Defeasance brings formal halt to city's police facility project
September 21, 2005 - Last in a series
By MIKE ANTHONY
The Crestwood Board of Aldermen's unanimous approval last week of an ordinance defeasing bond-like certificates issued to fund the construction of a new police station brought a formal halt to the project.
Defeasing the balance of $9.83 million in certificates of participation, or COPs, issued to fund the police facility ends the project, which had become a focal point of residents' dissatisfaction with the city's precarious financial condition.
A total of $9,270,088 was needed to fund an escrow account until the COPs are callable in 2007. With a total of $8,189,326.95 in COPs funds held by the trustee, UMB Bank, the city needed an additional $1,100,711.05 to fully fund the escrow account, including professional fees for the defeasance totaling $19,950.
Cash to fund the additional $1,100,711.05 came from the following funds: $520,000, capital improvements fund; $380,711.05, general fund; and $200,000, parks and stormwater fund, according to a Sept. 13 memorandum written by Director of Fi-nance Diana Madrid to City Administrator Don Greer.
Referring to the sources of cash, Madrid wrote, "If funding occurs as suggested above, the capital improvements fund and park and stormwater fund will have cash balances, respectively, of approximately $20,000 and $18,000. Additionally, the amount available through the general fund line of credit for the city's use will be approximately $350,000.''
The $19,950 in professional fees breaks down as follows:
• $12,000 — Armstrong Teasdale, bond counsel.
• $5,000 — A.G. Edwards, defeasance investment adviser.
• $1,750 — Robert Thomas, certified public accountant and verification agent.
• $1,200 — UMB Bank, trustee.
Aldermen adopted a resolution in July authorizing Greer to initiate the process of defeasing the certificates issued in late 2002 to fund the construction of the police facility. The resolution states the board intends to defease the certificates before Oct. 15 when a principal and interest payment totaling roughly $553,500 is due.
Defeasing the balance of the $9.83 million in certificates of participation, or COPs, issued to fund the police facility would bring an end to the project, which has become a focal point of residents' dissatisfaction with the city's precarious financial condition. Roughly $1.6 million has been spent to date on the project.
Voters in August 2002 approved Prop-osition S, the extension of a half-cent sales tax to fund construction of a new police building, fund repairs at the Government Center and allow the continuation of the city's street repair and replacement program.
The half-cent, capital-improvements sales tax had been scheduled to end in 2008, but voter approval of Proposition S extended the sales tax until 2023.
As the Crestwood Board of Aldermen moves toward halting the construction of the police facility, the Call continues its review of the project that dates back more than five years ago to May 2000.
The final installment of the chronology of the police facility project, based on city documents and published accounts in the Call, picks up in June 2005:
• June 28, 2005 — Aldermen voted 7-0 June 28 to repeal an ordinance approving a lease with the Westfield Corp. Ward 3 Al-derman Don Maddox was absent.
The city had planned to lease office space at the Westfield Shoppingtown Crestwood for roughly 18 months while the renovation of City Hall to include a new police facility takes place. Under the agreement, the city would have leased roughly 14,827 square feet of office space at a cost of $3,333.33 per month.
But bids for the renovation project recently were opened and the lowest base bid totals roughly $1 million more than the cost estimated by the project's architect, Horner & Shifrin Inc. Public sentiment against the project has been rising, culminating in a petition drive by a citizens' group, the Crestwood Citizens for Finan-cial Responsibility, seeking reconsideration of the lease ordinance.
About 1,125 signatures of the city's registered voters were needed for reconsideration of the ordinance and the county Board of Election Commissioners certified the group collected 2,201 valid signatures. The City Charter states that if an ordinance is returned to the Board of Aldermen and the board fails to repeal the measure, voters then will consider it at a city election.
In a June 13 letter to Greer, Westfield Development Director G. Todd Rogan wrote, "... We do not want the lease to be an issue of concern for either the city or residents. Please accept this correspondence as Westfield's offer to cancel the temporary lease of office space at Westfield Crestwood.''
Ward 1 Alderman Richard Breeding later requested the issue of full defeasance of the certificates placed on the agenda for July 12.
• July 12, 2005 — Aldermen adopted a resolution in July authorizing Greer to initiate the process of defeasing the certificates issued in late 2002 to fund the construction of the police facility.
The resolution approved by the board:
• Authorizes Greer to engage A.G. Edwards on behalf of the city of Crest-wood in the amount not to exceed $5,000 for their services.
• Authorizes A.G. Edwards to engage a certified public accountant firm at an additional cost estimated at $3,000 to certify that the escrow is adequately funded to pay the certificates' principal and interest and that the transaction is in accordance with Internal Revenue Service code requirements.
• Authorizes Greer to select UMB Bank, the current trustee of the certificates, as escrow agent for the transaction.
• Directs Armstrong Teasdale, current bond counsel for the certificates, to draft an escrow trust agreement for approval by the Board of Aldermen.
"... Based upon completion of the aforementioned tasks, appropriate ordinances will be brought before the Board of Aldermen to authorize and approve the purchase and deposit of government securities to provide for the payment of the city's funding of the escrow and to execute the escrow trust agreement,'' the resolution states.
• Aug. 25, 2005 — An ordinance authorizing the defeasance of bond-like certificates issued to fund the construction of a new police station was read for the first time by the Board of Aldermen. No vote was take by the board and aldermen will consider final approval of the measure when they meet at 7 p.m. Tuesday, Sept. 13, at City Hall, 1 Detjen Drive.
• Sept. 13, 2005 — Aldermen voted unanimously to approve an ordinance de-feasing the COPs.