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HomeMy WebLinkAbout1991-05-14 Minutes160 MINUTES OP A SPECIAL MEETING OF THE CITY BOARD OP DIRECTORS HELD JOINTLY WITH THE FAYETTEVILLE SCHOOL BOARD A Special Meeting of the Fayetteville City Board of Directors and the Fayetteville School Board was held on Tuesday, May 14, 1991 at 5:00 p.m.. at the High School East Campus Cafeteria, Fayetteville,. Arkansas. PRESENT: Mayor Fred Vorsanger; Directors Michael Green, Bob Blackston, Ann Henry, Dan Coody, Julie Nash, Shell Spivey; City Manager Scott Linebaugh, City Attorney Jerry Rose, City Clerk Sherry Thomas; members of staff, press and audience. Others present School Board Members Judy McDonald, President, Jack Butt, Vice President, Sue Gohn, Secretary, Mary Jo Day, Ed Fryer, and David Wilson. CALL TO ORDER The joint meeting was called to order by the Mayor, with seven Directors present. SCHOOL MILLAGE Judy McDonald gave a brief history of the millage increases over the years starting with 1984. She stated that the schools have been upgraded considerably since 1984. In 1987 the proposed millage was defeated by the voters; therefore, a 10 month plan was put into action to gain voters approval on the next election. At the 1988 election, the next millage proposal was approved along with a one cent city tax rededication. Scott Linebaugh reported that before this 1988 proposal was put on the ballot, two attorney generals gave the 1988 proposals their stamp of approval, and'advised the City that this was a legal procedure. In addition, the City was advised by the Rose Law Firm that it was legal for the City to issue sales tax bonds for the schools. He stated.,..that after the election, an. opinion was issued that stated that#the City could not issue bonds to finance facilities for the schools.. After receiving the opinion, the City started to look around for a bond counsel, which is required for the issuance of bonds. At that point Wallace, Dover & Dickson were hired for this purpose. After issuing their opinion, the firm went'out of business, and the City was required to`get .another bond counsel. At that point, the City decided to go to the largest in,the nation, Brown and Wood. Their opinion also stated that the City had no authority to construct or finance the school projects. The City has tried to '161 May 14, 1991 come up with another legal method to comply with what the voters mandated that the City fund $10,000,000 for schools construction. Linebaugh reported that a number of different things have been proposed that the City has looked into including property tax bonds, lowering the City's property tax and allowing the schools to raise theirs, giving up general funds, contributions, and setting up a special facilities board to try to come up with a method that would work. Only one method was found that would meet the test, and that was the method of giving regular tax revenues in the form of a grant to the schools. At that point, the plan was reviewed and declared to be workable. In July 1990, the City sent the proposed plan to the School Board and to the City Board, and basically this plan is similar to the one currently in use, where the City places non -regular tax revenues over a period of time into an escrow account. The City will start off by placing $2.6 million dollars for 90/91, and combine that with the school funds to start the project. Basically the mechanisms to do this were set up in February 1991, and the City and School District approved a contract and a lease agreement which stated that they would enter into this joint funding mechanism. CONSTRUCTION CONTRACT Currently the two Boards are meeting together to approve a construction contract that is before them. City Attorney Jerry Rose addressed the Board stating that the lawyers got involved in this issue because he and Rudy Moore were given the task of trying to figure out a legal means of giving the $10,000,000 without issuing bonds. The problem they were given was how to do this given some constitutional problems of using the sales tax money for schools and school construction, and the problems that we have with some statutes on giving just cash rents to school districts. He stated that the City could not issue bonds because they could not find a bond counsel to give an opinion that they are legal. You have to have that opinion, the attorney puts himself "on the line" with that opinion, and puts his malpractice insurance "on the line". He stated that is why attorneys are reluctant to give these opinions. Given the preceding problems, they have come up with a plan that was approved by the School Board and by the City Board in February 1991. He outlined this plan as follows: He stated that they were afraid that they might not be able to use sales tax money to fund schools, so they tried to find some other money. What they are attempting to do is to take the franchise tax that the City takes for their water and sewer fund, and pay that to the general fund. It is not an unusual accounting procedure from the