HomeMy WebLinkAboutRDA Packet 1995/02/14
Tuesday, February 14, 1995 Council Chambers
6:00 p.m. Public Services Building
6mmediately following the City Council meeting)
Soecia! Meeting of the Redevelooment Agencv of the Citv of Chuta Vista
CALL TO ORDER
1. ROLL CALL: Members Fox -, Moot -, Padilla -' Rindone -' and
Chairman Horton -
2. APPROVAL OF MINUTES: February 7, 1995
BUSINESS
3. REPORT FISCAL YEAR 1994-95 MID-YEAR AGENCY BUDGET REVIEW-At the time the
Agency approved the FY1994-95 budget, Members requested a mid-year report be
compiled for Agency review and discussion. Staff recommends the Agency accept the
report. This item was continued ftom the Agencv meeting of Februarv 7. 1995.
(Commuuity Development Director)
4. REPORT REQUEST FROM AUTO PARK DEALERS FOR ADDITIONAL FINANCIAL
ASSiSTANCE-On 1117/95 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 1119/95 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 this item be continued to the meeting of 1121195.
(Community Development Director)
ORAL COMMUNiCATIONS
This is an opportunity for the general publk to address the Redevelopment Agem:y on any subject matter within
the Agency's jurisdiction that is not an item on this agenda. (State low, 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 Communications
Form" available in the lobby and submit it to the Secretary to the Redevelopment Agem:y or City Clerk prior to
the meeting. Those who wish to speak, please give your name and address for record purposes and follow up
action. Your time is limited to three minutes per speaker.
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Agenda -2- February 14, 1995
OTHER BUSINESS
4. DIRECTOR'S REPORT(S)
5. CHAIRMAN'S REPORT(S)
6. MEMBER COMMENTS
ADJOURNMENT
The meeting will adjourn to the Regular Redevelopment Agency Meeting on February 21, 1995 at 6:00 p.m.,
immediately following the City Council meeting, in the City Council Chambers.
******
COMPLIANCE WITH THE AMERICANS \\TIH DiSABILITIES ACT
The City of Chula Vista, in complying with the Americans With Disabilities Act (ADA), request
individnals who require special accommodations to access, attend, and/or participate in a City
meeting, activity, or service request such accommodation at least forty-eight hours in advance for
meetings and five days for scheduled services and activities. Please contact the Secretary to the
Redevelopment Agency for specific information at 619.691.5047 or Telecommunications Devices
for the Deaf (TDD) at 619.585.5647. California Relay Service is also available for the hearing
impaired.
IC;I WP51 IAGENCYIAGENDASIO2.14-95.AGDI
-.
MINUTES OF A REGULAR MEETING OF THE REDEVELOPMENT AGENCY
OF THE CITY OF CHULA VISTA
Tuesday, February 7, 1995 Council Chambers
6:28 p.m. Public Services Building
CALL TO ORDER
1. ROLL CALL:
PRESENT: Members Fox, Moot, Padilla, Rindone, and Chair Horton
ALSO PRESENT: John D. Goss, Director; Bruce M. Boogaard, Agency Attorney; and Beverly A.
Authelet, City Clerk
2. APPROVAL OF MINUTES: January 24, 1995
MSC (Horton/Fox) to approve the minutes of January 24, 1995 as presented. Approved 4-0-0-1 with Padilla
abstaining,
CONSENT CALENDAR
None Submitted.
