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Minutes 1990-10-09 312, -- MINUTES REGULAR MEETING OF THE CITY COUNCIL TUESDAY, OCTOBER 9, 1990 CITY COUNCIL CHAMBERS, 215 EAST BRANCH STREET ARROYO GRANDE, CALIFORNIA The city council of the city of Arroyo Grande met at 7:30 P.M., with Mayor Mark M. Millis presiding. FLAG SALUTE AND INVOCATION Mayor Millis led the Pledge of Allegiance to our Flag, and the Rev. Jan Armstrong of Arroyo Grande Presbyterian Church delivered the invocation. ROLL CALL ,'""'\ I Present were Mayor Millis and Council Members A. K. "Pete" ! Dougall, Gene Moots, Doris Olsen and B'Ann Smith. Staff members I present were city Manager Chris Christiansen, City Attorney Judy Skousen, Ci ty Clerk Nancy Davis, Police Chief Rick TerBorch, Attorney Dave McEwen, Parks and Recreation Director John Keisler, Tree Program Coordinator Carolyn Leach and Public Works Director Paul Karp. ORAL COMMUNICATIONS None CONSENT AGENDA Council Member Dougall referred to Item 5.E. He said that it is an in-depth report that tells what the police, Fire, Building and other departments are doing. He said that the report is available to anyone who would want to go to city Hall and pick one up. It was moved by Smith/Dougall, and the motion passed to approve Consent Agenda items 5.A. through 5.J. , with the recommended courses of action. 5.A. september 25, 1990, city council Minutes. Approved. 5.B. October 3, 1990, Senior Advisory Commission Minutes. Informational. S.C. september, 1990, Investment Report. Informational. S.D. Third Quarter, Sales Tax Revenue Report. Informational. 5.E. Third Quarter, Departmental Monthly Reports. Informational. 5.F. Purchase of Radar Unit, Police Department, Budgeted Item. Approved. 5.G. Request from Village Merchants Association to Install Christmas Lights on the Bridge street Bridge and the Gazebo Area l During the Holidays. (village Merchants will pay for Installation. ) Approved. 5.H. Construction of ' the Shallow Paso Robles and Deep pismo Test Wells; Project No. 60-89-2. Approved 5.1. Purchase of Brush Chipper: Public Works Department: Budgeted Item. Approved. 5.J. coordinated Agricultural Support Program. Mayor Authorized to sign Contract. 6. REGISTER OF CHECKS It was moved by Dougall/Smith, and the motion passed, to approve the cash disbursements in the amount of $628,287.79, as contained in the October 4, 1990 Staff Report of Finance Director 1 -----_._-,--~- ----- .~.- 313 . CITY COUNCIL MINUTES OCTOBER 9, 1990 David Bacon 7.A. CONTINUATION OF PUBLIC HEARING - BOND FINANCING. ARROYO GRANDE COMMUNITY HOSPITAL. Mr. Christiansen announced that Dave McEwen, the city's Bond Attorney, was present to answer questions and speak about the issue. Mr. McEwen of the law firm Stradling, Yocca, Carlson & Rauth said that he had reviewed each of the bond documents and that they follow a very standard type of structure. He said they limit the r liability of the city to only those revenues received from the corporation. He said bond holders will know from the beginning that the only thing they can look to is the Vista Hospital System and there will be no liability to the City or individual Council Members. Council Member Olsen asked how the money is dispersed. Mr. McEwen said that the payments will be made by the corporation to the trustee and the trustee will make the payment to the bond holder. He said that once the bonds have actually been issued the City will no longer have a roll in the financing in terms of handling the money or administering the on-going transactions. council I Member Olsen ask how long the city would own the I hospital. Mr McEwen explained that the city would not actually own the hospital because of back-to-back escrows. He said the Recorder's office will record the purchase transaction and sale transaction simultaneously. After being assured that the Public Hearing had been duly published and all legal requirements met, Mayor Millis declared the hearing open and said all persons would be heard regarding the matter. . SADIE KROVIOUS of 855 Virginia Drive said that she has lived in Arroyo Grande for over 53 years and has seen many changes. She said that the change being discussed at this time really excites her. She said that she has volunteered over 2800 hours in the hospital in the past 9 years and sees the great need in our area for the local hospital with its wonderful new addition and proposed expansion. She said our area needs and deserves this hospital and that the Council is privileged to be able to assist in insuring that we will have it. She said that Marian Hospital in Santa Maria is an example of how the proposed type of financing can provide a wonderful hospital for our area and its citizens. She said she is eager to see an arrangement of this type proposed here where the profits of the hospital will be used to continually update and improve the hospital, in the city