HomeMy WebLinkAbout2003 09-23 Pre
Meridian City Pre-Council Meeting September 23, 2003
The Pre-Council Meeting of the Meridian City Council was called to order at 5:30
P.M. on Tuesday, September 23, 2003, by Council President Tammy de Weerd.
Members Present: Tammy de Weerd, Cherie McCandless, Bill Nary, Keith Bird.
Members Absent: Mayor Robert Corrie.
Others Present: Bill Nichols, Gary Smith, Stacy Kilchenmann, Brad Watson,
Brad Hawkins-Clark, and Kenny Bowers.
Item 1. Roll-call Attendance:
X Tammy de Weerd X Bill Nary
X Cherie McCandless X Keith Bird
O Mayor Robert Corrie
De Weerd: Okay I’ll go ahead and open this Pre-Council for City Council. It’s
rd
Tuesday, September 23. It is 5:30 and we’ll start with Mr. Clerk calling roll.
Item 2. Adoption of the Agenda:
De Weerd: We are going before I ask for adoption of the agenda ask Mr. Lloyd
Ayers to come up and speak to item number four our, Executive Session.
Ayers: Thank you Madam President. By way of introduction, I am Floyd Ayers.
De Weerd: Floyd I’m sorry.
Ayers: That’s all right. I have spent a career with Seattle Northwest Securities
Corporation financing local government entities throughout the state. Eric
Herringer is the manager of the Boise office currently since I’ve retired and I’m
with him tonight for this specific issue. The primary reason that I or we if you will
would recommend an Executive Session is that we’re simply not ready to bring
anything out for public consideration at this time. What we’re prepared to present
tonight is concepts. Concepts in terms of different methods of financing capital
projects at such point as the Council would receive one, a recommendation from
an architect for a dollar amount based on a space study. At such time, we would
be ready then to look at various concepts for financing then we would definitely
recommend that you go public with that and bring the public into the discussion.
Our whole premise tonight especially with an election pending our
recommendation is that this not become an election issue over the next couple of
three months and that we simply be allowed to talk about concepts. The way
other entities in the state have finance their capital projects and some of the pros
and cons to those. We’ll talk about general obligation and judicial validation and
Meridian City Pre-Council Meeting
September 23, 2003
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COP’s and a number that are strictly concepts. There’s no recommendation in
there. There’s nothing for the Council really to consider in terms of one of those
particular concepts. We have no contract for you to approve so we’re not
requesting any action whatsoever by the Council. This is an education service
primarily. I would be happy to answer any questions Madam Chairman or from
you or any member of the Council or Mr. Nichols.
Nary: Madam President.
De Weerd: Mr. Nary.
Nary: Well everything you described Mr. Ayers is sort of backwards from what
the public process is supposed to be. The general discussion of methods is
supposed to be public when you’re specifically looking at acquiring property that
can be done in Executive Session. I’m not sure but what you’ve described to us
doesn’t fit in the statute. Because it is an election time even more so we need to
be above board and make sure that, we’re compliant with the statute. We should
always be that way but the fact that it’s an election season even more so is the
reason to be sure that we are compliant. What you’re telling me is because it’s
an election season you think it should be held in secret. Just the method of
financing I can’t think of what about that needs to be secretive but nothing in the
statute grants us the authority just to address general concepts in Executive
Session. Are we talking about acquiring a specific piece of property? Is that
what you want to talk to us about?
Ayers: Madam Chairman and Councilman Nary absolutely not. We are not – we
have no property in mind. We’re not even aware of what kind of space needs the
Council will – and we’re just not prepared to get into a discussion like that
publicly. I can’t object to what you’re saying I can only say that if the Council
feels that way and they want to do this in a public matter I would recommend that
they tell us to go home and come back after November. The public will start to
ask questions about how much space, what’s it going to cost, what kind of
financing method are you going to use? None of those answers are available
and none of those will be available after tonight’s session. We’re perfectly willing
to do this in the public arena but if the Council’s feeling is that that’s the direction
we should go then you probably ought to tell us to go home and come back
another time.
Nary: Madam President.
De Weerd: Mr. Nary.
Nary: Yes I guess I don’t see that anything you’ve said falls under the Executive
Session privilege in the State Code to me. Now again certainly I’m only one
person but I just don’t see that it fits. I don’t care. Again, it’s what the rest of the
Council wants to do as well but I don’t care if we have this discussion in public.
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September 23, 2003
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We’ve talked about the needs of a city hall. We’ve talked about what we think we
might need. We’ve set money aside in our budget to study that issue. We’ve
talked about all that publicly. I’m not really that concerned that the public’s going
to ask questions. They should ask questions that’s okay. That’s not a problem
and we shouldn’t be shy about that. All we’re looking at is future needs of the
city in growth so I guess I don’t have a particular concern in having this
discussion publicly and I don’t want to have you go away just because there’s an
election. That is a very poor message to send to our community that we think we
need to avoid anything that someone might ask a question about between now
and November. That’s not a good message to me.
De Weerd: I was just going to ask myself permission to talk. I think that we don’t
want to put the cart before the horse and so we have authorized some money to
be used for a space study. Right now, we don’t even know what kind of space
requirements we’re looking at and there’s a lot of detail that will be probably
ironed out over the next couple of months. I don’t know Will’s not here what kind
of timeframe they have on that space study. Mr. Berg on the space study that
we’re doing right now and updating with ZGA have they put some kind of a
timeframe in regards to when they might have information available back to us.
Berg: Madam President, members of the Council I do not know if there’s a
specific date that they need to have that done. They did begin last week in
gathering information and I believe this week contacting Department Heads. I
think they’re trying to get it done right away but I don’t remember any specific
timeframe on the contract.
De Weerd: You know I think we do need information like that but I would share
Councilman Nary’s thing is is at this point it’s all fact finding. It’s what are our
options and I guess I would be interested to find out from you in your
relationships with other communities how they initiate these kinds of things. I
would suggest that we add to this specific thing. We do have reason to go into
Executive Session to get a couple of other updates from our attorney but maybe
we can add this to the agenda to have some preliminary discussions. When we
have more information on space needs at least estimates on costs and we can
have a little bit better information on how we want to proceed forward. I would be
very interested to find out what other communities have done and initiating this
process. I think we had discussed that prior too.
Ayer: Yes.
De Weerd: So if you wouldn’t mind sticking around and we can some of this
discussion if that’s amenable to the rest of the Council.
Nary: It’s fine with me. They’re already here.
Bird: They’re already here that’s fine with me.
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September 23, 2003
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Ayers: Madam Chairman we serve at your pleasure so we’re happy to stick
around. If you decide that you would like our presentation in open session, we’ll
certainly do that.
De Weerd: Well we hate to let a resource leave our door.
Ayers: We’ll come back.
De Weerd: Well and that might be more appropriate when we have more
information. I think to start the dialogue in the initial steps that would be a good
thing for us to hear.
Ayers: Certainly.
De Weerd: Thank you very much. If you would like to go finish, your lunches
feel free to and we will deal with our next agenda item. Thank you. I would
accept a motion to adopt the agenda with amendments.
Nary: Madam President.
De Weerd: Mr. Nary.
Nary: I would move to accept the agenda as presented except for item four
would be amended to I think it would be b or I guess it maybe b or f. To b and f
and that also amend to an item I guess prior – I guess that would be now item
five and we would amend item four to be a discussion regarding alternate
methods of financing in regards to a city hall at some point in the future by Mr.
Ayers and I can’t remember the other gentlemen’s name.
De Weerd: Eric Henneman? Eric something.
