Regular Meeting of California Borough Council, June 14, 2012 at 6:30 pm
CALL TO ORDER:President Jon Bittner called the meeting to order at 6:30 pm
ATTENDANCE: Mr. Alfano, Mr. Bittner, Mr. Difilippo, Mr. Encapera, Mr. Glab, and Mrs. Gutosky
ABSENT: Mr. Mariscotti and Mayor Durdines
MOMENT OF SILENCE
PLEDGE OF ALLEGIANCE
ADDITIONS OR CHANGES TO AGENDA
Mr. Alfano added under public housing – recreation authority & river town meeting
Mr. Bittner added release bond for contractor who pulled away from Knob Road project
Mr.Bittner stated the agenda will stand approved as printed and amended.
PUBLIC COMMENT
No public comment at this time
MINUTES OF MAY 10, 2012
Motion by Difilippo/Encapera to approve the minutes of the Regular Meeting of May 12, 2012 duly carried with all members present stating aye.
SECRETARY’S REPORT – MS. EVANS
Ms. Evans read the account balances and accounts payable as of April 30, 2012
Motion by Difilippo/Alfano to accept the treasurer’s report duly carried with all members present stating aye.
WAYNE GERHOLD – BOND COUNSEL
Mr. Bittner introduced Wayne Gerhold to council. Mr. Gerhold gave some information about himself and his law office in Pittsburgh. He explained that what the bond counsel does and that he is also an attorney who specializes in bonds. Primarily the financing is tax exempt where the owner of the security does not pay state, local, or federal income tax on the interest that they receive so there is a whole tax side of the transaction that he gets involved with so it is a very specialized field. He stated it has come to his attention and in talking to Keith as well. The interest rate environment has actually never been lower in the history of the country since World War II and the 2007 bond issue could be refunded and basically you would be selling refunded bonds that would result in lower interest rates and considerable savings to the borough. He believes just based on talking to the bankers and Keith that California’s savings right now would probably be around $480,000.00. He can go into greater detail as how to structure the savings you can have savings done two ways. You can take cash up front of the total savings and that money can then be used for additional capital projects but it cannot be thrown into the general administrative budget and used to say pay salaries. It has to be used for capital projects. The other way to structure the bond issue is doing it the way one would do a traditional mortgage loan refinancing and that is instead of taking the savings up front you reduce your debt service payments over the remaining life of that refunded bond issue. That is a policy question that you don’t need to decide tonight but he wanted to make them aware of the options in taking your savings. The Government Finance Officers Association, GFOA, he is an associate member of the GFOA, because he likes to read their materials as well. The GFOA has a standard of 3% savings. If you take the principle amount of the bonds that are outstanding which the 2007 are $5, 840,000.00 right now and multiply that by .03 you get $175,200.00 and so if you are looking at savings in the $480,000.00 range it certainly would be prudent to consider that. With regard to timing, the bonds can be redeemed without any prepayment, payment, or anything like that on the December 1, 2012. Under the federal tax code if you close on the refunding bond issue within 90 days of Dec. 1, 2012 that is considered a current refunding, which means that you get the funds that are required to pay the principle and the interest that’s due on all of the bonds on Dec. 1, 2012 and those refunding proceeds are given to your paying agent and that is US Bank, National Association and they hold the money until Dec. 1, 2012. There is a call notice that goes out that they and he work on and then basically all of the 2007 bonds are paid off on Dec. 1, 2012. However, you can close on that financing any time after Sept. 1, 2012 and since it takes about a month because of debt act approval process you can actually have the bond sale any time after August 1, 2012 for a bond closing that would occur any time after Sept. 1, 2012. He stated he would like to stop there but he has one other thing to say in terms of a decision that council would have to make is the next step is you have to bring in an investment banker to be able to work with you because it will take time. Shirley will have to collect some financial demographic and other data that is used for the offering documents similar to what was used in 2007 so it will take a little bit of time because she has enough to do. You may also have some time that permits this data to be collected by the investment banking firm and Shirley so he would say that if the borough would consider doing this refinancing, and his thoughts are that it certainly meets GFOA standards; $175,000.00 versus $480,000.00 that you may want to decide tonight at the public meeting whether or not you want to proceed. He stated he charges a flat fee and if turns out the financing does not occur, very unlikely in this instance, there is no cost involved at all since he works on a contingency basis. The only cost that would be involved that you would need to get a new rating and the rating agency charges about $9.0000.00 for that so you would incur that obligation that would be do whether you close on the bond or not. The other professionals, himself and the investment banker, we work on a total contingent fee basis. So if for some bizarre reason interest rates were to go through the ceiling by August 1 and the transaction would not be feasible