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HomeMy WebLinkAbout1986-12-08HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION MINUTES ADJOURNED MEETING OF DECEMBER 8, 1986 The Adjourned Meeting of the PFC was called to order by President Wight at the City of Huntington Beach Central Library, Huntington Beach, California at 4:05 P.M. on aforementioned date. Roll call was taken as recorded below. There were present from the Board: Also attending were: Stephen Wight Lorraine Faber Thomas West Melvin Carpenter Joseph Garafalo Dan Villella, Assistant Secretary Shari Donoho, Recording Secretary Don Kiser, Assistant Secretary Ron Hayden, Library Director, Community Services Department The first order of business was the approval of the October, 1986 minutes. Motion was made, seconded and passed to adopt the minutes. Next on the agenda was the approval of the October, 1986 Treasurer's Report. Mrs. Faber inquired as to the amendment of August and September, 1986 Treasurer's Reports. Mr. Villella indicated that a minor error had come to the attention of staff regarding the Status of Committed and Non -Committed Funds. Mr. Villella explained that the principal and interest amounts were slightly in error on those two reports in that in September the PFC does make a principal and interest payment and the accountant who had prepared the reports did not indicate the slight change in the principal reserve. Mr. Villella indicated that this was the second page of the report, the second and third line items, interest due March 1, 1987 and principal due September 1, 1987. It was believed that the previous report had indicated that the principal due would have been an even $200,000,000 and the estimated interest due $90,000 to $95,000. These figures represent the interest and principal due September 1, which was carried forward to the report being reviewed. The report being dated September 30, 1986 should have reflected the new principal amount which is due the following September 1, 1987 which is $210,000,000 principal versus the $200,000,000. Each year, similar to a mortgage, the principal being paid is slightly higher and the interest slightly lower. The report originally reflected this year's higher interest payment and smaller principal payment. The amounts are now correctly reflected in both R-21 the August and September 1986 reports. Mrs. Faber requested that both reports reflect that they have been amended. Mr. West moved that the Treasurer's Report for October, as well as the amended reports for August and September, 1986 be approved. Motion seconded and passed. Under new business, the Request for Proposal for the Children's Wing was to be discussed. Mr. Wight indicated that he thought the Board was at a stalemate on this issue in light of the letter forwarded to the Board by the City Administrator. Mr. Wight inquired if the Board was ready to discuss the issue of a request for proposal. Mr. Carpenter felt that the City Administrator wanted the Board to transfer the monies to the City to resolve the arbitrage problem. Mr. Carpenter indicated that it was his belief that the PFC's legal counsel had already advised that if the Board were to proceed along the lines as established for the study of the Children's Wing, the PFC earmarking the funds for construction, that the Board has, itself, solved the arbitrage problem. Mr. Carpenter indicated that he personally felt that the letter from the City Administrator was an insult to the Board. Indicating further that the letter was a play on words and in reading between the lines, it was Mr. Carpenter's feeling that the money would be utilized for redevelopment on the waterfront. Mr. Wight indicated that he would like the subject of the City Administrator's letter addressed at this time, indicating he would like to hear a motion that would turn the letter over to the PFC's legal counsel for opinion. Mr. Garafalo made the motion to forward the letter to legal counsel. The report from PFC's counsel is to be placed on the agenda for the January 28, 1987 meeting. Motion seconded and opened for discussion. Mr. Garafalo indicated that it was his desire for the Board to maintain a good working relationship with the City Council, stating that the Board was only trying to get into step with other organizations, as well as the City staff, in realization of the construction of the Children's Wing of the Central Library. He felt that by forwarding the City Administrator's letter to the PFC's legal counsel for opinion, that this action would not only provide the expert opinion needed, but time for the Board to mentally digest and more fully understand the context of the letter. Mr. Wight wished to clarify his understanding of the indenture. He felt that PFC funds could only be utilized for the Library unless the Board were to make a blanket gift to the City to the General Fund. The Board is very limited as to how the funds can be utilized even for the Library. Funds can be utilized for construction for the Library only. Mr. Wight stated that as Mrs. Faber had indicated, if the Council were to make a motion which would change the direction as to utilization of funds returned to the General Fund, that the City could then do anything they so desired with the money. Mr. West clarified the motion. Guidance from PFC's legal counsel to have