ITEM 1 - CALL TO ORDER

Mayor Burkholder called the meeting to order at 7:00 p.m. in the Council Chambers, Lakewood Civic Center South, 480 South Allison Parkway, Lakewood, Colorado.

ITEM 2 - ROLL CALL

Those present were: Mayor Steve Burkholder, Presiding

Jackie Herbst
Debbie Koop
Cheryl Wise
Jean Saum
Barbara Martin
Ray Elliott
Mike Stevens
Tom Booher
Carol Kesselman
Bob Murphy

Absent: None.

Others in attendance: Mike Rock, City Manager
Roger Noonan, City Attorney

Full and timely notice of this City Council meeting had been given and a quorum was present.

ITEM 3 - PLEDGE OF ALLEGIANCE
The Pledge of Allegiance was recited.

ITEM 4 - PROCLAMATION - JEAN SAUM DAY
Mayor Burkholder proclaimed October 24, 2003 as Jean Saum Day, honoring her tenure as a council member as well as her many other contributions to the City of Lakewood and the surrounding community.

ITEM 5 - PRESENTATION - COLORADO PARKS AND RECREATION ASSOCIATION
Barb Wisney, Executive Director of the Colorado Parks and Recreation Association, presented Mayor Burkholder and the City the following awards: 1) Columbine Education Award for the older adults fall prevention class, and 2) the Columbine Award for Parks & Recreation facility design for the Carmody Recreation Center Remodel.

ITEM 6 - PRESENTATION - COLORADO LOTTERY

Tom Kitts, Deputy Director of the Colorado Lottery, presented the following awards to the Mayor and the City: 1) Starburst Regional Award for Green Mountain Summit Trail, the Starburst Regional Award for the Charles Whitlock Inline Hockey Rink, 3) the Statewide Award for the Charles Whitlock Inline Hockey Rink, and 4) the 2003 People's Choice Award for the Bear Creek Lake Park Project (the only award of its kind).

ITEM 7 - RESOLUTION 2003-87 - APPOINTING A MEMBER TO THE LAKEWOOD HERITAGE, CULTURE AND THE ARTS COMMISSION

Councilwoman Koop made a motion to adopt Resolution 2003-87. It was seconded by Councilwoman Kesselman. Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 8 - RESOLUTION 2003-88 - RE-APPOINTING A MEMBER TO THE LAKEWOOD COMMISSION ON CULTURAL DIVERSITY AND HUMAN RELATIONS

Councilwoman Koop made a motion to adopt Resolution 2003-88. It was seconded by Councilwoman Kesselman. Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 9 - RESOLUTION 2003-89 (AS REVISED 11/27/03) - APPOINTING A MEMBER TO THE LAKEWOOD LIQUOR AND FERMENTED MALT BEVERAGE LICENSING AUTHORITY

Councilwoman Koop made a motion to adopt Resolution 2003-89. It was seconded by Councilwoman Kesselman. Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 10 - RESOLUTION 2003-90 - APPOINTING A MEMBER TO THE LAKEWOOD AD HOC YOUTH COMMISSION

Councilwoman Koop made a motion to adopt Resolution 2003-90. It was seconded by Councilwoman Kesselman. Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 11- PUBLIC COMMENT
No public comment.

The following Consent Agenda items were read into the record by the City Clerk:

ITEM 12. - RESOLUTION 2003-84 - ESTABLISHING CERTAIN FEES FOR THE CITY OF LAKEWOOD

ITEM 13 - RESOLUTION 2003-85 - FOR AUTHORIZING THE EXPENDITURE OF FUNDS FOR THE CARMODY RECREATION CENTER ROOF REPLACEMENT

ITEM 14 - RESOLUTION 2003-86 - AUTHORIZING THE CITY OF LAKEWOOD TO ENTER INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE COLORADO DEPARTMENT OF TRANSPORTATION (CDOT) FOR THE DESIGN AND RE-CONSTRUCTION OF TRAFFIC SIGNALS AT: US 285 (HAMPDEN)/KIPLING PARKWAY; I-70/COLFAX AVENUE; SIMMS STREET/COLFAX AVENUE; AND KIPLING STREET/6TH AVENUE FRONTAGE ROAD

ITEM 15 - RESOLUTION 2003-91 - AUTHORIZING THE ENTERING INTO THE LAW ENFORCEMENT ASSISTANCE FUND CONTRACT

ITEM 16 - ACCEPTING MINUTES OF BOARDS AND COMMISSIONS

Lakewood Liquor & Fermented
Malt Beverage Licensing Authority September 11, 2003
Heritage, Culture & the Arts
Commission Meeting August 20, 2003
Heritage, Culture & the Arts
Commission Meeting September 17, 2003

Public Comment:

Michael O'Beirne - P.O. Box 260313 - Lakewood, Colorado
Mr. O'Beirne stated that the fee increases mentioned are the same as taxes. He stated that the pageantry used this evening was to puff his opponent up to justify his actions. There are now fee increases staring us in the face. The recreation centers are poor performers tonight; Carmody Recreation Center is in need of a roof replacement. The City continues to tax citizens, increase fees, and there are City facilities that do not supply services for all the citizens of Lakewood. They are providing services for a select few, an exclusive few, a unique few, a limited few, while the rest of the people pay for them. He stated he was outraged at the choreography this evening and believes we come together this evening for worthy events and he does not want to disparage the whole proceedings. Mr. O'Beirne stated that we have to be very cognizant of the fact that we have taken funds from a buried utility fund, paid by a developer into the general fund, to offset our losses. Now, we look again at the changing of the terms to again pad the books and make nice a bad situation.

Councilman Murphy made a motion to approve the Council minutes; to accept the minutes of Boards and Commissions; and ordered all ordinances introduced on first reading to be published in the Lakewood Sentinel with public hearing set for the date included in the ordinance; and ordered the adoption of resolutions, all of which were included in the Consent Agenda items introduced into the record by the City Clerk. The motion was seconded by Councilwoman Kesselman.

Councilwoman Wise had Item 12 pulled from the Consent Agenda and placed under Item 23 - General Business, for a separate vote by City Council.

Vote on adoption of the Consent Agenda with the exception of Item #12: 11 Ayes. 0 Nays. The motion carried.

The City Clerk read Items 17 and 18 into the record. Mayor Burkholder opened a public hearing on both Items 17 and 18 together.

ITEM 17 - ORDINANCE O-2003-28 LEVYING TAXES FOR THE YEAR 2003, TO DEFRAY THE COSTS OF MUNICIPAL GOVERNMENT OF THE CITY OF LAKEWOOD, COLORADO, FOR THE FISCAL YEAR BEGINNING JANUARY 1, 2004, AND ENDING DECEMBER 31, 2004

ITEM 18 - ORDINANCE O-2003-29 ADOPTING A REVISED BUDGET FOR THE YEAR 2003 FOR THE CITY OF LAKEWOOD, COLORADO, AND FURTHER ADOPTING THE ANNUAL BUDGET FOR THE CITY FOR THE FISCAL YEAR BEGINNING ON THE FIRST DAY OF JANUARY, 2004, AND ENDING ON DECEMBER 31, 2004, ESTIMATING THE AMOUNT OF MONEY NECESSARY TO BE RAISED BY TAX LEVY BASED ON SAID BUDGET SO ADOPTED, ESTIMATING THE AMOUNT OF MONEY TO BE DERIVED FROM OTHER REVENUE SOURCES, SETTING FORTH THE APPROPRIATIONS FOR EACH FUND

Public Comments:

Johan Cohen - 1208 S. Brentwood Street - Lakewood, Colorado
Mr. Cohen stated that he is the President of Lakewood Citizens for Open Space. He addressed the Looking at Lakewood budget. He asked City Council to reconsider suspending the publication, Looking at Lakewood. He stated that he told City Council over a year ago that they are improperly using the publication to promote the Visitors Center at a time when it had opposition from his organization. It was drowning them out. He stated he thinks the publication is used to counter some real opposition and that is not a proper use for the publication. He stated that, specifically, it contains errors. In one issue it refers to a Visitors Center exhibit stating that naturalist tours of Belmar Park also will be available which will highlight the Journal of Colorado Ornithology, naming the park was the best place to see in Colorado. The Journal of the Colorado Field Ornithologists is to what is actually refers. That publication said that Belmar Park is a popular birding area that is virtually an island in a sea of urban development. The park is an important natural resource and an excellent place to see both residential and migrating birds. Not the same thing. The article ended by saying that expansion and increased activity at the Heritage Center and Belmar Museum has also affected the environment. The new Lakewood City Commons and the new band shell near Weir Gulch will further reduce wildlife, particularly the nesting of the velvet kingfisher and the rough-wing swallow along the creek. The City did a bit of misreporting at this point. Finally, the information that the publication did not give was the stealth opening of the Visitors Center. Mr. Cohen stated that when he spoke to Nina Johnson the day before the opening of the Visitors Center, she said it was an invitation only event, yet it included the whole City Council and the Mayor. If you are going to have the whole City Council and the Mayor, you must have a public meeting. He stated that he took full credit by bailing City Council out of this possibly illegal activity by crashing the event. At some point the City is going to need a PR publication, but it should not be used to drown out the competition. He urged City Council to suspend the publication and take a year to determine what Council really wants to do with it.

