from Finance Committee to Council on your recommendation.
Mr. Galster asked is the last page of the Fifth Third presentation the bond rate?
Mr. Knox replied Iím not sure.
Mr. Galster asked Mr. Schneider what do we need to do in order to change the wording from Finance Director to City Council.
Mr. Schneider asked what specific sections are we talking about. Most of the work is in the nature of the contracting authority. The Mayor and Clerk of Council are the Cityís contracting authorities. Council decides if there is to be a contract or not. Mr. Schneider asked Mr. Quinn, is there any statutory authority or responsibility? Iím sure we donít want to have to get Councilís approval by majority vote for every function.
Mr. Quinn said the purpose for the delegation of Clerk of Council/Finance Director is administrative capacity. In Section 5 the notes are signed by the Mayor and Clerk of Council. In Section 6 itís to the extent that the contracts are being signed. The intent is that this be an administrative function. Someone has to make the arrangements.
Mr. Schneider said in the first part of the paragraph they may want to change the wording, "the notes shall be sold by the Clerk of Council/Finance Director who may select either a public or private sale at his discretion and award it by such officers without further action of Council." Thatís to make it clear that theyíve acted now. I agree with the Mayor that the borrowing authority is clearly with the Council and this just assumed that the Clerk would be wanting to do what Council wants. If there is a dispute between what the majority of Council wants and what the Clerk thinks should be done, then the Council spells it out in the ordinance.
Mr. Galster asked if we change that, what happens when the time comes that we actually are going to sell the notes?
Mr. Schneider said if you are talking negotiated, make the decision now and tell him what you are going to do.
Mr. Galster said if we go negotiated and get the bids in, we pick a company.
Mr. Schneider responded you have what youíre going to get.
Mayor Webster said what you see is what you get. If you want to exercise total authority of this, which you certainly have the right to do, you tell Mr. Knox whether you want to do negotiated or competitive. If the consensus is to do negotiated and if you want to exercise your authority one step farther, tell him what company you want each one of these issues to be given to, and thatís all you do. Then itís up to Mr. Knox to get it done.
Ms. Manis said we pay the same fees for bond counsel either way. Weíll be adding those fees onto the negotiated fees from an underwriter. Is there a difference in going with two different companies as far as bond counsel is concerned. One of the reasons for going with a negotiated sale is that you have the person with you all the way. If we go with two companies we have two people doing this for us. What if we get conflicting information from them?
Mr. Quinn replied you are paying for a service; you are paying for advice so you get two instead of one.
Mayor Webster said I think itís important that we treat these as two separate issues. They are going to be retired from two different funding sources. I donít see where weíre going to get conflicting advice. Whether you go with the same company or not is your call.
Mr. Knox said one of the things I did not read off my original list is that we do not intend to combine the two together. That was an error on Mr. Ericksonís part.
Mr. Danbury said the issue is really in Financeís hands so Iíd like to see what kind of recommendation they can make to Council.
Council recessed at 8:25 p.m. for Finance Committee to meet. Council reconvened at 8:36 p.m.
Mr. Wilson stated Finance Committee recommends using the negotiated method and to use Seasongood & Mayer for the $2 million TIF and Fifth Third for the $7 million note. On page 2, Section 6 we want to amend that to read "be sold by the Clerk of Council/Finance Director who may select either a public or private sale as directed by Council".
Mr. Galster said on the second line we want to change "his discretion" to "Councilís discretion.
Mr. Galster made a motion that the second line in Section 6 should be amended to read as already described. The motion was seconded by voice vote. The motion to amend passed with seven affirmative votes.
Ordinance 42-1999 passed with seven affirmative votes.
Mr. Galster made a motion that Council recommend the negotiated sale of the notes in reference to Ordinance 42-1999 to Fifth Third. Ms. Manis seconded. The motion passed with seven affirmative votes.
Mr. Galster made a motion to amend Section 6 of Ordinance 44-1999 the same as Ordinance 42-1999. Mr. Vanover seconded. The motion passed with seven affirmative votes.
Mr. Galster made a motion to read Ordinance 44-1999 by title only. Mr. Vanover seconded. The motion passed with seven affirmative votes.
ORDINANCE NO. 44-1999 "AN ORDINANCE PROVIDING FOR THE ISSUANCE OF $2,000,000 OF RENEWAL NOTES BY THE CITY OF SPRINGDALE, OHIO, IN ANTICIPATION OF THE ISSUANCE OF BONDS, FOR STREET AND RELATED IMPROVEMENTS, AND DECLARING AN EMERGENCY"
Mrs. McNear made a motion to adopt and Mr. Wilson seconded.
Mr. Osborn said to bond counsel, you said that a note can be rolled five times without beginning the payment of principal, and then itís 1/20 per year. Just for clarification, this note was originally issued in December 1994 for a period that would expire on the first of September 1995. It was then renewed in September 95, 96, 97, and 98 so this would be the fifth renewal of the note. That fifth number you gave, is it the fifth issuance or fifth renewal?
