1993-03-22 - Village Board Committee of the Whole - Minutes SUMMARY OF COMMITTEE OF THE WHOLE OF THE PRESIDENT AND BOARD OF TRUSTEES OF THE
VILLAGE OF BUFFALO GROVE, ILLINOIS, HELD MONDAY MARCH 22, 1993, AT THE MUNICIPAL
BUILDING, 50 RAUPP BOULEVARD, BUFFALO GROVE, ILLINOIS.
President Mathias called the meeting to order at 7:30 P.M. Roll call indicated
the following present: President Mathias, Trustees Marienthal, Reid, Kahn, Rubin
and Braiman. Trustee Hendricks was absent. Also present were: William R.
Balling, Village Manager, William G. Raysa, Village Attorney and William H.
Brimm, Director of Finance and General Services. Additionally, William Hammer
from MSA Realty, Jeffrey Arnold and Jeffrey Owen of Rudnick and Wolfe and Myron
Louik of Louik/Schneider & Associates were present.
William H. Brimm acted as Secretary Pro-Tem for the meeting.
Manager Balling reported that several Trustees questioned the underlying purpose
of this meeting and a proposal to adjourn to Executive Session. After reviewing
the Trustee's concerns regarding matters considered for discussion, it was
decided to permit a presentation by MSA Realty before any consideration of
proposing an Executive Session this evening.
At this time, Trustee Reid motioned and Rubin seconded to move to Executive
Session for the purpose of discussing litigation. Prior to a vote, Trustee Reid
felt that any discussions on restructuring of the TIF district or its debt should
be done in open session with MSA representatives. Also, as the Village Board
deliberates the merits of any proposal, the Village should discuss them with
itself and not in the company of MSA representatives. Also any meetings on this
subject should be in an open forum with notices sent to all affected taxing
districts. Trustee Kahn agreed with Reid but would like to hear a brief review
of any proposal from MSA this evening. Trustee Reid was concerned that any
presentation would not be worthwhile in that a formal written proposal had not
been received from MSA prior to this evening's meeting and a review should
precede any dialogue.
Manager Balling responded that Option 5 is being advanced by MSA. This option
was a result of prior options becoming unacceptable to the impacted taxing
districts, especially Options 3 and 4. The meeting tonight was a result of
Village Board direction to work on some options that could permit some movement
ahead in some way toward a resolution of the fiscal problems of the TIF debt.
Of particular importance is to get some direction in order to deal with time
constraints in restructuring, especially before September 1, 1993, the next
interest payment date on the current bonds.
Trustee Rubin affirmed that any dialogue must be in open session; however, MSA
was asked to be in attendance this evening and he desired to hear Simon make a
presentation prior to any Executive Session. Trustee Marienthal agreed on not
having an Executive Session for dialogue and opined that options must be reviewed
in an open forum. Trustee Braiman also desired to hear MSA's presentation but
would not be in a position to consider any decision until notice to and comments
from other affected districts are received.
A polling on the Executive Session was taken and the vote was 4 against and 1 for
adjourning to Executive Session. President Mathias then asked for a polling on
whether the Board was willing to permit MSA to make a short presentation on the
TIF. The polling was three in favor (Kahn, Rubin and Braiman) and two against
(Marienthal and Reid) . Prior to the presentation, Trustee Reid again requested
that any proposal be submitted in writing, distributed to all affected taxing
districts in order to get their comments and request that they be present at a
scheduled meeting to present their comments; the lack of information given to the
other districts and their inability to participate is not proper.
At this time, MSA made their presentation. Jeff Arnold gave a quick overview of
the past history of the TIF that has been identified as contributing to the
current problems of a fiscal nature. He reviewed the following:
The prior efforts to get input and consensus from the other
districts, especially relative to Option 3. MSA's opinion is that
Option 3 did not work because the other districts were unable to
make it work.
Option 5 was developed after Option 3 became unworkable.
A restructuring is needed due to problems of the past-State sales
tax participation has become lower that originally presented due to
legislative changes, there has been a near failure in the
residential portion of the TIF, and due to economic conditions, the
retail leasing of the commercial elements has been slower than
anticipated.
An overview of the relation of MSA to their REIT was given. The
REIT will endorse Option 5 because Option 3 didn't work; they will
fund the theater although the return is marginal; and Arnold
reported that the REIT continues to lose significant money on the
Town Center and would suffer a further loss even with a
restructuring although the REIT realizes that in the long run it is
better off.
The Town Center loses money without a default. Simon continues to
support the center despite the losses and will continue to do so.
The current marketing efforts will remain strong although Simon
would have to evaluate its overall commitment to the project if the
Village fails to consider a restructuring. Arnold stated that the
theater will enhance the center but that project is related to the
restructuring and may not proceed without it.
With the restructuring, the goals and objectives of the past may not
be reached without a restructuring.
At this time, the proposed Option 5 was reviewed. The structure of the debt was
noted-$4.5 million of parity revenue bonds sold publically at market rates with
$4.0 million in zero interest bonds held be the REIT. The theater would then be
developed with a $1.0 million infusion of capital from MSA. The terms of
maturity would go beyond the current 03/01/97 maturity but terms would be
structured that would permit the call of bonds at any time if increment is
available. The refunding avoids a bond default by Village, which in MSA's
opinion could significantly lower our bond rating despite prior opinions on this
matter.
At this time, William Hammer of MSA reviewed from his perspective any benefits
of restructuring. He asked the Board to only consider the bond refunding and not
to worry about any real estate decisions on the project that are to be undertaken
by Simon (theater development and residential workout) . He does not want the
bonds to go into default and felt that a restructuring would work to everyone's
advantage, not only MSA and the Village but all other districts in the long run.
The presentation concluded at this time. Trustee Braiman commented that any
benefits that may be derived from a restructuring must be compared to and
benefits that may result if a restructuring does not occur. He also thought that
restructuring should wait until 1997 and then an evaluation of the condition of
the TIF should be brought to the Village for consideration at that time. MSA
responded that this may not be feasible due to the ongoing economic losses
coupled with uncertainty for the project as a whole and uncertainty as to what
a future Board of Trustees will do relative to restructuring in 1997 when the
bonds are set to mature. Additionally, MSA stated that they cannot continue to
put money into the center on a hope that the Village will assist them in 1997.
After some further discussion, a motion was made by President Mathias to consider
adjourning to Executive Session to discuss litigation. The roll call vote was
five for and zero against.
The Committee of the Whole adjourned at 9:04 P.M.
}14/(44------N
William H. Brimm
Deputy Village Cl rk
Approved By Me This /
Day of , 1993
age President