HomeMy WebLinkAboutAgenda Packet 1996/09/24
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Tuesday, September 24, 1996 tt~iS ::\[~:'I~ .',)dG:!: ..: ;'I<'j :',,' .. :~:..3j.tn~ :~;nj, la-~. Council Chambers
5:30 p.m. ue .. U0 ,C jqnncGs ~U ,::1,:) ~ '[i~'l "-',iC~! h'IRj~ on Public Services Building
DATED. "i(,. (<1t1i!- SiUJED.V ~'7 "
Special Meetin~ of the City of Chula Vista Citv Council
CALL TO ORDER
1.
ROLL CALL:
Councilmembers Alevy _, Moot _, Padilla _, Rindone _, and
Mayor Horton _'
CLOSED SESSION
Unless the City Attorney, the City Manager or the City CouncU states otherwise at this time, the Council will
discuss and deliberate on the following items of business which are permitted by law to be the subject of a closed
session discussion, and which the Council is advised should be discussed in closed session to best protect the
interests of the City. The Council is required by law to return to open session, issue any reports of final action
taken in closed session, and the votes taken.
2. CONFERENCE WITH LEGAL COUNSEL REGARDING:
1. Existing litigation pursuant to Government Code Section 54956.9
. Christopher vs. the City of Chula Vista.
. SNMB, L.P. vs. the City of Chula Vista and MCA.
2. Anticipated litigation pursuant to Government Code Section 54956.9
· Significant exposure to litigation pursuant to subdivision (b) Section 54956.9: 1.
. Metro sewer issues.
PUBLIC EMPLOYEE DISCIPLINE - Pursuant to Government Code Section 54957
PUBLIC EMPLOYEE RELEASE. Pursuant to Government Code Section 54957
CONFERENCE WITH LABOR NEGOTIATOR - Pursuant to Government Code Section 54957.6
· Agency negotiator: John Goss or designee for CVEA, WCE, POA, IAFF, Executive
Management, Mid-Management, and Unrepresented.
Employee organization: Chula Vista Employees Association (CVEA) and Western Council of
Engineers (WCE) , Police Officers Association (POA) and International Association of Fire
Fighters (IAFF).
Unrepresented employee: Executive Management, Mid-Management, and Unrepresented.
3. REPORT OF ACTIONS TAKEN IN CLOSED SESSION
ADJOURNMENT
The meeting will adjourn to the regular City Council meeting on September 24, 1996 at 6:00 p.m. in the City
Council Chambers.
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Tuesday, September 24,1996 the Public Serv'c"" Lu ....;"; COn' at Cjty J~all. on . Councll Chambers
6:00 p.m. DATED, ,11 rcih(ji SiCi',ED . )\;WI~ "Pubhc Semces BUlldmg
7 I
RelrUlar Meetin~ of the Citv of Chula ista Citv Conncil
CALL TO ORDER
1.
ROLL CALL:
Councilmembers Alevy _, Moot _' Padilla _, Rindone _, and
Mayor Horton _'
2. PLEDGE OF ALLEGIANCE TO THE FLAG. SILENT PRAYER
3.
APPROVAL OF MINUTES:
July 9, 1996 and August 6, 1996
4. SPECIAL ORDERS OF THE DAY:
a. Proclamation commending the Chula Vista Garden Club upon the occasion of their 50th
Anniversary. Mayor Horton will present the proclamation to Barbara Felber, President of the
Chula Vista Garden Club.
*****
Effective April 1, 1994, there have been new amendments to the Brown Act. The City Council must now
reconvene into open session to report any final actions taken in closed session and to adjourn the meeting.
Because of the cost involved, there will be no videotaping of the reconvened portion of the meeting. However,
final actions reported will be recorded in the minutes which will be availnble in the City Clerk's Office.
*****
CONSENT CALENDAR
(Items 5 through 7)
The staff recommendations regarding the following iJems listed under the Consent Calendar will be enacted by
the Council by one motion without discussion unless a Councilmember, a member of the public or City staff
requests that the item be pulled for discussion. If you wish to speak on one of these items, please fill out a
"Request to Speak Form" available in the lobby and submit iJ to the City Clerk prior to the meeting. (Complete
the green form to speak in favor of the staff recommendation; complete the pink form to speak in opposition to
the staff recommendation.) Items pulled from the Consent Calendar will be discussed after Board and
Commission Recommendations and Action Items. Items pulled by the public will be the first items of business.
5. WRITTEN COMMUNICATIONS:
a. Letter from the Acting City Attorney stating that there were no reportable actions taken in
Closed Session on 9/17/96. It is recommended that the letter be received and filed.
b. Letter of resignation from the Library Board - Peggy P. Donovan. It is recommended that
the letter of resignation be accepted with regret and the City Clerk be directed to post immediately
according to the Maddy Act in the Clerk's Office and the Public Library.
Agenda
-2-
September 24, 1996
6. RESOLUTION 18438 AUTHORIZING THE MAYOR TO SIGN A FIVE-YEAR LEASE
PURCHASE AGREEMENT WITH KONICA BUSINESS MACHINES FOR
TWO KONICA 6190 COPIERS AND DISPOSE OF THE TWO EXISTING
KODAK COPIERS THROUGH TRADE-IN AS PART OF THE LEASE-
PURCHASE AGREEMENT - On 2/13/96, the five-year agreement on the
City's existing two Kodak copiers expired. Ownership of the machines
transferred to the City at that time. The existing machines are long past their
useful life expectancy, break down frequently, are not energy efficient, and
require an expensive maintenance agreement to continue operating. Staff
recommends approval of the resolution. (City Clerk and Director of Finance)
7. RESOLUTION 18439 WAIVING IMMATERIAL DEFECTS, ACCEPTING BIDS AND
AWARDING CONTRACT FOR "PARKING LOT IMPROVEMENTS FOR
EUCALYPTUS PARK (PR-211)" - On 9/4/96, bids were received. The
general scope of the project includes improving the parking lot adjacent to the
American Legion's building at Eucalyptus Park. The work includes, traffic
control, removal of alligatored pavement areas and replacement with asphalt
concrete pavement, AC leveling courses, P.C.C. pad for trash receptacle,
P.C.C. drainage swale, asphalt concrete berm, drainage ditch, splash wall,
crushed aggregate base, and other miscellaneous items of work as shown on the
plans. Staff recommends approval of the resolution awarding the contract to
MJC Construction - Chula Vista. (Director of Public Works)
* * * END OF CONSENT CALENDAR * * *
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
The following items have been advertised and/or posted as public hearings as required by law. If you wish to
speak to any item, please fill out the "Request to Speak Form n available in the lobby and submit it to the City
Clerk prior to the meeting. (Complete the green form to speak in favor of the staff recommendation; complete
the pink form to speak in opposition to the staff recommendation.) Comments are limited to five minutes per
individual.
8.
PUBLIC HEARING
9.
PUBLIC HEARING
CONSIDERING THE OTAY RANCH REORGANIZATION NUMBER 1
CONSISTING OF ANNEXING PORTIONS OF THE OTAY RANCH TO
THE CITY, DETACHING THE OTAY LANDFILL FROM THE CITY
AND DETACHING TERRITORY FROM THE RURAL FIRE
PROTECTION DISTRICT - In August 1995, Council authorized the filing of
a reorganization application with LAFCO for the Otay Ranch Reorganization
Number 1. The proposed reorganization would annex the majority of the Otay
Valley Parcel, the Mary Patrick Birch Estate Ranch House and the Inverted "L"
area to the City. The reorganization was filed with LAFCO on 4/8/96. On
7/1/96, LAFCO approved the reorganization, designated the City as the
conducting authority and authorized Council to conduct the proceeding to
complete the reorganization process. Staff recommends this item be
continued indefinitely: will be re-noticed. (Special Planning Projects
Manager, Otay Ranch) Continued from the meeting of 9/10/96.
ADOPTING OTAY RANCH PRE-ANNEXATION DEVELOPMENT
AGREEMENT BALDWIN BUILDERS - The purpose of this item is to
present a development agreement with Baldwin Builders. On 6/25/96, the
Planning Commission and Council considered a series of development
agreements with Village Properties, United Enterprises, Greg Smith, and the
Foundation. (The Foundation agreement was subsequently split into three
separate agreements.) The remaining party who is a property owner of a
portion of the Otay Ranch property is Baldwin Builders, which is the trustee for
the bankruptcy. Staff recommends this item be continued to 10/1196.
(Deputy City Manager) Continued from the meeting of 9/17/96.
Agenda
-3-
September 24, 1996
10.
PUBLIC HEARING
APPEAL OF GINGER COWARDIN, YIN YANG ACCUPRESSURE, OF
THE REVOCATION OF HER LICENSE - Appellant, Ginger Cowardin,
operates Yin Yang Accupressure at 616 Third Avenue. Police officers
conducting a routine inspection discovered that the massage technician employed
by appellant was engaged in prostitution with the customers. Appellant's license
to operate was therefore revoked. Cowardin now appeals the revocation. Staff
recommends approval of the resolution. (Assistant City Attorney Fritsch)
RESOLUTION 18440 DENYING APPEAL OF REVOCATION OF LICENSE FOR GINGER
COWARDIN, YIN YANG ACCUPRESSURE
ORAL COMMUNICATIONS
This is an opportunity for the general public to address the City Council on any subject matter within the
Council's jurisdiction that is not an item on this agenda for public discussion. (State law, however, generally
prohibits the City Council from taking action on any issues not included on the posted agenda.) /fyou wish to
address the Council on such a subject, please complete the yellow "Request to Speak Under Oral Communications
Form" available in the lobby and submit it to the City Clerk prior to the meeting. Those who wish to speak,
please give your name and address for record purposes and follow up action. Your time is limited to three
minutes per speaker.
BOARD AND COMMISSION RECOMMENDATIONS
This is the time the City Council will consider items which have been forwarded to them for consideration by one
of the City's Boards, Commissions and/or Committees.
None submitted.
ACTION ITEMS
The items listed in this section of the agenda are expected to elicit substantiLll discussions and deliberations by
the Council, staff, or members of the general public. The items will be considered individually by the Council
and staff recommendations may in certain cases be presented in the alternative. Those who wish to speak, please
fill out a "Request to Speak" form available in the lobby and submit it to the City Clerk prior to the meeting.
Public comments are limited to five minutes.
11. RESOLUTION 18441 APPROVING COMMUNITY DEVELOPMENT BLOCK GRANT
AGREEMENTS FOR FISCAL YEAR 1996/97 WITH VARIOUS
COMMUNITY GROUPS AND AUTHORlZING THE MAYOR TO
EXECUTE SAID AGREEMENTS - On 6/4/96, Council approved Community
Development Block Grant (CDBG) funds in the amount of $315,450 for 17
public service programs, $260,350 for six community development programs,
and $87,500 for five additional non-profit organizations to provide eligible
planning/coordination type activities. The U.S. Housing and Urban
Development Department (HUD) requires a written agreement between the City
and each subrecipient of CDBG and HOME funds. Staff recommends approval
of the resolution. (Director of Community Development) 4/Sth's vote
required.
12. REPORT BONITA GOLF RESORT HOTEL AS IT RELATES TO THE PROPOSED
DISPOSITION OF THE CITY -OWNED PROPERTY AND TO ONGOING
NEGOTIATIONS PER THE EXISTING EXCLUSIVE NEGOTIATION
AGREEMENT (ENA) - On 9/10/96, staff presented Council a progress report
on the ENA with Joelen Enterprises for a proposed golf resort hotel, and with
a request by Joelen Enterprises for site control to meet prospective financing
requirements. At that time, Council requested staff return with a report
outlining the feasibility of selling versus leasing the City-owned property, and
an action plan to establish a conditioned escrow should Council elect to do so.
Staff recommends Council consider the options and provide direction to staff
regarding proceeding to arrange a conditional escrow. (Director of Community
Development)
Agenda
-4-
September 24, 1996
13.
REPORT
STATUS OF TELEGRAPH CANYON ESTATES (ST. CLAIRE
SUBDIVISION) - At a recent Council meeting several problems with Baldwin's
St. Claire development were brought to the attention of Council. Those
problems include a decline in the condition of the landscaping within Open
Space District Number 31, lack of completion of some public improvements,
and problems associated with abandonment of houses under construction. Staff
recommends Council accept the report and authorize staff to: (I) initiate action
to repair, re-vegetate and re-Iandscape the landscaped slopes, medians and
parkways through foreclosure on the bonds for Subdivision Map Numbers
13068, 13069, and 13070 on 10/19/96 wben the Subdivision Agreement expires
and the developer is in default; and (2) initiate action to abate a potential fire
hazard by removing three uncompleted structures adjacent to existing, occupied
dwelling units. (Director of Parks and Recreation, Director of Building and
Housing, and Director of Public Works) Continued from the meeting of
9/17/96.
ITEMS PULLED FROM THE CONSENT CALENDAR
This is the time the City Council will discuss items which have been removed from the Consent Calendar.
Agenda items pulled at the request of the public will be considered prior to those pulled by Councilmembers.
Public comments are limited to five minutes per individual.
OTHER BUSINESS
14. CITY MANAGER'S REPORT IS)
a. Scheduling of meetings.
15. MAYOR'S REPORTlS)
a. Setting Council priorities.
b. Setting a future Council workshop on permit streamlining/business responsiveness/standards of
service.
16. COUNCIL COMMENTS
ADJOURNMENT
The meeting will adjourn to (a closed session and thence to) the regular City Council meeting on October I, 1996
at 4:00 p.m. in the City Council Chambers.
A Special Meeting of the Redevelopment Agency will be held immediately following the City Council meeting.
Agenda
-5-
September 24, 1996
*****
CLOSED SESSION
Unless the City Attorney, the City Manager or the City Council states otherwise at this time, the Council will
discuss and deliberate on the following items of business which are permitted by law to be the subject of a closed
session discussion, and which the Council is advised should be discussed in closed session to best protectthe
interests of the City. The Council is required by law to return to open session, issue any reports of final action
taken in closed session, and the votes taken. However, due to the typical length of time taken up by closed
sessions, the videotaping will be terminated at this point in order to save costs so that the Council's return from
closed session, reports of final action taken, and adjournment will not be videotaped. Nevertheless, the report
of final action taken will be recorded in the minutes which will be available in the City Clerk's Office.
17. CONFERENCE WITH LEGAL COUNSEL REGARDING:
1. Existing litigation pursuant to Government Code Section 54956.9
. Christopher vs. the City of Chula Vista.
. SNMB, L.P. vs. the City of Chula Vista and MCA.
2. Anticipated litigation pursuant to Government Code Section 54956.9
. Significant exposure to litigation pursuant to subdivision (h) Section 54956.9: 1.
. Metro sewer issues.
PUBLIC EMPLOYEE DISCIPLINE - Pursuant to Government Code Section 54957
PUBLIC EMPLOYEE RELEASE - Pursuant to Government Code Section 54957
CONFERENCE WITH LABOR NEGOTIATOR - Pursuant to Government Code Section 54957.6
. Agency negotiator: John Goss or designee for CVEA, WCE, POA, IAFF, Executive
Management, Mid-Management, and Unrepresented.
Employee organization: Chula Vista Employees Association (CVEA) and Western Council of
Engineers (WCE) , Police Officers Association (POA) and International Association of Fire
Fighters (IAFF).
Unrepresented employee: Executive Management, Mid-Management, and Unrepresented.
18. REPORT OF ACTIONS TAKEN IN CLOSED SESSION
*****
COMMENDING
CHULA VISTA GARDEN CLUB
UPON THE OCCASION OF ITS 50TH ANNIVERSARY
WHEREAS, the Chula Vista Garden Club was organized in 1946 with the
objectives to promote amateur gardening; to encourage interest in horticulture,
civic beautification, roadside improvement and landscape design, and to assist in
projects for the conservation of our natural resources; and
WHEREAS, during the last fifty years, the Chula Vista Garden Club has
completed over 200 tree plantings throughout Chula Vista; has presented over 50
awards to high school and Southwestern College seniors; has completed numerous
civic improvements by planting trees and landscape shrubbery at schools, libraries,
post office and public parks; and
WHEREAS, in addition to serving their own community, the Chula Vista
Garden Club has also assisted in the reforestation of our national forests by
donating more than fifty Penny Pine plantations, many of which are located
adjacent to the Cleveland National Forest, and have participated in the national
"Save the Eagles" project through their donation of time and funding:
NOW, THEREFORE, I, SHIRLEY HORTON, Mayor of the City of Chula
Vista, California, do hereby COMMEND THE CHULA VISTA GARDEN CLUB
as it celebrates the 50th anniversary and express my personal best wishes for
continued success.
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rnv OF
CHUIA VISTA
MRMORANDUM
September 19, 1996
SUBJECT
The Honorable Mayor and City Council ~':
. - \ t 1
John D. Goss, City Manager ~l1 ~' ->
City Council Meeting of September 24, 1996
TO
FROM
This will transmit the agenda and related materials for the regular City Council meeting of
Tuesday, September 24, 1996. Comments regarding the Written Communications are as
follows:
5a. This is a memo from the Acting City Attorney regarding actions taken in Closed
Session on September 17, 1996. IT IS RECOMMENDED THAT THIS LETTER BE
RECEIVED AND FILED.
5b. IT IS RECOMMENDED THAT PEGGY P. DONOVAN'S RESIGNATION FROM
THE LffiRARY BOARD BE ACCEPTED WITH REGRET AND THE CITY CLERK
BE DIRECTED TO POST IMMEDIATELY ACCORDING TO THE MADDY ACT
IN THE CLERK'S OFFICE AND THE LIBRARY.
~~~
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CllY Of
CHUlA VISTA
OFFICE OF THE CITY ATTORNEY
Date:
September 18, 1996
To:
The Honorable
Mayor and City Council
Acting City Attorney CA.. '('II"
From:
Ann Y. Moore,
Re:
Report Regarding Actions Taken in Closed Session
for the Meeting of 9/17/96
The City Council met in Closed Session to discuss Metro Sewer.
The Acting City Attorney hereby reports to the best of her
knowledge from observance of actions taken in the Closed Session of
September 17, 1996, there were no actions that are required to be
reported under the Brown Act.
AYM: 19k
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276 FOURTH AVENUE. CHULA VISTA. CALIFORNIA 91910 . (619) 691-5037 . FAX (619) 585-5612
'11.,.I'o!;t~Roc)a!d~
243 East James Street
Chula Vista, CA 91910
September 7, 1996
f\E,CEIVED
'96 SEP 13 AS :01
Iri twtJ~~t
SEP , (
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ML David Palmer
Library Director
City ofChuJa Vista
365 "F" Street
ChuJa Vista, CA 91910
Dear David:
With feelings of mixed emotions, I am submitting my resignation from the Library Board of
Trustees effective September 25, 1996.
I have enjoyed my tenure on the Board and feel we have accomplished many good things on
behalf ofthe library and the citizens ofChula Vista. With so much more to be done, I feel my
usefulness has been diminished by physical constraints and an infusion of new ideas Ilnd vitality
would further promote the Library and those who benefit from it.
I respectfulJy request you accept my resignation.
Sincerely,
(1~n:: dJ~
cc: Mayot Shirley Horton
276 4th Avenue
Chula Vista, CA 91910
c'C.
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COUNCIL AGENDA STATEMENT
Item t;
Meeting Date September 24, 1996
R I. /8Y3f5'h" h M . f. I
eso utlon aut onzmg t e ayor to sIgn a lve-year ease-
purchase agreement with Konica Business Machines for two Konica 6190
copiers and dispose of the two existing Kodak copiers through trade-in as
part of the lease-purchase agreement.
SUBMITTED BY: City Clerk~
Director of Financrl'(, C\r-.
REVIEWED BY: City Manager~ ~ ~ \ \
On February 13, 1996, the five-year lease agreement on the City's existing two Kodak copiers
expired. Ownership of the machines transferred to the City at that time. The existing machines
are long past their useful life expectancy, break down frequently, are not energy efficient, and
require an expensive maintenance agreement to continue operating.
ITEM TITLE:
RECOMMENDATION: Approve resolution authorizing the Mayor to sign a five year lease-
purchase agreement for two, new Konica 6190 copiers and trade-in of the two existing Kodak
copIers.
BACKGROUND: In late 1990, the City was contacted by Eastman Kodak about replacing two,
high speed, high volume IBM copiers for Kodak copiers. IBM had sold its copier division to
Eastman Kodak, who then maintained the existing IBM copiers. Since the City was experiencing
many problems with the IBM copiers, Kodak wanted to replace them because they cost too much
to service. At that time, the City investigated to see what other copiers were available.
However, no supplier was able to compete with Kodak's price since they had a special program
for replacing IBM copiers. Therefore, the IBM copiers were replaced with two, reconditioned
Kodak 225 copiers.
Shortly after obtaining the Kodak copiers, the City started experiencing a lot of problems when
copying on both sides of a page (duplexing). The City's agreement with Kodak included a
clause which stated that they would replace the equipment if the City experienced problems
which Kodak could not fix. Because Kodak could not repair the duplexing problems, they
replaced the copier in the Administration Building with a reconditioned model 235 and made
some upgrades on the one in the Public Services Building. Although the problem improved, it
was not eradicated completely. While Kodak's service response has been excellent, there
continues to be many paper jams, which cause simple tasks to become time consuming, and a
lot of paper being wasted.
1
~ -/
Item ~
Meeting Date September 24. 1996
In February 1996, the final purchase payment was made for the two Kodak copiers. The City
had been paying $1,823 per month for purchase and approximately $2,500 per month for
maintenance, for a total monthly cost of approximately $4,323 (maintenance cost is based on a
per copy charge and varies based on actual usage).
Specifications were developed for replacement high speed, high volume copiers and sent out to
twelve potential bidders. A notice was also advertised in the Chula Vista Star News. Three
options were presented to the bidders: 1) a purchase option, whereby the City could make an
outright purchase of two copiers, 2) a thirty-six month lease-purchase option, and 3) a sixty
month lease-purchase option. A separate maintenance agreement would be required under the
purchase option once the initial warranty expired. Maintenance was included in each lease-
purchase option. The City is recommending a 60-month lease-purchase option as the most cost-
effective. Ten bidders responded to the Request for Bid as follows:
Name of Company Copier Model 60 Month Lease-Purchase'
Aztec Toshiba 7750 $4.201
Toshiba 9050 $4,792
Cash Lewis Sharp SD-3075 $5,100
Oce 2600/Sharp 3075 $5,025
Coast Mita DC-8585 $4,000
Danka Kodak 2085 $5,148
Diversified Toshiba 9050 $4,497
Eastman Kodak Kodak 2085AF $3,795
Kodak 2085/IS70A $4,253
Kodak 2110/2085 $4,264
Kodak IS70A $4,769
Kodak 2110/FS70A $4,767
Kodak 2110A $4,786
Konica Konica 6190 $2,948
Oce Oce 2475 $4,780
Remco Oce 2475 $4,173
Canon NP-9850 $4,235
Canon NP-9850II $4.711
Oce 2600 $4,750
Xerox Xerox 1090 $4.550
Net cost for two photocopIers. Includes all pnnclpal. mterest. delIvery, removal of the two eXlstmg machmes,
installation, training. maintenance, supplies (excluding paper). copy charges and. applicable sales tax.
2
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Item
Meeting Date September 24, 1996
~
An investigating committee was formed which consisted of:
Donna Toledo, City Manager's Office
Shirley Buxton, Public Works Engineering
Sandy Richardson, Human Resources
Beverly Authelet, City Clerk
John Coggins, Purchasing Agent
The purpose of the committee was to see a demonstration of the copiers as well as to obtain
references. After seeing demonstrations of the three low bid copiers (the Konica 6190, the Oce
2475, and the Kodak 2085AF), it was the consensus of the committee to recommend the Konica
6190 to the City Council. Not only was it the low bid, but it also performed better in the
demonstration than the higher priced copiers.
The Konica 6190 is a high speed, high volume photocopier that is highly recommended by a
number of current users. This copier is more technically advanced than the existing machines
and the maintenance agreement is more comprehensive. The monthly lease-purchase price is
firm for the sixty month period. The Konica 6190 is also EPA Energy Star compliant. This
means that the copiers automatically turn to a lower power after a period of inactivity. Another
feature is that Energy Star compliant copiers do not require the room temperature to be as low
as the existing Kodak copiers.
The existing Kodak copiers are unreliable, breakdown frequently, and expensive to maintain.
The current maintenance agreement with Kodak is subject to annual price increases. Given the
added energy savings, firm price arrangement, and more comprehensive maintenance agreement,
award to Konica Business Machines is cost effective and in the best interests to the City.
FISCAL IMPACT: Total monthly cost for the two Konica 6190 photocopiers is $2,948.81.
This includes all principal, interest, delivery, removal of the two existing copiers, installation,
training, maintenance, supplies (excluding paper), copy charges, and applicable sales tax.
Departments have budgeted monthly copy charges based on the prior $4,323
purchase/maintenance cost. Actual cost is distributed to departments based on number of copies
produced by each department. Sufficient funds are budgeted to cover costs associated with the
contract for the current fiscal year. Increased energy efficiency, reduced maintenance materials
costs, and a firm price arrangement will generate further unquantifiable savings.
3
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RESOLUTION NO. / J! iJO'
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA AUTHORIZING THE MAYOR TO SIGN A
FIVE-YEAR LEASE-PURCHASE AGREEMENT WITH KONICA
BUSINESS MACHINES FOR TWO KONICA 6190 COPIERS
AND DISPOSE OF THE TWO EXISTING KODAK COPIERS
THROUGH TRADE-IN AS PART OF THE LEASE-PURCHASE
AGREEMENT
WHEREAS, on February 13, 1996, the five-year lease
agreement on the City's existing two Kodak copiers expired and
ownership transferred to the City at that time; and
life expectancy,
and require an
operating; and
WHEREAS, the existing machines are long past their useful
break down frequently, are not energy efficient,
expensive maintenance agreement to continue
WHEREAS, ten bidders responded to the Request for Bid as
shown on Attachment A; and
WHEREAS, an investigating committee observed
demonstrations and checked references for the three low bid
copiers, and it was the consensus of the committee to recommend the
Konica 6190 to the City Council because not only was it the low
bid, but it also performed better in the demonstration than the
higher priced copiers.
NOW, THEREFORE, BE IT RESOLVED the City Council of the
City of Chula vista does hereby accept the ten bids and award the
contract to Konica Business Machines for two Konica 6190 copiers
and disposal of the two existing Kodak copiers through trade-in as
part of the lease-purchase agreement.
BE IT FURTHER RESOLVED that the Mayor is hereby
authorized to sign a five-year lease-purchase agreement in a form
approved by the City Attorney with Konica Business Machines for two
Konica 6190 copiers.
Presented by
Approved as to form by
~'1~
Ann Y. Moore, Acting
Attorney
Beverly Authelet, City Clerk
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ATTACHMENT A
t
._-~------_.__. -
Name of Company Copier Model 60 Month Lease-Purchase.
Aztec Toshiba 7750 $4,201
Toshiba 9050 $4,792
Cash Lewis Sharp SD-3075 $5,100
ace 2600/Sharp 3075 $5,025
Coast Mita DC-8585 $4,000
Danka Kodak 2085 $5,148
Diversified Toshiba 9050 $4,497
Eastman Kodak Kodak 2085AF $3,795
Kodak 2085/IS70A $4,253
Kodak 211012085 $4,264
Kodak IS70A $4,769
Kodak 2110/FS70A $4,767
Kodak 2110A $4,786
Konica Konica 6190 $2,948
ace ace 2475 $4,780
Remco ace 2475 $4,173
Canon NP-9850 $4,235
Canon NP-9850II $4,711
ace 2600 $4,750
Xerox Xerox 1090 $4,550
* Net cost for two photocopiers. Includes all principal, interest, delivery, removal of the two
existing machines, installation, training, maintenance, supplies (excluding paper), copy charges
and, applicable sales tax.
/ / z:;-
U:' --
COUNCIL AGENDA STATEMENT
ItemL
Meeting Date 9/24/96
. -,Q
ITEM TITLE: Resolution /.'5 f-) 7 Waiving immaterial defects, accepting bids and
awarding contract for "Parking Lot Improvements for Eucalyptus Park in
the City of Chula Vista, CA (PR-211)".
SUBMITTED BY: Director of Public Works~lJ r;rJ
Director of Parks & Recr(ation
Ci" """'g~~ "() ~
REVIEWED BY:
(4/5ths Vote: Yes_NoX)
At 2:00 p.m. on September 4, 1996 in Conference Room 2 and 3, the Director of Public Works
received bids for "Parking Lot Improvements in Eucalyptus Park in the City of Chula Vista, CA
(PR-211)." The General scope of the project includes improving the parking lot adjacent to the
American Legion's building at Eucalyptus Park. The work includes, traffic control, removal of
alligatored pavement areas and replacement with asphalt concrete pavement, AC leveling courses,
P.C.C. pad for trash receptacle, P.C.C. drainage swale, asphalt concrete berm, drainage ditch,
splash wall, crushed aggregate base, and other miscellaneous items of work as shown on the
plans.
RECOMMENDATION: That Council:
1. Waive minor irregularity in low bid (lack of signing second sheet showing the list of
subcontractors) .
2. Accept bids and award contract to MJC Construction - Chula Vista in the amount of
$31,427.50.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
The City Council on February 6, 1996 approved a project to renovate the parking lot and restripe
the lot to maximize the parking for the American Legion and upper ball fields at Eucalyptus Park.
The existing parking lot has large areas of failure due to improper drainage and the parking
7~/
Page 2, Item-.1
Meeting Date 9/24/96
striping is not maximized for space available. This project will correct the deficiencies in the
parking lot, improve the drainage facilities and maximize the available parking in the area.
Bids were received from seven contractors to perform the work as follows:
Contractor
Bid Amount
MJC Construction - Chula Vista
SRM Contracting and Paving - San Diego
Angus Asphalt, Inc. - Santee
Star Paving, Inc. - San Diego
American Asphalt & Concrete, Inc. -
Spring Valley
Frank and Son Paving, Inc. - Chula Vista
Performance Paving, Inc. - San Diego
$31,427.50
$33,694.50
$41,198.10
$41,910.00
$43,980.70
$44,472.00
$49,480.00
The low bid by MJC Construction is below the Engineer's estimate of $37,410.00 by $5,982.50
or 16%. Staff received excellent bids for the proposed work. The Engineer's estimate was based
on prices received on similar work in the last several years. Although this particular firm has not
performed construction work with the City of Chula Vista, the owner, while working with another
firm has performed satisfactory work while working for the City.
Prevailinl;( Wa!!e Statement
The source of funding for this project is Park Acquisition and Development Funds and
participating funds provided by the American Legion. No special minority or women-owned
business requirements were necessary as part of the bid documents. Disadvantaged businesses
were encouraged to bid through the sending of notice to contractors through various trade
publications.
Disclosure statement
Attached as Exhibit A is a Contractor's Disclosure Statement.
Environmental Status
The Environmental Review Coordinator has determined that this project is categorically exempt
under Class 1, Section 15301 (b) of the California Environmental Quality Act (minor alternations
of existing public improvements or public structures).
7~.2
Page 3, Item1
Meeting Date 9/24/96
Financial Statement
FUNDS REQUIRED FOR CONSTRUCTION
A. Contract Amount $31,427.50
B. Staff Costs (Staff and design) $11,400.00
C. Contingencies (approximately 10%) $ 3,172.50
TOTAL FUNDS REQUIRED FOR CONSTRUCTION $46,000.00
FUNDS AVAILABLE FOR CONSTRUCTION
A. American Legion Parking Lot Renovation (PR-211) $27,600.00
B. American Legion funds (PR-211) $18.400.00
TOTAL FUNDS AVAILABLE FOR CONSTRUCTION $46,000.00
7
MJC Construction inadvertently failed to sign the second sheet of their list of subcontractors in
the bid documents when submitted (See Exhibit B). This item was discussed with the City
Attorney's office and determined to be a minor irregularity. The lack of this completed
document, did not, however, provide an advantage to the low bidder. Therefore, staff
recommends waiving the minor irregularity.
FISCAL IMPACT: Construction of this project will improve the existing parking lot adjacent
to the American Legion's building and City ball field. It will also improve the drainage facilities
in the area, thereby minimizing the erosion of an existing slope within the park area. Overall City
maintenance within the parking lot and on the adjacent slope will be reduced with these
improvements.
Attachments:
Exhibit A -
Exhibit B -
City of Chula Vista Disclosure Statement
Letter of explanation from contractor
M:\HOME\ENGINEER\AGENDA \MJC.SLH
7~_j
/Fry0Q
RESOLUTION NO. -~ I
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA WAIVING IMMATERIAL DEFECTS,
ACCEPTING BIDS AND AWARDING CONTRACT FOR
"PARKING LOT IMPROVEMENTS FOR EUCALYPTUS PARK
IN THE CITY OF CHULA VISTA, CA. (PR-211)"
WHEREAS, at 2:00 p.m. on September 4, 1996 in Conference
Room 2 and 3, the Director of Public Works received the following
seven bids for "Parking Lot Improvements in Eucalyptus Park in the
City of Chula Vista, CA (PR-211)."
Contractor
Bid Amount
MJC Construction - Chula Vista
SRM Contracting and Paving - San Diego
Angus Asphalt, Inc. - Santee
Star Paving, Inc. - San Diego
American Asphalt & Concrete, Inc. -
Spring Valley
Frank and Son Paving, Inc. - Chula vista
Performance Paving, Inc. - San Diego
$31,427.50
$33,694.50
$41,198.10
$41,910.00
$43,980.70
$44,472.00
$49,480.00
WHEREAS, the low bid by MJC Construction is below the
Engineer's estimate of $37,410.00 by $5,982.50 or 16% and staff
recommends awarding the contract to MJC Construction; and
WHEREAS, MJC Construction inadvertently failed to sign
the second sheet of their list of subcontractors in the bid
documents when submitted; and
WHEREAS, the city Attorney's office determined it to be
a minor irregularity which did not provide an advantage to the low
bidder and staff recommends waiving the minor irregularity; and
WHEREAS, the source of funding for this project is Park
Acquisition and Development Funds and participating funds provided
by the American Legion and no special minority or women-owned
business requirements were necessary as part of the bid documents;
although disadvantaged businesses were encouraged to bid through
the sending of notice to contractors through various trade
publications; and
WHEREAS, the Environmental Review Coordinator has
determined that this project is categorically exempt under Class 1,
section 15301 (b) of the California Environmental Quality Act
1
7-7
(minor alternations of existing public improvements or public
structures) .
NOW, THEREFORE, BE IT RESOLVED the City Council of the
city of Chula Vista does hereby waive minor irregularity in low bid
(lack of signing second sheet showing the list of subcontractors) .
BE IT FURTHER RESOLVED that the City Council does hereby
accept the seven bids and awards the contract to MJC Construction -
Chula vista in the amount of $31,427.50 for "Parking Lot
Improvements for Eucalyptus Park in the City of Chula Vista".
BE
Chula vista
contract for
IT FURTHER RESOLVED that the Mayor of the City of
is hereby authorized and directed to execute said
and on behalf of the City of Chula vista.
Presented by
Approved as to form by
John P. Lippitt, Director of
Public Works
~~~
Ann Y. Moore, Acting City
Attorney
C:\rs\_jc.bid
2
7--:5
COUNCIL AGENDA STATEMENT
Item K
Meeting Date: September 24. 1996
ITEM TITLE:
Public Hearing: Consideration of the Otay Ranch Reorganization NO.1
consisting of annexing portions of the Otay Ranch to the City, detaching
the Otay Landfill trom the City and detaching territory trom the Rural
Fire Protection District.
SUBMITTED BY: Special Planning Projects ~~ger, Otay Ranch Proj
REVIEWED BY: CitYManage~~~\ (4/5thsVote: Yes_No_)
Staff requests the hearing on the Otay Ranch Reorganization No. 1 be pulled from the
Council calendar in order to perfect the LAFCO required landfill nuisance easements. Staff
continues to work on the easement issue but is unable to determine when it will be resolved.
Staff will renotify all parties when this item will once again be placed on the agenda for City
Council consideration.