Mr. Quinn replied fifth renewal. You would not have to pay down principal on this renewal.
Mr. Galster said if we paid early on the other ordinance and we get to the sixth year. Is that carried over as having been paid from the beginning or is it by the fifth roll over you have to pay? Do we get credit for all the money we paid prior to that or does it have to be in that one single year.
Mr. Quinn replied I donít know but Iím pretty sure you get the credit for the pay down for the first five year.
Ms. Pollitt said I noticed that the $2 million is a TIF. Can you explain that to me in how it relates to issuing this bond or renewing this bond for street repairs and how it relates to Pictoria Island?
Mr. Quinn answered this is not directly related to Pictoria Island. This is a previous tax increment financing for infrastructure improvements to facilities.
Mr. Osborn said we entered into an agreement with Fountain Realty and another company that owned property between Avon and Showcase Cinemas. In order to stimulate that development we agreed to issue debt and enter a TIF (Tax Increment Financing) agreement with those property owners to build the public infrastructure that would support development of the property. The cost of the improvements was just under $2 million. The purpose of the TIF was to create a source of revenue that will pay down the debt as development occurs. This does not require funding out of our general fund so the note we have before us at this time is related to that original $2 million debt we incurred to build the infrastructure.
Ms. Pollitt asked would any revenues that we would receive from the building of Pictoria Island go toward this $2 million debt.
Mr. Osborn replied letís leave Pictoria Island out of the picture right now. The TIF has a certain defined area. Any improvements to that property like Fresh America, IDI, General Advertising is subject to a service payment in lieu of taxes. What they would have paid in taxes for that improvement at a certain percentage, in this case 30%, is going not to tax but as a service payment to retire the debt.
Ms. Pollitt asked if that area is developed and additional revenues come to us, will that also be earmarked to reduce the $2 million debt or go into general funds?
Mr. Osborn responded we have to pay down that $2 million debt. Once the debt is paid down the service payments disappears and the money is distributed.
Mayor Webster said what you need to understand is hopefully there will be other development up there. We made it very clear to the developers that we donít want multiple TIFs. They will want to issue another TIF for the increased property tax revenue they are going to generate. If you are going to do it you pull the $2 million into there. The likelihood of this being outstanding for a year is somewhat remote. This is probably not going to be paid off over a normal course of events. Itís going to be rolled into a much bigger TIF. Mr. Quinn, is there any provision in here for this to be called early to be rolled into a bigger issue?
Mr. Quinn replied it is not in the ordinance. It can be built in because of the discretionary nature. If itís Councilís desire we can put that in there. It doesnít require amending the ordinance, just the actual note itself.
Mayor Webster stated I strongly recommend to Council that that language be in there so that this one can be called at any time over the next twelve month. Council said they wanted that done.
Ms.Manis asked if this is rolled over to a larger note then the five years are over and it starts again?
Mr. Quinn said the discussions Iíve been party to assuming the Pictoria Island project goes ahead and the infrastructure is financed with notes or bonds of the City, then the Pictoria Island people will pick up the obligation to make these payments.
Ms. Manis asked is what is built up now in the restaurant area the defined area that this money is coming from?
Mr. Osborn replied itís 100% from the restaurant area and 30% from the other areas.
Mr. Danbury said you mentioned there is a self supporting revenue debt where you can assess improvements such as sidewalks. Iím not suggesting that but could a Council, if they were to do road improvements, assess the businesses along the roads?
Mr. Quinn replied yes, according to the statutory method of assessing. The property has to be benefited. Road improvements are tougher.
Mr. Danbury said Iím not suggesting it. If we thought we were going to get into that we shouldnít have voted for the expansion. When we were looking at building this we paid out so much money and then we were looking at bonding. We found out we could do some retroactive bonding of some of the money we had already expensed.
Ordinance 44-1999 passed with seven affirmative votes.
Mr. Galster made a motion that this item be negotiated for sale with Seasongood and Mayer and that it be callable. Ms. Manis second. The motion passed with seven affirmative votes.
Mr. Osborn said after having made the recommendation regarding changes to the Property Maintenance Code at the last meeting, the issue of the specific numbers that were extracted from the National Property Maintenance Code and the manner in which they would apply to Springdale, gave me some concern. As some of you know, I called you to get dimensions on bedrooms in various parts of the City, and itís clear to me that the National Code would not be appropriate for our existing condition. I would like to withdraw that issue from you at this point, and have the Building Department do further research on it.
Mr. Osborn reported that we had a bid opening on salt on August 23. The current bidder was low and the price was very good. I would like to bring in an ordinance on September 1 and Iíll give you a more detailed report as part of the legislative package.
You may recall that our budget allowed us to add one police officer to the force. We need to change the staffing allocation authorized by the City code. Until a few years ago we had four lieutenants and three sergeants. A few years ago we changed that to three lieutenants and four sergeants. Itís the Police Departmentís recommendation that we go back to the alignment of four lieutenants and three sergeants. The decision to go the arrangement we had for the past three years was based on staffing assignments at that time. We did not want to promote a person out of the leadership role they had in investigations. We now would like to go back to the original structure and Iíd like to bring in legislation September 1 because we will have promotional opportunities coming forward in the next few weeks.
