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HomeMy WebLinkAbout1990-11-07 - City Commission Workshop Meeting MinutesCITY Or TAMARAC CITY COUNCIL COUNCIL WORKSHOP MEETING WEDNESDAY, NOVEMBER 7, 1990 Mayor Abramowitz called this meeting to Order on Wednesday, November 7, 1990 at 9:30 A.M. in the Conference Room 1. PRESENT• Mayor Norman Abramowitz Vice Mayor Bruce Hoffman Councilman Dr. H. Larry Bender Councilman Henry Rohr Councilman Henry Schumann John P. Kelly, City Manager Alan Ruf, City Attorney Kelly Carpenter, Director of Community 'Development Patricia Marcurio, Office Manager City Clerk's Office Mayor Abramowitz said one of the principles for Item 1 was not present yet, and Tabled Item 1 pending his arrival. Mayor Abramowitz said representatives of St. Malachy's Church and School are willing to lend the City tables and chairs any time they are needed at no cost. He said the City would need to pick them up and return them. He said Council action is required to lend City equipment to an organization. City Manager Kelly said this is appropriate. He said it will only be needed for one day and will be returned immediately following their event. Mayor Abramowitz said that Council's expression is that there is no problem with lending St. Malachy's Church the spotlight and that Council is pleased with the offer of the tables and chairs. City Manager Kelly said he has no authority to approve lending City equipment without Council approval. He asked Council if they would want him to make these decisions with notice to Council without calling a Special Meeting. Mayor Abramowitz said he has enough confidence in City Manager Kelly's decisions to know if Council action needed to be taken that he would not do something without bringing it before Council. He recommended approval of this to eliminate using City money and time for unnecessary meetings. Council'.agreed to give permission to City Manager Kelly to make this type of decision. •� r = .� _ . Mayor Abramowitz suggested that City Manager Kelly have a crossing guard placed there on a 60 day trial basis with a report at the end of the sixty days for proof of necessity. Vice Mayor Hoffman asked if this was for the crossing of University Drive or 75th Street. Mayor Abramowitz said it would be for the crossing of 75th Street from the University Club Apartments there. He said there is a tremendous amount of traffic coming from the back entrance next to Waterford Place going east to University Drive north and south. He said the residents Page 1 City Council Workshop Meeting 11/07/90/KJ at the University Club Apartments have indicated that are severaL children using that route at present. He said last year, when they requested a crossing guard, a guard was placed there and then removed due to there being only one or two children. He said they claim there are between 12 to 15 children now. Vice Mayor Hoffman said this needs to be done by Resolution. City Manager Kelly said it would be placed on the Agenda for Wednesday, November 14, 1990 at 7:00 F.M. and Council agreed. 1. 1100e"ant G"flan4 Adult, rgre A ,Vinq rjRei4*;y [AC ,71, PrgRpsal City Manager Kelly said the City has given approval for a complex in the Woodmont area. He said the City has been proceeding with the intent to have an Adult Care Living Facility in Woodmont. He said it would be on a 7 acre area consisting of a 300 bed unit. He said there have been several extensions granted by Council to keep this Facility a possibility. He said the deadline is approaching in mid --December and they are anxious to move forward with this project. He said an industrial development bond is in order to finance this project. He said the proposed issuance is authorized by the Tax Reform Act and is sponsored by the developer, which is a qualified 501-C-3 tax exempt organization. City Manager Kelly said the Industrial Development Bond; however, is to be issued through the City at the expense of the developer. He said there are certain selling points to it that City Attorney Ruf has reviewed that raise some concern and needs to be reviewed and discussed at a Public meeting. He said there are other factors that will be discussed during the presentation. Mayor Abramowitz said this project was first instituted four years ago at which time he was the President of the Woodmont Country Club Homeowners Association. He said at that time, this project was to be located on Woodmont Golf Course and the petitioners presented theiz proposal to the members of the Woodmont Homeowners Association. He said the Board of Directors at that time, was in favor of this project. He asked City Attorney Ruf if there would be a conflict of interest a. the present time with him making decisions as Mayor opposed to when he was acting as President of the Woodmont Homeowners Association. City Attorney Ruf said there is no conflict of interest involved. Mayor Abramowitz said he has no monetary interest and is not associated with these people. 