TOWN COUNCIL
TOWN OF SOUTH WINDSOR
Regular Minutes Page 1 October 18, 2010
TOWN COUNCIL – Regular Meeting
Council Chambers – South Windsor Town Hall
1. Call Meeting to Order
Mayor Pelkey called the Regular Meeting to order at 8:00 p.m., recessed the Regular Meeting in order to finish the Work Session and then reconvened the Regular Meeting at 8:05 p.m.
4. Roll Call
Members Present: Mayor John Pelkey
Councillor Gary Bazzano
Councillor Tom Delnicki
Councillor Janice Favreau
Councillor Kathryn Hale
Councillor Kevin McCann
Councillor Cary Prague
Councillor Keith Yagaloff
Members Absent: Deputy Mayor Havens
Also Present: Matthew B. Galligan, Town Manager
Councillor Prague sent best wishes and a speedy recovery to Deputy Mayor Havens who is recuperating from surgery.
5. Public Input
The following individuals came forward to speak in favor of the Connecticut Studios project:
Mr. Steven Luckingham, 48 Paper Chase
Ms. Christine Sans, resident of Bloomfield
Mr. John Carney, Chair of Connecticut Studios Committee
Mr. Richard Toce
Mr. Dave Thrault, resident of Waterbury
Ms. Cate Evans, Director of the Chamber of Commerce
Ms. Jean Dellarocca
Ms. Cindy Muska, 365 Nevers Road
ITEM:
5. Public Input (Continued)
Mr. Don Gonsalves, 40 Bayberry Trail came before the Town Council to request if questions from residents regarding Connecticut Studios will be answered? Mayor Pelkey responded that it would be appropriate to ask the questions now and during discussions the Council will try to have those questions answered. Mr. Gonsalves stated that he has seen all of the financials on the studios and the 6 ½% that is being used for interest he feels is wrong. Phase I of this project which is going forward does not finance the TIF bonds that are proposed to be approved. The financing is based on the whole project going forward.
6. Environmental Health & Safety Message
Councillor McCann reminded the public and Council that October is Breast Cancer Awareness month. Breast cancer is not a preventable disease, but is a treatable one. The treatment depends on early detection.
7. Adoption of Minutes of Previous Meetings
BE IT RESOLVED that the South Windsor Town Council approves the Minutes of the following Town Council Meetings: Work Session of September 20, 2010 and October 4, 2010; and Regular Meeting of September 20, 2010 and October 4, 2010.
Was made by Councillor Yagaloff
Seconded by Councillor Hale
The motion was approved, unanimously
8. Public Petitions
None
9. Communications from Officers and Boards Directly Responsible to Council
None
ITEM:
10. Communications and Reports from Town Manager
Mr. Galligan reported on the following items:
- Went before the Planning & Zoning Commission for an 8-24 referral in order to sell off the excess property of 765 Sullivan Avenue.
- Discussed changing the zone at 124 Sullivan Avenue (Old Firehouse) from Industrial to Restricted Commercial with the Planning & Zoning Commission.
- The additional handicap parking spaces at Rye Street park will be located near the concession area.
- Each department in Town will be broadcasting a program which will allow the department to explain to the public what the department does, contacts, etc. Public Works will be the first department to broadcast. Drew Guild will be doing the filming and editing of the programs.
Mayor Pelkey stated that the Town Council heard from Mr. Hill and Ms. Yario earlier in the Special Meeting. It would be in the best interest of the Town if Council members would not discuss the Bark Park in a public forum. The Town Manager will continue to negotiate with Mr. Hill and Ms. Yario but not in a public forum.
Mr. Galligan introduced the new Town Attorney, Dwight Johnson who is a partner with Murtha Cullina LLP. Town Attorney Dwight Johnson thanked the Council for giving Murtha Cullina an opportunity to work with the Town and stated that the law firm looks forward to working with the Town of South Windsor.