where the profit is I made, not go to some corporate office in some distant city to be spent, we know not where. She said she is proud of our city and of our City Council and will be proud of the affirmative vote. PATTY MOORE of 804 Hacienda said she has been here for about 15 years and that the Arroyo Grande Hospital Auxillary Volunteers help to make the community facility nicer and to help care for our less lucky citizens. She said that she believes there is no financial or liability risk involved and that the Council could easily help by approving the bond which is the best way to go forward. BERNIE BURKE of 1227 Priscilla Lane said he has a concern about making sure the City of Arroyo Grande is not taking on any type of liability. He said we haven't heard from our City Attorney as to what her idea is on this. He said he was wondering if the committee raising the bond ,issue had given any thought to the issuance of guaranteed bonds. 2 ~--~---_._- --- 314 ~ CITY COUNCIL MINUTES OCTOBER 9, 1990 BILL GERRISH of 823 Plata Road said that he is a tax practitioner and advises people how to avoid or' reduce taxation. He said it looks like a straight forward deal and should be approved. He said he understands that AMI is going to sell the hospi tal anyway and the potential reward is greater than any potential risk that may be involved. JERREN JORGENSEN of Avila Beach said that he owns property next to the hospital and is very much in favor of the hospital. He said he is concerned about the liability question for the City and the preservation of the 501 (C)(3) status. He said,that if this l goes through in a business like way and no one makes a profit the 501 (C)(3) status will not be jeopardized. He said that all of the city Council will be liable if someone files a lawsuit upon the determination by the Internal Revenue Service that it does not qualify for the 501 (C)(3) status, and once the tax-free status is lost through some impropriety it would jeopardize the status of the bonds and the City could be liable. MIKE LADY of 730 Oak Leaf Circle said he can understand the concerns of the Council and speaks as a citizel1 as well as President of the Arroyo Grande Chamber of Commerce. He urged the Mayor and Council to take a serious look at this and to look at it as a golden opportunity to better serve the community. He said he encourages a vote to accept the hospital that has a non-profit status and feels certain it is a good move for the community. SCOTT GROSS of Sausalito said that he is affiliated with the Vista Hospital System and that the guaranteed bond issue was investigated in great depth by Vista and First Boston who is the underwriter of the issue, and due primarily to the size of the facility, that kind of bond insurance is not available, regardless of financial strength. He said that he spoke in private to Dr. Jorgensen and assured him that the hospital will conduct all of its business in a totally open and aboveboard fashion. He said they have numerous legal restrictions and requirements to .ake sure they get legal opinions for every major transaction. He said that inurement is almost like the Holy Grail in a financinq of this type and they will make sure they do not violate any issue. He said the covenants require them to conduct transactions in that manner. KARL HOGAN asked if the Internal Revenue Sertice had been contacted for a determination on this before it is entered into, and if not, why? JOHN MYERS of Sacramento said "no," that these bond transactions very rarely require a specific request of the IRS to say if they are tax-exempt. He said to do that in thts day and age takes anywhere from 6 months to a year to proceS!3 and if you thought you had an issue and needed to do that: it would be l virtually impossible because of timing. Mr. Hogan asked if there is a list of cities which have ever entered into this. Mayor Millis said that the nearest one is Marian Hospital in Santa Maria, and was exactly the same. Mr. Myers said that there ~ave been more than 20 in California. ' DR. GLENN THORPE of 425 Cuerda Corte said that he spoke two weeks ago in favor of this involvement of the City in the sale of the hospital to a public benefit corporation. He said that he is a physician and has been in practice here for six years and is currently on the Board of the hospital. He said he would like to urge the Council to vote in favor of the proposal And to express his appreciation to the Mayor and Council for their thoughtful, openminded and circumspect approach to this matter~ MARIE CATTOIR of 195 Orchid Lane said she wouid like Section 3 - 315 CITY COUNCIL MINUTES OCTOBER 9, 1990 3, Page 2 to be explained and that it was her understanding that AMI wanted to cash out and the bonds had to be sold before the city could purchase the facilities from AMI. She said that it sounds liKe the City has the ability to sell something