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HomeMy WebLinkAbout1991.0606.TCRM.Minutes TOWN OF FOUNTAIN HILLS 41110, MINUTES OF THE REGULAR MEETING OF THE FOUNTAIN HILLS TOWN COUNCIL JUNE 6, 1991 A public meeting of the Fountain Hills Town Council was convened and called to order by Mayor John Cutillo at 6:30 p.m., Thursday, June 6, 1991, in the Fountain Hills Unified School District Administration Building located at 14605 N. Del Cambre Ave. , Fountain Hills, Arizona. ROLL CALL - Following the pledge to the flag and the invocation by Father Tot O'Dey of the Church of the Ascension, roll call was taken. Present for roll call were the following members of the Fountain Hills Town Council: Mayor John Cutillo, Vice Mayor Frank Clark and Councilmembers Peg Tibbetts, Mike Minarsich, Charlie Fox, Wally Hudson and Bill O'Brien. Also present were Town Manager Paul Nordin, Director of Community Development Gary Jeppson, Town Attorney Bill Farrell, Assistant Town Attorney Nick Dotterman and Town Clerk Cassie Hansen. AGENDA ITEM #2 - DISCUSS AND POSSIBLY ACT UPON THE SUNSET KIWANIS REQUEST FOR A SPECIAL EVENT LIQUOR LICENSE FOR THE 4TH OF JULY CELEBRATION Councilman Fox made a MOTION and Mayor Cutillo SECONDED the motion to accept the Sunset KIWANIS request for the July 4 celebration. Mr. Tekesky stated that the proceeds from the event would be used for the youth activities in Fountain Hills such as Mud Mania and Say No To Drugs program. He also mentioned that the event would be held on private property and the land owner had given the Chamber of Commerce permission to sell alcoholic beverages on the property. The Chamber had given permission to the Sunset Kiwanis to operate a beer concession within the fenced area of the park during the event. Mr. Tekesky said that the Maricopa County Sheriff's Department, Rural Metro and Valley Security had informed him that they would supply ample security for the event as long as the beer sales would be confined to the fenced area. Mr. Tekesky said that the Sunset Kiwanis would provide the proper insurance if their request was approved and that coverage would be a one million dollar policy for the town. Mayor Cutillo asked Mr. Tekesky to state his name and address for the record and Mr. Tekesky replied, Steve Tekesky of 17261 Kirk Lane, Fountain Hills, Arizona. Dennis Contino from 14661 N. Kings Way stated that he felt alcohol should not be sold at the function and that the Chamber should keep the event local and not advertise all over the valley. Mr. Hansen from the public stated that no beer sales had been mentioned in the advertising of the event and that there was no intention of changing or cancelling the event. He added that he felt this would be done in good taste. Ms. Kelly of 16276 East Rosetta, stated that she felt the Council could not do anything at this time to stop the fiasco however she was remembering how the event went two years ago. Steve Koover of 16430 Monaco stated that the Town had been very concerned about Beeline Highway for a long time. In this regard his concern was that if the Town condoned the sale of alcohol in the park to thousands of people who would be driving back to the valley after a long day, there would be a double standard involved. Mayor Cutillo said that they had been assured by the police and the fire department that everything would be under Town Council Regular Meeting Minutes 6\6\91 Page 1 of 6 control and that no more than twenty thousand people were expected at the event. Mayor Cutillo called for a roll call vote and the results were as follows: Vice Mayor Clark nay Councilwoman Tibbetts aye Counccilman O'Brien aye Mayor Cutillo aye Councilman Hudson aye Counccilman Fox aye Councilman Minarsich nay The motion CARRIED five aye votes to two nay votes. AGENDA ITEM #3 - DISCUSS AND POSSIBLY ACT UPON RESOLUTION 1991-26, APPROVING THE PLANS. SPECIFICATIONS AND ESTIMATES AND DECLARING ITS INTENTION TO ORDER THE IMPROVEMENT OF A PORTION OF THE TOWN OF FOUNTAIN HILLS KNOWN AS LOS ALTOS HILLS IMPROVEMENT DISTRICT BY THE CONSTRUCTION OF CERTAIN IMPROVEMENTS INCLUDING THE CONSTRUCTION. PAVING AND LANDSCAPING OF CERTAIN ROADS AND DRAINAGE FACILITIES; ALL AS SHOWN ON THE PLANS; DESIGNATING SUCH IMPROVEMENT AS THE LOS ALTOS HILLS IMPROVEMENT DISTRICT; DETERMINING THAT IMPROVEMENT BONDS WILL BE ISSUED TO FINANCE THE COSTS AND EXPENSES THEREOF AND DECLARING THE WORK OR IMPROVEMENT TO BE OP MORE THAN LOCAL OR ORDINARY PUBLIC BENEFIT; AND THAT THE COSTS OF SAID WORK OR IMPROVEMENT WILL BE ASSESSED UPON THE LOS ALTOS HILLS IMPROVEMENT DISTRICT; AND PROVIDING THAT THE PROPOSED WORK OR IMPROVEMENT WILL BE PERFORMED UNDER THE PROVISIONS OF 48-571 THROUGH 48-621 INCLUSIVE. ARIZONA REVISED STATUTES, AND ALL AMENDMENTS THERETO. Mr. Nordin said that he would like to spend some time in discussion with the Council and make his fifteen minute presentation which was really more for the public than the Council. Mr. Nordin stated that