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Minutes 06-13-96MINUTES OF THE CITY COMMISSION WORKSHOP MEETING HELD iN THE LIBRARY PROGRAM ROOM, BOYNTON BEACH LIBRARY, BOYNTON BEACH, FLORIDA, ON THURSDAY, JUNE 13, 1996, AT 6:30 P.M. PRESENT Gerald "Jerry" Taylor, Mayor Matthew Bradley, Commissioner Henderson Tillman, Commissioner Jamie Titoomb, Commissioner Carrie Parker, City Manager Sue Kruse, City Clerk William Hukill. Director of Development Mark Raymond, Moyle, Flanigan, Katz, Fitzgerald & Sheehan Kevin Conitz, William R. Hough & Co. OPENINGS A. Call to Order Mayor Taylor called the meeting to order at 6:43 p.m. and advised that the purpose of thi~ meeting ~s to dec~de what we are go ng to present to the School Board at the joint workshop between the City Commission and the School Board. At the request of MAyor Taylor, everyone in attendance introduced themselves. Bm Agenda Approval 1. Additions, Deletions, Corrections C,~mmissioner Bradley added Item II.A.7 (Date, Time and Location of the Joint Workshop between the City Commission and School Board). C~mmissioner Titcomb requested a synopsis of the last School Board meeting since he was out of town. 2. Adoption T~e agenda was adopted with the amendments. Synopsis of School Board Meeting At,his time. Mayor Taylor gave a synopsis of the School Board meeting. There was a vei'y good turnout of about 70 people, including members of the Chamber of Cqmmerce, parents, children, the City Commission. and staff. The City Commissioners spbke about what Boynton Beach hoped to get from the School Board, which is a high school as soon as possible. We did not discuss how that would be funded. We just MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 made it known that when the money is available, we hope to be number one on this list, since we have waited a long time for a high school. We also talked about the expansion of Congress Middle School, magnet programs in our elementary schools, improvements to our elementary schools, and cooperating with them to make these things happen. We let them know that everyone in Boynton Beach is concerned about schools, and Commissioner Bradley toId them he was in favor of supporting the one cept sales tax in order to get the money to catch up with the 30 new schools that are needed. II. ITEMS FOR DISCUSSION A. Discussion of Financing Option for Boynton Beach High School 1. 237 Loan Program a) Encumbrance b) Actual Borrowing Ci!y Manager Parker advised that the city has been talking about the issuance of city re~,enue bonds. However, the School Board has other options which the Commission might want to discuss with the School Board. Bil~Hukill, a former School Board employee, discussed the pros and cons of the 237 Loan Program. He distributed an excerpt of the General Education Facilities Report that the School District is legally required to issue to all municipalities in the County on O~ pc At B( ac cc cc ar th; fu~ uti ',tober 1st every year. He had highlighted certain portions of this document. On page )f the School District's Summary of the FY96 Five Year Capital Outlay Plan), he inted out that there are no figures plugged into the columns for the 237 Loan thorization as there has been in past years. He explained that before the School ,ard builds a project, they have to identify the funding source. They do not have to tually have the money, but they have to encumber the money as opposed to Ilecting the money. One of the ways you and I would do that if we were going to nstruct or buy a house is get a commitment from a bank that they would loan us 0,000 or $100,000. With that commitment, we would not actually have that money we would not be able to spend it, but we could enter into a contract to build or buy house. The 237 Loan Authorization is a bridge loan. It is a procedure set up and ~ded by the State in the amount of about $200 million or $300 million state-wide lized by this district and many others as a bridge loan, an encumbrance authorization. 2 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 For example, if it costs $30 million for a high school, but they cannot identify any of the funding sources that are going to be discussed this evening, and they do not have the dollars in the bank, then they simply authorize a 237 Loan and enter into an agreement with the State. The loan is authorized, which means they can come back tomorrow or next month or next year, within the time frames of that legislation, and actually borrow that money. You could enter $30 million for the Boynton Beach High School in the FY97 column. It would be a bridge loan, and you could proceed with the construction of the school or the arrangement of the actual specific funds, the ones that are going to be discussed this evening (the revenue bonds, general obligation bonds, or other source of income). Whatever it is, the loan authorization encumbers that loan to the extent that yau then can actually enter into the construction. The theory is that a $30 million high school, cash flow, is going to extend out over years. It will extend out over at least two, normally three, and sometimes four separate budget years, so you do not need the $30 million in cash when you award the contract. The loan authorization then allows you to make use of your cash flow. The Carryover Fund Balance shown on page 1 represents encumbered funds that are not spent as of that particular day. That wouId be the money that you would have to distribute. In the previous budget, the Carryover Fund Balance shown on page 1, in the amount of $259 million, was assigned to a project. That is where the cash flow comes from. Page 1 also shows a variety of interest income. That is because they oftentimes encumber funds that they collect but do not pay out. They collect it but they pay it out over time. They reinvest it, collect interest on it, and can use that interest. There are some complications with that if you get too much interest, but essentially that is what the 237 Loan Authorization is. Ot~ page 2, $73 million is entered for new high schools in the FY97 column, which is for the Boynton Beach High School. We need to get the encumbrance and keep it there for our high school. The next couPle of pages lists all the schools that have been built since about 1983. All the elementary schools were started. The yellow line represents the delineation between when Mr. Mills left and Dr. Uhlhorn came in, which, theoretically, would have been the end of the bond issue. After that, only two elementary schools were not started. One of them was Egret Lake. They had a problem with that site, but they already had that site. The other one was "M", which you will not find anywhere. They reassigned that. It became Seminole Manor, and that was the last of the elementary sahools