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HomeMy WebLinkAboutMinutes - Minutes - City Council - Meeting Date: 7/1/2003 * PLEASE NOTE: Since the Glendale City Council does not take formal action at the Workshops, Workshop minutes are not approved by the City Council. MINUTES CITY OF GLENDALE CITY COUNCIL WORKSHOP July 1, 2003 1:30 p.m. PRESENT: Mayor Elaine M. Scruggs, Vice Mayor Thomas R. Eggleston, and Councilmembers Joyce V. Clark, Steven E. Frate, David M. Goulet, H. Phillip Lieberman, and Manuel D. Martinez ALSO PRESENT: Ed Beasley, City Manager; Pam Kavanaugh, Assistant City Manager; Rick Flaaen, City Attorney; and Pamela Hanna, City Clerk 1. COMMUNITY FACILITIES DISTRICT OVERVIEW CITY STAFF PRESENTING THIS ITEM: Mr. Art Lynch, Chief Financial Officer; Mr. John Overdorff, Bond Counsel; and Juan Pittman, First Vice-President, UBS Financial Services. In 2002 the city proposed to the Arizona Tourism and Sports Authority (TSA) that the new home for the Arizona Cardinals be located in Glendale. The city's proposal included use of a community facilities district (CFD) to finance the local contribution to the project. At the August 30, 2002 City Council meeting, the Chief Financial Officer explained that the CFD financing structure allows a city to proceed with projects without incurring any liability or using its bonding capacity. Through its separate financial and legal structure, CFD would be self-funding. Therefore, it would not impact the city's budget. He recommended that a CFD be established at a future date, which would have the ability to sell bonds to pay for parking and other infrastructure needs. The city is currently finalizing funding arrangements for public improvements surrounding the NFL Cardinals football stadium, such as land and construction improvements for parking. A CFD provides a method of financing infrastructure from revenues generated on-site. The Arizona Cardinals football team and the TSA are involved in the funding discussion due to the importance of public infrastructure being in place prior to the opening of their stadium. A CFD is a separate political subdivision from that of a city, but land in the district is still subject to all requirements of the community forming it, such as zoning laws. Within those constraints, the CFD has statutory authority to construct, acquire, operate, and maintain public infrastructure. 1 The board of directors for the proposed size of CFD would by law be the City Council. However, the debts of the CFD are not debts of the city. Public infrastructure that may be financed with a CFD includes water, sewer and drainage projects; highways, streets, roadways and parking facilities; landscaping; street lights and traffic signals; civic buildings; pedestrian malls, parks, and recreational facilities; and lighting systems. A CFD may not be used to financing the construction of a stadium. However, it may be used for the infrastructure surrounding it. State statutes identify the steps for forming a CFD, which include a petition to the City Council by landowners within the proposed CFD. Like a city, the CFD can finance its capital projects through the issuance of general obligation, revenue, or special assessment bonds. On August 30, 2002 City Council adopted resolution no. 3603, which executed a development agreement with B&B Holdings, Inc. dba Arizona Cardinals. That agreement established rights and obligations regarding the development of a multi- purpose facility and related parking. On the same date, City Council adopted resolution No. 3604, which executed a development and disposition and intergovernmental agreement, an event staging license agreement, and a construction staging area license agreement with the TSA. The resolution provided direction that staff take all reasonable and necessary steps to acquire necessary lands. Arizona Cardinals, TSA, and their attorneys are aware of the city's proposal to form a CFD. Staff holds regular meetings with their representatives to coordinate the public infrastructure financing and construction. The city's financial advisor, bond counsel, and the underwriting community are aware of the project and the proposed CFD. Through its separate financial and legal structure, CFD would be self-funding. Therefore, it would not impact the city's budget. Existing city staff would administer CFD activities, in the same manner that city employees currently handle the City of Glendale Municipal Property Corporation (MPC) administrative functions. This approach is appropriate due to the public benefit provided by CFD and MPC. The recommendation was for moving forward to form CFD and provide direction. Councilmember Clark asked how they will deal with the conflict between the four year Council terms and six year Director terms, pointing out a Councilmember could choose not to run again after their term ends or fail to be reelected. Mr. Overdorff explained City Council members act ex-officio