Mayor Burkholder closed the public hearing.

Councilman Murphy made a motion to adopt Ordinance O-2003-28 on second and final reading. It was seconded by Councilwoman Kesselman.

Councilman Murphy stated that City Council discussed Looking at Lakewood at the program budget review study session held in August. There was a recommendation to cut back the number of issues and Council resoundingly did not accept the recommendation. It is the one vehicle that constituents enjoy receiving and he stated he is responding to that by supporting it at its current level.

Councilman Elliott stated that it is not the only form, but it is the number one form of communication that citizens look to regarding issues in Lakewood, per a citizens' survey. City Council actually increased the number of issues because it is used so much by the public.

Councilwoman Wise stated that citizens let her know how much they appreciate the communication they receive in the publication. She is supportive of keeping the publication ongoing. She stated that citizens continually tell her how much they enjoy that connection with the City. She stated she had been a member of the Screening Committee for the four years she has been on Council and applicants for the City's Boards and Commissions continually tell her that they received notification of an opening through Looking at Lakewood. The volunteer hours received far outweigh the cost to publish the newspaper

Roger Noonan stated that in regards to the issue of open meetings, there is an exception in the State Statutes about open meetings in regards to social gatherings, but could not quote the exact context of the law.

Vote: 11 Ayes. 0 Nays. The motion carried.

Councilman Murphy made a motion to adopt Ordinance O-2003-29 on second and final reading. It was seconded by Councilwoman Kesselman.

Councilman Elliott stated that due to the contact he had today in relation to Item #18, he made a motion to amend Ordinance O-2003-29 be deleting Section 1 of the ordinance. It was seconded by Councilwoman Herbst.

City Manager Mike Rock stated that he is both surprised and disappointed since Council unanimously agreed to this section of the budget. We depend on our employees to effect savings and those savings are, in fact, what builds our fund balance. They have performed very well, under very difficult circumstances. As we've constricted the available funds, we have not constricted the service demands. We have people working very hard to provide services and to save funds. Those employees, based on the Council's unanimous direction at the time of the budget study session, have been working doubly hard to find areas of savings, and if they achieve those targets, they would be eligible for merit-based, not automatic, but merit-based increases. Lakewood is the only Jefferson County entity even considering a salary freeze. It would be unfortunate, if we told our employees, who have worked so hard for us for so long, that we don't recognize that, or appreciate it, and somehow we've reversed a decision the night of the second reading of the budget. I think that would be a major disappointment to our employees. I think it also becomes a recruiting issue. As we try to recruit to fill positions, whether they are police agent positions, or whatever those positions might be. The implementation of a merit-based pay plan was done at the direction of Council in 1992. While employees understand, if the funds are not available this year, that they would not be eligible for an increase, they have also been led to believe that if they achieve additional savings and are able to provide a higher fund balance, that they would not fall behind their colleagues in other local governments. I would ask you to very seriously consider this because these are the people who are out there day and night providing services. I understand if the funds aren't there, but what we're saying is, with this change, even if the funds are there, that they may not get an increase and I think that throws the whole budget process open at a very late date.

Councilman Stevens stated that the fund balance would have to exceed that $900,000 figure to trigger the pay raises for the second half of 2004; the City would have to exceed that $900,000 figure. Is it safe to assume that the $900,000 figure is in effect, a cap on the total possible raises that could possibly be granted?

Mike Rock stated that Councilman Stevens was correct. It roughly equates to a 1.75% increase in salary if it were spread evenly across the board. It is not spread evenly because the City is on a merit-based system. To the extent that the fund balance overage exceeds that amount, then the rest of it is part of the fund balance.

Mr. Rock stated that when the salary freeze was proposed as a way to help Council achieve a fund balance that is double the amount in your policy. Council policy is 5%. We proposed the freeze to enable you to exceed 10% in the fund balance. That may have been a mistake because it has created the appearance that merit-based raises are discretionary rather than something that is inherent in our system. The last time the City did a salary freeze was in the 80's. It took the City three years to make up that amount, because over time we have to remain competitive. We have already seen some turnover. I think for employees to see that if they achieve certain standards they are eligible for an increase, is something very different to say that they may not be eligible at all, depending on an unknown political circumstance.

Councilman Stevens stated that we ask our employees to achieve this budget goal, if you will, and then as a reward, we're only saying, that you might, if you're lucky, receive a raise. He stated he has a problem with that.

Mr. Rock stated that the motion is to delete that section and therefore there would be no provision for merit-based increases. Employees will still get an evaluation because we do that to ensure consistent performance, but they would not be able to receive an increase.

Councilman Stevens - So the way this is written right now, we have a cap, we have a figure, we have a percentage rate, and we have a trigger that causes this to go into effect, so there really is not any uncertainty or ambiguity in the way this is written.

Mike Rock - There is not.

Councilman Murphy stated that this proposal for a wage and salary freeze is both very unusual, in the sense that no one else in the County is doing this, and very fiscally prudent. What we are doing for the employees is setting a very specific goal. If you accomplish savings of this amount, then you receive a raise for the last part of the year.
I think that is very reasonable and very prudent and I strongly urge everyone to vote against the amendment.

Councilwoman Kesselman - Urged Council to thing strongly about this amendment. One of the things that we have made a strong commitment to is the Lakewood staff to be sure that we reward those who are doing the job that we have asked them to do, and who have worked very hard to create some significant savings in the last few years. I would hate to see elimination of merit-based raises for those staff members who have worked so hard. I will not be supporting the amendment.

Councilwoman Wise - I am concerned about the outcome of this vote as well. What troubles me about this, and this issue was raised at the study session, but Council did not choose to delve into the policy implications behind this. We recently laid off employees in this City because of budget concerns. Because of that, our employees are now having to do more with less. What we failed to discuss when we were talking about this, is giving Council the opportunity to reinstate those individual positions as well, which would then take the added workload off the employees. I'm having trouble not supporting Mr. Elliott's amendment is that it does not give Council opportunity to come back and reinstate positions or programs that were eliminated. I would certainly entertain having this reviewed if we reach this $900,000 threshold. No way am I saying that the employees would not deserve the pay raise. I just think there are additional programs and positions that deserve equal attention at that same point in time. That is why I am supporting the amendment.

Councilman Booher - I believe in incentives and awards and that is a good way to operate. My concern would be if we were to strike this, is that it merits consideration. I don't think we should say that they are not eligible or that we reverse this decision. As I've studied, I have some concerns I would like to talk to you about. One, could we word it in such a way that shows actualy savings. As we all know, fund balances do not necessarily equate to additional savings. It is a result of many different things as a fund balance. Again, if Mr. Elliott were to put it in a way that this was not guaranteed, but would merit consideration and we put a date and time that we would look at this, and reconsider at that time and look at the whole picture again. At this time, that is something that I would give strong consideration to supporting.

