HomeMy WebLinkAboutRDA Packet 1999/12/14 TUESDAY, DECEMBER 14, 1999 CHULA VISI'A COUNCIL CHAMBERS
6:00 P.M. PUBLIC SERVICES BUILDING
(IMMEDIATELY FOLLOWING THE CIIY COUNCIL MEETING)
ADJOURNED JOINT MEETING OF THE
REDEVELOPMENT AGENCY/CITY COUNCIL/HOUSING AUTHORITY
OF THE CITY OF CHULA VISTA
1. ROLL CALL Agency/Council/Authority Members Davis, Moot, PadilJa, Salas, and Chair/Mayor Horton
~(*] ~ ~ ~ ~ b 4 b d:~
( Item 2 through 3 )
(Will be voted on immediately following the Council Consent Calendar during the City Council meeting)
The staff recommendations regarding the following item(s) listed under the Consent Calendar will be enacted by the Agency
by one motion without discussion unless an Agency member, a member of the public or City staff requests that the item be
palled for discussion, lf yan wish to speak on one of these items, please fill out a "Request to Speak Form" available in
the lobby and submit it to the Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. Items pulled
from the Consent Calendar will be discussed after Action Items. Items pulled by the public will be the first items of
business.
2. JOINT AGENCY/COUNCIL RESOLUTION ADOPTING 1998-1999 BLIGHT PROGRESS REPORT--In
1998, the State Legislature adopted changes to the reporting requirements of local Redevelopment Agencies
requiring the annual adoption of Blight Progress Reports (Health and Safety Code Section 33080.1(d). This is
the first fiscal year in which these reports are due to the State Controller. The reports are in the form of a
summary record of "major projects and expenditures" undertaken to eliminate blight in adopted redevelopment
project areas. [Community Development Director]
Staff Recommendation: Agency/Council adopt the resolution.
3. AGENCY RESOLUTION APPROVING A CONTRACT WITH ECONOMICS RESEARCH ASSOCIATES
AND TUCHSCHER DEVELOPMENT ENTERPRISES TO PROVIDE CONSULTING SERVICES FOR
DOWNTOWN BUSINESS RECRUITMENT STRATEGY AND IMPLEMENTATION--In July 1999~ the
Agency issued a Request for Proposals (RFP) for the development of a comprehensive business recruitment
strategy and recruitment services for the Town Centre I Redevelopment Project Area. The RFP generated a
total of eight proposals following distribution to over 100 consultant firms. Interviews of the eight respondents
were conducted by a panel including representatives from the Town Centre Project Area Committee, Downtown
Business Association and Community Development Department Economic Development and Redevelopment
Divisions. The selection panel unanimously recommended selection of the Economics Research Associates
(ERA) and Tuchscher Development Enterprises team. [Community Development Director]
Staff Recommendation: Agency adopt the resolution.
This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the
Agency's jurisdiction that is not an item on this agenda. (State law, however, generally prohibits the Redevelopment
Agency from taking action on any issues not included on the posted agenda.) If you wish to address the Agency on such a
subject, please complete the "Request to Speak Under Oral Communications Form" available in the lobby and submit it to
the Secretary to the Redevelopment Agency or City Clerk prior to the meeting. Those who wish to speak, please give your
name and address for record purposes and follow up action.
AGENDA -2- DECEMBER 14, 1999
The following items have been advertised and/or posted as public hearings as required by law. lf you wish to speak to any
item, please fill out the "Request to Speak Form" available in the lobby and submit it to the Redevelopment Agency or the
City Clerk prior to the meeting.
4. PUBLIC HEARING: CITY COUNCIL CONSIDERATION OF THE ISSUANCE OF TAX EXEMPT
OBLIGATIONS BY THE HOUSING AUTHORITY WITH RESPECT TO SALT CREEK VILLAS
AFFORDABLE HOUSING PROJECT--The City has received a request from Chelsea Investment Corporation
to issue an $8,000,000 Tax Exempt Multi-Family Revenue Bond to finance a proposed 150 unit rental housing
project, with a minimum of 40 percent of the units to be affordable to Iow income households. The project is to
be known as "Salt Creek Villas" located west of the Olympic Training Center on Olympic Parkway within the
Eastlake II and III subdivision of eastern Chula Vista. The City Council is being asked to hold a public hearing
on the question of whether the Housing Authority should issue tax-exempt bonds for the financing of the project.
Additionarly, it is requested that the Housing Authority adopt a resolution expressing its preliminary intention to
issue bonds and the Council to adopt a resolution authorizing the issuance, sale, and delivery of the bonds by
the Authority. The requested actions are preliminary and do not commit the Authority to issue the bonds or to
provide other financial assistance. Such preliminary actions are necessary in order to allow the project
developer to submit an application to the State bonding authority. [Community Development Director]
a) HOUSING AUTHORIff RESOLUTION REGARDING ITS INTENTION TO ISSUE TAX EXEMPT
OBLIGATIONS FOR SALT CREEK VILLAS
b) COUNCIL RESOLUTION APPROVING 1'HE ISSUANCE, SALE AND DELIVERY OF MULTI-FAMILY
HOUSING REVENUE BONDS BY THE HOUSING AUTHORITY OF THE CITY OF CHULA VISTA
FOR SALT CREEK VILLAS
Staff Recommendation: Housing Authority/Council adopt the resolutions.
The items listed in this section of the agenda are expected to elicit substantial 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.
S. JOINT AGENCY/COUNCIL RESOLUTION APPROVING A CONCEPTUAL FINANCIAL PLAN FOR THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AND AUTHORIZING STAFF 1'O
ASSEMBLE A FINANCIAL TEAM AND RELATED CONTRACTS AND DOCUMENTS TO PROCEED--In
May 1999, Council and the Agency secured the services of Rod Gunn Associates (RGA) to analyze the
Agency's fiscal condition. RGA is recommending a two phased financial plan to meet specific Agency financial
objectives. Phase I proposes the issuance of tax exempt bonds from the Otay Valley Road, Town Centre II and
Southwest Project Areas to be used to repay some inter-fund loans, eliminate existing fund balance deficits in
the Bayfront/Town Centre I and Southwest project areas, and provide funding for future Agency projects in order
to take advantage of the development opportunities in the current growth economy. Phase II contemplates a
financial merger of all of the project areas and subsequent issuance of more bonds before 2004, which is the
last year to incur debt in the original areas of Bayfront/Town Centre I, Town Centre II and Otay Valley Road.
Phase II is not recommended at this time since the tax increment revenue picture in the Bayfront project area is
unclear. [Community Development Director and Finance Director]
Staff Recommendation: Agency/Council adopt: 1) the resolution approving the conceptual Agency Financial
Plan as prepared by Rod Gunn Associates; and 2) authorize staff to assemble a financial team and related
contracts and documents to proceed.
AGENDA -3- DECEMBER 14, 1999
· ], d: i:~ :m :{,~-11 ~1:I--I.
6. DIRECTOR'S REPORT(S)
7. CHAIR(S)
8. AGENCY MEMBER COMMENTS
The meeting will adjourn to a regularly scheduled Redevelopment Agency meeting on January 4, 2000 at 4:00 p.m.,
immediately following the City Council meeting, in the City Council Chambers.
· 1 · · ].-1 ::1. ~,-"! ::1-'tLt [-];
Unless Agency Counsel, the Executive Director, or the Redevelopment Agency states otherwise at this time, the Agency will
discuss and deliberate on the following item(s) of business which are permitted by law to be the subject of a closed session
discussion, and which the Agency is advised should be discussed in closed session to best protect the interests of the City.
The Agency is required by law to rettlrn 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 Agency'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 Office of the Secretary to the Redevelopment Agency and the City Clerk's Office.
9. CONFERENCE WITH REAL PROPERTY NEGOTIATOR --Pursuant to Government Code Section 54956.8
Property: Agency-owned parcels at the northwest comer of Third Avenue and H Street
Negotiating Parties: Redevelopment Agency (Chris Salomone) and Chrismatt Corporation, a California
Corporation, dba Pieri Company (James V. Pied)
Under Negotiations: Price and terms for disposition/acquisition
10. CONFERENCE WITH LEGAL COUNSEL REGARDING ANTICIPATED LITIGATION - Pursuant to
Government Code Section 54956.9(c), Initiation of Litigation
One case.
REDEVELOPMENT AGENCY AGENDA STATEMENT
ITEM No. ~'~
MEETING DATE 12/14/1999
ITEM TITLE: RESOLUTION ADOPTING 1998-1999 BLIGHT PROGRESS REPORT
SUEMITTE", MY: COMMUNITY DEVELOPMENT DIRECTOR [.[1.~¢1 ~
The State Legislature adopted changes to the reporting requirements of local Redevelopment Agencies in 1998
requiring the annual adoption of Blight Progress Reports (Health and Safety Code Section 33080.1(d). This is the
first fiscal year in which these reports are due to the State Controller. The reports are in the form of a summary
record of "major projects and expenditures" undertaken to eliminate blight in adopted redevelopment project areas.
The form of the report is consistent with the State suggested format.
Adopt the 1998-1999 Blight Progress Report.
None required.
The 1998-1999 Blight Progress Report summarizes major actions taken to eliminate blight in the City's
redevelopment project areas during the last fiscal year. The State has not yet crafted any specific guidelines for
these summary reports and has this year simply requested a summary of projects and expenditures grouped by
project area. The California Redevelopment Association (CRA) intends to explore creation of specific guidelines
during the coming year. Therefore, the report format may change significantly next year.
The major actions listed are those actions most directly tied to blight elimination. These actions do not include every
specific project accomplished by staff dudng the fiscal year reporting pedod. The expenditures listed are inclusive of
all work accomplished by the Agency, including debt service.
None. This repod lists Agency funds expended during the previous fiscal year.
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AGENCY RESOLUTION NO.
AND
COUNCIL RESOLUTION NO.
JOINT RESOLUTION OF THE REDEVELOPMENT AGENCY AND
CITY COUNCIL OF THE CITY OF CHULA VISTA ADOPTING 1998i
1999 BLIGHT PROGRESS REPORT
WHEREAS, the Office of the State Controller requires the submittal of an Annual Blight
Progress Report pursuant to the Health and Safety Code, Section 33080.1 (d) within six months of
the end of the City's fiscal year; and
WHEREAS, the Annual Blight Progress Report provides a summary of major actions and
expenditures taken to eliminate blight during the previous fiscal year; and
WHEREAS, the Redevelopment Agency has made substantial progress toward elimination
of blight within all of the City's Redevelopment Project Areas as evidenced by the Blight Progress
Report; and
NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency and City Council of the
City of Chula Vista does hereby approve the 1998-1999 Blight Progress Report in the form
presented and authorizes submittal of the Report to the Office of the State Controller.
PRESENTED BY APPROVED AS TO FORM BY
~)'hr r~tSo ~ Io°~n~on~ m u n it y Development ,~o~~,
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BLIGHT PROGRESS REPORT
PURSUANT TO HEALTH AND SAFETY CODE SECTION 33080.1 (d)
PREPARED BY:
Redevelopment Agen of the of Chula Vista
November 1999
Introduction
This Blight Progress Report covers the 1999 Fiscal Year (July 1998 through June 1999) for
the Redevelopment Agency of the City of Chula Vista. The report describes activities
conducted by the Agency in alleviating blight in the Agency's five project areas, including
the Bayfront, Bayfront/Town Centre I merged, Otay Valley Road, Southwest, Town Centre I
and Town Centre II Project Areas. The Report also describes activities associated with Low
and Moderate Income Housing, which are covered separately and in greater detail in the
annual Housing Activities Report. This Report is a summary report noting major actions
and expenditures and does not discuss the extensive day-to-day work of the
Redevelopment Agency in blight alleviation.
Bavfront Proiect Ar9~
Major Actions: Shangri-La Site Environmental Clean-up
Marina Motor Hotel/Cappos Property Environmental Clean-up
Rados Property Demolition
Relocation Agreement for BF Goodrich South Campus
Tenant Improvements for Anthony's Restaurant
Crystal Bay Project Exclusive Negotiation Agreement
Expenditures: Professional Services & Supplies ............................. $528,358.33
Capital Outlays ............................................................... 32,998.08
Debt Service ................................................................... 65,932.60
Other Services ................................................................. 7,500.00
TOTAL ................ $634,789.01
Meraed Bavfront/Town Centre I Proiect Areas
Major Actiofls: Telegraph Canyon Flood Control
Rohr Public Improvements
"E" Street Water Line Upgrade
Expenditures: Capital Outlays ............................................................ $23,067.09
TOTAL ................... $23,067.09
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Blight Progress Report - November 1999
Page 2
Otav Valley Road Project Area
Major Actions: Phase I of Auto Park Development Underway
New City Corporation Yard Planning and Acquisition
Otay Valley Road Widening Completion
Animal Shelter Site Acquisition
Expenditures: Professional Services & Supplies ............................. $290,614.98
Capital Outlay ................................................................... 1,673.75
Debt Service ................................................................ 522,128.67
Other Services and Debt Reduction .................................... 156.00
Otay Valley Road Widening ........................................... 76,638.69
TOTAL ................ $891,212.09
Southwest Project Are~
Major Actions: San Diego County Family Resource Center Project Underway
Humphrey's Mortuary Project Underway
Construction of New Otay Neighborhood Gymnasium Underway
Planning for New City Animal Shelter Project Completed
Expenditures: Professional Services & Supplies ............................. $300,766.61
Capital Outlays ................................................................. 1,400.00
Debt Service ................................................................... 46,670.25
Other Services and Debt Reduction ............................... 99,570.10
TOTAL ................ $448,406.96
Town Centre I Project Area
Major Actions: Downtown Recruitment Consultant Selection Process
North Downtown Anchor Developer Solicitation Initiated
Continuation of "Main Street Concept" Revitalization Activities
Gateway Chula Vista Developer Negotiations
TC I Lighting / Landscaping District Prop. 218 Elections
New Millennium Program
Expenditures: Professional Services & Supplies ............................. $315,554.41
Capital Outlays ............................................................... 25,230.72
Debt Service ................................................................ 700,617.60
Other Services and Debt Reduction ............................ 540,382.87
Promotional Activites ................................................... 104,345.24
TOTAL ............. $1,686,130.84
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Blight Progress Report- November 1999
Page 3
Town Centre II Proiect Area
Major Actions: Planning for Relocation of Corporation Yard Property
Cooperative Planning with Chula Vista Elementary School Dist.
