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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 5/6/2003 (3) MINUTES OF THE SPECIAL MEETING OF THE COUNCIL OF THE CITY OF GLENDALE, MARICOPA COUNTY, ARIZONA, HELD TUESDAY, MAY 6, 2003, AT 1:00 P.M. The meeting was called to order by Mayor Elaine M. Scruggs, with Vice Mayor Thomas R. Eggleston and the following Councilmembers present: Joyce V. Clark, Steven E. Frate, David M. Goulet, and Manuel D. Martinez. Absent: Councilmember H. Philip Lieberman Also present were Ed Beasley, City Manager; Pam Kavanaugh, Assistant City Manager; Rick Flaaen, City Attorney; and Pamela Hanna, City Clerk. COMPLIANCE WITH ARTICLE VII, SECTION 6(c) OF THE GLENDALE CHARTER A statement was filed by the City Clerk that the one ordinance to be considered at the meeting was available for public examination and the title posted at City Hall more than 24 hours in advance of the meeting. ORDINANCE 1. SALE OF BONDS FOR MULTIPURPOSE ARENA PROJECT Art Lynch, Chief Financial Officer; Ray Shuey, Finance Controller and Chris Melvin, UBS Payne Weber Managing Director, presented this item. This is a request for City Council approval of an ordinance authorizing the execution of a supplement to the lease agreement with the City of Glendale Municipal Property Corporation (MPC), and its issuance of not to exceed $170 million in bonds. These actions are the final phase of the funding commitment for the city's portion of the multipurpose arena project. Costs of issuance and Separate City Costs previously authorized in the Arena Development Agreement (the Agreement) are also included. This financing completes the city's obligation under that Agreement. The project is 50 percent constructed and on-target to meet its expected opening date of December 2003. The project includes a 17,500-seat multipurpose arena complex that will be privately managed and serve as the permanent home of the Phoenix Coyotes franchise of the National Hockey League. It also acts as the anchor of a planned 223-acre multi- use development on adjacent privately owned property. At least 1.8 million square feet and ultimately, up to six million square feet of retail and other commercial uses is planned through privately funded development. 1 The project provides many expected benefits, including the city receipt of certain revenues associated with the project. Parking revenues, team rent and guarantee, arena revenues, and a base fee are all anticipated to be received by the city over thirty years, in accordance with the Agreement. Excise taxes from commercial activity within the city are also projected to increase due to completion of the multipurpose facility and surrounding developments both on and off-site. The city expects that the private use revenues and incremental excise tax revenues associated with Project and the mixed- use development will offset debt service over the life of the bonds, In summary, the ordinance under consideration funds a strategic project with expected, significant long term rewards for the city. The bonds' structure provides a strong source of security for bondholders based on the strong growth history of citywide excise tax and superior coverage ratios currently at over five times coverage with inclusion of the bonds being authorized by the ordinance. The recommendation was to waive reading beyond the title and adopt the ordinance authorizing the execution of a supplement to the lease agreement with the MPC and its issuance of not to exceed $170 million in bonds, both relating to the financing of a multipurpose arena complex. Mr. Art Lynch reviewed the details of the bond issuance, explaining it is comprised of $65,680,000 in tax exempt bonds and $99,580,000 in taxable bonds. He said both bonds would be proposed to the market with a 10-year call proposal, allowing the city to pay the bonds off and replace them with other bonds if interest rates drop. In response to Councilmember Clark's question, Mr. Lynch explained the contingency amount put into the bond deal covers unforeseen issues, while bond insurance guarantees investors will get repaid. He stated the contingency amount and bond insurance allow the city to achieve a higher bond rating and, consequently, a lower interest rate, Councilmember Martinez asked if the bond insurance will increase the city's bond rating to AAA. Mr. Lynch responded yes. Mr. Lynch stated revenues are expected to gradually increase over the first three years of the project and, using worst case projections, will cover outstanding debt service. Mr. Lynch reviewed the anticipated schedule, stating the bond sale is proposed to occur May 27 and May 28 is the target date for issuing the tax exempt bonds. He stated the arena is scheduled to open on December 27, 2003. Councilmember Clark asked if the city is still capped at $150 million in construction costs for the arena. Mr. Lynch responded yes, explaining capitalized interest costs and separate city costs account for the additional $20 million. Mr. Chris Melvin reported the city received four bids from different insurance companies, with the low bid coming in at 27 basis points. He explained they initially anticipated the issuance to cost $1.6 million, however, because of structuring components that have been put in place, it will only cost $900,000. He said current market conditions make this a tremendously opportune time to issue bonds. Vice Mayor Eggleston asked if the bonds will be sold by May 28. Mr. Melvin explained the bonds will be priced next week and close two weeks later. He assured Vice Mayor Eggleston that his staff has been working on the bond issuance for a number of months. Ordinance No. 2317 New Series was read by number and title only, it being AN ORDINANCE OF THE COUNCIL OF THE CITY OF GLENDALE, MARICOPA COUNTY, ARIZONA (1) AUTHORIZING THE EXECUTION AND DELIVERY OF A FOURTH SUPPLEMENT TO THE SERIES 1999 LEASE AGREEMENT WITH THE CITY OF GLENDALE MUNICIPAL PROPERTY CORPORATION RELATING TO THE FINANCING OF A MULTIPURPOSE ARENA COMPLEX; (2) PLEDGING CERTAIN EXCISE TAXES AND RECEIPTS IMPOSED OR RECEIVED BY THE CITY; (3) APPROVING THE FORM OF AND REQUESTING THE EXECUTION AND DELIVERY BY CITY OF GLENDALE MUNICIPAL PROPERTY CORPORATION OF A SERIES 2003 FOURTH SUPPLEMENTAL TRUST INDENTURE AND SERIES 2003A BONDS, 2003B BONDS AND 2003C BONDS IN AN AGGREGATE PRINCIPAL AMOUNT NOT TO EXCEED $170,000,000, SUCH FOURTH SUPPLEMENT TO LEASE AGREEMENT AND A PURCHASE AGREEMENT WITH RESPECT TO THE SALE OF SUCH BONDS; (4) DELEGATING TO THE CITY MANAGER OR THE CHIEF FINANCIAL OFFICER OF THE CITY THE AUTHORITY TO DESIGNATE THE FINAL PRINCIPAL AMOUNT, MATURITIES, INTEREST RATES AND OTHER MATTERS WITH RESPECT TO SUCH BONDS; (5) AUTHORIZING THE TAKING OF ALL OTHER ACTIONS NECESSARY TO THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED BY THIS ORDINANCE, INCLUDING THE EXECUTION OF CERTAIN DOCUMENTS AND THE DISTRIBUTION OF A PRELIMINARY OFFICIAL STATEMENT; AND (6) DECLARING AN EMERGENCY It was moved by Clark, and seconded by Goulet, to approve Ordinance No, 2317 New Series. Motion carried on a roll call vote, with the following Councilmembers voting "aye": Clark, Goulet, Eggleston, Martinez, Frate, and Scruggs. Members voting "nay": none. CITIZEN COMMENTS No comments were made. COUNCIL COMMENTS AND SUGGESTIONS No comments were made. 3 It was moved by Eggleston and second by Frate to excuse Councilmember Lieberman. The motion passed unanimously. ADJOURNMENT There being no further business, the meeting was adjourned at 1:40 p.m. Pamela Hanna - City Clerk 4