PUBLIC HEARINGS AND RELATED RESOLUTIONS AND ORDINANCES
3. PUBLIC HEARING EXTENSION OF LEASE FOR PROPERTY LOCATED AT 818
BROADWAY TO SOUTH BAY CHEVROLET COMPANY, INC., AND MR. EDUARDO MARTORELL,
WITHOUT PUBLIC BIDDING PURSUANT TO SECTION 33431 OF THE COMMUNITY
REDEVELOPMENT LAW --The Agency acquired the leasehold interest in the property as part of the acquisition
of the dealership's properties for the Auto Park project. South Bay Chevrolet has decided to continue to sell used
cars at the site and requests reconveyance of the lease and leasehold interests. Continued from the meeting of
Januarv 17. 1995. Staff recommends continuing this item to a date and lime certain. that being Tuesdav. February
21. 1995 at 6:00 p.m.. immediatelv following the Citv Council meeting. (Commuuity Development Director)
RESOLUTION 1445 AUTHORIZING THE EXTENSION OF LEASE FOR PROPERTY
LOCATED AT 818 BROADWAY TO SOUTH BAY CHEVROLET COMPANY, INC., AND MR, EDUARDO
MARTORELL, AND AUTHORIZING THE CHAIRMAN TO EXECUTE SAME
This being the time and place as advertised, the public hearing was declared open. There was no public testimony.
MSUC (Horton/Fox) to continue the public hearing to the 2/21/95 meeting.
ORAL COMMUNICATIONS
. Rod Davis, 233 Fourth Avenue, Chula Vista, CA, represenling the Chamber of Commerce, distributed the
new 1995 Commuuity Planners.
ACTION ITEMS
4. REPORT APPEAL OF DESIGN REVIEW COMMITTEE REQUIREMENTS FOR
SOUTH BAY CHEVROLET --The auto dealer wishes to appeal the need to install certain paving improvements
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Minutes
February 7, 1995
Page 2
as approved by the Desigu Review Committee. It is recommended that the Agency Board approve the report subject
to conditions as outlined by staff. Continued ftom the meeting of Januarv 24. 1995. (Commuuity Development
DirectorlDirector of Planning)
Chris Salomone, Director of Commuuily Development, stated staff provided two alternative solutions: I) the
applicant be required to provide $562.50, the estimated difference of what they had installed and what they should
have installed, and that the money be used to landscape an area on the auto park site that would not have been
landscaped and that they irrigate, landscape, and maintain in perpetuity; or 2) a fine of $3,750 could be imposed.
Chair Horton stated multi-colored concrete had been previously approved and questioned if it had been required of
both dealerships.
Steve Griffin, Principal Planner, replied that it referred to the treatment on the display pads which was one of the
deviations installed by the developer, i.e. salt fmished concrete on the pads. That deviation had been approved by
the Design Review Committee. Neither dealership installed multi-colored concrete.
Member Rindone stated he had a compromise for consideration. The City was trying to ensure that if there was
a violation it not be overlooked or set a bad precedent. The other concern was to ensure that the City had the best
product possible, but not being punitive to the applicant. He did not want to establish a tradition that if there was
a mistake or violation that the penalty be extremely severe. If the original request had been met the differential cost
was $562.50 but to tear it out and replace it was $3,750. The cost of landscaping and maintenance was
approximately $500.
MSUC (Rindone/Fox) the auto dealer is to pay the incremental value of $562.50 for future alternative public
improvements which would equal at least to what the cost would have been if done; and, require Alternative
2 for the full landscaping in the southwest corner of the dealership property not to exceed the range of $600.
OTHER BUSINESS
5. DIRECTOR'S REPORT(S) - None
6. CHAIRMAN'S REPORT(s) - None
7. MEMBER COMMENTS - None
ADJOURNMENT
ADJOURNMENT AT 6:38 P.M. to a Special Redevelopment Agency Meeting on February 14, 1995 at 6:00 p.m.,
immediately following the City Council meeting, in the City Council Chambers.
Respectfully submitted,
BEVERLY A. AUTHELET, CMC, City Clerk
by:
j - ~
REDEVELOPMENT AGENCY AGENDA STATEMENT
Item ..3
Meeting Date 02/14/95
ITEM TITLE: REPORT: FY 1994-95 Mid-Year Agency Budget Review
SUBMITTED BY: Community Development Director' c.s
REVIEWED BY: Executive Direct.&, (4/5ths Vote: Yes - No ...XJ
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 affected 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 a close monitoring of the situation is warranted. One of the
recommendations adopted by the Agency, was that staff return in January 1995, with a 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 and financial impacts of the Agency's fiscal
condition. This report serves to satisfy this requirement.
