SPECIAL CITY COUNCIL MEETING
Tuesday, April 12, 2005 7:00 p.m.
Public Safety Building
3925 W Cedar Hills Drive, Cedar Hills, Utah
This meeting was held electronically via telephone to permit one or more of the Council members to participate.
Present: Mayor Mike McGee, Presiding
Council Members: Darin Lowder, Melissa Willie, Rob Fotheringham, Jim Perry, James Parker
Kim Holindrake, City Recorder
Others: Brad Patterson - Ballard Spahr, Carl Volden, Brent Uibel, David Kirkpatrick, Russ Smart (7:30 p.m.), Gloria Smart (7:30 p.m.)
SPECIAL COUNCIL MEETING
1. This special meeting of the City Council of the City of Cedar Hills, having been posted throughout the City and the press notified, was called to order by Mayor McGee at 7:05 p.m.
Invocation given by Mayor McGee
Pledge of Allegiance
2. Consideration for Adoption of a Resolution Providing for a Special Bond Election to be Held on June 28, 2005, for the Purpose of Submitting to the Qualified Electors of the City of Cedar Hills, Utah County, Utah, the Question of the Issuance of not to Exceed $7,000,000 General Obligation Bonds to Refinance the Cost of Acquisition and Construction of the Cedar Hills Golf Course and Related Improvements; Approving the Form of and Directing the Publication of a Notice of Election, the Ballot Proposition and Other Voter Information; and Related Matters
See handouts. Brad Patterson explained that this is a resolution calling for a special bond election. There are new State Statutes in place requiring a 72-day notice prior to the election. A special election can be held twice yearly, the fourth Tuesday in June and the regular November date. The adoption of the resolution gets the process started. A General Obligation Bond is paid from taxes levied on taxable property. This bond election will authorize a series of obligation bonds to refinance the golf facility not to exceed 7,000,000 and not to exceed 30 years. The resolution authorizes publications in the newspaper, the preparation of ballots and the mailing of a notice to residents. Once the election is held and if approved, then the bonds will be eventually sold to a purchaser with interest rates and maturity schedules set. This is fairly standard. C. Perry asked if the City issues a revenue bond instead, is this resolution still valid. Brad Patterson stated that under Utah statutes, the City does not have to have an election to authorize a revenue bond but Cedar Hills has an ordinance requiring an election. The City is not obligated to go ahead with a General Obligation Bond. C. Parker asked if the resolution had to state General Obligation Bond or could it just state bonds. Brad Patterson stated that the City has to specify what kind of bond.
Brent Uibel asked if the purpose of this process was to retire the Zions Bank Loan, that voters want to understand where they stand and should the City have done this before. Mayor McGee stated that this would retire the existing bond. The loan before was a bridge loan and permanent in 2007. This is all about paying principle now. What was done before was not wrong. C. Perry stated that this ensures that all options are available. David Kirkpatrick asked if the bond were to pass in June, is the City obligated to take out the bonds. C. Perry stated that prior to the election, the City Council would be very specific as to the terms of and the bond and the amount. Then the City would move forward to pay off the existing loan. The City won’t borrow more than it needs. The plan is to improve the finance arrangements and lower the interest rate. Mayor McGee stated that the City is working on other options as well. The City wants to ensure the best position possible. David Kirkpatrick asked if the City had enough of a bond rating. C. Fotheringham stated that the City doesn’t have a bond rating because it is too small. He also would like to have seen the paragraph in the notice explained better. Mayor McGee stated that the City does not have money set aside for a special election. Brad Patterson stated that this is the refinancing of the project. The City doesn’t have $7,000,000 right now. Attorneys’ fees will cost between $15,000 and $25,000 to complete the entire bond process. These costs and the election costs are all part of the final amount of the bonds.
C. Fotheringham would like to see election costs at the next meeting.
C. Parker questioned the significance of the language “desires to submit” and “determine to” instead of using “may.” Brad Patterson stated that the City has to state its desire to take this action. If the Council decides to go ahead and take a different course of action, then the Council can repeal this resolution. Even if the bond election passes, the City isn’t obligated to issue the bonds. C. Perry stated that the City is hoping for terms from Zions Bank that will not have the City paying interest this year. The City is paying $30,000 a month in interest. The City will save a vast amount of money. Brent Uibel suggested that the Council get legal counsel on the existing bond to better understand options for its resolve. Mayor McGee stated that the City has received legal counsel on the options and what would happen with regards to adopting this resolution or not. This action tonight is one of the other options. C Parker stated that he doesn’t have a copy with him of the scenarios given by Zions Bank. He is concerned that with the total payments for the scenarios may be greater than the total payments under the existing agreement. Mayor McGee stated that the interest rate is significantly less. C Perry spoke to Eric Johnson, City Attorney, who thought that the previous proposals from Zions Bank had been retracted. Mayor McGee stated that he spoke to Rick Burkenshaw and they only retracted the help on the interest payments. Zions Bank is willing to go with any of the 10 options. The interest rate is at 2.79%. C. Parker stated that the City has no firm commitment from Zions Bank under any terms. Mayor McGee stated that the City can negotiate again. The City needs to do this election work now. C. Fotheringham stated that the first option is to look at going with a longer lease revenue bond. He would have expected that the City Council would have looked at this as the first option. C. Perry asked if the City could put two options in the resolution, Lease Revenue Bond and General Obligation Bond. Discussion as to how that would work on the ballot, etc. and that the bond has to pass with more than 50%. Two options would split the percentages and nothing would pass.
MOTION: C. Willie - To approve Resolution 4-12-2005A, Consideration for Adoption of a Resolution Providing for a Special Bond Election to be Held on June 28, 2005, for the Purpose of Submitting to the Qualified Electors of the City of Cedar Hills, Utah County, Utah, the Question of the Issuance of not to Exceed $7,000,000 General Obligation Bonds to Refinance the Cost of Acquisition and Construction of the Cedar Hills Golf Course and Related Improvements; Approving the Form of and Directing the Publication of a Notice of Election, the Ballot Proposition and Other Voter Information; and Related Matters. Seconded by C. Lowder.
Aye - C. Lowder
Nay - C. Fotheringham Motion passes.
This meeting was adjourned at 7:35 p.m. on a motion by C. Fotheringham, seconded by C. Willie and unanimously approved.
/s/ Kim E. Holindrake
Approved by Council: Kim E. Holindrake, City Recorder
April 19, 2005