Mike Rock stated that the fund balance is made up of a variety of components. I would certainly not say that $900,000 is absolutely going to be made up from savings. Partially, because these employees have been affecting savings for five or six years in a row. So, I'm not sure where the flex is there, but they are clearly part of that. Coupled with other efforts to help businesses along and do a variety of things, those all contribute to fund balance. What I am concerned about and I will be candid, I regret offering up this freeze in the first place. I thought it was the right thing to do because I thought it would be accompanied by the kind of things we talked about. Now, what we are doing is shifting it into a political arena, which depending on a whole variety of factors next year, including the composition of Council and whatever other things might be on everyone's minds, that the employees limp along not knowing whether they will have any consideration for raises. If we go the whole year without, we will eventually make it up, but it will cost the City money out of the budget and I think that creates a great deal of uncertainty. I fully appreciate the idea that, yes, we have eliminated some positions who were working very hard. I do not think the alternate solution would be to freeze employees' salaries and try to hire more employees at the same time. I think to put someone in that work environment knowing that someone got a job here because everyone else's salaries were frozen, is not going to be productive and trying to recruit employees into an atmosphere which either has salary freezes or has shifted the compensation program from what it has historically been, which is an administrative process guided by very specific principles. Ken has reviewed for you the whole merit-based pay system in the past. To shift that into a political arena, where maybe we will, maybe we won't, makes Lakewood a less attractive place to live, and for those very employees that we are so worried about keeping, because a number of you have expressed to me your worries about keeping certain employees, this is not the way to do it.

Councilman Booher - Would it be reasonable to set a place and time to review it and not necessarily, make it automatic this evening, but commit, saying that it does have merit and we do support this, but we would like to have the opportunity to come back and review it?

Mike Rock - The concern I have is that that is really what the budget is. That's what you do in your budget and so now we've taken this component out of the budget. We've taken out all the things we do in a budget. Out of all the things we do in a budget, street paving, snow plowing, police services, and we now want to take one segment out of that, and that is employee compensation. So we've taken the one group of people that we are going to rely on for the whole year to provide services and single them out and say we're going to adopt a budget in tight budget times, but on this one issue, we'll get back together and maybe we will, maybe we won't. Based on six weeks ago, there was no dissention. The proposal was, yes, let's do this, it makes sense. In six weeks, something has changed and so I think for employees in reading that, they would say that it is now a political process rather than a merit-based process.

Councilman Booher - I felt at that time that there were a couple of things that were still left open that we were going to revisit as far as the budget. If the numbers were looking good, we might re-institute a couple of different programs.

Mike Rock - I think we re-instituted all the programs that Council asked for which included Looking and Lakewood and Code Enforcement.

Councilman Booher - The community programs where we were doing matching or supporting neighborhood projects.

Mike Rock - I think what the Council decided is that they would freeze that program for 2004 but re-instate it in 2005 and in fact, if revenues were really good in 2004, it could be revisited in the revised budget. My memory may not be clear on that.

Councilwoman Herbst - I want to follow up with what Mr. Booher had to say. I'm not sure that exactly where we left off with the neighborhood participation program. I know that I personally voted against eliminating that program. For 2003 it was cut in the middle of the budget and in 2004. Councilor Kesselman made a comment that we made a commitment to staff and I agree. We have made a commitment to staff, but we have also made a commitment to the citizens of Lakewood and that is one program that we did not delve into in the budget session. There are a lot of open doors that were not closed during the budget session and I would support Mr. Elliott's amendment. I do agree with Mr. Booher that I think sometime we can come back and look at it. I see no reason why we can't.

Mike Rock - I'm confused. The budget is a give and take process. and you all went through two extensive budget sessions and I'm sure that every member of Council did not get every program they wanted, but, I am confused as to how we could be at this stage tonight, and take something that we had previous agreement to and take the people that we most rely on to provide the services and set them up on the tee box. I'll admit to being baffled.

Mayor Burkholder - This City has looked at historical trends and the direction it is going. This City, several years ago could see we were running into a problem on the fund balances at the end of the year. As you recall, in 2001, we cut $2 million out of the budget and reallocated $2 million. That still was not enough for economic downturn. We cut, in June of this year, the 2003 budget and then we further cut the 2004 budget. Part of budgeting is a difficult process. It is almost a year-round process here in this City. I will tell you this, we have complied, and staff has addressed, what we asked them to do in making sure our fund balances ended up in the appropriate manner. The purpose of a fund balance is to even out the years when we have slow downs, so we can maintain that level of service. By unanimous consent of this Counci, and we particularly mentioned this whole thing of creating a moratorium at our September 17th study session. We said this is the direction we're going. We again, brought it up two weeks ago during first reading, which you had the opportunity as a Council, to ask any questions that you might have. I look upon this as a contract with our employees. The only difference is between this budget and budgets in the past, is we pass the budget and then we have told staff to go forward and spend the money as appropriate for our staff. That's not a Council decision that is a policy decision for us to say what to do. It is an administrative decision for the City Manager and the department heads to move forward on that. We are the only City, as Mr. Rock said, that put a moratorium on this. Maybe what we should have done, is not do this, but we felt that was prudent. Let's see what happens the first half of 2004, and then we can certainly live up to the contract. As Mr. Stevens brought out, essentially there are triggers that are there. If we get to $900,000, the people that got us there are entitled to that and that is a contract to the people on staff. If they don't get there, they don't get anything. If there is any amount over that $900,000, that goes into the general fund. I feel we will be violating a contract that we have made and I am against this amendment. I do not think it is appropriate to do what is trying to be done here this evening after we have had numerous, numerous discussions on the budget, then in this 11th hour to come forward and try to change what we planned to do. This Council is the people who put together the 2004 budget. It is not appropriate to have next year's Council do this. We are required by City Charter to adopt the budget by November 1st. I would ask my colleagues here to vote against the amendment.

Councilwoman Kesselman - I certainly understand concerns expressed and trying to make sure that we are in fact, watching the budget and watching how we spend our dollars. Every year, mid-year, we have a commitment to review the budget, create a revised budget, and that is the time at which we might consider reinstating programs or doing other things, after we have provided the raises that was previously agreed on in our study session. If there are additional savings above that $900,000, maybe there are additional things that we can do this next year, but we will have to see. That is something that we need to review mid-year to identify whether or not we are able to do those things. We can have discussions at that point. Right now, we need to move forward.

Councilman Stevens - I think the most valuable asset for any organization, any company, the City, truly are its people. Everybody on Council is very much aware on how extensive the City surveys to make sure our salaries are in a competitive range for our staff. My fear would be that, if we ask our staff to perform at an extraordinary level, and aren't willing to make a commitment back to them, that sends a very valuable message, and one that I don't relish at all. I think loyalty goes both ways. If you expect employees to be loyal to an organization, I think the organization needs to be loyal to the people. I think if you're going to ask your staff to help you achieve something that is a pretty lofty goal in the first place, you need to be willing to say that you are willing to take care of them in that process. They need to be rewarded in that effort. I worry about the message this sends. I worry about the possibility of additional costs in having to acquire new positions, if we have people leave. There is quite a bit of cost in that. I am not going to be supporting this amendment. I would encourage the rest of Council to do the same.

Councilman Elliott - I would like to clarify a few things since I'm the one that proposed this amendment. Number one, I am not saying that there will be no increases to the staff in 2004. What I am saying is that there will be no automatic increase. Let me explain why. At the end of 2002, the general fund balance was $13,359,000 approximately. Based on a revised budget for 2003, we will have a $8.8 million fund balance, a decrease of $4.5, almost $4.6 million. With this automatic increase included, what happens if the current economy that we are experiencing today, is the same economy that we have in 2004? Where the City is in a problem situation where our revenues are not what we anticipate them being. We just granted an automatic increase to our employees. Am I saying there will be no increase to employees? Absolutely not. Do I think it needs to be revisited? Absolutely.

Councilwoman Koop - I will not be supporting the amendment to this. I see that we have made the commitment to our employees. They are wonderful employees. They have created a lot of savings in the last few years for us. I think we should stick to our commitment and I think Councilor Stevens and Councilor Kesselman and Councilor Murphy have all said it eloquently and there is not much more for me to say.

