City Council Special Meeting

Star City Council Special Meeting Minutes December 11, 2018 A special meeting of the Star City Council was held on December 11, 2018 at 7:00 pm at Star City Hall, 10769 W. State Street, Star, Idaho. Mayor Chad Bell called the meeting to order and all stood for the Pledge of Allegiance. Roll Call: Councilmen David Hershey, Michael Keyes, Trevor Chadwick, and Kevin Nielsen were all present. Approval of Agenda: Chadwick moved to approve the agenda, adding 4B Resolution No. 2018-11 Approval of Agreement for Real Property Ownership, Keyes seconded the motion. All ayes: motion carried. New Business: Joint Agreement with Star Fire District for Acquisition of Property: Mayor Bell explained the process tonight would be to have Chief Timinsky present, then Bill Gigray, Legal Counsel for the Fire District, to make additional comments, Council will then discuss, and then if anyone from the public wished to speak they would be given an opportunity. He explained they were here tonight to discuss the purchase of property by both the Fire District and the City jointly, with the Fire Department ultimately owning the building. The property they are talking about is on State Street, west of town, which used to be the vitamin factory. The Fire Department has successfully made an offer below the original asking price. Because the Fire Department does not have the funds for the total purchase price, the City has offered to jointly buy the property with them. The Fire Department will be responsible to pay to remodel the new facility and when the remodel is complete they will move the current station over to the new facility. They will then sell the station next door and the City will have first right of refusal to purchase it. They have outgrown the current facility and the living quarters are insufficient. He will have Chief Timinsky explain their options. They feel by doing this they will be saving the taxpayers money due to the cost of building a new fire station versus purchasing this existing building and remodeling it. He noted the City’s funds would still be secure. Greg Timinsky, Fire Department Chief, presented Mayor and Council with written comments and read them into the record (copy attached). Hershey asked if he understood that to build a new building for $6.4 million it would be to house the station only and would not include a training area, maintenance or administrative offices. Chief Timinsky stated that was correct, and the $6.4 million figure was from construction of a station in Meridian. Keyes asked about option #1 which stated it would cost $375 square foot to remodel the current station, and asked if that would include demolition cost. Timinsky stated it did include demolition. Keyes asked why it would cost $640 square foot, without demolition, to build a new station; why such a discrepancy in the numbers. Timinsky stated infrastructure is already to this station, while at a new site all of this would have to be put in, in addition to building a structure. Nielsen asked Timinsky to elaborate on some of the standards that are not being met. Timinsky stated a sample would be that the footings won't handle a remodel, the electrical and plumbing were built to residential standards and do not meet current code, the stairway doesn't meet current code, the living area Page 1 of 5 is no longer large enough, and the footing in the bay area won't accommodate any additional height addition. Mayor Bell asked William Gigray to give a rundown of the agreement and how it would work. William Gigray, III, 5700 East Franklin, Nampa, Idaho, stated he serves as Legal Counsel for the Star Fire Protection District. He stated this matter was brought to him by the Chief and Commissioners of the Star Fire District of the potential opportunity that had arose to purchase this 3.2 acre parcel with a 36,000 square foot building and that there may be a narrow window of opportunity in which to purchase. If they were able to purchase, they would then need to vacate the current Station No. 1 and offer it for sale; or it would open the facility to be available to the City. He was asked to prepare a joint agreement between the City and the Fire District to purchase the property. Gigray stated he had been working with Chris Yorgason, Legal Counsel for the City, and incorporated Yorgason's comments in the agreement put before the Council for consideration. Gigray summarized the provisions in the agreement: 1) It will be recorded in addition to the deed being recorded granting property from the bank to the City and the Fire District, so everyone is aware that this property, as well as Station #1, is subject to the terms and condition of this agreement. 2) Agreement provides for the initial purchase of the property, Fire District to pay $100,000.00 and the City paying $1,800,000.00 initial cost. The Fire District will pay for remodel costs. 3) The City will get an annual value evaluation and it provides the valuation will increase based on the LGIP interest amount. 4) Once the property is purchased it will be the responsibility of the Fire District to maintain, and pay for insurance and utilities. 5) The Fire District will be responsible to deal with the existing renter in the building, with the possibility of negotiating an ongoing rental agreement. Any rental money received will apply to maintenance costs. 