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HomeMy WebLinkAbout12/11/1985 - Workshop Minutes City Council MINUTES WORKSHOP CITY COUNCIL MEETING WEDNESDAY, DECEMBER 11, 1985 4:00 P.M. COUNCIL MEMBERS PRESENT: COUNCIL MEMBERS ABSENT: STAFF PRESENT: STUDENT GOV'T LIAISON: VISITORS PRESENT: Mayor Halter, Councilmen Bond, Tongco, Brown, McIlhaney, Runnels, Boughton None City Manager Cole, City Attorney Locke, Director of Capital Improvements Ash, City Secretary Jones, Utilities Office Manager Piwonka, Assistant City Manager VanDever, City Engineer Pullen, Deputy Finance Director Schroeder, Assistant Personnel Director Lucas, Administra- tive Assistant Magoon, Council Coordi- nator Jones Mike Hachtman See guest register. The meeting was called to order with Councilman Bond absent. Agenda Item No. 1 - Council concerns. Councilman McIlhaney reported some structures on the corner of Sebesta Road and Sandstone in need of repair. She pointed out that the water meter cover located in the easement is broken causing the area to cave in. Councilman Boughton commended the city staff for the excellent job done on preparations for the Christmas Open House. Councilman Runnels suggested scheduling a meeting of the Capital Improvements Committee to review the status of various projects and develop an updated report to present to the Council sometime in January. Mayor Halter concurred and suggested that such a meeting be coordinated with Director of Capital Improvements Ash. Mayor Halter referred to his memorandum dated December 5, 1985, concerning the original purpose for scheduling the Council con- cerns item on agendas, which was to provide Councilmembers with an opportunity to communicate with other members regarding mat- ters requiring the attention of the Council as a whole. He stated that if a problem arises, it should be reported to City Manager Cole for immediate attention rather than waiting to bring it to the staff's attention at the next council meeting. WORKSHOP CITY COUNCIL MEETING WEDNESDAY, DECEMBER 11, 1985 PAGE 2 Mayor Halter suggested that the Council consider scheduling a priority-setting session sometime in late January or early Febru- ary. After some discussion concerning possible dates for the session, the Council concurred that the best date for scheduling the session would be Friday, January 31st and Saturday, February 1st. Mayor Halter stated that he was working to coordinate a place to hold the meeting. Agenda Item No. 2 - Presentation by Rollie Waters of Waterst Tre~o and Davis on the Merit Pay Plan. Mayor Halter removed Item No. 2 from the agenda. Agenda Item No. 3 - Consideration of a resolution approving the creation of a development corporation in accordance with the De- velopment Corporation Act of 1979. Councilman Bond arrived at the meeting. City Attorney Locke presented the item. She stated that the pro- posed resolution puts the Council's stamp of approval on the cre- ation of the Foundation in accordance with Article 5190.6. Mr. Eddie Schultz, Chairman of the Foundation, stated there were several changes made to the original proposals presented previ- ously to the Council, and distributed a memorandum outlining the proposed changes. He stated that he would answer any questions concerning the proposed Bylaws and Articles of Incorporation. Councilman Tongco referred to page two of the Articles of Incor- poration and questioned why it includes reference to multi-family housing projects. Mr. Schultz stated that the reference to multifamily housing projects should be deleted. Councilman Tongco referred to Article 8, page 5, of the Articles of Incorporation and questioned whether the Council has the power to dissolve the corporation. Mayor Halter stated that the Coun- cil has the power to appoint the Directors of the Foundation. He pointed out that if the Council desired to dissolve the corpora- tion it could appoint Directors with the proposal that the corpo- ration be dissolved. Mr. Schultz stated that in his presentation he would address another set of circumstances under which the corporation could be dissolved. There were no additional questions concerning the proposed Bylaws and Articles of Incorporation, and Councilman Boughton moved ap- proval of Resolution No. 12-11-85-03 placing the Council's stamp of approval on the creation of the College Station Economic De- velopment Foundation in accordance with Article 5190.6. Councilman Brown seconded the motion which was approved unaRi- mously, 7-0. ~ ~ ' ° WORKSHOP MEETING OF THE CITY COUNCIL WEDNESDAY, DECEMBER 11, 1985 PAGE 3 Mr. Schultz presented a brief explanation of the College Station Economic Development Foundation proposals as delineated in the memorandum distributed previously. He stated that the Foundation will act as an independent non-profit development Foundation un- der Texas Law. He explained that the Foundation will be required to offer the city some type of consideration for deeding over the 755 acres to the Foundation, in order to legalize the transac- tion. In addition, he noted that the consideration made to the city will enable it to recoup a portion of the dollars expended on the original purchase of the property. He further stated that