in that bond issue. At the top of the sheet you will see that all the middle schools in that bond issue were built. In fact, all of them were built before 1990. You 3 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 will find that the SEC facility was built and all the high schools were built, except for "EEE" · It appeared that the funding for "EEE" had been switched over to Royal Palm Beach. page 7 identifies the cost of the Boynton High School and the West Boynton High School. They show it as a future funding need for this year (FY 97). Page 8 is statistical intormation which demonstrates why you need the capacity. If you look at the bottom half of that you will see that Atlantic High Sohool is above capacity by almost 600 students. Lake Worth is above capacity by 2,000 students, and Santaluces is above c~pacity by 400 students. Those are the student stations that would be built at the new location. Beyond the 237 Loan Authorization, you have a bunch of options of where to get the money, and so does the School District. The rest of the presentation covered the S¢hool District's options. Mr. Hukill stated that they may have other options that we have not thought about. Mayor Taylor referred to page 2, the $73,000,000 in FY 97 for new high schools· MI'. Hukill explained that the FY97 was what they were proposing in 1996 to do a year OLIt. They do not budget a year ahead. They only budget one year at a time. They were simply saying that if you want to look at a long range plan, this is our long range plan. Mayor Taylor referred to the Carryover Fund Balance of $259 million and asked if that is money that they have encumbered. Mr· Hukill advised that it is encumbered funds and it is unspent. COmmissioner Bradley said there has been some discussion by School Board members add staff members that the 237 Loan is not a viable option. He read the following from a ¢ocument: "Section 237 Loan can be used to start or fund additional appropriations with alternative funding to be found at a later date or by actually borrowing under the provision of this statute. The amount of any actual borrowing is limited to 25 percent of the prior year's ad valorem taxes for operating purposes. The amount borrowed, plus in'~erest, must be repaid over a period not exceeding five years. Loans authorized under this statute are intended to provide bridge financing until cash resources are available from normal recurring revenues or other alternative financing." M~. Hukill said that is the actual loan; that is not the authorization. He referred to the cc~nstruction bid award column on the list of elementary schools and pointed out that no - 4 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 dates have been entered in that column for several years after 1990. One way to account for that is that they did not exercise the option of using that 237 Loan AUthorization. It is a way of making use of the fact that you do not have to tie all your money up for a project when you enter it if you could demonstrate the cash flow is going to be there when you need the money. He believed that gap in there is partially due to the fact that the decision was made to stop using the 237 Loan Authorization. City Manager Parker suggested that because of his knowledge and credibility as an expert witness, the former Associate Superintendent for Finance, Dr. Boekhoff, be asked to attend the joint meeting with the School Board to explain the 237 Loan Program if the Commission chooses this option. Mr. Hukill advised that Dr. Boekhoff is probably the recognized expert in Florida educational wise. CRy Manager Parker also pointed out that this is a way to begin a project without actually having dollars in the bank, and sometimes this makes finance people very nei'vous. Therefore, sometimes it is not so much knowledge as it is a philosophical difference. It depends on how much you want to move forward without having actual cash to back you up, and how comfortable you are knowing your cash flow, the ecbnomic projections, and the millage rate projections. We have gone through a series of economic cycles in Palm Beach County. The School Board millage is based on assessed value just as the city millage, although they have many other sources of revenue that we do not. It is more of a comfort level and an approach as opposed to just pure knowledge. This would get the school going without any city participation whatsoever at that point. Cc[mmissioner Titcomb asked whose responsibility it would be to find a funding course if this option is chosen. City Manager Parker advised him that it would be the School Board's responsibility. 2. COPS Ci!y Manager Parker advised that this has been the methodology that the School Board has used in the past few years to fund construction projects. She asked Mark Raymond to give a brief overview of the COPS Program. M~. Raymond stated that the School Board basically only has two ways of obtaining Ior~g term financing. One of the methods would be through the issuance of general obligation bonds and the other method would be through the COPS Program. He explained why COPS were developed. The Florida Constitution provides for alt 5 MINUTES cITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 governmental units within a state that if you want to borrow money and repay it over a term of more than one year, you can only use your ad valorem tax revenues to do that after the borrowing is approved by referendum. So when we talk about a general obiligation bond with the School Board, we are talking about a bond that would be payable from ad valorem taxes, and it could onIy be issued if it has a term of more than a year if there is a reference. Ad valorem taxes are the School Board's one significant sources of revenue and an~ime it wants to borrow money for a term of more than one year, it is going to need to have a referendum. Therefore, people thought of a way of getting around that requirement, which was basically a play on the one year term limitation. He illustrated how COPS work. The School Board creates a corporation (the School Beard Leasing Corporation). The School Board wants the corporation to build a school and they will lease it from the corporation for one year. You could use ad valorem tax dollars to pay for it without having to have a referendum because you are within the one year requirement. The lease would be renewable every year for the next 20 or 30 years, as long as the School Board wants to continue renewing it. However, the School BQard does not have to renew it any particular year. Mn. Raymond explained where the corporation gets the money to build the school. ln~'estors loan the corporation enough money to build the school. When the corporation gets the rent payments from the School Board, they will pay