Cortland County Legislature

Approved Minutes of November 3, 2005 Special Session – 6:00 P. M.

 

Chairman Steve called the meeting to order at 6:06 p. m. and led the Salute to the Flag.

 

The Clerk called the Roll and all members were recorded as present except Mr. Cornell and Mr. Dafoe who were recorded as absent.

 Receive and File:

 Mrs. Tytler made a motion, seconded by Mrs. Brown, to receive and file a letter of complaint from Mr. Robert Fitch regarding Mr. Steve’s use of e-mail address on his campaign literature.

 Chairman Steve asked for discussion.  Mrs. Brown stated that using a county e-mail address on any kind of political literature is not acceptable.  She stated that as Legislators there is a responsibility they have, because of instituting this policy, which clearly states that it is not to be used for political causes.  When eleven out of nineteen Legislators feel that it is important enough to call for a special session to look into this matter she feels it is important for people to have their rights to discuss this. It is inappropriate, and removing it now, when it is a few days before the election serves no purpose.  She feels it is the Legislator’s responsibility to their constituents and to the other county employees to follow the policies and procedures that are implemented by them.  She stated that she thinks because of Chairman Steve using his e-mail address for a political purpose that the Legislators should be able to see the e-mails from his computer that he has sent or received since September.  Dr. DiGiovanni stated that to try to stay on point that the motion is to receive and file and he would like to speak to that.  He stated he feels uncomfortable that this body as a Legislature is potentially going to vote to receive and file what essentially amounts to an allegation – a complaint – and this body has a procedure to adjudicate complaints and that is to send them to the appropriate statutory committee for adjudication.  He feels they would be setting a bad precedent were this body to receive and file any complaint that comes to the Legislature.  He thinks the proper way for this to be handled is for this matter to be sent to Personnel Committee and after the vote is taken on whether to receive and file he would be more than willing to make a motion to refer the matter to that committee.  He would also make a motion that the Personnel Committee clarifies what is appropriate to be received and filed by this body.  He stated he thinks this body understands that the law calls for certain agencies and divisions of government to file reports with the Legislature on a certain timeline.  The Board of Elections and certain other agencies have to file reports and they are appropriate to receive and file.  A complaint letter from an individual with an allegation of a violation of County Policy to be received and filed at the level of the full Legislature without having had adjudication within the Personnel Committee, whose responsibility it is to draft and enforce policies seems to be jumping the gun and setting a very bad precedent.  He stated he was against receiving and filing and after we have that vote will make motions both on recommending that the Personnel Committee clarify or create a policy on what is appropriate to be received and filed and also to adjudicate the matter referenced in this document.  Mr. Armstrong agrees with Dr. DiGiovanni in that it needs to be looked at within the Personnel Committee and he also thinks the Ethics Committee that this body keeps talking about would be a good place for this to go in front of.  Mrs. Breed said that she is the Chair of the Personnel Committee and this complaint should go to that committee for review.  She stated she had placed a call to Mr. Fitch on Sunday and the call was never returned.  She thinks this is political grandstanding and that he really should have called back so this could have been placed onto the Personnel Committee’s agenda. 

