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HomeMy WebLinkAboutRDA Packet 1995/03/07 Tuesday, March 7, 1995 Council Chambers 4:00 p.m. Public Services Building (immediately following the City Council meeting) ,¡ Joint Rel!lÙar Meeting of the RedeveloDment Agencv/Citv Council of the City of Chnla Vista - CALL TO ORDER 1. ROLL CALL: Members/Conncilmembers Fox -' Moot -' Padilla -' Rindone_, and Chairman/Mayor Horton - 2. APPROVAL OF MINUTES: Febrnary 28, 1995 CONSENT CALENDAR (Items 3 and 4) The stDff rec_ndøtiøns reganHng the foUowing iIem(s) listed ruukr the Consent Ca/nulsr will be elUJded by the Agency by one motion willwut discussion rm/t:ss all Agency Member, ø member of the publk: or Cüy staff requests thot the item be pulleilfor discussio1l. If you wish to spt:ak on one of these items, please Jill out ø "Request to Speak Form" awzilitble in the lobby tl1Id submiJ it to the Secretluy of the lhthvelopment Agency or the Cüy Cleric prior to the meding. (Complete the green form to spt:ak inftZW)r of the staff recommendøtiøn; complete the pink form to spt:ak in oppositiøn to the stDff recommendøtiø1l.) Items pulleil from the Consent Cølt:ndør will be discussed after Action Items. Items pulleil by the publk: will be the first items of business. 3. WRITTEN COMMUNICATIONS: None. 4. AGENCY REPORT REQUEST FOR PROPOSALS FOR THE DISPOSITION OF THE EL DORADO BUILDING AT 315 FOURTH AVENUE--At the request of the Agency staff prepared a Request for Proposals (RFP) for the disposition of the HI Dorado Building. The Agency also requested a report on the cnrrent rent revenues generated and expenditures incurred in the building's operation. Both are contained in the staff report. Staff requests the Agency review the RFP and authorize staff to issue it. (Community Development Director) PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES The following items have been advertised and/or posted as public hearings as required by law. If you wish to speak to any item, please fill out the "Request to Speak Form" 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 infavorofthe staff recommendation; complete the pinkform to speak in opposition to the staffrecommendation.) Comments are limited to five minutes per individual. None Submitte~! d7~'G'; "n'c" ".'o'c.,.t,,=~IQm m .) C. , ;~ ~:'.e Cem :c.,,, ~: . ,. t:r:t , pD.H to,',...;",,: Lie Pu;,¡;cSe:'v.cc:. .:., .,:',::t.:icn Dt\TE3-3q5.~;:..L; ¿;~i11Jì14) ._. -. Ageuda -2- March 7, 1995 ORAL COMMUNICATIONS This is an opportunity for the general public to address the Redevelopment Agency on any subject matter within the Agency's jurisdiction thai is not an item on this agenda. (Stale law, however, generally prohibits the Redevelopment Agency from taking action on any issues not included on the posted agenda.) If you wish to address the Council on such a subject, please complete the yellow "Request to Speak Under Oral Communfcations 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 fol!ow up action. Your time is limited to three minutes per speaker. ; 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 certain cases be presented in the alJemative. 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 Cleric prior to the meeting. Public comments are limited to five minutes. 5. AGENCY REPORT REQUEST FROM AUTO PARK DEALERS FOR ADDITIONAL FINANCIAL ASSISTANCE--On 1/17/95 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 1/19/95 staff met with the Auto Park developers and their attorney to discuss financial problems associated with a lower Assessment District payout than anticipated. Staff recommends bringing this item forward to the Agency after receipt and analysis of the information. (Continned from the meeting of February 28, 1995) (Community Development Director) 6.A. AGENCY RESOLUTION 1447 JOINT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF COUNCIL CHULA VISTA AND THE REDEVELOPMENT AGENCY OF THE CITY RESOLUTION 17828 OF CHULA VISTA ADOPTING ENVIRONMENTAL IMPACT REPORT ADDENDUM 89-IOA FOR RANCHO DEL REY SPA ill, APPROVING A LAND DONATION AND FUNDING COMMITMENT FROM HOME PROGRAM FUNDS ($160,000) AND THE LOW/MOD FUND ($378,280) FOR AN AFFORDABLE HOUSING PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA ill, AND APPROVING A TRANSFER AGREEMENT WITH ORANGE HOUSING DEVELOPMENT CORPORATION (OR AN AFFILIATE THEREOF) IN CONNECTION WITH SAME--McMillin Compauies is required to enter into an Affordable Honsing Agreement with the City wltich provides a detailed plan for accomplishing their affordable housing program requirement to provide a minimum of 23 affordable units, McMillin proposes a for profit/ non-profit joint venture wltich is requesting financial assistance from the Agency/City. Staff recommends approval of the resolutions. (Commnnity Development Director) B. COUNCIL RESOLUTION 17829 APPROVING THE RANCHO DEL REY SPA ill AFFORDABLE HOUSING AGREEMENT WITH RANCHO DEL REY INVESTORS, L.P., AND A TRANSFER AGREEMENT WITH RESPECT TO 2.97 ACRES OF PROPERTY WITHIN SPA ill PROPOSED FOR DEVELOPMENT INTO A 40 UNIT LOW INCOME HOUSING COMPLEX -, - Agenda -3- March 7, 1995 OTHER BUSINESS 7. DIRECTOR/CITY MANAGER'S REPORTIS) . Negotiation between the City of Chula Vista and EastLake Development Company wi~respect to acquisition of Lots 3 and 4 by a private finn, through City incentives under the High Tech/ BioTech ordinance, with EastLake Business Center. - 8, CHAIRMAN/MAYOR'S REPORTIS) 9. MEMBER/COUNCILMEMBER COMMENTS Rindone: a. Redevelopment Agency C.I.P. Funds Report (Continued from the meeting of February 21, 1995) 10. 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 item(s) of business which are permitted by law to be the subject of a closed session discussion, and which the Agency is advised should be discussed in closed session to best protect the interests of the City, The Agency is required by law to return to open session, issue any reports of Ji!J£ll action taken in closed session, and the votes taken. However, due to the typical length of time taken up by closed sessions, the videotaping will be terminated at this point in order to save costs so that the Agency's return from closed session, reports of Ji!J£ll 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. 11. CONFERENCE WITH LEGAL COUNSEL REGARDING: 1. Potential litigation pursuant to Government Code Section 54956.9 . CYPRESS CREEK CO., LP., a Delaware limited partnership, by SUNBELT MANAGEMENT COMPANY, a Florida corporation, its managing agent agaiust the Redevelopment Agency of the City of Chula Vista and the City of Chula Vista 12. REPORT OF ACTIONS TAKEN IN CLOSED SESSION ADJOURNMENT The meeting will adjourn to the Regular Redevelopment Agency Meeting on March 21, 1995 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers, ...... COMPLIANCE WITH THE AMERICANS WITH DISABILITIES ACT The City of Chula Vista, in complying with the Americans With Disabilities Act (ADA), request individnals who require special accommodatious 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 informational 619.691.5047 or Telecommunicatious Devices for the Deaf (TDD) at 619.585,5647. California Relay Service is also available for the hearing impaired. [C:IWP51 IAGENCYIAGENDASIO3.07 .95,AGD] -. .- ~ þa;j1'; Clank! MINUTES OF A SPECIAL JOINT MEETING OF THE REDEVELOPMENT AGENCY/ CITY COUNCIL OF THE CITY OF CHULA VISTA Tuesday, February 28, 1995 Council Chambers 8:43 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Agency/Council Members Fox, Moot, Padilla, Rindone, and 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: February 21,1995 MSC (Fox/Padilla) to approve the minutes of February 21, 1995 as presented. Approved 4-0-0-1 with Moot abstaining. CONSENT CALENDAR (Item pulled: 4) 3. WRITTEN COMMUNICATIONS: None submitted, 4. RESOLUTION 1446 PROPOSING TERMINATION OF THE AMENDED PALOMAR TROLLEY CENTER DISPOSITION AND DEVELOPMENT AGREEMENT AS A RESULT OF EXCESSIVE PHASE II PROPERTY ACQUISITION COSTS, AND DIRECTING STAFF TO MEET AND CONFER WITH THE PALOMAR TROLLEY CENTER DEVELOPER REGARDING THAT PROPOSITION--The approved Disposition and Development Agreement (DDA) called for the Agency to participate in the excess costs of property acquisition and public improvements in order to make the project financially feasible for the developer. As a risk containment measure, either party has the right to 'walk away' after conferring with the other party, if the costs exceeded established maximum thresholds, Staff recommends approval of the resolution. (Community Development Director) Pulled from the Consent Calendar. Mr. Boogaard informed the Agency that an amended resolution had been distributed. It implemented the recommendation from the City Manager to meet and confer over a termination. Copies of the amended resolution had been given to representatives of Cyprus Creek. Mr. Goss stated the project had been bifurcated into two phases. In Phase II there was a procedure involved where the parties could go through a process to meet and confer over the respective cost sharing that would be involved in the project. Staff felt the people involved in the project had been very open and honest and responsive in the project. There was some knowledge that they were slightly above the $20 sq. ft. target. It was his understanding there was a lot of variation as to what the eventual costs could be to the overall project, i.e. anywhere from $26 to $32 sq. ft. There was a desire to keep pushing ahead by the developer and it was not until late November or early December that staff focused on the fact that it would be at the $26 sq. ft. which was considerably above the limit in the agreement. He felt it his responsibility to call to the Agency's attention to the conditions tbey were facing in light of the agreement. The RDA was a husiness and needed to be concerned about the impact of various agreements on the overall operations, There was a letter on the dias that expressed concern that the decision to terminate had already been made and that compliance with the meet and confer provision in the agreement was not being made in good faith. He assured the Agency that was not in concert with any discussion or instructions he had given staff. He felt under the agreement that the numbers had reached a point that it was worth while to use 0<'/ .. _.. -- -- Minutes February 28, 1995 Page 2 the provisions in the agreement and to enter into a meet and confer process which would be in good faith by both parties. 8 Jim Moxham, 2801 Albatross Street, San Diego, CA, representing Cypress Creek and their managing agent under the development agreement, Sun Belt Management Company, stated due to a delay of several years and bringing forward a larger project at the request of the Agency, the developer was promised the Agency's support and cooperation. The tone and direction of the staff report caught Sun Belt completely off.guard. They were shocked and felt betrayed. Sun Belt had done everything asked of them under the DDA and also not required of them, i.e. daycare, scholarship fund, redesign of project to accommodate a new street alignment for Price Club that was done at Sun Belt's cost with loss of efficiency of their parcels, etc. They had consistently performed throughout the process. Palomar Trolley had always been viewed and analyzed as one project, but because of the complex ownership interest of the Phase II properties it had to be built in two phases. If Sun Belt had waited until all the pieces were in place there would be no project today. Over the life of the DDA, which ran until 2012, the project would generate over $9.2 million in tax revenue to the City. That did not include the unaccounted benefit of a major Target expansion which was an indirect result of the project. All told over the term of the DDA, between what the new center would produce and what was being generated from Target, it would be over $10.6 million to the City. Phase I was developed below the anticipated cost and saved the Agency potential additional contribution of $165,000. Sun Belt successfully brought in the public improvements in under budget saving the Agency an additional potential contribution of $200,000, In their open and honest dealings with the City/Agency and their staff representatives they had always shared their cost projections. He did not feel there was any serious doubt in either party's mind that the cost would be over $20 sq. ft. When the amended DDA was approved in 7/93, staff presented at that time that $21 sq. ft. was the most recent estimate. On 12/93, Sun Belt provided staff estimates that costs were approaching $24 sq. ft. and that information had been known for over 14 months. Even though staff knew for over one year that the costs were approaching their current level they took no action to consider termination, As recently as November when final settlements were being negotiated, Sun Belt sought confirmation that they should continue to proceed. The action before the Agency was the response to Sun Belt's request to have the Agency's support to increase the limit. They were justifiably upset when Agency representatives knew the costs, approved all the settlements, and they now found themselves before the Agency considering the adoption of a resolution to terminate the DDA. They had been blind sided by the sudden and unexpected action. Overall, the difference between the staff estimate at the beginning and where they were today was less than $33,000, Staff should be congratulated for accurately predicting the costs of the project. Sun Belt would pay the over budgeted amount (the $33,000 differential between when the DDA was approved and the present) if the Agency was prepared to move forward. Sun Belt requested that the Agency reject the resolution and direct staff to bring forward a resolution increasing the Phase II limits to $26 sq. ft. which would put them in line with the total costs as originally conceived when the DDA was approved. Chair Horton stated it was staffs consensus that Sun Belt performed in good faith and had been honest and up front in all dealings. It was her understanding that the actual $26 figure was not actually known until several months ago. David Gustafson, Assistant Director of Community Development, stated the first time he saw the $26 amount in writing was the beginning of November. Mr. Moxham was correct in that staff knew that the costs were going to be over $20 sq. ft. The Agency knew that at the execution of the DDA, but they did not know how much over it would be. In early November, they had an estimate for one settlement that ran anywhere from a favorable settlement at $1.3 million to an unfavorable settlement at $2.2 million. Staff was in a quandary as to when they should bring forward an approval for an amount over $20 when they did not know how much it would be over $20, Mr. Boogaard suggested that the matter had a potential for proceeding toward litigation. Although there had not been a threat of litigation, there was a letter from the attorney for the developer. The testimony being given would be extremely relevant to litigation. The Manager had presented an option which would get the Agency and developer to a negotiating table which would take advantage of a negotiated provision, i.e. the "walk away" right. He recommended that the Agency either go into Closed Session to discuss the item because there was a serious prospect of litigation or that the Manager's recommendation be approved, He recommended that the solicitation of evidence that could be used against the Agency in subsequent litigation be avoided. ot-L -.... Minutes February 28, 1995 Page 3 Chair Horton questioned whether it would be Sun Belt's preference to go forward and meet and confer to come up with a reasonable solution. Mr. Moxham replied Sun Belt was always prepared to discuss the issues and probably preferred that would have happened prior to the staff report. Sun Belt felt strongly about their position and were not backing down from it and felt the Agency should move forward in taking action to increase the numbers. Sun Belt was prepared to sit down with staff and negotiate in good faith. Member Moot questioned if Sun Belt was unaware of Provision 8.4 of the agreement while they were negotiating the agreements to acquire the properties through condemnation and that the thought never occurred to them that the contract with Provision 8.4 may be asserted by the City. He was shocked that they knew that agreement existed with the provision in it and now they expressed shock that the Agency may want to invoke a provision of the agreement. Mr. Moxham stated he and Sun Belt were aware of the provision in the agreement and it was one of the reasons they had continually shared cost estimates with the Agency representatives so no one would be surprised in the eleventh hour as to what the costs were. They were continually updated as new information or settlements were reached. He felt it was Sun Belt's expectation, based on conversations with Agency representatives, that they were always supportive of increasing the limit. When the staff report came out to the contrary it was a shock. The provision allowed either party to terminate if the costs were over. Sun Belt knew they were over and did not choose to terminate and the Agency knew they were over and they never exercised that right to terminate until the resolution. It was a little difficult for him to say that the Agency could approve every settlement knowing that they were pushing the limit over $26, take the money from Sun Belt, settling them in the Agency's name, and then come back and say we spent your money and you've gone over the limit and the Agency was going to terminate under the provision. Mr. Boogaard urged the Agency not to respond publicly to that contention and to allow the matter to be handled by the representative at the negotiating table. Chair Horton questioned if the rents for Phase I were fixed rents or based on gross sales. Mr. Moxham replied they were all separately negotiated, Ralphs was $12 sq. ft. with cost of living increases and a percentage. The majority of tenants had percentage rent provisions in their leases. Chair Horton stated since the projections were actually higher than originally anticipated their return was greater than anticipated. Mr. Moxham responded that the center had only been open for a short time and until the annual sales figures came in on a stabilized basis with all the businesses open it was impossible to answer that question. Member Rindone stated everything that the City had done to the current time was in good working relationship with the developer. The first Phase had met, if not exceeded, both the developer's and City's expectations. He felt it was an intermediary step and the only reason he could support it was because it was a two part provision, i.e. 1) recognizing the provision to "walk away"'; and 2) directing staff to meet and confer with the project developer regarding possible alternatives to provide resolution and complete the project, i.e. Phase II. He felt everyone would like to see Phase II completed. With great reluctance he supported the staff recommendation, but did so because of the concern regarding the fiscal solvency of the RDA. MOTION: (Rindone) to approve the staff recommendation, i.e. to recognize the "walk away" provision and to direct staff to continue negotiations in an effort to find a solution to complete Phase II. Mr. Boogaard recommended that the Agency adopt amended Resolution 1446 which would be consistent with Member Rindone's motion and made reference to the relevant provisions of the agreement. 