RECOMMENDATION: That the City Council pull this item trom the Council's calendar
and direct staff to renotice the appropriate parties.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION: On August 20, 1996, staff reported to the City Council that a continuance
was necessary because the County has not yet received the landfill nuisance easements in a
form satisfactory to them trom SNMB, Ltd. A continuance to September 10 meeting was
recommended by staff and approved by the City Council. Council will recall the County
Board of Supervisors has to accept the easement before the City Council holds the final
reorganization hearing. All parties are trying to resolve the issues as soon as possible but
were not able to do so in time for this agenda statement.
In August of 1995, the City Council authorized the filing of a reorganization application
with the Local Agency Formation Commission (LAFCO) for the Otay Ranch
Reorganization NO.1. The proposed reorganization would annex the majority of the Otay
Valley Parcel, the Mary Patrick Birch Estate Ranch House and the Inverted 'L" area to the
City ofChula Vista. On July 1, 1996, LAFCO approved the reorganization, designated the
City as the conducting authority and authorized the City Council to conduct the proceeding
to complete the reorganization process. Those proceedings require the Council to hold a
noticed hearing on the reorganization. The Council is authorized by LAFCO to approve the
change in organization subject to the LAFCO conditions for maintaining fire service to the
Al13-924.DOC
y-j
-
Page 2, Item K
Meeting Date: September 24. 1996
Otay Landfill (completed July 30, 1996) and County of San Diego receiving the landfill
nuisance easements trom Village Development and SNMB, Ltd.
FISCAL IMPACT: None. State law provides one year from the LAFCO approval date for
Chula Vista to complete our reorganization proceedings. Specifically, the City must
complete the reorganization by July 1, 1997. However, if the proceedings are not completed
by December 1, 1996 and the Council Resolution filed with the State Board of Equalization,
the City will not receive the 1997 property tax revenue trom the reorganization. This
amount is estimated to be $87,000.
6<:A
COUNCIL AGENDA STATEMENT
Item
9
Meeting Date 9/24/96
ITEM TITLE:
Public Hearing
Adopting Otay Ranch Pre-annexation
Development Agreement with Baldwin
Builders
SUBMITTED BY:
Adopting Otay Ranch Pre-Annexation
Development Agreement Between the
City of Chula vista and the Baldwin
Bui ers (first reading)
Deputy City Manage~
ci ty Manager.jQ ~ h ~
(4/5ths Vote: Yes___ No-x-)
Ordinance 2690
REVIEWED BY:
Because reV1S1ons to the Agreement are still being negotiated, Baldwin
Builders has requested that this item be continued to October 1, 1996 to
allow sufficient time for the successful conclusion of the negotiation
process.
9-/
BALDWIN BUILDERS
September 18, 1996
Via: Facsimile and Overnight Delivery
Mr. George Krempl
Deputy City Manager
CITY OF CHULA VlST A
276 Fourth Avenue
Chula Vista, CA 91910
Re: Otav Ranch Pre-Annexation Development Agreement ("PADA") Between the City of
Chula Vista and Baldwin Builders
Dear George:
Please accept this letter as our request that the above referenced matter scheduled to be heard by
the City Council on September 24, 1996 be continued to October 1, 1996. Negotiations between
the parties are continuing and this will allow sufficient time for the successful conclusion of the
negotiation process.
Thank you for your consideration to the above and please feel ftee to give me a call if you should
have any questions.
Very truly yours,
BALDWIN BUILDERS
~fdk~~~~~L---
William R. Brasher /1/.... #ft-
'7
WRB/cm
cc: John Goss, City Manager, City of Chula Vista (via: facsimile & overnight delivery)
David Gould, Trustee (via: facsimile)
Ann Moore, Esq., Acting City Attorney, City ofChula Vista (via: facsimile & overnight
delivery)
Jim Johnson, CEO, Baldwin Builders
17550 Gilktu Avenue, Irvine, CA 92614 - (714) 757-6106 - Fax: (714) 757-6399
9~c2
COUNCIL AGENDA STATEMENT
Item
/0
Meeting Date
9/24/96
ITEM TITLE:
Public Hearing: Appeal of
Yang Accupressure, of the
license
Ginger Cowardin,
revocation of
Yin
her
Resolution /,~?ljI&'benial of Appeal of Revocation
of License
SUBMITTED BY:
Ruth M. Fritsch,
Assistant city Att~tiL~
4/sths Vote: Yes
No--1L
Appellant, Ginger Cowardin, operates Yin Yang Accupressure at 616
Third Avenue. Police officers conducting a routine inspection
discovered that the massage technician employed by appellant was
engaged in prostitution with the customers. Appellant's license to
operate was therefore revoked.
Cowardin now appeals the revocation. staff recommends denial of
the appeal, per the attached resolution.
DISCUSSION
Chula vista Municipal Code sections 5.36.101 et seq. regulate the
operation of massage businesses within the City.
The operator of a massage establishment must be licensed. (Section
5.36.050).
The Police Department is required to conduct inspections of massage
businesses at least four times a year (Section 5.36.200).
When, in the opinion of the City Manager, the massage business
poses an immediate threat to the public health, welfare, or safety,
he may suspend or revoke a license without a hearing. (Section
5.36.300) .
The person affected may appeal the revocation or suspension; the
appeal is heard by the City Council. The Council must hold a
public hearing within 30 days of the notice of appeal. The Council
must by resolution either grant or deny the appeal. (Section
5.36.320) .
Yin Yang's license was properly revoked, and the Council should
deny the appeal.
/[~/
Item
Page
It
2
BACKGROUND
On August 7, 1996, Chula vista police officers conducted an
inspection of Yin Yang Accupressure at 616 Third Avenue. Yin Yang
Accupressure is owned by Ginger Cowardin, who was a licensed
holistic health practitioner. The police investigation revealed
that prostitution was occurring on the Yin Yang premises by the
massage technician employed there, with the knowledge of Ms.
Cowardin (Ex. 1).
Therefore, on August 9, 1996, the Chief of Police asked the city
Manager to revoke Yin Yang's license (Ex. 2).
On August 14, 1996, the City Manager sent Ms. Cowardin a letter
suspending the license (Ex. 3)'.
On August 19, 1996, Ms. Cowardin
of her right to appeal (Ex. 4).
filed an appeal. (Ex. 5).
was notified through her attorney
On August 29, 1996, Ms. Coward in
On September 1, 1996, Ms.
Acting Deputy city Attorney
Ex. 6.
Coward in 's lawyer, Mr. Tanana, sent
Peggy MCCarberg the letter attached as
On September 11, 1996, Mr. Tanana was sent notice of the hearing,
and all of the materials that are provided herein (Ex. 7).
RECOMMENDATION
Yin Yang's license was properly revoked, since the business was
being used for prostitution, which is an immediate threat to public
health and safety (Section 5.36.300).
Moreover, a license is properly revoked if the licensee violates
any law, or conducts the business in an unlawful manner; a criminal
conviction is not required to support a finding of a violation of
any law (Section 5.36.230).
The evidence of prostitution supports the revocation of Yin Yang's
license under the above-cited sections. Council should therefore
pass the attached resolution upholding the revocation.
FISCAL IMPACT: NIA
M:\Ho.e\Attorney\A113.Yin
1 Ms. Coward in was later notified, through her attorney, that
the license is revoked rather than suspended. (Ex. 7)
lv' -,;!.
RESOLUTION NO.
/g7Jj;;~
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
CHULA VISTA DENYING APPEAL OF REVOCATION OF
LICENSE FOR GINGER COWARD IN, YIN YANG
ACCUPRESSURE
WHEREAS, Ginger Coward in, ("Appellant") operates Yin Yang
Accupressure at 616 Third Avenue in Chula Vista; and
WHEREAS, Police officers conducting a routine inspection
discovered that the massage technician employed by Appellant was
engaged in prostitution with the customers; and
WHEREAS, Appellant's license to operate was therefore
revoked; and
WHEREAS, on August 19, 1996, Appellant was notified
through her attorney of her right to appeal; and
WHEREAS, the Council heard and considered evidence and
argument by Appellant; and
WHEREAS,
revocation of her
hearing before the
on August 29, 1996, Appellant appealed the
license and the matter was set for a pUblic
City Council on September 24, 1996.
NOW, THEREFORE, BE IT RESOLVED the City Council of the
City of Chula vista does hereby deny Appellant's appeal.
Presented and Approved as to form by
~ 14 h~
Ruth M. Fritsch, Assistant city Attorney
M:\hoMe\attorney\cowardin
)iJ - _)
.
..
4/0
DATE:
TO:
August 9, 1996
SUBJECT:
John Goss, City Manager
Richard P. Emerson, Chief of Police
Agent Al Mendoza
Yin Yang Accupressure, 616 Third Avenue
VIA:
FROM:
On Wednesday, August 7, 1996 at approximately 1830 hours,
Sergeant Tom Maloney and I conducted a massage parlor
inspection at Yin Yang Accupressure located at 616 Third
Avenue, Chula Vista. We contacted Ginger Cowardin, owner of
the establishment, and licensed holistic health
practitioner. We informed Ms. Cowardin that we were
conducting a massage parlor inspection at the business, as
required per Chula Vista Municipal Code 5.36.200. The
ordinance specifically states that a minimum of four
inspections per year should be conducted. ;
Ms. Cowardin immediatelr recognized Sergeant Maloney and I
from a previous inspect10n we had conducted on January 30,
1996. Ms. Cowardin was cooperative and asked us to enter
the business. She said she had no patrons inside the
establishment and allowed us to have access to the entire
building.
As we entered the living room area within the business, we
were also greeted by Suphachai Otis (AKA Tanya while at the
business), a licensed massage technician who works under Ms.
Cowardin's holistic health practitioner license. Both
Sergeant Maloney and I also recognized Ms. Otis from the
previous inspection in January, and from processing her
application with the City of Chula Vista.
As we began to explain the inspection process to Ms.
Cowardin, I noticed that Otis immediately walked toward a
medium sized room adjacent to the living room area. This
room is not designated as a massage room, however, it is
still part of the business and is divided by a sliding glass
door. Ms. otis walked over to a small n1ghtstand located
adj acent to the bed in this particular room and removed a
brown clear plastic bag containing an unknown object. She
then looked at us as she rapidly walked toward the kitchen
area. She theI;l returned to our location empty handed. I
could tell Ms. Otis was very nervous by her body language.
I asked her what she had removed from the nightstand, and
she said, "That was nothing."
.
-~-+f
EXHIBIT
I
<
I.
Yin Yang Accupressure
Page 2
Sergeant Maloney and I then began to conduct the inspection
by first checking the posted business license and health
permits. As We continued to check the business, We walked
into the kitchen area and asked Ms. Cowardin if she kept any
supplies in any of the cabinets. Ms. Cowardin said she kept
some supplies there, such as incense. Ms. Cowardin gave us
consent to check the cabinets and other areas in the
kitchen.
As I began to open the kitchen cabinet doors, I found a bag
containing a white powdery substance. The substance had a
pleasant aroma similar to that of a rose fragrance. Ms.
Cowardin it was incense in a powder form.
As I continued to check the kitchen cabinets, I located an
Os co Drug clear plastic bag similar to the one I saw Ms.
Otis remove from the night stand located in the room adjacent
to the living room. I checked the bag and found it
contained a 36 count box of non-lubricated Trojan condoms.
I asked Ms. Cowardin why she had condoms, and she replied,
"I don I t know anything about that, they're not mine." I
then asked Ms. Otis if this was the bag she had removed from
the room adjacent to the living room. She paused for a
moment and said also that the condoms did not belong to her.
I asked Ms. Coward in if anyone else worked or had access to
the business besides them. Ms. Cowardin said that Ms. Otis
is her only employee and that no one else has access to the
business. She again told us that she did not know how the
condoms got there.
I told Ms. Otis I wanted to speak to her in a different room
away from Ms. Cowardin. Ms. Coward in immediately told Ms.
Otis to not talk to us. Ms. Otis told me that she wanted to
cooperate with us and did not want trouble from the police.
I then walked over to one of the massage rooms with Ms. Otis
while Sergeant Maloney remained in the kitchen area with Ms.
Cowardin. I asked Ms. Otis if she had removed the condoms
from the nightstand, and she said that the condoms did
belong to her and that she was trying to hide them from us.
I asked her why she would need condoms at a massage parlor,
and she said that she uSeS them for male customers when'they
request oral sex or "hand jobs." Ms. Otis clearly
understood that giving oral SeX for exchange of money was
against the law. Ms. Otis then told me that she only gives
oral SeX or "hand jobs" if the customer requests it in
addition to the massage. I asked her how much she charged
for oral SeX or a "hand ,job" and she said the customers pay
her anywhere from $30.00 to $40.00, in addition to the
massage fee.
-;2 -
10 -'5
(
(:
Yin Yang Accupressure
Page 3
Ms. Otis then told me, "I'm a boy." This caught me somewhat
by surprise since Ms. Otis has all the features of a female.
I asked Ms. Otis if I heard her correctly when she said she
was a boy, referring that she was a male. She then began to
explain . that she had a sex change operation in Thailand
approximately seven years ago. Ms. Otis also had silicone
breast implants during the complete surgery procedures. Ms.
Otis said many of the customers who think that she is a
female want to have sex for money in addition to the
massage. She said many customers become extremely upset
when they learn that they are unable to penetrate for sexual
intercourse. (Her surgery only consisted of the removal of
the penis and testicles.) Ms. Otis said she explains to the
customers that she was once a male when they learn that they
cannot fully penetrate. She volunteers to return the money
to them if they are not satisfied. I told Ms. Otis I would
much rather speak with her at the Chula Vista Police
Department, away from the business. She agreed to come to
the police department with Sergeant Maloney and me to
explain in detail what was going on at the business.
Sergeant Maloney then walked in the room and contacted me as
I continued to speak with Ms. Otis. I told Sergeant Maloney
that Ms. Otis was going to go to the police department with
us on a volunteer basis. I then told Ms. Cowardin that we
would later give Ms. Otis a ride back to the business.
Sergeant Maloney and I then drove Ms. Otis to the Chula
Vista Police Department, where we conducted an interview.
While at the station, Ms. Otis again told us what I had
already learned at the business. I tape recorded the
conversation we had with her. Ms. Otis told us Ms. Coward in
was not aware that she was giving oral sex to customers, in
addition to the massages. She began to explain that when a
customer enters the.business, they pay Ms. Cowardin for the
massage ahead of time. When the customer enters the massage
room with Ms. Otis, she would receive additional money for
oral sex or "hand jobs." She again told us that Ms.
Cowardin was not aware of any of the sex acts that were
being performed by her in the massage rooms.
We later drove Ms. Otis back to Yin Yang Accupressure, where
we again contacted Ms. Cowardin. I briefly told Ms.
Cowardin what I had learned from Ms. Otis while at the Chula
Vista Police Department. Ms. Cowardin also admitted knowing
that her employee, Ms. Otis, was performing sex acts while
at her business.
.
-;->
;, -
~ 10 -~
_ ~",....,,,:.::!7-~
(
..
Yin Yang Accupressure
Page 4
When I asked Ms. Cowardin why she allowed Ms. Otis to
continue this, she explained to me that it is safer for
customers to come to Yin Yang for sex acts than picking up a
prostitute on the street. Ms. Coward in said even though she
was aware of the sex acts that were being performed by Ms.
Otis, she has never witnessed any of them. She also said
that she does not perform any sex acts because "nobody wants
me. " Ms. Cowardin was aware that performing sex acts for
money was against the law.
Ms. Cowardin was very concerned and kept asking us if we
were going to arrest her. She kept telling us to give her
another chance and that the sex acts would stop. Both
Sergeant Maloney and I told Ms. Cowardin that we were not
going to arrest her and that the incident would be
investigated.
Sergeant Maloney and I feel that based on the evidence and
the statements by both Ms. Cowardin and Ms. Otis, their
license as holJ.stic health practitioner and massage
technician should be revoked under the authority of
5.36.230, which reads "In the event any person holding a
license or permit issued pursuant to this chapter violates
or causes or permits to be violated any of the provisions of
this chapter, or any provision of any other ordinance or law
relating to or regulating said bus~ness or occupation, or
conducts or carries on such business or occupation in an
unlawful manner, the city manager, may, in addition to other
penalties provided by ordinance, suspend or revoke the
license or permit issued pursuant to this chapter. For the
purpose of this section, a criminal court conviction shall
not be required to support a finding of a violation of any
law. II
NOTE:
Both the condoms and the microcassette tape of the
interviews were later logged into Chula Vista Police
Department under Property Tag #B42678.
.
110_7
. ..~
t.
.
'.
DATE:
August 9, 1996
<(\ \~~O}IP
-)
tiP ~
TO:
John Goss, City Manager
VIA:
Sid Morris, Assistant city Manager
Richard Emerson, Chief of pOlice~
Revocation of License Ying Yang Accupressure, 616
Third Avenue
FROM:
SUBJECT:
Officers from the Police Department conducted an investigation at
the business at 616 Third Avenue. Based on information developed
du~ing this inspection process, and statements of the owner and
employees, it is our request of you to revoke their license
pursuant to City Ordinance 5.36.230 which states "In the event any
person holding a license or permit issued pursuant to this chapter
violates or causes or permits to be violated any of the provisions
of this chapter, or any provision of any other ordinance or law
relating to or regulating said business or occupation, or conducts
or carries on such business or occupation in an unlawful manner,
the city Manger may, in addition to other penalties provided by
ordinance, suspend or revoke the license or permit issued pursuant
to this chapter. For the purpose of this section, a criminal court
conviction shall not be required to support a finding of a
violation of any law."
The supporting information is attached in the memo from Special
Investigations Agent A. Mendoza.
If your staff has a form letter for this type of revocation, please
have them prepare same. If not, we can prepare a letter for your
signature and will deliver it demanding that the business close
immediately.
YinYang
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EXHIBIT
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CITY Of
CHULA VISTA
OFFICE OF THE CITY MANAGER
Ms. Ginger Coward in
Yin Yang Accupressure
616 Third Avenue
Chula Vista, CA 91910
Dear Ms. Cowardin:
'.
August 14, 1996
The Chief of Police has informed me that, as a result of a police
investigation involving your premises, your license is in violation
of City ordinances and is being immediately suspended.
If you have any questions, please contact Sergeant Tom Maloney,
Investigations Division, at 691-5129.
sincerely,
JDG:mab
-t
.P.~
D. Goss
Manager
/0 - cr
276 FOURTH AVENUE. CHULA VISTA. CALIFORNIA 91910 ' (619) 691.5031 ' FAX (619) 585-5612
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EXHIBIT
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CITY OF
CHUlA VISTA
POLICE DEPARTMENT
August 19, 1996
Tom Tanana, Attorney at Law
4019 Goldfince Street, Suite 176
San Diego, CA 92103
Dear Mr. Tanana,
The license for Yin Yang Accupressure was suspended pursuant
to Chula Vista City Ordinance Section 5.36.300. This
section states that when in the opinion of the City Manager
there is an immediate threat to the public health, welfare
or safety, he may deny, suspend or revoke a license or
permit issued pursuant to this Chapter without ca11ina a
hearina. The person affected may appeal such a decision
pursuant to Sections 5.36.310 and 5.36.320 of this Chapter.
The effect of such a decision shall not be stayed during
pendency of such appeal.
Based on the police investigation, we believe that Yin Yang
Accupressure was a threat to public health and safety of our.
community. Therefore, pursuant to the above-mentioned City
Ordinance, a hearin~ was not required prior to the
suspension. Your cl~ent still has the right to appeal
pursuant to Section 5.36.310.
In any event, it has come to our attention that your client
wishes to close their business and relocate in another area.
We suggest you contact us to discuss this matter further.
Should you have any questions regarding the above, please
feel free to contact me at 691-5129, or Ann Moore of the
City Attorney's Office at 691-5037.
Sincerely,
~ ~~ Sergeant
Investigat~ve Division
Chula Vista Police Department
cc: Chief of Police
City Manager
City Attorney
7-
10 -/()
276 FOURTH AVENUE . CHULA VISTA. CAUFORNIA 91910
'4 -_...
EXHIBIT
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"ECEIVED
(llY OF
(HULA VISTA
OFFICE OF iHE CITY ATTORNEY
'96 AlE 29 P4 :14
1/1'1' tW tHUlA VI& T A
.n eLEIIK'S tFFICE
August 29, 1996
Thomas S. Tanana
Attorney at Law
4019 Goldfinch Street, suite 176
San Diego, CA 92103-1820
Re: Chula Vista Municipal Code Section 5.36.310 Appeal
Dear Mr. Tanana:
You are hereby authorized to submit an appeal on behalf of your
client on this date in a format which provides all necessary
information to the City of Chula vista to submit the appeal. The
City Clerk will not provide a standard form for that purpose.
The City will accept a timely appeal providing appropriate notice
to the City of the ground for the appeal in a form of your
choosing.
Very truly yours,
{f'~~~
Peggy J. McCarberg
Acting Deputy City Attorney
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Thomas S. Tanana
AUorney at Law
4019 GoldBnch Street
Suite 176
SanDiego,CA 92103-1820'
(619)685-8004
September 1, 1996
Hs. peqgy J. McCarberv
Acting Deputy City Attorney
cIty or Cbula VllS~a.
276 Fourth Avenue
Chula Vista.. CA 91.910
'1'elephone:
Fax :
(619)6~1-5037
(619)5&5-5612
u~ OFFICE Dlcmmrrs SURROtJImDfG COWARD1:N QB.:JECTIOHS/APPEAL
Dear Ms. McCa~berg:
This. tax is primarily sent to .elloriallle the following
incidents that occurred at or around your office and the office of
the Chula.vista City Clerk after 2:15 P.M. on Augu~t 29,1996:
(1) Upon requesting froD the city Clerk an appeal petition
form fQr Ms. CDwardin, pursuant to Chula. Vis.ta Municipal Code
(CVMC) 55.36.310, said Clerk said that she ~idn't have any form to
furnish. Upon showing her a. coPY' of"'C\!MC 15.3.6.310,. which
expressly requires that .y client's appellate petition b9 tiled
with the city Clerk "on a. fOrD furnished by her [(by the City
Clerk) ] ", said City Cleric. exprelldy stated that her off.1.C4I doesn't
follow the rules. Your letter. which is the cover sheet for t.t)e
appeal, confirms the Clerk's refusal to provide a standard form for
that purpose, in nonconformity with, in violation of, and under
color of ordinances set forth by the City of Chula vuta in ita
Hunlcipal Coda, as Bet forth. by its city Council. .
(2) (a) My client had relied upon the CitY'1I prior oral
agreement and 1: had submitted my client's written offCir per the
City's request. Not receiving any appropriate response to said
requested written offer. 1: nonll the less received a mailed let.ter
from Mr. .Maloney (a t118Dber of your illustrious vice squad). Said
let~er froll Hr. Maloney _s dated AUgust 19, 1996. H1l1takenly
aSfiull1ing that the City had acted in C}ood faith and that Hr.
Haloney'S August 19th letter bad lIerely crossed In. the lIail with IIY
client's August 19th draft offer, I waited until the tenth (and
final) day after Mr. Halon8.Y's letter dat.e before X rellpondad to
it.
(ob) As X pointed out 1n your offIce on August 29, 1996,
the aforementioned da~ was the very last day that IIY olient bad to
file any such appeal on Mr. Maloney's mailed let~Qr of August 19,
.
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EXHIBIT
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1996, pursuant to ~ 15,36.310. I waited until the tenth. an~
tinal day of Hr. Haloney's let~.r -- after receipt of the August
39{ 1996 .ail delivery to 'lAy oftice .- before I contacted thE: City.
Th ~ qave you the aaximum possible time 'to respond to 'the written
of~er that you had requested.. to submit on behalf of 'lAy cllen~.
It was not until that very late mOllent that the cit:y finally
bothered to inform lie that it was nQt accepting the wdtt:en offer
that it bad itself requested - ~ said in~oraatiol\ was not at any
time provided at the city'c init.iative.
(c) In other words, (i) you reneged and (ii) your
reneging was done 1n such a. way 88 to induce the reliance of 'lAy
Ql1ent on your putrid word.
(3)' (a) After said aall dolivery, 1 phydcaUy went to the
City offic:es Where, at about 2:20 P.M. on August 29, 1996, you
refused my request to provide .y client with any kin~ of extension.
A good word to describe that kind of refusal is -sleazy".
(b). Since said appeal would ha.ve to be filed with the
City Clerk and since X aaked yQU What tiDe they closed, you told .e
that you weren't sure what time the City Clerk's offioe closed --
but that they closed at either (130 P.H. or 5100 P.M.. ~hus, you
clearly restricted my cli~t'. appeal tille window to about 2 1/2
hours. .
(0) '1'be City Clerk told ae ~at they closed at S:OO P.M.
and I acted on the assUllPtion ~at you bureaucrats: were providing
misleading inform~tlon. So I acted as it olosing tiDe was 4~30
P.M.. It's a qood thinq that I II1strusted you.
(4.) (111 I then submitted. -.y client'. hand-written appeal at
around 4120 P.M., liS was best possible to do under these tIght
circwastances. After going to ay car to review Title 5.36 of tJ\e
CVMC, I roturned to your office to demand the iamediate return of
a1.1 indicia of licenses and penlita that had been taken ~rolD. .y
client, pending appeal. Tha.t delland. was finly grounded since BY
client had and has the. right to the. return of those 1Jtdlcia,
pursuant to CVMC I 5.36.290. (Specifically, the initial purported
suspension and the theft by the City of Chula Vista of al1in<l.1cia
of same makes any currently aU8ged suspension void. '.rhus,.y
client has a righ.t to the return of all lioenses and permi tIS
pqr.uant to CVHC 15.36.290).
(b) Your secretary. sai4 you were ill. II _eting, 'that you
wouldn't meet. with me <<md suggested that I set up an "appo1ntaentV
with her ~o meet with you.llometille next week. It was obvious that
you were in no such aeeting and that you si.ply refused to mset
with ae. Again, Ms. Kocarberg, X. first went to my car and only
tnen returne~ to lour office to BU. JIl':f delllands for the return of
the lioense/permi indicia -- after again ~eviewin9 Title 5.36 of
the CVHCl 'to llAke sure I was on tira ground in asserting my
cl1ent'& rights to t:h,e indicia.. As I was leaving for my oar to
exa.ine Title 5.36, Z aaw the City Clerk iuediately transport lilY
client's appeal petition to your office, so X knQW that you were
reviewing Hs. COwardin'a appeal as X stood waiting in your offioe.
(0) 1: waited in your office for 15 Binutes before X
rinally left. 2'hat va.s extr..ordinarily unprofessional of you, Hs.
a
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McCarber9, but not unexpected ot attorneys Wbo work tor 9'overrment.
Furthermore, Ms. McCarberq, that constitutes the assistance of the
continued violation of JIIY client's constitutional rights, pursuant
to 42 U.S.C. 1!il985, 1986. I take particular note of the faot that
ay client emphasized her rights -- pursuant to ~itle 42 of the
united states Cod. -- 1n h~ appeal that you were reading while I
was standing an.d .,.iUng for the return of all lioense/permit
incUoia.
(4) 7 particularly note that when I left your office
18hortlY after 0& I 30 P. N. ) l the liCJhu of the city Clerk had 4iaJaed,
ncUClating that (1) the. City Clerk'.. Qffice was 010a8d and (1i) no
one was anYWhere to be found in the City Clerk's office. !1'hus, if
I had subJUtted the appeal after 4:30 P.M., in reliance on the word
of you anI! the City Clerk, 'Illy client probably would have bean
screwed. X. stronglY suspect that this waa not unintentional
because this aarks a continued pattern of a veritable streaa of
violations of my client's procedural due procaas rights.
(5) (a) Since then, it has been brouqht to ay attention that
Mr. Mendoza (another aember of the Chula Vista Police Department's
Vice Squad, who identified hillself at the conferenoe room table as
someone working the politically shaded tasks of a Criainal
Intelligence Unit) oontaoted my client's landlord in Arizona and
atteJlpted to prompt ~ client's eviction, preswaably under color of
the Red Light Abate1ll8nt Act. My client'. landlord CJives the City
of Chula Vista the big 9arboni in response. Since NsI. CowareSin is
by no 5tretch a publio figure, that: aot was def8.1118tory per lie and
1 have the fullest intention to lIIue Mr. Mendoza for defaaation,
pursuant to the ru1es establilllhed under Paul v. Davis.
(b) And by the way, ay client has _de the old mas8age
parlor cite her nQW re8idanca and ahe has aoved in. :It is now her
home. Ms. cowardin. ",ill. remain ensconced in Chula vi8ta tor at
least four aore years. This is eapeoially true since Ms. Cowardin
has lived in Chula Vista foz: years: and oontlnues 'to aake Chula
vista her 4omioile.
(0) Another point about that slillester, Mr. Mendoza --
when Mr. Mendoza sat across lie at the conference room table in your
office on August 29, 1996 his response to my comments about civil
ric;hts was that his n_e Is DMendoza". That was 8. patently racist
remark. To a~orialiEe ay reply to Mr. Mandoza's racist remark:
"X don't care if [his] Daae ia 'Mendolia' or (Smith'''.
I bring ycur attention 1;0 the faQ't that ay client will be able
to laWfully p,ractica aasaa98 outsido Chula Vista only if the Chula
Vista 11cense is abandoned -- iutsad of lIuspen.ded. !1'hat'.
because, as a oollateral conaequence of a licanae suaperud,on in
Chula Vista, she'll prObably lose licensell in other jurisdictione
whenever she honestly answers any 9U8stion upon applIcation or at
renewal concernino any lIuspension or revocation of any license or
penait in another jurlJidiction. (The city of Chula Vista itselt
asks this question, per CVMC 15.36~lOO H.)
Thus. the nasty adainilltrative actions taken by the City ot
Chula Vista mean that MS. Covardin can't practice outside Chula
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Vista. This 9ives her nQ incentive Khatsoever to go outside clwla
VIsta to bUild any kind of massage business.
By demandlnq the ~~Dens1on of her license, instead of
allowing- her to a~nc:lon , you arQ doing absolutely nothing to
aotivate her 1:0 practice! outsido of the City of Chula visu. Since
her abandonment offer gave you evorything you wanted and since the
City now raises the thinly disguIsed pretens.e -- after the fact, I
Dight add -- of protecting 89ainst the nimmediate throat to the
public hlla~th, welfare o~ earety" of ~e ~esi~ts or Chu1.a 'Lieta
under its Kunicipal Code (whose rules this appeal shows you 40n't
fOllow), it Is obvious tha.t the City's actiQJ1s don't even IUl.ve a
rational basis of support ~- partioularly Where your vindictively
power-JIIonqorinq actions 4e111onstrate that you want to drive her out
of town.
These actions constitute aallce of the purest Bort and they
qive rise to the ready capaoity ot my client to assert the
violation of her civil rights under Title 42 ot the United StUe5
COde.
Furthermore, q1ven the United States Supr_e Court'. reoent
rul1nc;r in 44 1.lauormart, you are flat. oft the charts. You are no
botter than ~ criminal.
Ms. NcCarbeI:9, my client wac ao~t CIOnciliatory. She wall
~illinq to surrender and rai.. the whito f~aq. But: that wasn't
good enouqb roX' you. You want to alBr hQr. )lOW she is in a
fighting .ood and I all more than willIngto go to the Jlat for her,
Frame my client's original otfer. It's a tair bet that you'll
review it frequently over the next oouple months, because you will
definito~y wish that you hod accepted our extraorc1inArlly
charitable offer.
I hope you're ready for what's ooming. Just ask La Mosa Kayor
Art Madrid about my tenacity on these kinds of issues and watch the
events that unfo~eS in the next couple months. Although you
obviously dicSn't recoqni2e it on August 29th, your sleazy behavior
was a r~Bl1v stuDld error -- both morally an~ tactically.
As Around the county and you'll learn that I _ very prone to
Jlake these kind!> ot things aedia events. And it .is vli\ry possibJ.e
that a media event could do to Chula Vista what Art Madrid's 8ign
ordinance dieS 'to La Hesa -- and Rake it the whore capitol of San
Diego County.
Of particular salience, I _ Jlanaging a California MlleJabJ,y
campaign whose district boundaries include part of the City of
Chula Vista -- and. 'the priDary issue of our C8Dpaign is the
perverse llisapplication of the vice laws concerning prostitution.
I have. the peculiarly aalient ability at this particular juncture
in time to raise all sorts of public issues -- and it is
appropriate to do so, giyen the organic structure ot this
particular adm1nistrative forum. Hore. iJiPortantly, it faUs Kith1n
the aqenda. of our Assembly caapa1gn..
Again, I suggest tha~ you speak with La Meaa PiJlp, Art Madrid.
whose nedie. aotions converted the sleepy family town of La Hesa
into the whore capitol of San D1eqo count.y. Prostitution was not
a problem in La Mesa until all the election-iN:pireCI electioneering
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-aoted like a bright xed lantern being raised in La Mesa, drawing
all the moths to La Mesa".
Get one ~inq straight MS. KOCarberg. As a prosecutor ot
oonsensual orimes, people lIke you are of less value to society
than are prostitutes. unlike prostitutes, who engaqe in voluntary
exchanges with people who reque~t their services, you swill at the
publio trough of forciblr extracted tax l\OJ\ey and as such are aore
of a strain on the socia fabrio than is the worst kind of )lugger,
welfare recipient or natural parasite. .
My client hereby offers her initial offer, with the additional
conditlo.n that the City of Chula vista pay ber $2,000.00. That
offer expires at Midnight on September 8, 1996.
'!'his lotter alsQ c::.onstitutes a request that you send Jle a form
for filing an administrative claim with the City of Chula Vieta,
tKloause we plan to 8U8. Ae an officer of the Court, you aro
obliged to comply with thill "qUe.t. I expeot receipt of said fora
no latGr than septem!:IGr 1!5, 19116.
tll::-~~
THOMAS S. TANANA
Attorney at Law
co;
Chula Vista City Manager, Hr. John D. Goss
Chula Vista Vice Squaa Mem!:IGr, Hr. Maloney
Chula vista vice Squad Kember, Hr. Kendo28
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CllY OF
CHULA VISTA
OFFICE OF THE CITY ATTORNEY
September 11, 1996
Thomas S. Tanana
Attorney at Law
4019 Goldfinch Street, Ste. 176
San Diego, CA 92103-8004
Re: Appeal of Ginger Cowardin
Dear Mr. Tanana:
Pursuant to your client's notice of appeal dated August 29, 1996, please be
advised that the matter has been set for public hearing pursuant to Chula Vista
Municipal Code section 5.36.320 on September 24, 1996 at 6:00 p.m. in the Council
Chambers, located at 276 Fourth Avenue, chula Vista, California.
Enclosed please find the Agenda Statement and supporting documents (Exhibits 1-
7) .
Should you wish to present documentary evidence to Council prior to the hearing,
please deliver same to Patty Wesp, secretary to the City Council, for
transmission to the Council and to me.
I note from the file that the terms "suspended" and "revoked" appear to have been
used interchangeably with reference to the status of your client's license. It
is clear from Chief Emerson's August 9, 1996 memorandum (enclosed as Exhibit 2)
that revocation was intended, and I intend to ask the Council to uphold
revocation.
Finally, in the last page of your letter to Ms. McCarberg, you request an
"administrative claim". We have no such form, but since you further state that
you desire such a claim as a predicate to suing the City, I assume that what you
really want is a tort claim, and I therefore enclose one.
~=" '&..