when a district is less than 600 acres. He said, therefore, whoever is a member of the City Council at any given time would be a Director of the CFD. Councilmember Clark asked about the requirement to have a General Plan on file. Mr. Overdorff said the 2 General Plan will be specific to the CFD, however, historically, it recites that the CFD will have the power to do those things allowed by the statute. Councilmember Martinez expressed his opinion the requirement that 25 percent of landowners must support forming a district seems low. Mr. Overdorff explained 25 percent is the minimum number needed to sign a petition to get the City Council to consider creating a CFD. He said anything less than 100 percent support by the landowners requires a series of hearings, public notices and an election of the landowners. In response to Councilmember Clark's question, Mr. Overdorff said all landowners would be required to sign the petition if they claimed 100 percent consent. Councilmember Lieberman asked if the landowners would have a position on the Board. Mr. Overdorff responded no. Councilmember Lieberman asked if the City's current bonding authority gives it the right to issue bonds for the CFD. Mr. Lynch stated no, explaining the obligations of the CFD are separate from those of the city. He confirmed the District would be required to hold an election to issue the bonds if they were going to be issued as property tax secure bonds. He said, however, a bond election will not be necessary. Councilmember Clark pointed out a General Obligation bond, when issued by the city and backed up by property tax, makes no distinction as to where the property tax payment comes from. Mr. Lynch stated there would be a distinction with the CFD General Obligation Bonds. Mr. Overdorff confirmed only people within the CFD would vote in an election to assess a tax rate. Mayor Scruggs suggested staff create a slide that identifies the entities who own or will own properties within the CFD. Vice Mayor Eggleston noted the CFD is similar in setup to a County Flood Control District. He asked if the city will forego all sales tax rights within the CFD. Mr. Lynch explained the city would forego an agreed upon amount to fund the CFD bonds. Vice Mayor Eggleston asked if a property tax levy has been proposed in the CFD. Mr. Lynch responded no. Vice Mayor Eggleston asked if future development in the CFD would be subject to state and county property taxes. Mr. Lynch answered yes. Mr. Overdorff confirmed, at this point in time, no city property taxes go to the CFD and the CFD itself is not expected to levy a property tax. Mr. Overdorff confirmed for Mayor Scruggs that future development will be subject to normal city property taxes, but no additional property tax will be levied by the CFD itself. 3 Councilmember Clark suggested they include reimbursing the municipality for providing enhanced services within the District in their negotiations. Mr. Overdorff expressed his opinion the city would not be providing enhanced municipal services, but services necessary for current activities. He agreed, however, they would want to negotiate how those expenses will be handled. Councilmember Clark asked if the area would qualify as an Urban Core Business District. Mr. Overdorff offered to explore that issue. Mayor Scruggs pointed out the enhanced services would be offered on a very limited basis. Mr. Overdorff stated a public safety agreement, similar to the one negotiated for the arena, would be negotiated in regard to the stadium. He said, while the CFD could be involved in the agreements, it might be best to make direct arrangements between the operator or the team and the city. In response to Councilmember Martinez's question, Mr. Overdorff explained the CFD acts as a taxing and financing entity, but does not provide safety services. He said they will explore how the CFD can assist the city by funneling revenues to the city for city services. Mayor Scruggs asked if CFDs are for ongoing operation and maintenance or for public infrastructure. Mr. Beasley explained the structure is a state owned structure and the city does not envision bearing responsibility to fund, enhance or protect based on the public safety aspect. He said a series of negotiations will be held in the future to determine who will pay for public safety services. Councilmember Clark pointed out it is not just the matter of enhanced public safety for football games, but for all events that occur at the stadium during the course of a year. She stated, therefore, the CFD should be responsible for paying the cost of the additional public safety. Vice Mayor Eggleston noted other facilities, including Glendale Community College, ASU West and large churches are required to pay for special police security. He said, however, it is not known at this time what the enhanced public safety will cost. Councilmember Lieberman stated the CFD is a living, movable document. Mr. Overdorff