02--3 -. Minutes February 28, 1995 Page 4 Member Rindone stated that was the intent of his motion. Member Moot stated the contract provision required the Agency to meet and confer before considering termination. He read the staff report as giving the RDA a variety of views to look at as to what options could come up in a meet and confer conference. He felt the Agency's action was to go to the meet and confer process with the issue being brought back to the Agency to review what was discussed and what their options would be at that time. Mr. Boogaard requested that a separate spin not be put on the language in Resolution 1446. The intent of the resolution was to put the Agency in a position to terminate the agreement and deliberate on terminating the agreement. That required that the Agency offer to meet and confer to raise the limits above the $12 sq. ft. as provided for in Section 8.4 of the agreement. RESOLUTION 1446, AS AMENDED, OFFERED BY MEMBER RINDONE, reading of the text was waived. RESOLUTION 1446 PROPOSING DELffiERATION ON TERMINATION OF THE AMENDED PALOMAR TROLLEY CENTER DISPOSITION AND DEVELOPMENT AGREEMENT AS A RESULT OF EXCESSIVE PHASE II PROPERTY ACQillSITION COSTS, AND DIRECTING STAFF TO MEET AND CONFER WITH THE PALOMAR TROLLEY CENTER DEVELOPER REGARDING THAT PROPOSITION Chair Horton stated it was a hard decision to make as the Agency needed to find ways to address their deficit situation. However, it was her understanding that all through the project the developer worked in good faith with the Agency and went overboard in providing and addressing the Agency's needs in a very cooperative way. She supported the staff and developer entering into meet and confer for a possible solution, She felt the "walk away" provision, given the situation, was too harsh. She was not sure in her opinion that was fair and equitable. VOTE ON RESOLUTION 1446: approved 4-1 with Horton opposed. 5. REPORT REQUEST FROM AUTO PARK DEALERS FOR ADDITIONAL FINANCIAL ASSISTANCE--On 1/l7 /95 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 1/19/95 staff met with the Auto Park developers and their attorney to discuss fmancial problems associated with a lower Assessment District payout than anticipated. (Continued from the meeting of February 14, 1995) Staff reQuests the ilem be continued to the meetim! of March 7. 1995. (Community Development Director) MSUC (Rindoneffiorton) to continue the item to the meeting of March 7, 1995. * * END OF CONSENT CALENDAR * * PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES None Submitted. ORAL COMMUNICATIONS None ~-~ -, ..- Minutes February 28, 1995 Page 5 ACTION ITEMS 6. AGENCY/COUNCIL REPORT CONCERNING A REQUEST FROM McMILLIN COMPANIES FOR FEDERAL HOME FUNDS AND REDEVELOPMENT AGENCY LOW AND MODERATE INCOME HOUSING FUNDS FOR A PROPOSED AFFORDABLE HOUSING PROJECT IN RANCHO DEL REY SPA III--McMíllin Company is negotiating with a private non-profit joint venture to develop a 40 unit affordable housing project in SPA III of Rancho del Rey. The joint venture has requested federal HOME monies and Low and Moderate Income Housing Funds for the project. Staff recommends the Agency/Council provide direction to staff. (Community Development Director) Agency/Council Member Moot stated he would abstain from participation due to a conflict of interest with his business and left the dias. Shelia Shanahan, Community Development Specialist I, reviewed the project. Staff would return on March 7, 1995 with specific project details and appropriate legal documents. The Housing Advisory Commission had reviewed the proposal and supported it conditioned upon Council approval of the final documents and that the City contribution net not exceed $10,000. To bring the net contribution down to $10,000 staff was proposing that the City and McMillin Company split the affordable housing credits that could be created from the project. Chair/Mayor Horton questioned how long the Agency/City had the $1O,OOO/unit benchmark. David Gustafson, Assistant Director of Community Development, replied that it was not an official policy, but had been a general approach to affordable housing projects. The average might be closer to $8,000. Staff had taken the posture with most developers that $10,000 would be a maximum so the available funds could be spread out over all the project burden. Ms. Shanahan responded there was about $680,000 in Federal HOME funds and approximately $400,000 in the Agency low/moderate income housing fund, The Agency would be receiving over $700,000 in HOME funds 7/95 and approximately $1.1 million in low/moderate income housing funds. Chair/Mayor Horton questioned who came up with the estimated cost of $121,230/unit. Ms. Shanahan replied that the joint venture had prepared a proforma on the venture. That number included the land value as well as paying off the Mello Roos District. Agency/Council Member Rindone questioned the difference in the estimated value of the land, Ms. Shanahan stated staff was currently waiting for information on the value of the land. It was an estimate that everyone had agreed to use in the proforma and further negotiations about the relative contribution of McMillin's land contribution versus the Agency's was ongoing, Mr. Gustafson informed the Agency/Council that McMíllin had engaged an appraisal and felt it would be ready for the meeting of the 7th. Agency/Council Member Rindone stated that would then have an impact on the requested funds per unit, therefore, there could be a significant change. Mr. Gustafson stated the negotiation had been structured so they would be responsible tor providing $800,000 in the proforma and the Agency/City had capped their participation based on the concept of $800,000. Agency/Council Member Rindone questioned how the other 17 units would be marketed and how it would be advantageous to the Agency/City. J -5 -- - .- Minutes February 28, 1995 Page 6 Ms. Shanahan replied that the units would be available for other developers, mostly the developers in the eastern territories with the affordable housing requirement. Instead of building actual units they could buy the credits for a dollar amount (estimated $25,OOO/credit). Agency/Council Member Rindone questioned if it would be on a "first come, first serve" basis. Mr. Gustafson responded that McMillin would have the latitude, with the Agency/City oversight, to market the credits. A lot of the details were yet to be negotiated. The Agency/City would be looking at a guaranteed return of the Agency/City investment over $1O,ooo/unit. With every sale McMillin would have to pay back that proportional amount, i.e. 1/17th of the entire cost over $10,000. Agency/Council Member Rindone questioned how long they would have to maintain the units for low cost housing. Ms. Shanahan replied that the minimum affordability period would be 55 years. MSC (Fox/Rindone) to adopt staff recommendation and have staff return on 3/7/95. Approved 4-0-0-1 with Moot abstaining. ITEMS PULLED FROM THE CONSENT CALENDAR Item pulled: 4. The minutes will reflect the published agenda order. OTHER BUSINESS 7. DIRECTOR/CITY MANAGER'S REPORTlS) - None 8. CHAIR/MAYOR'S REPORT(S) - None 9. AGENCY/COUNCIL MEMBER COMMENTS - None ADJOURNMENT ADJOURNMENT AT 9:28 p.m. to the Regular Redevelopment Agency Meeting on March 7, 1995 at 4:00 p.m., immediately following the City Council meeting, in the City Council Chambers. Respectfully submitted, ~VERLY A. AUTHELET, CMC, City Clerk by: " \~~~~\ . Vicki C. Soderquist, Deputy Cit erk ;2-~ REDEVELOPMENT AGENCY AGENDA STATEMENT Item - Meeting Date 03/07/95 ITEM TITLE: Report Request For Proposals for the Disposition of the El Dorado Building at 315 Fourth Avenue SUBMITTED BY: Commo""" Developm,", D';P,¡ c.. 7, REVIEWED BY: Executive Director-J<i¡ ~ (4/5ths Vote: Yes - No-XJ --z- Council Referral Number: - BACKGROUND: At the request of the Redevelopment Agency, staff prepared a Request For Proposals (RFP) for the disposition of the El Dorado Building at 315 Fourth Avenue. The Agency also requested a report on the current rent revenues generated by the building and expenditures incurred in its operation. Staff is submitting this information along with the RFP for Agency's review. RECOMMENDATION: That the Agency review the RFP and authorize staff to issue it. BOARDS/COMMISSIONS RECOMMENDATION: N/A DISCUSSION: Descriotion of the orooertv The El Dorado Building is a professional office building located within the Town Centre 1 Redevelopment Project Area. The building was constructed in 1976. It was acquired by the Redevelopment Agency in 1990. The building's area is approximately 17,075 sq. ftof gross area, while the net leasable office area is approximately 15,743 sq. ft. The building is currently occupied by private professional businesses (4,210 sq.ft.), South Bay Community Services (5,731 sq. ft.), the atay Ranch Project (1,934 sq. ft.), some divisions of City departments (3,112 sq. ft.), and 756 square feet of vacant space. Descriotion of the RFP The purpose of the RFP is to solicit offers from individuals or companies interested in purchasing the building. The intent is to select the highest and most responsible bidder. The RFP provides a description of the building, land use information, and what the purpose of the RFP is, along with submittal requirements. The RFP also indicates that the building is partially occupied by City offices and that the City is, at this time reassessing its spatial needs. It is indicated that the City is interested in continuing to use some of the building space in the future and might be willing to negotiate a long- term lease with the new owners. The RFP requests information on prospective buyers, including who they represent, what their management experience is, their funding sources, etc. This information is needed to determine whether the prospective buyer is a reputable investor with the capacity to purchase and manage the building. 1-! Page 2, Item - Meeting Date 03/07/95 The RFP provides a period of 3D-days for prospective bidders to submit their proposals. The RFP also provides the prospective buyers the opportunity to inspect the building during a weekend in order to have adequate access to the building without causing disruption to tenants. If the Agency chooses to select one of the proposals, the proponent will be offered the exclusive right to negotiate a purchase agreement for a period of 9O-days, with a potential extension of this period at the Agency's discretion. The RFP reserves the Agency's right to reject any or all the proposals submitted. ReDort on the Buildim.!'s Revenues and Exnenditures In addition to the preparation of the RFP, the Agency also requested information on the current revenues and expenditures incurred in the operation of the El Dorado Building. Following is a description of these items. Currently, revenues are generated by all tenants in the building, except South Bay Community Services (5,731 sq. ft.), and the space that is currently vacant (756 sq. ft.). Rent rates on the paying tenants range from $0.90 to $1.10/sq. ft (one of the private offices pays $1.29 per sq. ft. and the Agency pays for all expenses, see attached table). Total gross revenues are currently $9,731 per month or $116,772 per year. These revenues include rent paid by the City to the Agency ($4,899 per month or $58,788 per year) for the building space occupied by the City departments. The costs to the Agency for the operation of the building involve janitorial services provided to the City offices and one of the private suites. The Redevelopment Agency pays for all common area maintenance costs and utilities, and repairs and improvements to the building. The private businesses, as well as South Bay Community Services, pay for their own janitorial services and office utilities. Total maintenance costs to the Agency are $3,461 per month or $41,532 per year. South Bay Community Services' rent has been subsidized by the Agency. If it were required to pay for rent at the rate of $lIsq. ft., its rent, based on the current area it occupies, would amount to $5,731 per month. The additional question from the Agency was what future funding requirements would be needed, at market rates, if the City were to continue to rent space for the City departments and continue to subsidize South Bay Community Services. (Staff is currently proposing that CDBG funds be granted to South Bay Community Services next fiscal year so that it can pay rent to the Agency for the space used.) Based on information from a local real estate broker, the current lease rates being charged to the tenants of the El Dorado Building ($0.90 to $1.10 per square foot) are consistent with the market. There would be some factors, such as the term of the lease, space required, and improvements needed, which would influence the specific rate to be applied, but in general the $0.90 to $1.10 per square foot are the current market rates. Based on a rental rate of $1.00 per square foot, the funding requirement for the City offices and South Bay Community Services is $58,788 and $78,324 per year, respectively. This includes rent, maintenance services, and utilities. ~-~ -. .-- Page 3, Item - Meeting Date 03/07/95 FISCAL IMPACT: Issuance of the RFP will not have a direct fiscal impact per se. However, if the Redevelopment Agency directs staff to issue the RFP and there are acceptable offers to purchase the building, a potential one- time payment will be generated by the sale (a recent "Opinion of Value" estimates the building's value at about $1.4 million). If the Agency keeps the building and continues with the current status quo, the Agency would continue to receive approximately $6,270 per month from net rental fees. When South Bay Community Services begins to pay rent for the space it occupies, the net revenue figure would increase to approximately $12,000 per month (assuming a rental fee of $1.00 per square foot and assuming that South Bay Community Services pays for its own janitorial services and utilities). [MZT IDISK#IXIELDORADO, RPT] 1~3 , -... 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O~ "'e: '" :J :J Q) :J Q) :> Œ ~ ~ :J :> U:J ...:.... ~ "'00 ox.c :JOo"'O ""0 «iã ~ 0 ø ø :2: ø w u.. w ~ ~ ø -I > ø '....0 a: :J t:r 0"- Oe: 0)(0 o~ g~ -I "'t ' w ~.t:: ""ô- l' ~~ ..... 0 0 0.... 0 0 0 m .t::~ >. .... m.... m .... .......... N ,K ~U) ...... 0 0 0...... .............. 0...... 0 ~~ "'... <I> êi :¡¡ ~ II ~a: ~O) . c¡¡ .... u ~.~ c:: c¡¡ OCl) ::! ::.. ii æ'~ ! gg ~~ '" It) 0) e ..,00000 It) 000 It) It) 0 0 0 It)~ ~r-- ~~ 0000 It) 000 It) It) 0 ...... m r-- r--o ~~ u..° '<t N It) 0) N N CX) CX) It) It) It) M N .... -~- ::s::.. - - - - - It),- u . N .......... ...................... ...... ........ u ~ 0 ø * ~~ u ::s c:: 0 Q) ~CI) U .0.. ::.. 00 Q) - "'u) <\ !-I.i .., (IJ u.. , -I ~ ...... N ~ ~~ ~~ :J - - , , - ID~ c~ ø « 0 ~ ~ I ~ ~ :2: 0 ~ a: ø ø ~ -'~ ~~ ~-5 ~ Pa;}E. blank! ~-¿. ~ / EI Dorado Building 315 Fourth Avenue City of Chota Vista Town ~~. ¡.J 7 "~ Redevelopment Areas Centre I '7 - . 12/78190 CJh~ pagE- Clank! 4,- 8 REQUEST FOR PROPOSALS FOR PURCHASE OF REDEVELOPMENT AGENCY PROPERTY Backaround The Redevelopment Agency of the City of Chula Vista is seeking proposals for the purchase of property under the ownefship of the Chula Vista Redevelopment Agency. The property consists of a parcel of land with a professional office building located at 31 5 Fourth Ave (northeast corner of Fourth Avenue and Center Street), Chula Vista. The building was built in 1976 and functioned as a private building. It was acquired by the Redevelopment Agency in January of 199O. The building is currently occupied by private professional businesses, a non-profit organization, and City offices. Property Description The site consists of one parcel of land with an area of approximately 33,977 sq. ft. (see attached map), located within the Town Centre I Redevelopment Project Area. The land use designations for this site are as follows: General Plan Professional & Administrative Redevelopment Plan Central Commercial (CC) Zoning Central Commercial (CC) The existing use is in compliance with these land use designations. The parcel is occupied by a professional office building and a 50-space private parking lot. The two-story building is of frame and stucco construction and comprises approximately 17,075 sq. ft. of gross area and 15,743 sq. ft. of net leasable office space, divided into 20 suites that range in area from 290 to 1,800 sq. ft. The building includes three separate structures tied by one continuous roof with an open courtyard in the middle of the structures with access on two sides (see attached copy of floor plan). The courtyard contains a fountain and modest landscaping. Current vacancies in the building are limited to one 290 sq. ft. suite. The current tenants are on month-to-month lease terms. Proposed Uses The life and condition of the existing building and other improvements do not require redevelopment of the site. However, if the future owner of the site wishes to redevelop the site, the proposed plans must comply with all Redevelopment Project Area and City land use requirements. Although long-term lease or installment sales proposals may be considered by the Agency, the preference is for disposition of the property by cash sale. As indicated above, 5,512 square feet of the building's floor area are occupied by City departments. Currently, the City is in the process of assessing its need for space at this building. The City will need to maintain some of this office space in the future and will be City of Chula Vista March 1,1995 Community Development Department Page 1 276 Fourth Avenue, Chula Vista, CA 91910 RFPs Due: On or before (619) 691-5047 ;/-1 by 5:00 p.m. willing to negotiate a long-term lease with the new owner. Information to be Included in Pronosals The intent of the RFP is to select the highest and most qualified bidder. There are no specific requirements for the purchase of the building. However, the Agency will look at the buyer's experience as property manager, the buyer's ability to secure financing,if necessary, and the buyer's future plans for the use of the site and building. All proposals should include the following information: 1. Background information on the prospective buyer/property manager; i.e., resume, experience, number of establishments owned or operated, years in operation. 