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HomeMy WebLinkAbout1987-10-28HUNTINGTON BEACH PUBLIC FACILITIES CORPORATION :MINUTES REGULAR MEETING OF OCTOBER 28, 1987 The Regular Meeting of the PFC was called to order by President Garafalo at the City of Huntington Beach Central Library, Huntington Beach, California at 4:00 P.M. on aforementioned date. Roll call was taken as recorded below. There were present from the Board: Also attending were: Thomas West Lorraine Faber Melvin Carpenter Joseph Garafalo Dan Villella, Assistant Secretary Shari Donoho, Recording Secretary Robert J. Franz, Deputy City Administrator Marguerite Davenport, President - Patrons Foundation Hal McDonald, Member - Library Board Nancy Zeleznikar, Chairman - Library Board Ron Hayden, Library Director Dorothy Boesch, President - Friends of the Library Mr. Warren G. Hall Mr. Michael K. Tierney Mrs. Ruth Bailey The firs; order of business, motion made to approve the July 29, 1987 regular meeting minutes and t!;e August 26, 1987 special meeting minutes. Mr. 4 e. t called a point of order. Mr. West felt that the order of business should be #5 - New B-siness, and #6 - Old Business should be reversed on the agenda. Motion made, seconded and approved to adjust the agenda to reflect such realignment. Mr. Carafalo returned to the first order of business. Motion made to accept both sets of minutes. Mrs. Faber abstained from approving the minutes of August 26, 1987 as she had been absent from that meeting. Motion seconded and approved. The next order of business was the review of the Third Quarterly Treasurer's Report. Mrs. Faber suggested that the meeting be turned over to Mr. Villella for a verbal report on this document. fir. Villella indicated that the Treasurer's Report was for the quarter ending September 30, 1987 in which was reflected Bank of America's attempt at realignment of funds pursuant to the directions of the Board as specified in their Resolution #87-01. Also, in September, both principle and interest payments fell due on the bonds, payment was made. Mrs. Faber inquired relative to the audited numbers for the quarter ending June 30, 1987, stating that the figures indicated that the Corporation was $100,000 under that which was reflected on the September 30, 1987 quarterly report. Mr. Villella responded that he would be glad to address the issue at this time, however, the report that he had just introduced was the quarter ending September 30, 1987. Mr. Villella indicated that under Item #5 - New Business, the, Board is to hold conversation as to the status of the annual audited financial statements. Mr. Villella stated that at the Board's pleasure he would discuss the audited figures. The Board indicated they would hold conversation at this time on the audited figures. Mr. Villella directed the Board's attention to the report which had been passed out at the meeting, dated June 30, 1987 Treasurer's Report (Reflecting Audit Dollar Amounts). The differences resulting therein are that no audited adjustments are present other than changing from a cash basis to an accrual basis. The Treasurer's Report is prepared strictly on a "cash" basis, that is, as payments are made they are then reflected. As money comes in, the money is recorded. The auditors, for the June 30, 1987 statements, will adjust those as interest is accrued even though it is not paid, funds will be reflected as an accrual even though it has not been paid. As just explained, these were the adjusting entries to the unaudited statement the Board received last meeting, and those audited figures the Board received today. Mr. West questioned the balances as of Septeniber 30, 1987. Mr. West indicated that in the Bond Reserve Fund the Corporation holds sufficient reserves as per the requirement. Mr. Villella indicated that the requirement is the Board must hold reserves equal to one year's rental payment and that the dollar figure reflected is adequate to meet the requirement. Mr. West stated that the Board then has approximately $31,000 excess to that amount. Mr. Villella indicated that this was correct, and that he could only assume that Bank of America has not transferred any interest earned by this fund. Mr. West addressed the Debt Service Fund and inquired if there was a requirement for the Corporatioe to retain any set amount in. this ',ind. Mr. Villella indicated that his interpretation cf the indenture is that at any point in time, within the Debt Service Fund, there should be one year's (or the following twelve liinnth cycle) worth of payments. That is one principle payment, the next due principle payment (at any point in time in the year there will be another principle payment due within 12 mc-oths), and the two semi-annual interest payments. Therefore, as reflected in the Treasur,.