South Bay Marketplace Tenant Improvements
Broadway Revitalization Action Plan Underway
Expenditures: Professional Services & Supplies ............................. $118,515.04
Debt Service ................................................................... 94,489.54
Other Services and Debt Reduction ......................... 1,571,592.05
TOTAL ......................... $1,784,596.63
Low and Moderate Income Housina
Major Actions: Trolley Terract Townhomes Completed
30 Mobilehome Units Rehabilitated
6 Single Family Residences Rehabilitated
Planning for Trolley Trestle Transitional Living Project
Planning for Villa Serena 132 Unit Senior Project
Expenditures: Professional Services & Supplies ............................. $664,783.46
Other Services and Debt Reduction ............................ 316,746.00
Orangetree Mobilehome Park ..................................... 256,684.98
Outreach Activities ............................................................... 275.00
Rehabilitation Grants ................................................... 209,633.15
Interest Expenses ........................................................... 35,000.00
Other Housing Expenses ............................................ 284,306.00
TOTAL ......................... $1,767,428.59
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REDEVELOPMENT AGEN(2Y AGENDA STATEMENT
ITEM No. ~
ME~..: :NG DATE 12/14/99
re'rEM TmTLm~: RESOLUTION APPROVING A CONTRACT WITH ECONOMICS RESEARCH
ASSOCIATES AND TUCHSCHER DEVELOPMENT ENTERPRISES TO
PROVIDE CONSULTING SERVICES FOR DOWNTOWN BUSINESS
RECRUITMENT STRATEGY AND IMPLEMENTATION
su,,,~am'rr,=,', -,Y.- COMMUNITY DEVELOPMENT DIRECTOR t.._~
REWL=WE'" ~Y: EXECUTIVE DIRECTOR ~ (4/5'""" VOTE: YF-S__ NO X )
Agency staff issued a Request for Proposals (RFP) in July for the development of a comprehensive business
recruitment strategy and recruitment services for the Town Centre I Redevelopment Project Area. The RFP
generated a total of eight proposals following distribution to over 100 consultant firms. The respondents were
Economics Research Associates/Tuchscher Development Enterprises, Downtown Main Street Visions, New City
America, Progressive Urban Management Associates, Economic Development Systems, Seifel Associates/Juarez,
BECA-Corazon, and Chabin Concepts. Interviews were conducted by a panel including representatives from the
Town Centre Project Area Committee (TCPAC), the Downtown Business Association (DBA), the Economic
Development Division, and the Redevelopment Division. The selection panel was impressed with all of the proposals
and unanimously recommended selection of the Economics Reseamh Associates (ERA) and Tuchscher
Development Enterprises team.
Approve the consultant contract with Economics Reseamh Associates (ERA)/Tuchscher Development Enterprises to
provide Downtown recruitment consulting services
Both the Town Centre Project Area Committee and the Downtown Business Association have been informed of and
endorsed the selection of Economics Research Associates/Tuchscher Development Enterprises.
Downtown Chula Vista continues to evolve as the center of the community. Dudng the 1960s and 1970s, Downtown
was faced with severe competition from large shopping malls and suburban developments which eroded its
traditional retail role. The City provided assistance through provision of new infrastructure, including streetscape
improvements, new developments, and public parking lots and structures. By the 1980s, development of the Park
Plaza at the Village, a new multi-plex cinema, new housing and office developments, and additional public
improvements worked to stabilize Downtown, although retailing continued to decline. During the restructuring of the
1990s, a visible decline in the retail vitality of Downtown became more apparent. As a result, stakeholders in
Downtown began a visioning process which resulted in a variety of recommendations for new revitalization
strategies. Retail vitality was identified as one of the most pressing needs. As a result, the City recognized the need
for professional assistance in creating a strategy for recruiting new retail development.
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PAGE 2, ITEM ~
MEETING DATE 12/14/99
The selection process included a thorough review of the eight (8) RFP responses by the selection committee. The
selection committee consisted of the Redevelopment Manager, a Senior Community Development Specialist, a
member of the Town Centre I Project Area Committee, and a member of the Downtown Business Association, Of
the eight respondents, one firm, Chabin Concepts, dropped out before being interviewed.
The proposals were evaluated based on the following criteria:
The consultant's qualificafions, including qualifications of the project manager and team and the qualifications of
any subcontractors.
2. The responsiveness of the work plan relative to the tasks and goals enumerated in the RFP.
3. Cost proposal.
4, Schedule of performance.
5. Creativity of the overall approach to the task.
The fee proposals received ranged from $24,000 to $137,000 and included the following (from lowest to highest):
· Downtown Main Street Visions {$24,000)
· New City Amedca ($56~000)
· Economics Research Associates/Tuchscher Development Enterprises ($64~844 plus transaction work on an
hourly fee basis)
· Progressive Urban Management Associates ($68,722);
· Economic Development Systems ($83,840 plus transaction work on an houdy fee basis);
· Seifel and Associates/Richard Juarez ($118~000 plus transaction work on an houdy fee basis);
· Border Environmental Commerce Alliance ($137,000).
All of the seven remaining proposers were interviewed by the selection committee and the Economics Research
Associates/Tuchscher Development Enterprises team was the unanimous choice of the committee. The selection
committee felt that the cost proposal from the EPA team was competitive with the others received. The committee
also felt that the Downtown Main Street Visions cost proposal was lower than the others because the firm is a faidy
new to the area. The selected consultant firm has not done consulting work in the City during the past year.
For purposes of this contract, the Agency is utilizing the City's standard two-party consultant contract. The final
contract is for a fixed-fee amount of $60,000, payable according to a schedule of milestones and deliverables. For
transactional work following successful completion of the recruitment strategy and marketing materials, staff will
return to the Agency Board with an appropriate funding request.
In the selection of a consultant to provide recruitment strategy services, the selection process emphasized
development of a sustainable recruitment strategy as well as actual recruitment services. Staff feels that the selected
consultant team provides the best balance between strategy development for the next decade and recruitment of
new businesses to fill various retail voids in the Downtown, The EPA team was instrumental in several highly
successful efforts, including creating the strategy for Downtown Santa Monica's Third Street Promenade, West
Hollywood's focus on recruitment of ~'creative industries," and closer to home, Ocean Beach's Newport Avenue
revitalization plan. In partnering with Tuchscher Development Enterprises, EPA is also bringing on board extensive
local experience and an in-depth understanding of the South Bay marketplace.
The selection of the Downtown recruitment consultant will result in the development of a strategy which will require
the on-going commitment of the City to the revitalization of Downtown. Staff has requested that the consultant team
assist staff with a vade~y of ancillary tasks, including assistance with a planned ioint workshop on Downtown issues
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PAGE 3, ITEM '--~
MEETING DATE 12/14/~9
with Council, the Economic Development Commission and the Town Centre Project Area Committee; review and
advice on the planned re-release of the developer solicitation for the Leader Building block on 3~ Avenue; and review
and advice on the potential re-formation of the Downtown Business Improvement Distdct (BID).
The team will also work strongly on actual business recruitment on a transactional basis once the recruitment
strategy is defined. Preliminary concepts for the recruitment focus include niche retail development, theme
restaurants, entertainment venues, art galleries, and mixed-use developments including upscale housing. Much of
the success of the recruitment phase will depend on the active commitment of the City to needed improvements in
infrastructure, landscaping, and potentially, land assembly and acquisition. Council will be kept fully informed of
progress in all of these areas tllrough periodic workshops, informational memoranda, and other means.
The proposed contract includes $60,000 for development of the recruitment strategy. The funding for the contract is
already appropriated for this fiscal year. An additional $10,000 for initial recruitment transactional activities, billed on
a time and materials basis, is anticipated. Staff will return to the Agency in May or June, 2000, with an interim report
and request for funding for the transactional activities. It is anticipated that additional recruitment transactional work
will be necessary and desirable during the upcoming fiscal year. Staff may propose additional funding dudng the
regular budget cycle for on-going transactional activities.
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RESOLUTION NO.
RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY
OF CHULA VISTA APPROVING A CONTRACT WITH ECONOMICS
RESEARCH ASSOCIATES AND TUCHSCHER DEVELOPMENT
ENTERPRISES TO PROVIDE CONSULTING SERVICES FOR
DOWNTOWN BUSINESS RECRUITMENT STRATEGY AND
IMPLEMENTATION
WHEREAS, the Redevelopment Agency issued a Request for Proposals to provide
consulting services to create a business recruitment strategy and recruitment services for Downtown
Chula Vista and the Town Centre Redevelopment Project Area; and
WHEREAS, following review of proposals and interviews of consulting teams, the selection
committee selected the team of Economics Research Associates and Tuchscher Development
Enterprises to provide the necessary services; and
WHEREAS, the selected consulting team brings considerable experience in development of
recruitment and marketing plans for business districts in other jurisdictions as well as local real
estate development experience; and
WHEREAS, the consulting team will provide both a recruitment strategy for the next decade
and actual recruitment services which will help activate Downtown Chula Vista as a center for retail
and services for the expanding South Bay region;
NOW, THEREFORE, BE IT RESOLVED the Redevelopment Agency of the City of Chula
Vista does hereby (a) approve a contract with Economics Research Associates and Tuchscher
Development Enterprises for consulting services for a Downtown Business Recruitment Strategy
and Implementation in the form presented; and (b) authorize and direct the Chairman to execute
same in a final form approved by the Agency Attorney.
PRESENTED BY APPROVED AS TO FORM BY
Director of Community Development ~gency A~rney
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AGREEMENT BETWEEN THE
REDEVELOPMENT AGENCY OF THE
CITY OF CHULA VISTA AND
ECONOMICS RESEARCH ASSOCIATES / TUCHSCHER DEVELOPMENT
ENTERPRISES
FOR CONSULTING SERVICES RELATING TO
DOWNTOWN RECRUITMENT STRATEGY AND IMPLEMENTATION
This agreement ("Agreement") is entered into effective as of December 14, 1999, by
and between the Redevelopment Agency of the City of Chula Vista ("Agency") and
Economics Research Associates and Tuchscher Development Enterprises (collectively,
"Consultant").
Recitals
Whereas, the Agency has conducted a Request for Proposals (RFP) process in
order to select a consultant team to provide a Recruitment Strategy and Implementation
for the Town Centre I Redevelopment Project Area; and,
Whereas, Consultant was selected from a field of eight consultant teams through
a process of review of submittals and interviews to provide the aforementioned
consultant services; and,
Whereas, Consultant warrants and represents that they are experienced and
staffed in a manner such that they are and can prepare and deliver the services
required of Consultant to Agency within the time frames herein provided all in
accordance with the terms and conditions of this Agreement;
NOW, THEREFORE, BE IT RESOLVED that the Agency and Consultant do
hereby mutually agree as follows:
1. Consultant's Duties
A. General Duties
Consultant shall perform all of the services described on the attached Exhibit A,
Paragraph 7, entitled "General Duties"; and,
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3-5
B. Scope of Work and Schedule
In the process of performing and delivering said "General Duties", Consultant
shall also perform all of the services described in Exhibit A, Paragraph 8, entitled"
Scope of Work and Schedule", not inconsistent with the General Duties, according to,
and within the time frames set forth in Exhibit A, Paragraph 8, and deliver to Agency
such Deliverables as are identified in Exhibit A, Paragraph 8, within the time frames set
forth therein, time being of the essence of this agreement. The General Duties and the
work and deliverables required in the Scope of Work and Schedule shall be herein
referred to as the "Defined Services". Failure to complete the Defined Services by the
times indicated does not, except at the option of the Agency, operate to terminate this
Agreement.
C. Reductions in Scope of Work
Agency may independently, or upon request from Consultant, from time to time
reduce the Defined Services to be performed by the Consultant under this Agreement.
Upon doing so, Agency and Consultant agree to meet in good faith and confer for the
purpose of negotiating a corresponding reduction in the compensation associated with
said reduction.
D. Additional Services
In addition to performing the Defined Services herein set forth, Agency may
require Consultant to perform additional consulting services related to the Defined
Services ("Additional Services"), and upon doing so in writing, if they are within the
scope of services offered by Consultant, Consultant shall perform same on a time and
materials basis at the rates set forth in the "Rate Schedule" in Exhibit A, Paragraph 1 1
(C), unless a separate fixed fee is otherwise agreed upon. All compensation for
Additional Services shall be paid monthly as billed.
E. Standard of Care
Consultant, in performing any Services under this agreement, whether Defined
Services or Additional Services, shall perform in a manner consistent with that level of
care and skill ordinarily exercised by members of the profession currently practicing
under similar conditions and in similar locations.
