HomeMy WebLinkAbout04/03/2001 Adjourned Meeting / Study Session 162
CITY OF YAKIMA, WASHINGTON
ADJOURNED MEETING /STUDY SESSION
OF THE CITY COUNCIL
APRIL 3, 2001- 7:30 A.M.
129 NORTH 2 STREET - COUNCIL CHAMBERS
1. ROLL CALL
Present:
Council: Mayor Mary Place, presiding, Council Members Clarence
Barnett, Henry Beauchamp, Lynn Buchanan, Larry Mattson
(absent after 8:45 a.m.), and John Puccinelli,
Staff: City Manager Zais, Assistant City Attorney Peterson and City
Clerk Roberts
Absent: Council Member Bernard Sims
Union Gap: Aubrey Reeves, Mayor, and Council Member Lee Driskill
Yakima Center: Kathy Coffey, General Manager; and Deb Krautworm,
Commission Member
2. REVIEW OF PROPOSED PUBLIC FACILITIES DISTRICT
• General background information on proposed Public Facilities District
City Manager Zais provided the following facts on the proposed Public Facilities
District:
• A market study supported the expansion of the Yakima Convention Center
• Financing the expansion project has been the topic of considerable
discussion including an analysis of the establishment of a Public Facilities
District (PFD)
• An amendment in the state law makes this financing tool available to us
• We are looking at a partnership with Selah and Union Gap to recoup the
sales tax credit that originates in our communities
• An emerging consensus is to site it south of Yakima Avenue to minimize
parking disruption and traffic on 8 Street and "A" Street; however, we are not
here to spend time on the siting of the expansion
• Background information and legislation
Rita Anson, Finance Director, briefly reviewed Section 2 in the PFD report
relating to the enabling legislation, RCW 35.57. The law provides that a portion,
up to .033 %, of the gross retail sales revenues generated within a city be
reallocated to the PFD established by that city. In order to obtain the sales tax
refund, certain criteria need to be met:
• The city must match those revenues
• The project must be at least $10 million, including the debt service
• ; The construction or remodeling must be started by January 1, 2003
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APRIL 3, 2001 ADJOURNED MEETING
A PFD Board of Directors would oversee the District. The Board has the
• authority to impose admission and parking fees and a tax on those fees, and with
the vote of the people, the authority to implement a sales tax of 0.2 %. (See
attached Exhibit 1, "Overview Proposed PFD Project ")
•
Ms. Anson quickly reviewed the development feasibility issues found in the chart
in Section 3 of the report and provided detailed information regarding the
operating revenues and expenditure estimates for the PFD. A final decision has
not been made on what would be used for the City's match for the estimated
sales tax credit. Calculated at one -third of the expected sales tax credit revenue
for the next 25 years ($7.4 million), the City would need to contribute $2.5 million.
The options being considered are: 1) contribute the Convention Center appraised
at $11.8 million ($2.8 million for the property and $9 million for the building); or 2)
contribute the property on which the Convention Center is built. The preference
is to contribute the least amount, which would be the property, however, because
of the way the legislation is written we may be contributing the building and
keeping the property.
• Proposed expansion project
Ms. Anson stated that an architectural study provided two options. One option is
to expand the convention center by 23,000 sq. ft. at a cost of $5.5 million. The
second option, recommended by the architect, provides for a 26,000 sq. ft.
expansion costing $7 million. Based on the financing of the expansion and the
debt service, staff recommends an expansion budget of $5.5 million if Yakima is
the only city establishing the PFD. If the three cities, Selah, Union Gap and
Yakima join the PFD, staff would recommend an expansion budget of $6 million.
City Manager Zais interjected that the estimates for the sales tax revenue are
very conservative since the cities would be responsible for the debt service and
would have to make up any deficit. Ms. Anson also commented that the sales tax
credit is not a new tax, nor is it an increase of existing taxes;, it is a refund from
the state on sales tax that is sent to the state from the cities.
• Financing the project
Ms. Anson stated that once a Public Facilities District is established, it
immediately earns the sales tax credit, so prior to the time we actually issue the
debt we could build up a reserve fund. The first obligation is to repay the
$80,000- $100,000 the City of Yakima has spent to date on this project. The
sales tax credit payment from the state would be used to make the annual bond
payments. If the sales tax credit revenue were not sufficient to make the annual
bond payment, the next source of revenue would be the reserve fund. If the
reserve fund is exhausted, then the cities forming the PFD would be obligated to
pay the difference based on a formula to apportion the cost.
City Manager Zais advised Council that staff wants to avoid issuing bonds that
would increase the City's debt capacity by the total amount of the project. The
PFD would have its own debt capacity.
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APRIL 3, 2001 ADJOURNED MEETING
Ms. Anson referenced Section 5 and reviewed the objectives of the financing
plan:
1) Minimize the impact on the City's debt capacity
2) Maximize project dollars
3) Provide a "marketable" bond offering
A proposal was developed to meet the majority of those three objectives that
includes a two -part financing structure through a revenue bond and a general
obligation bond. Revenue bonds do not use debt capacity, but require that net
operating revenues be at least 1.5 times debt service and that a debt reserve of
125% of the average annual debt service be established. She stated that their
calculations show that the cost of the bonds can be covered within the projected
budget, even using conservative numbers for the revenue projection. The
calculations show the sales tax credit would be $500,000 and the debt service
requirements would be $480,000, a $20,000 cushion.