it hasn't acquired or else they are selling it and buying it from the same corporation and it is very confusing. John Myers explained that the hospital would be sold from vista to the City and immediately, in a "nanosecond", will be sold back down to the corporation. He said it is a somewhat strange looking financing technique called a Certificate of Participation. l Mr. McEwen said that what is happening is that when you have a solid sale and solid purchase contract the obligation of the City, which is limited soley to the revenues generated by the hospital, gets assigned to the trustee for the benefit of the bond holders. He said certificates were purchased to provide a fund of money which is applied to the purchase of the hospital and the bond holders essentially are loaning that money to purchase the hospital against the promise to repay them from the revenues and the City is involved only as a conduit and does not have any liability. council Member Olsen asked if the City was a go-between and Mr. McEwen said that the money never touches the City's hands. Marie Cattoir said that the Council should thank anyone who tOOK the time to express a concern. She said that she was told she had a negative personality, and if negative means that she is concerned about the city getting in over its head, she is negative. She said that if the Council is willing to take the risK and go forward with this, she hopes it will go the way everyone thinks it will. She said she certainly wants quality medical care in this community and that it is going to taKe a rededication of all the physicians who practice there for the best interest of the people. When no one else came forward to speak, Mayor Millis closed the hearing to the floor. Dave McEwen said that he would liKe to address each one of the questions: 1. With respect to contacting the IRS, it is not typical in this type of transaction because the tax issues are very clear and the only time a ruling is requested is when there is a real doubt in Council's mind as to the outcome of an analysis under the tax laws. 2. With respect to the 1986 Tax Act, Congress dealt at length with the question of hospital financing. It was a topic which they took very seriously. There were those who would liKe to have seen it eliminated completely and Congress did not do that. They chose to continue the ability of local governments to provide hospitals through tax-exempt financing. 3. with respect to the Offering Prospectus, on the cover there will be a statement which says that neither the installment ,-,. purchase agreement nor certificates constitute a debtor liability to the City within the meaning of any constitutional or statutory prohibition. 4. Each of the basic documents contains indemnification provisions which protect the City from liability or the cost of suit should there be a bond holders suit. If something were to happen to the project and the bond holders did not receive payment they would be looking to enforce their rights under the indenture. 5. With respect to 501 (C)(3), the covenants contained in the bond documents are there for a specific purpose and that is to protect the bond holders from actions by the corporation in the future. The tax-exempt opinion that the bond holders receive when they buy the bonds deals with conditions as they exist on the day of delivery. 'The covenants can be enforced by the bond holders. 4 --- ----~---._---_.._- 316 .~ CITY COUNCIL MINUTES OCTOBER 9, 1990 It is our duty as bond counsel to protect the bond holders and we take that very seriously. council Member Olsen asked if the City were to be sued would the City be out the cost of legal representation. Mr. McEwen said that there are indemnification provisions in each of the documents which provide that the corporation would pay those costs as well. Council Member Moots said that he wanted to assure everyone that this Council has put a lot of work into finding out everything that can be found out about this endeavor. He said they were very l skeptical when they first heard about the proposal, but as time has passed they found that there is no liability to the City and that according to the documents they have seen, this will pay for itself and have money left over. He said that this will be a not for profit hospital no matter if the City acts or not and the savings that will result from participating will lower the interest rate to the hospital, leaving more money for patient care and equipment. He said that the quality of care in the hospital has to be vastly improved by this step and he has no qualms about going forward. council Member Smith said she thinks this is a wonderful, innovative idea and an opportunity for this Council to be a part of making health care the best that we can make it. She said this is our hospital, like it or not, and we need to do whatever we can to help, and she supports