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Home My WebLink AboutRDA Agenda statement 2004/23/04 JOINT REDEVELOPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT ITEM NO.: ...3 MEETING DATE: 11/23/04 ITEM TITLE: JOINT RESOLUTION (1) AUTHORIZING THE FORMATION OF A 501 C3 PUBLIC BENEFIT CORPORATION FOR PURPOSES OF CONDUCTING REDEVELOPMENT AND PLANNING ACTIVITIES WITHIN THE URBAN CORE PLANNING AND REDEVELOPMENT AREAS OF CHULA VISTA; (2) DIRECTING STAFF TO PREPARE NECESSARY LEGAL DOCUMENTS NEEDED FOR THE 501 C3 FORMATION (3) APPROPRIATING FY 04-05 OPERATING BUDGET AND COMPENSATION SCHEDULE FOR THE 501C3 BOARD OF DIRECTORS; AND (4) DIRECTING CITY STAFF AND THE CITY AnORNEY TO REPORT BACK TO THE CITY COUNCIL BY JANUARY 2005 WITH DRAFT LEGAL AND OPERATING DOCUMENTS SUBMlnED BY: REVIEWED BY: EXECUTIVE DIRECTOR 4/5THS YOTE: YES ~ NO 0 BACKGROUND On February 3, 2004, the City Council directed staff and consultants to prepare an analysis and discussion paper on the creation of a 501 c3 Redevelopment Corporation. As part of the preparation for this report, two facilitated workshops were held on the formation of a 501 c3 Corporation. The workshop participants included three representatives from the Urban Development Committee (UDC), Mayor Padilla, Councilman McCann, the City Manager, City Attorney, City Finance Director and the City Community Development Director. A detailed report, attached, was distributed to the Council and the public on July 20th of this year. This staff report builds upon the conclusions and recommendations from these workshops, the July report, and recent legal analysis prepared by Rutan and Tucker LLP, Attorneys at Law on behalf of the City Attorney's office. RECOMMENDATION 1. Authorize the formation of a 501 c3 Public Benefit Corporation for the purposes of conducting redevelopment and planning activities within the Urban Core Planning Areas and Redevelopment Project Areas of the City of Chula Vista; .3 -I PAGE 2, ITEM NO.: MEETING DATE: .3 11/23/04 2. Direct the City Attorney and the Community Development Director to prepare all necessary legal and operational documents including but not limited to the Articles of Incorporation, Bylaws, operational budget, and amendments to City Ordinances as described in Exhibit A. 3. Appropriate $100,000 for the preparation of formation documents and for the initial period of operation in FY 04-05. 4. Establish compensation schedule for 501 c3 board members at $750 per month and $1,500 per month for the Board Chair. BOARDS/COMMISSIONS RECOMMENDATION Not applicable. DISCUSSION The City of Chula Vista's Redevelopment Agency was formed in 1972 and became fully functional in 1975. The goals of the Redevelopment Agency are to reduce blight and ta encourage new development, reconstruction, and rehabilitation of residential, commercial, industrial, and retail uses. Much of a Redevelopment Agency's success depends on its ability to time projects to correspond with market opportunities, respond to the needs of investors, and maintain sufficient financial capacity to leverage private investment. The City of Chula Vista has a number of resources that makes the proposal of the 501 c3 Corporation well timed. These include: · Chula Vista's physical location, within 7 miles of downtown San Diego, which is experiencing a magnificent urban revival, pravides the City great potential to attract development capital. · A strong real estate market has created opportunities for rejuvenation in the City's urbanized area, particularly given the high demand for housing units and retail space. · Chula Vista's Bayfront is one of a few remaining prime undeveloped bayfront properties on the west coast, providing significant future development opportunities for the City. · Chula Vista's close proximity to Mexico provides an economic advantage whose potential remains largely untapped. · The political-will to support and encourage redevelopment opportunities throughout the City, particularly in the older more urbanized areas. The previously released report (July 20th, 2004) focused upon evaluating four 501 c3 Corporation structural alternatives against important tangible factors within the control of the City Council and its management staff: operational efficiency, developing and maintaining a strategic advantage, alignment of the 501 c3 Corporation goals and objectives with the City's goals and objectives and financial impact/gain to the City. This approach ensures results in the areas most critical to the success of the City and allows for the formation of a 501 c3 Corporation to occur as a model speaking to the unique needs and situation of Chula Vista. S-A PAGE 3, ITEM NO.: MEETING DATE: -3 11/23/04 Authorities Granted To the 501 c3 as a Support Entity of the City of Chula Vista The 501c3 is being created to assume certain functions of the Agency - specifically to carry