HomeMy WebLinkAboutRDA Packet 1995/05/16
Revised: May 16, 1995
Tuesday, May 16, 1995 Council Chambers
6:00 p.m. Public Services Building
(immediately following me City Cooncil meeting)
Joint Meeting of the Redevelooment Agencv/Citv Council
of the City of Chula Vista
CALL TO ORDER
1. ROLL CALL: Members Alevy -' Moot -' Padilla -' Rindone_,
and Chairman Horton -
2. APPROVAL OF MINUTES: May 2 and May 9,1995
CONSENT CALENDAR
(!lem3)
The staff IYICommnu1otiolUl nganling the foUowillg items lisúd wuIu the ColUlml CaIetu/ar will be etUU:úd by
the Agency by 01U! motion willwut discøssiøn JUlÙSS an Agency Member, a IIU!1IIber of the pubfil: or City sII1/f
IYlqøests tIuIt the item be prdkd for disCllS8Ïøn. If YO' wisll to spea/c on 01U! of these items, please fill out a
HRetpUSt to Spet1k FormH IJWlÜIJIJk in the IDbby and SlIbmit it to the S«ntIuy of the RedePelop1lU!llt Agency or
the City Cleric priDr to the meeting. (Compkú tbe gnen form to spea/c in faror of the sII1/f IYIcommnu1otion;
compkú the pin/c form to spea/c in opposition to the staff ncom.mnulation.) Item:r prdkd from the ColUle'"
Cohndar will be disCllSsœ øftu Action Item:r. Item:r plllled by the pøbfiI: will be the first items of basiness.
3. WRITTEN COMMUNICATIONS: None
* * END OF CONSENT CALENDAR * *
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
The following items have been adverlised and/or posted as public hearings as required by law. If you wish to
speak to any item, please fill out the "Request to Speak Form" available in the lobby and submit it to the
Secretary of the Redevelopment Agency or the City Clerk prior to the meeting. (Complete the green form to speak
in favor of the staff recommendation; complete the pinkform to speak in opposition to the staffrecommendation.)
Comments are limited to five minutes per individual.
ORAL COMMUNICATIONS
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 incladed on the posted agenda.) If you wish to
address the Council on such a subject, please complete the yellow "Request to Speak Under Oral Communications
Form" available in the lobby and submit it to the 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. Your time is limited to three minutes per speaker.
Agenda -2- May 16, 1995
ACTION ITEMS
The items listed in this section of the agenda are expected to elicit substantial discussions and deliberations by
the Agency, staff, or members of the general public. The items will be considered individually by the Agency
and staff recommendations may in cerlain 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 Secretary to the Redevelopment
Agency or the City Clerk prior to the meeting. Public comments are limited to five minutes.
4. REPORT REQUEST FROM AUTO PARK DEALERSIDP FOR ADDmONAL
FINANCIAL ASSISTANCE--The Redeyelopment Agency considered the
request for additional financial assistance from the Auto Park Developers on
February 14, 1995 and directed staff to obtain and analyze financial data on
dealership operations. The Auto Park developer has requested this item be
coutinued to the Agency meeting of June 6, 1995. Staff concurs with the
request. (Continued from the meeting of May 2, 1995) (Community
Development Director)
5. AGENCY
RESOLUTION 1453
and
COUNCIL
RESOLUTION 17898 JOINT RESOLUTION OF THE REDEVELOPMENT AGENCY AND
CITY COUNCIL OF THE CITY OF CIllJLA VISTA INSTRUCTING
STAFF (1) TO COMMENCE CEQA REVIEW FOR ACQillSmON OF
30.06 ACRES OF UNIMPROVED REAL PROPERTY LOCATED ON THE
EAST SIDE OF MEDICAL CENTER DRIVE FOR THE PROPOSED
DEVELOPMENT OF A VETERANS HOME; (2) TO FORMALIZE AN
AGREEMENT wmI SWEETWATER UNION illGH SCHOOL
DISTRICT FOR SUCH ACQillSITION, SUBJECT TO CERTAIN TERMS
AND CONDITIONS; (3) TO NEGOTIATE A FORMAL AGREEMENT
WITH THE CALIFORNIA DEPARTMENT OF VETERANS AFFAIRS
FOR SUCH DEVELOPMENT, SUBJECT TO CERTAIN TERMS AND
CONDITIONS, AND (4) TO TAKE ALL OTHER NECESSARY AND
APPROPRIATE ACTIONS TO FINALIZE SUCH MATTERS
EXPEDITIOUSLY AND TO PRESENT SUCH MATTERS TO THE
AGENCY/COUNCIL FOR FINAL APPROV AL--Staff recommends the
Agency/Council commence CEQA review, approve the contract and appropriate
the funds therefor and approye the terms to acquire the property and authorize
the Executive Director to take the necessary actions to complete the acquisition.
(Community Development Director)
OTHER BUSINESS
6. DIRECTOR'S REPORTiS)
7. CHAIRMAN'S REPORT(S)
8. MEMBER COMMENTS
Agenda -3- May 16, 1995
9. CLOSED SESSION
Unless Agency Counsel, the Executive Director, or the Redevelopment Agency states otherwise at this time, the
Agency will discuss and deliberate on the following items of business which are permitted by law to be the subject
of a closed session discussion, and which the Agency is advised should be discussed in closed session to best protect
the interests of the City. The Agency is required by law to return to open session, issue any reports offi11gJ adion
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 fi11gJ 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.
10. CONFERENCE WITH LEGAL COUNSEL REGARDING:
1. Property acquisition and disposition; instructions to negotiators pursuant to Government Code
Section 54956.8
. 30.06 acres of raw land on the east side of Medical Center Drive (Parcel #641-01O-Œ);
owners - Sweetwater Union High School District; and,
Third Avenue and Alvarado Street (Windntill Farm site) (Parcel #'s 568-420-14,15,31;
568-511-18, 19,20); owners - Chula Vista Redevelopment Agency
11. REPORT OF ACTIONS TAKEN IN CLOSED SESSION
ADJOURNMENT
The meeting will adjourn to a Special Redevelopment Agency Meeting on May 23, 1995 at 6:00 p.m., immediately
following the City Council meeting, in the City Council Chambers.
......
COMPLIANCE wmI THE AMERICANS WITH DISABILITIES ACT
The City of Chula Vista, in complying with the Americans With Disabilities Act (ADA), request
individuals who require special accommodations to access, attend, and/or participate in a City
meeting, activity, or service request such accommodation at least forty-eight hours in advance for
meetings and five days for scheduled services and activities. Please contact the Secretary to the
Redevelopment Agency for specific information at 619.691.5047 or Telecommunications Devices
for the Deaf (TDD) at 619.585.5647. California Relay Service is also available for the hearing
impaired.
[C:I WP51 IAGENCYIAGENDASIO5-16-95 .AGD]
---.- -
MINUTES OF A JOINT MEETING OF THE REDEVELOPMENT AGENCY/CITY COUNCIL
OF THE CITY OF CHULA VISTA
Tuesday, May 2, 1995 Council Chambers
5:15 p.m. Public Services Building
CALL TO ORDER
1. ROLL CALL:
PRESENT: Agency/Council Members Alevy, Moot, Padilla, and Acting Chair/Mayor Pro
Tern Rindone
ABSENT: Chair/Mayor Horton
ALSO PRESENT: John D. Goss, Director/City Manager; Bruce M. Boogaard, Agency/Council
Attorney; and Beverly A. Authelet, City Clerk
2. APPROVAL OF MINUTES: April 18, 1995
MSC (Padilla/Moot) to approve the minutes of April 18, 1995 as presented. Approved 3-0-1-1 with Horton
absent and Alevy abstaining.
CONSENT CALENDAR
(Item pulled: 7)
BALANCE OF THE CONSENT CALENDAR OFFERED BY AGENCY/COUNCIL MEMBER PADILLA,
reading of the text was waived, passed and approved 4-0-1 with Horton absent.
3. WRITTEN COMMUNICATIONS: None.
4, RESOLUTION 1449 APPROVING THE MORTGAGE CREDIT CERTIFICATE (MCC)
PROGRAM AND ASSIGNING ITS ALLOCATION AND PROGRAM TO THE AGENCY FOR
IMPLEMENT A TION
RESOLUTION 17884 APPROVING THE MORTGAGE CREDIT CERTIFICATE (MCC)
PROGRAM AND ASSIGNING ITS ALLOCATION AND PROGRAM TO THE AGENCY FOR
IMPLEMENTATION n The MCC was authorized by Congress in the Tax Reform Act of 1984, as alternative
to mortgage revenue bond-backed ¡¡nancing as a tool for providing home ownership assistance to lower income
households. Staff recommends that the Agency approve the resolution authorizing application for a $10 million
allocation. (Community Development Director)
5. RESOLUTION 1450 ACCEPTING BIDS AND AWARDING CONTRACT FOR PAINTING AND
STUCCO WORK ASSOCIATED WITH TOWN CENTRE PARKING STRUCTURE IN THE CITY OF
CHULA VISTA -- The project involves all work required as described in the bid request. Staff recommends
approving the resolution and awarding the contract to Merzi Painting and Construction, low bidder. (Community
Development Director)
6. RESOLUTION 1451 GRANTING EASEMENT TO THE CITY OF CHULA VISTA FOR
STREET PURPOSES FOR THE CONSTRUCTION OF IMPROVEMENTS ALONG BROADWAY
ADJACENT 801 BROADWAY (APN 623-050-06)
;{- (
Minutes
May 2, 1995
Page 2
RESOLUTION 17885 ACCEPTING EASEMENT FROM THE REDEVELOPMENT AGENCY
FOR STREET PURPOSES FOR THE CONSTRUCTION OF IMPROVEMENTS ALONG BROADWAY
ADJACENT TO 801 BROADWAY (APN 623-050-06) -- The proposed improvements to be constructed in the
Broadway Widening Project from I to L Streets include the installation of street and traffic improvements at the
southeast comer of Broadway and K Street. The existing right-of-way is insuftïcient to properly install the
improvements. It is necessary to acquire a portion of the property at 801 Broadway to facilitate the construction
of the project. S!1lff recommends approval of the resolutions.
7. REPORT BROADWAY BUSINESS HOMES --Report on proposal to construct "business homes"
on the former Fuller Ford site located at 760 Broadway, Chula Vista. The project includes 36 town homes with
commercial (or professional) space on the ground floor. (Community Development Director) Pulled from the
Consent Calendar.
Mr. Goss s!1lted the Broadway Business Home proposal was a very unique proposal. It was a combination of
residential and business in the same unit. It was on the Agency's agenda because it involved property that was
owned by the Agency/City which was the old Fuller Ford site, The policies applied through the community
development, planning, and engineering departments of the City were oriented toward development that was more
traditional. Staff had some concern because the City policies were oriented toward more traditionat types of
development and did not necessarily fit the type of proposal being offered, Therefore. staff felt it important to
present to the Agency a number of issues before proceeding on with the processing of the proposal.
Chris Salomone, Director of Community Development, stated part of their charge as an agency was to do creative,
readaptive use of difficult parcels and difficult situations. Staff planned to proceed and process the project but
wanted to identify some of the issues for the Agency,
Agency Member Moot s!1lted the City was willing to take ownership of the loop road but staff had recommended
that the City not !1lke on the responsibility of the common area expenses. He questioned where the common areas
were that were at issue.
Mr. Salomone replied they were the parking lots in front that were accessed off Broadway adjacent to the sidewalks
in front of the building.
Agency Member Moot questioned if the typical way of maintaining those areas was through CC&R's which was
self-enforced by a homeowners association or through an assessment district.
Mr. Goss s!1lted those were the two basic choices, but because of the change in laws over time. developers were
very reluctant to set up a homeowners association because they felt that over time they were buying litigation, Staff
had concerns regarding the City maintaining and taking responsibility for the common areas, He had discussions
with s!1lff regarding that and in some respects it could be compared with Third Avenue area where the City had
money and hired under contract people to maintain the landscaping. There was a definite interest in trying to avoid
a homeowners association on the part of the developer, There was a letter from the attorney representing the
developer that also expressed that perspective.
