HomeMy WebLinkAbout1993-05-18 MinutesMINUTES OF‘A MEETING OF THE CITY COUNCIL
A.meeting of the Fayetteville City Council was.held on Tuesday, May
18, 1993, at 6:30 p.m. in the Council Room of the City
Administration Building, 113 W. Mountain, Fayetteville, Arkansas.
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PRESENT: Mayor Fred Hanna; Aldermen Conrad Odom, Woody Bassett,
Fred Vorsanger, Len Edens; Joan Chapman, Heather Daniel,
Stephen Miller, and Kit Williams; City Attorney Jerry
Rose; Assistant City Attorney LaGayle McCarty; City•Clerk
Sherry Thomas; City Treasurer Glyndon Bunton;
Administrative Services Director Ben Mayes; Planning
Management Director Alett Little; Public Works Director
Kevin Crosson; members of staff, press, and audience.
CALL TO ORDER
Mayor Hanna called the meeting to order with eight aldermen
present.
CONSENT AGENDA
Mayor Hanna introduced consideration of items which may be approved
by motion, or contracts and leases which can be approved by
resolution, and which may be grouped together and approved
simultaneously under a "Consent Agenda":
A. Minutes of the May 4, 1993 regular.City Council meeting.
B. A resolution approving the extension of the agreement with the
University of Arkansas to operate the Educational Channel on
the Warner Cable System for six months until November 21,
1993.
The Cable Board recommended approving the six month extension
to allow them time to study various options for the operation
of the educational channel.
RESOLUTION 49-93 AS RECORDED IN THE CITY CLERK'S OFFICE
C. A resolution approving an amendment deleting Section #11 on
pages 32 and 33, the Printed Materials Distribution Policy, to
the Minimum Standards for Operation and Commercial
Aeronautical Activities at the Fayetteville municipal Airport.
The Airport Advisory Board decided this issue could better be
handled if left to the discretion of the Mayor, Airport
Advisory Board, and the Airport Manager.
RESOLUTION 50-93 AS RECORDED IN THE CITY CLERK'S OFFICE
A resolution awarding a contract to Time Striping, Inc., the
low bidder, in the amount of $21,986.21 plus a 10% contingency
of $2,198.00 for remarking the runway and taxiway surfaces and
133
May 18, 1993
for "outline"••markings that maybe requested based on a recent
FAA inspection.
The Airport Advisory Board recommended approval at their May
6, 1993 meeting. A 50% matching state grant has been received
for this project.
RESOLUTION 51-93 AS RECORDED IN THE CITY CLERK'S OFFICE
E. A resolution approving the purchase of Tract #28 in the
Airport Land & Easement Acquisition Project, consisting of 8.4
acres at a negotiated price of $35,000 upon the condition of
an access easement to the south of the property being granted
to the City and upon the City granting an access easement to
the property owner giving him access to his remaining land.
W. D. Schock Co., Inc., recommends this purchase. •The
property owner, Harry Gray, has accepted the offer including
the easement exchange.
RESOLUTION 52-93 AS RECORDED IN THE CITY CLERK'S OFFICE
Vorsanger, seconded by Miller, made a motion to approve the consent
agenda. Upon roll call, the motion passed by a vote of 8 to 0.
REZONE R93-19
Mayor Hanna introduced consideration of an ordinance rezoning 22.03
acres located off Longview and west of North College from A-1,
Agricultural, R-1, Low Density Residential, and R -O, Residential -
Office, to C-2, Thoroughfare Commercial, as requested by. CEI
Engineering.
The Planning Commission voted 6-1-0 to recommend rezoning, subject•
to the applicant providing additional access to the north or west.
Mayor Hanna stated the petitioner had requested this item be
postponed until the second meeting in June.
HWY 180•WATER & SEWER RELOCATIONS
Mayor Hanna introduced consideration of a resolution awarding a
contract to Goodwin and Goodwin Construction Company for the
Highway 180 Water and Sewer Relocation Project in the amount of
$371,384 plus a contingency of $41,552, and approval of a budget
adjustment.