Councilwoman Saum - I want to make it perfectly clear that I have nothing against paying employees the salary they deserve and our employees deserve the very best salary that we can give them. As far as discussing this issue, it came as a surprise to me, kind of at the end of our budget session, and I apologize if I just didn't keep up with things, I had understood we were going to have a cap on salaries the whole year of 2004. At the last minute, it was kind of thrown in, that at the middle of the year we would kind of look at it and go ahead and take the freeze off then. I didn't think we had an opportunity to really discuss it. This is maybe where I should have held up my hand and asked if there would be an opportunity to discuss this some more. Yes, we worked out the budget. We spent a lot of time on it. We agreed to it. I think that one issue still had not really been resolved. I see nothing wrong with revisiting this in six months when we have a much clearer picture of our financial situation at the City of Lakewood. I will go along with that.

Councilwoman Martin - I am one of these people that see good points in what everyone has said this evening. Personally, I was in favor of not eliminating Section 1 but amending it. I think we just missed the boat. I think as a Council, we should have paid attention to what we were saying back in September at the study session. I agree with Ms. Saum, we should have discussed it further. We had an opportunity two weeks ago. I'm making an excuse for myself because I was out of town, was not here, did not see this information until this weekend and that is when it looked strange to me. I took the time to talk with staff today and I do feel we would be doing a great disservice to our employees to not go with what we had said we were going to do and this is not the time to change it. I know we could make amendments and we could do a lot of things and I was certainly in favor of that. I also have to say, I'm very disappointed in my fellow Council people who asked me to represent them and they are not willing to take my decision on this and that part, I am disappointed with, but I will not support this amendment.

Councilman Murphy called the question.
Vote to cease debate: 10 ayes. One nay (Booher)

Vote on Amendment: 5 Ayes. 6 Nays. (Koop, Burkholder, Kesselman, Stevens, Murphy, and Martin). The motion failed.

Vote on Original: 11 Ayes. 1 Nay (Herbst). The motion carried. The Ordinance was adopted.

ITEM 19 - ORDINANCE O-2003-30 - AMENDING SECTION 2.21.015 OF THE LAKEWOOD MUNICIPAL CODE RELATING TO THE EXPIRATION OF THE TERM OF MEMBERS OF THE JUDICIAL REVIEW COMMISSION

Public Comment: None.

Councilman Murphy made a motion to adopt Ordinance O-2003-30 on second and final reading. It was seconded by Councilwoman Kesselman.

Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 20 - ORDINANCE O-2003-31 - AMENDING SECTION 1.17.060 OF THE LAKEWOOD MUNICIPAL CODE RELATING TO THE EXPIRATION OF THE TERM OF MEMBERS OF THE VICTIM ASSISTANCE COMPENSATION BOARD

Public Comment: None.

Councilman Murphy made a motion to adopt Ordinance O-2003-31 on second and final reading. It was seconded by Councilwoman Kesselman.

Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 21 - ORDINANCE O-2003-32 - AMENDING SUBSECTIONS 8.14.060 B.3. AND B.4., 8.14.090 B., D., E., G., H., I., J., 9.80.090 B., C., D., F., G., H., I., 9.85.060 B.4. AND B.5., 9.85.090 B., C., D., 10.66.300 B. AND 10.66.310 A. AND D. OF THE LAKEWOOD MUNICIPAL CODE RELATING TO ADMINISTRATIVE FEES

Public Comment:

Michael O'Beirne - P.O. Box 260313 - Lakewood, Colorado
Mr. O'Beirne - Was a report emerging that showed a comparison of previous fees and the relative new fees that are emerging for citizens analyze? This is what I was referring to earlier. I would like to know the assessment of those fees that are staying the same, those that are change, and the relative net to the City of the increase in fees. Thank you.

Public Hearing was closed.

Councilman Murphy made a motion to adopt Ordinance O-2003-32 on second and final reading. It was seconded by Councilwoman Kesselman.

Mayor Burkholder - When I was on Council, I think Jean Saum and I were the only ones on Council at that time, we would periodically look at fees and they were huge huge increases at that particular time, comparatively speaking because these might not have been increased for several years. As a matter of policy, it was decided to review these every year and increase them based upon operational costs. That's essentially how this comes about.

Councilwoman Wise - There is a little bit of similarity between this and Item #12, which I asked to be removed. I do plan to support the passage of this ordinance. I want to point out that some of the reasoning for that is that in this particular ordinance, these increases in fees are being passed on to situations as a result of extreme cases. Where the City has repeatedly worked with violators and we have absorbed an inordinate amount of the costs on this and so I think it is very appropriate, without further explanation from staff on the need for the increases in fees on this. I wanted to clarify why I will want further explanation on the other resolution when the titles of these have some similarities. I do plan to support this ordinance.

Councilman Stevens - I do plan to support this and to answer Mr. O'Beirne's question, it looks like an approximate 4% increase and it would be a range from roughly $4 to $19 in higher fees identified for repeat violators who are billed for clean-up in zoning matters. I will be supporting this.

Councilman Murphy - In North Lakewood and East Lakewood, the hot button right now is code enforcement. Anything that gives our Code Enforcement Department any arrows in their quiver, including extra money, to help solve some of these problems, I am very much in favor of.

Councilman Elliott - I think one other thing that needs to be pointed out in relation to this ordinance is that we have added an additional Code Enforcement Officer to the City, because not just in Bob's Ward 2, when we go and look at the most requests that are most demanded service in the entire City, this is by far the most requested service: junk, rubbish, inoperable cars. We deal with that on an everyday basis and we still are not beginning to pass along all the costs that are incurred for us as a City to enforce those issues and I think it is the number one issue throughout the entire City, and definitely up in the Ward 4 area. Thank you.

Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 22 - ORDINANCE O-2003-33 - AUTHORIZING THE CITY OF LAKEWOOD TO ENTER INTO AN INTERGOVERNMENTAL AGREEMENT WITH THE MOUNT CARBON METROPOLITAN DISTRICT AND THE TOWN OF MORRISON

City Manager Mike Rock - This agreement covers the area generically known as the Rooney Valley, which is located in both Lakewood and Morrison. We have worked with the Town of Morrison and with various property owners in the Rooney Valley for some time to try to address the issues in the Rooney Valley. The primary thing we accomplished is we developed a master plan that will guide development, both in Morrison and in Lakewood. We therefore, have a coordinated approach and don't have two entities competing against each other within the Valley. That predicts land use. There is a joint governing board, then developed through an intergovernmental agreement that balances the interest of the two communities. That intergovernmental agreement also addresses how we'll provide services; how police, fire, streets, etc. will be provided.

Then, in addition to that effort, we have been addressing the Mount Carbon Bankruptcy for some time. Mount Carbon is a special district that's formed. It's not unusual. Lakewood actually has a number of special districts. Special districts are usually formed to provide utility services and in some cases, some additional services in an area. The Mountain Carbon District has been in bankruptcy for some time. They proposed a bankruptcy reorganization plan that the City of Lakewood and the Town of Morrison both believed was not in the public interest. The City Council, a number of years ago, authorized the City staff, in cooperation with Morrison, to fight against that bankruptcy plan because it created an inordinate amount of debt; created a substantial burden on current and future property owners; and, we believe, provided an unjust enrichment to the plan funders. We were successful in winning that fight in court. It was an expensive fight and it was a long fight. Part of what we represented to the court, at the time, is that we believed that a better plan could be developed. We in fact, told the court, that we would come back to the court, with a better plan. So in the intervening years, Lakewood and Morrison, along with area property owners, worked on a new plan. That new plan was proposed over the opposition of the Mount Carbon District. Mount Carbon District did not support that plan. In discussions with Lakewood City Council and Morrison, we believe it was a good plan.

What we are discussing tonight though, is not the plan. The plan has already been proposed. It is actually Lakewood's plan. It has been proposed to the courts and the courts have approved it. What we are now dealing with, is how to implement that plan and make sure that plan is implemented consistent with what the bankruptcy court proposed. We believe that the plan and the intergovernmental agreement protect the public interests and protects the interests of current and future property owners. It places new restrictions on the District. The best way to look at the agreement being considered, is that it is a way to ensure that the District's powers are reduced from the powers that the District has today. It is a way to restructure existing debt. The District today has $77 million in debt and they are obligated to pay that debt. If you translated that to a mill levy, Randy Funk suggested, it would be a mill levy somewhere between 50 and 100 mills to pay that debt. That is not debt that they might sell, it is debt that exists today. In total, the authorized debt for the District, what has already been issued and why they could issue, totals $420 million. What the bankruptcy plan does is reduce that debt, authorized at $420, actual of $77 million, and reduces it to $16 million. Currently, the District has unlimited ability to levy a property tax to pay for that debt. The District is run by a board of directors who constitutes the voting block within the District. So, as opposed to Lakewood, where if we wanted to issue debt, we would have to have a citywide vote; the District has the ability to authorize and implement debt without further vote, which is how they got to $420 million.

