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