2. A proposed acquisition price and terms of sale, or lease. 3. Buyer's future plans for the property. 4. Statement of financial capability to acquire the property, including sources of funding. 5. The number of copies to be submitted by proponents is three (3), with at least one original. Pronertv Insnection In order for prospective buyers to inspect the building with the minimum disruption to the tenants, Saturday, March -, 1995 has been selected for inspection by prospective buyers. The premises will be accessible and City Staff will be available to answer any questions between the hours of - and -' (Date an time for inspection will be determined after Agency authorizes staff to issue RFP). Result of RFP Review The exclusive right to negotiate a purchasing/sales agreement will be offered to the successful proposer for a period of 90 days. In the event a binding agreement is not executed and approved by the Redevelopment Agency within this 90-day period, the Agency may extend the Agreement for an additional three months or seek additional proposals. Purchase Contract In the event an offer to acquire the property is accepted by the Agency staff, a purchase contract on a form approved by the City Attorney would be prepared and presented to the Agency for its consideration. City of Chula Vista March 1. 1995 Community Development Department Page 2 276 Fourth Avenue, Chula Vista, CA 91910 RFPs Due: On or before (619) 691.5047 by 5:00 p.m. 1- II) Aaency Reserves Riaht to Reiect ProDosals The Agency reserves the right to reject any or all proposals. This notice does not obligate the Agency to tender the property, enter into a Purchase Agreement or Lease, or otherwise contract for redevelopment of the site. Grant Subiect to Non-Discrimination Covenants In accordance with applicable state law any grant of the property will be subject to covenants prohibiting discrimination by owners, tenants, or users, their heirs, executors, administrators or assigns thereof against any person or group of persons on the basis of race, creed, color, national origin, or ancestry. Public Hearina Reauired In accordance with applicable state law, a public hearing or hearings may be required prior to Agency acceptance of any offer to acquire the property. Additional Information Current lease information as well as additional information or explanation of submission requirements can be obtained by contacting Miguel Z. Tapia, Community Development Department at (619) 691-5047 during normal working hours, 8:00 a.m. to 5:00 p.m., Monday through Friday. Deadline for Submission Proposals are to be submitted no later than 5:00 p.m. on ,1995. (Proponents will be given a 30-day period to respond). Proposals will be reviewed by Redevelopment Agency staff. Final selection will be made by the Redevelopment Agency. All firms submitting proposals will be notified as soon as a final determination has been made. Proposals should be submitted to: Miguel Z. Tapia, Community Development Specialist Community Development Department 276 Fourth Avenue Chula Vista, CA 91910 [M""["[X","""""'"," City of Chula Vista March 1,1995 Community Development Department Page 3 276 Fourth Avenue, Chula Vista, CA 91910 RFPs Due: On or before (619) 691-5047 tf~ (/ by 5:00 p.m. rþ .~rþ '1>E b1 ~ ~~ Iroto t .JaaJ~S Jajoa~ - -0-. -'--. ".". .I,S oSlZ,,1 . .- - - OO¡..~ ....;¡ '. ~I I í) 9.' V . ~'O~: . /IV ~~~ . 1: .' ~ ~ N ';>. ~ "":) .:----:-- .:... ~ ~ \J Il.. <1> V) ::J 8 c ~ <1> I.\J !'oJ > ..., ~ .!:: ~ 11. of.-' L. J ~ ~ ::J 0 l.L. W => -t----- 20: \Q Wo ~ '-l >0 ~ ~-.J ~ ILL 1--1-- a:CI) =>0: 0- LLLL LO F Street T- Jj~/~ ('I) ^ I " . . . ,. ~ -i'~. ÒQSI f ::::. 0, I .~ I ,..:IS 00-8 I I .\t'l , ~ '" >I I' -, f'i' , . , .c -() ..... W "- ::J ~ 0 zec \Y LL wa >0 «-1 :eLL 1-0 ecz ~a - 00 LLW lúC/) T- ('I') F Street :::00. 1- /3 - , 'Jhi~ þCU¡¡E: t;lank! ~-/tf ~ ..s. 2-T£M INFORMATION MEMORANDUM March 2, 1995 TO: The Honorable Chairman & Members of the Redevelopment Agency VIA: John D. Goss, Executive Director~ ~Ò~ FROM: Chris Salomone, Community Development ~ctorLS. SUBJECT: Auto Park: Request for Additional Financial Assistance On February 7, 1995 the Agency received a request for additional financial assistance from the Auto Park developers. Staff requested additional information from the developers (see attached letter) and requested two weeks to analyze the information and report back to the Agency. Pursuant to a conversation with John Abbene, attorney for Fuller Ford, staff expected the requested information by Wednesday, March 1. However, as of that date, staff had not received any information from the developers. Staff will bring this item forward to the Agency after receipt and analysis of the information. CS/FK:ss Attachment [c:1 w p win Isylvi a 1m em oslautopar k, nfo] s-/ fJh¿~ !=9g Clank! 5-2- , ~J~ 1,1 j': ~ :-:: " -- ¡ i' ON OF Ii I CHULA VISTA I OFFICE OF THE CITY ATTORNEY Febrnary 13, 1995 John J. Abbene Haskins, Nugent & Newhamn 1010 Second Avenne, Suite 2200 San Diego, Ca. 92101 Re: Chu1a Vista Auto Park Dear John: As we discussed in our telephone conversation on February 8th, in order for City staff to fully analyze your proposal regarding the Chula Vista Auto Park as set forth in your letter to Sid Morris dated January 30,1995, the City will need to receive and review financial information regarding your clients current operations of the Auto Park. Accordingly, the City requests that you provide the following information as soon as possible: 1. Independently verified, monthly operating statements for the Ordway and Fuller dealerships reflecting all revenues, expenses and net operating income, if any. 2. Loan documents with General Motors and Ford financing companies and any and all other lenders which have loaned monies with respect to the dealerships, reflecting the terms of such loans. This would include any and all loan information with respect to the undeveloped parcel owned by Hr. Ordway, commonly referred to as "Parcell". 3. An accounting of all proceeds disbursed to the owners of the dealerships at the time of the closing of the original Auto Park land transaction and in connection with any subsequent financing or refinancing of those properties, including Mr. Ordway's Parcell. 4. Any and all other documents or information which would assist the City in evaluating and quantifying the current and projected economic condition of the dealerships at the Auto Park. You should forward such information to the attention of Fred Kassman. Please call me with any questions or comments you may have with respect to this request. Very truly yours, cc: Bruce M. Boogaard Sid Morris Chris Salomone Fred Kassman Doug Fuller David Ordway Travis Reneau C,Utlobbene S-3 276 FOURTH AVE/CHULA VISTA, CALIFORNIA 91910/(619) 691-5037 , fJh¿~ þ~E Clank! 5-1 JOINT REDEVELOPMENT AGENCY/CITY COUNCIL AGENDA STATEMENT Item (p ir ."ß Meeting Date 3/7/95 ITEM TITLE: A. Agency Resolution 1447 and Council Resolution 17828 Joint Resolution of the City Council of the City of Chula Vista and the Redevelopment Agency of the City of Chula Vista adopting EIR Addendum 89-IOA for Rancho del Rey SPA III, approving a land donation and funding commitment from HOME Program Funds ($160,000) and Redevelopment Agency Low and Moderate Income Housing Funds ($378,280) for an affordable housing project proposed to be developed in Rancho del Rey SPA III, and approving a land transfer agreement with Orange Housing Development Corporation (or an affiliate thereot) in connection with same. B. Council Resolution 17829 Approving the Rancho del Rey SPA III Affordable Housing Agreement with Rancho Del Rey Investors, LP., and a transfer Agreement with respect to 2.97 acres of property within Spa III proposed for development mID , 40 ""it 'ow iocom, hOO'l"" SUBMITTED BY: Community Development Director REVIEWED BY: City Manager/Executive Direct,' (4/5ths Vote: Yes..x.. No -) BACKGROUND: This project was introduced in concept to the Agency/Council at the February 28 meeting. As previously discussed, McMillin Companies is required to enter into an Affordable Housing Agreement with the City prior to the first Final Map approval within Rancho del Rey SPA III that provides a plan for accomplishing their Affordable Housing Program requirement to provide a minimum of 23 affordable housing units. McMillin proposes to provide land to a for-profit/nonprofit joint venture development team who proposes to build 40 affordable family units within SPA III as a method for satisfying their requirement. The joint venture is requesting financial assistance from the City/Agency. RECOMMENDATION: That the Council/Agency approve the attached resolutions approving a reservation of $378,280 in Redevelopment Agency Low and Moderate Income Housing Funds, $160,000 in Federal HOME funds, and a City land donation, adopting Addendum EIR 89-IOA, approving a land transfer agreement between the City and the joint venture and approving agreements between the Agency/Council and McMillin Companies concerning McMillin's affordable housing requirement, the low income housing credits, and the land transfer from McMillin to the City. . BOARDS/COMMISSIONS RECOMMENDATION: The Housing Advisory Commission at their February 22 meeting voted to support the proposed project subject to Council approval of final documents, and a City/Agency maximum net contribution of $10,000 per unit. fo- I -, - Page 2, Item ¿, It ~ ß Meeting Date 03/07/95 DISCUSSION: McMillin Companies proposes to satisfy their affordable housing requirement for SPA III by inviting a joint venture development team consisting of Sares-Regis as the for profit developer/contractor, Orange Housing Development Corporation (nonprofit) and South Bay Community Services to build a 40 unit affordable family housing project within SPA III. The joint venture plans to apply for State and Federal Tax Credits and the next application deadline is March 10. They are seeking Council/Agency funding approval prior to this submittal because in order to be complete, the application must include a commitment for funding from all sources including local government participation. The provision of affordable housing units within a larger market-rate housing development, as McMillin Companies is proposing, is a high priority in the City's Housing Element and Comprehensive Affordable Housing Strategy. This project is an ideal way to accomplish the remaining affordable housing requirement in Rancho del Rey. THE PROPOSED PROJECT The joint venture proposes to build 40 affordable family units in SPA III south of J Street (site map attached as Exhibit A). Rents will be affordable to families at or below 60% of the median income. They propose to provide - . 24 two bedroom units (750 square feet) of which nine are targeted to families at or below 45% of the median income with a rent of $435, and 14 are targeted to families at or below 50% of the median income with rents at $486, . 12 three bedroom units (1,140 square feet), of these five will be targeted to families at or below 50 % of the median income ($553 rent), one targeted at 55 % of median income ($612 rent) and six units targeted for families at or below 60% of the median income renting for $671, and . four, four bedroom units (1,262 square feet) renting at $741 and targeted to families at or below 60% of the median income. The two bedroom units would be stacked flats and the three and four bedroom units would be in a townhome configuration. A preliminary site plan, unit plan, and elevations are attached as Exhibit B. Proposed amenities include a 2,000 square foot club house with a kitchen, restrooms, meeting room and individual rooms for counseling, a library, or other services. The project will also have a tot lot, half court basketball court, carports, a picnic area with tables and gas barbecues, a gazebo, and open area hardscape and landscaped areas. Units will have individual patios. The proposed site plan will not be submitted to the Planning Department for review until after the project receives a tax credit allocation (if successful). The tentative development schedule is to complete predevelopment work by the end of March, 1996 so that they can begin construction in April, 1996. They hope to be ready for occupancy in February, 1997, and fully leased in June of 1997 when they hope to receive their permanent loan. (,-v Page 3, Item 6 /rfß Meeting Date 03/07/95 REOUESTED ASSISTANCE The estimated project cost is $4,938,301 or $123,458 per unit. Cost projections are $89,103 higher than reported on February 28. These final figures reflect further refinement of the figures as well as requirements of the conventional lender. Tax credit financing would cover 52 % of the cost. The balance would be funded through a conventional loan (21 %) and local contributions (27%). Staff has requested that the developers look for cost savings to reduce costs; however the joint venture has been unable to do so. The costs for this project include the following: . $20,000 per unit for land in ready to build condition, . tax credit financing requirements generally add eight to nine percent to development costs, . buying out Mello Roos Assessment Districts at approximately $128,000 ($3,200 per unit) so that the fee does not need to be paid out of operating income; a savings that can be passed through to tenants, . construction and landscaping costs sufficient to build a quality project that will blend in with the other developments being built by McMillin. Another cost consideration is the relatively small project size. Fixed development and financing costs are spread over only 40 units. The joint venture has requested a local contribution of $1,338,279 (27.1 % of project costs). Of this, McMillin Companies would contribute the land valued at $800,000 ($20,000 per unit) on the proforma. As part of the local contribution, they are requesting that the City grant $160,000 in Federal HOME Funds and loan $378,280 from Agency Low and Moderate Income Housing Funds paid back through residual receipts, if any are generated from the project. Loan terms will be negotiated and placed in the disposition and development agreement and loan documents. Security for the loan will be in the form of a deed of trust on the land. The total amount to be contributed by the City/Agency is $538,280 or $13,457 per unit. Affordability covenants would be in place for a minimum of 55 years. According to the joint venture development team, the proposed Agency loan could potentially be paid back after 15 years when the tax credits are scheduled to be paid off. At this point the joint venture may have the ability to refinance the project, and have sufficient equity to payoff the Agency loan. The 55 year minimum affordability term would not be affected by this loan payback. Detailed terms and conditions of the grant and loan, as well as a specific loan payback schedule would be contained in a disposition and development agreement that would be negotiated with the joint venture prior to any release of funds. hr-3 -.-, -- --.. Page 4, ItemHYÞ Meeting Date 03/07/95 The per unit City contribution of $13,457 is higher than staff can support given the limited amount of housing funds available and the amount of funds being requested by other nonprofit developers for similar multifamily projects funded in part with tax credits. Staff's position is that City funds should not exceed $10,000 per unit for this project which is a benchmark level that the City has typically used over time in negotiations with developers of various types of assisted housing projects. To bring the City's net contribution down to $10,000, staff has negotiated with McMillin Companies to share a portion of the sale proceeds from affordable housing credits that could be generated from the project. Affordable housing credits could be created based on the concept that McMillin is required to provide a minimum of 23 units but is contributing towards a 40 unit affordable housing project leaving 17 "extra" units that they would otherwise not be required to provide. They are asking for the right to sell these credits to other developers. Other localities have adopted the practice of selling affordable housing credits. For example, the City of Carlsbad has housing credits that they believe are worth approximately $25,000 per credit. City staff and McMillin Companies have agreed to split the proceeds of the credits so that the Agency/City net contribution does not exceed $10,000 per unit. To accomplish this the Agency and McMillin would have an agreement that gives McMillin the right to sell the credits and for each credit, the Agency would receive a share of the proceeds. HOUSING/TRANSFER AGREEMENT BETWEEN THE CITY/AGENCY AND McMILLIN The Housing/Land Transfer Agreement between the City/Agency and McMillin is currently being drafted and will be presented at the March 7 meeting. The agreement will articulate the general terms and conditions of McMillin Companies' land donation. The major deal points covered by the Housing/Transfer Agreement are as follows: . City net participation per unit will be capped at $10,000. . The land value for purposes of this transaction is capped at $800,000. If the appraisal shows a value below $800,000, McMillin Companies will contribute the difference in cash to the project. . McMillin will have control of the sale of the 17 Affordable Housing Credits generated from the project with $8,100 from each credit sold going to the Agency housing fund. Both parties will enter into an agreement regarding the specific mechanics of the sale of the credits prior to the sale of the first credit. . The land donation and subsequent development of an affordable housing project will satisfy McMillin's affordable housing requirement. r;-f Page 5, Item Úl A-f f3 Meeting Date 03/07/95 . If the project is not built, McMillin will need to find another way to satisfy their requirement. Before project completion, McMillin will secure their performance (methods and level currently being negotiated). . As security for McMillin's performance, they will provide the City with a deed of trust in second position behind their bonding company for the affordable housing parcel. The current property value is less than McMillin's proposed contribution because it has not yet been improved. Also, the City's subordinate position weakens the security. Thus, to provide further security, the City will also be given a deed of