TOWN OF SOUTH WINDSOR
WORK SESSION MINUTES
TOWN COUNCIL MONDAY, JULY 30, 2012
COUNCIL CHAMBERS TIME: 7:00 P.M.
1. Call Meeting to Order
Mayor Delnicki called the meeting to order at 7:02 p.m.
2. Roll Call
Members Present: Mayor Thomas Delnicki
Deputy Mayor Gary Bazzano
Councillor M. Saud 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
Town Attorney Dwight Johnson
Deputy Mayor Bazzano made a motion to Suspend the Rules in order to go into Executive Session. Councillor Snyder seconded the motion and it was approved, unanimously.
7. Executive Session
At 7:05 p.m. Deputy Mayor Bazzano made a motion to go into Executive Session to discuss a personnel issue. Councillor Snyder seconded the motion; and it was approved, unanimously.
The following individuals went into Executive Session: Mayor Delnicki, Deputy Mayor Bazzano, Councillor Anwar, Councillor Beaulieu, Councillor Havens, Councillor McCann, Councillor Prague, Councillor Snyder, Councillor Yagaloff, Town Manger Galligan and Town Attorney Johnson.
At 7:25 p.m. Deputy Mayor Bazzano made a motion to adjourn the Executive Session. Councillor McCann seconded the motion; and it was approved, unanimously.
3. Public Participation
Mr. Gene Botteron, 34 Victor Lane came forward to speak in opposition to the spending of $3 million dollars on ball fields. Timing is not right to spend funds on ball fields and although it is inexpensive to bond money right now, it is not free. Ball fields are important to the community but they are not essential. There are other needs in the community that should be considered.
ITEM:
3. Public Participation
Mr. Tim Shepard, 45 Newberry Road felt that the Town should not try to restrict the sale of tobacco in pharmacies. There are a lot of items that are sold in pharmacies that would need to be taken off the shelves. There needs to be personal responsibility and personal choice when it comes to sale of items in the pharmacy.
Mr. Timothy Appleton, 161 Woodland Drive came forward and stated that there are other important issues that need to be addressed prior to fields. Athletic fields would be nice to have but they are not a need to have. Mr. Appleton requested that the Town Council put necessary items on the ballot to go to referendum.
Mr. Tony Fornuto, 17 Gulley Drive came forward and stated that he feels there are other items that are far more important than athletic fields. Users of these fields should think about doing some type of fund raisers for these fields. Mr. Fornuto felt that Town Council members should voice their opinion regarding this issue.
Mr. Kevin Foley, 498 Main Street stated that he is in favor of these fields. It is time for the Town to grow and there will never be lower costs for doing fields. Athletic fields are an extension of curriculum and a lot can be learned on the field.
Mr. Kevin Greer, 86 Windshire Drive requested that the Town Council vote positively on sending the athletic fields to referendum.
Ms. Robin Klemba, 99 Chapel Road came forward to state that she supports the athletic fields because there are not enough fields in Town.
Mr. Michael Bullock, 6 Betty Drive explained that he has coached a lot of sports in Town and would like to see the Town get synthetic fields.
Mr. Robert Dickinson, 19 Birch Road stated he has heard it is very difficult for teams to find fields so he would therefore support these fields but would like to see efforts made to incorporate bike and pedestrian trails within the plan.
Ms. Borria from Charlie Circle came before the Town Council and stated that she feels parks are great but there are other things that are necessary such as bringing the taxes down. Ms. Borria also feels that education is more important.
Mr. Mike Mundo, 249 Maskel Road stated he would like to support the fields and would like the best for the community. There is a growth in sports in South Windsor which creates the necessity of creating more fields. Turf fields are safer than grass and there is less upkeep which will save the Town money.
ITEM:
3. Public Participation (Continued)
Mr. Scott Higgins, 48 Cornerstone Drive said he is in support of the athletic fields. The fields will be a benefit to the Town and would serve as an educational tool for kids.
Mr. Hugh Brower, 25 West Road commented that athletic organizations should be encouraged to create private fields which would not have any cost to the Town. If the Town does create more fields, Mr. Brower felt that the maintenance of those fields should be at the cost to the users. If this item goes out to referendum, Mr. Brower requested that the exact price of this project be clearly shown.
At 8:00 p.m. Mayor Delnicki recessed the Special Work Session in order to bring the Special Meeting to order. The Special Work Session reconvened at 8:02 p.m.
4. Communications
Mayor Delnicki stated that people are not getting vaccinated for the whooping cough and there has been a report that a few people in South Windsor have come down with this. Mr. Galligan explained that he received an email from the individual who had concern about that and it was sent to the Heath Department to investigate what the next step would be to have people vaccinated and also find out why they are not being vaccinated.
5. Town Manager’s Report
Mr. Galligan explained that Mr. Marsh is here tonight to update the Council on the status of the Connecticut Studios project.
Mr. Dan Marsh from National Development Council came before the Town Council and reviewed the Connecticut Studios Project Components (Exhibit A).
Councillor McCann stated in the lease revenue bond coverage there is a line item for several different years for the annual real property taxes resource solar. Councilor McCann questioned why those real property taxes go down significantly once you get out about six to seven years? Mr. Marsh explained that that shows a change in the way the tangible tax is collected. The real property tax actually goes up but the tangible tax collections go down so the net result is that although you will see a slight increase year to year with real property taxes unless there are new investments in capital, the tangible tax should drop as the project gets out in the later years.
Councillor McCann then asked if that is because of the depreciated value of the equipment? Mr. Marsh stated yes and that assumes that there is no new capital investment. If there is new capital equipment, then there would be corresponding tangible on the new investment.
ITEM:
5. Town Manager’s Report (Continued)
Next, Mr. Marsh reviewed Budget for Studio, Solar and Public Improvements, as shown in attached (Exhibit B).