 Chairman Steve stated he chose to receive and file this at this meeting and did not want to set another meeting because he did not want to set a precedent that complaints went to the full body.  He did pass out another complaint that was received tonight at both caucuses.  This has put him in a difficult situation with the thoughts that there might try to be a cover up of these complaints before the election.  He said the first time he heard of this complaint was from a news reporter –Patrick Ruppe – who asked what it was about.  Chairman Steve asked Mr. Ruppe if he had a copy of the complaint and after reading it, he then read the e-mail policy and realized it would be hard for any one person to make a decision on the appropriateness or inappropriateness of what had been done.  He then sat back and asked himself what he would do if this were a complaint about someone else’s use of e-mail.  Chairman Steve decided if it was someone else, he would ask them to stop and that is exactly what he did.  He immediately pulled the address off all of his literature and off the web page.  He then called Mr. Allen, who he knew was using his county address also, to make him aware and asked him to refrain from the use and he agreed.  He feels he took the corrective action.  He had talked to Mrs. Breed about looking at this at a special Personnel Committee meeting and also to review the e-mail policy for clarification.  When the Tobacco Securitization offer came available Monday and he decided to call a special meeting to handle that issue, he decided to add this for discussion.  He knows that everyone has a right to their opinion and he certainly does not want to be part of any cover up or scandal. He has his opinion on what the e-mail policy is and he does think it needs to be clarified because everything can be looked at as political.  He had to make a decision what to do and trying to avoid being looked at as trying to hide something, made the decision to address this as a receive and file.  Mr. Elston said he thinks the group is being asked to receive and file something that they have not received a copy of that from the Clerk of the Legislature. He is not sure what they are being asked to receive and file and therefore cannot vote on the issue.   Mrs. Brown said they were on the desks.  Mr. Elston said the one he has is addressed specifically to him.  Mrs. Brown said the Clerk had placed them on the desks today.  Chairman Steve said there are copies on the desks of what he had received so that everyone has the same one.  Mrs. Tytler asked for clarification as to what will happen if this body votes to receive and file?  If that is done will this not be referred to the Personnel committee to be looked at?  She would like to see this issue handled by that committee which she feels is the appropriate action.  Chairman Steve said Mrs. Breed has agreed to place this on the next Personnel Committee Agenda.  This is a political issue. There can be a special Personnel Committee called if that is the wish of this body.  He stated he does not feel that is necessary and this body needs to move forward.  The situation has stopped.  Mrs. Tytler would like to see the committee look at the policy and clarify as to appropriate and not appropriate use.

 Dr. DiGiovanni would like to clarify the reason why he was not in support of receiving and filing  is because this would set a precedent for dealing with complaints in the future. He said he thinks this needs to be handled in the correct way, which is within the committee structure.  If this is received and filed, what is to stop the letters that could be sent in the future at election time to each and every Legislator alluding to misuse or violation of some policy and requesting a special meeting by the full Legislature to deal with those?  His caucus agrees that this needs to be looked at and the policy needs to be reviewed and would like to see this referred to the Personnel Committee.

 Mrs. Brown stated that this is not alleged and that it is documented, so she does not feel that this complaint or any other constituent’s complaint should just die. That is why eleven of the members of this body requested that some action be taken by this Legislature and they were Republicans and Democrats therefore, she does not feel it was political.  She does believe it should go to committee for some action.  She does not feel that any other letters of complaints by constituents should be ignored either and she does feel this is a very legitimate complaint.

 Chairman Steve stated that it is proper for the Personnel Committee to handle this and not appropriate for the full body to have to call special meetings to act on these types of complaints.  He stated that before the complaint had even come out, it had been taken care of by his removing the information from the necessary places.   Chairman Steve said the County receives complaints by the thousands and this Legislative body cannot handle them.  He stated he has offered his e-mail files to anyone that would like to review them.  His office and his desk are open to anyone wishing to see any of his e-mails.

 Mrs. Brown stated that she feels this complaint is different from most, in that it involves one of the Legislators and that eleven members felt it needed to be looked at as a body.  Chairman Steve said the document that was signed and turned in by the eleven Legislators actually asked to violate the Sate Law. Mrs. Brown said it was not asking to violate the Law it was a misinterpretation of our own rules. Chairman Steve said he disagrees with that. Mrs. Brown said she was the one who did it; therefore, she knows it was not done intentionally to violate any Law. Chairman Steve said he has to deem these statements as being politically driven and not necessary for any resolution of this situation.  He knows that there are assertions of his abusing his power, but he also knows that all Legislators hold respectful positions here and need to move forward. Mrs. Brown said that in order to dispel all of this, all Chairman Steve had to do was make a public statement that it was a mistake or that he overlooked it.  Chairman Steve asked if it wouldn’t have been appropriate for the Minority Leader to approach him and ask how this was going to be handled when the complaint was received before going out and getting eleven signatures to call a special meeting. Mrs. Breed stated that Mrs. Brown just stated that she had a misinterpretation of the Law and wasn’t that exactly what this is all about, a misinterpretation of a policy? Mrs. Brown said she did not file hers; it was pulled. Chairman Steve said no it was not pulled, it was recorded and filed.