Mr. Salomone s!1lted s!1lff wanted to explore the possibility of a third party buffering the City, i,e. some type of
management company that could indemnify the City,
Agency Member Moot s!1lted in his legal practice it was very common for shopping centers, as part of a rent
structure, to require contributions for common area maintenance expenses. He felt that some intermediate entity
could be created that would be responsible for administrating the collection of common area maintenance expenses.
If the people within the project were contributing to the maintenance it would probably be well maintained, If those
expenses fell upon another agency it may not be as well maintained.
).,~~
Minutes
May 2, 1995
Page 3
Mr. Goss stated that was something that needed to be explored, One of the problems besides taking on the liability
with the changes in law was that any kind of needed increase in assessments could be blocked by a majority vote
of the people in the district. Then, in effect the general taxpayers dollars would have to start underwriting the
maintenance of the open space area,
8 Joseph Citron, 761 Golden Park, San Diego, CA, representing Jaellen Enterprises, stated it was a very old
concept as it went back over 1,000 years and a relatively new concept in that it was burgeoning all over the country.
They were proposing the beginning of the revitalization of Broadway, They were proposing a business community
not a residential community. Business owners would be allowed to live above their stores, If the business owners
wanted tot lots, barbecue pits, and park benches, which had been proposed by the Planning Department, they would
go to EastLake to buy a home. That was not what they were looking for. They had met with a number of focus
groups over time and the design came from those focus groups. They had personally invested $125,000 in the
project, were in version seven of the plot for the project, and had been working on it for over one year and had
not received approval from the City. He was asking the Agency to help find a way to tell staff to move forward
on a pilot project. There were several other properties that were owned hy the Agency/City that they were
interested in also. They were desperate at the current time and needed the Agency's help.
8 C. W. Kim, 7191 Encelia Drive, La Jolla, CA, c.w. Kim Architects & Planners, stated it was an exciting
and challenging project. He then gave a slide presentation.
Mr. Citron stated that when mixed use was suggested it was normally where there was a store and condominiums
or some residential use that had been built along side of it, but not the same owners or same activity. The project
was to be one owner that ran the store and lived upstairs,
Member Alevy questioned the sale price for the units and actual living space and retail space,
Mr. Citron replied the building was three stories and the store was more than 1/3 of the space due to the storage
and garage on the main level. The upper story was the smallest, the bedroom section. They were running
approximately 2,100-2,200 sq, ft. and they had set a target sales price starting at under $200,000 and range up to
$250,000 fee simple, full ownership of both the store and upper residential area.
Member Alevy stated from a marketing angle it was very exciting. He was concerned with the City's burden and
questioned what would happen if all the units were not sold,
Mr. Citron replied he was the developer of a successful $90 million project across the bay. They were used to
doing good sized projects and the proposed pr"ject was small even though it was $9 million and they were going
into it with all the funds available to complete the project. They were going into it as cautiously and conservatively
as possible because they could not point to 20-30 uther similar project that had been done. Therefore, they were
building the models first. The actual funding available was to build the first six unit building. Five of the units
were already spoken for. The next step would be the completion of half of the property, 18 units would be
completed. Their intention was to build the entire 36 units. Their building company would be on-site and
responsible for the project.
Member Alevy questioned the plan for securing the area, i,e, to keep people out of the living area during business
hours and out of the business area after business hours,
Mr. Citron replied that the focus groups suggested electric gates on the two entrances of the loop road. It was only
a suggestion and nothing was cast in stone, He hoped the Agency would allow them to move forward to be able
to work out those items that could not be finalized at the present meeting,
Member Padilla questioned if there was any independent market analysis or information about the success of similar
mixed use projects in other areas in California, He felt that was an important approach when looking at what the
policy approach would be of the City.
;2-3
Minutes
May 2, 1995
Page 4
Mr. Citron stated they were having to go out of the slate in order to obtain that information. The focus group
reaction was very positive to the project. It was becoming increasingly difficult for them to be able to sell the units
for the prices outlined and one of the key ingredients of the success and sale of the units was an eager market
looking for that price range. The City processing was a very large part of that $200,000 - $250,000, They wanted
pennission to build the model units or the first building and from that show the City the market. The biggest
problem as identified in the report was not the site but Chula Vista, the perception of people not living in the City.
Member Padilla slated he could understand and sympathize with what Mr. Citron was saying. but before the Agency
could do that there were processes and decisions that had to be made by the Agency regarding policy applications.
He questioned if Mr. Citron was intending to provide specific information or to work with staff in order to oblain
that information.
Mr. Citron slated they would do that, They wanted to be able to prove their point and fell they could do that while
working 00 the project.
Member Moot slated he could see no reason why the project could not be done, He did not see anything in the
report that would create any grave obstacle to going forward expeditiously, He would support the City moving in
that direction. Some of the technical issues, i.e. whether it was done by tentative map or some other approach,
seemed resolvable. He questioned if there was a hang-up on some of the technical issues.
Mr. Citron stated the City Attorney had been meeting with their attorney and it was his understanding that they
needed to proceed to work out all the details. They were aware that there were costs they would have to bear and
work that they would have to do which they were more than willing to take on. He had a letter from Chicago Title
which slated they were more than ready to insure title based on the procedures outlined.
Member Moot slated the land use issues were one of three significant issues identified, He expressed concern that
the parking for the residential did not turn into storage space for the businesses.
Mr. Citron slated they were looking at writing a good set of deed restrictions on the properties that would be
enforceable. In order to avoid problems later they were going to give the buyers a hound manual instructing them
on how to maintain the residenceslbusinesses and have them sign a receipt upon receiving it. He fell it would be
one of the better mainlained developments within the City.
Acting Chair Rindone commended Mr. & Mrs. Citron on their projects. He fell staff wanted the Agency's
preliminary reactions to the project and he concurred with Member Moot. It was a golden opportunity and one that
the City could not afford not to do. It was unique. would address a business market that had not been addressed,
and would be in the heart of the area that needed to be revitalized the most. The City had a commitment to make
sure that what was returned to Broadway was exciting and he felt the project provided that. He urged staff to be
creative and package the project.
Mr. Citron thanked the Agency for their support.
Acting Chair Rindone slated the only reservation he had regarding the staff report was the two building concept.
He hoped they would at least do a wing in the first phase rather than two units, He felt that created a statement
and enthusiasm for the project.
MSC (PadillalRindone) to accept the report. Approved 4-0-1 with Horton absent.
. . END OF CONSENT CALENDAR' .
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
None submitted.
;;'-1
Minutes
May 2, 1995
Page 5
ORAL COM~ruNICATIONS
None
ACTION ITEMS
8. RESOLUTION 1452 AUTHORIZING THE EXECUTION OF A COOPERATION AGREEMENT
BETWEEN THE CITY OF CHULA VISTA AND THE CHULA VISTA REDEVELOPMENT AGENCY
PURSUANT TO THE TERMS AND CONDITIONS OF THE APPROVED DISPOSITION AND
DEVELOPMENT AGREEMENT EXECUTED FOR THE APPROVED CHANNELSIDE SHOPPING
CENTER PROJECT AT FIFTH A VENUE AND C STREET
RESOLUTION 17886 AUTHORIZING THE EXECUTION OF A COOPERATION AGREEMENT
BETWEEN THE CITY OF CHULA VISTA AND THE CHULA VISTA REDEVELOPMENT AGENCY
PURSUANT TO THE TERMS AND CONDITIONS OF THE APPROVED DISPOSITION AND
DEVELOPMENT AGREEMENT EXECUTED FOR THE APPROVED CHANNELSIDE SHOPPING
CENTER PROJECT AT FIFTH A VENUE AND C STREET n The resolution authorizes the execution of a
Cooperation Agreement between the Agency and the City for the purposes of contractually obligating the City to
pay to the Agency in any given year, the funds necessary to make the negotiated subsidy payment to Wal-Mart.
Staff recommends approval of the resolutions. (Community Development Director)
Chris Salomone, Director of Community Development, informed the Agency/Council that the item was a follow-up
to the adoption of the Development Agreement for the Wal-Mart project. It verified the amount of the tax sharing
agreement between the City and the Agency that had been previously approved, The Wal-Mart project was
underway and on schedule for a September opening. It was staft's understanding that the second tenant in the
80,000 sq, ft, building adjacent to Wal-Mart was Best Products.
Agency/Council Member Padilla questioned if aner year 5 of a 15 year term approximately 50% of the general sales
tax revenue would be applied to the debt service,
Mr. Salomone responded that was correct.
Agency/Councilmember Padilla questioned if the funding mechanism for both the improvement costs and repayment
would not be utilized it weren't for the tax increment revenue in the Town Centre II area.
Mr. Salomone replied that would be an option that would be presented to the Agency for consideration,
Agency/Councilmember Padilla requested claritication of the statement that"... no assurances for ultimate
rep~yment, any amount paid by the City for the Agency under this obligation will be booked as loans to the Agency
Mr. Salomone replied that as a prudent accounting practice for the City any money paid to the Agency would be
booked as a loan. As long as the redevelopment process was active the Agency could collect tax increment and pay
back the General Fund any money that was forwarded to it. They were not guaranteeing that the money would be
paid back because the life of the pr"ject area could terminate in 2014 but the State had always extended that
termination period. Therefore, it was booked as a loan hoping that ultimately it would he paid back to the General
Fund,
Agency/Council Member Moot questioned if the $4,9 million tigure was for net sales tax revenues after loan
repayment obligations and the "transfer" effect over the 15 year period of time.
Mr. Salomone replied that was correct.
2--6
-,
Minutes
May 2, 1995
Page 6
Agency/Council Member Moot questioned how the sales tax revenues were predicted and if reliable data was
available, i.e. the projected sales tax revenues from the new store and the lost sales tax revenues from existing
stores.
Mr. Salomone responded that independent financial consultants were hired. In Wal-Mart's case, there were
hundreds of stores in operation and the data was readily available, The experience within the City led staff to not
be terribly optimistic about the numbers. The peso devaluation recently was totally unanticipated and had an effect
on sales tax generation in the City. The payment to Wal-Mart would he a percentage of whatever was generated
and would be forgiven after 15 years.
Agency/Council Member Moot felt it important to keep track of the extent to which sales tax revenues were reduced
at adjacent businesses within the City.
Agency/Council Member Padilla assumed they were conservative estimates,
Mr. Salomone replied that they were stand-alone estimates on Wal-Mart. None of the other retailers in the center
had been considered in the calculations,
Mr, Goss stated the sales tax revenues received in March were approximately 6 % ahead of where it was last year.
It was important to understand that sales tax receipts to the City were late. i.e. 2-3 from when collected and then
forwarded by the State to the City. Therefore, the formal impact of the devaluation of the peso was unknown. The
informal survey conducted by the Finance Department indicated a mixed response, Some businesses had been hurt
and others had no impact. There were other positive economic factors going on in the City and he felt the overall
net effect was yet to be seen.
Agency/Council Member Alevy questioned if the chart was based on revenues from taxes from the Wal-Mart store
alone and what would happen with the tax revenues from the other tenants in the center.
Mr, Salomone replied that the revenues would go to the General Fund. The City had guaranteed that there would
be no tax sharing on the balance of the center as part of the Development Agreement.
Acting Chair/Mayor Pro Tern Rindone felt that needed to be reinforced, As other stores were added to the center
it would result in unanticipated revenues to the City.
RESOLUTIONS 1452 AND 17886 OFFERED BY RINDONE, readin~ of the text was waived, passed and
approved 4-0-1 with Horton absent.
9. REPORT REQUEST FROM AUTO PARK DEALERSHIP FOR ADDITIONAL FINANCIAL
ASSISTANCE -- The Redevelopment Agency considered the request for additional tinancial assistance from the
Auto Park Developers on February 14, 1995 and directed staff to obtain and analyze tinancial data on dealership
operations. Additional information has been received and analyzed, and recommendations are offered for
consideration. (Community Development Director)
Mr. Goss stated the applicant requested that the item be pulled trom the agenda because they were unable to attend
the meeting.
Chris Salomone, Director of Community Development, informed the Agency that staff would be meeting with the
applicants attorney. If it had to be heard next week staff would call a special meeting with the Mayor's approval.
MSC (Rindone/Moot) to continue the item indetinitely. Approved 4-0-1 with Horton ahsent.
.2-~
Minutes
May 2, 1995
Page 7
ITEMS PULLED FROM THE CONSENT CALENDAR
Item pulled: 7, The minutes will retlect the published agenda order.