'vice Mayor Hoffman said he would like more information on the bonds, who issues them, who is responsible for them and what the City's responsibility is in this project. City Attorney Ruf suggested an introduction of the petitioners as follows: Harry Rappaport, President of Woodmont Gardens, ACLF Alan Gabriel, Attorney for Woodmont Gardens, ACLF Clark Bennett, Vice President of William R. Hough & Company Ira Cor, Vice President of Woodmont Gardens, Inc. Mayor Abramowitz said this has come before the Council in the past. He said he is very interested and there are many questions to be answered. Mr. Bennett said the bonds are Industrial Development Bonds that are authorized under the Tax Reform Act of 1986. He said that Act was a rather restrictive restructuring of what could or could not be done under existing tax laws. He said it tremendously restricted the ability of a municipal government to issue bonds. He said the Industrial Development Bond is one of those permissible acts that a City may undertake for a number of reasons. He said the City of Tamarac issues the bonds. Page 2 City Council Workshop Meeting 11/07/90/KJ 1 Mr. Bennett said the City is a conduit that is a municipal body that is empowered to issue bonds for projects such as this. He said the developer or the person building the project is responsible for the bonds. He said there is no moral or other pledge of the City's ad valorem taxes or any of the non -ad valorem revenue streams such as sales taxes or guaranteed entitlements. He said nothing is pledged to these bonds. Mr. Bennett said what is pledged to the bonds are the earnings from the project. He said the earnings from the project flow through a trustee and are paid by the trustee to a bond holder. He said the City has no responsibility in any way to administer the bonds. He said neither City Manager Kelly nor any of his staff are involved in any administration of the bond or any of its documents. Mr. Bennett said the City authorizes the issuance of the bonds and the City employs a Bond Counsel to represent the City. He said the Bond Counsel's fees and expenses are paid for, as are all of the fees and expenses of this transaction from proceeds of the bond issue. He said there is no liability, monetary or otherwise, to become a part of the City. He said interest payments and principle payments are made directly to a trustee, and when the payments are received by the trustee on the appropriate days, the trustee pays the bond holder. He said if there is a default, it does not affect the City and the City is not responsible for making any kind of payment to the bond holder. He said this does not affect the City's credit rating.' Vice Mayor Hoffman asked what happens if there is no profit to pay the bond holders. Jeffrey Miller, owner of Woodmont Gardens,, Inc., entered and joined the meeting. Mr. Bennett said should the developer or project fail, and the money is not available to pay the interest on the bonds, the bonds would be in default. He said the pledge is a first lien on the property. He said the property is pledged or,there is a mortgage against that property and the property would be sold. He said the bond holder takes that risk. Mr. Bennett said he has been an underwriter for the City of Tamarac and knows the bond ratings for the City and other items. He said unlike the City of Tamarac's bonds that are rated and/or insured, these bonds will not receive a bond rating nor will an insurance company insure them. He said they are not normally the kind of bonds, unless there is an extraordinary pledge of some other kind of support to the bonds, that would receive any kind of rating. He said in the bond document, there would be certain eventualities in the event of default provided for. He said the City would be creating a loan to the developer through the issuance of the bonds. He said the primary role of the City is to allow the developer to borrow money at a lesser rate than that which he would borrow from a bank or any other lending institution. He said the developer would be borrowing at tax exempt rates. C/M Schumann asked if the City is brought in as a party defendant in a lawsuit, who defends that lawsuit and who pays the cost of it. Mr. Gabriel said there would be an indemnification agreement between the City and the developer as part of the agreement and the developer would be responsible. He said there will be development agreements drawn up as part of the bond agreement that will provide for the developer's obligations as they relate to the City. C/M Schumann asked if there would be any impact fees payable to the City. Mayor Abramowitz asked that issue be held for discussion later in the meeting. He suggested to have the responsibility of the City be discussed at present. C/M Schumann asked what taxes would normally be on this property and who would make the assessment