~
Ruth M. Fritsch
Assistant City Attorney
---
Enclosures
cc: Chief Emerson
Agt. Mendoza
Sgt. Maloney
Patty Wesp
tan.l.t
-- ) 9 ~ EXHIBIT
)0 -~~ 7
276 FOURTH AVENUE. CHULA VISTA' CALIFORNIA 91910 . (619) 691-5037 . FAX (619) 585.5612
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#;Iv
DATE:
August 9, 1996
John Goss, City Manager
Richard P. Emerson, Chief of Police
TO:
VIA:
FROM:
Agent Al Mendoza
SUBJECT :
Yin Yang Accupressure, 616 Third Avenue
On Wednesday, August 7, 1996 at approximately 1830 hours,
Sergeant Tom Maloney and I conducted a massage parlor
inspection at Yin Yang Accupressure located at 616 Third
Avenue, Chula Vista. We contacted Ginger Cowardin, owner of
the establishment, and licensed holistic health
practitioner. We informed Ms. Cowardin that we were
conducting a massage parlor inspection at the business, as
required per Chula Vista Municipal Code 5.36.200. The
ordinance specifically states that a minimum of four
inspections per year should be conducted. ;
Ms. Cowardin immediatelr recognized Sergeant Maloney and I
from a previous inspectJ.on we had conducted on January 30,
1996. Ms. Cowardin was cooperative and asked us to enter
the business. She said she had no patrons inside the
establishment and allowed us to have access to the entire
building.
As we entered the living room area within the business, we
were also greeted by Suphachai Otis (AKA Tanya while at the
business), a licensed massage technician who works under Ms.
Cowardin's holistic health practitioner license. Both
Sergeant Maloney and I also recognized Ms. Otis from the
previous inspection in January, and from processing her
application with the City of Chula Vista.
As we began to explain the inspection process to Ms.
Cowardin, I noticed that Otis immediately walked toward a
medium sized room adjacent to the living room area. This
room is not designated as a massage room, however, it is
still part of the business and is divided by a sliding glass
door. Ms. Otis walked over to a small nJ.ghtstand located
adj acent to the bed in this particular room and removed a
brown clear plastic bag containing an unknown object. She
then looked at us as she rapidly walked toward the kitchen
area. She then returned to our location empty handed. I
could tell Ms. Otis was very nervous by her bOdy language.
I asked her what she had removed from the night stand, and
she said, "That was nothing.-
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EXHIBIT
I
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Yin Yang Accupressure
Page 2
Sergeant Maloney and I then began to conduct the inspection
by first check~ng the posted business license and health
~ermits. As we continued to check the business, we walked
~nto the kitchen area and asked Ms. Cowardin if she kept any
supplies in any of the cabinets. Ms. Cowardin said she kept
some supplies there, such as incense. Ms. Cowardin gave us
consent to check the cabinets and other areas in the
kitchen.
As I be~an to open the kitchen cabinet doors, I found a bag
contain~ng a white powdery substance. The substance had a
pleasant aroma similar to that of a rose fragrance. Ms.
Cowardin it was incense in a powder form.
As I continued to check the kitchen cabinets, I located an
Os co Drug clear plastic bag similar to the one I saw Ms.
Otis remove from the night stand located in the room adjacent
to the living room. I checked the bag and found it
contained a 36 count box of non-lubricated Trojan condoms.
I asked Ms. Cowardin why she had condoms, and she replied,
"I don't know anything about that, they're not mine." I
then asked Ms. Ot~s if this was the bag she had removed from
the room adjacent to the living room. She paused for a
moment and sa~d also that the condoms did not belong to her.
I asked Ms. Cowardin if anyone else worked or had access to
the business besides them. Ms. Cowardin said that Ms. Otis
is her only employee and that no one else has access to the
business. She again told us that she did not know how the
condoms got there.
I told Ms. Otis I wanted to speak to her in a different room
away from Ms. Cowardin. Ms. Cowardin immediately told Ms.
Otis to not talk to us. Ms. Otis told me that she wanted to
cooperate with us and did not want trouble from the police.
I then walked over to one of the massage rooms with Ms. Otis
while Sergeant Maloney remained in the kitchen area with Ms.
Cowardin. I asked Ms. Otis if she had removed the condoms
from the nightstand, and she said that the condoms did
belong to her and that she was trying to hide them from us.
I asked her why she would need condoms at a massage parlor,
and she said that she uses them for male customers when. they
request oral sex or "hand jobs." Ms. Otis clearly
understood that giving oral sex for exchange of money was
against the law. Ms. Otis then told me that she only gives
oral sex or "hand jobs" if the customer requests it in
addition to the massage. I asked her how much she charged
for oral sex or a "hand .job" and she said the customers pay
her anywhere from $30.00 to $40.00, in addition to the
massage fee.
-c2 ~
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Yin Yang Accupressure
Page 3
.
Ms. Otis then told me, "I'm a boy." This caught me somewhat
by surprise since Ms. Otis has all the features of a female.
I asked Ms. Otis if I heard her correctly when she said she
was a boy, referring that she was a male. She then began to
explain .that she had a sex change operation in Thailand
approximately seven years ago. Ms. Otis also had silicone
breast implants during the complete surgery procedures. Ms.
Otis said many of the customers who think that she is a
female want to have sex for money in addition to the
massage. She said many customers become extremely upset
when they learn that they are unable to penetrate for sexual
intercourse. (Her surgery only consisted of the removal of
the penis and testicles.) Ms. Otis said she explains to the
customers that she was once a male when they learn that they
cannot fully penetrate. She volunteers to return the money
to them if they are not satisfied. I told Ms. Otis I would
much rather speak with her at the Chula Vista police
Department, away from the business. She agreed to come to
the police department with Sergeant Maloney and me to
explain in detail what was going on at the bus1ness.
Sergeant Maloney then walked in the room and contacted me as
I continued to speak with Ms. Otis. I told Sergeant Maloney
that Ms. Otis was going to go to the police department with
us on a volunteer basis. I then told Ms. Cowardin that we
would later give Ms. Otis a ride back to the business.
Sergeant Maloney and I then drove Ms. Otis to the Chula
Vista Police Department, where we conducted an interview.
While at the station, Ms. Otis again told us what I had
already learned at the business. I tape recorded the
conversation we had with her. Ms. Otis told us Ms. Cowardin
was not aware that she was giving oral sex to customers, in
addition to the massages. She began to explain that when a
customer enters the.business, they pay Ms. Cowardin for the
massage ahead of time. When the customer enters the massage
room with Ms. Otis, she would receive additional money for
oral sex or "hand jobs.. She again told us that Ms.
Cowardin was not aware of any of the sex acts that were
being performed by her in the massage rooms.
We later drove Ms. Otis back to Yin Yang Accupressure, where
we again contacted Ms. Cowardin. I briefly told Ms.
Cowardin what I had learned from Ms. Otis while at the Chula
Vista police Department. Ms. Cowardin also admitted knowing
that her employee, Ms. Otis, was performing sex acts while
at her business.
e
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Yin Yang Accupressure
Page 4
When I asked Ms. Cowardin why she allowed Ms. Otis to
continue this, she e~lained to me that it is safer for
customers to come to Y1n Yang for sex acts than picking up a
prostitute on the street. Ms. Cowardin said even though she
was aware of the sex acts that were being performed by Ms.
Otis, she has never witnessed any of them. She also said
that she does not perform any sex acts because "nobody wants
me. " Ms. Cowardin was aware that performing sex acts for
money was against the law.
Ms. Cowardin was very concerned and kept asking us if we
were going to arrest her. She kept telling us to give her
another chance and that the sex acts would stop. Both
Sergeant Maloney and I told Ms. Cowardin that we were not
~oing to arrest her and that the incident would be
1nvestigated.
Sergeant Maloney and I feel that based on the evidence and
the statements by both Ms. Cowardin and Ms. Otis, their
license as ho11stic health practitioner and massage
technician should be revoked under the authority of
5.36.230, which reads "In the event any person hold1ng a
license or permit issued pursuant to th1S chapter violates
or causes or permits to be violated any of the ~rovisions of
this chapter, or any provision of any other ord1nance or law
relating to or regulating said bUS1ness or occupation, or
conducts or carries on such business or occupation in an
unlawful manner, the city manager, may, in addition to other
penalties provided by ordinance, suspend or revoke the
license or permit issued pursuant to this chapter. For the
purpose of this section, a criminal court conviction shall
not be required to support a finding of a violation of any
law."
NOTE:
Both the condoms and the microcassette tape of the
interviews were later logged into Chula Vista Police
Department under Property Tag #B42678.
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DATE:
August 9, 1996
q\\~~~
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6 Jf' fY'"
TO:
John Goss, City Manager
VIA:
Sid Morris, Assistant City Manag~r I~
Richard Emerson, Chief of police~
Revocation of License Ying Yang Accupressure, 616
Third Avenue
FROM:
SUBJECT:
Officers from the Police Department conducted an investigation at
the business at 616 Third Avenue. Based on information developed
du~ing this inspection process, and statements of the owner and
employees, it is our request of you to revoke their license
pursuant to City Ordinance 5.36.230 which states "In the event any
person holding a license or permit issued pursuant to this chapter
violates or causes or permits to be violated any of the provisions
of this chapter, or any provision of any other ordinance or law
relating to or regulating said business or occupation, or conducts
or carries on such business or occupation in an unlawful manner,
the city Manger may, in addition to other penalties provided by
ordinance, suspend or revoke the license or permit issued pursuant
to this chapter. For the purpose of this section, a criminal court
conviction shall not be required to support a finding of a
violation of any law."
The supporting information is attached in the memo from Special
Investigations Agent A. Mendoza.
If your staff has a form letter for this type of revocation, please
have them prepare same. If not, we can prepare a letter for your
signature and will deliver it demanding that the business close
imJDediately.
YinYang
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-- _7 ....-
EXHIBIT
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CllY OF
CHUlA VISTA
OFFICE OF 'THE CITY MANAGER
~ ~
August 14, 1996
Ms. Ginger cowardin
Yin Yang Accupressure
616 Third Avenue
Chula Vista, CA 91910
Dear Ms. Cowardin:
The Chief of Police has informed me that, as a result of a police
investigation involving your premises, your license is in violation
of City ordinances and is being immediately suspended.
If you have any questions, please contact Sergeant Tom Maloney,
Investigations Division, at 691-5129.
Sincerely,
.'
J.~
D. Goss
Manager
JDG:mab
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EXHIBIT
3
276 FOURTH AVENUE. CHULA VISTA. CALIFORNIA 11110 . (618) .'.5031 . FAX (618) 585.5612
10 --...
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01Y Of
CHUlA VISTA
POUCE DEPARTME~rr
August 19, 1996
Tom Tanana, Attorney at Law
4019 Goldfince Street, Suite 176
San Diego, CA 92103
Dear Mr. Tanana,
The license for Yin Yang Accupressure was suspended pursuant
to Chula Vista City Ordinance Section 5.36.300. This
section states that when in the opinion of the City Manager
there is an immediate threat to the public health, welfare
or safety, he may deny, sus~end or revoke a license or
permit issued pursuant to th~s Chapter withol1t callincr a
hearincr. The person affected may appeal such a decision
pursuant to Sections 5.36.310 and 5.36.320 of this Chapter.
The effect of such a decision shall not be stayed during
pendency of such appeal.
Based on the police investigation, we believe that Y1n Yang
Accupressure was a threat to public health and safety of our.
community. Therefore, pursuant to the above-mentioned City
Ordinance, a hearin~ was not required prior to the
suspension. Your cl~ent still has the right to appeal
pursuant to Section 5.36.310.
In any event, it has come to our attention that your client
wishes to close their business and relocate in another area.
We suggest you contact us to discuss this matter further.
Should you have any questions regarding the above, please
feel free to contact me at 691-5129, or Ann Moore of the
City Attorney's Office at 691-5037.
Since:z:ely,
~ ~~ Sergeant
Investi~at~ve Division
Chula V~sta Police Department
cc: Chief of Police
City Manager
City Attorney
7-
EXHIBtT
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276 FOUR1M AVENUE. CHULA VISTA . CALIFORNIA 111110
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CI1Y Of
CHULA VISTA
OFFICE OF THE CITY ATTORNEV
ftECEIVED
"96 A1Jj 29 P 4 :14
IliY IF tHUlA VI~i A
.n elMK'S 'FFIC~
August 29, 1996
Thomas S. Tanana
Attorney at Law
4019 Goldfinch Street, Suite 176
San Diego, CA 92103-1820
Re: Chula Vista Municipal Code Section 5.36.310 Appeal
Dear Mr. Tanana:
You are hereby authorized to submit an appeal on behalf of your
client on this date in a format which provides all necessary
information to the City of Chula Vista to submit the appeal. The
city Clerk will not provide a standard form for that purpose.
The City will accept a timely appeal providing appropriate notice
to the ci ty of the ground for the appeal in a form of your
choosing.
Very truly yours,
{f~<~
Peggy J. Mccarberg
Acting Deputy City Attorney
PJM:clb
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AUorney at Law
.019 GoldFInch Street
Suite 176
SlnDiego,CA 92103-1820'
(619)68S-8004
September 1, 1996
Ms. Pe9qy J. McCarbexv
Actinq Deputy city Attorney
city or Chul. V:L.~.
276 Fourth Avenue
Chula Viata.. CA SU10
~lephone: ('l9)6~1-5037
J'ax : (619)585-5612
.
mE:.. DFFICI: DfemmrTS SlmRuuJluDfG t!OII1RDYN O~IOHSJAPPEAL
Dear Ms. Mcca~ber9:
This. fax 1. priaarlly .ent to ullor1alile the following
incidents that occurred at or around your office and the office of
the Chule-vista City Clerk arter 2:15 P.K. on August 29,1996:
(1) Upon reQUestin9 trOD the city Clerk an appeal petition
form far Ks. ~ardin, pursuant to ChulA ViB.ta Municipal Code
(CVKC) 15.36.310, aaid Clerk aai4 that ahe 4idn't have any form to
furnish. Upon ahowinq her .. copy Qf"'CWC 15.3.6.310,. whlch
expressly requires that .Y client' a appellate petition b9 filed
with the City Clerk "on .. fora furnished by her ((by the City
Clerk) ]", .aid City Clerk .xp%eoll1y atated that her office doe.n't.
follow the rules. YDur letter. which is the ClOver abeet tor the
appeal, confirms the Clerk'. refusal to provide a aUulclarcl form for
that purpose. in nonconfonity with, 1n vlolation of, and under
color or orCSlnanoes Nt rorth by the city of Chula Vata J.ft. ita
Hunicipal Coda, as ..t forti\. by 1.1:8 city Cowu:ll. .
(2) (a) My cUent hac! relied upon t.tIe City's prior oral
agreement and 1: had aw.ltte4 ay cl1en"t.'s written offer per the
City'. request. Mot reoeivinq any appropriate response to .aid
requested written offer. J: DOnQ the lass received a _Uad. 1ettuo
troD. Mr. .Maloney (a a...r of your illustrious vice &qUad). Said
let~er froll Mr. Maloney __ dat.e4 AulJU,llt 19. 1996. Mistakenly
a~UI1in9 that ~ City had acted in 900d fa1th ancS that Mr.
lIaloney's AU9Ust Uth letter bad aerely "0..a4 in. the aaU with .y
clhnt'. AU9USt 19th dran otfer, I w.ited. unt.il tha ~anth (and
final) day atter 1Ir_ Malonay's leUer data before I ....ponded to
it.
~) J.s J pointed out. In your ofUe. on AU9U8t It, 1996,
the afore_nt10nelS date V&8 the very last day that .Y oU.nt. baa to
tile any .uch appeal on Mr. Maloney'a _iled 1.t~ of Auguat 1~,
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EXHIBIT
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1996, purcuant t:o CNHC 15..36.310. ! vaited until the tenth. an~
tinal aay ot Hr. Kalon.y'B let~er -- atter receipt of the August
a!i{ 1!i96 ma11 delivery to my otti.ce -- before X contacted ~. cit.y.
Th e 'lave you the maximum possible time to respond to the writ.t.en
of~cr that you had requestad .. to aubJl1.t on behalf ot my cHent..
It was Dot until that vary lata .o.ent that the city finally
bothered to inform ae that It was liCIt aceopUng the written offer
that it bad it..lf requested - and said intor.ation. wa. not at any
time proyicted .t t.he city's initiAtlva.
(c) In other vords, (1) you ranegot.S &Dd (H) rour
r.neging vas 40na in weh a. va}' .. to inctuce tha reliance 0 .y
oUant cn t'Our putrid word.
(3). (a) &fter said ..11 del1vary, 1. pbyaical1y _nt t:o the
City offlces where, at about 2:20 P.M. on August 29. 1996, you
refused .Y request to pz-o'Vide IIY client wit.h any kind ot extension.
A qOO4 word to 4ascribe that kinct of refusal i. -.leazy".
(b) Since saict appeal wauld bave t:o be tlled wltb the
city Clerk and sinc. I .sked yQu what tim. they closed, you told ..
that you woren't sure what tl.aa the city Clerlt'. otfioe olo.ed --
but that they Clos.d at eithor ~130 P.K. or 6.00 P.M.. "hus, Iou
clearly restricted ay cliant'. appeal Uaca window to about a /2
bours. .
(0) 'l.'be City Clerk told .. ~t ~ay close4 .~ s:no P.M.
and I acted on the ass\DIPt!on that you buroaucratc _re provlctinq
aisleAding inforaa.tlon. SO I acted .S it olasin; tiae vas .:30
P.M.. It's a vood thincJ that I ai.trusteeS you.
(~) (01 I then lIubmitt.d'aY eHent'. band-written .ppeal at
around .120 P.II., .. vas best possible to do uncter th..e t.i9ht
oircwastances. Mter Going to .y car t.Q review Title 5.36 of t.l\o
CVKC, I returnect t.o your office t.o demand the iamecUate return of
all indicia of 11cense. and peraita that had been taken from my
client, pending appeal. ThAt. de.and. w.. finly grounded since .Y
client had and hac the. r1qht to th4l return of those 1.ncUcie,
pursuant to CVKC 1 5.36.2~0. (specificallYt the initial purported
suspension and the th.ft by the cUy of Chula Vieta of all 11'Ic11cia
of same aaJtes any currently 811ag.ct Buspandon void. ftus,.y
client has a riGh.t to the r.turn of all lloens.. and perai Us
p~.uant t.o CVKC 15.36.290).
(b) YO\Ir aecntary. .ai4 you ware in . _ot.in" t:hat )'Qu
voulcSn't. -.eet with ae and augqested that I ..t up an -appo1ntaentU
with her t.o .eet with you. soaeti.. next. ...ok. It vas obvious that
you vere in no auch .eetinc;r and that you aimply retused to .eot
with Be. Again, lis. KoCarberq, I. fint. vent to -.y car and only
t.h.en returned to your office to aake 'IlY deaana tor the return ef
the lieen.e/permit indicia -- sfter agdn areviewing 'I'1tle 5.36 Of
the CVKCl t.o aake sure I was on tira QrOund In ....rtin; my
client's rights: to the imiie!... All I wu le.vinCjJ for BY oar to
examine Title 5.36, 1 ..w the Ci~y Clerk iaaecSiately transport .Y
cUent'. appeal petition ~ your otfic., 8Q I Jcnow tha~ you were
rev1ewinq Ms. co_rdin's appeal.. % stood vaiting 1n your ofUce.
(c) ! waited In your office tor 15 mnutes before X
~inallY left. That was ~Or41n.arUy unprofe..ional of you, lis.
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McCarberq, but not unexpecte4 of attorneys WO vork for governaent.
Furthermore, Ms. McCarberq, that conati tutes the assistance cf the
continued violation of ~ client's constitutional riqhts. pursuant
to 42 U.S.C. 11il985. 1986. X take particular note of the fact that
ay client _phas1ze4 her rlQh.ts -- pursuant to !'iUe 42 of the
Oni ted states Code - 1n h~ appeal that you were reacUnq while X
vas atandinl} and waitin9 for the nturn of all 110ens./perait
indioia.
(4) I particularly note thai; when I l~t your ofUoe
lahortlI after 4130 P.M.). the l1qbu of the city Clerk bad 4iued,
nc1ioat ng 1:bat (1) 1:b_ City Clerk'" Qffice v.. olo.ed and (11) no
one vas anywhere t:o be foun!. In the C1ty Clerk's offloe. ftus, if
I bad subllitted th. appeal aftv 4:30 P.1I., in reliance on the vord
of you anI! 1:b. city Clark, ay cUant probably vould have beall
screwed. 1: strongly suspect that this w.s not unintentional
because this aarks a continued pattern of a veritable .tr... of
violations of ay clunt's procedural due proe"lI r1fJhte.
(!S) (a) since th.n, it !wi been brouQht to ay attention that
Mr. Mendoza (another a.llber of the Qula Villta Pollee Department'.
Vioe Squad, who identified bwelt at the conf.renee room table as
soaeone working the politically abaded taska of a er1a1nal
Intelliqence Unit) contaoted ~ client'. landlord in 1rbona and
attempted 'to prompt'll;y client's eviction, presu.ably under color of
the Red Liqht Abate..nt Act. My client's landlord 9ive. the City
of Chula Vista the big 9arboni In re.pon.e. Since MIl. Cowardln 18
by no stretch a public flqure, that aot vas ctefaJll8tory per .. and
1 have the fullest intention ta .u. Hr. Kando&a for ctetaaatlon,
pursuant to the rules: e.ta1:llished Wld.r Paul v. Davill.
(b) And by tba way, ay client ball ..de the 014.....g.
parlor cite her new nsidenoe anc! .he ha. aovad in. It 1. now bar
home. lis. cowardin "UJ. roain Clllconcad in Chula villta for at
least four aore years. 'l'hia i. e.pecially t.rue .inee lis. Cowardlft
has lived In Cbula vieta fo~ years .nd continua. 'to aake Cbula
Vista her domicile.
(a) Another paint aJxIut that eliae.ter, Mr. Ilen40za -
vhen Hr. Mendoza sat across a. at the conference room 'table in lour
office on AuCJust 29. 1996 his respoMl& to ay COJDDl4lnts about c vil
rights vas 1:bat his n..e i. 8Men4oza". 'l'bat va. . patently racist
remark. '1'0 a_crialbe ay "ply t.o Hr. lIendosa'. zoaei.t rUlark:
. I don't care if (his) DUe. 1& lKaft4o.a' 01' C sa! th' " .
I brln9 your attantion to th. fact that ay olient will be able
'to lawfully practice .....9. outsido Chula Vista only if the Chub
Vista 1ic8n... ill abaJ\dOn~ .- 1JuItsa4 of 8uapended. '!'hat'.
because, a. a collateral con.equence of a licen.. sU8pansion in
Chula Vista, lIbe'l1 probably lose lieena.. in other iuris4.1ctlons
whenever ehe honestly answere any QUesUon upon application or at
renewal concernino an3/' 8uspl!!nsion or "vocation of any 11cense or
perait in another jurisdiction. (The City of Cb.ula "i.ta itsalf
asks this question, ~r CVMC '5,36.100 H.)
!'hue, 1:be na.ty adalnbtraUve actions taken by the City ot
Chula Vista a.an that .... Cowar4in can't practice outside Cbula
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vista. 'rbis 9ivec her JlO incentive -matsoover to QO outside cIUlla
Vista to bUild any kind of ..ssag. bualnes8.
By d_anding \:.h. alUE....1>!I'1on of her 1.1cense inst.ad or
allowin(jf ber to abandon -It, you arA doing absolut.ly ftothlng to
aotivate ber to practice out.dde of the city of Chula Viau. Since
ber aban<1onaent ofter Gave you everythin9 you ..anted and .ince the
city now raises 1:he thinly iUagui..d pre~s,e -- atter the fact, I
.iqht add -- of protectinv against tha -iJuledlate ~eat to tbp
public health! welfare O~ satety" ot the residantll of Cbula Vista
W'lder its Nun cipd Code (wh06e rules We appeal .hows you don't
tollow), it is obvioWl tha.t the city'. actians don't even have a
zoational basis of support -- partiow.arty Where your yincUctlvely
power-JIIOngerlng actions deaonstrate that you want: to dri~. her out
of town.
'rhe.. acUons oonstltute _lioe of th. purest sort and they
vive rise ~o the ready' oapaolty ot .y oHent to ..sart the
violation of bar civil rl;hta v.nlier soitle 42 of i:he united statell
COde.
rurthermore, viwn the United States Supr_e COurt's reoent
rulinq in 4. T.taunrllart, you ara flat. Qff the cbar1:a. You are no
better than a criminal.
Ms. Mccarberv, IIY al1en.t waa lIOa:t aonoiUatory. She "..
willing to aurrender and rais. the White flaq. aut ~t wasn't
qood enouqb for you. You want to E2r bor. Mow she is in .
f!9hting eODd and I all IIOre than villIn;to go = the aat for ber.
Frame my client'. original otfer~ It's a fair bet that you'll
review it frequently over the next oouple eonths, beCause you will
definitely wish. that YOII bad eccepted our extraordinarily
charitable offer.
I hope you're ready for What's 00ll1n9, Just ask. La He.a Mayor
Art Hac1rid about my tenacity on these kinds of issues and watch the
events that unfold in the next couple aonths. Althouqb you
obviously dian't recoqniae it on August 251th, your sleazy behavior
vas a ~,allv stuDl~ error -- both morally .n~tactically.
As); around the county and you f 11 learn that I _ yery prone to
lUlJte these kinds of tbings aedia events. And it is v,ry possib1.e
that Ii media event could do t.o Chula Vista what Art Madrid'. siqn
ordinance c!id 'to La Hua -- and aalte it the Whore capitol of. San
Diego County.
Of particular aalience. t am .anaqin9 a california A8s.1Ib1,y
campaiqn whose district boundaries 1ncl~e part of tbe city of
Chula Vista -- and tbe prbary isaue of our C8Dpaiqn is the
perverso ai.application of the vice lava conoerninq prostitution.
I have, the peculiar~ aalient ability at this particular juncture
in time t:o raise all aorta of public issue. -- and it is
appropriate to do 80, vlyen the ~anio structure of t.his
particular adJllini.tratJ.ve fOnalD. .ore. hiPortantly. it falls llithin
the aqanda of our Assembly ClllDpaiCJn~
A,qain. I SU\lgest that: you s~al(. with La M.s. .iap, Art Madrid,
whose hadi.. actions converted the al..py fallUy ~own of La Ke,a
into the whore capitol ot san Diego county. ~.UtuUoJ\ w.. not
a probl_ in La lIesa until all the election-inspired electioneering
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-acted UJce . bright ..e4 lantern bein9 rabed in 1.a Ken, drawing
all the moths to 1.a Mesa".
cet one t.hinq atraiqht 118. JIOCarberq. As a prosecutor of
consensual orilles, people lIke you are of less value to society
'than are prostitute.. unlike prostitute., who enqaqe in voluntary
exchanges with people who request their .ervices, you swill at the
publia trouoh of torciblr extracted tax lIOJ\ey and a. such ara aore
of . strain on the Bocia fabric than i. t:be .-oret. kind of au;ger,
welfare recipient or ftatural paruit:e, '
My cUent hereby offen har initial offer, with the additional
conc11.t1cm that the city of Chula viata pay bar $2,000.00. 'that
offer expires at Kidnight on septeaber 8, 1996.
'l'his letter also aon.titutes a request that you .end .. . fora
for filing an adminiatrat:iva claim with the city of abula Vieta,
beaausQ we plan t.o aU8. All an officer of the Court, you are
ob11ged to comply with thia "qUa.t. I expect receipt of aaid fora
DO latGr than Septelllb8r 115, 111\16.
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WOKAS S, I'AKANA
Attorney at Law
co:
Chula Vista Cl ty Manager, 1Ir. John D. Goas
Chula Vista Vice Squad Kelllb8r, Hr. Kaloney
Chula vista Viae Squad )f....""'r, 1Ir. KendORa
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em Of
CHUA VISTA
OFFICE OF 11iE CITY ATTORNEY
September 11, 1996
Thomas S. Tanana
Attorney at Law
4019 Goldfinch Street, Ste. 176
San Diego, CA 92103-8004
Re: Appeal of Ginger COwardin
Dear Mr. Tanana:
Pursuant to your client's notice of appeal dated August 29, 1996, please be
advised that the matter has been set for public hearing pursuant to Chula Vista
Municipal Code section 5.36.320 on september 24, 1996 at 6:00 p.m. in the Council
Chambers, located at 276 Fourth Avsnue, Chula Vista, California.
Enclosed please find the Agenda Statement and supporting documents (Exhibits 1-
7).
Should you wish to present documentary evidence to Council prior to the hearing,
please deliver same to Patty Wesp, secretary to the City Council, for
transmission to the Council and to me.
I note from the file that the terms "suspended" and "revoked" appear to have been
used interchangeably with reference to the status of your client's license. It
is clear from Chief Emerson's August 9, 1996 memorandum (enclosed as Exhibit 2)
that revocation was intended, and I intend to ask the COuncil to uphold
revocation.
!'inally, in the last page of your letter to Ms. McCarberg, you request an
"administrative claim". We have no such form, but since you further state that
you desire such a claim as a predicate to suing the City, I assume that what you
really want is a tort claim, and I therefore enclose one.
~,y 7Jo.
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Ruth M. !'rUsch
Assistant City Attorney
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Enclosures
cc: Chief Emerson
Agt. Mendoza
Sgt. Maloney
Patty Wesp
tan.let
-- ) 9 ~ EXHIBIT
7
276 FOURTH AVENUE. CHULA VISTA' CAUFOANIA 11110 . (III) 1111-5037 . FAX (611) 585-5612
tfI.,~__....
COUNCIL AGENDA STATEMENT
ITEM TITLE:
Item / )
Meeting Date 09/24/96
/f51j'/ /
RESOLUTION APPROVING CDBG AGREEMENTS FOR FY 1996-97
BETWEEN THE CITY OF CHULA VISTA AND VARIOUS COMMUNITY
GROUPS AND AUTHORIZING THE MAYOR TO EXECUTE SAID
AGREEMENTS
REVIEWED BY:
Community Development D1ector
City ManagerJ 8 p~ ~~\
{<.,
SUBMITTED BY:
(4/5ths Vote: YesL No_)
BACKGROUND:
On June 4, 1996, the City Council approved CDSG funds in the amount of $315,450 for 17 public
service programs, $260,350 for six community development programs, and $87,500 for five
additional non-profit organizations to provide eligible planninglcoordination type activities. The
U.S. Housing and Urban Development Department (HUD) requires a written agreement between
the City and each subrecipient of CDSG and HOME funds.
RECOMMENDATION: That the City Council adopt the resolution approving the agreements with
the social service and community development organizations; and authorize the Mayor to execute
the agreements.
BOARDS/COMMISSIONS RECOMMENDATION: The Commission on Aging, Youth Commission,
Childcare Commission, Housing Advisory Commission, and Human Relations Commission made
funding recommendations in March and April 1996 which were considered by Council in approving
the CDSG budget on June 4, 1996.
DISCUSSION:
The agreements between the City and the subgrantees cover the period from July 1, 1996 to June
30, 1997. Each agreement has several exhibits attached which are incorporated into the
agreements. An example of an Agreement and the exhibits are attached as follows:
Exhibit A: The Statement of Work and Performances Schedule describes the services the
agency will be providing and the estimated number of people who will be provided each
of these services each month. This performance schedule will be used to monitor each
agency's progress in completing the scope of work.
Exhibit B: The Itemized Budget shows exactly how the agency intends to expend the
CDSG funds. This itemized budget will be used to monitor expenditures through the year.
Exhibit C: The HUD Income Limits for the San Diego Standard Metropolitan Statistical Area
(revised May 1995) will be used to determine the number of low income
households/persons served. Each program is required to serve a minimum of 51 percent
low-income persons/household.
Exhibit 0: City of Chula Vista Party Disclosure Form.
//~/
Page 2, Item / /
Meeting Date 09/24/96
The agreements are with the following organizations for the purpose and amount stated:
PUBLIC SERVICES
CV Youth Services Network $101,347
Southwestern College (1) $6,000
Jobs for Youth $3,000
Senior Adult Services-Meals on Wheels $10,000
Adult Protective Services $6,000
George G. Glenner Alzheimer's Family Center $5,000
LSS-Shared Housing $3,500
The Access Center of San Diego, Inc. $2,500
Family Violence Prevention Coalition $31,590
AIDS Foundation $2,000
Episcopal Community Services-Health Education $6,000
CV COPS * $80,000
Woodlawn Park Civic League $16,000
LSS-Shared Housing $10,000
Chula Vista Public Library * $16,500
SBCS- Thursday's Meal $2,800
Chula Vista Therapeutics * $13,213
TOTAL PUBLIC SERVICES $315,450
(1) Southwestern College Career Center job placement activity to be funded from Public
Services in the amount of $6,000. The activities targeting specific businesses and specific jobs
are to be funded under Community Projects as "special economic development projects" in the
amount of $10,000.
COMMUNITY PROJECTS
SBCS/YMCA - Teen Center Club Rent $33,600
SBCS Grafitti Removal $35,000
LSS-Caring Neighbors $24,000
SBCS Office Rent $61,200
SBCS-Community Development Program (2) $46,550
BECA-Micro Loan Program * $50,000
Southwestern College - Career Center $10,000
TOTAL COMMUNITY PROJECTS $260,350
(2) The SBCS Community Development Program received funding approval in the amount of
$70,112 ($46,550 from CDBG funds and the remaining balance of $23,562 from HOME funds).
//~ ol
Page 3, Item 3
Meeting Date 09/24/96
ADMINISTRATION AND PLANNING
Fair Housing Council $38,000
CV Human Services Council $28,000
MAAC Project-Lead Based Paint $5,500
United Way-Homeless Task Force $1,000
CV Park & Recreation Human Services Coordinator * $15,000
TOTAL ADMINISTRATION AND PLANNING $87,500
* CDBG Program staff will draft and execute Memorandums of Understanding with City
departments utilizing CDBG funds. These include the CV COPS ($80,000). Chula Vista Library's
Literacy Team ($16,500), Chula Vista Therapeutics, Community Development Department's BECA
Micro Loan Program ($50,000), and Park and Recreation Department's Human Service Coordinator
($15,000).
The Chula Vista Cluster requested $25,000 for planning and design services associated with
rehabilitation of the County of San Diego Insectary building which Council previously approved at
the June 4th meeting. The Chula Vista Cluster contacted staff requesting that the funds also be
used for asbestos removal services. Staff has pulled the agreement pending extensive
environmental and programatic review which is now in process. Staff will bring the Agreement
for this program to Council for approval at a later date when the review process has been
completed.
FISCAL IMPACT:
These contracts, totaling $686,862, will be funded out of the City's 1 996-97 CDBG and HOME
entitlement funding ($663,300 from CDBG and $23,562 from HOME). In the remote event that
HUD should withdraw the City's CDBG or HOME funding, the agreements provide that the City
is not obligated to compensate the subgrantees for program expenditures.
Of} M:\HOME\COMMDEV\STAFF.REP\09-24-96\cdbg.con [September 19,1996 {10:1Sam)]
/) /3
RESOLUTION NO.
/yJjI/J
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA
VISTA APPROVING CDBG AGREEMENTS FOR FY 1996-97
BETWEEN THE CITY OF CHULA VISTA AND VARIOUS
COMMUNITY GROUPS AND AUTHORIZING THE MAYOR TO
EXECUTE SAID AGREEMENTS
WHEREAS, the City participates in the Community Development Block Grant
(CDBG) and HOME Investment Partnership (HOME) Programs, a principal goal of which is to fund
projects and services which will benefit low-income Chula Vista households; and,
WHEREAS, the City will be entering into a separate funding agreement with HUD
for the City's 1996-97 CDBG entitlement; and,
WHEREAS, the City Council of the City of Chula Vista held a public hearing and
allocated CDBG entitlement and other unallocated funds on June 4, 1 996, a portion of which was
allocated for the Grantees; and,
WHEREAS, the City is desirous of having certain services for the benefit of low-
income households performed by the Grantee; and,
WHEREAS. Grantees warrant and represent that they are experienced and staffed
in a manner such that they can prepare and deliver the services required by Grantor within the
timeframes herein provided all in accordance with the terms and conditions of this Agreement.
WHEREAS, In the event that HUD should withdraw the City's CDBG and HOME
funding, the City is not obligated to compensate the subgrantees for program expenditures.
NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista
does hereby find, order, determine, and resolve as follows:
SECTION 1. The City Council does hereby approve the following Agreements, known by the
following Document Number adjacent thereto, copies of which are on file in the
Office of the City Clerk.
