TOWN OF SOUTH WINDSOR
WORK SESSION MINUTES
TOWN COUNCIL TUESDAY, JANUARY 3, 2012
COUNCIL CHAMBERS TIME: 7:00 P.M.
1. Call Meeting to Order
Mayor Pelkey called the meeting to order at 7:06 p.m.
2. Roll Call
Members Present: Mayor Tom Delnicki
Deputy Mayor Gary Bazzano
Councillor Saud M. Anwar
Councillor Cindy Beaulieu
Councillor Ed Havens
Councillor Kevin McCann
Councillor Cary Prague
Councillor Janice Snyder
Councillor Keith Yagaloff
Also Present: Matthew B. Galligan, Town Manager
3. Public Participation
Mr. Ralph Palumbo, Connecticut Studios came before the Town Council to give an update to the Council on the Connecticut Studios project. Attorney Tom Ritter from Brown Rudnick was present to talk about one of the primary components to the studio development, the solar development.
Attorney Tom Ritter came forward and expressed disappointment on not receiving any megawatts for solar during the first round, but stated that the good news is that there are still 20 megawatts that will be given out. There have been discussions with an electrical distribution company and there should be an understanding soon. It then goes to the regulatory body and a hearing will be held and hopefully the regulatory body will approve it and Connecticut Studios will receive the solar component needed.
Answering questions from the Council, Mr. Palumbo explained that the current projects depends heavily on the solar and the solar does provide some federal tax attributes that will help capitalize the company and also some state tax attributes so it is very important for the overall model. The project is eligible for a tax credit under code section 179 under the American Recovery Act and there is an election that can be made to convert that credit to a cash grant.
Councillor Yagaloff reiterated that the solar component would produce through the federal grant the conversion into cash that would make the project feasible.
ITEM:
3. Public Participation
Mr. Palumbo stated that what Councillor Yagaloff just said is a good way to clarify the capital component of this project. There is also a credit component of it with the electric distribution company. Their involvement in paying a ground lease and property taxes will provide a great credit enhancement to the bonds which is probably equally as important.
Councillor Yagaloff then stated that the TIF financing component remains in place, it might be modified somewhat because the overall structure of the project has changed but the need for the TIF financing remains a major component of the project as well.
Mr. Palumbo explained to the Council that the primary component of this development is the studio. The studio consists of two buildings, 40,000 square feet of sound stage of each building and another 25,000 square feet of office space for each building so it is roughly 130,000 square feet plus the mill and storage building is another 160,000 square feet. The dynamics have changed but it is still a very substantial development. Compared to the solar, the solar is not a box development, it is a ground mound development which is much different so you can’t compare it in square footage. From an investment standpoint, the gross investment of the studio is more than twice of what the solar component is. We are in a very different economy then when this project first started and unfortunately it
happened and we had to react and restructure to live within the economy that we have. Mr. Palumbo stated that he has a company that is a solar development company and the company presently has solar farms that are being developed in Massachusetts. Massachusetts has a different program then Connecticut, it is not a competitive comparison bid it is an open market process where you negotiate with land owners and municipalities that need to buy power or private companies. The basic modeling is substantially similar. In Massachusetts to negotiate the land lease and the power agreement it took approximately 18 months. The process in Connecticut is much different and should not be as long.
Answering further questions, Mr. Palumbo explained this project will be an all union construction project. A Project Labor Agreement also known as a Community Development Agreement was signed and there was a statement by the union that they would like preference of jobs, which Connecticut Studios is very committed to. The present mortgage on the property will be paid off when Connecticut Studios closes on the property and will not be an encumbrance on the property.
Mr. Jeff Hyman of Guggenheim Partners explained that the TIF bonds are not being actively marketed at this point and then went on to explain the process of the TIF bonds and the rate that is felt these bonds could achieve in the market place.
ITEM:
3. Public Participation
Mr. Ralph Palumbo told the Council that the solar farm will not be constructed on the original footprint of this development where the retail and office space were proposed. There is a 22 acre parcel that will be used for the solar farm and the parcel where the retail and hotel were planned will still be used for those purposes in the future.
4. Communications
None
5. Town Manager’s Report
None
6. Items for Discussion
A. Funding for Debris Management
Mr. Galligan reported that VMP is now closed down and the debris is gone from there. Today new stone and gravel have been put into the parking lot to re-grade that whole area. The financing for debris management is around $8,000,000. All of the information that needs to be provided to FEMA is due on January 6, 2012. South Windsor has Town roads that are connector roads that go to other Town’s which may be eligible for 100% reimbursement. Mr. Galligan recommended doing a note sale so that the bond costs can be kept down. Notes are selling at about half of a percent, so on $8,000,000 South Windsor will be looking at approximately $40,000 for the first interest payment. Under this program the note can only be done for two years so the third year the Town will have to take out a
bond on the note. The Town is hoping that the Federal Government will be paying 75% of that over the two year period to us and the difference that will be taken out in a bond at that point would be just the 25% the Town owns plus any other type of reimbursement the Town may be eligible for. This recommendation should not affect the taxpayers because the Town will probably have a $200,000 payment but almost $600,000 debt will be coming off at the same time. The Council will need a bond resolution by Bond Counsel and Mr. Galligan stated that he will be asking that Bond Counsel to draft the resolution so that any payments that come from FEMA, Title 23 or anything related to the storm be used to pay down the debt.
Answering questions from the Council, Mr. Galligan explained that the payments for the debris management are basically due now but the company realizes that those payments are not going to be made. Mr. Galligan stated that he does not know when the FEMA reimbursement is going to be, but the Town has just received the reimbursements for Storm Irene.
ITEM:
6. A. (Continued)
Mr. Galligan explained to the Council that there are so many different ways the Council could decide upon on how to take care of funding for debris management. After discussing each, the Town Council needs to decide which method makes the most sense for the Town. Mr. Galligan informed the Council that Attorney Panico rendered an opinion to the Town that the Town does not have to go to referendum for the long term bond or floating notes and he would get that legal opinion to the Council.
At 8:00 p.m. Mayor Delnicki recessed the Work Session in order to call the Regular Meeting to order. The Work Session reconvened at 8:04 p.m.
Councillor Yagaloff stated that he agrees with the concept of bonding out up to $2,000,000 and then taking notes for the balance of the $6,000,000. Councillor Yagaloff stated he would like final costs for the debris clean up and also the cost to the Town for other expenses related to the storm such as over time, emergency costs and shelter operation costs. Mr. Galligan explained that those additional costs will be covered by the Town’s operating budget and will get reimbursed. Mr. Galligan then stated that he should have a final number and a resolution for the next Council meeting.
7. Executive Session
None
8. Adjournment
At 8:12 p.m. Deputy Mayor Bazzano made a motion to adjourn the Work Session. Councillor Prague seconded the motion and it was approved, unanimously.
Respectfully submitted,
Deborah W. Reid
Recording Secretary
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