OTHER BUSINESS
10. DIRECTOR'S/CITY MANAGER'S REPORTrS) - None
11. CHAIRMAN'S/MA YOR'S REPORTrS)
a. Acting Chair Rindone stated the Agency had received a memo regarding the proposed alternatives for the
Vista Hill Hospital. He had forwarded a memo to Council and he was uncertain that staff had received a copy
regarding the concerns of the School District $1 million due to a cash tlow problem, He requested that the City
Clerk provide staff with a copy of that memo. Before there was a sign-off on May 5th the school district should
be contacted and that issue addressed.
Mr. Goss stated he had seen the letter Mr, Rindone recoived, It was his understanding that the expansion of the
use of the facility was proposed very recently. Vista Hill had heen looking at another use and that had failed. He
was not certain what could have been done regarding advanced notice because the City was not notified.
12, AGENCY/COUNCIL MEMBER COMMENTS - None
AD JOURNMENT
ADJOURNMENT AT 6:20 P.M, to the Regular Redevelopment Agency Meeting on May 16, 1995 at 6:00 p,m"
immediately following the City Council meeting, in the City Council Chambers.
by:
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"--ð'
MINUTES OF A SPECIAL MEETING OF THE REDEVELOPMENT AGENCY
OF THE CITY OF CHULA VISTA
Tuesday, May 9, 1995 Council Chambers
9:12p.m. Public Services Building
CALL TO ORDER
1. ROLL CALL:
PRESENT: Members Alevy, Moot, Padilla, Rindone, and Chair Horton
ALSO PRESENT: John D. Goss, Director; Bruce M. Boogaard, Agency Attorney; and Vicki C.
Soderquist, Deputy City Clerk
2. APPROVAL OF MINUTES: None submitted.
CONSENT CALENDAR
None submitted.
* . END OF CONSENT CALENDAR' .
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
None submitted.
ORAL COMMUNICATIONS
. Bill Ayers, 44 East Mankato Street, Chula Vista, CA, Chair of the San Diego County Veterans Committee,
slated AB940 regarding the funding for the Veterans Home had been rewritten, He felt that funding would go to
the City that turned over the land to the Slate first. He urged the Agency to move expeditiously in their negotiations
with the school district for the property,
OTHER BUSINESS
3. DIRECTOR'S REPORTlS) - None
4. CHAIR'S REPORTlS) - None
5. MEMBER COMMENTS - None
ADTOURNMENT
The Redevelopment Agency met in Closed Session at 9: 15 p,m" reconvened at 10:48 p,m. and adjourned at 10:49
p,m. to the Regular Redevelopment Agency Meeting on May 16, 1995 at 6:00 p.m. immediately following the City
Council meeting, in the City Council Chambers.
;;2.-q
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Minutes
May 9, 1995
Page 2
CLOSED SESSION
Member Rindone stated he would abstain from participation in Closed Session in order to avoid the appearance of
a conflict of interest due to his employment by the Sweetwater Union High School District.
6. CONFERENCE WITH LEGAL COUNSEL REGARDING:
1. Property acquisition and disposition; instructions to negotiators pursuant to Government Code
Section 54956.8
. 30.06 acres of raw land on the east side of Medical Center Drive (Parcel #641-010-07); owners -
Sweetwater Union High School District; and Third Avenue and Alvarado Street (Windmill Farm
site) (Parcel No. 's 568-420-14,15,31; 568-511-18,19,20); owners - Chula Vista Redevelopment
Agency
7. REPORT OF ACTIONS TAKEN IN CLOSED SESSION - No reportable actions were taken in Closed
Session.
Respectfully submilled,
BEVERLY A, AUTHELET, CMC/AAE, City Clerk
by: ~ ~~~~~"'.
;J.. -/6
REDEVELOPMENT AGENCY ITEM #4
MEMORANDUM
May 16, 1995
TO: The Honorable Mayor Shirley Horton 6f11
VIA: John D. Goss, City Manager.Jq ~
-7 c,.
FROM: Chris Salomone, Community Development Director L,/
SUBJECT: Redevelopment Agency Item #4: Report - Request from Auto Park
Dealership for Additional Financial Assistance
The Auto Park dealership has requested this item be continued to the regular
Redevelopment Agency meeting of June 6, 1995.
Staff concurs with the request and asks the Agency to continue the item to the
June 6 meeting.
[BB\C:\WP51 \AGENCY\MEMOS\MA YOR-3,MEM]
REDEVELOPMENT AGENCY AGENDA STATEMENT 4
Item .!t-. 1 I .-
Meeting Date '57O2795.j- (b i;,
ITEM TITLE: REPORT Request from Auto Park Developers for Additional
Financial Assistance
SUBMITTED BY: Community Development Director
REVIEWED BY: Executive Director (4/5ths Vote: Yes - No-Xl
BACKGROUND: On January 17, 1995, the Council approved a conditional payout of $1.3
million to the Auto Park Developers for construction of public streets within the Auto Park
under, Assessment District 92-2. On January 19, 1995, staff met with the Auto Park
Developers, Messrs. Ordway and Fuller, and their attorney to discuss financial problems
associated with a lower assessment district payout than anticipated. As a result of that
meeting, the developers made specific requests for financial assistance which were reviewed
by staff. Their requests included the following:
Increase the Maximum Agency Repayment Obligation in the Disposition and
Development Agreement (DDA) by $783,230;
Decrease the Base Sales Tax that the City would receive from $550,000 to
$340,000;
Decrease the Annual Escalator Factor from 6% to 2% and postpone its
application one year, beginning July 1, 1996.
In addition, the Chevrolet dealers expressed their desire to have the Agency acquire parcel #1
from them due to their inability to market the parcel.
The Redevelopment Agency considered the request from the Auto Park Developers on
February 14, 1995 (see Exhibit AI and directed staff to obtain and analyze financial data on
dealership operations. Additional information has been received and analyzed, and the
following recommendations are offered for consideration.
RECOMMENDATION:
1. That the Agency not take any actions to acquire Parcel #1 (vacant land parcel).
2. That the Agency not consider a reduction in the maximum Agency Repayment
Obligation of $1.9 million as stated the Disposition and Development Agreement.
3. That the Agency not consider lowering the Sales Tax Base from $550,000 as stated
in the Disposition and Development Agreement.
4. That the Agency direct staff to draft an amendment to the Disposition and
Development Agreement for further review which will allow an annual review of the
escalation factor, taking into account current cost of living factors.
5. That the Agency reduce the current escalator of 6% to 3%, based on current cost of
living data.
4-1
1
Page 2, Item £ /
Meeting Date: ~é>
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
In mid January, staff met with the Auto Park Developers, Messrs. Ordway, Reneau and Fuller,
and their attorney to discuss their request for additional financial assistance from the Agency
due to a shortfall in anticipated reimbursements for public improvements constructed under
Assessment District 92-2. The Auto Park Developers specifically requested the following
amendments to the terms of the Disposition and Development Agreement:
Increase the Maximum Agency Repayment Obligation by $783,230;
Decrease the Base Sales Tax that the City would receive from $550,000 to
$340,000;
- Decrease the Annual Escalator Factor from 6% to 2% and postpone its
application one year, beginning July 1, 1996.
The Developers were requested to submit financial information on current operations of the
Auto Park in support of their request. Information pertaining to South Bay Chevrolet including
financial reports on operations and copies of loan agreements was received on March 20,
1995 and has been reviewed by staff. No information was received from Ford. Also received
was a letter from Mr. John Abbene. attorney for the Auto Park developers, requesting that
the Agency purchase parcel #1 (vacant land parcel west of Fuller Ford/Honda) from South Bay
Chevrolet in order to expedite the sale and continued operation of the dealership located on
parcel 3.
The letter from Mr. Abbene is attached as Exhibit B. Based upon this request and review of
the financial information, staff has the following comments and recommendations. A glossary
further explaining the DDA terms used below is attached as Exhibit C.
1. Aoencv Purchase of Parcel #1
South Bay Chevrolet purchased Parcel #1, comprising approximately 2.5 acres through the
" Agency for approximately $750.000 in August 1993. The site is difficult to sell and develop
at this time because of its limited size and presence of stockpiled, contaminated soil on the
adjoining parcel to the rear of parcel #1. Staff is currently working with the former land
owner to remove the stockpile. When that occurs, the rear 1.5 acres can be combined with
the front 2.5 acres to provide a more appropriate site for a new auto dealership. South Bay
Chevrolet is required to purchase the parcel if and when it is cleaned up at a price equal to
the price per square foot price paid for Parcel #1. South Bay Chevrolet was aware of the
conditions on the adjoining parcel at the time of purchase of Parcel #1.
Assuming it would be possible to sell the parcel in a shorter time frame, South Bay borrowed
$1,045,000 from GMAC on this property based upon a rather optimistic appraisal of its value
once improvements (roads, sidewalks, sewer, etc.) were installed. This loan is cross
collateralized with a $3.9 million loan from GMAC on Parcel #3 for construction of the
dealership. The loan is due to be paid off in May of this year, thereby providing an
impediment to transfer of this parcel along with sale of the dealership. South Bay has
.4-;2. \
- ~ '
Page 3, Item..r / --
Meeting Date: .5JO.2f95 ç (lph ')
requested that the Agency repurchase this parcel, for at least the amount of the loan. Based
upon the lack of response from the target market, the property appears to be over-
encumbered.
The problems impeding sale and development of this parcel stem from the discovery of
contaminated soils and the need to stockpile them until an economical removal plan is
authorized by the regulatory agencies. The decision to financially encumber Parcel #1 was
unfortunate. South Bay Chevrolet does not have the funds to retire this debt in May.
Assuming the Agency had the will to acquire the site, funds are not currently available. The
Agency is, in fact, planning to divest itself of property in order to retire its own debt.
Consideration of acquisition of parcel #1 is not be recommended by staff.
2. Increase the Maximum Aaencv Reoavment Obliaation
The Auto Park Developers were anticipating approximately $1 Million more than they will
receive in reimbursements for construction of public improvements through Assessment
District 92-2. The shortfall is apparently due to miscommunications between the developers
and their consultants concerning limitations of the Assessment District. In an effort to make
up this shortfall which includes a $730,000 right-of-way acquisition charge, the Developers
have requested that the Maximum Agency Repayment Obligation stipulated in the DDA under
Incentive Payments (see attached description) be increased by $730,000 to reimburse the
Developers for the land cost attributed to public rights-of-way. This would increase the
Agency's Maximum Repayment Obligation during the first six years of operation of the Auto
Park from $1.9 million to approximately $2,630,000. It should be noted that any amount not
repaid during the first six years is forgiven.
Even though it is unlikely, given current sales volumes, that the Auto Dealers will generate
enough sales tax revenue to be repaid the $1.9 Million within six years, it is not recommended
that the Maximum Repayment Obligation be increased. The Agency has already provided
substantial subsidy for this project through the purchase of the Broadway dealership
properties and the loan the Shinoharas to relocate the contaminated soils. Further subsidy
based upon the lack of vigilance by the Developers and their consultant during the
development process is not justified. In addition, once the Maximum Repayment Obligation
is satisfied, or six years elapses (whichever occurs first), the Developers continue to share in
the post incentive payments for a period of nine years.
3. Decrease in Base Sales Tax from $550.000 to $340.000
The Sales Tax Base - sales tax revenues based upon 1988 auto sales from the Ford and
Chevrolet dealerships which would accrue to the City before incentive or post incentive
payments to the Developers are computed - were set at $550,000 per year under the
assumption that auto sales would increase from late 1980's levels.. However, the evidence
submitted by South Bay Chevrolet indicates that auto sales in 1994 were considerably lower,
and off to an even slower start in 1995. Although Fuller Ford did not submit sales
information, the owner of the dealership, Doug Fuller, verified in a telephone conversation
with staff, that 1994 Ford sales were down as well. If further action on this item is desired
by the Agency, staff will validate sales figures.
~-3-
4
Page 4~ il I ^~
Meeting Date: ,'J Ib ICf \
A reduction in the base would have a direct financial impact upon the City since the City
receives 100% of the base before the sharing formula with the dealers goes into effect.
Based upon the potential impact to General Fund revenues, reduction in the Base Sales Tax
limit is D.Q1 recommended.