CDBG Sub-recipients 96-97 Contract Funds
Number Allocated
Chula Vista Youth Services Network C096- $101,347
Southwestern College Career Center C096- $6,000
Jobs for Youth C096- $3,000
Senior Adult Services - Meals on Wheels C096- $10,000
Adult Protective Services C096- $6,000
George G. Glenner Alzheimer's Family Center C096- $5,000
LSS - Shared Housing C096- $3,500
The Access Center of San Diego, Inc. C096- $2,500
Family Violence Prevention Coalition C096- $31,590
/) - 1/
CDBG Sub-recipients 96-97 Contract Funds
Number Allocated
AIDS Foundation of San Diego C096- $2,000
Episcopal Community Services - Health Education C096- $6,000
CV COPS C096- $80,000
Woodlawn Park Civic League C096- $16,000
Lutheran Social Services - Project Hand C096- $10,000
Chula Vista Public Library C096- $16,500
South Bay Community Services - Thursday's Meal C096- $2,800
CV Therapeutics C096- $13,213
SBCS/YMCA - Teen Center Club (Rent) C096- $33,600
South Bay Community Services - Grafitti Removal C096- $35,000
Lutheran Social Services - Caring Neighbors C096- $24,000
South Bay Community Services - Office Rent C096- $61,200
SBCS - Community Development Program C096- $46,550
BECA Micro Loan Program C096- $50,000
Fair Housing Council C096- $38,000
CV Human Services Council C096- $28,000
United Way - Homeless Task Force C096- $1,000
CV Park & Recreation Human Services C096- $15,000
Coordinator
SECTION 2. The City Council does hereby direct and authorize the Mayor of the City of Chula
Vista to execute said contracts for and on behalf of the City of Chula Vista.
SECTION 3. This resolution shall take and be in full force and effect immediately upon the
passage and adoption thereof.
SECTION 4. The City Clerk shall certify to the passage and adoption of this Resolution; shall
enter in the same in the book of original Resolutions of said City; and shall make
a minute of the passage and adoption hereof in the minutes of the meeting at which
the same is passed and adopted.
Presented by Approved as to form by
Chris Salomone
Director of Community Development
",!.~ fv(~
Ann Moore
Acting City Attorney
{jf} M;\HOME\COMMDEV\RESOS\cdbg.con (September 19, 1996 (10:00am)]
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EX M-I- PLt
AGREEMENT SETTING OUT TERMS AND OBLIGATIONS OF
CHULA VISTA YOUTH SERVICES NETWORK
IN REGARD TO THE EXPENDITURE OF CITY FUNDS APPROPRIATED
THIS AGREEMENT is made this September 24, 1996, for the purposes of
reference only, and effective as of the date last executed between the parties, between the City
of Chula Vista ("City") herin, a municipal corporation of the State of California, and Chula
Vista Youth Services Network, a non-profit organization ("Grantee"), and is made with
reference to the following facts:
RECIIAL~
WHEREAS, the City participates in the Community Development Block Grant
(CDBG) Program, a principal goal of which is to fund programs and services which will benefit
low and moderate-income Chula Vista households; and,
WHEREAS, the City has entered into a separate funding agreement with HUD
for the City's annual CDBG entitlement.
WHEREAS, the City Council of the City of Chula Vista held a public hearing and
allocated CDBG entitlement funds on June 4, 1996, a portion of which was allocated for the
Grantee; and,
WHEREAS, the City is desirous of having those certain services for the benefit
of low income households, hereinafter enumerated, perfortned by the Grantee; and,
WHEREAS, HUD requires the execution of a written agreement setting the tertns
and obligations for the expenditure of CDBG funds by the Grantee; and,
WHEREAS, Grantee warrants and represents that they are experienced and staffed
in a manner such that they can prepare and deliver the services required of Grantee within the
time frames herein provided all in accordance with the tertns and conditions of this Agreement;
NOW, THEREFORE, in consideration of the mutual obligations of the parties as
herin expressed, the parties hereto agree as follows:
1. Tertn of Agreement. The tertn of this agreement shall be for a period of
one (1) year, from July 1, 1996 through June 30, 1997.
2. Statement of Work Schedule. The Grantee shall perfortn those duties
described in the Statement of Work in Exhibit A, attached hereto and incorporated herein.
These services shall be provided during the tertn of this agreement and according to the
Perfortnance Schedule in Exhibit A, attached hereto and incorporated herein.
3. Low Income Requirement. The services to be perfortned by Grantee shall
be provided primarily to persons of low income households. A minimum of 51 % of the persons
1 jj- t
provided services shall be of low income, as determined by the most current HUD Income
Limits for the San Diego SMSA, a copy of which is attached hereto and incorporated herein
(Exhibit C). Grantee shall use reasonable means to determine the income level of each person
or fami! y served.
4. Compensation and Budget. The Grantee agrees to expend City-
appropriated funds to meet bona fide obligations incurred for Chula Vista Youth Services
Network) on the condition City receives sufficient CDBG funds and appropriates them for the
purposes provided for in this agreement, and the City shall compensate Grantee for said services
up to a maximum of $101,347 (One hundred one thousand three hundred forty seven dollars)
payable in approximately equal monthly installments unless a more advanced payment schedule
is set forth in the attached Exhibit A. An itemized budget for said expenses is set forth in
Exhibit B, attached hereto and incorporated herein by reference. Notwithstanding the foregoing,
the City shall, on 30 days advanced written notice to Grantee, have the option to terminate this
Agreement and, in doing so, terminate funding to the Grantee.
5. Reimbursement Payments. Payment of those City appropriated funds shall
be made to Grantee in monthly or quarterly installments following receipt of the "CDBG
Expense Reimbursement Claim Form" from the Grantee. Expenses itemized on the "Expense
Reimbursement Claim Form" shall be limited to actual expenses incurred during the period
specified on said form, and shall not include any anticipated costs. Grantee shall attach xeroxed
copies of all source documentation, such as receipts, bills, time sheets, etc. as shall provide
reasonable proof of actual expenses incurred. Reimbursement Claim Forms will not be
processed unless accompanied by the required documentation. Spreadsheet formats are not
acceptable. The Grantee understands and accepts that in the event that HUD should withdraw
the City's CDBG and HOME funding, the City is not obligated to compensate said grantee for
its expenditures.
6. Reports. The Grantee shall provide the City with a quarterly report,
submitted no later than 40 days after the last day of the previous quarter, which includes a
narrative of the services provided and an itemized accounting of the expenditures of CDBG
funds during the previous quarter. In addition, said report shall include the following statistical
data for persons/households served during the previous quarter:
(a) the total number of persons/households served;
(b) the number of persons/households receiving each type of service
provided;
(c) of the persons/households served, the number of residents and non-
residents of Chula Vista;
(d) annual gross household income by standard categories, adjusted for
family size (low, moderate, other);
(e) race or ethnicity according to standard categories (Black, Hispanic,
Asian/Pacific Islander, Native American, White);
2
))-7
(f) number of female-headed households served;
(g) narrative of contract objectives (in Agreement) comparing current
objectives vs. original objectives in Agreement. Provide
explanation if not meeting original objectives.
7. Assignment. The services of Chula Vista Youth Services Network are
personal to that organization. The Performance of this Agreement may not, by sub-agreement,
be assigned to any other entity without prior written consent of the City.
8. Financial Records and Audits. The Grantee shall maintain all financial
records for three years following the term of this Agreement. The City, at its discretion may
require the Grantee to provide or allow the City to undertake a complete financial and program
audit of its records. Those records shall contain, at a minimum, the following information for
each client served: income, residency, and ethnicity. The records shall also contain receipts or
other proof of all expenditures made with City CDBG funds.
9. ReDresentatives. The Community Development Director, or his/her
designated representative, shall represent the City in all matters of this Agreement. The City,
at its discretion may require the Grantee to provide or allow the City to undertake a complete
financial and program audit of its records. Those records shall contain, at a minimum, the
following information for each client served: income, residency, and ethnicity. The records
shall also contain receipts or other proof of all expenditures made with City CDBG funds.
10. Uniform Administrative Reauirements. The Grantee shall comply with the
applicable uniform administrative requirements as described in HUD regulation 24CFR 570.502.
This HUD regulation requires compliance with certain sections of 24 CFR part 85 "Uniform
Administrative Requirements for Grants and Cooperative Agreements to State and Local
Governments" .
11. Other Program Requirements. The Grantee shall carry out each activity
specified under this Agreement with all Federal laws and regulations described in 24 CFR 570,
Subpart K, with the following exceptions: a) The Grantee does not assume environmental
responsibilities described at 24 CFR 570.604; b) The Grantee does not assume responsibility for
initiating the review process under the provisions of 24 CFR 570.612.
12. Accounting Procedure. The Grantee agrees to abide by the requirements
of OMB Circular A-122 "Cost Principles for Non-Profit Organizations". The Grantee shall
account for use of Block Grant funds separately from other funds so as to demonstrate that the
funds are used for their designated purposes.
13. Program Income. Any program income derived from CDBG funds shall
be reported to the City and shall only be used by grantee for the services funded under this
Agreement. All provisions of this Agreement shall apply to the use of program income for said
activities. Said program income shall be subSlantially disbursed for said services before the City
will make additional reimbursements to the Grantee. If said program income is on hand when
this agreement expires, or is received after expiration of this agreement, then said program
income shall be paid to the City.
3 //-;r
14. Conditions for Religious Organizations. If the Grantee is a religious entity,
affiliated with a religious entity, or sponsor of religious activities, then Grantee shall abide by
the HUD regulations 24 CFR 570.200(j) which prohibits discrimination on the basis of religion
and prohibits the use of funds for religious activities, and places other restrictions and limitations
on the Grantee.
15. Drug-free WorkDlace. The Grantee shall maintain a drug-free workplace
at all times for the duration of this contract.
16. Lobbving of Federal Officials. The Grantee shall not use any funds
provided under this Agreement to pay any person for influencing or attempting to influence an
officer or employee of any Federal agency, a Member of Congress, an officer or employee of
Congress, or an employee of a Member of Congress in connection with the awarding of any
Federal contract, the making of any cooperative agreement, and the extension, continuation,
renewal, amendment, or modification of any Federal contract, grant, loan, or cooperative
agreement. If Grantee utilizes any other funds for any of the aforementioned purposes, then the
Grantee shall complete and submit Standard Form-LLL, "Disclosure Form to Report Lobbying",
in accordance with its instructions.
17. Insurance. Grantee represents that it, and its agents, and staff employed
by it are protected by worker's compensation insurance and has coverage under public liability
and property damage insurance policies which this Agreement requires to be demonstrated in the
form of a certificate of insurance. Grantee will provide, prior to commencement of the services
required under this Agreement the following certificates of insurance to the City: a) Statutory
Worker's Compensation coverage plus $1,000,000 Employers liability coverage; b) General and
Automobile Liability coverage to $1,000,000 combined single limit which names the City as
additional insured, and which is primary to any policy which the City may otherwise carry
("primary coverage"), and which treats the employees of the City in the same manner as
members of the general public ("cross-liability coverage").
18. Hold Harmless. Grantee shall defend, indemnify and hold harmless the
City, its elected and appointed officers and employees, from and against all claims for damages,
liability, cost and expense (including without limited attorney's fees) arising out of the conduct
of the Grantee, or any agency or employee, or others in connections with the execution of the
work covered by this Agreement, except only for those claims arising from the sole negligence
or sole willful conduct of the City, its officers, or employees. Grantee indemnification shall
include any and all costs, expenses, attorney's fees and liability incurred by the City, its officers
and agents, or employees in defending against such claims, whether the same proceed to
judgement or not. Further, Grantee at its own expense shall, upon written request by the City,
defend any such suit or action brought against the City, its officer, agents, or employees.
Grantee's indemnification of City shall not be limited by any prior or subsequent declaration by
the Grantee.
19. Suspension and Termination. In accordance with HUD regulation 24 CFR
85.43, Grantee may be suspended or terminated by the City after 30 days written notice to the
Grantee due to default by the Grantee or Grantee's inability to perform, regardless of whether
such inability is due to circumstances within or beyond the Grantee's control. The award may
be terminated for convenience in accordance with 24 CFR 85.44. Settlement of any disputes
4 J)~9
shall be based on the laws of the State of California.
20. Agreement Modification. This Agreement may not be modified orally or
in any manner other than by an agreement in writing signed by the parties hereto.
21. Breach of Contract. The parties reserve the right to pursue any remedy
provided under California law for remedy in instances where contractors violate or breach
contract terms.
22. Reversion of Assets. Upon expiration of this Agreement, Grantee shall
transfer to the City any CDBG funds on hand at the time of expiration and any accounts
receivable attributable to the use of CDBG funds, including any program income derived from
CDBG funds.
IN WITNESS WHEREOF, City and Grantee have executed this Agreement this
day of , 1996.
CITY OF CHULA VISTA
BY:
Shirley Horton
Mayor, City of Chula Vista
ATTEST:
City Clerk
APPROVED AS TO FORM BY:
~ YV1N~
Ann Moore
Acting City Attorney
CHULA VISTA YOUTH SERVICES NETWORK
BY:
/J- 10
5
EXHIBIT A
EXAHPLE
Adult
Protective
Services, Inc.
..
i;"'
)'
i,'
: ~:.: '
":~\O~i;-:::':";
. .
A private, non.profit agency providing services
to seniors in San Diego County.
2840 Adams Avenue, Suite 103, San Diego
California 92116-1404 . (619) 283-5731
Statement of Work and Performance Schedule
The Community Development Block Grant funds will be used to provide disabled
elderly Chula Vista residents transportation to and from the South Bay Adult Day
Health Care Center. Adult Protective Services, Inc., will furnish the Community
Development Department of Chula Vista with quarterly reports on the characteristics
of the persons served - number, gender, ethnicity and whether of low or lower
income as defined for the San Diego Metropolitan Area. 100% will be disabled, over
60, residents of Chula Vista and within the HUD income guidelines. The program
serves 85 persons at anyone time who are eligible for this assistance. However,
the reports will be made on actual members of people served by the CDBG Grant funds.
The $7,020 will be used to purchase approximately 356 trips per month from Handy Trans.
It is the objective of this program to restore as many disabled elderly as
possible to an increased level of self-care so as to avoid both nursing home plaa€ment
and the breakdown of home caregivers.
/)~ / /
OVER TWENTY-FIVE YEARS OF EXCELLENCE
7"~f"qIBIT B
~d~U~ · . ,
EXP\tJ\PLE.
SOUTH BAY ADULT DAY HEALTH CARE CENTER
PROPOSED BUDGET FY 95 - 96
BUDGET FY 95 - 96
-------------------------------------------------------------
-------------------------------------------------------------
REVENUES
MEDICAL
SHARE OF COST
VETERAN ADMINISTRATION
PARTICIPANT FEES
NUTRITION - DEPT. OF EDUCATION
CITY OF CHULA VISTA
INTEREST & DIVIDENDS
492872
2957
69529
17428
29087
7020
322
TOTAL REVENUES:
619215
-------------------------------------------------------------
-------------------------------------------------------------
EXPENSES
WAGES & SALARIES
FRINGES
CONSULTANTS
AUDITING
EQUIP. MAINT.&REPAIR
DATA PROCESSING
PAYROLL SERVICES
RENT,MAINT.&JANITOR
UTILITIES
TELEPHONE
INSURANCES
OFFICE SUPPLIES AND MINOR EQUIP.
OTHER SUPPLIES
POSTAGE
MILEAGE
TRANSPORTATION
TRAINING
PRINTING
SUBSCRIPTIONS
BANK SERVICE CHARGES
EMPLOYEES' ADS
DEPRECIATION
PHYSICAL EXAMS.
FOOD COSTS
CONFERENCE,MEETING
ORGANIZATION DUES
OTHER COSTS
335840
77803
22951
834
2587
2387
3363
28918
3915
3177
12245
12528
5994
1738
4775
34797
494
720 ~
807
60
359
1389
11
52442
58
561
8462
TOTAL EXPENSES:
619215
-------------------------------------------------------------
-------------------------------------------------------------
EXCESS (DEFICIENCY).
/J~J"I
/ / / (7-
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EXHIBIT C
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COUNCIL AGENDA STATEMENT
Item 12
Meeting Date 09/24/96
ITEM TITLE:
Report regarding the proposed Bonita Golf Resort Hotel as it relates to the
potential disposition of City-owned property and to ongoing negotiations per
the existing Exclusive Negotiating Agreement
Community Development Director (.5.
City Manag~ (4/5ths Vote: Yes_ No_I
SUBMITTED BY:
REVIEWED BY:
BACKGROUND:
On September 10, 1996, staff presented Council with a progress report on the proposed Bonita
Golf Resort Hotel. Staff also presented a request from the developer for Council to authorize the
approval of a more definitive agreement for the conditional sale of the property in order to satisfy
developer's prospective lender's requirements for "site control". At the time the report was
written the developer was requesting that such an agreement be approved and that an escrow be
opened by September 11 and closed within 30 days to three months to meet lender requirements.
At the September 10 Council meeting the developer requested that the escrow be opened within
the next two weeks and closed by the end of the calendar year. Staff's report indicated that this
request deviated from the existing ENA which requires that numerous issues be negotiated over
a course of 12 months, resulting in a DDA which delineates the negotiated conditions - as
prerequisites to be complied with prior to the property transfer - as well as the negotiated
business terms of the transaction. (The ENA provided for a lease or sale of the property subject
to negotiation.) Staff's report identified various issues raised by the developer's request for
property control and the condensed timeframes, and outlined questions that needed to be
answered by the lender. What is proposed is an alternative to the ENA process to meet the
requirements of a lender willing to invest over $30 million in Chula Vista. The issue raised by
staff, however, still would need to be addressed. even with this alternate procedure.
At the September 10 meeting, Council requested staff to return on September 24 with a report
outlining: 1) progress on negotiations regarding key issues, such as tee times, course impacts,
trail impacts, parking, flood control, environmental review, etc; 2) parameters for making a
decision to sale versus lease the city-owned property; and 3) an action plan as to how to move
forward to approve a more definitive agreement for the sale and development of the hotel and
open a conditioned escrow in the event Council elects to do so. Their attorney offered to submit
a draft conditional escrow agreement as a point of discussion with staff. This report provides an
update of progress since September 10 on these issues and outlines staff's recommendations
regarding the negotiation of a purchase agreement to be used as conditions of an escrow.
RECOMMENDATION: That Council consider the request of Joelen Enterprises that the City sale
City-owned property for the development of a golf resort hotel and that Council provide staff
direction regarding the finalization of a Disposition and Development Agreement (DDA) and
opening of an escrow to allow future transfer of the property subject to the developer meeting the
conditions of such agreement.
/~ ;/
Page 2. Item ---1L
Meeting Date 09/24/96
BOARDS AND COMMISSIONS RECOMMENDATIONS: Not applicable.
DISCUSSION:
A. PROJECT UPDATE
1. MARKET STUDY
A market feasibility study was undertaken by PKF Consulting under contract to the City and
paid for by the developer. The study was received by staff on September 9, 1996, and
provided to Council at the September 10 meeting. The study surveyed meeting planners,
local employers and other demand generators, and evaluated the proposed hotel in
relationship to nine competitive golf resorts (Singing Hills, Quail Inn, Lawrence Welk, Pala
Mesa, Morgan Run, Lodge at Torrey Pines, Sheraton Grande at Torrey Pines. Carmel
Highlands Doubletree and Rancho Bernardo Inn). The study determined that:
. "There is a market for the subject golf resort, and this market is in the $100 and under
rate category. "
. "The subject site offers good access to the airport and a somewhat secluded resort like
atmosphere. The neighborhood... is well suited to the development of a first-class hotel
such as a Hilton, Marriott, or Sheraton of a good (but not luxury) quality."
. Local employers indicated that much of the first-class hotel business that is currently
being referred to hotels outside of the South Bay could be captured.."
. The proposed hotel will be most like the sub-set of large golf resorts (Sheraton, Carmel,
and Rancho Bernardo)
. The hotel will achieve approximately 65 % of its business from groups, 15 % from
commercial, and 20% from individual leisure
. In an average year, the hotel will achieve an occupancy of 74%, and an average daily
rate of $95 (lower than the combined golf resort market but above the small resort
submarket and the rates in Mission Valley)
It might be noted that the developer's appraiser submitted comments to Joelen which have
been forwarded to the City and are attached for your information (Exhibit A). In summary,
these comments suggest that the study could have been expanded in certain areas and that
as a result the findings are too conservative, I.e. that capture rates and resulting room rates
are too low. The appraiser suggests an average daily room rate of $103.00 would be
feasible.
2. SITE PLAN
The developer submitted a Preliminary Site Plan on September 16, 1996, and the related
acreage on September 19, 1996 (see Exhibit B). The developer has not yet submitted a
deposit for processing land use entitlements. (As indicated in the September 10 report,
/J-;L
Page 3, Item -1L
Meeting Date 09/24/96
staff continues to work without a deposit account against which to charge staff time until
further direction from Council.)
a) Trail
The developer's recently submitted site plan places the recreational trail alignment along
the north side of the hotel and is without vehicular interference. Staff will be working
with the applicant to integrate the trail into the overall hotel complex and golf course,
and to ensure protection for joggers and horse riders from golf course activities.
b) Parking
The development proposal includes parking for 453 vehicles which is significantly less
than the total parking required by the Municipal Code for multiple uses. Staff plans to
utilize a consultant to prepare a 'Shared Parking Study' in order to evaluate the
proposed reduction in parking. The study will analyze parking demand generated by each
land use component of the project (including the golf course) at different times of the
day, week and month. A comparison of parking demand in other similar golf resort
hotels in San Diego county (and neighboring counties if necessary) will also be included.
The Shared Parking Study should be completed in 6 - 8 weeks from the date the
consultant is hired. (It is staff's recommendation that the cost of this study be advanced
by the City and reimbursed by the developer as a condition of the DDA.)
c) Ingress/Egress
As previously reported, staff is evaluating the feasibility of locating the hotel's main
entrance at the signalized northerly terminus of Otay Lakes Road. This would avoid the
need for an additional traffic signal between Allen School Dr. and Otay Lakes Road. This
option, however, creates physical and fiscal impacts which need substantial further
analysis, including:
. The need to extend the existing storm drain culvert 1 25-1 50 lineal feet
. The need to relocate an electrical pole from the center of the entryway
. The need to move the 18th green 75 to 100 yards east, potentially changing the
PAR from 5 to 4
. Estimation of costs and related cost-sharing
. Whether or not the entrance to the hotel will be a public or private street, and how
maintenance, insurance and indemnity obligations shall be allocated between the
various parties and uses
3. ENVIRONMENTAL REVIEW/ PROCESSING SCHEDULE
The attached processing schedule (see Exhibit C) indicates a time frame of approximately
6.5 months to complete the EIR. It should be noted that the 6.5 month schedule includes
formal bidding and EIR consultant selection. However, that process was completed in 1992
resulting in the selection of RECON Consultants. RECON has indicated a willingness to
renew their old contract and has submitted a bid to complete the EIR for $39,260. (RECON
has completed work in the areas of biological, archaeological, air quality and noise studies
J:J -]
Page 4, Item --1L
Meeting Date 09/24/96
that will be incorporated into the current EIR.) Staff is prepared to renew the RECON
contract in the interest of reducing processing time. If the applicant also agrees to select
RECON to complete the EIR, the processing schedule would be reduced to approximately
5.5 months. Much of the time, as you know, i a result of mandatory reviews that are part
of the EIR process. This compares favorably to two projects that have been recognized for
outstanding performance in terms of fast-tracking: the Kaiser Hospital and the MCA
Amphitheater EIR's, which were completed within 5.5 to 6 months.
Staff has not yet received an environmental review application. Upon receipt of the
application, approval of RECON, and the deposit for the environmental consultant services
the EIR study will commence. Discussion of the relationship between CEOA review and
closing escrow on the property is provided below under D. 2. Legal Issues. Please note that
even under this expedited EIR processing schedule, CEOA review will not be complete
within the 30 day to 3 month time frame that the developer has requested for the period
of escrow.
Staff has also not yet received applications for the required General Plan Amendment,
Rezone, CUP or Precise Plan.
4. MOU BETWEEN AMERICAN GOLF AND JOELEN
The developer has submitted a proposed MOU between the City, American Golf and the
developer. City staff and American Golf have recently met and have established oreliminarv
positions in response to the developer's proposals. Among these are the following. (The
City's and American Golf's responses were not yet presented to the developer at the time
of writing and are subject to further negotiation.)
a) MOU Term
A maximum 20 year term with a potential 20 year renewal.
b) Guaranteed Tee Times for Hotel Guests
. Pacific Standard Time: 11 :00 a.m. - 12:30 p.m.
. Pacific Daylight Time: 12:30 p.m. - 2:00 p.m.
This 1-1/2 hour block of time would allow for 11-12 start times daily to accommodate
up to 44 hotel guests.
Unused tee times will be released to American Golf two days in advance to allow public
play. If American Golf is unable to sell 50% or more of the released tee times, the hotel
will be responsible for paying American Golf up to 50% of these unused tee times.
c) Tournaments
American Golf will accommodate tournaments to the best of their ability, assuming a
60 day minimum advance notification.
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Meeting Date 09/24/96
d) Shotgun Tournaments
Shotgun tournaments must begin at 7:00 a.m. American Golf will coordinate.
e) VIP Complimentary Rounds
American Golf will coordinate with the hotel in issuing complimentary golf rounds.
Complimentary golf rounds will be counted against the hotel's guaranteed tee times.
f) Pro Shop Facilities
The hotel will provide free space to American Golf for a full service golf pro shop, two
offices, and storage area for golf carts (in exchange for American Golf relinquishing the
restaurant parcel lease).
g) Green Fees
American Golf and the City will determine all course fee rates. American Golf opposes
a three-tier fee system which charges hotel guests a higher rate than either residents
or non-residents. Final determination of green fees may be predicated on the completion
of the Master Plan, the costs of the improvements and the related financing mechanism.
h) Golf Course Master Plan/Improvements
American Golf will commit to hiring a golf course architect to develop a master plan
upon execution of the DDA.
5. FLOOD CONTROL
a) Boyle Engineering Study
Staff has authorized Boyle Engineering to proceed to update their 1 980 Golf Course
drainage study to identify flood control options. Per staff's Sept 10 report, staff
recommends that the City advance the $24,640 cost of the study (from Public Works
Department operating budget) on the basis that the DDA provides for reimbursement to
the City by the developer upon receipt of financing. The study will be completed by the
end of November. However, we should have information available to use to make
decisions and cost estimates by early November. This study will address the necessity
of lowering the water lines crossing the river west of the Willow Street Bridge.
b) Removal of Reeds/Relocation of Pipes/Channelization
The County has agreed to remove 1 5 acres of arundo cane blocking the channel west
of Willow bridge in October and to contract with Environmental Trust for annual cane
removal/maintenance. The Sweetwater Authority has offered to relocate or lower their
line at a total cost of $250,000 to be shared 1/3 each by the City, County and
Sweetwater ($83,333 each). If the City of San Diego would agree to a similar proposal,
the cost to the City and County would double (to $166,666 each). The County has
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Page 6, Item --1L
Meeting Date 09/24/96
indicated a willingness to cooperate in this proposal. Supervisor Cox has set up a
meeting on Sept. 30 with the City, Sweetwater and City of San Diego Water Utilities
Department to discuss the project. Agreement between the City, American Golf and
developer needs to be reached regarding the responsibility for improving the natural
channel west of the golf course. Staff is suggesting that the City's share of both water
lines removal (estimated at $ 166,666) be paid for out of the proceeds of the land sale
(if a sale is approved by Council). with a portion potentially reimbursed by the developer
and that American Golf and the developer share in the cost of the offsite channel
improvements. Final allocation of costs would be determined after the Boyle Engineering
study is completed.
B. SALE VERSUS LEASE OF CITY-OWNED PROPERTY
1. LEASING - ADVANTAGES AND DISADVANTAGES
Council was provided a preliminary lease versus sale analysis for the hotel property as part
of the April 23 staff report accompanying the Exclusive Negotiating Agreement (ENA). This
preliminary analysis was conducted by Keyser Marston and Associates (KMA) and is
attached as Exhibit D. The analysis was based on the developer's February 1996 proposed
lease terms, which were revised from their 1991 submittal. In April, KMA indicated that
the lease terms were substantially at odds with conventional hotel ground leases,
particularly in the absence of any base rent and in terms of the proposed phasing and
structuring of participation rent. The developer was also proposing that the lease payments
to the City would be subordinated to project financing. KMA also concluded that these
proposed lease terms were not advantageous to the City. (Fundamental to the viability of
proposed lease terms is the economic viability of the project. KMA expressed concerns
regarding the project's economic feasibility based upon estimated costs and room rates
presented by the developer at that time.)
Keyser Marston and Associates (KMA) have again been retained by the City to assist in
financial analyses and negotiations pertaining to the hotel property transfer, golf course
improvement financing and related impacts upon course fees and the lease with American
Golf. Among the contract's scope of work is a full analysis of a lease versus sale of the
specific property in question.
However, in order to provide Council with information to use in evaluating the desirability
of selling the property for the Sept 24 meeting, KMA was asked to immediately review the
developer's hotel Operating Pro Forma contained in the recent PKF market study and to
provide general advantages and disadvantages of leasing. In reviewing the more recent Pro
Forma, KMA suggests that a project with total development costs exceeding $75,000 per
room may not be feasible; the developer's numbers would indicate that the hotel as
proposed will cost significantly higher than this figure. However, Joelen indicates that the
PKF room rates are too low, and if increased would lessen the gap.
KMA's general leasing guidelines are provided in the attached September 20 letter to the
City (Exhibit E). In summary, KMA suggests that in determining a position relative to sale
or lease, Council should consider the extent to which any of the following seven criteria
apply. KMA's initial responses to these criteria are provided in italics.
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. Is there an opportunity that the property will appreciate substantially on the property
2!1!! for the lease to allow the City to participate? The lease terms last proposed by
Joelen clearly forestall such participation for at least 10 years. It is unlikely that a
participating ground lease will result in substantial appreciation in the near term.
. Is the property
ground lease?
properties.
so unique that the City can dictate maximum land value through a
The property's location should not command a premium over other
. Are there legal restrictions of the sale of the property? The City Attorney has
established that no such restrictions apply.
. Should the City maintain control of the property for public policylstrategic reasons?
There does not appear to be extraordinary intrinsic value such as would be the case for
a waterfront area, for example.
. Should the City maintain development control, beyond entitlements, for continuing use
or reuse? This is a policy issue Council may wish to consider.
. Does the City want to assume risk related to offering financial assistance as landlord,
particularly in the form of a subordinated ground lease recognizing it could lose the
property if the project is not successful? The City can achieve land use controls through
deed restrictions and/or the purchase agreement/DDA if properly structured.
. Is the City prepared to undertake the costly negotiation, documentation and monitoring
process required by a ground lease? This is a Council policy issue.
It would appear that answers are largely no. Therefore, if Council wishes to accommodate
a lender who is unwilling to lease (or to offer desirable terms for a lease) a land sale could
be a viable course. As KMA points out, "we do not see a strong reason for maintaining
ownership if the property, unless the City is to convey the property at less than its fair
reuse value as a method of providing assistance to the project."
2. LAND VALUE
a) Previous Offers
The Developer has offered $2.3 million for 7.5 acres, or $7.07 per square foot. The site
plan has been revised to include additional acreage since this offer was made.
Information received on September 19, 1996 from the applicant's engineer shows a
proposed acquisition of 8.36 acres; see map, Exhibit F. (The total "project area" is 9.06
acres. The applicant is proposing that. 7 acres of parking and entry way be owned and
maintained by the City leaving only 8.36 acres to be purchased by Joelen. This
proposal will require analysis by staff.) 8ecause the final acreage is not yet known, it
is also not known how the developer's offer will be adjusted to reflect the additional
acreage above the original 7.5.
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Page 8, Item ~
Meeting Date 09/24/96
Listed below for Council's information are offers previously received by the City in
response to the City's RFP on the site:
TOTAL PRICE DATE OF
BUYER LAND USE ACREAGE PRICE PER sa.FT. OFFER
. Retail Properties Group Retail Center 38C. $800,000 $6.12 sf 3-96
. Adma Townhomes 38C. $1,000,000" $7.66 sf" 3-96
. Joelen Enterprise. Hotel 7 BC. $2,212.148 $7 .26 sf 2-98
. Joe"n Enterprise. Hotel 7,6 ec. $2,310,812 $7.07 sf 2-98
.Additionally, Adma proposed to revert .87 8C. back to City for Park
NOTE:
Using Joelen's previous offers of $7,25 and $7.07 psf, at 8.36 acres, the
price would be $2,640,172 or $2,574,622, respectively. At 9.06 acres, it
would be $2,861,238 and $2,790,200, respectively.
b) Current Restricted Appraisal Report
A full appraisal has not yet been conducted by the City, although Keyser Marston and
Associates has already been contracted to do so. In order to respond to Council's
request for information on September 24, staff commissioned an abbreviated "Restricted
Appraisal Report." A Restricted Appraisal Report was provided to the City by Lipman
Stevens Marshall and Thene, Inc. on September 23, 1996 (see Exhibit G). This report
offers an opinion of the market value of 8.36 acres of the subject property based upon
"highest and best use", disregarding existing zoning. The appraiser assumed "a highest
and best use" of multi-family (for sale or rent) at 20 units per acre, and used a sales
comparison approach. The appraiser is advised of the proposed hotel and states "any
additional value derived by a hotel use above multi-family land values is caused by the
entrepreneurial skill of the developer and would not be reflected in land value were the
property to be placed for sale in the open market." (The appraiser also factored in costs
to demolish the clubhouse and to bring the site above flood plain level.)
The concluded value of the 8.36 acre vacant parcel is $2,900,000, or $7.96 per square
foot.
c) "Formal" Fair Market Value Appraisal
As noted, the City has intended to undertake a full FMV assessment to determine the
value for the site, taking into consideration the proposed hotel use. KMA has been
contracted to do this "Reuse Valuation". This appraisal has not yet been conducted,
pending receipt of various information from the developer (including a site plan,
construction cost budget, and operating pro forma) (see KMA letter, Exhibit H). The
reuse appraisal should be completed within three weeks of receipt of the needed
information.
d) land Value for Purposes of the Purchase Agreement/DDA as Condition of Escrow
Section D below discusses staff's recommendations concerning the use of a Disposition
and Development Agreement (DDA) as the Purchase Agreement and conditions of an
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Page 9, Item---1L
Meeting Date 09/24/96
escrow. Staff believes that the DDA include a minimum purchase price with an
understanding that the final purchase price will be negotiated in the future following
completion of both the developer's and the City's full appraisals and at the City's sole
discretion to establish the final price. It should be recognized that the lender needs to
firm up the issues of property control and needs a "not to exceed" figure rather than a
minimum number. That would support the recommendation of Steve Delaney that the
developer, staff and lender enter into negotiations to resolve this and other issues
presented by this project (see Exhibit I).
C. LENDER REQUIREMENTS
1. REAL ESTATE DEVELOPMENT CONSULTANT ILENDER REQUIREMENT CLARIFICATION
Per Council direction to obtain consulting assistance as needed, staff has obtained the
services of Mr. Steve Delaney, of TopMark, Inc., to assist in discussions with the
prospective lender. Mr. Delaney has been asked to help clarify the issues previously posed
to the developer and lender by staff, as reported in the September 10 staff report.
Specifically, City staff and the consultant are attempting to clarify the lender's ability to:
a) make a loan commitment and perform
b) finance a groundlease (versus a sale)
c) extend the required escrow opening date (from the originally requested Sept 11)
d) extend the escrow period to a minimum 6 month timeframe to allow for CEQA
compliance (from the original 30 days/3 months to a minimum 6 months)
e) make available predevelopment financing prior to the transfer of property
f) accept the Purchase Agreement/DDA conditions as proposed by the City as conditions
of the escrow
The consultant is also clarifying the status of the developer's other due diligence items as
required by the lender prior to taking the developer's application to the Loan Committee,
including the status of the developer's financial feasibility study, in order to assist the City
in coordinating timeframes. Finally, the consultant is evaluating the current lending
environment for similar hotels.
