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Minutes 03-01-90MINUTES OF THE SPECIAL CITY COMMISSION MEETING HELD IN COMMISSION CHAMBERS, CITY HALL, BOYNTON BEACH, FLORIDA THURSDAY, MARCH 1, 1990 AT 5:00 P. M. PRESENT Gene Moore, Mayor Robert Olenik, Jr., Vice Mayor Lillian Artis, Commissioner Arline Weiner, Commissioner Lee Wische, Commissioner J. Scott Miller, City Manager Sue Kruse, Deputy City Clerk Mayor Moore called the meeting to order at 5:05 P. M. Commission Statement Mayor Moore asked if everyone on the Commission received a Copy of the statement and said they would talk about it at the next meeting. Position of City Clerk Since Betty Boroni had retired, Mayor Moore asked if Sue Kruse would become the City Clerk. Vice Mayor Olenik inquired whether there was a memo to the effect that Mrs. Boroni retired. City Manager Miller replied that Mrs. Boroni gave notice a month ago, when he first came on board, ~hat she was going to retire the end of February. The posi- tion is under Civil Service procedures now, and two indivi- duals expressed an interest in that appointment. Mayor Moore felt Sue Kruse should be moved up, but he agreed with City Manager Miller it would be City Manager Miller's call. William I. Niles ~ayor Moore referred to Mr. William I. Niles, 24 Oaks Lane, Boynton Beach, FL 33436 "raking the City over the coals", and he requested that he be asked to attend a Commission meeting. General Obligation Bond Issue (Judgment Bond) for Tradewinds Settlement City Manager Miller told Mayor Moore this meeting was called by him in response to a letter dated February 27th from Mark Raymond, Esq., Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P. A., West Palm Beach, FL. City Manager Miller was informed by Mr. Raymond's office that the State Attorney's Office indicated they will vigorously challenge ~he validation of the judgment bonds. If, by chance, the MINUTES - SPECIAL CITY COMMISSION MEETING BOifNTON BEACH, FLORIDA MARCH 1, 1990 Circuit Court does validate the bonds, Office is approximately 98% sure that the State Supreme Court. the State Attorney's they will appeal to In the interim, City Manager Miller said the State has filed a Motion to Dismiss, which will be heard Friday, March 9, 1990 at 9:30 A. M. That is the same time the City is to have its bond validation hearing. The Motion to Dis- miss hearing may suppress the bond validation hearing. There may not be a bond validation hearing on Friday, March 9th. Another date may have to be set on the calendar for that hearing, pending the decision of the Judge on the Motion to Dismiss. John Flanigan, Esq., Moyle, Flanigan, Katz, Fitzgerald & Sheehan, P. A., apprised the Commission Mr. Raymond had not arrived at the meeting because he was caught in a traffic jam on 1-95. He stated it was obvious that no matter what happens to the validation, the validation will not zip on through, so the City will not be able to have the refunding bonds issued by the time the City needs to make a first payment on the judgment. The Commission was now faced with the decision of trying to decide what it wanted to do in the interim until the validation could be completed (whether they wanted to go to short term bonds or some other kind of financing). Mr. Flanigan supposed one other choice would be to let the interest accrue on the judgment and hope the judgment creditor does not attempt to levy. Mayor Moore asked whether going with tax anticipation bonds Would involve another validation and doubling of the costs and fees. Mr. Flanigan answered negatively and added that his firm would not charge any additional fees for doing that. They were talking about doing bonds for less than a year, which would clearly not be subject to any referendum requirement, and using them to pay off the judgment. They would then proceed with the validation procedure on the long term bonds and refund the short term bonds with the long term bonds. Mayor Moore questioned whether that would require a Resolution setting forth a tax anticipation notice and back-up by whatever support the City can get for that. Mr. Flanigan answered affirmatively and added that was a choice the City would have. He also confirmed Mayor Moore's statement that it would involve laying it on the next budget to the tune of $8,000,000 or whatever it would be. Vice Mayor Olenik commented they still would have the choice of considering if they have sources of revenue other than MINUTES - SPECIAL CITY COMMISSION MEETING BOYI~TON BEACH, FLORIDA MARCH 1, 1990 general obligations and doing a bond issue that would not be general obligation and obviously would not require a referendum. Mr. Miller thought Moyle, Flanigan needed to know whether or not to withdraw