that would be the only cost incurred. The next step would be to hire an investment banker to then start working on the numbers and working with Ms. Evans in collecting the information that is required to go into the offering document. Really you have many new members of council so if you have any questions please ask me. Mr. Glab asked if we are meeting the December 1st deadline when is the latest we would need to start the process. Mr. Gerhold stated you don’t have to close the bond issue in September but you should close the bond issue in the middle of November which means you would have the bond sale in the middle of October and close it in the middle of November. You have to do a 30 call notice but we could do a conditional call which means that all the 2007 bonds would be redeemed Dec. 1, 2012 assuming that the paying agent, US BANK, would have sufficient funds to do that. Mr. Glab stated working back from that time frame we should meeting with the investment banker sometime is July or August. Mr. Gerhold stated the bond sale would be in August for a closing in September and the only thing that they will tell you is that the longer you wait the longer you play the interest game because no one knows when the interest rates may rise again and if they go up then your savings is less and you take interest rate risk the longer you wait. Mr. Melenyzer stated the last time the bonding was done three investment bankers came in and gave presentations to council as a whole so they could decide which investment bankers they wanted to use and it came out to be PNC. This way you get to ask and get answers to questions and you have some competitive things going on. Mr. Gerhold stated he would come down for that. Mr. Gerhold stated you as council set the policy and you have options you could just stay with PNC they didn’t’ do a bad job the last time or you can have 2 investment bankers, he is aware of another one, Benning, that has contacted him, so you may want to meeting both of them. He added that the reason that professional services are not required to be bid under Pennsylvania Law that there is an understanding by the General Assembly, one of the rare instances when they were rational, that when you are dealing with professional services there is a level of trust and working relationships that are developed so it is a non-bid situation. He thinks the next step is to hire either one of them or have them both come down one evening giving them a half an hour to speak so if you are unsure of a banker that you would want to select that is the process he would recommend. Mr. Melenyzer stated Wayne has done a wonderful job and even came back when we had questions with no fees involved and he answers all our questions over the phone so he has been great.
Mrs. Gutosky asked what interest rate we are paying now. Mr. Gerhold stated 4.6%. Mrs. Gutosky asked if we were to reduce it today what would it be. Mr. Gerhold stated it would be at about 3.5%. Mrs. Gutosky asked if the savings would be significant enough to incorporate the $9,000.00 fee for the rating company. Mr. Gerhold stated yes when he gave the number of $480,000.00 that is net of the purchase of the bond insurance, payment of the underwriter’s discount, and then payment of the other fixed cost of financing. He added that anytime you get a number from the banker it is always net of all the cost involved and they usually don’t exaggerate, they are not going to say you have $480,000.00 and then turn around and say sorry you only have $200,000.00 that is not going to happen. They usually lowball the savings so they can come here and look good announcing savings that were a little more than what they had promised. There was more discussion concerning payments and current terms by the engineer and Mr. Gerhold. Mr. Bittner asked what council’s pleasure is. Mr. Melenyzer stated you should hire bond counsel tonight and Wayne has more than proven himself that last time around. Mr. Melenyzer stated council also needs to discuss whether they want to just go with PNC or bring in a few others for presentations and then select one to go with.
Motion by Glab/Alfano to retain Wayne Gerhold as bond counsel for the refinancing of the 2007 bonds duly carried on a roll call vote with all members present voting yes.
Motion by Glab/Difilippo to begin the process and bring in investment bankers, PNC, Benning, and possibly Edward Jones or another and get bonding rating at a special meeting duly carried on a roll call vote with all members present voting yes.
PRESIDENT’S REPORT – MR. BITTNER
COUNTY HAULING – 1 YEAR EXTENSION ON CONTRACT
Mr. Bittner stated that County hauling has requested a one year extension on their current contract and this is the last extension allowed under the current contract with the same conditions. He read County Hauling’s letter.
Motion by Difilippo/Alfano to approve a one year extension duly carried on a roll call vote with all members present voting yes.
RESIDENTIAL PARKING PERMITS
Mr. Bittner stated we discussed residential parking permits and parking in the business district he has not been able to contact Indiana University but hopefully he is going to contact them and set up a date not this coming week but the following week that we can go up to Indiana to see what they are doing and get a feel from them as to how to do it. He wants Mr. Tuday to go along because he will be in charge of all the signage and everything plus with the way we are going to work the new meter persons that we hired he thinks we will be able to cover that for enforcement if we need to do that also.