Answering a question from Councillor Yagaloff, Mr. Galligan explained that the Ambulance Corps. does not have a contract with ASM. ASM provides mobile intensive care services to the Town of South Windsor through the protocol process of the Health Department that oversees this whole area.
Town Attorney Dwight Johnson answering a question posed by Councillor Yagaloff explained that the general policy if someone makes a credible threat of litigation to the Town, it is strongly preferred that the Town Council not discuss the issue in a public forum. The Town Council should bring the issue to the Town Attorney.
ITEM:
10. Communications and Reports from Town Manager (Continued)
Councillor Delnicki thanked the Town Manager for providing Rye Street Park with additional handicap parking spaces and then questioned when the Ribbon Cutting Ceremony for the new firehouse would be held. Mr. Galligan stated that he has not heard of a date yet but would let the Council know.
Councillor Delnicki then questioned why the Hog Jog is not being held this year? Councillor Prague explained that the Junior Women’s Club is holding the event this year and the Hog Jog has been eliminated. The event this year is called “Fall Family Festival” and is being held on Saturday, October 23, 2010 from 10:00 a.m. to 3:00 p.m. a the Community Center. Mr. Galligan stated that he would find out why the Hog Jog was eliminated.
11. Reports from Standing Committees
None
12. Reports of Temporary Committees
None
13. Communications and Petitions from Council
Mayor Pelkey stated that today there was a groundbreaking ceremony for Connecticut Studios. There is final business that needs to be taken care of to move this forward. The intent of tonight’s meeting is to inform the public on this project and to answer concerns and questions from the Council who will be voting on this matter.
14. Public Participation
None
15. Consent Agenda
None
16. Unfinished Business
None
ITEM
17. New Business
A. Discussion Item: Connecticut Studios
Mr. Matthew Galligan, Town Manager began discussions by stating the Town tries to find ways to promote economic development and for Connecticut Studios the Town has been looking to do TIF financing which was part of the original Purchase and Sales Agreement. TIF financing would enable the Town to get public improvements such as road work and utilities which would cost the developer and not the Town. The area of I-291 has been being worked on for a number of years to get it shovel ready. Town Attorney Dwight Johnson from Murtha Cullina, Bond Counsel Dave Panico from Robinson and Cole, Dan Marsh from The National Development Council, Economic Development Coordinator Craig Stevenson and the Principals for this project are available tonight to answer any questions or concerns that the Council may have.
There was a groundbreaking today for Connecticut Studios and there is strong pressures from the State level to move this project forward.
There was an article in the newspaper which talks about Mr. O’Brien saying this project has been sized down. Mr. Galligan stated he does not feel the project has been sized down. The decision to make the project concentrate on the core business is the recommendation of myself, staff, the Planning & Zoning Commission and the State Traffic Commission. It was not to size the project down but everyone involved knew the railroad crossing and some very sensitive issues were two to three years away before you even get those approvals. If the Town waited those two or three years and had a massive project then what may have happened is the State credits may have gone away, the funding may go away and then we have no project so we made a conscious decision to concentrate on their core business and
then do the rest of the project in phases.
There are two individuals that will be key regarding the public improvements and that will be Bond Counsel and the Underwriter. The process with the Underwriters will not be an easy process and they will be reviewing every aspect of this project and other projects in South Windsor to make sure this project will work.
Mayor Pelkey requested that the Town Attorney answer questions that were forwarded to him from Council members.
ITEM:
17. A. (Continued)
Town Attorney Johnson stated that he was questioned whether the bankruptcy at the Albuquerque, New Mexico studios would have any affect on the Connecticut Studios project. Town Attorney Johnson explained that based on what he has been advised, he does not see any problems.
Attorney Johnson then stated that the Town and the Developers have a Purchase and Sales Agreement, and in that agreement it was stated that it is the obligation of the Town to use best efforts to the extent commercially reasonable to move ahead with the tax incremental financing. Attorney Johnson does not see any basis for the Town to walk away from this project without exposing itself to the liability from the Developer.