to see that the City would receive an Page 3 City Council Workshop Meeting 11/07/90/KJ equivalent amount as to what it would receive if some other development were built there insofar as ad valorem taxes. Mr. Gabriel said he had made a proposal on behalf of the developer of paying to the City $80,000 up front as financing fees to help the City for purposes like this. C/M Rohr asked why the City should do this and what advantage there is for the City to issue bonds and supply low financing for the developer. Mr. Bennett said this development has been before Council since late 1987. He said the developer has been attempting to get this development Into the ground since the beginning proposal. He said circumstances beyond their control have developed for various reasons. He said at present, it is the economy that prevents financing. He said the developer does not want to lose this development. He said the developer has similar developments of this type in Dade County. Mr. Bennett said the advantage to the City is to have the ACLF first, because if this developer cannot build it, there is no one else available that could be able to do it. He said it is a beautiful development and it is one that everyone has accepted since the beginning of the process. He said the City would get the benefit of ad valorem tax increases and all else that is part of a new development coming in and the proposals being made to the City are so the City would not lose that benefit. Mr. Gabriel said the City would be getting a first class facility that will provide the services needed and income. Mayor Abramowitz said he would like City Attorney Ruf's remarks regarding the responsibility and liability of the project. City Attorney Ruf said he is not an expert on these types of bonds; therefore, he called in Howard Whittaker, currently with Greenberg Traug from Miami, to assist him with this issue. He said Mr. Whittaker has been to Tamarac twice to meet with him regarding this issue and he said there is a Statute that indicates that the City is not responsible in case of default. He said he has reviewed this carefully and there is no obligation by the City. Mayor Abramowitz asked if there is any responsibility on the part cf the City if a default or failure occurs, whatever the case may be. City Attorney Ruf said by Statute, the City is insulated from liability or responsibility. Mayor Abramowitz asked if this affects Tamarac's.standing in the bond market as far as ratings are concerned. Mr. Bennett said prior to 1986, before there were certain Statutory changes in this law and before there were changes in what a City could or could not do as far as Industrial Development Bonds were concerned, it would have impacted the City. He said since then and because of the nature of the changes, it is his experience that there is no impact on the City. He said the bond rating agencies and insurance companies fully know that the City is acting as a conduit and it has nothing to do with the collections of the City's ad valorem taxes or the profitability of the City's Water and Sewer Department or any other non -ad valorem avenues. He said they all stand alone. Mayor Abramowitz suggested viewing of a site plan. Mr. Miller said some changes were made to the original site plan. He said there is a proposed lake between the two buildings with little patio areas within the courtyard areas. Discussion was held regarding the proposed site plan. Vice Mayor Hoffman asked if this project would have a nursing facility. Page 4 1— City Council Workshop Meeting 11/07/90/KJ Mr. Bennett said there will be no nurses, but there will be assistants to help them. Mr. Rappaport said the doctors will be their own doctors. He said dispensing of medication will be done by a -nurse. Mayor Abramowitz said his interpretation of ACLF was the ability to dispense without the ability to prescribe medications. He said C/M Bender is also a resident of Woodmont Gardens and was not involved with the Homeowner's Association at the time of the initial proposal. V/M Hoffman asked how the land is acquired. Mr. Rappaport said the land is already owned by Woodmont Gardens ACLF. C/M Bender said the land was formerly owned by Florida Power and Light and was sold by FPL and the sub -station had to be moved to Southgate Boulevard. He said there has been some discussion made that there are Statutory regulations covering this. He asked if the Statutory regulations change, what protection does the City have and how would it be handled. Mr. Gabriel said once the City approves this and it is an ongoing entity, the City is vested with the regulations under which it was approved. City Attorney Ruf said the bond documents would indicate that they cannot look to the City. V/M Hoffman said even if the regulations change the City would still be protected. Mr. Bennett said no matter what happens to Federal regulations and no matter what changes they