-T7s Report as of September 30, 1987, principle payment due as of 9/1/88 (approximately eleven months from the date of the statement) there will be another principle payment due and the two corresponding interest payments. Mr. Villella reiterated that he presume, that Bank of America, because they paid -2- Tape 8 -1.005/3539j a principle and interest payment in September, had not yet transferred, by the end of September, the next principle and interest payment into that fund which will fall due the following September 1. Mr. West stated that what he was trying to determine was what the Corporation must retain in the Debt Service and Bond Reserve Funds and where those funds come from. His understanding is that the retention requirement is $787,000. Mr. Villella stated that his interpretation of the indenture is that those monies take first priority. Therefore, the funds come from whatever sources are available until the requirements of both the Debt Service Fund and Bond Reserve Fund are satisfied. Mr. West indicated that the Corporation is to have $787,712 in balance at any point in time. Mr. Villella stated that he had hoped that Ms. Arneson would be present at this meeting, and could only rely upon his interpretation of the indenture. Mr. Villella again stated that his interpretation is that this issue is not spelled out clearly in the bond indenture. The $399,000 requirement is quite clear. However, his interpretation is that in the Debt Service Fund, there must be the next principle and semi-annual interest payments. Mr. West moved to accept the Treasurer's Report and the Reflected Audit Dollar Amounts Report. Motion seconded and approved. The next point of business public input. Introductions of those present were conducted as reflected on the first page of these minutes. Mr. Garafalo encouraged public input. Mr. Hayden. addressed the Board. Mr. Hayden advised that the Library Needs Assessment Study has been presented to Council, and while he cannot discuss the study, as the Council has not yet been briefed with regards to the study contents, Mr. Mayden did wish to share that the Council has had an opportunity to review the executive summary. In this summary it is indicated that Library expansion is warranted. Mr. Hayden indicated that he was present at this meeting of the Board to emphasize this need and to offer support for the Council's request for the relinquishment of the funds by the Public Facilities Corporation, Board back to the City. Mr. Hayden further offered that he had been advised that at the last meeting of the Library Board, the Board had supported the Council's decision as well. Ms. Boesch inquired that if the Public Facilities Corporation released the funds to the City if there was anyway to insure that such funds would he utilized for Library expansion. Mr. Garafalo indicated that upon the return of the funds to the City, that this would become a matter between the citizens of ! !untington Beach and the City Council. Ms. Arneson arrived at 4:0 8 P.P[. Under Old Business, Mr. Vest reported that an answer to Mayor Kelly's June 5, 1987 letter had been forwarded. ';'r. West recommended that a letter of acknowledgment of Mr. Cook, Interim City Administrator's, letter dated October 21, 1987 be prepared. Motion made, seconded and approved. Resolution #87-02, Return of Excess Funds to the City, was then reviewed by the Board. Mr. West requested an amendment be made to the last paragraph. The last paragraph -3- Tape 87.005/3539j to read, "NOW THEREFORE the Board of Directors of the Huntington Beach Public Facilities Corporation does hereby request and direct the Trustee to remit the sum of $1,350,000 from the Construction Fund to the City of Huntington Beach to reimburse the City for any rent or additional rent previously paid under the 1972 Lease and Sublease." Motion made and seconded. Mr. Carpenter held discussion at this time indicating that there is one other method to dispose of excess funds which should have very careful consideration before the Board approves the motion before them. Mr. Carpenter indicated that he felt very strongly that the Board, as well as the City, owes these funds to the investors and not putting aside the fact that the Library needs the expansion and that this purpose would be an excellent use of these funds. Mr. Carpenter felt, however, that the Board should very seriously consider paying off the debt before these excess funds are relinquished to the city for Library expansion projects. Mr. Carpenter volunteered that he was not certain of which direction the Board should proceed along these lines in view of the correspondence received by this Board on this subject. Mrs. Faber indicated that the Board has explored the possibility of bond redemption earlier, and that it was determined that the bonds would have to be purchased at a price which is about face value according to the indenture to retire such bonds early. If the City were to borrow money to accomplish the expansion of the Library, they would be paying a much higher rate of interest than the Public Facilities Corporation will continue to pay on the bonds that are currently outstanding. This determination was the basis for rejecting this option. Mr. Faber felt that circumstances had not changed for this initial analysis on bond redemption. Discussion was then held with legal counsel regarding early redemption of bonds. Mr. Garafalo called for the vote. Motion approved to adopt Resolution #87-02 as amended, returning all excess funds to the City from the Construction Fund. Ms. Arneson presented her verbal report regarding construction to the Second Issue (Library) by the City without the consent of the Public Facilities Corporation. Ms. Arneson referred the Board to Section 8 of the Lease. The City must not initiate construction to the Second Issue without the consent of the Public Facilities Corporation Board. This provision remains in force until the lease has been completed. Mr. West inquired, presently the Board has in its possession a report from Don Kiser that indicates that there will be approximately $75,000 expended for parking lot landscaping and conservation/energy types of projects. Mr. West inquired if these types of projects would