approximately one year ago when he came to Fountain Hills, he spent much time concentrating on figuring out what the Council expected of him. Mr. Nordin stated that during the course of his extensive interviewing process with the Town, prior to being offered the position of Town Manager, he discovered that the Town Council and the community were, for the most part, pro-growth and desirous of growing past its present population of ten thousand. He added that the town was initially intended to grow to thirty-five to forty-five thousand people when built out. He also said that one of the things that should be considered as a necessary and natural outgrowth of the policy decision would be the use of improvement districts. Mr. Nordin said that the bond method of financing was a tried and true method and he stated that the improvement district method was appropriate for this project. He explained that improvement districts were designed to build roads, sewer lines, water lines and other infrastructures. Mr. Nordin said that he had asked the Town's financial consultants and the Town 's Bond Attorney to come up with some examples of towns that had used similar programs. He cited Scottsdale as having one such raw land deal and he added that Scottsdale had a very well established improvement district procedure. Mr. Nordin stated that in 1988 the City of Showlow did a raw land deal with a single owner and in 1985 the Town of Suprise had a bond issue on a raw land deal. Mr. Nordin stated that the Los Altos Hills improvement district would only include the construction of roadways, and the drainage and landscaping that would go along with them and would not include any sewer or water lines. Mr. Nordin said that the estimated cost for the Town Council Regular Meeting Minutes 6\6\91 Page 2 of 6 improvements would be $6.35 million and stated that the resolution before the Council was a resolution of intent which was the first step in the establishment of an improvement district. Mr. Nordin explained that the resolution was to give the appropriate land owners notice that an improvement district was being considered for their property and give the public a thirty day notice that this type of procedure was being considered. Mr. Nordin said that the tentative date for the next step, if teh Council acted favorably on the resolution before them, was July 10 and at that time there would be a resolution before the Council actually ordering the improvements. He added that between now and the July 10 meeting, there would be time for public comment. Mr. Nordin said that the resolution had been tabled many times and the reason for that was that the developer of the land, the Felker Group, had not complied with all the engineering requirements from Willdan and Associates. Mr. Nordin added that the Town would assume a contingent liability with this type of process although no money would pass directly to the developer, it would all go to the town. Mr. Nordin said that the Town would set the standards for the construction of the roads and would maintain ownership until the project was completed. The multi- improvement district would enable the Town to construct the project and, in effect, not pay for the construction but bill the property owners for the cost of the improvements. Mr. Nordin went on to say that it was the staff's responsibility to insure that the Town was adequately protected and that staff was currently going through the process of analyzing whether or not the contingent liability would ever become a reality. Mr. Nordin stated that Mr. Felker had been associated with the project since day- one and that he wanted to clarify that it was not Mr. Felker that was the monetary force behind the project, but a group of insurance companies, Milwaukee Mutual, Secura and West Bend Insurance from Milwaukee, Wisconsin. Mr. Nordin said that the Town 's financial investigations had centered on the financial stability of the insurance companies. Mr. Nordin said that he would then address contingent liability and what would continue to be done between then and July 10 and whether it would become a reality. He went on to say that there were two very important safeguards that were presently in place that would work to insure that the contingent liability would not become a reality. The first safeguard he addressed was the super statutory lien and he explained that it would involve three entities, the financial end of the project, the developer and the town manager. Mr. Nordin said that, if for example, the developer defaulted on his payments, the town manager would have the ability, through the super statutory lien, to take the developer's property. The financial end of the project would then not be in first position and the bond holders would take first position and they would take over the developer's land free and clear. Mr. Nordin continued, saying that the bond holders could sell the property for however