RECOMMENDATION: It is recommended that the Agency Board accept the report and
approve the proposed work plan for January through July 1995 as described in Section B, and
inform the City's Port representative of the Agency's desire to move the sale of Bayfront
properties to the FY1994-95 Port CIP from the FY1998-99 Port 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 a 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 Tax
Allocation Refunding Bond issue. The following summary points are provided:
1. Current year (94-95) net debt service savings of $1,181,890.
2. FY 95-96 through FY 2010-11 average annual net debt service savings of $198,529.
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Page 2, Item -.3
Meeting Date 02/14/95
3. The extended debt service will secure the necessity to receive, and the 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 Bayfront/Town Centre I project area.
C. SALE OF AGENCY ASSETS
In the August 23, 1994 Agency staff report (Attachment 2), 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 parcels 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 Hotel 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.
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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
.ê... 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 ofthe 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.
($550,000) 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.
.!:h South Bav Chevrolet
As will be provided to the Agency under a separate report, staff issued an RFP for the South
Bay Chevrolet property in October with a due date of November 29. Only two proposals were
received, 1) a housing proposal and 2) a Used Car sales and automobile repair operation, both
of which are recommended not to be pursued. However, the Agency received an offer to
acquire the property outside of the RFP process which appears to be a much more attractive
offer than either of the two offers received under the RFP. Staff will pursue this proposal and
advise the Agency accordingly.
3. EI 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
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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 also 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 separate 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 sale.
5. Evaluate the feasibility of funding "Economic Development" with more participation
by the General Fund.
This item was included in the June 21, 1994, staff report as a recommendation for improving
the Agency cash flow situation by reducing expenditures. Currently, eighty-five percent
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Page 5, Item -.5
Meeting Date 02/14/95
(85%) of the City's Economic Development activities are being reimbursed to the General
Fund by the Redevelopment 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 project
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 requirement 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 region. 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 feasibility 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.
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Page 6, Item ..3
Meeting Date 02/14/95
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 are 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 A assumes that the Agency is successful in the current fiscal year in selling two
properties in the Bayfront to the Port District. Those properties are the Motor Marina Motel,
valued at $1,000,000, and the Cappos property, valued at $750,000. As the table indicates,
the current year projection estimates a revenue surplus of $353,356, thereby changing the
"all funds" balance from a negative $1,083,169 to a negative $729,813.
TABLE A
Redevelooment A.encv
FY 94.95 P,oiected Fonanelal Summa..
Expendltu,e.
P,ojected
Beg;nnlng Ending
Fund Fund
P,olect Balance Revenue O.e.,,"on. Debt Se..lce Balance
Southwest 1461,7001 161,400 359,150 0 ($ 659,4501
Bayfcont/Town Cent,. I 1661,2111 5,B39,7B3 2,138,155 "'2,495,855 544,562
Tow" Ce,,"e II (1,292,8971 639,000 309,005 1,403,506 (2,366,4081
Otay Valley Road 1648,8361 821,262 4.38,889 0 1266,4631
Low/Mod/Om. T,ee/H,. 1,704,436 1.714,053 1,681,882 0 1,736,607
Fine Art, 277,039 12,300 8,000 0 281,339
11,083,'69) 9,'87,798 4,935,081 3,899,361 1$ 729,8131
"'Includ., loan to Bayf,ont Con,",vancy T,ust 1201,7851 + Public Liabmty P,.mlum 115,000)
'"' Cu"ent yea' ,u,pluc; ReYenue, Ieee expendltu,e, Ibl $353,356
Table B assumes that the two property sales to the Port will occur and 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
current 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.
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Page 7, Item~
Meeting Date 02/14/95
TABLE B
Redevelopment A.encv
FY 94-95 P,olected Flnenoiol Summe..
Expendltu,e.
P,ojected
Be.;nnln. Endln.
