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HomeMy WebLinkAboutMinutes Council 090993ROLL CALL ANNOUNCEMENTS CITY COUNCIL WORKSHOP MEETING CITY OF PALM BEACH GARDENS SEPTEMBER 9, 1993 7:30 PM The Workshop Meeting of the City of Palm Beach Gardens, Florida was called to order by Mayor Russo at 7:30 PM in the Assembly Room of the Municipal Complex, 10500 North Military Trail, Palm Beach Gardens, Florida; and opened with the Pledge of Allegiance to the Flag. The Deputy City Clerk called the roll and present were Mayor Russo, Vice Mayor Monroe, Councilwoman Furtado and Councilman Clark. Councilman Jablin arrived at 7:30 PM. Mayor Russo stated that the announcements were as posted on the City's Bulletin Board. ITEMS FOR DISCUSSION GOLF COURSE REPORT City Manager Herakovich reported two evaluations have been performed on the golf course; the most recent report being done, at no charge, by the Professional Golfers Association of America. Mr. John Rossi of PGA of America said that it is a known fact that the golf course was not performing as anticipated. It is covering its expenses but is not generating a sufficient level of revenue to cover debt (mortgage). Mr. Rossi said that normally a course will take 2 - 4 years to reach a stabilized level of activity. This course was only going into its third year. Mr. Rossi felt the golf course was a viable asset and could be improved through: 1) increase in level of play; 2) proper pricing in market place. These items CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 2 and more were covered in the detailed report he provided to the City. Councilwoman Furtado questioned the computerized record keeping and asked what specific areas were concerned. Mr. Rossi suggested that there be a total look at the way the computer system generates reports and the various points of control, such as using standard checks and balances when closing out cash, as an example. As of now, there are weak controls which could allow for theft. Mayor Russo thanked Mr. Rossi for the indepth report he and his company provided. city Manager Herakovich advised that Mr. Rossi brought up three items of importance: 1) sometimes municipalities are not used to running a "retail" enterprise with its daily reporting W needs; 2) construction of the course and proposed improvements; 3) concessions be brought in- house. Mayor Russo suggested the Council focus on needed decisions, such as: 1) if suggestions could be accomplished and the course could make a profit, the decision would be easy whether to sell or not sell the course; 2) the option of leasing the golf course; 3) the possibility of bringing in a management company to do over -all management of the course; 4) increased servicing to the public, as described by Mr. Cavenaugh using Disney World's unique method of customer service as an example; 5) the importance of reconstructing a couple holes of the course. CITY OF PALM BEACH GARDENS. WORKSHOP MEETING. 9 -9 -93 3 Vice Mayor Monroe asked Mr. Rossi about the report's recommendation that an employee or strong golf professional manager being the most viable option at the present time. Mr. Rossi said the option of employee or manager would be determined by what the Council would be comfortable with and what works in the City's best interests to achieve the City's goals to market the facility, and to provide the expected level of service. Mayor Russo stated he felt, after a discussion with George Quintero of PGA Association of America, that an RFP (Request for Proposal) be done for management, not precluding whether it would be an individual or a management company, and try to make a determination re: what direction the City should take. Mayor Russo also reported that many of the items in the report had also previously been covered by Don Kepler, the golf course manager, and a decision needed to be worked out. Councilman Clark felt it necessary to prioritize what needed to be done first. He stated he saw four major problems with the golf course: 1) the golf course facility itself; 2) the clubhouse facility; 3) the marketing; 4) the management, self or contractual. He asked Mr. Rossi if he had a recommendation re: the order of prioritization of those four items. Mr. Rossi felt marketing was important but, if the players were not treated properly, marketing wouldn't help. Improvements, CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 4 if major, would have to be done now including work on the front entrance area, and other improvements could be phased in. And, he felt it important to be ready for this winter season. Councilman Jablin stated he felt the clubhouse was badly planned and badly built, and he thought there could be ways of fixing it that would be cheaper than fixing the course. He felt this would be more cost effective because the City may get more money selling items out of the clubhouse to a captive audience than from rounds of golf. Mayor Russo said that he did not feel the City was qualified to