the City's case at this time and go forth with a short term financing vehicle for a 12 month period to pay off the Tradewinds settlement. That would give the City at least a year to go through the judgment bond process again, should the City elect to go that way, or a referendum. Mayor Moore thought the City should set forth the necessary implementation of a Resolution to put this on a referendum as a backup. He told Vice Mayor Olenik he thought the people would pass it if they knew the City will have to put ~8,000,000 on the budget for next year. Mayor Moore did not think there was much choice, but he thought that should be an alternative. He felt Mr. Flanigan would agree if the issue before the people was that they either pay it in totality in this year's budget or spread it over 20 years, they would not have much choice but to vote for it. Mayor Moore remarked the City has to bail itself out, and they must do it in the most expeditious way they can. Mayor Moore noted this would not be able to make the elec- tion. He reiterated it should be set up as a backup. They ~hould go forward against David Bludworth, State Attorney, go get this approved on the bond judgment debt. If the City ~ails on that, Mayor Moore thought they should go with tax revenue bonds within the one year. He stated he obtained a ~entative commitment that without referendum, the City can get financing at 8½% to 9% without validation. The people he spoke with gave a tentative commitment they will go with ~he $5,000,000 and the $3,000,000, if they have to, without 9alidation. After repeating prior statements, he thought if ~hey had a referendum with an approval of, "Shall we fund, ~hrough general obligation bonds, sufficient money to pay off this judgment?", it would remove any technical questions Mr. Bludworth or anybody else might raise. Mayor Moore felt confident that he already had a commitment ~rom an independent bank. They will step in and make a qommitment, probably tomorrow morning, on the $5,000,000 and the $3,000,000 without referendum and without anything else other than tax anticipation notes and, hopefully, with backup of the surplus the City may have from other sources. Mayor Moore thought that was the way they should go. Commissioner Weiner wanted all of this in writing. The last meeting went quickly, and she thought they should have MINUTES - SPECIAL CITY COMMISSION MEETING BOYIqTON BEACH, FLORIDA MARCH 1, 1990 waited until they had clarification. Commissioner Weiner felt they should have waited 48 hours to see if they could manage to do it the way they were saying, and it turned out they could not. Mayor Moore responded that the City hired the best. Commissioner Weiner asked whether they could have 24 hours. Mayor Moore replied they would have eight days to see whether the State Attorney will block the City. He repeated his prior recommendation. Ail of this was not very clear to Commissioner Weiner. Mayor Moore asked whether the Attorneys knew what he was saying. Mr. Raymond apologized for being late, and replied: (1) Some issues had not been addressed. (2) None of their conclusions concerning the strength of their case with respect to the long term judgment bonds have changed. What had changed was something they knew could occur all along. That was that the State Attorney's Office indicated they will file an appeal of any Circuit Court decision rendered in favor of the City with respect to the validity of the bonds. Mr. Raymond explained it is a certainty that the long term judgment bonds cannot be issued in time to make the $5,000,000 and $3,000,000 payments on the day they have to be made to avoid any interest. He thought he could say with certainty that the long term bonds cannot be issued by the expiration of the 150 day period, during which the Tradewinds group said they would not seek execution of the judgment. Mr. Raymond asked: Does the City wish to try and pay the judgment within those time frames, knowing it cannot be for the long term bonds? or Does the City wish to leave the judgment outstanding, knowing the judgment is bearing interest at the rate of 12% from January 24th, the date the settlement was exe- cuted, and knowing there is at least a possibility the Tradewinds group will try to seek some kind of enforce- ment of the judgment at the end of the 150 day period? He thought that was the first decision to be made. It should be in light of the next step. If the Commission decides it does not want to leave the judgment outstanding, then they must come up with a means of paying the judgment within those time frames, which means they must think of an alternative that will not require a validation, because a validation will put them back to