may make, the bond documents that are going to be put in place that authorize these bonds, will provide for those things now in effect that will insulate and protect the City. He said those documents cannot be changed, unless all of the bond holders agree that they can be changed however many bond holders there are. He said these bond documents are what control the liability. V/M Hoffman said the change could be done by the bond holders. Mr. Bennett said only to the extent that it affects their receiving interest, principle and the security. Mr. Gabriel said they cannot change the terms of the documents. V/M Hoffman asked if the bond holders have a meeting and unanimously agree to something, can they state that the City.will have to assume responsiblity. Mr. Bennett said absolutely not. Mayor Abramowitz asked if the bond holders have a meeting and decide to defer interest payments on this for five years and they all agree, that would be alright and Mr. Bennett agreed. Mayor Abramowitz said there is no way that anybody can change the particulars once they are issued regarding the liability and exposure and Mr. Bennett agreed. City Manager Kelly asked how these Industrial Development Bonds differ from the County and is the County issuing the same type with them being a conduit. Mr. Bennett said the County does act as a conduit also. He said William R. Hough & Company is a member of the Broward County Health Facilities Authority. He said any Authority created by the County can issue Industrial Development Bonds. He said there is an ongoing issuance for a Catholic Nursing Home in Broward County. He said the County is acting through its Health Facilities Authority as a conduit for that issuance with the entire sole purpose to achieve a lower rate of interest. City Manager Kelly said discussions have been held regarding a one time fee, such as an inducement fee of $100,000.00, to encourage the City to participate. He said it was also indicated that this fee is to be paid Page 5 City Council Workshop Meeting 11/07/90/KJ to the City at the time of closing. He said at the closing of the bond transaction, the City would receive a total payment of $95,000.00 plus any actual out--of-pocket expenses the City has incurred. Mr. Gabriel said he had originally proposed a one-time fee of $80,000.00 to the City. He said he then took into consideration the ad valorem issue and he tried to give the City some kind of certainty of.what the assessment may be and what monies it may be getting in the future. He said he did that by taking today's assessed value as the property is and tripled it. He said based on the tripling, he gave the City an up -front fee for immediate payment, and gave his developer a period of 5 years for which there would be no payments made to the City which would give him the opportunity to get operating before his payments would be due to the City. He said the benefit to the City is that the fee was paid up- front. Mr. Gabriel said commencing on the date taxes are actually due these would be a new assessment payment made to the City that would Increase every other year by 5%, whether there is a down -turn in the economy or whatever, the City would get its money and the City would know what money was to come in. Mr. Gabriel said since that time, City Manager Kelly and he have had a conversation and an indication was made for a change to that original proposal and the counter -proposal was a $100,000.00 up -front fee. He said basically one year no ad valorem taxes until the building is issued a Certificate of Occupancy and the Tax Appraisers office reappraises the property as a completed development. He said then the Tax Appraisers office would show the value with a tax exempt and no payments being made to the various governmental entities. He said the agreement was made that if it was to be done that way, the developer would let the Property Appraisers office reappraise the property as normal, let the City set the millage as normal, and the developer would pay whatever would have been paid if it were not a tax exempt entity to the City. He said the only thing that the developer wanted to reserve was the ability to go against the Property Appraisers office if they did not agree with his appraised value. He said that concept is agreeable with the developers. V/M Hoffman said a time limitation should be placed on this. Mr. Gabriel said a time limitation would be on it by Law with the Tax Appraisers office. He said language would be placed in the documents that would provide for this and it would say, "Pursuant to today's laws and abilities to question the Property Appraiser's assessment, we would be permitted to do that". He said the City would receive payment no matter what. C/M Rohr asked the estimated dollar value of this project. Mr. Bennett said they are talking about a bond issue of 12 million dollars. Mr. Rappaport said the 12 million dollar bond