Mr. Wilson asked are the lieutenants department heads?
Mr. Osborn replied originally one lieutenant was in charge of each shift and the fourth was in charge of the Investigations Bureau. We went to a situation where we had four sergeants and three lieutenants with a lieutenant in charge of each shift, but a sergeant in charge of the Investigations Bureau. Weíd like to take that position back to a lieutenantís rank. They exercise the same level of oversight and command authority as the patrol lieutenants. In response to Mr. Wilsonís question about budget, Mr. Osborn said the increase in salary would be the equivalent of about 5% of one personís salary but I donít think that is significant enough to be a substantive part of the issue.
In response to Mr. Danbury about the coyote situation, Mr. Osborn reported that there have not been any coyotes trapped. The trapper believes that is probably because the drought we have been experiencing has been forcing the coyotes into areas near water, which would be out of the wooded area where we have been trying to trap them. We have seen two more confrontations between pets and coyotes in recent weeks; one on Springdale Lake Drive and one on Cedarhill.
Mrs. McNear said I got another phone call about deer in the Oxford Hills area and I just donít have anything to tell this person who keeps calling me. This person wants us to trap them and take them somewhere else, which is not possible. She says they are devastating the yards and leaving a mess from the droppings. Is there any relief we can offer?
Mr. Osborn reported short of undertaking a program to kill off the deer, there isnít anything we can do. Quite honestly, the people who own the property where we would have to do the hunting, prefer to have the deer population in place. In fact, they are concerned about the fall off in the deer population.
Mayor Webster said they have allowed us to enter their property to do the trapping of the coyote because they think the coyote are decreasing the deer herd.
Mrs. McNear said the resident wants to put up a fence but she lives on a corner lot.
Mr. Osborn said the deer routinely jump the fence at Oak Hills Cemetery so it would have to be a very tall fence. There is no effective way of putting a scent down to scare them off. There have been ideas about putting up string to keep the deer out but I have no idea if it is effective. I think one of the reasons we are seeing them in the residential areas is because of the drought.
Mr. Danbury said a friend of his uses a certain type of soap that keeps them away.
Mayor Webster said we had an incident this past Saturday where a ladyís dog got nipped by a coyote and I understand that they were in a group of five. Thatís very disturbing when they start running in packs so I think we need to get back to Trapper John and see if we want to take the next step which is not a very pleasant one, but if it continues weíre not going to have any choice.
Ms. Manis said if you start seeing that, then people who have guns are just going to do it. If we have to do it first instead of putting other people in danger, then I donít think we have a choice either.
Ms. Pollitt asked Mr. Osborn for an update on the disaster plan you are working on.
Mr. Osborn replied it is not complete. Fundamentally, Iím not happy with the format and model language that we have received from the Hamilton County Disaster Authority. Weíre going back line by line and rewriting it so itís taking a great deal of time. Itís safe to say we have a fundamental response in place in terms of command and control authority, because weíve had a disaster plan in place for some time. There is a very rigid command and control process already in place for any type of fire fighting event that might come along. That command and control just escalates as the nature of the event in seriousness. Weíre trying to take the fundamental command and control structure and provide for other issues, such as how you bring in disaster relief from the state government and things of that nature.
Ms. Pollitt asked what is the status of the Fire Department alarm for bad weather? Are all the signs monitored?
Mr. Osborn replied we are buying a new siren but apparently there are only one or two companies who make these sirens and there is a long delivery wait. We have attempted to repair the one that is there. We had people come out and look at it and they couldnít find anything wrong. We ran another test and it did not go off. There is a protocol in place in the event the siren fails to go off, that the siren will be manually engaged. We know that the other sirens have worked when tested and when initiated by the County to alert the public because we have people who live in the vicinity of the sirens whom we can ask if they worked.
Ms. Pollitt said I did not hear the sirens on April 9. I heard one from the direction of the mall but I thought it was more in the Sharonville area so I had a real false sense of security.
Mr. Osborn responded once the County sets the sirens off, they all go off. It doesnít select certain areas.
MEETINGS AND ANNOUNCEMENTS
Board of Health September 9
Mr. Danbury stated that I called our newest Councilperson-to-be to let him know we would be discussing the bonding issues. I spoke with his wife and unfortunately he had by-pass surgery on Monday. I would like to keep him up to date on everything and hope he has a speedy recovery.
COMMUNICATIONS FROM THE AUDIENCE - none
UPDATE ON LEGISLATION STILL IN DEVELOPMENT
RECAP OF LEGISLATIVE ITEMS REQUESTED
Realignment of Police Department - September 1
Salt bids - September 1
Council adjourned at 9:23 p.m.
Edward F. Knox
Clerk of Council/Finance Director
Randy Danbury, President of Council