What this bankruptcy plan and the accompanying intergovernmental agreement, does, is limit the existing powers of the District. It eliminates their power to do parks and recreation, and streets and traffic. It restricts their powers to only water and sewer. It reduces the debt authorization from $420 million to $16 million. It restricts the mill levy to 20 mills. The mill levy to pay for $420 million in debt would be 525 mills and I'm not suggesting you could issue that much. What normally is done and what the District actually proposed in their last bankruptcy plan is to sell debt at about $0.10 on the dollar; $420 million would still be $42 million in debt. In requires that the District only use its mill levy to pay its debt and provides for a small operating budget. It limits tap fees and in fact, restricts those tap fees to the average of taps charged in surrounding areas. It provides alternatives to property owners so that if they do not wish to receive water and sewer service from the District, they have the ability to receive it from other providers. There are some time constraints on this. There are bondholders who wish to be paid, large and small. The City will be repaid approximately $600,000 for the cost that it has incurred. However, the bankruptcy plan also has a time limit which expires if it is not implemented within a period of time.

There are two components: One is the bankruptcy plan that is already authorized and approved by the court. It is essentially Lakewood's plan. Next, is the implementation of the plan. What is being proposed is an intergovernmental agreement that has already been approved by the Town of Morrison; already approved by the Mount Carbon District; and only awaiting Lakewood's approval. I know there is concern about authorizing or approving new debt. This, in every aspect, restricts the powers of the District. It is our plan. It is a plan that has been authorized by the City Council and promoted to the courts. Now is an opportunity to implement the plan. We believe it is in the public interest to do so. There was a question as to why the City Council had not received a copy of the IGA. I don't believe City Council has ever received any intergovernmental agreement prior to adoption. We can make copies available to you.

Councilman Murphy stated that speaking as the Council Representative and one of three Lakewood Representatives on the Rooney Valley Joint Project Review Committee, comprised of three people from Lakewood and three from Morrison, that oversees development in the Rooney Valley; this is an important, essential, and logical next step that we have been waiting for for the three years that I have been on the Committee. I congratulate Mr. Rock and the attorneys for negotiating, what is not just a good deal for Lakewood, but a very good deal for current and future property owners.

Public Comments:
None.

Councilman Murphy made a motion to adopt Ordinance O-2003-33 on second and final reading. It was seconded by Councilwoman Kesselman.

Councilman Stevens - There was a previous plan that had gone before the bankruptcy court, which was quite onerous and we all held our breath, hoping that that plan was not approved. Fortunately, it wasn't. Under this IGA, if I understand it correctly, it makes the District, the Town of Morrison, and the City of Lakewood, and not the County responsible for the implementation and enforcement of the plan, approved by the bankruptcy court.

Mike Rock - There are three options, under what the bankruptcy court agreed to. One, is a modified service plan. The only entity that can modify service plans when a District encompasses more than one municipality is the County. The County looked at it and decided, that since they were not a party to negotiating the agreement and they have no land in it; they preferred we did it under an intergovernmental agreement, because they knew that option exists. That is why the County passed on it. The second option is an intergovernmental agreement. The IGA does everything that the amended service plan would do. It sets limitations on the powers of the District; it provides remedies if any of the parties don't perform; it provides time constraints; and it provides alternatives. The third option, if we fail to do one of the above, those requirements are then waived, the bankruptcy plan is then implemented but without any restrictions on the District. What that does, is allow the District to not only issue debt to pay its existing $77 million debt and issue that at $16 million, but there is no limitation on the ability to issue future debt. There is no limitation on the ability to get into other businesses. Essentially, the plan is implemented but without the safeguards. That is why we feel the intergovernmental agreement provides the best safeguards to everyone involved.

Councilman Stevens - And it provides more local control.

Mike Rock - More local control that the amended service plan would have and more local control than the waiver would have. We have the ability, for example, to withhold building permits. We have the ability to withhold approvals for installation of water and sewer facilities. We have the ability, essentially, to control how and when development occurs and if Mount Carbon fails to perform, then we can exercise those penalties.

Councilman Stevens - You mentioned the restriction on the District for the general obligation bonding to $16 million and it limits the District property tax levy to 20 mills. Where did that 20 mills come from?

Mike Rock - That is based on a fiscal analysis of what it takes to pay off $16 million in bonds within a reasonable period of time, based on property that has fairly limited value now because it's not developed. Then it was based on a projection. We looked at a number of alternatives; a very rapid build-out, a moderate build-out, and a low build-out. The 20 mills is based on a worse case scenario. There is a time limit. Even if it's not paid off by the end of a certain period of time, there are no further plans. The previous plan, actually, would have continued it in perpetuity. We calculated, that cost under the previous plan, to property owners would have exceeded $1 billion in the life of the plan. This is substantially less.

Councilman Elliott - One of the concerns I have when I look at this is the people that we are dealing with with this new amended service plan is the same group that brought forward the entire Mount Carbon Metropolitan District. Yet, we're negotiating with these same people. My question is, I understand that we have these handcuffs to try to stop them, but what if they don't? What if they disregard the intergovernmental agreement? What does it do? Do we wind up back in the same situation we are in today?

Mike Rock - The reason we are dealing with the same people is they are a duly constituted unit of government, just as we are. Just as someone might look at Lakewood City Council, Jefferson County Commissioners, Morrison Town Council and say, "I wish someone else was on there." Likewise, these are individuals who have essentially the same status in the eyes of the law as City Council does. We had considered at one point, trying to see if the Board could be dissolved. We explored that legally. It's just not possible to do. If we do not implement this plan, we do not do what we told the courts. When the courts denied the first plan, we asked them to deny it because we will propose a better plan. The courts approved the better plan over the objections of this Board. If this plan is not implemented, then our standing in court is gone and the Board has the ability to go back to court; in fact, will be forced to go back to court. The outstanding debtors, the people who hold $77 million in debt, are the ones essentially forcing the action. That ranges from very small investors to large investors. There is an indentured trustee. There are very sophisticated people involved and some smaller unsophisticated investors. If this plan is not implemented, the District would propose an alternate plan, of approximately $80 million in debt, rather than $16 million . We will go back to court. We will have probably expended between $600,000 and $800,000 over the last six or seven years in fighting bankruptcy plans. This was the best one because we were at least promoting our own plan instead of spending dollars fighting someone else's. If we fail to act, the District has an obligation to propose a new plan to the court. We lose our standing and we would be back in court fighting over it. Everyone shares the same concerns, being that this District has made some very bad decisions in the past. That's why the current plan is structured to put handcuffs on the District to limit them in several areas. The reason they keep proposing plans is two-fold; one, they have an obligation to pay the debtors and the court will make them keep coming back with plans; and no property can be sold or developed while it's in limbo. At some point, then property owners also start taking actions to force something. It is the same group of people, but we have a whole set of remedies under the intergovernmental agreement that essentially puts a great incentive, under the guidance of a federal bankruptcy court, to move forward. The bankruptcy plan is only effective if Lakewood and Morrison implement it. If we don't do our part, then the bankruptcy plan is null and void. I believe it expires a year from its approval and there are certain intermediate steps that need to occur in between them.

Councilman Elliott - Some of the concerns that I've got may end up going to the bankruptcy plan. I look at this funding mechanism and what's happening and you have this plan funder putting in $5 million to repay $73 million according to the memo I received. So for $5 million, he takes care of the $73 million and what we give to the plan funder is the ability to collect on $16 million. Everyone else is literally taking pennies on the dollar for this deal. Plan funder is getting three times the amount he is putting in. This may be part of this bankruptcy proceeding, but when I look at it I wonder why they would agree to doing that and allowing the plan funder, who is the guy who allowed this whole thing to go south in the first place, to now get three times the amount of money that he is putting in. I guess that is some of my concern in it. Logically, this makes no sense to me. We're rewarding bad behavior, where some people are taking it in the shorts, and this guy is coming out three times the dollar amount.

