Council Meeting - May 15, 2012

Work Session
The work session was a town meeting regarding the possible refinancing of two bonds - the golf course bond and one of the pressurized irrigation bonds (PI2). This possible refinance would be to lower our interest rates, which is available to us due to our recent increase in bond rating. Our financial advisor, Marc Edminster, came to present options.
The current PI2 bond has an approximate balance of $900,000. The current interest rate is 5.99% and cannot be called without a penalty. Wells Fargo is offering to refinance that bond and is giving two options:

1. Fixed rate of 3.08% for the first seven years, variable rate after that,
2. Fixed rate of 2.92% for the first five years, variable rate after that

Both options would also allow us to call the bond at anytime without penalty. Having a lower interest rate would save us money, but the risk is not knowing what the variable rate would be after the fixed rate expires. It most likely only makes sense to refinance this bond with one of these options if the bond could be paid off during the fixed rate period, however, this would most likely only happen through an increase in fees. My personal opinion is to not refinance this bond at this time as the utility rate analysis performed recently is already recommending a rate increase to cover future improvements and growth. Increasing utility rates and increasing fees to pay off the bond more quickly would be a sizable increase for residents. However, this is only in the discussion phase at this point and more research is being done by the finance team and committee.

The GO bond for the golf course was issued and sold in the public markets with no ability to prepay for ten years, which means prepayment cannot occur before 2016. Mr. Edminster was concerned about the negative arbitrage opportunity so recommended waiting at least five months before doing a refi on this bond. The savings realized can either be taken upfront for one year or in small amounts yearly over the life of the loan. This savings would be on property taxes.

Council Meeting

Public Comment
Ken Cromar - Mr. Cromar again discussed the November 6, 2011 Daily Herald article written by Caleb Warnock regarding the golf course. Mr. Cromar would like a newsletter correction regarding the golf course financials. He also expressed concern that his letter read at a recent Council meeting was not included in the official minutes. He has contacted the state records ombudsman regarding GRAMA requests he has made.
   **The Golf Course Finance Advisory Committee has met once already and is continuing to meet to review the golf course financials and to present a comprehensive overview of where things stand. This information will be provided to residents once it is complete.

Jan Streeter - Ms. Streeter read an open letter to Mr. Cromar and his supporters. She reminded him that he did not get enough votes to be on the Council. She believes the golf course is an asset to the city even though she is not a golfer. She voted for Councilmembers Gygi, Augustus, and Rees because she felt they had the best ideas for the long term. She feels Mr. Cromar's views discourage business and that his approach shows lack of respect for others.

Robert Wetzel - Mr. Wetzel wanted to express his support for the Council and Mayor. Cedar Hills is a beautiful community. He appreciates the work of the Council, he loves WalMart, and the loves the city. Said Mr. Cromar does not represent him.

Ken Kirk - Mr. Kirk expressed appreciation for the Mayor and Council. He is appalled by those who do not want the Mayor to have an opportunity for justice through the legal system. He condemns the attempts to ruin the Mayor and our city through the media. He asked Mr. Cromar to stop the attacks.

Kim Groneman - Mr. Kirk read a letter from Mr. Groneman. He is upset over the money and staff hours being spent because of attacks made by Mr. Cromar. City does yearly audits and these are sufficient, there is no need for an additional audit. Without these attacks the city staff could focus on more important things. Residents voted for the City Council to make important decisions. Ken Cromar doesn't represent the majority of residents.

Charelle Hagan - Ms. Hagan wanted to recognize the hard work of the Mayor and Council. She previously served on the Council and knows the golf course has always been an issue. It is OK to not agree, but it is upsetting to see the personal attacks that are happening. It is hurting the city and families. She is opposed to any petition asking for the Mayor to resign.

Cameron Tovey - Mr. Tovey is tired of seeing the city in the news. He voted for not defaulting on the golf course bond as he believes in paying your debt and honoring commitments. He is disgusted by the attempts to ruin the lives of elected officials. He is against the petition asking the Mayor to resign. GRAMA requests are costing too much time and money. Feels men who have been arrested and charged with tax evasion are not qualified to serve on the Council.