come up with a management plan and could use input from those who have owned and operated golf courses. Councilwoman Furtado advised the Council that there were qualified people in the area who could help. Vice Mayor Monroe asked Mr. Rossi if he knew people in the community who had the ability to assist the City. Mr. Rossi said he did have an monthly employment bulletin that went out nationally for people /communities looking to hire individuals or put out an RFP. His organization does not recommend specific individuals as they are not a job placement group. They do have, however, manuals on what a golf course professional should be, the criteria, what the operation should be, what form the contract should take, etc. Vice Mayor Monroe asked if an employee CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 5 of PGA would be prohibited from working with the City on this. Mr. Rossi thought it was the policy of the PGA not to get involved in the specific hiring situation because it had to serve all its members. But it could provide the resources and work with clients, for example, in working up a job description and how to go through the interview process. Mayor Russo felt there should also be some discussion re: leasing the golf course. Since the golf course was not generating the dollar amount that it would take to attract a qualified buyer, he did not feel that selling the course would be an option at this time. If the City pursued leasing the course, the problems are: 1) the lease income would not cover the debt service; 2) the financial stability of the lessee would have to be confirmed and the course properly maintained so at the end of the lease period the course would be returned to the City in good condition. Mayor Russo asked Kevin Mulshine of Wm. R. Hough & Co to comment on whether the City could sell or lease the golf course. Mr. Mulshine said the issues come down to the three options of sell, lease or manage. But he asked that Mark Raymond, Bond Counsel, respond on the question of legal ramifications of such action first. Mr. Mark Raymond discussed the tax - exempt status of the bonds used to purchase the golf course. A private golf CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 6 course would not have the tax - exempt status. If sold or leased, the City's golf course would be for private use. Earlier this year, he stated, the IRS announced ways in which a change in use (leasing or selling) would be allowed under certain criteria. These would not apply if the City hired a manager to run its course. The criteria are: 1. The facility must have been in use at least five years; since the city doesn't fall under this requirement, it could go to the IRS and ask for a Private Letter Ruling. 2. Required to pay off the bonds; $1.8 million in bonds now outstanding. Bonds are not subject to prepayment until the year 2000. When subject to prepayment, they carry a premium of about 2 %. Amount needed today to put in a bank account, invest to pay all the debt service on the bonds until the year 2000, and then in 2000 pay off the outstanding bonds is $8.45 million. The City has $750,000 in debt service reserve fund which means $7.7 million is needed to accomplish the defeasance. If the City can't sell the facility for $7.7 million, with one exception the City must come up with the remaining money out of pocket within 90 days of date of sale. The one exception is if the City sells the facility at a loss and it receives less than $5,000,000 from the disposition, it doesn't need to throw in its own money but can take the $5,000,000, pay off as many bonds as it can and just keep paying the debt service on the remaining bonds through general funds. Also, Mr. Raymond reminded the City Council that, if the City hires an independent company to manage the golf course instead of using an employee, there are restrictions on that, such as: 1. The term of the contract cannot be for more than five years. 2. The City has to have the right to terminate the contract after three years without paying any CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 7 penalty. 3. The manager's compensation has to be at least 50% payable on a fixed -fee periodic basis; example: $1,000 per month for five years. Up to half of the compensation may be paid on a formula basis, but none of the compensation may be based on net revenues (share of the profits). The City may pay based on gross revenue but only half of the compensation. City Manager Herakovich asked Mr. Raymond if he was talking about changing the use of the course, whereas the Council was asking whether or not they can lease the course for public use. Mr. Raymond stated that the City would be leasing it to a private entity that would make money off of it. That would become a private use at that point. Vice Mayor Monroe asked City Manager Herakovich how difficult it would be for staff to do an RFP for management. The City Manager stated it would not be too difficult if there were local