the Board properly handle the resources as to fulfill the role as the Public Facilities Corporation Board with full cognizance of impending plans of the Library facility. For discussion, Mr. West -2- 'rape 86.010/2889j proposed that the Board take action to transfer $1,179,000 of excess funds into the Construction Account so that it is reflected in the Treasurer's Report as being dedicated for that purpose as opposed to being reflected as part of the Bond Redemption Fund. Further, that all funds be aligned in accordance with Mr. Villella's report on Fund Retention Requirements. In earmarking the excess funds in the Construction Fund in this manner, Mr. West felt secure that the Board would have protected themselves from the accusation of arbitrage. Mrs. Faber pointed out that realignment of excess funds to the Construction Fund would not prevent funds from being returned or reallocated to the City for project(s) at a later date. An advantage to leaving the funds with the PFC in the Construction Fund would be the fact that funds would continue to bear interest and grow. Whereas if funds were returned to the City's General Fund, any interest that is accumulated on those funds goes back into the general budget and does not continue to make the Construction Fund grow. Monies returned to the General Fund would actually lose value through the inflationary factor. Mr. Wight felt that Mrs. Faber had made a very important assessment and highlighted the most critical factor for the funds remaining with the PFC in the Construction Fund. Further that the interest on the Construction Fund needs to stay with the Library where they belong. Mr. Carpenter felt that the interest accrued could possibly raise the fund level to a point where the City would not have to raise any more funds to implement the project. Mrs. Faber indicated that this was not beyond realization depending upon the size of the project and how much in grant funds could be attracted. Mrs. Faber stated that there are matching grants available and asked Mr. Hayden to elaborate on this issue. Mr. Hayden indicated that Library staff is in the progress of investigating matching grant availability, indicating further that there is a potential basis for matching contributions. Mr. Hayden stated that he had met with McDonnel Douglas to make a proposal. Also, a proposal was made to Rockwell International. Mr. Hayden stated that one of the first questions asked of Library staff by matching grant agencies is what type of support or commitment has already been secured to -date. Mrs. Faber felt that as a part of the motion to have legal counsel review this issue, that perhaps it would be appropriate to request an interpretation as to how, mechanically, any funds should be moved from the PFC's control. Mr. West stated, also to be considered was whether or not the PFC can retain the monies in the Construction Fund, earmarking such funds for Library construction in maintaining consistency with the original charter. Motion seconded and passed to forward issue for review to PFC's legal counsel. The Board then held discussion as to an appointment of a sub -committee to meet with Don Kiser and other City staff to insure that the Board follow usual and customary guidelines with regards to obtaining requests for proposal on the Library Children's Wing -3- Tape 86.010/2889j Feasibility Study. Mr. Hayden indicated that the second portion of the Council's action was that staff was to establish a scope of study of Library needs. Mr. Hayden has been officially assigned, along with Don Kiser, to prepare a response to the Council along those lines. Mr. Wight felt that the City wanted a broader scope of comparative needs for all of the Library annexes as they stood against other prioritized City funding. Mr. Carpenter stated that if the City were to take the study, that they shall include outlying satellites. Further, that the PFC was not responsible for satellite annexations, but responsible for the Central Library Facility only. Mr. Hayden indicated that the scope of comparative needs has not yet been defined, but indicated that staff may very well review the overall needs of the Library, i.e., annexations improvements. Mr. Wight reiterated Mr. Carpenter's point that the PFC was responsible for the Central Library Facility only. If the City wanted to supplement the construction of the Children's Wing and fund an all encompassing assessment of needs which would include the annexations, this would be up to the Council for decision. Mr. West requested a review of the City Council's actions. He inquired if they approved to conduct a study. Mr. Hayden indicated that Council approved (7-0) to have staff compile information so that they may review what the study would entail. Mr. West inquired if Council did or did not commit to a consultant study. Mr. Hayden indicated that Council did not commit to a consultant study. Indicating further that Council reflected their interest in learning more about the study and what would be involved. Mr. West requested Mr. Hayden to provide Council's official words that was passed with regards to the PFC's funds. Mr. Hayden read from the Action Agenda, "Funds from PFC to be turned over to City and identified as reserved for the Library pending study of the needs of Library (6-1, Kelly - No)". Mr. Carpenter