HomeMy WebLinkAboutrda min 1984/02/02
MINUTES OF A REGULAR MEETING OF THE REDEVELOPMENT AGENCY
OF THE CITY OF CHULA VISTA, CALIFORNIA
Thursday, February 2, 1984 Council Chambers
7:25 p.m. Public Services Buildlng
ROLL CALL
MEMBERS PRESENT Chai rman Cox; Members Moore, McCandliss, Scott,
Malcolm
STAFF PRESENT Executive Director Goss, Community Development
Di rector Desrochers, Special Counsel Reed,
Housi ng Coordinator Gustafson, Redevelopment
Coordinator Zegler, Public Information Consultant
Cox
ALSO PRESENT Michael Green, Michael Cowett, Paul Stei ger,
Michael Splitstone, Keith Gardner
ITEM NO. 1 - APPROVAL OF MINUTES
Member Scott noted that a correction to the minutes of the meeting of January
19 shoul d be made on Page 1, Item No. 1 regardi ng the Port Commi ss i oner' s
report. The fifth pa ragraph shoul d i ndi cate that "Commissioner Creaser"
rather than "Member Scott" referred to crui se 1 i nes, etc.
MOTION TO APPROVE MINUTES AS CORRECTED
MSUC (Moore/Scott) to approve the mi nutes of January 5 and 19, 1984, as
corrected.
ITEM NO. 2 - RESOLUTION - AUTHORIZING THE CHAIRMAN TO EXECUTE AN EXCLUSIVE
NEGOTIATION AGREEMENT WITH EYE PHYSICIANS MEDICAL
GROUP FOR A PERIOD OF SIX MONTHS
The Eye Physicians Medical Group has expressed an interest in developing
Parcel 3 (intersection of Bay Boulevard and "FII Street) of the Bayfront
area. The developer requested an extension of time to this date in order to
review the proposed Exclusive Negotiation Agreement for the property.
Member Malcolm, noting a confl ict of interest with this item, left the dais
at this time.
Chairman Cox indicated that Agency members should review the disclosure
statement information provided by the Eye Physicians Group.
Communi ty Development Director Desrochers stated that the Agency had
previously authorized staff to seek a request for proposal for marketing the
property, and staff has solicited proposals from area brokerage houses. As a
resul t, the fi rm of Grubb & Ell is was sel ected to market the property. At
the same time, the Eye Physicians Group requested that they be given
consideration to develop the property.
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Redevelopment Agency Meeting -2- February 2, 1984
In response to Member Scott's question, Mr. Desrochers indicated that the Eye
Physicans Group approached staff in December 1983 stating thei r desi re to
seek a restaurant operator and build a restaurant. Although they are not in
the restaurant business, they have successfully developed other properti es
throughout the area.
Mr. Mi chael Green, Esq. , 535 IIHI! Street, representi ng the Eye Physi ci ans
Group, responded that the development of Parcel 3 would be an investment for
the group. Professionals would be hired, perhaps Grubb & Ell is, to market
the property. The doctors woul d 1 i ke to own the bui 1 di ng, the 1 and, and
1 ease the property to a restaurant operator. Mr. Green noted that currently
the group is making an addition to their surgical center on Third Avenue;
however, most of their investments have been of a passive nature.
Discussion followed regarding the two six-month extensions included in the
Exclusive Negotiation Agreement. Mr. Green noted that one extension would be
appropri ate but a second one is probably meani ngl ess because the developer
should be able to finish the project in a year.
In re sponse to Member Scott's questi on regardi ng the type of commission
recei ved by the marketi ng fi rm, Mr. Desrochers indicated that if the Agency
chose Grubb & Ellis, their real estate commission would be approximately six
percent, or close to $20,000.
In answer to Member McCandliss' question, Community Development Di rector
Desrochers stated that if another entity proposed to develop Parcel 3 through
exclusive negotiation, evi dence woul d be provi ded to the Agency that the
proposer is credible, and if perhaps another enti ty coul d match the Eye
Physicians Group, the Agency would be asked to extend this item for at least
a couple of weeks in order to provide an evaluation for the Agency's review.
Mr. Desrochers explained the evaluation process for the Eye Physicans Group.
The partners individually have participated in other types of developments as
j oi nt venture partners so they are not neophytes to the development
indus try. Collectively, it is not known if the group of four physicians has
ever been involved together with the same development. They do not intend to
operate a restaurant, but they want to participate as investors.