Nary: I thought it was Agerman but I guess –
De Weerd: It’s Eric.
Nary: Anyway the gentlemen that were here if they would give us maybe not a
60 minute presentation. (Inaudible) motion accepted with the amendments.
Bird: Second.
De Weerd: Okay would you repeat that motion please? I have a motion to
accept the agenda as Councilman Nary amended. All those in favor say aye.
Okay all ayes.
MOTION CARRIED: ALL AYES
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September 23, 2003
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Item 3. Follow-Up from September 9, 2003: Discussion with Lee
Centers on Silvercreek Subdivision (fka Powder River
Subdivision):
th
De Weerd: Okay item number three follow up from September 9 discussion
with Lee Centers on Silvercreek Subdivision fka Powder River Subdivision. I
assume we start with Dave McKinnon.
McKinnon: Thank you Madam President. We missed you a couple of weeks
ago. Just to catch you back up to speed again, it’s the formerly known as
Powder River project and I’ve got it up on the tripod here. It’s basically 44 units
in the county. This would be a county subdivision and we would be asking for a
Rezone from the county. That’s the reason why we’re coming to you again was
to talk a little bit about water and sewer services out in that area and connecting
to the city sewer services is one of the major points. At the last meeting before
we left, there was some direction from the Council to Brad Watson to write a list
of questions that he wanted answers that we would give a response back to the
Public Works Department and Public Works. You should have all received a
copy of that. I see some nodding of heads. I haven’t heard back from the Public
Works Department in response to my letter and so maybe we need to have some
time for Public Works to respond back to our letter tonight. You should have all
received a copy of that. One of the other questions that came up at the previous
meeting that you missed Tammy, was Councilman Nary requested that we talk
with the Bear Creek Developers and find out what their opinion would be of us
hooking on to the Bear Creek lift station. There had been some talk in the past
about nobody else hooking up to the Bear Creek lift station. We have talked with
the Bear Creek Developers and I’ll paraphrase their response. Their response
was we don’t care what happens with the lift station as long as we still have the
capacity for what we’ve been approved for. If there is additional capacity in the
Bear Creek lift station they don’t mind if someone else uses that but they want to
make sure that there is capacity for everything that they’ve been approved for. In
the future if there’s a need to update or upgrade the pumps in the lift station or
increase capacity we’d be willing to participate. I know that Bear Creek
Developers are looking at possibly increasing capacity there too with future
development. We would be willing to pay our fair share of the increase of that for
the lift station. Bear Creek was not of great concern. In the meantime, besides
the list of questions that we’ve answered we have talked to the Fire Department
to find out about fire flows and to find out about their concerns with emergency
response times. We would still be working with the Meridian Rural Fire District
and I’ve spent some time with Joe Silva in the last week finding out about fire
flows and what types of requirements he would have with this. In the past when
this project has been discussed he has had the developer and the developer’s
representatives come to meetings with the Fire District and their commission.
Joe has told me that based on the fact that we’re only dealing with 44 lots now,
as long as we can get the fire flow to 1,000 gallons per minute pressure and as
long as the houses are less than 3600 square feet in size he’s okay with the
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September 23, 2003
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development. That this is a development he could live with. He does not want to
see this go back to the Fire District again to their committee. He feels strong
enough that this is a project that could work because of the small size. If you
want, I do have the letter. I can go through the detailed list of responses. Some
of the responses are more technical in nature something for the Public Works
Department. I can go through those if you would like but just to reiterate the
major points that we have for this project is we’re not trying to go past the city on
this project and go straight to the county and ask the county to do this. We would
like to do this with the city’s approval. We’re trying to meet all the requirements
of the amendment that was recently made to the Comprehensive Plan that we
provide for Park’s impact fees that we would pay for the sewer connection fees
up front that we would have deed restrictions and a note on the plat requiring
annexation in the future when it’s available. It would be dry line sewer
connection to the city for the future. It’s a project that requires some cooperation
from the city because one of the things that the county requires for the rezone to
the R-4 from the RUT would be your approval and connection to city services.
We would be providing a well that’s not connected to the city system right now.
In fact, it would be two wells. One of the questions that Brad had asked was is
there a need for two wells and the answer to that is yes. DEQ requires two wells.
One for backup just in case there’s not enough pressure from the first well if you
have more than 25 homes and so there would be two wells here. In the future,
we would give the city the opportunity to purchase this well and we talked a little
bit about how that would be worked out. Lee has given me just a discussion draft
option agreement as to how that could be worded and I’ll give that to Mr. Nichols
so that he could have a chance to review that just so that you know that we’re
trying to work with the city. That in the future we can give the city the first right or
refusal on that well so that when the city does reach that point this well could be
purchased by the city and brought into the rest of the city water system. I’ll go
ahead and hand this to Mr. Nichols. In addition to that, I have a copy of a water
facility agreement that City of Nampa has signed for a similar type of situation
where the water system is outside of the City of Nampa’s limits but they’re
providing some services to the well. It’s a project that they’ve recently approved.
If we can get the 44 lots in this subdivision rather than developing it at county
standards we would be developing it to city standards so that when the city does
annex out there it’s inevitable that city services will be there and that the city is
going to grow that direction. We’ve seen the majority of the growth in the north
but sooner or later, it will go to the south. The sewer treatment plans show for
the Black Cat Trunk to extend to this are in the future. That when this develops
rather than having to mesh with the county subdivisions that are already out
there. You would have a city standard subdivision that would be able to mesh
with the city standards right away rather than have an entrance into a subdivision
that’s built to county standards and then have city standards follow through the
rest of the subdivision. This would provide an equal meshing. Basically, the one
thing we’re asking for the city to do is grant us the ability to request a rezone to
hook up to the sewer system of the city and provide some sort of agreement with
the water system in future. For that, we’re asking for 14 additional homes rather
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September 23, 2003
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than the 30 homes that we could ask for under the RUT zoning for the entire
property. We’re just asking for some sort of support from the city for our rezone.
That rezone would enable you to have a subdivision that meets the city
standards and you would receive the benefits of this project as if it were a city
subdivision. You get your park impact fees and your sewer fees paid up front
even through it’s a county development. Did you have any questions at this
point?
De Weerd: Council? I guess I would ask – and you probably went over this last
time is what is different about this request?
McKinnon: The major difference between this request and previous requests is
that we would limit this development to 44 units. In the past, it’s been 30 units up
to 455 units but the 40 units in the past meant that we would be approved for 40
units in the county and then every year we could come back in for additional
units. Now we’re proposing a Non-Development Agreement or a Development
Agreement depending on how you want to label that that would limit us just to the
44 units until sewer services and water services become available from the city.
Rather than asking for an approval of a project that could continue to grow in the
county we would be limiting it to only 14 more homes than what we could
typically get approved for in the county. Then we would be done until sewer
services come from the city. That’s the major difference.
De Weerd: So just the addition of extra houses a little bit over and above what
he would be able to do with the cluster development?
McKinnon: That’s correct. With a cluster development, we could do 30 houses
in the county under the RUT zoning.
De Weerd: So 14 more. This way what we gain from that is we gain park impact
fees and development to city standards.
McKinnon: That’s correct, curb, gutter, sidewalk, and fire hydrants.
De Weerd: And then with the well site how is that working?
McKinnon: How does the well site work? We would procure the water rights.