felt that the Board was at an impasse as far as Mr. Kiser's request for proposal was concerned until the City staff returns to Council with their report. Mr. West felt that the Board was in a situation wherein it placed Don Kiser and Ron Hayden in difficult positions, indicating the Board has utilized these individuals as staff and that they are not really in this mode. Mr. West felt the course of action should be as follows. Take action to table this activity given the recent action of the City Council and the PFC's request for clarification on their request with regards to funds. There are two reasons to proceed; 1) to take Don Kiser and Ron Hayden from the mode of having two masters - the Board should not have these individuals working for Directors when they should be working for the City, and 2) appoint a sub -committee to meet with Council liaisons, Director of Community Services, City Administrator to reach a meeting of the minds. Mr. West indicated that he feels the Board has made more progress for the Library than they could have made on their own behalf through the administrative hierarchy and the Board should continue to play catalyst in this venture. -4- Tape 86.010/2889j Mr. Garafalo felt that since Mrs. Faber had been appointed as a committee of one to meet with the various administrative staff, that she should continue on in this post and that he would provide her with whatever assistance she may need. Mr. West made the first motion to table the action with regards to the request for proposal in light of the recent action on the part of the Council to undertake a total needs study. Motion seconded and passed. Mr. Wight appointed Lorraine Faber and Joseph Garafalo to meet with City staff on this issue. Mrs. Faber felt that she and Mr. Garafalo could meet with City staff within the next two weeks which would provide City staff time to meet with Council and report back prior to the next meeting of the PFC. Mr. West inquired as to the agenda of such a meeting with City staff. He felt that one agenda item would be to fully understand the scope of activity of the City in terms of its needs. The second agenda item would be to try to understand, specifically, where each of the parties, specifically the City Administrator, is with regard to the long term disposition of $1.1 million. It was felt that the PFC needs to go back to the Council with a confirming clarification that the monies if turned back to the City are, in fact, going to be set aside specifically and only for Library construction whenever that may occur. The Board held discussion that the phraseology as handed down by the Council on this subject was not protective enough to insure utilization of these funds for Library construction only. Mr. West felt that it was imperative that the Council liaisons be present at the next PFC meeting. This next meeting will be a crucial meeting and Council representatives should be present (Councilperson Green, and newly appointed PFC Liaison Councilperson Finley). Mr. West felt that the Board had taken a very positive attitude toward the Library Facility and its needs. Mr. West indicated that the Board has been the only public vehicle where there has been an opportunity to continuously dialogue on this issue. Mr. Garafalo felt that the Board was at a disadvantage not having legal counsel available to comment on the arbitrage issue. The Board held discussion regarding the arbitrage situation and the presence of PFC's legal counsel. Mr. Wight authorized Mrs. Faber to contact legal counsel with regards to an opinion on the arbitrage issue. Mrs. Donoho requested the Board be specific as to what was to be conveyed to legal counsel. Mrs. Faber indicated that the Board would like Ms. Arneson to review the communication as submitted by the City Administrator. Mr. Villella thought that the Board also would like clarification as to what is required in transferring funds to the Construction Fund, i.e., timing, restrictions, when is there a deadline to deal with an arbitrage issue. Mr. West indicated that the Board desired Ms. Arneson to read the letter from the City Administrator and determine whether the Board has any alternative course of action. Can the Board, in fact, place the monies in the Construction Fund and dedicate same to future Library construction. If so, does that satisfy the arbitrage question. Further, if the answer is no that this does not solve the arbitrage situation, then provide the Board with the methodology for complying with the situation. -5- Tape 86.010/2889j Mrs. Faber indicated that a legal opinion as to whether it is by mutual consent that the disposition of these monies are determined, or if it is a situation wherein the lease agreement and indenture indicates that the Board must be responsive to a City request and that the City has the exclusive right to make that decision. Mrs. Faber indicated that it was her feeling that the indenture and lease were not specific in this regard and felt that these instruments were silent on who has the power. Mr. Wight disagreed, stating that it was his feeling that the lease and indenture were not silent at all and was confident that the Board held power through the charter. By charter, the Board was incorporated with a specific set of orders which were not changed by any indenture or lease instrument. Mr. Wight