opinion of the attorneys for the City to pay a franchise tax essentially to itself : May 14, 1991 .. for the use of its streets, by -ways and public ways. This is a reasonably common accounting method among cities. The franchise tax in water and sewer is paid to the general fund. The sales tax money that was going to be used for funding schools is now designated to be used for capital improvement projects in water and sewer. The bottom line is that we have franchise tax dollars now available to be used for school construction rather than sales tax dollars. The franchise tax money, of which now accumulates by the year, is taken and the accumulations (approximately $3,000,000) are placed with $3,000,000 that the School Board has to come up with a total of around $6,000,000. Under the terms of this lease agreement, the City may over a period of years, buy out the School Board's interest in the high school, on a dollar per dollar basis. This essentially, allows a refund to the School District, of their investment of their $3,000,000, and it gives the City the entire investment over a period of time about $6,000,000. It then allows, at the end of that period, for the school district to buy the City's interest for one dollar. The bottom line is, that at the end of a certain number of years, the School District should be have a high school worth approximately $6,000,000. Other projects needed by the district could be handled in much the same manner. He stated that this was a rather novel way to fund a school and was not without legal risks. He stated that this was the best way that counsel could think of to achieve this endeavor. BID SUMMARY Mr. Henley stated that a copy of the bid had been distributed to those present. He stated that the document in question was from Dr. Simpson, and himself and were dated April, 8, 1991. This contained a recap of the three bids that were obtained at that point in time. These documents were reviewed briefly for the benefit of those present. PUBLIC COMMENT Judy McDonald explained to those present,"that public comments were welcome at:this point, but answers to their questions could not be guaranteed;.but will be addressed during another board meeting. The Secretary of the School Board, Sue Gohn„ was asked to note the questions so that they could be addressed during discussion time. McDonald introduced the first speaker, Pat Waldren. • *Ms. Waldren, a teacher at"Root Elementary, and president of the Fayetteville Education Association and representative of more that 300 school employees, addressed the Board'making the following statement: ,162 163 May 14, 1991 "It appears that with a mandate from the public, as strong as this one, that we need to just take the risk, bite the bullet, whatever it takes, and proceed with these contracts. The high school situation is worsening daily, and it's not going to get better. This looks like our only hope to solve that situation, and the citizens strongly mandated it, and I would urge that you proceed with the contracts. Thank you." Ms. McDonald then introduce Ms. Rita Hardgrave, a faculty member of Fayetteville High, and also a parent of three. Her statement was as follows: "I don't know if it's appropriate to spend the money in the way we've talked about, and I guess what I want to address, is the inappropriateness of ignoring the need that we have. It's been over five years, that we've been trying to raise money to get a new high school, and in that time we've run out of classroom space, we've run out of time, and I'm real scared that if this doesn't work, we're going to run out of options. I don't believe that fancy buildings make perfect schools, and I think you've all heard that before, when I've talked about salary. But there is a wide range between fancy and adequate. The building that we currently have is not adequate for the function that it hasto serve. It actually hampers the educational process. I think we could probably give P.E. credit to those students who are hopping from Bates to portable building to portable building. I don't think that is an appropriate thing. Also, it's not just a faculty problem. As a counselor, I enroll lots of new students who come to this building, and inevitably, the parents comment on the building, and when they comment on the building, they often make comments about the community. I have a hard time defending that. I hear comments like `I've always heard that this is a good high school. What's wrong? Doesn't the community support it? Why do you have such a crummy building?' And I don't have a good answer. I hope that I don't have that question very often. I think that the other group that if affects is the students. I hear those same questions from students. Often they will go to other places for competitions or contests, and they will come back and say, `You know, everyone tells me that education is important, but why do we have a building that looks this way? I mean, a business wouldn't look this way. A bank doesn't look this way. A professional office doesn't look this