We would develop the well, build the well, and operate the well. We would hire a
private company to maintain the well and to operate the well. The only thing that
we would require from the city is for the city is for the testing of the well for DEQ
standards and Central District Health standards on a monthly basis or as
required by those health districts. We would have somebody maintain that and
operate that because it would be a private system that operates separately from
the city’s system. This would not connect as a loop system with the city at this
time. In the future, as the city annexes out in that area this would be a well that
would be built to city standards. The city would be given the opportunity to
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September 23, 2003
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review the plans for the well to make sure that it meets the requirements of DEQ
and the city. As the city develops out in that area, they would have the option to
purchase the well. Currently, a well in that area without such an agreement if
Lee was or if we were to build a well in that area, somebody a private service
company could come in and purchase that well such as United Water. This way
if the City of Meridian has first right or refusal the city would be able to continue
to maintain their – I guess it’s not their monopoly but they would be able to
control the services in their service area.
Nary: Madam President.
De Weerd: Mr. Nary.
Nary: Mr. McKinnon just so I’m clear you said that no further development would
happen until city services available but you want to hook to sewer now.
McKinnon: Black Cat Trunk I’m sorry.
Nary: Okay so you’re talking about the rest of the services not just the sewer.
McKinnon: That’s correct the rest of the services as Black Cat Trunk extends
down to that area. This wouldn’t have a pull on your police force at this time
because this would still remain in Ada County and so we haven’t contacted the
Meridian Police Department for that reason. As far as public services it’s one of
the major issues would just be the sewer system coming from Black Cat because
the water system could hook up to the existing water system that the City of
Meridian has. That’s the way it’s worked with Silverstone and other projects
where they’ve built the wells and the city is coming from behind and purchasing
those wells.
Nary: I guess my other concern is is that the development here, I mean for it to
become part of the city it appears that every time in the past a discussion is sent
around the annexation path to get there since it’s on the I guess the west side of
Kentucky Ridge. I guess I’m trying to figure out in our crystal ball when do we
realistically think we’re going to be able to annex this property. My concern is is
we’re going to have these people on sewer with a note on their plat and maybe in
their CC&R’s and 10 years from now when we go to annex them because we
rd
finally are contiguous it’s the 3 owner since you developed this property and
they don’t know anything about what’s on that plat anymore. Now all of a sudden
we’re in a big dogfight with these people over being part of the city. I guess I just
don’t want to be in that fight. That’s not really a question I guess I wonder what
your thoughts are about that. It just seems like that’s one of the issues that Boise
has wrestled with for years.
McKinnon: It’s a good comment to make. I know that the subdivision you bring
up Kentucky Ridge actually has a note on their plat that says that once sewer
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September 23, 2003
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service becomes available they will require annexation into the City of Meridian.
There is some availability of sewer in that area and Kentucky Ridge could
forcefully be annexed into the City of Meridian. That would create a path for
annexation to the project that we’re talking about. It’s contiguous to the parcels
that we’re talking about tonight. Right now, we’re only talking about a very small
portion of the overall development. We’re talking about basically 17 or 18 acres
for 44 units but this is a much larger project in the long run. Something on the
same scale as like a Tuscany Lakes, you know the 400 plus units could possibly
be placed in here. One of the comments that you recently as a Council approved
in the amendment to the Comprehensive Plan was that any development that
takes place outside of an area that are annexable would be that you require that
that subdivision or that deed has a restriction placed on it that says upon being
contiguous, they would annex. Your own Comprehensive Plan allows for that.
Vienna Woods was handled in a very similar manner and there are some cat and
dog fights that do happen once people realize that they have to connect to the
city but it’s something that it should be disclosed during the process of buying
and purchasing a house. If it’s a deed restriction, it’s required to be disclosed at
that time. The Comprehensive Plan addresses it and the City of Meridian has
done it in the past. One of the things that we may need to look into is on the
legal side if Mr. Nichols, your attorney has some additional options with that.
Some other ways to make sure that people realize that that’s going to happen
you know we can make sure that happens. In addition to that, Lee, as being the
owner of this property in working with us we realize that we only can do 44
homes until those services get there. One of the requirements of the
Development Agreement could be that the remainder of it is annexed into the city
at that time if even be tied to a Development Agreement. The remainder of it –
it’s annexed at the same time as the remainder of the property. There are
numerous ways that we could go about doing that and safeguarding it. There
might be some political will that is needed to make that happen just like with all
these other developments but it’s something that has happened in the past. It’s
in the Comprehensive Plan and we’re just trying to abide by the Comprehensive
Plan for that.
De Weerd: I think we almost need to put up signs like we do on our stub streets.
This will be extended and you will be annexed. People don’t really always look
on the plats and I probably would have been one of those at one time. It’s very
difficult and even in a disclosure type of situation when you’re signing already 50
pages of paper work it gets by most homeowners. I guess my other concern is
going to be this well site. You know as established by an independent and I think
we’ve had this conversation before with Mr. Centers and discussing when we
build a well we give hook up fees to it. It helps defer that cost and I’m sure, Mr.
Centers, you’re looking at that as well. That’s also built in the expense or the
cost of that well site. It helps defray that. With him building the well, getting
those costs and then already our ratepayers and our taxpayers lose if we
depreciate and it appreciates. Have you worked with staff in answering – I don’t
like the vague well whatever the price is at the time, I think we need to be a little
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September 23, 2003
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bit more specific. We have been in a couple of situations lately where well sites
seem to be a great profit venture. I just don’t understand this but I’m starting to
get a little leery of this well site business. Have you worked with our staff in
trying to get close to at least some perimeters on that?
McKinnon: Let me answer that in a couple of ways. As far as working with staff
on that right now, we’ve worked with staff on a lot of different issues. That’s one
of the issues that we really haven’t spent a great deal of time on. It looks like Mr.
Nichols right now he’s looking at something. It might actually be the option
agreement that I handed to him to review tonight. The interesting thing about
land and the whole path for annexation issue we’ve talked about if it takes
several years from now before the path for annexation becomes available land
value in Meridian has not stayed stagnant. It’s skyrocketed. If we were to look at
a purchase price right now, for what the land is worth six years from now it could
be doubled what it is. I remember when I started here we were looking at a land
value per acre. People were paying 30,000 dollars. By the time, you know up
until six months ago people were purchasing land for development at 50,000
dollars an acre. That’s a huge jump in just about three years time and it’s going
to continue to go up. If we’re talking about purchasing a well six years in the
future of today’s development price that land value has gone up. The cost of
construction has gone up so there has to be some way that the value of that well
can appreciate with the value of the land. One way to offset the cost that you
talked about for the hookup fees for that well would be the fact that the homes
that are in existence right now on that well would not be – those homes wouldn’t
pay hookup fees. In the future if it became part of the well system the remainder
of this development the other 300 odd homes in this development could be
required to pay hookup fees to that well if it becomes a city well. There’s no
offset on the hookup fees because we’re only allowing 44 homes to hook up to
that well and it’s a well that we’re paying for. The offsetting of hookup fees in the
future if the city purchases that well they could recoup the other homes in the
areas to hook onto that well and hook onto the water system. The idea of the
well depreciating in value over time there may well be some depreciation to that
well. That’s the reason we would have an independent appraiser come in and
say this is what the value of this well is today rather than this is what the value of
the well was when you built it five, six or seven years ago. Just one final thought
on the well system. I haven’t been a number of private wells that are built to
community standards but I do know typically that and Brad and Gary can help
straighten me out on this if I’m not correct. I belive that we probably could build it
for a little less than what the city could at this time. There may be some offsets
on that.
De Weerd: Well I guess whatever offsets you would have it sounds to me from
what you said will be offset with the increase in the value of the land so I don’t
see where we would be coming out ahead on this one.