Wanda Badger - She appreciates the Council, loves the new Community Recreation Center, and appreciates all the work being done.

Jim Perry - Mr. Perry served on the Council for eight years. While on the Council an investigation was launched on a former mayor due to allegations from this same small group but nothing was ever found. This small but vocal group does not represent the silent majority.

Tonya Edvalson - Ms. Edvalson appreciates the work of the current and past Councils. She is proud of Cedar Hills and feels safe and accepted here. Loves the sense of community. Says the city already does audits and nothing of concern has been found. She would like Mr. Cromar to stop the attacks, they are unwanted. She feels it is unfortunate the media doesn't want to tell her story.

Zonda Perry - Mrs. Perry lived in Cedar Hills for 11 years. Councilmembers and Mayor sacrifice a lot to serve. The minority hurts others by the way they go about things. Citizens vote every two years and have made their voices heard. It is unfortunate how much money is being spent to defend against lawsuits.

David Jackman - Doesn't want Council to spend a lot of money on a forensic audit and wants to sign a petition in support of the Mayor.

Darryl Acumen - Loves Cedar Hills and WalMart. He is the state chair for the Republican Party for one area of Cedar Hills and wanted to get a waiver on the fee in order to go door-to-door for voting purposes. Gretchen will work with Mr. Acumen on this.

Nate Cramer - Supports the Mayor and Council and their efforts. Feels the Mayor has always been transparent in discussions. He sees the Mayor wants real world solutions to our issues.

Angela Johnson - Hoped Mayor would step down after federal charges were filed, she feels that would be easier for the City. She supports a forensic audit. She was concerned over an event in 2011 where Kim Holindrake told the Mayor that there was not a current contract on file for Konrad Hildebrandt and was later reprimanded.

Consent Agenda
The minutes from the April 3, 2012 were already approved at a prior meeting and there were no new minutes to approve.

City Reports
David Bunker - In the process of approving the 2013 budget. A public hearing for the budget will be scheduled. Family Festival is next month.

CM Gygi - Attended a meeting for North Point Solid Waste and contract with Allied is coming up. Utah Valley Dispatch is encouraging other cities to join. Working with the Finance Committee on changes to the budget.

CM Jackman - Finance Committee is also discussing refi of bonds. He is attending an LPPSD meeting this week.

CM Rees - Three residents have joined the Beautification Committee and the committee met to discuss a variety of new plans.

CM Augustus - Has a Planning Commission meeting this month.

Mayor Richardson - On behalf of CM Martinez reported that rec classes start on May 22nd.

Discussion on Fiscal Year 2013 Budget
The Council has been reviewing portions of the budget for the past several meetings and the overall budget was presented by Rebecca Tehero. She is still working with Jim Madsen on getting some better and more accurate figures for the golf course. One thing that is changing on the golf course financials is a new line item which will show a dollar amount transferred to the golf course from other funds to subsidize any losses. In the past the golf course considered any losses a loan from the City but this seems to have caused confusion and concern. Moving forward the financials will show any loss as a subsidy from another fund so residents can easily see this information.

Review/Action on Boundary Adjustment on Earl Property
A resident of Pleasant Grove with property located on 9540 N Canyon Road has requested a boundary adjustment to move their property into Cedar Hills. They have already submitted the required paperwork to PG to authorize a public hearing. The Council voted to approve this resolution indicating the intent to adjust the boundary accordingly and authorizes a public hearing to take place.

Review/Action on Parameters Resolution for Refinance of PI2 Bond
As mentioned above, the town meeting held earlier discussed the possible options for a refinance of this bond. A parameters resolution does not approve the refi or obligate us to move forward, but it starts the process so a public hearing can be held. The parameters resolution was approved.

Review/Action on Parameters Resolution for Refinance of GO Bond
Same as above.