SECURITY CAMERA SYSTEM
Mr. Bittner stated that Mr. Tuday brought a quote back for approximately $4,900.00 for camera system for the borough building. He asked if council wants to discuss that more or act on it tonight or do you want more information from Mr. Tuday, what is council’s pleasure. Mr. Alfano asked if our borough crew would install this or we’d have to get it installed from someone else. Mr. Tuday stated that his crew will install it and said that it might be a little bit more or less depending on how many cameras we want to go with. There are 15 cameras, 4 outside and 11 inside on the quote. Mr. Alfano asked if he has solicited any other quotes for the equipment. Mr. Tuday stated no because this is the one that that school district uses. Mr. Alfano asked if they purchased through a government purchasing program. Mr. Bittner asked what the name of the company is. Mr. Tuday stated it is Alarmex. Mr. Alfano asked if they are on the purchasing program or we don’t know that for fact. Mr. Bittner stated for this price we would be under that requirement. Mr. Bittner stated that Pete Capanna, from the school district, said that most people who do installation of camera or camera equipment this is the supplier they use. Mr. Alfano stated he just wants to make sure we’re not violating any purchasing requirements. Mr. Agrafiotis stated they are in the clear.
Motion by Alfano/Glab to do that camera project at approximately $4,900.00, installation by our crew and paid for from the gaming revenue funds duly carried on a roll call vote with all members present voting yes.
STREETSCAPE UPDATE
Mr. Bittner stated as far as the streetscape update is concerned it is taking place. There will be a job meeting on Tuesday at 10:00 am, he will not be able to attend but Mr. Tuday will be there, anyone else who would like to attend you are more than welcome. It will be held on Wood Street where the recreation authority office was. Basically they just go over any questions that need asked and move along with those.
RELEASE BOND – SELIER CONTRACTING
Mr. Bittner stated we had a contractor that bid the project on Knob Road and that contractor decided to pull out of the contract and he needs his bond released. Mr. Brower asked that we have Mr. Melenyzer look into that and he states in his letter here that even though Seiler contracting breached their contract with the borough the borough did not incur any damages as a result of said breach. Accordingly he recommends council pass a motion at tonight’s meeting releasing Seiler Contracting for its not performance of the agreement and also authorizing his office, which is Melenyzer & Agrafiotis, to notify the bonding agent of the same. Mr. Bittner stated that upon the recommendation of the solicitor he would like a motion to release Seiler’s contracting bond, additionally he and Mr. Brower discussed notifying the bonding agent of the fact the Seiler Contracting breached the executed agreement by refusing to perform the work. Mr. Melenyzer stated it is up to council if they want to add the additional note to the bonding company about him not completing the contract. There was further discussion and the borough cannot withhold any monies from the bond since the second contractor’s cost is actually lower than Seiler’s cost.
Motion by Alfano to release Seiler Contracting from the contract terms and authorize the solicitor to release the bond with verbiage stating he did not fulfill the contract.
Motion failed for lack of a second.
Motion by Glab/Gutosky to release the bond and have the solicitor include in the letter the specific reason surrounding the release of the bond duly carried on a roll call vote with all members present voting yes.
PUBLIC HOUSING – MR. ALFANO
ZONING/CODE ENFORCEMENT UPDATE
No update at this time the code enforcement officer was off for a couple of days. They will be inspecting all the dorms next week.
REVISED SITE PLAN – CONDITIONAL USE HEARING
Motion by Alfano/Gutosky to approve the revised site plan for Anthony Fiume at 442-456 Second Street as recommended by the planning commission at their June 5, 2012 meeting duly carried on a roll call vote with all members present voting yes.
SAI – 277 EAST MALDEN SITE PLAN REVIEW- PAVILLION & PARKING LOT
Motion by Alfano/Glab to approve SAI’s site plan for a pavilion and parking lot at 277 East Malden Drive as recommended by the Planning Commission at their June 5, 2012 meeting. There are two stipulations placed on this by the planning commission and they have met with the operation and maintenance agreement that was duly recorded by the Washington County Recorder of Deeds on June 4, 2012 duly carried on a roll call vote with all members present voting yes.
MAUND PROPERTIES- SITE PLAN REVIEW
Motion by Alfano/Gutosky to approve the site plan for Maund Properties for a restaurant at 459 Third Street as recommended by the Planning Commission at their June 5, 2012 meeting duly carried on a roll call vote with all members present voting yes.
CONDITIONAL USE – GIFFIN @129 FIRST STREET
Motion by Alfano/Encapera to approve the conditional use for the Giffin property located at 129 First Street which involves four two bedroom apartments on that site where a single family structure was raized in a C2 zone as per our Conditional Use hearing earlier tonight, June 14, 2012 with the conditions that he provide 8 parking spaces and the conditions set forth in the borough code. Mr. Melenyzer explained that only the council members who attended that conditional use hearing can vote or the council members who did attend can provide a summary to the other council members who did not attend and then everyone can vote. Mr. Alfano covered the material quickly and council voted and the motion duly carried on a roll call vote with all members present voting yes with the exception of Encapera who abstained.