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September 23, 2003
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McKinnon: I guess there’s a little bit of paradigms shift that would need to take
place rather than the city losing and somebody else winning. I guess we would
be looking at it as a win, win situation. We’re not looking at selling this to make a
large profit. We’re looking at putting this in right now to be able to have the
development for 44 homes. In the future, the well could be used for that. The
city is not required to purchase this well in the future. There’s no requirement the
city would have to purchase it. If the city wanted the well, they could purchase it
and an agreement could be made to purchase that well. The city would have the
first right or refusal on that well.
De Weerd: But I think we would be setting ourselves up for something that we
probably don’t want to get into. I would like a little bit more thought into this one
specific. I don’t know how the rest of the Council feels but I’ve been told we
would get fair value and boy I think our perception of fair is much different from
the person who was offering that fair deal.
McKinnon: We would be happy to work with staff. If you guys have a way that
would be fair to you that you would believe is something that would work we
would be happy to look at it and take a look at it. We would ask that you take a
look at what we’ve given to Mr. Nichols tonight and have his opinion as to what
that was. If you guys have any other way of doing it that, you think would be
equitable towards everybody we’re more than happy to listen and take a look at
it. We’re not looking at trying to make a great killing on this well we’re really
looking at developing this land as these 44 units right now. The well is
something that’s required for us to do.
Bird: Madam President.
De Weerd: Mr. Bird.
Bird: Dave I have a couple of questions regarding the well. I’m like Tammy it
really concerns me. Actually you say you know you’re going to give us a good
deal but if it’s 10 years down the line all that equipment has been 10 years of
use. The line has been 10 years of use and I don’t know what kind of life we get
out of that stuff and how much the deal is. I can’t see where a well property goes
up. If we do annex you the right of first refusal is null and void because as a city
we’re not going to allow anybody in there but us. You’re not going to go over and
sell it to United Water because they’re not going to be in our systems. I don’t –
these well sites and stuff have – and I understand where the developers are
coming from don’t get me wrong. I know that you guys have to pay more for your
land and stuff. In the same token these wells that are put in is to your benefit
whether the city puts them in or whether you put them in. I’m positive you guys
can do it cheaper probably than we can. I’m absolutely positive but I also think
that ten years down the road that we’re inheriting something that there could be
problems line, pumps and everything else. They’ve had wear and tear on them.
You say you’re going to hire a private company to run the well for you out there.
Meridian City Pre-Council Meeting
September 23, 2003
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I don’t know what private companies they have around here. I know there are
well companies like United Water or the one that’s over in Weaver Sub in Boise
and those like that. They actually own the well and they get the money in and
stuff on it. Now who’s going to be responsible for the maintenance and how
good are they going to take care of it. The city we take care of ours. United
Water takes care of theirs but some of these small ones get the money and run.
McKinnon: I can address a couple of those issues. About the well and one of
the thoughts I had as you were talking, was that there is a possibility that if the
city wanted the well now for the future there’s a possibility that the city could take
over the well after the well is built so that any depreciation, maintenance,
operation of that could be in the city. Hookups from that could be right now for
the city. It could become a city owned piece of property that’s outside of the city
and that we could do it that way. That would solve a lot of those questions that
you have because we would be purchasing it for what the value is today. The
operations maintenance would handle that in the future. The question that you
asked about who would maintain that there are several different organizations in
town that do that. I happen to be a close acquaintance with one of those people
and you may know him as well. Randy Dearden, Public Work’s Director at the
City of Garden City. He actually operates 16 different well systems for
subdivisions in the county and in the valley. He and his staff Tom Meele they
meet all the requirements for all the certifications and requirements for operating
and maintaining those systems. That’s probably who we would be contracting
with. There are very qualified people that deal with the operation and
maintenance of that. Until such time as the city purchases the well the
operations and maintenance of that well should something break would go back
onto the owner of the well which would be the subdivision at this time. If Mr.
Centers decides to keep ownership of that or if he sells that to someone else
there would be you know an agreement that the owners and assigns, heirs and
assigns whoever owns it would be responsible for that until such time as another
organization takes over responsibility for that well.
Bird: Madam Chairman.
De Weerd: Mr. Bird.
Bird: That brings up another item David. You know you said that until – or he
sells it or something. These people whoever he sells it to and stuff has to know
that once that goes in the city they no longer own that well nor will it be of service
to the subdivision. We’ve never allowed another one to come in and as long as
I’m on here, we’re not going to. Once you’re in the city, you’re going to be on city
water.
McKinnon: Lee’s got something – an answer on that.
Meridian City Pre-Council Meeting
September 23, 2003
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Centers: Lee Centers. I would like to answer a couple of questions. If there’s a
dispute on the price of the well the city would have it appraised, I would have it
appraised and that spells out that we just meet in the middle. It would be the
land value goes up but some of the equipment would actually be depreciated
you’re correct. Some of those motors depending on how many hours it’s got on
there they wouldn’t be worth what they were when we put in. To solve the
problem about the maintenance I’m in an agreement and cities can do it. You
can go outside of your city limits and you can do the O&M on these it’s not
difficult. We would be good to do that so that you knew how it was taken care of
during the time that – until you decide to do it. The well is probably going to go –
it will go from LC to either the city or the Homeowners Association. Often times
the Homeowners Associations, take it over. If they were to take it over they have
to assume the same and that spells it out in there. They have to assume the
same agreement that I have with the city. It just means if it works if it’s a fit when
you come out there then you just take it over and we would come to an
agreement.
De Weerd: But Lee what happens I know that there’s been situations where a
Homeowners Association can dissolve itself with the simple majority. If you have
a Homeowners Association that decides that they don’t want to exist any longer
who would take over that O and M responsibility.
Centers: That – I had my attorney draft that and he didn’t just create it today. It’s
some stuff that he found. I believe that spells that out there for quite a few what
ifs. Since you’re in a position to be able to take, it over if something should
happen you would have the first stab at trying to fix a problem if one did arise. I
did want to mention too a couple of things. You know as the wells or land prices
go up so do your impact fees or so do your water hookup fees. That should
coincide with any increased prices. I mean your water hookup fees are higher
today then they were ten years ago and your well prices are higher today then
they were ten years ago. That should coincide with the cost of developing these
wells.
De Weerd: I just think it needs a little bit further study. I appreciate where you’ve
been and where we are today. I think we’ve come a long way. I still don’t think
we’re there with this well site and I want to know – I would like to have some kind
of analysis done on if we do it and what – a cost analysis on what’s being
proposed versus if we do it and how that would effect our rate payers. I think
eventually it’s going to affect our ratepayers but I have – that’s just a guess. I
would like a little bit more concrete numbers on that.
Bird: Madam President.
De Weerd: Mr. Bird.
Meridian City Pre-Council Meeting
September 23, 2003
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Bird: I would concur with you on the deal. I know that Mr. Centers needs to get
this decision right away. I would like Mr. Nichols to look over this agreement. I
think, in my mind this agreement has a lot to do on that well. I believe if it is full,
proof like we hope it is that protects the city, and then I don’t see too much. I can
see also, so many things coming up on that well ten years down the road that if
we’re not protected that we could wind up and so could Mr. Centers wind up
losing our shirts on the thing. I would like Mr. Nichols to have time to study it and
come back with an opinion on it and see if he thinks it’s full proof for us.
De Weerd: What is the timeline Mr. Centers, you’re working with as far as when
do you need a decision from the city and how does that effect what you have in
front of the county?
