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Minutes 66-03-29137 MINUTES OF THE CITY COUNCIL OF THE CITY OF CYPRESS HELD March 29, 1966 The Cypress City Council held an adjourned regular meeting on March 29, 1966, in the City Council Chambers, 5311 Orange Avenue, Cypress, California, at 7:30 p.m., all notices having been posted as required by law, Mayor Frank P. Noe presiding. PRESENT:' Councilmen McCarney, Wright, and Noe ABSENT: Councilmen Gorzeman and Kanel Also present were City Manager/City Clerk Dartell Essex, Administrative Assistant Darrell Dalton, City Attorney James Erickson, Public Works Director Arthur Schatzeder, and Police Chief George Savord. Mayor Noe declared a recess at 7:31 p.m. The meeting was called back to order at 7:34 p.m. with the following in attendance: PRESENT: Councilmen Gorzeman, Kanel, McCarney, Wright, and Noe ABSENT: None CONSIDERATION OF BIDS RECEIVED ON CYPRESS CIVIC CENTER CORPORATION BONDS: The City Manager reported that bids for the Cypress Civic Center Corpor- ation Leasehold mortgage bonds have been opened at 10:00 a.m. this date at the headquarters office of the Bank of America in Los Angeles. The following two bids were received: NAME OF BIDDER AVERAGE INTEREST RATE ON $1,150,000 BONDS Merrill Lynch, Pierce, Fenner,& Smith, Inc. 4.9308% Ctncotta, Inc. 4.9624% The City Manager outlined the following actions to be considered by the City Council at this meeting: 1. A decision as to whether to approve the low bid of 4.9308%. Approval of an Agreement rescinding the original ground lease of November 18th. This action is required due to the fa~ that the City now owns the entire Civic Center site. Approval of a new ground lease between the City and the Cypress Civic Center Corporation, dated March 1, 1966, providing for an annual rental fee from the Corporation to the City of $1.00. Approval of the City Hall lease with the Civic Center Corporation, which at the interest rate of the low bid received, would be $39,716.60 semi-annually. Mr. Essex reviewed the need for the Civic Center facilities and summarized the advantages of the lease-back method of finance, which include the guarantee to the taxpayers that additional tax levies cannot be made to pay for the Civic Center project, and further that the lease-back financing would allow the City to utilize its bonded capacity for future needs. The City Manager requested Mr. Ed Wells, Financial Consultant of the firm of Bartle Wells Associates, to review the present bond market. Mr. Ed Wells addressed the Council, stating that there has been a restriction in the availability of funds for investment; therefore, the low bid received of 4.93% is a fair bid in terms of today's market. The Civic Center Corporation bonds had been given a rating of BBB, which means that they are tax-exempt mutual funds and can be used for trust funds. Mr. Wells outlined the program followed by his firm in advertising the Civic Center bonds, stating that 300 copies of the bond brochure had been mailed directly to bidders. March 29, 1966 Mr. Wells stated the four national syndicates had been set up to bid on the Civic Center issue; however, two had decided not to submit their bids. In view of the lack of available money in today's market, Mr. Wells stated that the City was fortunate to have recieved competitive bids on the bonds. He further pointed out that three weeks ago, the municipal bond market was at its highest point in the past 30 years. He also reviewed the rates which could be expected on General Obligation bonds and advised that State of California General Obligation bonds are now being offered at over 4%. Mr. Wells stated that the annual lease payment of the City to the Civic Center Corporation of approximately $80,000 is substantially less thah 10% of the estimated City budget, and this percentage will decrease each year. He emphasized that a postponement of opening the bids would not have resulted in a lower interest rate since there is no foreseeable major improvement to be expected in the bond market. Any major deferment of this project would result in other costs to the project not directly related to financing. In concluding his remarks, Mr. Wells strongly recommended that the City proceed to approve the lease with the Non-ProfitCorporation with a rental payment based upon the bids received this date. The City Manager advised the Council that if the Civic Center project were delayed at this time, the City could expect the following: Increased construction costs. The low bidder on the Civic Center construction has advised the City that on April 1, 1966, lumber costs will rise considerably. Also, labor rates could be expected to rise approximately $190,000 in throe years for this project. Loss of Administrative Costs. Commitments to the Architect and other consultants in the approximate amount of $65,000 would have to be absorbed. 