Mike Rock - When you get into a bankruptcy, you are always dealing with bad behavior. It is distasteful, but to step back, what we are doing, is putting constraints on a District that is currently unconstrained and has issued debt that is well beyond any logic. I'll ask Randy Funk (City Attorney's Office) to address the plan funder arrangement. Actually, the plan funder also holds a portion of the debt. It's not as sweet as it may seem.

Randy Funk - In regards to that particular issue, there are two main property owners, one of which has been involved with the District for some years. The other one has acquired its interest in the property and in the debt more recently, as the bankruptcy was being filed. Between those two property owners, they own a little less than $60 million of that debt. There is about $14 million, principal and interest, that's actually owned by the bondholders; about $7 million in actual principal of bonds, with another $7 million in interest on that. Then there are some other creditors that own about $5 or $6 million. Basically, the plan funder and its fellow property owner are in a sense, taking $60 million, converting that to a $5 million cash payment and then $16 million in bonds. So instead of getting a three-times value, they are reducing their paper value by about 90%. They are actually giving up a lot of paper. It's relatively worthless paper, but that's the exchange.

Councilman Elliott - Once again, because this is in Mr. Booher's and my back yard, I've got concerns about what this means because we have a large residential development and businesses that will be affected as well. I heard Mr. Rock say there will be a mill levy that these people will be paying, property taxes to really pay that debt. Yet, there is no services that they will receive for that debt they are undertaking. Can you explain that whole arrangement? It's kind of taxation without representation. It's an issue to me. If you're paying taxes, what services are you receiving for those taxes? Part of it is bad behavior that we've got going into the bankruptcy.

Randy Funk - The 20-mill levy is a capped mill levy to pay the $16 million of exchange bonds. Right now, the debt, as it was noted, is $77 million. Based on the value of the property, there would be hundreds of mills that would have to be imposed to pay that debt. Thus, they are in bankruptcy. There are some facilities out there that are in disrepair. They need to be repaired. We've been shown that this District does not have very good ability to do that. Therefore, they have been limited in providing only water and sanitation services which they do have some resources to provide. They will not be providing streets or any of those services. That's part of what this IGA does, is limits their ability to do some of those services. Some other entity could come in and provide those services in the future, but yes, there will be a 20-mill levy for the past improvements, such as they may be, that have been installed. That is just a debt that will have to be paid by the property owners at some point.

Mike Rock - Without question, it is a complicated deal and we have worked on this for years. There is no alternative that would provide a zero mill levy to the properties. The debt is an obligation of the property. What we can assume is that the property value is somewhat discounted because of the burden of the bankruptcy and there are no existing property owners, at least of the Mom and Pop type. This is bare ground so everyone coming into this property is going to have the same opportunity. The last debt was $200 million and we've come down to $16 million. The mill levy was at 37 and we've come down to 20. We can't get it down any further. There is no room on the margins to make it any better. One thing I am comfortable on is there is no unjust enrichment to the people who created the problem. They are there and they have a District Board, but we took a plan that did provide unjust enrichment and we've really created one that passes the smell taste. Everyone congratulated the parties for tightening this down so much. Again, bankruptcies are distasteful, but this is as good as it gets. What I wouldn't want to be doing, is be back here two years from now, $300,000 later explaining to you why a 27-mill levy would make sense. It won't go down because the interest costs are rising on the property. You can't make the math work. It can only go, unfortunately, in the wrong direction.

Councilman Elliott - We're looking at a 20-mill levy to pay the debt back. On top of that for the operation of the District, which I understand is going to provide water and sewer, an additional potential of 17 mills. When you combine those two, you're looking at 37 mills. Just to give the public an idea what the concern is on this, is the average homeowner's paying 4.711 mills. This in reality is seven times the mills that an average homeowner would pay. Obviously, one of the concerns that you addressed, Mike, is that as people are buying this property, it is going to be burdened with a significant increase in the property taxes that will be paid. Once again, for no particular purpose, other than to get this thing moving along, to pay off the debt that has been encumbered for really no benefit in service, with the exception of the water and sewer piece.

I heard it from you, Mike, now I want to hear it from the attorney. Is there anything else? Would there be any other way with this plan, the possibility for a better plan or is this the best we can hope for in relation to the Rooney Valley and Mount Carbon District.

Randy Funk - The bankruptcy plan, as Mike noted, was approved by the court back in June. The bankruptcy plan adjusted the debt. It adjusted what the mill levy would be, what the exchange bond amount would be, the $16 million , and many other provisions. What it didn't do was dictate how the District operates going forward because a federal court cannot interfere with a local government's operation. We've had to follow this process, that Mike described to basically restrict the ability of the District going forward. We negotiated that as part of the bankruptcy plan. We required the District to basically have an amended service plan under the bankruptcy plan or that Lakewood and Morrison waive that requirement. We do not want to waive that requirement. Because Jefferson County did not approve the plan, we need to use this mechanism of the IGA to be able to place those restrictions on the District; so that going forward it can't increase its mill levy, can't incur more debt, can't exercise powers beyond water and sewer. This really is, I think, at this point in time, the very best we can expect. The other thing that is important to recognize on that additional 17 mills is that's it's a maximum of 17 mills or $150,000. The property has so little value because of the bankruptcy. In large part, there is that ability to incur up to 17 mills which will be by these major property owners, just to operate the District during the first couple of years. We expect that once it changes hands, once it starts to develop, assessed values go up, then of course, that mill levy will drop significantly. That's the expectation.

Mike Rock - Unless you own the only house in the valley, I would doubt that you have to pay the 17 mills, because it wouldn't take very many houses to produce $150,000 at a much lower mill levy. One other important thing that Randy noted, we tend to focus on the original property owner and developer, but there are very legitimate people who have come into the Valley and made an investment and have worked very cooperatively with us to try to come up with a legitimate plan. Also, it's important that our neighbors in Morrison have a very strong interest in seeing this resolved, because this is a very big part of their community. It is a relatively small part of our community, but it is a very big part of theirs. They have really been held in limbo and they are in such a precarious economic situation, that they have relied on us to help work on their behalf. That's part of the work Bob has done that you will inherit before too long in the Committee.

Councilman Murphy - Speaking from the JPRC's perspective, this is a Board or District, that has proven over the years, that when left to its own devices, it has a certain capacity, for shall we say "mischief." The IGA is the final implementation step to limit that capacity for mischief.

Councilman Elliott - Obviously, given that this Board has had the possibility for getting into some "mischief," is there any possibility that the Mount Carbon District could be eliminated entirely from this amended service plan and somebody else could come in and fulfill their responsibilities?

Randy Funk - We attempted, through the bankruptcy process to try to reduce their powers to virtually nothing; other than paying off the existing debt going forward and that was not successful. As long as debt is outstanding, the District cannot be dissolved. The District has to stay in existence. What we were trying to do is limit its powers to virtually nothing. Because of uncertainly about water and sewer services in that area, they desired to keep that in effect, so it was the final compromise. If they are not able to provide that service though, property owners in Lakewood can opt out of the District and can receive service from elsewhere. There is pretty good flexibility for the property owners within Lakewood, if the District is not able to provide that water and sewer service within a reasonable period of time.

Mike Rock - It's kind of a good news, bad news deal. With the approval of the bankruptcy plan, and then its implementation through an IGA, that allows development to occur. As soon as development occurs, the Board will be reconstituted. The reason the Board exists today is that there is no development in the Valley, and so the Board members own a piece of property there. As soon as there is development, whether it's residential, office, or retail and new property owners exist; the new property owners can have an election and the Board of Directors can be replaced by individuals who have a property interest. It would be nice to able to do that at the front end, but you have got to get out of the bankruptcy and allow development to occur in order to have qualified electors who could serve on the Board of Directors.

Councilman Elliott - So as residents get built, they will be able to vote new members onto that Board and basically, if they need to replace the people that are currently there, have that capability.