Mayor Delnicki requested that the Council be sent the number that would show clear taxes to the Town for this project as well as when this project will be built and when will the Town receive taxes.
Councillor Yagaloff stated that there are two major changes from the old plan to the new plan. One major change is the solar component and the addition of the solar revenue and what that means for the overall project and the funding. The other major change is the Town will not be doing TIF Financing, but will be doing bonds that are backed by the full faith and credit of the Town.
Mr. Galligan explained that this will be a lease financing and the Town will not give up the good faith and credit as long as there is an appropriation clause in the lease and every year the Town appropriates the necessary amount. It is hopeful that the National Development Council under a 5013C will float the bonds at a municipal rate and they will help do the project and get the G-Max price and then as the bonds become due, the taxes that are generated would go into a fund or would be given to the Town to go into the fund to pay that portion and then any additional taxes will come to the Town. In effect we are backing in the sense that the Town is doing a lease but it does not affect the Town’s overall rating with the Rating Agencies because it is not considered financing, it is considered a
lease.
Councillor Yagaloff voiced certain concerns regarding this project but stated that the whole deal has changed in a positive way. The revenue that is going to be produced by the Solar Farm is enabling the lease option approach whereas otherwise it would not be possible. This new model is feasible while the old model was reliant upon the revenue projections from Connecticut Studios. Mr. Marsh stated that the old model was relying on the revenue projections from the Studio while the new model gives the Town a lot more comfort in that there is a revenue stream that is likely to be there aside from what the developers would normally pay through the operation of their trade or business.
Councillor McCann stated that there are a few things that he feels the Council needs further information on. Under the budget for the Studios, Solar and Public Improvements, on the Studio and Solar and the Studio column itself, there are developer fees and predevelopment services totaling about $17.4 million dollars which is about 33% to 35% of the remaining costs for those two projects. Are these simply fees that are going directly to the developer?
ITEM:
5. Town Manager’s Report (Continued)
Mr. Marsh answered that the developer fees are going to the developer. Some of the pre-development services and fees are going to third parties. On the solar farm, that developer fee is one hundred percent deferred until the Town gets the bonds paid off so that is included to calculate the credits. A portion of the developer fee that would be earned in the Studio may be deferred as well. Being proposed is the real property taxes, tangible taxes and the net cash flow from the solar farm all go to pay first for the taxes for the lease payment and then if there is money left over after that the developers can get a return on the deferred developer fee. On the Studio, the developer fees will be the last fees out once the project is successfully completed.
Councillor McCann voiced concern of the Town paying $400,000 for the easement purchase when the Town has already given the property for this project.
Mr. Galligan explained that the Town is not allowed to sell this land and make a profit. The Town will own that property eventually which will include the easements and public improvements. Councillor McCann felt that the Town should not be paying for something when the Town has already given the land to the developer.
Mr. Marsh reviewed the lease revenue bond coverage as shown in attached Exhibit C. Starting in year 2014 there is roughly $997,000 in real property taxes coming into the Town of South Windsor. There will be more revenue coming into the Town then there is debt service payment on the bonds.
Mayor Delnicki questioned if the projected revenue to the Town in taxes for the first year would be the difference of the $997,361 less the $558,000? Mr. Marsh said that would be correct and each year those numbers would go up. Within the solar net cash flow there is an operating capital adjustment within the budget so the net cash flow is reduced because there are more expenses in that year because of capital replacement repair.
Councillor Beaulieu asked what the interest rate that is anticipated on the lease financing that is proposed? Mr. Marsh explained that 2.8% has been used but a bank investor may be looked at as a different way to go.
Councillor Beaulieu then questioned what is the rating assigned to this particular financing relative to those of the Town of South Windsor? Mr. Marsh stated that it is probably one full grade below of what the senior debt rating is.
Deputy Mayor Bazzano questioned if there would be revenue coming into the project and to the Town for the first full year? Mr. Marsh answered that there will be some revenue coming into the Town.
ITEM:
5. Town Manager’s Report (Continued)
Mr. Galligan stated that there are bonds being floated or probably investment by a bank to pay for this. The Town has a lease arrangement. The taxes that are being generated from the solar farm will pay the debt and any funds above and beyond that will go into the general fund.
Councillor Yagaloff felt that this deal makes a lot of financial sense. The Town is taking out a lease. The 5013C organization will own the infrastructure that is built on easements that are on land that is owned by Connecticut Studios. The Town is leasing that infrastructure from the 5013C organization and once the infrastructure is paid off, the Town will own it.
Mr. Marsh stated that the money for this project will be coming from the following locations:
- $5,000,000 from DECD loan
- $5,000,000 from Ocean Capital Home loan
- Capital Lease agreement
- $4,000,000 from a Bridge loan from a Regional Bank
- Preliminary letters of interest from purchasers of both the infrastructure film credits and the renewable solar energy credit.
- Analysis on developer equity pending.
- Pursuant to the Town Council’s finical decision, the revenue to build the public improvements would be in place as well.
Although the project does not have final commitment on all of these, Mr. Marsh stated he is comfortable and expects that the equity investors will be in place to buy at the present rate projected in the proforma.
Mr. Marsh stated that the project is waiting for the following items in order to go forward:
- GMP contract.
- Power Purchase Agreement Appraisal.
- Proof of Financing for the hotel operator.
6. Items for Discussion
A. The Connecticut Studios Project
Discussed above under the Town Manager’s Report
ITEM:
7. Executive Session
None
8. Adjournment
At 9:15 p.m. Councillor Yagaloff made a motion to adjourn the Work Session. Councillor Anwar seconded the motion and it was approved, unanimously.
Respectfully submitted,
Deborah W. Reid
Recording Secretary
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