fall within the purview of the Board predicated on the umbrella language of the lease. Mrs. Arneson indicated that she felt such projects would fall under the purview of the Board, indicating that the only exception would be as specified in the lease which states, ". . .this shall not prevent the City, without obtaining the Corporation's consent, from temporarily affixing personal property to the facilities, provided the City shall repair any damages thereto when such property is -4- Tape 87.005/3539j removed." Ms. Arneson indicated that the City should obtain the written consent of the Corporation in such incidents of major construction, i.e., parking lot landscaping, etc., according to the lease. Mr. West felt that a letter should be forwarded to the City Administrator advising him of such facts, indicating that projects as described earlier in this meeting should be submitted to the Corporation Board prior to the project(s) execution. Mr. West made a motion to so notify the City Administrator, informing him of the requirements of Section 8 of the lease, and requesting that the City follow such requirements/procedures. Motion seconded. Mrs. Faber held discussion indicating that this provision should be initiated as of this date and should not delay any contracts which are currently in progress as this would cause a delay of three months until the Board was to meet again. Mrs. Faber felt that if the City had submitted the parking lot landscape improvement and energy conservation projects to the Board, that the Board would have approved same. Mr. West suggested that the letter so indicate the Board's benevolence. Mr. Garafalo called for the vote. Motion approved. Mr. Villella reviewed with the Board the report as prepared by the City's Insurance and Benefits Manager regarding Fire/Earthquake Insurance on the Second Issue. Mrs. Faber indicated that the page which lists the Library under the schedule of properties insured, should be forwarded to the Board. Staff will forward the requested page in the next agenda package under "Informational Items". Mr. Villella reviewed with the Board the Library Maintenance Report. Mr. West made the motion to accept the report with the Board's concurrence relative to the items listed therein. Motion seconded and approved. Mr. Garafalo indicated that he would prepare the response to Mr. Cook's letter of October 21, 1987, and assigned Ms. Arneson to prepare correspondence to the City Administrator relative to Section 8 of the lease. Under New Business, the Board prepared to hold interviews for the position vacated by Mr. Stephen Wight. i11r. Garafalo inquired of the Recording Secretary if appropriate advertisements had been placed for the vacated position. Mrs. Donoho advised that a news release had been prepared and forwarded to 1','Ir. William Reed, Public Information Officer, who placed the appropriate notices. Mr. Garafalo inquired if past applicants had been notified of the opening. cs. Donoho stated that all applicants on file with her office had been notified of the position. Mrs. Faber inquired if any response had been received. Mrs. Donoho advised that nost applicants either expressed no further interest, or had moved from the City's limits. ; xo applicants did not respond to the letter forwarded them, an attempt had been made t::; ;.each these applicants by telephone to no avail. Both Mr. Warren C. Hall and Mr. Michael K. Tierney were then interviewed by the Board relative to their qualifications/experience. Mr. Garafalo called for an open vote. Mrs. Faber (Warren Hall), Mr. Garafalo (Warren Hall), Mr. Carpenter (Michael Tierney), Mr. West (Warren Hall). 511Z Tape 87.005/3539j Mr. Hall was appointed to the position of Director to the Board of the Public Facilities Corporation. Mr. Hall's term shall expire July 27, 1989. The Board thanked Mr. Tierney and encouraged him to apply for other City Boards and Commissions in which he has an interest. Information Items were reviewed with the Board. Under Director's Comments, the Board held discussion with Mr. Franz relative to his knowledge as to the requirements under Section 8 of the Lease as discussed previously in this meeting. Mr. Franz advised that he was aware of the requirement. The Board inquired if the Capital Improvement Program document would be an appropriate vehicle from which to work. Mr. Franz felt that the Capital Improvement Program document would be most adequate for this purpose. Mrs. Faber inquired of Mr. Franz if the Library Director's attendance at the quarterly meetings of the Board could be reinstated. Mr. Franz could foresee no problems with Mr. Hayden's attendance at the meetings, but added that he was not Mr. Hayden's supervisor. Mr. West felt that it would be more appropriate to allow th City Administrator decide who from the City's staff should attend the meetings of the Board. Mr. West made the motion to write a letter to the City Administrator to formally make such a request. Motion seconded and approved. Mr. Garafalo directed Mrs. Faber to prepare the communique to Mr. Cook on this subject. The meeting was then adjourned to the Regular Meeting of the Board at 4:00 P.M., January 27, 1988 at the Central Library Facility, Balboa Room, 7111 Talbert Avenue, Huntington Beach, California. Al &15� 6 A I K. DONO 110 Recording Secretary �AN T. VILLELLA Assistant Secretary, K.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: JOSEPH GARAFALO President, H.B.P.F.C. LORRAINE FABER Secretary/Treasurer, H.B.P.F.C. Q-V Tape 87.D05/3539j