Review/Action on Forensic Audit
The Council had requested that Ms. Tehero request bids on a forensic audit after charges were filed against Mayor Richardson. The charges filed have nothing to do with city finances or any of his work as Mayor; however, we understand it has caused many questions. Ms. Tehero reviewed the bids and felt the bid received from Squire & Co. most closely aligned with what the Council wanted to review. The proposal is for $7,600 and would audit the following from the past three years:

• Allegations made against the Mayor by Mr. Severn and Mr. Sorensen regarding use of impact fee money,
• Review the policy on disbursement of funds,
• Verify that controls are working,
• Review the accounting for the golf course
• Review the three transactions Mayor Richardson made on his city credit card

Public comment was received during this time:

Ken Cromar - Wants the audit done. Says insiders are feeding him information and that is how he found out about Konrad hiring his son-in-law.

Jerry Dearinger - Wants to make it clear the audit was not suggested by his group, he was asked for his opinion by CM Gygi. He wants the audit to go back farther than three years.

Ken Kirk - Outside audits are done each year and nothing illegal has been found. Doesn't want audit. Doesn't want Council to try to appease Ken Cromar or his group as they won't believe the results any way.

Angela Johnson - It wasn't Mr. Cromar's idea to do an audit. Feels the $7,600 audit is not enough. The research she's done for the type of audit she feels we need would cost $100,000 per year audited.

Charelle Hagan - OK with audit, but don't spend $100,000. Asked Council to please use taxpayer money wisely.

Debbie Severn - She believes many of the allegations are factual and wants the Council to answer them. Mayor Richardson stated that Mr. Severn never came to talk with him prior to filing the allegations and he would've met with him any time. Will still meet with Mr. and/or Mrs. Severn any time they want.

Marisa Wright - Doesn't want audit. Says Mr. Cromar misleads residents and won't trust audit results anyway.

The Council approved the audit 3 to 1. CM Gygi voted against. it.

My thoughts - I am not worried about trying to appease a small group of residents. I fully understand that anything we do will never be considered good enough for some. My vote had nothing to do with appeasing a few. Instead, I was thinking of the many residents in Cedar Hills who aren't as politically involved but have read some very disturbing articles in the media recently and are wondering what is going on in our city. I've had several residents approach me with concerns over flyers they've received and news articles they've read. I also thought it was very important to follow the advice of our City Attorney who strongly recommended the forensic audit. It was these two considerations that had the greatest impact on my vote.

Discussion on Civic Center
There is no new information on this so the discussion will be continued at another time.

Appointment to North Utah Valley Animal Shelter
Brad Kearl was the CH representative on this Board. CM Gygi was appointed by the Mayor to now serve as the representative.

Adjourn
The Council did go into Executive Session.

City Council Meeting - May 1, 2012

Work Session

Utility Rate Study
In March the City Council authorized Bowen, Collins & Associates to perform a utility rate analysis study to determine if we needed to change rates to handle changes in demand patterns and cover future maintenance costs. The analysis reviewed culinary water, pressurized irrigation, sewer, and storm drain rates. BCA determined that the estimated replacement value of the water system is $34.5 million, $21 million for the PI system, $49 million for the sewer system, and $15 million for the storm drain system.

BCA looked at the current revenue received on each utility, determined what that would amount to over the next 10 years, and also proposed a rate structure based upon the needs of the system to accommodate for growth and maintenance and/or replacement.

BCA suggests a rate increase each year for the next 10 years for culinary water, sewer, and storm drain. They do not recommend a rate increase for PI. The overall utility increase ranges from 3.7% to 4.3%.

These rate increases would cover almost the entire costs that are assumed will be needed for these utilities. BCA mentioned that the increases assume 3% rate of inflation and the overall increase suggestions are not much higher than that, which shows the City has planned well for future needs and will not need to implement a large rate increase all at once like many other cities have done.

Cedar Hills currently uses a block method to determine utility rates and BCA recommends we stay with this structure but change the first tier for water to a high of 8,000 gallons instead of the current 10,000 gallons to come closer to the average residential use of 6,000 per month. BCA also recommended that block rates for water be determined by meter size as larger meters have a higher cost of service. Implementing this will not affect most residents as most are on the smaller meters. The same applies to other utilities where the block rate for PI would be based on connection size, meter size for sewer, and lot size for storm drain.

