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HomeMy WebLinkAbout2011-06-27 Finance Committee Minutes FINANCE COMMITTEE June 27, 2011 Councilors: Hawes, Blanchette, Durgin, Bronson, Longo, Palmer, Weston, Nealley, Gratwick Staff: Cyr, Conlow, Dyer, Heitmann, Farrar Others: Hanson, Glickman, Cohen, Higgins, Hollander, Kelly, Knox, Hamilton, Woodcock, Russell 1. Council Order 11-222, Authorizing Issuance of $7,000,000 of Qualified School Construction Bonds Cyr explained that this is the first step in process where we actually issue the bonds. This order will authorize up to $7,000,000 of qualified school construction bonds. The school is expecting its last large bid later on this week and will have a firm idea of the th actual amount that we are going to issue on July 11 when this comes back for its second reading, public hearing and passage. Cyr said that she anticipates that the amount will be closer to $6,000,000 rather than $7,000,000 now that further pricing has been received on the projects. Unfortunately, projects cannot be added or changed. In speaking with the City’s financial advisor, the actual index for the qualified school construction bonds is running higher than what he anticipates that our taxable interest rate will be on these bonds. Therefore, it is realistic that we will be at or near zero th interest. This will be first read this evening and it will come back on July 11 for final action and public hearing. Councilor Bronson asked Cyr what sort of action she would like on this tonight and they agreed to “effectively Finance Committee recommends”. Cyr explained the term referred to as Q-SCAB Bonds; Qualified School Construction Bonds. There is an index market that’s traded daily where people buy the tax credits associated with these bonds. The City will issue these bonds at a taxable interest rate. The City’s financial advisor estimates that it will be about 4.9%. On the date of the bond sale, the index rate will be established based on the open market. At this point it’s running in excess of 5%. Cyr believes that the interest rate will be offset totally. The other part of this bond program is that the City can establish how to repay the principal. The City will make the interest payment and on the same date or 2 days later, and will be reimbursed through the tax credits that were purchased on the open market as part of the sale. Nealley stated that it’s good that they were able to obtain this financial mechanism whereby effectively there is no interest rate to the bonds by tax credits. Nealley supported the item. Durgin directed a question to Cyr about the bonds requiring identification of the projects in terms of what the funds would be used for. He stated that there are approximately 10 projects and asked if all 10 school projects now been identified? Cyr answered yes. A motion was made to second. The Finance Committee recommended to Full Council, passage of above issue. Bronson noted it passed unanimously. 2. Request for Proposals – Pre-opening and Private Management Services – Bangor Arena and Convention Center – Global Spectrum Cyr explained that Staff had been directed to issue RFP’s for obtaining a private th operator as well as pre-opening services for the new arena. On April 29, three responses were received. They were from Global Spectrum, SMG, and Venue Works. All three are well known and respected operators of facilities across the nation. Requested information included some specific major areas such as qualifications, experience, advertising & sales, financial capabilities, food & beverage operations, transitions plans, staff & compensation, preferred contractual terms, pre-opening services, advertising, consulting, specifically in the areas of naming rights, etc. Cyr continued that a selection committee was assembled to review the written proposals as well as participate in on-site interviews in consultation with Council Chair. The following individuals were selected to serve on this committee: Councilor Durgin, City Manager Conlow, Debbie Cyr, Mike Dyer, and Steve Crame, General Manager of the Cumberland County Civic Center. All three on-site interviews were conducted on June st 1. Questions were asked based on the content of their written proposals as well as th their presentations. The Review Committee reconvened on June 7 to discuss the interview process and reviewed each member’s thoughts and position of each respondent. As a result, it was decided that it was in the City’s best interest to narrow the selection down to Global Spectrum and SMG. Cyr further explained that Venue Works was a very good respondent. They have facilities similar to ours, but they are somewhat geographically removed as most of their facilities are primarily in the Mid West. Cyr said that they then asked for additional clarification from both Global Spectrum and SMG on such areas as staffing levels, pay and benefit ranges, distinction between types of expenses, etc. After receiving all of the information, it was nd distributed to the Review Committee which reconvened on June 22. The committee was unanimous in its position that either firm could serve well in this endeavor. Both have vast experience with arena and convention networks, both emphasize that this business is built on relationships. After careful consideration of all of the information presented, it is the recommendation of the Committee that the City Council authorize the City to enter into negotiations for pre-opening and private operator services for the new arena meeting complex with Global Spectrum. Cyr stated several reasons why Global Spectrum was chosen. These include their attention to detail in answering questions, offering solutions, their understanding of our market and facility. Cyr went on to highlight some areas of concern and interest to the Council and the community in general when it comes to the new arena. Cyr gave many samples of questions to Global Spectrum and the answers that were received were clear, precise, and with a common goal of success for the Bangor area. The committee members worked extensively in reviewing proposals, interviewing candidates, and discussing opinions with one another. In the end, the committee’s recommendation had to be based on the firm that they felt was the best fit for the facility, market and community. In the committee’s opinion, that choice is Global Spectrum. This item comes before the Finance Committee for recommendation to the Council later on this evening. The City Council will actually authorize the City to enter into negotiations. If that Council Order is approved, the City Manager and staff will negotiate an agreement with Global Spectrum. The City will need to develop some general negotiation parameters and will need to review and approve the final negotiated contract. Durgin mentioned that he was fortunate to be selected as the only Councilor member on the committee. He stated that he was privy to all of the information that was submitted. He did, however, want to explain his personal choices on the decision made. He explained that he felt that side by side, both Global Spectrum and SMG were identical as far as their ability to meet the needs of the City of Bangor. As a matter of fact, in using the numbering system, his own rated SMG as the winner. However, once he discussed each issue with the staff and with the close correlation between the two bids, he chose to support a unanimous decision. Durgin also wanted to make it clear to the public that as a Council, no selection has been made. This is only a commitment made to go forward with negotiations. Palmer asked whether tonight is the time to move ahead with this or should it be delayed for a period due to Durgin’s personal feelings with the decision to choose Global Spectrum. Longo explained that this is a very important decision. He stated that it’s a $65 million investment and 75% of the voters in our community voted for the new arena. He wants to be sure that the committee is firm in their decision. Longo felt that maybe a bit more information from both parties, SMG and Global Spectrum would be appropriate. Nealley expressed that a lot of time has been spent, the Review Committee came up with a unanimous decision, and Durgin agreed to that decision so Nealley doesn’t feel that we should revisit this. Hawes spoke of the hard work of the committee and felt compelled to speak out that she is in favor of the recommendation made. Blanchette wanted to address the fact that the committee was well represented of the City of Bangor. She is comfortable with the committee’s recommendation and sees no advantage of postponing the decision. Durgin noted that the only thing to lose in putting off the decision is time. If the council is satisfied with their decision, then it should move forward at this time. He feels confident that Global Spectrum will serve the City of Bangor very well. He feels comfortable going forward with negotiations, but wanted to share his thoughts on the process. Bronson opened the floor to anybody representing the companies involved who wanted to speak to this subject. Tim Woodcock of Eaton Peabody, representing SMG spoke as well as Todd Glickman with Global Spectrum. A motion was made and seconded to move to staff recommendation. Cathy Conlow commented that the process was a fair one and felt comfortable moving forward. Bronson stated that the Finance Committee recommends to the full Council, adoption of this order to attempt to negotiate with Global Spectrum. Meeting adjourned at 7:15 p.m.