4. Decrease the Annual Escalator from 6% to 2%
As indicated above, the base sales tax, $550,000 in year one, is to increase by 6% per year
for 15 years covered by the Incentive and Post Incentive payments. The developers have
requested that the increase be reduced to 2% based upon the lower CPI for the past few
years. The 6% annual increase was predicated upon inflation rates in the late 1980's when
the terms of the DDA were developed. The CPI for the past two years has averaged closer
to 3%. Reduction of the escalator to 3% would result in a loss of approximately $12,375 to
the City in the second year if the Auto Park generates at least $550,000 in sales tax revenue
from July 1, 1995 - June 30, 1996. If the escalator remains at 3% for the next four years,
when compared to the current 6% escalator, the loss will increase slightly each year.
Based upon lower inflation rates, a reduction in the escalator is justified, at least through the
incentive payment period. A reduction from the current 6% is recommended for consideration
on a year by year basis. In order to accomplish this, the DDA will have to be amended. If this
report is approved, staff will return to the Agency with a revised DDA for approval.
FISCAL IMPACT: The Sales Tax Base increases each year by the escalator amount. Sales
tax revenues received over the base plus escalator are shared between the Agency (25%) and
the Auto Park Developers (75%) through the incentive period (years 1-6). As the escalator
decreases below 6%, the amount subject to the sharing formula increases. Since the Agency
receives only 25% under the sharing formula, 75% of the difference between the original
escalator (6%) and the reduced escalator will be a "loss" in terms of anticipated revenues.
For example, if the escalator is reduced to 3% at the end of the first year of operation, the
base in the second year will be $566,500 ($550,000 base plus 3%). The Agency anticipated
the base plus 6%, or $583,000. The difference, $16,500 will now be subject to the sharing
formula with the Agency receiving 25%, or $4,125, and the Developers receiving 75%, or
$12,375. This last figure ($12,375) represents the "lost" revenues to the Agency.
During the post-incentive period (years 7-15), the sharing formula changes with the Agency
receiving 62-1/2% and the Developer 37-1/2%. The lost revenues during the post-incentive
period would thus be equal to 37-1/2% of the difference between the base at the time plus
the escalator and what the base would have been if the escalator had been a consistent 6%
from year 1.
[FK/diskA/autopark.a13]
¿¡-Lt-
EXHIBIT A
REDEVELOPMENT AGENCY AGENDA STATEMENT Item L
Meeting Date 02/14/95
ITEM TITLE: Report Request from Auto Park Dealers for Additional
Financial Assistance
SUBMlTI'ED BY, Com..""", - ~ S .
REVIEWED BY: Executive Directo~ ~ (4/5ths Vote: Yes - No..x..>
.-7'
- BACKGROUND: On Tuesday, January 17, 1 , the Council approved a conditional payout
of $1.3 million to the Auto Park Developers for construction of public streets within the Auto
Park under Assessment District 92-2. On Thursday, January 19, 1995, staff met with the Auto
Park Developers, Messrs. Ordway and Fuller, and their attorney to discuss financial problems
associated with a lower assessment district payout than anticipated. As a result of that meeting,
the developers have made specific requests for financial assistance (see attachment A) which
have been reviewed by staff.
RECOMMENDATION: That the Council review the letters submitted by the Auto Park
developers' attorney, John Abbene, requesting specific financial assistance and continue
discussion of this item one week to allow staff time to obtain and analyze dealership financial
documents to provide a cost benefit analysis regarding financial assistance.
BOARDS/COMMISSIONS RECOMMENDATION: Not applicable.
DISCUSSION:
At the meeting of January 17, 1995 with staff, the developers explained that they were
anticipating approximately $1 million more than they will receive from the City under
Assessment District 92-2 for construction of on-site streets and a sewer pump station. This will
leave them short in meeting their other financial obligations. The shortfall was apparently due
to miscommunications between the developers and their consultants. Although the total bond
" issue was for $1.9 million, the developers had not been informed by their consult! that
approximately $400,000 of the Asses~meQt District proceeds were being used to payoff their
obligations under the Otay Valley Road As-'TI1ent District to avoid double U"'"1'sment district
liens against their property. An additional $200,000 was åpplied towards bond issuance costs.
¡The Developers' consultants worked with staff to develop the pro forma for the assessment
district, the acquisition agreement and all other related documents and was aware and advised
by staff of all of the constraints including the requirement to payoff the lien for Assessment
District 90-2 (Otay Valley Road) so that there would not be two assessment district liens against
the property, and also the City's limit on issuing bonds for assessment district (no more than
33 % of the valuation of the property to be assessed).
f-S-
! Page 2, It~.....:::.!....- ._; :
I Meeting Date 02114/95,
The developers were also not informed that the City is limited in the amount of bonds that can
be issued under an assessment district to 33 % of the appraised value of the property to be
assessed, regardless of the total cost of improvements. In this case, the City's bonding limit was
$1.9 million, although total costs including a $730,000 right-of-way acquisition charge, totalled
$2.5 million. In establishing the assessment district, City staff worked closely with the
developers' consultants and fully disclosed all these issues and constraints.
In an effort to make up for the shortfall of funds, the developers have requested assistance in
securing a loan and reconsideration of specific tenns of the Disposition and Development
Agreement which included a yearly payback to the developers over the Ílfst fifteen years of
operation of the Auto Park based upon sales tax revenues generated by the dealerships (further
explained below). They have presented a specific proPosal to staff for review in a letter dated
January 30, 1995 attached hereto. However, there were no documents verifying current
financial conditions submitted as support for their request.
Under a separate lettec also dated January 30 (see attachment A), the Agency is requested to
repurchase parcel #1 from South Bay Chevrolet. The Agency had purchased the site from
Shinohara and conveyed it to South Bay chevrolet in August 1993. This parcel originally
comprised 4 acres. After deletion of the rear portion of the lot totalling 1.1 acres due to the
need to stockpile contaminated soils relocated from the other parcels and loss of .4 acres for
right-of way, the lot was reduced to approximately 2.5 acres. Mr. Ordway claims that he can
not sell the property now because of the reduced size and the presence of the contaminated soils
on the rear parcel.
The specific requests for assistance include the fo!1owing:
- Assistance in securing a $1.1 million loan.
- Amendment of the DDA to increase the maximum payback amount through
incentive payments, decrease the annual esca1ator and posfpone the effective date
of the esca1ator by one year.
- Agency repurchase of parcel #1.
Alt1iough the Auto Park Developers are claiming financial hardship, staff has not received
adequate documentation to substantiate the amount of hardship or justify the level of additional
. participation requested. Additionally, staff needs to review loan documents pertaining to all of
the parcels, evidence of oth« encumbrances and operating s1atem.ents indicating cash flow. This
information has been requested from the ownm.
It is therefore recommended that this Item be continued for two weeks in order that the
developers can provide the information requested. and staff bas the opportunity to
adequately review this material.
FISCAL IMPACT:
The Developers have requested assistance in securing a loan with the amount of $1.1 million,
amendment to financial tenns of the DDA and Agency repurchase of Parcel #1.
~-t.
, Page 3, Item ~
Meeting Date 02/14/95
Loan Assistance
Assuming the Agency assisted the Developers in approaching lenders but did not directly loan,
consign, or in any other way guarantee the loan, there would be no direct financial impact to
the Agency.
Amendment of the DDA
Amendment of the terms of the DDA to increase the maximum repayment under Section 40l(vi)
will only impact the Agency if the Auto Park is more successful than originally projected.
The developers have requested that the maximum loan repayment be increased by $738,230 in
order to reimburse the developers for the land right-of-way costs not forthcoming under the
assessment district reimbursements. Based upon initial revenue projections for the Auto Park
which included three large dealerships (Ford, Chevrolet and Toyota, which was negotiating to
purchase Parcel #1 at that time, and one small dealership) with annual sales increases of 6%,
it was possible for the developers to receive adequate incentive payments to cover the entire loan
amount plus interest through year six. There are currently two major (Ford and Chevrolet) and
two smaller (Honda and Kia) dealerships in operation. Current sales volumes and the delay in
opening a fifth dealership on Parcel #1 make it highly unlikely that the level of sales tax
revenues necessary to generate incentive payments to return an additional $738,230 will be
forthcoming during the first six years. In the event that the Auto Park does extremely well and
exceeds estimated sales tax revenues during this period, the Agency, througþ its 25% share,
would also be receiving more revenues than anticipated during the first six years.
As indicated above, the base sales tax, $550,000 in year one, is to increase by 6% per year for
15 years covered by the incentive and post incentive payments. The developers have requested
that the increase be reduced to 2 % based upon the lower inflation rate in the past few years.
The 6% annual increase was predicated upon inflation rates in the late 1980's when the terms
of the DDA were developed. Inflation for the past two years has averaged closer to 3 % .
Reduction of the escalator to 2% would result in a loss of $16,500 to the City in the first year
if the Auto Park generates at least $550,000 in sales tax revenue from July I, 1995 - June 30,
1996. This figure will increase slightly each year for the next five years.
~ The base sales tax was also predicated on actual auto sales in the Jate 1980's which have not
been replicated since. The developers have, COnsequently, requested a reduction in the base to
$340,000 which is commensurate with recent sales Jeve1s. Such II. reduction would have a direct
financial impact upon the city since the City receives 100% of the base before the sharing
formU1a with the dealers goes into effect. If the base were reduced to $340,000, the City's loss
in the first year would be 75% of sales tax revenues over $340,000, up to $550,000. If sales
tax revenues reach $550,000, the City would lose $157,500. The sales tax base increases every
year by the escalator amount (currently 6%).
The developers have also requested that the escalator not be applied to the base sales tax until
July 1, 1996. In accordance with the DDA, the escalator is scheduled to go into effect on July
1, 1995.
4-7
,
Page 4, Item~ '. -
Meeting Date 02/14/95.
The financial impact to the City of postponement of the effective date of the escalator would be
relatively minor, totalling $33,000 in year one if the base remains at $550,000. The loss would
reduce to $2,OOO:t per year thereafter.
Agency Repurchase of Parcel #1
In addition to the Chevrolet dealership (lot #3), Mr. Ordway owns lot #1 which comprises 2.4
acres. This parcel originally comprised 4 acres. However, Shinohara retained 1.1 acres to
stockpile contaminated soils. Ordway purchased 2.9 acres through the Agency. The site was
reduced by 4 acres due to construction of the westerly cul-<le-sac of Auto Park Drive. Mr.
Ordway claims he cannot sell the property now because of its reduced size and proximity to
contaminated soils. He has proposed that the Agency repurchase the parcel at a value inflated
to account for land development costs. In addition, Mr. Ordway is required to purchase the 1.5
acres once the contaminated soils are removed (which could occur later this year). The Agency
would presumably have to assume this obligation as well. This would require a cash payment
of approximately $1 million (per Ordway's request) which would be tied up until the land was
sold by the Agency. It may be possible to recoup these funds when market conditions improve
and the contaminated soils are removed from the adjoining parcel.
ak:aulopadlJttnheJp ...4
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.. ~
NUGENT 8< NEWNHAM
THO".' p, M""NT . P_~"ON.L C..-o~TtO.
CUPNEN L. H<"'HHAM ATTo"..eyS "T LAW L.o. ~OLLA OFFiCe
.OCHV. "«'NHA" '010 HCO.O AveNV" .VIT< noo .,C 'ROSPECT nR..,-, S"'T< >OS
CHRTL L. .UP"'.
O.VIO H. NV«.T ÐAN DIJ<OO. CAI.IP'ORNU, ..".01-0044 ~ "OLL., "L"O.MI. 0'0>7
.ANn O. HILL'. "'.c'NONE ...., "."0"
"OCHAEL H. ".H TELepHONe '0'01 uo-.." P.C"'<oLe ""'" ..........
P.'RceK M, .">TH P.C.",OLE ,.,., ".-0<"
.OPH J, ...e.c
".oeoIT. G. "LCOCK
.u.e.. W. "AnlNe January 30, 1995
."'ON C. LTHN
M. RAT."'N ".WPMAN
Bv Fax and Mail
.- - , . ,- '-' '" ., ,M .,....
sid W. MQx;r~ "~3 :-:-:;::.T 1. ~:.",:-!"'I r:Fr: =-" " ~, . . :?":;" ,.- .. ..
city Manager
City of Chula Vi.sta.