trust on their information center. The deed on the info center will remain until the bonding company's deed on the affordable housing parcel is removed and the property is improved as required (off site improvements, utilities stubbed, ready to build). The deed on the affordable housing parcel will remain until McMillin's affordable housing obligation is fully satisfied. (The proposed project will satisfy this requirement once built. If the project does not go forward, the agreement requires the parties to negotiate alternate satisfaction of McMillin's affordable housing requirement.) If any of these conditions are altered through subsequent redrafts of the agreement, staff will brief the Councill Agency on March 7. TRANSFER AGREEMENT BETWEEN TIlE AGENCY AND TIlE JOINT VENTURE The Transfer Agreement between the City/Agency and the joint venture development team of Sares-Regis, Orange Housing Development Corporation and South Bay Community Services is currently being drafted and will be presented at the March 7 meeting. This agreement will give the joint venture site control with a provision that through a subsequent disposition and development agreement, the site will be returned to the City/Agency if the project is not completed. McMillin may also have a reversionary interest until the point where their affordable housing requirement is deemed fully satisfied. As currently contemplated, the joint venture is asking the City/Agency to contribute most of our funds early in the project (approximately four months prior to the execution of a construction loan). To retain tax credits, the joint venture is required to spend approximately 10% of project costs no later than mid-December, 1995. While the project itself would not be far enough along to incur this level of cost, the funds must be spent. To accommodate this time frame, City/Agency funds would be used to pay development fees prior to the time they are actually required. Most of the fees would be paid to the City and could be recovered if the project did not go forward. Staff would also explore the possibility of entering into agreements with the other entities who would be paid fees (school district and water districts) where they would hold the fees into a trust account until needed. In addition to this security, the City/Agency will have a deed of trust on the property to cover the funds we contribute. A detailed Disposition and Development Agreement as well as loan documents will provide specific conditions of City/Agency participation. ¿r5 -- -- Page 6, Item ¿ frþß Meeting Date 03/07/95 ENVIRONMENTAL REVIEW Rancho del Rey SPA III was the subject of an Environmental Impact Report EIR-89-10, in which all impacts from implementation of the SPA plan were documented in full compliance with CEQA. The project represents an increase in the target density for the specific planning area within which it is proposed. A density transfer within the SPA plan is proposed to allow the increase, with no net increase in overall unit count for the SPA. The process of density transfer is specifically prescribed in the SPA plan and is not considered to be a discretionary project. The project represents only a minor change in the overall SPA plan and does not affect any of the conclusions made in the previously certified EIR with regard to significance of impacts. As such, staff has determined that the appropriate CEQA documentation is an Addendum to EIR-89-1O. The Addendum EIR-89-IOA is attached to this report as exhibit C and adoption of the Addendum is an action of one of the resolutions for this item. Use of federal HOME funds requires compliance with the National Environmental Policy Act (NEPA). Since no federal action was contemplated at the time that the SPA plan was processed, no action toward NEPA compliance had been taken prior to inception of the affordable housing project. That compliance process is now underway. The appropriate notices have been filed and an Environmental Assessment (EA) and Environmental Review Record have been prepared. The EA has uncovered no significant effects that would require preparation of an Environmental Impact Statement and therefore, a Finding Of No Significant Impact (FONSI) will be issued once the obligatory public review periods have ended. The expiration of the review periods is anticipated to occur on March 30, 1995. No action formally granting or appropriating HOME funds may be made prior to that date. FISCAL IMPACT: The project request is for $160,000 in Federal HOME funds and $378,280 in Agency Low and Moderate Income Housing Funds. Currently, the City has $680,000 in Federal HOME funds and a balance of $400,000 in the Agency Low and Moderate Income Housing Account. The City expects an additional allocation of $708,000 in HOME funds in July, 1995. On a yearly basis the Agency receives approximately $1,150,000 in tax increment for affordable housing of which, $700,000 is spent on housing rehabilitation and housing administration with the balance of approximately $450,000 available for housing development. Staff estimates that if the net City contribution for this project does not exceed $10,000 per unit, funds will be available for other affordable housing projects currently under review. ss:RAY2A.113 b'-~ ~ L--'P i EJEJEJEJ00Œr~ ! f~~~~~H~ j(ifrrri ~i::~:;;= ! , . I. . . . - . . ,. . . - . . ! i , i 1= = : = s . -0 ;0 0 -0 0 VI T '" )0> " m " >< 0 ::r: ;0 ~ '" "" )0> ~ ~ ... T :þ :x: 0 c: VI ...... :z û) -0 ;0 0 c... T n ... ~ ; i G m~ ' ~ - ..~ ',. . Q'. ~:J . J ' - -, . :þ ~I "'N n. ""N, ~ J-Þ/ I <-() °::r: ~~ ~~ :?;:ëi) ë:!~ ~~ g eJ 'iIo- -"'i fT1 >< :I: n § 0 ~ ;;v 0 0 < >- , [ §~ b -~ ~~ ~t "110~ ¡¡;j':,,: ~i ~"" N; ~~ <:êi5 .. ~~ <:!),! ~ ~~ :\ :JJ ~l@) ~~& ~~ ~~~ rn~ ~ 'IIo~ . ::::: i¡ . 4: ='-17' "".., I:> ~ ~ ~ ~ ~ ~ ~ ~ .. ~ î ~!:: ,,~ () p~ , 0 ¡v .j 0 0 < » '\1t ~j~1 ~'4 ' .- ~ ~ ~ , ::2¿t....?11 a/ /, n ", :I'~~~ ~ j ~ ~ ~ ð~ ~~ .¡.~~ ~ ~ ~ ~ ~ tÞ, ~~ 0 , h~ ~.. ~ t rii", ¡;o <J~~ ~', ~ :2:ëì5 ~ ~~ " 'l-I , "' C!~ 0 h ...~~~ìt~~~ )j <$'lt-=- ~~~ tt! i ~ ~ \1 rn~ 0 5J < ~. .. ~ ~ ~~ '!oS¡ .., ~¡~~~ ~ ~ ~ . ~ "'-; ? u-..,. ~ . , ~>. ~ r '" t ~' !i ~ ,,::, . ~::¡ ~ ~ . A IS '\~~ It '.'i,: . q}~' ~. - ri~ ~. ~ j~ iii . I EXHI BIT C ADDENDUM TO ENVIRONMENTAL IMPACT REPOR't EIR-89-10A Rancho del ReySPA ITI PROJECT NAME: Rancho del Rey SPA III Affordable Housing PROJECT LOCATION: Eastern tenninus of East J Street, east of Paseo Ranchero PROJECT APPUCANT: Sares - Regis Orange Housing Corporation and South Bay Community Services CASE NO.: EIR-89-10A I. Th'TRODUCTION The environmental review procedures of the City of Chula Vista allow the Environmental Review Coordinator (ERC) to prepare an addendum to an Environmental Impact Report, if one of the following conditions is present: 1. The minor changes in the project design which have occurred since completion of the Final EIR have not created any new significant envirOhmental impacts not previously addressed in the Final EIR; 2. Additional or refilled Ïnfonnation available since completion of the Final ErR regarding the potential environmental impact of the project, or regarding the measures or alternatives available to mitigate potential environmental effects of the project, does not show that the project will have one or more significant impacts which were not previously addressed in the Final EIR. Additionally, Section 15162 of the CEQA Guidelines describe conditions that call for preparation of a subsequent ErR. None of those conditions exist with respect to the proposed action, as evidenced by the following. The project involves development of 40 multi-family affordable dwelling units on an approximately 3 acre site within SPA ill of the Rancho del Rey community and setting aside funds from the Low- Moderate Income Housing Fund and from the HOME fund to assist in development. An Environmental Impact Report was prepared for the Rancho del Rey SPA III which contemplated development of the site with multi-family residential at a target density of 12 dwelling units per acre. The project represents an increase in allowable density on the project site to approximately 18 dwelling units per acre with a corresponding decrease in density in another portion of the plan. This type of density transfer is specifically prescribed in the SPA Plan document and requires no amendments to the SPA plan or any related discretionary approvals. The total number of dwelling units allowed in SPA III will remain unchanged and ¡; - II consequently, the sigIÚficance of environmental impacts identified in EIR-89-10 would be identical to those anticipated with implementation of the proposed modifications. No substantial changes with respect to the circumstances with which the project is undertaken would occur with the proposed density transfer or use of affordable housing funds. Additionally, no new mitigation measures or project alternatives exist at this time that would be considered sigIÚficantly different from those analyzed in the previously certified ElR. Therefore, in accordance with Section 15164 of the CEQA Guidelines, as amended, the City has prepared the following Addendum to the Final EIR for the Rancho del Rey Affordable Housing Project EIR-89-lOA. A. PROJECT SETTING The approximately 3 acre project site is located eastern portion of the City of Chula Vista, at the tenninus of East J Street. Existing land use designations for the site allow multi-family residential development. B. PROJECT DESCRIPTION The project proposes to construct 40 multi-family affordable dwelling units within SPA ill of Rancho del Rey using funds from the Low-Moderate Income Housing fund and the HOME fund. Gross density of the project will be 18 dwelling units per acre which exceed the target density in that planning area by 6 dwelling uIÚts per acre. A transfer of density from another portion of the SPA plan is proposed to offset this increase. The project is subject to all other provisions of the Planned Community District Regulations and Design Guidelines. C. IDENTIFICATION OF POTENTIAL ENVIRONMENTAL EFFECTS The project does not represent a change in the level of sigIÚficance or the quality of any of the environmental impacts documented in the previously certified ElR-89-1O. No changes in environmental conditions or in the feasibility of any mitigation measures or project alternatives have occurred since the certification of EIR-89-10 that would result in any environmental impacts upon implementation of the proposed project. ~ to ~ It- -.. COUNCIL RESOLUTION NO. /712.9 RDA RESOLUTION NO. / 'It¡. 1 JOINT RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA AND THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA ADOPTING EIR ADDENDUM 89-10A FOR RANCHO DEL REY SPA III, APPROVING A LAND DONATION AND FUNDING COMMITMENT FROM HOME PROGRAM FUNDS ($160,000) AND THE LOW/MOD FUND ($378,280) FOR AN AFFORDABLE HOUSING PROJECT PROPOSED TO BE DEVELOPED IN RANCHO DEL REY SPA III, AND APPROVING A TRANSFER AGREEMENT WITH ORANGE HOUSING DEVELOPMENT CORPORATION (OR AN AFFILIATE THEREOF) IN CONNECTION WITH SAME WHEREAS, the City of Chula vista ("city") is in control of funds under the Home Investment Partnerships Program (42 U.S.C. §12741 et~) ("HOME Program funds"), which program is designed to provide assistance to affordable housing projects; WHEREAS, the Redevelopment Agency of the City of Chula vista ("Agency") is required to set-aside and oversee disposition of certain tax increment funds in a Low and Moderate Income Housing Fund ("Low/Mod Fund") for the purpose of encouraging the develop- ment of low and moderate income affordable housing within the City; WHEREAS, pursuant to that certain Agreement Concerning Rancho Del Rey and Low-Moderate Income Housing, dated August 7, 1990, Rancho Del Rey Investors, L.P., a California limited partnership ("RDR"), as successor in interest to Rancho Del Rey Partnership, a California general partnership, is obligated to provide 23 low income housing units to the city in connection with its development of SPA III of the Rancho Del Rey master planned community (the "SPA III Affordable Housing Obligation"); WHEREAS, RDR has been negotiating with the City, and the City is concurrently approving herewith, an agreement (the "SPA III Affordable Housing Agreement") which sets forth the terms and conditions pursuant to which RDR may fulfill its SPA III Affordable Housing Obligation; WHEREAS, one of the methods for RDR satisfying its SPA III Affordable Housing Obligation contemplated by the SPA III Affordable Housing Agreement is the donation, subject to certain terms and conditions, by RDR to the City of certain real property within SPA III, owned by RDR, comprised of an approximately 2.97 acre parcel, as more particularly described in Exhibit A attached hereto ("site"), and the development of the site by third parties into an affordable housing project; ~ ~-13 WHEREAS, the terms for the transfer of the site by RDR to the City are more specifically set forth in that certain Rancho Del Rey Spa III Conveyance Agreement and Escrow Instructions between RDR and the City (the "RDR/City Transfer Agreement") being approved by the City concurrently herewith; WHEREAS, a market analysis of the site has indicated that the fair market value of the site at the time of its proposed transfer to the City shall be approximately Eight Hundred Thousand Dollars ($800,000); WHEREAS, Orange Housing Development Corporation, a California public benefit corporation, South Bay Community Services, Inc., a California public benefit corporation, and Sares- Regis Group, a California general partnership (collectively, "Developer") are currently negotiating the terms for the formation of a Joint Venture, the sole purpose of which is to facilitate the acquisition, financing and development of the Site into a 40 unit multi-family rental housing complex with units restricted for persons and families of low income (lithe project"); WHEREAS, City/Agency staff is negotiating with Developer the terms of a Disposition and Development Agreement ("DDA") pursuant to which the City/Agency would agree to provide the Developer (or an assignee thereof approved by the city/Agency) with financial and other assistance in order to facilitate the development of the Project; WHEREAS, to further assist in funding the cost of the Project, Developer intends to file an application for Low Income Housing Tax Credits ("LIHTCs") with the California Tax Credit Allocation Committee ("TCAC") under §42 of the Internal Revenue Code; WHEREAS, Developer proposes to fund the Project through the following sources: (1) RDR's grant of the site to the city pursuant to the RDR/City Transfer Agreement (2) the City's donation of the site to the Developer (or a City-approved non- profit assignee thereof); (3) a below market Agency loan of Low/Mod Fund monies in the amount of Three Hundred Seventy Eight Thousand Two Hundred Eighty Dollars ($378,280); (4) a grant from the City from HOME Program funds in the amount of One Hundred sixty Thousand Dollars ($160,000); and (5) amounts derived from other financing sources, including, without limitation, a construction loan, a permanent loan, and a sale of LIHTCs allocated by TCAC to the Project; WHEREAS, the deadline for submission of the TCAC application is March 10, 1995; / ~-/f .-. WHEREAS, various actions required by the Agency and City procedure and state law in order to permit the transfer of the site to Developer and the development of the Project on the Site, including but not limited to, negotiation and approval after required public notice and public hearing of the DDA, will not be completed by March 10, 1995; WHEREAS, among the requirements of the TCAC application are (1) evidence of financing commitment by any local public agency, including the amounts and sources thereof; and (2) evidence of site control or its equivalent where it is impossible to complete the transfer of the site prior to the application deadline; WHEREAS, the purpose of this Resolution is to comply with such TCAC application requirements by providing Developer with documentation evidencing (1) the city/Agency commitment to provide partial financing for the Project from a land donation, HOME Progral!l funds and the Low/Mod Fund; and (2) site control by approvJ.ng a transfer agreement between city and an affiliate of Developer (the "city Developer Transfer Agreement"); WHEREAS, on March 7, 1995, the City Council and the Agency held a public meeting on the matter of this Resolution at which meeting the City Council considered the staff report, the proposed form of TCAC application to be submitted by the Developer to TCAC in connection with the Project, and all other information and evidence presented; WHEREAS, an Environmental Impact Report, EIR 89-10 has been certified for development of the Rancho Del Rey SPA III property, which includes the site; WHEREAS, the development of the site into the Project requires a density transfer as its sole land use action, a non- discretionary action specifically prescribed in the SPA plan conditions which govern the Site; WHEREAS, the Project represents a minor chang~ in the project described in EIR 89-10 and, as such, requJ.res the preparation and adoption of an Addendum EIR in accordance with the Environmental Review Procedures of the City and the California Environmental Quality Act (CEQA); WHEREAS, staff has prepared Addendum EIR 89-10A with respect to the Project and the city Council has found, in their independent judgement, that such Addendum has been prepared in full compliance with CEQA and the Guidelines promulgated thereunder; and WHEREAS, the proposed use of HOME Program Funds requires compliance with the National Environmental Policy Act (NEPA) and staff has commenced the compliance process by filing required ~ 6-/5 - notices and preparing the required Environmental Assessment document. NOW, THEREFORE, the City Council of the City of Chula vista and the Redevelopment Agency of the City of Chula Vista, respectively, do hereby resolve as follows: 1. Recitals True and Correct. The City/Agency finds and determines the recitals set forth above are true and correct to the best of its knowledge. 2. Adoption of Addendum to EIR. The City adopts Addendum EIR 89-A as an Addendum to EIR 89-10. 3. city Contribution to the Proiect. The City hereby (a) sets aside One Hundred Sixty Thousand Dollars ($160,000) of HOME Program funds to be granted for the development of Project; and (b) agrees to donate the Site for the development of the Project. 4. Aqencv Contribution to the Proiect. The Agency hereby sets aside Three Hundred Seventy-Eight Thousand Two Hundred Eighty Dollars ($378,280) of Low/Mod Fund monies to be loaned at below market rates for the development of the Project. 