Highway 180 is scheduled for major improvements in 1993. This
project was originally budgeted to be paid from the sales tax pay
as you go money. Due to the outcome of the lawsuit, it is
recommended this project be funded from Water and Sewer Fund.
May 18, 1993
Alderman Daniel asked if this was just for the water and sewer
portion of the project. Mayor Hanna stated that was correct.
Alderman Miller asked if this was to be funded from the Water and
Sewer Fund rather than from sales tax. He asked if there was
sufficient funds in the Water and Sewer Fund.
Mayes stated this will be funded from Water and Sewer, but this
does about deplete the funds available for further projects.
Alderman Vorsanger asked if the state had any plans for the
railroad tracks by the Farmers Coop. He stated traffic gets tied
up for quite a while when they are switching trains.
Kevin Crosson stated he would try and find out the state's plans.
Williams, seconded by Vorsanger, made a motion to approve the
contract. Upon roll call, the motion passed by a vote of 8 to 0.
RESOLUTION 53-93 AS RECORDED IN THE CITY CLERK'S OFFICE
CONDEMNATIONS
Mayor Hanna introduced consideration of an ordinance approving the
initiation of condemnation proceedings on the following tracts of
property to be acquired for the Airport Land Acquisition Project in
conjunction with the Obstruction Lighting & Removal Project:
A. Tract #21, owned by Louise Dunlap, Trustee, for the amount of
$3,320, for a property easement;
B . Tract #48, owned by John Andre, for the amount of $702, for an
avigation easement;
C. Tracts #93, 94, & 97, owned by Floyd Mabry, Jr., for the
amount of $45,715, acquisition of the three tracts;
D . Tract #101, owned by Mary Bond Smith, for the amount of
$9,000, for the purchase of a fee simple and avigation
easement;
E . Tract #118, owned by Esther Bowling and the heirs of Elvis
Kelley, for the amount of $2,500, for the purchase of the
tract;
W . D. Schock Co., Inc., recommends the condemnation proceedings be
approved in order for the City to acquire the necessary property
and/or easements associated with this project.
Assistant City Attorney McCarty read the ordinance for the first
time. Williams, seconded by Miller, made a motion to suspend the
rules and place the ordinance on its second reading. Upon roll
call, the
ordinance
motion to
third and
vote of 8
May 18, 1993
vp
133
motion passed by a vote of 8 to 0. McCarty read the
for the second time. Miller, seconded by Odom, made 'a
further suspend the rules and place the ordinance on its
final reading. Upon roll call, the motion passed by a
to 0. McCarty read the ordinance for the third time:
Alderman Miller asked after the condemnations are approved, is
there any possibility the property owners can come back to the City
at a later date and sue for more money, such as the Wilson property
brought before the Council some time ago.
Alderman Williams stated that was
The settlement that went to Mr.
which made the settlement larger
a different set of circumstances.
Wilson included accrued interest
than the value of the property.
Alderman Chapman asked how the values for the properties and
easements were derived. Mr. W. D. Schock stated the amounts were
set by appraisal.
Upon roll call, the ordinance passed by a vote of 8 to 0.
The emergency clause was approved by a vote of 8 to 0.
ORDINANCE 3703 APPEARS ON PAGE yea
SEWER MAIN REPLACEMENT & REHAB
OP ORDINANCE BOOR X X VI
Mayor Hanna introduced consideration of a resolution awarding a
contract to the low bidder, Benson Construction, in the amount of
$1,761,161 plus a 5% contingency of $88,058 for the Sanitary Sewer
Main Replacement and Rehabilitation of the Illinois River
Watershed, Basins 10 and 11, the Wilson Park area.
This project involves replacing or lining about 15,932 feet of
sewer line, repairing or replacing about 210 manholes, and other
associated repairs scheduled to begin in late May and end in
November 1993. This project was originally bid late last year, but
due to comply with the state Trench Safety Law, it had to be rebid.
Benson Construction was the low bidder on the first bid, and this
new bid is $136,131 below the original bid.
This project is required by an EPA Administrative Order dated
December 20, 1989, for the City to stop the recurring sewer
overflows in this area.
Alderman Miller stated this renovation will do a lot to clean up
the water quality of the creek in Wilson Park.