276 Fourth Avenue
Chula Vista, CA 91910 , . '7: ,,", : T., ,.-- ,
~:~..~ ':.'~e;, Chtlla Vista Auto"Park' '.,','
(
.. ":
Dear ~. Morris; 0 "" .., ,
,... -.. . - .
.; : ;AS, discussed in ~ .~~t1J\'ÇJ 'ë)Ì1 January- 19, 1995, 'the'
~ve1.Opers of the CbUla V~- Auto .pç-Jc; (David ordway, ~avis
:Reneau .And Doug Fu11er, A$c¡enera1 partner 01' the DGJi' l"aJaUy
. ~te4 1'artner~p)' ~e ext:r8lllely ~Bat1Stied .i1:l1 ~e amount ~
' 1:IOnd ~ be~ cÜSbl1rØe(t tor .Assessmènt 'D~strlot No. 92-2.
~e bond procèeðs to 'be diøbur8eè1 1:0' the developers are almost 50t
~.8S than 1;:Þat whiCh' wa.s orj,g1rie11y conteiiIplated. ',We understand
that 1:I1e amount of 1:h. bonI;l$ ljIold was 1111i.Ud by '1:I1e value of the
property th<!l,t foras 1:1)e AaSOS81llerit District, ',but also realize t:hat
the va.luo.tian iqD.Ored any value for hlprovÐ11lGnts to the property
which are signiticant. '
, :. It ,w~s o+lc¡ina¡ly ,contèlDplated ,that the bond proceeds would
reimburae the deVelopers for the costs of co~ctin9 the içrove-
'melita:, pa~t' the 'lien on the Auto Park pared. for Assessment:
DlstriC1: Bo. 90-2, reimbut:åe the c1EiveloPers fOrincident:al costs
~c1 ~~e develope'n¡ $738,230 fOr ltcqu1sition of the rights-of-
way be ' transtet1;'ec1 to the City. !rIie ~l construction costs
and~iderit:al expens,~ 1nc;urred by the de~l~ was approxi-
mat~y $1,5S0;OOOWhiie the amount 01' bond proce . beinc¡ cUsbUrsed
is only $1~36'8,OO!). ~e' Qost:;:to devel~ indicated abOve does
not include the cost for the otay Rio Water Line. 'l'hus, the bond
procee~ will, not eV ilnrêillibut"~ th~ developers for their out-of- .
pocket: oos~ 1n~d, in con8tru~ the improvements.
, ' , . ' ,c-, '.
.. Zn addition', tbedelay, in the widening: of ot::ay Valley Road hlis
si~ificant1y impacted the business of the dealeJ:'s in ,the Auto
... -. -'" -.---. "". Lf- l' "' "
619238Ø465 NlkiENI to ~ APe 568 PØ3/O6 JAN 3Ø,' 95 ,~:26
sid W. Mord,s
City Manager
city of Chula Vista li
January 30, 1995
Page 2
Park. Other :tactors, such as the devaluation of the peso, have
adversely a:t:tected the' business of the dealers at a ti1he when
overhead costs have increased dramatically.
As discussed at our meeting, the - developers are hereby
respectfully requ,esting assistance :trom the City of Chula Vista
and/or the :R.adevelopment Agency in making up the' ehortfall in the
bond, prooeedg and directly compensating the developers .for the
-. . rights-of-way."" , ., - .,.. .-. ... ..- ., -- ~ .-"
,"':r;"""'-,'~'" ~"'~:r' ""'.',~-~ A?'. ",.. " ".'" -~..", ...
First;. ihe" çevëïo~rs request the assistanë~'ot -the" city .., ,.
and/or Redevelopment Agency in securing loans in the total aJIIOunt
ot $1,100,000 to reimburse the developers for con~truction costs
and m"cellaneou:s expenses not being reimbursed by the bond
proceeds, to reililburse the .. developere ,for costs incurred in
~ob.stru:ctingthe otay Rio Water Line, and to. JDake up the shortfall
.~~~~, bond' pr~eds for the right-of-way acquisition costs.
:', .: .! second, the døveloperø, r~ that the City ~d Redevelopment
Ag~cy OC?nd4er ~Ønð1ng thi!, 0' ition ai1\1 DevelopmentAgreeaent
("ODA") çovet'inq the AU~ Þa~ tò increase the -ount of incentive
payments ~lly payable to .the developerS as a Deans of
..~ly paying' 1:I10J11 for the cóst 'of the ¡and oons1&tinl of the
~ras1:rqctæ:e ~VGaen1:a (ratber than a .ere borrowinl for the
.cQj~ of'..uch 'lan S)'. , "t'he boJ;Tw$ii9 .fOr.the cOst or th~ .land
referre4 -t:o ,aboVe' vi1l"proviCle the' ,deyelopQrs with short-term
Capital' needs ~Ue chang-es. in:-'the 'iiu::entlve payments will assist
1:I1e d.~velo~~ 111 r~pay~~ the ,.~:~~.. ;::: ','
" A prop06ed,«Ullei1dmen.t to, ~e:..D~:;:~ as follows: :i
\. ,i~ ~e :~1.mwi AgencY- Repap.,entobligation ..in'
,~ : Section. 401... (vi) should be incree.øed' by .the
. c~ted ri!¡J1~-o~-way :~~i..~~~o~ ~st of $73~,230. .
'." 2.: ~e.Baaa Sales D.x,._ount,should.be decreased,
. t:o'$340;000 ~. JIÒr. aOcurat:aly.:.~efl.ct the sales taxes.
...paid:by t:hel;ioa~s '.1Dthè; P.m:..' The' averaqe Combined
t:&xttble sales of Puller :tOM ån<l South Bay Chevrolet for
'. 3.991 and 1992 (thè2 years "pree;:edinc¡' the closing on the
.. iand purcháce) 'wasil appr~t:aly $33,'300,000." ,
, 3.', The ,6~, IQsc:alator.:'on 'the';Base.Sá.les'l'ax «UIIount
, should be decreaSedfrOl\ ,6~;tci.'2t,andthe first year of
increase' should be thè' Agency Fiscal Year, be<¡inning
Julyl,l996. : ,:""",
-
.' 4-/0
.. -- - ..' .'.-- ...,.... -... , .
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Sid W. Morris
City Manager
City of Chula Vista
.january 30, 1995
Page 3
We greatly appreciate your pagt assistance and willingness to
discuss these JIlatters. If you wish to dilicuss these matters bet'ore
taking them to the city Coun~il, please call me. As we discussed,
we would appreciàte your taking these issues to the City Council
meeting on February 7, 1995. Thank you for your cooperation.
Sincerely,
--. . - -'~T"; ""':;~' ;~J ~ ,;;; - ":,-;,,,.
.. .-,
John Abbene
JJA/nf
c(;;-} : Chris 'Salomone (Via Fax)
J Douglas Fuller
'=David Ordway,
,.' ¡ Trav.f,s Reneau
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NUGENT &: NEWNHAM
~H'MA' P. NU«'" A '"O'CC"OHA' COOoOOO>A"'O.
"',"HON " NeWHHAH "'TTO~"CY" A' ...... LA ..IOU.... O'~IC"
J'CHUA W"'NMAN '0'0 UC... AveNV.. 'U",. ..00 .,. '.ooc."e, "ACCT. .u"", .0.
C""",, " 'u,,'e.
~v,o H, NUO.H' S"'" "IItGO, c.u.J:PORNIA "'UO,","""'" LA '"'u.. CA"'OOM,. ..OU
J<HU 0, H""'A TO""'NO.C '0'.' -.....,
HICH'" M. ...H "«~H'hO CO,., ........ "."N'LO 'oto, ...-<>...
'A'~I.K H. 'HITN '~C"H'.. ,..., ~S
JOHH ... ~".H<
H.~eOITM O. A'COCK
STeveH W. H.....,.s January 30,1995
.'HOh e. LYHN
... ....TH"'N NeWMHAH
By Fax and Mail
- si~ W: Morris' ,.., '..., '.. '.., ..',. ..-
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City HanI!'9'er" ,~,'r",; '.'.'"""T '!. '.~,,--~ I'!P(' Co" ., ~ ," ~~, :-.~ . -~ -.. ,
City of Chulc vista
276 Fourth Avenue
Chula Vista, CA 91910
,. ..'
Re: Chula Vista AutO :Par~~~ i>ãrc¡'~ i
"" ",
:¡:iDèar'Mr~ Morris: ',.
",. , . . . , . "." " ... ..
~. -;"~ òn behaU or ~Ve' òrdwaY"1üt4 1'ravu' Reneau, owners of South
~ ':BaY Cliev;rolGt an4 -Parc,ê1s3.and.<1 'of ~i(, Chula Vista Âuto Park, 88
'.'.cU:~8Sed ~ .our ~~~ OD.JaDuaxy. J9¡ ;1:995., we request t:he Cit:yts
; ,and/o'l; ~844V~oplllQD,t A9'~'s .ssistance ~tb rupeçt; to Parcel 1
,'. of. ,1;he Auto ~ark, ~e ~t lc;It... ~ you 'bow, the .~lIe of ParoeJ.
. 1 '~ 1d.gn1fiçantJ.y re4uCe4 \then contaJabateð sou. was ~ound
1:hroughout tb,e entire AuW Park and s~ored on a Ho1.cUng site ~ed
out: of the original Parcel 1. the eíøall'siz~ of Parcel 1 -and .the
failure of .Hr. ShinoJiat:ato reiAòdlate th~ HoJ,.din'iJ site or even
adequ~tely stòre the 09,n1:udnated soil bas IlIAd. it impossibJ.e for
~e owner5to' sell PUoel 1. g¡,.y bayeliad severaJ. potential
bUyers Intt. aU have indicaUd that, the parcel is not 1.arge enough
tÇlr a ~ ~eUership.
.' ~e coat or -purcbU1n9 iILnd bolding-Parae], 1 to'iJether with the
dr~tica11.le 1ncr~ ov~ead in oPeratin9 South Bay CbevroJ.et,
I!.a~ '~' nø theGl1,~ty of Hessrs. ~dw8.Y. and Reneau to
'continue to, opGrat;e the' dft Ii!nbip. 1'hq ere h ilmaediate' need of.
your finaric!&l, a$s1St:aJ1ce 'or t:J1ey. JAY -be foré:ed to c1.ose Sou1:h Bay 7f-
CheVroJ.et. We req\Jes,t tbatthe City e.nd/or, Redevelopalent Agency
purchase parçe1".i1t~ ~th~, oWl).~a,as.~oon as pOsaibJ.e for their
òut;",of-P<JCke.t cost .in p\1rchasirtq and maintaining the parcel. In
adc:Ution,"á.s~part. of the'puJ::chasè transaçt:ion, we must address the
oblicje:tion of !«8$8rS. Ordway. and Reneäi1 to purchase the Holding
Site when ðn~ if the oontamin&:tec1 ~òil.:is, remov~. . .
.