agreed changes could be made to the document in the future. Councilmember Frate pointed out the questions being asked do not need to be answered for another two years and recommended staff continue with their presentation. Councilmember Goulet asked if the stadium could ultimately hire another agency to provide public safety services. Mr. Overdorff explained it was not the purpose of the CFD to deal with public safety and those negotiations would have to be done outside of the CFD. 4 Councilmember Clark expressed her opinion their discussion was helpful in that it helped her understand the capabilities and limitations of a CFD. Councilmember Martinez asked about the geographic area included in the CFD. Mr. Overdorff explained the CFD would basically cover the stadium and surrounding parking area. Mayor Scruggs summarized their discussion, explaining the CFD is related to providing a financing mechanism for infrastructure related to the stadium. She said, while there is a concern about extraordinary public safety needs associated with the stadium, the CFD is not intended to pay for public safety services. She stated, therefore, the city must anticipate a need for extra public safety and determine which of the available options will best address that need. Mr. Overdorrf and Mr. Lynch agreed. Councilmember Clark agreed with Mayor Scruggs' summation, except in terms of the powers of a CFD, explaining the state statutes specifically enumerates reimbursement to municipalities. Mr. Overdorrf agreed the statute provides for the CFD to fund enhanced municipal services, however, there are a number of issues involved, including whether or not it meets the definition of a redevelopment area or core business district, the fact that the CFD does not intend to ever levy property taxes, and whether revenue left over after the payment of debt service could be funneled to the city. He said the city could also establish separate agreements wherein the other venue operators pay the costs directly. He stated, at this point, he is unable to determine which option would be the most efficient. Councilmember Clark said, while she does not care where the money comes from, it is incumbent upon them to identify a source of revenue to cover the additional public safety costs. Mayor Scruggs agreed, stating, however, they first have to form the CFD. Mr. Lynch explained the next step would be the first CFD Board meeting, in which they would consider and look at the formation documents, negotiate the development agreement and set up procedural rules for the district. He said, as a financing mechanism, it would have a proposed budget as well as insurance for the District Board and its activities. In response to Councilmember Lieberman's comments regarding the agreement, Mr. Flaaen advised Council to discuss the specifics of the agreement during the Executive Session. Mr. Lynch stated the next steps are an ordinance that approves the financing arrangements, a second CFD Board hearing on the feasibility study required under state statutes, and review and approval of the bond terms and financing documents. He reviewed the generalized time schedule, explaining the resolution could be considered either on July 22 or September 9. He pointed out 5 the Board's first meeting could be held immediately following the Council meeting if formation of the Board were adopted with an emergency clause. He said a 30 day requirement will be applicable if formation of the Board is adopted without an emergency clause. Mayor Scruggs said, even though Council is on vacation during the month of August, they could hold a Board meeting prior to September 9 if enough members are available. Mr. Lynch agreed. Mr. Overdorrf explained the proposed meeting dates were based on the tradition of other City Councils who have formed CFD Boards, stating they typically prefer to meet immediately following their City Council meetings. Mr. Lynch said the second CFD meeting would be held to approve the bond terms, noting the timing of that approval is set for two weeks after the first CFD meeting. Mr. Lynch discussed the general structure, explaining the city will create the CFD and, once formed, the Cardinals will transfer the land to the CFD. He said the CFD would then issue the CFD bonds for infrastructure and capital and, finally, construct the onsite infrastructure and parking. He stated the city would be responsible for CIP funding for construction of improvements and the Cardinals would be responsible for some of the off-site improvements. He explained the CFD receives revenues from a variety of sources and then pays the debt service and all related costs. He said the Cardinal's guarantee of the bonds was the final component of their discussions. He explained 152 acres will be transferred to the CFD, with the TSA's 28 acres representing the stadium footprint. He said the CFD has responsibility for the parking spaces, water and sewer, storm drainage, and