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11292004 November 29, 2004 Council Meeting November 29,2004 - A special called meeting of Mayor and Council was held at Smyrna City Hall in the 2nd Floor Conference Room. The meeting was called to order by presiding officer Mayor A. Max Bacon at 5:50 o'clock p.m. All council members were present except Council Member Pritchett, who was attending an NLC conference. Also present were City Administrator Wayne Wright, Deputy City Clerk Lee Miller, City Attorney Scott Cochran, Demarco Bell from Eltekon Capital and Christopher Travis from Gill, Elrod, Ragon, Owen and Sherman PA. FORMAL BUSINESS: (A) Approval of Lease Purchase Agreement with Eltekon Capital for Financing of Johnson Controls Improvements Mr. Wright stated the agreement under consideration will provide financing for capital improvements made in connection with the Johnson Controls master agreement. Mr. Wright stated the lease payments are covered by savings or revenue increases. . - Council Member Wood asked Mr. Bell ifEltekon Capital (EC) is a third party to the agreement providing financing for Johnson Controls (Je), and Mr. Bell answered in the affirmative. Council Member McNabb asked what the lease factor for the agreement is, and Mr. Bell stated it is 4.16%. Council Member Wood asked if this is a fixed rate, and Mr. Bell answered in the affirmative. Council Member Newcomb asked what representative of the City has reviewed this lease purchase agreement, and Mr. Cochran stated that both the bond counsel and bond advisor customarily consulted by the City have reviewed the proposed agreement. Council Member Lnenicka asked Mr. Cochran if this agreement is something for which bids should be solicited. Mr. Cochran stated there is no requirement in this instance for bids. Mr. Cochran stated that the proposed interest rate for the agreement expires at the end of this month, and that the City's bond advisor has indicated that the proposed rate would be acceptable. Mr. Travis stated that the projected savings expected to be realized by the City from the planned JC improvements should equal or exceed the debt service. Mr. Travis stated that a staggered payment schedule is a feature of the proposed agreement which is not typically available in conventional bond issues. Council Member McNabb asked if the proposed payment schedule is contractually guaranteed, and Mr. Travis answered in the affirmative. Mr. Cochran stated he asked the City's bond advisor whether or not terms more favorable to the City could be obtained through a conventional bond issue. Mr. Cochran stated the City's bond advisor indicated it is uncertain whether or not a bond issue would be advantageous to the City in this case, and that there are costs associated with a bond issue which are not found in the EC proposal. Council Member Newcomb asked if the proposed agreement includes contingency provisions to address any performance deficiencies or other possible disputes with JC. Mr. Wright stated that JC is obligated to compensate the City for any shortfall between the combination of revenue increases and cost savings projected by JC and the revenues and savings actually realized. Mr. Wright stated that the lease agreement must be paid in any case. Mr. Wright stated that if JC cannot achieve the projected revenues and savings, then JC will have to compensate the City for any shortfall. Council Member Wood stated the proposed agreement is for an expenditure of $5,750,828.88 to be paid in 156 installments over a period of thirteen years. - MOTION: Council Member Wood made a motion to approve authorization for the Mayor to execute the lease purchase agreement between the City of Smyrna and Eltekon Capital, LLC. The motion was seconded by Council Member Scoggins. Motion was approved 6 - O. November 29,2004 ADJOURNMENT: With no further business, the meeting was adjourned at 6: 15 p.m. A. MAX BACON, MAYOR ~~~ CHARLES PETE WOOD, WARD 7 '--. ~a4l0. ~~'tfJ -' - 'AN D. HIOTT, CITY CLERK ~.( J-A----- RON NEWCOMB, WARD 2 , 2 - - -