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"
sid w. Hõrris -
city Manager
City of Chula Vista
January 30,1995
Page 2
The'owners Geek reimbursement of the following costs;
original Land Cost $ 876,511.00
share or Infrastructure Cost
Not Reimbursed by Bond,Proceeds 26,681.00
Penaits 5,104.00
Property Taxes - First Installment 1994-95 19,660.00
--, - .. First Installment Supplemental, -"
""~-'~5 !,'_'l'¡1~- (1!4JIJ!~:~-9j9~4 =~,: : ',' -~.';~;'~8~OO- - .-
Both Installments tor 1993-94 ---3,666.00
Interest Expense 103,672.00
Miscellaneous Fees and Expenses 10.000.00
,<
-... 'l'OTAL $1.048.544.00
',-," ¡
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, .' i! xt -18 our belief that the developmen1: of l'arOG1s :I and 3 as
vèJ.l as the eons1:rUctiòn of the roads and' other infrastru~
~r~vements þilve .ncr"Se~ tile valuo of P~l i: to $11 per square
toot;. particularly utero .the;,Bo],dbic¡."slte .is .remedlated and
'CóJlb1ned-with Para6l. 1., 1'h1s will eqaJJl. the ,city or Redevelopaen1:
AJenc:y ;to .~e ~ - recqyer the cost. Unfo~ately, 'Kessrs.
ordWay and Reneau are unable to hold this parcel When it is not
C¡filneratinc¡ àny income and cannot be sold until' the 'Holding- Site is
raediated. , '",---
-' : As we discussed, we Would appreciate your t:aJdnc¡ this -tter
to the _City Council ~~t~ on Peb~ ,7. 1995. If you wish to
cU._cuss thlis ,:issue befo~ ,t:ak1ng-'-it to the City Council, pl_se
call me. 'l'bank you for your cooperation~ "
. ~: .' ( f -
.Sincerely, , -
:. ,
~ ~rß~
JOhn, Abbene
:J:JA/nt
eel :Chris SalOlllone (Via Fax) ,°- '--
Davia Ordway ;,; , ~"
. Travis Reneau n ':. ','::
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EXHIBIT B
NUGENT & NEWNHAM
'HOMAS P. NUGEN' A P'O""'ONAL CO'PO.A"ON LA ~OLLA OFF<CE
"EPHEN L. NEWNNAM ATTORNEYS AT LAW
_OSHUA WE'NMAN .>s PAOSPEC' "AEn. SU'" 305
CHERVL L. AUFFOEA <0<0 SECONO AVENUE. SU"E 2200 LA -OLLA. CAL"OAN'A g203>
OAV'O M. NUGEN' 'ELEPHONE le,g ..g'3e..
_AMES O. M'LLEA SAN DIEGO, CALIFORNIA 92101-3944
M'CNAn N. FOSN nLEPNONE ,e,g, 23e-0323 ESCONDIDO OFFICE
PA'A'CK M SM"" FAC"M'LE le,g, ..,S-046S
-ONN _. AS6ENE "66 SOU'N ESCONO,OO SOULEVAAO
MEAEO"M G. ALCOCK ESCONO'OO. CAL"OA",A gW2S
"EVEN W. NASK'NS March 17, 1995 'ELEPNONE 'e,g, '.B<O'
"MON C. LVNN
M. KA'N"VN NEWNNAM
Bv Messenoer ~
Fred Kassman 1i/;R 1995
Department of Community Development c~",.:: :o'd
City of Chula Vista
263 Fig Avenue
Chula Vista, CA 91910
Re: Chula Vista Auto Park - South Bav Chevrolet
Dear Fred:
Pursuant to the letter of February 13, 1995 from Glenn Googins, we
enclose the following information with respect to South Bay Chevrolet
and the loans ágainst Parcels 1 and 3 of the Chu1a Vista Auto Park.
First, enclosed are financial statements for South Bay Chevrolet
for the 12-month period ending December 31,1994 and for the month of
January 1995. As indicated on these financial statements, South Bay
Chevrolet incurred a $137,000 net loss in 1994 which includes a
$288,000 net loss for the month of December 1994. They also incurred
a $187,000 net loss for the month of January 1995. Also enclosed are
copies of the Promissory Notes reflecting any loans made by General
Motors Acceptance Corporation for the construction of the
infrastructure improvements and the new dealership. One Note is for
$3,921,895 and the other Note is for $1,045,000. Both of these Notes
are secured by deeds of trust covering both Parcels 1 and 3 in the Auto
Park.
With respect to the cash proceeds received by Messrs. Ordway and
Reneau at the time the Auto Park property was purchased, Mr. Reneau
indicated that of the $175,000 that he received, $142,500 was paid to
his sister for her interest in the property at 821~d~ay and~
balance was put back into the dealership. Of the on ece1ved by
Mr. Ordway, he indicated that $160,000 was contributed to the
dealership and the balance was used for personal reasons.
We request that this letter and the enclosed financial statements
be kept confidential.
......
1-f~
~
Fred Kassman
Department of Community Development
City of Chula Vista'
March 17, 1995
Page 2
We will forward the financial information on Fuller Ford as soon
as it is available. However, with this information, the City and/or
Redevelopment Agency can move forward on the request regarding
Parcel 1. If you need any additional information, please contact me
immediately.
Sincerely,
, ~bb"ne
JJA/nf
cc: Travis Reneau
David Ordway
<,I-It;.,
EXHIBITC
DEFINITION OF TERMS
1'-/'1
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¿¡-If
1 401. Aqencv Incentive and Post-Incentive PaYments.
2 a. Definitions. As used in this Section 401, the
following definitions shall apply:
3
(i) "Aqencv Fiscal Year" shall mean the year
4 beginning July 1 and terminating June 30.
5 (ii) "Applicable Percentaqe" shall mean:
(w) during any period of time that less than two Major
6 Brand Auto Dealerships are operating on the Site, zero
percent (0\), (x) during any period of time that two
7 Major Brand Auto Dealerships are operating on the Site,
twenty-five percent (25\), (y) during any period of time
8 that three Major Brand Auto Dealerships are operating on
the Site, fifty percent (50\), and (z) during any period
9 of time that four or more Major Brand Auto Dealerships
are operating on the Site, seventy-five percent (75%).
10
(iii) "Base Sales Tax" shall mean, for any
11 given period of computation, the amount of $550,000.00,
as such amount shall be increased by six percent (6\),
12 on a cumulative basis, at the end of each Agency Fiscal
Year. The amount of $550,000.00 represents one percent
13 (It) of $55,000,000.00.
14 (iv) "Incentive PaYment Commencement Date"
shall be the same as the "Liability Segregation Date"
15 (as such term is defined in Section 10Sd., above),
provided such date occurs within the time contemplated
16 therefore in the Schedule of Performance.
17 (v) "Incentive PaYment EXDiration Date" shall
mean the earlier to occur of (X) the sixth anniversary
18 of the Incentive Payment Commencement Date, or (y) the
date upon which the Maximum Agency Repayment Obligation
19 has been satisfied in full,.
20 (vi) "Maximum Aqencv Repavment Obligation"
shall mean an amount equal to the lesser of: (x) the
21 difference between the Acquisition Price and
$3,767,504.00, and (y) such portion of the amount
22 described in clause (x) which has been paid by Agency to
Redeveloper-in the form of Incentive Payments as of the
23 Incentive Payment Expiration Date. Portions of the
Maximum Agency Repayment Obligation remaining
24 outstanding, from time to time, and at any time, shall
accrue interest at a fluctuating rate per annum equal to
251 the floating commercial loan rate announced from time to
time by Bank of America as its "prime rate" plus two
26 percent (2%).
27 (vii) "Sales Tax Received bv Citv" shall mean, I
for any given period of computation, that portion of t~e !
28 California sales tax (curr~ntly one percent (1%»,
I J\AO2330lT - NAP -y
4- I ~
1 which, following payment to the state Board of
Equalization by businesses operated upon the Site
2 pursuant to the provisions of this Agreement, was
received by the city for use as unrestricted, general
3 fund revenues. Notwithstanding the generality of the
foregoing, Sales Tax Received by City shall not include
4 any portion of California sales tax collected from the
Site and paid to the City for special pUrposes, such as
5 transportation purposes.
6 b. Incentive PaYments.
7 (i) Upon the expiration of the 180th day
following the close of the first full Agency Fiscal Year
8 after the Incentive Payment Commencement Date, and
occurring thereafter on an annual basis until and
9 including the Incentive Payment Expiration Date,
provided that in each such year the Sales Tax Received
10 by City for such period of computation exceeds the Base
Sales Tax for the same period, Agency shall pay to the
11 owners of fee title to the Site, in the aggregate, the
Maximum Agency Repayment Obligation in the form of the
12 "Incentive Payments". Such payments shall be calculated I
and paid to such owners individually, as described in
13 clause (ii), below.
14 (ii) The Incentive Payment to any given Site
Parcel owner for any given period of computation shall
15 be calculated by multiplying the difference .
(hereinafter, the "Site Parcel Tax Excess") between: (x)
16 the portion of the Sales Tax Received by City which is
attributable to the applicable owner's site Parcel
17 during the given period of computation less (y) one-
quarter (1/4) of the Base Sales Tax for the given period
18 of computation, by the Applicable Percentage(s). In the
event any site Parcel is further subdivided, Agency
19 shall have no obligation to make any Incentive'Payment
applicable thereto until such time as it has received
20 assurances with respect thereto in the nature of the
assurance described in Section 401c., below, executed by
21 all owners.
22 Notwithstanding the foregoing, in the event
that, using the method of calculating the Site Parcel
23 Tax Excess described above, for any given site Parcel
one-quarter (1/4) of the Base Sales Tax is greater than
24 the Sales Tax Received by city with respect to said Site
Parcel, the Site Parcels for which such is not the case
25
26
27
28
J\AO2330lT.NAP -
4- :< ()
,
I
1 shall each have their respective Site Parcel Tax Excess
reduced by an equal portion of such excess. By way of
2 example only, assuming that for year lOX" the Sales Tax
Received by City is $1,000,000, the Bases Sales Tax is
3 $600,000, and there was one dealership operating on each
of the site Parcels during the entirety of year "x"
4 (Site Parcels 1, 2, 3 and 4 being responsible for, I
respectively, $350,000.00, $350,000.00, $225,000.00 and I
5 $75,000.00 of the total $1,000,000 Sales Tax Received by
City), the owners of Site Parcels 1, 2 and 3 will
6 receive 75% of, respectively, $175,000.00, $175,000.00
and $50,000.00, and the owner of site Parcel 4 shall
7 receive $0.00.
8 c. Post-Incentive Pavments. Upon the first
anniversary of the Incentive Payment Expiration Date and
9 occurring thereafter on an annual basis until the ninth
anniversary of the Incentive Payment Expiration Date,
10 provided that in each such year the Sales Tax Received by
City for such period of computation exceeds the Base Sales
11 Tax for the same period, Agency shall make payments (the
"Post-Incentive Payments") to each Major Brand Auto
12 Dealership operating within the applicable computation period
equal to the product of thirty-seven and one-half percent
13 (37!s%) of the Site Parcel Tax Excess attributable to the site
Parcel upon which such dealership is located (which
14 calculation of Site Parcel Tax Excess shall be subject to the
same adjustments as are described in clause (ii), above).
15 The foregoing described allocation assumes that each &ite
Parcel shall have no more than one dealership operating'
16 thereupon. To the extent that there may be more than one
such dealership operating upon a Site Parcel, Agency shall
17 have no obligation to make the applicable Post-Incentive
Payment until such time as the dealerships operating upon
18 such Site Parcel deliver a written instruction to the
Executive Director (in form and content acceptable to Agency
19 general counsel and executed by all such dealerships)
specifying the manner of apportionment and holding the Agency
20 harmless in connection with payment in accordance therewith.
21 d. Nature of Incentive Pavments and
Post-Incentive Pavments. Notwithstanding anything to the
22 contrary in this Section 401, it is understood and agreed
that although the method of calculation of the Incentive-
23 Payments and the Post-Incentive Payments is based upon sales
tax received by City, in no event shall such method of
24
25
26
27
28
J\AD233DlT. NAP
1~.< ¡
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1 calculation constitute a commitment by City or Agency of
sales tax proceeds. The parties acknowledge that' Agency's
2 obligation to make Incentive Payments and Post-Incentive
payments, based upon the calculations described above, is a
3 separate obligation of Agency of which Agency shall be
obligated to arrange for a source or SOUrces of repayment,
4 and in no event shall constitute an obligation of the City.
Additionally, Agency's obligations to pay the Incentive
5 Payments and the Post-Incentive Payments shall be an
indebtedness of the Agency for the purposes of
6 Sections 33670, gt~. of the Community Redevelopment Law.
7 e. Miscellaneous.
8 (i) Accounting. Agency shall have the right
9/ to receive from Redevelo~ar, and Redeveloper shall
deliver to Agency within thirty (30) days following
10 I Agency's request therefore, an accounting and status
report concerning and setting forth the present status
and amounts of retail sales proceeds applicable to the
11 Site for the particular Agency Fiscal Years in question,
including, without limitation, sales tax records
12 submitted to the State Board of Equalization.
13 (ii) Calculation of California Sales Tax. As
provided above, the definition of Base Sales Tax is
14 calculated on the assumption that the California sales
tax to be returned to the City for use as unrestricted,
15 general fund revenues shall remain one percent (It).
