Loading...
HomeMy WebLinkAbout1985-09-19MINUTES ADJOURNED CITY COUNCIL MEETING THURSDAY, SEPTEMBER 19, 1985 CIVIC CENTER COUNCIL CHAMBER 6:30 P.M. • • • • • • • • • • • • • • I. CALL TO ORDER Mayor Snyder convened the meeting at 6:30 p.m. I[. PLEDGE OF ALLEGIANCE - Councilman S. Roy Wilson III. INVOCATION - Mayor Pro-Tempore Richard S. Kelly IV. ROLL CALL Present: Excused Absence: Councilmember Jean M.Benson Mayor Pro-Tem Richard S. Kelly Councilman S. Roy Wilson Mayor Walter H. Snyder Also Present: Councilmember Phyllis Jackson Bruce A. Altman, City Manager Carlos L. Ortega, Assistant City Manager Sheila R. Gilligan, City Clerk Kirby Warner, Director of General Services Richard J. Folkers, Director of Public Works Warren Diven, Counsel for Assessment District 83-1 V. ORAL COMMUNICATIONS - A None VI. PUBLIC HEARINGS A. CONSIDERATION OF ACTIONS REQUIRED FOR ASSESSMENT DISTRICT NO. 83-1. (Continued from the meeting of September 13, 1985. Mayor Snyder noted that this item had been continued and that the public hearing was therefore still open. Mr. Altman reported that staff has asked the City Council to continue this item at its last meeting because staff 1 MINUTES ADJOURNED CITY COUNCIL MEETING SEPTEMBER 19, 1985 • • • • • • • • • • • • • • • • • • • • • • • • • felt Prudential Bache should "test the waters" and come back with a more favorable interest rate than that which had been submitted at the meeting of September 12th. They did that and came back with a rate .07% less. Staff had then checked to see if it was in fact the best rate available and in so doing found that Miller and Schroeder was considerably lower in this case. He advised that Miller Schroeder assumed all risks in this venture and that the City had virtually none if it approved a new agreement with them. He stated that Council now had the option of (1) staying with Prudential Bache and the approved underwriting agreement at a higher interest rate, or (2) negating the underwriting agreement and entering into one with Miller Schroeder at the lower interest rate. Mr. Altman concluded his remarks by stating that the representatives of Prudential Bache had conducted them- selves as true professionals and gentlemen throughout the negotiations, and he thanked them for their coopera- tion. Mr. Ortega reported that staff had in fact asked Pruden- tial Bache to better its offer by "testing the waters" and had told them that staff would try to better it if possible. The factors weighed were (1) the net interest cost which was 9.62% by Prudential Bache and 9.20% by Miller Schroeder which in bonding language means 42 basis points below Prudential Bache, and (2) to make sure that the there were equalized factors in the two proposals, and after review, staff found there was no substantial difference in the equalized factors. He added that another test was to prevent somebody from front -end -load- ing the bond schedule so staff looked at the true interest cost which was for Prudential Bache 9.72% and for Miller Schroeder 9.49% or a difference of 23 basis points. Mr. Ortega stated that the selection of the underwriter at this point was Prudential Bache but that had been for the purpose of allowing them to officially represent themselves as our underwriter in premarketing of the bonds. However, the contract itself has a provision that states that the City Council may reject or approve the proposed bond purchase contract and in case it is not accepted, the City Council has the option of cancelling the underwriting agreement. In analyzing the City's options, staff recognized that Prudential Bache is the local firm. However, the difference in the total debt service issue would be $124,930 which is a significant and substantial amount not only to the City but to the residents who will be paying off this bond issue. Mr. Warner added that these factors of comparison had been reviewed by Prudential Bache, and its representa- tives had agreed that they were a measurement that could be looked at to see a true comparison. MR. LARRY HOGART, Prudential Bache, Pasadena, addressed Council and stated that on the face of things and the basis of true interest cost, Miller Schroeder had given the City an excellent bid. He stated he did not know what the contract was insofar as interest charges back to 2 MINUTES ADJOURNED CITY COUNCIL MEETING SEPTEMBER 19, 1985 the City, but he was sure the City's attorney had reviewed it and protected the City from any risk. MR. BOB DE MONDRUM, Prudential Bache, San Francisco, thanked the City for the time spent with his firm. He commended staff for its excellence. He noted that the $124,930 did not take into account that Miller Schroeder's discount charge was larger and this charge of $26-27,000 would come out of the construction proceeds. MR. ED BENSON, Bateman, Eichler, Hill, Richards, Palm Desert, stated his firm had received an initial interview but had not been invited to negotiate further. He had learned a few days prior that there were problems with the interest rates, and he asked the City Council to continue it for a few more days to allow his firm to give the City a further choice. Upon question by Councilman Wilson, Mr. Ortega responded that staff had contacted two firms which both had recent experience with bond issues in municipalities in an attempt to better the interest rate. Stone 8 Youngberg was contacted because of their experience in this field and because they are the firm handling the Monterey extension bonding. They said the Prudential Bache bid was competitive in today's market. Miller Schroeder was contacted because of their recent experience with both the City and County of San Bernardino. Miller Schroeder under bid Prudential