out all non-delegable redevelopment activities. This means that the 501 c3 would replace the Agency as the approving authority for all redevelopment matters with the exception of use of eminent domain, issuances of bonds, approval of formation or expansion of project areas, and approval of disposition development agreements and other similar contractual matters reserved only for governmental legislative bodies. Staff is recommending that the 501 c3 be given planning, zoning, and project review responsibilities in the Redevelopment Project areas and Urban Core Specific Planning area. These additional authorities would allow for existing city processes (e.g. design review, environmental review, and planning commission functions) to be consolidated and streamlined into the responsibilities of the 501 c3. This consolidation could potentially expedite project processing time by three to four months. An organization that operates efficiently and effectively is better positioned to be successful in meeting its goals and objectives. In redevelopment, attaining a high level of organizational readiness means that the Redevelopment Agency has highly trained stoff and is especially sensitive to the needs of investors that seek out higher risk opportunities in the blighted urbanized areas of cities. Redevelopment agencies that are successful almost always have clear policies and streamlined processes. Specifically, it is recommended that the following activities currently provided by separate commissions be the sole responsibility of the 50lc3: · All Planning Commission functions and responsibilities . All Design Review Committee responsibilities . All Resource Conservation Commission responsibilities Finally, it should be noted that the 501 c3 is subject to the open meeting provisions of the Rolph M. Brown Act and all legal requirements and restrictions that apply to the Planning Department and the Planning Commission. StaffinQ and Territory The workshop participants and staff examined two aspects of the core functioning of the 501 c3 - the territory over which it would assume responsibility and the staffing of the 501 c3. The workshop participants reached general agreement that from an organizational readiness perspective all redevelopment territories should be under the authority of the 501 c3 (see page 31 of the Report on the Formation of the Chula Vista 501 c3 Corporation). This allows for one set of operational procedures to be applied to all redevelopment project areas and allows for development of consistent public outreach tools and mechanisms. Furthermore, the ,3-3 PAGE 4, .TEM NO.: MEETING DATE: .3 11/23/04 recommendations from the workshop suggest that utilizing City staff provided continuity with the City, would eliminate legal and financial misalignments between the 501c3 and the City, and would allow the 501 c3 to continue to build upon the community development strategic efforts now underway. It is recommended that the by-laws of the 501 c3 establish the following: · The Chief Executive Officer (CEO) of the Corporation shall be the Director of the City's Community Development Department; · The General Counsel to the Corporation shall be the City Attorney; · The Chief Financial Officer (CFO) of the Corporation shall be the City's Finance Director; · The Corporation's day to day staffing will be the Community Development Department and other relevant city staff as determined by the City Manager. Staff is recommending that the territory over which the 501 c3 has authority include all land within the City's redevelopment project areas and "Urban Core Specific Planning Area" (see attached maps). This provides needed continuity with planning efforts within redevelopment areas and the adjacent territories. For example, key public amenities and improvements will likely be located in areas of the urban core that are not within the redevelopment project areas. These key public amenities such as infrastructure improvements, public parks, and housing efforts are essential to the over all successful revitalization of the "west." Streamlined project processing, proposed as part of the 501 c3 authorities (discussed below), must be extended to the urban core to assure consistent and timely processing with developments occurring within the redevelopment areas. Board of Directors The workshop participants examined multiple aspects of board composition and found that the board makeup should be related to the specific charge and function of the 501 c3 - redevelopment. The workshop participants, to varying degrees, focused on the need for board members who bring expertise that directly relate to redevelopment, real estate, community revitalization, urban design and architecture, and business (see page 28 of the Report for a complete list). The workshop members also believed that selecting board members from the San