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FINANCE / CLAIMS
COMMITTEE ACTIONS
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ATTENDANCE: Carvin Hilliard, Chair; Matt Miklave; William Krummel; Douglas Hempstead; Kelly L. Straniti; Gwen Briggs; Douglas Sutton (8:05 p.m.)
STAFF: Timothy Sheehan, Redevelopment Director; Thomas Hamilton, Finance Director; Paul L. Jones, Redevelopment Agency; Peter Nolan, Corporation Counsel; Susan Sweitzer, Redevelopment Agency; Michael Stuart, Tax Assessor (8:05 p.m.); Gerald J. Foley, Purchasing Agent; Lisa Biagiarelli, Tax Collector
OTHER: Mayor Richard A. Moccia; Robert Koch, The Hour; Tony Doumlele, Norwalk Resident
The meeting was called to order at 8:00 p.m. by Mr. Hilliard.
1. Approval of Minutes – Finance Committee meetings of July 10, 2007 and August 14, 2007
** THE APPROVAL OF THE MINUTES WAS MOVED BY THE CHAIR.
** MOTION PASSED WITH ONE ABSTENSION TO THE AUGUST 14TH MINUTES: MS. STRANITI.
2. Claims Committee: Receive Monthly Claims Report; Review and approval of claims as required from Claims Committee Report
Ms. Biagiarelli said that there were two special requests on the August Claims Report that the Committee needed to vote on and asked Mr. Hamilton if he wanted to go over the Wee Burn issue.
Mr. Hamilton said that the Wee Burn issue was a court stipulation emanating from an appeal of the value set in the 1999 revaluation. He said that they were currently operating under the 2003 revaluation.
Mr. Stuart arrived at 8:05 p.m.
Mr. Hamilton introduced Michael Stuart, who was the City’s new tax assessor. He then continued, saying that in 2001 there was a sale on the property and the sale brought the value that we currently had to the attention of the assessor, and it was realized that the property had been undervalued and so the assessor went back and did a clerical error correction and brought the value up. This gave the taxpayers an opportunity to appeal to the Board of Assessment Appeals. They did so with no satisfaction and eventually escalated the issue and made the argument that there were deed restrictions on the property that limited the potential use of the property and that the best use for the property was no longer consistent with the full market value of the property and their argument prevailed.
Ms. Biagiarelli said that her department was looking for the Committee to take a vote to approve this so that they could go ahead and issue a refund because the amount was too much for them to refund on their own.
Mr. Hamilton added that this was three years worth of refunds.
Mr. Hempstead asked if this would come out of the current year’s operating budget.
Mr. Hamilton answered that it would not.
** MR. HEMPSTEAD MOVED TO ACCEPT ITEM 2.
** MOTION PASSED UNANIMOUSLY
3. Narrative on Tax Collections – Receive and Review Report
Ms. Biagiarelli distributed the narrative to all members and
reviewed it along with the spreadsheets all members had received in their
agenda packets.
4. Monthly Tax Collector’s Report dated August 31, 2007 – Receive and Review
Report
Ms. Biagiarelli briefly reviewed the Monthly Tax Collector’s report and said that she would go into further detail at the next meeting of this Committee.
** MR. HEMPSTEAD MOVED TO ACCEPT ITEMS 3 AND 4.
** MOTION PASSED UNANIMOUSLY
5. Authorize the Mayor to execute an amendment to the master lease agreement for office copiers with IKON Office Solutions, extending the expiration date to October 31, 2011, and authorize the Purchasing Agent to add new office copiers to this master agreement for a total amount not to exceed $39,200. Various accounts.
Mr. Foley reviewed the memorandum he’d provided to the Committee and asked for authorization to extend the master lease agreement with IKON Office Solutions through 2011 so he could get four year leases on four other machines and come back to seek authorization to extend the leases on those so that they would all come up together in 2011.