5. Approval of City/Developer Transfer Aqreement. The city (a) approves the City/Developer Transfer Agreement in substantially the form presented, with such minor modifications as may be required or approved by the City Attorney; and (b) authorizes the Mayor to execute same, the final form of such agreement to be kept on file with the City Clerk as Document No. 6. Conditions to Citv/Aqencv Commitment. The City and Agency commitments set forth above are each conditioned upon and subject to (a) the subsequent approval by the Agency and City Council of the DDA and related loan documents in accordance with applicable laws and existing City/Agency policies; and (b) TCAC's approval of the tax credit application which was presented to the City and Agency in connection herewith, and its allocation to the Project of the LIHTC requested thereby. / ~ -it; 7. Directions to staff. City/Agency staff is hereby authorized and directed to take any appropriate action consistent with the purposes of this Resolution including negotiation of a final DDA and presentation thereof to the City/Agency for its approval. Presented by Approved as to form by ~ ~ Chris Salomone, Director of , City Community Development .: HOME\ATTORNEV\JOINT ~ ~...17 -, EXHIBIT "A" J-12322E AFFORDABLE HOUSING SITE LOT 10 A percel of lend being II portion of Lot 10 of Map No. 13176, in the City of Chula VIsta, on file In the Office of the County Recorder of San Diego County, State of California described as follows: Beginning at the Northeast corner ofla/d Lot 10; thence South 17°51 '08- East along the Easterly line thereof 388.00 feet; thence leaving said line South 72°08'54- We.t 228.00 feet; thence North 50°51'548 West .205.40 feet to the beginning of a tangent 228.00 foot radius curve concave Southwesterly; thence Northwesterly along the arc of said curve through a centrell angle of 18°21'21- II distance of 73.04 feet; thence North 89°13'15- West 18.54 feet to II point on the Westerly line of SlIld Lot 10 and to the beginning of e non-tangent 270.00 foot radius curve concave Southeasterly, to which a redial line bears North 83 ° 16'OS- West; thence along sllid Westerly IInllllnd the Northerly line the following courses: Northeasterly along the arc of said curve through a central angle of 00°09'488 a distance of 0.77 feet; thence North 28°53'42- East 185.95 feet.to the beginning of a tangent 428.00 foot redlus curve concave Northwesterly; thence Northeasterly along the arc of said curve through a central angle of 18°015'408 a dIstance of 120.23 feet thence South 78°47'188 East 187.88 feet: thence North 89°40'458 East 156.24 feet to the POINT OF BEGINNING. Containing 2.97 acres more or less. ChAJ~ D. C ~~ 2~17..CfS Chris D. Clremele L.S. 5287 Exp.12-31-95 ~-/f ~ RESOLUTION NO. 171.27 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CHULA VISTA APPROVING THE RANCHO DEL REY SPA III AFFORDABLE HOUSING AGREEMENT WITH RANCHO DEL REY INVESTORS, L.P., AND A TRANSFER AGREEMENT WITH RESPECT TO 2.97 ACRES OF PROPERTY WITHIN SPA III PROPOSED FOR DEVELOPMENT INTO A 40 UNIT LOW INCOME HOUSING COMPLEX WHEREAS, pursuant to that certain Agreement Concerning Rancho Del Rey and Low-Moderate Income Housing, dated August 7, 1990, Rancho Del Rey Investors, L.P., a California limited partnership ("RDR"), as successor in interest to Rancho Del Rey Partnership, a California general partnership, is obligated to provide 23 low income housing units to the City in connection with its development of SPA III of the Rancho Del Rey master planned community (the "SPA III Affordable Housing Obligation"); WHEREAS, RDR has been negotiating with the City an agreement (the "SPA III Affordable Housing Agreement") which sets forth (1) the terms and conditions pursuant to which RDR may fulfill its SPA III Affordable Housing Obligation; (2) the security being provided to the city in order to secure such obligation; and (3) other terms and conditions relating to the continued development of SPA III and the potential creation and allocation of surplus "affordable housing credits" in the event RDR performs certain duties under such agreement; WHEREAS, one of the methods for RDR satisfying its SPA III Affordable Housing Obligation contemplated by the SPA III Affordable Housing Agreement is the donation, subject to certain terms and conditions, by RDR to the City of certain real property within SPA III, owned by RDR, comprised of an approximately 2.97 acre parcel, as more particularly described in Exhibit A attached hereto ("Site"), and the development of the site by third parties into an affordable housing project (the "Project"); WHEREAS, the terms for the transfer of the site by RDR to the City are more specifically set forth in that certain Rancho Del Rey Spa III Conveyance Agreement and Escrow Instructions between RDR and the City (the "RDR/City Transfer Agreement") being approved by the City concurrently herewith; WHEREAS, the terms and conditions for the transfer of the site by the City to the proposed developers of the Project and the City and Agency's funding commitment to the Project, subject to certain terms and conditions, are being approved concurrently herewith; ~ 6-/1 NOW, THEREFORE, the City Council of the City of Chula vista hereby resolves as follows: 1. Recitals True and Correct. The city finds and determines the recitals set forth above are true and correct to the best of its knowledge. 2. Approval of City/Developer Transfer Aqreement and the SPA III Affordable Housinq Aqreement. The City (a) approves the SPA III Affordable Housing Agreement and the RDR/City Transfer Agreement in substantially the form presented, with such minor modifications as may be required or approved by the City Attorney; and (b) authorizes the Mayor to execute same, the final form of such agreements to be kept on file with the City Clerk as Document Nos. and , respectively. 3. Directions to Staff. City staff is hereby authorized and directed to take any appropriate action consistent with the purposes of this Resolution. Presented by Approved as to form by &-~- ~~ Chris Salomone, Director of Community Development .: \HOME\ATTORNEY\JOINT1 ~ /;--:).0 EXHIBIT "A" J-12322E AFFORDABLE HOUSING SITE LOT 10 A parcel of land being a portion of Lot 10 of Map No. 13176, In the City of Chula VIsta, on file In the Office of the County Recorder of San Diego County, State of California described al follows: Beginning at the Northeelt cornerofsa/d Lot 10; thence South 17°61'088 Ealt along the Easterly line thereof 388.00 feet; thence leaving said line South 72°08'548 WIlt 228.00 feet; thenoe North &0°51'848 West .205.40 feet to the beginning of e tangent 228.00 foot radius curve concave Southwesterly; thence Northwesterly along the arc of laid curve through a centrel angle of 18°21 '218 a distance of 73.04 feet; thence North 89° 13'158 West 18.154 feet to e point on the Westerly line of laid Lot 10 and to the beginnIng of 8 non-tangent 270.00 foot radius curve concave Southeasterly, to which a radial line bearl North 83 ° 16'088 West; thence along said Westerly line and the Northerly line the following courses: Northeasterly along the arc of said curve through a central angle of 00°09'488 a distance of 0.77 feet; thence North 26°53'428 Eelt 186.95 f88t,to the beginnIng of a tengent 428.00 foot redlul curve concave Northwesterly; thence Northeasterly along the erc of said curve through a central Ingle of 18°015'408 a distance of 120.23 feet thence South 78°47'188 Eest 187.88 feet; thence North 89°40'458 East 86.24 feet to the POINT OF BEGINNING. ContaIning 2.97 acres more or less. CluJ:' ß. C~~ 2,11..fJS Chris D. Clremele L.S. 6287 Exp.12-31-95 6,-;2( ~ þWJg Clank! 6-21/ INFORMATION MEMORANDUM 9a. , March 2, 1995 TO: Honorable Chair and Members of the Redevelopment Agency Board FROM: John D. Goss, Executive Director p SUBJECT: CLARIFICATION OF AGENCY MID-YEAR BUDGET REPORT BA.CKGROllND At the February 21, 1995, Agency meeting under Councilmember Rindone's comments, questions were raised regarding the data reported in the Mid-Year Budget Report presented February 14, 1995, and data reported in the Proposed Fiscal Year 1994-95 Budget Report presented to the Agency Board on Augnst 23, 1994. The Augnst 23, 1994, report was included as an informational attachment to the mid-year report on February 14, 1995. The purpose of this Informational Memorandnm is to clarify the fiscal projections presented in the mid- year report and to address the other questions regarding the Agency's fiscal condition raised by Councilmember Rindone. As a note, the information presented in the February 14, 1995, report was not intended to be a comprehensive financial analysis of the Agency's condition. The report was provided as an update on Agency activities with the understanding that a detailed analysis is currently in progress as part of the overall budget review process. After staff completes their review, we will be able to present a comprehensive picture of the Agency's fiscal situation when the FY 95-96 budget is presented to the Agency in June. m~f'TJ~~roN Capital Improvement Program There is an inherenl difficulty in presenting a "balance sheet" for the Agency al anyone poinl in time because the figures are always projections which are based on a variety of assumptions. In each report that has been presented to Council, the figures listed have been accurate at that time based upon the information which was known at that time, and assumptions of anticipated actions, This is also true with respect to the deleted CIP information from the February 14, 1995 report. Staff was in the process of completing a detailed review of the Agency CIP projects to determine the number of projects which would be recommended to be deferred or canceled. At the time the mid-year report was presented, that review had not been completed and it was undetermined with any accuracy as to what amount of ClP expenditures and commitments were necessary for the current year. However. staff had included as a work item (#6) in the report, an overall assessment of the Agency CIP to be presented in the FY 95-% budget process. Attached is a brief synopsis clarifying the "nnmbers" that were the basis of Councilmember Rindone's questions. Additionally, attached is a copy of the Febrnary 14, 1995 report (which includes the Angnst 23, 1994 report) as specifically requested by Councilmember Rindone. However, in light of Councilmember Rindone' s concern, a more expeditions and preliminary review reveals that there are current year CIP expenditures which must be made due to commitmenls which cannot be changed at this time. The result of this analysis is that it is anticipated that a total of $869,113 will actually be spent prior to the end of this fiscal year. It should be stressed that until the complete analysis and review of the CIP is complete, (during the FY 95-96 budget process) staff is deferring any activity on projecls that do not have contractual obligations. 9-1 Page 2, March 7, 1995 Clarification of Agency Mid-Year Budget Report Revenue As a further illustration of the "moving target" of projections, there has been one significant positive update to this table since the February 14 report. While worlcing with the auditors on the annual financial statements, the Finance Department determined that a reserve account in the Bayfront/Town Centre I Project is now no longer required. Release of that reserve along with other minor accounting adjustments has resulted in an increase to the begiuning fund balance for that fund in the amount of $693,993, which also continues through to a similar increase in the projected ending fund balance. Rather than presenting a variety of different tables with each representing a different assumption in regards to the Agency's current year financial picture as requested, the chart below represents an updated simplified "bottom line" projection of the Agency budget at this time, based on the most current information. The revenue projections are based upon three asset sales occurring in this fiscal year as follows: $1,750,000 (Bayfront) from the sale of the Marina Motor Hotel and Cappos properties; and $1,200,000 (Sonthwest) for the South Bay Chevrolet site. It is staff's opinion, however, that the current fair market value for the South Bay Chevrolet site is greater than the current offer of $1.2 million. It will be staff's intent to negotiate an increase in the acquisition price. The chart below includes expenditure projections which are consistent with those listed in the February 14, 1995 report and a so includes the CIP requirement discussed above. Be!!innine Projected Fund Balance Revenue Operations CIP Debt Service Endine: Balance Totals- (389,176) 10,387,798 4,935,081 869,113 3,899,361 $295,067 One focus of Councilmember Rindone's concern centers on the issue that without one-time revenues from the sale of properties, the fiscal projections for the Agency in the current year and in future years are problematic. 'This poinl is clearly understood and well taken. However, for the current year at least, the three properties sales are included because staff believes that these events will occur during this fiscal year. However, should they not occur a corresponding decrease in revenue will be experienced, Agency Financial Strategy During the 1980's, the Agency was "cash rich" from tax increment revenue, interest revenue, and bond proceeds. At that time, it was advisable to take the liquid cash assets and invest in non-liquid property assets in order to help facilitate future significant development projects. The sale of bonds was also necessary so that the tax increment would be committed to expenditures (Debt Service), Otherwise, that increment would be lost to Chula Vista. The Agency then proceeded to acquire over the years approximately $26,000,000 in property assets. At this time, the recommended strategy is to convert some selected property assets from non-liquid capital back to liquid cash assets. This shift in strategy is based upon the general overall economic climate of the 1990's characterized by recession, a declining tax revenue base compounded by an increased demand for governmental services. The City and Agency has, to this point, been able to avoid more drastic measures that other cities have had to face already. The properties proposed to be sold al this time really represent assets with minimal long-term development potential. 9'~ r Page 3, March 7, 1995 Clarification of Agency Mid-Year Budget Report Restricted Funds Council member Rindone questioned whether any of the funds coming into the Redevelopment Agency were restricted to specific types ofnses. The answer is yes, Basically all Agency funds are restricted to uses within the projecl areas from which the tax increment is generated. As you've noted previously, some projects areas have positive fund balanees and some are negative. The overall "balance" provided in the previous chart is just a lwnping together of all of the restricted funds. A more detailed analysis of this concept will be discussed in the comprehensive report which will be presented during the budgel review process. To be more specific however, both the Low and Moderate Income Housing Fund and the Fine Arts Fund have even more restrictive qualities than each of the project area funds. These funds can only be used for specific, well defined purposes. The Low and Moderate Income Honsing Fund is restricted for use on operations and any debt service expenditures related to the production of low and moderate income housing. The operations costs include staff time reimbursements and normal operating expenditnres necessary to administer the program pursuant to the requirements set forth in the Health and Safety Code. The other restricted fund is the Fine Arts Fund. As yon may recall, the Fine Arts Fund was set up to promote visual and cultural enhancements within the Town Centre I and Bayfront project areas by funding and creating significant works of art from developer fees. Existing Council policy requires that for every "major" project developed within those project areas, that either one half of one percent (Bayfront) or one percent (Town Centre I) of the costs of the major project would be required to be paid by the developer as a fee to go into the Fine Arts Fund. The developer has the option of paying the fee or providing a fine art component within their project. Conclusion It needs to be stressed that staff is well aware of the current financial pictnre and the ramifications thereof. At this point, we are taking a hard look at the situation on a year by year basis with an eye toward fundamental policy decisions with respect to a realistic expenditnre reimbursement level more in line with the "base" or stabilized revenue not dependent on asset sales. Historically, previous Councils have had the luxury of ample funds with which to acquire approximately $26,000,000 in assets for the purposes of facilitating significant future high-profile projects. Unfortunately, today's economic conditions dictate that the sale of selected assets, even at a loss, is a viable short-term alternative, bnt only a short term alternative. ?