6) It will be the responsibility of the Fire District to proceed with the remodel; valuation of the Fire Station will increase with the remodel improvements. 7) The agreement provides the City can purchase Station #1 at anytime following the term of this agreement. After the remodel it is the intent of the Fire District to purchase the City's interest in the property. 8) Per terms of the agreement the City can seek final payment after thirty-six months. It is the intent of the Fire District to go for a bond to pay for the City's investment in the property. Gigray discussed the process for evaluating the value of Station #1 if the City chooses to purchase it. Both parties can agree on a value or the City can seek an appraisal and both parties will approve the appraisal. Gigray noted there are several options for repaying the City for their investment. Keyes asked Gigray if he could discuss the results of any recent appraisal of the new building. Gigray deferred to Chief Timinsky who stated the bank had appraised the property at $2.4 million and the County appraised the property at $3.2 million. Mayor Bell noted the bank's original asking price was $3.2 million, but they have accepted an offer of $1.9 million if they exercise purchase by the end of December. Keyes asked about the market value of Station #1. Timinsky stated their appraisal is six years old and without looking it up, it was at $500,000.00 to $600,000.00. Nielsen asked about Section 8.2.2.4 and asked as the Fire District makes a payment to the City, how is that payment applied - applied wholly as ownership transfer to the Fire District or would there be a percentage of that going to the investment rate of return. Gigray stated the Fire District has the option to make payments. After a payments made, the City and Fire District have to approve a new evaluation of Page 2 of 5 the value of the building. This is a deliberate process where the City and Fire District know at all times what the value of that building is. It is better if parties know where they are along the way; it avoids each party thinking of different values. He stated he has done joint agreements before with other agencies and they have worked well. Chadwick asked in reference to Section 8.2.3, as to when does the Fire District plan to do the remodel. Gigray stated he understood that once the property is closed on they intend to proceed with request for qualifications. Chadwick asked if they have the funding to do the actual remodeling, to which it was stated they do. Chadwick noted that for the City budgeting next August the ownership value would be at the default value of $1.8 million as they would be in the remodeling phase. Chadwick stated he felt they should add something that they do an evaluation at the completion of the remodel. Nielsen noted that Section 8.2.3.1 does state following the completion. The Mayor wanting to make it clear, stated what they are proposing is the City would take $1.8 million dollars from our State Investment Pool and purchase this property jointly with the Fire District. The Fire District will pay the City back at the same rate the City would have received from the State Investment Pool, so the money would continue to grow at the same rate it is now. The term of this agreement is thirty-six months after the date of closing; meaning the City has the right to call this due at the end of thirty-six months. This would allow them time to find other ways to finance the purchase from the City. Nielsen noted we wouldn't be calling it due; we would be exercising our option to be bought out. The Mayor noted he felt it was a great opportunity for the community because they would have a new fire station costing around three million dollars, which will save taxpayers money versus the cost of a new station being built. This facility will allow for growth for many years. Nielsen stated he would like to have a discussion about the percentage they might get from the State Investment Fund. If we're doing this for the benefit of the public, because we have joint taxpayers that both entities serve; he asked why the City would charge a percentage on the sale to the Fire District if they are going to have to go out for a bond and increase the tax load to the citizens. He asked why the City would try to collect that; he felt it was a double taxation. If this is for the benefit of the public, he stated he would like to hear everyone's thoughts on this. Keyes stated that although they share the same tax base in general and because they are two different entities and do maintain separate P & L's; he felt to be good stewards they need to see the City's P & L does not appear to have a negative impact by going through this process. For that reason he felt it is important to maintain the LGIP equivalent return they would have gotten anyway off of the taxpayers' dollars. Chadwick stated he concurred with Keyes and they have a responsibility to be good stewards with their money to the taxpayers. Hershey stated if they do get a bond they would take ownership of the property sooner and the City would be done with joint ownership. If it took only a year, we wouldn't be collecting this over three years; their bond would be completely separate and we would be done. He stated he didn't see double in there anywhere. Nielsen stated he felt it was double because the money was collect from the