where they are now. If 4 MINUTES - SPECIAL CITY COMMISSION MEETING BO~z~qTON BEACH, FLORIDA MARCH 1, 1990 they have a couple of those alternatives, each alternative raises an additional element of uncertainty concerning the ability of the City to ultimately finance the $8,000,000 with the long term judgment bonds. Mr. Raymond stated the simplest case would be to pay the judgment directly with the long term bonds. If the City interposes some kind of interim financing to pay off the judgment, the long term bonds will not be paying the judg- ment directly, but they will be paying something that was used to pay the judgment. The Attorneys will have to establish that is OK also. They think, in certain circum- stances it should be OK, for the same reason they think it is OK to pay the judgment directly. Mr. Raymond said that was just getting one step beyond what has not been said for almost 50 years by a Court. He thought it was a certainty that the long term bonds will not pay the judgment unless the City is willing to let the judgment hang. Mr. Raymond asked if the Commission was willing to incur 12% from January 24th and if they were willing to run the risk that Tradewinds may come back to try and do something to force the City to pay the $8,000,000 in 150 days from January 24th. If the Commission was willing to run the one risk and bear 6he costs, Mr. Raymond said they did not have to do anything with respect to the validation. They could just let it run its course. Mr. Raymond thought it would be fine to go ahead with the referendum plan as a backup and with any other plans. Mayor Moore had full confidence in Moyle, Flanigan to win a victory for the City. He recommended that the Commission give them full support to go forward with the hearing on March 9, 1990. If there is an appeal or objection, they Should handle that. In the meantime, Mayor Moore recommended that the Commission adopt a Resolution setting a referendum at the earliest possible date on having the bonds supported on a referendum by the voters and also having a Resolution adopted to have tax anticipation notes for the one year period as an interim deal. Mayor Moore emphasized ~hey were not talking about that much interest. In any event, it will be a minimum time period. He urged the Commission not to get nervous about 12%, as he thought it would be a lot less than that. He explained it will not be one year, so it will not be a big impact. Mayor Moore felt they should have those things available. He thought MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 1, 1990 they could be purchased through a large bank that already indicated they will pick up the City. Mayor Moore repeated his prior recommendation. Commissioner Weiner stated this matter still was not clear to her, and she said she needed more time. Mr. Raymond said they were talking about validating long term bonds to pay the judgment direct, which was great. If they win in Circuit Court and the State Attorney appeals, and the.City is delayed and decides it cannot leave the judgment outstanding but has to pay it off, and they pay it off in short term bonds, they will throw the appeal out the window and will start over with a validation for long term bonds they will use for whatever purpose it will be. Mayor Moore asked what direction Moyle, Flanigan wanted from the Commission, other than what they had already been given. Right now, the Commission had told them to validate the bonds on a judgment refunding or technicalities. He added that the Commission has total confidence in Moyle, Flanigan's ability to win the case. If the City is going to issue a short term debt to make the payments, Mr. Flanigan pointed out they will have to help validate that aspect of the transaction. Mayor Moore replied he has purchasers who will take it without valida- tion. Discussion ensued. If the City floats short term tax anticipation notes, Mayor Moore said the City will have to put $8,000,000 in the budget right away to pay them. If they use the proceeds of long term bonds to pay off anything other than the judgment, Vice Mayor Olenik stated they will have to go back and make the Complaint read that way and validate that. He stressed that is not the way it is right now. Right now, it contemplates a direct payoff of the judgment. Mayor Moore replied they only have eight days to see what happens. Vice Mayor Olenik thought the Commission had decided to put in the option for the short term phase. Mr. Flanigan responded they are prepared to come with a Resolution to do that on Tuesday, if that is what the Commission wants to do, but they would like to go back and amend the Validation Complaint to contemplate that alterna- tive. He doubted that they