TOWN COUNCIL
TOWN OF SOUTH WINDSOR
Minutes Page 1 November 29, 2010
TOWN COUNCIL – Special Meeting
Council Chambers – South Windsor Town Hall
1. Call Meeting to Order
Mayor Pelkey called the Special Meeting to order at 7:05 p.m.
2. 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 Edward Havens
Also Present: Matthew B. Galligan, Town Manager
3. Public Input
Mr. Mike Sullivan of 24 Jared Court came before the Town Council. Mr. Sullivan stated that in June the developers had another ground breaking in Pennsylvania and was wondering if the Pennsylvania project had to be scaled back like the Connecticut Studios has or because of the proximity of the Pennsylvania studio, will that studio have any impact on the Connecticut studio. Mr. Sullivan then questioned if there are any inconsistencies between the supporting documentation that was provided for the TIF financing versus the Redevelopment Agency public hearing?
Mr. John Bassilakis of 220 Laurel Road questioned due to the contingencies with the federal money, how many jobs or what percentage of those jobs would need to be given to others outside of South Windsor?
Mr. Don Gonsalves of 40 Bayberry Trail stated that he is concerned about the financing for this project. There has never been a public meeting regarding the P & L, cash flow or requirements of this project. The other thing that should be done is generally there is a post audit on the Albuquerque studio to find out exactly what happened to that project to have it go bankruptcy.
ITEM:
3. Public Input (Continued)
Mr. Peter Riley, President of the Greater Hartford New Britain Building Construction Trade Council came before the Town Council. He explained that he represents 20,000 union trades workers in the State of Connecticut, several hundred which live in South Windsor. Mr. Riley encouraged the Town Council to support Connecticut Studios. This project will bring a lot of jobs and help revitalize the economy.
4. Special Business
A. Resolution Appointing the Board of Education as the Building Committee for Handicapped Accessibility Code Compliance Renovations and Improvements at South Windsor High School
WHEREAS, a referendum appropriating $1,100,000 for Handicap Accessibility Code compliance Renovations and Improvements at South Windsor High School and authorizing the Issuance of $1,100,000 bonds of the Town to meet sais appropriation and pending the issuance thereof the making of Temporary Borrowings for such purpose was approved by the South Windsor residents at the election held on November 2, 2010; and
WHEREAS, it is necessary for a Building Committee to be appointed to this project
NOW, THEREFORE, BE IT RESOLVED that the South Windsor Town Council hereby appoints the Board of Education as the Building Committee for Handicapped Accessibility Code Compliance Renovations and Improvements to be done at South Windsor High School.
Was made by Mayor Pelkey
Seconded by Councillor Hale
Mayor Pelkey stated that this issue came before the Capital Projects Committee and overall it was felt that the Board of Education should be appointed because of the compliance issues. The Board of Education has overseen a number of projects of this size and magnitude.
Councillor McCann said that he had discussions on this issue with Patrick Hankard and felt that it is appropriate to appoint the Board of Education.
ITEM:
4. A. (Continued)
Answering questions from the Council, Mr. Galligan explained to the Town Council how the reimbursements work for this project. These funds can not be used for anything but this project. The Board of Education would have to come back before the Town Council if they wanted to set up a sub-committee and the only body that can make a decision regarding the compliance issues are the Board of Education if the Town Council appoints them as the Building Committee.
Councillor Hale stated that she fully supports this resolution.
Mayor Pelkey called for a vote on the Motion; it was approved, unanimously.
B. Discussion Item: Connecticut Studios Information and Review of the Project, as shown in attached Exhibit A, (requested by Town Manager, Matthew B. Galligan)
Mr. Galligan answered questions that were raised as follows:
- There are no federal requirements that state how many residents outside of South Windsor will need to be hired for this project.
- The Redevelopment Agency is meeting on Wednesday, December 1, 2010 to hold a public hearing regarding the site plan for the Connecticut Studios project.
- The Underwriter will analyze the P & L.
Mr. Galligan reviewed four slides with the Town Council (6% Interest Rate – Revenue vs. Debt Service, 6% Interest Rate – Surplus Revenue to the Town including Personal property Taxes, 8% Interest Rate – Revenue vs. Debt Service, and 8% Interest Rate – Surplus Revenue to the Town Including Personal property Taxes, as shown in attached Exhibits A, B, C and D)
Mr. Galligan then explained that it does not make sense to do this project with a general obligation bond because then the taxpayers of this Town would be at risk.
ITEM:
4. B. (Continued)
Mr. Mark Miller who is from Los Angeles and would be running the Connecticut Studios came before the Town Council. He explained that the Albuquerque Studios went through a bad year. The bankruptcy will hopefully be resolved next year. The studios have been taken over and will be run by another entity until November 2011. There has been a lot of questions on when the Connecticut Studios will be up and running. Mr. Miller explained that the studios will benefit other businesses in Town.
Answering questions from the Council, Mr. Miller explained that he has been in this business for 35 years. He has held jobs anywhere from technical director, building of stages and studios to working for a post production company. Mr. Miller stated that he had owned a visual effects company but sold that company in order to come to Connecticut to run these studios. Mr. Miller said that he has looked at relocating to Connecticut and it is his intention to move to South Windsor. Connecticut would be a natural place for studios. The reasons Connecticut was chosen was because of the tax credits being offered as well as shooting on the streets of Connecticut will be less than shooting on the streets of New York or Los Angeles. The studios will work closely with unions to create
jobs. Visual effect will be a big part of this development and could create 100 to 200 jobs. Seventy five percent of the productions will be at the studios and twenty-five percent will be off site. There will be a variety of equipment that will be used for personal property taxes. The studio in Philadelphia is small with only two studios and will be opening in about three weeks.
