Minutes of the Centerville City Council special meeting held Tuesday, March 24, 2009 at 6:00 in the Centerville City Council Chambers, 250 North Main Street, Centerville, Utah.

MEMBERS PRESENT
Mayor    Ronald G. Russell

Council Members  Paul A. Cutler
Justin Y. Allen
Ken Averett
Sherri Lyn Lindstrom
Lawrence Wright

STAFF PRESENT
Steve Thacker, City Manager
Blaine Lutz, Finance Director/Assistant City Manager
Lisa Romney, City Attorney
Cory Snyder, Community Development Director
Delbert Dillingham, Court Clerk Supervisor
Randy Randall, Public Works Director
Bruce Cox, Parks and Recreation Director
Kathy Streadbeck, Recording Secretary 

VISITOR
Jason Burningham, of Lewis, Young, Robertson & Burningham 
 
CONSIDER PARAMETERS RESOLUTION NO. 2009-12 – Consideration for adoption of a resolution authorizing the issuance and sale of not more than $16,000,000 aggregate principal amount of sales tax revenue bonds, Series 2009, of Centerville City, Utah; fixing the maximum aggregate principal amount of the bonds, the maximum number of years over which the bonds may mature, the maximum interest rate which the bonds may bear, and the maximum discount from par at which the bonds may be sold; providing for the publication of a notice of public hearing and bonds to be issued; providing for the running of a contest period; and related matters.

Blaine Lutz, Finance Director, reviewed the bond process, including bond insurance with regard to financing the proposed Cultural Arts Center. It seems the bond insurers are concerned about this being a Redevelopment Agency (RDA) project. Nationally, RDAs are a higher risk; therefore, bond insurers will not provide bond insurance for this project. Without bond insurance the interest rate on the bond would be significantly higher (around 4%, a difference of about one million dollars over the life of the loan). Historically, this has not been the case, but with the current economic climate down-turned, bond insurers are apprehensive. Mr. Lutz explained if the City did a sales tax revenue bond for the proposed Cultural Arts Center, then the needed bond insurance could be secured and the City would be able to get a better rate on the bond (around 3%). He explained the RDA would still be able to own and operate the facility as planned under this scenario. Staff does not see this scenario as a greater risk, as the City has already pledged sales tax as security for this project’s bonds. This scenario is a little different than previously planned and would require additional agreements and a public hearing, but would result in bonds issued at lower interest rates. Staff is asking the Council to make a decision on the proposed Parameters Resolution tonight in order to keep this process timely. If the City Council is not comfortable with the proposed resolution then staff can move forward with the RDA bond, at a higher rate.

Councilman Wright questioned why the City does not take ownership of the proposed Cultural Arts Center and allow the RDA to manage the facility.

Mr. Lutz explained there is more flexibility if the RDA owns the facility. The City could take ownership, but there are more laws that would govern the operation of the facility, especially with regard to private functions or sale of the facility, if proved necessary.

Jason Burningham, LYRB, said he met with bond counsel to discuss these issues. He said there is an advantage to the RDA retaining ownership of the proposed Cultural Arts Center. Private activities can be more easily managed if the RDA owns the facility. He said the City could own the facility and the RDA could operate the facility, but there are more rules and use regulations if the City owns the facility. He also said there is no reason why the City can’t finance the project. The local government Bonding Act specifies that the City can issue sales tax bonds for the purpose of acquiring, constructing, maintaining, or developing facilities (including a theater) and those facilities can be owned jointly with another political subdivision or can be owned solely by another political subdivision, such as an RDA. He also explained the City could use both the RAP tax and the RDA tax increment to finance this project. He explained the RAP tax does not preclude who can finance a project or how the funds are distributed as long as they are used on a qualifying project, which this is.

Mr. Burningham explained the conditions of the market are such that it is more economical for the City to finance this project as discussed by Mr. Lutz. There is a significant difference in the loan amounts and interest rates of the bond with the City procuring the bond vs. the RDA. If the City decides to proceed with the sales tax bond, then the Interlocal Agreements may need to be amended and a new public hearing will need to be held. If all goes as planned, the bond could be closed by early May 2009. 

Councilman Wright questioned why the proposed resolution provides for $16 million when the total project cost estimate is only $14.3 million. Mr. Burningham said the amount on the proposed resolution could be lowered.

Mayor Russell said the City has already committed to pledging sales tax for this project. It seems foolish not to get the best deal possible on the bond. He said it does not make sense to change ownership of the facility when the County is already providing their revenue to the RDA. All documents involved in this process already show the RDA as the owner and it seems counter-productive to change ownership at this point. He also said the $16 million bond limit listed on the proposed resolution will allow for flexibility. Councilman Allen agreed.

Councilman Wright made a motion to approve Parameter Resolution No. 2009-12, authorizing the issuance and sale of not more than $16,000,000 aggregate principal amount of sales tax revenue bonds, Series 2009, of Centerville City, Utah; for the purpose of constructing a Cultural Arts Center and related improvements; calling a public hearing and establishing a time, place, and location for said public hearing; providing for publication of a notice of public hearing and bonds to be issued; providing for a pledge of the City’s sales tax for repayment of the bonds; fixing the maximum aggregate principal amount of the bonds, the maximum number of years over which the bonds may mature, the maximum interest rate which the bonds may bear, and the maximum discount from par at which the bonds may be sold; providing for the running of a contest period; and related matters; with any non-substantive changes as needed. The motion was seconded by Councilwoman Lindstrom and passed by unanimous vote (5-0).