the investors back. However, the investors have to realize that the School Board only has to pay the corporation one year at a time and if they decide not to pay the corporation, the corporation does not have any revenue source to pay the investors back. The corporation will still own the school and might be able to find someone else to rent it, bui probably not. The piece of paper that the investor buys when it makes this loan is ca!led a Certificate of Participation (COP). It is called a Certificate of Participation be~cause it entitles the investor to participate in the stream of rent payments that the S~hool Board makes to the corporation. Mayor Taylor asked who the corporation is. Mr. Raymond said it is called the Palm Beach County School Board Leasing Corporation. He did not know if the members of the Board of Directors are members of the School Board or private citizens. Typically, there is an affiliation between the two. Anine Centi, Vice Chair of the Education Advisory Board, asked how much interest the co[porat~on pays to the investor, Mr. Raymond explained that this is a function of r MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH~ FLORIDA JUNE 13, 1996 the market. The interest rate that is borne by the loan would be comparable to the interest rate borne by taxes and bonds, although it would be a little higher. When the City of Boynton Beach issues bonds, it has to pay the investors back in the next 20 years. Therefore, the interest rate is lower because there is less risk. Mayor Taylor pointed out that the School Board said they were not going to do any mere COPS. 3. City Revenue Bonds M~. Cenitz distributed a handout (attached) and stated that the city has several revenue strJeams. If the city were to choose to partake in a particular project, the city can finance it using tax exempt bonds. The city has several revenue streams that they can use to do that. For instance, if the city chose to make expansions to its water and server system, it could do that. In fact, the city currently has outstanding water and sewer system bonds. The revenue stream to pay back those bonds would be water an¢ sewer system revenues. If the city were to choose to do another particular type of prgject that is not related to a specific enterprise fund or a water and sewer fund, the city' could issue general obligation bonds and ask the voters if they would pay an in4reased ad valorem tax to bond it. They would issuethe bonds in the amount needed to build the project and the ad valorem taxes would increase by a level to pay the debt set'vice on the bonds. This is one new revenue source that the city or the School Board or iany entity could have. The project that they build would not be a burden on the current budget. It would be a brand new revenue source. For obvious reasons, very fe~ bonds are issued with the general obligation mechanism. Ar tb re mi be other mechanism would be for the city to take one of its existing revenues, in ditien to ad valorem taxes, build the project, and use some of the general funds from ; city to pay the bonds back. However, generally, you can only issue a portion of that /enue. In this case, assuming a 1.25 coverage factor, which is generally the nimum an investor would accept, over 20 years, you could issue about $30 million in nds, backed by half cent sales tax revenues. The same theory is used to generate all of the other revenue debt capacity numbers listed on the handout. You generally ta~e the amount of money that you get and apply some coverage factor to it so that you haFe a cushion in case those revenues are not what you need them to be. That is what thC market would accept and aliow you to issue bonds on a particular level. The city cufrently has one bond issue outstanding and it is backed by the public service taxes. Th~arefore, the available bonding capacity is somewhat less because you already have scene of your capacity utilized. If you did not have any bonds, the capacity for the MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 public service tax would be $38 million. You have about $19,000,000 outstanding, so you have another $19,000,000 available to you. That is one option. Let's say you chose to build a high school. You could utilize one of your revenues, a non ad valorem revenue, generate those funds, and build a high school. Obviously, it is not your job to build schools. It is the School Board's job to build schools and pay for those schools because everybody pays ad valorem taxes to the School Board for that purpose. A rather innovative approach that has been talked about is that the city could issue its own bonds backed by any one or a combination to pay the cost of the high school and could sign an agreement entrusting the School Board with the money to build a high school. At that point, in order to be paid and not be out-of-pocket, you could enter into a lease purchase agreement with the School Board. This lease purchase agreement is very similar to the agreement Mr. Raymond spoke about earlier in the meeting. However, instead of the corporation, the City of Boynton Beach would enter into an agreement whereby the School Board would not pay the city rent each year equal to the debt service that you are paying to the investor. You issue bonds, give the money to the School Board to build a high school, and pay the investors. The School Board pays you rent each year equal to the debt service that you are going to have to pay the investors. Just as in the COP issue, the agreement that you would enter into has to be the same as with the COP whereby the School Board has the ability to terminate the lease and walk away every single year. Mr. Conitz explained why any investor would look to buy that particular structure. For all practical purposes, the School Board cannot afford to walk away from a high school. That is the analysis that is done on every single COP issue. It is called essentiality (how essential the projects are). Even though you have a legal right to walk away, for alii practical purposes, you could never walk away. If there is any doubt that these projects are not essential and you could walk away, those kinds of projects do not get financed with COPS because an investor will not take it. The investor in every case is velry unlikely to ever come up short if the School Board Were to walk away. The insurer will make those payments to the investors. Commissioner Tiilman asked if this bond will reduce the city's bonding capacity. Mr. Conitz answered affirmatively. Commissioner Tillman asked if the debt service on those bonds would appear on residents' tax bill under the city or under the Palm Beach County School District. Mr. Conitz advised that the debt service on this bond would not aplpear on anyone's tax bill. It would be a budget item