issue is not the value of the property. He Said involved in the bond issue are certain things such as administrative costs. V/M Hoffman asked if the value of the property would be around 8 or 9 million dollars. Mr. Gabriel said it would probably be around that. V/M Hoffman asked if a development was to be placed on the same property for an 8 or 9 million dollar project, what would the developers feels and impact fees bring the City. Mr. Gabriel said one thing the Council needs to realize is that this development has already paid whatever fees were required of it when .it originally was proposed in 1987. He said those fees have been held by the City throughout this time, so when impact fees are questioned, this has been paid until this point. V/M Hoffman said he would like to know what the normal development impact fee would be. He said if this has already been paid, it would need,to be deducted from what the City would normally receive. City Manager Kelly said this depends on the type of project. Page 6 City Council Workshop Meeting 11/07/90/KJ Mayor Abramowitz said regardless of the fact of what is being built and how it is being built, he would like to be assured that if any other development was built there, the City would get exactly the same amount of money. He said there is no way that he would want to give any tax concessions in any form to the project because of the nature of the project. Mr. Gabriel said this property was originally part of the Leadership Housing, Inc., litigation and certain rights were brought through to this developer as a result of the court order. He said this was all packaged together at that time and provided for all of what was believed to be the impact fees required by the City. He said he had the impression that all fees associated to this project had already been paid. He said City Manager Kelly had a summary prepared as to what was due, if any, on this project and it was brought back with some items for discussion. He said there is a question about local parks and recreation, which was thought to have been taken care of. He said there are questions regarding on -site beautification fees which was handled, engineering fees and engineering bond fees which, if part of obtaining a building permit, were not dealt with. He said everything depends upon the discussion of the list being reviewed. Mr. Gabriel said the future traffic needs are not verified. He said the City has had over $226,000.00 paid since 1987 and has been, hopefully, collecting interest. He said they always said they would provide the City with some kind of financing fee for going through the trouble of doing this which has always been acknowledged. Mr. Gabriel said there has been no bond issue made by a Broward County municipality to be able to determine where a fee was paid. He said Deerfield had one, but no fee was paid to Deerfield. He said Broward County has an annual fee rather than a lump sum fee. He said Dade County has a lump sum fee, where a project of this type would be around $50,000.00. Mr. Gabriel said the fee with the City is now at $100,000.00 with the understanding that all impact fees that have been discussed, have been handled. V/M Hoffman said he does not want them to pay more than anyone else, but the City could get less than what a motel would offer which needs to be worked out. Mr. Gabriel said they have committed from the beginning to pay whatever they would be responsible to pay. He said there needs to be an understanding between the City and the developer of what those requirements are. V/M Hoffman said at present, he has no objections to moving forward with this project as discussed at this meeting. C/M Bender said he would like to see a summation of everything discussed. C/M Schumann said Tamarac would be the City issuing the bonds. He said there was some reluctance of insurance companies to underwrite this or to insure them and he asked why. Mr. Gabriel said unless these types of projects are extraordinarily well -managed and well -financed, insurance companies have taken the position that they are not interested in issuing a policy on this type of facility. He said the reason is because, when dealing with the Water and Sewer Department, the City has the ability to raise the rates wherever they need to be raised to cover expenses and costs. He said the City is not restrained by anything other than a political environment to do that. He said there is an upper limit to appoint where any individual facility can raise its rates and still retain its clientele. He said costs can sky -rocket and they can still only raise their rates so much. He said the upper limit says they can only go so high and, if they cannot make those payments, or if they cannot service their debt out of their net profit, there is a problem and that is what the insurance companies and rating agencies are looking at. He said the concern is that these types of