Centers: We don’t have anything in front of the county yet. If Mr. Nichols would
review that document we would perfect that. When you are satisfied with it then
maybe we could proceed. I would be much willing to do that.
De Weerd: Okay so right now you’re just fact finding and trying to get a better
feel from the Council on where they stand. I would like to hear from the –
McKinnon: Madam President, members of the Council we basically have some
timeframe rather than just an open timeframe. The city is working with the
county right now for the county to adopt the new Comprehensive Plan. That’s
one of the timeframes that we’re working with is that we’d like to have this in prior
to that adoption. It really doesn’t make a big difference. One of the things that
they have with that is that if we don’t submit in that time if we don’t have some
sort of sense of approval from the city we would rather submit for a cluster
subdivision under the old Comprehensive Plan rather than the new
Comprehensive Plan at the county.
De Weerd: Okay. Mr. Watson did you have something?
Watson: Yes if I could interject into the whole discussion. I know you’re focused
on the well lot and rightfully so but I think there is some other bigger picture
issues and I don’t mean to direct your thinking on this whole topic that have come
to mind since this was originally proposed two years ago. We talk about sewer
service and you know it’s very easy to put in some dry line sewer and pump it
down somewhere else but as Mr. McKinnon pointed out early in his conversation
Bear Creek is already looking at other property and pumping into that lift station.
Just yesterday, I received a call and a fax from another property that abuts Mr.
Centers eastern boundary asking how to connect to the sewer and if we don’t let
them connect to the sewer how do they build a community sewer system. We’re
looking at this issue of the well and operation of the water system within these 44
lots but I’m trying to look at the whole area out there and what’s really going to
happen to us. My short two and a half-page memo to Dave has turned in with his
comments to about eight pages because I’ve responded to those and I just got
Meridian City Pre-Council Meeting
September 23, 2003
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those done this afternoon. I didn’t have a chance to get them to you. There are
still some issues and still some questions not only around the well lot. The
private operation versus the city operation of the water system is huge. Whether
we can do it financially is it even wise to do it. If we don’t do it and a private
provider comes in what is the realistic mechanism for us to come in and take that
over given the likelihood of annexation someday. Vienna Woods and Edinburgh
were brought up. Those were a little different because at that time, we did have
authority over the platting procedure to the county but we no longer have that.
Once you approve a Development Agreement and approve providing sewer and
water, you’re done. We don’t have that plat anymore to look at any of these
things. Those are just a few of the things. I’ve kind of got a couple of pages of
notes here. There are a few things to work on. I can put together my responses
to Dave’s letter. I guess in the long run I would be – does the Council want a
recommendation memo from Public Works –
Bird: Yes.
Watson: -- in the end. It’s obviously going to take some time. We need to
review these documents that they’ve provided to Mr. Nichols. This isn’t going to
happen in two weeks I don’t think. Some kind of financial analysis on this well in
itself if I had nothing else to do would probably take a week to two weeks just to
provide – to hear the figures and to go over it with Stacy. I guess my point is this
is a big thing not just a well lot.
De Weerd: And not much has changed as far as some of the concerns that were
brought up originally this is just a smaller version of it.
Watson: Council member de Weerd if we have to provide water to 400 lots or 44
lots or sewer we still have to figure out how to do it. It’s a different way but we
still have to figure out how to do it and we have to figure out how to make it a
long-term solution from this little tiny short-term solution. The one final point, that
I’ll bring up and I guess I’m editorializing a little bit but it’s very difficult and
frustrating for staff and I think for the public when they come in to talk to us about
these properties to give an answer. We don’t know what to tell them –
***End Of Side One***
Watson: -- we have not recommended approval of any community water or
sewer systems any interim solutions but it’s getting more difficult to tell them that.
Especially this woman that called me yesterday I didn’t have an answer for her. I
said well this is on the agenda tomorrow night you’re welcome to attend and
listen to what we have to say.
De Weerd: Now Brad what is the timeframe. I know with the Black Cat sewer
line going down you’re bringing that to the interchange or to I-84 is that correct?
Meridian City Pre-Council Meeting
September 23, 2003
Page 16 of 27
Watson: Well Council member de Weerd the current scope of the project brings
it to Ten Mile Road.
De Weerd: To Ten Mile.
Watson: Conceivably we could change order our contract and bring it to the
north side of the interstate if Eastbourne Development provides us with a site
plan where they want it to go. That’s the only space left to go but they don’t have
a site plan on it (inaudible) so we can’t really negotiate for an easement with
them.
De Weerd: What is the timeframe even on the Black Cat Trunk.
Watson: The current project it’s intended that it would be operational late
summer early fall 2005.
De Weerd: 2005, so providing service south of the interstate can still be at least
2005 and then depending on what Eastbourne does and how the interchange
comes out which is as early as 2007 at the earliest development in that area of
town is not even possible until after that?
Watson: Council member de Weerd I’ll give you the same line I give everyone
that comes in asking about property. The current project is what I told you slated
to be done 2005 it brings it roughly to Ten Mile Road. We don’t have any more
of that project in any capital improvement plan. If a group of developers decided
to bring it along that would be up to, you folks to approve that sort of project but
the city itself doesn’t currently have any plans and I can’t guess as to a year.
De Weerd: Well it sounds like there still needs to be some discussion and
certainly give staff time to respond to the letter that you wrote David and see
where we’re at. We can put this on our agenda. It sounds like two weeks would
not give you sufficient time Brad?
Watson: Council member de Weerd I can respond to Dave’s letter tomorrow. It’s
drafted now but it has more questions in it. I feel like we’re going to go back and
forth here for a while. Ultimately you want a recommendation memo. There are
enough questions and issues here I don’t know what the timeline is. If it’s two
weeks a month or two months. It seems like every time we have questions more
things come up. If you wanted to put it off for two weeks and see where we are,
we can see what we can put together.
De Weerd: Council.
Nary: Madam President.
De Weerd: Mr. Nary.
Meridian City Pre-Council Meeting
September 23, 2003
Page 17 of 27
Nary: I guess I don’t know that we have a lot of options at the moment other than
a couple of weeks. I do think Mr. Centers deserves an answer within a
reasonable time. He has brought together a good project that is very attractive to
what we would like to do but there are concerns. I think we all understand that I
don’t know if we’re going to have an answer to him at all, I mean I really don’t. I
don’t think you know Mr. Centers owned that property for a long time and we
have an obligation to serve it or not have it in our impact area. We’ve had that
discussion before too. I think we do need to keep this before us at least to the
point where we can say well we can’t do anything more than where we are. I
think two weeks is our next meeting and I think we need to keep it in the forefront
at least at this point. I guess I would ask that we continue it for two weeks and
we’ll see where we are. I think if we let it get off this radar screen, it’s not very
fair to Mr. Centers. I think we have to be fair to what he would like to do and he
deserves an answer as well. I think at least today that’s the best we could do.
De Weerd: Mr. Centers.
Centers: I just want to say you know I’ve worked on this for a couple of years.
I’ve taken a number of different stabs at it. There is capacity for the sewer out
there. You’ve – policy has been changed for different projects. The well can be
worked out. What he’s got I mean nothing is full proof but it gives you all the
legal rights to do what you had to do out there. If they don’t annex I mean you
can shut their sewer off there are all kinds of things you can do. If you don’t I
mean it’s a quarter mile from city limits. When you approved Kentucky Ridge, I
had my attorney make sure that it said when services were available which is
300 feet that Kentucky Ridge would be annexed into the City of Meridian. You
go to the county they don’t want to do it. If you guys would annex Kentucky
Ridge like it was supposed to be I’d have my annexation route, I would have
water and sewer stubbed to the property. I have to do something with it. It’s a
quarter mile from city limits and if you keep coming up with all these reasons why
you cannot service this then you’re going to get acreages. There’s nothing else I
can do about it.
