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HomeMy WebLinkAboutMIN MAR 08 1994 REGULAR SESSION CITY COUNCIL - CITY OF BEAUMONT HELD MARCH 8, 1994 - 1:30 P.M. BE IT REMEMBERED that the City Council of the City of Beaumont, Texas, met in regular session this the 8th day of March, 1994, with the following present: HONORABLE: Evelyn M. Lord Mayor Guy N. Goodson Mayor Pro Tem Councilman, Ward II Andrew P. Cokinos Councilman At Large Brian R. Alter Councilman At Large Lulu L. Smith Councilman, Ward I John R. Davis Councilman, Ward III David W. Moore Councilman, Ward IV Ray A. Riley City Manager Tyrone Cooper Asst. City Attorney Rosemarie Chiappetta City Clerk -000- The Invocation was given by Councilman Moore. The Pledge of Allegiance was led by Councilman Alter. -000- Citizen comment was invited on the Consent and Main Agendas. Mr. Cleveland Nisby, 4520 Corley, addressed Council to explain the traffic congestion and danger at Washington Boulevard and Interstate 10 and in favor of Agenda Item No. 3 approving an agreement with the Texas Department of Transportation for traffic signal upgrades at that intersection. Mr. Rob Demary, 430 East Elgie, addressed Council to express appreciation for the improvements to be considered on Agenda Items 1 and 2 for Magnolia Park by erecting an Activity Center. -000- The following Consent Agenda items were considered: Approval of the Minutes of the regular City Council session held March 1, 1994 ; -57- March 8, 1994 Resolution No. 94-51 authorizing purchase of two diesel tractor mowers for use by the Parks Division in the amount of $20,870. 00 from Eastex Farm and Home; Resolution No. 94-52 authorizing a six-month lubricants, contract with Sitton Oil and Marine to furnish engine oil, hydraulic oil and automatic transmission oil; Resolution No. 94-53 authorizing purchase of a hydraulic rescue tool from Ferrara Firefighting Equipment in the amount of $15,899.00 to be used by the Fire Department to gain fast access to injured victims trapped in vehicles; Resolution No. 94-54 authorizing a lease agreement with the Beaumont Independent School District for a 20,555 square foot tract of land out of the College Square Block of the Original Town Site of Beaumont between Neches and Trinity Streets, fronting College and the new Wall Street Connector, for a street beautification project at $10. 00 per year, with extensions in five year increments; and Resolution No. 94-55 authorizing settlement in the amount of $5, 500. 00 of the claim Jerome Williams vs. The City of Beaumont. The Consent Agenda was approved on a motion made by Councilman Cokinos and seconded by Councilman Alter. Question: Ayes: All Nayes: None -000- Resolution No. 94-56 authorizing a construction contract for the Magnolia Park Activity Center with Daniells Building and Construction, Inc. for the base bid of $2,263,900. 00 and alternate bid #01101 in the amount of $28,200. 00 for additional parking and authorizing Change Order No. 1 (deletion of brick wall around the mechanical courtyard, changes in the HVAC system, alternate electrical fixtures and addition of a scoreboard in the gymnasium) , decreasing the contract by $18,711.00, for a total construction cost of $2,273, 389. 00 was approved on a motion made by Councilman Davis and seconded by Councilman Smith. Question: Ayes: All Nayes: None -000- Resolution No. 94-57 authorizing a four-year lease purchase agreement for the Magnolia Park Activity Center with Banc One Leasing Corporation at a fixed rate of 4.89% with annual payments of $484, 774.83 with initial funding of the project of $550, 000. 00 from Community Development Block Grant funds was approved on a motion made by Councilman Davis and seconded by Councilman Moore. Question: Ayes: All Nayes: None -58- March 8, 1994 Resolution No. 94-58 authorizing an agreement with the Texas Department of Transportation to upgrade the fixed-time traffic signals on IH-10 frontage roads at Washington Boulevard to fully actuated operation (by having the signal timings respond to traffic flows) was approved on a motion made by Councilman Alter and seconded by Mayor Pro Tem Goodson. Question: Ayes: All Nayes: None -000- Resolution No. 94-59 approving amendments to the $450, 000.00 loan commitment for building improvements at the Beaumont Retirement Hotel, requested by the Urban Group III, on Items 4, 8, and 15 discussed at the February 22 City Council Workshop, and an additional revision not discussed: that in the event of any default, the City will proceed first against the collateral for satisfaction of all amounts due, was considered. A lengthy discussion by Councilmembers, explanation by Scot Sheldon, counsel for the Urban Group III (New Beaumont Hotel Project) , regarding their request that provision be made that in the event of any default, the City proceed first against the collateral (building) , and then, if necessary, pursue recourse against the borrower, and recommendation by the City Manager to impose a time limit, was held. After further discussion concerning the proposed change in default recourse, Councilman Alter made a motion to approve Resolution No. 94-59 accepting the original "loan arrangement as presented (in Workshop February 22) with the exception that Paragraph 15-b, which is the last paragraph, which relates to placing the collateral building in front of the personal liability provisions be eliminated, and that the parties to whom we are proposing this loan have until March 31st to either accept it or reject it as proposed. " Councilman Smith seconded the motion. Question: Ayes: All Nayes: None -000- Councilman Alter encouraged everyone to exercise their privilege to vote in the Primary Election before 7:00 p.m. today. Councilman Cokinos reported that he enjoyed attending the Ms. Senior Texas Beauty Pageant held at Hotel Beaumont this weekend and also the Black Democrat's function honoring County Commissioners on Saturday, where Councilman Moore presented a proclamation on behalf of the City of Beaumont. Mayor Pro Tem Goodson joined with Councilman Alter in encouraging voter participation today and recognized the presence of Fire Chief Pete Shelton. Councilman Smith said she had an exciting weekend participating in -59- March 8, 1994 Leadership Beaumont's annual Youth Leadership Program (8th grade students) held Friday and Saturday and then at Camp Enterprise, sponsored by the Rotary Club. She said both groups of enthusiastic young people set fine examples. Mayor Lord told about a three-day "Communities that Care" orientation session, "a fine new program that Judge Farris has brought under his leadership of the Juvenile Court Justices in the Country to Beaumont, where we will run a pilot program that will be watched by other cities all over the nation. . . " -000- Mr. Robert Knight, a Kountze resident, addressed Council to complain about a $20. 00 non-resident fee to check out library books. Mr. Knight said he pays sales tax to Beaumont through large purchases and the Federal government supplies grant monies for procurement of books for the libraries; therefore, he does not feel a library fee should be assessed to non-residents. -000- There being no further business, the regular session of City Council was recessed to conduct a Workshop Session. -000- I, Rosemarie Chiappetta, City Clerk of the City of Beaumont, Texas, certify that the above is a true copy of the Minutes of the regular City Council session held March 8, 1994. Rosemarie Chiappetta City Clerk -60- March 8, 1994 EXCERPT MARCH 8, 1994, CITY COUNCIL MEETING Mayor Lord: Item 4, please. Mr. Riley: Item 4 is the resolution which would approve the amendments to the loan proposal for Urban Group III for building improvements at the Beaumont Retirement Hotel. Council conducted a Workshop two weeks ago, at which time you heard the request for modifications in the proposed loan agreement. The information has been provided to you again with another letter. You see in here we've shown what the modifications are and how they are fixed plus there was the one additional change which was included in the request, and that relates to the standing of--that's the last one in there in paragraph 15-b and that's concerning the collateral being used for satisfaction of all amounts then due and owing, and then after the collateral is satisfied, then would you have the recourse as previously agreed. I think the Council, the point was there would be full recourse for one year and declining 25% a year after that for a period of four years. This provision would say that the collateral would have to be used in order to satisfy the obligation before you would have access to that recourse. Mayor Lord: Questions? Councilman Cokinos: I got a question. Mayor Lord: Councilman Cokinos. Councilman Cokinos: Mr. City Manager, what are you, what is your recommendation, what is your feeling about this? I want to hear it from you. Mr. Riley: Well, what appeared at Council when you worked out the idea about the recourse, it was in order to be able to have a diminishing value related to the collateral of, that you would have the recourse against the corporate or the partnership. In the event that now you put the collateral in front of it, it really obviates, I believe, the, the concern about the recourse matter at all. In effect, it just puts the collateral back in front of it, which is about where you were before, if that's satisfactory to the Council. I think that we just need to understand that is really a basic change from what the, where you ended up at the end of your Workshop the previous week. It's, after all the discussion about recourse, ultimately you can put the collateral in front of it, then you really don't have that kind of recourse. PAGE 2, EXCERPT CITY COUNCIL MEETING MARCH 81 1994 Councilman Cokinos: Are you trying to say that you don't feel comfortable with this? Mr. Riley: I'm saying that I want to make sure that the Council understands exactly what has been proposed to them. If the Council is comfortable with it, with the change from appeared to be what we considered to be a consensus at the end of the last Workshop, then certainly we can do it. I just do not want the Council to misunderstand where we've gone with regard to this question about recourse during the period since about last November. Councilman