it wholeheartedly. Council Member Dougall said that he has been supportive of this almost from the start and thanked the pUblic for getting so deeply involved. He said he thinks that the Council has dug as deep as it can dig to try to find something wrong. council Member Olsen said that assistance from the public was commendable and also thanked the people from the hospital for being so willing to guide the Council through this. She said that after consideration she thinks it will be the better way to go. Mayor Millis said he is in agreement with the Council Members and said he hopes that those in the. audience realize that this is new to them. He said that he and the Council have a responsibility to all of the citizens and there were some very legitimate questions raised. He said that he was skeptical at first but believes this is best for the community and the hospital. Mr. Christiansen read the title of a resolution providing for and authorizing installment purchase financing of the Arroyo Grande Community Hospital. It was moved by Smith/Dougall, and the motion carried to dispense with further reading of the resolution. It was moved by Smith/Dougall (5-0-0, Smith, Dougall, Moots, Olsen and l Millis voting aye) to adopt Resolution No. 2424 Authorizing Installment Purchase Financing of Arroyo Grande Community Hospital. Mr. Christiansen read the title of a second resolution authorizing the execution and delivery of an installment purchase agreement, installment sale agreement, trust agreement, certificate of participation agreement, official statement, and certain other actions in connection therewith relating to installment purchase financing on behalf of the Arroyo Grande Community Hospital. It was moved by Smith/Dougall, and the motion passed to dispense with further reading of the resolution. It was moved by Dougall/Smith (5-0-0, Dougall, Smith, Olsen, Moots and Millis voting aye) to adopt Resolution No. 2425 Authorizing the Execution and Delivery of an Installment Purchase Agreement, Installment Sale Agreement, Trust Agreement, Certificate of participation Agreement, Official Statement, and Certain Other Actions in Connection Therewith Relating to Installment Purchase Financing on behalf of the Arroyo 5 ~~ 317 CITY COUNCIL MINUTES OCTOBER 9, 1990 Grande community Hospital. 7.B. PUBLIC HEARING - AMENDING ORDINANCE NO. 333 C.S. . THE COMPREHENSIVE TREE PROGRAM. TO INCLUDE TREE PLANTING. REMOVAL. PRUNING. AND PROTECTION REOUIREMENTS: REPLACEMENT RATIOS AND PENALTIES: CITYWIDE: CITY OF ARROYO GRANDE PARKS AND RECRBATION DEPARTMENT. I Mr. Christiansen referred to an ordinance recommended by the Parks and Recreation Department and said that Parks and Recreation I Director John Keisler and Tree program Coordinator Carolyn Leach , could explain it in detail. Mr. Keisler referred to his memo of September 17, 1990 and said that the ordinance is a very important, and at times a very emotional and controversial subject. He said that workshops have been held, there have been public hearings, and both the Parks and Recreation and Planning commissions have recommended approval of the ordinance. Council Member Olsen asked if the approval by the Parks and Recreation and Planning Commissions was unanimous. Mr. Keisler replied that it was unanimous by the Planning Commission but there was one against by the Parks and Recreation Commission. Carolyn Leach referred to her memo of September 14, 1990 and explained areas of the ordinance which needed to be more specific in actually naming what processes they are going through getting permits or going through appeals. Mayor Millis referred to the present ordinance and asked if the proposed ordinance is to expand the original one. Ms. Leach said that it would expand as well as fill some holes in the original ordinance. After being assured that the Public Hearing had been duly published and all legal requirements met, Mayor Millis declared the hearing open and said all persons would be heard regarding the matter. BILL DENNEEN of Nipomo said the ordinance is not strong enough. He said that as Arroyo Grande goes, the whole county goes and that Arroyo Grande is on the cutting edge. He said that we must protect and nurture the Oak trees and implored the Council to I pass the ordinance. ROBERT HUNTER of San Luis Obispo said that he owns and operates a tree trimming business and is familiar with ordinances on tree care in the county. He said that the existing ordinance is r a good one but is incomplete and the one being proposed is a giant step forward. He said trees on private property are not private property because the whole community can see and enjoy them and they should be cared for. He said that the actual value of trees is quite substantial and can accentuate the value of a property. He said another benefit of this ordinance is that it helps educate the public in the care of trees and