would keep the same hearing date. Mayor Moore asked whether the State Attorney had filed a Motion to Dismiss. Mr. Ftanigan answered affirma- tively. He explained they scheduled March 9th as the date 6 MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 1, 1990 for the trial, but the filing of the Motion to Dismiss pulls the time for the State to file an Answer. Mr. Flanigan informed Mayor Moore that the State Attorney will have the right, on Friday, (if the Motion to Dismiss is denied and the State says not to go forward) to file an Answer on a subsequent day and reschedule another hearing. Mayor Moore added that it will still move forward at the earliest possible moment in the most expeditious method, but it won't if the City says they are going to back off and get it done in whatever time frame they can. Commissioner Weiner reiterated this was unclear to her. Mayor Moore reminded her time was of the essence and the City was looking at 12%. Commissioner Weiner stated she Could not possibly vote on anything this complicated. She ~id not understand Mayor Moore's conversation with the Attorneys. commissioner weiner wanted the Attorneys to Submit a proposal to the Commission in writing that would give them all of the details on what they are to vote on. She wanted to wait 24 hours and come back again so she could ~nderstand what she would be voting on. Mayor Moore apprised her they were here on an emergency basis. Mayor Moore said the Commission had already directed Moyle, Flanigan to get the bonds validated. If anyone intervenes 0r objects, appellate hearings will be involved. Mayor Moore thought that was the most expeditious method. It had been advertised and ready to go. If that fails, Mayor Moore ~hought they should have some backup plans. As a backup ethod, he felt they should take action today to say this hould be set on referendum, which would relieve any problem hatsoever. If the people vote that the City should not xceed $10,000,000 to pay off this problem, even the State ttorney will not object. ommissioner Weiner again stated this was not clear to her. urther comments were made. Commissioner Wische wanted to ear from the City's Financial Advisor. ~nthony C. Soviero, Regional Manager, Prudential-Bach~ ~a~ital Funding, 4800 North Federal Highway, Suite 20lA, ~oca Raton, FL 33431, appeared with David Levy. Mr. Soviero thought the Mayor's comments were well taken. Iln completing the alternative, as the City looks for long erm financing, he said the Commission should look at using he long term financing to pay off the bridge loan as well ~s the first choice, which is to pay off the judgment. Rather than waiting for the results and then going back to 7 MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 1, 1990 see if they can pay off the bridge loan, Mr. Soviero stated they should take them parallel. From the standpoint of the interest that accrues, Mr. Soviero said the City can borrow money in a tax exempt market for a lot less than 12%. The City has the option of going to the capital markets, as in a bond issue. Mr. Soviero believed Mr. Levy had some conversations with Grady Swann, Finance Director, about going to a bank, as suggested by Mayor Moore, and negotiating some favorable terms. Mr. Soviero advised they should go to three or four banks to get the best deal for the City. There are cost savings there. Mr. Soviero thought the ultimate objective Would be to go the least costly way. The fact was the judgment is accruing at 12% from January 24, 1990. If the City can borrow the money at less than 12%, the City will come out ahead, taking into consideration any costs incurred in borrowing the money. Mayor Moore did not think the interest impact would impact until March 24, 1990. Mr. Soviero agreed to meet with Commissioner Weiner and explain to her what this was all about. If the Motion to Dismiss is not granted on Friday, Vice Mayor Olenik asked what the likelihood would be of the State asking for another hearing date. Mr. Raymond replied Moyle, Flanigan would be prepared to proceed with trial immediately. Mayor Moore asked whether they had talked with anyone in the Attorney General's Office or Jim Wolfe, Florida League of Cities, Tallahassee. Mr. Raymond answered they had not. Mayor Moore said he would talk to them tomorrow morning (March 2, 1990). Mr. Raymond was not aware the Commission was thinking about wanting a referendum for this debt. He thought they should ~ook at this because there may be a limitation for bonds that are voted on, such as they can only be used to finance Capital projects. Mayor Moore asked the Commission to under- stand a judgment was entered against the City. If the City ~oes not take care of it, he