Cokinos: So, are you recommending (pause) Mayor Lord: Well, if I may, I think we're putting the City Manager in a funny spot because ours is the job to make policy and his is the job to carry out the policy upon which we decide. Councilman Cokinos: I beg your pardon, Mayor, we've talked, the City Manager and I have talked about this, and all I want to do is make sure--cause he's the expert, we're not the expert. And, are you comfortable with this as a City Manager? Mr. Riley: I, I believe that the way it was presented at the last week, that that was acceptable. It appeared to me to be acceptable to Council. It would seem as if, from my standpoint at the present time, I would not accept the last proposed change because I think that it really tends to obviate the work that was done previously. Councilman Cokinos: That's what I 'm, that's what I 'm seeking for right Mr. Riley: My personal feeling is that with all that has been done, there, just completely does not have anything, in other words there is virtually no need to have the personal recourse. If Council understands that and want to proceed with this, then they just need to understand that what you're really doing is accepting the collateral which is the building itself as the collateral against the loan, and that the recourse is really a major issue anymore. PAGE 3, EXCERPT CITY COUNCIL MEETING MARCH 8, 1994 Councilman Cokinos: Then that means eliminating 15-b? Mr. Riley: Well, the last, the last proposal which was added in their letter, which is that newly proposed addition which you can see is added to 15-b. Councilman Cokinos: Well, that's what I was looking for. Thank you very much. Mayor Lord: Are there other questions? Do I have a motion? Mayor Pro Tem Goodson: Mayor, if I might, we don't take comments from citizens. I know that people are here, Mr. Sheldon and Mr. Parsons. Mayor Lord: It's always the prerogative of a councilmember to ask anybody. Mayor Pro Tem Goodson: I don't know if it would really do any good for any additional discussion, but perhaps if they want to respond, I guess I was of the understanding that we were dealing with four-year guarantee with a declining balance Councilman Cokinos: That's not true. Mayor Pro Tem Goodson: without any limitations, looking to the collateral first, and this came up after the last Council meeting. I know that the amount of the loan, as we are making it now, with the balance of the other loan is less than the value of the building, so I understand. Is that not correct, Scott? If you all want to come up. Scot Sheldon: My name is Scot Sheldon. I 'm with the law firm of Moore, Landry, Garth and Jones, here in Beaumont, located at 390 Park Street. I very much appreciate the opportunity to come up and discuss this. I did draft those changes. As you know, I was at the Workshop, and we discussed all of this. And, as you all know, when we came to Workshop, we talked in PAGE 4, EXCERPT CITY COUNCIL MEETING MARCH 81 1994 terms of our proposal being to eliminate the recourse obligation or recourse nature of the note. Your position was basically that you wanted to maintain the recourse, and through our spirit of cooperation we agreed on the four-year deal. With our position being no recourse, then the building would stand alone as collateral for the loan. With yours, you had recourse against the borrowers, and you also had the building. We didn't discuss at (it ?) all, because our position was no recourse, anything about the building serving as collateral. And, it was after that meeting that Bob and I discussed this matter in my offices and realized that we had not discussed it in Workshop. That's why I wanted to point out in my letter to Mr. Riley that we included this provision as something that wasn't discussed. The only thing that I would disagree with, and ask very much that you consider is, that the building was already agreed upon as collateral. I think that everybody was concerned about two things, and I 'm not speaking for you all, it's just my understanding of this deal, that there was some concern about my clients' commitment to go in there, make the improvements to the building or, if for some reason the project didn't happen like it was intended within this four-year period and there had to be a sale of the building, that if there was a deficiency, you all wanted my clients to be personally liable for it. And, that in my mind was what the recourse obligation was for, that you needed a period of time in order to know that they truly were committing to you to come in, spend the monies to improve the property, put the sprinkler systems in and do so forth, and then for the next three years after that completion to operate the facility to provide housing for the elderly who are down there now and the others in, in that need. All we were doing with this provision was asking that that building continue to serve as the primary collateral for this loan, and then in the event that after a sale of the building there's a deficiency my clients are still gonna be personally liable. We just didn't want, or were hoping, with this language that you would not take the position that, Hey, we