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CEMETERY COMMISSION 2020/12/22 MinutesThe City of Lake Forest is subject to the requirements of the Americans with Disabilities Act of 1990. Individuals with disabilities who plan to attend this meeting and who require certain accommodations in order to allow them to observe and/or participate in this meeti ng, or who have questions regarding the accessibility of the meeting or the facilities, are required to contact City Manager Jason Wicha at (847) 234-2600 promptly to allow the City to make reasonable accommodations for those persons. CEMETERY COMMISSION MEETING MINUTES LAKE FOREST CEMETERY ZOOM MEETING TUESDAY, December 22, 2020, 4:30 P.M. I. CALL TO ORDER, ROLL CALL: Chairman O’Brien called the meeting to order at 4:35pm I. ROLL CALL TO ORDER Chairman O’Brien called the December 22, 2020 special Zoom meeting of the Cemetery Commission to order at 4:35pm. The following commissioners - Dennis O’ Brien, John Anderson, David Hooke, Rommy Lopat, and Robert Thornburgh - were present via Zoom as well as Chuck Myers, Phil Alderks, and Elizabeth Holleb representing the City staff. City Manager Jason Wicha was absent. Chairman O’Brien declared a quorum of commissioners to be present and the Zoom meeting was to be considered a formal meeting of the Cemetery Commission, with all actions undertaken at the meeting to be deemed enforceable. II. CONSIDERATION OF A RECOMMENDATION TO CITY COUNCIL TO APPROVE THE AWARD OF A CONTRACT TO APPLIED ECOLOGICAL SERVICES FOR THE CEMETERY RAVINE RESTORATION PROJECT Chairman O’Brien requested a motion to approve the bid from Ecological Services for the ravine restoration work and award the contract to Ecological Services. Motion by Commissioner Anderson, seconded by Commissioner Thornburgh, to approve the bid from Ecological Services and award the contract to Ecological Services for the ravine restoration work at Lake Forest Cemetery. Motion passed unanimously. With the unanimous approval of the contract, the Commission can go forward with the presentation about the project to the City Council. III. CONSIDERATION OF A RECOMMENDATION TO CITY COUNCIL TO AUTHORIZE A LOAN FROM LAKE FOREST BANK AND TRUST IN THE AMOUNT OF $1,600,000 FOR THE MEMORIAL GARDEN PHASE II PROJECT Chairman O’Brien asked Commissioners to direct their attention to Phase II of the Memorial Garden project and its financing, noting that City Finance Director, Elizabeth Holleb, was invited to participate in this special meeting to provide clarification about project financing. Commissioners were invited to proffer questions to Director Holleb about project financing. COMMISSIONERS PRESENT VIA ZOOM Dennis O’Brien, Chairman John Anderson David Hooke Rommy Lopat Robert Thornburgh STAFF PRESENT VIA ZOOM Chuck Myers, Superintendent of Parks, Forestry & Cemetery Phil Alderks, Cemetery Sexton Elizabeth Holleb, Finance Director STAFF ABSENT Jason Wicha, Secretary Treasurer, City Manager OTHERS PRESENT VIA ZOOM Dani Spann, Zoom Meeting Web Host Manager December 22, 2020 Page 2 Commissioner Lopat asked City staff to identify the impetus to proceed with this project at the current time. Supervisor Myers indicated the Cemetery Commission and staff have been working on Phase II of the Memorial Garden project for the past several years. The preliminary design has been completed to the point where the Commission can bid on the project. The Commission has engaged in extensive discussions on the project over the past few years and are at the point where it is ready to move forward with project financing. Sexton Alderks noted the Cemetery’s premium niche offerings in the circular outer wall are almost sold out. The popularity of these niches was part of the reason fueling the initiation of the Phase II project. The project would provide additional niche spaces in the premium price range attractive to customers. The spire was originally designed as the focal point of the garden, but was left out of the initial construction project as a result of budget constraints at the time. Discussion about moving forward with Phase II of the Memorial Garden project began in 2015 when the original bond offering for Phase I was paid off. Chairman O’Brien commented that the current financial climate is a perfect time to take on this project; from a financial standpoint, the Commission would be able to provide an attractive product to offer to the market. O’Brien addressed taking out the loan at the 1.7% rate as opposed to paying cash from the Commission’s investments. He indicated that using a conservative 5% rate of return on investments and the 1.7% loan rate over a period of 10 years would bring in some $325,000 in additional revenue over self-funding. Commissioner Anderson added it is the Commission’s responsibility to the City, as well as to the Cemetery’s legacy, to move forward with the Phase II project. He suggested the Commission should take the opportunity now to invest in the future of the Cemetery and move forward with the project, given the fact a design is in place and the Commission has actively discussed its implementation. Commissioner Lopat inquired about financing options as well as the possibility of waiting for the City to initiate a future bond issue and piggybacking on this bond initiative, or obtaining a loan directly from the City of Lake Forest. Finance Director Holleb reviewed the four options for financing – issuing of bonds, financing from City internal financing, bank loan, and self-financing from the endowment. Discussion followed by the Commissioners. Holleb explained there are additional costs associated with a bond issue - it is difficult to project what the interest rates will be 18+ months out, and the status of any future bond issues are unknown at this time. She reminded commissioners that if the City were to internally fund the project, the City Council would need to approve a loan and negotiate an interest rate to be paid over time. In the past, the City Council has applied the current market rate to such loans. It is the conclusion of the finance department that bank financing is the most appropriate option for the Phase II project at this point in time. Holleb said the Commission can obtain a loan from a bank other than Lake Forest Bank and Trust and collateralize the loan with the William Blair investment portfolio; this option would not provide the Commission the advantage of having City funds already at the bank as collateral, as is the case with Lake Forest December 22, 2020 Page 3 Bank and Trust. Holleb indicated the Commission can feel comfortable that Lake Forest Bank and Trust will provide a competitive interest rate whenever they are ready to proceed with the project. Chairman O’Brien expressed concern