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Home My WebLink About1988-04-13 Council Minutes - Special MeetingCITY OF KENAI "Od Oap" 4 4"" 010 F10"O KENAI, ALUM NN1 Tv"NOM M-M16 NOTICE OF SPECIAL MEETING AND BUDGET WORK SESSION The Kenai City Council will be holding a Special Meeting on Wednesday, April 13, 1988 at 7:00 PM in the Council Chambers. To be discussed: • y 1. Ordinance 1253-88 - Increasing Rev/Appns - _ ;. 1 Outstanding Defaults, lot & 2nd Deeds of Trust - [.:' Dairy Queen Property �.. a. Public Hearing - Ord. 1253-88 2. Approval of Payment to State of Alaska, $56,314.50, for Delinquent Dairy Queen Loans Immediately following the Special Meeting, the Council will have a work session to review the 1988-89 budget. The public is encouraged to attend and participate. >>, Janet Ruotsala, CMC City Clerk _ DATED: April 8, 1988 .. • ..,-I r-. KENAI CITY COUNCIL - SPECIAL MEETING - MINUTES APRIL 130 1988 - 7:00 PM KENAI CITY HALL MAYOR JOHN J. WILLIAMS PRESIDING PLEDGE OF ALLEGIANCE ROLL CALL Present: Linda Swarner, John Williams, Ray Measles, Chris Monfor, Marj O'Reilly Absent: Tom Ackerly, Art McComsey (excused) 1. Ord. 1253-88 - Increas. Rev/Appns - Outstanding Defaults, 1st & 2nd Deeds of Trust - Dairy Queen Property a. Public Hearing - Ord. 1253-88 MOTION, REMOVE FROM TABLEs Councilman Measles moved, seconded by Councilwoman Monfor, to remove Ord. 1253-86 from the table. There was no public comment. VOTE: Motion passed unanimously by roil call vote. Atty. Rogers explained, he declared a conflict in this matter. He asked Atty.. Dolifka to take his place at the table at this time. ATTY. DOLIFKA TOOK THE CHAIR FOR ATTY. ROGERS. Councilman Measles asked, what happens if we do not pay $66,000 by April 19? Atty. Dolifka replied, the purpose of bringing to Council is that by April 19 the State forecloses. The purpose of this is to avoid additional costs. There will have to be two foreclosures. Do you want a saving of cost and fees for first and second foreclosure? if you do nothing it will not jeopardize your position. As long as we pay those before foreclosure you are okay. $5,000 each foreclosure, a total of $10*000 saving. Councilman Measles asked, any costs of first and second if they proceed with the foreclosure? Atty. Dolifka replied yes. if we complete our foreclosure at July 8. If the State starts theirs --May 10 it will -be -August- before - these came to'sale. At that time the City will have to - - - — - - --pay-those- of -----costs- -and fees- of two foreclosures. -- If- - you do nothing you do not prejudice your position to pay off at a later date. You go to July S. Councilman Measles asked, there is no cost to them if they r 1" KENAI CITY COUNCIL - SPECILL MEETING - MINUTES APRIL 13, 1988 - 700 PM PAGE 2 foreclose? Atty. Dolifka replied, if you do it they will not. You will have far higher costs and fees than Ya what we will with this one. Do you want to pay this now to avoid legal fees and costs of two foreclosures? Or pay off at a later date and then pay fees? Councilman Measles asked, what would be the possibility of negotiating a buy-out at lesser cost? Atty. Dolifka .r. - replied, you should try but he is not overly optimistic. They have the City where they want, they are in total position of power. A similar situation shows this will show precedence. I have always been denied in the past. That is why the City was asked to .` subordinate. If you were in first and they were in ---- --- -=- = second and third, this is public money, the City would be betray public trust to do this. Councilman Measles -. .I asked, if the State foreclosed and the City did nothing, the State is first, what happens to the second and third? Atty. Dolifka replied, they continue second, so they do not care. Your foreclosure would be complete July 8, the City will own at that time, subject to first and second. If you do nothing and they foreclose Aug. 15, you will lose the Dairy Queen to them. You have three choices, if you do nothing more, you will lose the property. The Notice of Abandonment was distributed. Mayor Williams said the property is under City control at this time. The request is to approve $225,000 from airport funds to hold in position to be used to pay off $56,000 immediately and the remaining balance of first and second mortgage held by the State. We have begun foreclosure proceedings. If we do nothing with this, we will continue till we complete action. If we elect to let first and second foreclose in August, we