HRA Agenda 11-23-1998
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AGENDA
MONTICELLO HOUSING AND REDEVELOPMENT AUTHORITY
Monday, November 23, 1998 - 6:00 p.m.
City Hall
MEMBERS: Chair Steve Andrews, Vice Chair Bob Murray, Brad Barger, Darrin Lahr, and Dan
Frie.
STAFF:
Treasurer Rick Wolfsteller, Executive Director Ollie Koropchak, and Recording
Secretary Nancy Whalen.
CONSULT ANTS: Rusty Fifield, Ehlers & Associates
Attorneys Dan Greensweig and Steve Bubul, Kennedy and Graven
1. Call to Order.
2. Consideration to approve the November 18, 1998 HRA minutes.
3. Consideration to adopt a resolution awarding the sale of Temporary Public Project
Revenue Bonds, Series 1998.
4.
Other business.
5.
Adjournment.
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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 Wolfsteller, 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
1. 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 DARRlN
LAHR TO APPROVE THE MINUTES, AS WRITTEN, OF THE HRA MEETING OF
NOVEMBER 9, 1998. Motion carried unanimously.
3.
Consideration of adding: aR:enda items.
No agenda items added.
4. Consideration to adoot 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 office. 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 HRA's options. A special meeting was set for November 18, 1998, at 6 p.m.
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HRA Minutes - 11/18/98
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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 language to disclose the letter received and its potential impact on
investors.
2. Evaluate options for issuing the bonds.
3. Secure reasonable financing for the project.
The disclosure of the 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 over.
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.
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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 of the City Council
adopted after January 1, 1999 that declares the Council's intent to:
1.
2.
Complete construction of the 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.
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HRA Minutes - 11/18/98
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4. The trustee shall not release any bond proceeds if the City Council takes action to:
1. Terminate contracts for the construction ofthc community center.
2. Terminate the lease agreement with the Monticello Housing and
Redevelopment Authority.
3. Tcrminatc 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 1, 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.
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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 holdcrs 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 ofthc 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.
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HRA Minutes - 11/18/98
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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. Oreensweig stated that his office was not part of the bidding process and did not
review the bids. However, the process of issuing a Letter of Intent 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 ahcad with the salc of the bonds.
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Dan Greensweig stated that there would be costs occurred in delaying the project. It
would be 10% more expensive to rebid the project in January if the contractor leaves the
site. The further you get into the project the harder it is to untanglc. 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 DAN FRIE TO
APPROVE THE FINANCE PLAN AND DIRECT EHLERS AND KENNEDY AND
ORA VEN TO PREP ARE REVISED LEGAL DOCUMENTS TO REFLECT THE
APPROPRIATE 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.
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lIRA 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 FRIE TO
TABLE ITEM #5 UNTIL THE DECEMBER 9, 1998, HRA MEETING. Motion carried
unanimously.
6. Consideration to authorize payment of monthly HRA bills.
A MOTION WAS MADE BY BOB MURRAY AND SECONDED BY DAN FRIE TO
AUTHORIZE PAYMENT OF THE MONTHL Y BRA BILLS AS SUBMITTED.
Motion carried unanimously.
7.
Consideration of executive director's report.
Executivc Director Ollie Koropchak reported that the Public Works Department is
proceeding to do thc ncccssary 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 thcm 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.
Adjournment.
A MOTION WAS MADE BY DARRIN LAHR AND SECONDED BY BRAD
BARGER TO ADJOURN THE MEETING AT 6:35 P.M.
Steve Andrews, Chair HRA
Nancy C. Whalen, Recording Secretary
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