** MR. HEMPSTEAD MOVED TO ACCEPT ITEM 5.
** MOTION PASSED UNANIMOUSLY
6. Appointment of Robinson and Cole as Special Counsel for the Waypointe Project
** MR. HEMPSTEAD MOVED TO APPROVE ITEM 6.
Mr. Hamilton called the Committee’s attention to a memorandum he’d prepared which was included in each member’s agenda package. He said he hoped they all had a chance to read it and that it addressed items 6 and 7 together because in many respects the appointment of counsel to represent the City was in furtherance of continuing the negotiations with the selected developer for the Waypointe Project. He said that at a joint meeting of this Committee and the Planning Committee, the Council was provided with extensive information on the status of the project and the status of negotiations at that point. He said that the Council was briefed on a financing concept that had been presented to the City by the developer and that generally the word back from this Committee and from the Planning Committee was that the City should proceed with negotiations cautiously, taking the time necessary to do all due diligence to make sure that the City is protected to the maximum extent possible if and when there is any public financing imposed. Mr. Hamilton said that he wanted to be clear that neither himself nor the Redevelopment Agency staff had reached any conclusion about whether the City should go forward with the concept of public financing to support this project and neither had reached a level of comfort with the $104 million amount that had been proposed by the developer so the decision about the recommendation of both the concept and the amount were still open issues as far as they were concerned. He said that there was authorization from both Committees to proceed with further examination of the concept and that minimizing risk to the City was of paramount importance. He said that he’d heard and read that there appeared to be some misperceptions about what was being discussed and what was not being discussed and wanted to make it very clear that any public debt if there was any public debt that was issues related to this project would be solely for publicly owned infrastructure. He added that federal tax law precluded them from issuing tax exempt debt to support a private developer’s private property interests, which meant that any debt, if and when any debt was issued would be used to support the financing of public garages, meaning garages that were open freely to the public, not parking for residential structures and not necessarily free but open to the public with equal access to anyone who wanted to use them. He said that the City could not issue tax exempt municipal bonds to finance a garage that was limited to specific users or that was reserved for owners of residential units or other specific people so any public financing, if there was any public financing would be for public garages and public infrastructures such as streets. Mr. Hamilton said that there had never been any discussion about and the developer has not proposed that there be any public financing of any private improvements whatsoever. He then added that none of the debt was to be repaid from the general revenues of the City and that if and when there was debt that was issued it was to be repaid from parking revenues and from a Special Services Tax, which was a supplemental tax that would be levied on the affected property owners in the district. He said that the Special Services Tax would have the same collection enforcement mechanisms as any other tax so it was certain that the City would collect the Special Service District tax if there was one. He went on, saying that the area where the City was spending a considerable amount of time and was still working on very diligently was getting comfortable with the parking revenue component of this project. He said that the parking revenues were subject to a bit more uncertainty than a Special Service District tax so the Redevelopment Agency had retained the services of an outside independent parking consultant who was working through those numbers. He said that this was not anywhere near the final stages, but that the Agency was trying to determine whether or not the City could be comfortable with the numbers and if not, what numbers they could be comfortable with. He said that active negotiations were currently being conducted with the developer and the developer had counsel at the table and that the City needed to likewise have counsel at the table that had the necessary expertise in the areas of financing, structuring of public contracts and real estate development. He stressed that this was necessary to properly represent the City and to protect the City's interests and that Robinson and Cole as a firm was uniquely qualified to perform those services. He said that they were already the City's bond counsel, and that they were one of, if not the leading municipal bond counsels in the state of Connecticut. He said that more importantly than even that was that they’d represented West Hartford with their redevelopment project with the same developer and this deal was in many respects modeled after West Hartford’s project, which was currently nearing its successful completion. Mr. Hamilton then noted that Robinson and Cole had committed to a 15% reduction of all of their hourly rates that were quoted in the proposal that was before the Committee.
Mayor Moccia said that there were a lot of rumors going around, saying that the City was being given away and those rumors were nonsense. He said that if there was no redevelopment project for Waypointe or West Avenue, there were infrastructure repairs that would have to be made there to sewers, sidewalks, storm drains, etc. regardless.