Mr. Green, referring to the draft Exclusive Negotiation Agreement he prepared
(distributed earlier this evening to Agency members), remarked that the group
is requesting an initial negotiation of seven months in order to evaluate the
development and prepare a Disposition and Development Agreement. Consi deri ng
the desi gn revi ew process and approval s through the Coastal Commi ssi on, the
developers felt that it would be difficult to perform this in six months.
With the seven month s proposed, $14,000 would be deposi ted rather than
$12,000 for a six-month negotiation period.
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Redevelopment Agency Meeti ng -3- February 2, 1984
Discussion followed regarding the net worth of the Eye Physicians Group. Mr.
Desrochers indicated that he had last reviewed their statements in December
of 1983 and therefore could not get into any details concerning their net
worth. In order to provide a more adequate description of their financial
condition, Mr. Desrochers requested that this information be provided to the
Agency next week.
It was noted that the resolution was prepared prior to receipt of the Draft
Exclusive Negotiation Agreement. Therefore, the present resolution indicates
a six-month negotiation period rather than the proposed seven months.
MOTION TO AMEND EXCLUSIVE NEGOTIATING PERIOD TO SEVEN MONTHS
MSC (Cox/McCandliss) to amend the resolution providing for an Exclusive
Negotiation Agreement with Eye Physicians Medical Group for a period of seven
months. (Member Malcolm abstained.)
Member Scott stated that he could not support the main motion because
adequate information regarding the financial condition of the developers is
not provi ded.
Member Moore suggested that a logical amendment coul d be made so that the
acti on taken toni ght woul d take effect if and when the basi c fi nanci al
capabilities of the proposed developers are known.
MOTION TO CONTINUE ITEM
MSUC (Cox/Scott) to continue item to February 7, 1984 (following the City
Council meeting), and have staff obtain financial information which would
allow a determination to be made about the entity's financial capabil ity.
(Member Malcolm abstained. )
Special Counsel Reed advised that Mr. Green's clients should be aware that if
the Agency enters into an Exclusive Negotiation Agreement with the Eye
Physicians Group, a public hearing would be held regarding the financial
capabi 1 i ty, and thi s woul d be a publ i c record. Mr. Desrochers added that
when the Disposition and Development Agreement public hearing is held a
financial disclosure of the firm is required.
Member Malcolm returned to the dais at this time.
ITEM NO. 3 - RESOLUTION NO. 478 - APPROVING, AUTHORIZING, AND DIRECTING
EXECUTION OF AGREEMENT FOR BOND COUNSEL
SERVICES WITH JONES HALL HILL AND WHITE, A
PROFESSIONAL LAW CORPORATION
The need for bond counsel services was discussed at the 1 ast Agency meeting
due to the favorable interest rates to the Agency and the actual sale of
bonds and/or notes dependent on review by recognized bond counsel.
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Redevelopment Agency Meeting -4- February 2, 1984
Community Development Director Desrochers noted that anywhere in the
resolution that states "bonds" it should also state "notes."
RESOLUTION OFFERED BY MEMBER MOORE, the read; ng of the text was waived by
unanimous consent, passed and adopted unanimously.
ITEM NO. 4a - RESOLUTION NO. 479 - AUTHORIZING AND DIRECTING THE SALE OF NOT
TO EXCEED $25 MI LLION PRI NC IPAL AMOUNT OF
REDEVELOPMENT AGENCY OF THE CITY OF CHULA
V IST A, BAYFRONT/TOWN CENTRE REDEVELOPMENT
PROJECT 1984 TAX ALLOCATION NOTES,
ADOPTING OFFICIAL NOTICE OF SALE AND
AUTHORIZING OFFICIAL ACTION
4b - RESOLUTION NO. 4BO - AUTHORIZING THE ISSUANCE OF NOT TO EXCEED
$25 MILLION PRINCIPAL AMOUNT OF
REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA BAYFRONT/TOWN CENTRE PROJECT 1984
TAX ALLOCATION NOTES
4c - RESOLUTION NO. 481 - AUTHORIZING AND DIRECTING THE SALE OF NOT
TO EXCEED $25 MILLION PRINCIPAL AMOUNT OF
REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA BAYFRONT/TOWN CENTRE REDEVELOPMENT
PROJECT 1984 TAX ALLOCATION BONDS,
ADOPTING OFFICIAL NOTICE OF SALE AND
AUTHORIZING OFFICIAL ACTION
4d - RESOLUTION NO. 482 - AUTHORIZl NG THE ISSUANCE OF NOT TO EXCEED
$25 MILLION PRINCIPAL AMOUNT OF
REDEVELOPMENT AGENCY OF THE CITY OF CHULA
VISTA BAYFRONT/TOWN CENTRE REDEVELOPMENT
PROJECT 1984 TAX ALLOCATION BONDS
4e - RESOLUTION NO. 483 - AUTHORIZING LITIGATION TO COMPEL THE
SECRETARY OF THE AGENCY TO PUBLISH A
NOTICE OF THE SALE OF THE REDEVELOPMENT
AGENCY OF THE CITY OF CHULA VISTA
BA YFRONT /TOWN CENTRE REDEVELOPMENT PROJECT
1984 TAX ALLOCATION BONDS
UNANIMOUS CONSENT - RESOLUTION NO. 484 - AUTHORIZING LITIGATION TO COMPEL THE
SECRETARY OF THE AGENCY TO PUBLISH A
NOTICE OF THE SALE OF THE
REDEVELOPMENT AGENCY OF THE CITY OF
CHULA VISTA BAYFRONT/TOWN CENTRE
REDEVELOPMENT PROJECT 1984 TAX
ALLOCATION NOTES
The subject resolutions are the first steps in order to seek validation
th rough the Superi or Court of the bond issue. Passage of the resol uti ons
will require certain actions that will result in litigation in the process of
validation for the Agency's issue.