-3 ~ /=9£ Clank! q-f Attachment I CLARIFICATION TO COMMENTS 1. August 23, 1994 report includes CIP figure of $3,358,598 (3-17) This amonnt is the prior years' (FY 93-94) aclual expenditure of riP fnnds. There is no ongoing cost. The primary expenditure was $2,9 million for Auto Park acqnisilion, 2. August 23, 1994 report amortizes CIP through an annual cost of $370,000 (3-18) This amonnt represents the addilional FY 1994-95 appropriation for new or ongoing rIP projects. The specific projects and funding levels are lisled on the same page. 3. August 23, 1994 report includes aggregate revenue of $9,745,000 and aggregate expenses of $13,539,000 for a difference of $3,794,371 This table represents actual revenue and expenditures for FY 93-94, The revenue was $9,745,239, expenditures for Operations ($5,546,482), riP ($3,358,598) and Debt Service ($4,634,530) total $13,539,610, With the beginning fund balance of$2,711,204 this creates an ending fnnd balance of ($1,083,168) for FY 1993-94, 4. Reference to Table A is from the February 14, 1995 report that expenses are an aggregate of $13,276,000 for a shortfall of $4,088,411 The $13,276,000 figure is calculated by adding $1,083,000 prior year negalive carry over, to $4,935,081 the FY 94-95 Operating Expenses, $3,899,361 the FY 94-95 Debl Service and $3,358,558 which is the prior years, FY 93-94, actual riP expendilure which is not applicable to the FY 94-95 figures, 5. Reference to recalculation of Table A from February 14, 1995 report by deleting the sale ofthe properties (3-6). Revenne of$9,187,798 inclndcs $1,750,000 for the sale of Marina Motor Hotel and Cappos Property to the Port, Deleling these property sales would give a revised revenue estimate of $7,437,798, If one were to use this revised figure the Table A ending year balance would increase by $1,750,000 10 a total deficil of$2,479,813, However, slaffbelieves the property sales to Ihe Port will occur during this fiscal year, 6. Reference to a shortfall figure of $1,767,127 This figure is derived by using Table A from the February 14, 1995 report, adding Operaling expenses ($4,935,081), Debt Service ($3,899,361) and the CIP ($370,483) from the Angnst 13',1994 report, which is a reasonable assnmption, However, Ihe figurc providcd in this report represents the actual riP expenditures projected for FY 94-95 and is a more accurate figure, This total of$9,204,925 is then subtracted from the revenue figure discussed above which has been reduced by the two property sales. If you chose 10 look at this infonnation by just comparing the current years projected revenue to the current years projecled expenditures, (assuming the use of no one-time property sales) then the figure of $7,437,798 for revenue wilhoulland sales would be correct, creating a possible annual shortfall of $1,767,127, If, however, you use the corrected figures from the lable in this report and follow these same assnmptions then the tolal revenue of $7,437,798 which is less the property sales ($10,387,798 - $1,750,000- $1,200,000 = $7,437,798) is then compared expenditures of$9,810,902 from Operations ($4,935,081), riP ($976,460) and Debt Service ($3,899,361) the nel balance, excluding and beginning fnnd balance, would be ($2,373,104), If the property sales figure is included then the projected balance would be a posilive $576,896 ($2,950,000 - $2,373,104 = $576,896), 9-5 .-.- ..-. ~ þa;jE; Clank! q~~ , ! ~ ~ ~ (/\/'- ~ ~G!!l¡ ,. ~an w~ ~/4J Item~ 1/ ~~ Zt; It ¡)~ Meetin9 Date 02/14/95 ITEM TITLE: REPORT: FY 1994-95 Mid-Year Agency Budget Review SUBMITTED BY: Community Development Director l(; REVIEWED BY: Executive Direct# (4/5ths Vote: Yes - No _lU Council Referral Number: - BACKGROUND: The Redevelopment Agency Board, at their meeting of August 23, 1994, approved the FY 1994-95 Redevelopment Agency budget. In recent years a number of factors have negatively effected the Agency's sole funding source, property taxes. The downturn in the economy since 1990, Rohr's reassessment about the same time which costs the Agency $650,000 annually, the delayed development of the MidBayfront, and the State's take-away of $2 million have been key impacts. While the Agency remains very active in economic development activities e close monitoring of the situation is warranted. One of the recommendations adopted by the Agency, was that staff return in January 1995, with e mid- year budget "progress" report that 1) outlines progress made toward the attainment of the Agency's budgetary goals, 2) includes a plan of action for the final six months of the fiscal year, and 3) updates corresponding budgetary end financial impacts of the Agency's fiscal condition. This report serves to satisfy this requirement. (RECOMMENDATION. .;, ~oomm,"",' "," ". Ag,"", eo.' ,~'" ". ~port ,"" "I ' approve the proposed work plan for January through July 1995 as described in Sectio~; end D inform the City's Port representative of the Agency's desire to move the sáTë òf Bayfront j properties to the F.Y1994-~ Port CIP from the FY.!!!_9_8:.~~ p"ort CIP. BOARDS/COMMISSIONS RECOMMENDATION: Not Applicable. DISCUSSION: As stated above, the body of the report is structured into five major sections and includes the status of the previous budget recommendations from the August 23, 1994, report and a proposed work plan for the remaining six months of the current fiscal year. A. 1994 TAX ALLOCATION REFUNDING BONDS Although not included as a specific budget work item (itemized below in Section B), the Agency and Council adopted resolutions on September 20, 1994, authorizing the final actions necessary to consummate the sale of the refunding bonds with a goal, among other things, to receive e cash flow benefit from reduced debt service payments through the year 2011. On November 15, 1994, final authorization was received from the Agency Board to proceed with the refunding which has now been completed. Included as Attachment 1 is the informational report filed by the Director of Finance itemizing the results of the 1994 Tex Allocation Refunding Bond issue. The following summery points are provided: 1. Current year (94-95) net debt service savings of $1,181,890. 2. FY95-96 through FY 2010-11 average annual net debt service savings of $198,529. 9-7 ~ .~ Page 2, Item 3 . '\ Meeting Date 02/14/95 ' 3. The extended debt service wm secure the necessity to receive, and thè protection from losing. tax increment revenue through the year 2024, 4. During the 1995 calendar year, staff will present an amendment to the Bayfront Redevelopment Plan to extend the life of the project area to the maximum of 2014. which extends the time for repayment of debt to the year 2024, B. PAINT PIT SETTLEMENT The City/Agency has received $291,817 as settlement for the "paint pit" clean up costs. The Finance Department researched the documentation presented to Daley and Heft (Special Counsel) and determined that the General Fund contributed approximately 25% of the total expenditures on the "paint pit". Therefore, the settlement proceeds have been deposited 25 % ($72,954) into the General Fund and 75% ($218,863) to the Agency. This amount has been included as projected revenue this year for the Bayfrontrrown Centre I project area. C. SALE OF AGENCY ASSETS In the August 23, 1994 Agency staff report (Attachment 21, which approved the FY 94-95 Agency budget, the following three (3) recommendations were approved by the Agency Board: 1. Sell the Marina Motor Hotel and Cappos Properties to the Port District 2. Market for sale the Fuller Ford and South Bay Chevrolet sites 3. Issue Request for Proposals (RFP) for the EI Dorado Building The following is a current status of each recommendation: 1. Shangri-La, Marina Motor Hotel and Cappos Properties Staff has met, and will continue to meet, with the City's Port Commissioner to discuss the Port District's acquisition of the three percels at the foot of "F" Street (Shangri-La, Cappos, and Marina Motor Hotel). The Port District has completed its' initial environmental assessment of the "Shangri-La" property and have found soil and water contamination. The soil contamination appears to be associated with the previous property user (San Diego Shipbuilding) since it is related to sandblasting and painting etc. The water contamination issue is still unclear with respect to the severity, potential source and the clean-up standards that would be applicable. Based on the information currently available, staff does not feel that the water contamination will be as significant an issue as the soil contamination. The Cappos property will soon be cleared of the remaining contamination issues by the former tenant. The Marina Motor Hotal property is not believed to have any contamination issues and therefore, these two properties will be aggressively pursued for sale to the Port District as part of the Port District CIP. Although specific selling prices have not been discussed, the Port has informally discussed in concept to purchase the property under the same zoning at the time that the Agency purchased.the properties. Therefore, staff is hopeful that the selling prices will approximate the purchase prices of approximately $2.7 million for these three properties. '-3-'2z- 9-1 ¡ , , Page 3, Item.3 Meeting Date 02/14/95 These sales will require the City/Agency to request of the Port moving property acquisition to the 1994-95 Port CIP budget from the FY 98-99 year, and moving back the funding of the Nautical Activities Center to later on in their 5 Year CIP Plan. This has already been informally discussed with the current Chula Vista Port Commissioner and the Acting Port Director. It would be appropriate for the City/Agency to formalize this position for transmittal to the Port and is so recommended in the "Recommendation Section" of this report. 2. Fuller Ford and South Bay Chevrolet properties ~ Fuller Ford The Redevelopment Agency recently approved a 5 year lease to "Budget Rent-A-Car" for the former Fuller Ford truck leasing operation on the small parcel on the east side of Broadway across from the main facility. The terms of the lease will bring to the Agency $31,200 in year 1; $33,600 in year 2; and $36,000 with annual increases pursuant to the CPI for years 3 through 5. The Agency can terminate (with 6 months notice) after 3.5 years. The larger parcel on the west side of the street is the subject of a Conditional Use Permit and Rezone application to permit the development of the "Broadway Business Homes Village" project proposed by Joelen Enterprises. The project envisions the construction of 36 dwelling units to be constructed over commercial retail space on the 2.52 acre site. The proposed project is being processed and should be forthcoming for evaluation by. the Council/Agency. Currently, the project proponent is only willing to pay approximately $5.00 a sQ. ft. ($550,0001 for the property which is significantly less than what the Agency paid for it. As you may recall, the Agency purchased the property for $1.7 million to facilitate the Auto Park project. However, this "loss" could potentially be off-set by the increased property tax increment revenue to the Agency and some sales tax revenue to the General Fund. At this point however, the total economic benefits of the project have not been determined. .12... South Bav Chevrolet As will be provided to the Agency under a separate report, staff issued en RFP for the South Bay Chevrolet property in October with e due dete of November 29. Only two proposels were received, 1) e housing proposel end 2) e Used Cer sales end eutomobile repeir operetion, both of which ere recommended not to be pursued. However, the Agency received en offer to ecQuire the property outside of the RFP process which eppeers to be e much more ettractive offer than either of the two offers received under the RFP. Steff will pursue this proposal and advise the Agency accordingly. 3. £1 Dorado Building RFP An RFP for sale of the EI Dorado Building is being prepared and will be brought forward for Council/Agency consideration this month. 4. Sale of Lower Sweetwater Valley Site Although not part of the previous workplan recommendations, staff has been negotiating with Pacific Malibu and Warner Properties for the sale of the Agency-owned site in the Lower Sweetwater Valley area for a potential "Family Fun Center" and recreation project. A strong 9~ 7 ~ - ! . Page 4, Item --3 Meeting Date 02/14/95 potential exists for the entire site to be sold at its' current appraised value of $620,000. The site was purchased with Low and Moderate Income Housing funds for approximately $165.000 in 1989. D. PROPOSED WORK PLAN FOR JANUARY THROUGH JUNE 1995 1. Complete Request for Proposals (RFP) process for the EI Dorado Building. It is anticipated that staff will present the RFP for Agency approval in February. Evaluation of the responses will be within the context of determining the relative value of selling the property for an immediate cash flow benefit versus the long-term value of keeping the asset as "income property". This evaluation should a so include the potential of receiving lease income from South Bay Community Services. which has not paid rent, and perhaps increasing the rents from the other tenants, including the City. The estimated current fair market value for the property is $1.4 million. 2. Continue to pursue the sale of the "F" Street properties (Shangri-la, Cappos, and Marina Motor Hotel) to the Port District. The sale of the "F" Street properties, discussed earlier, acquired as part of the Mid-Bayfront Specific Plan, is the most critical aspect of the budget program with respect to relieving the Agency's short-term cash flow problem. The ultimate planned development for the properties are for the right-of-way necessary to extend Marina Parkway and for park land and conservation areas. The Agency paid approximately $2.7 million, or $10.93 per SQ. ft.. for the three properties totalling approximately 5.75 acres, during the 1980's. 3. Pursue sale and development of lower Sweetwater Valley site. As described previously, staff is currently negotiating under a Semi-Exclusive Negotiating Agreement, a Disposition and Development Agreement for the sale of the Agency low/Mod- owned site in the lower Sweetwater Valley area. Staff will continue to aggressively pursue the negotiations and will report back to the Council on the result of the negotiations in the near future. The current estimated appraised value for the property is $620,000. 4. Continue marketing and entertaining offers for the South Bay Chevrolet site. As stated previously in this report, staff will be recommending under a separata report that the Agency not accept the development proposals received under the RFP process. However, in light of the recent offer received outside of the RFP process in the $6.50 per square foot range, the potential sale of this asset remains a viable alternative. The unsolicited offer, in excess of $1 million, reinforces staff confidence in this site as a commercially marketable asset. In any event, staff will advise the Agency when a staff recommendation has been formulated with respect to the potential sa e. 5. Evaluate the feasibility of fundin9 "Economic Development" with more participation by the General Fund. This item was included in the June 21, 1994, staff report es a recommendation for improving the Agency cash flow situation by reducing expenditures. Currently, eighty-five percent 9~/1J ~ - --. - i~ Page 5. Item -.:3 Meeting Date 02/14/95 (85%) of the City's Economic Development activities are being reimbursed to the General Fund by the Redeve opment Agency including activities occurring outside of the redevelopment project areas. The rate of reimbursement is based on the notion that the activities that are City-wide and/or regional in nature. produce some "benefit" to the ~oject areas. However. with the passage of AB 1290 the State legislature has made clear its' intentions to "tighten down" on the activities that receive funding from redevelopment property tax increment revenue. Their intent. among other things, is illustrated by the requirement to adopt project area "Implementation Plans" (which have been done) to show progress in the elimination of blight in the project areas. The requiremant to adopt implementation plans clarifies a previous ambiguity by instituting a reporting requirement which forces the Agency to illustrate that the Agency's goals. objectives. projects and expenditures will not only provide a "benefit". but more importantly. eliminate blight within the project areas. This evaluation is not being recommended to include evaluating the "worth" of the current Economic Development program since if successful, the program will be a tremendous benefit to the entire City and the South Bay ragion. Instead. the evaluation would be centered on the clarification of the appropriateness to expend redevelopment funds on these activities given the new legal context as required by AB 1290 and. if necessary. a recommended refinement of what activities should be funded by redevelopment and what activities should not. 6. Evaluate the faasibifity of eliminating or deferring all or some of the Agency CIP. .As was determined through the budget process last year. the Agency's existing Capital Improvement Program does not have existing funds set-aside for their completion. Staff proposes to provide a full analysis of the Capital Improvement Program in the FY 1995-96 budget process, at which point choices can be made regarding projects that could be eliminated or deferred. The CIP program currently requires approximately $2.25 million. Attached for your information as Attachment 3 is a listing of the existing Agency capital improvement projects which are to be evaluated. 7. Development Projects The last item of the proposed "work plan" consists of four "high profile" development projects of critical importance to the City and Agency with respect to 1) implementing the goals and objectives of the redevelopment and implementation plans, and 2) meeting the City's and Agency's financial goals. They are distinctly different from the previous five items because they do not represent opportunities for an immediate and substantial infusion of cash to the Agency's operating funds, but again, are vital to the economic health of the Agency. a. Continue Development Agreement negotiations with the new owners of the Mid- Bayfront project. b. Pursue development of Phase II of the Auto Park project. c. Evaluate the potential development of the Windmill Farms site in conjunction with the school districts. - 9,. II ~ -- Page 6. Item 3 Meeting, Date 02/14195 d. Pursue development of an amphitheater project. Obviously, the above list does not represent an exhaustive list of projects to be worked on ~ by the Community Development Department. The projects proposed in the budget "work program" are included because they are either critical for improving the cash flow problem of the Agency, or afe high priority development projects that will have significant positive financial impacts to the City's General Fund (sales tax revenue) and to the Redevelopment Agency's Operations Fund (land sales and property tax increment revenue). E. CURRENT YEAR FISCAL PROJECTION The following two tables provide an updated projection of revenues and expenditures for the current year and the corresponding effect on the fund balances. The two tables make different but realistically supportable assumptions regarding disposition of Agency-owned properties. but are otherwise identical in their assumptions (the disposition of these and other Agency-owned properties are discussed in detail in Section C above). Table ~hat the Agency is successful in the current fif:lJ year in sellin~ t~~ ~es in the Bayfront t~port District. Those properties are ryIo.!or M~/I!:1a Motel. ')ì:~ va ue at $ 1.000,000. and app~ property, valued at $750.000. As the tab e indicates, -f t:. the current year proìection estimàres a revenue surplus of $353,m. thereby changing ~f¡ 6 " (Ai "all funds" balance from a negative $ 1,083.169 to a negative $729,813. ei. 1161, 0 ~ ~- I tfI ~BlEA--=:> R~~~ - \':).\¡;¡~ ¡pI) ==- ~nI~ ~ ',Or;~ -¡;e{. ..JIod..oIo~mAo.nc' v ~X ¡;.~ "/,..,,\1(. ,,1\ ~ ....95 P,olKtod Rnonoiol Summ... Q~ /" ~ 1 ~ Ex........,.. rn;-17 r _od~ ... -....no -no ",.. Fund Fund . , ~ ...I!!!œ!... Ro...... O_non. DoIrt......,. 