about the Commission approaching the City Council for $1.6 million at a very low interest rate while the City is dealing with some difficult economic times given the current Covid-19 situation. He expounded that it may be burdensome for the City to tie up this amount of money at a low interest rate now or in the near future due to the pandemic’s lingering economic uncertainties. Commissioner Lopat inquired whether William Blair, the investment firm used by the Cemetery Commission, would extend a loan or if the Commission should actively seek alternate loan quotes from other banks to obtain the best interest rate. It is not known if William Blair offers that service at this time. Chairman O’Brien provided a clarification that the bank will not commit to the interest rate until the Commission begins to draw down the funds. They will do the underwriting, but the rate would be fixed at the point the Commission was ready to start drawing down the money. Any bank the Commission would utilize would take the same position. If, for instance, the project were to be delayed by a year and a half, .75 would not be the interest rate at that time. Commissioner Lopat floated the option of paying some of the Phase II project in cash and a portion with a smaller loan. She also would like the public to weigh in on paying $600,000 for a spire that was promised to customers 20 years ago. Superintendent Myers reported he had a conversation with Cathy Czerniak about a presentation to the Historic Preservation Commission (HPC); the HPC could hear a presentation about the project in January or February 2021. A presentation could be arranged for February, noting the HPC previously approved the spire and its design, which has not been altered in the past 20 years. He does not feel comfortable going out to bid on the project until the presentation to the HPC has taken place in the event any changes are recommended to the spire. Commissioner Lopat inquired if the Commission should seek additional quotes for project financing. Chairman O’Brien noted a review of Finance Director Holleb’s memo outlining the four project financing options, concluding that bank financing is the most appropriate funding option at this time. In light of Commissioner Lopat’s inquiry, Chairman O’Brien asked if the Commission planned to seek additional quotes on project financing. Commissioner Anderson emphasized the role of the Commission involves a reliance on experts rather than micromanagement of projects. Anderson asked Finance Director Holleb for her recommendation on whether the Commission should seek financing additional quotes or move forward with the Lake Forest Bank and Trust proposal. Holleb stated the Lake Forest Bank and Trust proposal provided a competitive rate, and the City’s financial advisory firm agreed with this analysis. December 22, 2020 Page 4 Finance Director Holleb asked if the Commission was comfortable with the May to November construction timeframe; if there is a chance the timeframe could be pushed back, the Commission should wait and obtain competitive quotes in three to four months. If the Commission seeks competitive quotes, Holleb asked if the Commission would be willing to collateralize a loan with their investment portfolio since they would not have the advantage of the City of Lake Forest’s deposits at Lake Forest Bank and Trust to lean upon. Superintendent Myers addressed the issue of construction timing and pointed out a delay in the commencement of work on the project might cause it to be pushed into FY2022. He noted there are many components to this project with the niche component being proprietary; only one company engages in this specific type of niche unit. Myers indicated the company is very busy and cannot guarantee the timing for the project; the Commission may need to work around the company to have other aspects of project completed in the interim. Finance Director Holleb indicated the Commission can feel comfortable that Lake Forest Bank and Trust has an interest in and willingness to loan money for the project, and that whatever the rate is, the Commission can be assured it will be competitive. At minimum, this exploratory discussion has assured the Commission that an opportunity for financing is available. Superintendent Myers explained this discussion is not a commitment to the actual loan, but rather it accepts the idea of the Lake Forest Bank and Trust loan proposal in principle, with the final loan to be negotiated at the time of issuance. Chairman O’Brien emphasized the point of this discussion is the assurance of financing in order to move forward with the construction and bid documents for the project so the Commission can move forward with the project. Chairman O’Brien asked the Commission about their stance on shopping the loan versus trusting the opinion of the Finance Department to accept the Lake Forest Bank and Trust loan proposal. Commissioner Anderson indicated his feeling was to support the recommendation of the Finance Department, and not to shop the loan; Commissioners Thornburgh and Hooke were in agreement. Commissioner Lopat voiced being in favor of shopping the loan to other banks. Chairman O’Brien stated that the majority of the Commission favored not shopping the loan. O’Brien then put forward the following motion, reiterating that this motion would finalize the relationship with the Lake Forest Bank and Trust, but would not finalize the deal with Lake Forest Bank and Trust itself. Motion by Chairman O’Brien to approve the recommendation to authorize financing from Lake Forest Bank and Trust based on the possibility of adjustments of rate based on construction plans and timing. Chairman O’Brien and Commissioners Anderson, Hooke and Thornburgh voted to approve the authorization of financing from Lake Forest Bank and Trust for the Phase II Memorial Gardens project; Commissioner Lopat voted not to approve. The vote of the Cemetery Commission was 4-1 to approve going forward with financing from the Lake Forest Bank and Trust. Motion passed. December 22, 2020 Page 5 IV. OTHER MATTERS Chairman O’Brien asked if there were any other matters to be brought before the Commission. Supervisor Myers stated he is currently working on preparing a presentation for the Commission’s January meeting. He hopes to arrange for a presentation from Craig Bergman and/or his staff regarding the Phase II plans. V. CITIZENS’ OPPORTUNITY TO ADDRESS CEMETERY COMMISSION Chairman O’Brien asked for citizen comments. No public input was received for the Cemetery Commission. VI. NEXT MEETING The next regular meeting of the Cemetery Commission is scheduled for Wednesday, January 27, 2021 at 5:00PM VII. ADJOURNMENT The meeting was adjourned by Chairman O’Brien at 5:52pm.