F. Insurance
Consultant represents that it and its agents, staff and prime contractor employed
by it in connection with the Services required to be rendered, are protected against the
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risk of loss by the following insurance coverages, in the following categories, and to the
limits specified, policies of which are issued by Insurance Companies that have a Best's
Rating of "A, Class V" or better, or shall meet with the approval of the Agency:
Statutory Worker's Compensation Insurance and Employer's Liability Insurance
coverage in the amount set forth in the attached Exhibit A, Paragraph 9.
Commercial General Liability Insurance including Business Automobile
Insurance coverage in the amount set forth in Exhibit A, Paragraph 9, combined single
limit applied separately to each project away from premises owned or rented by
Consultant, which names Agency as an Additional Insured, and which is primary to any
policy which the Agency may otherwise carry ("Primary Coverage"), and which treats
the employees of the Agency in the same manner as members of the general public
("Cross-liability Coverage").
Errors and Omissions insurance, in the amount set forth in Exhibit A, Paragraph
9, unless Errors and Omissions coverage is included in the General Liability policy.
G. Proof of Insurance Coverage
(1) Certificates of Insurance.
Consultant shall demonstrate proof of coverage herein required, prior to
the commencement of services required under this Agreement, by delivery of
Certificates of Insurance demonstrating same, and further indicating that the policies
may not be canceled without at least thirty (30) days written notice to the Additional
Insured.
(2) Policy Endorsements Required.
In order to demonstrate the Additional Insured Coverage, Primary
Coverage and Cross-liability Coverage required under Consultant's Commercial
General Liability Insurance Policy, Consultant shall deliver a policy endorsement to the
Agency demonstrating same, which shall be reviewed and approved by the Risk
Manager.
H. Security for Performance
(1) Performance Bond.
In the event that Exhibit A, at Paragraph 19, indicates the need for
Consultant to provide a Performance Bond (indicated by a check mark in the
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parenthetical space immediately preceding the subparagraph entitled "Performance
Bond"), then Consultant shall provide to the Agency a performance bond by a surety
and in a form and amount satisfactory to the Risk Manager or City Attorney~ which
amount is indicated in the space adjacent to the term, "Performance Bond", in said
Paragraph 19, Exhibit A.
(2) Letter of Credit.
In the event that Exhibit A, at Paragraph 19, indicates the need for
Consultant to provide a Letter of Credit (indicated by a check mark in the parenthetical
space immediately preceding the subparagraph entitled "Letter of Credit"), then
Consultant shall provide to the Agency an irrevocable letter of credit callable by the
Agency at their unfettered discretion by submitting to the bank a letter, signed by the
City Manager, stating that the Consultant is in breach of the terms of this Agreement.
The letter of credit shall be issued by a bank, and be in a form and amount satisfactory
to the Risk Manager or City Attorney which amount is indicated in the space adjacent to
the term, "Letter of Credit", in said Paragraph 19, Exhibit A.
(3) Other Security
In the event that Exhibit A, at Paragraph 19, indicates the need for
Consultant to provide security other than a Performance Bond or a Letter of Credit
(indicated by a check mark in the parenthetical space immediately preceding the
subparagraph entitled "Other Security"), then Consultant shall provide to the Agency
such other security therein listed in a form and amount satisfactory to the Risk Manager
or City Attorney.
I. Business License
Consultant agrees to obtain a business license from the Agency and to
otherwise comply with Title 5 of the Chula Vista Municipal Code.
2. Duties of the Agency
A. Consultation and Cooperation
Agency shall regularly consult the Consultant for the purpose of reviewing the
progress of the Defined Services and Schedule therein contained, and to provide
direction and guidance to achieve the objectives of this agreement. The Agency shall
permit access to its office facilities, files and records by Consultant throughout the term
1. The City Attorney's Office prefers that you obtain approval of the surety or bank, the form of the security and
the amount of the security from the Risk Manager in the first instance and not the City Attorney. The City
Attorney's office would be available on such risk issues as an alternate only if the Risk Manager is unavailable
and the matter can't wait. Page ,4
3-8
of the agreement. In addition thereto, Agency agrees to provide the information, data, .
items and materials set forth on Exhibit A, Paragraph 10, and with the further
understanding that delay in the provision of these materials beyond 30 days after
authorization to proceed, shall constitute a basis for the justifiable delay in the
Consultant's performance of this agreement.
B. Compensation
Upon receipt of a properly prepared billing from Consultant submitted to the
Agency periodically as indicated in Exhibit A, Paragraph 18, but in no event more
frequently than monthly, on the day of the period indicated in Exhibit A, Paragraph 18,
Agency shall compensate Consultant for all services rendered by Consultant according
to the terms and conditions set forth in Exhibit A, Paragraph 11, adjacent to the
governing compensation relationship indicated by a "checkmark" next to the appropriate
arrangement, subject to the requirements for retention set forth in paragraph 19 of
Exhibit A, and shall compensate Consultant for out of pocket expenses as provided in
Exhibit A, Paragraph 12.
All billings submitted by Consultant shall contain sufficient information as to the
propriety of the billing to permit the Agency to evaluate that the amount due and
payable thereunder is proper, and shall specifically contain the Agency's account
number indicated on Exhibit A, Paragraph 18 (C) to be charged upon making such
payment.
3. Administration of Contract
Each party designates the individuals ("Contract Administrators") indicated on
Exhibit A, Paragraph 13, as said party's contract administrator who is authorized by
said party to represent them in the routine administration of this agreement.
4. Term
This Agreement shall terminate when the Parties have complied with all
executory provisions hereof.
5. Liquidated Damages
The provisions of this section apply if a Liquidated Damages Rate is provided in
Exhibit A, Paragraph 14.
It is acknowledged by both parties that time is of the essence in the completion
of this Agreement. It is difficult to estimate the amount of damages resulting from delay
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in performance. The parties have used their judgment to arrive at a reasonable amount
to compensate for delay.
Time extensions for delays beyond the consultant's control, other than delays
caused by the Agency, shall be requested in writing to the Agency's Contract
Administrator, or designee, prior to the expiration of the specified time. Extensions of
time, when granted, will be based upon the effect of delays to the work and will not be
granted for delays to minor portions of work unless it can be shown that such delays did
or will delay the progress of the work.
6. Financial Interests of Consultant
A. Consultant is Designated as an FPPC Filer
If Consultant is designated on Exhibit A, Paragraph 15, as an "FPPC filer",
Consultant is deemed to be a "Consultant" for the purposes of the Political Reform Act
conflict of interest and disclosure provisions, and shall report economic interests to the
City Clerk on the required Statement of Economic Interests in such reporting categories
as are specified in Paragraph 15 of Exhibit A, or if none are specified, then as
determined by the City Attorney.
B. Decline to Participate
Regardless of whether Consultant is designated as an FPPC Filer, Consultant
shall not make, or participate in making or in any way attempt to use Consultant's
position to influence a governmental decision in which Consultant knows or has reason
to know Consultant has a financial interest other than the compensation promised by
this Agreement.
C. Search to Determine Economic Interests
Regardless of whether Consultant is designated as an FPPC Filer, Consultant
warrants and represents that Consultant has diligently conducted a search and
inventory of Consultant's economic interests, as the term is used in the regulations
promulgated by the Fair Political Practices Commission, and has determined that
Consultant does not, to the best of Consultant's knowledge, have an economic interest
which would conflict with Consultant's duties under this agreement.
D. Promise Not to Acquire Conflicting Interests
Regardless of whether Consultant is designated as an FPPC Filer, Consultant
further warrants and represents that Consultant will not acquire, obtain, or assume an
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economic interest during the term of this Agreement which would constitute a conflict of
interest as prohibited by the Fair Political Practices Act.
E. Duty to Advise of Conflicting Interests
Regardless of whether Consultant is designated as an FPPC Filer, Consultant
further warrants and represents that Consultant will immediately advise the City
Attorney of Agency if Consultant learns of an economic interest of Consultant's which
may result in a conflict of interest for the purpose of the Fair Political Practices Act, and
regulations promulgated thereunder.
F. Specific Warranties Against Economic Interests
Consultant warrants and represents that neither Consultant, nor Consultant's
immediate family members, nor Consultant's employees or agents ("Consultant
Associates") presently have any interest, directly or indirectly, whatsoever in any
property which may be the subject matter of the Defined Services, or in any property
within 2 radial miles from the exterior boundaries of any property which may be the
subject matter of the Defined Services, ("Prohibited Interest"), other than as listed in
Exhibit A, Paragraph 15.
Consultant further warrants and represents that no promise of future
employment, remuneration, consideration, gratuity or other reward or gain has been
made to Consultant or Consultant Associates in connection with Consultant's
performance of this Agreement. Consultant promises to advise Agency of any such
promise that may be made during the Term of this Agreement, or for 12 months
thereafter.
Consultant agrees that Consultant Associates shall not acquire any such
Prohibited Interest within the Term of this Agreement, or for 12 months after the
expiration of this Agreement, except with the written permission of Agency.
Consultant may not conduct or solicit any business for any party to this
Agreement, or for any third party which may be in conflict with Consultant's
responsibilities under this Agreement, except with the written permission of Agency.
7. Hold Harmless
Consultant shall defend, indemnify, protect and hold harmless the Agency, its
elected and appointed officers and employees, from and against all claims for
damages, liability, cost and expense (including without limitation attorneys' fees) arising
out of the conduct of the Consultant, or any agent or employee, subcontractors, or
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3-11
others in connection with the execution of the work covered by this Agreement, except
only for those claims arising from the negligence or willful misconduct of the Agency, its
officers, or employees. Consultant's indemnification shall include any and all costs,
expenses, attorneys' fees and liability incurred by the Agency, its officers, agents, or
employees in defending against such claims, whether the same proceed to judgment or
not. Further, Consultant at its own expense shall, upon written request by the Agency,
defend any such suit or action brought against the Agency, its officers, agents, or
employees. Consultants' indemnification of Agency shall not be limited by any prior or
subsequent declaration by the Consultant.
8. Termination of Agreement for Cause
If, through any cause, Consultant shall fail to fulfill in a timely and proper manner
Consultant's obligations under this Agreement, or if Consultant shall violate any of the
covenants, agreements or stipulations of this Agreement, Agency shall have the right to
terminate this Agreement by giving written notice to Consultant of such termination and
specifying the effective date thereof at least five (5) days before the effective date of
such termination. In that event, all finished or unfinished documents, data, studies,
surveys, drawings, maps, reports and other materials prepared by Consultant shall, at
the option of the Agency, become the property of the Agency, and Consultant shall be
entitled to receive just and equitable compensation for any work satisfactorily completed
on such documents and other materials up to the effective date of Notice of
Termination, not to exceed the amounts payable hereunder, and less any damages
caused Agency by Consultant's breach.
9. Errors and Omissions
In the event that the Agency Administrator determines that the Consultants'
negligence, errors, or omissions in the performance of work under this Agreement has
resulted in expense to Agency greater than would have resulted if there were no such
negligence, errors, omissions, Consultant shall reimburse Agency for any additional
direct expenses incurred by the Agency. Nothing herein is intended to limit Agency's
rights under other provisions of this agreement.
10. Termination of Agreement for Convenience of Agency
Agency may terminate this Agreement at any time and for any reason, by giving
specific written notice to Consultant of such termination and specifying the effective
date thereof, at least thirty (30) days before the effective date of such termination. In
that event, all finished and unfinished documents and other materials described
hereinabove shall, at the option of the Agency, become Agency's sole and exclusive
property. If the Agreement is terminated by Agency as provided in this paragraph,
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Consultant shall be entitled to receive just and equitable compensation for any
satisfactory work completed on such documents and other materials to the effective
date of such termination. Consultant hereby expressly waives any and all claims for
damages or compensation arising under this Agreement except as set forth herein.
11. Assignability
The services of Consultant are personal to the Agency, and Consultant shall not
assign any interest in this Agreement, and shall not transfer any interest in the same
(whether by assignment or novation), without prior written consent of Agency. Agency
hereby consents to the assignment of the portions of the Defined Services identified in
Exhibit A, Paragraph 17 to the subconsultants identified thereat as "Permitted
Subconsultants".
12. Ownership, Publication, Reproduction and Use of Material
All reports, studies, information, data, statistics, forms, designs, plans,
procedures, systems and any other materials or properties produced under this
Agreement shall be the sole and exclusive property of Agency. No such materials or
properties produced in whole or in part under this Agreement shall be subject to private
use, copyrights or patent rights by Consultant in the United States or in any other
country without the express written consent of Agency. Agency shall have unrestricted
authority to publish, disclose (except as may be limited by the provisions of the Public
Records Act), distribute, and otherwise use, copyright or patent, in whole or in part, any
such reports, studies, data, statistics, forms or other materials or properties produced
under this Agreement, except for the purposes of issuance of bonded indebtedness, in
which case the Agency will present Consultant's findings in their totality, unless in
receipt of written authorization from Consultant.
13. Independent Contractor
Agency is interested only in the results obtained and Consultant shall perform as
an independent contractor with sole control of the manner and means of performing the
services required under this Agreement. Agency maintains the right only to reject or
accept Consultant's work products. Consultant and any of the Consultant's agents,
employees or representatives are, for all purposes under this Agreement, an
independent contractor and shall not be deemed to be an employee of Agency, and
none of them shall be entitled to any benefits to which Agency employees are entitled
including but not limited to, overtime, retirement benefits, worker's compensation
benefits, injury leave or other leave benefits. Therefore, Agency will not withhold state
or federal income tax, social security tax or any other payroll tax, and Consultant shall
Page 9
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be solely responsible for the payment of same and shall hold the Agency harmless with
regard thereto.