Fund Fund
P,olect Balance Revenue Ope..";on. Debt Se..lce Bolance
South we.. 1461,7001 1,361,400 359,150 0 $540,550
Bayfmnt/Tcwn Cent,e I 1661,211) 5,B39,783 2,138,155 "'2,495,855 544,562
Town Cent,e II 11,292,897) 639,000 309,005 1,403,506 12,366,408)
Otay Valley Road 1648,836) 821,262 438,889 0 1266,463)
Low/Mod/Om. T'ee/H,. 1,704,436 1.714,053 1,681,882 0 1,736,607
F;ne Arts 277,039 12,300 8,000 0 281,339
11,083,169) 10,387,798 4,935,081 3,899,361 $ 470,187
,., Includes loan to 8aylmnt Con,e..ancy T'ust 1201,785) + Public Uab;¡;ty P<emlum 115,000)
'" Cunent yea, su,plus; Revenue, Ie" expendl,"", Ibl $1,553,356
In the event that one or more of the sales assumed in the tables do not 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
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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 Trolley Center
Net Annual Sales Tax: $400,000
Annual Property Tax: $ 78,000
Permanent Jobs: 500
4. Chula Vista Center - ExDansion
Net Annual Sales Tax: $250,000
Annual Property Tax: $150.000
Permanent Jobs: 250
5. Broadway Plaza rWal-Mart) (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 II
3. Amphitheater
4. Amcor
5. High-Tech/Bio-Tech Zone
6. Border Environmental Commerce Alliance
7. Veteran's Home
8. 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.
1:lwpSl Ihaynes\reports\mìdbudg4, 1131 3~t
ATTACHMENT 1
COUNCIL INFORMATION
DATE: December 8, 1994
TO: Honorable Mayor and City Council
VIA: John D. Goss, city Manager Ø'
PROM: Robert W. Powell, Director of Finance~
SUBJECT: REDEVELOPMENT AGENCY TAX ALLOCATION BOND REFUNDING
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. This 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. These
amounts (column five) reflect the actual savings to the Agency from
issuing the refunding bonds.
The second schedule, labeled Improvement in Final Pricing (Bonds
Priced 12/2/94), is simply meant to compare the estimated debt
service requirements that were presented to you at your meeting on
November 15,1994, with the actual debt service requirements as the
result of consummating the sale of the bonds. The 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 less each year than was estimated at the
earlier meeting. Stated another way, the net savings to the Agency
from the transaction ended up being approximately $50,000 more 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 -3-- 7
Attachments
I
CHULA VISTA REDEVELOPMENT AGENCY
1994 Tax Allocation Refunding Bonds
Final PricIng I Debt Service Information
"Old" DIS "N_" D'S , Actual State Net Savings
F.Y. 1H6 flØ4RfIf. Net DJS Subvention Affw
Ending Bonds Bonds . Savings "Given up" SubWlfllion
1995 2,073,286 891,396 1,181,890 o 1,181,890
1896 3,125,449 2,406,986 718,463 400,241 318,222
1997 3,124,074 2,562,262 561,812 452,157 108,1155
1896 3,115,534 2,556,028 559,506 401,157 158,348
1999 3,109,669 2,553.903 555,766 323,628 232,138
2000 3.106,206 2,549,841 556,365 242,155 314,210
2001 3,099,276 2.552.778 546,498 160,178 388,320
2002 2,719,156 2,547,356 171,800 0 171,800
2003 2,713,356 2,544.878 168,478 188,478
2004 2,710,075 2,545,261 164,814 1114,814
2005 2,708,525 2,543,341 165,184 1115,1114
2006 2,707,919 2.546,581 161,338 181,338
2007 2,707,469 2,535,453 172,016 172,018
2008 2,706,388 2,536,162 170,226 170,226
2008 2,703,888 2,532,903 170,985 170,1185
2010 2,699,181 2,540,268 158,913 158,813
2011 2,691,481 2,537,669 153,812 153,812
2012 2,530,103 (2,530,103) 2,530,103)
2013 2,532,565 2.532,565) 2,532,585)