from the city. Every year the budget item would indicate "x" amount of dollars for debt service on the bond issue. Th!ere would be a corresponding revenue on the other side of the ledger that states "lelase payment from the School Board", and the two would offset each other. MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 Commissioner Tillman asked if the city would be responsible in the event that the School Board does not continue to participate. Mr. Conitz answered affirmatively. Mn. Conitz said the School Board currently has three COPS issues outstanding. In 1994 the School Board issued approximately $62 million worth of certificates. In 1995, they issued about $132 million, and just last month they issued about $33 million. So right now, the School Board has about $225 million worth of COPS outstanding. The annual lease payment of those certificates is approximately $17.5 to $18 million. He assumed that there are 10 to 15 schools tied up in that lease. In order to make the certificates more saleable to an investor, the mechanism that the imfestor community has to come up with to help insure that there really can be no opportunity for anyone to walk away is called a master lease concept. More appropriately, an "all or none appropriation". The master lease concept basically says that everything is under the same lease. Therefore, if the School Board were to walk away from their COPS obligations, the School Board cannot pick and chose which schools not to pay for. Even if the School Board does not like two or three schools, it is no! going to walk away from 15 schools that it needs to get out of the debt service on two or three schools. This element is very well perceived by the investment community, the rating agencies, and the municipal bond insurers as a very secure structure. You wduld not be considered part of the master lease, but we believe that there could be an ariangement that your separate lease would be under the "all or none appropriation" concept. City Manager Parker said that is incorrect. She tried to do this and the School Bdard Attorney said they would not do that because each indenture agreement would have to be changed. Wiih regard to the interest rate on a COP, Mr. Conitz stated that if the city were to build a new city hall and issue half cent sales tax bonds to do that, they would pay a series of interest rates on their debt that would result in an average interest rate of "x". Because of ~he ability of the School Board to walk away, and other features of a COP that are somewhat undesirable to an investor, there is generally a small interest rate penalty associated with a COP. The interest rate differential can be somewhere between five and ten basis points. A base point is one-tenth of 1 percent. Therefore, if the city bohds had an average interest rate of 5.75, the Palm Beach School Board might have an! average interest rate of 5.80. It is not a huge interest rate differential. COPS are mestly accepted by the market and are all insured. Under the right circumstances, he believed there would be a situation where the city would pay a slightly lower interest rate than the School Board because of features inherent in a COP issue. However, ce!tain things which the city might want in the transaction may eat away at the interest 9 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 rate differential. But, in general, the city is going to pay slightly less than the School Board. Mr. Conitz' handout showed a 20 year amortization average debt service on a $40 million bond issue. Over 20 years, the average annual debt service on a city bond issue would be approximately $3,400,000. Over the life of the issue, that is about $68 million (about $28 million of interest over 20 years). Thiere is another alternative. The School Board may be unwilling to start making lease payments on a facility if the facility is not done for two years. What would need to be done is to capitalize that interest and issue enough bonds so that the interest coming du~ in the first two years is not payable by anyone. It is in the bond issue. If you were to do that and payments begin in 1999, you would have the same 20 year payments. They would just start two years later. The difference would be that the payments would be about $3,850,000 per year, or $77 million over the life of the issue. Starting your payments in two years costs about $9 million over the life of the issue. Mr'. Conitz advised that on a $40 million issue, in today's dollars, five basis points interest rate savings would save about $165,000. If the difference was ten basis points, that would increase to about $329,000. Because of the larger numbers involved when yol~ capitalize interest, that same five basis point differential would equal $255,000 and ten basis points would equal a little over $500,000. MS. Centi asked if these bonds are callable. Mr. Conitz stated that the call provisions that we would anticipate in this scenario would be an optional call provision of 10 years at one or two standard call provisions. This is a straight bond issue. If you were to do customize things, such as if the School Board were to do a GO bond issue, they would have to call the bonds in early. Ms. Centi asked if they are insured. Mr. Conitz answered affirmatively. COmmissioner Bradley asked if the basis points depend on the market. Mr. Conitz answered affirmatively. Wiih regard to the revenue matrix for the city, City Manager Parker advised that we currently utilize all of these sources of revenue, with the exception of the water and sewer system, the local option gas tax, and the recreation user fees, which have their own separate funds. All the other items, along with property taxes, are sources of 10 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 funds for our general fund. Therefore, if in any one year the School Board did not pay us; we would not have the money in the general fund to make that $4 million payment. At this point, the only source of money we have is to borrow it out of the utilities system. Ciiy Manager Parker also advised that Mr. Raymond and she specifically went over the issue of "all or none" because we felt it was a critical issue in relationship to this bond issue and would have given the city a lot more protection. However, the School Board's bond counsel told us that this could not be done, and Mr. Raymond has reviewed everything and has agreed with that. Therefore, we would be going into this as a stand- alOne school, As you have seen from the capacity numbers, the School Board would still be over capacity once the high school is built. Therefore, we have to think about the likelihood of Where the School Board is going to put those students if they do not utilize our school. We also have to think about whether or