De Weerd: And I think that needs to be part of the staff’s recommendation.
We’ve said it before Lee, it needs to be a matter of what we do here and how we
can – our ability to serve this piece of property or not and how long that would be
and what you’re willing to deal with. We need to service it in a reasonable
amount of time. If we can’t do it it shouldn’t be in our area of impact and then
you do need to do your acreages or whatever. I know from a planning
perspective it’s best to have the urban densities because you have other
properties around there but I think those are all considerations that need to be
brought into staffs recommendations when they bring them back to us.
Centers: You know going back to Kentucky Ridge I remember when I came in
front of the city and said why don’t you annex Kentucky Ridge and they said
Meridian City Pre-Council Meeting
September 23, 2003
Page 18 of 27
because they didn’t have sewer capacity. That it’s wandering going into another
drain, which is two thirds of Bear Creek. I mean we’re not – this isn’t fair we’re
not playing by the same rules. Year after year, it’s always something else,
something else and you know now we’re focusing on a well that could easily be –
you can go out there and do the O and M on it. You’ll know what you’re dealing
with, you’ll inspect it, and you can approve the drawing.
De Weerd: I think what you’ll always find as the first person in is always most
heavily scrutinized because we don’t have a policy on this. We haven’t – our
policy has been not to do this and so even that you’ve gotten this far I think is
that our staff is trying to work with you on this. Let’s see what we – we do need
to move on with our agenda but let’s see what we can work out in the next couple
of weeks. Dave’s very familiar with the issues that we deal with on the city side
as well so maybe we can get a lot done in these next two weeks.
Centers: Okay.
De Weerd: Okay.
Centers: Yes.
De Weerd: Thank you.
Item 4. Presentation of Alternative Methods of Financing:
De Weerd: Okay item number four is discussion of bonding options and I have
no idea how Councilman Nary added it to the agenda. I think I’ll just open it up to
Floyd and have him come up and talk to us about how we can look at capital
projects and different funding mechanisms, funding choices that are available as
well as how do you initiate the process of looking at these things from a citizens
perspective. I’m sorry I didn’t know Eric or Floyd which one of you.
Ayers: Thank you Madam Chairman just one little bit of background. We met
with the Mayor in late August and talked about some of these concepts. At that
point, we were invited to speak to the entire Council in Executive Session. That’s
why we came tonight prepared to do that. I understand Councilman Nary’s
concerns and comments. I can’t argue with him. There is a provision in the
statutes for property and for personnel issues in Executive Session but not
financing that I’m aware of. We’re prepared to do that we just wanted to say to
the Council it’s not our goal to make it an election issue. We’ll either make the
presentation tonight or we’ll come back in November and make the same
presentation at the Council’s pleasure.
De Weerd: I don’t think – we’ve already had a presentation from someone else
less than a year ago about different funding. It’s all in line of as we do our future
planning and look further down the road where we’re going and how we’re going
Meridian City Pre-Council Meeting
September 23, 2003
Page 19 of 27
to get there. What mechanisms are in front of us that can help us achieve that.
Again, this is all part of fact finding it shouldn’t become a campaign item other
than we realize that we have a number of capital items in front of us. Not just a
th
city hall but a 4 fire station. This conversation I think can have great benefit to
us in any regard.
Ayers: All right. Thank you Madam President. We’re prepared to proceed. Eric
did he leave. Eric has prepared a discussion of the various concepts and if we
may, we’ll let him run through those concepts. There is some experience with
each one of them since I’ve been here doing this for over 30 years that I would
be happy to relate based upon the Council’s interest. With that, Eric Herringer.
Herringer: Thanks Floyd. Madam Chairman and members of the Council my
name is Eric Herringer I’m with Seattle Northwest Securities. I think Floyd and I
will tag team this to some degree because like he said there is some specific
experience that he doesn’t always necessarily recall to me until it comes into this
mind. I’ll probably learn a few things as I go through this as well. I thought
initially about talking about some of the initial project you know where do you
start. I mean do you start with the studies, the space studies and where – trying
to figure out what your revenue sources are and how you can afford them. The
more I thought about it I thought it would be best to talk about the financing
options first because that actually leads into geez, to go forward with the
financing option and talking about finance you really need a good solid plan
behind you. Then to get that solid plan takes the sort of working with different
advisors, staff, and engaging the public and so forth. Financing options in Idaho
typically take the form of a bond. The most common bond you’re going to fine is
a general obligation bond voted by the public two-thirds majority. What it does is
it authorizes clear legal authority to issue the debt and go into debt. It also
authorizes a property tax separate from any other property taxes specifically to
repay the debt. You probably already know these things. Of course, you have a
revenue bond but really, in talking about a city hall project doesn’t really fit into
the revenue bond or the LID bond so I really was concentrating on the general
obligation bond or some other mechanism to finance city hall. The great thing
about a voted general obligation bond is that you get the lowest interest rates you
could get. There’s not necessarily another mechanism that will get you lower
interest rates. Probably your lower financing costs because you basically have
something that investors throughout the country will buy your universal buyers
that will you loan you money is the largest. You can get a very high bond rating
therefore you drive down your cost. Now, that doesn’t necessarily mean that you
need the levy the full tax to repay that obligation. You can pay from any other
legally available sources perhaps the general fund, perhaps cost savings that
come in from consolidating services into one facility if you take the city hall for
example. You can consolidate services you can get rid of some facilities you are
leasing. You get some efficiencies not having the drive time between different
facilities. You can kind of figure out how to capture those things and use that
money to help pay the debt so you don’t have to rely on property taxes
Meridian City Pre-Council Meeting
September 23, 2003
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completely. Maybe you are able to defray that and in building your financing plan
to be able to build that in so that when you talk about what its going to cost a
taxpayer if they vote for a bond it would be less than it might otherwise be
because you have those other internal revenue sources that perhaps come
available. There’s lots of examples of that, Floyd and I were talking about the
Ada County Courthouse and when they consolidating the county facilities in the
courthouse there was a variety of cost savings because they no longer had some
lease facilities and just like the things I talked about and they were able to use
those to show you know fairly big chunk of the debt would be made up of those
cost savings. So general obligation bond doesn’t necessarily mean you have to
levy the full property taxes for that. The other option falls, there are many options
under this option. There’s a new sub option under the certificate of participation,
which is really like a lease purchase. I believe the city has been involved in the
lease purchase for the police station. We call them certificates of participation
because what you end up selling is participation in these lease payments it looks
very much like a bond. You have a lease purchase, you make lease payments.
There is an interest in principal components of the lease payment and it gets
passed through to the investor, it looks like a bond. At the end of the lease term
you can purchase the facility for one dollar and you own it free and clear. The
certificates of participation typically will require some sort of legal authorization.
That usually takes the form of judicial conformation. These issues I know are
nothing new to the Council, I would imagine in terms of with the city of Boise City
and the police station that they took before judicial conformation were denied
which says a couple things. It’s not a given that you will receive judicial
conformation and it’s important to make sure what you are asking a judge to look
at is structured properly and that you have a good legal argument. With the
certificate of participation you really are just looking for the legal authority to do
something. You are not getting any new revenue source. So you sort of have to
say, I have the money where I can find the money with cost savings with the
growth and the tax base things like that, I just need the legal authority to go
ahead and do this lease purchase. Why do you need legal authority to do it?