way. Why does a community expect us to live for eight hours a day in buildings like this?' I think it's real discouraging, and that's one of the ways that it hampers the educational process. I think it's discouraging to students sometimes, to see other buildings, and they just kind of feel like they're left out in the process. So, I would encourage you to please consider not ignoring the needs, and to go ahead with this process and let's get started because we don't have much time left. We've 164 May 14, 1991 got a bigger class next year than we did this year, run out of options." At this time, Ms. McDonald introduced Tiny Hamilton who the Board as follows:, "Distinguished members of the Fayetteville School Board, Honorable Mayor, City Directors, ladies and gentlemen: This is an impromptu speech. I speak on behalf of myself and my family. This is a very serious matter, and one of the things that I would enjoy seeing more than anything else, other than our future children having the adequate place to attend and learn, and the teachers be compensated in a way found that they can be brought up to par for all of their academic work that they did, would be to see on a new facility, the name of a man who has distinguished himself as an architect and a gentleman that I have always respected and admired, Mr. Haley. His name on the plaque would mean so much to the school system in Fayetteville, because the facility designed by him, and instrumented by him, would certainly add to this community. I want to thank you for the opportunity to speak before you, but I want to caution you. In academia, we are responsible, or you are responsible, to bring up students to learn right from wrong, among many other things that you are charged with. As we know, throughout the recent past, and the history of Fayetteville,we've had many problems that have created much expense for legal counsel. I say to the Board of Directors, God love you. This City needs this school. The School Board, God love you, too. You want to do your best for the City, but I want to encourage you, in closing, we must above all, set the good example for our youth, and whatever we do, let's not keep getting into more and more problems because we've just got to do it now. Let me suggest, to consider very closely, the ramifications that may happen. I would like to ask Judge Moore, or Jerry Rose: Is there such a thing as a friendly lawsuit where you can go to the Court in a expeditious manner, and request from that Court a ruling on what you and Judge Moore has advised these two Apodies about the constitutionality, the legality, •• and the statutory responsibility of what you are planning to do? Thank you. Ms. McDonald introduced the next speaker,.. Don Nelms, who addressed the Boards'as follows: "I had a little bit to do with influencing the sub -committee to accept sales tax as a method„to fund these schools and I did it because I felt like this was the only possible way that we could get this done. I think that the people of the City of Fayetteville, spoke very clearly that they wanted to use City sales tax to fund $10,000,000 of -school projects. That is very clear. I don't think, necessarily, that the City Board at the time, would like to admit,it, but I personally, and we've addressed LJJ May 14, 1991 don't think that the City sales tax would have ever been extended or passed, had it not been for the School Board issue. In other words, I think it simply would not have passed. If you want to worry about the legalities of things, I think that's really important, and God bless attorneys, I guess. The principle that I would like to put forward to you is, this is what the people of the community want to do, and we feel like it's the right thing to do, it's necessary, has to be done, so I would say, let's get on and do it. You know, it's like taxes or anything else, there's a million different ways to look at it, and you can keep putting it all in a stack and re -ordering it, but the basic fundamentals are that the people are willing to pay for it, and want to pay for it in this way, and I think that we need to get on with it and get it done." Ms. McDonald introduced the next speaker, Larry Bittle, whose statement was as follows: "Judy, and the Board members, thank you for allowing us to give input. Two Votes For Fayetteville -- that's what it was named, that's what it was phrased, and that's the way it was supported. That is the way that it was taken to the community. Support for the City, support for the schools, all in one package, with the rededication of the one cent sales tax. We had input from the City Board, we had input from the City Board, City Managers, school Superintendents, Chamber of Commerce, and many concerned citizens. This was after the recommendation of many, many citizens of this community that worked long and hard on the Citizens Advisory Committee that brought this project and this idea into being. That is why the vote was so strong in favor, in a time and climate in which we hadn't been getting many positive