Councilman Wright made a motion to go into a Redevelopment Agency (RDA) meeting.  The motion was seconded by Councilman Averett and passed by unanimous vote (5-0).

At 7:07 p.m. an RDA meeting was held. In attendance were: Ronald G. Russell, Chair; Ken Averett, Vice Chair; Directors Justin Y. Allen, Paul A. Cutler, Sherri Lyn Lindstrom, and Lawrence Wright; Steve Thacker, Executive Director; Blaine Lutz, Finance Director; Lisa Romney, City Attorney; and Kathy Streadbeck, Recording Secretary.

At 7:23 p.m. the special City Council meeting was reconvened.

WORK SESSION – Financial Planning with Department Heads

Cory Snyder, Community Development Director, reviewed the proposed budget for his department for the next three years. He said he does not foresee a significant change to his budget. He said with the down-turned market, there has been a significant decline in revenues from building. He explained this is a good time to do some future planning as housing needs will likely change as time goes on. Mr. Snyder said he does anticipate some consulting fees with the Shorelands project.

Councilman Cutler questioned if a full-time building inspector is still needed, given the decreased building market. Mr. Snyder said the full-time building inspector has not been consistently busy, but with the proposed Cultural Arts Center that may soon change. This position, along with the Contract Building Inspector, may be re-evaluated over the next several quarters. 

Councilman Wright questioned who is responsible for the budget and maintenance of the Whitaker Museum. He also questioned which department deals with the funds for the proposed Deuel Creek debris basin.

Steve Thacker, City Manager, said the Whitaker Museum has its own budget and will be discussed by the City Council at a later date. He also said the budget regarding the debris basin will be reviewed and discussed at a later date. Mr. Thacker said the Judge will also present several budget items to the City Council on April 21, 2009, relating to the impact of State legislation in 2008.

Delbert Dillingham, Justice Court Clerk Supervisor, presented the court’s budget for the coming years. There are no major changes with the exception of the City Hall remodeling project which will bring the court up to the main floor. He explained the court’s purpose is not to be a revenue generating department.

Randy Randall, Public Works Director, reviewed his department’s three-year budget summary, including the Public Works building, drainage division, street division, and water division. He explained the change-out program for equipment (i.e., excavator and backhoe) stating this is much more cost effective than keeping the equipment for many years. He said he would also like to keep all trucks within a 10-year age limit. Mr. Randall also reviewed the City Council’s goals with regard to his department as listed in the March 3, 2009 City Council work session minutes.    

Mr. Thacker said he is not convinced that a street sweeper is worth the cost as listed in Mr. Randall’s 2011-2012 summary. Mr. Randall said this is a high cost and high maintenance item that may or may not prove appropriate. This is something that can be re-evaluated over the years.

Bruce Cox, Parks and Recreation Director, reviewed his department’s proposed three-year budget. This department includes parks, building maintenance, recreation, and cemetery. He said he has a need for an additional full-time employee with the new parks that have been completed over the recent past and with the Legacy Parkway trail and the proposed D&RGW trail. Mr. Cox also reviewed the City Council goals as they relate to his department.

Mr. Thacker said if a new full-time employee is hired in the Parks and Recreation Department, he would like the Parks and Recreation Director to assume some Emergency Management responsibilities relating to citizen preparedness. He also said the question of how to maintain the Legacy Parkway Trail still needs to be explored. Currently, there is no money for capital projects as there has been a significant drop in park impact fees with the down-turned housing market. Any capital improvement projects regarding parks will most likely not be added to the budget. 

Mayor Russell questioned if the City’s baseball program should be moved to the South Davis Recreation District. Mr. Cox said program attendance has dropped significantly over the past couple of years. This may be an option that should be explored further.

Councilman Cutler questioned if there was a need for any funding for the parks central control irrigation system. Mr. Cox said the first phase of this project (three parks on-line with the central control irrigation system) will be ready to test when the water is turned on in April. He said they will evaluate the system over the next year. If the system works as planned, then the expansion of the project will be proposed for the budget for 2010-2011.  

Councilman Averett asked Mr. Cox how he felt about skate parks. Mr. Cox said if you build a skate park, then you need to build a really good one. He said he does not believe Centerville has the resources or the demand for a skate park. Centerville is not big enough to afford or maintain a project of that size. He said he believes a skate park should be run as a swimming pool in a controlled environment. A South Davis Recreation district skate park would be better than a municipal skate park.

Blaine Lutz, Finance Director, reviewed his department’s proposed budget. He said budgeting over the past couple of years has been easy, but this year, with the down-turned market, it will prove more difficult. He reviewed the projected wage, health care, and retirement cost increases. He also reviewed major capital investments, fund balance, and revenues over the past several years. In the coming fiscal year, revenues will be short and expenditures are estimated to exceed those revenues. He said the City has had several good years and there is enough fund balance to make up the difference for this coming fiscal year. Mr. Lutz said the City will need to be frugal this coming fiscal year in order to keep a balanced budget. He recommended that major projects/equipment be put on a waiting list, that no new programs/services be started, and that wage adjustments be watched closely.

Mr. Thacker said he will consider all this information and compile a Proposed Budget. This Proposed Budget will be submitted to the Council for their review in early May. 

The meeting was adjourned at 9:30 p.m.

______________________________    ______  4-07-09___________
 Marilyn Holje, City Recorder                                      Date Approved

 _____________________________________
Kathleen Streadbeck, Recording Secretary