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HRA Minutes 11-18-1998 . . . MINUTES MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY WEDNESDAY, NOVEMBER 18, 1998 Members Present: Chair Steve Andrews, Vice Chair Bob Murray, Brad Barger, Dan Frie and Darrin Lahr Council Liaison: Brian Stumpf Staff Present: City Administrator Rick Wolfstellcr, Deputy City Administrator Jeff O'Neill, Executive Director Ollie Koropchak. Guest: Mayor Bill Fair Consultants: Rusty Fifield, Ehlers & Associates Steve Bubul and Dan Greensweig, Kennedy & Graven I. Call to order. Chair Steve Andrews called the meeting to order at 6 p.m. 2. Consideration to approve the November 9, 1998 HRA minutes. A MOTION WAS MADE BY BRAD BARGER AND SECONDED BY DARRIN LAHR TO APPROVE THE MINUTES, AS WRITTEN, OF THE HRA MEETING OF NOVEMBER 9, 1998. Motion carried unanimously. 3. Consideration of adding agenda items. No agenda items added. 4. Consideration to adopt a resolution awarding the sale of Public Proiect Revenue Bonds, Series 1998. Executive Director Ollie Koropchak gave a brief background regarding the bond sale. She stated that at the HRA meeting of November 9, 1998, a letter was distributed by two Council members and the mayor-elect regarding the possibility of stopping the project in January when the new Council took oflice. The City attorney advised the HRA that this information must be disclosed to potential bidders. The possibility existed that this letter could negatively affect the sale of the bonds. Ehlers & Assoc., requested time to look at the lIRA's options. A special meeting was set [or November 18,1998, at 6 p.m. -1- HRA Minutes - 11/18/98 . Rusty Fifield, Ehlers & Associates, stated that on November 9, the HRA rejected the bond bid and authorized Ehlers & Associates to do the following: 1. Prepare languagc to disclose the letter reccived and its potcntial impact on investors. 2. Evaluate options for issuing the bonds. 3. Sccure reasonable financing for the project. The disclosure ofthe letter made long-term bonds unmarketable at a reasonable rate. Ehlers & Associates felt that temporary bonds were a more viable way to finance the project. The temporary bonds would prevent taxpayers from being saddled with unnecessarily high interest rates. Also, permanent financing could occur only if and when the community center is built and the controversy ovcr. Mr. Fifield stated that issuing the bonds at this time provides the capacity to enter into a construction contract with the knowledge that all funding was secured. The bond issue is structured to protect the bondholders and the credit rating of the City from the potential termination of the project. . Rusty Fifield stated that R.J. Steichen & Co., had submitted a proposal to purchase the $7,385,000 Temporary Public Project Revenue Bonds at a interest rate of not greater than 4.5% and a price of not less than 99% of par. The following are stipulations by Steichen on the purchase of the bonds: 1. Prior to closing, the City will deposit, with the Trustee, $150,000 to pay discount and all costs of issuance. 2. The budget for 1999 contains an irrevocable appropriation of funds to pay interest due on August 1, 1999 and February 1,2000. 3. No bond proceeds may be disbursed without a resolution ofthe City Council adopted after January 1, 1999 that declares the Council's intent to: 1. 2. Complete construction ofthe community center. Appropriate funds in fiscal year 2000 to pay interest due on August 1, 2000 and February 1,2001. Issue long-term bonds to refund the Temporary Bonds before February 1, 2001. 3. . -2- HRA Minutes - 11/18/98 . 4. The trustee shall not release any bond proceeds if the City Council takes action to: I. Terminate contracts for the construction of the community center. 2. Terminate the lease agreement with the Monticello Housing and Redevelopment Authority. 3. Terminate the development agreement with the State Armory Building Commission. Bob Murray asked if there as a pre-payment provision and conversion privilege with the short term bonds. Rusty Fifield stated that the bonds are subject to redemption on February 1, 2000. Long term bonds could be issued as soon as November I, 1999, 90 days prior to February 1, 2000. Brad Barger asked Rusty what he felt could be the worst case scenario if they follow through on the letter. . Rusty Fifield stated that the bonds would disappear and the City of Monticello has to find the money to pay any obligations due. The bond holders would get all their money back. Bob Murray asked when the funds would be available. Rusty stated bond closing would be mid-to-Iate December. Only the new Council will be authorized to release the