citizens to put in the investment pool and when the Fire District goes out for a bond to pay this back the citizens are taxed again just to put that money back in. Discussion followed on the options to have the money paid back in three years. Mayor Bell invited comments from the public. Richard Stuppy, 22153 CanAda Road, Star, asked about the cost for the new facility. The Mayor and Timinsky stated they estimate it to be less than $100.00 per square foot once it is remodeled. Page 3 of 5 Denise VanDoren, 11071 Frost Street, Star, stated she is curious as to why the City chose this route rather than just purchasing it and then leasing it with an option for the Fire District to buy. It seems they could do the improvements and then at the end of the day it seems to come out in the wash and would be less complicated. The Mayor stated they talked with Legal Counsel on both sides and decided this was the best and cleanest way for government entities to do it. VanDoren stated this sounded like a loan. The Mayor reiterated this is not a loan, they are purchasing jointly. VanDoren stated she is not opposed, felt it was a good location and a great opportunity; she was just curious. Nielsen stated from his perspective the City wasn't necessarily interested in being in the owner/tenant business. Doing it this way the Fire District remains obligated for all the building repairs and maintenance and ongoing things of that nature. We are a financial partner not an operating partner. Gary Smith, 258 Langer Lake Way, Star, stated he is concerned that taxes are going up continually. He is hearing his neighbors asking why are taxes going up and are very concerned. A lot of people in Star are on fixed incomes and an increase in taxes greatly affects them. He asked if they are seriously considering this that they think about how this affects the citizens and their taxes. He stated he liked saving money, and this is a good plan as long as it doesn't impact taxes. His other concern is the location they are looking at and concerned with noise from fire trucks in a residential area. Also of concern with the location is when Albertsons opens that intersection is going to be congested. This congestion should be taken into consideration when thinking about approval. Smith asked if this will have a public meeting for the City and then another for the Fire District before this is approved. The Mayor stated that is what this is tonight; this is not a public hearing tonight, but is a public meeting at which the public can give comments. The Fire District will have a Board meeting Thursday night which is also a public meeting. After their meeting Thursday night it will be either approved or denied. Mayor Bell asked for Council discussion and whether they felt anything needed to be changed in the agreement put before them. Chadwick commented that he believes this is a win/win for the citizens of Star. To go back to what Smith said about responsibility with taxes to the taxpayers; if the Fire District would have to build a new station it would be $10 million dollars. To get a building for $3 million is being responsible by saving $7million. He stated traffic is a concern and will continue to be. They will probably put in an emergency signal light. As for noise, he felt it won't be any different than fire trucks driving in that direction. Chadwick stated he is for the purchase of this facility and felt they should proceed forward. Hershey added he felt this is the cheapest route. The building next door will no longer accommodate the needs of Star. This building will not only accommodate the needs of Star but sounds like it can handle an influx of a second engine company, the maintenance and logistics for training as well as possibly large rooms the City could use on occasion. He stated he felt taxes are important, but the saving of millions which are going to have to be spent sooner or later is important. Hershey stated he felt this is one of the soundest things they can do. They have protections in place with this resolution if it were all to go south, which he doubted it will. Hershey stated he is in support of this resolution. Nielsen stated he is pleased with the results of this. He stated he felt this is one of the better actions that could possibly be taken to provide the City with fire protection and the needs of the Fire District and to meet the needs of our citizens. Resolution No 2018-11 Approval of Agreement For Real Property Ownership: Nielsen moved to approve Resolution No. 2018-11 the Agreement for Real Property Ownership, Chadwick seconded the motion. Keyes stated because this would save the Fire Department over three- Page 4 of 5 million dollars over the next ten years and we have about three-thousand homes in the city of Star, the math works out to about a thousand dollars per house. He noted this is real money they are able to help our taxpayers save. He stated he is in support of this Resolution. All ayes: motion carried. Mayor Bell stated he felt extremely good about this and that it will be an asset to this community for public safety. He thanked the Chief and everyone involved in making this happen. Adjournment: The Mayor adjourned the meeting at 8:05 pm. Approved: Respectfully submitted: _____________________________ Charlten Bell, Mayor _________________________________ Kathleen E. Hutton, Deputy City Clerk Page 5 of 5