the proposal delineates a transaction whereby the city will deed to the Foundation the 755 acres free and clear of all liens and restrictions and at the same time the Foundation will initiate an unsecured note back to the city for $1,000,000 bearing no inter- est and designating that no payments will be due for ten years. He further explained that the unsecured note will need to include some restrictive covenants allowing the Council to dissolve and assume possession of all assets if the Foundation were to de- fault. He noted that since the Foundation does not plan to de- velop the 755 acres, it is requesting that the city agree to re- move the restrictive covenants from the 755 acres once the Foun- dation is capable of purchasing additional property for develop- ment, noting that this property will then assume those restric- tive covenants. He stated that in order to assist the Foundation in its attempt to maximize the value of the existing acreage and provide for the greatest flexibility in negotiating future land trades or purchases, the Foundation requests that the city agree to act as guarantor for the Foundation in securing notes from banks, entities or other individuals. He explained briefly the proposal concerning the water tower site. He noted that it is anticipated that there will be a fifty year lease on the water tower site and during this lease period the Foundation will per- form certain acts on behalf of the city to help maximize the val- ue of the site and to determine what types of businesses will of- fer the greatest return in areas such as sales tax, utility us- age, etc. He stated that the Foundation proposes that the city will compensate the Foundation for its efforts by appropriating the first twenty-five years of lease payments to the Foundation. He further noted that the remaining twenty-five years of lease payments plus the return of the property and improvements will be to the city. Councilman Bond asked why it is important to the Foundation to be vested with the first twenty-five years of lease revenues versus the city exercising fiscal control over those revenues. WORKSHOP MEETING OF THE CITY COUNCIL WEDNESDAY, DECEMBER 11, 1985 PAGE 4 Mr. Schultz stated that the Foundation is attempting to obtain a certain amount of funds earmarked for the industrial economic de- velopment program, that are not inside the control of a city council. He explained that this step will remove the matter from under any political situation. In addition, he explained that with a twenty-five lease guarantee the Foundation can use the designated funds to secure mortgages. He stated that the Founda- tion has intentions to construct buildings to lease to companies that are unable to construct their own buildings. He further stated that the Foundation is attempting to create a program that will eventually become self-sufficient. Councilman Bond asked Mr. Schultz if in his opinion the Industri- al Revenue Bond Program is failing, and if not, does the Founda- tion plan to use this particular funding mechanism. Mr. Schultz stated that the Industrial Revenue Bond Program has been consid- ered a possible method of funding; however, the political future for these bonds is uncertain. Mr. Schultz pointed out that the market value of the city's prop- erty is something more than $1,000,000.00. He explained that the Foundation has the ability to provide sites and bring industry to the sites, which the city is not able to do. He further stated that the Economic Development Model indicates that the return to the city will be tens of millions of dollars, which represents more than adequate consideration from the standpoint of returning something back to the city. He stated that the Foundation wants to develop a program with the ability to function for the long- term. Councilman Bond stated that he would need confirmation from the City Attorney as to whether or not the city can guarantee notes for the Foundation. Mr. Schultz replied that this concept has been done in the past. He stated that this concept will provide the Foundation with the flexibility to do certain things that it was unable to accomplish previously in its negotiations with Mr. Fitch. Mr. Schultz stated that the Foundation is requesting the Council to approve the concept as presented. He stated that the legal counsels of both entities will draft the legal documents to allow these proposals to be initiated. City Attorney Locke stated that it had been determined that a gift deed to the Foundation was not possible. She stated that the proposals presented will require additional research from the WORKSHOP MEETING OF THE CITY COUNCIL WEDNESDAY, DECEMBER 11, 1985 PAGE 5 standpoint of the city and suggested that a Council Committee should become more involved in these negotiations. Councilman Tongco suggested that the Council as a whole should discuss more thoroughly the proposals. Councilman Bond stated that he supports the efforts of the Foun- dation and its members, but that he wants to be assured that all the proposed activities are within the framework of what the city can legally undertake. He noted that the Attorney General's opinion states that there must be some contractural