 Dr. DiGiovanni called the question.  Mr. Elston objected.  Chairman Steve said he has really been put in a touchy situation. He would like any and all discussion that is necessary that is going to be to the positive benefit for this County to be able to occur.  Mr. Elston said he has concerns that the letter that has been put onto his desk is not signed, therefore he is not sure of the validity of the document. Mr. Allen respects the concerns of Mr. Elston, however believes that this matter needs to be acted upon and moved on to the Personnel Committee.  He believes the motion on the floor is to receive and file and that needs to be acted upon.   

Chairman Steve said he also would like to move forward, but he does not want to be accused of not letting discussion to take place.  Mr. Willcox is a little slighted because he was not asked to sign any document.  He stated in regards to Mr. Fitch’s complaint, his feeling is that if it smells like a political trick and looks like a political trick, then it probably is a political trick.  Mr. VanDee asked Mr. Willcox if he meant the e-mail or the letter that he  was a little confused?

 Chairman Steve called the question with a roll call vote at the request of the body.

 With Mr. Allen, Mr. Behrenfeld, Mrs. Breed, Dr. DiGiovanni, Mr. Elston, Mr. Hartnett, Mr. McKee, Mr. Steger. Mr. Tagliente, Mrs. Tytler, Mr. VanDee, Mr. Willcox, and Mr. Williams voting nay, and Mr. Armstrong, Mrs. Brown, Mr. Ross and Mr. Steve voting aye with Mr. Cornell and Mr. Dafoe recorded as absent the motion to  receive and file a letter of complaint from Mr. Robert Fitch regarding Mr. Steve’s use of e-mail address on his campaign literature FAILED.

 Dr. DiGiovanni made a motion for this matter to be referred initially to the Personnel Committee with both a motion to adjudicate the matter that is raised in this letter as well as instructions to clarify the e-mail policy and the appropriate use of e-mail.  Mr. Allen stated he would like to second that motion.  Chairman Steve said he was sorry but he couldn’t accept that motion because the Legislature is under a Special Session and at this meeting the only matters that may be handled are what are listed on the agenda.  Chairman Steve stated he is sure that Mrs. Breed will make a statement that this will be taken care of and he is sure that this Legislature will make sure of that.  Dr. DiGiovanni said that he appreciates the clarification on the rules, therefore he is not making this as a motion but as a statement – that he would hope that the Personnel Committee would investigate and come up with a policy of what is proper to be received and filed at the Legislature.  Mrs. Breed stated that the Personnel Committee would address this issue at the next meeting.

 Mr. Williams requested to read a letter into the record and proceeded to read a letter addressed the Clerk regarding his e-mail address and use.  Chairman Steve said this would be handled as a communication and not acted on because of this being a Special Meeting.

 Resolution:

 On motion of Mr. Steve, seconded by Mr. Allen, Agenda Item No. 1 was moved to the floor for discussion. Chairman Steve said that during the Tobacco Settlement, the Tobacco Corporation was formed by the County Legislature. By default as being Chairman of the Legislature, he automatically becomes President and the Treasurer of the County automatically becomes Treasurer of the Corporation with other appointed officers.  The intent of this resolution is to bring this decision to the full body for its action.  The reason for the Special Meeting is this needs to be acted upon immediately. Mr. John Shehadi, our financial advisor, is here and will be available to answer questions after a brief explanation. This body has the same opportunity that they had before them in 2001 for an upfront settlement of future monies that are due to the County by the Tobacco Settlement.  In 2001, the Legislature had decided to participate in Securitization, which allows them the same opportunity now, and extend the period for ten additional years.  The discussion that happened at the Board Meeting is there are three options for the County to make, they can go for the high estimate or for the low estimate or do nothing at all.  Chairman Steve said there were packets in front of the Legislators and he reviewed them highlighting the years and the amounts.  If the County took the high estimate, the County payments would not start until the year 2044.  If the County took the low estimate, the County payments would start in 2033.  He said there is a column showing the high estimate, a column showing the low estimate, and a column if they chose to do nothing.  He said there have been discussions about making structural changes and capital improvements for the County.  The County has very little bond debt that this could be used for and the interest rate on that is favorable already.  This could be used to offset the bond debt that would be needed to build a new building such as a health complex or any capital improvement program that was plugged into this program.  By off setting the debts of doing some major capital programs, there could be substantial savings to the County for the future. The purpose of this money is to educate the public about not smoking and it can be used for capital programs.  There are many avenues that the County can use to leverage this money to the best advantage for the County and also if the County changes its mind in the future there are changes that can be made.  There are many numbers in front of you and none of us has a crystal ball to know exactly what will happen in the future, however, decisions have to be made now on the best estimates we are able to look at.  The Tobacco companies are double A bond rated.  The likeliness of them going away might not be an issue but it is something to be weighed.  The rate of this is 6.5% and the County is able to bond at 4.5% right now so there is a cost associated with this.  There are criteria of how the money has to be spent and timing on that.  There is a way in the future to refund the County out of the pool if the interest rates on bonding drops drastically.  If any buildings are built with the Tobacco money, there can be no private agencies located in them, so the County could not rent space out until the bonds were retired.