However, in the event such percentage of California
16 sales tax is modified in subsequent years, the parties
shall cooperate to reformulate the definition of Base
17 Sales Tax to take into consideration such modified
percentage. Further, in the event such percentage is
18 increased, the calculation of Sales Tax Received by City
shall be limited to the originally contemplated one
19 percent (It) amount, while in the event such percentage
is decreased, the calculation of Sales Tax Received by
20 City shall be based upon such actual decreased
percentage.
21
(iii) Failure to ODerate. Notwithsta~ding any
22 provision in this Section 401 to the contrary, it is
understood and agreed that in the event that either: I
23 (x) the Incentive Payment Commencement Date fails to
occur within the time frame set forth in the Schedule of
24 Performance, or (y) such dates having occurred within
the time frame d~scribed in the Schedule of Performance,
25 thereafter, 'for any continuous period of thirty (30)
days or longer (or within any given one-year period in
26 the event of any noncontinuous aggregated period of
ninety (90) days) there fails to be operating upon the
27 Site at least two Major Brand Auto Dealerships, Agency
shall cease to have any further obligations to make
28
J\A02330lT ,NAP
L{ -).~
1 Incentive Payments or Post-Incentive Payments under the
provisions of this Section 401.
2
ADDITIONAL TERMS
GMAC - General Motors Acceptance Corporation: lenders for auto
purchase loans, dealer operation loans and mortgage lenders.
DDA - Disposition and Development Agreement.
'f-).3 ~
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L(-:J..t.f
REDEVELOPMENT AGENCY ITEM #5
MEMORANDUM
May 16, 1995
TO: The Honorable Chairman and Agency Me~
. vcr~
VIA: John D. Goss, Executive Directorjli ..-..
FROM: Chris Salomone, Community Development Director ¿~<) /
SUBJECT: Redevelopment Agency Item #5: Joint Resolution - Veterans Home
The resolution sent forward with the Agenda packet indicated it was an Agency
resolution. However, the resolution is a Joint Resolution of the Aqencv and Council
and the attached resolution reflects that.
The text of the resolution remains the same. The heading was changed to reflect
(Agency Resolution 1453 and Council Resolution 17898).
[C:IWP51 IAGENCYIMEMOSIMA YOR.4.MEMJ
AGENCY RESOLUTION 1453
COUNCIL RESOLUTION 17898
JOINT RESOLUTION OF THE REDEVELOPMENT AGENCY AND CITY COUNCIL OF
THE CITY OF CHULA VISTA INSTRUCTING STAFF (1) TO COMMENCE CEOA
REVIEW FOR ACQUISITION OF 30.06 ACRES OF UNIMPROVED REAL PROPERTY
LOCATED ON THE EAST SIDE OF MEDICAL CENTER DRIVE FOR THE PROPOSED
DEVELOPMENT OF A VETERANS HOME; (2) TO FORMALIZE AN AGREEMENT WITH
SWEETWATER UNION HIGH SCHOOL DISTRICT FOR SUCH ACQUISITION,
SUBJECT TO CERTAIN TERMS AND CONDITIONS; (31 TO NEGOTIATE A FORMAL
AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF VETERANS AFFAIRS FOR
SUCH DEVELOPMENT, SUBJECT TO CERTAIN TERMS AND CONDITIONS, AND (4)
TO TAKE ALL OTHER NECESSARY AND APPROPRIATE ACTIONS TO FINALIZE
SUCH MATTERS EXPEDITIOUSLY AND TO PRESENT SUCH MATTERS TO THE
AGENCY/COUNCIL FOR FINAL APPROVAL
WHEREAS, the need for a Veterans Home in Southern California is well established,
with over two-thirds (2/3) of the state's veterans residing in Southern California; and,
WHEREAS, the State of California has created the Governor's Commission on the
Southern California Veterans Home to advise the Governor and the Legislature on the
placement of such a Home; and,
WHEREAS, it is contemplated that, wherever the Veterans Home is located, it will
provide shelter and services to 400 veterans and create 200 to 300 new local jobs; and,
WHEREAS, a substantial portion of the Veterans who will reside at the site earn low
or moderate incomes; and,
WHEREAS, the City/Agency believes that the social and economic benefits of
developing the Veterans Home in Chula Vista would be very significant; and,
WHEREAS, the City/Agency staff has negotiated terms for acquisition of the Hospital
School Site with the Sweetwater Union High School District.
WHEREAS, the City/Agency has conceptually approved the donation of land for the
building of a Veterans Home facility at the Hospital School Site property which consists of
30.06 gross acres of undeveloped land located on the east side of Medical Center Drive,
between East Naples court and Medical Center Court in the City of Chula Vista; provided that
the site is selected for development by the State of California, and recognizing the nature of
the facility warrants relief from certain development fees; and
NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY
OF CHULA VISTA AND THE CITY COUNCIL does hereby find, order, determine and resolve
as follows:
1. Staff shall immediately commence CEQA review for acquisition of 30.06 acres
of unimproved real property located on the east side of Medical Center Drive for the proposed
development of a Veterans Home.
Agency Resolution 1453
Council Resolution 17898
2. Staff shall formalize an Agreement with Sweetwater Union High School District
for the acquisition of the Hospital School Site in substantial conformance with the following
terms and conditions, with such other appropriate terms and conditions required by the City
Manager and the City Attorney:
In exchange for the transfer of fee title by the District of the Hospital School Site to
the City/Agency (or its designee), on the terms set forth below, the City/Agency shall
provide the District with the following:
1. Fee title to that certain real property located at Third Avenue and Alvarado
Street, Chula Vista, comprised of approximately 2.63 unimproved acres,
commonly referred to as the "Windmill Farms Site", The site was recently
appraised at $1,375,000.
2. The City is currently negotiating to acquire approximately 50 acres of
undeveloped real property located within Phase II of the Otay Rio Business
Park upon which the City intends to relocate its corporate yard (the
"Proposed Corporate Yard Site"). If the City acquires the Proposed
Corporate Yard Site (which it will use good faith efforts to do within two
years), the City shall (a) provide the District with 8 to 10 undeveloped acres
of that proposed corporate yard site (not to exceed $545,000 in value, the
current estimated value of such an interest); (b) mutually agree upon
division of the corporate yard site property so as to accommodate a design
that best meets both agencies requirements; and (c) provide two access
roads to this corporate yard site; City will explore the feasibility of having
one such access road proceed north, directly to Otay Valley Road.
3. In the event that the District develops the Windmill Farms Site into an
administrative headquarters for itself and/or other public agencies, the
City/Agency at no cost to the District, would finance, or would arrange for
financing, of the District's lease or debt service payments for such facility
for a period of twelve (12) years, not to exceed $500,000 with the
maximum amount payable, in total and in anyone year, not to exceed the
tax increment generated by the facility and received by the Agency in
unrestricted funds. This would not prevent the district from subleasing a
portion of the building to a private venture. City/Agency will work with
merchant builder to negotiate a lease payment schedule in favor of the
District in the early years.
4. City staff will expedite processing, and presentation to City Council for due
consideration, of any District application for the rezoning of the District
property located at 1130 Fifth Avenue, Chula Vista, upon which the
District's administrative offices are currently located. Due consideration will
be afforded the District's preferred zoning of the subject site.
In exchange for the transfer of fee title by the City/Agency of the Windmill Farms
Site to the School District (or its designee) and for the other consideration set forth
above, the District shall provide the City/Agency with the following;
Agency Resolution 1453
Council Resolution 17898
1. Fee title to the Hospital School Site. The site was recently appraised at
$1,920,000.
2. The District shall exercise its best efforts in order to structure the property
transfer in a manner consistent with the City/Agency's intended use of the
site; namely, donation to the State of California ("State") for the
development into a 400 bed, congregate care Veterans home facility
("Veterans Home Project"). Such best efforts shall include the District's
agreement to transfer the Hospital School Site by no later than July 1,
1995, in exchange for the Windmill Farms Site, eight to ten acres of a
corporate yard site and lease/debt service consideration as identified in Item
No.3 above or a Irrevocable Letter of Contractual Obligation pursuant to the
terms of this agreement.
3. Staff shall negotiate a formal Agreement with the California Department of
Veterans Affairs for such development on terms and conditions approved
by the City Manager and the City Attorney including, without limitations,
provisions which assure the development of the Veterans Home on the site
and/or which return the site to the Agency if no such development occurs
on agreed upon terms.
4. Staff shall take all other necessary and appropriate actions to finalize such
matters expeditiously and to present such matters to the Council/Agency
for final approval.
PRESENTED BY: APPROVED AS TO FORM BY:
e~ ~
Chris Salomone
Community Development Director
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[BBIC:IWP51 IAGENCYIRESOSIVETHOME2.RESI
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JOINT REDEVELOPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT
Item 5
Meeting Date 05/16/95
ITEM TITLE: RESOLUTION 1453INSTRUCTING STAFF (1) TO COMMENCE
CEQA REVIEW FOR ACQUISITION OF 30.06 ACRES OF
UNIMPROVED REAL PROPERTY LOCATED ON THE EAST SIDE
OF MEDICAL CENTER DRIVE FOR THE PROPOSED
DEVELOPMENT OF A VETERANS HOME, (2) TO FORMALIZE AN
AGREEMENT WITH SWEETWATER UNION HIGH SCHOOL
DISTRICT FOR SUCH ACQUISITION, SUBJECT TO CERTAIN
TERMS AND CONDITIONS, (3) TO NEGOTIATE A FORMAL
AGREEMENT WITH THE CALIFORNIA DEPARTMENT OF
VETERANS AFFAIRS FOR SUCH DEVELOPMENT, SUBJECT TO
CERTAIN TERMS AND CONDITIONS, AND (4) TO TAKE ALL
OTHER NECESSARY AND APPROPRIATE ACTIONS TO FINALIZE
SUCH MATTERS EXPEDITIOUSLY AND TO PRESENT SUCH
MATTERS TO THE AGENCY/COUNCIL FOR FINAL APPROVAL.
{^
SUBMITTED BY: Community Development Director é <,> ,
REVIEWED BY: Executive Direct°tf (4/5ths Vote: Yes - No..x:J
Council Referral Number: -
BACKGROUND: On October 25, 1994 the Chula Vista City Council conceptually approved
the donation of 20 acres of land at the Hospital School site currently owned by the Sweetwater
Union High School District (SUHSD), and the exemption of the majority of development fees
in support of the Veterans Home project. On October 27, 1994 the Governor's Task Force on
a Southern California Veterans Home voted in favor of recommending the Medical Center Drive
site in Chula Vista as the location for the development of the next Veterans Home facility ahead
of all other proposals in Southern California. On November 14, 1994 the Chula Vista
Redevelopment Agency, the City of Chula Vista, and the Sweetwater Union High School
District, entered into a Memorandum of Understanding ("MOU") regarding the Agency's
proposed acquisition of certain real property owned by the District, comprised of approximately
30.06 unimproved acres, commonly referred to as the "Hospital School Site". On May 12, 1995
the SUHSD Board of Trustees approved the proposed tenns of an agreement to acquire the
subject property as previously discussed with the City/Agency members on May 9, 1995 (see
attached letter).
RECOMMENDATION: That the Agency adopt the proposed resolution.
BOARDS/COMMISSIONS RECOMMENDATION: The City's Housing Advisory
Commission and the Veterans Advisory Commission support the development of the Veterans
Home at the proposed site.
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Page 2, Item ~
Meeting Date 5/16/95
DISCUSSION:
The following property acquisition terms and conditions were discussed by the City/Agency
members at their Executive Session on May 9, 1995 and approved by the Board of Trustees of
the Sweetwater Union High School District on May 11, 1995.
CitY / A!!encv Obli!!ations
In exchange for the transfer of fee title by the District of the Hospital School Site to the
City/Agency (or its designee), on the terms set forth below, the City/Agency shall provide the
District with the following;
1. Fee title to that certain real property located at Third Avenue and Alvarado
Street, Chula Vista, comprised of approximately 2.63 unimproved acres,
commonly referred to as the "Windmill Farms Site". The site was recently
appraised at $1,375,000.