votes. This came forth with a 66% endorsement rate. Now, these are your constituents that are saying this is what they want to do. I ask you to continue with the Two Votes For Fayetteville. Let's continue in a positive vein; let's continue to work together. I commend you all on how far you have come, and the bending and the negotiating that has taken place to get us to this point, I would encourage you to continue in that act, by taking the final step, that being the ratification or the approval of the bids as have been submitted for this project. Thereby, I think you will be fulfilling the wishes of your constituents in this community and also, taking a very strong positive step as far as the leadership of Fayetteville is concerned. Thank you." Ms. McDonald introduced the next person to address the Board, Jeff Koenig who made the following statement: "As you all know, I was involved with Larry's committee, as the chairman of facility subcommittee, and rather than -May 14, 1991 covering the territory that everyone else has covered, I'd like to point out through this building situation -- I want to confirm what we heard earlier. We have been at this for over six years: this building, its needs, the degeneration of this building has been a recognized problem for over six years. My, subcommittee worked on this building diligently for a period of over.a year studying the needs. We have presented to these two Boards the most conservative plan that we know addressing the immediate needs with no frills. I strongly urge you not to let this deterioration go on. We have a responsibility to the community, and we have a responsibility to our students. I have no other solutions. If we let this problem go on, we are not only going to lose money on the bid situation, we are going to lose money because we have buildings falling around our ears. Thank you." Ms. McDonald introduced Barry Herzog, who made the following statement. "I thank you for this opportunity. I am Barry Herzog. The Chamber of Commerce has reviewed all of these concerns and issues at numerous times, and we wish and hope that this support will come through and we will be able to complete this project and accept the contract that has been discussed and approved by the City, as well as by the School Board. Thank you." Ms. McDonald •introduced Steve Ward, who made the following statement. "This evening I come to you in behalf of the Board of Directors of the Chamber of Commerce, urging you folks to move ahead in a very positive fashion." STAFF RECOMMENDATIONS Dr. Simpson announced to the Board that four contracts would be awarded at this meeting. The recommendations are as follows: Recommendation of awarding of the contracts of Raynco Enterprises, awarding bids for the labiequipment, and the mill work that Mozier Manufacturing submitted, and finally,* the he recommended the awarding of the contract for Bryant Work for asphalt parking areas. Linebaugh stated that the City has worked on this for nearly two years. The best process that the City -could find was done by administrative staff, legal,staff, and the outside legal help that the City -has gone through. --This has been discussed at length, and a mutual agreement has.been passed and also a lease approved in February. He reported that Staff recommends this process and is hopeful that the SchoolBoard4would help in the legal risks that may be involved. Staff also recommends the awarding of the bids as recommended by Mr. Haley and Dr. Simpson. 1w 167 May 14, 1991 Rudy Moore, legal counsel for the School Board, addressed those present by saying that lawsuits do not always remain "friendly" and extreme caution should be encouraged before they proceed with this endeavor. Director Coody stated that if the City gets into a situation where the contracts are signed to go with the school, the worst case scenario would be that an injunction could be filed against the City, and work on the school would have to be stopped until the legalities are taken care of. He urged his fellow Board members to consider this issue with great caution. Director Blackston stated that he too was a bit reserved in casting his vote. He stated that this could be another potential lawsuit and should be considered at great length before the votes are counted. He stated that he was aware of one attorney that was planning on filing suit if tax money is used for the schools. Jerry Rose addressed the Board concerning the probable lawsuit and the different actions that could be taken to defend the City in this potential suit. He stated that the odds of winning a case such as this was at best 50/50. Jack Butt addressed the Board in favor of the appropriation of the taxes for this purpose, but he stated that caution should be used before diving into this matter. Sue Gohn, a school board member, addressed the Board stating that we owe this much to our children and teachers, and should proceed as planned, and she urged the Board to cast positive votes on the matter at hand. Ed Fryar stated that the Fayetteville schools