Mr. Miller explained that the attributes for the poor revenues in New Mexico were labor issues and New Mexico is hard to sell because people think only westerns can be done there. Albuquerque is a much larger facility than what is being proposed in Connecticut. The amount of employees throughout the year at the studios depend on the production that is being done. Presently 90% of the space is used for films and 10% is used for t.v. productions in New Mexico and as an average there is anywhere from 600 to 1,500 employed during filming.
ITEM:
4. B. (Continued)
Mayor Pelkey explained to the public and the Town Council that if a production company decides to do a film there is a variety of work that will need to be complete which will require a variety of employees. There are also things that will need to be built which will give the businesses of South Windsor more business. After production is complete, props and scenery will need to be stored. The studios usually find warehouses and other areas to store these items which will also mean more business for South Windsor.
Answering questions from the Council, Mr. Marsh explained that the years that the funding would not be sufficient for the tax incremental financing would be covered by the capitalized interest payment. Capitalized interest will flow through the Trustee to cover the bonds.
Councillor Yagaloff stated that it is his feeling that the labor agreement should have stipulations in it that at least 25% of employees for thi project should be South Windsor residents are hired for this project. Mr. Galligan explained that the Town Attorney is presently looking at this issue and then suggested that the Town Council pass an ordinance regarding the PLA agreement.
Councillor Yagaloff noted that during discussions with the Planning and Zoning Commission, the public improvements were not addressed. The Planning and Zoning Commission wanted to have sidewalks included with the public road. If the Town is going to have public infrastructure that is going to be utilized by the public, then the Town needs to make sure the requirements of public infrastructure are met.
Answering questions from Councillor Yagaloff, Mr. Galligan explained that the only money invested into this area is the evaluation and $306,000. If the Town does not do the TIF financing then there would be a long road ahead to complete this area for development. This property has been empty for a long time and it is a very difficult piece of property because there is nothing else developed in this area.
ITEM:
4. B. (Continued)
Councillor Yagaloff stated that after reviewing the graphs it appears to him that the TIF financing could be split to an 80/20 again. This would give the Town tax revenue upfront and the Town would not have to worry about the different phases being complete or not. Mr. Galligan explained that the Underwriters are the individuals who have decided this and just because there is 100% pledge, does not mean the Town is giving up 100% and the Town is getting more than 20%. The Town does not want to keep this going for 29 to 30 years. The proforma’s show that this financing will be paid off in 12 to 15 years. Councillor Yagaloff stated he would rather have the financing paid off in 20 years and get 20% each year.
Attorney David Panico from Robinson and Cole explained that the 100% pledge is necessary to sell the bonds for the lowest interest rate possible. Mr. Marsh added that the higher the risk, the higher the interest rate.
Councillor Hale reviewed the projected amounts that the Town would receive each year and stated that the Town would be receiving better than the 20%. The Town taxpayers have no obligation to pay these bonds and the assumptions are very conservative. The personal property taxes are lower than what the Town really will be receiving. This deal is the best proposal that has come along in 15 years and the Town has every guarantee and protection that is necessary to move forward.
Senator LeBeau came before the Town Council and stated that he discussed with Dan Molloy the tax credit for the Connecticut Studios and also discussed all of the other things that this studio will bring to the State of Connecticut. Senator LeBeau felt there was no reason to believe that the Town will lose these tax credits.
Councillor Delnicki questioned Senator LeBeau if he could get something in writing from Mr. Molloy that says these tax credits will not go away. Senator LeBeau stated that he would not be able to do that.
Mayor Pelkey read a letter from Gary Patel who is the CEO of Kautilya Group. The letter states that Connecticut Studios, LLC and Kautilya Group will be developing an upscale extended stay hotel under a joint venture agreement in the Connecticut Studios Complex, as shown in attached Exhibit E.
ITEM:
4. B. (Continued)
Answering questions from the Council, Mr. Galligan explained that Mr. Patel owns and operates Kautilya Group and owns various hotels. There is presently one local restaurant that is interested in relocating to the Connecticut Studios parcel, but these are on-going negotiations.
Mayor Pelkey stated that everything must be in place prior to the bond holders giving one dime for this project.
Councillor McCann felt that pledging 100% of taxes to be generated on this project is a huge risk for the Town and he would not never approve this type of pledge. Councillor McCann stated he would like to look at a general obligation bonds for this project.
Councillor Delnicki stated that the Town should be protecting the residents and should look at a local preference bid ordinance so that residents would be first choice for various jobs that arise in association with this project. Councillor Delnicki then requested in writing if Connecticut Studios defaults, can that hurt the Town in any way? Mr. Galligan suggested that the Town Council look at a development ordinance for this project.
Attorney Dave Panico from Robinson & Cole reviewed the resolution that will be brought forward at the next Town Council meeting regarding TIF financing. Attorney Panico answered various questions from Council members.
Mr. Ralph Palumbo came forward and stated that the resolution will be important for this project to move forward. The market is presently unstable and as a developer have to react to solve any issues that come up.
6. Executive Session
None
ITEM:
7. Adjournment
At 11:00 p.m. Councillor Hale made a motion to adjourn the Special Meeting. Councillor Delnicki seconded the motion; and it was approved, unanimously.
Respectfully submitted,
Deborah W. Reid
Clerk of the Council
Attmt.: Exhibit A (6% Interest Rate – Revenue vs. Debt Service)
Exhibit B (6% Interest Rate – Surplus Revenue to the Town including Personal Property Taxes)
Exhibit C (8% Interest Rate – Revenue vs. Debt Service)
Exhibit D (8% Interest Rate – Surplus Revenue to the Town including Personal Property Taxes)
Exhibit E (Letter from Kautilya Group)
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