helps protect the trees in the city. AL SPIERLING of 299 Miller Way commended the Council for the action taken to protect the trees in the City and said the actions taken to protect the trees in the recent developments have done a lot for our city. He said he wanted to praise the Tree Coordinator who contacted property owners and offered suggestions for the maintenance and preservation of trees. ELLA HONEYCUTT of 560 Oak Hill Road said that in 1978 a 4-H Club tried to save a tree and failed and that it has taken a long 6 318 -, CITY COUNCIL MINUTES OCTOBER 9, 1990 time to get where we are. She showed a picture of the club and asked the Mayor to read a letter. Mayor Millis read the 4-H Club letter saying the tree is a landmark and should be saved, and in the name of progress this beauty should not be destroyed. Ms. Honeycutt said that she and her husband spent five hours videotaping trees in Arroyo Grande, but newcomers don't realize the value of trees and something has to be d~ne. l MN ABELOE of 1259 Poplar street said he had about 43 signatures on a petition to deny the tree ordinance based on section 10-3.07, and he considers this the taking of personal I property rights. He asked what the holes were in the existing ordinance and what is filled. Ms. Leach said that the old ordinance was lacking in such basic definitions as what is a development, a definition of a tree, street trees, and development impact fees had to be in compliance with the government code. She said that it has been written so that the City has the option to deny removal of city owned trees; the appeals procedure has been changed; the method of designating landmark trees is clarified; and she listed all of the points in her memo. Mr. Keisler added that a developer can be required to put up a fence or barrier around the trees because people tend to run into trees with tractors or backhoes and rip them. He said another thing that was added was the requirement of a permit to remove a tree in the first 20 feet of an industrial, commercial or residential area. He said that a certified Arborist is required to report on some conditions if there is a question about a tree. Mr. Abeloe referred to Section 10-3.03 (f) and (b) and said it was one sided and it should be the City's responsibility to correct any problems with a City tree on private property. He then referred to section 10-3.07 and asked what happens to a person who does not get a permit to remove a tree. Mr. Keisler told him it would be a misdemeanor subject to a $150.00 fine. Mr. Abeloe asked what would happen if he didn't pay the fine and the City Attorney told him he could go to jail for a year and pay a $1,000.00 fine. Mr. Abeloe said his issue is philosophical and does not have anything to do with trees. He said that cutting down trees is not a problem in Arroyo Grande and is not a problem to create a law for. He said that the property owner has all of the liability and expense of the tree but the ordinance would control the trees and the City would have no responsibility or liability. He said his ~ argument is that in this nation it has always been the right of a private individual versus what 100 other people would think. He said he has the right to do with his property as long as it does not endanger the healt~ or welfare of the community. Mr. Abeloe also spoke against requiring a permit to remove a tree and fencing of trees: the appeals process: release of performance bonds; said that the city is adding 10 more pages of administration and that the city should stay out of his front yard. KARL HOGAN of 1255 Poplar Street said that just cleaning up the old ordinance and putting in some of the things missed would be plenty. He said this makes him bitter with fees and costs going up everywhere and the City putting more on the public. He said the City cannot take care of what it has now and that the trees behind Williams Bros. Market get taken care of only once a year. 7 .-- 319 CITY COUNCIL MINUTES OCTOBER 9, 1990 BOB OWENS of Santa Margarita said he has worked with the City on Landmark Trees and also the City of Morro Bay and the County. He said that most of the street tree ordinances are reactionary in their original response because of poor stewardship and injustices done. He said that people get upset and wonder why this is allowed to happen and start asking questions. He said there should be encouragement to plant trees in this ordinance and a monetary reward for planting them. He said the only way the City will have trees in 30 years is to encourage people to plant them because they cannot be maintained forever: they are a very renewable resource , and something that is designed to live ~ certain life expectancy and fail. MARIE CATTOIR said she thinks Mr. Hogan and Mr. Abeloe had some excellent observations and said she is angry and bitter because when the St. Barnabas Tract was planned