agreement be- tween the city and the Foundation which speaks to the Foundation carrying out the city's specifications. City Attorney Locke stated that the most difficult task is plac- ing a value on the property. She explained the transaction that was initiated between the City of Bryan and their Industrial Foundation. She pointed out that a cash transaction would be the safest type of transaction and a gift transaction would be hard to defend. She further stated that some type of transaction in the middle would be more defensible. She expressed her concern that there is no expectation of more money at the end of the agreement. She referred to some discussion at the Foundation meeting of a profit splitting and noted that she would be in- clined to support the idea because it would aid in the defense of the agreement. Councilman Bond asked if there is any chance that the 1979 Devel- opment Corporation Act overrides Article 5421c. City Attorney Locke stated that the Act provides the Foundation with the abili- ty to do things that the city is unable to do, such as, market- ing, soliciting of funds and entering into contracts with private corporations. She stated her opinion that these activities could represent value and would be defensible. City Attorney Locke stated that the Council needs to determine the value for the property. Mr. Schultz stated that the question is whether or not the pro- posals presented represent legal transactions, and if not, then an alternate method will need to be devised. He stated that the proposal was structured in this way to allow the Foundation to gain as many dollars as possible so that it will not have to re- turn to future city councils for funding allocations. He noted that the appraised value of the 755 acres is approximately $3,000,000.00. He pointed out that the money to operate the WORKSHOP MEETING OF THE CITY COUNCIL WEDNESDAY, DECEMBER 11, 1985 PAGE 6 Foundation will come from the money made off the initial purchase of the property, the difference between the $3,000,000.00 and the $1,000,000.00. He noted that over a ten year period, the Founda- tion will receive $200,000.00 a year and stated his opinion that this amount of funds will not be sufficient to operate the Foun- dation; nevertheless, the Foundation will not be coming back to the city every year for additional funds. He further stated that the Foundation reviewed the possibility of paying fair market value for the property and determined that if fair market value were paid, it would greatly reduce the Foundation's ability to compete effectively. He stated that the Foundation is requesting approval by the Council of the concept as presented subject to its legality. Councilman Brown moved approval of the College Station Economic Development Foundation proposals and concepts subject to their legality. Councilman Boughton seconded the motion. Councilman Tongco stated that all parties should understand that there may be minor adjustments to the concepts as presented. Mayor Halter suggested that any concerns of Councilmembers with regard to the proposals and concepts should be expressed during this discussion. Councilman Tongco expressed concern about tying up the lease rev- enues from the water tower site for twenty-five to fifty years. Mr. Schultz replied that the allocation of the lease revenues to the Foundation for twenty-five years is part of the concept. Councilman Tongco questioned what will happen if in five to eight years down the road the lease revenues are not necessary for the continuation of the Foundation's operations. Mayor Halter stated that the concern would be addressed by a change in the members of the Board of Directors and, ultimately, dissolution of the Foundation. Mr. Schultz stated that the Foundation will use those funds to establish and maintain long-term programs. Councilman Tongco asked if the Council will have the option to continue to authorize funding for different projects or the op- portunity to revert the funds back to the city. Mayor Halter re- plied affirmatively. WORKSHOP MEETING OF THE CITY COUNCIL WEDNESDAY, DECEMBER 11, 1985 PAGE 7 Councilman McIlhaney expressed concern with proposal no. 4 and asked City Attorney Locke to determine if that activity is legal. Councilman Bond stated that if the Foundation approaches the city for commitment to a project the City will reserve the right to approval of the project. Mr. Schultz stated that proposal no. 4 provides the Foundation with the interim ability to get the maxi- mum value of the city's property in the back. The motion to approve the College Station Economic Development Foundation proposals and concepts subject to their legality was approved unanimously, 7-0. Prior to adjournment, Mayor Halter addressed the question of a priority-setting session on Friday, January 31st and Saturday, February 1st to Councilman Bond. Councilman Bond concurred. Agenda Item No. 4 - Adjourn. Mayor Halter adjourned the meeting at 5:20 P.M. Gary Hal~',~' Mayor D~a~ J0n~ity Secretary GUEST REGISTER Workshop City Council meeting ~ 11, 1985 3:00 p.m. 2. 19. 3. 20. 4. 21. 5. 22. 6. 23. 7. 24. 8. 25. e 26. 10. 27. 11. 28. 12. 29. 13. 30. 14. 31. 15. 32. 16. 33. 17 34. ,005 47