Alderman Vorsanger pointed out this re -bid came in lower than the
original bid.
A.
May 18, 1993
Mayor Hanna stated he had received a call from a citizen who stated
this agenda item was not published in the newspaper.
City Clerk Thomas confirmed that the item had been sent to the
paper, along with the rest of the agenda items for this meeting,
for publication.
Mayor Hanna stated this project has been done in phases. The EPA
has mandated the City to complete the renovation of the water and
sewer lines.
Vorsanger, seconded
contract. Upon roll
by Chapman, made a motion to approve the
call, the motion passed by a vote of 8 to 0.
RESOLUTION 54-93 AS RECORDED IN THE CITY CLERK'S OFFICE
ECONOMIC DEVELOPMENT
Mayor Hanna introduced consideration of a resolution about a
request by the Chamber of Commerce on behalf of an industrial
prospect. He stated the Chamber had requested this item be
postponed.
ENVIRONMENTAL CONCERNS
Mayor Hanna introduced a report on House Bill 1730 from the
Environmental Concerns Committee.
Alderman Chapman, chairperson of the Environmental Concerns
Committee, stated House Bill 1730 has come out of the Senate as Act
1820. She feels this is one of the most important acts that was
passed by the General Assembly dealing with the environment.
Alderman Chapman stated landfills are not the only environmental
problem, but they are a serious matter, and the matter of focus
with this act. This act deals with the issue of local governments,
both cities and counties, being able to set more stringent
standards than those set by the state.
Washington County passed an ordinance designed to protect the White
River Watershed and Beaver Lake which limits landfills from being
no closer than 2 miles to certain streams. This ordinance was
challenged by Sunray Sanitation. The chancellory court declared
the ordinance unconstitutional. In August, 1990, the Quorum Court
decided to appeal. On appeal, the Arkansas Supreme Court ruled in
September of 1991 that the ordinance was not unconstitutional.
This Supreme Court ruling made a very important statutory
interpretation. In the spring of 1991, the state passed Act 752,
a comprehensive landmark bill, which set the policy for this
state's landfill regulations.
May 18, 1993 4"
Alderman -Chapman stated the City -is a member of the Four County
Solid Waste Management Authority.1 The pattern for the'future will
be to work with and through this organization in developing
landfills for Northwest Arkansas. And, as a result of Act 1830,
cities and counties do have the right to require stricter
regulations than those set by the State of Arkansas. This will
enhance the power of the various regions within the state.
Mayor Hanna stated he and City Staff will be attending the Four
County Solid Waste Management meetings. He agrees with Alderman
Chapman, and the City is learning more as we go along with this
waste management process.
INCINERATOR LAWSUIT UPDATE
City Attorney Jerry Rose stated he will attempt to answer questions
the Council asked regarding the incinerator lawsuit at their last
City Council meeting. He reminded the Council that he does not
represent the City in this litigation. There have been two outside
firms involved in this case, McDermott, Will & Emery and .the
Niblock Law Firm. Rose stated he has served as liaison between the
law firms and the City Council.
Rose stated Fayetteville along with West Fork and Washington County
formed the Northwest Arkansas Resource Recovery Authority and sold
$22,405,000 of revenue bonds. .The bonds were issued by the
Authority and were insured by FGIC. In the Waste Supply Agreement,
the City agreed to pay tipping fees when using the incinerator that
would be used to pay off the bond issue. The incinerator project
was canceled following a non-binding special election held by the
City. Approximately $8 million of the bond proceeds had been spent
on the project at that point.
By Ordinance 3444, the City of Fayetteville increased sanitation
fees by $2.02 per month to pay the short fall on the bonds. A
class action suit was filed with Katherine Barnhart representing
the class against Fayetteville, West Fork, Washington County, Union
National Bank (the bond trustee) the Bank of Little Rock, and FGIC.
The plaintiff contended Ordinance 3444 was illegal because it was
passed for a specific purpose. -
Fayetteville contends it has the authority to pay the shortfall on
the bonds. By paying the shortfall, the City would be honoring the
contractual agreement, protect its credit rating, and keep from
having additional litigation, from the insurance company, .etc.
Judge Oliver Adams ruled in favor on the City on September 3, 1992.