much the market would bear and hopefully generate enough revenue to pay off the debts. The second safeguard that Mr. Nordin addressed was the financial stability of the project itself which in this case would be the insurance companies that he referred to earlier and he added that in the days forthcoming the staff would continue to obtain financial statements from those entities. Mr. Nordin stated that Mr. Felker had been in a chapter eleven action involving a Scottsdale project. Mr. Nordin said that he would cite several options that the'Town had in terms of the financial security that he had mentioned before. Mr. Nordin said, first, they could investigate the possibility of the insurance company consortium buying the bonds and that would provide the ultimate security in terms Town Council Regular Meeting Minutes 6\6\91 Page 3 of 6 of collateralization in order to protect the Town one hundred percent. He said that another possibility was concurrent construction of the road improvements and golf course or the sewer lines adding that this would insure the project would have improved, developed land on it at the same time that the improvement district was making the road improvements. Mr. Nordin said that another way to insure financial security would be to require that the company post full faith credit bonds and reserve funds could be established in case the bond payments were not made. Mr. Nordin said that he recommended approval of the resolution of intention as he had outlined it, adding that if the Council did approve the request, staff would continue to go forward with the studies of the project. Mr. Nordin also added that the appraised value of the Los Altos Hills project was $26 million and therefore the coverage ratio would be approximately four to one which, he added, was very good. Councilman Minarsich stated that in case of a default, the Town would only be responsible for the semi-annual payments and not the seven million dollars all at one time and asked what the payment figure would be. Mr. Nordin responded that the annual payments, which would be a principal payment, would range from $225,000 to $700,000 with annual interest of $674,000 down to $59,000 in the last year of the bond issue. Mr. Nordin stated that the annual debt service would range from $899,000. to $764,000. and that all of the figures were based on a fifteen year schedule. Vice Mayor Clark asked that Mr. Nordin run through what Tempe had done with their situation and he said what if the developer could completely build out Los Altos Hills within a year so that there would not be time for inflation to effect the project, what would the guess be as to the assessed value at the completion of the project. Mr. Nordin responded that the activities that a Town could be engaged in were very limited and he added that Tempe had been involved in some very aggressive growth activities. Mr. Nordin said Tempe obtained many parcels of land in the downtown area by eminent domain and condemnation and in the beginning, actually gave some of that land to developers in order to construct some of the buildings. In response to Vice Mayor Clark 's second question, Mr. Nordin turned the floor over to Mr. Casillas, from the Peacock group, and stated that in terms of potential resale cost to other developers to build out, a figure of approximately $85 million was used. He said that did not include any homes being constructed on the property, so if they wanted to figure in one hundred homes at one hundred thousand each, that would add another $10 million. Mr. Casillas said that Maricopa County Tax roles would be figured at a ninety percent value, which would be $85.5 million and assuming the lowest assessed value ratio which is residential property at ten percent, that would be $8,550,000 of new assessed value. He added that this did not take into consideration any commercial development on the property. Vice Mayor Clark stated that in that case there would be an approximate ten percent across the board tax reduction for the tax- payer. Mr. Nordin stated that as the Town 's assessed value increased it would spread the tax burden around to a greater extent and therefore, the individual cost would be less. Mr. Nordin said that he had always thought that one of the main driving forces behind the community's desire to continue to grow was the property value. Mrs. Petroff asked how the improvement district differed from a road district with regard to employees and did the Town currently have a road district. Councilman Fox said that there were no road districts. Mrs. Petroff asked if the citizens would be getting more for their money with the improvement district and Town Council Regular Meeting Minutes 6\6\91 Page 4 of 6 Mr. Nordin answered that a common question among the citizens was if a road district and an improvement district were the same or similar and they are not. Mrs. Petroff asked if other areas of Fountain Hills would