Diego region would provide greater access to talent and experience in these disciplines. This thought was directly linked to the expectation that the 501 c3 board members would playa significant role in developing negotiation strategies and in attracting large well-capitalized developers and investors to Chula Vista. The by-laws will provide a set of clear qualifications for meeting the specific board seat qualifications. Staff recommends that the areas of "expertise" by the workshop participants be synthesized into four seats on the Board - allowing for some flexibility: · Architect · Real estate developer or business leader 3--~ PAGE 5, ITEM NO.: MEnlNG DATE: .3 11 /23/04 . Civil engineer/ Urban designer/ enviranmental planner ar scientist . A Chula Vista resident whO' meets any ef the abeve criteria The workshap participants alsO' discussed the inclusian of the Mayor and Cauncil members an the baard as pesitive. Inclusien ef Ceuncil members and the Mayer prevides centinuity with City visien, geals, and policies that are eutside the day-ta-day activities af redevelapment, but which are interrelated to' the averall fundion and eperatien af the City. In additian, inclusian af the Mayer and Cauncil members an the Baard is apprapriate and necessary to' previde prudent and fiduciary aversight ef the priaritizatian and expenditure af public funds. A legal analysis provided by Rutan & Tucker, LLP, clarified legal parameters ef the 501c3 in relatian to' redevelapment and planning adivities. These parameters establish that the City may delegate "nanessential fundians" to' a 501 c3 as a "supperting arganizatian" of the City; hawever, Internal Revenue Service guidelines require that the City exercise substantial cantral aver the sup parting entity, and "this is usually accemplished thraugh City representatives sitting en the board ef diredars. If less than the entire City Cauncil serves an the suppart entity board af directars, the suppart entity's bylaws shauld pravide the City representatives a veta pawer ever majar financial business decisians, and vest in the City the pewer to' appaint successar direders to' the Suppart Entity's gaverning baard." Based an the abave it is recammended that all five members af the Cauncil be seated an the 501c3 baard af directars. This wauld establish a nine-member baard with a balanced camplement af eleded representatives and citizens whO' bring impertant expertise and talents to' the redevelapment agency and the City. Because this new 501 c3 baard will be expeded to' actively participate and lead the redevelapment and cammunity enhancements af western Chula Vista, the time cemmitments are expeded to' be substantial. Campensatien and reimbursement far expenses ore important far the recruitment and retentian af quality board members. Staff is recammending 0 moderate manthly stipend af $750 far the members and $1,500 far the Chair ef the Baard. This amaunt is certainly greater than "011 valunteer" baard members far charitable arganizatians and it is substantially less than baard members whO' serve an gavernmental erganizatians that require significant amaunts af time cammitted to' arganizatianal fundianing (e.g. water and sanitatien baards). Because these amaunts ore to' be set by ardinance, they can be reviewed periodically to' determine if adjustments shauld be made. FISCAL IMPACT The an-geing cast af aperatians af the 501 c3 shall became an abligatian af the Agency, hawever, there is a ane time FY04-05 laan from the City's General Fund af $100,000 to' be repaid by the Agency aver time. On-geing casts af aperatien far the 501 c3 to' the agency shauld be off-set by revenue generated by future prejects in the redevelapment areas. AnACHMENTS Attachment A - July 20, 2004 Staff Repart Autharizing the Farmatian af a 501 c3 Carparatian Attachment B - Repart an the Farmatian af the Chula Vista 501 c3 Carparatian (distributed in July) J-S- J ~ ~~~ fii ., ~ ~ oJ < E llf ::I> ~ >- ~lJ I ; 0- ::I '" n ... if l",)"'< ",!Ii 0- 0[ ~ ~! ..~ ~ oJ oJ .. oJ z+~ ~ ~ z~>< .,;1 ~~ .. ... H c !; ~ 5~i~ ~ ~ '" Ii <g,,~ ao: ~~ oJ .. '" ~O =....:1 " 0'" ~ IE! ;;; ... ~ .h , l . ... .. 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" ....,.----.. ,~\, ~-\ o I" ..ili ~ -.------...-.--., ,,,,,\:') \~\..\__________'C__._, (' '\:' /::"<(\ /~\" \ f \...-.... ~~_;.