2. The City is currently negotiating to acquire approximately 50 acres of
undeveloped real property located within Phase II of the Otay Rio Business Park
upon which the City intends to relocate its corporate yard (the "Proposed
Corporate Yard Site"). If the City acquires the Proposed Corporate Yard Site
(which it will use good faith efforts to do within two years), the City shall (a)
provide the District with 8 to 10 undeveloped acres of that proposed corporate
yard site (not to exceed $545,000 in value, the current estimated value of such
an interest); (b) mutually agree upon division of the corporate yard site property
so as to accommodate a design that best meets both agencies requirements; and
(c) provide two access roads to this corporate yard site; City will explore the
feasibility of having one such access road proceed north, directly to Otay Valley
Road.
3. In the event that the District develops the Windmill Farms Site into an
administrative headquarters for itself and/or other public agencies, the City, at no
cost to the District, would finance, or would arrange for financing, of the
District's lease or debt service payments for such facility for a period of twelve
(12) years, not to exceed $500,000 with the maximum amount payable, in total
and in anyone year, not to exceed the tax increment generated by the facility and
received by the Agency in unrestricted funds. This would not prevent the district
from subleasing a portion of the building to a private venture. City will work
with merchant builder to negotiate a lease payment schedule in favor of the
District in the early years.
4. City staff will expedite processing, and presentation to City Council for due
consideration, of any District application for the rezoning of the District property
located at 1130 Fifth Avenue, Chula Vista, upon which the District's
administrative offices are currently located. Due consideration will be afforded
the District's preferred zoning of the subject site.
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Page 3, Item ~
Meeting Date 5/16/95
SUHSD District Obligations
In exchange for the transfer of fee title by the City/Agency of the Windmill Fanns Site to the
School District (or its designee) and for the other consideration set forth above, the District shall
provide the City/Agency with the following;
1. Fee title to the Hospital School Site. The site was recently appraised at
$1,920,000.
2. The District shall exercise its best efforts in order to structure the property
transfer in a manner consistent with the City/Agency's intended use of the site;
namely, donation to the State of California ("State") for the development into a
400 bed, congregate care Veterans home facility ("Veterans Home Project").
Such best efforts shall include the District's agreement to transfer the Hospital
School Site by no later than July I, 1995, in exchange for the Windmill Fanns
Site, eight to ten acres of a corporate yard site and lease/debt service
consideration as identified in Item No.3 above or a Irrevocable Letter of
Contractual Obligation pursuant to the tenus of this agreement.
Additional Conditions
The fonnal agreement with the SUHSD for the acquisition of the site will include a condition
for the City/Agency to return the property to the SUHSD in the event that the Veterans' Home
Project is not built due to lack of State funding or other reasons beyond City/Agency control.
Furthennore, as stated in the proposed resolution, the proposed Veterans Home Project will be
developed subject to a negotiated fonnal agreement with the California Department of Veterans
Affairs for such development, subject to certain tenus and conditions yet to be detennined and
approved by Council/ Agency.
Project Benefits
The development of a Veterans Home will provide the following significant economic and social
benefits to Chula Vista;
8 A $32 million construction project which will generate employment opportunities
of construction trades for approximately I year.
8 The creation of approximately 250-300 new pennanent jobs ranging from entry
level to professional levels.
8 An annual payroll estimated at 8 million dollars which will be a boost to the local
economy.
8 An economic stimulus by establishing a demand for services and increasing
number of visitors to the City in need of hotels and other accommodations.
8 Regional share housing credit for the City.
8 Social benefit and demonstrated City commitment in meeting Veterans needs.
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Page 4, Item ~
Meeting Date 5/16/95
In addition, the proposal to use the Windmill Fanns site to build a school district administrative
office is a positive redevelopment project which can bring significant economic benefit to the
downtown district of the City.
FISCAL IMPACT:
The proposed exchange of land involving the Windmill Fanns and Otay Rio Business Park
properties in exchange for the Hospital School Site is based on values detennined by current
appraisals.
The transaction will be structured so that,in effect, the low/moderate fund will be purchasing
from the Agency the $1,920,000 site and paying the Agency back in the fonn of a land swap
for the Lower Sweetwater Valley site valued at $620,000 and structured payments over time for
the 1.3 million balance.
The proposal for the Agency to finance or arrange for fInancing of the District's lease or debt
service payments for a period of twelve (12) years, not to exceed $500,000 is based on the tax
increment actually generated by the proposed administrative facility and received by the Agency
in unrestricted funds. The development of the school district administrative office has the
potential to produce economic benefits to the redevelopment area which will exceed the tax
increment generated.
[AGlC,IWPSl lJUANlAt13S1 VETHOME2.AI3]
5-LJ
'
(f) Sweetwater Union High School District
ADMINlsmATION CENTER
"30 Alth A..nue
Chul. VIOl.. California 919"028011
(819) 891-8600
Dlvl8fon 01 PIannII11J.1Id F"çlll1/'"
May 12, 1995
Mr. 01rls Salomone
Plrecror of Community Development
aty of Chula Vista
2.76 Founh Avenue
OIula V1rta, CA 91910
Dear Mr. Salomone:
Re: Veterans' Home
On May II, 1995, the Board of Trustees of me Sweetwater UnIon High School Dlstrlct
took action In Cased SessIon to approve (4-.1 vote) me asrnement, as prevIously approved
by me O1ula Vista Oty Council on May 9, 1995. Knowing that the Council and staff are
Interested In expediting mls me, let me provide you with the following deadlines In order
that we may best bring thb to dosul'el
. June 8, 1995 - only board meednr durfnr the mond1 of June
. AD Items are due for inclusion In the aaencfa by May 24. If possible, we would request
a mutuaRy agreed upon conb'aCt and an In'evocabIe Letœr of Contraaaal Obllaatlon be
prepared by tf11s date.
Please advise.
It Is with pleasure that I have the opportUnIty to write tfds letter to you.
. ~
.
.CaIn. . .
AssIstant Superintendent of Planning & Fadlhb
ABC:mr
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RESOLUTION J453
JOINT RESOLUTION OF THE REDEVELOPMENT AGENCY AND CITY
COUNCIL OF THE CITY OF CHULA VISTA INSTRUCTING STAFF (1)
TO COMMENCE CEQA REVIEW FOR ACQUISITION OF 30.06 ACRES
OF UNIMPROVED REAL PROPERTY LOCATED ON THE EAST SIDE
OF MEDICAL CENTER DRIVE FOR THE PROPOSED DEVELOPMENT
OF A VETERANS HOME, (2) TO FORMALIZE AN AGREEMENT WITH
SWEETWATER UNION HIGH SCHOOL DISTRICT FOR SUCH
ACQUISITION, SUBJECT TO CERTAIN TERMS AND CONDITIONS, (3)
TO NEGOTIATE A FORMAL AGREEMENT WITH THE CALIFORNIA
DEPARTMENT OF VETERANS AFFAIRS FOR SUCH DEVELOPMENT,
SUBJECT TO CERTAIN TERMS AND CONDITIONS, AND (4) TO TAKE
ALL OTHER NECESSARY AND APPROPRIATE ACTIONS TO FINALIZE
SUCH MATTERS EXPEDITIOUSLY AND TO PRESENT SUCH MATTERS
TO THE AGENCY/COUNCIL FOR FINAL APPROVAL.
WHEREAS, the need for a Veterans Home in Southern California is well
established, with over two-thirds (2/3) of the state's veterans residing in Southern California;
and,
WHEREAS, the State of California has created the Governor's Commission on
the Southern California Veterans Home to advise the Governor and the Legislature on the
placement of such a Home; and,
WHEREAS, it is contemplated that, wherever the Veterans Home is located, it
will provide shelter and services to 400 veterans and create 200 to 300 new local jobs; and,
WHEREAS, a substantial portion of the Veterans who will reside at the site earn
low or moderate incomes; and,
WHEREAS, the City/Agency believes that the social and economic benefits of
developing the Veterans Home in Chula Vista would be very significant; and,
WHEREAS, the City/Agency staff has negotiated terms for acquisition of the
Hospital School Site with the Sweetwater Union High School District.
WHEREAS, the City/ Agency has conceptually approved the donation of land for
the building of a Veterans Home facility at the Hospital School Site property which consists of
30.06 gross acres of undeveloped land located on the east side of Medical Center Drive, between
East Naples court and Medical Center Court in the City of Chula Vista; provided that the site
is selected for development by the State of California, and recognizing the nature of the facility
warrants relief from certain development fees; and
NOW THEREFORE, THE REDEVELOPMENT AGENCY OF THE CITY
OF CHULA VISTA AND THE CITY COUNCIL does hereby find, order, determine and
resolve as follows:
5-7
1) Staff shall immediately commence CEQA review for acquisition of30.06 acres
of unimproved real property located on the east side of Medical Center Drive for the proposed
development of a Veterans Home.
2) Staff shall fonnalize an Agreement with Sweetwater Union High School
District for the acquisition of the Hospital School Site in substantial confonnance with the
following tenns and conditions, with such other appropriate tenns and conditions required by
the City Manager and the City Attorney:
In exchange for the transfer of fee title by the District of the Hospital School Site to the
City/Agency (or its designee), on the tenns set forth below, the City/Agency shall provide the
District with the following:
1. Fee title to that certain real property located at Third A venue and
Alvarado Street, Chula Vista, comprised of approximately 2.63
unimproved acres, commonly referred to as the "Windmill Fanns Site".
The site was recently appraised at $1,375,000.
2. The City is currently negotiating to acquire approximately 50 acres of
undeveloped real property located within Phase II of the Otay Rio
Business Park upon which the City intends to relocate its corporate yard
(the "Proposed Corporate Yard Site"). If the City acquires the Proposed
Corporate Yard Site (which it will use good faith efforts to do within two
years), the City shall (a) provide the District with 8 to 10 undeveloped
acres of that proposed corporate yard site (not to exceed $545,000 in
value, the current estimated value of such an interest); (b) mutually agree
upon division of the corporate yard site property so as to accommodate a
design that best meets both agencies requirements; and (c) provide two
access roads to this corporate yard site; City will explore the feasibility of
having one such access road proceed north, directly to Otay Valley Road.
3. In the event that the District develops the Windmill Farms Site into an
administrative headquarters for itself and/or other public agencies, the
City/Agency at no cost to the District, would finance, or would arrange
for fmancing, of the District's lease or debt service payments for such
facility for a period of twelve (12) years, not to exceed $500,000 with the
maximum amount payable, in total and in anyone year, not to exceed the
tax increment generated by the facility and received by the Agency in
unrestricted funds. This would not prevent the district from subleasing a
portion of the building to a private venture. City/Agency will work with
merchant builder to negotiate a lease payment schedule in favor of the
District in the early years.
4. City staff will expedite processing, and presentation to City Council for
due consideration, of any District application for the rezoning of the
District property located at 1130 Fifth Avenue, Chula Vista, upon which
the District's administrative offices are currently located. Due
consideration will be afforded the District's preferred zoning of the subject
site.
5-8
In exchange for the transfer of fee title by the City/Agency of the Windmill Farms Site to the
School District (or its designee) and for the other consideration set forth above, the District shall
provide the City/Agency with the following:
1. Fee title to the Hospital School Site. The site was recently appraised at
$1,920,000.
2. The District shall exercise its best efforts in order to structure the property
transfer in a manner consistent with the City/Agency's intended use of the
site; namely, donation to the State of California ("State") for the
development into a 400 bed, congregate care Veterans home facility
("Veterans Home Project"). Such best efforts shall include the District's
agreement to transfer the Hospital School Site by no later than July 1,
1995, in exchange for the Windmill Farms Site, eight to ten acres of a
corporate yard site and lease/debt service consideration as identified in
Item No.3 above or a Irrevocable Letter of Contractual Obligation
pursuant to the terms of this agreement.
3) Staff shall negotiate a formal Agreement with the California Department of
Veterans Affairs for such development on terms and conditions approved by the City Manager
and the City Attorney including, without limitations, provisions which assure the development
of the Veterans Home on the site and/or which return the site to the Agency if no such
development occurs on agreed upon terms.
4) Staff shall take all other necessary and appropriate actions to finalize such
matters expeditiously and to present such matters to the Council/Agency for final approval.
PRESENTED BY; APPROVED AS TO FORM BY;
(~.< 5;~c_Œ(:ì",-S1V¿ /
Chris Salomone, Executive Secretary and
Community Development Director
[c:\ WP51 \JUANIRESOS\ VETHOME2.RSO]
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