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Commuinity Development Authority - MINUTES - 4/17/2003 CITY OF MUSKEGO APPROVED, AS COMMUNITY DEVELOPMENT AUTHORITY (CDA) CORRECTED MINUTES 5/12/03 Thursday, April 17, 2003 PUBLIC HEARING—Regarding the Terms of a Proposed Lease between the City and the Community Development Authority of Certain Public Rights-of-Way and Public Improvements in Redevelopment District No. 1 in Connection with Lease Revenue Bond Issue. Commissioner Link, Vice-chairperson of the CDA, declared the hearing open at 7:10 p.m. Also present were Commissioners Rob Glazier, David Lindbury, Gail Miles, Ald. Rick Petfalski, Ald. Nancy Salentine, Mayor Mark Slocomb, Finance Director Dawn Gunderson, Plan Director Brian Turk, and Mr. Dave Anderson of Ehlers & Associates. Those present recited the Pledge of Allegiance. Notice of the public hearing, followed by the regular meeting was posted in accordance with the Open Meeting Law. Commissioner Link read the Notice of Public Hearing. Mr. Anderson stated that the CDA is in the process of financing the projects related to TIF District #9, the water utility and burying the underground cable in the Tess Corners area. The method they are going to use is CDA-lease revenue bonds. There are three parties to the agreement—the bondholders, the CDA, and the City of Muskego. Whenever this type of transaction occurs, the bonds are sold. The bondholders provide money to the CDA, the CDA then provides the money to the city so the city can do the projects in the TIF district. Because this isn’t a very good security for the bondholders, with the CDA giving the money to the city, there needs to be a method to get the money back to the bondholders in a secure manner. In regard to the water main, the CDA holds title to the water main, which is going to be installed on Janesville Road, the CDA will then lease the water main to the city. The city will use its TIF revenues to make the lease payments to the CDA. The CDA will use those monies to pay back the bondholders. This is the mechanism proposed for financing. This is a hearing on the lease. The reason for this public hearing on the lease is anytime public property is leased to anybody, there has to be a public hearing. The CDA commissioners received the lease document in advance of the public hearing. Essentially, because the CDA owns a water main, the city wants to lease it from the CDA and will make payments every six months and the money will then be used to pay the bondholders. The lease also included an interest and payment schedule for the public hearing purpose and for Common Council action with an interest rate of 5.75%. This interest number needs to be high enough so the CDA does not have to hold another public hearing and have Council action again. He indicated he would discuss the numbers in more detailed with the CDA commissioners later in the meeting. Commissioner Link inquired if anyone would like to comment at this time? Kristina Strandberg asked why the water main needed to be leased, why they couldn’t just do the improvements within the city? Commissioner Link responded that the CDA has the ability to sell bonds that are double- tax exempt which makes them more desirable to those who buy bonds. The city does not have the legal right to do it. The bonds are more desirable if they are issued through a CDA, than if they would be issued through a city. This is why the CDA was created as a funding source so you CDA Minutes of Public Hearing and Regular Meeting, April 17, 2003, page 2 would get more value for the money and spend it in the community. The city, on the other hand, is better at building water mains than the CDA. Basically, the CDA provides access to funding sources that the city would otherwise not be able to obtain and the CDA has rights and mechanisms that are focused directly on the community development that are different than the tools and the mechanisms that the city has by statute. Ms. Strandberg asked what is the CDA, is it the name of a company? Commissioner Link said the CDA is the Community Development Authority and it is enacted by State statute. It is a quasi-governmental entity. Plan Director Turk explained that the CDA is a separate, political entity of the community that gets its authority from the Common Council, but has the ability to function independently of the Council to the extent that the Council gives authority to the CDA with rights to undertake projects and do development plans, but the funding has to be approved by the Council. They work together, but the CDA has independent authority to initiate projects. Ms. Strandberg summed up that the CDA is just like an organization basically, it’s not like a private agency that would have to render in for money? Mr. Anderson said the CDA is independent in that it is controlled by the city. The main purpose is to focus on areas of redevelopment in the city. The statute gives the CDA more authority to act like a private company as well as a governmental authority. As there were no further comments or questions, Commissioner Link declared the hearing closed at 7:15 p.m. and thanked everyone for attending. CDA REGULAR MEETING Commissioner Link reconvened the regular meeting of the CDA at 7:16 p.m. PRESENT: Commissioners Rob Glazier, David Lidbury, Suzi Link, Gail Miles, Ald. Rick Petfalski, and Ald. Nancy Salentine Also in attendance Finance Director Dawn Gunderson, Mayor Slocomb, Plan Director Brian Turk and Mr. Dave Anderson from Ehlers & Associates. ABSENT: Commissioner Frank Waltz (Excused) GUESTS: None. APPROVAL OF MINUTES: Ald. Nancy Salentine stated that the number of citizens in attendance at the open house should be changed to over 200. Ald. Salentine moved to approve the minutes of the April 10, 2003 meeting as corrected. Commissioner Lidbury seconded. Upon a voice vote, the motion carried unanimously. OLD BUSINESS: CDA ADMINISTRATION OF THE ECONOMIC DEVELOPMENT REVOLVING LOAN FUND Director Turk informed the CDA commissioners that Mr. Wolff is in the process of