not the School Board would ever walk away from that high school. The School Board is trying to get a funding mechanism in place to finance the $800 miilion in back projects that they have. One of the things that we have talked to their staff about is structuring in this agreement that once the major funding source is approved or identified, the School Board would defease these bonds and the city would noi longer have this debt, thereby freeing up the rest of our debt capacity and taking us off the hook for this debt service payment. COmmissioner Bradley stated that the "all or none" concept would be optimal. HOwever, if the School Board is going to walk away from COPS, it is not necessarily goling to walk away from us first. And if they are going to walk away, it is probably be)cause of the whole system. Md. Raymond pointed out that if the city promises to pay back the investors no matter wllat, and the School Board decides not to fund the annual lease, the investors are going to get their money. The city will be the only entity that is hurt. Cdmmissioner Bradley asked how the insurance plays a part in that. Mr. Raymond said if the School Board does not appropriate and there is no money to pay the investors, th6 insurance company pays the investors and acquires whatever right the investors m~.y have had, which is basically the right to own the school and find somebody to rent it. !However, this creates a problem the next time the School Board wants to borrow 11 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 money because they know that someone, whether it is the investors or the insurance company, is going to be hurt very badly. This creates a very strong reason for the School Board not to nonappropriate, in addition to the essentiality that Mr. Conitz talked about. However, Mr. Raymond was concerned that this might not hurt their ability to do a COP the next day. City Manager Parker pointed out that the school children who are going to that school, their parents, and all the people associated with that school will also get hurt. City Manager Parker pointed out that both the city and the School Board usually utilize the MBIA insurance company. Therefore, everyone would know if the School Board did not pay or was contemplating not paying. Mr. Hukill asked Mr. Conitz if he contemplated reinvestment of the funds. Mr. Conitz said he did not. Mr. HukiII pointed out that if there are no payments made for the first year, there would not be payments made to the contractors either. That is a cash flow, s0 you would not be spending very much of the $40 million the first year. He stated that the figure that the school Board gave us is between $28 million and $30 million. Those combinations of numbers (the reinvestment of the funds) would make the $77 million total debt service unrealistic. It probably would be closer to $50 million. 4. Special Millage - Budget Allocation MC: Hukill advised that all the schools in Florida are authorized to annually float up to twp mills of revenue for capitaI expenditures and the local school board has done that. Lqoking at page 1 of his handout, he assumed that the $104 milIion shown in FY96 was two mills, meaning that in that year one mill raised that $52 million. It also appears that as~ they go across the table, they have added 3 percent a year because of the rollback in itaxes. That probably is a conservative figure because it does not contemplate additions to the tax rolls. So over the five years, there is $550 million available, as~suming that every year the School Board levies that two mills that is available to retire any of these other kinds of funding that we have to pay for schools. Therefore, they have that baseline amount of money as long as they vote that millage. It is not their odly source of income, but it is their biggest source of capital income. They could, for e~ample, dedicate $30 million out of the special millage. However, they would not do that. They would use cash out of there but they would not dedicate the $30 million out ofithere. MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 In response to a question from Mayor Taylor, Mr. Hukill said they encumber it every year. That is what their capital budget does. City Manager Parker stated that the School District has a list of projects much like we halve a ClP list. They already have a number of schools on that list, and we could ask them to reprioritize that budget list to fit the high school in the current allocation. Commissioner Bradley asked if some of that capital is going to operation. Mr. Hukill sold it depends on how you define it. If you look at their expenditure side, you will find about $40 million a year of their total capital budget revenue goes to, for example, maintenance of the schools. Roughly $10 million goes to staffing for the people who rub the construction program. They have a number of other expenditures they make out of that and a lot of people think that those are operating expenses. A case can be m~de for that, but the State has authorized the school districts to do those sort of things. The argument is that as bad as this hurts, the operating budget is where the real crunch is and that is the one that affects the children. So if you can transfer e~penses out of the operating budget into this budget, which is what they have done, that leaves more money in the operating budget to keep the ration of students to teachers 31 to I instead of increasing to 33 to 1. If they took the maintenance and put that $40 million back in the operating budget, for example, that would probably change their teacher/student ratio. It would be a very significant amount. C6mmissioner Bradley asked if we should suggest that there would be funds in the millage category for construction. Mr. Hukill said he did not know if there are funds in th? millage category for construction. He was merely pointing out that this is their major source of revenue. Ciiy Manager Parker advised that under this methodology, we would be asking the SChool Board to reallocate their projects to fit our project in. However this is usually a vary difficult argument to make. 5. Sales Tax City Manager Parker said the sales tax issue will be coming up soon and asked if the COmmission wanted to wait until that is approved, since our project is on the list of projects to be funded with that sales tax. The only option they have is their general obligation bond with the ad valorem taxes, similar to what they did in 1986, but the lik~elihood of this occurring is slim to none. 13 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 Commissioner Titcomb asked if we are already on that priority list. City Manager Parker advised that we are on the priority list for the sales tax. Commissioner Titcomb asked about the special millage revenue bonds that Mr. Hukill was talking about. Mr. Hukill said it is hard to say. The way he reads their FY96 budget is that both Boynton Beach high schools are a high priority. However, they are unfunded at the moment, and that is what we are trying to get over. We do not care whether it is funded or not. We want it to be encumbered. The 237 Loan was suggested to encumber that loan and then coime up with these other options to actually pay the bills. City Manager Parker pointed out that the high school cost the same as three elementary schoOls. So if they want to put us in, they would have to cut three elementary schools, or two junior high schools. 