The entire analysis can be viewed online at http://www.cedarhills.org/sites/default/files/agendas/city-council-ws-agenda-2012-05-01.pdf.

Pleasant Grove Sewer Proposal
This item will be moved to another meeting as there was not enough time to discuss.

Council Meeting

Public Comment
Virginia Rosenthal - Ms. Rosenthal lives right next to Mesquite park and is concerned about placement of future bathrooms. She has had problems with the portable units including trash, smell, people throwing rocks in her yard, loud conversations late at night, etc. She would like the Council to identify other areas for restrooms. Council member Martinez will work on this with her.

Marisa Wright - Mrs. Wright wants to thank the Council for making hard decisions and working hard. She knows it is a stressful job and appreciates the service of each council member.

Paul Sorensen - Mr. Sorensen provided the Council with a financial summary he has completed on golf course financials. He brought up his frustration with the September 2011 newsletter entry on the golf course and wants a correction in a future newsletter. He feels residents need to know about the golf course financials and that additional expenses should be included, such as water usage and rent for the clubhouse. He feels revenue and expenses for the golf course need to be separate from the CoRec. Council member Gygi will provide Mr. Sorensen's analysis to the Golf Course Finance Advisory Committee.
**On a side note, additional expenses for water and rent aren't associated to parks or other city facilities so the golf course (which is city-owned) hasn't been treated any differently.

Consent Agenda
The minutes from the April 3, 2012 City Council meeting and ordinance changing the location of Council meetings to the CoRec were both approved.

City Reports
Council member Augustus - Planning Commission has worked through Harts approval.

Council member Martinez - Grand opening for the CoRec is on May 5th 10am-2pm. Recreation classes start on May 15th.

Council member Jackman - LPPSD met on the budget process. Chief Freeman discussed ways to cut costs with better ways of using equipment. The Finance Committee discussed the study on utility rates.

Council member Gygi - The Finance Committee also discussed a possible refinance of city bonds and is still researching options.

Review/Action on City Manager Performance and Contract
This item was tabled as the City Manager resigned earlier in the day.

Review/Action on Preliminary Plan for Bridgestone Development
Perry Homes submitted a preliminary plan for their 8-plex units. There are two units with homes being either 1400 sq ft or 1584 sq ft. One resident asked about the apple trees currently in that area and Perry is willing to remove the apple trees if the community wants this done. The preliminary approval was granted with the following requirements:

• A final plat shall be prepared and submitted for approval
• Proposed sidewalk on 4500 West shall be a minimum of 6-feet wide
• Proposed parking stalls along 4500 West shall be a minimum of 20-feet in dept so as not to impede with walk
• Material types and landscaping shall be reviewed and approved by the City Council
• Drainage calculations, street design, and utility design shall meet City standards and shall be approved by the City Engineer

Review/Action on Final Plan for Harts Gas Station
Harts provided examples of signage that will be on the building and the canopy as well as outside placement of ice freezers and propane tanks. Harts will be having a ground breaking ceremony as soon as permits are approved. The final plans were approved with the following requirements:

• Final plat shall be prepared with right of way dedication identified
• An executed development agreement with water rights required and right of way maintenance
• Final signage plan to be submitted

Review/Action on Tentative Fiscal Year 2013 Budget
Rebecca Tehero presented additional items suggested for the 2013 budget, which includes money for communications, utility revenue based on suggested rates from the utility rate analysis, and to lease instead of purchasing new golf carts. The Council has requested that the revenue projections for the golf course be recalculated to be more realistic as the current numbers are lofty and we will not meet our projections for 2012. The tentative budget was approved; however, this is not the final budget. The State requires each city to approve a preliminary budget by May 1st of every year but a final budget is still forthcoming.

Discussion of Future Civic Center
This item was postponed for a future meeting.

Review/Action on Completion of CoRec Basement
The Council has determined that the basement of the CoRec should be completed, but there was some discussion on where the money will come from. In our original talks the assumption was that the $350,000 set aside for a splash pad would be used for this; however, the CoRec went over budget so the remaining balance of the recreation impact fees is approximately $150,000. There are some other areas where we can pull this money from, including CARE tax and the unrestricted funds set aside for a possible Civic Center. The Council requested that staff move forward with obtaining bids on completion of the basement and the Finance Committee will make suggestions as to where the money should come from.