Mike Rock - That is our complete intent. We did, as Randy said, propose the elimination of the Board, but they were not willing to give up their seats. Elections will be required as soon as development occurs.

Randy Funk - In a special district, electors have to be qualified to vote in Colorado and they have to own property in the District, or be married to someone who owns property in the District, or reside in the District. In that case, a single individual residing in the District or owning property in the District has as much voting power as a property owner who has hundreds of acres. I think that is a significant aspect. As the property begins to develop, then those who reside there and own property there will be better able to take control of the situation.

Councilman Elliott - I appreciate your indulgence. The case has been going on since before I ran for office four years ago. There have been a lot of discussions and it really helps to see it on paper. I have had a number of contacts and phone calls today which is why I am raising the issues. I want to make sure we're comfortable because this does affect Ward 4, because this will be a Ward 4 area, I'm assuming, based on where the residences will be. When the residential development happens, I want the buyers to do their homework.

Councilwoman Wise - To take us back to the beginning, if I understand right, really what we are voting on tonight is a technical requirement. The technical requirement is that in order to enact the existing plan, we need to vote to remove the required approval of Jefferson County Commissioners. I have to be honest, and say that when we first got the report that they had denied or declined our plan, that alarmed me. I wondered what they knew that we did not know, because I've heard some very disquieting grumbling about all of that. The devil is in the details and this has been very well explained. Randy, you just crystallized a lot of things tonight. I'm comfortable with this. For my own curiosity, if we can opt out of having JeffCo approve this now, why did we see it necessary to go through them in the first place?

Mike Rock - The way that special district law is set up, the easiest way to restrict the District is to amend its service plan. A service plan for a special district is kind of like a City Charter. It tells you what powers you have and do not have. Because the Mount Carbon District was originally created by Jefferson County, they created the original service plan; the District had very broad powers; and the first line of thought was to go back to where the District was created and restrict its powers. Jefferson County had a very legitimate concern in that they had not been involved in this and Lakewood and Morrison had been working on it for six years. They had had no part of it. They had no background. The District is wholly within the two communities and Jefferson County stated the communities could go through an intergovernmental agreement. That is actually what the commissioners' denial was based on. It was not that they found anything. We had a very lengthy hearing and they freely admitted that this was new to them, and it was our plan and we ought to do it. The intergovernmental agreement accomplishes essentially, the same thing. It was asking Jefferson County to catch up to five years of work for an entity that is not within their jurisdiction.

Councilwoman Wise - Based on everything that has been offered tonight, I can certainly support this. I do appreciate you taking the time to explain it to us laymen.

Councilwoman Koop - I found this discussion very informative this evening and would like to ask a question on behalf of the viewers. After listening to all of this, what would be the soonest they might see some development in this District.

Mike Rock - I think, realistically, 24 months. There are still infrastructure needs to be met. In the world of planning and development, that is really not a long timeframe.

Councilman Booher - I apologize for not being able to get with you today. I've been trying to get with my Co-councilman, Mr. Elliott. In the last 48 hours, there seems to be a lot of people coming forward with some pretty serious concerns and unfortunately, it's something that I've been unable to follow up with. It is from some people I respect within our ward and within the County. I would like to make a motion to table this for two weeks until we meet again. Respectfully, for me to do some more of my due diligence. I apologize for bringing that out of the blue, but in order for me to move forward and make a sound decision tonight, I would sure like to have that extra time. I know we've worked on this for a long time and I appreciate that. I just ask for a bit more.

The motion was seconded by Councilman Elliott.

Mike Rock - The reason we have this on emergency clause tonight is because we need to get this implemented. We have worked on it for an extended period of time. The Mount Carbon District is under the same time constraints for adopting a budget as the City of Lakewood. Absent the restrictions included in this intergovernmental agreement, the Mount Carbon District has the ability to levy those mills necessary to pay its existing debt and the ability to do other things. The problem with a delay, since this was really originally planned to be implemented in August, is that there are knowledgeable bond buyers lined up to move on this. These bonds are restricted to institutional buyers. Nobody can buy one that is not fully knowledgeable about the District's history and the risk associated with the bonds and therefore; hopefully, receive an interest rate commensurate with that risk. That bond sale has been lined up for some time and has been on hold pending the implementation of the intergovernmental agreement. The City of Lakewood is due to be reimbursed $600,000 for legal costs incurred by Lakewood and Morrison and Lakewood will receive the majority of that. That would be in jeopardy by delay. It's not that I'm trying to push this through on a high speed basis, but because we have worked so long on it; and because we have made representations to the courts; and because we changed strategies from the County adopting an amended service plan to Lakewood adopting an intergovernmental agreement, all of those things combined have put us in a position where we really need to move. It is why we put the emergency clause in, to speed it up even further. I appreciate that people within the area might have concerns. I don't think that anybody who owns property within the District, within the area affected by this, have those concerns. They have had ample notice. They have been to hearings. They've been represented by a trustee. For the people who are truly affected, those who own property, they are very supportive. Now if someone was considering that they might want to buy something in the future, and had a concern for that reason, then I think if we have an opportunity to inform. I'm not sure that in two weeks, I can provide you any information that I can't provide you tonight. I'm certainly happy to answer questions as long as we need to. I think if we delay, it puts our $600,000 in jeopardy. It delays even further, the period of time for the people who are owed the debt to be repaid. It misses the deadline for the District's adoption of its budget. We are able to meet with the two of you, or the entire Council, in future study sessions, but the plan has already been approved by the Court and will not be changed. The only issue is whether this implementation vehicle is best; and if we don't do this, would we allow the bankruptcy to be implemented without any restrictions on the District, which I think would not be good because of all the things we've discussed. We would be willing to meet with you, Tom. We could have a special session. But I ask that you act on this. We can do all the follow up you want after the fact.

Mayor Burkholder - Mr. Noonan, could you explain to Council the ramifications of a table.

Roger Noonan - I would like to get a clarification from Councilman Booher that might help the matter. His motion, as I heard it, was to table until the next meeting. What I would recommend is that the motion be to continue the matter to November 10th as opposed to the tabling language. If you table something, you don't normally table it to a date. Tabling requires the motion to remove it from the table.

Councilman Booher - I withdraw my motion.

Councilman Elliott - As the seconder of the motion, I agree to the withdrawal of the motion.

Councilwoman Martin - Just to bring back all the years in the past, I thought there wasn't any water available. So, why will Mount Carbon be allowed to provide these services in 24 months?

Mike Rock - There actually is water available. There have been issues of treatment and storage, but Mount Carbon does own water rights; and I believe have a current capacity for 400 taps, and the ability to provide more. There is actually a whole structure of how water treatment and sewer plants would be built. It has been the bankruptcy that has prevented the building of water treatment and storage plants, but there are water rights. In addition, a property owner has the protection, that if for whatever reason, the District didn't provide the water in a timely fashion, the property owner has the option of receiving water from Morrison or from another District. In this case, Consolidated would be the most likely provider. So we've built in protections, so that if something went wrong under one avenue of receiving water, there are a couple of others. There are water rights. It's been an issue of treatment and distribution.

Councilwoman Martin - Visualizing the map of Rooney Valley, I thought the north part was in Jefferson County, but perhaps Mount Carbon does not have anything to do with that.

Mike Rock - The Mount Carbon District is essentially Lakewood and Morrison; and then there is a piece of property that belongs to Jefferson County Open Space, which wouldn't be receiving services. I think there was one other parcel that was left out. The areas that would be served under this agreement are in Lakewood and Morrison.

Councilman Elliott - Why is it so critical that we do this now versus waiting two weeks from now? What is our hurry? I know this has probably been a very grueling process, but if we were to continue it for two weeks, I'm not sure I would be much smarter on it. I want to make sure my Co-councilor is comfortable and has his issues answered. How important is that speed issue. I know we've been delaying it. Why is the time to essential?