streets and utilities. He said offsite improvements are a combined responsibility of the CIP and the Cardinals. Mr. Lynch identified the revenue sources flowing into the CFD, as being sales tax, parking revenues, construction sales tax, facility user fees, CIP funds, youth sports and the Department of Transportation. He said the funds can be used for debt service, associated costs of the debt, infrastructure improvements, reimbursements for land purchase and acquisition, and the establishment of a separate reserve fund. He stated any left over funds could ultimately be used to address city, TSA or Cardinal costs. Councilmember Clark pointed out the city's CIP funds are capped at $3.5 million and the TSA's are capped at $1 million. Mr. Lynch agreed. Mr. Lynch identified UBS Financial Services as the Senior Managing Underwriter and JP Morgan and Stun Youngberg as co-managers. Mr. Pittman, UBS Financial Services, stated they are one of the leading municipal bond underwriters in the country and number one in taxable bonds. 6 He said they have significant experience in terms of developing sports facilities, noting they were the senior managers for the Phoenix Coyote Arena financing. He stated they have a history of innovations in terms of CFD financings, having set up fixed rate financings, insured and non-insured financings, and senior and subordinate structures. He said they also have significant experience in terms of private and public offerings. He explained yields are currently at a 45 year low, making it an extremely attractive time to get into the market. He said, while basing revenues on ticket sales and projections make the deal more complex than if they were based on a historical revenue stream, they believe the deal is very feasible. He explained their intent is to set the structure up in such a way that they are able to obtain an investment grade rating, thereby achieving the lowest possible cost. Mr. Lynch introduced members of the other underwriting agencies. Councilmember Lieberman expressed his opinion they are rushing, given the fact that construction of the stadium is still a number of years off. He asked how long it will be before they begin funding the CFD with CIP funds and how soon funds will have to be available to pay for the cost of infrastructure improvements. Mr. Lynch explained CIP funding is done annually as part of the city's budget process. He said it typically takes six months to form the CFD, therefore the CIP projects in the FY 2003/04 will be needed this year. He clarified the funds would not have to be transferred into the CFD account since they have already been appropriated in the CIP. Councilmember Goulet asked if the history of revenue streams is transferable when a facility is moved from one location to another. Mr. Pittman said, while they can point to the past history of previous arena financings as a model for rating agencies, a new facility always runs the risk of not meeting its revenue projections. In response to Councilmember Clark's question, Mr. Lynch explained a private offering is one where a specific buyer is identified, whereas a public offering is one where bonds are sold to competing buyers throughout the United States. He said they hope to get as close as possible to a public offering, however, the market could make it necessary to look at a private offering. Mr. Overdorff noted the statute says the bonds have to be sold in a private offering if an investment- grade rating is not achieved. Councilmember Clark asked if they anticipate the city not receiving an investment-grade rating. Mr. Pittman said, while it is their goal is to achieve an investment-grade rating, at this point it is too early to know if that goal will be met. Mayor Scruggs directed staff to return to Council with additional information at the July 15 meeting. 7 2. CITY MANAGER'S FOLLOW-UP REPORT TO COUNCIL ITEMS OF SPECIAL INTEREST CITY STAFF PRESENTING THIS ITEM: Ms Cathy Gorham, City Manager's Office, Acting Director of Council/Manager Relations and Ms. Meaghan Ellsworth, Senior Management Assistant The purpose of this item is to present information to the City Council on items that were identified by Councilmembers at their April 1s workshop. After further discussion with the two Councilmembers concerning the suggestions for consideration, the topic of the Downtown Movie Night was dropped at this time. Today's report focuses on the second topic identified. Based upon a request from Councilmember Martinez, Cholla District, the City Manager is providing an initial assessment of the request by the Glendale Sister Cities Program, Inc. Board Members to dissolve the Glendale Sister Cities Program. A memorandum from the City Manager details a historical synopsis of the funding and activity of the Glendale Sister Cities Program, Inc.; an overview of neighboring city's programs; and a thumbnail sketch of the tasks and costs associated with providing Council options