Bache. Mr. Altman added that at no point prior to 4:30 p.m. this date was Prudential Bache given Miller Schroeder's bid. MR. BENSON stated that all firms dealt with many of the same clients and that Prudential's bid would have been easy to obtain. He asked why his firm had not been contacted since they had just completed a very successful bond sale for Cathedral City. Mr. Ortega responded that staff sought bids from the firms with recent experience in this type of municipal bond and that the sale in our neighboring city had not been this type. Councilman Kelly stated he was being put in a very bad position in that he felt all this had been resolved after a subcommittee of himself, Mayor Snyder, and staff had reviewed it and made the recommendation for Prudential Bache. Councilmember Benson concurred stating she felt the City had a commitment to Prudential Bache and that if it were to be opened up, it should be opened to everyone. Mayor Snyder stated he had favored a continuance at the last meeting because he felt the interest rate should be lower than the one presented at that meeting because he knew Indian Wells had received a lower one for its bonds. He went on to say that Council had asked staff between then and now to determine whether or not we had a good rate, and he felt they had done just that. He noted that in addition to the bonding issue, Council needed to make a decision on an award of construction contract which was rapidly approaching expiration is not awarded. He said he would be reluctant to throw away a $125,930 saving for 3 MINUTES ADJOURNED CITY COUNCIL MEETING SEPTEMBER 19, 1985 • . * • . . . . • * . . . * . . • • . * . • . . • the citizens. Upon question by Councilman Wilson, Mr. Ortega responded that all local firms were asked to submit proposals, and only three responded. In addition to local firms, Birr Wilson and Miller Schroeder were solicited. Councilman Wilson asked if the Council were to accept this proposal from Miller Schroeder whether or not it could be condi- tional that provided no better offer comes in within 24 hours with the understanding that all firms originally contacted would be solicited for their best interest rate. Mr. Diven responded that this condition could be imposed but that Miller Schroeder could and probably would withdraw its offer under such a condition. Mr. Altman stated that staff's original recommendation was that both the Redevelopment bonds and these bonds be awarded to Miller Schroeder with an alternative recommen- dation to split the issues with these bonds being given to Prudential Bache. MR. HOGART added that because Miller's discount was larger, the savings was really only about $100,000. Mr. Kirby added that it was about $8.00 per parcel per year for the life of the bonds. Mayor Snyder declared the Public Hearing closed. Councilman Wilson moved to reject the 0purchase offer from Prudential Bache and to instruct staff to rescind the agreement. Mayor Snyder seconded the motion. Motion carried by a 3-1-1 vote with Council - member Benson voting NO and Councilmember Jackson ABSENT. Councilman Kelly stated his affirmative vote was cast only because he felt stuck with no other option. Councilman Wilson moved to accept the purchase contract from Miller Schroeder and authorize its execution. Mayor Snyder seconded the motion in the interest of expediting the project. Motion carried by a 3-1-1 vote with Councilmember Benson voting NO and Councilmember Jackson ABSENT. Councilmember Benson stated for the record that she felt the program had been handled very badly. She said Council had wanted to keep it local, and she hoped future selection processes would be better. Mr. Diven noted that Council should consider adoption of Resolutions 85-98, -99, and -100 continued from the last meeting. He recommended that line 15 of Section 7 be corrected to read "September 2, 1986, in place of "March 2, 1986". Councilman Wilson moved to waive further reading and adopt Resolution No. 85-98, authorizing and providing for the issuance of bonds pursuant to the "Improvement Bond Act of 1915" as amended by Mr. Diven. Councilman Kelly seconded the motion. Motion carried by a 3-1-1 vote with Councilmember Benson voting NO and Councilmember Jackson ABSENT. Councilman Wilson moved to waive further reading and adopt Resolution No. 85-99, awarding the contract for the construction of certain public works of improvement in a special assessment district. Councilman Kelly seconded the motion, and the motion carried by a 4-0-1 4 MINUTES ADJOURNED CITY COUNCIL MEETING SEPTEMBER 19, 1985 • • • • • • • • • • • • • • • • • * • • • • • . • vote with Councilmember Jackson ABSENT. Councilman Wilson moved to waive further reading and adopt Resolution No. 85-100, making award for sale of bonds and providing for the establishment of a redemption fund for the payment of said bonds amended to substitute Miller Schroeder for Prudential Bache. Councilman Kelly seconded the motion. Motion carried by a 3-1-1 vote with Council - member Benson voting NO and Councilmember Jackson ABSENT. MR. BENSON stated he had received a letter two days prior from Mr. Ortega requesting proposals for the bond issue for District 84-1. He said it was not enough time to prepare an adequate response but that when he asked for an extension, it had been refused. Mr. Altman instructed staff to extend the deadline from Monday, September 23rd, to Wednesday, September 25th, and to instruct all parties solicited. XVII. ADJOURNMENT Upon motion by Benson, second by Kelly, and unanimous vote of the Council, Mayor Snyder adjourned the meeting at 7:40 p.m. ATTEST: /� SHEILA R. GIL GAN, CI CLERK CITY OF PALM DESERT, A IFORNIA 5 44W4.7474-1 WALTER H. SNYDERR`