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08-16-88SpMtg186 AUGUST 16, 1988 A Special Meeting of the City Commission of the City of Delray Beach, Florida, was called to order by Mayor Doak S. Campbell in the Commission Chambers at City Hall at 7:15 P.M., Tuesday, August 16, 1988. Roll call showed: Present - Commissioner Patricia Brainerd Commissioner Marie Horenburger Commissioner Jimmy Weatherspoon Mayor Doak S. Campbell Absent - Commissioner Mary McCarty Also present were - City Manager Walter O. Barry and Assistant City Attorney Jeffrey Kurtz. Mayor Campbell advised that before getting underway he wished to make a brief statement for some of the people who have been concerned relative to the Mercer/Slavin interviews that have been going on with both City staff and members of the Commission. He has spoken with Jim Mercer and Mr. Mercer is going to conduct, over the next several weeks, a rather intensive continuation of his discussions with the members of the Commission, the City Manager and the staff. He is evaluating the information he is receiving and playing an excellent role of mediator. Mayor Campbell asked for a concurrence of the Commission, that until the City gets this resolved, that they might look to reimbUrse him for any out of pocket and travel expenses (although not any recompense for any additional fees, since that is in his original contract). Mr. Weatherspoon advised that he would have a problem with this since part of his overall contract package certainly included situations of this nature. Ms. Brainerd stated she would have no problem and felt that Mr. Mercer is fulfilling a useful purpose. Mayor Campbell commented that they would keep close tabs on this and asked the City Manager to keep them informed of any requests on the part of Mr. Mercer regarding out of pocket expenses. (1) CRA Parking Garage. (A) Resolution No. 44-88 authorizing the CRA to institute condemna- tion proceedings on a parcel of property lying immediately north of N.E. 1st Street, east of N.E. 7th Avenue, across from Atlantic Plaza, beinq known as The Harbor View Apartments. The caption of Resolution No. 44-88 is as follows: A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF DELRAY .BEACH, FLORIDA, AUTHORIZING THE ACQUISITION OF CERTAIN REAL PROPERTY AS HEREINAFTER DESCRIBED BY THE DELRAY BEACH COMMUNITY REDEVELOPMENT AGENCY BY GIFT, PURCHASE OR EMINENT DOMAIN; PROVIDING AN EFFECTIVE DATE; AND FOR OT~ER PURPOSES. (Copy of Resolution No. 44-88 is on file in the official Resolution Book) Assistant City Attorney Kurtz advised that the resolution authorizes the CRA to institute eminent domain proceedings; the CRA, in turn, will have to pass a like resolution before they can formally institute any proceedings. It is anticipated that the CRA will make an offer prior to these proceedings. Bill Finley, representing the CRA, furnished the Commission with a CRA/Atlantic Plaza schedule; they are trying to coordinate a great many different forces and actions here in the community at the same time in building the garage to coincide with the development of the 187 department store. Mr. Finley stated the CRA, with the City's direction and guidance, will be filing to condemn property and at the same time they will be getting ready to go out for interim financing of 3.5 million dollars. In the October/November period of the schedule the CRA must have the funds in hand to file in the court prior to the time it can take over any property it does condemn; literally every day, every week is important. Dave Lenahan, resident of the apartment complex that is being considered for condemnation, asked if any more feasible alternative locations for the parking garage have been examined. He would like to see the garage go up somewhere where the City would not have to tear down a part of old Delray. James Bowen, 116 Marine Way, stated he is concerned that this will undoubtedly lower property values in the entire block in which the parking garage will be located. Mr. Weatherspoon moved for the adoption of ~esolution No. 44-88, seconded by Ms. Brainerd. Upon roll call the Commission voted as follows: Ms. Brainerd - Yes; Ms. Horenburger - Yes; Mr. Weatherspoon - Yes; Mayor Campbell - Yes. Said motion passed with a 4 to 0 vote. (B) Public Hearing and approval of contract between the City and the CRA for the transfer of certain air rights over N.E. 1st Street to facilitate the construction of a parking garage. Assistant City Attorney Kurtz reported this involves a transfer of air rights over N.E. 1st Street; they will be further defined upon final site plan approval. This will allow the parking garage to trans- verse 1st Street on the second level; without the air rights that would not be possible. Robert Federspiel, attorney for the CRA, gave a brief descrip- tion of the concept of the property acquisition and how it all fits together. He advised the site plan calls for the acquisition of the property on the corner of 1st Street and 7th Avenue which is presently owned by Sandy Simon of Atlantic Plaza; the overall acquisition that the CRA needs to get would be the parcel he owns, the air rights over the City street and the air rights over the existing Atlantic Plaza proper- ty. Ms. Brainerd moved for the approval of the contract and the form of the conveyance of the air