SPECIAL COUNCIL MEETING
A Special Council Meeting was held on December 31, 1991 at 8:30 a.m. with Council President Christiansen presiding. Members of Council present were Mr. Lambert, Mr. Daisey, Mr. Levitt, Mr. Pitts, Mr. Salters, Mr. Lynn, Mr. Weyandt and Mr. Hare.
Council staff members present were Chief Hutchison, Mr. Lucas, Mr. Worley, Mrs. Boaman and Mr. Rodriguez. Mr. DePrima and Fire Chief Baker were absent.
FINANCING PLAN - PURCHASE OF WSFS BUILDING
A summary was given by Mr. Gary Patterson and Mr. Mike Karia on the purchase of the WSFS Building and the financial mechanics involved in the transaction. At the direction of City Council, the Downtown Dover Development Corporation offered a bid to purchase the WSFS Building. Their bid, in the amount of $1,350,000, was successful. Mr. Patterson relayed the advantages to the City owning the facility, such as the availability of parking for the library and protection of the library for future expansion, and the relief from needed additional space of City Hall offices. The Administrative Services Department will move into the first floor of the facility which will enhance customer service with the availability of drive-thru windows. The building is already equipped with a safe and approximately $20,000 to $50,000 worth of furniture.
Since approval of the sale required FDIC approval, the settlement date could not be finalized until FDIC approval was achieved. During their November meeting, the DDDC appointed a subcommittee (consisting of Mr. Karia, Mr. Dorzback, Mr. Holden, Mr. Weyandt, Mr. Lynn and Mr. Patterson) to serve on a negotiating team for financing of the property. After negotiations and meetings on a proposed financing plan, Mr. Karia and Mr. Patterson offered the following:
PURCHASE FINANCING
Purchase Price $1,350,000
Settlement Expenses (maximum) 10,000
TOTAL $1,360,000
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Bank Loan $ 890,000
Proposed Loan from City - Depreciation Fund 470,000
TOTAL $1,360,000
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1. The loan amount from the City will be for 20 years and carry the second lien.
ANNUAL CASH FLOW ESTIMATES
Calendar Year 1992
Receipts - Rent $ 185,700
- Interest 2,000
Disbursements - Expenses (89,800)
- Principal and Interest (86,100)
- Interest (11,800)
TOTAL $ ---
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NOTES
1. As the principal on the bank loan decreases, additional funds will be available to pay the interest and principal on the second loan.
2. The increases in the expenses and interest rates and the increases in the rent are considered and assumed concurrent.
3. Any available funds will be paid to the City towards the interest and principal.
4. The first bank payment will start in March 1992, and thus the rent received in January and February 1992 (totalling $30,950) can be used to reduce the principal on loans or can be used as working cash or for the combination of both.
Mr. Patterson apologized to members of Council for not keeping them more informed, but explained that with the settlement falling so close to the holidays there was very little time to keep members of Council completely up to date on the transactions as they were rapidly falling into place. Final settlement for the property will take place today, December 31, 1991, following Council's approval of the financing plan, which includes a loan from the City in the amount of $470,000.
Responding to questions by members of Council, Mr. Patterson explained that the budget impact will be through rent payments from the City to the Corporation, which comes back in the form of an interest or loan payment. Mr. Karia stated that the annual rent for approximately 5,500 sq. ft. will be $60,000 to $65,000, with the General Fund being responsible for the smallest percentage, which will be approximately $6,000 in the first year. This same money will come back to the City in the form of interest. Mr. Karia stated that the $470,000 loan from the City will come from the City's Depreciation Fund. This is appropriate as the Customer Services Department is mainly funded by the Electric and Water/Sewer funds since they mainly service these departments.
Mr. Weyandt stated that the building has many features that are needed now and in the future and he projected that the value of the building will increase significantly over the next 20 years. Mr. Lynn agreed that the purchase of this property is in the best interest of the citizens of Dover, it is economical, and it meets our future needs at a reasonable cost.
Mr. Weyandt moved that the Finance Director be authorized to proceed with the financing of the WSFS building with the proposed loan from the City in the amount of $470,000 with the financing of the balance to be from Wilmington Trust Company. The motion was seconded by Mr. Lynn and carried by a unanimous roll call vote.
Mr. Levitt moved to adjourn, seconded by Mr. Salters and unanimously carried.
Meeting Adjourned at 9:11 A.M.
DEBRAH J. BOAMAN
CITY CLERK
All orders, ordinances and resolutions adopted by City Council during their meeting of December 31, 1991, are hereby approved.
JOHN E. RICHTER
MAYOR
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