 Chairman Steve invited Mr. Shehadi come forward to answer any questions.  Mr. Shehadi said there is no easy answer here, noting he was here in 2001 when the last decision was made.  In 2001 the County was receiving the Tobacco money directly into the budget so making the decision to take a lump sum payment meant forgoing the money being generated into the budget in lieu of an upfront payment to retire County debt.  Today’s decision is a little different on the budget impact because the County will not see any residual payments until 2016, therefore current budgets are not impacted.  He explained why there was a change in the payments being sent back to the Counties.  All the numbers in front of you are based on reports done with expectations in the future and no guarantees.  Forming a pool of Counties allows for opportunities that would not be able to happen on individual levels because of associated costs.  When several Counties absorb the costs, the possibilities are opened up.  The pool includes 24 Counties that are tentatively in and possibly 3 more to join.  He further explained what has happened with other pools that have been formed and the payments Counties have received.  He also explained what is happening currently with interest rates and how this is affected.  He explained the process that will happen if the County approves this and that the County could expect their money before Thanksgiving.  Mr. Steve asked Mr. Shehadi if the County opts not to join this pool, would they have this same option next year?  Mr. Shehadi said he does not believe so within the next year.  There is a possibility that five years from now there may be another pool.  There also may be a possibility if one of the big Counties that has not already securitized decided they wanted to do that and went through NYSAC and formed a pool that Cortland County could join that pool, but at this time there in nothing else out there. 

 Mr. Behrenfeld thanked Mr. Shehadi for coming.  Mr. Behrenfeld asked if the numbers within the first column can shift and are not firm?  Mr. Shehadi said they could shift.  Mr. Behrenfeld asked would this be the very best that we are looking at or could the numbers go either way?  Mr. Shehadi said they could go either way.  Mr. Behrenfeld said that he understands there is a variable on the revenue streams.  He has concerns that this is so sensitive to the discount rate that will impact the outcomes.  He gave some examples of what could happen depending on different discounts rates.  He said there are trade offs here.  He does recognize the viability of what Chairman Steve has put forward and how doing this may allow the County to proceed with projects that haven’t been able to be done. However, he is concerned about how much future purchasing power is being given up to take advantage of this now.  He is not sure he has had enough time looking at this to make an educated decision.  It is hard for him to project what will happen in the future with interest rates on bonds and not being able to do that leaves many questions.  Mr. Shehadi agreed and said there is a risk factor because of all the variables.  Mr. Behrenfeld said it becomes a question as to whether we grab the money now to accomplish what could be accomplished in the near future and give up future purchasing power or do we take a chance and wait for what the future brings?  He questions the 6.5% rate and isn’t sure if he can support that.  Mr. Shehadi said the County is benefiting from a lower rate than was predicted a couple of months ago and still a pay out in the future.  Mr. Behrenfeld stated another concern he has if that Chairman Steve has referred to several capital projects for the future but none of those are in final planning stages at this time and to speculate on what may be done with this money seems a little vague at this time.  He stated that the County does not need this money to do any of the projects because of the financial conditions within the County, they can borrow more favorably than this to complete any of them.  Chairman Steve agreed with Mr. Behrenfeld however felt this is an opportunity for the County to receive money currently and not have to bond within the next year or two.  The projects to be done would need to be identified and then the numbers would have to be analyzed.  We have not made any final plan for capital projects but this decision needs to be made now.  The three million dollars that the County would receive now would only be a start on any of the major capital projects that could be moved forward.

