2001 08 07 City Council Minutes

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CITY COUNCIL PROCEEDINGS JOURNAL 173 AUGUST 7, 2001 PAGE 437 MINUTES OF THE MEETING OF THE CITY COUNCIL Wichita, Kansas, August 7, 2001 Tuesday, 9:02 A.M. T
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he City Council met in regular session with Mayor Knight in the Chair. Council Members Brewer, Fearey, Gale, Lambke, Martz, Pisciotte, present. Chris Cherches, City Manager; Gary Rebenstorf, Director of Law; Pat Burnett, City Clerk; present. Invocation – Kevin Clark, Catholic, gave the invocation. The pledge of allegiance to the flag was participated in by the Council Members, staff, and guests. Minutes -- approved The Minutes of the regular meeting of July 17, 2001, were approved 7 to 0. AWARDS AND PRESENTATIONS PROCLAMATIONS Proclamations previously approved were presented. NEW BUSINESS PRESBYTERIAN MANORS, INC. REQUEST FOR LETTER OF INTENT FOR HEALTH CARE FACILITIES REFUNDING REVENUE BONDS – PRESBYTERIAN MANORS, INC. Allen Bell Financial Projects Director reviewed the Item. Agenda Report No. 01-0881. In 1990, the City Council issued refunding and improvements revenue bonds to finance or refund previous financing on Presbyterian Manor, Inc. (“PMI”), facilities throughout Kansas. Presbyterian Manor Inc., a Kansas not-for-profit corporation, wishes to refinance its outstanding bonds and is requesting City Council approval of a Letter of Intent to issue its Health Care Facilities Refunding Revenue Bonds in an approximate amount of $25,000,000. Several years ago, PMI requested that the City of Wichita act as a “host” bond issuer for consolidated financings of PMI facilities located throughout Kansas. The City then entered into interlocal cooperation agreements with the Kansas communities that have PMI facilities. These agreements authorize the City of Wichita to issue Revenue Bonds on behalf of, and with the consent/approval of, the participating municipalities located in the state of Kansas. PMI has twelve retirement community facilities serving Kansas, 765 licensed intermediate care (IMF) and skilled nursing (SNF) beds to provide service and health care for Kansas’ older adults. Its Kansas facilities have over 1 million square feet of various types of living and health care space on 143 acres of Kansas land. PMI employs 1,155 individuals in Kansas including 21 employees at their corporate headquarters and 92 employees at its 139,400 square foot retirement community in Wichita. PMI serves over 1,700 senior adult residents in Kansas and Missouri. CITY COUNCIL PROCEEDINGS JOURNAL 173 AUGUST 7, 2001 PAGE 438 Bond proceeds will be used primarily to refinance currently existing debt and pay costs of issuance. A small portion of the bonds will be used to construct improvements and acquire equipment for the PMI facilities in Kansas. An estimated analysis of the uses of project funds is: USES OF FUNDS Amount needed to refund outstanding bonds New money capital project Debt service reserve fund Costs of issuance including underwriters discount Contingency for original issue discount and other Potential costs Total cost of Refinancing Project $19,190,495 180,100 2,201,500 500,000 2,927,905 $25,000,000 The firm of Hinkle Elkouri Law Firm, L.L.C., will serve as bond counsel in the transaction. Ziegler Capital Markets Group, in Chicago, Illinois, has agreed to underwrite the bonds. Presbyterian Manor, Inc., is in compliance with the Standard Conditions contained in the City’s IRB Policy. Presbyterian Manor, Inc., agrees to pay all costs of issuing the bonds and agrees to pay the City’s $2,500 annual IRB administrative fee for the term of the bonds. Presbyterian Manor, Inc., does not request a property tax abatement in conjunction with the IRBs. Bond documents needed for the issuance of the bonds have been prepared by bond counsel. The City’s Attorney’s Office will review and approved the form of bond documents prior to the issuance of any bonds. The public hearing held in conjunction with this item satisfies the TEFRA Hearing requirement in the federal tax code for tax-exempt bonds. Mayor Knight Mayor Knight inquired if anyone wished to be heard and no one appeared. Motion -- Fearey moved that the public hearing be closed; and the Letter on Intent for Health Care Facilities Refunding Revenue Bonds to Presbyterian Manor, Inc., in an amount not-to-exceed $25,000,000, subject to the Standard Letter of Intent Conditions, be approved. Motion carried 7 to 0. -- carried CASA DEL NORTE REQUEST FOR LETTER OF INTENT FOR INDUSTRIAL REVENUE BONDS - CASA DEL NORTE APARTMENTS. (District VI) Allen Bell Financial Projects Director reviewed the Item. Agenda Report 01-0882. The City has received a request from C.E.R. Corporation, Inc. for a letter of intent it issue industrial revenue bonds in an amount not to exceed $10,000,000 to finance the costs of developing Phase I of a multi-family housing project (Casa Del Norte Apartments), located at 505 West 33rd Street North, in north-central