14. Administrative Claims Requirements and Procedures
No suit or arbitration shall be brought arising out of this agreement, against the
Agency unless a claim has first been presented in writing and filed with the Agency and
acted upon by the Agency in accordance with the procedures set forth in Chapter 1.34
of the Chula Vista Municipal Code, as same may from time to time be amended, the
provisions of which are incorporated by this reference as if fully set forth herein, and
such policies and procedures used by the Agency in the implementation of same.
Upon request by Agency, Consultant shall meet and confer in good faith with
Agency for the purpose of resolving any dispute over the terms of this Agreement.
15. Attorney's Fees
Should a dispute arising out of this Agreement result in litigation, it is agreed that the
prevailing party shall be entitled to a judgment against the other for an amount equal to
reasonable attorney's fees and court costs incurred. The "prevailing party" shall be
deemed to be the party who is awarded substantially the relief sought.
16. Miscellaneous
A. Consultant not authorized to Represent Agency
Unless specifically authorized in writing by Agency, Consultant shall have no
authority to act as Agency's agent to bind Agency to any contractual agreements
whatsoever.
B. Consultant is Real Estate Broker and/or Salesman
If the box on Exhibit A, Paragraph 16 is marked, the Consultant and/or their
principals is/are licensed with the State of California or some other state as a licensed
real estate broker or salesperson. Otherwise, Consultant represents that neither
Consultant, nor their principals are licensed real estate brokers or salespersons.
C. Notices
All notices, demands or requests provided for or permitted to be given pursuant
to this Agreement must be in writing. All notices, demands and requests to be sent to
any party shall be deemed to have been properly given or served if personally served
Page 10
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or deposited in the United States mail, addressed to such party, postage prepaid,
registered or certified, with return receipt requested, at the addresses identified herein
as the places of business for each of the designated parties.
D. Entire Agreement
This Agreement, together with any other written document referred to or
contemplated herein, embody the entire Agreement and understanding between the
parties relating to the subject matter hereof. Neither this Agreement nor any provision
hereof may be amended, modified, waived or discharged except by an instrument in
writing executed by the party against which enforcement of such amendment, waiver or
discharge is sought.
E. Capacity of Parties
Each signatory and party hereto hereby warrants and represents to the other
party that it has legal authority and capacity and direction from its principal to enter into
this Agreement, and that all resolutions or other actions have been taken so as to
enable it to enter into this Agreement.
F. Governing LawNenue
This Agreement shall be governed by and construed in accordance with the laws
of the State of California. Any action arising under or relating to this Agreement shall
be brought only in the federal or state courts located in San Diego County, State of
California, and if applicable, the City of Chula Vista, or as close thereto as possible.
Venue for this Agreement, and performance hereunder, shall be the City of Chula Vista.
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SIGNATURE PAGE
TO
AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY OF
THE CITY OF CHULA VISTA AND ECONOMICS RESEARCH
ASSOClATES/TUCHSCHER DEVELOPMENT ENTERPRISES
FOR CONSULTANT SERVICES
IN WITNESS WHEREOF, Agency and Consultant have executed this
Agreement thereby indicating that they have read and understood same, and indicate
their full and complete consent to its terms:
City of Chula Vista
by:.
Shirley Hot,on, Mayor
Attest:
Susan Bigelow, City Clerk
Approved as to form:
John M. Kaheny, City Attorney
Economics Research Associates
By:
William Anderson
Economics Research Associates
By:.
William Tuchscher
Tuchscher Development Enterprises
Exhibit List to Agreement
(X) Exhibit A.
Page 12
3-16
EXHIBIT A
TO
AGREEMENT BETVVEEN
CITY OF CHULA VISTA
AND
ECONOMICS RESEARCH ASSOCIATESlTUCHSCHER DEVELOPMENT
ENTERPRISES
1. Effective Date of Agreement: December 14, 1999
2. City-Related Entity:
(X) Redevelopment Agency of the City of Chula Vista, a political subdivision
of the State of California
3. Place of Business for Agency:
City of Chula Vista,
276 Fourth Avenue,
Chula Vista, CA 91910
4. Consultant:
Economics Research Associates
964 5th Avenue, Suite 214
San Diego, CA 92101
5. Business Form of Consultant:
( ) Sole Proprietorship
( ) Partnership
(X) Corporation
6. Place of Business, Telephone and Fax Number of Consultant:
964 5th Avenue, Suite 214
San Diego, CA 92101
Voice Phone (619) 544-1402
Fax Phone (619) 544-1404
Page 13
3-17
7. General Duties:
Prepare a Recruitment Strategy for Downtown Chula Vista.
8. Scope of Work and Schedule:
A. Detailed Scope of Work:
Task 1 - Consultant to hold Orientation Session with Downtown stakeholders to
discuss history, vision, development and economic objectives, collect relevant
information and reports and assemble data; conduct meetings with staff and
stakeholders; collection of relevant market information; "Brainstorming"
Session(s) to generate range of program options and development strategies,
market parameters, conceptual schemes; conduct site reconnaissance to
determine opportunities and constraints.
Task 2 - Conduct review of North Downtown (Leader Building Block) Developer
Solicitation Strategy in concert with Agency RFP re-issuance, provide
professional expertise and conceptual framework.
Task 3 - Conduct analysis of existing market conditions, including specific
market indicators as listed in RFP submittal, conduct data collection and analysis
of market parameters, inventory of office, residential and retail projects, rents,
major anchors and orientation.
Task 4 - Assistance with coordination of joint workshop on Downtown issues
with Agency/Council and stakeholder groups.
Task 5 - Detailed concept definition and testing, including the formulation of
alternative concepts, testing of alternative concepts, development of evaluation
matrix.
Task 6 - Conduct in-depth market analysis of potential uses to determine levels
of demand with special emphasis on office, retail, entertainment and movie
theaters, and food/beverage uses.
Task 7 - Prepare a retail gap analysis and identify potential "gap" uses,
determine if commercial use categories are consistent with Downtown vision,
space availability and other factors.
Task 8 - Develop recommended Recruitment Strategy, conduct Final
Workshops(s), create an Action Priority Schedule, and develop a strategy to
market the developed recruitment strategy externally.
Task 9 - Review of Business Improvement District (BID) Reformation Process
for Downtown, including review of property-based BID approaches, income
generation, and development of strategy.
Task 10 -Create and assemble "Fax" marketing package and complete final
marketing package. Additional tasks associated with transactional recruitment
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activities will be the subject of negotiation and will be part of a secondary
contract to be developed.
B. Date for Commencement of Consultant Services:
(X) Same as Effective Date of Agreement
C. Dates or Time Limits for Delivery of Deliverables:
Deliverable No. 1: Draft Recruitment Strategy due by May 1, 2000.
Deliverable No. 2: Final Recruitment Strategy due by June 1, 2000.
Deliverable No. 3: Recruitment Marketing Package due by July 1, 2000.
D. Date for completion of all Consultant services:
September 1, 2000 (unless contract amended)
9. Insurance Requirements:
(X) Statutory Worker's Compensation Insurance
(X) Commercial General Liability Insurance: $1,000,000.
(X) Errors and Omissions Insurance: $250,000 (not included in Commercial
General Liability coverage).
10. Materials Required to be Supplied by Agency to Consultant:
Any existing market studies or other analysis relevant to downtown business
recruitment.
11. Compensation:
A. (X) Single Fixed Fee Arrangement
For performance of all of the Defined Services by Consultant as herein required,
Agency shall pay a single fixed fee in the amounts and at the times or milestones or for
the Deliverables set forth below:
Page 15
3-19
Single Fixed Fee Amount: Sixty Thousand Dollars ($60,000), payable as follows:
Date or Deliverable Amount or Percent of Fixed Fee
February 1, 2000 $10,000
March 1, 2000 $10,000
April 1,2000 $10,000
Draft Recruitment Strategy $15,000
Final Recruitment Strategy $10,000
Marketing Package $ 5,000
Consultant shall not be entitled to any brokers fee or commission for the
performance of any of the Defined Services hereunder.
12. Materials Reimbursement
Not Applicable
13. Contract Administrators:
Agency: Byron Estes, Redevelopment Manager
Consultant: William Anderson, Vice President, Economics Research Associates
William Tuchscher, President, Tuchscher Development Enterprises
14. Liquidated Damages Rate:
Not Applicable
15. Statement of Economic Interests, Consultant Reporting Categories, per Conflict of
Interest Code:
( X ) Not Applicable. Not an FPPC Filer?
( X ) List "Consultant Associates" interests in real property within two radial miles
of Project Property, if any:
2 5 If Consultant, in the performance of its services under this agreement: 1) conducts research and arrives at
conclusions with respect to its rendition of information, advise, recommendations or counsel independent of the
control and direction of the Agency or of any Agency official, other than normal contract monitoring; and 2)
possesses no authority with respect to any Agency decision beyond the rendition of information, advice,
recommendations or counsel, Consultant should not be designated as an FPPC Filer.
Page 16
3 - 20
Crystal Bay Mixed Use Proiect (William Tuchscher)
16. (X) Prime Contractor is Real Estate Broker and/or Salesman
17. Permitted Subconsultants:
Not Applicable
18. Bill Processing:
A. Consultant's Billing to be submitted for the following period of time:
( ) Monthly
( ) Quarterly
(X) Other: Per the Schedule of Payment Indicated Above.
19. Security for Performance
Not applicable.
H:\HOME\COMMDEWEstes~2ptyagrdowntown.doc
Page 17
3 -21
JOINT CITY COUNCIL ! HOUSING AUTHORITY
AGENDA STATEMENT
ITEM NO. ~
MEETING DATE 12/1 4/gg
ITEM TITLE: PUBLIC HEARING: CITY COUNCIL CONSIDERATION OF THE ISSUANCE OF
TAX EXEMPT OBLIGATIONS BY THE HOUSING AUTHORITY WITH RESPECT
TO SALT CREEK VILLAS AFFORDABLE HOUSING PROJECT
HOUSING AUTHORITY RESOLUTION REGARDING ITS INTENTION TO ISSUE
TAX EXEMPT OBLIGATIONS FOR SALT CREEK VILLAS
COUNCIL RESOLUTION APPROVING THE ISSUANCE, SALE AND DELIVERY
OF MULTI-FAMILY HOUSING REVENUE BONDS BY THE HOUSING
AUTHORITY OF THE CITY OF CHULA VISTA FOR SALT CREEK VILLAS
SUBMII'II'ED BY: COMMUNITY DEVELOPMENT DIRECTOR L~
REVIEWED BY: EXECUTIVE DIRECTOR ~ l~'''' (4/5
BACK~IROUND
·
The City has received a request from Chelsea Investment Corporation to issue an $8,000,000 Tax Exempt Multi-
Family Revenue Bond to finance a proposed 150 unit rental housing project· The project is to be known as "Salt
Creek Villas" located west of the Olympic Training Center on Olympic Parkway within the Eastlake II and JII
subdivision of eastern Chula Vista (see attached Exhibit 1), The project is to be owned and operated by a limited
partnership consisting of two general partners, Chelsea Investment Corporation as the Administrative General
Partner and Pacific Southwest Community Development Corporation as the Managing General Partner.
At this time, the City Council is being asked to hold a public headng on the question of whether the Housing Authority
should issue tax-exempt bonds for the financing of the project. Additionally, it is requested that the Housing Authority
adopt a resolution expressing its preliminary intention to issue bonds and the Council to adopt a resolution
authorizing the issuance, sale, and delivery of the bonds by the Authodty. The requested actions are preliminary and
do not commit the Authority to issue the bonds. Such preliminary actions are necessary in order to allow the project
developer to submit an application to the State bonding authority, and to allow the developer to receive
reimbursement out of bond proceeds for actual costs it incurs leading up to the actual sale of bonds.
The developer is in the process of preparing an application for an allocation of the 2000 state ceiling on private
activity bonds for multi-family rental housing projects from the California Debt Limit Allocation Committee (CDLAC).
The application process is a very competitive one and would require the developer to demonstrate readiness to
complete the project and strong support from the community for the project. If successful in obtaining a bond
commitment from CDLAC, the developer plans to come back to the Authority to request final approval for the
issuance of the bonds.
The issuance of the bonds is in the public interest due to the reservation all of the units within the project as
affordable housing for very Iow and Iow-income households. The public headng is required by federal tax law
governing the issuance of tax exempt bonds. This activity would provide funding for a project that has already been
subject to review under CEQA, and therefore does not require any additional environmental analysis.
4-1
PAGE 2~ ITEM ~
MEETING DATE I P../14/99
That the City Council conduct the required public hearing regarding the Authority's intent to issue tax-exempt
obligations for Salt Creek Villas.
That the Housing Authority adopt a resolution regarding its intention to issue tax-exempt obligations for Salt Creek
Villas.
That the City Council adopt a resolution approving the issuance, sale and delivery of multi-family revenue bonds of
the Housing Authority of the City of Chula Vista for Salt Creek Villas.
On December 15, 1999, the Housing Advisory Commission will consider the proposed affordable housing project and
the use of tax exempt bonds and Low and Moderate Income Housing Set-aside funds to finance the project.
The City's State-mandated Housing Element requires the provision of housing for all economic groups and to
distribute affordable housing developments throughout the City's jurisdiction. The City's strategy to implement this
mandate, the "Affordable Housing Program", is to require 10 percent (10%) of any new subdivision in excess of fifty
(50) units to be made affordable for Iow and moderate income families (5% Iow and 5% moderate) and to balance
affordable housing development throughout the City.