she came before the I Council and begged the City to think of the tree ordinance when the I street was planned. She said that if the ordinance is adopted she will ignore it and will not ask for a permit. Mr. Hogan said that there is a severe pest problem with trees in the mountains and no one is paying any attention to it. He said that millions of trees are being lost and people should write to I the Department of Forestry. When no one else came forward to speak, The Mayor closed the public hearing to the floor. Council discussed updating the existing ordinance, rights of I the property owner, definition of a tree, who sets policies, more I control in undeveloped land, sidewalk repairs when damaged by trees, liability, a separate section on oaks, the 20 foot set back, education, enforcement, planting of trees, permits, and loopholes. Mayor Millis said that the proposed ordinance should be sent back to staff to work out a balance between preserving the oaks and the property owners rights. It was moved by Dougall/Olsen, and the motion carried to send the ordinance back to staff. S.A. HOOK RAMPS AT CAMINO MERCADO No Report B.B. INTERSECTION IMPROVEMENTS AT WEST BRANCH STREET/GRAND AVENUE/TRAFFIC WAY AND WESLEY STREET No Report 8.C. SOLID WASTE TASK FORCE I Mr. Christiansen referred to a report from C.O.G. relating to I Assembly Bill 939, which requires the state and local jurisdictions I to put together a solid waste management program. He recommended proceeding with the Memorandum of Agreement and beginning a planning program. It was moved by Dougall/Smith, and the motion carried to approve th~ Memorandum of Agreement and authorize the Mayor to sign. B.D. UPDATE ON DISPOSAL OF HAZARDOUS WASTE: NOTICE OF VIOLATION: CORPORATE YARD Public Works Director Paul Karp presented his memorandum dated October 2, 1990 regarding the cleanup activities. He stated that the cleanup was ,proceeding as required but costs would exceed previous estimates by at least $10,000.00 (corrected 11/13/90). He said that the reports dealing with the Corporation Yard toxic problems are quite technical. He said that copies of those reports are public information and can be obtained by contacting the office of the city Engineer. 8 ._--_...._-~._----~-------,._--_.- .-.-... 320 - CITY COUNCIL MINUTES OCTOBER 9, 1990 8.E. UPDATE ON COUNTY PROJECTS AFFECTING THE CITY City Attorney Judy Skousen said there are several other projects and we are vigorously protesting them and asserting the necessity for an area wide EIR. Mayor Millis said that it is his hope that in the near future there can be a joint meeting of the County and city Planning Commissions to show them where our borders are and our problems with drainage. He said that the concerns of the Cities are not reaching the Supervisors. "'" RUTH BRACKETT said that the same issue Came up in Oceano and , , when there is a large project the environmental coordinator sends i out a request for comments. Ms. Skousen said that those comments I are not being responded to. Ms. Brackett said that the county , planning process is in total disarray and that there is poor communication and poor response. Ms. Skousen said that the Subdivision Review Board meets on October 10, 1990 and Scott Spierling will attend. Because of a possible conflict of interest Mayor Millis, Council Member Dougall and Mr. Christiansen left the room. 8.F. PROPERTY TRANSFER - FIVE ACRES After discussion it was moved by OlsenjMoots, and the motion carried to approve the Settlement Agreement and authorize the signature. Mayor Millis, Council Member Dougall and Mr. Christiansen returned to the room. 9.A. REOUEST FOR SPECIAL CONSJDERATION TO BUILD A DETACHED GARDEN SHELTER: 385 MESOUITE: ROYAL OAKS DEVELOPMENT (MR. AND MRS. C.R. TYNER) After discussion it was moved by Smith/Dougall, and the motion passed to grant the request. 9.B. RESOLUTION AUTHORIZING THE MAYOR TO SIGN A LEASE AGREEMENT FOR CAR CORRAL PARKING LOT. Mr. Christiansen read the title of the resolution. It was moved by Dougall/Smith, and the motion carried to dispense with further reading of the resolution. It was moved by Dougall/Smith (5-0-0, Dougall, Smith, Olsen, Moots and Millis voting aye) to adopt Resolution No. 2426 Authorizing the Mayor to Sign a Lease Agreement for Car Corral Parking Lot. 10. WRITTEN COMMUNICATIONS None 11- ORAL COMMUNICATIONS 'i 1. Council Member Smith asked if the stop light at Traffic Way is being fixed. Mr. Karp said that the proper authorities have been notified. 2. Mayor Millis announced his intention to nominate at the next meeting four people for the Teen Advisory Committee. They are Donna ped, Jim Fogarty, Daniel Jones and Heather Hoekman, a teen. 12. CLOSED SESSION None 13. ADJOURNMENT It was moved by Dougall/Moots and the motion carried to adjourn at 10:45 P.M. 9 -- 321 CITY COUNCIL MINUTES OCTOBER 9, 1990 .Ji/i4IP ATTEST: r I I i ! , r i 10 , i