3. Redesign problems and costs. 4. Limitation of extent of City services in existing facilities. 5. Possibility of employee turn-over. Based on these probable losses, the City Manager recommended that the City approve the low bid of 4.93% and further approve. the required lease agreements with the Civic Center Corporation. Mr. John L. Kennedy, 10002 St. Vincent Circle, Cypress, addressed the Council, reading a prepared statement protesting the method of financing the Civic Center improvements. Mr. Frank Visca, 5782 Lime Avenue, Cypress, addressed the Council, challenging several of the statements made by the previous speaker and questioned the reasons his opinions were not expressed as a member of the Cypress Civic Center Development Committee. Mr. Konnedy addressed the Council, stating that he had ~eq~ested ~o bo oxcused from the Civic Conter Developmont Committee due to businoss commitments. Mr. Kennedy furthor statod that as a rosult of a convorsation with the City Managor, the circulation of a proposed petitlop in opposition to the lease-back method of financing was delayed based upon the promise of the City Manager to suggest adoption by the City Council of an Ordinance similar to that proposed by the initiative petition. City Manager Darrell Essex clarified the conversation referred to by Mr. Kennedy, stating that he had suggested that the Committee formed to circulate the petition consider the effect it might have upon the sale of the Civic Center bonds. He had also advised Mr. Kennedy that if the intent of circulating the petition was not to stop the Civic Center but was a legitimate petition against the lease-back method of financing, he would recommend adoption by the City Council of an Ordinance similar to that proposed by the initiative petition. He reported that since Mr. Kennedy did not inform him of the decision of the Committee, he had not presented the matter to the City Council. March 29, 1966 Mr. Frank Visca again addressed the Council, stating that he did not recallMr. Kennedy ever asking to resign from the Civic Center Development Committee. Discussion ensued concerning the bids received on the Civic Center BOnds. In answer to a question from Councilman McCarney, Financial Consultant Ed Wells stated that the receipt of only two bids was not unusual due to the present condition of the bond market, and emphasized that the City was fortunate to get competitive bids. Mr. wells stated that he would like to correct a statement made by Mr. Kennedy concerning the savings which would accrue to the Cityif general obligation bonds were used instead of the lease-back method of financing. Mr. Wells estimated that the City would save only approximately $3,000 per year, or $75,000 over the total 25-year bond period, if general obligation bonds were available for sale. On the other hand, if General Obligation bonds sold, it would mean that the City tax rate could go over and above the basic $1.00 limit, whereas the tax rate cannot be raised over the maximum amount of $1.00 through the use of the lease-back method. Mr. Wells further stated that the fee received by the Financial Consultant was a flat rate, and is not changed at all by the interest rate obtained. In answer to a question from Mr. City's credit rating of BBB will bonds. As the City matures, the John Kennedy, Mr. Wells stated that the not be changed after the sale of the credit rating will improve. Councilman Kanel stated that as a member of the City Council, he wished to disagree with several of the remarks made by the first speaker at the meeting, and requested that his remarks be made a part of the record. Councilman Kanel's remarks, a copy of which are on file in the Office of the City Clerk, challenged the information that had been presented to the City Council regarding the Civic Center project and concluded that the City Council must proceed with the Civic Center, which represents the best interests of the people of the City. Mr. John Kennedy addressed the Council, requesting Councilman Kanel to refrain from dealing in personalities. Mr. Richard Critelli, 5491 Belle Avenue, Cypress, addressed the Council, stating that he has been associated with the Committee circulating the lease-back petition, and advised that the petition is ~ill being circulated and will be submitted to the City Council prior