problems could arise in the future. Page 7 City Council Workshop Meeting 11/07/90/KJ Mr. Gabriel said the buyer of these types of bonds will normally be individual buyers; most are brokerages. He said this will probably be placed with a very few institutional, sophisticated investors that understand the risks and rewards in this kind of paper. C/M Schumann asked if this would be the same as municipal bond of tax fees. Mr. Gabriel said it will be tax exempt and will be a "municipal" bond. He said it will be an Industrial Development Bond and will not carry the same kind of security as if the City were to issue a bDnd for street improvements. C/M Schumann said these bonds would not be guaranteed by a.:usurety and Mr. Gabriel agreed. C/M Bender asked if the City can make the agreements so that it perpetuates to the new buyer and City Attorney Ruf said yes. V/M Hoffman asked why people would buy these bonds if they are not as secure as general municipal bonds. Mr. Gabriel said the rate is higher. He said the rate would be approximately 10-1/4% tax exempt. He said the investor would look at the substance of the developer and the management of the facility. He said there is extensive investigation into those areas by the investor. C/M Rohr asked how long of an extension would be needed. Mr. Gabriel said he was going to ask for a one year extension which is typically what the Code provides. He said the documents would not be prepared or the bond issued by December 22, 1990. He said it takes approximately 120 days to issue the bonds. Mayor Abramowitz said normal extensions are whatever are granted, Mr. Gabriel said what will happen is that if this project does go through for whatever reasons, they will have to figure out another means of financing. Mayor Abramowitz said he does not want to see figures only. He said he would like a report on how much another project would bring in. He said he would like to know if the developers have paid or owe and he would like a total figure for this project. Mr. Gabriel said they were prepared to offer the original $80,D00.00 up- front with no strings attached and were prepared to go with the understanding that the impact fees had already been paid to go to the $100,000.00. He said with a question regarding impact fees now, he feels they can still go with $100,000.00 and the impact fee question is the only issue to be worked out. Mayor Abramowitz said he does not want Council to get a set of figures at present that will be changed later and asked City Manager. Kelly to meet with the appropriate people to determine what is owed, if anything, and bring that figure to Council for discussion. Mr. Gabriel said after the numbers are worked out, he would do a similar proposal to the one already submitted for Council to have somethinc in writing. Mayor Abramowitz agreed. He said the group met with the Woodmont Homeowner's Association recently. He said he received a call from the President of the Homeowner's Association indicating that he appreciated the presentation by them. He said he wants to know all of the exact facts. V/M Hoffman said Council should give them the indication that If things are as discussed at the table, Council is not opposed to it. Mayor Abramowitz said an expression of interest has been shown by Council. City Manager Kelly said the discussion is regarding an inducement of a $100,000.00 fee, payment in lieu of taxes at the equivalent to whatever Page 8 City Council Workshop Meeting 11/07/90/KJ R it would be by Mr. Markham's standards and whatever the tax rate may be in the City of. Tamarac. He said both parties indicated the developers pay what is expected and if they have already paid, they would not be asked to pay again and the determination will be made and presented to Council. He said a closing transaction is $95,000.00 plus the out-of- pocket expenses. Mr. Gabriel said City Manager Kelly is taking the letter that -was sent to him and adding another $95,000.00, which is not the case. Mayor Abramowitz said that is what is needed to clarify and Council wants to hear the final figures. C/M Bender said there would be an increase every other year. City Manager Kelly said that was in the original proposal. Mr. Gabriel said the way it is now being presented is whatever the ad valorem taxes would have been that the City will receive. Mayor Abramowitz said he would like City Manager Kelly to bring a proposal based on verification of fact to Council. Mr. Gabriel said time is of the essence due to the economy and the preparation of bonds. With no further business to discuss, Mayor Abramowitz ADJOURNED this meeting at 11:00 A.M. CAROL A. EVANS CITY CLERK "This public document was promulgated at a cost of $130.85 or $2.91 per copy to inform the general public, public officers and employees of recent opinions and considerations of the City Council of the City of Tamarac." Page 9 City Council Workshop Meeting 11/07/90/KJ