Mr. Delaney submitted a letter addressing some of these issues on September 20 and will
be available to answer questions on Tuesday evening, September 24. His letter is
summarized under #2 below and attached as Exhibit I.
2. CURRENT LENDER REQUIREMENTS
Based upon staff's and Mr. Delaney's conversations with the lender's advisor, we
understand the lender's key positions to be as follows:
. The Lender would accept the "purchase/escrow instructions" as prepared by the
developer's attorney. However, from the City's perspective, this agreement does not
provide the assurances needed as relates to Council's receiving public input and having
unfettered discretion to approve entitlements, environmental review and other policy
matters. This is discussed in greater detail in item D below.
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Page 10, Item---1L
Meeting Date 09/24/96
. The lender is requIring that the escrow close by December 31, 1996, Le. within
approximately 3 months. In light of the fact that the EIR process will need to be
completed prior to the transfer of the property - for both legal and policy reasons - this
timeframe does not accommodate the City's needs. (It also does not allow time for
approval of entitlements or for policy issues to be negotiated and/or complied with prior
to closing.) This is also discussed in item D below.
. The lender is willing to reimburse the developer's predevelopment costs (approximately
$350,000) upon receipt of entitlements.
· The lender would like the City to provide 50% seller financing ("carry back") to facilitate
an early close of escrow. However, this may raise a "pre-commitment" issue, as
discussed in item D.
D. CONVERSION OF THE EXISTING ENA INTO AN AGREEMENT WHICH PROVIDES "SITE
CONTROL" (PURCHASE AGREEMENT/ESCROW INSTRUCTIONS)
The City Attorney's Office offers the following analysis of the legal and policy implications of
converting the existing Exclusive Negotiating Agreement into a more formal purchase
agreement. Such an agreement has been requested by the Developer for purposes of providing
the Developer with the "site control" required by Developer's proposed lender.
1. EXISTING ENA
The existing Exclusive Negotiating Agreement (" ENA ") between the City and the Developer
does what its title implies: it calls for the parties to negotiate. The subject of the
negotiations is the terms and conditions upon which (a) the City would agree to sell or lease
certain property adjacent to the Chula Vista Municipal Golf Course to the Developer, and
(b) the Developer would agree to design, build and operate a certain kind of hotel on the
property. The ENA is "exclusive" to the extent that during its term the City agrees that it
will not negotiate with any other party regarding the sale or development of the property.
The only concrete obligations under the ENA are for the parties to provide each other
information about the value and feasibility of the project, to cooperate in processing
entitlements for the project, and to negotiate in good faith proposed project terms and
conditions. If certain milestones are reached in this process, the ENA contemplates that
City staff would present a negotiated Disposition and Development Agreement ("DDA") to
the City Council for its consideration. The City Council retains the right to approve or
disapprove the proposed DDA in its sole discretion. If the City Council were to disapprove
the DDA, the City would have the right to walk away from the project without liability.
2. PROPOSED PURCHASE AGREEMENT/ESCROW INSTRUCTIONS
The Developer wants to replace the existing ENA with an agreement that would provide
Developer with "site control" which the proposed lender has indicated must be obtained
before the lender is willing to issue a conditional loan commitment.
Since the parties were in the early stages of negotiations and information gathering under
the ENA, staff's initial response was to continue to proceed under the ENA, and to consult
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Page 11, Item -1L
Meeting Date 09/24/96
with the lender to determine if the existing ENA would be sufficient for the lender to
continue to move forward with the project. The lender indicated that it needed a more
definitive agreement, which staff agreed to explore.
Staff explored converting the ENA into a purchase agreement, retaining all the ENA's
discretionary authority (e.g. conditions yet to be negotiated, future approvals by Council,
business terms of the deal), including the negotiation of a DDA for Council approval, as
prerequisites to escrow closing. This type of purchase agreement/escrow instructions
would ideally satisfy the City's interest that it not pre-commit to a transaction prior to
having all the information and business terms it needs to make such a commitment, and at
the same time provide the lender with some assurances that the project would proceed.
Following Council direction of September 10, the Developer's legal counsel prepared a draft
Purchase Agreement/Escrow Instructions for staff's review. (The Developer subsequently
submitted a revised version of the document which included proposed changes by the
Developer and the lender's representative.)
3. STAFF CONCERNS WITH DEVELOPER'S PROPOSAL.
If satisfying this prospective lender's requirements for "site control" is necessary to keep
the project proceeding forward, staff recommends that the existing ENA be replaced with
a more definitive conveyance agreement (via a DDA) that protects the City against pre-
committing to the approval of business terms or entitlements. Staff has some concerns
regarding the form of the Agreement presented by the Developer, recognizing that these
are their first drafts, and with the number of business terms that still need to be negotiated,
and importantly, with the lender's request to close by December 31, 1996. These concerns
are summarized below:
a) Timing of CEOA Analysis.
The Developer's proposed agreement does not condition the close of escrow on the
completion of the CEOA process and neither the Developer's nor the lender's current
proposals accommodate the estimated 5.5 to 6 month timetable for completion of the
CEOA process.
As indicated to Council on September 10, the City Attorney's Office believes that there
would be a significant risk of successful challenge under CEOA if the City were to close
escrow on the hotel property without first having conducted the necessary CEOA
review. This position has been confirmed by the City's special legal counsel on CEOA,
Tina Thomas. Accordingly, staff does not support a Purchase Agreement that does not
provide for CEOA review as a condition to close.
The risk of successful legal challenge under CEOA if the City were to approve an
agreement for the transfer of the property subject to the completion of CEOA prior to
the close of escrow is relatively low, per the City Attorney's Office, so long as the
purchase contract appropriately reserves the City's sole and unfettered discretion in its
conduct of the necessary CEOA process. This approach to conditioning land sale and
development contracts entered into by public agencies has become fairly common,
particularly in the redevelopment context.
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Page 12, Item ---12-
Meeting Date 09/24/96
b) Reservation of Discretion
The Developer's proposed Purchase Agreement imposes a "reasonableness" standard
on the City in approving certain elements of the project, including certain land use
entitlements. As Mr. Delaney notes in his letter" An agreement to agree usually ends
up in a dispute, especially when it is documented as a Purchase Agreement." This issue
is problematic for a number of reasons:
. The City cannot legally exercise its authority to approve land use entitlements, and
other police powers matters, in any way other than in the exercise of its sole and
unfettered discretion.
. This contractual standard of "reasonableness" restricts the City in a way that the
ENA does not: the ENA reserved for the City Council sole discretion on all matters.
Agreeing to a contractual standard of "reasonableness" would therefore not achieve
the goal of duplicating the protections of the City under the ENA.
. Depending on the context, what constitutes a "reasonable" approval or disapproval
may be debatable. Unless each party shares the same expectations of a transaction,
the exercise of "reasonable" disapproval can lead to a dispute that is difficult to
resolve. The reservation of "sole discretion" on substantive issues which are not
easily measured or resolved by objective procedures or standards protects the City
against this possibility.
The Developer and the proposed lender can take some comfort in the fact that even
with the reservation of sole discretion on project entitlements, the law forbids the City
from acting "arbitrarily or capriciously." Moreover, the City cannot deny an entitlement
without first making certain findings and determinations, based on substantial evidence,
which support that denial. Outside the police powers context, the exercise of sole
discretion is also subject to the equitable limitation that the party exercising such
discretion must act "in good faith".
c) Need to clarify each parties expectations with respect to deal points for project
processing, development and operations
One primary purpose of a written agreement is to accurately reflect each party's
expectations of the other. If the parties to an agreement have expectations that do not
match-up, there is a significant risk of a dispute in the implementation of their
agreement. This risk is compounded where an agreement leaves significant business
terms to be resolved by future negotiations.
At this point in the negotiations, staff believes that additional discussions between the
City, the Developer, and Developer's proposed lender are necessary before we can be
assured that our expectations coincide. One thing that needs to be resolved is the
proposed lender's apparent need to close escrow by the end of the year. As discussed
above, given the City's current CEQA timeline, of 5.5 to 6 months, this is problematic.
Another concern is the lender's proposal that the City provide 50% seller financing to
facilitate an early close of escrow and to give the lender assurances that while the City
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Page 13, Item ~
Meeting Date 09/24/96
is reserving discretion, the City is nonetheless "committed to the project". Among other
pOlicy problems that the proposal for seller financing creates is that from a legal
standpoint, this approach may also have the effect of making the City seem "pre-
committed" to granting entitlements in the project to the extent that the City would be
subject to a potential significant financial loss if it were to decide not to approve the
project.
Other deal points with the Developer also remain unresolved. For example, the manner
in which the cost of the improvements to the golf course and the channel will be shared
remains unclear. Such matters may be resolved in future negotiations, but it would be
better for all parties to have a better idea now as to what each party expects from the
other before we "agree to agree" on such issues in a formalized agreement.
4. RECOMMENDED FORM AND COMPONENTS OF PURCHASE AGREEMENT
There are natural competing interests among the parties in their approach to this transaction
as each party, the City, and Developer, and the proposed lender, for its own purposes, is
looking for the other parties to show their "commitment" to the project before they
themselves commit their money, assets and time and other resources. This is enhanced
by the fact that the City is further charged by law with the task of not pre-committing to
a project before all required analysis is conducted and procedures followed.
Subject to the successful resolution of the issues discussed in #3 above, if the City Council
desires to proceed at this time to accommodate the Developer's need for "site control,"
staff feels the elements should be considered as part of any approval.
a) The agreement would be titled and structured as a Disposition and Development
Agreement ("DDA "). This reflects the idea that the City not only cares about the terms
for selling the property, but also the terms and conditions for the development and
operation of the hotel project.
b) The City Council would retain sole and unfettered discretion to approve all project deal-
points and entitlements; City staff would continue to be obligated to negotiate with the
Developer in good faith.
c) The completion of the CEQA and entitlements process for the project would be express
conditions to close. This protects the City (and the project) against legal challenge, and
assures that before title is transferred, the completion of the project on acceptable terms
is a close to "guaranteed" as possible.
d) The "process" during the contingency period would be spelled out in greater detail so
both parties are coordinated in moving towards satisfaction of conditions.
e) The City would retain the right to approve project feasibility and the value of project to
the City.
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Page 14, Item--1.L.
Meeting Date 09/24/96
f) The key . deal points. for project development and operations shall be described in
greater detail than currently provided in the ENA in order to avoid misunderstandings and
disputes.
g) The City will retain the right to .walk away. if it properly exercises its sole and
unfettered discretion to disapprove any element of the project.
h) The City would not provide seller financing.
E. RECOMMENDATIONS - NEXT STEPS
Staff is recommending that Council provide direction regarding its desire to convey fee title to
the property and regarding its desire to finalize a Purchase Agreement/DDA to accomplish the
land sale in an expedited fashion to accommodate the prospective lender. If Council wishes
to sell the property and to open an escrow in the immediate future, it is recommended that
Council direct staff to: 1) further refine the scope and content of the DDA for use as the
Purchase Agreement and as conditions of an escrow; 2) continue to discuss and negotiate the
terms of this agreement with the developer and the lender to discern if mutually agreeable
terms can be accomplished; and 3) return to Council within a short period of time, say 3
weeks, with a report - and with a proposed agreement if terms acceptable to the City can be
reached. The Council meeting to consider approval of a Purchase Agreement should be widely
and publicly noticed.
F. MISCELLANEOUS LEGAL ISSUES REGARDING DISPOSITION PROCEDURES
As indicated by the City Attorney's Office at the September 10th Council Meeting, as a charter
city the City has broad discretion to determine for itself the manner in which it disposes of
public property. In this regard, there are currently no provisions in the City's Charter or
Municipal Code which would dictate or limit the City's approach to disposing of the subject
property.
The City did purchase the property with general obligation bonds in 1965. Those bonds were
authorized by a special election. The bonds were paid off last year, however, so there are no
remaining covenants or obligations to bondholders which would affect the sale or development
of the property. Moreover, the fact that a special election was held to approve the bonds does
not impose any special requirements relating to the sale or use of the property. The City's
special bond counsel, Chick Adams of Jones Hall Hill and White, has issued a legal opinion
which confirms this analysis.
There is no express legal requirement that a public hearing be held prior to the City Council
approving an agreement for the sale or development of property under the proposed
circumstances. Nonetheless, from a legal standpoint, it is always safest to have more rather
than less public input in order to avoid any argument that . due process. rights were violated.
Finally, there is also no express legal requirement that in the sale of real property a purchase
price be determined based upon an appraisal. The California Constitution does, however,
prohibit charter cities from making . gifts of public funds.. While there is a broad . public
purpose. exception to this rule, the best way to avoid its implication is to only sell property at
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Page 15, Item ~
Meeting Date 09/24/96
or around its appraised value. Thus, while an appraisal is not a required condition to sale, it
is generally recommended for both legal and policy reasons.
FISCAL IMPACT:
a) Developer Deposit
As noted in the Sept. 10 report, cost recovery departments continue to provide extensive staff
support for this project without a developer's deposit against which to charge staff time.
b) Lease versus Sale
As PKF states in its recent market study "Without knowing the lease terms or sale price it is
not possible to estimate the financial benefit of the land transaction." However, based upon
the limited information available, the following analysis is offered:
Per staff's previous report, the developer's last lease proposal showed rental revenue to the
city of approximately $600,000 in Year 1, with a cumulative of $9.8 to $13 million by Year
25, for a net present value of $2.7 - $3 million. (These numbers were questioned by KMA due
to the questioned economic viability of the project using the developer's estimated costs and
room rates.)
The developer has offered $2.3 million for 7.5 acres of land, or $7.07 psf. The developer's
revised site plan received 9-16-96 proposes an extension of the project to the east and
indicates that the site will increase to 8.36 to 9.06 acres. Using $7.07 psf, this translates to
$2,771,722 for 9 acres. The developer's appraisal estimates the land value at $2,900,000.
The DDA is proposed to include a minimum sale price of $7.80 sq. ft., subject to further
negotiations after receipt of appraisals ($7.80 sf @ 9 acres = $3,057,912). It should be
recognized, however, that the lender is looking for a "not to exceed" number for their budget
to be submitted to their lending committee.
c) Developer Cost Sharing
The terms of the DDA, including cost sharing for various public improvements and consultant
services (which were to be negotiated under the ENA over the 12 month period), have not yet
been finalized. However, this report suggests that the DDA should provide, at a minimum, for
the developer to share in the cost of:
. Boyle Engineering Study 1
. Water pipe lowering or relocation 1
. Channelization west of Willow Bridge 1
'It should be recognized, however, that much of this work would eventually need to be
accomplished by the City and/or Golf Course operator in order to eliminate golf course flooding,
whether the City's property is developed or not.
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Page 16, Item --1L
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d) Other revenues to the City
PKF's market study contains a preliminary estimate of financial benefit to the City. The study
estimates the following revenues:
. Transient Occupancy Tax
. Sales tax
$640,000
$ 33,000
e) Job Creation
The PKF study estimates that 202 jobs will be created by the hotel, with 180 net new jobs.
EXHIBITS
A - Developer's Appraiser's Comments
B - Preliminary Site Plan
C - Processing Schedule
D - Keyser Marston Preliminary Study
E - KMA September 20 letter regarding lease vs. Sale Option
F - Site Plan Acreage Map
G - Restricted Appraisal Report
H - KMA September 20 letter regarding Reuse Valuation
I - TopMark, Inc. September 20 letter regarding lender Requirements
!ADMIN/dt) M:\SHARED\ADMIN\BONtTA1\09-24-96\bonit. [September 23, 1996 (4:34pmll
J:2~/"
'SEP-17-96 WED 11:54 AM C. B. H. V
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FAX NO. 619 4230884
DON SONNEMAN
2094 '-OWen St., NW
Salem, OR 87304
phOne No.: (503)-371-7600
Fax No.l(503)-383-7829
,
FROM: Don Sonneman DATE: 09f16196
TO: Joseph and ler10re Citron (619). 229-3313
SUBJECT: COmm9l1t\1 QI1 ~a$iblily $IUdy
AttaCl\ecf are the draft commentt Y'O!J reqtJQ~.
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EXHIBIT A
'SE~-17-~6 WED 11 :54 AJ.I 0. H. V
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FAX 110. 619 4230884
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PKF Consulting Study - DeU.ilson Areas of Disagreement
1. Average Dally !=tate. Our estimate of average dally rate is $103 per room and PKF
Consumng estimate Is $95 per room. This is a critical diffgr~nce. In our analysis, a $95
room rata would be lnau!fiolentto make the project feasible. The PKF Consulting study's
has major weaknesses..-In the area at estimating average daily rate. The weaknesses
in their analysis Is as follows:
-Average dally r~ .~. ~~IY a ~~p~stte Df'sev<<;~ '~Jfe'1~ ~;;ILEachof these
rates should be addtess.d corno'how'ln the survey. Group rates for corporationS,
group rates for associations. individual commerolal ratot, indIVIdual fiesure rates. Uesure
rates lire not addressed In the study.
-The SUMY process for estimating gr!)up rates for .employer generated meetings
omitted 8Urveye of Important ceteQbrles of demand generatora . Susveys of
, -' ~-.
employers seemed to be solely focUSed ~n thOse employers soulh of the subject property.
This results In omitting the foll~ing categori~ of employers. (t) Employers nor:th C)f the
. .' ~, . ..,~ :. ", . ,. . ,
sUbJect property between 1-8 and Highway, 54, (2) Employers In other Califoq\la cities
. . . ., 1., ~ .,. .t.
, (San Francisco, San Jose. LO$ ~oeles, Sacramento) that have historically booked
" l." ., . '. , '. '
groups.ln San DleQO HCte'$.J3).,eniPlOy~~.~n,s1;Jrroundin9 weStern tltS.toS..th9.t have
. ~ I. ~. "4 -' - ..,
historically booked groups In San Diego hotels (from cities like pheonix. Portland. Seattle.
Denver and Salt Lake ciiy). . Reasons for these omissions are not providacL Additionally.
many U.S. and Mexican employers have facUlties located In Mextco (for U.S. employers
that have locatIOns In both countrlf3$.' San Diego is an appropriate group meeting
lOcation). Even though the narrowly targeted 5uNey of South Bay employers produce B.
.: . I . - ' '
reasonablE! response, PKF ldenti~ed the following weakness In that process within their
report; ...08 recent newpapElr account indloates thai there are 130 maquiladoras in
lljuana. We obtained contact Information on fewer than 10 such ert1ployers In our survey
.,
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FAX NO. 619 4230884
P. 4
process. And other Chula Vista employers such as Hyspan. WhiCh Is reported to bring
clients 'n from all over tI1e world for It$ specially &fee~ did not respond. The true figure
. of demand [or good quality hotels by South Bay employers Is Dkelyto be materially larger
than was quantified by our survey process. Out of town employers may well be a more
lucrative source (higher rates) of guests than South Bay employers:"
'. .
AuoaIatlons ere not spec:IfIGIIIIy fBrgeted in the survey . CorporatIons seem to be
the target of t/1e surwy. 'Nomerition Ofdireot surveys and interviews wht1 SSSOCIaflons
18 found within the feasibility study. Associations oompoaed 62% Of San Diego group
meeting and oonventlon room nights according to a 1993 San Diego and Convention
VIsitors study. QV$f' 98.00.0 roomJ!!gtltswere_generClt~_ durlr'9Jhal yaar for smaller
meeting (avg. 100: ~pre) for DIstrict and Blatewidel ~~~ ~lngs. Although the
d' .., _L .1. . .:1=,- ........ .
aWl8Qe sI%e of International, national and regional meetings 1$ owr 300 people. some
portion of these meeting are smaller. If only 10% of theoe meeting ware of a size for the
SUbjeCl propenyto accommodat8,1I1lS wouk;l repre:senl snlllUUum:d 70.000 .UUlU "iv"IO
on EI regional basis.
. .
There GMI'\'I8 to be an: U~81attd aQumptlan tllat the hotel CIiIn draw business only
:.. - r : . .
from demand generatora south of the sub(ect property - The PKF study indiC;Ues that
. . .
the South Bay Is loSing Potential hotel business to hotels in MisslQn Valley, beach and
bay areas and downtown. In an apparont contradiction. 1hey (lM't $99 the subject as
able to capture business from ~ose same hoters that comes from employers located
botween 1-8 and the subject pr0p6rty, Con6equently many of.1he employerein prestige
locations. with ability to support hlgher rates were not surveyed.
MeetIng planner 8umya Mlrs nOt ueeful . 3rd party meeting planner surveYs were
. .
simply too limited a response from Which to draw conclusions (5 respondents). The
questions asked were not designed to generate an e~ate of a f~e for the subject
hotel Itlstead. the questions focU~ on what rates the cIiOOts 01 these rrieetiog planners
were paying. The answers probably ~ more abOut what cftents they choose to target
for their business than what Is an average daily rate for the hotel.
/ d-. ~ EXHIBIT A .--:. 3
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4. The growth tide applted to average dally rate Is unauppolUd and unsupportable-
TIt" study Irlllized an extremely low 3.0% growth rate. ThI$ rate Is almost a full poim
below Ifte 8Verliige for all categories of hotels (InCluding poorly pGrfonnlng segments) In
their own PKF Consuhlng quarterly Hospitality Survey. In that SlIme survey. expenses
are forecast to grow at 3.6% annually. USing Ifte 3.0% growth rat9 would mean
decreasing net Income or deoreas!ng value each year. 'This Is absolutely contrary to what
hotel observ9rs tell us.
. v', ;'"
6. 8/za of rn.IIng apace - 11111 study ooncluslons appeared to be primarily based on
comments from meetino ptamers and COI'potations. It does not appear that the study
Included Interviewing eithet. weddlng.planners 0LJ0ca1 hotels to determine the. .optimum
slle to aooommO<Sate WeMn~ Without this Input" rsacHt<lncUJ<<jj:may be premature.
'... .. I .'_ ' .1' ! e:""=-I... vJ. ,
Sinoe a high percentage of San Dlegans have famIly members In otrler parts of the
country thrs Is also a source for guests. The study does not address the number of
guests typically QQI'IQratCld by a wedding and the contributIOn to average dairy rate.
'. I; :
AdditJon.ally. the stUdy only ccj'npares the subject property meeting space to 6("all golf
course hotels WIthout considering the slmll8r sized facilities at several mission valley and
beech or bay hotels.
8. 11Ie.nlx of gUMtS may not be correCt -1118 pementage of the leisure segment may
be understated. Given"e more rural lOcation a larger leisute c;omponentwoukf GGGfII
approprlata. Also. the leisure percentage is lower than both groups used for comparison
In tho $1udy. Thle potantJally leads to understatoment of average daily 1'818 by grealer
emphasis on lower group rates.
7. The analysis does nat aecoc.irlt for any patronage from beech and bey hOtelI -
We believe that the beach and tniy hotels have two categories of.potential gue$fs t/ult
can be taken from these hotels: (1) unaccommodated demand during the peak ~n
(Le. people tumed away can be ref(irred to the subject property as an alternative re$Ort
destination) and (2) the more price sensitive ~entG that are wlnerable as these beach
and bay hotel ratas contin.ue to &scaIats.
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Id:- - EXHIBIT A - L/-
1':l-:lO
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Rale Of a Feasibility Study
A feasibility study often .tends to have an exaggorated role in the oyes of the cJlent (I.e.
like tablets handed clown from the mOf,/lltain top). From the appraisers perspective, It Just
one of many tools that help provide a picture of the market for a proposed hotel. A
feasibility study like the one discussed above, probably represents the best technology
avaHaba for modeling the. future performance of a proposod hoteL Add'ltionally, PKF
Consulting Is one of a emaU groUp of cOnsulting oiganl2a1ions that have extensive
experience in this process.
The feaslblfity study Is helpful In providing additional data for estimates of average dally
rate, occupancy, responsiveness of different market segments to the hotel. A major
element of this process Is dlred Interv.l!lws ~I'\d man in sUlVe~ eam'p!ing U1eperspectlves
of corporations that i)()!j)k, group meetings and tI)e, .,rtI8/lY !nte"^~~es that assist
corporations and IntfiVid\hils In.-t)ook\t1g'thelt travel and'mecmng'arranaements., ,The
results ar8 then COI'1sldervd as a part of the appraisal process. Consequently, the
feasibility study represents only one part in a long chain of analytical steps. Just like the
other elements of the appraisal process, It Is given the emphasis that is appropriate based
on our perception of II's reliability. Like other elements of the appraisal process, It Is
. tested for reasonableness by comparing results to our other methOds of analysis.
o
Limitations of 8 FeaSIbility sWdy
It Is essential that the reader understand the'very real limitations of a feasibitity study In
order to place proper emphatiS, on It'$ Importance and reRabUIty: . .
l " ~ ,I
1. Interviews and mall-In surveys may refleot the respondGnts attltudG$ at that
elngle point In time. The:d~a from these surveys Is one factor used In estimating
average dally rate8 and occupancy in dlscour1t~d cash flow analysis. The dlSoounted
. . cash flow analysis starts 2.5 years'ln the fulure and may extend as long as 12.Byears .
". ~'~"In the future. How many of the pe,ople surveyed or Interviewed today, wHl hold the same
'posltlons, and have the same abUity to Influence travel and lodging decisions 2.5 years
to 12.5 years from today? .
2. Our ability to fOreCast the.fUtU"' health of the buslne811 sector Ie mol'fl limited
than appraisers like to admit... The health of the lodging "industry has:a strong
correlation with Gross Domestic Product This Is beCause corporations and other
businesses book group travel and meetings as welt as generming the Individual business
traveller. Today majOr portions of corporatlon.s operating In the U.S. are more heavily
Influenced by events outside ;the U.S. that are not well understood by economIsts or
appraisers. Changes in currenCy exchBnge rate$, complexlnternatiOnaltrtCle agraements
O. Md technologlc!11 change cause change in the competitive postur~ of companies within
Bach Industry In the U.S. Change occurs frequently in ways that are difficult to prediot
,
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EXHIBIT A ~~-
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FAX NO. 619 4230884
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both In the short term and in the long tenn. How many appraisers In the mid to late 80s
would have predicted any of the following events: (1) The virtual disappearance of several
of the largest defense contractors within the San DIego Economy, (2) The crash of the
Japanese eoonomy, {3} The level of coneolidatlon wfthln many Industrie$f1at has oocured
since 1990 (I.e. airlines. banking) (4) The changes OOC\.Iting as a result of NAFTA r:ach
of these events had profound consequences on the health of Individual businesses and
of course business related travel.
---
3. The Ue&ure 8egment 18 8180 ,*vfly (nflueooed by 8Vtmt outSIde the u.s. that
we ~not accurately predict. Arst class and luxury hotels are used primarily by U.S.
residents with sufficient disCretIOnary Income to corI8ldet lravel outside the U.S. So fOr
B new york resident. the list of direct competitors for the subjeCt property may Include B
hotel In SpaIn or Italy In addition to Hotels In San Diego County. How comj)6fitive the
local rates are relative to those In other countries are a function 01 currency exchange
rates. CUrrency exhange rates are linket to inflation IU\d Intere&l mtes. Prec:lictlng these
are <frfficult evsnJn the sh.O.Itterrn....How manY..Jppralse.r$ woukthave pre<l.!l:ted how
frequently the Intere~ iraJe would be raised by ~raI, R~!,nt;E!l)IefItions during
19941 Some inteiTfational'destil'lations also change In relative popUlarity based on
porrtlcal 6tabIIity . an area that few apprai~ers are equipped to addreGIj.
~:)" unantlcipateCl Change In tfte supply of competitive hOtel rooms can ma((e
~h of the feasibility ~)' unreliable for toraQstIng P\IfpOSCIs. While carefuf
efforts have been made to examlrie the potential for competitive supply to corne on line
an unanticipated entry Is possible: If the planning and permll process for 9011 resort Is
Initiated within the next 6 months to a yoar. It cOuld be a competitor In time to adversely
affect the subject property's occupancy and awrage daDy rates during the second or third
year of operation. While thiS Is an unlikely prOcess for a project starting from scratch
(because of the ~ssity to d;vorop the golf course as watO, we cite the example of
Morgan's Run which is a countly OIub repackaged to function as a golf resort. This
transition requires a development effort simU.r to that of the subject property.
L/ 5. Technology may c;hange howcompanie$ conduct buslnese .,d have meetings
In_p we cannot foresee. Just within the past year. lodging experts and eXPerts In
the office market have been focusing on the expanded Interest In, Internet
communications, Internet marketing meoblU\i$ll'l8 and &Mail and advanced on-line
conferenoing techniques and vidoo conferences. They speculate that thescI mechanisms
may gradually change the need for offlce space, the need for meeting spa~ and the
nee<! for internet Ilnkage$ within hotels: The changes could be very subtle and gradual
or dramatio - In either case, our vision of the future is limited and Imprecise.
6. Any penelraUon .t~s require good deftnlUon of the dlrecI compeUtors -In the
case of the subject property, the prootiC! and it's location Is sufficIently unique $0 there
are no real c:limct competitors for a golf resort wilhin CIOM proximity to San Diego tourist
attractiQna. The I the retlabRIty of penetration studies may be more questionable
.... than with .' ~ote product that has many highly similar COmpetitOl'$.
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7. Any Interview and eampllng process haelpherent 6mitatlons. A feasbility study
Is done with time comstralnts. The reliability of the sampling process depends on 'the
number of respQI1denls and wI1ether the resonses were gathGred from an appropriate mix
Of COntacts. Additionally, were the appropriate qUe&llons asked, were the q<Jestlornl
properly phrased, wore the responses clear and were the responses propetrly Interpreted?
How skilled and Q)(pGrf9ncecl were the interviewers? The evaluation of all of these factor$
lays the groundwork for the reliability of the feasiblity study.
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~3/19/1996 16:56
21362252~4
KEYSER MARSTON LA
PAGE ~2
KEYSj;R MARSTON ASSOCIATES INC.
EXHIBIT D
SOD SOUTh CII:.4ND AVe;NUi:,. Sum 1480
Los ANCet.ES, CUIFOJ.NJA. 900?'1
PHONE: 213/622-809'
fAx: 2131622-5204
E-M/UL; kMAI.1o(h:UAIN(.COM
M1I'lSOas IN~
lUA" mrA1E
RmIiYJOI,.QI"MENT
~"'etbu$lN(;:
OCONOMIC DiVELQP"'fIJl.
FISCAL b.tI'AC'
INFR~r;FfNANC
"ALU^1loN AND
Lm<;AtlQ~ tiWlOJ<r
tosANGUZS
RJOtAID L. 110m
a....YJN E. Hou.JS, n
KA'rHtaN H. H8AI)
MEMORANDUM
S.....vD/t.Go
GERALD M. TUM!Iu:
Roa"". W....,.,
PAUl. Co MA1w.
TO; Chris SlOIlomooe, Community Development Director
Dave Gustafson, AssIstant Director Of Community Development
City of Chula Vista
SAN FAANQSCO
A. JURY' KBYSD.
TrMOTfiY C KI:t.Ly
KATe BAlU..Ii FUNt:
DONI" E. COMo'"
Dr:..u: M. KExN
f'ROM: Keyser Marston Associates, Inc.
SUBJECT: Bonita Golf, Course Resort
DATE: March 19, 1996
PursulOlnt to your request Keyser Marston Associates, Inc. (KMA) has
preliminarily reviewed the letter dated e 23, 1996 from Bonita Grand Golf
Lodge Resort offering terms under Which'they wou ase the su ~e prope
and develop a 250 room conference oriented hotel. Based upon our review of
that material and our experience with similar projects we Offer the fOllowing
comments.
Develooment Costs
No detailed development bUdget was provided for our review. The project is
estimated by the developer to cost $35 millioo to develop, exclusive of land and
a start-up reServe. When the deve/opers cost estimate is adjusted to reflect the
negative cash flows generated during the hotel's stabilization period, the
development costs total approximately $37 million dOllars or $148,000 per room.
Given the low rise nature of the hotsl and our understanding thai required offsite
improvements are minimal, a hotel at this cost should be of a superior quality
Id--
EXHIBIT D -
(
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~3/19/1996 16:56 21362252~4
KEYSER MARSTON LA,
PAGE <13
Page 2
ROOm Rates
The Initial average room rates are projected by the developer to be $85.00 per
night in 1996. The stabilizel:1 roOm rates (year 6) ere projected to be $124.76
($101.44 in 1996 dollars). These rates are inconsistent with a hotel CO$t of
nearly $150,000 per room unless other department Income, i.e., food and
beverage Income is unusually strong. Given that a review of the current INU'l<.et
conditions Is beyond the scope of this assignment we camot comment upon the
rationale for the room rate assumed or the other departmental revenues.
lease ProDOsal
The proposed lessee has, in part, recognized the project's difficult economics by
the terms of the leese proposal. The lease has several unconventional terms.
First, the proposal calls for a percentage lease, only. No base or "minimum"
lease is paid throughout the lease. Rent is calwlated based upon a percentage
of operating income, with varying percentages applied to the different
departments' gross Income. The percentages proposed are generally within the
typical range. What is unconventional is that the percentage rent is phased in
over the initial 10 years of the lease, with only 10% of the indicated rent paid In
the fourth year, Increasing gradually to 62% by the 10th year and 100% by the
11th year. Projected lease payments range from $25,000 in the second year of
the lease to $449,000 by year 10, and $760,000 by year 11 as calculated by
KMA. (We woufl:1 note that there appears to be a mathematical error in the
proposer's calculation of rent beyond year 10.)
We have estimated the present value of the proposed lease payments, basad
upon the proposer's assumptions but corrected for the math error, at
approximately $3.08 million. This assumes a 5% increase in gross revenues
after year 11 as suggested by the proposer. When a more moderate 3% annual
increase is used, the value of the lease payments is estimated at $2.7 million. In
eacl1 case we have discounted the lea!\e revenue by 13%, recognizing the risks
associated with percentage rentll.
! d- ~ EXHIBITD - J...-..
KEYSi.R MARSTON AS90r:::IATXI5 INC.
)d.-Jl~
~311j(1995 15:55 21352252~4
KEYSER MARSTON LA
PAGE 64
"'age 3
Financial ~easibilitY
Based solely upon the information cont8ined In the February 23rd proposal,
there Is some concem that the project may not be financiable, even given the
unconventional nature of the proposed lease tenns. Our finn is currently
working on several hotel projects, Including projects In which acquisition
flnane/ng or refinancing Is being arrangec/o In each of these projects, lenders are
requiring debt service coverage of approximately 150% or the overall cash
return on total investment (cost) must be apProximately 13% to 14% to attract
investment capital. Wa would expect a to-be-built hotel would require at least
these economic parametors to attract financing or equity investment from
conventional soun:es. The pro forma submitted by the developer suggests a
debt service coverage ranging from 109% In the third year to 136% by year 7
and cIoes not reach 150% until after year 10. Total return on total investment in
year 4 is leu than 10% and does not reach the minimum or 13% until year 9.
This aSSumes the modest ground rent'as proposed by the developer.
Recommendations
Given the above, we would reCOmmend the following;
1. The developer should provide evidence from lender anellor a 3rd party
that financing is available. This may requIre replacement of debt with
equity monies.
2. The developer should provide a detailed cost pro forma and copies of
recent market studies which support the assumptions utilized in the
proposal. It is important that included as part of the coat pro forma is unit
cost as well as square footage and conceptual specifications for FF&F.
3. If the responses to #1 and #2 above support the assumptions utilized In
the submittal, the City mUst recognize that the proposed use may not
represent the . highest and best use' from a financial perspective. Thus
the City must make 8 policy decision aa to its willingness to accept rent
that may not maximize the site's value. This would be a pOlicy decision
related to the quality level of the project propOSed.
4. If the City elects to go forward to negotiate a leaae, the proposal should
be modified as follows:
KIiYSIiR M^:&S'rONA5S"OCtATES INt
I^- EXHIBITD - 3
1~-:17
U~'~~fL~~O LO:~b L!~bLL~La~
N:. 'r'::)tJ( MAt<ti I UN LA
I-'A<:;t. ~5
Page 4
· The proposa' Should be dear as to the unsubordinated nature of
the 'ea58 [that Is, the lease payment must be macIe from gross
iracome, Prior to debt service payments).
