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HomeMy WebLinkAbout08-16-2016 Regular Council Meeting MinutesMARANA TOWN COUNCIL REGULAR COUNCIL MEETING MINUTES 115 5 5 W. Civic Center Drive, Marana, Arizona 8 5 65 3 Council Chambers, August 16, 2016, at or after 7:00 PM Ed Honea, Mayor Jon Post, Vice Mayor David Bowen, Council Member Patti Comerford, Council Member Herb Kai, Council Member Carol McGor ray, Council Member Roxanne Ziegler, Council Member REGULAR COUNCIL MEETING CALL TO ORDER R AND ROLL CALL. Mayor Honea called the meeting to order at 7:02 p.m. Town Clerk Bronson called roil. All Council Members were present with the exception of Council Member Ziegler, who was excused. PLEDGE OF ALLEGIANCE /INVOCA.TION /MOMENT OF SILENCE, Led by Mayor Honea, APPROVAL OF AGENDA. Motion to a PP rove b Council Member McGo rray, second by Council. Member Bowen. Unanimously passed 6-0. CALL TO THE PUBLIC. There were no speaker cards presented. PROCLAMATIONS P I Proclaiming August 21 - -27, 2016 National Employer Support of the Guard and Reserve Week (Jocelyn C. Bronson) Read by Town Clerk Bronson. MAYOR AND COUNCIL REPORTS: SUMMARY OF CURRENT EVENTS. 'No reports. MANAGER'S REPORT: SUMMARY OF CURRENT EVENTS. No report. August 16, 2016 Regular Council Meeting Minutes � PRESENTATIONS CONSENT AGENDA. .Motion to approve by Vice .Mayor Post, second by Council Member Bowen. Passed unanimously 6-0. C1 Resolution No. 2016-08 1 : Relating to Utilities; approving and authorizing the Mayor to sign an Agreement for Construction of Water Facilities Under Private Contract for the Marana Assisted Living project (Scott Schladweiler) C2 Resolution No. 2016-082 Relating to Transaction Privilege Tax; approving and authorizing the Mayor to execute a modification to Intergovernmental Agreement Between The State of .Arizona and the Town of Marana regarding the administration, collection, audit and/or licensing of transaction privilege tax and affiliated excise taxes imposed by the Town of Marana (Erik Montague) C3 Resolution No. 2016-083 Relating to Finance; declaring, for purposes of section 1.150 -2 of the federal treasury regulations, official intent to be reimbursed in connection with certain capital expenditures relating to wastewater treatment facilities (Erik Montague) LIQUOR LICENSES L1 Relating to Liquor Licenses; recommendation to the Arizona Department of Liquor Licenses and Control regarding a new series 14 Club liquor license application submitted by Ryan Witner Anderson on behalf of Del Webb at Dove Mountain Community Association, Inc., located at 14085 N. Del Webb Trail, Marana, Arizona 85658 (Jocelyn C. Bronson). Presented by Ms. Bronson, who noted that the application was properly reviewed and no protests were received. Staff recommends approval. .lotion to approve by Vice Member Post, second by Council. Member Bowen. Passed unanimously 6--0. BOARDS, COMMISSIONS AND COMMITTEES COUNCIL ACTION Al PUBLIC HEARING Feasibility report for projects, the construction of which are to be financed with proceeds of sale of general obligation bonds. Resolution No. GFCFD 2016-03 [Marana Town Council acting as the Gladden Farms Community Facilities District Board of Directors] : Consideration and possible adoption of a resolution approving a feasibility report with regard to projects and resolving intent therefor; authorizing the sale and issuance of general obligation and general obligation refunding bonds, Series 2016; prescribing certain terms and conditions of such bonds; approving the form and authorizing the execution and delivery of necessary related documents and an official statement; delegating the determination of certain terms of such bonds and matters related thereto to the district chief financial officer and authorizing the subsequent levying of an ad valorem property tax with respect to such bonds. Board Chair Ilonea noted that the Council would be sitting as Board Members for this item. Board Chair Honea opened the public hearing. Erik Montague introduced the item and noted August 16, 2016 Regular Council Meeting Minutes 2 that the Gladden Farms development has been active since 2004. Gladden Forest had been the developer of this project until approximately December of 2012 when remaining portions of the project were sold to Petrus Land Investors 11 and formed a new company and brought on Dean Wingert and GK Rihl to oversee the continuance of that project. The current favorable market rate environment combined with some of the landowner changes provide an opportunity to look at refunding or refinancing the remaining portions of the outstanding debt as well as looking at key deal points as part of that overall structure of that financing. Based on the current market environment, it is anticipated that some significant savings could be achieved. Present tonight are various members of the group working with the developer, including the district financial advisor, Marls Reader with Stifel. District bond counsel from Greenburg Traurig are Michael Caf so and Paul Gales. Developer representative from Crown west Land Group is OK Rihl. Tied to this financing and restructuring is a new money piece up to $400K to acquire an additional portion of the Gladden Farms Park. This is what requires, by statute, information to the public through the public hearing the feasibility study. There were no speakers, and Chair Hones closed the public hearing. Mark Reader then presented background on the debt structure and some of the