funds. Mark Wenzell, AKA, stated that the contractor has already started work. The Contractor has spent approximately $1 million and contracted for $2-3 million in work to subcontractors. The contractor makes his money in the fall not in the winter and he can't start in January. He needs to move quickly. If the contractor's contract is not official by November 28, 1998, he will leave the site. Brad Barger asked how the contractor could begin without approval of funding and a signed contract. Dan Greensweig, City Attorney, stated that the contractor had a Letter of Intent signed by the City and the contractor expects the City to uphold their end of the agreement. The Letter of Intent is standard practice. The contractor has a right to litigate to regain any of his expenses. There could be measurable risk to the City if litigation over the contract occurs. Brad Barger asked on a scale of 1 to 10 what Mr Greensweig felt the risk was to the City. . -3- HRA Minutes - 11/18/98 . Dan Greensweig stated that without reading the language of the Letter of Intent, he felt possibly a 5 or 6. Brad Barger stated that with all the turmoil surrounding this project, how was it that legal council recommended a Letter of Intent. Mr. Greensweig stated that his office was not part of the bidding process and did not review the bids. However, the process of issuing a Letter ofIntent was standard for a typical project. Jeff O'Neill stated that on November 2, 1998, the City Council accepted the bids and awarded the contract to Donlar. Staff then sent a Letter of Intent to Donlar, low bidder, at the direction of the Council. Brian Stumpf asked if the risk to the City would be less without going ahead with the sale of the bonds versus going ahead with the sale of the bonds. . Dan Greensweig stated that there would be costs occurred in delaying the project. It would be 10% morc cxpensive to rebid the project in January if the contractor leaves the site. The further you get into the project the harder it is to untangle. Waiting will increase the cost of the project. Jeff O'Neill handed out a tabulation showing that $2.6 million has been expended thus far. Rusty Fifield stated that for the HRA to accept the short term bond lease proposal, they must approve the finance plan and direct Ehlers & Kennedy & Graven to prepare revised legal documents to reflect the appropriate terms and conditions. The HRA must also schedule a special meeting for Monday, November 23 to take formal action on the bonds and execute related legal documents. A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DANFRIE TO APPROVE THE FINANCE PLAN AND DIRECT EHLERS AND KENNEDY AND GRAVEN TO PREP ARE REVISED LEGAL DOCUMENTS TO REFLECT THE APPROPRIA TE TERMS AND CONDITIONS. ALSO, SCHEDULE A SPECIAL MEETING FOR MONDAY, NOVEMBER 23 TO TAKE FORMAL ACTION ON THE BONDS AND EXECUTE RELATED LEGAL DOCUMENTS. Voting in favor, Steve Andrews, Dan Frie, Bob Murray, and Darrin Lahr. Opposed Brad Barger. Discussion was held on the motion. Brad Barger wanted to know the ramifications regarding the National Guard if the Armory does not open by a specified date. . -4- . . . HRA Minutes - 11/18/98 Tom Vesley from the National Guard stated that the Guard was committed to the project and would assist the City in any way they could. 5. Consideration to accept or deny a counter-offer for purchase of the property located at 218 Front Street. A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY DAN FRlE TO TABLE ITEM #5 UNTIL THE DECEMBER 9, 1998, HRA MEETING. Motion carried unanimously. 6. Consideration to authorize payment of monthly BRA bills. A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN FRlE TO AUTHORIZE PAYMENT OF THE MONTHLY BRA BILLS AS SUBMITTED. Motion carried unanimously. 7. Consideration of executive director's report. Executive Director Ollie Koropchak reported that the Public Works Department is proceeding to do the necessary repairs on 3 Walnut Street. They are also putting shingles on the roof of the garage. Before demolition of the property takes place, the Public Works Department would like to move the garage to a property they own on West 39. Darrin Lahr asked if the Public Works Department was billing the HRA for the shingles. Ms. Koropchak stated that she would ask them not to bill the HRA with the understanding that the HRA would work with them before demolishing the property. Ms. Koropchak also stated that she has tried renting the property to two other renters. Neither of them was interested. She will now proceed to advertise the property. 8. Adiournment. A MOTION WAS MADE BY DARRlN LAHR AND SECONDED BY BRAD BARGER TO ADJOURN THE MEETING AT 6:35 P.M. ~" ....-'"' -5-