rights, seconded by Ms. Horenburger. Upon roll call the Commission voted as follows: Ms. Brainerd - Yes; Ms. Horenburger - Yes; Mr. Weatherspoon - Yes; Mayor Campbell - Yes. Said motion passed with a 4 to 0 vote. (C) Resolution No. 45-88 authorizing the City's extension of a line of ~redit in the amount of $300,000 to the CRA. Mr. Finley advised this resolution authorizes the CRA to borrow up to 3.5 million dollars to build the garage; because the CRA's income and tax increment financing will not be sufficient to cover the debt service on the garage for years three and four, they are coming to the City for support in this effort. The CRA is borrowing both the first year's and second year's interest in order to not put a burden on the City during this early period. The caption of Resolution No. 45-88 is as follows: A RESOLUTION OF THE CITY COMMISSION OF THE CITY OF DELRAY BEACH, FLORIDA, APPROVING THE ACQUISITION OF CERTAIN REAL PROPERTY AND THE CONSTRUCTION AND INSTALLATION OF CERTAIN PARKING FACILITIES AND EQUIPMENT BY THE DELRAY BEACH COMMUNITY REDEVELOPMENT AGENCY; AUTHORIZING THE ISSUANCE OF REVENUE BONDS OR NOTES BY THE DELRAY BEACH COMMUNITY REDEVELOPMENT AGENCY FOR THE FINANCING THEREOF; AUTHORIZ- ING THE EXECUTION AND DELIVERY OF A LINE OF CREDIT AGREEMENT IN FAVOR OF THE DELRAY BEACH COMMUNITY REDEVEL- OPMENT AGENCY; AND CONSENTING TO THE WAIVER OF CERTAIN -2- 8116/88 188 PROVISIONS OF AN EXISTING AGREEMENT WITH THE DELRAY BEACH COMMUNITY REDEVELOPMENT AGENCY. (Copy of Resolution No. 45-88 is on file in the official Resolution Book) Upon question, Assistant City Attorney Kurtz advised they are going to suggest that the Commission pass this resolution subject to coming to an agreement as to the form and final details of the Inter- local Agreement, the Agreement to be on the agenda of August 23rd. Mayor Campbell suggested saying "the form attached hereto is authorized to establish a line of credit" rather than going into an exhibit. Assistant City Attorney Kurtz concurred. Assistant City Attorney Kurtz suggested that the final form of the agreement come back to the Commis- sion; he felt it would be inappropriate at this time to authorize the final language on the Interlocal Agreement. Mayor Campbell clarified that all the Commission is doing this evening is authorizing the issuance of the bonds and saying it is all right for the City to enter into an Interlocal Agreement with regard to establishing a line of credit for some sort of a system, the terms, of which will come back to the Commission for final approval. Ms. Horenburger moved for the adoption of Resolution No. 45-88 amending Section 6 to include only the first sentence and eliminating the rest of the paragraph, seconded by Mr. Weatherspoon for discussion. Frank Brady of McCarter and English, bond counsel for the CRA, distributed copies of the amended resolution to the Commission. Assistant City Attorney Kurtz advised it is his understanding that the CRA is presently contemplating going through validation pro- ceedings on these notes; along with that there is going to be a valida- tion hearing and an opinion letter from McCarter and English forthcoming on certain issues including the public purpose issue which the City Attorney's Office has some concerns with. Mr. Brady stated that, as part of the ordinary duties of a bond counsel in the closing of a financing, they will deliver an opinion to the effect that the project that is being financed serves a valid public purpose and that the bonds themselves are validly issued in accordance with the State law. In addition, they would issue an opinion that the interest on the bonds is exempt from taxation; such opinion letter would be delivered at the closing of the bond issue prior to the expenditure of any funds on project costs. Ms. Horenburger moved to amend the motion on Resolution No. 45-88, that the Commission received in their packets, changing only Section 6, "The capital budget of the agency is hereby amended to conform with the provisions of this resolution to the extent of any inconsistency herewith in order to assist the agency in the financing of the costs of the project. The City may establish a line of credit by Interlocal Agreement". Mr. Weatherspoon amended his second. Mayor Campbell asked where Section 7 came from; it was not in the resolution originally handed out. Mr. Brady advised this section has to do with an outstanding agreement between the City and the CRA which requires that in the event the CRA incurs any debt, in addition to that prior Interlocal Agreement, it would need to get an opinion of a CPA that they covered the debt service on their outstanding debt, plus the new debt, by more than 1.3 times. The CRA at this point does not have sufficient tax increment revenue at the point in time when they issue the new bonds to pay for the parking garage to cover their debt service by that amount. They need, therefore, to have the City consent to having the new bonds and the new line of credit agreement be secured on an equal basis with the prior Interlocal Agreement. Assistant City Attorney Kurtz stated this waiver of the parody test would be for this issue only and does not waive it as to other debt financing they may incur in the future. Upon question by Ms. Horenburger as to any change or addition, Assistant City Attorney