2014 2,528,875 2,528,875) 2,528,87~
2015 2.524,240 2,524,240 2,524,240)
2018 2,522,209 2,522,209 2,522,209
2017 2.522,546 2,522,546 2,522,546
2018 2,519,656 2,519,656 2,518,858
2018 2,508,537 2,508,537 2,508,537
2020 2,513,181 2,513,181 2,513,181
2021 2,507,387 (2,507,387 2,507,387
2022 2,505,750 (2,505,750) 2,505,750
2023 2,502,259 (2,502,259) 2,502,258
2024 2,491,121 (2,491,121) (2,481,121
2025 1,746,525 (1,746,525) 11,746,525
47,820,932 75,938,020 (28,117,088) 1,979,516 128,350,078)
J-)O
Grigsby Brandfonl & Co., 12/8/94 CV_PRIC.XlS pege 2
CHULA VISTA REDEVELOPMENT AGENCY
1994 Tax Allocation Refunding Bonds
Improvement In Final Pricing (Bonds Priced 1Z/2194)
11/15 Estimate Actual Net
Fisc.' VH' Pruenf8d Debt Svc a:::'
Ending to Agency Locked /n
111115 947,621 891,396 -,221
11198 2,478,897 2,406,986 11,111
11197 2,596,421 2,562,262 "'1.
1998 2,598,623 2,556,028 082,895
1111111 2,603,758 2,553,903 .,au
2000 2,601,554 2,549,841 11.713
2001 2,596,935 2,552,778 "'187
2002 2,599,780 2,547,356 12,G4
2003 2,599,607 2,544,878 14,728
2004 2,601,607 2,545,261 -,346
2005 2,595,735 2,543,341 IZ,3I4
2008 2,595,318 2,546,581 ",731
2007 2,595,806 2,535,453 1O.35S
2008 2,592,309 2,536,162 _,147
200II 2,590,043 2,532,903 17140
2010 2,588,412 2,540,268 ",144
2011 2,591,962 2,537,669 14,283
2012 2,585,025 2,530,103 14,122
2013 2,582,815 2,532,565 10,210
2014 2,574,737 2,528,875 ",882
2015 2,575,337 2,524,240 11,C117
2016 2,571,225 2,522,209 ..011
2017 2,567,912 2,522,546 -.
2018 2,565,425 2,519,656 _.718
20111 2,567,900 2,508,537 .,313
2020 2,559,450 2,513,181 ....
2021 2,549,812 2,507,387 oI2AZI
2022 2,542,637 2,505,750 ..IIT
2023 2,541,600 2,502,259 .,N1
2024 2,527,550 2,491,121 ....
2025 1,850,000 1,746,525 .03,471
77,535,813 75,938,020 1,117,783
3..../1
Grigsby Blandford & Co.. 1218194 CV_PRIC.xLS pøge 3
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:
1 ATTACHMENT 2
REDEVELOPMENT AGENCY AGENDA STATEMENT
Irem~
Meeting Dare 08/23/94
ITEM TITLE: RESOLUTION 1411 Adopting the Redevelopment Agency Budget
for Fiscal Year 1994-95 and Appropriating Funds Therefor
SUBMITfED BY: Executive Directof5?
(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 deferred 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-owned real estate, and 'the
second was to establish current market values of three Agency-owned 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 estimares, the proposed 1994-95 budget as well as the long-term 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~scal Year 1994-95 Redevelopment Agency Budget incorporating the following staff
financia1 plan recommendations:
,-
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 E1 Dorado Building
4, Return to Agency in January 1995 with a mid-year progress report
BOARDS/COMMISSION RECOMMENDATION: Not applicable.
--
DISCUSSION:
Section 1 General Overview
As has been discussed in detail in previous reports, staff has been proactive in developing a long
term plan to deal with the deficit of the Agency. Based on this detailed review, it is
recommended that the Agency plan as carefully as possible for the future, but preserve
maximum flexibility for the long-run. While it is expected that the current deficit problem will
prove to be short-term as the economy recovers and real estate development and 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 not 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 are currently emerging in the
general economic recovery. Ø' :!J ~ / 3 .