Under the City's Affordable Housing Program, the master developer of Eastlake has an obligation to provide a total of
one hundred thirty eight (138) Iow-income units. Chelsea Investment Corporation, the for-profit affordable housing
developer of the pending 440-unit Teresina at Lomas Verdes affordable housing project in McMillin's Otay Ranch
SPA One community and the 132 unit Villa Serena senior housing development in the Sunbow II community, has
proposed the Salt Creek Villas development to satisfy Eastlake's Iow-income housing requirement. The Affordable
Housing Agreement with Eastlake will need to be amended to declare Eastlake's Iow-income housing obligation
satisfied upon completion of construction of Salt Creek Villas and occupancy of all units by Iow-income tenants. This
amendment to the Agreement will be presented to City Council for consideration at such time final approval of the
issuance of the bonds is requested.
The use of the Authority's tax-exempt status to issue bonds for rental housing represents an attempt to improve the
affordability of rental housing in Chula Vista. Such bonds are a form of public-private partnership which gains
importance as federal housing programs diminish and development costs make Iow-income housing development
problematic. In the City's Housing Element of the General Plan, the Affordable Housing Program declares that,
"Where practical, the City shall consider the use of tax exempt revenue bonds for the purpose of underwriting a
portion of the cost of Iow and moderate income housing." Used appropriately in pursuit of public good, tax exempt
multi-family bonds represent a tool to achieve such underwriting; made necessary by the gap between market rental
rates and development costs.
In order for a multi-family housing bond to attain and sustain federal tax exempt status, the projects in the issue must
meet certain federal requirements pertaining to the inclusion of Iow-income tenancy and the preservation of the
project units as rentals. This tax-exempt instrument represents a subsidy to the development community from the
federal treasury as a result of reduced tax revenues. Because that subsidy is a giving of public funds, the federal
regulations address the provision of public good.
4-2
PAGE 3, ITEM
MEETING DATE 12/14/99
The Proposed Project
The Salt Creek Villas development is proposed to be built west of the Olympic Training Center on Olympic Parkway
in the Eastlake subdivision east of Interstate 805 in the City of Chula Vista. The development envisions 150
apartment units in a two story fiat configuration. In accordance with Federal law for multifamily revenue bond
financing, at least 40 percent of the rental units (60 units) are required to be available for occupancy by persons or
families whose income does not exceed 60 percent of the median income for San Diego County. The Iow-income
units will satisfy the requirements of the City's Program for the Provision of Affordable Housing within the Eastlake
community.
The residential units will be two story fiats of Type V construction. The proposed unit mix and sizes are as follows:
24 1BR/1BA units approximately 660 SF
76 2BR/1BA units approximately 825 SF
50 3 BR/2 BA units approximately 1,000 SF
This project will provide a balance of housing opportunities to help fulfill a long overdue need in Chula Vista for
affordable rental housing in the neighborhoods east of Interstate 805.
Each unit will include full sized energy-efficient appliances, air conditioning, dual paned windows, and balconies or
pdvate patios. Project amenities include pool, tot lot, exercise facility, business center, and laundry facilities.
Income and Rent Restrictions
Of the 150 units, 40 pement of the units (60 units) will be restricted to households at 60% of the median income,
which is currently $31,500 for a family of four. It is proposed that the rents on the 1BR units will range from
approximately $466 to $564/month. Rents on the 2 BR units will range from approximately $557 to $676/month and
$641 to $777/month for the 3 BR units. The restricted rents are determined by HUD for the current fiscal year.
Income and rent restrictions for Salt Creek Villas will be maintained for a period of no less than 52 years, exceeding
the 33-year term of the bond. The Iow-income housing commitment will bind all subsequent owners of Salt Creek
Villas, so that the commitment remains in force regardless of ownership.
The income and rent restrictions outlined above are to be incorporated into the Regulatory Agreement, which will be
recorded against the Property. Compliance with these restrictions will be subject annually to regulatory audit and
annual tax credit certification. The developer has successfully managed Iow-income housing units for 12 years.
Compliance with strict property management policies and procedures will ensure that income and rent restrictions will
be maintained for the full 52-year compliance pedod.
Proposed Financin,q of Proiect
It is currently estimated that the proposed total project cost will be $15.7 million. Sources of funding for the project
will include approximately $8 million in bond proceeds, $5.2 million in Iow-income housing tax credits, and $2.5
million from other sources which could include deferred developer fee and a City/Agency contribution.
It is anticipated that the developer will request financial assistance of approximately $1.5 million from the
Redevelopment Agency of the City to meet the expected $2.5 million financing gap, with the developer providing
approximately $1 million in their deferred Developer fee to assist with this gap. A recommendation for financial
assistance will be presented to the Agency for consideration before or at such time final approval of the issuance of
the bonds is requested. Any financial assistance provided will be based upon a full financial analysis of the project
4-3
PAGE 4, ITEM
MEETING DATE 1 ~'/14/99
costs, demonstration of the financial assistance, and subject to the negotiation and approval by the Authority and the
Agency of satisfactory terms of the Regulatory Agreement and Loan Agreement,
Assuming all financial commitments are secured, construction is expected to begin late Summer 2000 with
completion of the project estimated by Summer 2001.
Bond Structure
The developer is proposing that the Authority issue tax exempt bonds to finance the construction. The bonds would
total approximately $8 million. Final approval for the issuance of the bonds and all related bond documents will be
presented to the Housing Authority for approval at a later date.
Summary
It is staff's recommendation that: 1) The City Council conduct the required public headng regarding the intent of the
Authority to issue tax exempt bonds; 2) The Housing Authority adopt a resolution regarding its intention to issue tax
exempt bonds; and 3) The City Council approve the issuance, sale, and delivery of multi-family housing revenue
bonds of the Housing Authority to finance the proposed project for the following reasons:
· The proposal's effectiveness in serving the City's needs and priorities as expressed in the Housing Element of
the General Plan and the HUD Consolidated Plan.
· The proposal's consistency with the City's affordable housing policies as expressed in the Housing Element, and
the HUD Consolidated Plan.
· The proposal's development and operating feasibility, financing soumes and the role of the City and the Agency
in providing financial assistance or incentives.
Salt Creek Villas is proposed by a development team made up of Chelsea investment Corp. and Pacific Southwest
Community Development Corporation, and is committed to affordable housing. The project quality includes good
design and location. The Agency housing goals are supported by the project's unit mix and affordability.
The City's highest pdority for the development of affordable housing remains family units whenever feasible.
Additionally, the site offem an opportunity to provide a mix of housing types and population groups within a master
planned community prodominately comprised of single family homes.
:FISCAL
Conducting the public hearing and approving this resolution only indicates an intention by the Authohty to issue tax
exempt obligations and does not commit the City to issue bonds at this time. All costs related to the issuance of the
bond will be paid for from bond proceeds or profits. The bonds will be secured by the project and will not constitute a
liability or obligation to the Authority. Some staff time costs will be associated with monitoring compliance with the
Regulatory Agreement. Those costs will be reimbursed from an annual administrative and origination fee to be paid
by the Developer to the Authority, which will be negotiated before the Authority approves the actual issuance of the
bond. It is anticipated that the developer will request financial assistance of approximately $1.5 million from the
Redevelopment Agency of the City to meet an expected financing gap. A recommendation for financial assistance
will be presented to the Agency for consideration before or at such time final approval of the issuance of the bonds is
requested.
1. Location Map
H:\HOME\COMMDEV~STAFF REP\I 2-14-99\Salt Creek.doc
4-4
RESOLUTION NO.
RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF
CHULA VISTA REGARDING ITS INTENTION TO ISSUE TAX-
EXEMPT OBLIGATIONS FOR SALT CREEK VILLAS
WHEREAS, the Housing Authority of the City of Chula Vista (the "Issuer") desires to assist
Chelsea Investment Corporation (the "Applicant") in financing the costs of constructing and acquiring
certain facilities and improvements, as provided in Exhibit A attached hereto and incorporated herein (the
"Project");
WHEREAS, the Issuer intends to assist in the financing of the acquisition and construction of the
Project or portions of the Project with the proceeds of the sale of obligations the interest upon which is
excluded from gross income for federal income tax purposes (the "Obligations"), which Obligations are
expected to be issued pursuant to Chapter 1 of Part 2 of Division 24 of the Health and Safety Code of the
State of California; provided, however, that this Resolution shall not authorize the issuance of the
Obligations and provided further that neither the faith and credit nor the taxing power of the Issuer shall
be pledged to repay such Obligations if, and when, authorized; and
WHEREAS, prior to the issuance of the Obligations the Applicant desires to incur certain
expenditures with respect to the Project from its own available monies which expenditures are desired to
be reimbursed from a portion of the proceeds of the sale of the Obligations if, and when, issued;
NOW, THEREFORE, THE BOARD OF COMMISSIONERS OF THE HOUSING
AUTHORITY OF THE CITY OF CHULA VISTA DOES HEREBY RESOLVE, ORDER AND
DETERMINE AS FOLLOWS:
SECTION 1. This Board of Commissioners of the Issuer has received an application for the
financing of the Project on behalf of the Applicant (the "Application"). q~e Applicant will incur costs
with respect to the Project prior to the issuance of the Obligations. The Issuer hereby states its intention
and reasonably expects to reimburse the Applicant for such costs with proceeds of the Obligations;
provided, however, that nothing herein obligates the Issuer to issue the Obligations or provides the
Applicant with any legal right to compel the issuance of the Obligations, which decision remains in the
final discretion of the Issuer. Exhibit A describes the general character, type, purpose, and function of the
Project.
SECTION 2. The reasonably expected maximum principal amount of the Obligations is
$8,000,000.
SECTION 3. his resolution is consistent with the budgetary and financial circumstances of
the Issuer, as of the date hereof. No monies from sources other than the Obligation issue are, or are
reasonably expected to be reserved, allocated on a long-term basis, or otherwise set aside by the Issuer (or
any related party) pursuant to their budget or financial policies with respect to the Project costs. This
Board is not aware of any previous adoption of official intents by the Issuer that have been made as a
matter of course for the purpose of reimbursing expenditures relating to THE Project and for which tax-
exempt obligations have not been issued.
SECTION 4. This resolution is adopted as official action of the Issuer in order to comply with
Treasury Regulation § 1.103-8(a)(5) and Treasury Regulation § 1.150-2 and any other regulations of the
Internal Revenue Service relating to the qualification for reimbursement of Issuer expenditures incurred
prior to the date of issue of the Obligations, is part of the Issuer's official proceedings, and will be
4-$
available for inspection by the general public at the main administrative office of the Issuer.
SECTION 5. All the recitals in this Resolution are true and correct.
Presented by Approved as to form by
Chris Salomone John~l. Kaheny c~] '~
Community Development Director Cf6) Attorney
4-15
EXHIBIT A
DESCRIPTION OF PROJECT
A proposed multifamily rental housing project of approximately 150 units to be known as "Salt
Creek Villas" and to be located on a six acre site immediately west of the Olympic training Center
adjacent to Olympic Parkway in the City of Chula Vista, California.
1
DOCSOC\698545vI\29999,0000 4 - 7
RESOLUTION NO.
RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA
APPROVING THE ISSUANCE, SALE AND DELIVERY OF MULTIFAMILY
HOUSING REVENUE BONDS OF THE HOUSING AUTHORITY OF THE CITY OF
CHULA VISTA FOR SALT CREEK VILLAS
WHEREAS, the Housing Authority of the City of Chula Vista (the "Authority") has previously
expressed its intent to issue multifamily housing revenue bonds (the "Bonds") to finance the construction
of a 150-unit multifamily rental housing project (the "Project") to be located in the City of Riverside to be
owned by Chelsea Investment Corporation, a California corporation or one of its affiliates; and
WHEREAS, pursuant to Section 147(f) of the Internal Revenue Code of 1986, as amended (the
"Code"), the Bonds are required to be approved, following a public hearing, by an elected representative
of the governmental unit having jurisdiction over the area in which the Project is located; and
WHEREAS, the Board of Commissioners of the Authority is made up of members which have
been appointed but not elected to their positions, and the City is the next higher governmental unit with an
applicable elected representative from which the Authority derives its authority; and
WHEREAS, the Project is located wholly within the geographic jurisdiction of the City; and
WHEREAS, the City Council is the elected legislative body of the City; and
WHEREAS, the City has caused a notice, attached hereto as Exhibit A, to appear in the Star
News, which is a newspaper of general circulation in the City, on November 27, 1999 to the effect that a
public hearing would be held by the City Council on December 14, 1999, regarding the issuance of the
Bonds by the Authority; and
WHEREAS, on December 14, 1999, the City Council held said public hearing, at which time an
opportunity was provided to present arguments both for and against the issuance of the Bonds;
NOW, THEREFORE, BE IT RESOLVED, by the City Council of the City of Chula Vista, as
follows:
Section 1. The City Council does hereby find and declare that the above recitals are true and
COITect.
Section 2. Pursuant to Section 147(0 of the Code, the City Council hereby approves the
issuance of the Bonds by the Authority in one or more series, in an aggregate principal amount not to
exceed $8,000,000 and with a final maturity not later than 33 years from the date of issuance to finance
the construction of the Project. It is the purpose and intent of the City Council that this Resolution
constitute approval of the issuance of the Bonds by the applicable elected representative of the
governmental unit having jurisdiction over the area in which the Project is located, in accordance with
said Section 147(0.
4-1t
Section 3. This Resolution shall take effect from and after its adoption.