Wichita. C.E.R. intends to use the letter of intent as evidence of City support in its application to the State of Kansas for low income housing tax credits. C.E.R. is also requesting City Council approval of a property tax rebate under the Neighborhood Revitalization Program, equal to all taxes paid on improvements for a period of five years, plus an additional five years subject to City Council review. In its initial phase of development, Casa Del Norte Apartments will consist of five residential buildings containing a total of 71 units, and an office facility that will include two learning centers and a central laundry room. The proposed project is not only designed to provide a quality apartment living community targeted to (but not limited to) the Hispanic Community, but residents will also have available a full range of educational opportunities to help in adjusting to the American culture and gaining access to the workforce. CITY COUNCIL PROCEEDINGS JOURNAL 173 AUGUST 7, 2001 PAGE 439 The proposed project will be owned by Casa del Norte I, L.P., A Kansas limited partnership whose general partner will be C.E.R. corporation, Inc., a 501(c)(3) corporation. C.E.R. is the local affiliate of S.E.R. Corporation, Inc., a national workforce training organization. The project will be funded with the proceeds of tax-exempt multifamily housing revenue bonds and low income housing tax credits. It is the intent of the owner to qualify 100% of the apartment units for the tax credit program by reserving the units for tenants whose income does not exceed 60% of the area median income. Tax credit investors will be limited partners in the ownership entity. Casado-McKay, Inc. will also be a substantial investor in the project and will serve as developer and general contractor. An estimated analysis of the sources and uses of project funds is: SOURCES OF FUNDS Bond Proceeds Tax Credit Equity Total Sources Phase I Phase II Total $5,000,000 1,300,000 $6,300,000 $5,000,000 1,300,000 $6,300,000 $10,000,000 2,600,000 $12,600,000 $ 125,000 5,825,000 125,000 125,000 100,000 $6,300,000 $ 125,000 5,825,000 125,000 125,000 100,000 $6,300,000 $ 250,000 1,650,000 250,000 250,000 200,000 $12,600,000 USES OF FUNDS Land Constructions Costs Issuance Costs FHA Financing Fee Miscellaneous Total Uses It is anticipated that construction of Phase I will proceed immediately and Phase II will start within two years. The firm of Hinkle Elkouri Law Firm, L.L.C., will serve as bond counsel in the financing transaction. The bonds will be underwritten by Froggatte & Company and either privately placed with a financial institution or publicly reoffered to investors. C.E.R. agrees to comply with the Standard Conditions contained in the City’s IRB Policy, with the exception of condition #7 which requires, in part, selection of general contractors based on procedures that do not exclude minority or women-owned firms. C.E.R. has advertised for subcontractors in a way that is inclusive of minority and women-owned firms; however Casado-MacKay, Inc. was pre-selected to serve as general contractor because of its financial interest in the project. C.E.R. originally requested a property tax abatement on the bond-financed improvements, which is not allowed under current IRB policy. An alternative that is provided for under current policy is a property tax rebate under the Neighborhood Revitalization Program. Under the approved guidelines for this program, the City Council may approve a rebate of taxes on all real property improvements for a term of five years, plus an additional five years, on a case-by-case basis. Staff recommends this approach as an alternative to approving a tax abatement outside of the IRB policy. C.E.R. agrees to pay all costs of issuing the bonds and agrees to pay the City’s $2,500 annual IRB administrative fee for the term of the bonds. The amount of the proposed tax rebate for Phase I would be approximately $72,000 per year, of which $21,000 would be from the City of Wichita, $20,000 from Sedgwick County and $31,000 from USD 259. Bond documents needed for the issuance of the bonds will be prepared by bond counsel. The City’s Attorney’s Office will review and approved the form of bond documents prior to the issuance of any bonds. The public hearing held in conjunction with this item satisfies the TEFRA hearing requirement in the federal tax code for tax-exempt bonds, as well as the public hearing requirement in the City’s policy governing support for low income housing tax credits. Notices of the tax credit public hearing have been mailed to owners of all property located within 200 feet of the proposed project site. Under the tax credit policy, C.E.R. still must present the project to the District Advisory Board and the Housing Advisory Board before receiving a resolution of support for the tax credit application required by the State of Kansas. CITY COUNCIL PROCEEDINGS JOURNAL 173 AUGUST 7, 2001 PAGE 440 Mayor Knight Mayor Knight inquired if anyone wished to be heard. Sen. Paul