be able to use the district or would it be just for Los Altos Hills. Mr. Nordin stated that it only would be for the road construction in that area and that they would be public roadways and not private. Mr. Nordin stated that his example using the city of Tempe was not to be mistaken as the avenue that he thought the Town of Fountain Hills should take. Mr. Thomas addressed the subject of contingent liability and said that Vice Mayor Clark 's point regarding the assessed value of the town being approximately $85 million was inaccurate and that the appraised value was approaching $700 million. He added that the homeowner was assessed at ten percent, commercial property was at twenty-five percent and vacant land was sixteen percent, making the assessed valuation approach $100 million. He continued, saying that he wanted to propose a very simple rule that on the $100,000 home, having a market value of $125,000, the contingent liability for each $100,000 of home value would be $635 and if they had to pay the interest payments on the debt that would amount to approximately $45 per $100,000 of assessed value annually. Mr. Gendler asked if the developer would continue with the project should the improvement district not be formed and Mr. Nordin called on Mr. Scott Rose from the Felker Group to answer the question. Mr. Rose stated that conventional methods of financing for projects as these really were not available in this market and whether or not they would go forward would be dependent upon if they could obtain that sort of financing. He added that this would be tax free financing and therefore could be at a lower tax rate. Mr. Ron Smith from the Felker Group stated that the golf course construction would cost approximately $7 million and the total, including all the amenities would be approximately $10.5 to $11 million that the developer would be contributing. Mr. Songer said that he felt there should be some guarantee to the tax payers and that this would be a risky project, suggesting that the three insurance companies should put some money in escrow as a show of good faith. Councilman Fox stated that there had already been conversation with the insurance companies about a type of added securities from them. Mr. Saladino asked if the $26 million appraisal was with or without improvements and Mr. Farrell invited him to go by the town offices and read it as he had not had time to read it in its entirety. Mrs. Sniper asked if the insurance companies were going to take the risk on the roads as well as the town and the owners and Mr. Nordin stated again that they were in the process of investigating different methods that the insurance companies could post a guarantee on the bonds. Mr. Rose stated that the insurance companies were already taking a risk on the project in as much as they already had $9 million hard cash invested in the project and another $8.2 million in a second position lien on the property. He continued that the bond money that would be taken out on the property would be in first position and should the bonds not be paid, they would lose the land and the money they had invested. Councilman Fox reiterated that there was no possibility of the Felker Group obtaining the bond funds. Mr. Coover asked what the priorities were concerning the road construction and the golf course, etc. , and what would happen if the golf course grading was completed and the developer ran out of money. Mr. Smith stated that the construction of the roads and utility trenches were scheduled for the same time as the golf course and that the roads and the golf course would be graded almost simultaneously. 46t,. Town Council Regular Meeting Minutes 6\6\91 Page 5 of 6 Mayor Cutillo made a MOTION to pass resolution 1991-26 as written and Councilwoman Tibbetts SECONDED the motion. Vice Mayor Clark requested clarification on the date of the hearing and Councilman Fox stated that it would be Wednesday, July 10, at 6:30 p.m. in the School Administration Building. Motion PASSED unanimously. AGENDA ITEM # 4 - CALL TO THE PUBLIC Mrs. Petroff asked for clarification on the transportation issue in Fountain Hills and that she would like to see a local van or something and Mayor Cutillo referred her to Mr. Nordin after the meeting. AGENDA ITEM #5 - ADJOURNMENT Councilman Fox made a MOTION to adjourn. SECONDED by Councilwoman Tibbetts and CARRIED unanimously. The Town Council adjourned at approximately 8:05 p.m. TOWN F PO AIN HIL By: /(74 Jotn . Cutillo, Mayor ATTEST: c.L.a&L.k �IJ• �`� 4-�^J Cassie B. Hansen, Town Clerk CERTIFICATION I hereby certify that the foregoing minutes are a true and correct copy of the minutes of the Regular Meeting held by the Town Council of Fountain Hills on the 6th day of June 1991. I further certify that the meeting was duly called and that a quorum was present. DATED this I S*k. day of August 1991. Cassie B. Hansen, Town Clerk Town Council Regular Meeting Minutes 6\6\91 Page 6 of 6