Presented by Approved as to form by
Chris Salomone t~hn M"~aheny//
Community Development Director ~ey
4-9
EXHIBIT A
PROOF OF PUBLICATION PRINCIPLE CLERK
(20 1 5.5 C.C. P) This space is for the County Clerk's filing stamp
STATE OF CALIFORNIA,
County of San Diego:
I am a citizen of the United States and Proof of Publication of:
a resident of the county aforesaid; I am
PUBLIC NOTICE
over the age of eighteen years, and cv13270 CITYOECHULAVISTA
NOTICE OF PUBLIC
not a party to or interested in the HEARINGREGAUDING ----
above-entitled matter. I am the ISSUANC£0F
MULTIFAMILY ROUSING
Public Headng
principal clerk of the printer of THE
REVENUE BONDS'
NOTJCE IS HEREBY GIVEN --
STAR NEWS, a newspaper of that, atitsmgularmeetin~i
to be held at 6:08 p.m. on
gerneral circulation, published ONCE Tuesday. December 14.
1999. at the City Council
WEEKLY in the city of Chula Vista Chambers of the City of
and the South Bay Judicial District, chula Vista tacated at 176
Fourth avenue, Chula Vista,
county of San Diego, which California 91910, the City
Council of the C~y of Chula
newspaper has been adjudged a Vistawillcoqductsapu~lic
hearing as required by
newspaper of general circulation by Section 147(f) of the Inter-
the Superior Court of the County of hal Revenue Code of 1986.
as amended, at which it will
San Diego, State of California, under hear and consider intorma-
tion conceming the
the date of April 23, 1951, Case suance by edber the City of
Chula Vista (the "City") or
Number 182529; that the notice, of the Housing Authority of
the City of Chute Vista (the
which the annexed is a printed copy "Authority") of bonds (the
(set in type not smaller than 'Bonds") to finance a pro-
posed mugitamily rental
nonpareil), has been published in houslngprojectofapproxi-
mutely 150 units to be
each regular and entire issue of said k,ow, as "Suit Creek Vil-
las'' located on a size acre
newspaper and not in any supplement site immediately west of
the Olympic Training Can-
thereof on the following dates, to-wit: ter adiacent to Olympic
Parkway in the Cdy of
Chuia Vista. California (the
11/27 "Project") The Project is th
be owned and/or operated
by Chelsea Investment Co¢-
poralion, a California cor-
all in the year 1999 potation, Or one of its affili-
ates. The City or the Auth-
ority proposes to issue the
I certify (or declare) under penalty of Bonds in an aggregate
pdnci I amount not to ex-
perjury that the foregoing is true and
At least 2p percent of the
correct, rental units inthe Project
are required to be available
for occubency by persons
or families wflose income
Dated at Chula Vista, California 91910 doesnotexceed 50percent
of the median income for
the San Diego, California,
/ - Primary Metropolitan Sta-
N{~ tistical Area, or, aBernative-
this ?th d'~y~of vember 1999. ly. atleast40percentofthe
~iur~ ~l~{~~ ~ ~"""~!~u ~ ~- i ~ rental units are required to
' be available for occupancy
by persons or families
coed 60 percent of the me-
,~.~n , dian income thr tbe Area, in
~ %'-~.)] each case at affordabte
rents established by applic-
abre State law
ALL PERSONS HAVING
iANY INFORMATION RELE-
VANT TOT HE PROPOSED
ISSUANCE OF THE BONDS
DESCRIBED ABOVE ARE
HEREBY INVITED TO AP-'
PEAR AT THE TIME AND
PLACE MENTIONED
ABOVE TO PRESENT SUCH
INFORMATION TO ~'HE
CITY COUNCIL
For fudber information,
contact Juan Arroyo, Hous-
4- 10 lng Coordinator of the City,
at (619) 585-5722.
SALT CREEK VILLAS
1',I
4-11
JOINT REDEVELOPMENT AGENOY/(~ITY (~OUNCIL
AGENDA STATEMENT
ITEM NO.-- ~'
MEETING DATE 12/14/99
ITEM TITLE: RESOLUTION APPROVING A CONCEPTUAL FINANCIAL PLAN FOR THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AND
AUTHORIZING STAFF TO ASSEMBLE A FINANCIAL TEAM AND RELATED
CONTRACTS AND DOCUMENTS TO PROCEED
SUa~MIT'FEO BY: COMMUNITY DEVELOPMENT DIRECTOR £G'~'~ ~
FINANCE DIRECTOR
REVIBWED BY: EXECUTIVE DIRECTOR/,~ 9 ~ (4/5TM VOTE: YES__ NO X )
In September 1998, the City Council and Redevelopment Agency Board approved a professional services contract
with Katz Hollis to prepare an Agency Financial Plan. Katz Hollis was unable to complete the scope of work required
under the contract. Therefore, in May 1999 staff secured the services of Rod Gunn Associates (RGA) [the financial
consulting firm that finished second in the competitive Request for Proposals (RFP) process] to complete the contract
under the original terms and conditions as approved by the City Council and Redevelopment Agency.
RGA analyzed the Agency's fiscal condition and is recommending a two phased financial plan (attached as Exhibit A)
to meet specific Agency financial objectives. Phase I proposes the issuance of approximately $15,990,000 in tax-
exempt bonds to be secured by property tax increment from the Otay Valley Road, Town Centre II and Southwest
Project Areas to be used to: 1) repay some inter-fund loans, 2) eliminate existing fund balance deficits in the
Bayfront/Town Centre I and Southwest project areas, and 3) provide funding for future Agency projects to take
advantage of the development opportunities in the current growth economy. Phase II contemplates a financial
merger of all of the project areas and subsequent issuance of more bonds sometime before 2004, which is the last
year to incur debt in the original areas of Bayfront/Town Centre I, Town Centre II, and Otay Valley Road. The
financial merger is not recommended at this time since the tax increment revenue picture in the Bayfront project area
is somewhat unclear due to the status of the power plant.
This report provides a summary of the proposed plan (with expected fiscal results) and requests Council approval of
the financial plan in concept as well as authorization to assemble the financial team and related contracts and
documents to proceed. Staff will then return to the Council/Agency with the proposed financial team, related
professional services contracts, and updated bond issuance financial information. If the financial market conditions
are still favorable, staff will also request authorization to proceed with the issuance.
It is recommended that the City Council and the Redevelopment Agency adopt the resolution which approves the
conceptual Agency Financial Plan as prepared by Rod Gunn Associates and authorize staff to assemble a financial
team and related contracts and documents to proceed.
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PAGE 2j ITEM
MEETING DATE 1~'/14/99
Not applicable.
Prior to discussing the specifics of the proposed financial plan, it is important to briefly discuss recent Agency
financial and performance history in order to place the proposed plan in proper context and fully understand the basis
for the objectives.
Back,qround
The statewide recession of the late 1980's and early to mid 1990's resulted in several concurrent ne§ative fiscal
impacts to the City and Agency which have had lin§ering Iong-te~ effects. Major property tax reassessments and
stagnant growth in property tax revenues in general, as well as State "takeaways' through the State Education
Revenue Augmentation Fund (ERAF) negatively influenced overall revenues and fiscal health. While growth in the
City in general was slow, the Redevelopment Agency was very active completing and incentivizing the Palomar
Trolley Center, Wal'Mart, Auto Park, and Chula Vista Center Renovation projects. The Agency also laid the
groundwork for the Scripps Hospital Expansion project (negotiations and relocations) and actively pursued the
Barkett "Mid-Bayfront" project. The sales tax producing projects helped the General Fund maintain a steady sales
tax base while other communities in the region and throughout the State were experiencing significant declines.
The land acquisition for the Auto Park project was incentivized through major loans from the Bayfront project area to
the Otay Valley Road project area. The Bayfront loans were made largely from the previous Bayfront Tax Allocation
Bond (TABs) proceeds. The Chula Vista Center was incentivized through the issuance of General Fund Certificates
of Participation (COPs) for the parking structure. This General Fund obligation was arranged so that the General
Fund could potentially be repayed in the future if the project area had surplus revenues. However, Town Centre II
funded the debt service for the COPs in the early years from fund reserves until those reserves were depleted
several years ago. Those COP payments, along with the other factors identified above (property tax reassessments,
stagnant Agency revenues, ERAF, and major project expenditures and loans) led to depleted Agency reserves,
which then resulted in the current outstanding loan advances from the General Fund and Sewer Fund. Additionally, it
should be noted that throughout this period, the Bayfront project area was also advancing annual loans of
approximately $200,000 or more to the Nature Interpretive Center (NIC) for its operating budget. The RDA continues
to make these loans and the proposed plan does not provide relief from that obligation.
In an effort to get through the recession as easily as possible, the Agency then began selling non-essential assets,
canceling Capital Improvement Projects, reducing operating budgets and refinanced (for the third and final time), the
Bayfront TABs to achieve some annual debt service savings. Those short term efforts were generally effective under
the economic and financial circumstances at that time. However, the proposed conceptual plan presented for
consideration reflects a much brighter set of circumstances and is geared towa~ addressing some of the lingering
negative results of the recession.
Financial Plan Obiectives
After a thorough review of the current Agency fiscal condition, Finance and Community Development staff outlined
basic Agency financial objectives for RGA to address in the proposed plan. Staff recommended that the plan
address the following objectives in order of pdodty: 1) Repay the Sewer and RDA inter-fund loans, 2) Eliminate
existing fund balance deficits in the Bayfront/Town Centre I project areas, 3) Fund staff and operations costs on an
on-going basis, 4) Raise capital for projects, and then, 5) Repay the General Fund and/or fund the Certificates of
Participation (COP) payments. Phase I substantially addresses the first four objectives and Phase II is expected to
address the fifth objective.
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PAGE 3, ITEM ~
MEETING DATE 12/14/99
Proposed Financial Plan - Phase I
Given the above stated objectives, the plan proposes to issue approximately $15,990,000 (net proceeds of
$13,292,000) in tax-exempt bonds from the Town Centre II, Southwest, and Otay Valley Road project areas in order
to repay certain obligations of various redevelopment areas, raise funds for projects and provide resoumes to fund
annual staff and operations costs, The tables below delineates the proposed soumes and uses of the bond
proceeds:
SOURCES USES
Town Centre II $4,112,519 Repay Bayfront Loans $10,755,995
Southwest 2,601,285 Repay Sewer Fund 996,721
Otay Valley 6,578,931 Repay General Fund 583,056
Project Funds 956,963
TOTAL $13,292,735 TOTAL $13,292,735
It is important to note that of the $10,755,995 loan repayment going back to Bayfront, $9,908,760 would be available
for projects with the remaining $847,235 used to fully repay the loan from the Sewer Fund. The net effect is that the
entire Sewer Fund loan ($1,843,956) is repaid, a small General Fund loan is repaid ($583,056) and the Agency
receives $10,865,723 for projects.
Two important elements that will be addressed in Phase I, are the elimination of negative fund balances (deficits) and
substantial reduction of the RDA inter-fund advances described previously. The following table delineates the
"before" and "after" picture for the Agency's fund balances:
TABLE 1
REDEVELOPMENT AGENCY
FINANCIAL PLAN FUND BALANCE ANALYSIS
Available Fund Balance (Deficit) at 6130199 ($1,717,772) $1,021,783 $980,736 ($1,343,196) ($1,058,449)
Tax Allocation Bond Proceeds 4,112,519 6,578,931 2,601,285 13,292,735
Repayment of Inter-Project Area Advances 10,755,995 (3,497,519) (6,578,931) (679,545)
Repayment of General Fund Advances (583,056) (583,056)
Post Financial Plan Available Fund Balance$9,038,223 $1~053,727 $980~736 $578t544 $11,651,230
As the above table reflects, the negative fund balances in Bayfront/TC I and Southwest will be eliminated and as a
whole, the Redevelopment Project Funds will have substantial fund reserves ($11.65 million) to proactively pursue
and incentivize future development projects. It should be noted that the amount of funds available for "projects" is
after allocating approximately $1,665 million in annual administrative costs which includes an allocation of
approximately $293,000 for the annual RDA loan to the Nature Interpretive Center (NIC). As this plan proceeds and
staff get closer to sizing the bonds, staff may recommend increasing this amount based on more currant costs, which
would then reduce the amount available for projects,
5-3
PAGE 4, ITEM ~
M EETI NG DATE 12/14/99
Table 2 below provides a "before" and "after" picture of the inter-fund advances. As indicated, overall the RDA
advances will be reduced from $30.52 million to $17.33 million. The Bayfront is currently owed $15.046 million and
will be repaid all but $4,29 million. There will still be substantial outstanding loans owed to the General Fund with
repayment terms primarily based on the Agency's ability to pay from surplus revenues.
TABLE 2
INTERFUND ADVANCES
Existing $13,342,468 $1,843,956 $15,045,911 $285,535 $30,517,870
Repayment (583,056) (1,843,956) (10,755,955} (13,183,007)
REMAINING $12,759,412 $ 0 $4,289,916 $285,535 $17,334,863
As outlined in Table 3, of the $17.33 million of remaining loans, $12.76 million will still be owed to the General Fund
which is primarily from the Town Centre II Certificates of Participation for the Chula Vista Center ($10.64 million).
This amount will increase as the General Fund continues to make the COP payments as was originally contemplated
when the bonds were issued.
TABLE 3
POST PLAN ADVANCES
Southwest $639,484 $285,535 $925,019
Town Centre ii 10,639,548 10,639,548
Otay Valley Road 4,289,916 4,289,916
Bayfront 1,480,380 1,480,380
TOTAL $12~759~412 $ 0 $4~289,916 $285,535 $17~334~863
It is hoped that Phase II of the plan (financial merger) will allow for a substantial amount of the remaining advances
from the General Fund to be repaid. The development of the Bayfront will be the key to providing the Agency with
the ability to repay those advances.