Review/Action of Assignments
The Council accepted the resignations of Brad Kearl, Kim Holindrake, and Konrad Hildebrandt. More information can be found in the press releases on our website and on this blog.

The Council did go into Exective Session.

Press Release - Charges Against Mayor Unrelated To Recent Resignations

Yesterday it was reported that Cedar Hills’ Mayor Eric Richardson was named in a federal complaint filed in U.S. District Court. This has led some to speculate that the recent resignations of Konrad Hildebrandt, Kim Holindrake, and Bradley Kearl may in some way be related. The City Council wants to make it known that the timing of these items was coincidental and the resignations of these three individuals are in no way related to the complaint filed against Mayor Richardson or to each other.

The Council also wishes to emphasize that these resignations had nothing to do with recent allegations and subsequent calls for resignation made against Mayor Richardson and Mr. Hildebrandt by a few residents. As was previously announced, the County Attorney stated that, even if true, the allegations made did not support a criminal investigation and therefore refused to proceed. The City Council requested that an item be added to the May 1 agenda to reconsider the appointments of city manager, city recorder, and city building and zoning official. Each of these positions is a political appointment and serve at the will of the City Council. Before the meeting Mr. Hildebrandt, Ms. Holindrake, and Mr. Kearl were given the opportunity to resign and chose that option. A severance package was provided to all three individuals. Mr. Hildebrandt was entitled to receive severance under the conditions of his contract signed in 2002 and the Council offered severance to Ms. Holindrake and Mr. Kearl as a gesture of appreciation for their length of service and contributions to the City.

At this point the City Council is unaware of the details surrounding the federal complaint but will continue to operate under the assumption that Mayor Richardson is innocent until proven guilty. However, to assure both the Council and the residents of Cedar Hills that nothing inappropriate or fraudulent has occurred, the City Council has requested an internal and external forensic audit on the City’s financials to cover January 2010 to present. At this time there is no suspicion of any mishandling of the City’s financials and Mayor Richardson is not and has never been a signor on any City accounts. “The City has internal controls in place to prevent fraud,” said Rebecca Tehero, the City’s finance director. “In addition, an independent firm reviews these controls every year and has not identified any deficiencies; therefore, I do not have any reason to suspect that any wrongdoing has occurred.” The forensic audit may take several weeks to perform but the City Council will release the findings after the audit is complete. In the meantime the City will work on preparing updates as appropriate and will proactively communicate with residents while working to address concerns.

Additional questions may be directed to Councilmember Gary Gygi at ggygi@cedarhills.org.

Press Release - Changes in City Leadership

Cedar Hills today announced several changes to its leadership. Konrad Hildebrandt, the City Manager, has resigned effective May 1. David Bunker, the City's Public Works Director, will act as the temporary City Manager and will work directly with Mayor Eric Richardson during this transition.

Mr. Hildebrandt became the City Manager of Cedar Hills in 2002. Under his management the City experienced tremendous growth and grew from 4,704 residents to now over 10,000. Mr. Hildebrandt's vision for the City has led to the beginning phase of a commercial district, which has benefited the City through increased revenue from sales tax. During his tenure the City has had a bond rating increase, a decrease in staff-to-resident ratio, and has received the Government Finance Officers Association's Distinguished Budget Award nine out of the last ten years.

"Konrad has been a valuable asset to our city, and his numerous contributions have led to improved services and quality of life for our residents," said Mayor Richardson. "We appreciate his service as City Manager and wish him well in his future endeavors."

Kim E. Holindrake, City Recorder, and Bradley Kearl, City Building and Zoning Official, have also resigned effective today. Ms. Holindrake has been with the City since 1991. Mr. Kearl has been with the City since 1999.

Addressing these changes Mayor Richardson said, "We are grateful for the efforts of these department heads. No doubt City administration will take on a different feel. We wish Kim and Brad all the best."

Questions can be directed to Mayor Richardson through e-mail at erichardson@cedarhills.org.