Kurtz advised they made it specific on the -3- 8/16/88 189 amount of the note which is 3.5 million dollars (Section 3). Mr. Brady added, for the Commission's edification, the reason for this is that the agency asked the tax lawyers if they could borrow interest as part of this financing and it was decided they could do that and not lose the tax exempt status of the bonds. The City Manager stated that means the City will not have to advance nor participate in this funding for the first two years. Ms. Horenburger moved to amend her motion for the adoption of Resolution No. 45-88 that the Commission received this evening and once again amend Section 6 to reflect the wording in the earlier motion and add Sections 7 and 8, i.e., "The City may establish a line of credit by Interlocal Agreement" along with the capital budget of the agency sentence and "in order to assist the agency in the financing of this project" Mr. Weatherspoon amended his second. Upon roll call the Commissign voted as follows: Ms. Brainerd - Yes; Ms. Horenburger -Yes;. Mr. Weatherspoon - Yes; Mayor Campbell - Yes. Said motion passed with a 4 to 0 vote. Before roll call the following discussion was had: Upon question by Mr. Weatherspoon as to the collateral, Mr. Finley advised that because this is going to be free parking it won't have revenue as a typical garage will and they are not allowed under law to provide a mortgage. ~at they are pledging is the future income to the CRA which is practically automatic as the development inside the CRA District proceeds; basically it is the credit of the CRA pledging its future income and the minor backup of the City that the bank is looking for. The City's liability is limited to the $300,000. Upon question by Mr. Weatherspoon as to what would happen if the Commission did not approve this line of credit until after they came to agreement on the Interlocal Agreement, Mr. Brady stated they are trying to validate the entire financing package, i.e., the CRA's bonds and the agreement between the City and the CRA. The time frame for the court validation hearings and the period in which the taxpayers and residents may appeal that decision is a 60 day period; the CRA needs to have the funds in hand to deposit in court for the acquisition of the land it needs to acquire to construct the parking garage, which would be part of the eminent domain hearing. They need to have that in hand by the 20th of October. Mr. Weatherspoon stated for the record that he is not comfortable with telling someone they can do something before the City agrees upon the terms of how they are going to do it. Jim Watt, attorney representing the Northeast Delray Residents Association, advised that his clients are opposed to the conveyance of the air rights which they believe is the conveyance of public property for a private purpose and very much opposed to the financing arrange- ments for this parking garage. They feel this is using taxpayers' dollars as the money that will come into the CRA through the tax incre- ment financing mechanism is tax dollars that otherwise would go for general governmental services. Mr. Watt stated the CRA is on a very tight timetable and this gives the Commission very little time to digest and consider the different elements. At this point the roll was called to the motion. (D) Approval of Interlocal A~reement between the CRA and the City for the extension of a line of credit by the City to the CRA in the amount of $300,000. Upon question by Mayor Campbell, Mr. Finley advised that the resolution the Commission passed is what they need for their processing purpose, but they are satisfied to bring the Interlocal Agreement back to the Commission on August 23rd when they have ironed out all the details with the various City departments. Mayor Campbell stated that until this is voted upon they anticipate loaning $300,000. Mr. Finley advised they are satisfied with the action taken in helping them meet the deadline. For clarification, Assistant City Attorney Kurtz advised that the agreement that the Commission will be seeing on August 23rd will be -4- 8/16/88 190 for a line of credit for $300,000; the source of funding at this time would be identified as undesignated surplus. Discussion followed with the Commission reviewing the document. Upon question by Ms. Horenburger, Mr. Brady advised that Item B .on Page 9 is simply stating what one of several events of default would be, i.e., the failure of the agency to observe any of the covenants that it agreed to in the agreement. Ms. Horenburger asked what the City and the CRA does if for some reason there is a failure to raise the funds to meet this after the loans and the line of credit run out. Mr. Brady advised that if the tax increment revenues don't materialize, the holders of the bonds are noticed that they might not have sufficient revenues to cover the debt service on their bonds and they just have a bad piece of paper. Mayor Campbell questioned the preliminary cost estimate; he did not see the capitalization of the street improvements. The City Manager advised $275,000 has been allocated in the budget refining that number somewhat. Mayor Campbell asked if perhaps they should amend this, just in case, to give an authorization if the City decides to go that way to issue bonds up to then an amount to include 