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Redevelopment Agency Meeting -5- February 2, 1984
RESOLUTIONS OFFERED BY MEMBER SCOTT, the readi ng of the texts was wai ved by
unanimous consent, passed and adopted unanimously.
ITEM NO. 5 - RESOLUTION NO. 485 - APPROVING AN AGREEMENT WITH THE CITY OF
CHULA VISTA FOR THE PAYMENT OF CERTAIN
UTILITY COSTS I NCURRED FROM THE OPERATION
OF THE TOWN CENTRE PARKING STRUCTURE
An agreement for the Agency to repay the City for metered uti 1 ity costs
incurred from the operation of the parking structure has been prepared. The
City, as lessee to the parking structure, is responsible for costs relative
to metered uti 1 i ti es consumed due to the parki ng structure's operati on. In
addition, the Agency agreed to be responsible for metered water, sewer, gas,
and electric costs incurred from the structure's operation for a specified
number of years.
RESOLUTION OFFERED BY MEMBER MALCOLM, the reading of the text was waived by
unanimous consent, passed and adopted.
ITEM NO. 6 - REPORT: REQUEST FOR COMMERC IAL REHABILITATION LOAN FOR 315
FOURTH AVENUE
At their meeting of December 15, 1983, the Agency authorized $100,000 as an
additional loan to the Town Centre Development Corporation for providing low
interest commercial rehabilitation loans to businesses within the Town Centre
Project Area. Criteri a were pl aced upon the use of these funds in order to
maximize the benefits to Town Centre. These cri teri a placed the highest
priority on rehabilitation on new construction projects along Third Avenue
and projects in other 1 ocati ons with seri ous code vi 01 ati ons. All projects
approved by the LDC which do not meet these criteria must also be approved by
the Agency. Since the subject project at 315 Fourth Avenue does not meet the
criteria established by the Agency, the application for fundi ng is being
presented for review and approval by the Agency.
Community Development Di rector Desrochers stated that Mr. Zogob's offi ce
building is close to ten years old and at this time he wishes to modernize
and beautify the structure in order to attract tenants.
Discussion followed regarding the necessity to obtain financial assistance
from the LDC for this project. It was also noted that at this point, the LDC
is unable to prioritize projects due to the timing of loan requests.
MOTION TO DENY REQUEST
MSC (Scott/Malcolm) to deny the request for a commercial rehabilitation loan
at 315 Fourth Avenue. (Member Malcolm voted "no.")
Redevelopment Agency Meeting -6- February 2, 1984
ITEM NO. 7 - RESOLUTION NO. 486 - AUTHORIZING THE CHAIRMAN TO SIGN GRANT
DEED CONVEYING LOT 6 OF THE TOWN CENTRE
FOCUS AREA SUBDIVISION TO CENTRE CITY
ASSOCIATES, LIMITED-COMMERCIAL
The commerci al developer for the Town Centre Focus Area has requested to
purchase Parcel 6 of the Focus Area Subdivision at this time and lease the
parcel to Fuddruckers, Inc. for development of a restaurant. Escrow for the
subject sale has been opened and is planned to be closed on January 23 by the
developer's request.