Mr. Hilliard said that Mr. Hamilton gave an excellent explanation and that he’d wanted to talk about some of the rumors that were out there so he was glad that that was cleared up.
Mr. Sheehan said that he thought it was important for the Committee to know that the Redevelopment Agency would have their counsel at the table as well and that currently, the City was the only party who did not have authorized counsel representing it.
Ms. Briggs asked if it was correct that there were currently negotiations being conducted.
Mr. Nolan answered it was and that Robinson and Cole was currently at the table.
Ms. Briggs asked if the City was paying them currently.
Mr. Nolan answered that the City had not paid them anything.
Mr. Hempstead said that he was intrigued to see that this project could really work but he was not completely comfortable with it and wouldn’t be until the Committee had adequate information presented to them. He said that the most prudent thing to do was not only to bring in Robinson and Cole but also to conduct a separate fiduciary review. He said that the City needed counsel because the Committee and the staff needed to have all the information in front of them to make an intelligent decision. Mr. Hempstead then asked as an example if the City would want ownership of the parking garage after 20 years.
Mayor Moccia said that Norwalk had the advantage of having West Hartford having done this first and having many of their issues documented so they would save money in some of the groundwork and research.
Ms. Straniti agreed that this was the first step in moving forward with a very complicated financing proposal and Robinson and Cole had a good reputation in many areas of the law and would be the best for this project, especially given that they already did it in West Hartford and they probably already have some templates set up which could be beneficial to the City of Norwalk also. Ms. Straniti hoped that the issue about the parking garage brought up by Mr. Hempstead was being dealt with currently by the consultant that the City had hired.
Mr. Nolan said that that was probably something that the Committee would have to think about upon receipt of the consultant’s analysis. He said that part of the advantage of having Robinson and Cole as counsel was that they could have Robinson and Cole brief the Council on the negotiations on a monthly or more frequent basis in executive session at Committee meetings so the Council could weigh in on the process early on in negotiations.
Mr. Miklave said that Robinson and Cole was an excellent law firm but was concerned that they might be so invested in the advice they gave to West Hartford two years ago that they'd be afraid to back away from it now. Mr. Miklave wanted to make sure that the City would be looking over their shoulder to be sure that this was independent of that and that the project would be suited for Norwalk.
Mr. Nolan said that the developer had hired Day Pitney, LLP which was another major firm and who’d done the other side of the transaction in West Hartford so Mr. Miklave was right in that care had to be taken to make sure that this was independent of that. He added that Diane Beltz-Jacobson had adjusted her schedule to attend all conference calls and meetings and that Redevelopment had counsel present so there were two separate sets of counsel looking this over to help give that independent analysis.
Mr. Krummel said that he thought this was a very important issue and knew that everyone present had at their heart the fiduciary responsibilities that they were charged with by the citizens of Norwalk. Mr. Krummel said that he was very concerned with transparency and wanted to know everything that was happening. He said that at the July 10th meeting, the Committees were presented with a Tie and Bond Report dated January 23rd and wondered why so much time had lapsed between the creation and presentation of such a critical document. He said that the Tie and Bond report was referred to in that public meeting and that he’d read that Tie and Bond felt that this report provided a summary of the existing conditions for traffic, parking, utilities, sanitary, sewers and a storm drainage, identified the improvements necessary and provided an opinion of probable cost. He said that nowhere in this report other than the Yankee Doodle Garage, was there mention of the structured parking that was mentioned that the public meeting. He then mentioned that the municipal costs break out was $10,595,000 and asked where the hundred million dollar figure came from. He said that Mr. Sheehan had told him that the number was from parking but that it was not in the Tie and Bond report and to his knowledge there was no information presented on that and wanted to know that before special counsel was hired to represent the City in these negotiations.
Mr. Hempstead said that there probably should some kind of joint meeting with the attorneys that were currently involved so that they could give an update to the Committee Members in executive session.