Feliciano Sen. Paul Feliciano explained that success for the project would not be possible without involvement of SER and its considerable experience. The proposed project is located within the HUD designated Neighborhood Revitalization Area. Senator Feliciano requested a waiver of City Council Policy and urged approval of tax abatement, rebate, and credits. Floyd Crawford Floyd Crawford, resident one house south of the proposed project, said he had no idea what was being built. Mr. Crawford said Jackson Street is unpaved and if the project has an entrance/egress on Jackson, the situation would be intolerable. If the project is done, someone should be required to pave the street. Many of the residents in the area are on fixed incomes and the cost of paving would be too expensive for them. Wilma June Lang Wilma June Lang, resident across the street from the proposed project, asked that the project not be approved until people in the area are aware of what is being proposed. The project sounds like a business training center that would be adjacent to residential – an undesirable situation. Ms. Lang said her grand children are at her home every week and she was unsure the project would be a good neighbor. Judy Shuffy Judy Shuffy said there is already a lot of high-speed traffic and there is a concern about increased traffic and opening of Jackson Street. Motion -- Fearey moved that the public hearing be closed; and the City Council decision be deferred to September 11, 2001, to allow the project developer to meet with neighbors and DAB VI. Motion carried 7 to 0. -- carried CASE CORP TAX EXEMPTION REQUEST – CASE CORPORATION. (District V) Allen Bell Financial Projects Director reviewed the Item. Agenda Report No. 01-0883. Case, headquartered in Racine, Washington, has manufactured agricultural equipment for over 155 years. Since 1994, Case has undertaken several comprehensive expansion projects that have resulted in $9.7 million capital investments. Since 1994, the Case multi-phase expansion plan has created 306 new jobs. On January 1, 1999, the City of Wichita annexed property, including Case Corporation, located at 3301 S. Hoover Road, in southwest Wichita. On September 14, 1999, City Council approved a 100% tax exemption on personal property improvements for a five-year term. Case has sustained consistent growth in sales and production and is moving forward with plans to expand their manufacturing capabilities of the Wichita plant by purchase of additional new equipment. Case is now requesting the City of Wichita approval of a five-year 100% Economic Development Tax Exemption on the new manufacturing equipment, in conjunction with the ongoing expansion of their Wichita facility. Since 1968, the Wichita Case facility has manufactured tractors, primarily Uni-Loaders and Case Trenchers. Case recently added the manufacture of the Skid Steer tractor to their Wichita production line. Case currently has over 600 employees at the Wichita facility and plans to create 101 new jobs over the next five years as a result of the 2001 expansion project. The new $21,260,790 expansion will consist of acquisition of new manufacturing equipment. Under the City's Business Incentives Policy, Case is eligible for the following: CITY COUNCIL PROCEEDINGS JOURNAL 173 AUGUST 7, 2001 PAGE 441 TAX EXEMPTION ELIGIBILITY ELIGIBLE % INCENTIVE EXPLANATION 100.00% New Job Creation: Case will create at least 101 new fulltime jobs. 100.00% Capital Improvements: Case will invest; approximately $21,260,790 200.00% Total Business Incentives 50.00% - TOTAL ELIGIBLE - BUSINESS INCENTIVES (Max. allowed is 50%) 50.00% Export Premium: Case exports 97% of its product outside Kansas. 50.00% - TOTAL ELIGIBLE FOR EXPORT PREMIUM (Maximum allowed is 50%) 100.00%TOTAL EXEMPTION ALLOWED UNDER BUSINESS INCENTIVE POLICY Case is eligible for a 100% tax exemption for five years on the new personal property. A notice of public hearing has been published. Case has agreed to comply with the conditions for receiving an economic development tax exemption set forth in the Business Incentive Policy. The estimated first year taxes on the proposed $21,260,790 expansion would be $528,175 on personal property, based on the 2001 mill levy. Using the allowable tax exemption of 100 percent, the City would be exempting (for the first year) $528,175 of new taxes for personal property tax rolls. The tax exemption will be shared among the taxing entities as follows: City - $142,844; County/State $137,109; and USD 261 - $248,222. Wichita State University Center for Economic Development and Business Research calculated a costbenefit analysis indicating benefit-to-cost ratios, which are as follow: City of Wichita Sedgwick County USD 261 State of Kansas 2.05 to one 1.91 to one 1.41 to one 11.70 to one Mayor Knight Mayor Knight momentarily absent with Vice Mayor Pisciotte in the Chair. Allen Bell Financial Projects Director explained that the tax exemption recommended would be for 100% on a five-year plus five-year