were definitely overcrowded due to a "baby boom" approximately seven years ago, but more time should be spent considering this issue. He stated that he was in favor of the tax money being spent on the schools and he stated he would support the Board in the use of taxes for schools. Director Spivey stated that there had been many opinions on the friendly lawsuit idea, but it was his concern that this could cause the whole bond issue to be in question. This could be ruled unconstitutional and the City could be ordered to pay back all funds that were used by the school. Jerry Rose stated that nothing has changed as to the constitution, the laws or the legal advice rendered. He stated that the failure to enter into this contract to build the school, in no manner ensures that there will not be a subsequent lawsuit to invalidate the capital improvement program. He stated that if the Board has focused this issue only on a city/school contract, then sight of the big picture has been lost. 1` May 14; 1991 Director Blackston stated that he was not opposed to what the Board was trying to do, but his major concern ,was that he is convinced that the lawsuit will be pursued. He stated that he was concerned about a structure that is partially completed, and they will gain an injunction to stop the building from being built. He asked how: long it would take to obtain an injunction and how long it could be delayed from a legal standpoint. Rudy Moore stated that first a lawsuit would have to be filed. He stated that generally two to four weeks after an injunction is filed the matter would be resolved. Mayor Vorsanger stated that there had been a resolution entered into in January and February authorizing the execution of this lease/option agreement. He reminded the Board that they also entered into the authorization of the execution of a mutual agreement construction of educational facilities. That says the city and the district shall cooperate in the solicitation of debts from contractors in awarding contracts for construction of a new high school facility. He stated that there was no obligation on the part of the City to provide additional funds in the event that sums contributed are inadequate to fund construction. Vorsanger asked (1) If the City does not approve the construction contract now, are we in essence, in violation of that contract with the school? and (2) has the school district given any thought, because of the situation that we find ourselves in, to presenting this City Board in a "hold harmless clause", so that when things do go awry down the road, somehow there is a stopping point where we try to hold to mutual terms? Moore stated that the possibility of holding the City Board liable if the construction is not begun has not been explored by him. He stated that he would not want to render an opinion on that issue at this point. He addressed the "hold harmless clause" by responding that, "yes, that has been discussed at least to some extent." The big problem is where to draw the line. Director Henry voiced her opinion in opposition to the tax money being used for schools unless a legal decision could be rendered that this would be legal to pursue in this manner. Director Spivey stated that the high school is over crowded. He further stated that this needed to be done now because there will always be risks when deciding to build school facilities. Lastly, he stated that the contractors were bound to their bids for 60 days, so if those bids expire without being awarded, the bids will be re -bid and there is no point in doing.this just to wait on a friendly lawsuit decision. Director Coody stated that if he had known that a potential lawsuit would be in question over this issue, he might not have voted for the tax increase. 16U May 14, 1991 Mary Jo Day stated that she was willing to take the risk of a lawsuit and was willing to take the risk five years ago to benefit the schools. Butt, seconded by Day, made a motion to accept Dr. Simpson's recommendations to the award of the contracts. Upon roll call, the motion passed by a unanimous vote. Coody, seconded by Spivey, made a motion to approve the contracts. Director Coody stated that there would probably be attorneys fees incurred in this matter, and that it would probably be costly. He asked if the schools would participate in the payment of attorneys fees if they should be incurred. McDonald stated that the schools could not be liable for the cost of the city's fees even though it pertains to a school building and school funds, but they would be responsible as far as the construction issue was concerned. Blackston, seconded by Henry, made a motion to table this discussion until the next regular Board meeting to be held May 21. Upon roll call, the motion passed by a vote of 5 to 1 to 1, with Green abstaining and Spivey voting in the minority. Director Blackston stated that this issue had been discussed at length many times, but he wanted to table this discussion until the 21st of May. ADJOURNMENT The meeting was adjourned at 7:00 p.m.