Judge Adams stated Ordinance 3444 -was a valid use of the City's
powers and did not constitute an illegal exaction. The plaintiff
_appealed to the Arkansas Supreme Court.
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Alderman Vorsanger asked the date the bonds were issued and the
date the incinerator project was called off.
May 18, 1993
Alderman Bassett stated the bonds were sold in 1985, reissued in
1986, and the vote to stop the project was in March of 1988.
Rose stated he had been asked 10 questions by the City Council:
1. What is the expected dates for the appeal? Rose stated the
plaintiff asked for an extension of time to file their brief which
is now due on July 10. The City's brief is due 30 days after that,
and a reply brief is due 10 days after the City files a brief.
Alderman Williams asked if the City's attorneys had been told that
the City does not want an extension of time but rather wants to get
on with this and get it settled as quickly as possible. Rose
stated the attorneys are aware of this.
2. What is the status of the appeal? Rose stated after the
briefing schedule has been met, the Arkansas Supreme Court will set
a date for oral arguments. The court will take under advisement
the arguments and may take from a week up to a year before issuing
a decision. The average amount of time they take is 3-4 months.
No one expects this appeal to be over until after January 1, 1994.
3. Is there any way to expedite the appeal? Rose stated there
does not seem to be anything the City can do. The City is only one
of several players in this suit. Our attorneys do not want to drag
their feet and will ask for no extensions of time.
4. What is the amount of the incinerator debt? Rose stated as of
April 30, 1993, the principle amount was $20,810,000. The total
amount of interest to be paid from June 1, 1993 through December 1,
2013 is $20,375,062. As of May 27, 1993, the trustee will have
$9,901,853.67. This amount will come close to the principle amount
of about $11 million owed on the bonds.
5. Why has the debt increased: Rose stated the bond interest
payments are made twice per year. The interest is only paid one
time per year. The only money the trustee has to make the payments
with is the $9 million they are holding. They have this money
invested, but they are also making payments from this money. The
interest rate earned is less than the interest rate being paid on
the bonds by about $900,000 per year. The debt has increased
because there is not enough money to pay of shortfall on the bonds.
6. Who does the City have tolling agreements with and who have we
filed suit against? Rose stated there are tolling agreements with
Jim McCord, the former city attorney, Kutak, Rock & Campbell, who
represent the underwriters, and Union National Bank. Rose stated
the City has filed suit against Wright, Lindsey and Jennings, the
Rose Law Firm, FGIC, and A.G. Edwards. These suits are currently
in abeyance until the ruling is received from the Supreme Court.
May 18, 1993
7. • How much money has the City taken in on the '$2.02 per month?
Rose stated the City has collected .$2,512,000.
8. How has this money been spent? Rose stated attorney fees have
been paid to McDermott, Will & Emery in the amount of $1,131,000,
to the Niblock Law Firm in the amount of $316,000, and to Jim Rose
who represents the NWARRA, in the amount of $65,000 making total
attorney fees of $1,512,000.
Alderman Bassett stated this does not include the fees paid by the
trustee to their attorneys, the Friday Law Firm.
Ben Mayes stated the City has the remaining funds invested and
designated for the incinerator debt.
9. If the City did not have to pay attorney fees, would the debt
have been lower? Rose stated sure.
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10. How has the trustee invested the money, and has their strategy
affected the size of the debt? Rose stated the trustee states they
have invested the money per the instructions of the City which is
in short term investments. They invested short term because of the
unknown outcome of the litigation.
Alderman Bassett stated as a result of them not making any long,
term investments when interest rates were high, the City lost
money. That is one reason for the shortfall. The interest rate on
the bonds ranges from 5.8% to 7.125%, and the City is earning about.
3%. „.
Rose stated he asked Ben Mayes to estimate the amount.of money.the
City has .lost because of -the investment strategy used by the
trustee. Mayes estimated the loss at about $178,000.
Alderman Williams asked if the trustee had support for the
statement that the City instructed them to invest short term?
Alderman Vorsanger stated that was the initial instructions when
the bonds were issued. When the bonds were sold,.,the City thought
it would be building an incinerator and would need to be able to
get to the money to make payments to the contractor, etc. There
was about $8 million spent of the $22 million bond issue.