 Mrs. Brown said one of the concerns she has is there is not a capital project in process currently that has been approved by this Legislature.  The other concern is that in theory the County will lose almost nine million dollars by taking the three million now.  Mr. Shedadi said that the reason for these projections was to try to show what the three million now is compared to what the twelve million in future payments would be in today dollars.

 Mrs. Tytler asked if given the nature of the source of this money is it feasible that it could be earmarked for programs in the community that make a difference to the constituents of this County such as Communities That Care program?  Chairman Steve said this money could not be used that way however savings associated from any other moves that could be made by this certainly could be appropriated to programs.  Chairman Steve said this bond has to be used for capital projects and it was set up a very general list to move forward with this.  Mr. Shehadi stated that when the money is made available to the County, the Tobacco Corporation would have to verify how the money would be spent.

 Mr. VanDee asked Mr. Schrader for his opinion on this.  Mr. Schrader said he would characterize this exactly like Mr. Shehadi has.  The only way to really know if this is the right decision will be fifteen or twenty years down the road. The up side is taking the money upfront and not having to issue any debt to be able to complete a capital project in the near future.  The down side is the loss of potential spending funds in the future by taking the money in advance.  There also is a risk associated with the risk of bond percentages.  Is it really an advantage to take the money up front and lose money in the long run?  Who is to know?

 Dr. DiGiovanni asked what the direct costs are associated with this?  Mr. Shehadi said those costs are already taken out of the monies before the County receives its share and have been figured into the calculations before you.  Mr. Willcox asked what that amount is?  Mr. Shehadi said about $270,000. but that is not for their firm. 

 Mrs. Tytler just wants to be clear that they can go ahead and do this without specifying exactly what will be done?  Mr. Shehadi said there would be a very generic list of projects including a list of many possibilities that may be done and it will need to be made specific in the future.  He said the project needs to have a long life term expectancy that is why they are capital projects.  The time line will let the County be able to make decisions in the near future as to what the specific programs are to be.  Changes can be made and the time line change be extended a little.

 Mr. Elston asked for a recommendation from the Treasurer? Mr. Ferris said when this was discussed on Monday he was in favor of moving forward with this as long as the County has capital projects for the money to be used to accomplish.  He said Chairman Steve said there were capital projects in the making so therefore he supports the County in this movement. 

 Chairman Steve called a five-minute recess at 7:45.

 Mr. Tagliente said he will be voting no because from the information that was just heard  the interest rates are not favorable for the new capital projects and the County is in good financial shape currently.  He is also concerned about the loss of future spending. Mr. Behrenfeld said that he had come into this meeting with hesitation in supporting this, however after hearing all the variables that may occur he has moved to the side of supporting this. Mr. Allen said he would be supporting this because of the unknown markets in the future and not having any way of knowing how the County would benefit in the future. Mrs. Tytler said she is still on the fence but does believe that this would allow the County to update facilities that serve the constituents of this County in a better way.

 Chairman Steve requested a roll call vote.

 With Mr. Allen, Mr. Armstrong, Mr. Behrenfeld, Mrs. Breed, Dr. DiGiovanni, Mr. Elston, Mr. Hartnett, Mr. Steger, Mrs. Tytler, Mr. VanDee, Mr. Willcox, Mr. Williams and Mr. Steve voting aye, and  Mrs. Brown, Mr. McKee, Mr. Ross and Mr. Tagliente voting nay with Mr. Cornell and Mr. Dafoe recorded as absent Agenda Item No. 1 became Resolution No. 336-05: A Resolution Authorizing the Cortland Tobacco Asset Securitization Corporation (The “Corporation”) To Participate In the Proposed NYCTT V Restructuring Transaction and Approving An Amendment to the Residual Certificate Issued by the Corporation.

Chairman Steve thanked everyone and said there is still work that must be done.

 Meeting was adjourned at 8:03 pm.