• Draft legal documents
Ms. Anson stated she worked with Legal Department staff to identify what
documents would have to be put in place to establish the PFD. The PFD would
need a charter and a set of bylaws. If the PFD includes multiple cities, an
interlocal agreement would be needed, as well as a design, development
construction, financing and operating agreement. She reviewed the highlights of
the draft charter, including the composition of the board of directors, and the
bylaws. The Yakima City Council may amend the by -laws. City Manager Zais
advised Council that with the creation of the PFD, the Yakima Advisory
Commission would no longer need to be in existence since its responsibilities
would be transferred to the regulating agency. He also pointed out that the
District would also be subject to the Public Disclosure Act and the Open
Meetings Act.
Ms. Anson reviewed the highlights of the Interlocal Agreement and the Design,
Development Construction, Financing and Operating Agreement, as well as the
Yakima Commitments found in Section 4 of the Report. (Council Member
Mattson absent after 8:45 a.m.)
• The next steps to take
Ms. Anson referenced the outline in Section 7 on the next steps to take if a
decision is made to establish a PFD. The three cities would have to make a
decision on whether or not they wish to form a Public Facility District, and to
approve the Charter, bylaws and other agreements, hopefully by April 30. Next,
members would have to be appointed to the PFD Board. By June 30, the PFD
Board would take action to impose the .033% retail sales and use tax, establish
their officers, meeting dates and other operating practices. In the meantime, the
City would obtain approval from the Department of Revenue to transfer the sales
tax credit; transfer the Convention Center property to the PFD; and eliminate the
Yakima Center Advisory Commission, all by June 30; and then approve the bond
issuance so that construction can begin no later than January 1, 2003.
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APRIL 3, 2001 ADJOURNED MEETING
• Staff recommendations
Council considered the staff recommendations provided under Section 8 of the
report, which are:
•
• Establish a Public Facility District with the cities of Selah and Union Gap
• Transfer ownership of the Convention Center to meet the 33% sales tax
credit match requirement
• Approve expansion of the Convention Center for approximately $10 million
• Approve issuance of the bonds to fund the expansion project
• Yakima City Council retain control and responsibility for the design and
construction of the expanded Convention Center
Mayor Place commented that we have a consensus of the Yakima City Council
to ask staff to bring this back on April 17 to consider legislation to establish the
PFD. We will wait to hear from Union Gap and Selah. Aubrey Reeves, Mayor of
Union Gap, stated that the earliest they could get back to Yakima on this would
be April 23.
Kathy Coffey, General Manager of the Yakima Center, stated that they have
been working on this project for the last three years and look forward to
implementing it.
City Manager Zais and Council members expressed appreciation to staff
members Rita Anson, Tim Jensen, Cindy Epperson and the legal assistance
from our consulting attorneys for the thorough report.
3. ADJOURNMENT
The meeting adjourned at 8:57 a.m.
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READ AND CERTIFIED ACCURATE BY: ,rl 4 ��� l D
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ATTEST:
CITY CLERK MARY PLACE, MAYOR
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Minutes prepared by Karen Roberts. An audio and video tape of this meeting are available in the City Clerk's
Office.
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APRIL 3, 2001 ADJOURNED MEETING
EXHIBIT 1
City of Yakima
PUBLIC FACILITY DISTRICT PROJECT (PFD)
SECTION 4
PFD STRUCTURE - HIGHLIGHTS
OVERVIEW
PROPOSED PFD PROJECT
(as of 03/29/01)
1. Multi -City PFD made up of Selah, Union Gap and Yakima
2. Establish PFD for purpose of:
(a) Transferring sales tax revenues currently going to the state to the PFD, and
thus, back into the local economy
(b) Providing a funding mechanism for the expansion of the Yakima Convention
Center
3. The expansion project will cost approximately $10 million, including debt service
4. Yakima will issue a Revenue bond and a LTGO Bond to fund the cost of the
expansion project; (the LTGO bond will, but the revenue bond will not, affect the
City's debt capacity).
5. The PFD will impose a .033% Sales Tax Credit (thereby transferring existing tax
revenues from the state to the PFD) and will transfer these revenues to Yakima to
pay debt service on the bonds
6. Should both the Sales Tax Revenues and related reserves be insufficient to cover
a debt service payment, the cities will be obligated to contribute a proportionate
share of the deficient amount (refer to "Development" document for more details)
7. Yakima will transfer ownership of the Convention Center to the PFD in fulfillment
of the 33% sales tax revenue match requirement. (Currently under review is
whether both land and building will be transferred to the PFD. The match
requirement is approx. $2.4 million; appraised value of convention Center is: Land
$2.8 million and Building $9 million. Refer to Appendix I for detailed calculation of
match requirement.)
8. Construction will begin no later than January 1, 2003, per legislative requirement
9. Yakima will be responsible for the design and construction of the expansion
•
project (similar to the original construction and the first expansion project) and for
the operation and maintenance of the expanded facility (similar to current
arrangement)
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