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There was discussion about where the $8 million was -spent.
Alderman Bassett stated a substantial amount. was paid for
engineering, legal, and consulting fees for issuing the bonds.
Also, a number of studies were done about the incinerator project.
Kevin Crosson stated there was -also a substantial amount of
constructioncompleted by the firm in Denmark on the components for
the incinerator.
May 18, 1993
Rose stated the firm in Denmark had to be paid for their work as
well as for the breach of contract by the City when the project was
stopped.
Alderman Vorsanger pointed out that people have forgotten what they
voted for in 1988 when they voted to stop the incinerator project.
He read from the 1988 election ballot. Either option called for an
increase in sanitation fees, either an increase to pay off the
shortfall on the bonds if the incinerator project was stopped or an
increase in rates to pay the tipping fees when using the
incinerator.
Alderman Williams stated he felt some people were concerned because
they had to vote for some type of payment and increase in
sanitation rates. They did not have the option to vote not to pay
for the incinerator.
Alderman Bassett stated the purpose of this discussion is not to
rehash the past but rather to determine a method of working out how
to get enough money in the pool as quickly as possible to pay off
this debt. He wants to find a way for everyone to work together to
solve this problem. This debt is keeping the City from being free
to move on and be free from the past.
INCINERATOR DEBT REDUCTION FUND
Mayor Hanna stated he was considering establishing an Incinerator
Debt Reduction Fund where any future undesignated and unneeded
funds could be placed and applied to the incinerator debt.
Alderman Chapman asked how this fund would be built. She felt
establishing such a fund too quickly could cause problems.
Alderman Bassett stated he very much supports the idea to set up a
fund and funnel any possible money to it. However, before the
Council does that, he asked if such a fund were set up and if city
property was sold, for instance, could the money be put in this
fund. He asked if this would present any legal problems or any
problems because of general versus special revenues.
City Attorney Rose stated a lot of what this suit is about is the
$2.02 charge. The lower court stated the City could collect the
funds, but the Supreme Court is still out on this question. This
question applies to general fund revenues. He is concerned about
the fact that bond money can only be used for the purpose it was
raised. The City can use general fund revenues now until the
Supreme Court says differently.
Mayes stated the City currently has a Reserve for Incinerator
Disengagement account in the Sanitation Fund where all monies for
this are being kept. When money became available from another
fund, the City could probably do a budget adjustment and designate
May 18, 1993
the funds to the Incinerator Fund. The City would have to look at
each specific case.
Mayor Hanna agreed with Alderman Chapman in that there is no
emergency or rush to get this established. He would like the
Council to take time to get the fund properly structured.
Alderman Vorsanger stated the Washington attorneys had been working
for some time when he came on the Board. He asked when they.
started. •
Crosson stated they started shortly after the vote was taken in
1988. They were originally hired to negotiate the settlement with
the contractors. The firm was retained to defend the City..
Rose stated Jim Rose, attorney for the Authority, has stated he
would be coming to the Council to talk with them about the
Authority. It is important legally to keep the Authority in
existence. The Authority would be the entity to file any lawsuit
in this case.
Alderman Williams asked who the representatives- are on the
Authority.
Rose stated it is probably the City Council members.
ARKANSAS STATE REVOLVING LOAN PROGRAM
Ben Mayes stated there is no decisions that need to be made at this
meeting regarding deciding whether or not to borrow funds. What is
needed at this meeting is for the Council to .pass a .resolution
stating their intention to borrow money. This will merely keep the
option open for the City to exercise this right. It will be a non-
binding resolution for the state.
Alderman Vorsanger stated the Water & Sewer and the Environmental
Affairs Committees recommend this. This state offered financing
can only be used for waste water treatment and sewer system
rehabilitation projects. He felt this was an opportunity the City
may want to take advantage of. Alderman Vorsanger_ stated David
Hausam, of the Llama Company, has been hired by the state to work
with this program. Alderman Vorsanger stated the Water & Sewer
Committee felt this Council should have the opportunity to continue
to explore this type of financing.:
Vorsanger made a motion to approve the resolution.