RESOLUTION OFFERED BY MEMBER MOORE, the reading of the text was waived by
unanimous consent, passed and adopted unanimously.
ITEM NO. 8 - RESOLUTION NO. 487 - AUTHORIZING REIMBURSEMENT TO THE CITY OF
CHULA VISTA IN THE AMOUNT OF $12,600 PLUS
10 PERCENT ANNUAL INTEREST FEE FOR THE
PREPARATION OF ENVIRONMENTAL DOCUMENTS FOR
THE OTAY VALLEY ROAD REDEVELOPMENT PROJECT
FROM FUTURE TAX INCREMENTS IN THE PROJECT
AREA
On January 24, 1984, the Ci ty Council approved a resol uti on appropri ati ng
funds from the General Fund for the purpose of preparing environmental
documents for the Otay Valley Road Redevelopment Project. Since an
envi ronmenta 1 impact report is necessary for impl ementati on of the project
area and is a more appropriate expenditure of the Agency, the City is
requesti ng reimbursement for thi s expense from the Agency. Reimbursement to
the Ci ty can be made at the poi nt at which tax increment revenues from the
project are available for such repayment.
Member Scott i ndi cated a possi bl e confl i ct of interest and abstai ned from
voting on this matter.
RESOLUTION OFFERED BY MEMBER MOORE, the readi ng of the text was wai ved by
unanimous consent, passed and adopted. (Member Scott abstained. )
ITEM NO. 9 - REPORT: HOUSING PROJECT PROPOSAL AND REQUEST FOR ASSISTANCE BY
HOUSING OPPORTUNITIES, INC.
RESOLUTION NO. 488 - APPROVING FINANCIAL ASSISTANCE TO HOUSING
OPPORTUNITI ES, INC. FOR HOUSING PROJECT
AND APPROPRIATING FUNDS THEREFOR
Housing Opportunities, Inc. (HOI) is proposing to develop an affordable
for-sal e housi ng project and requests assi stance from the Agency's Low and
Moderate Income Housing Fund. Di scussions have continued with HOI, and an
evaluative report on the proposal has been received from the Agency's housing
proposal s consul tant, Touche-Ross & Company. Conceptua 1 approval from the
Agency is now des ired so that the developer mi ght proceed wi th securing
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Redevelopment Agency Meeting -7- February 2, 1984
property acquisition and construction financing. The resolution would give
conceptual approval to expenditure from the Low and Moderate Income Housing
Fund of $1.6 million. The expenditure of those funds would be contingent on
subsequent Agency approval of the Development Agreement and the necessary
loan documents.
Housing Coordinator Gustafson gave a brief background of the developer's
p roposa 1 . He also discussed the need for low and moderate income housing for
first-time homebuyers in the $22,000 to $32,000 income range.
Discussion followed regarding the replenishment of the Low and Moderate
Income Housing Fund, the use of Agency funds for this type of a project, and
the whereabouts of the 10% profit.
Mr. Paul Steiger, Housing Opportunities, Inc. , 438 Cami no del Rio South,
Suite 206, San Di ego, Cal iforni a 92108, expl ai ned the non-profi t status of
his organization.
In response to Member Malcolm's question concerning private mortgage
insurance, Mr. Steiger indicated that this type of insurance coul d be
provided in the Development Agreement when it is drawn up.
Member Malcolm expressed concern that the proj ect is not withi n the
affordable range for purchase by prospective first-time homebuyers.
According to the report, the financial capability of HOI is not very clearly
defined. The first $800,000 to be funded by the Agency for the buy-down is
recognized; however, the next $800,000 given for basically no-interest loans
is not addressed in further reduced sales prices. He concluded that low and
moderate income housing should be distributed more evenly around the City.
In response to Member McCandliss' concern regarding the financial capability
of HOI, Mr. Steiger responded that HOI has more than adequate capability to
complete the project and that this issue could be made a contingency in the
Deve 1 opment Agreement. Rega rdi ng the funds provi ded to hi s organi zati on, he
referred to Exhi bi t nAil of the consultant's report which outlines the
distribution of funds. Mr. Stei ger added that 95% of the homebuyers come
wi th i n 5 mi 1 es of the site. Therefore, the re would be no trouble in
attracting Chula Vista residents to the project.
Further di scussi on i nvol ved the compari son of another si te on East "H" Street
and the HOI project.
Member Malcolm expressed concern that an appraisal of the subject property
was not obtained through a qualified professional appraiser.