~~~1. r~~:\'" 111110 ::a m e m < m r- )>)> -I -I CIt 0 g:lI 0 :;:lIDO 0 0 0 -I )> -a me :i :i c: )> -< 3: )>m -I -< -n CIte z z :J: :;:lID m 0 n :i < 0 z )> -I :;:lID m m m Z m Z Z CIt r- -I "" 0 r- :;:lID -I -I -I m m :;:lID :;:lID -< 0 < m m '- m - :;:lID m r- - 0 n 0 )> -I "" )> 3: e '" m m Z )> -I CIt Z ATTACHM T A JOINT REDEVELOPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT ITEM NO.: MEETING DATE: S' ..JL 07 /20/04 'TEM TITLE: JOINT RESOLUTION (1) AUTHORIZING THE FORMATION OF A 501 C3 CORPORATION FOR PURPOSES OF CONDUCTING CHARITABLE BUSINESS IN THE FORM OF REDEVELOPMENT AND PLANNING ACTIVITIES WITHIN THE REDEVELOPMENT AREAS OF CHULA VISTA; (2) SELECTING A NAME FOR THE 501 C3 CORPORATION; (3) DIRECTING THE REDEVELOPMENT AGENCY EXECUTIVE DIRECTOR TO ESTABLISH A TECHNICAL COMMITTEE; AND (4) DIRECTING THE TECHNICAL COMMITTEE TO REPORT BACK TO THE CITY COUNCIL BY OCTOBER 2004 WITH DRAn ARTICLES OF INCORPORATION, BY LAWS AND A PROPOSED OPERATING AGREEMENT SUBMlnED BY: COMMUNITY DEVELOPMENT DIRECTOR REVIEWED BY: EXECUTIVE DIRECTOR 4/5TH5 YOTE: YES 0 NO ~ BACKGROUND On February 3, 2004, the City Council directed staff and consultants to prepare an analysis and discussion paper on the creation of a 501 c3 Redevelopment Corporation. As part of the preparation for this report, two facilitated workshops were held on the formation of a 501c3 Corporation. The workshop participants included three representatives from the Urban Development Committee (UDq, Mayor Padilla, Councilman McCann, the City Manager, City Attorney, City Finance Director and the City Community Development Director. The attached report builds upon the conclusions and recommendations from these workshops and the recent analysis prepared by Keyser Marston Associates (KMA) in their report presented to City Council on October 20, 2003. RECOMMENDATION 1. Authorize the formation of a 501 c3 Corporation for the purposes of conducting charitable business in the form of redevelopment and planning activities within the redevelopment areas of Chula Vista; 2. Select a name for the 501 c3 Corporation; 3. Direct the City's Redevelopment Agency Executive Director to establish a Technical Committee consisting of the: 5- J:D/- I .:3-8 PAGE 2, ITEM NO.: MEDING DATE: ",,5" -- 07/13/04 a. Mayor b. City Council member(s) c. City Manager d. City Attorney e. Community Development Director f. City Finance Director g. Chair of the Urban Development Corporation 4. Direct the Technical Committee to report bock to the City Council by October 2004 with draft Articles of Incorporation, by-lows, and 0 proposed Operating Agreement subject to the foilowing guidelines: a. The Boord of Directors sholl include regional representation with recommendations for selected professional categories as discussed by the workshop participants. b. The 501 c3 Corporation is to be staffed by City employees and include a/l redevelopment territory under its authority. c. The 501 c3 Corporation Chief Executive Officer initially shall be the Community Development Director. BOARDS/COMMISSIONS RECOMMENDATION Not applicable. DISCUSSION The City of Chula Vista's Redevelopment Agency was formed in 1972 and became fully functional in 1975. The goals of the Redevelopment Agency ore to reduce blight and to encourage new development, reconstruction, and rehabilitation of residential, commercial, industrial, and retail uses. Much of 0 Redevelopment Agency's success depends on its ability to time projects to correspond with market opportunities, respond to the needs of investors, and maintain sufficient financial capacity to leverage private investment. The City of Chula Vista hos a number of resources that makes the proposal of the 501c3 Corporation well timed. These include: · Chula Vista's physical location, within 7 miles of downtown San Diego, which is experiencing a magnificent urban revival, provides the City great potential to attract development capital. · A strong real estate market has created opportunities for rejuvenation in the City's urbanized area, particularly given the high demand for housing units and retail space. · Chula Vista's Bayfront is one of 0 few remaining prime undeveloped bayfront properties on the west coast, providing significant future development opportunities for the City. ~ A ...3 - 9 PAGE 3, ITEM NO.: MEETING DATE: --- f..:; ~ 07/13/04 · Chula Vista's close proximity to Mexico provides an economic advantage whose potential remains largely untapped. · The political-will to support and encourage redevelopment opportunities throughout the City, particularly in the older more urbanized areas. The attached report is focused upon evaluating four 501 c3 Corporation structural alternatives against important tangible factors within the control of the City Council and its management staff: operational efficiency, developing and maintaining a strategic advantage, alignment of the 501 c3 Corporation goals and objectives with the City's gools and objectives and financial impact/gain to the City. This approach ensures results in the areas most critical to the success of the City and allows for the formation of a 501 c3 Corporation to occur as a model speaking to the unique needs and situation of Chula Vista. FISCAL IMPACT There is no fiscal impact at this time. AnACHMENTS Attachment A - Report on the Formation of the Chula Vista 501 c3 Corporation J:\COMMDEV\STAFF.REP\07 -20-04\501 c3 Corporation.doc -F ....3 - I [)