The constitution limit on that can incur a long-term liability without a vote of the
people. Lease purchase says this is subject to annual appropriation therefore its
not a long-term debt, city could just walk away from the facility not appropriate.
You need to make the document subject to do that.
De Weerd: Now Eric you can take that to the vote of your citizens and they could
pass that using that same funding method.
Herringer: Sure. You can pass it – Floyd correct me if I’m wrong. But you can
pass the lease purchase concept and say no it was not subject to annual
appropriation we’re going to commit to these lease payments for 20 years or
however long and ask our voters to approve it, still be two thirds. Another thing
you could ask the judge to do and that has been done a few times and that is to
not ask if the subject to annual appropriations is not long term debt but ask about
if its ordinary or necessary. If the constitution has a provision of ordinary or
Meridian City Pre-Council Meeting
September 23, 2003
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necessary and you can occur that so you wouldn’t have a subject to annual
appropriation but it’s hard to imagine a lot of facilities. I mean it’s a pretty strong
task, it’s hard to imagine a facility that could get the ordinary and necessary test,
if its not essential service like water sewer type services and you see that a lot
with revenue bonds for water and sewer where its essential service and it needs
to get done. Once you get the judicial validation you end up like I said being able
to sell something that looks very much like a bond and with some marginal
increases in your issuance costs you can get interest rates that are pretty similar
to a general obligation bond. You have the additional situation of property tax
liability on the facility. Recently citizens have sort of in Ada County have said hey
these facilities are lease purchased are actually owned by a trustee and that
trustee is leasing the facility to the city. Therefore it’s a for profit organization that
technically owns the building they should be taxed. The trustee really is acting
as a pass through. They’re not you know – they’re going to pass that lease
payment or that property tax liability back to the entity that’s using the facility.
Therefore, that’s an additional cost. It’s pretty clear to identify the property tax
liability which if you put it in to your overall (inaudible) cost now significantly
increases how much it costs to finance the facility over a general obligation bond.
De Weerd: But that would be in your financing plan so all of those costs would –
Herringer: Yes you would have to bill that in and now you have another layer of
costs that you would have to get to put on top. That money’s going to come back
to the city right because like I said that’s property taxes that flow back. I would –
you know.
De Weerd: And various other tax amenities a portion.
Herringer: A portion you would be – yes, you would just get a portion of that
back. You can do a COP without judicial validation and you have a lot of legal
risk if you do because there’s easily someone could come and challenge and
bring a lawsuit.
Nichols: Actually they have the legal risk because if it’s null and void then we get
to keep it and they don’t get to collect.
De Weerd: Thank you for that clarification Mr. Nichols
Herringer: We don’t necessarily want to take that risk but you know you could try
to go out and negotiate with a private party and say here are the issues this is the
legal risk are you willing to take it on. You have to pay more for risk and so your
borrowing cost again would go up. You would probably have to pay a
significantly higher rate to go do that. I would bet you would be challenged and
things wouldn’t be so good. I don’t know if I want to go in to all the different
mechanism ways you could sell that. Again, there are all various ways of finding
buyers who are willing to take that risk or put that risk on somebody else other
Meridian City Pre-Council Meeting
September 23, 2003
Page 22 of 27
than the city or the underwriter. 6320 financing you may have heard that
th
concept. 6320 financing stands for the 20 ruling of this IRS of 1963. I either
made that up or I heard it somewhere. It allowed entities to do – it basically was
a way to promote public private partnerships to eliminate the burden of
government. That’s a pretty fancy thing to say what does it mean. It means that
a developer could come in and build your facility because maybe they have a
stake in the area around the facility that they want to develop. They – it allows
that developer to essentially access to tax exempt financing so they can lower
their borrowing cost and therefore deliver a project potentially cheaper than they
could otherwise. With 6320, you would have to set up a non-profit organization
and essentially the non-profit organization would buy the facility outright from the
developer and be the entity that issues the tax-exempt debt. Essentially, it
provides that – that’s how the developer gets the tax exempt financing because
you have this non-profit set up. It’s a 501C3 and there are a lot of entities that
actually provide a turnkey service in that developer financing sense. It still hasn’t
changed the underlying lease document the city would still need to have a lease
purchase agreement with the non-profit. That lease purchase agreement would
still need to be somehow authorized legally. It’s an option and it’s something that
should be covered. We talked a little bit about urban renewal and potentially
having an Urban Renewal Agency involved. The Ada County Courthouse had
CCDC the Urban Renewal Agency of Boise issue the debt and they’re leasing
the facility to Ada County. That could work. Again, you would have that lease
agreement between the two entities but it might be a way around now having
another tax exempt organization have title to the facility so you don’t have that
property tax liability. I think you could make the same argument with the 6320 by
having a non-profit be the entity that has the facility title to the facility so you
avoid that property tax issue. Again, I think you know it goes back to in a Judicial
Confirmation for anyone to be able to take the risk on that. Those are kind of the
general concepts of financing mechanisms that that we thought about. Again, we
go back to the general obligation bond and say well hey if you have the revenue
and you can actually afford to finance a building without the additional property
tax or minimize that additional property tax wouldn’t it be great if you could just
do the general obligation bond. Because you get lower interest rates and it’s just
those two thirds. We kind of get into the concept of geez if you could package
this correctly and if you could develop a good plan and identify these cost
savings, identify revenue sources it could help you pass that bond issue and that
you could essentially either eliminate or defray any of the additional property tax.
Another alternative from a revenue source is how can you turn this facility into
something that generates revenue. Is there a way to grant space to another non-
profit or another governmental entity that needs space in the area you know and
work that into the plan so you have some revenue coming in that helps offset the
debt again. At this point, I’m going to probably go to well where do you go from
here in terms of developing plans so if there’s any question on the issuance
process I would be happy to – at least the debt options that are available.
Bird: Madam President.
Meridian City Pre-Council Meeting
September 23, 2003
Page 23 of 27
De Weerd: Mr. Bird.
Bird: Eric what – I know that you met with the Mayor and what kind of dollar
values were we talking about for bonding. I have a real problem if we can – I
would sooner do like we did with the Police Station to be truthfully to finance if it’s
not – because I heard some rumors that it was quite a bit of money to pay that
had been discussed. I don’t know. Do you mind – what was the dollar value you
were talking about?
Herringer: Dollar figure for the new facility?
Bird: Yes.
Herringer: We really haven’t been – we haven’t really talked about – you know I
think that that whole plan is still in development. If someone does have a
number then I would –
Bird: What kind of interest are the bonds (inaudible) right now. What kind of
interest are we getting (inaudible) for?
Herringer: Sure yes on a 20 year issue right now and this is if you got a Geo
bond voted and you would probably pay a net effective rate of somewhere – and
this is at the quarter basis point so a quarter percentage point 25 basis points
cushioned and the number and that’s what I ran. You’re probably looking
somewhere around 4.35 percent as a net effective rate all in. If you backed out
that quarter point, you would be looking at something more like 4.10. Rates were
– we were doing 20-year general obligation bond issues for cities two months
ago in the neighborhood of 3.80 as a net effective rate. It actually came back up
a lot higher than what we are at now because I have to always double check
myself. When I say 4.10, I can’t imagine I can’t believe I’m saying that. They
were higher a couple of weeks ago but they’ve actually started to get back a little.
I think most people think that rates are going up though. We’ve sort of – that the
leading economic indicators are suggesting we’re kind of getting out of this
recession. In fact it’s going to leave rates pretty low pretty for awhile until the
unemployment picture turns around but you know is it likely for rates to be higher
six months from now than they are today I would say you know I would say yes.