resources available that could be utilized. Also, some research would be needed and recommendations made on how to phase improvements or do them all at one time, etc. Mayor Russo stated perhaps four or five people could get together who were familiar with golf course management for the purpose of review and recommendations. City Manager Herakovich suggested the City get an RFP for whatever services the City decides are necessary and it was important to have the RFP reviewed by the PGA to identify weaknesses or loopholes the City may have missed. CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 8 Mayor Russo stated that a golf course manager and plan of action needed to be in place by November 15th which is 2 months away. After further discussion, it was the consensus of the Council that an RFP would be done for management and a manager would be in place by Thanksgiving. Vice Mayor Monroe suggested that a Good Neighbor Award should go to the PGA of America. Mayor Russo also said a Plaque and Key to the City should be given in appreciation for all their work. PENSION FUNDS UPDATE City Manager Herakovich stated the three pension boards were up and running and members of the Police Pension Fund were here to address questions. Mayor Russo asked if the City had legal representation present. The City Manager advised that Lee Dehner had been hired as the attorney for the General Employees Pension Board and for the Fire Pension Board. Mr. Dehner was also representing the Police Pension Fund at this meeting; however, the City Attorney was present and could make a determination if the City were in need of a legal expert. Bonnie Jensen of the Police Pension Fund stated she had expected some proposals from Travelers for about a month but had not yet received them. One purpose for being before the Council was to find a game plan in order to get out of the Travelers' contract, since it was felt CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 9 that was not the best investment vehicle. Ms. Jensen stated the Board is looking to the City to make the Fund sound. She stated this was the first year that the Chapter 185 money, per Travelers, was not sufficient to cover the actuarially- required deposits. City Attorney Brant reviewed the procedures re: shortfalls. Besides the City picking up the shortfall, there were other source options, including the surplus sitting in the Pension. The City Attorney recommended the City hire its own independent actuary to review Travelers' figures. Mayor Russo asked if it would be necessary to do the funding at this time? Ms. Jensen stated that Travelers' said this amount would be due October 1st. She also stated that the Fund really needed the assistance of the City in order to lay it on the line with Travelers. City Manager Herakovich pointed out that the final deficit figure would not be known until after October 1st when the actuarial is completed. Councilman Clark ascertained that Ms. Jensen felt the final figure would be no more than $136,286. City Attorney Brant raised a question re: who would pay the penalty to remove Travelers - the City or the Pension Board. After additional discussion, Mayor Russo asked that the City Attorney determine the correct use of the Chapter 185 and advise if it should be used to offset actuarial differences. CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 10 Mr. Dehner stated that the law allowed State monies deposited annually to the fund to become an integral part of the fund or segregated at the election of the members for the extra benefits of the employee group. There are some gray areas in Chapters 175 and 185 and several years ago an attempt was made to clarify those rules. Mayor Russo stated that, if the City funded the shortfall now, would the City get another report to show what shortages would occur in future years? Ms. Jensen said the City would get a report one year ahead of time. Mayor Russo also asked that, if the Fund is actuarially sound now and the City is getting the money from Travelers, would the City be OK and not have to fund anymore? Ms. Jensen said there shouldn't have to be additional funding because there should be an even amount of contributions. Mr. Dehner restated that, once a level is established, a part of the proposal to be presented would include a "X" percent of payroll annually and the City could anticipate that same amount of funding each year and there would not be any additional funding required above that. City Manager Herakovich spoke on the proposed removal of Travelers. She stated there were three independent governing boards working on this but the question still was "Could we afford to get out of it and what will it cost ?" and the Pension Boards must make a decision at that point. The Boards may say the employees do not wish CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 11 to assume the loss and the City should help, but it won't be the Council's decision, and must be made by the Boards. Mr. Dehner said that since they last met, a few things have occurred: ANNEXATION STUDY 1. In order not to send Travelers any more money, they agreed to a waiver of any further contributions; The waivers have been signed by the City Manager on behalf of the City as the main party under the contract. 