Proposed Financial Plan - Phase II
As previously discussed, Phase II of the plan calls for the Agency to consider the benefits of a financial merger of all
of the project areas and then the subsequent issuance of additional bonds sometime prior to 2004. The idea is to
"pool" the collective resoumes of all of the project areas to achieve some bonding efficiencies, eliminate inter-RDA
project area loans, and increase overall flexibility. Current time limitations to incur debt (2004) in the Bayfront/Town
Centre I (original area), Town Centre II (original area), and Otay Valley Road project areas bdng a sense of urgency
to this matter.
The financial merger is not recommended at this time since the Bayfront project revenue picture is so unclear.
Future tax increment revenue questions on the Midbayfront, BFG South Campus and power plant sites need to be
answered positively over the next couple of years in order for the merger to be effective. With some significant
development in the Bayfront over the next few years, it is hoped that the revenue picture will be solid enough to
merge the project areas and issue bonds. It is expected that a significant pottion of the bond proceeds would go
toward repaying the General Fund for the COPs at that time. The need for Bayfront development is a major reason
for staff recommending that Bayfront be repaid from the loans advanced. The project area needs to have monies
available to proactively bring in development.
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PAGE 5, ITEM .~
MEETING DATE 1-3/14/99
Summary
The proposed financial plan represents a proactive effort by staff to take advantage of current market and financial
conditions to help correct some of the negative fiscal impacts of the recession, Staff is confident that the proposed
plan will render positive financial benefits to both the Agency and the City and provide much needed capital to pursue
the proiects necessary to ensure a successful redevelopment program.
Adoption of the resolution will not result in a direct fiscal impact. Staff will return to the Council/Agency with the
proposed financial team and related professional service contracts for Bond Counsel and a Financial Advisor and all
related documents. It is anticipated that most of the costs for the necessary professional services will be funded by
proceeds from the proposed bond issue.
H:\HOME\COMMDEV~STAFF.REP\I 2-14-99\RDA Financial Plan.doc
5-5
AGENCY RESOLUTION NO.
AND
COUNCIL RESOLUTION NO.
JOINT RESOLUTION OF THE CITY COUNCIL AND THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA
APPROVING A CONCEPTUAL FINANCIAL PLAN FOR THE
REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA AND
AUTHORIZING STAFF TO ASSEMBLE A FINANCIAL TEAM AND
RELATED CONTRACTS AND DOCUMENTS TO PROCEED
WHEREAS, in September 1998, the City Council and Redevelopment Agency approved a
professional services contract with Katz Hollis to prepare an Agency Financial Plan after a
competitive Request for Proposals (RFP) process; and
WHEREAS, Katz Hollis was unable to complete the scope of work for the project and Rod
Gunn Associates (RGA), the firm finishing second in the RFP process, then agreed to complete the
scope of work under the original terms and conditions as approved by the City Council and
Redevelopment Agency; and
WHEREAS, RGA completed the scope of work and recommends the issuance of
approximately $15,990,000 in tax-exempt bonds from the Otay Valley Road, Town Centre II and
Southwest project areas for the purposes of repaying inter-fund loans, eliminating negative fund
balances, funding on-going administrative costs and funding discretionary projects; and
WHEREAS, on December 14, 1999 the City Council and Redevelopment Agency reviewed
and approved the conceptual financial plan and authorized staff to assemble the appropriate
financial team and related contracts and documents necessary to proceed.
NOW, THEREFORE, BE IT RESOLVED the City Council of the City of Chula Vista and the
Redevelopment Agency of the City of Chula Vista does hereby approve the conceptual
Redevelopment Agency Financial Plan as prepared by RGA and authorizes staff to assemble the
appropriate financial team and related contracts and documents necessary to proceed.
Presented by Approved as to form by
CD.hr r2cStoSralo~mcOon~ern unity Deve,o pme nt Jc?fn~aheny ~ v-~''-~-'
~ and Ag~,~
,5-6
· .~ FINANCIAL PLAN
PREPARED FOR
CHULA VISTA
REDEVELOPMENT AGENCY
October 5, 1999
Rod Gunn Associates, Inc.
FINANCIAL CONSULTANTS
3010 Old Ranch Pkwy, Suite 330 · Seal Beach, CA 90740-2750
562-598-7677 · F?~X 562-431-5446
5-7
Chula Vista Redevelopment Agency
276 Fourth Avenue
Chula Vista, CA 91910
Executive Summary
The purpose of this Financial Plan is to demonstrate the Agency's ability to repay its obligations during
the life of each of the Redevelopment Projects in conjunction with raising funds for economic
development. The Agency prioritized its objectives for the Financial Plan in the following order:
To repay the Sewer Trunk Fund
To repay the inter-project loans
To raise funds for economic development
To eliminate existing fund balance deficits in Bayfront/Town Center and Southwest Projects
To fund staff costs
To repay the General Fund and/or fund the COP payments
The Financial Plan presented here achieves these objectives. The Financial Plan incorporates the
issuance of approximately $16,000,000 in tax-exempt tax allocation bonds. Proceeds of the bonds will
be utilized pursuant to the Financial Plan to repay obligations of the various redevelopment projects,
raise funds for economic development and provide resources to fund annual staff costs in the following
manner:
The outstanding balance of $1,843,956 due to the Sewer Trunk Fund is repaid in full in
1999/00.
Inter-project loans are reduced from $15.3 million to $3.8 million in 1999/00. The balance is
repaid over time.
$9.9 million is raised in the Bayfront Project Area and $925,000 in the Southwest Project Area.
The General Fund is repaid $583,000 in 1999/00. All other General Fund loans are repaid
over time on a priority subject to Agency discretion (i.e. the Agency could choose to fund
economic development first).
> $1,372,000 in annual administrative costs are funded.
A further objective of the Financial Plan not stated by the Agency is to position the Agency financially
to maximize its ability to raise funds shortly before the AB 1290 time limit to incur debt is reached.
5-8
Phase I of the Financial Plan was developed by treating each Project Area on a stand-alone basis, so
that the objectives outlined above could be achieved without a merger of the Project Areas. Phase II of
the Financial Plan assesses the positive impacts that could be obtained by merging the Project Areas.
The primary benefit to the project merger is the ability to cross-collateralize the obligations of each of
the Project Areas and to use the combined surplus tax increment to fund projects or repay debts of any
underlying project area. This will be discussed further in conjunction with our recommendations.
Redevelopment Plan Constraints
The Financial Plan was developed in accordance with the limitations contained in the Redevelopment
Plans. The Plan adoption dates, amendments and financial limitations are described in the charts
below.
CHULA VISTA REDEVELOPMENT PROJECTS
ADOPTION AND AMENDMENT DATES
Project Area Date Purpose
Bayfront 7/16/74 Plan Adoption
7/5/79 Merge with Town Centre I
4/22/86 Financial Limits
11/8/94 AB 1290 Limits
6/23/98 Add Territory/Amend Limits
Town Centre I 7/6/76 Plan Adoption
7/5/79 Merge with Bayfront
4/22/86 Financial Limits
11/8/94 AB 1290 Limits
6/23/98 Extend Limits
Town Centre II 8/15/78 Plan Adoption
5/87 Add Tax Incremem Provisions
7/19/88 Add Territory
11/8/94 AB 1290 Limits
Otay Valley Road 12/20/83 Plan Adoption
11/8/94 AB 1290 Limits
Southwest 11/27/90 Plan Adoption
11/8/94 AB 1290 Limits
Page 2
5-9
CHULA VISTA REDEVELOPMENT AGENCY
PLAN LIMITATIONS
Maximum Maximum Last Date Plan Last Date to
Project Tax Increment Bonded to Incur Expiration Collect Tax
Area Revenues Indebtedness Debt Date Increment
Bayfront/TC 1
Original Area $210,000,000 $50,000,000 1/1/2004 7/16/2014 7/16/2024
Amendment Area N/A (1) combined 7/2018 7/2033 7/2043
Town Centre II-
Original Area: $100,000,000 $42,500,000 1/1/2004 8/15/2018 8/15/2028
Amendment Area: combined combined 7/19/2008 7/19/2028 7/19/2038
Otay Valley Road $115,000,000 $45,000,000 1/1/2004 12/20/2023 12/20/2033
Southwest $15,000,000 $150,000,000 11/27/2010 11/27/2030 11/27/2040
annually
(1) Not required for plans adopted after 1994.
Existing Debt Structure
Each Project Area has certain liens on its tax increment revenues. Such liens were taken into account
in the process of developing the Financial Plan. These liens are detailed below.
Bayfront Project Area
· Housing Set Aside Requirement. Each project area has an obligation to deposit 20% of tax
increment revenues into the Agency's low and moderate income housing fund.
· Pass-through Agreements. The Agency is currently subject to a statutory "pass-through" of a
portion of tax increment generated in the Bayfront Project Area beginning in Fiscal Year 2000/01
with respect to both the Original Project Area and the recently added Amendment Area.
· Bonded Indebtedness. The Bayfront Project Area has the following outstanding bond issues:
· $14,810,000 1994 Senior Tax Allocation Refunding Bonds, Series A
· $8,195,000 1994 Subordinate Tax Allocation Refunding Bonds, Series C
· $5,680,000 1994 Senior Tax Allocation Refunding Bonds, Series D
Page 3
5-10
All three series of bonds are secured by Tax Revenues of the Bayfront/Town Centre Project. Tax
Revenues are equal to Tax Increment Revenues less the 20% Housing Set Aside requirement.
However, a portion of the debt service can be paid from the 20% Housing Set Aside
(approximately $180,000 annually) because a portion of the proceeds of the bonds were used for
Iow and moderate income housing purposes. Each series of the bonds matures in 2024. The
average interest rate of the Series A Bonds is 7.5%, the average interest rate of the Series C Bonds
is 8% and the average interest rate of the Series D Bonds is 8.625%.
· Advance from the General Fund. Outstanding balance as of June 30, 1999 was $1,480,380.
· Advance from the Sewer Trunk Fund. Outstanding balance as of June 30, 1999 was $847,235.
· Development Agreement with BF Goodrich. The proposed development agreement with BF
Goodrich may provide for payment of additional tax increment generated on the North Campus, a
loan of certain amounts to the Agency by the Port District for 10 years and the repayment of such
amounts back to the Port District in the subsequent I0 years.
Town Centre II Project Area
· Housing Set Aside Requirement. , Each project area has an obligation to
deposit 20% of tax
increment revenues into the Agency s low and moderate income housing fund.
· Pass-through Agreements. The Agency entered into an agreement with the County to "pass-
through" a portion of tax increment generated in the Town Centre II Project Area beginning in
Fiscal Year 2014/15.
· Reimbursement Obligation. The General Fund obligation to pay lease payments on the 1993
Certificates of Participation (COPs) for the Town Centre II Parking Project has been reimbursed by
the Town Centre II Project Area to the extent of available funds. Unpaid reimbursements have
been accrued as an advance from the General Fund.
· Advance from the General Fund. Outstanding balance as of June 30, 1999 was $11,222,604.
· Advance from Bayfront Project Area. Outstanding balance as of June 30, 1999 was $3,497,519.
Otay Valley Road Project Area
· Housing Set Aside Requirement. , Each project area has an obligation to deposit 20% of tax
increment revenues into the Agency s low and moderate income housing fund.
· Advance from Bayfront Project Area. Outstanding balance as of June 30, 1999 was $10,868,847.
Page 4
5-11
Southwest Project Area
· Housing Set Aside Requirement. Each project area has an obligation to deposit 20% of tax
increment revenues into the Agency's low and moderate income housing fund.
· Pass-through Agreements. The Agency entered into agreements with five taxing agencies to "pass-
through" a portion of tax increment generated in the Southwest Project Area.
· Advance from the General Fund. Outstanding balance as of June 30, 1999 was $639,484.
· Advance from the Sewer Trunk Fund. Outstanding balance as of June 30, 1999 was $996,721.
· Advance from Bayfront Project Area. Outstanding balance as of June 30, 1999 was $679,545.
· Advance from Otay Valley Road Project Area. Outstanding balance as of June 30, 1999 was
$285,535.
Projected Tax Revenues Based on New Development
Tax Revenues for each of the Project Areas were projected using a 2% inflationary growth factor for
secured assessed value only. In addition, the following schedule of new developmem was included.
CHULA VISTA REDEVELOPMENT AGENCY
PROJECTED NEW DEVELOPMENT VALUES
Bavfront/Town Centre I
2000/01:
BF Goodrich Consolidation $ (44,000,000)
2001/02:
BF Goodrich Consolidation (14,000,000)
BF Goodrich New Plant 57,000,000
3rd & H Project 17,045,000
2002/03:
BF Goodrich Consolidation (14,000,000)
Crystal Bay Land Sale 44,000,000
2003/04:
3ra & H Project 20,164,000
2004/05:
3rd & H Project 5,449,000
Total $ 71,658,000
Page 5
5-12
Town Centre II
2000/01:
5 acres adjacent to Walmart $ 10,000,000
2002/03:
7 acre corporate yard 75,000,000
Total $85,000,000
Otav Valley Road
2000/01 to 2004/05:
5 % annual increase
for new development $27,500,000
Southwest
2000/01:
Greenwald Development $ 6,100,000
2001/02:
Greenwald Development 6,900,000
Total $13,000,000
Financial Plan
The Financial Plan includes Phase I to be implemented currently and Phase II to be implemented in the
future. Phase II of the Financial Plan is discussed in our recommendations.