There are no guarantees but you know I think the general trend is an upward rate
environment.
Bird: And you know you brought up the Boise deal getting turned down well any
citizen would be or judge would be stupid to – if you’re going to pay 20 million
dollars in interest alone. That isn’t good financing. That’s not – I mean you pay
your building a 15 million deal and buying 35 million for it. That’s not good
financing. You know say like we probably need – we’re just guessing and we’ve
had these space analysis before like our city hall we probably need about 50,000
Meridian City Pre-Council Meeting
September 23, 2003
Page 24 of 27
square feet to build to plan for the future. Not that we need all that right now but
you know to plan for the future. I don’t know why we would need over 70 million
dollars or something like that as a bond. Is that – that’s feasible isn’t it to have
that small – I mean I realize the larger the project the better the bond interest and
stuff.
Herringer: Well and we’re talking in conceptual terms here and you know I
realize was thinking about these options from a conceptual standpoint. Just
general projections on a 10 million-bond issue right 20-year finance you know the
kind of numbers with that quarter basis point cushion built in you’re probably
looking at an annual payment of somewhere around 750,000 dollars a year.
Again, that’s with the general obligation both. What does that mean on a tax
base of two billion, 2.3 billion the tax rate per thousand is pretty minimal 33 cents
per thousand on a 100,000-dollar home that’s 33 dollars. That’s 10 million. If the
projects eight or seven that only goes down. It’s fairly affordable. If you’ve
figured out cost savings so that you actually could – only half of that had to come
from the tax base now you’re looking at a lot less.
Bird: Yes you hit up on that. I don’t know what we’re paying a month maybe
Stacy does. I have a feeling we’ve got to be paying probably 20, 25,000 in
leases a month.
Kilchenmann: (inaudible) well the Public Works lease the square footage went
up so about 28,000.
Bird: About 28,000? You’re looking at 300,000 or so there, that could be made
towards a payment. We have to budget for right now. Like you said Eric, we
wouldn’t have to get all of them through the million dollars right off the bat if we
could do that.
Herringer: Yes and probably now is a good time to say that it’s again, in a way, a
little early to be talking about what the best financing mechanism is without
knowing necessarily what the project is. It’s really – conceptually you start with
what are your needs and how do you develop those needs. A professional
comes in and does the space planning, talks to staff and those types of things.
Gets sort of that laundry list of things people want and of course, that gets paired
down. How does it get paired down it gets paired down with meetings with you
know citizens finding out – this is typically this is sort of what I typically
experience in other places is you know there’s some public involvement. You
end up with a package that you know you’re not going to get 100 percent
agreement typically but you have something that’s been well thought out. There
has been some thoughtful dialogue not only with staff but also with community.
You have a package that you feel pretty good about and you have a dollar price
you can look at what the financing projections are and try to figure out what those
revenue cost savings are where the other revenue is coming from potentially.
New revenue if you’re able to lease out part of your facilities to another entity.
Meridian City Pre-Council Meeting
September 23, 2003
Page 25 of 27
Then you have your financing package you have your conceptual designs and
this is the space this is going to happen, here’s why we need it, here’s all the
benefits and here’s how much it’s going to cost. Whether you take it at that point
out to the vote of the public or you say geez we really need this and we think it’s
okay to go to a judge and ask the judge to allow us to do this. Those decisions I
think it made after you have some dollars in front of you in a project.
De Weerd: Well I think you’re very true when you say you know there’s a lot of
information that needs to be done before we get into specifics. This was – we’re
not really sure the goal of today and it’s unfortunate that the Mayor couldn’t be
with us. I guess I would like to maybe tap into your expertise on the steps of
involvement and as we update our space study and as we look to plan for
serving our public in the most efficient way in the future how to set that process in
motion. How we can also initiate public involvement at some point what would fit
into your financing plan so you can identify those internal revenue sources and
where we could gain some cost savings. Certainly there are a lot of things that
need to be placed in motion but from your experience how have these processes
been initiated.
Herringer: Floyd if you have an immediate answer for that I have a couple of
thoughts. You know my initial impression is that to get something in front of
people that has sort of been developed by – you know go out and get an advisor
to come in and do that space planning and figure out what the needs are. You
figure out if a facility is efficient, you know and let the consultants’ kind of work
with staff to figure out that efficiency piece cost effective piece. Get something
that has some fairly concrete ideas but some reasons behind it. Those reasons
being the efficiencies and the cost savings. That sort of helps you get an idea of
where these revenue pieces could come in. Then you have something that
maybe has some other options together with it that you could take out and start
engaging the public. Whether it’s through public meeting processes, forms and
things like that. Those are my kind of initial thoughts on how to get something
sort of moved along to a point where people can actually look at it and start
making comment on it because enough thought has gone into something that
there is some reasons why it’s where it’s at. I don’t think I said that very well.
De Weerd: No I think you did.
Ayers: I would have one thing –
De Weerd: Floyd can you –
Ayers: Thank you Madam Chairman. Normally our experience has been that
Council did whatever review process you’re comfortable with to hire your team.
Get your architect on board, your bond council, and your finance team and then
make them work together through staff to come to you with recommendations.
Because the goal is to give you the most efficient space possible with the lowest
Meridian City Pre-Council Meeting
September 23, 2003
Page 26 of 27
bond paramount that we have to go to the market with. In concert with that, you
want the capital market to want to buy your bond. We have to make sure that
this credit is something that the investors will look at as something a prudent
person would buy for their portfolio. If we can do that, we’ll lower your interest
rates. It costs you no more to get your team together up front, than if you try to
wait and just bring them on as you think you need them. Our recommendation
would be to review. If you want to hear from other finance people or other bond
attorneys or whatever but make those selections and then make them work for
you. Thank you.
De Weerd: Council any questions? Okay Floyd and Eric thank you for your time.
Herringer: Thank you Mr. Chairman, members of the Council we appreciate it.
Floyd just you know tries to commit me to do work. Thanks a lot.
De Weerd: Thank you.
Ayers: Sorry for the confusion. I think we came under a little different pretext of
what we thought we were going to do.
Nary: No problem.
De Weerd: No problem at all. We appreciate you being here.
Ayers: Thank you.
De Weerd: Thank you.
Item 5. Executive Session per Idaho Code 67-2345(1)(c):
De Weerd: Well Council we still have an Executive Session but we can put that
at the end of our regular agenda.
Nary: You were reading my mind. That was what I was going to ask if we could
do and then we can take five minutes before we start.
De Weerd: Okay do you have a motion Mr. Nary.
Nary: I would move that we continue what would be item five on the Pre-Council
Agenda to the end of our Council Agenda. We’ll also when we get to that move
to amend that agenda to include the Executive Session. That’s a motion.
McCandless: Second.
De Weerd: Okay it’s been moved and seconded to move the Executive Session
to our Regular Agenda. All those in favor say aye.
Meridian City Pre-Council Meeting
September 23, 2003
Page 27 of 27
MOTION CARRIED: THREE AYES, ONE ABSENT
De Weerd: Okay I would take a motion to adjourn.
Nary: So moved.
McCandless: Second.
De Weerd: All those in favor say aye.
MOTION CARRIED: THREE AYES, ONE ABSENT
(TAPE ON FILE OF THESE PROCEEDINGS)
APPROVED:
/ /
ROBERT D. CORRIE, MAYOR DATE
ATTESTED:
WILLIAM G. BERG, JR., CITY CLERK