don't need to look at the building, that's their problem, all we're gonna do is come after the guarantors, as long as it's during that four-year period. And, I don't think that what was proposed was something that you did or didn't agree on. I'm not saying that you did, it just seemed logical that if this loan is being made for improvement to the building to provide this type of facility in Downtown Beaumont, that the only reason you would want my clients to stand behind it personally was in the event that the building didn't serve as sufficient collateral for the loan, or in the event that somehow or another that my client didn't fulfill its obligations under this spirit of cooperation that we agreed we gonna have going into this. So, that was the Mayor Lord: Excuse me, Mr. Sheldon. I don't want to turn this into another Workshop. Mr. Sheldon: And, I didn't have that PAGE 5, EXCERPT CITY COUNCIL MEETING MARCH 8, 1994 Mayor Lord: I have a feeling because there was no motion, am I reading Council correct, that we find this something that is not been put before us before in a setting where we can give and take freely in Workshop style, and would it be the wish that we postpone this, perhaps? Councilman Cokinos: Do you need a motion on that? Mayor Lord: I 'm sort of gather consensus first. Councilman Cokinos: Do you need a motion for, to postpone? Mayor Lord: Well, I will, if that's what the consensus is. Mayor Pro Tem Goodson: Yes, Mayor, I, I ' ll be happy to postpone it or discuss it. I, I just in response real quickly to what Scot said. The only reason, Scot, that I take a contrary position is because what I recall from, and it's not in our materials today, but what my last recollection of what was presented as the value of the building, which was brought up as your clients is an important issue, is that once the improvements were made, is that it would exceed the value of the loan, and if, if that was the intent of Council to look just at the collateral, we wouldn't ever have gotten off on the guarantee issue anyway. So, I guess I 'm taking a little, position, the way, the compromise I thought that Council reached, and I 'm not trying to speak for other Councilmembers, but I know I 'll tell you in my mind, the compromise was for four-years personal guarantee recourse, not looking to the building first, looking to whatever collateral the City chose to because at that rate, what I scratched it out last week, and I think Brian did too and maybe others, that would then reduce the total of guarantee by over a $100, 000 per year. So, at that rate, the four-year, I mean the personal guarantee to mean, means very little, if it stands behind the collateral because the buildings going to have to decline by more than the reduction, if, if the building is already worth more than the note, then every year as that guarantee rolls off, the building's going to have to decline even more than that in value for the personal guarantee to ever come into effect. So, my thought was that the four-year guarantee was the compromise between 1000 full recourse and, and none. So, I guess my, my opinion is to the contrary that it was a four-year declining guarantee, was the compromise with not the building to come first because I don't calculate, unless it's a tremendous downturn in the value of that building in four years, that the personal guarantee will ever be reached, if the collateral stands as the value. PAGE 6, EXCERPT CITY COUNCIL MEETING MARCH 81 1994 Mr. Sheldon: I don't disagree with that and Mayor Lord: Again, I don't really want, think this is the place to get into a dialogue. (Indiscernible comments--multiple voices) Councilman Cokinos: I so move for a postponement, Mayor. Mayor Lord: Mr. Manager. Mr. Riley: May I ask the Council for some consideration? This, this original loan was approved back in November. It's from Program funds from this year's C, Community Development budget. We have attempted to negotiate this now, and it's now the middle of March. We need to move on with it. At the end of the last Workshop which was two weeks ago, it seemed like the Council had moved Mayor Lord: We were together. Mr. Riley: fairly, fairly well in order to get to the reduction of the recourse to where it would be limited. In my opinion, we need to move on with this in order to be able to determine how we're going to use those CD funds. If Council were sat, if they were satisfied with what was appeared to be a consensus last week, we would appreciate it, if in effect you would. . .either approve those modifications or amendments or not, with or without the last request, and then put a time limit on time for them to accept that loan that will be the, acceptable to the Council, so that we can move on. So, if, if this last part, if the first part were acceptable, what was concluded end of last week, if you could approve those modifications and say that we would add to it, that they've got 10, 15 days in order to exercise that agreement, then we can move on. If they fail to do that, we can always come back, if they've got some other kind of request, but in the meantime, you have $450, 000 obligated from CD funds