face the potential of losing the entire property. If we force the State to move against us with foreclosure we could encumber additional debt of $7,000 to $10,000. Councilman Measles asked, what is the total of first? Atty. Dolifka replied, the principal balance of the first is $160,000; the principal balance of the second „ - is $20,000. Penalties would be accrued interest. The City is $330,000. Mayor Williams added, $56,000 is accrued interest. Atty. Dolifka added, part is = principal. Mayor Williams asked, is $225,000 sufficient to cover the debt? Atty. Dolifka replied, ,..;; $225,000 was on the basis of a call to H. Darnell. We thought it would cover it. Councilman Measles asked, _.-------- ..-- - -- - - if the_State .fore- losed and took the property, would "{ r• ..,,, , both the second and third have to benefit before they can Atty. Dolifka replied, the State -_foreclose? controls second. The -City-will find themselves -in -the- - - - -- -- - - �" same position as the debtors. The court recently held .,�.. that even if you start foreclosure, you can change. L JJ J n . KENAI CITY COUNCIL - SPECIAL MEETING - MINUTES APRIL 13, 1988 - 7:00 PM ;f PAGE 3 You have to decide if it is worth your time. Do we ". want to walk from this property and lose our $3301040 or pay for second and first. The City has a difficult i be th re in ISMa trust You have to posit on cause ey a p • look at it in a.different light. City Manager Brighton = said we cannot walk from that property. FAA will00 require we make payment to airport funds. Mayor f Williams asked, would it be improper, now that we have taken physical control, to at this point discuss potential for that property? Atty. Dolifka replied, one of the main reasons for notice of abandonment was when they abandon you have certain rights to take "--- =- --,-.. possession. You can discuss potential but it is not your property till July 8. if you discuss potential with other people, you have that caveat. If you pay it . all off now, they can step in and pay only their } arrears. You could talk potential but always with the condition that you may not be able to take title. f �° .- Mayor Williams asked, would we lose credibility if ___ information was passed to Council at this time with no strings attached? Atty. Dolifka replied from executive sessions I was directed to start action. The owners have abandoned. You are not in ownership, just f'4 possession. You have no rights to enter into contract. do, that be a different ball game FAA may will - subsequent to this. If you did nothing, and FAA would sue you for specific performance, you do not want that u to happen. Mayor Williams said he can see us putting $1.2 Million into this. Councilman Measles said not if. we pay off and take the property back. If we lose the - property, then we would have to pay fair market value, it may be less than $225,000 to pay off the State. City Manager Brighton explained he was indicating if we wanted to walk, we cannot walk. The information is, there are Dairy Queen operators in Anchorage that are extremely interested in acquiring this property. They - r have been in his office and he said he could not start negotiating a contract till this was settled. He said - he would notify them when he was in a position to talk to them. They are extremely interested in acquiring the property. Mayor Williams said we are not taking a J big chance in paying off and holding the property. The economic downturn is at or near the bottom. = Councilwoman Swarner asked, has the sales tax been filed? Mayor Williams replied he has been assured by the past owner it was taken care of. Acct. Parnell said they have always kept up with sales tax. VOTE, Adopt Ordinance: ' Motion passed unanimously by roil call vote. 2. Approval of Payment to State of Alaska, $56,314.50, for D31inquent Dairy Queen Loans 1 PW- KENAI CITY COUNCIL -SPECIAL MEETING -MINUTES ;r APRIL 13, 1988 - 7:00 PM f, .1 PAGE 4 ,'..� MOTION: Councilwoman O'Reilly moved, seconded by Councilwoman Swarner, to approve payment of $56,314.50 to the State. Motion passed unanimously by roll call vote. w Councilman Measles asked, when is it due? Atty. /= Dolifka replied, April 19. Mayor Williams requested the record show the bill will be paid. 3. Mayor Williams asked Council to review the resolutions 1..' _ distributed this date. He will take them to the Conference of Mayors meeting$ :... sj ADJOURNMENT: Meeting adjourned at 7:40 PM. Q%vV �T Janet Ruotsala City Clerk Apomm nt cvVC1L O A. ,