for the continuance of the Glendale Sister Cities Program. This is the first action taken in response to the request for dissolution of the Glendale Sister Cities Program by the Glendale Sister Cities Program, Inc. Board of Directors. Public meetings will be held, should the Council direct staff to research the option of operating the Glendale Sister Cities Program, or help to develop a viable non-profit organization. Researching the two options outlined in the attached memorandum from the City Manager is not a budgeted item. A detailed cost analysis of the option(s) will need to be conducted. The recommendation was to provide this information to City Council for review, discussion and staff direction. Ms. Gorham suggested assessment reports and new items be brought to Council at its October 1, 2003 workshop. Ms. Ellsworth stated the Glendale Sister Cities Program is a 501C-3 organization and the City of Glendale has no legal obligation to help dissolve or take on the program nor is the city's approval needed for the program to be dissolved. She said the Council's office has funded the program, however, the program has not requested any funding since FY 2001. She stated Special Events has allowed the program to work some of their events as fundraisers, however, the program decided not to participate in the Fiesta's Glendale Program or World Music Festival. She explained the purpose of the program is to bring together community members, municipalities and business organizations and create opportunities to increase cross cultural awareness through arts and education, business and economic development, and other efforts. She said, should Council decide to take on the program, staff would recommend the program be 8 placed under the Conventions, Events and Cultural Services Department. Ms. Ellsworth discussed the results of their research on other cities, noting the City of Phoenix provides an annual grant to their non-profit Sister Cities Program and funds its employees as temporary employees. She reported the City of Avondale folded their organization and has no plans to reinstate the program at this time. She stated the City of Tempe has a non-profit volunteer organization and provides some in-kind event services and financial assistance. She said the Town of Gilbert also has a Sister Cities Program, noting it is a non-profit sub-committee of the Chamber of Commerce. Ms. Ellsworth said, if the city were to adopt the Sister Cities Program or decide to assist in recruiting Board members, staff would have to do a business plan to identify goals and objectives, performance measurements, budget allocations, revenue options, staffing requirements, operations and personnel costs and office locations. She estimated the project to take four to eight months at a projected cost of $16,000 to $22,000. Councilmember Frate agreed the Board members have lost interest. He suggested the Chamber of Commerce consider adopting the program. Vice Mayor Eggleston said the Sister Cities Program has done nice things for the city. He stated he would also like the Chamber of Commerce to consider adopting the program. Councilmember Lieberman stated the Sister Cities Program was started because of the pilots that were transferred from Luke to Memegen, Germany. He said he would hate to see the program dissolve because it allows the city to interface with other cities around the world. He expressed his opinion sister cities should also be identified in Russia and Japan given the influence of their cultures on Glendale. He pointed out the program lacks members, not money. Councilmember Martinez agreed with Councilmember Lieberman, stating the program adds to the city. He suggested the city assist with recruiting new members, but that the Chamber operate the program. He noted the program has indicated it would donate its funds to the Glendale Community College International Student Fund if it is ultimately dissolved. He asked who made the decision as to who the sister cities would be when the program was initially established. Ms. Gorham said, while the program was established before she came to the city, the Sister Cities International charter recommends the functions be driven by citizen input. Mayor Scruggs said Sister Cities International strongly recommends that any Sister Cities program become incorporated. She stated the city cannot control people's interests and, although Glendale residents are strong volunteers, they do not appear to have much interest in this program. She expressed her opinion the program would have the best chance of success if the Chamber took it under its charge, pointing out one of their most successful trips was Chamber driven. She suggested they also ask the Glendale Community College International Students Organization or Glendale Civic Pride if they would be interested in taking over the program. Councilmember Clark said there is no doubt the cultural relations that have been formed have