that should be obligated to some other source rather than sitting here completely dormant for the period of time. Mayor Lord: Thank you, Mr. Manager. Well, there was no second to the motion to postpone, is there any other motion before the PAGE 7, EXCERPT CITY COUNCIL MEETING MARCH 81 1994 Councilman Cokinos: Let me make the motion and see if we have a second. Mayor Lord: Thank you, Mr. Weldon, Sheldon, I 'm sorry. Councilman Cokinos: I make a motion that we postpone this. Mayor Lord: There is a motion, postpone. There is no second. Councilman Cokinos: So what does that mean, Mr. City Manager? Mayor Lord: It means we have a clear deck for any other motion. Mr. Alter. Councilman Alter: Scot, the purpose is in my mind for having personal guarantee, when we're making the loan, a loan that's going to be used to do the enhancements in the property, to a great extent, keep an operator in the property, cause otherwise we are simply using our own tax dollars to improve the property ourselves. We're not the operator. It's a for- profit business. The long-term guarantee I can understand. It's based on the financial statements that were presented. Right now you're running at somewhat even keel. You couldn't get outside financing because of it. We're stepping forward to be able to get it. If the building stands in front of the personal guarantee, then we're back in the same position that we started with, with you being able to walk away, or your client being able to walk away tomorrow and our tax dollars still being used to operate the building with no operator, to improve the building with no potential operator. The compromise in my mind agreeing to four-years was that if you are on line and in front for four years, I know that you're gonna make your best efforts for a minimum four years to operate the structure, if we're willing to make that level of capital improvement loan. And, as a result, I would not agree to keeping the building in front of that, if we're gonna have a short term personal liability. Mayor Lord: Do you wish to make a motion? PAGE 81 EXCERPT CITY COUNCIL MINUTES MARCH 81 1994 Councilman Alter: So, I would make the motion that we accept it as discussed last week without this last addition of the paragraph, and that's really my reason for it. Mayor Lord: I have a motion. Councilman Smith: Do you want to put a time frame on how long they have to approve this? Councilman Alter: I would Councilman Smith: Fifteen days? Councilman Alter: What's today? Today's the 8th, I 'd say the end of the month. The only reason I would say that is that if there's some changes, with Spring break coming up there's a lot of movement within all of us going around, I would say until the end of the month. I 'd say until March 31st. Mayor Lord: Do we have a second on that? Councilman Smith: Second. Mayor Lord: And, would you like to repeat that for the benefit of the City Clerk? Councilman Alter: I would move that we accept the proposed loan arrangement as presented with the exception that the newly proposed addition wherein the building would stand in front of the personal liability provision be eliminated, and that the parties be given until March 31st to accept or reject the proposed loan arrangement. Mayor Lord: I have the motion, PAGE 9, EXCERPT CITY COUNCIL MEETING MARCH 8, 1994 Councilman Cokinos: Question. Mayor: and I have the second, have I not? Councilman Cokinos: Question. Mayor Lord: I want to make sure, yes, certainly, question? Councilman Cokinos: Now is this, this pertain to 15-b? Mayor Lord: I think probably you can sit down now, Scot. Councilman Cokinos: Well, I think, I think you ought to reflect in your motion, Mr. Alter, this pertains to 15-b. Councilman Alter: Is that what originally. . . (indiscernible--multiple voices) Councilman Cokinos: That's, that's what we've been talking about. Councilman Alter: Then, I was looking (Multiple voices--indiscernible) Mayor Lord: . . .I think we're all clear. Councilman Cokinos: With, with, with the last part of paragraph 15-b. Relate back to the Council what your motion is. I want to hear it, Mayor. PAGE 10, EXCERPT CITY COUNCIL MEETING MARCH 81 1994 Mayor Lord: I'm not trying to stop you, Mr. Cokinos. Councilman Cokinos: I want to hear. Councilman Alter: I would be happy to restate that. I move or propose that we accept the loan arrangement as presented with the exception that paragraph 15-b, which is the last paragraph, which relates to placing the collateral building in front of the personal liability provisions, be eliminated and that the parties to whom we are proposing this loan, have until March 31st to either accept it or reject it as proposed. Councilman Cokinos: Okay, all right. I go for that. Mayor Lord: You understand that now, Mr. Cokinos. Councilman Cokinos: Yes, that's exactly what I 'm, was aiming for. Mayor Lord: Is everyone on Council clear? Councilman Alter: For the record, since there was a change, make sure our second approves the change. (A nod of approval from Councilman Smith. ) Mayor Lord: Yes. Any further discussion. All in favor, please say aye, contrary, naye. The ayes have it. . .carried as amended. END OF EXCERPT