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.
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VICE MAYOR MONROE
EXA M. RIEF, DEPUTY CITY CLERK
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COUN LWOMAN �'ijRTADO
COUNCILMAN CLARK