Answering questions from the Council, Mr. Galligan explained that the public infrastructure which is being built on the private property is owned by the Town of South Windsor and taxes are not charged on publicly owned property.
Mr. Dan Marsh of The National Development Council added that although the public infrastructure is on private property, there is a perpetual easement that will go back to the Town for all the area’s where public improvements are made. The tax revenue that is contemplated in the initial bonding includes the private development on the property for the whole project which is contemplated to be phased in over a period of years. In order to put in the eligible public improvements, it requires an amount of annual tax revenue that will not be earned in the initial phase I. Even though the whole project is not being built, the developers are being asked to provide the capital that is needed in order to be able to sell the large bond issues.
Councillor Yagaloff stated that his primary concern is that the anticipated revenue from the project is sufficient to pay the TIF bonds. Councillor Yagaloff then questioned if the Town is doing the TIF financing in conformity with State Statutes; if the financing is in the best interest of the Town; and is the Town getting the best negotiated deal? Councillor Yagaloff stated he has been very supportive of this project. The project is going to be good for the economy, jobs and good for South Windsor. The TIF financing is essentially a tax abatement for a longer period. Tax abatements are not given for this amount of time. Originally it was discussed to finance the project for a total of 15 years and now 29 ½ years is part of the proposal, but 29½ years is a long time for the Town
not to get 80% of the taxes on this project.
ITEM:
17. A. (Continued)
Mr. Marsh stated that Councillor Yagaloff had a very good point, but if the project develops as projected, it is anticipated that the financing will be paid off in 13 years or somewhere between 12 to 15 years. At that point the Town would then get 100% of the taxes. After a while the Town Council could also choose to change from TIF financing to general obligation bonds.
Councillor Yagaloff stated he did not want to get into discussions regarding general obligation bonds and feels that would not be the best way to proceed. The other concern with the financing is capitalizing the interest on the TIF bonds which would extend the length of the bonds and the Town would be deferring the receipt of taxes for a period of 2½ to 3 years beyond the bond period.
Mr. Galligan explained that the capitalization of the interest is being done because there will be a period of time from the time public improvements are being done to the time the building is being constructed and receives a certificate of occupancy that taxes would not be generated and the tax increment financing would not be paid.
Councillor Yagaloff responded that the payment of taxes should be deferred for the period of time of construction. Construction will not take three years and Councillor Yagaloff stated that he does not believe in capitalizing interest during the period when the project is up and running because that would be extending the non-payment of taxes beyond the bond period.
Mr. Galligan explained that until the project generates revenue the project would not be able to pay taxes and that is why the interest is being capitalized.
Councillor Hale stated that the Council needs to have a little trust in our consultants and professional staff. After a project is built the taxes are assessed on October 1st of each year. The taxes do not come due for nine months until the following June. The professionals will make sure that capitalization period is a short as possible. Mr. Galligan added that this project will probably get done in 2011 and taxes will probably not be received until 2013. The tax increment financing mechanism is based upon what the Assessor values the building at with the taxes generated and those taxes pay the bond off, not the taxes.
ITEM:
17. A. (Continued)
Councillor McCann stated that the Purchase and Sales Agreement was based on a site plan which included a hotel, restaurants, a studio project with 6 to 8 sound states, office space, mill space for set construction and a visitor center. The project now is in phases and does not include the same amount of square footage per item and some items have not been included in the new proposal. This project has been scaled back and Councillor McCann stated he fails to see where it is necessary with the project that is being proposed right now for the Town to obligate itself to provide TIF financing that is going to be paid back with taxes that are generated on a scaled down project. There will not be enough taxes generated to pay back the TIF financing.
Mr. Marsh explained that what is being proposed are phases which does not go out that far and will pay off the bonds. The development year for the first phase is December 2011, the hotel is scheduled for 2012 and the remainder of the phases are to be developed in 2014. These phases were planned with the realities of the economy. The plan calls for adequate coverage with a combination of taxes and additional payments to make sure that the Town can make the revenue bond payments on the TIF bonds.