understood the judgment holder would have the right to impose the taxing authority at the elarliest possible date. Mr. Raymond replied there are no rleported cases in Florida that tell how that is done. Iff they proceed with the case they now have, Mr. Raymond sltated they would be validating judgment bonds that would be uised to pay the judgment directly. If something happens ahd the City decides to interpose some interim financing, they would have to start over. Mr. Raymond said they would MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 1, 1990 be happy to do that. It would just mean the City would lose a little time. Mayor Moore asked what the other alternative would be. Mr. Raymond replied there may not be another alternative. The only other alternative would be to attempt to amend the Resolution Tuesday night (March 6, 1990) and get it introduced at the hearing. Mayor Moore asked if the Commission would agree they should go forward with the direction they gave Mr. Raymond to try and get an answer on March 9th and come back. The Commission will regroup as quickly as possible if that fails. The last time they went through this, Commissioner Weiner heard the Attorneys say there might be a problem. The Commission had to vote on it that minute. Commissioner Weiner found herself in the position of voting in the minority because she needed more clarification. She had no intention of letting that happen again. If it meant ~pending more time, she wanted to do that. Mayor Moore reiterated that they did not have the time. Commissioner Weiner disagreed. Commissioner Artis asked whether they could have the referendum. Attorney Raymond replied there was a possibil- ity it might not work. After explaining, he emphasized they would have to research that. Discussion ensued. Mr. Raymond did not think the City would be substantially prejudiced by letting Moyle, Flanigan continue on the track they were on and take no action right now. If the Commission decided not to pay off the judgment with the bonds that were going to be validated and come up with some other financing source that will require validation, Mr. Raymond said the City can lose a few days. Commissioner Weiner asked, "For instance, what?" Mr. Raymond answered, ~'For instance, long term bonds to pay off short term bonds." After discussion, Mr. Raymond said that did not have to be decided tonight. Mayor Moore thought Moyle, Flanigan should be given direc- tion to go forward. That was all Mr. Raymond wanted to know. Commissioner Weiner questioned whether they were ~aking a vote, because she did not know what they were voting on. Mayor Moore replied the Commission had already given ~oyle, Flanigan direction to go full force, so they did not meed a motion to do anything else. Vice Mayor Olenik had left the dais. Commissioner Wische left the dais at 5:45 P. M. to find Vice Mayor Olenik so ~hey could get a consensus. 9 MINUTES - SPECIAL CITY CO~MISSION MEETING BOYNTON BEACH, FLORIDA MARCH 1, 1990 Commissioner Weiner once more asked to see this in writing before voting. Mr. Raymond informed her Moyle, Flanigan had submitted a six page memorandum on this. He offered to answer any questions the Commission had. Commissioner Weiner was not prepared to deal with this in such a speedy fashion. After further commenting, she again asked for a written memorandum of what Mr. Raymond was proposing that the Commission do. There were other comments by Mayor Moore and Commissioner Weiner. Commissioner Wische and Vice Mayor Olenik returned to the dais. Mayor Moore did not think any additional action was needed, and he explained. He did not feel the Commission needed to give Moyle, Flanigan any more direction other than to actively pursue the accomplishment of the mission they had given them direction on. Discussion ensued. Commissioner Weiner wanted the Attorneys' legal opinion of what went on in the Chambers today. She wanted to know what the City's options were, as she did not understand what they were. Mayor Moore asked City Manager Miller to get any definitive information Commissioner Weiner would desire. Mayor Moore thought the message from the Commission was to go forward with what they told Moyle, Flanigan to do previously, get it validated if they can on Tuesday night. Then they will have to get together the next morning. This was the first time Mayor Moore heard if it is passed On referendum, it would relieve all of the problems. There were other comments. ADJOURNMENT The meeting properly adjourned at 5:50 P. M. 10 MINUTES - SPECIAL CITY COMMISSION MEETING BOYNTON BEACH, FLORIDA MARCH 1, 1990 CITY O] ATTEST: Mayor ~ Vice ~or Commissioner _~C~i t y Cle~- Recording SecretaryZ/ (One Tape) / / C~0~missioner 11