801"""V' Southw... loel.7OOI lel.000 359.150 0 "e59.0501 8.yf,ont!Town e.n", I lee1.2111 5.e3B.7B3 2.139,155 w2.0B5.B55 5".582 Town eo"". II 11.2B2.8B71 e3B.000 309.005 1.003,508 (2.3ee,0081 Ot.. Voltov Rood leOS.83el 821.2e2 0"8.88B 0 12ee.Oe31 low/Mod/Omg TOM"". 1.700.43e 1.714.053 1.e81.882 0 1.73e.807 F"........ 277.03B 12.300 8.000 0 281.33B 11.083.1 e81 1.187,7B8 4.835.081 3.eBB.3el 14 72B,8131 "10- 10.. to - Conoorv..ev T..... 1201.7851 . ...... u-. Pr..wm 115.0001 w C"".m YO' .uop ...: Ro....... Ion ....-. Ibl 4353,35e Table ~at the two property sales to the Port will occur 8nd that the Agency will sell the South Bay Chevrolet site under the proposal referenced in Section C.2.b above. The sale price for South Bay Chevrolet is estimated at $1.2 million. As the table indicates. the currant year projection estimates a revenue surplus of $ 1,553.356. thereby changing the "all funds" balance from a negative $1,083,169 to a positive $470.187. (? - - EV2~~~ !+,..t/v".1 i::~"/V$¥.5 - 'f/f{7,7Q<¡j 0 p~.ïIAls. L¡,"'36,O~) t. - 1:7~O,()" ~ ~ L- Debt- S-_"f. !> g~eV3b) 3 ~ - tJV,," c.:t..? . '?no 4~3 (Piim. fi'/'23/"i'i ) #' 41 7 43'7, 7t:¡õ :::: (2.D1't t: 'F!. 3-1f1 ...- ' neo~ \I1I $T '1. '-tJJ.f.q;)Ç a- / - (~~ I"..,¡¡ 5.1. 9.- V ¡qq'1-"S . ~ /ff.¡IJIJIt-L Rev"",,;;: -=-~?, lf3?¡ 7"6 (IÞJ/ð LttfJO ~".)r;) -&:1 ~ot..f q.!).5"' - !fNNIJlf-L EYf"""S~...5 J J 1- (w c.x: p ,.pz, 'ilz.>;,) ~ ) . Page 7, Item..>o.L. !t-NNUlf-L- DØfcH:::- - 1,7 b 1'27 - Meeting Date 02114195 PJ-vS low/Moo lJou.$JlJ!!¡ - TABLE B Se'"r 1I5~. Rodevolooment Aoe~v FY 114-95 P'o~<1ed "nandol Summa.. EApondi1u... ..o octod 800;..... Endi.. Fund Ñnd ~ 8o1.~ Rov.nue O"',"on. D." ....I~ 8o1.~ Southw..t 1<61.7001 1.361.400 :159.150 0 .540.550 Bayf,ontITown C.n"o I (661.2111 5.939.763 2.13B.155 w2,495.655 644.562 Town Can"a II 11.292.6971 639.000 309.005 1.403.506 12.366.4061 Ctoy V"'y Rood 164B.8361 B21,262 438,869 0 1266.4631 low/Mod/Omg T..o/Hog 1.704.436 1.714.053 1.6B1.8B2 0 1.736.607 F;no Arts 277.039 12.300 8.000 0 261.339 11.083,1691 10.367.796 4.835,061 3.B99.361. 470.187 ~ Includo. loon to Boy/,ont Con.......y Tnm 1201.7651 + Public Liobõ!õty """....115,0001 w C""ont YO" .""".." R.yon... .... U..ndRU'.. bl .'.553,356 In the event that one or more of the sales assumed in the tables do 1121 occur, there will be a corresponding decrease in current year revenues. F. COMPLETED AND CURRENT MAJOR PROJECTS Although the Redevelopment Agency revenue/expenditure cash flow estimates provided in the previous section are of concern since only through the sale of assets can a positive balance be achieved. they should be considered in the context of other benefits to the City (primarily sales tax revenue and jobs) that do not flow to, or are of direct benefit to the Agency's financial cash flow condition. The following list of projects represent Community Development projects that have either been.completed, in the process of being completed, or are being worked on, that have substantial Redevelopment Agency "investment" either in staff time costs, monetary participation. or both. Completed Projects 1. Rancho del Rev Commercial Center (K-Mart, Home Depot and Price Club) ~ Net Annual Sales Tax: $800,000 ( Annual Property Tax: $300,000 . Permanent Jobs: 1,200 Lower net sales tax due to the old Home Depot building not being currently occupied. 2. Auto Park - Phase I Net Annual Sales Tax: $600,000 Annual Property Tax: $ 50.000 Permanent Jobs: 300 9',-/3 ðI Page 8, Item 3 Meeting Date 02/14/95 - Net sales tax will increase dramatically as new dealerships come on-line and the "repayment" obligations decrease. 3. Palomar Trollev Center Net Annual Sales Tax: $400,000 Annual Property Tax: $ 78,000 Permanent Jobs: 500 4. Chula Vista Center. Exoansion Net Annual Sales Tax: $250,000 Annual Property Tax: $150,000 Permanent Jobs: 250 5. Broadwav Plaza (Wal-Martl (estimated opening date of November 1995) Net Annual Sales Tax: $500,000 Annual Property Tax: $135,000 Permanent Jobs: 450 It should be noted that the above referenced net sales tax projections from the completed projects have already been included in the General Fund revenue projections. Future Projects The following projects are still in various planning, negotiation and evaluation stages, and therefore an accurate assessment of their "benefit" cannot be provided at this time. However, it is certainly safe to assume that each of these high profile projects will reap significant benefits to the City and Agency including the creation of jobs and public amenities. 1. Mid-Bayfront 2. Auto Park - Phase \I 3. Amphitheater 4. Amcor 5. High-TechlBio-Tech Zone 6. Border Environmental Commerce Alliance 7. Veteran's Home B. Family Fun Center FISCAL IMPACT: Acceptance of this report and approval of the proposed work plan does not in and of itself have a positive or negative fiscal impact. The implementation of the work plan is aimed at enhancing the fiscal condition of the Agency and the City's General Fund. (:lwp51 lhaynaslroports\midbudg4. 1131 -;3P-- < ~ ð 9--/1 ATTACHMENT 1 COUNCIL INFORMATION DATE: December 8, 1994 1r0: Honorable Mayor and city Council VIA: John D. Goss, city Manager ~ nOM: Robert W. Powell, Director of Finance~ 8UBJECTI RZDZVELOPKmrr AGENCY 1rU aLLOCATIOIi BOW UFUJlDING At your meeting on December 6, 1994, you were provided an informational item, the purpose of which was to inform you of the results of the final pricing of the Refunding Bonds being sold to refinance the outstanding 1986 Tax Allocation Bonds. Apparently the attachments were not as clear as they could have been and the item generated more questions than it answered. This is an attempt to clarify that information. The same schedules that accompanied the original item are attached. The first schedule, labeled Final Pricing/Debt Service Information, compares the existing annual debt service requirements in the first column to the new debt service requirements in the second column as the result of the refunding. '!'his comparison yields the Actual Net Debt Service Savings reflected in the third column. In order to arrive at the real net savings to the Agency, the amounts of State Subventions that would have been received had the refunding not been accomplished are then subtracted in column four to arrive at the Net Savings After Subvention shown in column five. '!'hese amounts (column five) reflect the actual savings to the Agency from issuing the refunding bonds. '!'he second schedule, labeied Improvement in Final Pricing (Bonds Priced 12/2/94), is simply aeant to compare the estimated debt service requir_ents that were presented to you at your aeeting on . November 15, 1994, with the actual debt service requir_ents as the result of consummating the sale of the bonds. '!'he results of this comparison are reflected in column three, which shows that the actual debt service cost to the Agency on the refunding bonds is approximately $50,000 Ie.. each year than vas estimated at the earlier meeting. Stated another way, the net savings to the Agency from the transaction ended up being approximately $50,000 aore each year than was previously projected. I hope this clarifies the results of this refinancing effort for you. Howev~r, should you have further questions, please feel free to contact me. RWP/eb J r 1-- Attachments 9~/§ _.. -- CHULA VISTA REDEVELOPMENT AGENCY 1 D9.c Tax AlIoaitJon Refunding Bonds Final PricIng I Debt Servlce/nfonnation .Old" CIS .New" c/s . ,.Actual State Net S8vings F.Y. 1"6 fI~ Ref. It.: DIS Subvention AItw Ending Bonds Bonds :"'s.vfngs.. . "GIven up. 8ubVWIlion 18115 2,073.286 891.396 1,181.890 0 1,181,880 18116 3.125.<4.c9 2,~06,986 71M63 400.2~1 118,222 18117 3.124,074 2.562.262 561.812 ~52.157 108,855 1898 3,115.534 2,556,028 559,506 ~01,157 158,3049 1999 3,109.569 2.553.903 555,756 323,628 232,138 2000 3,106.206 2,549,841 .556.365 242.155 114,210 1001 3.099.276 2.552,778 546.~98 160.178 JIe,320 1002 2.719.156 2,547.356 171,800 0 171,800 1003 2,713.356 2.544.878 168.478 118,478 2004 2.710.075 2.545,261 154,81~ 164,814 1005 2.708,525 2.543.341 .165.184 185,164 1008 2,707.919 2.546.581 161,338 181,338 1007 2,707,469 2.535.~53 172,016 172,018 1008 2.706,388 2,536.162 170.226 170,228 1009 2,703.888 2.532.903 170,985 170,985 2010 2,699,181 2.540.268 158,913 158,913 2011 2.691.~81 2.537,569 153,812 163,812 2012 2.530,103 (2.530.103) .530,103 2013 . 2.532.565 ,532.565 ,132,585 2014 2.528.875 2,528.875 ,128,815 2015 2.52~,240 , 2.524.2~0 .I24,2AO 2018 2,522,209 ,522,209 .522,209 2017 2.522.546 2,522,546 ~ 2018 2.519.656 ,519.856 2019 2.508.537 .508.537 12.108,137 2020 2,513,181 513,181 ~ - 2021 2,507,387 507,387 .. .sa7 - 2022 2,505.750 ., 505.750 ,710 1023 2.502.259 -:: ,502,259 C2.IO2,259 1024 2.491.121 ,491.121 f2At1,1Z1 JO25 1,746.525 1,746.525) '1,'46,125 47,120,932 75,938.020 (28,117,088) 1,979.516 (21,350,079) ~ - Grtglby 8randford & Co,. '21'&'84 C?V_PRIC.xL.S hoe 2 c¡ r-/? , i CHULA VISTA REDEVELOPMENT AGENCY 1894 Tax Allocation Refunding Bonds Improvement In Fin.' Pricing (Bonds Priced 12J2/94) 11/15 Eatlm8!e ActuII Net Fisc.' VH' Pru."ted Debt Svc I/IIfI'OWItI Ending to AQMcy uebel In 8I'wfnQ8 1895 847.621 891.396 18.w 1196 . 2,.78.897 2..06.986 Tt.l1t 1197 2.596,421 2,562,262 84,158 1198 2.598.623 2.556,028 G,øs 1199 2,603,758 2.553.903 ...us 2000 2.601.55<1 2,549.841 11."3 2001 2.596.935 2.552.778 ",181 2002 2.599.780 2.547,356 a,a. 2003 2,599.607 2,&«,878 "',m 200.c 2,601.607 2,545,261 18,J4ð 2005 2.595.735 2.543.341 II,3M 2006 2.595,318 2,546.581 ",731 2007 2.595.806 2.535.453 80,313 2008 2,592.309 2.536.162 .,147 2009 2.590,043 2.532,903 171*1 2010 2.58M12 2,540,268 ",1" 2011 2,591,~2 2.537.669 ...,1t3 2012 2.585.025 2.530.103 "',122 2013 2.582.815 2,532,565 80.210 201. 2.574,737 2.528.875 ""'2 2015 2,575.337 2.524.2.0 lUll' 2018 2.571.225 2.$22,m .. 018 201' 2.567.112 2,522.545 ..... 2018 2,665..25 2.511.656 .. "" 2011 2,667.100 2,508,537 . 2020 2.559.450 2,513.181 .. 1021 2,549.812 2.507,387 . 1022 2,542,837 2,505.750 . 1023 2.541,800 2.502,259 . 1 1024 2.527.550 2.491.121 ... 2025 1.850.000 1,7.8.525 .,471 77,535.813 75,138.020 "'97.713 9-/7 - ~ II~ ,',' Grigsby Blandford & Co.. '211W4 CV_PRIC.xLS Page 3 ~ fa9£ Clank! - 1,. /~ r¡ --/R .- . . . \ /".., ¡..,. .' j j ATTACHMENT 2 REDEVELOPMENT AGENCY AGENDA STATEMENT Item-L Meeting Date 08/23/94 ITEM TITLE: RESOLUTION 1411 Adopting the Redevelopment Agency Budget for Fiscal Year 1994-95 and Appropriating Funds Therefor SUBMITI'ED BY: Executive DiIedí)r7 (4/5ths Vote: Yes- No.xJ BACKGROUND: At the June 21, 1994 Redevelopment Agency meeting, the Agency's Fiscal Year 1993-94 budget was adopted and the FY .1994-95 budget adoption was defemd pending . a staff response on two issues. The first request was for the City Attorney to analyze the legal aspects of a proposal to invest City funds for acquisition of Agency~wned real estate, and 'the second was to establish current market values of three Agency~wned properties being considered for possible purchase by the City. Additionally, during this interim period staff was able to further refine 1993-94 available year- end fund balance estimates, the proposed 1994-95 budget as well as the 10ng-tem1 financial plan. The report consists of four general categories: General Overview, Proposed Financial Plan Recommendations, Adoption of the Fiscal Year 1994-95 Budget, and Future Positive Impacts FY 95-96 and Beyond. RECOMMENDATION: That the Redevelopment Agency adopt the resolution which approves " the F~ Year 1994-95 Redevelopment Agency Budget incorporating the following staff financial plan recommendations: '-' . 1. ..sen the Marina Motor Hotel and Cappes properties to the Port District 2. .Market for w.e the Fuller Ford and South Bay Chevrolet sites 3. Issue Request for Proposals (RFP) for the EI Dorado Building 4. Return to Agency in January 1995 with . mid-year progress report BOARDS/COMMISSION RECOMMENDATION: Not applicable. - DISCUSSION: Section 1 General Overview M bas been discussed in detail in previous reports, iliff bas been proactive in devdoping a long tem1 plan to dœ1 with the deficit of the Agt:ncy. Based on this dcIailed ævicw, it is recommended that the Agt:ncy plan as carefully as possible for the future, but preserve maximum flwõility for the long-run. While it is expected that the current deficit problem will prove tQ be short-tem1 as the economy recovers and real estate development II1d commerce return to full health, the Agency plans to be set at the first sign of recovery to take advantage of its assets and capabilities. We must, however, realize that it may DOt be in the Agency's or the City's best interests to liquidate assets and cut back on operational capacity to the degree that it would impact our ability to respond to the opportunities that arc currently emerging in the general economic recovery. . 3 -- ~~ / - 9-;9 ,J - . ~ i . ',-. Page 2, Item ~ -- Meeting, Date 08123194 In the previous report a variety of options to deal with the operating deficil were presented as follows: Property Asset Sales City-Agency Sales Tax Cooperation Agreement Funding EconoRÚc Development with a greater share from the General Fund Reduce Agency Reimbursement for General Fund Staffing Costs In reviewing these options, Council requested 1) further information on, and the legality of, investing City funds in the purchase of real estate and 2) the current market valuation of three properties proposed for sale to the City. As Slated in the memo from the City Attorl1ey (Attachment 1) the concept of using the City's pooled investment account to purchase the - properties does not appear to be legally viable. The Attorney concludes that current City investment guidelines do not permit the City Council to invest City funds in real estate, and that it would take a Charter Amendment to modify the guidelines. He also felt that it would be a 'high risk' for the City. Although it is c:ertainIy understood and agreed that investment by the City in real estate .owned by the Redevelopment Agency is ,of higher risk than what the current policy allows, Administration and Community Development staff believe that the risk is mitigated for the , following reasons: I) the investment in real estate would be limited to a maximum of S" of the City's: t,otll investment portfolio, and 2) the Agency property proposed to be IOld to the City have a high potential investment value and could not be characteriz.ed as 'risky' properties. The overall intènt was to provide short-term relief to the Agency while also allowing the City the opportuni~ to re¡ilize financial benefits from the expected appreciation for these properties, However, since State law and the Charter precludes such an investment, and steps need to be taken now to stabilize the Agenc¡y's budget, it is recommended that action be taken to prudently ICII certain select assets to support Agency opemtions. The table below identifies the three properties Council directed staff to re-evaluate, with the previously estimated values and with the currently estimated values, based on appraisals: Prior CUrrent "-ed Prooertv V8lue 'V8Iu. ~ EI Dorado BuIIcfong ",800,000 ",400,000 RFP °Mefziotis° U,2oo,ooo ",200,000 Hold 340-368 Bay Boúevlrd ",'00,000 ",265,000 Hold A$ the table identifies, two of the three properties appraised are closely in-line with thdr previously reported values. However, the "Merziotis. property, a 6.36 ICæ parcel at the noi1heast comer of E Street and Bay Boulevard, came in aignificantly lower. The site is intended for development as a Hote1IMotd use and is controlled by the Bayfront Redevelopment Plan and the Local Cœsta1 Plan. The ex¡iected future value was estimated to be $4,900,000 at its highest and best use as- a hotd and sit-down restaurant. If IOld today however, the $4,900,000 value would need to be severely discounted to the estimated $1.2 million value. The majority of th~ discount is due to estimated "bolding/profit' cost of $3.1 million. In essence, - ~ ~13 'F" ' , 9~;;W l. ',j ~.- } ; Page', 3, Item ~ Meeting Date 08/23/94 the appraisaJ report indicated that for a hoteUmotel use, an investor would need to purchase the property and hold it for another five to ten years before the hoteUmotei market is expected to return. It is for this reason that staff does not recommend selling this property at t.'üs ti!!1e. Section 2 Prooosed Financial Plan Recommendations This section of the report details the specific staff recommendations listed previously for the 1994-95 Agency budget and the long-term financial plan. The recommendations are as follows: I. Sell the Marina Motor Hotel and Cappos properties to the Port District ' 2. Market for sale the Fuller Ford and South Bay Chevrolet siteS 3. Issue Request for Proposals (RFP) for the E Dorado Building 4. Return to Agency in January 1995 with a mid-year progress report Recommendations 1 through 3 (Property Asset Sales) Recommendation #1 calls for the Agency to sell the Marina Motor Hotel and Cappos properties to the Port District. Staff is pursuing discussions toward the possibility that the Port District could purchase these two properties designated for park lands. The value applied to these properties (collectively totalling $2.1 million) represent the acquisition costs to the Agency, but . not ~y the value' of the property at this time. Recommen~tion n proposes that the Agency market for sale the Fuller Ford and South Bay Clevrolet,¡ites. With respect to the Fuller Ford site, the Agency, on 1uly 17, 1994, authorized the execution of a Semi-Exclusive Ntgotiating Agreement with 1oe1en EntClprises for the west side of the property (approximately'2.5 aaes) to build a unique 8Business Home- complex. The Citrons, however, are currently speaking in tenDS ofSS.OO a square foot for the 2.5 aaes which will result in only approximately $S44,500 to the Agency. Staff feels that the fair market value for the property is in the S7.SO per square foot range which would genemc approximately $817,000 for the western portion, and another approximately $283,000 for the eastcm.9 Ia'es. The South Bay Chevrolet site was the IUbject of . previously approved Semi-Exclusive Ntgotiating and Covenants Agreement (SENA) with The Mœham Company for . commercial shopping center. Unfortunately, The Moxham Company was DOt able to comply with provisions of the SENA by ICCUring . 8high wlume8 reIail sales anchor for the site and did DOt wish to leek an extension. The Agency does DOt have any poteøtial ~ for the site at this time. Recommendation 13 proposes that ~ Agœcy issue an RFP foÌ sale of the E Dorado Building. It would be prudent to 8test the market waters8 011 this office buDding before engaging in actual marketing of the property in order to get . clearer picture of the achievable value and to be able to assess the benefit of receiving that value compared to the impact the sale would have on City IelVÍces currently occupying space in the building. The RFP process will allow the Agency the time to be more deliberate in analyzing the benefits of sale. . 