David Hausam stated the only thing needed of the Council this
'..evening is to pass a resolution stating the intent to .pursue
financing. This will allow the City to reimburse itself for a bond
issue or for the contract that has just been approved for the sewer
system rehabilitation project. The resolution will be non-binding,
May 18, 1993
and there is no commitment to the state made at this time. He
stated the City will then have time to study the various options
available with this program.
Alderman Vorsanger asked what the interest rate for the program is
and what is the length of the pay back period.
Hausam stated the interest rate on the loan is 4%. Including the
up front cost of issuing the bonds, the interest rate is 4.32%.
There is a 3% one time charge for issuing the bonds associated with
the financing. Hausam stated the loan is for 20 years, but he
thinks they will also work with a 1 year pay back period. Payments
are then made on a monthly basis, and they should start as soon as
the project is completed.
Mayor Hanna asked what the consequences would be if the resolution
was not passed until another month or so. Hausam stated the City
could not reimburse itself for any monies spent before the
resolution was approved.
Mayor Hanna stated passing this resolution would give the
appearance that the City will be borrowing money when we have
promised the people will be using a pay-as-you-go method of
payment.
Alderman Chapman agreed with the Mayor. She stated this financing
method is also attractive because they look favorable on the use of
inhouse engineers and allow a 10 year loan period. However, there
are several things that need solid answers before this resolution
is passed. She recommended allowing additional time for further
consideration of this program before passing any resolution.
Ben Mayes stated the request for this resolution would only reflect
on the one contract that was approved tonight. He stated he feels
the City should get with the state and get more information on the
program and consider it in conjunction with the next sewer system
package.
Alderman Williams asked that the estimated cost of $1,940,000 be
itemized for the next Council meeting.
JUVENILE CONCERNS COMMITTEE
Alderman Bassett stated the Juvenile Concerns Committee had met
this same afternoon and has set dates for two public hearings. The
first will be on Thursday, May 27 at 6:30 p.m. in Room 219 of City
Hall. This meeting will be to hear from the teens of the
community. The second public hearing will be on Thursday, June 3
at 6:30 p.m. in Room 219. This meeting will be to hear from all
other citizens. After these public hearings, the committee will
set down and reach some type of conclusion and recommendation to
present to the Council.
WARD 3 MEETING
May 18, 1993
Alderman Vorsanger stated Ward
20 at 7:00 p.m. at Root School.
Butterfield School but no one
attend this next meeting.
WARD 4 MEETING
143
3 would be meeting on Thursday, May
Last month the meeting was held at
showed up. He hopes citizens will
Alderman Daniel stated Ward 4 would
7:00 p.m. in Room 111 of City Hall.
last Ward 4 meeting.
DRAKE FIELD AND REGIONAL AIRPORT
meet on Thursday, May 20 at4,
Only 2 citizens attended the
Alderman Edens stated he has distributed an information packet to
each of the aldermen which includes a draft of the Drake Field
lease. He recommended bringing a copy of the first rough draft of
this lease to the aldermen for their ideas, comments, etc. He
stated it was a complicated document. He asked the aldermen to
review the document and get back to either himself of Alderman
Williams. They will take the comments to the .next Airport
Authority meeting.
Alderman Williams stated he had good news for the City Council.
Drake Field is operating in the black. Dale Frederick informed him
the City had loaned the airport about $1 million which can now be
repaid to the City from the operating revenue at Drake Field. He
suggested making payments of $20,000 per year. He stated the FAA
has approved a $3 per person embarking fee that can be assessed by
an airport. Alderman Williams stated if Fayetteville collected $3
per person, about $50,000 per month could be recouped. He feels
the citizens of Fayetteville should be repaid the loan as quickly
as possible.
Alderman Vorsanger asked if the Board had not approved the $3
charge sometime last year. He asked why it was not being
collected. He stated the net income at the airport is before
depreciation.
Ben Mayes stated he will get an answer regarding the $3 charge from
Dale Frederick. As he understands the situation, collection of the
$3 charge has been frozen because the revenue has to be designated
to a particular use.
ADJOURNMENT
The meeting adjourned at 8:27 p.m.
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