3.8 million dollars. Ms. Horenburger commented that she is meeting with some County engineering staff, having talked with Mr. Simon about some of the street improvements and the fact that he does pay County road impact fees and we don't have a County real close to this project, that we might look at that or some other method of trying to look at the street. She felt a dialogue was important to look into some other possibilities of funding those improvements. Mr. Finley stated' as a matter of City financial policy it has never been discussed, it has never been understood and the cost estimate which the Commission has is one which has been done with the understanding that the City was going to do the street improvements. The City Manager stated if we could roll it into the total bond package it may allow some additional flexibility for the City in terms Of the letter of credit. Assistant City Attorney Kurtz informs him that it is unlikely that the $300,000 will be drawn upon for at least two years. Tom Lynch, CRA, stated with regard to the $300,000, they are not going to ask the City for that money; it is only in the third and fourth year that they would possibly need it if they don't have enough tax increment financing. Right now the City is not going to loan them any money. Mr. Lynch stated they would look into capitalizing the road improvement at their meeting tomorrow. The City Manager advised they would simply share the debt service. Assistant City Attorney Kurtz advised that if the City wants to do this there should be a motion to reconsider. Ms. Horenburger moved to reconsider Resolution No. 45-88, seconded by Mr. Weatherspoon. Upon roll call the Commission voted as follows: Ms. Brainerd - Yes; Ms. Horenburger - Yes; Mr. Weatherspoon - Yes; Mayor Campbell - Yes. Said motion passed with a 4 to 0 vote. Ms. Horenburger moved to amend Resolution No. 45-88 to just reflect it is the previous motion that was passed except for that change on Page 4, amended to 3.8 million dollars, seconded by Ms. Brainerd. Upon roll call the Commission voted as follows: Ms. Brainerd - Yes; Ms. Horenburger - Yes; Mr. Weatherspoon - Yes; Mayor Campbell - Yes. Said motion passed with a 4 to 0 vote. (E). Discussion of agreement between Atlantic Plaza and the City concerning in lieu of parking fees relative to the Atlantic Plaza site plan modification. Assistant City Attorney Kurtz advised that within the City ordinances in the downtown area a developer has the ability to either provide parking spaces on site, enter into an agreement to provide them off site or with the acquiescence of the Commission, pay for parking spaces at a rate of $2500 per space. Atlantic Plaza is currently working its way toward the Commission for final site plan approval on a modification to allow the Jacobson's Department Store to be there. It is anticipated that there will be in the neighborhood of 300 parking spaces required for them to provide in addition to what they will have to provide on site; this will amount to approximately $750,000. -5- 8/16/88 191 Assistant City Attorney Kurtz advised there is property on the corner of N.E. 1st Street and 7th Avenue that is owned by the developer; it is contemplated that will come to the City as part of this in-lieu of fee and, in addition, there are air rights on the Atlantic Plaza site which the CRA needs to acquire and will acquire them through the City pursuant to this agreement. Mr. Finley presented a rendering of the site plan, pointing out the subject property which is currently being appraised. Assistant City Attorney Kurtz commented that the property will be transferred to the City and then there will be a subsequent agreement to transfer it to the CRA. Whatever the appraised values come to would form part of the in-lieu of parking fee, the other monies to be made up through the execution of a note. He stated the developer is requesting that the note be over a 15 year period in 10 equal annual installments beginning in the fifth year. Mr. Federspiel stated what they will be doing is granting, as part of the overall agreement, the right for Atlantic Plaza to have a connection or access point to the public facility; they will actually retain ownership and construct some portion of the connection. Upon question by Mayor Campbell as to whether the air rights have value, Mr. Finley stated it is technically the location of poten- tially another office building. Assistant City Attorney Kurtz stated they would like the Commission's acquiescence to the idea that Atlantic Plaza can provide parking in this manner by paying the in-lieu of parking fees in accor- dance with the City's ordinance, the final details subject to final site plan approval and the appraisals. David Schmidt, attorney for the developer of Atlantic Plaza, advised the figures they have been using would be anywhere from $300,000 to $400,000, the amount of money Atlantic Plaza would have to pay. The income projections on the Jacobson's development reach a break even point after the first five years, so that is why they are asking for the 15 year period. Mayor Campbell suggested that if the City is going to be extending it that long, they may have to look at some kind of nominal interest figure. Mr. Schmidt stated they discussed the possibility of that time period with an amortization