Mr. Galligan explained that it was decided to do this project in phases because it would take much longer for approvals on items such as crossing the railroad with a road and by the time those approvals came in the tax credits from the State would no longer be available and the financing would no longer be available. So phasing this project allows for the Town to receive tax credits from the State and to keep financing in place.
Answering questions from the Council, Mr. Galligan explained that if the road and all of the other public improvements are developed and the developer goes bankrupt, the Town will then have a shovel ready area for a project at no expense to the Town for the public improvements.
Councillor McCann voiced concern that the Town is going forward with a project on faith that the rest of this project is going to be built. If the rest of the project is not built out, the Town will not have the sufficient income to pay back the financing.
Mayor Pelkey stated that the Town is not risking one dollar. The Town has the opportunity to develop the I-291 corridor which is the grand plan of the
ITEM:
17. A. (Continued)
development in this area of approximately 400 acres. The Town Council should be looking at the positive aspects of this project and moving it forward.
Mr. Galligan explained that this developer could be coming in and only building the studios which could be built off of Chapel Road and all of the public improvements would not be necessary. The developer is continuing to build that road in order to open up the entire parcel and that is a major benefit for the Town.
Mr. Marsh reviewed the payment schedule with Council members.
Councillor Bazzano requested that the Council be allowed to review the commitment letter from the bank. Mr. Galligan said he would try to get that information for the Council and just make sure that the financial information associated with the developer is not in that.
Councillor Delnicki stated that he had asked for full financial disclosure regarding this project and expected a Power Point presentation. There should be a presentation in order to allow the residents of South Windsor to view the financials of this project and to get a better understanding of the whole project. Mr. Galligan stated that will put a presentation together for a future Town Council meeting.
Councillor Yagaloff stated that it seems like all Council members are in favor of this project, but disagree somewhat as far as the incentives that are being offered. Councillor Yagaloff then questioned if the project goes into foreclosure would it be deeded over to the bank? Town Attorney Dwight Johnson explained that the Town will own the infrastructure and the necessary interest in land such as easements to protect themselves. Mr. Galligan then answered a question stating that the Town will be signing an agreement with the developers that they will be responsible for any maintenance of the Town public infrastructures.
Councillor Yagaloff reviewed the project saying that the first phase does not generate sufficient real property taxes to pay the TIF bonds and if the whole build out does not get constructed the TIF bonds will fail. Councillor Yagaloff suggested that the Town review a pledge of 75/25 which would allow the Town to receive 25% of the tax revenue going forward instead of 20%.
ITEM:
17. A. (Continued)
Councillor Favreau stated that the Town is sitting here on the cusp of a major opportunity. There will be taxes being generated from the personal property which will be extremely valuable. The personal property will more than likely off set whatever the Town will be giving up in the 80%. There is no risk to the Town.
Councillor McCann questioned why the Town would be providing $5,000,000 out of the $12,000,000 for public improvements which in his mind some of the items seem to be private development. The Town Council needs to review these items closely in making a determination of just how much the Town is going to finance. Mr. Galligan explained that some of the parking will be public parking so that when the area is developed further and parking is necessary, the public parking area can be used, but this is a policy decision that the Town Council will have to decide upon.
Mr. Dave Panico from Robinson and Cole explained further that what is being used as public parking can be tax exempt from the tax on the bonds. So any public improvement that is being used truly for public use is tax exempt.
Mayor Pelkey requested that any further questions the Town Council members may have be emailed to the Town Manager. The Town Council asked a lot of questions tonight and had a good conversation. There will be a Power Point presentation done in the near future to give the public information. The Governor and the elected officials on the State level are all very supportive of this project. It is time to move forward with this project which will greatly benefit the Town of South Windsor.
18. Passage of Ordinance
None
22. Adjournment
The meeting adjourned at 11:00 p.m.
Respectfully submitted,
Deborah W. Reid, Clerk of the Council
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