review basis, 100% Economic Development Tax Exemption on the new manufacturing equipment, in conjunction with the ongoing expansion of their Wichita facility. Mayor Knight Mayor Knight inquired if anyone wished to be heard and no one appeared. Motion -- Martz moved that the public hearing be closed and the Ordinance granting a 100% tax exemption for five-years with an additional 5 years upon review and approval by the City Council, on personal property improvements for a five-year term be placed on first reading. Motion carried 7 to 0. -- carried ORDINANCE An Ordinance exempting property from Ad Valorem Taxation for economic development purposes pursuant to Article 11, Section 13, of the Kansas Constitution; providing the terms and conditions for Ad Valorem Tax Exemption; and describing the property of Case Corporation, so exempted, introduced and under the rules laid over. CITY COUNCIL PROCEEDINGS JOURNAL 173 AUGUST 7, 2001 21ST STREET IMP. 21ST STREET IMPROVEMENT – HILLSIDE TO OLIVER (District I) Mike Lindebak City Engineer reviewed the Item. PAGE 442 Agenda Report No. 01-0884. The 2001 Capital Improvement Program includes a project to improve 21st Street between Hillside and Oliver. The proposed project has been presented to Wichita State University (K.S.A.) officials, District One Advisory Board, and affected property owners at a neighborhood meeting. K.S.A. is relocating and extending a perimeter road along the north side of campus and moving its existing entrance at 21st on the west side of Eck Stadium to a new location on the east side of the Braeburn Golf Clubhouse. The 21st Street project will provide traffic signals and a left turn lane into the new campus entrance and a five-lane (four through lanes and center two-way left turn lane) east to Oliver Street. The project budget is $3,000,000, with $800,000 to be funded by General Obligation Bonds and $2,200,000 to be funded by Federal Funds administered by the Kansas Department of Transportation. Mike Lindebak City Engineer, responding to a question, explained that the signal and Yale and the pedestrian crosswalk would remain. There would be a new signal at a new location. Construction will start in late fall and continue through next spring. Twenty-first street will remain open through construction. Mayor Knight Mayor Knight inquired if anyone wished to be heard and no one appeared. Motion --- carried Brewer moved that the project and Federal/State Agreements be approved; the Ordinance be placed on first reading; and the necessary signatures be authorized. Motion carried 7 to 0. ORDINANCE An Ordinance declaring 21st Street North, between Hillside and Oliver, 472-83368, to be a main trafficway within the City of Wichita, Kansas; declaring the necessity of authorizing certain improvements to said main trafficway within the City of Wichita, Kansas, declaring the necessity of and authorizing certain improvements to said main trafficway; and setting forth the nature of said improvements, the estimated costs thereof, and the manner of payment of same, introduced and under the rules laid over. INTERSECTION IMP. IMPROVEMENTS TO INTERSECTION OF CENTRAL AND HILLSIDE. (Districts I and II) Mike Lindebak City Engineer reviewed the Item. Agenda Report No. 01-0885. The 2001 Capital Improvement Program (CIP) includes a project to relieve traffic congestion in the Hillside corridor. One part of the project is improvements to the intersection of Central Avenue at Hillside. Affected property owners have been notified. The project will reconstruct the intersection to provide a smooth driving surface, improve the storm water sewer system, install a right turn/decel lane in the southeast quadrant of the intersection, and widen Hillside near 3rd Street to match the improvement of Hillside between Kellogg and Central scheduled for 2002. The project budget is $2,000,000. The funding source is General Obligation Bonds. Approximately $1,170,000 is currently budgeted for this project in the 2000 Arterial Corridors CIP project. The remaining $830,000 is proposed to be funded from the 2001 Arterial Corridors project. Mayor Knight Mayor Knight inquired if anyone wished to be heard and no one appeared. CITY COUNCIL PROCEEDINGS JOURNAL 173 Motion --- carried AUGUST 7, 2001 PAGE 443 Brewer moved that the project be approved and the Ordinance be placed on first reading. Motion carried 7 to 0. ORDINANCE An Ordinance declaring the intersection of Central Avenue and Hillside, 472-83408, to be a main trafficway within the City of Wichita, Kansas; declaring the necessity of authorizing certain improvements to said main trafficway within the City of Wichita, Kansas, declaring the necessity of and authorizing certain improvements to said main trafficway; and setting forth the nature of said improvements, the estimated costs thereof, and the manner of payment of same, introduced and under the rules laid over. SENECA STREET IMP. SENECA STREET IMPROVEMENT – MAPLE TO MCLEAN BOULEV
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