Mike Rock - As I mentioned, there was actually a bond sale proposed with an institutional buyer more than a month ago now. That has been put on hold pending the approval of the intergovernmental agreement. The first concern is that if we have a knowledgeable buyer who understands the risks associated and is willing to buy, knowing that we don't get paid and the debt holders don't get paid until the bonds are sold. Part of the reason for speed, is to keep on line a potential buyer so you don't have to go through all of the delay in an extended bond sale. That is really the primary concern. The secondary concern is that we are well behind schedule on the commitments we made to the court and to all the parties involved. What Mount Carbon has been pushing for is that we simply waive the requirement. In fact, Mount Carbon proposed to go back to court and make a proposal to the court, that because the amended service plan was not approved by Jefferson County, Lakewood and Morrison be required to waive that requirement. Our delay, was costing them the ability to sell the bonds and the land and was interfering with the orderly implementation of the bankruptcy. We went to court and asked the judge to wait because we are in the process of implementing this and asked for a reasonable period of time to implement the IGA. We did not want to be forced into the waiver. The waiver of course, implements the bankruptcy with none of the restrictions on the District. Another concern is that they do have to adopt their budget. They need to adopt it under the same time frames we do, which means their budget would have to be adopted over the next week or two. I really don't see any property owners in the Valley coming forward. I understand that other citizens may have questions out of curiosity, but existing property owners are represented and supportive. None of this is going to change the plan, the discussion is whether this IGA is preferable to a waiver. The amended service plan is out of the way. We could talk a lot more, but we really wouldn't change anything that affects the parties involved.

Randy Funk - Largely, the pressure is coming from the other parties. The District approved the IGA last week and has executed it, as have the main two property owners, whom we asked to acknowledge it and notarize their signatures. So that as we record this, their successors will be on notice that they concurred in what actions we're taking as the three governmental entities. We've received the signatures, by again, those two major property owners and the District today, as well as Morrison approving this last week at their meeting, subject to Lakewood approving it tonight. Everyone is on board with this. The other parties are pushing to have it done. The trustee is asking when their bondholders are going to get paid. We've got a lot of interested parties out there. As Mike indicated, there was a buyer for the bonds. The way this works is the plan funder will receive the exchange bonds, but that doesn't generate cash and there needs to be $5 million of cash. So instead of selling property, what the plan funder intends to do is to sell a portion of those bonds to an investment banker that has agreed to purchase the bonds, we understand. This will provide the cash which will then implement the plan. The bondholders will get paid. The City will get repaid. The plan will be implemented. This is really a key element and the District has been pushing and suggested that if we don't waive the requirement or proceed with this agreement, they will go back to court and seek to have that requirement removed.

Councilman Elliott - Right now we have an intergovernmental agreement with Morrison in relation to the development of the Rooney Valley and the sharing of revenues. In that intergovernmental agreement, there is an ability for either party, Lakewood or Morrison, to opt out of that agreement. Is there any way for Morrison potentially to opt out and single-handedly do the development. There is a piece of the property from Rooney Valley that currently is in the City of Morrison. Can they opt out of the agreement and go build upon that property?

Randy Funk - Not as I recall. I drafted that agreement as well and I don't recall any provision that allows them to opt out. The two Municipalities are bound together to move forward with that agreement. There is a provision that Lakewood is to provide the majority of the services initially and then be reimbursed. There is even a requirement that if we don't do that, there are provisions to handle that as well. We are both bound to that agreement and have restricted each other from striking out on their own. Each Municipality does the initial zoning or platting or whatever; but there needs to be this Joint Project Review Committee approval of a final development plan. There are three phases of that that have to be approved by the Joint Project Review Committee for any development to occur. After paying the costs, the revenues from that development are shared equally between the two Municipalities.

Mayor Burkholder - That intergovernmental agreement was agreed upon in 1999 and was signed by the Mayor of Morrison and myself in the spring of 2000. We have three members and they have three members and there are certainly safeguards that protect both Morrison and the City of Lakewood. Dick Plastino, Bob Murphy, and Ken Lloyd from the Planning Commission served on that Committee. That IGA was recognized as quite a unique and forward intergovernmental agreement.

Councilman Elliott - Is there a time constraint given to us by the courts in moving this forward?

Randy Funk - There's an interesting issue in bankruptcy court, when a plan is confirmed, then normally, it's simply implemented. If you think of a typical corporate Chapter 11, the debt is adjusted and the plan is implemented and so forth. In this case, because there are things that needed to happen post confirmation, such as issuing the bonds and having the amended service plan, and some of those things happen; the court with the recommendation of the various lawyers involved, didn't want to have a plan approved because then the District could not go back into bankruptcy and have it just in limbo. The Confirmation Order itself is effectively rescinded after a year if the effective date has not occurred. The effective date means the exchange bonds have been issued and these other steps have been implemented. The bottom line is a year from the date of approval, which I believe was June 19, 2003. This will unwind if in fact it is not implemented by that time.

Councilman Elliott - So in reality, in that year they have to have the plan basically funded or everything starts to unravel. So our real time constraint given from the courts is to have it done, have it funded within that one-year time frame.

Randy Funk - That's why we need to get this approved so they can then finalize the issuance of the bonds and then the payout and exchange happens.

Mike Rock - It is also fair to say that there is a degree of distrust on the Mount Carbon Board of Directors towards the City of Lakewood. We beat them in court once, then we took a plan to court on their behalf that they were opposed to. Then we asked the Court to dissolve the District and get rid of all the directors. It's not our normal working relationship with other governmental entities and there has been a distrust on the part of the Mount Carbon Board that somehow Lakewood would, at the eleventh hour, do something to hold this up. This would be one of those eleventh hour discussions because everybody else has adopted it. One of the consequences of delaying for two weeks is that they would probably go to court and we would go to court. We would win, but we would be spending more money and that's why I would really rather try to answer all the questions tonight. I think we don't gain anything and we expose ourselves to risk.

Councilman Elliott - Once again, I have to be honest with you. I'm not thrilled in any way, shape, or form with what is being proposed here. I would like to see the people that were involved in creating this mess, get virtually no money out of it. Unfortunately, the court has already ruled on the bankruptcy plan; and no matter what my thoughts or concerns are, the court has accepted that. I wish we didn't have to play with these people because I think there is going to be a burden upon the people that will be buying property and building buildings down in this area. Once again, I would like to caution the people as this development does proceed, to realize what you are getting entangled with, what that's going to mean from a property tax standpoint. Do your due diligence. Do your homework before you make a commitment on that property because you will have a significant amount of additional property taxes that you'll be paying. Hearing what I heard tonight, and the City's ability to answer some of these questions and understand more of what's going on with the plan, I am going to support this ordinance to go ahead and accept the amended service plan. Once again, it is in my backyard. I am going to be on the Joint Planning Review Commission. I once again, apologize to the rest of my Council mates, but I think it is contingent upon us as Council to really know what is going on and what the impacts are. Even though this isn't in your backyard; hopefully when there is something in your backyard I will show you the same courtesy that you've shown me tonight. Thank you.

Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 23 - GENERAL BUSINESS

A. - RESOLUTION 2003-84 - ESTABLISHING CERTAIN FEES FOR THE CITY OF LAKEWOOD

Councilwoman Wise stated that there is an implication that there is a shift in policy on how we assess fees. That is what I would like some clarification on. We increased the percentage of the cost of living to offset fees. Now, if I understand this correctly, even with that 4% cost of living increase previously approved, we still fell short of covering the cost of doing business. Has the policy become that all operating costs are to be absorbed and passed on to the user? It appears as though we are asking the users to make this a cash funded program.

Vince Harris, Manager of Development and Review. - The policy is the same as adopted in 1996. The fees collected do not cover all of the costs incurred for processing the development applications. Fees are generally made up in the building application process, after the development review takes place. Policy is not different. The fees now being proposed us to cover the cost of reviewing the applications at the front end of the process.

Councilman Murphy made a motion to adopt Ordinance O-2003-32 on second and final reading. It was seconded by Councilwoman Kesselman.

Vote: 11 Ayes. 0 Nays. The motion carried.

ITEM 24 - REPORTS
Mayor and City Council reported on their weekly schedule of events and their participation in various activities.

ITEM 25 - ADJOURNMENT
There being no further business to come before the Council, Mayor Burkholder adjourned the meeting at 9:40 p.m.

Submitted by,
Margy Greer, City Clerk

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