· The phase ~ 'n of the percentage lease should be a.ccelerated if
negotiated gl'O$8 Income levels ("break points") are obtained eartler
than the pro fonna assumes. Rather than dates goveming the
Percentage, the achieved level of gross income should govern the
proportion of the percentage rent paid.
· A base rent Should be established upon the hotel reaching a
stabilized point of gross revenues. Percentage rents would be
payable should percentage rents exceed the base rent.
· Definitions IiI$ to quality and amenities must be established. To the
mttent the hotel costs are less than pro forma, adjustments would
bamacle to the percentage rent "break points."
These represents basic: leaae concepts. A myriad of other lease terms and
definitions will be required to develop the lease document itself.
We hope this review has been helpful and are available to discuss the above at
your convenience.
CEH:gbd
I16I02.CHV
11220.0011
KEYStiR MARSTONASSOCIAl'ES INc.
I d-- - EXHIBIT D -- 1-
)~- :I~
, ^
TABLE 1
LEASE PAYMENTS
BONITA GRAND GOLF LODGE RESORT
CITY OF CHULA VISTA
LEASE PAYMENTS
YEAR 3% INCREASE. S'k INCREASE.
1 $0 $0
2 25,000 25,000
3 35,000 35,000
4 50,581 50,581
5 111,162 111,162
6 149,848 149,848
7 222,329 222,329
8 298,409 298,409
9 382,856 382,856
10 448,720 448,720
11 745,454 759,929
12 767,818 797,925
13 790,852 837,822
14 814,578 879,713
15 839,015 923,698
16 864,186 989,883
17 890,111 1,018,377
18 916,815 1,069,296
19 944,319 1,122,761
20 972,649 1,178,899
21 1,001,828 1,237,844
22 1,031,883 1,299,736
23 1,062,839 1,364,723
24 1,094,724 1,432,959
25 9,801,153 13,078,510
TOTAL $24,262,128 $29,695,983
NPV @ 13% $2,731,079 $3,086,867
. PERCENT INCREASE IN REVENUES AFTER YEAR 10
KEYSER MARSTON ASSOCIATES. INC.
FILENAME: CVLPMT.XLS; NPV PMT; DATE: 318196; JJL
! d- - EXHIBIT D - S- 1:2 - 21
KEYSER MARSTON ASSOCIATES INC.
ADVISORS IN:
REAL ESTATE
REDEVELOPMENT
ECONOMIC DEVELOPMENT
FISCAL IMPACT
500 SOUTH GRAND AVENUE, SUITE 1480
Los ANGELES, CALIFORNIA 90071
213/622-8095 FAX 213/622-5204
MEMORANDUM
L05 ANGELES
RICHARD 1. BoTTI
CALVIN E. HOLL!S, II
KATHLEEN H. HEAD
SAN DIEGO
GERALD M. TRIMBLE
ROBERT J. WETMORE
PAUL C. MARRA
TO:
Ms. Cheryl Dye, Economic Development Manager
Community Development Department
City of Chula Vista
SAN FRANCISCO
A. JERRY KEYSER
TIMOTHY C. KELLY
KATE EARLE FUNK
DENISE E. CO!\iLEY
DEBBIE M. KERN
FROM:
Keyser Marston Associates
SUBJECT:
Bonita Hotel - Lease vs. Sale Option
DATE:
September 20, 1996
As requested, Keyser Marston Associates, Inc. (KMA) has reviewed the feasibility study
prepared on behalf of the City by PKF Consulting relative to the proposed Bonita Golf
Resort. We have also reviewed the package presented to the City in February 1996 by
the proponent of the hotel project, Joelen Enterprises ("Joelen"). Based upon the
information presented in the above referenced material, we have prepared the following
discussion paper concerning the relative advantages and disadvantages of the City
offering the site for lease or sale.
Background
It should be noted that last March, KMA prepared a preliminary evaluation of the lease
terms proposed by Joelen. Based upon the information submitted by Joelen at that
time, we concluded:
. The lease terms were substantially at odds with conventional hotel ground
leases, particularly in the absence of any base rent and the phasing of
participation rent. Additionally, the lease proposed was to be sub-
ordinated to project financing. We therefor concluded that a lease was
not advantageous to the City, as proposed.
/ d- - EXHIBIT E -- /
\~ - '3t>
Page 2
. The project economics presented by Joelen suggested the hotel would
not meet current underwriting standards.
We have not received updated information from Joelen concerning the hotel's projected
development costs or operating revenues, neither are we aware of any changes to their
lease proposal presented last Spring and addressed in our memorandum of March 19,
1996. Our review of the recent PKF Consulting feasibility study suggests that a project
with total development costs exceeding $75,000 per room may not be feasible, given
the operating income projected by PKF. We understand Joelen believes the PKF room
rate assumptions to be overly conservative.
The following discussions assumes the project is economically feasible and that the
lease terms ultimately negotiated are conventional with respect to the major economic
provisions. The issue of subordination is discussed more fully below.
Ground Leases
Real estate ground leases have traditionally been utilized in situations where the
landowner (Lessor) desires to maintain long term ownership of the land without actually
being responsible for the development of the property. Ground leases are particularly
common by public agencies whose interest in maintaining long term ownership may be
based on any of the following considerations:
1. Belief in long term appreciation: In certain circumstances, particularly
when the property is being developed at the bottom of a real estate cycle,
or where the use is pioneering, there may be an opportunity for
exceptional appreciation in land value, particularly with regard to
alternative investment opportunities for the land sale proceeds.
2. Uniqueness of the properties: Certain properties are so unique -"one of a
kind" - that the owner can dictate a ground lease. Ocean front properties
in Hawaii are an extreme example.
3. Legal restrictions on the sale of property: Certain properties cannot be
sold either due to title restrictions (such as State Tidelands Trust
properties) or the use of sale proceeds are so restricted that the public
agency is economically motivated to lease rather than sell properties
(school district sites).
4. Intrinsic site value: Certain properties, due to there strategic location or
historical nature, are often required by public policy to be maintained in
public ownership. This might include key downtown sites, port expansion
properties, etc.
!;;)-
EXHIBIT E - d-
I~ -3f
KE'iSER MARSTON ASSOCIATES INC.
Page 3
5. Ongoing development control: Maintaining an ownership position through
a ground lease (even if the ground rent is subordinated) allows the public
agency to play some role in the continuing use and reuse of the property
(even if only from the position of a passive landlord). This has been
important in several redevelopment situations where the public has
invested significantly in a landmark project.
6. Financing Assistance: Properly structured, particularly as a subordinated
ground lease, the landlord can provide assistance such as to make a
marginal development possible (see "Subordination" below). Effectively
the Landowner is a joint venture partner although the transaction is
structured as a ground lease.
7. Pure public policy: Some public agencies, as a result of one or more of
the above, or other considerations, merely have a standing policy against
sale of publicly owned land.
Thus, the primary advantage of a ground lease is that it provides a vehicle for long term
interest in and control of the property in question, allowing the Landlord to meet certain
economic and public policy objectives.
Ground leases, by public agencies in particular, can have certain disadvantages when
compared with selling the property outright, especially where the fee interest in the land
is "subordinated".' These disadvantages include:
1. Loss of economic return due to foreclosure: in the event a subordinated
ground lease gets in trouble, the lessor may lose its interest in the
property and not be in a position to affect what happens to the property.
2. Reduction in economic return due to rent renegotiations: Public agencies
are particularly vulnerable to a reduction in economic return due to
renegotiations during downturns in the property's performance. This is
particularly true where the other public benefits to the landowner (tax
revenues, image, amenity value to the community, etc.) outweigh the
value of the ground rent.
3. Uncertainty in economic return: Performance based "percentage rents"
are high risk to the landlord, and are often the basis for partial
subordination.
, Subordination occurs when the landlord agrees to allow the Lessee to encumber the fee interest in
the property with a mortgage for purposes of obtaining financing for the project. A landlord may be
asked to subordinate both its interest in the fee as well as its right to receive ground rent. In the event of
a default on the mortgage financing, the lender can foreclose on both the Lessor and lessee's interest in
the property. Occasionally, ground leases will be structured such as to subordinate the right to receive
'" " , po""" of~. "m, b. ,,' 'h. ... )
/~ ~ EXHIBITE-3 KEys~~~~~j!~J~~IcIATES
IN C.
Page 4
4. Discounted land value: In many situations, a lessee will argue that the
value of the property subject to a ground lease should be discounted as
compared with the purchase of the fee, unless the property is truly
unique.
5. Investment risk through lack of diversification: A public agency cannot
diversify its investment if the investment is tied up in a ground lease. The
problem is compounded when both the ground rent and the tax benefits
are a function of the property's performance.
6. Initial costs of lease negotiation and documentation: Leases which
properly protect the landlord's interests are complex and are the most
expensive form of real estate transactions to negotiate and document,
especially when contrasted with a simple sales agreement.
7. Ongoing monitoring costs: A lease imposes certain lease administration
costs, including monitoring of insurance and maintenance responsibilities,
rent audits, etc.
8. Ongoing liability exposure: As the landlord, the public agency remains a
target for litigation regarding injury claims which is only partial mitigated
through indemnification agreements.
Lease Versus Sale
As mentioned above, we are not aware of any changes to the April lease proposal
discussed in our March memorandum. In summary, no base rent was proposed, and a
percentage rent was phased in over the initial 10 years of the ground lease.
Escalation's and reappraisals were not addressed in the proposal. In subsequent
conversations with Joelen representatives, it was stated that the proposal assumed the
ground lease would be full subordinated to a lender. In establishing the position of the
City relative to sale or lease, we believe the City should consider the extent to which
any of the seven criteria on page two apply. The following represents KMA's initial
response to the criteria, based upon available information at this time:
. Is it likely that the property will appreciate substantially as a result of the
use, and will the ground lease allow the City to participate in the
appreciation? The lease proposed by Joelen certainly forestalls any such
participation for at least 10 years. It is likely that a participating ground
lease will not result in substantial appreciation to the property as a result
of the proposed hotel use in the near term. The hotel will require a period
of stabilization as the property is marketed and we would anticipate
increases to room rates and thus room revenues to be modest during the
initial years of the hotel operation. The hotel will likely continue to face rate
I d - EXHIBIT E - '-I K E , /E ?:; ~Rt 0 N Ass 0 C J ATE 5
IN C.
Page 5
increase resistance as it is being positioned as a less costly alternative to
competitive properties.
. Is the property unique such that it can command maximum land value
through a ground lease or will a significant discount be applied after
consideration of the risks to the City? While the property, once developed
will represent one of very few golf course hotels in the marketplace, its
location is not such as to command a premium over other properties.
Development is sufficiently pioneering that we would significantly discount
the value of any participation rent negotiated as part of the ground lease.
. Is the City prohibited from selling the property either through deed
restrictions or by City asset management policy? We are not aware of
any such prohibition.
. Is there intrinsic value to the site such that the City must maintain
ownership? The property is not within the downtown area, is not a water
front area or otherwise does not appear to have any extraordinary intrinsic
value.
. Does the City desire to maintain some additional controls on the property
beyond zoning and other discretionary entitlement controls? This is a City
policy issue and related to the following criteria.
. Does the City have an interest in sharing the risk of the project through a
participation form of ground lease, recognizing that it may lose its
economic interest in the property if the development is not successful?
Again, a policy issue. To the extent the City does not provide any financial
incentives, such as accepting a contingent or subordinated payment for
the land, the City can achieve' land use controls through deed restrictions
and the sales contract.
. Is the City prepared to undertake the costly negotiation, documentation
and monitoring process required by a ground lease? This is a City policy
decision.
An additional consideration is that financing on non-subordinated ground leases today
is very difficult to obtain, will be relatively expensive if available, and thus will make
development of the project more difficult.
Absent specific policy considerations relative to disposal of City assets, we do not see
a strong reason for maintaining ownership of the property, unless the City is to convey
the property at less than it's fair reuse value as a method of providing assistance to the
project. If the City does provide such assistance, there are alternatives to ground
/ J- - EXHIBIT E - ~ E Y S E R~ ~ ~ 0 N Ass 0 C I A TE S
IN C.
Page 6
leases which would provide the City with the opportunity to participate in the financial
returns of the project.
We hope this review is helpful and we are available to discuss our comments at your
convenience.
CEH:gbd
96675.CHV
11220.0014
/ CA - EXHIBIT E - (;,
)~- ??
KEYSER MARSTON ASSOCIATES INC.
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9-23-1996 11 ,20AM
TO:
REFERENCE:
FROM:
FILE:
DATE:
FROM LSMT 619 232 7219
Mr. Daniel Rofoli
CommUDity Development D.epartment
City of Chula Vi$ta
276 Fourth Avenue
ChuJa Vista, California 92010
P.2
An 8.36-acrc vacant r= on the north side of
_. . ,Bonita Road at Dtay .Road.ChuIa Vista. "-
,'r.~9;oia !).1~"., -... ..'
. ....' ._.. I.. .,... .
"w."',_ _.__.
UPMAN STEVENS MARSHALL & THENE. INc.
Kevin M! Thene, MAl' .
401 B Street Suite 2101
San Diego, MOrnia 92101-424.4
96177K'I'
September 23, 1996
/ d- - EXHIBITG - /
1~-38"
9-23-199611'20AM
FROM LSMf 619 232 7219
P.3
JBPfIRBY L. ANDERSON
Vlr{CENTG. PERRBR
RJd-iARD J. HUTZLBR.
DmDIBB C. KAY
lORN R. LAWIJ!R
I\IARKT. CI.M!I.LI!It.
"'A""W. ao\JTII
Lipm;:J1] Stevens Marshall & Thene, Inc.
_ :estal<o Appniscrs '" Consul...... B.L. "BIlL" UP....... "AI. CItE
WAL'lmI. ~S. MAl
T1IOMA8 O. NAl\$IIALI., MAl
KEVIN M. nU!NB. MAl
September 23, 1996
Mr. Daniel Rofoli
Community Development Depanment
City of Chula Vista
276 Fourth Avr:nw::
Chula Vista, California 92010
Rc: An 8.36-acre vacant parcel on tbe north side of Bonita Road at Otay Lakes Road. Cbula
Vista, California 91902.. . -. . . _~..,,__ ., .. "._....... . .. ....
F"':"Jt.! ',~::>,'-- '31'~ '0"2'" -t....,')
Dear Mr. Rofuli:
IU your request, I have completed an appraisal. of the referenced property and submit my
findings in the following apprlfsal. . .' ,
, 5 j
The appraU;al was made to express an opinion, as of September 23, 1996, of the marlret value
of the subject's fee simple Estate.
This is a Restricted Appraisal ~ort which is intended to comply with the reporting
requirements set forth under Standards Rule 2-2(c) of the Uniform Standards of Professional
Appraisal Practice for a Restricted Appraisal Report. All such, it does not present all of the
reasoning and analyses that were used In the appraisal process to develop the appraiser's opinion
of value. Supporting documentation concerning the data, reasoning, and analysis is retained In
the appraiser's tile. The depth of discussion contained in this report is specific to the needs of
the client. The intended use is asset evaluation. The appraiser is not responsible for
unauthorized use of this report.
The value is subject to the attac:bed Limiting Conditions and Certification.
Client
Community Development Department
City of Cbula Vista
276 Fourth Avenue ~
COOla Vista, California 92010
Appraiser
";
Kevin M. Thene. MAl
Cenified General Reat Estate Appralser
State of California OREA Apptaiser ,I.D. No. AGOO3085 ,
Expiration Date: JanUary 25,' 2000 .
401 B Street. Suit,e 2101. San Diego. CaJiJomia. 92101-4244; !'honc (619) 232--2801
.1..
Fax (619)232-7219
EXHIBIT G --' ;)--....
:/:3--
1.:2 - ~r
9-23-199611,21AM
FROM LSMT 6192327219
P.4
Subject
An 8.36-acre vacant parcel located on the north side of Bonita Road at Otay Lakes Road, Chula
Vista, California 91902
Purpose of the Appraisal
The purpose of the appraisal is to CliUmate the market value as defined by the FDIC, 12 CPR,
Part 323-AppraisaIs, 323.2 Def"mitions (t), August 29, 1990.
Intended Use of the Appraisal
For the sole purpose of assisting in evaluating the: pi Uf"" ty for the City of ChuIa' Vista
Community Devel~nt ~. ...'....~..___ _, . ...' .,' .... .
Interest Valued
1:'/:"''''", ': ,'- :;1 ~~ -,"7>- -. -",. ":1
The fee simple estate.
History of Property
The property has not sold in the last three yeatS. It is not listed for sale. It is owned by the
City of Chula Vista.
EffectIve Date of Value
Scpte:mbcJ: 23, 1996 .
Date of Report
'.
SepteJI1ber 23, 1996
Indicated Exposure,l1me
I.c:8s than 12 months. .
Property Description
There is no legal description available. Please reference the exhibit included for the location of
the property.
The site is substantially a rectangu1ar shaped pateellocated on the north side of Booita Road at
Otay Lakes Road. The size is reported to be 8.36 acres by the Community Development
Department. The subject zoning Is A-14. . Per instructions, I have been instructed to assume
zoning in the context. of my opinion of hlgbest and best use IU1d disregard the existing ;tOning.
"
Lipman Ste'fens Mariman & Thone, Inc.
2
/;}- _ EXHIBITG - 3
}:J -Vo
9-23-1996 11 ,21AM
FROM LSMT 619 232 7219
P.5
Highest and Best Use
As if vacant: If the site were developed, the highest and best use is considered to be a multi-
family USe either for sale or for rem:. Demand for additional office or retail development is not
evident. The development density is assumed to be 20 units per acre, or 167 unita overall. I
understand that the site is ptoposed for ~ development of a hotelll.tld conference center. While
this is within the realm of reasonableness, it is my opinion that any additional value derived by
a hotel USe above multi-family land values is caused by the entrepreneurial skin of the developer
and would not be reflected in land value if the property were to be placed for sale in the open
marlret.
Appraisal Development and Reporting Process
The subject was ins],1ected on September 21, 199q: .. The .,;;ite ~ WIIs provic\ed by the
Community Develo~eIlfDep~t ~fW~ City ot Chula Vista.
I. ." '" _,:\. . " '""
A Sales Comparison Approach is the prinwy valuation method. Sales of multi-family p=l
were reviewed, conf1lIlled and compared to the subject.
This Restricted Appraisal Report Sets forth II.tl abbreviated analysis of data and the appraiser's
conclusions and supporting documentation is retained in the apptaiser's ftle..
Summary of Analysis and Valuation
Seven sales and two escrows were considered in the valuation of the subject. Unadjusted the
range is from $8.97 to $13.68 per square foot of net land area and $16,234 to $41,787 per unit.
Mter a<ljustrnents the range is from $8.79 to $11.38 per square.foot and $16,231 to $22,500 per
unit. I reconcile at $9 per square foot and $18,500 per unit. This produces a value range from
$3,090,000 to $3,280,000. This range of value assumes the site is in finished condition ready
for development. Demolition contractors estimate it would cost about $136,000 to remove the
improvements. According to the City of Clmla Vista Engineering Department it would cost
$168,000 to bri.na the site above the flood plain and ptovide a compacted site. Deducting theses
COsts indicates a value range of $2,786,000 to $2,976,000. This value range ~timate docs not
consider the cost of constmcting any drainage facilities, if needed.
Concluded Value
After considering the infonnatlon available and the characteristics of the site, the fee simple
value is estimated at $2,~,OOO. This value estimate does not consider the cost of constructing
any drainage facilities. if needed.
U\lUlIUI Stevens MaI'Shall & Thene..' Inc.
/if -
EXHIBIT G - L.)
}~-~I
3
9-23-1996 11 '22AM
FROM LSMT 619 232 7219
P.6
It has been a pleasure to have been of service to Community Developm.ent Departm.ent. City of
Clm.la VIsta in this assignment.
Sincerely,
LIPMAN STEVENS MARSHALL & THENE, INC.
~~27
Kevin M. Thene, MAl
Certified Gent;raI Real Estate Appraiser
State of California
OREA Appraiser I.1?.,.No..A~08S ..: "
Expiration Date: Ianvao;t25.~ ~ :: 1 :?-~,':' ,,-
..-.~ - .....;
KMT:11r
Lipman Stevens Mars.IWI & Thene, Inc.
4
/0- -
EXHIBIT G - S-
I~- ~ ~
9-23-1996 11 ,22AM
FROM LSMT 619 232 7219
P. 7
LIMITING CONDITIONS
This appraisal is made expressly subject 10 tile ,fOllowing conditions and stipulations:
I. No responsibility' is asswned for matters which are le~al in nature, nor is any ~inion On the title
rendered herewith. This appraisal assumes good title, responsible Ownership and competent
III3I13gomcot. Any liens or encumbrances which may now exist have been disregarded, and the
prop(Orty has been appraised as though free of indebtedness.
2. The factual data utilized in this analysis has been obtained from soure;e:s deemed to be reliable;
however, no responsibility is assumed for its accuracy.
3. Unless otherwise stated in this report, the existence of hazardous mab:ria1, which mayor may
nOl be present on the prop(Orty, was not observed by the appraiser. The appraiser ha$ no know-
ledge of the existence of such marerials on or in the property. The appraiser, however, is not
qualified to detect such substances. ',The preseDCe., of subslanCe$. such as asbestos, U{"ea-
formaldehyde foam.insula~~n. ot:,otI;J.er.potentlally hazardous material!: may affect the value of
the property. The value estimate' is'pretlicated on the assumption mat there is no such material
On or in the property that would cause a loss in value. No responsibility is assumed for any such
conditions, or for any expertise or engineering knowledge required 10 discover them. The client
is urged to retain an expert in this field, if desired.
4.
Except as noted, this appraisal assumes the land to be free of adverse soil conditions which would
prohibit development of the property to i1:; highest and best usc.
, [
5. This appraisal is of surface rights only, and no analysis has been made of the value of subsurface
rights, if any.
6. Disclosure of the contents of this appraisal report is 'governed by the By-Laws and Regul<ltions
of the Appraisal Instilute. ' ,
7. Neither all nor any part of the contents of this report (especiilly any conclusions as:to value, the
identity of the appraiser or this appraisal firm, or any reference to the Appraisal Instilute or to
its designations) shall be disseminated to the general public by the use of advertising media,
public relations media, news media, sales media or other media for public COm"'''';''.ations
without the prior written consent of the signatory of this appraisal report. Possession of this
report or a copy thereof, does not carry with it the right of publication. It max not be used for
any purpose by any petsOn other than the party to whom it is addressed W1thout !hI;: written
consent of the appraiser, and in any event only with the proper written qualification.and only in
its entirety., "
8. As agreed upon with the dient prior 10 the preparation of this appraisal, this is a Limited
Appraisal because it invokes the departure provision of the UnJform'Standards of Professional
Appraisal Practice. I have omitted the descriptive data and abbrevi<lted the Sales Comparison
Approach.
9 - This is a Restricted, Appraisal Report which is intended 10 comply with reporting requirements
set forth under Standards Rule 2-2(c) of USPAP for a Restricted Appraisal report. As such, it
does not include aU of the data, reasoning, and analyses that were used in the appraisal process
to develop the appraiser's opinion of value. Supporting documentation concerning the data,
reasoning, and analyses is ,retained in the appraiser's file. The information contained il} this
report is specific to the needs of the client and for the intended use stated in this report. The
appraiser is not responsible for unauthorized use of this report. '
10. This value estimate does not consider the cost of constructing any drainage facilities, if needed.
, Lipman Stevens MarshsU & Thene, bJc,
5
I d- -: EXHIBIT G
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9-23-199611,23AM
FROM LSMT 619 232 7219
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CERTIFICATION
I certifY, to the best of my knowledge and belief, ...
the statements of fact contained in 1hi$ ".eport are true and correct.
the reported analyses, opinions, and coocluslons ate limited only by the reported assumptions and
limiting conditions, and are my petiOIIa1, unbiased professional analyses, opinicms. and
conclusions. '
I have no present or prospective inrerest in the properlY !bat Is the subject of this report, and I
have no personal interest or bias with respect to the parties involved.
my COlnpensation is not contingent u,POn the rcporting of a predelcm1ined value or direction in
val'Uc that favor~_the 1:IIUSC;.of $e clie.nt,the am.01!!\,t of theyalue CIIRmate. ,the 'tv>inmp.l1t of a
stipulated result or~, ~~,~f '!-,~b~ellt event.
my analyses, opinions, and conclusions were develOPed. and this report has been prepared, in
comormity with the x-equirements of the Code of 1>rofessional Ethics and !he Standards of
Professional Practice of the Appraisal Institute and the Uniform Standards of Professional
Appraisa1 Practice.
the use of this report is subject ID the requirements of the Appraisal Institute relating to review
by its duly authorized representatives.
as of the date of this report, Kevin M. Thene, MAl ha$ completed the requirements of the
COlltinuiu.g education program of the Appraisal Institute. ,
I have made a peri;onaI inSpection of the properlY that is the subject of this report.
this appraisal was ~ot based' on ~ requested miniInum valuation, a :$pecific valuation or approval
of a loan.
~
'1Cevin M. Thcnc, MA,I
Date; Sejltember 23,,1996
Certified General Real Estate Appraiser
State of California ,
OREA Appraiser No..AG003085
Expiration Date; January 25, 2000
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Lipman Steveus Marsball & TheIle, Inc.
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Banlta Golf CounMr Hotel
8t/nIJ. pcIodt,01 Df Guitw SctIoI'I 81 of. Rancho Da L8 N8c:1an In". CItv Of CIIuta
VlIUI, Ccutty of 11m CfIOo,It8m' of CaJIforDIa. IIId portIcm mora '**'*""
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w.c ,n.ao feItJ thence S<<dh 71'40'29" WII.t 70.00 feet; theftCe SouVI
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1hInce eIanI.... nortI18rIy ~ tbe faIoWInt OO\lftlllS: IoIdb ."'07"
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QUALIFICATIONS OF KEVIN M. TBENE, MAl
Education:
Bachelor of Science Degree in Real Estate - 1982, University of Arizona, Tucson, Arizona .
Successful completion of the following courses sponsored by Appraisal Institute:
Capitalization Theory and Techniques; Basic Appraisal Principles; Case Studies in Real
Estate Valuation; Residential Valuation; Standards of Professional Practice; Market
Analysis & Feasibility
Seminars (Partial List):
Demographic & Feasibility Analysis; Fair Lending; litigation Seminar; Appraiser's
Legal Liability; Advanced Cash Flow &. Analysis; Apartment Valuation; Market Analysis
& Feasibility Analysis; Downtown Redevelopment
Professional:
Lipman Stevens Marshal!.& Thene, Inc., San Diego, June 1989 - Present
Bu~~~=en, m:~.,'~CsO~~Az, Da~6~19k3"- :~ 19~9 "'-.
Associate
Associate with S3tXlers K. Solot and Associates, Tueson, AZ, September 1982 - September 1983
Associate
Types of Appraisals:
Automotive DealershipslRepair & Service; Commercial, Industrial & Residential
Acreage; Industrial and R&D Properties; Leasehold &. .Leased Fee Estates; Office
Buildings; Retail Buildings; Neighborhood &. Connnunity Shopping Centers; Mitigation
Land; Residential and Subdivisions; Mastelplan Communities; Hotels & Motels;
Residential Income Properties; Mixed-Use Properties; Nursing Homes; Biomedical
Research Buildings; Residential Care Facilities; Special Use Properties; Reviews
Memberships:
Appraisal Institute -MAl (No. 8291); currently serving as a Board of Director, San Diego Chapter
Regional Standards & Ethics. Panel, Government Relations Chair.
Certified General. Real Estate Appraiser, Stale of California (No. AGOO3085)
National Association of Industrial and Office Parks
Expen Witness:
Federal Bankruptcy Court
Selected List of Qienrs:
Aid Association for Lutherans
Bank of America
Bank of Soulhcrn CaUfumia
Boswell Properties
California Community Reinvestment
Corporation .
Carltas Companies
Cemre City Development Corporation
City of Chula Vista .
City of Coronado
City of San Diego
Collins Developmem Company
Daley 8< Heft
Ell Lilly
Federal Deposit Insurance COrporation
First National BanI:
Gray Caxy Ware &. I'reidentich
Gru.....ont Bank
.GSC Realty Corporation
La Jolla Cancer Resun:h FouadatiOD
Luce Forward Hmdlton &. Scrtpps
McDonald Hecht &. Solben
Mower Koeller Nebeker Carlson &. Haluk
Nippon Landic
North County Transit District
O'Melveny &. Mey.rs
OUver McMillan, Inc.
Price/CoslCo
I d.. - EXHIBIT G
Regents of Ibe University of Califomh
Resolution Trust Corporation
Rohr industries, Inc.
San Diego Natiorml Bank
San Diego State Univenity
Foundation
Scientif'JC..AIhnta, Inc.
Scripps Bank
Shepard Mullin Richter &. Hampton
Swiss Bank
Union Bank
United.S-. Post Office
. Weinstock Manion Reisman k Shore
Wells Fargo Bank
Western Savin&.
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COMMUNITY DEVHOPMfllT
DEPARTMENT
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SEP 2 3 1996 :
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KEYSER MARSTON ASSOCIATES INC.
-~1f:S1NI'"
500 SOUTH GRAND AVENUE, SUITE 1480
Los ANGELES, CALIFORNIA 90071
213/622~8095 FAX 213/622-5204
REAL ESTATE
REDEVELOPMENT
ECONOMIC DEVELOPMEI\:T
FiSCAL IMPACT
MEMORANDUM
Los ANCELE~
RICHARD L. BoTTI
CALVIN E. HOLLIS, II
KATHLEEN H. HEAD
TO:
Ms. Cheryl Dye, Economic Development Manager
Community Development Department
City of Chula Vista
SAN DIEGO
GERALD M. TRIMBLE
ROBERT J. WETMORE
PAUL C. MARRA
FROM:
Keyser Marston Associates, Inc.
SAN FRANC/SCO
A. JERRY KEYSER
TIMOTHY C. KELLY
I<A TE EARLE FUNK
DENISE E. CONLEY
DEBBIEM.KERI\
SUBJECT:
Bonita Golf Resort Reuse Valuation
DATE:
September 20, 1996
You have requested that we advise you as to the information which we require in order
to prepare the subject reuse valuation in accordance with our agreement (Task 1). As
we discussed, the purpose of the assignment is to determine the fair value for the site
takina into account the Dermitted (reauired) use and anv unusual restrictions imDosed
bv the Seller/Lessor (Citv ). Therefore we would request the following information from
the developer and/or City:
1. Preliminary site plan.
2. Narrative and tabular description of the facility including number of rooms,
building space allocation, etc.
3. Preliminary construction cost budget including any off-site responsibilities of the
developer.*
4. Preliminary operating proforma and 5 year operating projection. *
5. Description of the hotel quality proposed, best expressed by providing a short
list of comparable facilities in Southern California.
I,}--.- EXHIBITH - (
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Page 2
6.
A description of any operating restrictions in the form of COP conditions likely to
be imposed, etc.
7.
Likely terms of operating agreement with American Golf relative to the hotel. If
this is unknown at this time, our valuation will assume the hotel will have an
agreement which will meet the requirements of a golf oriented executive meeting
hotel.
8.
If available, the highest and best use appraisal estimate being prepared by the
City's appraiser.
*
We have been advised by Joelen that there is no more current information than
that submitted by them last Spring. If that is the case we will utilize the PKF
information on operating projections and assume development costs are
consistent with the operating income.
Please advise us as to the availability of the above information. We can complete our
reuse valuation analysis within 3 weeks of receipt of the above data.
CEH:gbd
96676.CHV
11220.0014
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KEYSER MARSTON ASSOCIATES
IN C.
COMMUNITY DEVf[OPMUlT
DEPARTMENT
Top Mark, InC.
SEP 2 3 19$
CONFIDENTIAL
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September 20, 1996
Stephen P Delaney
Chief Executive Officer
VIA FACSIMILE
Mr, Chris Salomone
Community Development Director
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 92010
Re: Bonita Golf Resort
Dear Chris:
Per your request, I have reviewed the information that you provided me concerning the Bonita
Golf Resort , In addition, I have made a number of calls, including a long conversation with
Patricia LeVoy, the Advisor to SIAM Management (the proposed lender), The purpose of this
letter is to give you a brief summary of my understanding of the project and to give you my
recommendations,
The project appears to be well conceived and could offer substantial economic benefits to the
City, Under normal circumstances, I would recommend that you actively pursue the project
under normal fast track procedures, Unfortunately, the developer is pushing to move much
quicker than a normal fast tract project This pressure ITom the developer has raised a number of
issues that must be addressed as soon as possible, These issues include:
The developer and lender need site control The developer is requesting an immediate
execution of a "contingent" purchase agreement The problem here is the definition of contingent
The developer has proposed a document that acknowledges the need for certain items to occur,
but has not provided language that specifically acknowledges the City's need for public input and
impartial discretionary approvals,
The developer/lender want to close escrow by 12/31/96 with 50% down and a 50% seller
Second Trust Deed This is critical to the developer for two reasons, It secures the lenders
commitment with lender funds that are currently available and it gives them the next level of "site
control" that the lender wants, I have two very major concerns with the 1996 close, First, it
gives the developer control (fee title ownership) of a very important community asset prior to
approvals being obtained, Numerous scenarios could occur, including the developer limiting or
denying public access, as a leverage against the City, to insure approvals or to obtain concessions
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!\orth C(Junt~ (61\}) 792-IOhO
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Mr. Chris Salomone
Page Two
September 20, 1996
from the City. Furthermore, the 50% seller carry back gives the City financial incentive to
approve the project. This taints the councils' objective review of public testimony and reports
concerning the development.
Is there enough information to properly document the transaction now? Do all three
parties (City, Developer & Lender) have a clear understanding of the project? There is no site
plan, no definition of the exact parcel, no defined purchase price, no agreement on a close date,
and I do not think there is a clear understanding of what "site control" means. An agreement to
agree usually ends up in a dispute, especially when it is documented as a Purchase Agreement.
I have had limited involvement with this project, and have not had the opportunity to meet or talk
with the developer. With that disclaimer acknowledged, my recommendations are as follows:
I. Use the developer's proposed format of a Purchase Agreement, but make
absolutely sure that the City Attorney has all the language necessary to spell out all the
contingencies (for both the Buyer & Seller) and that there is no question about the City's
need for impartial discretionary approvals. The developer should indemniry and hold the
City harmless for any denials throughout the process. Staff, and your consultants, should
be given adequate time to review the documents and give input.
2. If you concede to give the developer "site control" as outlined above, I believe that
there will be subsequent attempts to redefine the agreement to obtain concessions and to
give the developer more control. Before signing a Purchase Agreement, there should be a
meeting of the three parties to make it very clear what the City can and cannot do. There
should be no misunderstanding or renegotiations.
3. DO NOT close prior to all discretionary approvals being obtained.
4. Do not provide any seller financing.
I have attached a summary of my conversation with Patricia LeV oy.
If you should have any questions, please contact me.
Sincerely,
'" ',I ~
~p~~
Stephen P. Delaney ,
SPD/liz
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A project of J~I.n Ent.rpri...
Eat.bli....d 1972
Joe.t . Lanor. Citron
ChNner.. Man.Cllng o.neral P.rtneo,.
September 23, 1996
MrCal Hollis:
Keyser Marston Associates, Inc.
500 South Grand Avenue, Suite 1480
Los Angeles, CA 90071
re: Your Bonita Golf Resort Reuse Valuation, Your Fax of9/19
Dear Mr. Hollis:
We are in receipt as of 9/20 of a copy of your 9/19 Fa.x to Cheryl Dye, forwarded by her
to us. We inuncdiately went to work that afternoon Friday, to answer your Fax. As I
worked through your questions, I began to wonder what direction you were headed in,
and therefore had some conversations with people in the business. We understood that
you have been engaged by the City of Chula Vista to arrive at a valution of the land for the
potential sale to us. The questions you ask in your fax all deal with the project as a
finished product, and no one can understand what any of that may have to do with the
present valuation of the land. We are dealing with a piece of raw land, the improvements
presently on a portion of the land representing only a negative to the value, as they will
have to be demolished
The only use for the information you requested of us would be for an estimate of what the
hotel and land will be worth when completed and in operation. And that would be of use
if the City is planning on selling us the land already rezoned for hotel use and with a
gaurantee that all the entitlements will be in place. That would be great, but totally
unrealistic, of course. Meanwhile, M will have to invest a year's worth of work and
millions of dollars, in getting the property rezoned and all the entitlements in place. It is
not reasonable for us to be ezpected to pay twice for that: once on an inflated property
price, and a second time getting the zoning and entitlements.