rewriting the manual now with the State template in mind. They should have the document in the near future. NEW BUSINESS: CDA Minutes of Public Hearing and Regular Meeting, April 17, 2003, page 3 REVIEW AND DISCUSS DRAFT OF REDEVELOPMENT DISTRICT #2 PROJECT PLAN AND SETTING A PUBLIC HEARING DATE ON SAME Plan Director Turk briefly reviewed the draft with the CDA commissioners. He acknowledged the efforts of Mr. Dustin Wolff and Mr. Jeff Muenkel of the Planning Department for their efforts in putting the document together. Much of the information was contained in the blight determination memo that they had received earlier. He focused their attention on the areas described between document pages 39-45 on the district vision plan and implementation as well as the phases of the project plan starting with:  Phase 1—the redevelopment of the former Parkland Mall site;  Phase 2—the Basse property which is moving forward with development;  Phase 3—the Janesville Road reconstruction which is tentatively scheduled to start in 2008;  Phases 4 & 5—are discretionary but included so that the CDA are enabled to do projects at a later date if they choose. He continued, that in Phase 1, it is a very detailed concept plan with detailed cost estimates and as you review Phase 5, it becomes a little more nebulous because there is no immediate plan for the areas. Commissioner Lidbury asked how he determined the order of phases as there was a lot of public comment about addressing the south side of Janesville Road? Plan Director Turk replied that Phase 1 speaks for itself being the Parkland Mall. Phase 2 is developing and is moving ahead and there should be dirt turning next spring on that project. Phase 3 is a known project. They went in order of how seriously they know these things are happening. He called their attention to pages 52 and 53 of the document where it relates to targeted area acquisitions and discretionary acquisitions. The discretionary acquisitions are the majority of the properties that had blight determination and with the exception of the Pick N Save and the Walgreens complex are really going to be seriously impacted by the highway project. Some discussion followed on the Pick N Save parking lot location and the owner of the properties in this strip mall. He encouraged the commissioners that as they review the document and have questions, to feel free to call him. Further mentioned that the document is freely available for parties interested in obtaining a copy for themselves. Plan Director Turk advised that the CDA commissioners needed to take action on setting a meeting date for the public hearing on the Redevelopment District #2 Project Plan. Alderman Petfalski moved to officially establish May 15, 2003 as the public hearing date. Commissioner Rob Glazier seconded. No further discussion. Upon a voice vote, the motion carried unanimously. CITIZEN COMMENTARY: No comments. MISCELLANEOUS BUSINESS AS AUTHORIZED BY LAW LEASE AGREEMENT AND BORROWING FOR LEASE AGREEMENT CDA Minutes of Public Hearing and Regular Meeting, April 17, 2003, page 4 Mr. Anderson provided the CDA commissioners with an updated copy of the TID #9 Financing Plan and also Comparative Proposals. He briefly explained the bargaining procedures of contacting underwriters throughout the country on bond sales. For the initial issuance of the CDA bonds, it’s a different situation because the CDA has no assets and no revenue. The revenue is coming from a TIF that has no tax base. This is not a very secure situation as in other bond sales. The underwriter has to understand the transactions and the TIF plan. They solicited information from underwriters doing this type of business in Wisconsin. They had received two proposals; one from Stifel Nicolaus and the other from Baird. The copy of the financing plan showed the projected TIF revenues, the capitalized interest which is necessary as a part of the borrowing, the interest earnings, and the total revenues. A review of this document shows why a 5.75% rate is a good not to exceed number in the lease. The comparative proposals covered the time frame from 2007 to 2021 and showed the average interest rate for each year. Both proposals had a lower interest rate than the average A-rated fund. Baird had the best proposal. They will start with Baird with all the documents and Baird will do some pre-marketing of the bonds. Mayor Slocomb inquired why the proposal started with 2007? Mr. Anderson stated that was the first year they would have principal payments due. Commissioner Miles asked what happens if the interest rates go up or down in the future? Mr. Anderson explained that once there is a firm proposal, the interest rate is fixed. This would be fixed on May 15 and not vary after that date. This is the process that they will be going through. Plan Director Turk said that in the future, the CDA would have to decide what interest rate they would be charging to the city. ECONOMIC DEVELOPMENT STRATEGIC PLAN STATUS Director Turk mentioned that the Mayor’s Task Force is meeting on Wednesday, April 23, and they will be able to see the first portion of the retail marketing analysis. This will show for project area #2 the retail components they need to market for the downtown. Being aware that the city had sent a letter to the owner of Parkland Mall, Commissioner Link asked if the CDA should also send a letter to the owner as they would be a more direct party impacting him at this point, a courtesy letter? Director Turk stated he had already taken care of sending the letter on behalf of the CDA. NEXT MEETING: The next meeting is scheduled for Thursday, May 15, 7:00 p.m., Muskego City Hall, for the public hearing on the Redevelopment District #2 Project Plan and a regular meeting following. They will also receive the bond sale reports for that day. ADJOURNMENT: There being no further business, Ald. Petfalski moved to adjourn. Commissioner Glazier seconded. Upon a voice vote, the motion carried unanimously. Meeting adjourned at 7:46 PM Stella Dunahee, CPS Recording Secretary