indicated that the City Council may do what they so pleased, but if the Board went to suit based upon the agreements, there was no question as to who holds the authority. The Council does not possess authority predicated on the way the Board was chartered. Mrs. Faber felt it would be beneficial to have legal counsel review the instruments and formulate a legal opinion in this regard. Mr. West indicated that another point would be, what the Board is entitled to do and not entitled to do under the charter. Mr. Wight felt that legal counsel had already provided the Board with this information in an earlier report and these actions, as referenced in the report, were not subject to Council approval. Mr. Wight indicated that Ms. Arneson could add her previous opinion on this subject to the new report requested by the Board. Mr. Villella stated that one of the issues that had been discussed previously was that any construction of an additional wing to the Library Facility would require Council approval since it would be on City owned land and, therefore, if the funds are placed in the Construction Fund, there must be some limit as to the time the monies may remain in this fund without any actual construction taking place. Mr. West indicated that the master plan depicts a wing, and that there is a fund raiser currently in progress and all evidence shows forward movement in that general direction. Mr. West moved to take action to distribute the funds according to Dan Villella's report of October 31, 1986 with the proviso of $110,000 which shall be placed into the Administrative Fund for future use by the Corporation. The residual amount is to be placed in the Construction Fund. Motion seconded. The Board held discussion with regards to retention requirements for the Bond Redemption Fund. Mr. West amended the original motion to reflect that the residual amount would be placed into the Construction Fund earmarked for the capital improvements of the Library consistent with the original master plan and any update. Motion seconded and passed. Under old business, the amendment to the Bylaws was reviewed by the Board. Mrs. Donoho advised that feedback provided from PFC's legal counsel had already been incorporated into the amendment as presented. Mr. Wight felt that under the present set of circumstances and increased activity generated around the Board, he felt that the Director's may wish to entertain the possibility of eliminating the situation wherein all Directorship -6- Tape 86.010/2889j appointments would come up for approval at the same time. In conjunction with the amendment, Mr. Wight indicated that he would like to hear a motion which would include the: initiation of re-election of Board Members immediately. The Board then held discussion to moving the annual elections/meeting to the month of June. Mr. West made the motion to table the issue. Motion failed due to a lack of a second. Mr. West made the motion to change the wording of Article III, Section 3, Pages 6 and 7, Elections and Terms of Office as follows; "The term of office of each Director shall be three years and the terms shall be staggered so that one or more Directors shall be elected at each annual meeting of the members held in June, provided (1) any such June meeting is not held thereat, the Directors may be elected at any adjourned meeting or at any special meeting of the members held for that purpose.. . ." Further, that any reference to the month of January be changed to reflect the month of June within the amendment. Motion seconded and passed. Informational items were reviewed by the Board. The Board acknowledged receipt of the letter from Bank of America and noted that whatever qualities were being forwarded in the way of apology, were masked by a barrage of creative spelling, marginal grammar and an abhorrent display of visually identifiable typographical error corrections. Mr. Wight indicated that the letter did not "say anything" and still did not provide the Board with what had been requested from the Trustee. Mr. Wight was of the opinion that a response was needed from legal counsel to show cause for dismissal of the Trustee. Under Director's Comments, Mr. Wight indicated that after June of 1987 he shall be moving two blocks within the Fountain Valley city boundary and inquired as to the provision in the Bylaws regarding residency. Mrs. Faber read from the Bylaws, "Director's shall be residents of the City of Huntington Beach at the time of appointment. . ." Mrs. Faber indicated that she felt this was an amendment to the Bylaws to address a similar situation of a previous Board member. -7- Tape 86.010/2889j . The Board held discussion as to the date of the next meeting and an adjustment thereto. The Board decided to follow their new schedule and to meet the last Wednesday of the first month of each quarter. The meeting was then adjourned to 4:00 P.M. on Wednesday, January 28, 1987 at the Central Library Facility, Balboa Room, 7111 Talbert Avenue, Huntington Beach, California. H K. DON H Recording Secretary DAN T. VILLELLA Assistant Secretary, H.B.P.F.C. Note: Statements referred to hereinabove are noted as being in general only and are not intended to be verbatim quotes. Approved: STEPHEN WIGHT President, H.B.P.F.C. LORRAINE FABER Secretary/Treasurer, H.B.P.F.C. -8- Tape 86.010/2889j