schedule with a balloon at the end so there would be lower payments at the beginning. Ms. Horenburger stated she was not in favor of including the forgiveness provision in the agreement, i.e., that they be locked in subject to a future amendment by another Commission. Mr. Weatherspoon stated he believed some interest should be paid, regardless of the time frame. Ms. Brainerd commented that she has no problem with the forgive- ness provision; she felt if it is not put in the City is penalizing the developer from going ahead with the project now instead of waiting to see what the City does with the in-lieu of. Upon question by Mayor Campbell, Assistant City Attorney Kurtz stated the note would be executed prior to the issuance of the building permit. Assistant City Attorney Kurtz clarified that Mayor Campbell would like staff to look into the fact that the law in existence at the time the note is executed would control on this provision, as opposed to the law now or what it may be in the future. Mayor Campbell advised he is asking staff to determine what the status of a note is for the City's long range planning purposes and reliance and if it is not in the best interest to carry a note that is forgivable, that we still allow the issue to be discussed and give the developer the benefit of an exten- sion. Assistant City Attorney Kurtz noted that the City is getting property; it is contemplated in the agreement that the City is not going to give back the property even if the fee is eliminated. (2) Update on the City-wide beautification project and considera- tion of waiver of contractor's bonding requirements. Frank Spence reported that the City had received no bids on the Linton Avenue landscaping and irrigation project even though seven contractors picked up. plans and specs. All seven were contacted to -6- 8/16/88 192 determine why they did not bid; all said it was because of the require- ment for a bid bond and performance bond. It appears from a review of the law that any project over $200,000 must be bonded; the legal ques- tion is whether the Commission can waive that particular requirement. Mr. Spence advised that irrigation contractors have complained that landscape contractors cannot bid on irrigation and vice versa; there- fore, these need to be bid separately. By doing this and revising the scope of the project downward, staff believes the total project estimate to be $165,000 for landscaping and $50,000 for irrigation and electri- cal, thus eliminating the need for the bonding requirement. The recom- mendation is to authorize staff to revise the scope of this project and to rebid the segments separately. Upon question by Mayor Campbell with regard to the beautifica- tion on West Atlantic Avenue, Nancy Davila, City Horticulturist, advised that the problem is with the approval by FDOT legal department of the permit agreement. The City thought they had the indemnification lan- guage approved both by our legal counsel and theirs; however, they have had a change of legal counsel and have changed their mind and position on what they would accept. Ms. Davila advised she has forwarded the correspondence to the City Attorney's Office and is waiting to hear-how they intend to resolve the issue. The Commission requested they be advised of the outcome as quickly as possible. Ms. Davila advised that next week the Commission will see the final plans for Homewood Boulevard and South Federal Highway between the C-15 Canal and Linton Boulevard; they hope to have the bids out for Homewood immediately. South Federal Highway has the same problem attached to it with the permitting as that is under DOT control.. Upon question by Ms. Horenburger, Assistant City Attorney Kurtz stated he is personally unaware of this latest indemnification problem, but will be looking into this as requested by the Commission. Ms. Horenburger moved to authorize the Administration to rebid the project by rebidding the landscaping, irrigation and electrical segments separately and waive the contractor's bonding requirements, seconded by Mr. Weatherspoon. Upon roll call the Commission voted as follows: Ms. Brainerd - Yes; Ms. Horenburger - Yes; Mr. Weatherspoon - Yes; Mayor Campbell -Yes. Said motion passed with a 4 to 0 vote. (3) Resolution No. 46-88 awardin~ and determinin~ the details of the City's Water and Sewer Revenue Refunding Bonds Series 1988. The City Manager requested that this item be withdrawn; it will be presented at a Special Meeting later in the week. It was the consensus of the Commission to hold the Special Meeting on Friday, August 19th at 5:00 P.M. Mayor Campbell declared the meeting adjourned at 8:34 P.M. City ~lerk ATTEST: M A Y O'.R The undersigned is the City Clerk of the City of Delray Beach and that the information provided herein is the minutes of the meeting of said City Commission of August 16, 1988, which minutes were formally approved and adopted by the City Commission on~f~. -7- 8/16/88 193 City Clerk NOTE TO READER: If the minutes that you have received are not completed as indicated above, then this means that these are not the official minutes of City Commission. They will become the official minutes only after they have been reviewed and approved which may involve some amendments, additions, or deletions to the minutes as set forth above. -8- 8/z6/88