We have offered to purchase the property as is, unimproved except for the building and
paving aforementioned, all of which must be removed at our cost, and the western 1/2 will
require considerable fill. The use we will be putting the property to is, perhaps, the hiihest
and best use, (especially as it will be affording the City a considerable annual income
which other uses would not), but we must spend our time and money getting there.
~ooo Coronado Bay Road etJ Coronado, CA 92118 . (619) 424......"4 FAX 423-0884
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Let us emphasize that we stand ready to pwvide the City and any of their consultants any
and all information that is germaine to the task being done. If you have any questions
and/or need any jnformation of that genre, please let us know, and we will respond
irrunediately.
Sincerely,
a S;:--"8.. /.
A?e; ~. Citro~
JAC:ja
cc: Cheryll Dye, Chris Salomone. John Goss, Glen Googins, City Council members
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MEMORANDUM
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TO:
Ms. CheI)1 Dye, Economic Development Manager
Community Development ~par\ment ,_
City 'or Ohula Vi8ta .. ,-. .. "!lC' _',
Key"r Mllr&ton Associates, Inc.
Bonita Golf Resort Reu6e Valuat.io!'l
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Jo,,~,. Wnwou
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FROM:
'oW FMHClSCO
A.. JSIn' JCMIR
T_ c.1:iu.,
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DrMI. Eo CQforI.Ii't
Dr"" M. I<m<
SUBJEcr:
DA'fE:
September 19, 1S96
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YOLl halle reque8ted thi! we advise you as to the Information which _ require In order
to prepsrQ the subject rQuse vahJaUon In 'accordance WIth our agreement (Tuk 1). As
we dlecue.ed, the purpoee of the 88$rgnment Is to determine the fair valUG for tt'Ie lite
taklno into"""'" 11'11 the oermltted lreauirad\ un and .!'IY unusual relllrlctlOM ImD08ed
bv the SollerllHlor CCItv). Therefore we wouro reques1 the following InformaUon from
the dov.,loper l/'rdIor Cily.
1. Proliminary $ilo plM_
2, Narrative and Iab.II.r description or the facility InclYdlng number' r:f ~OITl&.
building 1p$C8 alIocatJor" ~
3. Preliminaty consli'lolCtion Ctlst budget including IIr1Y off-lite re.ponlibiliU98 Of the
developer. .
4. Preliminary opel"lllting Pfoforma ancJ 5 year opGratrhg projec:lion,
5. DeltTlption Of tne nOte! quali~ proposed, be$t expressed by providing e '"011
lilll of compiInlble flKilitiot in Southen'l C8Iifoml..
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be impoeood. ate.
7. Likely term. of oplll'lltlng agreemllnl: with Anwticafl Golf relative to the hotel. If
this Is unknown at thill time, CK.I" veluation Will &$IUIne the hate! will "..... an
agreemenl which will meet the requirements of II golf oriented execo.Alvs meeting
hotsl.
p!aase Idvlse U5 as to the i!lVailability of !he IIbrJw infOl'lTNltion.
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((IYt.... MAIStON AS501;1AtJ.. I)fC,
COUNCIL AGENDA STATEMENT
Item:
Meeting Date: 09/24/96
/J
ITEM TITLE:
Report: Status of Telegraph Canyon Estates (St. Claire Subdivision)
SUBMITTED BY:
Director of Parks and Recreatio
Director of Building & Housin g0
Director of Public Works
Fire Chief 91.1 tV .
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City Manage\J-1 Vx,Q ,~\
At a recent Council meeting several concerns with Baldwin Builder's St. Claire development were
brought to the attention of the Council. Those concerns include a decline in the condition of the
landscaping within Open Space District No. 31, lack of completion of some public improvements,
problems associated with suspension of construction of partially-built houses, and other concerns
raised by residents of San Marcos regarding a Baldwin Builders project there. This report
addresses the status of these issues, what staff has done, or will be doing, to remedy the situation
and some things staff is looking at to minimize this type of situation from occurring in the future.
REVIEWED BY:
(4/5ths Vote: Yes
No X)
RECOMMENDATION: That the City Council accept this report, support current staff actions
to address these issues, and authorize staff to: I) initiate action to effect the repair, re-vegetation
and re-Iandscaping of the landscaped slopes, medians and parkways; 2) foreclose on the bonds
for Subdivision Map Nos. 13068, 13069, and 13070 on October 19, 1996 when the Subdivision
Agreement expires and the developer is in default; and 3) initiate action to abate a fire nuisance
adjacent to existing, occupied dwelling units.
DISCUSSION:
The Telegraph Canyon Estates project is located off of Otay Lakes Road, east of the Otay Lakes
Mobile Home Park, and west of the SR-125 right-of-way (Attachment "A"). The Telegraph
Canyon Estates Development was approved for construction of 343 single family dwellings. At
this time 153 houses have been completed for occupancy and building permits have been issued
for 91 additional houses. Since approximately August of 1995 when construction was suspended,
68 of these homes have been left in a partially-built state, creating a fire nuisance. Although
actual construction activities may have taken place up to as late as February, 1996, the last
building inspection took place the previous August, 1995. The developer, Baldwin Builders, filed
for Chapter 11 reorganization in May, 1995 and the court appointed a trustee in May, 1996 to
manage the affairs of the company.
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The suspension of construction activities on the project created several concerns. These concerns,
which will be discussed in more detail below, are:
1) Landscape maintenance and irrigation has ceased to occur. The high rate of plant
failure and growth of weeds along Telegraph Canyon Road has resulted in many
complaints from residents and the neighboring Eastlake Development Company. Further,
the lack of watering in the Open Space area has caused the landscaping in that area to die
and become dry. Last, the lack of on-site maintenance has also allowed brush and weeds
to grow in the undeveloped street areas. Failure by the developer to maintain the
landscaping and abate the weeds has added to the fire nuisance for the nearby residents.
2) Many houses are only partially constructed and in the framing stage, accentuating
the fire nuisance for completed and occupied homes immediately adjacent.
3) Water lines and temporary roads for emergency fire access are in need of repair.
A section of water line within one of the "units" with homes under construction was
disconnected. Also, within two "units", due to the unknown length of time this project
could be suspended, there is an inadequate roadway to accommodate fire vehicles in an
emergency in inclement weather.
Also addressed below are comparisons of Chula Vista's infrastructure financing procedures to the
Mello-Roos financing that has become problematic for the City of San Marcos as well as the
related issue pending before the City Council on the development agreement with Baldwin
Builders for their property in the areas of Villages 10 and 11 of the Otay Ranch.
CLARIFICATION: CURRENT OWNERS. DEVELOPERS. TRUSTEES
Whenever a construction project goes into bankruptcy, the City and the community are placed
in an undesirable situation. For example, when a contractor for a capital improvement project
goes bankrupt, and pulls out of a job mid-stream, like with the reconstruction of Marina View
Park or the Telegraph Canyon Drainage Project, there is unfortunately a substantial delay before
the project can get on line again. In the case of a capital improvement project, this delay entails
convincing/compelling the bonding company to perform in terms of bringing in another contractor
to finish the work. This can often lead to subsequent litigation as with the Telegraph Canyon
Flood Control Project, with some of the issues not resolved until years later.
In the case of St. Claire, the City has a situation where two different entities with different goals
and objectives are involved in a project where houses under construction remained incomplete
for a period of time. Baldwin Builders, when it was under the control of Jim and Al Baldwin,
made attempts to start and stop the project over a period of several months prior to Baldwin
Builders filing for Chapter II protection (here after generally referred to as bankruptcy).
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According to the Baldwins, their problem was that the original lender, GE Capital, was bought
out by bond holders, which were in turn bought out by other bond holders. The end result was
that funds tied up in financial transactions were not available to move the project forward. The
company's goal, which they were unable to achieve, was to finish the houses and sell them in
order to derive revenue to address some of their financial problems. Their perspective is that
ultimately they were blocked by the bankruptcy that prevented them from achieving that goal.
Before filing for Chapter II protection, Baldwin Builders did not take steps or did not perform
presumably because of their financial difficulties.
After the Chapter II filing, David Gould was appointed to be Trustee of Baldwin Builders, with
Jim Johnson and Bill Brasher retained by the Trustee to carryon operations of Baldwin Builders.
The stockholders and board of directors for Baldwin Builders remain the same, but with their
controlling authority suspended for the duration of the trustee's involvement.
The goal of the trustees and the new management of Baldwin Builders is somewhat different -
to retum money to the creditors that was not paid by the previous operators of Baldwin Builders
and to get the company back on a solid financial foundation. A trustee's goal may be broader
in the sense that they normally have an interest of selling an entire project in order to get as
much money as quickly as possible to address the obligations of the bankruptcy. But in this case,
they are attempting to get court approval to complete the unfinished homes in St. Claire and
address other outstanding issues.
So, the perspective of Baldwin Builders prior to the bankruptcy was that they were attempting
to build houses, but were prevented for financial reasons. Their further perspective is that once
the bankruptcy occurred, the entity that takes the bankruptcy takes the good with the bad, and has
the responsibility for finishing the project. The attitude of Baldwin Builders post-bankruptcy is
that they are just coming on to a project, learning all the details of this and other projects that
they may have taken over on behalf of the bankruptcy trustee. They are, furthermore, precluded
from spending additional money on the project unless approved by the court, which limits their
flexibility and timeliness of performance. They are, as just pointed out, attempting to get
authority to finish the houses there.
When it comes to issues like the demolition or completion of half-built homes, they must further
assess whether or not taking down the existing uncompleted homes or bringing them to
completion is in the best interest of the Trustee. Also, court approval is necessary to modify the
assets of the property. Efforts to complete construction on partially-built housing inventory have
proceeded in other Baldwin Builders projects in Anaheim and Del Mar. Similar efforts to finish
home construction in Chula Vista were initiated about a month and a half ago, but have been
placed on hold pending a September 30 bankruptcy court hearing of a protest by the bonding
company (See Attachment B). If that permission is granted, then the problems with the
incomplete houses will be addressed by the developer. As discussed below, they have hired a
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structural engineer to begin the process of completing those homes as soon as they receive
permission from the court.
Baldwin Builders has basically been the same name for two different management entities. The
one pre-bankruptcy entity was blocked from finishing the project, if they had ever been able to
get the money to do so, by the bankruptcy. The post-bankruptcy Baldwin entity has been unable
to address those issues created by the bankruptcy and suspension of construction due to the
absence of court approval to proceed. It is staff s assessment that they will proceed to
completion, however, similar to a contractor going bankrupt on a capital improvement project,
there is an unfortunate delay while the financial responsibilities for completing the project are
being addressed.
SUBDIVISION STATUS
As indicated above, the tentative subdivision map was approved for a total of 343 single family
dwellings. Attachment Al shows the entire subdivision as proposed on the tentative map.
Originally the development was known as Telegraph Canyon Estates, but is now known as the
"St. Claire" development. Baldwin Builders proposed to build the project in phases. The plans
submitted indicated that the project was divided into 3 "Neighborhoods" for phasing based on
product type. Each of these "Neighborhoods" was further broken into either 4 or 7 smaller
"Units" sized to reflect the ability to construct and sell homes. Attachment A2 indicates the units
and neighborhood breakdown, as well as the first phase of home construction.
Baldwin started construction on the project through the mass grading of the entire site and the
processing of three initial final maps with the associated final grading and public improvements
for those first three maps. These first three final maps and Subdivision Improvement
Agreements, for Unit I in each of Neighborhoods 1,2, and 3, were approved by the City Council
on October 19, 1993. Subsequent final maps for additional "Units" in each of the
"Neighborhoods" would proceed as sales of the new homes permitted further final maps. To date
the developer has processed 13 Final maps which include 282 residential lots. According to the
information supplied prior to the first final map there are 3 additional units which have a separate
final map to complete the subdivision. Attachment 'C" indicates the maps that have been
approved and the dates of the subdivision agreements.
Under the standard subdivision agreement utilized by the City, a developer has three years from
the time the agreement is approved by the Council to cause all necessary materials to be furnished
and all public improvement work required to be completed as under the agreement. The
agreement also requires the developer to provide two approved improvement security bonds
which guarantees: I) the faithful performance of the contract; and 2) the payment of all materials
and labor used in connection with construction of the improvements.
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The bonds to complete the improvements, such as the landscaping and certain other work in this
case, can be called upon to finalize the work, but the City may have limited ability to mandate
payment until the developer is in default of the agreement after three years when it expires. The
City Attorney is working with the bonding company to assure timely compliance.
As can be seen in Exhibit 'B', the first three subdivisions were approved by the City Council on
October 19, 1993 and the developer will be in default on the work included in the improvement
plans for those final maps on October 19, 1996. The first three subdivisions are Map Nos. 13068
(Neighborhood I, Unit I), 13069 (Neighborhood 2, Unit I), and 13070 (Neighborhood 3, Unit
I). The next map, No. 13104 (Neighborhood I, Unit 2), was not approved until May 3, 1994
and, consequently, the developer will not be in default until May 3, 1997.
As part of the process of finalizing the subdivisions the developer was also required to form Open
Space District No. 31 to take care of the open space areas and slopes and the parkway and
median in Otay Lakes Road. The assessments for the District include two areas: I) Otay Lakes
Road medians and parkways (150 feet west of Rutgers eastward to SR-125); and 2) 30 acres of
landscaped slopes and a \12 acre mini park located in the neighborhood of the subdivision. Upon
the approval of the first set of final maps, the City started assessing the property owners to build
up a reserve in anticipation of the City taking over the open space improvements. All property
owners within the district, including the developer for unsold and undeveloped lots, is assessed
the full amount of the assessment on the property tax bill.
CONCERN NO. I - LANDSCAPED AREAS
Staff has pinpointed the following landscape problems:
I. Overall deterioration of the landscaping;
2. Lack of water due to the water meters being padlocked by the water district for
non-payment.
3. Vandalism and lack of maintenance of the irrigation system.
The landscaped area within the District is currently the responsibility of Baldwin Builders during
the maintenance period, since the District has not yet been accepted by the City. The landscaped
slopes and mini-park were scheduled to be turned over to the City for maintenance in January
1996. However, the landscaping was not being maintained in a satisfactory manner and has been
unacceptable for maintenance turnover. Beginning September of 1993, staff informed Baldwin
numerous times orally and twenty (20) times in writing about the landscape maintenance issues
associated with the project (Attachment 'D'). Baldwin Builders was unresponsive to staffs
notices. A more stringent remedy to this problem was not actively pursued because the Open
Space area had not been accepted by the City and because the developer would have to bring it
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up to an acceptable standard before the City would accept it. The developer has built-in financial
incentives to turn over the property to the City: 1) to allow for the bonds to be released and
capital to flow to other projects, and 2) to avoid incurring a double cost of paying as property
owner into the assessment district reserves at the same time they are maintaining the landscaping
themselves. Further, the serious decline of the landscaping did not occur until the developer
suspended construction on the project.
Damage Caused bv Construction
Another issue staff is pursuing is the damage Baldwin Builders' contractor caused to the
landscape and irrigation systems of the parkway and medians that front the St. Claire project.
The landscape medians and parkway begin 150 feet west of Rutgers Street, and goes eastward
to the SR-125 right-of-way. Prior to Baldwin's construction commencing, the medians and
parkway's landscape were flourishing and were maintained by a City's landscape contractor as
part of the EastLake Maintenance District area.
Beginning September 27, 1993, and again on January 6, 1994, the contractor was installing an
access road, a turn lane, a sewer, a storm drain, and two bus stop turn-ins. The construction
work required the removal of a section of the landscape medians and parkways along Otay Lakes
Road. The construction work severely damaged the irrigation lines which feed water into all the
planter areas servicing the medians and parkways along Otay Lakes Road. When staff observed
this construction activity occurring, Baldwin was directed to repair the damage. Baldwin Builders
agreed by written acknowledgement that they would correct the damage (Attachment E).
Progress was made to repair all of the irrigation breaks, but the repair work was not completed
at that time.
Baldwin Builders' financial problems and non-payment of water utility bills resulted in the water
district padlocking the water meters for this area during December, 1995 and Marchi April, 1996.
However, City staff did not learn that the meters had been shut off until May, 1996 when the
poor condition of the landscaped median became apparent. During this period, the majority of
the landscape material has deteriorated.
Although the water district has since removed their locks, there is some dispute as to the level
of watering that is currently taking place in the open space, mini-park, and model home areas.
This is being discussed further with the trustee, who has agreed to work with staff to address the
operational status of the irrigation system.
Staff Actions
As noted earlier, Parks and Recreation Department staff has held numerous meetings and sent
several written correspondence to Baldwin Builders in an attempt to get them to correct the poor
condition of the landscaping. At a meeting with City staff on May 8 to discuss the state of the
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landscaping, Baldwin Builders' project manager indicated that they did not have funding for the
landscape maintenance and the City should pursue this matter with the bonding company.
The Parks and Recreation Department then contacted the bonding company though the City
Attorney's Office. Letters were sent to the bonding company on May 9, and July 2, 1996
(Attachment 'F') requesting cooperation in resolving the problem. The bonding company,
Fireman's Trust, inspected the site with staff on August 19 to evaluate the deficiencies of the
project. The bonding company has not responded to our request at this point. Staff is making
every effort to get the bonding company to complete the landscaping improvements so that the
City can take over and maintain the district. While we believe that we will be successful in
working with the bonding company, staff has experienced mixed results with the responsiveness
of bonding companies in the past and it is not known how long this issue will take to be fully
resolved. Rather than wait for that resolution, staff has met with the bonding company to
evaluate potential interim actions. In consultation with the City Attorney, and with notice to the
bonding company, staff took immediate action to complete the repair and reactivate the irrigation
systems servicing the Otay Lakes Road medians and parkways to prevent further plant loss. This
work was completed in the last two weeks, at a total cost of $6,000 which mayor may not be
recoverable.
Further landscaping measures, and their estimated costs, which have yet to be undertaken, are as
follows:
Medians and Parkways: Replacement of dead material:
Open Space areas: Repair to irrigation system:
Open Space areas: Replacement of dead material
(incl. hydro seeding slopes, replacing shrubs):
$35-$40,000
$8-$14,000
$36-$40.000
Total landscaping remediation needs:
$79-$94,000
Ongoing costs to water and maintain these areas are approximately $2,300 per month for the
medians and parkways and $11,000 per month for the open space areas and park. These sums
would continue to be paid via maintenance district assessments once Baldwin Builders has
completed the maintenance period and the district has been accepted by the City.
Staff has investigated the possibility of financing the repairs and replanting with funds from the
Open Space District's reserves ($130,000). If it were possible to use funds from the District's
reserves, they would have to be reimbursed by any eventual reimbursement from the bonding
company or Baldwin Builders. However, after consulting with the City Attorney, staff has some
concerns over our legal ability to use restricted Open Space District funds to complete work
required by the developer, even if done as a loan. Further, there is no assurance that either the
developer or bonding company would reimburse that account for the work done. Therefore, staff
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does not recommend this as an course of action. However, if Council believes more immediate
action is required to repair and replant the landscaping staff will look into this option further as
well as other available options for financing the work and report back on those alternatives.
Other landscape related issues to be addressed include a general clean-up and weed abatement
to mitigate existing appearance, continued weed control and irrigation until re-vegetation is
facilitated by the Bonding Company. There has been an increase in the amount of vegetation due
to general weed growth (tumbleweeds) along the streets and backyards and from a failure to
properly maintain the landscaping in the area designated to be turned over to the City as open
space. The Fire Department has issued notices of abatement for weed clearance in the general
vicinity and the removal of brush from the area around three specific homes discussed below (See
Attachment H). Since the weeds growing near these homes are still fairly green vegetation, the
Fire Department does not see the need to take any immediate City action to remove them any
sooner than the notice to abate will allow. Staff was notified on September 19 by the Trustee's
representative that clearing of the weeds will begin on September 24.
CONCERN NO.2 - SUSPENSION OF CONSTRUCTION OF HOUSES
As indicated above, 153 houses have been completed for occupancy at this time and building
permits have been issued to complete 91 additional houses. Construction on these additional
houses has been suspended since approximately August of 1995. Since that time 68 of these
houses have been sitting in a partially completed condition. Of the houses under construction 23
are about 75% complete, 13 are 55% complete, 30 are 45% complete, and 2 houses are 25%
complete. Permits were obtained for 23 other houses but no construction was ever started.
Attachment A-4 indicates the areas of the overall St. Claire development with partially built
homes. Area A is the area where no house construction ever started. Areas B,C, and D have
partially constructed homes.
The overall quality of the materials in these partially completed houses has not significantly
deteriorated during this period. However, continued exposure to the weather may necessitate
replacement in the future of some of the exposed wooden structural members. Prior to
commencing work on the project new building permits would have to be secured, and Building
Department staff would conduct a thorough inspection of the partially completed houses and
identify any components that would require replacement. In addition, the Trustee has hired a
structural engineer to inspect these homes. The inspection will begin on Friday, September 20,
with those houses closest to the occupied homes to be completed first in anticipation of a release
of additional funds by the court.
The principal problem associated with the suspension of construction of these partially completed
houses is the fire nuisance they pose to adjacent occupied homes. This nuisance is due to the
amount of highly combustible wood exposed in the structure and the difficulty of securing the
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site to prevent access by unauthorized parties. Adequate separation exists in most of the
development to prevent a significant threat of fire spread to other occupied homes or
developments should a fire occur. However in three specific areas the Fire Marshal feels that the
proximity of unfinished houses to occupied homes presents a fire nuisance. (See map highlighting
the three homes in question--in areas B and D) In each case the set back between unfinished and
occupied homes is less than twenty feet. These are the three homes being inspected this Friday.
Staff Actions
In reviewing the circumstances that lead to suspension of construction of these houses during
construction, an effort has been made to determine if some actions could have been taken to
minimize the impact of Baldwin Builders' actions on the City and the residents in the area. Ideas
such as requiring substantial cash deposits to be placed with the City to guarantee completion of
projects, or placing restrictions on the total number of building permits that a single developer
can obtain simultaneously, were considered, but ultimately rejected due to potential legal
challenges or the extreme burden it would place on each developer's ability to effectively plan
and implement the construction projects. Also, even with implementation of these types of
restrictions, staff felt it was unlikely that these measures would have been effective in avoiding
the problems associated with this project.
Staff from the Fire Department and the Department of Building and Housing have also evaluated
the fire nuisance to those occupied homes that are immediately adjacent to the abandoned homes.
Staff has determined that the nuisance to these occupied houses from a fire originating in the
adjacent partially completed houses warrants further action. In the three situations where this
occurs, the Departments have issued notice to have the condition addressed. This could be done
by either completing the construction on all of the partially completed houses or have the
combustible construction removed on the three partial houses which are close to occupied homes.
The process to abate the nuisance normally provides the owner a minimum of 60 days to
voluntarily comply by taking one of the actions described, after which time the City has the
ability to have the work performed and charged against the property owner in the form of a tax
assessment. Notice to abate the condition has been forwarded to Baldwin Builders and the
bankruptcy trustee (See Attachment H).
As discussed above, the trustee has filed to complete all partially built housing inventory in
several of its Southern California projects. The completion of the St. Claire homes is pending
a bankruptcy court hearing on September 30. Based on staff s desire to proceed with either final
construction or demolition as soon as possible, the trustee's agent has confirmed that Baldwin
Builders will proceed with a structural engineer's analysis of the three homes in question this
Friday. Thus, once the court hearing is complete, the trustee anticipates that action can be taken
on the homes without further delay to either complete construction or proceed to demolition. To
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facilitate a favorable court decision on this matter, the City staff will be sending a letter to the
judge in the case detailing the Fire Department's concerns.
Absent some indication following the bankruptcy court hearing that completion of development
or razing of the structures will face significant further delays, the Fire Department would not
recommend any further remedial actions at this time.
CONCERN NO.3 - INADEOUATE WATER LINE AND ROADWAY
Further increasing the fire nuisance in the area are the lack of an appropriate temporary roads for
firetruck access (See Attachment A-4; Areas B and C) and operational fire hydrants (See
Attachment A-4; Area C). When the building permits were issued, the developer had adequate
water to the site to meet the fire flow requirements. This was through a temporary above ground
line which the developer had in place while the permanent system was completed. Some time
after the work was suspended on the project, without the Fire Department's knowledge, the
situation was changed because of a combination of vandalism and/or the developer's financial
condition whereby the site no longer had adequate water for fire flow. Although fire access roads
were initially in place, they have since deteriorated and require regrading and/or paving to
provide appropriate all-weather access.
Staff Actions
After a routine inspection by the Fire Department revealed the fire hydrants were not operative
in one of the units with homes under construction (Attachment A-4; Area C), the Fire Marshal
approached the Engineering Division of the Public Works Department and advised them of the
situation. The Engineering Division contacted the trustees for Baldwin Builders to remedy the
situation. Because of the problems with the bankruptcy, the representative for the trustee was
unable to solve the problem directly. However, since the City had a cash deposit from Baldwin
Builders to pay for inspection and plan check activities by City staff, the trustee's representative
authorized the Engineering Division to prepare a contract to be funded by that deposit and get
bids for activating the water system and improving fire roads.
The work for improving the fire roads consists of regrading a roadway and placing two inches
of asphalt pavement to serve as an all-weather access road. A contract was immediately prepared,
bids were sought and one was obtained for the work. The amount of the work was within the
limits of the authority of the City Manager to approve a contract and the contract was awarded
to the one bidder. A preconstruction meeting was held with the contractor on September 12,
1996 and the work is scheduled to begin shortly.
Subsequently, after learning of the proposed bankruptcy court hearing on September 30, 1996,
it was decided to proceed immediately with the regrading only. This should be sufficient to
provide access at least through the start of the rainy season. Staff has placed a hold on the
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asphalt paving until the results of the court hearing are known and a determination is made as
to whether or not the builder may begin construction work in the very near future. If
construction resumes in a timely manner, the regraded roads may be sufficient to serve as the
temporary access until the final subdivision roads are complete and passable. If it appears that
re-initiation of construction activities will not begin before the rainy season, staff will have the
paving completed. Staff will re-evaluate this need by the middle of October and proceed as
necessary. This action will improve the Fire Department's ability to respond to a fire that may
originate in or reach this area. It should be noted that the three partially-built homes discussed
above are immediately adjacent to both water and access roads that meet city standards.
OTHER CONCERNS:
San Marcos Issues/Mello Roos
At the August 20 Council meeting several other problems with Baldwin's performance in San
Marcos were brought to the attention of the Council. In San Marcos the residents were paying
a Mello- Roos assessment for police and fire services and installation of public facilities. These
assessments have been increasing annually and the values of the residents homes have been going
down because of the condition of the neighborhood as left by the developer. In addition, the San
Marcos residents indicated that Baldwin was required to build a park, but that the park has not
been completed.
Policies and development history in San Marcos and ChuIa Vista differ in some very significant
ways. One of these differences is in the substantial experience of successful master-planned
communities in Chula Vista, including such projects as EastLake, Rancho del Rey and Salt Creek
Ranch.
Another difference is with financing. Chula Vista does not use Mello- Roos districts for financing
of new subdivisions. It is our understanding that the amount paid every year for the Mello-Roos
can increase by the CPI up to 2% per year. Although assessment districts were not used in St.
Claire to install City public improvements, Chula Vista does use them and they could be used in
Otay Ranch.
This City has several safeguards in this process that protect our residents. First, Assessment
District payments are fixed at the time the resident purchases their home and it does not increase
over time. Second, Chula Vista only uses districts for backbone streets and utilities common to
several individual tracts, not for facilities within individual tracts. Last, in setting up assessment
districts, the City has a 1 % cap on the total of all bonded indebtedness (i.e. assessment district
and school district Mellos) on the tax roll. This is in addition to the property tax. The City will
not allow a district to be created where the annual payments for the assessment district plus all
other districts, such as those formed by the School District or Water District, exceeds 2% of the
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property's value. However, annual open space district charges and utility charges collected on
the tax roll are not part of this cap.
A representative of San Marcos also indicated that the City of San Marcos did not have the same
level of disclosure required by Chula Vista to new buyers informing them of all fees and charges.
After San Marcos started receiving feedback they strengthened their process by requiring all
buyers to sign a statement that they had viewed a video tape prepared bv the Citv on Mello-Roos
and Assessment District charges.
Apparently, part of the problem in San Marcos was that the debt load on the Mello-Roos district
was substantial, including an expensive entry statement, a school which was constructed too early,
a park and monies to the General Fund for maintenance. The San Marcos representative also
indicated that they are also cutting back on the number of public improvement items that they
allow to be charged in a Mello-Roos. Chula Vista already does this through the value limitation
discussed above.
Baldwin Builders as currently constituted had no participation or responsibility for the problems
that were identified in the City of San Marcos. It is true that they may have angered residents
of San Marcos, since the Baldwin Builders pre-bankruptcy were attempting to work through the
Mello-Roos problems with those property owners, and the Baldwin Builders post-bankruptcy
threatened to sue them in terms of some of the actions contemplated with the Mello- Roos district
(See Attachment G). But, as indicated above, in Chula Vista we do not use Mello-Roos districts
to build basic city infrastructure for the projects, and we have a limit on the total amount of
assessments not exceeding 2% of the property value. This is a formula that was tied to analysis
of the election that led to the adoption of Proposition 13.
Related to an unbuilt park in San Marcos, the City of Chula Vista requires a developer to either
pay Park Acquisition and Development (PAD) fees up front with the approval of the Final Map
or to bond for the cost of the park to be built. After the developer builds the park the PAD fees
are returned or the bond released. If a developer were to abandon the project before completion
of the park, the City could take the PAD fees paid to complete the improvements or call in the
bond. In the St. Claire project the City required the small park to be built early on and the park
was completed per plans and specifications, but has not yet been accepted by the City due to the
one year maintenance period.
Development Agreements/Tentative Maps
In regard to Baldwin Builders' pending development agreement for Villages 10 and II of the
Otay Ranch, staff is currently evaluating potential development agreement conditions to guarantee
satisfactory completion of the St. Claire project. This language is currently being drafted and
negotiated and will be brought forward as part of the separate report on the development
agreement to Council on October 1, 1996.
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The tentative map for Village Development has been delayed two months while the conditions
have been re-examined by staff to ensure that the interests of the City and the community are
protected.
LESSONS LEARNED
The City has not experienced a situation over the past twenty or more years such as encountered
in the St. Claire project. Even during the late 70's when the economy was down or in the
"financially challenged" Sunbow project in the 80's, the City did not experience any problems
of this nature. As a consequence staff believed that with the extent of conditions being placed
on developments, tentative maps and permits, the City and residents were sufficiently protected.
Nevertheless, the current situation has caused staff to look back on the entire process to determine
what can be done to minimize the potential for such things happening again. Staff will be
looking at the following areas to strengthen our process:
*
The existing boilerplate subdivision agreement provides three years from the time of
approval by the Council for the developer to complete the public improvements. Staff
will be reviewing this condition with the City Attorney to see if it can and/or should be
reduced to two years. With a shorter time period staff can declare a project in default
sooner and have the bonding company step in sooner.
*
Staff will also be reviewing adding a section to the subdivision agreement that allows staff
to declare a developer in default before the expiration of the time period of the agreement
if no work has been done on site for a period of time such as three to six months. Both
of these possible changes may have legal ramifications of which staff is currently not
aware.
*
In the future, each department's field staff will closely monitor these types of
developments for signs that would suggest the project may be faltering. When such
occurs, staff will aggressively push for completion of all public improvements required
to maintain the public health and safety of those residents within and outside the
development.
*
Staff will develop a mechanism for closer coordination with local water districts and other
"outside" agencies to ensure better notice and communication regarding common projects.
Following consideration of tonight's report and implementation of any recommendations, staff
will provide a final report to Council on the project status.
/~--; ~/_?
)7
Page 14, Item: ~
Meeting Date: 09/24/96
CITY ATTORNEY'S ANALYSIS
An additional memo on related confidential matters has been forwarded to Council by the City
Attorney's office. Staff has worked in close consultation with the City Attorney's office and has
responded to their input and analysis via the actions, recommendations and discussion presented
herein.
SUMMARY OF RECOMMENDATIONS
Staff is already taking action to: 1) notice the developer and trustee of the fire nuisance and
demand appropriate corrective measures, 2) ensure adequate fire access and water to the site, 3)
send a letter to the court apprising them of the city's concerns, and 4) apply to the court to permit
City intervention on the site should the bankruptcy court decline to authorize further construction
by the Trustee.
Further actions recommended for Council direction to staff include: 1) initiating action to effect
the repair, re-vegetation and re-landscaping of the landscaped slopes, medians and parkways,
subject to funds which may be made available via existing bonds, developer deposits, or
bankruptcy court decisions; 2) foreclosing On the bonds for Subdivision Map Nos. 13068, 13069,
and 13070 On October 19, 1996 when the Subdivision Agreement expires and the developer is
in default; and 3) initiating action to abate a fire nuisance adjacent to existing, occupied dwelling
units.
FISCAL IMP ACT
Based On the costs summarized below, staff is proceeding with the water line and road
improvements now, and the remainder of the work to be finished either 1) with favorable court
ruling On September 30 allowing the trustee to complete the homes or 2) with October 19
foreclosure on the subdivision bonds.
1) Landscape Maintenance
If the Council chooses to have City staff expedite the repair the landscaping in the yet-to-be-
accepted open space districts, the source of funds for the expenditure of the $8,000 to $14,000
would have to be determined. The necessary replanting would cost an additional $36,000 to
$40,000. Staff would look at funding alternatives and return to Council with a report and request
for the necessary action. Although the irrigation repairs have been completed On the medians and
parkways (at an upfront cost of $6,000 which mayor may not be recoverable), the replanting
necessary there is estimated to cost $35,000 to $40,000.
/3-j(
Page 15, Item:
Meeting Date: 09/24/96
13
Maintenance of the parkways and medians will cost approximately $2,300 per month, with open
space areas and the mini-park costing $11,000 per month. These sums would continue to be paid
via maintenance district assessments.
Clearance of brush around the unfinished homes is set to begin, per the Trustee's representative,
on September 24. The cost of this work will be borne by Baldwin Builders.
2) Partially Completed Homes
In the extreme situation that Baldwin Builders fails to voluntarily comply with the notice to abate
the fire nuisance posed by the three partially completed houses adjacent to occupied units, the
City, with the court's permission, could incur the immediate cost of having the three structures
dismantled and the combustible materials removed. An estimate of the cost to have an outside
contractor perform this work would be $15,000. This cost could fluctuate based on the salvage
value of the components. Through the abatement process, these costs, along with staff time
reimbursements, would be recovered from Baldwin Builders through tax assessments. However,
the City would have to front the funds necessary from the General Fund in as much as Baldwin
Builders does not have a large enough deposit remaining on account with the City to draw from
(see discussion below).
3) Water Line/Access Road Improvements
The developer's deposit accounts total approximately $27,600. The cost of the one water line
and two fire truck access roads (asphalt paved) is $21,300. If the asphalt paving is postponed
per staff recommendation, the reduction in the contract and savings in the developer's account
is $6,750. This would leave a balance of $13,050 available for any other necessary
improvements. If it appears that the temporary access roads will still need to be paved for
passage during the rainy season, that balance would drop to approximately $6,300.