benefited the city, stating, however, the city cannot mandate citizen participation. She said the community has spoken and does not believe there is a driving interest in this type of activity at this time. She pointed out citizen interest could resurface at some point in the future, at which time the program could be revived. She 9 agreed it would be inappropriate to make the program a city function. Councilmember Goulet stated, given that the organization has some money, it is incumbent on the organization to determine the true level of community interest. He said a number of people have questioned how the city benefited from the program. He suggested they also look at the Thunderbird Graduate School as a possible candidate to take over the program. Councilmember Martinez suggested the Council respond to the Board's letter, recommending they approach the other organizations discussed by Council and offering to assist in setting up the meetings. Vice Mayor Eggleston agreed with Councilmember Clark, stating every volunteer organization experiences ebbs and flows. He said he learned a lot from his involvement in the program and believes other people would be interested if they knew more about the program. Councilmember Clark said, while there would be no harm in assisting the Board in setting up meetings with other organizations, the Board would have to take the lead role in the meetings. Mayor Scruggs voiced Council's consensus, directing staff to write a letter to the Glendale Sister City organization listing various possibilities and offering to facilitate in contacting other organizations, but making it clear that the Sister Cities Program must develop their own presentation. She suggested Council members include information about the program in their newsletters to see if the level of interest can be increased. She pointed out it is quite difficult to dissolve a 501C-3 organization. 3. ITEMS OF SPECIAL INTEREST TO COUNCIL CITY STAFF PRESENTING THIS ITEM: Mr. Randy Henderlite, Police Chief and Mr. Andrew Kirkland, Assistant Police Chief This item is being placed on the agenda to provide members of the City Council an opportunity to identify an item of special interest that they would like considered for possible future workshop discussion. All identified items will be referred to the City Manager for an initial assessment of the time and resources needed to bring a full report forward for Council consideration and direction. The City Manager will report back to the Council with an assessment of the item being asked for consideration. The item will be specifically posted on the agenda so that discussion may take place by the full Council and direction may be provided to the City Manager regarding whether future study and/or a full report is warranted. At the request of City Council, this item is being placed on the first workshop agenda of each quarter. The recommendation was to identify items of special interest for referral to the City Manager. Chief Henderlite introduced the new Assistant Chief of Police, Andrew Kirkland Councilmember Martinez asked staff to research whether contributions to the Arts Fund 10 should be suspended until the city's budget situation improves. He also asked if the Cemetery Fund monies could be redirected to the General Fund. Councilmember Lieberman agreed staff should look at the Art Fund, particularly in regard to the $2 million that would be put into the Art Fund in relationship to the arena. He said he does not necessarily agree with statements he has heard that that money has to be used exclusively in the Arena area. With regard to a previous meeting wherein Council was asked to allow BMX bike riders to utilize the new skateboard park, Councilmember Lieberman suggested staff look into what would be involved in creating a BMX freestyle area. He said he also agrees that staff should look at the Cemetery Fund. Councilmember Frate stated the American Graduate School would like to return their Balloon Festival to Glendale. Mayor Scruggs noted the city is already working on that issue. Councilmember Clark said a number of constituents would like to be able to dump their allotted 2,000 pounds at the landfill, but in multiple trips. She said she also wants to further address empty big box stores, suggesting staff look at stipulating that the property owner secure a buyer or tenant within 12 months of vacancy or divide the space into smaller spaces. Mayor Scrums said she would like to look at what could be done with the northeast corner of 51 Avenue and Northern, the northeast corner of 59 Avenue and Greenway and the northeast corner of 67th Avenue and Bell. She pointed out a number of the smaller vacant properties are in much worse condition than the larger vacant big box stores. Councilmember Clark agreed they should look at all vacant properties and develop innovative ways of dealing with the issue. ADJOURNMENT The meeting was adjourned at 4:00 p.m. 11