Phase 1
The first and foremost goal of the Financial PIan was to reallocate resources between Project Areas to
the extent available in order to make each Project Area self-sufficient on a going-forward basis and to
repay inter-fund advances to the extent possible. A secondary objective was to provide a way to
insulate the Bayfront Project Area existing indebtedness in the event that the final assessment
methodology chosen for the SDG&E plant causes a reduction in revenue as well as from the loss of
value from the South Campus of BF Goodrich. The Agency can accomplish these goals in large part by
issuing a tax-exempt secured by tax increment revenues of the individual Project Areas, and using the
proceeds to satisfy the inter-fund loans. Accomplishing this part of the Financial Plan does not require
a merger of the Project Areas. The remaining goal of the Financial Plan is to provide project funding
and to repay the General Fund. Certain project funds can be obtained now, while new development is
needed to raise any significant funding in future years. Further, a project merger under Phase II of the
Financial Plan would be required in order to repay in full the General Fund advance to Town Centre II.
Page 6
5-13
The repayment program outlined herein would have the Agency issue $15,990,000 ~n tax-exempt
bonds. The tax-exempt Bonds would be allocated between the Project Areas as follows: $4,645,000 to
Town Centre II; $8,370,000 to Otay Valley Road; and $2,975,000 to Southwest. The net proceeds of
the Bonds would be $13,292,735 after paying costs, funding certain capitalized interest and funding a
reserve fund.
Par Amount Net Proceeds
Southwest $ 2,975,000 $ 2,601,285
Town Centre II 4,645,000 4,112,519
Otay Valley Road 8,370,000 6,578.931
$ 15,990,000 $ 13,292,735
PROPOSED USES OF FUNDS
Southwest Town Centre II Otay Valley Road Bayfront
Repay Bayfront $ 679,545 $3,497,519 $6,578,931
Repay General Fund 583,056
Repay Sewer Fund 996,721 $ 847,235
Projects 925,019 31,944 9,908,760
Costs 152,600 180,056 343,170
Capitalized Interest 824,986
Reserve 221,115 352,425 622,913
$2,975,000 $4,645,000 $8,370,000 $10,755,995
Southwest Project Area:
The proceeds from the Bonds allocated to the Southwest Project Area would be applied as follows:
Repay Sewer Fund $ 996,721
Repay Bayfront Project 679,545
Project Funds 925,019
$2,601,285
The Southwest Project Area $639,484 General Fund advance and $285,535 loan from Otay Valley
Road Project would be repaid over time. The tax increment revenues from the Southwest Project
would be allocated to pay expenses as shown in Table No. 1.
Page 7
5-14
Town Centre II Project Area:
The proceeds from the Bonds allocated to the Town Centre II Project Area would be applied as follows:
Repay Bayfront Project $3,497,519
Repay General Fund 583,056
Project Funds 31,944
$4,112,519
The Town Centre II Project Area $10,639,548 General Fund advance would be repaid over time. The
tax increment revenues from the Town Centre II Project would be allocated to pay expenses as shown
in Table No. 2.
Otay Valley Road Project Area:
The proceeds from the Bonds allocated to the Otay Valley Road Project Area would be applied as
follows:
Repay Bayfront Project $6,578,931
The balance of the Bayfront Project advance to the Otay Valley Road Project would be $4,289,916
after this transaction and would be repaid over time. The Financial Plan reflects all remaining tax
increment in the Otay Valley Road Project Area being used for such repayment for an extended period
of time. The tax increment revenues from the Otay Valley Road Project would be allocated to pay
expenses as shown in Table No. 3.
Bayfront Project:
The Bayfront Project will be repaid a total of $10,755,995 with proceeds of the Bonds. The Agency
must trace the expenditure of the Bonds through to their final disposition to maintain the tax-exempt
status of the Bonds. Therefore, these repayments are allocated to the following purposes:
Repay Sewer Fund $ 847,235
Project Fund 9,908,760
$10,755,995
The tax increment revenues from the Bayfront Project would be allocated to pay expenses as shown in
Table No. 4.
Page 8
5-15
Interfund Advances:
Interfund advances before and after the transactions described herein are shown below.
INTERFUND ADVANCES
ADVANCES FROM
[
GENERAL SEWER BAYFRONT OTAY VALLEY TOTAL
SOUTHWEST 639~484 996,721 679,545 285,535 2,601,285
OTAY VALLEY ROAD 10.868,847 10,868.847
TOWN CENTRE II 11,222.604 3,497,519 14,720,123
BAYFRONT 1,480,380 847.235 2,327,615
13,342,468 1,843,956 15.045,911 285,535 30,517.870
REPAYMENT PLAN (583,056) (1,843,956) (10,755,995) (13,183,007)
REMAINING 12,759,412 4,289,916 285,535 17,334,863
REMAINING ADVANCES - BY PROJECT AREA
GENERAL SEWER EAYFRONT OTAY VALLEY TOTAL
SOUTHWEST 639~484 285,535 925.019
TOWN CENTRE II 10,639,548 10.639.548
BAYFRONT 1,480.380 1,480.380
OTAY VALLEY ROAD 4,289.916 4,289,916
12,759,412 4.289,916 285,535 17,334.863
Repayment of the General Fund Advance and the Otay Valley Road Advance to Southwest should be
deferred as long as possible, because the Southwest Project will have very little surplus tax increment
unless new development occurs. It is recommended that any surplus be devoted to project costs.
The General Fund Advance to Town Centre 1I is largely a result of an agreement with the Agency to
reimburse the General Fund for debt service on General Fund Certificates of Participation issued for
parking facilities in Town Centre II. These amoums have continued to accrue as a liability to the
General Fund. In the past and at the present time, the Town Centre II Project does not have the
resources to repay these amounts. Repayment of the General Fund Advance to Town Centre II is likely
to be accomplished only as a result of a merger of the Town Centre II Project with the Bayfront
Project. If the current outstanding loan balance of $10.6 million is added to the annual COP payment
from next fiscal year to maturity of the COP's in 2013/14, the total projected advance to the Town
Centre I1 Project from the General Fund would be approximately $26 million before any accrued
interest. Table No. 2 shows surplus tax increment being generated over the next 30 years of only $20
million, based on $85 million in new development in the Project Area. The conclusion is that these
amounts can only be repaid in full by merging with the Bayfront Project and using the combined
surplus to repay the General Fund. A merger for this purpose will also partially resolve the issue of
how to capture the surplus tax increment in the Original Bayfront Project Area after the time to incur
debt has expired in 2004. If the Crystal Bay development occurs as projected, the Bayfront Project
Page 9
5-16
Area will have several million dollars in tax increment annually that will be in excess of its debt
requirements. Merging the project areas and utilizing the Bayfront Project surplus tax increment to
repay the General Fund is a good method for capturing all of the Bayfront tax increment after the
Project Area can no longer incur debt.
Repayment of the remaining Bayfront Advance to the Otay Valley Road Project will come at the
expense of funding additional economic development programs in the Project Area. On a stand-alone
basis, the Otay Valley Road Project can repay the balance due, with accrued interest, by fiscal year
2022/23. This assumes that there is only a slight amount of new development ($27 million over 5
years). Any additional development will accelerate the repayment schedule. Also, it seems that if the
Bayfront Crystal Bay development really takes off, there will be sufficient tax increment in Bayfront
and Bayfront won't really need to utilize the repayment of the Otay Valley loan during the foreseeable
future. If the Otay Valley Road project is merged along with the Town Centre II Project, it is
reasonable to assume that Bayfront can forgive the balance of the loan (since all funds can be
commingled after payment of debt service from the merged project area to repay any other obligation).
Table No. 5 depicts the result of a project merger and the ultimate repayment of the General Fund
advances using a 7% interest rate on outstanding balances. It also shows the combined surplus
available to pledge to other obligations, which could be used to raise new project funding in any of the
constituent project areas.
Administrative Costs:
After completing the transactions described herein, administrative costs can be allocated to each Project
Area on a basis that is relatively consistent with the amount of revenue that each project generates. For
purposes of this Financial Plan, administrative costs have been allocated to each project on the
following percentages:
Bayfront 42.0%
Town Centre II 32.0%
Otay Valley Road 19.0 %
Southwest 7.0 %
In addition, another $293,000 is allocated directly to Bayfront relating to the Bayfront Conservancy
Trust.
Page I0
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Smnmary for Fiscal Year 1999/2000:
The following table illustrates how the reallocation of funds results in each Project Area being self-
sufficient.
CHULA VISTA REDEVELOPMENT AGENCY
ESTIMATED SOURCES AND USES OF FUNDS FOR 1999/00
Otay
Bayfront and Town Valley
Town Centre Centre FI l~flfl galghwf.~f Total
Tax Increment 3,479,000 1,008,000 1,077,000 867,000 6,431,000
Housing Set-Aside (695,800) (201,600) (215,400) (173,400) (1,286,200)
Repay HSA Deferral (79,830) (79,830)
HSA Debt Service 197,800 197,800
Pass-tkrough Agreemems (356,000) (356,000)
CounW Admin Charges (41,000) (13,000) (8,500) (11,000) (73,500)
Interest Earnings 185,000 36,000 58,000 16,000 295,000
Net Revenues 3,125,000 749,570 911,100 342,600 5,128,270
TAB Debt Service (2,560,944) (251,000) (95,000) (215,000) (3,121,944)
Add'l OTV Advance Repayment 305,184 (555,420) (250,236)
Net Available for City Admm
Loan Obligations and COPs 869,240 498,570 260,680 127,600 1,756,090
City Admin Reimbursement (869,240) (439,040) (260,680) (96,040) (1,665,000)
Remaining Revenue 59,530 31,560 91,090
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Recommendations
Phase I
Implement Phase I of the Financial Plan through the issuance of tax-exempt bonds. The bonds should
contain an optional redemption feature allowing the Agency to restructure its debt on a tax-exempt basis
prior to January 1, 2004. This will provide the Agency maximum flexibility as the time limit on
incurring debt approaches.
Phase H
Project Mer~er
After achieving self-sufficiency on a going-forward basis under Phase I, the Agency should consider a
merger of the Project Areas. In the long run, a project merger will probably serve the Agency's
interests in that it will provide a means to (1) repay in full the General Fund advance to the Town
Centre II Project; (2) potentially allow forgiveness/repayment of the remaining inter-project advance
from Bayfront to Otay Valley Road; and (3) if the Crystal Bay develops, allow the significant surplus
tax increment in Bayfront to be commingled and used to fund project costs in the other three
redevelopment project areas, which currently have no additional capacity to raise funds barring future
development.
An additional benefit to the merger is protection for the outstanding in the Bayfront Project Area in the
event that the limitation on tax increment ($210 million) is reached prior to the final maturity of the
outstanding bonds. This is possible if the Crystal Bay development exceeds expectations and if there is
significant development on the south campus of BF Goodrich. Further, if the Bayfront develops as
planned, the diversity of the development will help to lessen the existing concentration of the tax base in
BF Goodrich, making for a stronger overall credit rating and increased bonding capacity.
While there is significant upside potential to a project merger if the Crystal Bay develops, there is
potential downside to including the Bayfront Project in a merger. First, if, as part of the Crystal Bay
development, the Agency ends up sharing the tax increment with the developer, overall financial
benefits of a merger to the other projects will be reduced. Second, the proposed plan with BF
Goodrich would have the Agency subordinate its payments under the agreement to the payment of the
outstanding tax allocation bonds. However, this is only a benefit to the merger if the Agency can
obtain a subordination clause relating to a refinancing of the existing bonds, future bonds of the
Bayfront Project and/or future bonds of the any merged project. This may not be feasible. If the
Crystal Bay development occurs, that would offset (from a bonding capacity view) the negative impact
of not obtaining a subordination clause. Again, everything hinges on new development. Finally, the
impact of the SDG&E assessment has not been taken into account. Depending on the outcome, the
Bayfront Project Area may see a reduction in tax increment.
Since there are several unresolved issues relating to the Bayfront Project Area, the positive impact of a
project merger cannot be projected with any great certainty at this time. It may be a winner, loser or
have no impact depending on the outcome of the Crystal Bay and BF Goodrich negotiations and the
SDG&E assessment. If there is a negative financial outcome of these three variables, the Agency may
choose to leave Bayfront out of the merger. As the outcome of each item becomes more certain, the
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Agency will be in a better position to judge the financial impacts. However, consideration needs to be
given to the approaching time limitation on incurring indebtedness. Therefore, our recommendation is
to allow more time for the financial impact of the items discussed to be determined with greater
certainty, with the goal of making the decision by January 1, 2003, one year prior to the last date to
incur debt in the Bayfront, Town Centre II and Otay Valley Road Projects.
Page 13
$ - 20
[..
5 - 25
APPENDIX A
BOND PROCEEDS FLOW OF FUNDS
5 - 26
CHULA VISTA REDEVELOPMENT AGENCY
FLOW OF FUNDS
USE OF BOND PROCEEDS TO REPAY INTERFUND ADVANCES
///[ TAX EXEMPT
BOND
PROCEEDS
$13,292.735
.$4,112,51 I 6,578,931
$2,601,285
ALLOCATED [ ALLOCATED
TO TOWN ALLOCATED
CENTRE II TO SOUTHWEST TO OTAY
VALLEY ROAD
· ·
REPAY
GENERAL PROJECT REPAY REpAY
FUND FUNDS BAYFRONT · · BAYFRONT
5583,056 $31.944 $3.497,519 56.578,93 I
REPAY
PROJECT SEWER
FUNDS FUND
·
USE OF BAYFRONT ADVANCES REPAYMENT
ADVANCES
REPAID FROM
PROJECT TAX EXEMPT
FUNDS
$9.908.760 PROCEEDS
$I0.755,995
REPAY
SE~ER
FUND
$847.235
5 - 27