Housing Coordinator Gustafson narrated a brief slide presentation depicting
the housi ng project's boundari es i ncl udi ng the topography of the 1 and. The
developer's responsibility will also include drainage improvements for Poggi
Creek and the extension at the i ntersecti on of East Orange Avenue and
Brandywine. He noted that one of the inhibiting factors in attracting
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Redevelopment Agency Meeting -8- February 2, 1984
developers for such a housi ng project is improvements to the 1 and such as
these. Mr. Mike Splitstone, Civil Engineer, consultant to HOI, discussed the
drainage improvement needs for the Brandywine area.
Member Scott remarked that overall he is in favor of the project; however,
this area tends to be overloaded with high density housing.
In response to members' concerns, Housi ng Coordi nator Gustafson explained
that the benefi t of the second $800,000 wi 11 provi de a break in interim
financing to the developer. That break would contribute to the reduction of
sales prices. Additionally, the second $800,000 would be rolled over into a
loan pool for buyers which would allow purchase by lower income households.
Member Malcolm expressed concern that if we are giving HOI the second
$800,000, we shoul d be getti ng back something in return, preferably which
would benefit the buyer.
Chairman Cox declared a 5-minute recess at 9:25 p.m.
The meeting reconvened at 9:30 p.m.
Mr. Kei th Ga rdner, Touche-Ross & Company, 600 B Street, Sui te 1000, San
Diego, California 92101, referring to Exhibit "A" of their report indicated
that the exhibit shows a pro forma of the project with and without subsidy.
Without the subsidy, the project is not financeable. He conti nued that if
the target range of homebuyers coul d be reached wi thout a subsi dy, then no
financial assistance would be needed. Regarding the first $800,000 subsidy,
the Agency is getting a return because the project is being made financeable.
Chairman Cox requested cl arifi cati on of staff's recommendation upon
acceptance of this report. Mr. Gustafson indicated that the Agency would be
appropri ati ng funds for the two subsi di es whi ch woul d be conti ngent upon
coming back with the Development Agreement. (The Hous i ng Coordi na tor noted
that the staff report should reflect that a 4/5ths vote is needed.)
Special Counsel Reed noted that the Agency is not authori zi ng any type of
expendi tu re toni ght, and when prepa ri ng a Development Agreement, a thorough
research of PMIs will be included.
Communi ty Development Director Des rochers stated that a clause coul d be
inserted into the resol uti on regardi ng requi rement of an MAl appraisal as
well as additional information from the Agency Attorney.
MOTION TO ACCEPT STAFF RECOMMENDATION
MSUC (Cox/McCandl i ss) to accept staff recommendati on, and appropri ate funds
contingent on the delivery of a Development Agreement and other necessary
1 egal documents.
Communi ty Development Di rector Desrochers stated that staff wi 11 return at
the next meeting with the contract for services to obtain an appraisal on the
subject property, within a six-week timeframe.
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Redevelopment Agency Meeting -9- February 2, 1984
Chairman Cox requested that a stipulation be provided in the resolution that
an MAI appraisal be obtained, and that this be performed while assembling the
Development Agreement.
RESOLUTION OFFERED BY CHAIRMAN COX, the readi ng of the tex twas waived by
unanimous consent, passed and adopted unanimously as amended.
ITEM NO. 10 - REPORT: SAN DIEGO CONVENTION CENTER
An oral presentation was given to members during the Council meeting which
preceded the Agency agenda this evening.
MEMBERS' COMMENTS - None
DIRECTOR'S COMMENTS
Executive Director Goss noted that the parking structure has $1,500 budgeted
for advertising opening ceremonies and temporary signs.
Executive Director requested a Closed Session for matters of litigation.
MOTION TO ADJOURN TO CLOSED SESSION
MSUC (Cox/McCandliss) to adjourn to Closed Session for matters of litigation.
Public Informati on Consul tant Cox stated that the banners for the parking
structure grand opening have been ordered along with a freestanding sign.
Member Malcolm requested that the housing proposal consultant, Touche-Ross,
be requi red to complete a fi nanci al di scl osure statement. Communi ty
Development Di rector Desrochers noted that the housi ng consultant sel ected
Dan Grady; however, since there was a confl i ct of interest wi th the HOI
group, Touche-Ross performed the housi ng proposal eval uati on instead of Mr.
Grady.
ADJOURNMENT to Closed Sessi on at 10: 00 p.m. to the mi d-month meeting of
February 16, 1984, at 4:00 p.m. The Recordi ng Secretary was excused and the
Executive Secretary reported that Closed Session ended at 10:20 p.m.
WPC 0991 H
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