6. General Obligation Bond (1986 Bond Issue) This item was discussed earlier in the meeting. = Date, Time and Location of the Joint Workshop between the City Commission and School Board Virginia Farace, the Library Director, advised that the School Board offered to hold the joint meeting on Monday, July 1st from 4:00 p.m. to 6:00 p.m. Some of the members of the School Board and the Superintendent have appointments at 6:00 p.m. and 6:30 p.m. that evening, The City Commission had no objection to holding the meeting at the School Board site in West Palm Beach. Discussion and Questions by City Commissioners and General Public M~yor Taylor asked if the School Board would still have to find the money to fund the school if we convince them on the 237 Loan Pro~ram. Mr. Hukill said they either have to do out a cash flow, re-identify funds, or come up with one of the strategies that have been discussed tonight. City Manager Parker advised that they could start construct[on add are ready for bids on the schools. Mayor Taylor was in favor of trying for the 237 Loan Program first. 14¸ MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 In response to Commissioner Titcomb's question about the track record of the 237 Loan Program in similar situations, Mr. Hukill stated that there is a record right here in the county; however, they never got to the point where they had to actually implement a loan against that. However, they used the authorization all the way through the meetings. Cqmmissioner Bradley asked if the authorization acts as a bridge for a year or two until a funding source is identified. Mr. Hukill said it allows them to go into their cash flow. Thiere is a delay in payment to the contractors. For example, the first day you award the contract on a $30 million job you do not have to have the $30 million. On paper you doi have to have it. You have to have it encumbered, but you do not actually pay it out that day. You do not pay much out for the first three or four months. So it allows you, over a large series of projects, to have a great deal of cash to maneuver. It simply enables you to start projects ahead of the actual fund identifications. C~mmissioner Bradley felt we should push for the 237 Loan. He said it places the responsibility where it should be, but he felt that at some point we should also talk again ab~Out collaborative effort and how we are interested in working towards a funding source. COmmissioner Tillman was in favor of the 237 Loan, and COPS, as an alternative. He pointed out the School Board's responsibility, and he was not in favor of giving into them every time they say they cannot do something. City Manager Parker asked him ho~v he felt about incentives for the project. Commissioner Tillman did not have any pr&blem with incentives. However, he did not want to tie up $3 million a year. C~mmissioner Bradley stated that if we could get five basis points, the revenue bonds w~uld be a sweetener. He said some members of the School Board are looking for the city to come to the table, and collaborative effort means cash in their minds. Toward the end of the meeting with the School Board, he suggested discussing the revenue bolnd issue and how that would save them $180,000 or $350,000, and other possible ways to sweeten the deal. COmmissioner Titcomb agreed that the School Board has an obligation to us because of ihe chain of events of the last bond issue and how the city got shortchanged. He was in favor of the 237 Loan approach and the COPS program as a secondary source. He said it seems other communities have moved forward and nabbed up the schools out from under us. 15 MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 Mayor Taylor had a problem with more incentives than just going there and trying to work this out. He would like to know what incentives other cities have given them. He pointed out that it is their job to build the school. We have paid our school taxes and they have not done it. We have waited 10 ten years for this school. They owe us, and we should not have to beg them and give them whatever they need. He would push for the 237 Loan and if they do not want to go with that, he suggested waiting to see if the sa!es tax is going to be put on the November ballot. He felt it will pass and if it does, he saw no reason why we would not be one of the first schools to be built. He thinks we should let the School Board bring the matter of a revenue source up first. He did not fear that they would ever not make that payment. Mn. Hukill said if they vote in November for a sales tax increase and it is successful, you stiil do not have the revenue. Therefore, in order to expedite the school, you still need the bridge loan or some other strategy. Whatever the revenue source is, this gets you to 'whenever that is available. That's the purpose of the 237 Loan. Commissioner Bradley agreed with City Manager Parker's suggestion to have Dri Boekhoff at the joint meeting, and he felt we should contact the School Board members to count the votes. C¢~y Manager Parker suggested having Mr. Raymond and Mr. Conitz available at that meeting if the Commission wants to push the 237 Loan hard. Mr. Hukill felt the issue of a 237 Loan will come up at that meeting, and that we should be prepared to discuss it. Mr]. Raymond inquired about the sales tax issue that the city raised with the School Bqard. City Manager Parker advised him that Palm Beach County utilized a methodology to exempt portions of their construction project with sales tax. They de~,ided to move forward on that on their own with their own staff and utilize it county- wiee, not just on this particular school. Ci!y Manager Parker explained that school boards, cities, counties, etc., are exempt frqm sales taxes on purchases or construction items purchased by the public entity. In the case of a $40 million school or a $10 million city hall, it can be a considerable dollar value. However, the Department of Revenue does not allow that sales tax exemption if the purchase is made by the contractor or subcontractor. The purchase has to be made by the nonprofit public entity. It is a