to the dead- line of April 29th. Mr. Critelli emphasized that he has never made a statement that he is against a Civic Center, but on the other hand, has never stated that he is for this particular civic center. Mr. Kennedy addressed the Council, stating that they had slacked off publications in the papers, not in circulation of the petitions. Councilman Gorzeman stated that although the 4.93% interest rate was higher than what he had hoped, he feels it is realistic when compared to the rates which are now being obtained on General Obligation Bonds, and suggested that the City Council proceed to take the necessary action to accept the low bid on the bonds. Councilman Kanel stated that he would like to hear comments from the other members of the City Council concerning their feelings on the matter. Mayor Noe indicated he felt the Council had no choice except to proceed with acceptance of the bid. He also stated that the City had received a reasonable construction bid and referred to the savings which had accrued to the City through the purchase of the Civic Center site three years ago. In response to an inquiry from Councilman Kanel, Councilman McCarney stated he wished to make no comment. Councilman Wright stated that he has been in favor of the Civic Center for many years and recommended that the City Council proceed with the necessary actions. March 29, 1966 140 It was moved by Councilman Wright, seconded by Councilman Kanel, and carried, to approve the bid of Merrill Lynch, Pierce, Fenner, and Smith, and recommend to the Cypress Civic Center Corporation that this bid of 4.93% be accepted. The following rol~call vote was taken: AYES: 4 NOES: 1 ABSENT: 0 COUNCILMEN: Gorzeman, Kanel, Wright, and Noe COUNCILMEN: McCarney COUNCILMEN: None It was moved by Councilman Kanel, seconded by Councilman Gorzeman, and unanimously carried, to approve the Agreement rescinding the Cypress Civic Center Corporation Ground Lease dated November 18, 1965, and authorize the Mayor to sign and City Clerk to attest subject to approval as to form by the City Attorney. The following roll call vote was taken: AYES: 5 NOES: 0 ABSENT: 0 COUNCILMEN: Gorzeman, Kanel, McCarney, Wright, and Noe COUNCILMEN: None COUNCILMEN: None The City Manager outlined the need for approval of a new Ground Lease Agreement with the Civic Center Corporation, said Agreement providing for a rental payment to the City of $1.00 for the lease of the Civic Center site now owned by the City. It was moved by Councilman Gorzeman, seconded by Councilman Wright, and unanimously carried, to approve the Cypress Civic Center Corporation Ground Lease for the Civic Center land, and authorize the Mayor to sign and City Clerk to attest subject to approval as to form by the City Attorney. The following roll call vote was taken: AYES: 5 COUNCILMEN: NOES: 0 COUNCILMEN: ABSENT: 0 COUNCILMEN: Gorzeman, Kanel, McCarney, Wright, and Noe None None It was moved by Councilman Kanel, seconded by Councilman Wright, and unanimously carried, to approve the City Hall Lease between the Cypress Civic Center Corporation and the City, dated March 1, 1966, which is in accordance with the construction and finance bids received and authorize the Mayor to sign and City Clerk to attest said agreement subject to approval as to form by the City Attorney. The following roll call vote was taken: AYES: 5 NOES: 0 ABSENT: 0 COUNCILMEN: Gorzeman, Kanel, McCarney, Wright, and Noe COUNCILMEN: None COUNCILMEN: None Council~n Kanel requested Councilman McCarney to explain why he had voted against acceptance of the bid, but had voted in favor of the remaining motions concerning the Civic Center; however, Councilman McCarney stated he did not wish to comment on his action. PROGRAM FOR DEDICATION OF TEXACO PARK: The City Manager stated that a tentative program had been established for dedication of the Texaco Park site, and requested the City Council to advise him of any changes desired in the program. The City Council indicated approval of the dedication program as s~,~mitted. PERSONNEL SESSION: It was moved by Councilman Kanel, seconded by Council- man Gorzeman, and unanimously mrried, to call a personnel session at 8:50 p.m. The Mayor called the meeting back to order at 9:40 p.m., all City Councilmen in attendance. ORAL COMMUNICATIONS: There were no oral communications presented at this time. ADJOUrnMENT: There being no further business to come before the City Council, it was moved by Councilman Gorzeman, seconded by Councilman Wright, and unanimously carried, to adjourn the meeting at 9:41 p.m. ATTEST: CITY EL/~O~F TH F CYPRESS March 29, 1966