0' '.' '. , ' 0 The following table updates the list of. Agency-owned . properties, with current disposition ~ recommendations: 9.-!;-[ ~ S /-:9. - Page 4, Item ~ !' - .~ . Meeting. Date 08/23/94 PrlOI' Cuneot Proposed Prooertv Valua Value ~ Marina Motor Hotel' .'.200,000 .',200,000 ' 501110 Port Cappos (965 F 51.)' 900,000 900.000 . Sell 10 Port Fuller Ford' 1,100,000 1.100,000' Market South Bay Chevrolet' 900,000 900,000' Market EI Dorado Building' 1.600,000 1.400,000 ' RFP Merziotis 2.200,000 1.200,000 Hold 340-368 Bay Blvd. .l.1QQ.QQQ .Llli..QQQ Hold .9,000.000 $7 .965,000 . RECOMMENOED SALES .6.500.000 As identified in the table, the five properties recommended for disposition represent a maximum amount of $5.5 million in land sale revenue. In each case, the actual amount of revenue to be generated from the sales are uncertain and dependent on a number of outside uncontrollable factors. Recommendation 4 It is recommended that staff return with a mid-year..progrcss" report in January, 1995. As indicated iri the prior report, staff believes that the exercise of developing a long-range financial plan has been worthwhile and fruitful. Staff bas laid out an ambitious plan that, when realized, will result in positive financial benefits and ramifications. In order to keep Council apprised of , stafrs.progrcss; a report will be jmsented outlining: 1) the accomplishments made toward the attainmènt of the three recommendations stated above, 2) the plan of action for January through June 1995;and.3) the updated corresponding budgetary and financial impacts that are expected. " Redemption of a Portion of the 1986 TABS . As ouUined in the previous budget report of June 21, staff presented a pre1iminaIy scenario whereby the Agency could fund approximately $6.S million in debt service payments over the next 4 1/2 years by escrowing $S.S million up front (presumably through cash raised by asset sales) to deCease the .non-refundable. portion of the existing bonds. ~. Unforttinatdy, in order to realize the maXimum benefit of this plan, the Agency would need to raise $S.S million and escrow it prior to May I, 1995. The sale of property is the only viable IOIJrCC of this amount of money. Although staff feels that this is not feasible, any property sale revenues over and above the amount needed to fund the operating deficit will earn edditional in~ and effectively fund some portion of this debt service obligation. Section 3 ' ~doot1on or 1994-95 A~encv Bude:et Results of Agency Operations for Fiscal Year 1993-94 The following table shows the results of Agency operations, including expenditures for capital improvements and debt service, for fiscal year 1993-94. These figures differ significantly from those provided in the June 21, 1994 agenda item for various reasons, but primarily due to the incluSion of capital improvcincnt expenditures:in this schedule. .The other differences are , r.; 4. I 3- '¿ ...,' L.. -. .', ,. r - 9 - ';;2. y-- - I . ."0 --" , -' . .0 Page S. Item ~ Meeting Date 08/23/94 generaIly the result of refmements in revenue and expenditure figures due to fiscal year end accounting adjustments. The net result is that the Agency is now reflecting a $1,083,168 fund balance deficit as compared to the June 21, 1994 schedule showing an available fund balance of $863,289. The major capital expenditures excluded from the previous report were $1.1 million each for the Auto Park Project and the Otay Valley Road Street Widening Project. and $555', 116 ~'1 for the acquisition of the Shinohara property. Ii 14~ '2- ) f) NI>~::- I b ~PMENTAGENCY (ZIlV~ ~ 13,5~( 't ?>?) FY 93-94 FI ~NCI~L SUMM~RY ~yp,.øñ - -;- ...~ Beginning EXPENDITURES 1)~ fndI g fI2Iß1 Fund Solonee Revenuo OÐerotlna CIP. Debt Servleo Fund Belonee (Deficitl (Deficitl Southwest $ 1312,1131 $ 136,650 $ (263,8211 $ 122,4161 0 $ 1461,7001 SlyfrantfTC I 881,637 3,848,764 11,493,3811 1274,7441 13,623,4871 1661,2111 Town Centre II 11,129,9341 3,764,938 12,906,5901 12671 11,011,0441 11,292,897) Ouy Val/ey Rold 1,778,712 859,935 1387,7861 12,899,6971 0 1648,8361 Low & Mod 1,224,278 1,128,537 1486,905) 1161,475) 0 1,704,436 Fine Arts 268 624 16415 180001 0 0 277039 U.711.204 tS.745.239 .15,546.4821 .13,358.5981 .C4.634 5301 .11.()83.1681 Proposed FJSCaJ Year 1994-95 Budget 'The prpposed Redevelopment Agency budget for 1994-95 totals $8.790.238 and is composed of Agency Operations ($4.163.916). Debt Service ($4,255.839). and Capital Improvemenls ($370.483):-' -Bstimated revenues to the Agency are projected to be $11.980.496. creating a budgetary sUl'plùs of $3.190.258 for this fiscal year. However. when the FY '93/94 operating deficit identified above is included, the final ending fund balance for FY '94195 will be $2,107,090. The following tables show the proposed budget by project area, with separate presentations for Operations. Debt Service. and Capital Improvemenls. Since these figures have been somewhat refined since the June 21 report. also included is a reconciliation to those Dumbër¡ and an explanation of significant differences. OPERATIONS 06121194 REPORT ADJUSTMENTS 1994195 +/1-) Proposed 881.ftDA HousIng . 300,000 . 0 . 300,000 886-6outhwest 369,160 0 359,160 89O-8ayfront/Town Centre I ,1,867,270 174,819 ... 2,132,089 891-Fine Arts 8,000 0 8,000 992-Town Centre" 284,660 24,346 ... 309,005 893-Low Mod 804.330 0 804,330 O<ange Tree MHP 16,490 0 16,490 994-Otay Valley .tO1 200 ~... 434852 Subtotal U,931,100 .232,816 .4,163,916 - '. '7~ W ERAF Payment to Schools ø ¿ I - 9~:J-3 ! .J - ,. -.. - Page 6, Item ~ Meeting Date 08/23/94 DEBT SERVICE 06/21194 REPORT ADJUSTMENTS 1994195 +/H Proposed I 1986 Tax Allocation Bonds $1.709.1B2 ... $605.718 $2.314.960 .. 1987 COPS 'B' TCI 450.850 0 450.850 1987 COPS 'B' TCII 154.476 0 154.476 1993 COPS-REF 1987 'A' 971.850 0 971.850 1993 COPS 'Parking' 162.703 0 162.703 LOW/MOD Loan Repayment 674.398 (574.398) 0'" NIC-Bayfront Conservancy Trust --1.QLQQQ ~ 201 000 Subtotal $4.224.459 $31.380 $04.255.839 I ... Contemplated the 'Defeasement' of the 'Non-Refundable' portion of the Bonds requiring escrow amount of $6.5 million - this scenario Is not deemed to be feasible. .. Estimated debt service In current year with the 86 TABS Refunding ... FY 93.94 loan not consummated -<feemed unnecessary CAPITAL IMPROVEMENT PROGRAM 06/21/94 REPORT ADJUSTMENTS 1994195 +/(-) Proposed 995-Geographic Information System $0 $ 10.000 $ 10.000 995.S0, Shipbuilding Demolition 0 ZMQQ ZMQQ 35.000 35.000 996.Auto Po', ( - 0 60.000 50.000 996-Geographic Information System 0 MQQ MQQ 55.000 55.000 897-Paint Pit 0 267.000 267,000 ... 997-Automated Budget System 2 .lMll .lMll 280.483 280.483 Subtotal. CIP $0 8370.483 8370.483 ..:.- Gr8IICI Tot8I . AI Costl .S,155,559 .634,679 .S,790.238 ... ThIs expenditure may be erogible for nlimburlernent Inter 'Polanco' judgement AGENCY REVENUE Adoption of the resolution wi11 appropriate funds for the FY 1994/95 Redevelopment Agf:lJcy budget totalling $8,790,238. This proposed budget is based on the RCOmmendation to sc11 property and to use proceeds from the property sales to epply to the fund balance deficit and balancing the budget, while concurrently proceeding with the refunding of the 1986 TABS. If Council accepts all of the staff RCOmmendations, staff wi11 be pursuing the sale of a tota1 of four properties and issue an RFP for the E1 Dorado building toward the goal of gcnetating SS.5 million. If the sales goal is realized, there wi11 be a budgetary IlUplus of $3,190,258 to be epplicd to the deficit as the table below indicates. ~~ Jt?= . I 9~c2t ir ~~ , j Page 7, Item ~ ." .' Meeting Date 08/23/94 The table below identifies the. current revenue projections as they compare with the ones presented in the prior report: REVENUES 06/21194 REPORT ADJUSTMENTS 1994195 +/C-I Proposed B85.Southwest $218,000 ($ 65,9001 ... $152,100 990-SayfrontfrC I 3,726,263 (133,9071 .. 3,592,356 B91-Fine Arts 12,300 0 12,300 992-Town Centre II 671,804 (55,2731 .. 616,631 993-l0W/MOD Income Housing 991,100 54,847 .. 1,045,947 994-otay Valley Road 821,262 0 821,262 Paint Pit Judgement 0 240,000 240,000 Property Sales 1714830 3 785 170 5 500 000 TOTAL $8.155.559 U.824937 $11.980.496 FY 93194 Operating Deficit ($1,083,1681 ($1,083,1681 8udgetary SwpIuI (Daflclt) . U.107.090 ... Decrease based on actual experience for pñor yur and tax wring agreements with other agencies. .. Decrease or Increasè based on actual experience for prior year. Section 4:" Future Positive Imnact.ç - 1995/96 and Beyond Previously:' staff provided a long term plan based on various growth scenarios. The result mowed an annual opera!ing ~cit of a high of $2.5 million next year and declining slightly every year thereafter until sometime between FY 2002 and FY 2004 when Agency revenues would equal Agency expenditures. However, it is staff's opinion that this scenario is highly unliJceIy, given the following major factors: 1. Additional Agency Assets ~ As provided in the Agency CWTent year plan, the maximum amount of SS.5 million in sale proc:eeds from the recommended pro¡ierties could be generated and added to fund balance in order to balance the budget and earn intdest.. AdditionallSSets are 8lso available for liquidation or development that could further protect the Agency from future budgetary deficits if necessary. These assets include the Merziotis, Shangri-La, and Bay Boulevard properties. 2. Completion of Major Projects Major projects such as the Mid-Bayftoot, MCA Amphitheater, and/or phase n of the Auto Park will result in major .spikes. Of lax increment revenue to the Agency that were not previously estimated in the cash flows. The prior cash flows were estimated utilizing historic growth fiends and projecting similar trends for the future. Completion of these projects or ,,!me other projects that may come on-line, will significantly increase lax increment revenue to the Agency. . 9~':<5 ~ ¿-If: -. -- ) Page 8, Item l . '- .' Meeting Date 08/23/94 3. Growth of Southwest Project Area It is anticipated that the Agency's newesl and largest project area, Southwest, will experience tremendous growth and therefore, growth in tax increment revenue for the Agency. The project was adopted in December 1990 and encompasses over 1,100 acres ofindustriaI and commercial corridors along Main Street, South Broadway, South Third Avenue and 1-5. Staff is currently in the planning stages for street widening and other improvements for Main S~ while also in the midst of an eronomic feasibility and land use study for the purposes of developing a long range eronomic development strategy for the area. It is expected that Southwest will be in a competitive position to be able to attract new businesses and development as the general eronomic climate improves. Therefore, the long range perspective is that Southwest will experience tremendous growth and will begin to provide some financial relief toward the end of the 199Os. 4. General Economic Improvement The 1990s, so far, have not been prosperous in terms of real estate values and investment returns in California. This state has been in a prolonged slump deepened by the reduction in the military infrastructure and the painful conversion from a military based economy. However, with the tremendous diversity and strengths of the state in general, it is anticipated that California will again emerge from this recession as powerful and influential as ever. Therefore, . . as sta~. before, when the economy begins to pick up again, we will see a corresponding increasè in property sales and appreciation, and therefore increased tax revenue for the Agency. -, 5. . Stabilization of Tax Increment from State Assessed Utilities Although not relative to the expected revenue for the current year, staff is expecting to see stabilization of assessed values assigned to utilities beginning in FY 95-96 because FY 94-95 is the final year of a three year phase in of a 10.S'" reduction in assessed values as a result of state-wide litigation. This is especia1Iy important in the Bayfrontrrown Centre I Project Arta, since almost 50'" of that project's tax increment revenues are derived from this so\!.I'Cý. Other Expected Cost SaviDgs and Revenue Inci'eases Although the above described items are significant, they are difficult, if DOt nearly impoSS1"ble. to estimate specific positive impacts. However, the following three items can be determined: 1. 1986 Bayfront TABS ReCundiD& The Redevelopment Agency issued $7 million in Tax Allocation Bonds for the combined Bayfrontrrown Centre Redevelopment Project AmIs in 1979. These bonds were refinanced in 1984 and again in 1986 decreasing the total principal amount and annual debt service. The proposed refunding of the tax increment bonds, taking advantage of currently low interest rates, will reduce annual debt service and, consequently, reduce the Agency's annual operating deficit for the Bayfront Redevelopment Project Area. . -- . '.',"~;ø' 5o-?~' - 9 -;;-b . .'. ~'-- ~ l..t;r.v ¡ þJ"j ~rJI.flií J , ¡ Hco1'lfI!:S\ ~~.I F. Page~tem 1- Meeting Date 08/23/94 Agency Resolution No. 1383, authorizing the issuance refunding of Tax Allocation Bonds in an amount nol to exceed $37,500,000 was adopted on December 28, 1983, and Agency Resolution No. 1400, authorizing appointment of an underwriting team, bond counsel, and fmancia1 adVisor for these bonds was adopted on May 4; 1994. In the Agency item for the May action, it was indicated that annual debt service savings of between $100,000 and $200,000 could be achieved, depending on market interest rates at the time of issuance. At this time, under the structure recommended by the refunding team, potential ~ annual debt service savings through the final maturity date of the existing bonds, 2011, are projected to be in excess of $650,000. Savings of $816,000 are projected for 1994-95, largely due to only having to fund one semi- annual debt service payment in the initial year of the issue. The recommended structure contemplates issuing the refunding bonds with a final maturity date of 2024. Although this structure increases the overall cost of the borrowing over the life of the refunding issue, it maximizes annual savings through the year 2011, and still achieves overall present value savings of approximately 3 9b. More importantly, by extending the maturity date, a higher coverage ratio of annual tax revenues to annual debt service is obtained, creating the opportunity for additional borrowing, if necessary, and the related extension of the pledge of tax revenues for debt service, tends to insulate this projeèt from the State Legislature's continued attempts to pirate local funds. The tentative financing timetable calls for final Agency approval of the refunding and related . . legal do!:uments in late September. 2. "PalntPit. Judgement " As Council is aware, the City/Agency bas been pursuing legal recourse for the cost of removal of environmental hazards from the .Paint Pit" located on the Corporation Yard property at "F" and Woodlawn. All eligible Agency costs related to this clean up will be reimbursed to the Agency through the successful .Polanco" judgement pursued by our Special Legal Counsel to enforce the Agency's insurance policy. .,;.... Currently, the Agency bas submitted approximately $800,000 in invoices for reimbursement Approximately $240,000 is expected to be paid by October 1994 ($212,513.30 + interest). The œmaining amount (approximately $S90,000) will be argued before . jury trial to detennine if they are eligible costs for reimbursement Under the policy, eçenditures related to clean-up of the .soil and water' are œ covered. Disposition of the jury trial is expected by January 1995. However, for the pIIIpOSCS of projecting rcvœue, ODly the aforementioned $240,000 is included in the budget. Additionally, the current year CIP includes another $267,000 for the Paint Pit, which staff will be pursuing for rdmburscment 3. F1nal Year or ERAF Payment The current fisca1 year iŠ the final year in which the Agency is responsible for making payments to schools as part of the State budgetary bailout crisis. Beginning in FY 1992-93, the State seized approximately $1,113,000 from the Agency ($647,000 + $233,000 + $233,000) to help 9--:<7 ~ :s 7 ¡-: -. --- , ; ~ . ... Page 10, Item ~ - Meeting Date 08/23/94 balance its' own budget Therefore as it stands now, the Agency will not need to make any other payments to the State which will result in reduced expenditure levels. Summary of Future Positive Impacts As we look ahead from the current fiscal Ye:M toward FY 95-96 and beyond, several significant factors, as described above, are on the horizon that will have positive impacts on the Agency's financial status both in terms of revenue enhancement and/or decreased expenditures. They are as follows: 1. Surplus funds from proposed property sales In current year 8 Maximum amount of $5.5 million 2, Additional property assets to sell Including Merziotis, Shangri-La and Bay Boulevard 8 Maximum amount of $6.0 million D Merziotis $4 ,000,000 D Shangri-La $ 900,000 . D Bay Blvd. $1,100,000 3. On-going savings from the 86 TABS :.8 ~ annual savings in excess of $650,000 through 2011 -, 4, Completion of DJJýor projects 8 " Undetermined impact but projects include Mid-Bayfront, MCA Amphitheater and Auto Park Phase IT 5. Outstanding growth potential from the Southwest Project Area 8 Undetermined, but expect tax increment revenue to take-off by the late 1990's 6. General improvement In the economy .,0. 8 Undetermined, but will increase property tax revenue to the Agency 7. PossIble reimbursements from 'Paint Pit' .apeuditures . S230,OOO increase in current Ye:M revenue . Posst'bility of another $857,000 aver the next two years ($590,000 + $267,000) 8. Reduced Aaenc:y apeuditures for the CIP . Reduction of approximately $200,000 from Current Ye:M expenditure level 9, Final year of ERAF payment . Reduction of $233,000 from current Ye:M expenditure level 10. Stabilization of Unitary Tax Revenue . Undetermined, but UnilaIy Revenue will not be reduced as has been the case over the past several years ,~ 3- -~2--:. 9~¿! !~. Page .11, Item ~ Meeting Date 08/23/94 11. No retroactive tax sharing payments from Southwest to the taxing districts . No additional "hits" to the existing fund balance of $247,000 It is expected that by taking pruåent actions now, and with the expected financi.a1 revenue versus expenditure improvements identified above, that the Agency will again emerge from the current deficit situation. mCAL IMPACT: Adoption of the 1994-95 proposed budget will appropriate $8,790,238 of an estimated $11,980,496 in revenues for Agency Operations, Debt Service, and Capital Improvements. 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