things happening in the market as well as an overview of the transaction. The purpose of the refinancing is to save a substantial amount of money on the debt service for the development. He began with an overview of the financial markets, including the Federal Reserve rate hike which is on hold. He then presented a chart showing rates a year ago and where they are now, which is good news. The cash that is coming into the municipal bond funds is good news. He indicated that we are close to all -time historical lows in the market. He then gave a brief summary of Gladden when it started in 2002 when the development agreement was signed. Development started in 2004 as a master planned community, and the developers approached the town to form a community facilities district of about 700 acres for the development of approximately 1,746 residential units. When the district was formed, they had a $69M general obligation bond election to help fund public infrastructure. There was a public policy secondary tax rate objective of about $2.50 per 100, and a $30 M & 0 levy. over the course of 2004 -2010, the district issued about $9.4M in bonds for purposes of financing and reimbursing public infrastructure. The annual debt service associated with that is about $700K. So over the past 12 years, it's been an overall successful development. The secondary $2.50 tax rate was never exceeded during that period. However, the great recession held down the tax base which we were hoping would grow faster. So the $2.50 tax rate has not been sufficient to pay all the bond payments, and the developer has paid that shortfall each year over the past 12 years. There are four public home builders there now, which is a good sign. The future shortfall by the developer we think will be minimal depending on what happens to the tax base. We structured in about $700K in a letter of credit provided by the developer in the event there is a problem going forward. We feel good about the progress and the way we have structured it to ensure there is protection for the property owner and for the district. He then reviewed how the $9.4M bonds have been issued over the course of the infrastructure. At times, some of the rates were fairly high, the reason being that they were issued in the early stages of development. The average cost of capital is about 5.63 to 5.65 percent. We are going to try to get to 3.5 to 3.75 percent money. Next, he reviewed what the savings means. The developer provided numbers on the closed single family units. Currently we are about 1,278 closed residential lots. The plan was for about 1,276 August 16, 2016 Regular Council Meeting Minutes 3 units. The developer is suggesting another 40 units will close and then in 2017, the projections jump to 108, and then higher to get to build -out by 2020. The project has had starts and stops, but at the moment the trajectory looks positive. The County provided tax base information for homes within the Gladden Farms community facilities district. In 2016 -17, it is up to about $220M. At the height of the recession, we bottomed out at about $150M, but we are now close to the 2009 -10 level. we believe that is pretty good value compared to debt on the property. Counting the lots that are under construction or hope to be under construction in the near future, the project looks to be approximately 90 percent built out over the next couple of years. So there is some diversification in the tax base. He next presented a chart on estimated net assessed property according to owner occupied, rented residential, commercial and industrial and agricultural and vacant land. Getting to the bottom line, we will take all the bonds out, and the developer has requested $400K in new money bonds for Gladden Farms park. That will be incorporated into the financing, and the transactions will be collateralized for about $700K. That is the district's security in the event there is some kind of problem in the future; we can use that letter of credit to achieve our ongoing objective of $2.50 on the debt service. That letter of credit will stay in place for three consecutive years of the tax base supporting the debt service on its own. That could be up to five years. once the tax base is sufficient at $2.50 to pay all the debt service, a release provision has been incorporated in which the developer does not have to provide that on an annual basis. He believes that is good protection for the town and for the district. As mentioned earlier, the cost of capitalization is about at 5.63 percent now, and we are in negotiations with the credit rating agencies and a bond insurance company. If successful with the bond insurance company, we would sell the bonds at a AA rate. If all that happens, we think we can get 3.7 or 3.75 percent cost of capital which would equate to about $1,068,000 of cash flow savings in terms of debt reduction net, and on a present value basis about $962,245 in today's dollars, about 12.7 percent net value savings. In the coaling weeks we should have an efficient refunding for the district and we are confident we have collateralized the transaction for best protection in the future. Mr. Montague, Mr. Caflso, and Mr. Reader responded to several questions from the Council for clarification of point within the presentation. Mr. Reader did state that the term for the new bond would be to 2033; 2036 for the original bonds. Motion to approve by Board Member Bowen, second by Board Member Kai. Passed