Attachment:
'A' - Site Maps
'B' - Letter from Baldwin Builders (re: St. Claire) dated September 12, 1996
'C' - Approved Subdivision Improvement Agreements
'0' - Written Communication Table
'E' - Letters ITom City Attorney, dated May 9, 1996 and July 2, 1996
'F' - Letter from Parks & Recreation, agreed to by Baldwin Co., dated September 23, 1994
'0' - Letter from Baldwin Builders (re: Mello-Roos) dated September 12, 1996
'H' - Letters from Fire Department: Notices to Abate
(wp6.1 - cis)
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FINALED (3)
UNDER CONSTRUCTION (94)
~ VACANT (6)
OPEN SPACE (1)
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CHULA VISTA PLANNING DEPARTMENT
LOCATOR PROJECT PROJECT DESCRIFTlON.
C) APPLICANT: SUBDIVISION
PROJECT St, Cloir (Telegroph Conyon Estotes)
ADDRESS. .
Properties (104) owned by BDldwln Builders ond Iheir
SCALE, FILE NUMBER, stolus,
NORTH No Scale
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ATTACHMENT A-2
Units 4, 5, 6
NNeighborhood Boundaries
/,/ Unit Boundaries
_ Unit 1 Areas
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800 Feet
Telegraph
Canyon
Estates
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ATTACHMENT
A-3
OPEN SPACE DISTRICT ,.0. 31
CITY OF CHULA VISTA
COUNTY OF SAN DIEGO, STATE OF CAUFORNIA
TELEGRAPH CANYON ESTATES
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~ \327r\ "\ .~ - ((,' SA"4 DIEGO, ASSESSOR PARCEL MAP FOR !)[TAILED
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A"4 ASSESSWENT WAS LEVIED IY TM[ CITY COUNCIL or THE
CITY OF CHUU VISTA, STAT[ OF CAUFORNIA, ON "ARCELS
OF LAND SHOWN ON THIS AMENDED ASSESSWENT OIAGRAM MAP.
SAID ASSESSWENT WAS L.[VIED ON THE ___ DAY Of __
1113. REFERENCE 1$ MADE TO THE ASSESSWE"4T ROLL
RECORDED IN THE OrnCE OF THE CITY ENGINEER FOR THE
[J(ACT A...OUNT OF UCH ASSESSW[NT l[VI[D AGAINST EACH
PARCEL or LAND SHOWN ON THIS AMENDED ASStSSWENT
DlAGRAW.
CITY CLtRK - CITY or CHULJ. VISTA
LOT ,. 1.11 ACRES
LOT " 1.62 ACRES
LOT IC 0.38 ACRES
LOT 2. - 20.&.4 ACRES
LOT 28 2.45 ACRES
LOT ]A - 1.10 ACRES
RECORDED IN THE OfFICE OF THE CITY ENOtNEER OF THE
CITY or CHUI.A VJSTA THtS ___ Cht.Y or ____. "'3.
CITY ENGINEER - CITY Of CHULA VISTA
F'lLED 1111 THE ornCE or THE C!TY CLERK or THE CITY
OF CHULA VISTA THIS __ DAY or ____. 1M3.
LEGEND
~
...SSESS"ENT DISTRICT IOUNDARY
"'SSESSMENT NUMBER
CITY CURK - CITY or CHULA VISTA
FilED THIS ___ DAY OF ____. 1M3 AT ___ III
THE OffICE Of THE COUNTY AUDITOR Of THE COUNTY Of SAN
DIEGO. ST...TE Of CALlfORNI....
IRRIGATED OPEN SPACE
ORNAMENTAL LANDSCAPE
o 200
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OPEN SPACE DISTRICT NO. 31
SHEET NO. 1 OF 1
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r- removed this area - Water line/hydrant connection and . ~17 7 A ~
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UNDER CONSTRUCTION (94)
LEGEND
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FINALED (3)
VACANT (6)
OPEN SPACE (1)
./"" "-\
CHULA VISTA PLANNING DEPARTMENT
LOCATOR PROJfCT PROJECT DESCRIPTION,
C) APPliCANT, SUBDIVISION
PROJECT SI. Clair (Telegraph Canyon Estates)
ADDRESS, -
Properties (104) owned by Baldwin Builders and their
SCAlf: FILE NUMBIR, status.
NORTH No Scale
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.69/l2/l996 19:6l 7l4666642l6
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p~ 62
EX HI BIT B-1
BALDWIN BUILDERS
September 12,1996
Via FAX 1619/585-5612
Mr. Sid Morris
A8sistant City Manager
CITY OF CHULA VISTA
276 Four1h Avenue
Chula VISta, California 91910
I
SUBJECT: Otay Ranch pt~-Annex.tion Development Agt'M>.l8nt (-PADA-)
Between the C}ty of Chili. Vista and Baldwin Builders
Dear Mr. Morris:
This letter is written to confirm the substance of our phone conversation earlier
today. ;
As ycu know, I just became aware this morning that there is a report being
prepared by the staft' of the City on our Telegraph CanyonlSl Claire Crossing
project related to the lack of activity on inventory units whIch have been started
n not completed. .
These Inventory units were commenced prior to the Baldwin Builders bankruptcy
filing In July 1995, and construction was stopped In October 1995. In November
1995, for a couple of weeks construction was re-started and once again stopped.
The seme situation of starting and stopping work within a couple of weeks also
occurred in February of this year. This same scenario has OCCUT8d at other
Baldwin projects that were under construction.
On May 23, 1996. I was appointed Chief Executive Officer of Baldwin Builders
and immediately learned thatl we did not have a title Insurer who would issue title
policies to close escrows on any of the Baldwin inventory. AS the result of the
activity explained above end the fact thllt we did not have a title insurer, the
Bankruptcy Court (the .Court") was completely unwilling to allow any
constructIon to resume. Obvtously, this is nat difficult to understand in that all
the Judge htId observed to dllte was the inability of the previous managel,leI,t to
complete the obligations they had undertaken.
181111 Hale Awnut, INlnl. California 92e08
(714) eeo-1700. (714) 1180{1421 . FAX
/_5 --,,2C
.219/12/199& 19:211
714&&212142121
JIM J~
PAGE 213
EXHI BIT B-2
Mr. Sid Moms
Seplember12,1996
Page Two
W. then ..t aboUt establishing a plan that the Court would approve which would
allow us to correct the problems aeated by our predecessors; to wit, starting and
stopping Inventory construction, not paying subcontractors, and not meeting
commitments to various local egeneies. We went to the Court and got an order
allowing us to complete a project In the City of Anaheim which was very close to
being finished, In order for UI to demonstrate to the Court our ability to do what
we Indicated we would do. This Involved bringing on board a new title company
and making an arrangement to escrow the proceeds of the sale of the homes to
Insure that the subcontractors, engineers and other consultants would be paId
for their work as the e$a'OWS closed.
We were succeslfulln this endeavor, and we were subsequently able to
convince the Court to issue us a like order for our project 81 Carmel del Mar In
San Diego County. We are presently completing those inventory units.
Approximately one and one-half months ago, we requested the Court to !J"ant us
the same right In regard to ell our remaining projects that contain unfinished
inventory, including, but not limited to, Telegraph Canyon/SI. Claire Grossing.
One of the creditors objected to this latest request for reasons that we believe
are completely unfounded, and if they do not withdraw their objection, we will
have a hearing at month end before the Court. We are confident that the ColIt
will agree with us and we will be able to gear up and complete the remaining
inventory. At such time as we are able to gear up, we will immediately obtain a
structural engineer's report. meet with the subcontractors, and proceed through
the completion of the inventory.
As you are well aware, since I have become the Chief Executive Officer, we
have attempled to be good citizens through the acquiescence of the annexation,
and as explained above, have attempted, subject to Court approval, to complete
the standing inventory. I realize the problems that the standing inventory hils
aeated for you; however, I do not feel It Is of my making. However. while It Is
not of the current managemenrs making, we will definitely rectify the problems.
As I expressed to you on the telephone, It Is disconcerting to have complied with
our part of the agreement III"Id to continue to pursue correcting the problems
created by prior management, and at the same time appear to have the City
blaming us for those prtor problems.
/~] -.:2 /
. "9/12/1996 19: "1 71466""421"
JIM .JtHI5CI-I
Mr. Sid MarrIs
September 12,1996
pagertne
If IlI"Iderstand COrTeCtly, there are changes being propoHd to our Development
Agreement at a hearing to be held on September 17. which might be an attempt
to prevent similar problems from occurring in the fUture. It would appear to me
that the City would be best served in directing those concerns to projects over
which the creator of these problems maintains CXJI1troI, and give us the
opportunity to show that we operate in a different manner.
Thank you for your consideration to the above.
Yours very truly,
BALDWIN BUILDERS and
BAlDWIN BUILDING CONTRACTORS
) ~? --- c2 .2
PAGE "4
EXHIBIT B-3
EXHI BIT C
TELEGRAPH CANYON ESTATES
APPROVED SUBDIVISION IMPROVEMENT AGREEMENTS
Name No. Date Reso. No. Recorded Map No.
Units Approved
TELEGRAPH CANYON ESTATES NEIGH 1 UNIT 1 38 10/19/93 17280 11/22/93 13068
TELEGRAPH CANYON ESTATES NEIGH 1 UNIT 2 39 5/3/94 17477 5/10/94 13104
TELEGRAPH CANYON ESTATE-NEIGH 1 UNIT 3 19 9/6/94 17641 9/13/94 13137
TELEGRAPH CANYON ESTATES NEIGH 1 UNIT 4 13 1/24/95 17791 1/27/95 13182
TELEGRAPH CANYON ESTATES NEIGH 2 UNIT 1 33 10/19/93 17281 11/22/93 13069
TELEGRAPH CANYON ESTATES NEIGH 2 UNIT 2 26 8/2/94 17598 8/11/94 13123
TELEGRAPH CANYON ESTATES NEIGH 2 UNIT 3 7 12/6/94 17746 1/27/95 13184
TELEGRAPH CANYON ESTATES NEIGH 2 UNIT 4 14 1/24/95 17792 1/27/95 13183
TELEGRAPH CANYON ESTATES NEIGH 3 UNIT 1 32 10/19/93 17282 11/22/93 13070
TELEGRAPH CANYON ESTATES NEIGH 3 UNIT 2 12 8/2/94 17599 8/11/94 13124
TELEGRAPH CYN ESTATES NEIGH 3 UNIT 3 7 12/6/94 17747 1/27/95 13185
TELEGRAPH CANYON ESTATES NEIGH 3 UNIT 8 15 1/24/95 17793 1/27/95 13186
TELEGRAPH CANYON ESTATES NEIGH 3 UNIT 7 27 8/15/95 18000 9/26/95 13242
TOTAL 282
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ATTACHMENT E-l
CllY OF
CHULA VI5TA
PARKS AND RECREA 1 ION OE f-\ r ~,' L!J 1
September 23. 1994
Jerry Sims, Superintendent
The Baldwin Company
11975 El Camino Real, Suite 200
San Diego, CA 92130
Re:, Conditions for transfer of City water meter
Dear Mr. Sims,
The following memorandum is in response to the proposal by The I3,id\\ In Compony to assume twO C ,:y
water meters to repair and make fully operational the City la~ds;,p~d medians and parkways damag,d
during the road improvement to the Telegraph Canyon Estates ProJ~ct
The landscaped area to be improved in;ludes the park\\ay s or: bot'; the north and sOL;th sice of O:,y
Lakes Road. the center median from approximately 150 fee: "cs: c' Relgers to ,ppro,'ma'ely 100 feet
east of the eJsternmost boundary of Tekgraph Canyon ESlat':> Fe ?crj'ose of the project :s to rr"'.e
repair to all the landscaping infrastructure damaged by Telegrap'; Canyon Esta:e Projects The follow .,g
conditions must be agreed to by The Baldwin Company
1. Repair all damaged imgation systems to thei' (::o:::.al wOlklng condlt:cns
2. Restore and replace all damaged plants,apes \0 Ih~11 crlginal emb!Jsh~d conditions
3. The project area wi11 be irrigated and maintained by The B.ldwin Company u~:il
landscape is deemed acceptable by a rep:esen:a:i\ e of the Parks and Recreation
Department.
4. The water meters to be assumed by The Baldwin Company are
B.
01307688
913.2626-14
Address
2029 Otay
Lakes Road
2077 Otay
Lakes Road
-
P&R J.D.
A.
Meter No,
01307720
Accoun: 1"0
913.2625-15
S. -
Cross connections wi1J not be Dennitted.
~
1~-:"~:'~
Jet.
~. !,-.r-
.
j:,:'''--)/,
.-/ ~ (/
, -
276 FOURTH AVEtCHULA VISTA, CALlFOR"<IA 91910/lf'~' (.<,- .0':
ATTACHMENT E-2
6. Cenification of the following backflow prevenwrs '" ill be the responsibility of The
Baldwin Company and will be returned to the City fully certified,
P&R - ID.
A2
B2
~
Febco
Febco
~
825Y 2'
825Y 2
Seri,,] 1'0
51'#1295 ]
St\hU934U
7. The following irrigation controllers will be rerurned 10 the City in fully operational with
their warrantlles intact. Please note that Ihese controllers are warrantied by Pacif,:
Technical Services. Any servicing should be p~rfurm';d by Pacif,c Technical Services
P&R JD Make M2!W Std',l }:-:S Service Area
A3 Griswold JD Comtel 4~ North & Sou t ~,
Park\>.ays
B3 Griswold IDC Comtel 16 Medians
8. All technical drawitlg> allJ plans proviJed TI1, D"!d", i" C~",;;l,,:' Ie ::::CI the Foper
repairs will be returned al acceptance.
9. The Baldwin Company ",11 provide the Open Space Coordinator a 24 hours-a-day. "
days a week emergency number for the Immediate resolu'.lon 0: emergencies such as
irrigation failures that could impact the safei" d tfa:k alarg Olay Lakes Roa~
Attached is a set of four drawings of the project "re.
'~. Sincerely, /~
, L'
, _) l1.-0''''''
,
,-
Jerry Foncerrada
Deputy Director of Parks
_J:-.
:'~
uty authorized officer of The Baldwin Company. do
conditions, and any deviations from the agreed upon conditions must be
and Recreation Department's DepulY Director of Parks or his designated
i;'::.
JL~;"<~r.:' ,
iI~~,,-..,. .;t:'.:~_ '"
,~....j" ,,'
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~~~~
OW Of
CHULA VISTA
OFFICE OF THE CITY ATTORNEY
ATTACH1'iENT F-l
May 9, 1996
Victoria M. Campbell
The American Insurance Company ~
777 San Marin Drive
Novato, Ca. 94998
Re: Bond No. 111 2720 3450
Slope Landscape and Irrigation Bond
Dear Ms. Campbell:
The author is the City Attorney for the City of Chula Vista.
Chula vista entered into an Agreement with Otay vista Associates,
a California limited partnership, to install certain landscape and
irrigation improvements for a real estate development called
"Telegraph Canyon Estates" and in connection with said Agreement
obtained from you the above-referenced landscape and irrigation
bond.
Your principal, Otay Vista Associates, was obligated to install
landscaping and maintain said landscaping for a period of one year
after the City's Landscape Architect originally accepted the
landscape improvements for said open space. The one-year
maintenance period ended this January and while we tried to in the
interim negotiate with them to get them to take care of the
necessary landscaping and irrigation, they have failed and refused
to do so, claiming essentially that they are out of funds.
Please accept this letter as demand under the bond to complete your
principal's obligation under the Agreement and take over the open
space district and install the necessary landscaping and
irrigation. Once that is completed, we can accept the improvements
and continue to maintain them under the funding auspices of the
Open space District No. 31.
I would appreciate if you, after reviewing this matter, would
contact Jerry Foncerrada at 619-691-5071 or my secretary, Lorraine,
at 619-691-5037 to set up a time to meet and discuss this matter in
further detail. As you can see from photographs of some of the
~!: ~c26
276 FOURTH AVENUE' CHULA VISTA' CALIFORNIA 91910 . (619) 691.5037 . FAX (619) 585.5612
',>,"'-.c.-.r.~p...
ATTACHMENT F-2
victoria Campbell
May 9, 1996
Page Two
"
proposed open space district attached, the landscaping is in. a
severe state of decline and the residents of the district, who are
all recent home buyers, are complaining vociferously about the
situation. I say this so that I might urge your most immediate
attention to the matter.
I am enclosing a copy of the above-referenced bond and the contract
cont ing the ndscaping obligations.
Bruce M. Boogaar
City Attorney
BMB:lgk
cc: Jess Valenzuela
Jerry Foncerrada
c: \1t\c..pbell
~
~
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-
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~~~~
CI1Y OF
CHUIA VISTA
OFFICE OF THE CITY ATTORNEY
ATTACHt1ENT F-3
July 2, 1996
Brian R. Watson
Associate Surety Counsel
Fireman's Fund
One Market Plaza
Spear Street Tower, 10th Floor
San Francisco, CA. 94105
Re: Claim No.:
Subfile:
Principal:
Obligee:
Bond No;:
Project:
H 456 S 96 (to be assigned)
G - City of Chula vista
Otay Vista Associates/Baldwin Builders
City of Chula Vista
111 27203450
Telegraph Canyon Estates, units 1, 2 and 3,
TR#93-03
Dear Mr. Watson:
This correspondence is in response to your letter dated May
31, 1996, sent to this office. I understand that you have spoken
to the City's Deputy Director of Parks, Jerry Foncerrada, this past
month. He is available for questions you may have on the status of
the property should you have any. He can be reached at 619-691-
5615.
Enclosed please find copies of the following items in response
to your request for further documentation:
1. Videotape of property at issue taped approximately June
14, 1996.
2. City Council Resolution No. 16960 approving the Tentative
Map which sets forth the principals' obligations as to
the subject property at Section V Paragraph D, and
Paragraph 38-67, beginning at Page 12.
3. a.
b.
c.
Turn Over Schedule.
7/15/94 letter to The Baldwin Company re Telegraph
Canyon Estates - Open Space Issues.
9/23/94 letter to The Baldwin Company re Conditions
for Transfer of City Water Meter.
/ _~ --'-7 U
276 FOURTH AVENUE' CHULA VISTA' CALIFORNIA 91910 . (619) 691-5037 . FAX (619) 585-5612
.,.\" .....c.ra-~PDf
.
j
Brian R. Watson
July 2, 1996
Page Two
d.
e.
f.
g.
h.
i.
j.
k.
ATTACH~fl.ENT F-4
11/16/94 letter to The Baldwin Company re Open
Space District #31.
6/12/95 First Walkthrough punchlist to Baldwin.
6/16/95 letter to Baldwin re Landscape Turnover
Status, Telegraph Canyon Estates.
8/21/95 letter to The Baldwin re Walkthrough
Date(s): 6.1.95.
10/11/95 letter to The Baldwin Company re
Walkthrough Date(s).
10/27/95 Fax to John Badeau.
11/15/95 letter to The Baldwin Companies re
Walkthrough Date(s): 6.1.95, 10.11.95, 11.13.95.
1/4/96 letter to Baldwin Companies re Walkthrough
Date (s) : 6.1. 95, 10.11. 95, 11.13.95; Turnover
Punchlist.
1. 4/19/96 letter to Baldwin Companies re Walkthrough
Date(s): 6.1.95, 10.11.95, 11.13.95, 1.4.96;
Turnover Punchlist.
As Mr. Foncerrada discussed with you, this is not a typical
contract for work but rather requirements as part of an overall
development plan. Hence the typical contracts you may normally
deal with are not applicable to this project. If you believe there
are other documents which may be helpful, please feel free to
contact the undersigned. The city is looking forward to a prompt
resolution of this mater since there have been constant complaints
about the poor condition of the property.
Your courtesy and cooperation are appreciated.
Very truly yours,
~/ll~
peggy J. McCarberg
Acting Deputy City Attorney
PJM:lgk
Ene.
cc: Jerry Foncerrada
Deputy Director of Parks ) _S ..- _5 )
C:I1tlwltlon
ATTACHMENT G-l
'c$~
BALDWIN BUILDERS
I
,
September 12, 1996
Via: F~-iIelDd 0Yemiaht Delivery
Tbe Honoreble Shirley &nOlI,
Mayor of Tho City ofChula VISta.
~ McIPbcrs of the City C<JundJ
(:rrY OF CHULA VISTA
276 Fourth Avenue
<;:huIa Vista, CA 91910
J.!.e:
I
,
~ear Mayor Horton and MemberI oftha City COUDci1:
Otav Ranch Pre-A_titm Develoi'ment A$reement t"PADA"' Between the City or
Chula Vista and Baldwin But1ders
This letter it written in regard to tile Public Hearing which wis held before you on August 20,
~996 for your ooaaideration of approval of the above reCerllDCCd DI8Uet.
~ you are aware. a DUmber ofresidenu oftbe Paloma project III San Marcos, II well IS a
~er of the San Marcos City Council. spoke at the bearing. The prlncipa1 CCIIICen1-a>' ~
~ tbe roaidontl was that Baldwill Builders had not lived up to their obligations in tho Paloma
~ The MKXIDCIary issue was the Mello-Roo. rollback.
! .
~ I oxp1aiJiod cIurins tile beariD& the propolllld Mello-Roos acXion that was beiDa ooaaidere4 by
the Chf of San Mm1xJ& is amtI'Uf to law IDd could result in the bond ho1derl dedarin& . default
'Y'dch would not be ofbenefit to our company or the ".n~. I believe you were all provided
with copies ortho memorandum &om tho San Marcos City ~'""r 8Dd Special Bond CouDB01
~ the San Man:os Chf Council against the action the San Marcos City Council was
~ to UDdertIb. As wt have pmiousIy stated. _ are wiIliIIa to work with them
~ this IJsuc but it IIIIIItbo done In IlIIIIIIICII'tbat cIooa DOtjeopantizetbe w,.:''8
~Roo.fI~"" ._._ . '.' .
We share and undcrmnd tho probl...... expressed by tho resldentl and lire -\';nl court approval
to complete the UGfi1Iiahod invemory which was awte4 and stopped by our pmIeeesaors. During
the lID1Ie.court bouina we are .ootiJ>a approval to restan coastNCIion of the partially oomplctOd
16BIlIUll.Anu"."""" ct g26I)6 ('If) f60.17OD-'a (714) 7$6-8911
f;
/_3 -'J~
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---.-
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--~._--_...,..._.__.
._._._--~-~
SEP .12.1996 9' 54Ff1 n-E LUSK COI'F'R'IY IRVII'E
ATTACHMENT G-2
1'<<:1.1307 P.~3
The HODorable Mayor and Memben oftbe City Cound1
Page 2
s.ptember 12, 1996
inventory wDts lit Telegraph CaIIyoD whIc:b, .pa, W8S Itar1ed and stopped by tile previous
manaaemeat of Baldwin Builders.
We have only been Involved with tbese projects fir the last three and ODe-baIfmoDtbs and are
worlcins diligently to attempt to briDe Baldwin Builders back into an operationl mode and to
c:omp1ctc the existiDa houses 00 tboae projects which bave DOt aeon any Iaivity tbr lit lout the
last DIne moaths.
Ii! you may recaD, lit the June 25th 10int Meeting aftlm CImIa VISta City Couneil and 1be
PIaDDins Commission. we qreed to support the lDDexation of our property into the City aDd tIm
City agreed to negotiate in good faith usiq clue 4ilipnce to enter into a Development ~
with Baldwin Builders. From tbIIt date we haw supported the anaexation and all we are asking Is
that the City Staff and city Cov.ncil honor their =rresponclini COJ"lftttmeDt made to us.
As W8S expressed by 10hn Goss at the August 20th hearing, the City will provide the co1ld!tions
that wiD control our 1i.1tu:re development on the Ranch at the time of the processiDa afthe SPA
and Tentative Tract Maps for our property, which, &om the iafonnatlon we bave received &om
the Cby, will require at least two (2) year. to complete.
If you have any questions regardlns 1be above please contact me. We look fblward to a positive
re&Olution of this matter at our September 17, 1996 hearing.
Very truly yours,
WRBIc:m
co:
Jo1m 0011, City MaIIageI', City ofChula VISta (via: facsimile " ~ cIcIIvery)
David Gould, TIU8tcc (vii: &csImile)
Ocny 1mu1ska, Spcda! PIIIDI!Di Projects MaDaser, Cby ofCbu\a VISta (via: ~i1e &:.
overnight delivery)
Jim Jolmson, CEO. Baldwin BuiJderI
Georp ICrempl. Deputy City lo4'anar. City ofClmla Villa (via: &~...tle &:. ovemigbt
dcIivcry)
)).- )"3
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.......~~~
~~~~
EXHIBIT H-l
ClN OF
CHULA VISTA
CHULA VISTA FIRE DEPARTMENT
75TH ANNivERSARY
LEGAL NOTICE
NOTICE TO ABATE FIRE NUISANCE
September 12, 1996
Baldwin Builders
500 Newport Center Dr. #700
Newport Beach, CA 92660
The property indicated below has been inspected by the Chula Vista Fire Department
and has been determined to be a fire and/or health hazard due to the accumulation of
weeds and/or waste matter on such property.
The problem areas and property in question is around the unfinished single family
dwellings.
Property:
St. Claire - Telegraph Canyon Estates
NorthlWest of Marquette Road
North/East of Germain Road
East End of Versatlles Road
It is requested that you abate such nuisance making your property a hazard. The
above mentioned property must be cleaned by September 26, 1996, at which time a
reinspection will be conducted.
Your cooperation is appreciated and will help promote and ensure fire safety to all
nearby residents.
Tha, you.
{"vv "-' /~
Rod Hastiel, Captain
Fire Inspector
RH/I
02250
/_J - _ ~ y
PROUDLY SERYINC THE COMMUNITY SINCE 1921
:1,'J\I!~111 lilli!.\\hl/\. {,\III(JI<\I\ II'jllll 1/,1/111'11 ~{)~'/' 1,\\(111'1)1,'11 'nl'll
;"',''''.1''""
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=- ..~ ~
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~~~
CllY OF
(HULA VISTA
CHULA VISTA FII<E DEPARTMENT
7 5TH ANNiv~R~AI{Y
EXHIBIT H-2
September 19, 1996
William Brasher
Baldwin Builders
500 Newport Center Dr., Suite 700
Newport Beach, CA 92660
Re: NOTICE TO ABATE
Dear Mr. Brasher:
The Chula Vista Fire Department has done an inspection of the subdivision
Telegraph Canyon Estates, now known as St. Claire. Due to the suspension of
construction activities in the three projects (Legacy, Classics, and Crossing), the projects
are now considered a fire nuisance by the City of Chula Vista. The items that create the
nuisance are: 1) lack of water supply, 2) inadequate fire department access roads, 3)
excessive weeds growing next to unfinished homes, 4) lack of security at the sites, and 5)
partially framed, exposed wood, single family homes with no known completion date
adjacent to inhabited homes.
LEGACY
The project is located in the northwest quadrant of the St. Claire subdivision. The
unfinished homes are on Marquette Ave. The items of concern that create the nuisance,
are:
1. Two fire hydrants on the site do not have a water supply, Chula Vista Municipal
Code, Section 15.36030 mandates that "fire hydrants, where required in all
subdivisions, apartment complexes, commercial developments, etc., shall be
installed in an operable condition prior to any combustible construction materials
/] .~~S-
PROUD! Y ~fRYING THE COMMUNITY SINCE 1921
, )fl"!"!
.i ,I., J I \1 If ()I("I, ',1/
;.1 )~ '; ;. I,'." r! \1: I C, I > I I'; /
EXHIBIT H-3
Baldwin Builders
September 19, 1996
Page 2
being placed on site." Section 903.4.2 of the Uniform Fire Code has the same
requirement.
* The Fire Department requires Baldwin Builders to re-establish a water supply to
the two hydrants on Marquette Ave. within the construction site.
2. The Fire Department access road is no longer usable by a fire apparatus. As per
Section 8704.2 of the Uniform Fire Code. access roads shall be established and
maintained in accordance with Section 902 There is an exception within the code
which states, "When approved by the Chief. temporary access roads of a width,
vertical clearance and surface which provide access for fire apparatus are allowed
to be used until permanent roads are installed." Section 8704.2.
* The Fire Department requires that the original access road be rendered usable for
fire department apparatus.
3. The construction site has become overgrown with weeds. This has created a weed
abatement/fire nuisance. Chula Vista Municipal Code Section 8 32.010 requires,
whenever the Chief finds weeds, rubbish, or any other material upon any street,
parkway, sidewalk, property, lands or located in the city, which may endanger or
Injure neighboring property, or health and welfare of the residents of the vicinity, or
which shall be deemed a fire hazard, he shall give, or cause to be given, notice to
remove such weeds. rubbish or other material in the manner hereinafter provided.
Section 1103.2.4 of the Uniform Fire Code states, "Cut or uncut weeds, grass, vines
and other vegetation shall be removed when determined by the Chief to be a fire
hazard."
* The fire department requires Baldwin Builders to cut and remove all weed
vegetation within the site.
4. The site needs to be secured as per Section 1110.3 of the Uniform Fire Code. The
code states, "Vacant buildings and properties to be maintained free of
accumulations of combustible or hazardous materials and securely locked or
barricaded to prevent entry by unauthorized persons."
* The Fire Department requires Baldwin Builders to repair the fence to return it to
its original condition. The fence is intended to secure the area.
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CITY OF CHULA VISTA
EXHIBIT H-4
Baldwin Builders
September 19, 1996
Page 3
CLASSICS
The project is located in the northeast quadrant of the subdivision. The unfinished homes
are at the end of St. Germain St. The nuisance items are:
1. The need for fire department access.
2. The site has become overgrown with weeds. This is a weed abatemenUfire
nUisance.
3. The site needs to be securely locked or barricaded to prevent entry by unauthorized
persons.
. The mitigation requirements for this site sire the same as for the Legacy Project
I Site.
4. Unfinished exposed wood structures adjacent to an occupied structure with no
known completion date
. The fire department requires Baldwin Builders to submit revised construction
schedule for completion of the unfinished homes.
CROSSING
The project is located in the southeast quadrant of the subdivision. Tile unfinished homes
are at the end of MarquIS Ct. The nuisance Items are:
1 The site has become overgrown with weeds.
2. The site needs to be securely locked or barricaded to prevent entry by unauthorized
persons.
3. Unfinished exposed wood structures adjacent to occupied structures with no known
completion date.
. The mitigation requirements for this site are the same as for the Classics Project.
/'?- \')
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CITY OF CHULA VISTA
EXHIBIT H-5
Baldwin Builders
September 19, 1996
Page 4
CONCLUSION
This letter is an official Notice to Abate the Fire Nuisances listed. You have 60 days to
abate the items The 60 day time period will commence on September 20, 1996. The City
will continue to abate the water supply and access roads issues with the developer monies
on deposit for the St. Claire subdivision. If the fire nuisance is not corrected within the 60
days, the city will pursue further actions.
In the event further information or clarification of this Notice to Abate Fire Nuisance should
be necessary, please do not hesitate to contact me at (619) 691-5055. All written
communication in reference to this Notice shall be addressed to:
Douglas A. Perry
Fire Marshal
City of Chula Vista
447 "F" Street
Chula Vista, CA 91910
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Douglas A. Perry
Fire Marshal
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CITY OF CHULA VISTA
Madam Mayor and City Council Members,
This is a petition to call on the Mayor and City Council Members to recognize and act
upon the situation existing at the St, Claire Development which was caused by the
Baldwin Company, The Chula Vista City Council should act to pressure and compel the
Baldwin Company into either completing the sixty-nine (69) partially-constructed homes
in the development or have these structures tom down and removed,
This current situation is both a safety hazard and a visual eyesore and is not in keeping
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Madam Mayor and City Council Members,
This is a petition to call on the Mayor and City Council Members to recognize and act
upon the situation existing at the St. Claire Development which was caused by the
Baldwin Company. The Chula Vista City Council should act to pressure and compel the
Baldwin Company into either completing the sixty-nine (69) partially-constructed homes
in the development or have these structures torn down and removed.
This current situation is both a safety hazard and a visual eyesore an? is not in keeping
with the City's designation of Otay Lakes Road as a scenic r9adway\ ',\
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Madam Mayor and City Council Members,
This is a petition to call on the Mayor and City Council Members to recognize and act
upon the situation existing at the St. Claire Development which was caused by the
Baldwin Company. The Chula Vista City Council should act to pressure and compel the
Baldwin Company into either completing the sixty-nine (69) partially-constructed homes
in the development or have these structures tom down and removed.
This current situation is both a safety hazard and a visual eyesore and is not in keeping
with the City's designation orOtay Lakes Road as a scenic roadway.
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Madam Mayor and City Council Members,
This is a petition to call on the Mayor and City Council Members to recognize and act
upon the situation existing at the St. Claire Development which was caused by the
Baldwin Company. The Chula Vista City Council should act to pressure and compel the
Baldwin Company into either completing the sixty-nine (69) partially-constructed homes
in the development or have these structures tom down and removed.
This current situation is both a safety hazard and a visual eyesore and is riot in keeping
with the City's designation ofOtay Lakes Road as a scenic roadway.
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Madam Mayor and City Council Members,
This is a petition to call on the Mayor and City Council Members to recognize and act
upon the situation existing at the St. Claire Development which was caused by the
Baldwin Company. The Chula Vista City Council should act to pressure and compel the
Baldwin Company into either completing the sixty-nine (69) partially-constructed homes
in the development or have these structures torn down and removed.
This current situation is both a safety hazard and a visual eyesore and is not in keeping
with the City's designation ofOtay Lakes Road as a scenic roadway.
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September 24, 1996
Mayor Shirley Horton
City of Chula Vista
276 Fourth Avenue
Chula Vista, CA 91910
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tASTLAKE
COMPANY
Re: City of Chula Vista Council meeting of September 24, 1996
Item 16- Report of Telegraph Canyon Estates
Dear Mayor Horton:
I am encouraged to see that the Council is considering taking actions to remedy the incomplete
status of the referenced project. After reviewing the staff report on this topic I am uncertain as to
the ultimate action that the City may take. The purpose of this letter is to request that the
City at a minimum immediately initiate regular maintenance activity for the landscaping
on Otay Lakes Road without regard to the status ofthe claims against the project's bonds.
As presented in the staff report, this section of roadway was originaIly built by EastLake and was
accepted by the City for maintenance by the Open Space District. We have been attempting to
get the City to resume their maintenance activities since last April but have to date been
unsuccessful. On several occasions it has been necessary to "cleanup" the area with our own
forces in order to make the roadway more presentable to our home shoppers and residents. The
current combination of an activated irrigation system and no regular maintenance results in an
overgrown and unkempt appearance. It is in neither the City's or EastLake's best interests to
aIlow this condition to continue any longer.
The Council's assistance in this matter is appreciated. If you have any questions or if! can assist
the City in any way please do not hesitate to call me.
Sincerely,
~
Bruce N. Sloan
Vice President
BNS
cc: Jess Valenzuela, Parks and Recreation Department
90n Ln;!" Averlue Suite IOn
Ch!Jla Vist'l, Califnrnio 91914
Teleph'Yle (h191 4210127
Facsimile (619) 421-1830
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Denis Hill, 10:42 AM 9/24/96 , Baldwin St. Claire Development
Return-Path: Dionysius@worldnet.att.net
Date: Tue, 24 Sep 1996 10:42:25 +0000
From: Denis Hill <Dionysius@worldnet.att.net>
Organization: AT&T
To: shorton
Subject: Baldwin St. Claire Development
X-U RL: http://www.ci.chula-vista.ca.us/citygov.htm
Hello, my name is Denis Hill, I live at 1941 Versailles Road in the
Baldwin St. Claire Development here in Chula Vista. I would like to
share with you some concerns my wife and I have with the development
here.
Are you aware that there are approxiamtely 70 unfinished dwellings in
our neighborhood that have been standing for over a year with no
construction?
Do you know the potential for accidents by children playing in these
areas? Additionally the potential for a devastating fire which could
wipe out the entire development (we're coming into the Santa Ana
season of hot dry winds soon).
My wife and I had bought our home in good faith, knowing that Chula
Vista is a great city. We would like to consider ourselves part of
that, but it's difficult when you see property values dropping, and
the neighborhood becoming an eyesore to the rest of the community.
Could you please look into our problems here, we need you help.
Sincerely,
Denis Hill
LPrinted for Mayor Shirley Horton <shorton@cLchula-vista.ca.... 1 I