paperwork nightmare to try to work out some altbrnatives on how to purchase your large ticket items. Therefore, we suggested a m~thodology that had been used by Palm Beach County, some other counties, and otlter school districts in the State where you can go through your contract documents MINUTES CITY COMMISSION WORKSHOP BOYNTON BEACH, FLORIDA JUNE 13, 1996 and have some of the larger items purchased by the School Board and get the sales tax exemption for those items. This saves money on the total project. The School Board wanted the city staff to do that for their schools. We were thinking about doing that if the city was going to do the revenue bond for them, but that does not get them the methodology. Therefore, they decided to set something up in-house for them to do so;that they could do them county-wide. Goal Setting Workshop Between Department Heads and City Commission Mayor Taylor explained that the City Commission and department heads had a goal setting workshop last year. He suggested having it again this year. He has reserved Aberdeen for June 21 st; however, there was some discussion whether ali of the members could make it. The date and time have yet to be set. III. ADJOURNMENT Thiere being no further business '~o come before the City Commission, the meeting was adiourned at 8:27 p.m. ATTEST: Ci!yCClerk R~cording Secretary (Three Tapes) CITY OF BOYNTON BEACH 17 GENERAL EDUCATIONAL FACILITW~S REPORT BOYNTON BEACH, FLORIDA ZLU C) O ~-0 OO · -t- rr- O0 UJ LU -J r~ NEW HIGH SCEOOL "III" Location: To be determined at a later date by the Office of Educational Facilities. Minimum Site Size: 32 acres Center Classification: C-1 for grades 9-12 Relief for: Other area school initial Recommended Student Capacity: Ultimate Student Capacity: 2008 398 Initial Recommended Student StatiOns: Ultimate Student Stations: 2114 531 Recommended New Construction: Eight secondary classrooms (7535 NSF)--240; two science labs (3253 NSF)--48; two skills labs (2225 NSF)--60; two resource rooms (1315 NSF); partial ESE suite (t958 NSF)--10; art lab (2080 NSF)-~30; band (3790 NSF)--35; P.E./gym (11445 NSF)--60; two vocational labs (4002 NSF)--48; media center (3088 NSF); administration (1455 NSF); student services (663 NSF); food service (2593 NSF); teacher lounge/dinin9 and staff toilets (341 NSF); stage (1093 NSF); public use (180 NSF); auditorium seating (1339 NSF); textbook storage (120 NSF); student storage (200 NSF); student toilets (602 NSF); custodial, flammable, and equipment storage (573 NSF) [ecommended Studen~ Capacity: 398 243 SOUTH TECHNICAL EDUCATION CENTER (1571) Grades: VE-VE Site: The site consists of one parcel which contains a total of 30 acres. The administrative unit is located at 1300 South West 30th Avenue in Boynton Beach. Water is provided and sewage is disposed by public systems. Parking is partially developed and drainage is adequate. The site size is above the legal minimum size for the present capacity of this school. Buildings: The plant consists of 10 permanent buildings and 10 relocatable units. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all student and staff occupied spaces. Artificial lighting is adequate. Total Existin~ Satisfactory Student Statio~: 664 General Conditions of Permanent Buildinqs: The exterior' and interior of the permanent buildings are in excellent condition. The custodial service appears to be excellent. Other Conditions: NOne Recommendations: A. Capital Outlay Classification: C-2 for Grades Vocational B. Student Transfers: Excess students to other area schools C. Site Expansion: None D. Site Development: None E. Site Improvement: None F. Remodeling: None G. Renovations: None H. New Construction: None I. Recommended Student Capacity: 664 251 CONGRESS COMMUNITY MIDDLE (1581) Grades: 6-8 Site: The site consists of one parcel which contains a total of 29 acres. The administrative unit is located at 101 S. Congress Avenue in Boynton Beach. Water is provided and sewage is disposed by public systems. Parking is developed and drainage is inadecruate. The site size is above the legal minimum size for the present capacity of this school. ~: The plant consists of 13 permanent buildings. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all student and staff occupied spaces. Artificial lighting is adequate. Totai Existinq Satisfactory Student Stations: 1465 General Conditions of Permanent Buildings: The exterior and interior of the permanent buildings are in good condition. The custodial service appears to be good. Other Conditions: None Recommendations: Capital Outlay Classification: C-1 Student Transfers: Excess students Site Expansion: None for Grades 6-8 to other area schools Do iSite Development: None 'Site Improvement: Provide adequate drainage; provide adequate covered walkway between permanent buildings Remodeling: Convert Building 01, Rooms 120, 120A to vocational exploration lab (1529 NSF)--2; convert Building 01, Rooms 120B, t20C to pre-vocational home economics orientation lab (1404 NSF)--16; convert Building 01, Room 102 to exploration of manufacturing occupations lab (expansion of existing lab) (850 NSF)--Minus 7; remodel Building 04, Rooms 101 101D, 102 102D, 103 105D for better utilization (12583 NSF)--Minus 37; remodel Building 06, Rooms 101 101C, !01F, 102 !02C, 102F, 103, 104 104D, 105, for better utilization (114Q3 NSF)--Minus 45; convert ~uilding 08, Rooms 101 101C, 101F, 102 102C, 102F, 103 104D, 105 for better utilization (12609 NSF)-- Minus 40; convert Building 05, Rooms 101, 10lA, 102 to two resource rooms (1049 NSF)--Minus 10; remodel Building 01, l17A, l19A, and 103 for better utilization (2765 NSF); remodel Buildings 04, 06, and 08 all spaces except as specified above, for better utilization (10943 NSF) 192 CONGRESS COMMUNITY MIDDLE (Continued) G. Renovations: None H. New Construction: Four SLD classrooms (3963 NSF)--40; three ESE resource rooms (2053 NSF); two ESE itinerant rooms (520 NSF) Recommended Student Capacity: 1246 193 CITRUS COVE ELEMENTARY (2071) Grades: K-5 ~,ite: The site consists of one parcel which contains a total of ~0 acres. The administrative unit is located at 8400 Lawrence Road in Boyton Beach. Water is provided and sewage is disposed by public systems. Parking is developed and drainage is adequate. The site size is above the legal minimum size for the present capacity of this school. Buildings: The plant consists of four permanent buildings and six relocatable units. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all student and staff occupied spaces. Artificial lighting is adequate. Total Existing Satisfactory Student Stations: 789 General Conditions of Per~nent Buildings: The exterior and interior of the permanent buildings are in excellent condition. The custodial service appears to be excellent. Other Conditions: None Recommendations: Capital Outlay Classification: C-1 for Grades K-5 Student Transfers: Excess students to other area schools Site Expansion: None D. Site Development: None E. Site Improvement: None Remodeling: Transfer six satisfactory relocatable units to New Elementary-91-A16 (6240 NSF)--Minus 72; convert two resources to skills lab (1246 NSF) G. Renovations: None New Construction: None I. Recommended Student Capacity: 717 72 FOREST PARK ELEMENTARY (0831) Grades: K-5 Site: The site consists of one parcel which contains a total of 12 acres. The administrative unit is located at 1201 S.W. 3rd Street in Boynton Beach. Water is provided and sewage is disposed by public systems. Parking is developed and drainage is adequate. The site size is above the legal minimum size for the present capacity of this school. Buildings: The plant consists of nine permanent buildings and four relocatable units. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all student and staff occupied spaces. Artificial lighting is adequate. Total Existinq Satisfactory Student Stations: 438 General COnditions of Permanent Buildings: The exterior and interior of the permanent buildings are in good condition. The custodial service appears to be good. Other Conditions: None Recommendations: A. Capital Outlay Classification: C-1 for Grades K-5 B. Student Transfers: None C. Site Expansion: None D. Site Development: None E. Site Improvement: None Remodeling: Transfer four satisfactory relocatable units to New Elementary-91-Al6 (1636 NSF)--Minus 37; convert three intermediate classrooms to skills development labs. (2612 NSF)--Minus 78 G. Renovations: None New Construction: Four kindergarten classrooms (4887 NSF)-- 100; six primary classrooms (8881 NSF)--150; ESE suite (CORE) (3784 NSF)--28; music lab (2015 NSF); art lab (1575 NSF); P.E. planning and storage (420 NSF); two resource rooms (1315 NSF); expand administration/student services (2207 NSF); expand food service (1407 NSF); teacher lounge/dining (605 NSF) I. Recommended S~uden~ Capacity:- 601 78 GALAXY ELEMENTARY (0821) Grades: K-5 Site: The site consists of one parcel which contains a total of 16 acres. The administrative unit is located at 461 W. Boynton Beach Boulevard in Boynton Beach. Water is provided and sewage is disposed by public systems. Parking is partially developed and drainage is adequate. The site size is above the legal minimum size for the present capacity of this school. Buildings: The plant consists of ll permanent buildings and nine relocatable unitS. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all istudent and staff occupied spaces. Artificial lighting is adequate. Total Existin~ Satisfactory Student Stations: 631 General Conditions of Permanent Buildinas: The exterior and interior of the permanent buildings are in good condition° The !custodial ser~rice appears to be good. Other Conditions: None Recommendations: Capital Outlay Classification: C-1 for Grades K-5 Student Transfers: Excess students to other area schools lC. Site Expansion: None !D. Site Development: None Site Improvement: None Remodeling: Transfer eight to New Elementary-91-A6 Renovations: None New Construction: None Recommended Student Capacity: satisfactory relocatable (8320 NSF)--Minus 96 535 units 79 POINCIANA ELEMENTARY (0791) Grades: K-5 Site: The site consists of one parcel which contains a total of eight acres. The administrative unit is located at 1400 N.W. 1st Street in Boynton Beach. Water is provided and sewage is disposed by public systems. Parking is partially developed and drainage is adequate. The site size is below the legal minimum size for the present capacity of this school. Buildings: The plant consists of 14 permanent buildings and five relocatable units. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all student and staff occupied spaces. Artificial lighting is adequate. Total Existing Satisfactory Student Stations: 665 General Conditions of Permanent Buildings: The exterior and interior of the permanent buildings are in good condition. The custodial service appears to be excellent. Other Conditions: None Recommendations: A. Capital Outlay Classification: C-1 for Grades K-5 B. Student Transfers: Excess students to other area schools C. Site Expansion: None D. Site Development: None E. Site Improvement: None Remodeling: Transfer three 'satisfactory relocatable units to New Elementary-91-A13 (2552 NSF)--Minus 32; convert two intermediate to music (1546 NSF)--Minus 46; convert Building 0_~6 to art (1971 NSF)--Minus 46; convert eleven intermediate to primary (308 NSF)--Minus 44; convert one intermediate to skills lab (1058 NSF)--Minus 30; utilize two intermediate as resource (1476 NSF)--Minus 42; convert Building 1_~2 to two skills labs (2085 NSF) G. Renovations: None H. New Construction: None I. Recommended Student Capacity: 425 117 ROLLING GREEN ELEMENTARY (0781) Grades: Site: The site consists of one parcel which contains a total of 15 acres. The administrative unit is located at 550 Miner Road in Boynton Beach. Water is provided and sewage is disposed by public systems. Parking is partially developed and drainage is inadequate. The site size is above the legal minimum size for the present capacity of this school. Buildinqs: The plant consists of eight permanent buildings and eight relocatable units. The heating capacity of the permanent buildings is adequate. Air conditioning is provided in all student and staff occupied spaces. Artificial lighting is adequate. Total Existin~ Satisfactory Student Stations: 626 General Conditions of Permanent Buildings: The exterior and interior of the permanent buildings are in excellent condition. The custodial service appears to be excellent. Other Conditions: None Recommendations: Capital Outlay Classification: C-1 for Grades K-5 Student Transfers: Excess students to other area schools Site Expansion: None Site Development: None Site Improvement: Provide adequate drainage Remodeling: Transfer seven satisfactory relocatable units to New Elementary-91-A13 (7968 NSF)--Minus 94; convert Building 06, Room 103 to P.E. planning and storage (400 NSF); convert two intermediate to two skills labs (1740 NSF)--Minu~ 50; convert two interraediate to two SLD (1790 NSF)--Minus 32; convert four intermediate classrooms to primary classroom (112 NSF)--Minus 16; convert Building 06, Room 106 to textbook storage (342 NSF) Renovatiohs: None 119 ROLLING GREEN ELEMENTARY (Continued) New Constr~ction: Four kindergarten classrooms (4887 NSF)-- 100; EH classrooms (995 NSF)--8; three ESE itinerant spaces (780 NSF); music lab (2015 NSF); art lab (1575 NSF); two resource rooms (1315 NSF); teacher lounge/dining (605 NSF); teacher pl~ng for two (205 NSF); expand administration/ student services (500 NSF) Recommnended Student Capacity: 542 120