unanimously 6 -0. A2 Resolution No. 2016084 Consideration and adoption of a resolution approving and authorizing the execution and delivery of a First Amendment to District Development, Financing Participation and Intergovernmental Agreement (Gladden Farms Community Facilities District) and declaring an emergency. Erik Montague presented, and noted that this item ties to the item just approved by the District Board related to the sale that occurred in December of 2012. Staff came before Council in January of 2013 and transferred all rights and responsibilities from the previous owners of the project to the new owners. Tied to that, this development agreement does a number of things. In part, it removes the original party, Forest City Enterprises, the parent corporation of Gladden Farms, the original project developer. It removes them from all Community Facilities District (CFD) developer obligations, and inserts the names of the new development entities. It amends certain terms to accommodate the refunding and refinancing of previously issued funds; it modifies certain terms extended by letters of credit which was August 16, 2016 Regular Council Meeting Minutes 4 referred to in the previous item, which are basically the various forms of security or surety that the developer continues to meet their obligation under the various instruments. It also reduces certain amounts of the letter of credit. Under the original development agreement, it anticipated a $300K letter of credit tied to the operations and maintenance portion of the district. The district levies or establishes an overall target rate of $2.50 for the debt piece which it has maintained. In addition, it levies the $30 per $100 of valuation for operations and maintenance. Based on the work that had been done by district staff and various consultants, we identified that based on the actual historical collections combined with historical usage and projected usage of that o & M, that it seemed advantageous to reduce that letter of credit since we've never tapped into that over the life of the bonds that it seemed more appropriate to re -size it closer to the $10oK mark which is currently framed that way. It also contemplates, like the $700K letter of credit that we just spoke of, this $1 o0K letter of credit also has a release provision, and that letter of credit would be released when the district achieves on that $.30 $100K in collections, and the district would be sel=f supporting at that time. It requires Gladden I, LLC to cover any shortfall. in any debt payment or operations and maintenance obligations, so while that letter of credit is in place and until such time as the district collection $100K or more in operations and maintenance expense, should there be additional costs above what collections are, the district has the ability to send the bill to the developer, and they would be obligated to pay for o & M costs as they occur. It also provides various forms of clarification and amendments relating to when the secondary property tax collections reach the level of where those letters of credit are no longer necessary. Vice Mayor Post asked what public infrastructure or maintenance is $.30 cover. Mr. Montague stated that it will cover Lon Adams Boulevard and Madden Drive — major roads — as well as most major portions of the trunk line on sewer and major water lines. It would not include infill infrastructure within the residential developments and the maintenance of the Gladden Farms Park but not the splash pad. Anything new or wasn't part of the original park is not eligible. Along Moore Road, there is a vegetative barrier or some landscaping /green space area that it would not be responsible to maintain. It's intended to cover the wear and tear and normal replacement of things. It was not intended to pay for salaries and personnel to maintain the park. .lotion to al-)prove by Vice Mayor Post, second by Council Member Bowen. Passed unanimously 6-0. ITEMS FOR DISCUSSION/POSSIBLE ACTION EXECUTIVE SESSIONS. Motion to fro into executive session on item E2 at 7:51 p.m. by Fite Mayor Post, second by Council Member McGorracy. Passed unanimously 0--0. El Executive Session pursuant to A.R.S. §38-431.03 (A)(3), Council may ask for discussion or consultation for legal advice with the Town Attorney concerning any matter listed on this agenda. E2 :executive session pursuant to A.R.S. § 38- 431.01(A )(3) and (4) for discussion and consultation with the Town's attorneys regarding potential claims and proceedings to recover damages and costs incurred in connection with soil conditions at The Pines subdivision. August 16, 2016 Regular Council Meeting Minutes 5 Council returned to public session at 8:22 p.m. Mr. Cassid asked Council for a motion to proceed in a manner consistent with the discussion in executive session, includin proceedin with the Count so that there would be an potential waiver of conflict havin the town's counsel represent the Count and the Town of Marana in this matter. Council Member McGorra made that motion, second b Vice Ma Post. Passed unanimousl 6-0. FUTURE AGENDA ITEMS ADJOURNMENT. Alotion to adjourn at 8:23 p.m. b Vice Ma -Post, second b Council Member Kai. -Passed unanimousl 6-0. CERTIFICATION I hereb certif that the fore are the true and correct minutes of the Marana Town Council meetin held on Au 16, 2016. 1 further certif that a q uorum was present. N J l C. Yronson, Town Clerk AMRANA r (0) Au 16, 2016 Re Council Meetin Minutes 6