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CITY MANAGER'S REPORTS AND RECOMMENDATIONS:
<br />Agreements
<br />Library
<br />161
<br />City Manager Trevino referred to draft documents for Council's review and approval
<br />regarding the completion of the Lease and Leaseback financing of Colton's public
<br />library, including a memorandum from John E. Brown and Glen E. Stephens of Best,
<br />Best & Krieger, Legal Counsel for the City of Colton with regard to the library
<br />project.
<br />Mr. Trevino continued because of the fact that the bond market is no longer viable
<br />for the private investor, the City has had to look at alternative forms of
<br />financing for this project and, in that regard, he has met with the firm of Birr,
<br />Wilson & Company, which firm is willing to commit itself to purchasing certificates
<br />of participation for the construction of the library site.
<br />Mr. Trevino advised the firm of Best, Best & Krieger has reviewed the entire financing
<br />package and has determined that this form of financing would be no greater than that
<br />agreed to by the City Council previously, August 18, 1981, and, further, this firm
<br />advises that legally the obligation of the City to pay lease payments would not con-
<br />stitute an obligation of the City for which the City is obligated to levy or pledge
<br />any form of taxation, and the City would still have the option to purchase the
<br />library during the lease term. Mr. Trevino said this means in order for the City to
<br />proceed with the library project, issuance of certificates of participation would have
<br />to take place to finance the construction of the new library. The cost savings to the
<br />(Y) City would be approximately $200,000.
<br />D
<br />Mr. Trevino concluded Staff recommends approval of Resolution No. 4185, in order to
<br />Q permit Staff to proceed with the sale of Certificates of Participation.
<br />Moved by Councilwoman Garcia, seconded by Councilman Hayes, to approve Resolution
<br />No. 4185.
<br />Councilwoman Garcia asked if by approving this Resolution, is the City Council also
<br />approving the Construction Management Agreement and all of the draft documents as
<br />submitted by Best, Best & Krieger.
<br />Mr. John Brown, of Best, Best, & Krieger, and Legal Counsel for the City of Colton,
<br />responded yes, in effect, if the City Council adopts Resolution No. 4185, the Agree-
<br />ments and related documents are also being approved.
<br />Councilwoman Garcia then asked if these documents can be amended at a future date.
<br />Mr. Brown answered yes, if Council so desires.
<br />Mr. Brown said the Council Members are familiar with the procedure for the sale of
<br />the certificates of participation, which is similar to the sale of mortgage revenue
<br />bonds in connection with the Redevelopment Agency financings.
<br />Councilman Rehrer questioned this method of financing for the proposed library, stat-
<br />ing he was not in favor of this procedure, he felt the City should go back to its
<br />original concept of the City calling for bids on the library project, have a contrac-
<br />tor submit his bid and plans, and build the library. Mr. Rehrer said he felt that
<br />all of the monies that would be involved with this form of financing, bonds, repay-
<br />ments, etc., could be used to build the library and furnish the interior also.
<br />Mayor Gonzales asked by utilizing this method of financing, the certificates of par-
<br />ticipation, the City would realize a savings of approximately $200,000.
<br />Mr. Trevino responded that actually, the bottom line figure is less than what it was
<br />-- before, as before the costs were approximately $1,200,000., and now it would be ap-
<br />proximately $1,020,000.
<br />Councilman Rehrer then questioned the fact that Mr. King's proposal was going to cost
<br />the City approximately $750,000, and now it is going to cost the City approximately
<br />$1,020,000., and stated there was a discrepancy somewhere.
<br />Mr. Brown then explained to Councilman Rehrer that the previous amount of $750,000.
<br />represented construction costs only, and did not include the cost of financing, in-
<br />terest factors, etc.
<br />Councilman Rehrer then stated that due to the instability of the bond market today
<br />and the economy, he would recommend the City forget about a new library for at least
<br />six months.
<br />FEB 16 1982
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