Mr. Miklave said that he respected very much the points that Mr. Krummel made and thought that they were worthy of consideration. He said that it seemed to him that there were two tracks and they both needed to be pursued simultaneously and with the requisite degree of due diligence. He said that track one was what was going to be built, if anything and track two was how it would be funded. He said that it didn’t make sense to negotiate a Land Disposition Agreement that required between $25 and $100 million if the City was unable to fund the public portion of the infrastructure improvements. He agreed with Mr. Krummel that there needed to be transparency and an understanding of all the implications of this from all aspects of the development plan. He reiterated that he was unwilling to commit $50 to $100 million to this unless it was certain that this project was in the public interest, fiduciarily responsible, consistent with the community and reasonably economically sound.
Mr. Hempstead said that he wanted to go forward with hiring a firm because he did not feel comfortable supporting this project until there was counsel in place with the expertise to deal with this sort of project.
Mayor Moccia said that he wanted to reemphasize to Mr. Krummel's
point that none of the debt associated with this development would be repaid
from the City's general operating revenue and that if for not other reason
the City needed Robinson and Cole to advise them on how to proceed with the
institution of a Special Service Taxing District.
Mr. Doumlele said that for the developer to put the idea forward of the special
financing arrangements suggested that he was undercapitalized and the solution
for that was that he should bring in additional financing partners himself
which would provide the additional financing requirements at no extra cost
or risk to the City. He said that the master development agreement and the
financing issues were two separate things and should be the subject of two
separate studies and suggested that two separate contracts be pursued with
Robinson and Cole and that the study on special financial arrangements should
be paid for by the developer because it would benefit him and not the City.
Mr. Doumlele went on to say that this project would cost taxpayers $1500 each
but that he expected that the number was intentionally exaggerated and that
with great fanfare, it would be later announced that the number was dropped
from $105 million to let's say $95 million, and the focus would then be put
on saving $10 million rather than the remaining $95 million cost. He then
asked what would happen if a phase of the project were delayed or occupancy
rates were lower than expected and who would pay the difference. He said that
Norwalk in particular had a poor record on parking garages, noting that the
Maritime garage nearly brought the Parking Authority to its knees because
the revenue was far below what a very capable reputable parking garage company
projected and that this project was going to be three to five times the financial
equivalent of the Maritime garage and under very plausible circumstances could
bring the City to its knees.
Mayor Moccia said that the information being circulated that this project would cost every taxpayer $1500 was incorrect and that money would be paid back by the developer in a Special Services Taxing District with a special assessment on top of the normal property taxes by the property owners and with the parking revenues. He said that this Council and any succeeding Council and any succeeding Mayor would not advocate that the City pick up the debt for this.
Mr. Miklave said that he appreciated Mr. Doumlele's comments
and the time he’d spent looking into this. He said that he disagreed with
the Mayor to the extent his comments presupposed that a Special Service District
would be established and that had not yet been decided. He said that the questions
that were raised about the study and how much was really necessary to move
economic development forward were appropriate to ask and he hadn’t made a
decision about any of them. He said that the hiring of Robinson and Cole was
an appropriate step to take to get the information on the table with which
to make a decision and he was not committing to anything other than that.
** MOTION PASSED UNANIMOUSLY
7. Discussion on Status of Waypointe Project; Discussion on Infrastructure Financing associated with Waypointe Project
This was not discussed any further as it was decided that it was sufficiently covered under the previous item’s discussion.
8. Receive Board of Estimate and Taxation Special Appropriations from September 4, 2007
** MR. MIKLAVE MOVED TO ACCEPT ITEM 8.
** MOTION PASSED UNANIMOUSLY
ADJOURNMENT
** MR. MIKLAVE MOVED TO ADJOURN.
** MOTION PASSED UNANIMOUSLY
The meeting was adjourned at 9:06 p.m.
Respectfully submitted,
Jessica Schroder
Telesco Secretarial Services
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