2. The contract has been sent to Travelers for their signature. Travelers has sent it to the State for their approval. They feel it should be back shortly. 3. Even though that contract has not been completed, the City has not made any contributions prior to June 1st because the City is safe under the discontinuance provision of the contract. Mayor Russo stated that the City Attorney, representing the City Council, give his opinion on statutes 175 and 185. Mayor Russo also requested that the Pension Funds representatives and the Council meet with Travelers as soon as possible to get the separation settled. Kim Glas, Planner, provided an update on the annexation study. She stated there were some infrastructure problems and the Council never really decided what policy it would set for addressing those issues, including road improvements. Mayor Russo said he felt those pockets needed to meet the criteria or become a special funding district like everyone else. The City shouldn't ask current residents to pay for future residents annexing into the City. Vice Mayor Monroe asked Ms. Glas if, CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 12 v if, within the past year, the County came up with a proposal that they would pay one -third of the cost, the homeowners assessed a third and the municipality assessed a third? However, Vice Mayor Monroe did not feel the City's residents should be asked to pay any of that cost; it should be up to the County and the pocket areas. Councilman Clark asked if there was a way to breakdown what pockets were affected by infrastructure problems, as opposed to those areas that would not have those problems and with which the City should contact. Mayor Russo stated the City had an interlocal agreement with the County to aggressively pursue the annexation of these pockets and at one point in time the city did aggressively pursue this but some areas did not want to he annexed for whatever reasons. He said there are possibly smaller pockets that the City could annex and some that can't be done due to cost, etc. Vice Mayor Monroe requested clarification on why the Council was talking about this annexation issue and the City Manager stated the County requested, three or four weeks ago, that the City sit down and discuss the progress it had made on the interlocal agreement. The City declined at that time but the City is now looking at an expiration date of October 1st. Vice Mayor Monroe questioned the expiration date and felt it had already passed, according to an effective date of 1 -1 -89. The City Attorney CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 13 provided a review and then mentioned a sliver of land in Lake Park across from the bowling alley, called Pop's Driving Range that had been missed. Vice Mayor Monroe stated she felt less aggressive re: annexation at this time due to the City's budget situation and because she wanted to make sure everyone was on a friendly basis at the time anexation occur? With regard to Keating Drive, the streets had been paved, she said, the drainage was assumed to be in, and she would have no problem if a petition came in to the Council for annexation of that area. But she didn't feel the City should go out and begin seeking annexation until everyone is more amenable. Councilman Clark stated he thought it would be helpful to have a list of those pockets recently annexed and what areas still needed to be considered. The City Attorney felt there should be an exact policy and procedure, whether the annexation is voluntary or involuntary. Councilwoman Furtado said she also would like to have a list of pocket areas and their problems. She stated she'd been contacted by people in the Highland Pines area and Brady Lane just off of Military Trail who felt lost not knowing if they're "unincorporated" or "Palm Beach Gardens ". She further mentioned those roads were good, for annexation purposes. The City Attorney reviewed CITY OF PALM BEACH GARDENS, WORKSHOP MEETING, 9 -9 -93 14 possible covered problems and policy should some areas have private roads that would not be maintained by the City, even if annexed. After discussion, Vice Mayor Monroe stated that, if those pocket areas wish to discuss possible annexation, they would be welcome, but it would not be based on the Interlocal Agreement. Vice Mayor Monroe said that for now it was a matter of identifying the areas and have the information available for any citizen who might walk in and ask what to do about annexing. ADJOURNMENT There being no further business to discuss, the meeting adjourned at 10:04 PM. IkPPROVAL M&Yf61irPUS$0 VICE MAYOR MONROE EXA M. RIEF, DEPUTY CITY CLERK J .1 - COUN¢i N J COUN LWOMAN �'ijRTADO COUNCILMAN CLARK