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08/27/1991 City CouncilTHESE MINUTES SUBJECT TO SEPTEMBER 3, 1991 APPROVAL EDMONDS CITY COUNCIL MINUTES August 27, 1991 (Work Meeting) The regular work meeting of the Edmonds City Council was called to order at 7:00 p.m. by Mayor Larry Naughten at the Library Plaza Room, 650 Main St., Edmonds. All present joined in the flag salute. PRESENT ABSENT STAFF Larry Naughten, Mayor William Kasper, Arrt�Tousler, Admin. Svs. Dir. Steve Dwyer, Councilmember Councilmember Peter Hahn, Commun. Svs. Dir. Roger Hertrich, Councilmember Jack Wilson, John Wallace, City Attorney Jo -Anne Jaech, Councilmember Council Pres. Jackie Parrett, City Clerk John Nordquist, Councilmember Jeff Palmer, Councilmember CONTINUED REVIEW OF PROPOSAL TO PURCHASE EDMONDS SHOPPING CENTER Following a short introduction by Administrative Services Director Art Housler, Dick Ehlers of Dain Bosworth explained a five-year bond call versus the more traditional ten-year bond call. This was in response to questions from the Council at the previous meeting. He observed. that the taxable municipal bond market is very thin at this time, and his firm had determined 1% as the operating parameter in doing the analysis. He said if you have a five-year call the interest rate will be 1% higher than it otherwise would be. He noted that $118,000 more interest expense would be paid for a five-year call, but he added that if the Council was confident they would con- vert the property to public use and rgfund with tax-exempt bonds in 5, 6, 7, or 8 years, they would save money on a five-year call, but otherwise it would cost:. His firm believes there to be a market for five -year -call bonds, and he said they would try to market first with retail inves- tors as there had been some resistance from institutional investors because of the five-year call. Councilmember Hertrich expressed concern that on the one hand they were talking about buying a piece of property to let it finance itself, but at the same time it was being suggested to make it public use quickly, so he was concerned as to how it was going to pay for itself. Bob Yeastings of Yeastings & Hughes, the City's independent investment advisor, had submitted a letter to the Council reviewing the Dain Bosworth information. He said the information Dain Bosworth had provided was reasonable. He was more conservative on the 1% differential, saying in the first five years the bonds would not be callable so the person who buys the six -year call is not going to have much of a premium --not J%, and it moves gradually up to 20 years before they will want the 1%. He felt it was a smart thing to put the five-year call in if they thought they would"have a public use for the property in five years. He said it provides flexibility as to what they wanted to do with property. He thought the calls Dain Bosworth had projected appeared to be reasonable and he said the market has been strong and it is a good time to sell bonds. Dick Ehlers added that the package is with Moody's, and they would do the analysis the following day and he expected a reading back late Thursday or Friday. He said his salespeople have been soliciting interest in the bonds. Also, he said the official statement would have to be printed the following day. Art Housler stated that a report from Greenwood, Ohlund & Co. had been received and the City Attorney advised that it should be discussed in Executive Session. The.Council recessed to Execu- tive Session at 7:18 p.m. for an expected 15-20 minutes to discuss the report and for a report on litigation. The meeting was called back to order at 8:35 p.m. City Attorney John Wallace summarized the Executive Session discussion saying the CPA firm of Greenwood, Ohlund & Co., represented by Pat- rick Ebert, provided a report of their analysis of the proprietary information provided .by the seller to the City. He noted that proprietary information is required to be kept confidential until such time as the City goes forward to acquire the property. Also, he said Mr. Voorhees and he had discussed matters of litigation with the City Council. Councilmember Dwyer asked how much of the conclusions reached by Mr. Ebert was allowable for the Council. to mention in the current setting, and Mr. Wallace responded that anything that in any way .revealed any of the proprietary information was required to be kept confidential. Several more questions were asked as to what they could discuss, referring to specific sentences (identi- fied by sentence or paragraph number) in the confidential report, but none of it could be dis- cussed at this time. COUNCILMEMBER PALMER THEN MOVED, SECONDED BY COUNCILMEMBER NORDQUIST, THAT BASED ON THE RESULTS OF THE INSPECTION (SPECIFICALLY THE CONDITION OF THE ROOF), INFORMATION IN THE REVENUE AND EX- PENSE ANALYSIS AND THE DIRECTION THEY INDICATE, AND OTHER DATA PRESENTED, THAT THE MAYOR AND CITY ATTORNEY BE DIRECTED TO GIVE IMMEDIATE WRITTEN NOTICE TO THE SELLER THAT THE CITY IS EXERCISING ITS OPTION TO TERMINATE THE OFFER; I.E., NO PURCHASE. Councilmember Dwyer clarified that the revenue and expense analysis is what was prepared by Mr. Ebert. Councilmember Hertrich stated the numbers do not work out, even though he had several special uses in mind for the property. Councilmember Dwyer said his preference was to extend the options that were given them, so he would vote against the motion, but he would not have voted yes on a motion to proceed. A ROLL CALL VOTE WAS TAKEN ON THE MOTION, WITH COUNCILMEMBERS PALMER, JAECH, NORDQUIST, AND HERTRICH VOTING YES, AND WITH COUNCILMEMBER DWYER VOTING NO. MOTION CARRIED. It was noted that in light of the action taken on this item, action on Item 2 of the agenda was moot (a proposed resolution establishing a public process to prioritize public interests for the property). There was no further business to come before the Council, and the meeting was adjourned at 8:45 P.M. THESE MINUTES ARE SUBJECT TO SEPTEMBER 3, 1991 APPROVAL. THE OFFICIAL SIGNED COPY OF THESE MINUTES IS ON FILE IN THE CITY CLERK'S OFFICE. JAC ELINE G. P RRETT, City Clerk EDMONDS CITY COUNCIL MINUTES Page 2 August 27, 1991 AGENDA EDMONDS CITY COUNCIL PLAZA MEETING ROOM -LIBRARY BUILDING 7 :0 0 -- ! 0: 00 P.m. AUGUST 27, 1991 WORK MEETING -,NO AUDIENCE PARTICIPATION CALL TO ORDER FLAG SALUTE 1. CONTINUED REVIEW OF PROPOSAL TO PURCHASE EDMONDS SHOPPING CENTER (50 MINUTES) 2. PROPOSED RESOLUTION 721 DECLARING VARIOUS PUBLIC PURPOSES FOR EDMONDS (10 MINUTES) SHOPPING CENTER PROPERTY AND ESTABLISHING A PUBLIC PROCESS TO PRIORI- TIZE COMPETING PUBLIC INTERESTS FOR SAID PROPERTY THE PUBLIC IS INVITED TO ATTEND PARKING AND MEETING ROOMS ARE HANDICAPPED ACCESSIBLE