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J Page 2, Item ~
-
Meeting Date 08/23/94
In the previous report a variety of options to deal with the operating deficit were presented as
follows:
Property Asset Sales
City-Agency Sales Tax Cooperation Agreement
Funding Economic Development with a greater share from the General Fund
Reduce Agency Reimbursement for General Fund Staifmg Costs
In reviewing these options, Council requested I) 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 stated in the memo from the City Attorltey
(Attachment I) 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 certainly 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 5% of the
City's:total investment portfolio, and 2) the Agency property proposed to be sold to the City
have a high potential investment value and could not be characterized as "risky" properties, The
overall intènt was to provide short-term relief to the Agency while also allowing the City the
opportunitY to feiIlize 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 Agency's budget, it is recommended that action be taken to prudently
sell certain select assets to support Agency operations.
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 Proposed
Prooertv Value Value Disoosition
EI Dorado Building $1,600,000 $1,400,000 RFP
"Merziotis" $2,200,000 $1,200,000 Hold
340-368 Bay Boulevard $1,100,000 $1,265,000 Hold
As the table identifies, two of the three properties appraised are closely in-line with their
previously reported values. However, the "Merziotis" property, a 6.36 acre parcel at the
northeast comer of E Street and Bay Boulevard, came in significantly lower. The site is
intended for development as a HotellMotel use and is controlled by the Bayfront Redevelopment
Plan and the Local Coastal Plan. The expected future value was estimated to be $4,900,000 at
its highest and best use as a hotel and sit-down restaurant. If sold today however, the
$4,900,000 value would need to be severely discounted to the estimated $1.2 million value. The
majority of the discount is due to estimated "holding/profit" cost of $3.1 million. In essence,
~ 3 ~/f
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Page 3, Item i
Meeting Date 08/23/94
the appraisal 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 hoteUmotel market is expected to
return. It is for this reason that staff does not recommend selling this property at t.'ús time.
Section 2 ProDosed 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:
1. Sell the Marina Motor Hotel and Cappos properties to the Port District J
2. Market for sale the Fuller Ford and South Bay Chevrolet sites
3. Issue Request for Proposals (RFP) for the E1 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 necessarily the value of the property at this time.
Recommendation #2 proposes that the Agency market for sale the Fuller Ford and South Bay
Chevrolet~tes, With respect to the Fuller Ford site, the Agency, on July 17, 1994, authorized
the execution of a Semi-Exclusive Negotiating Agreement with Joe1en Enterprises for the west
side of the property (approximately 2.5 acres) to build a unique "Business Home" complex. The
Citrons, however, are currently speaking in terms of $5.00 a square foot for the 2.5 acres which
will result in only approximately $544,500 to the Agency. Staff feels that the fair market value
for the property is in the $7.50 per square foot range which would generate approximately
$817,000 for the western portion, and another approximately $283,000 for the eastem.9 acres.
The South Bay Chevrolet site was the subject of a previously approved Semi-Exclusive
Negotiating and Covenants Agreement (SENA) with The Moxham Company for a commercial
shopping center. Unfortunately, The Moxham Company was not able to comply with provisions
of the SENA by securing a "high volume" retail sales anchor for the site and did not wish to
seek an extension. The Agency does not have any potential buyel'$ for the site at this time.
Recommendation #3 proposes that the Agency issue an RFP for sale of the E1 Dorado Building.
It would be prudent to "test the market waters" on this office building before engaging in actual
marketing of the property in order to get a 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
services 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.
The following table updates the list of Agency-owned properties, with current disposition
recommendations: ~ 3~/Ç
¡ ,
Page 4, Item ~
Meeting Date 08/23/94
Prior Current Proposed
PrODertv Value Value DlsDosltlon
Marina Motor Hotel' $1,200,000 $1,200,000 ' Sell to Port
Cappos (965 F St.)' 900,000 900,000 ' Sell to Port
Fuller FDrd' 1,100,000 1,100,000 ' Market
South Bay Chevrolet' 900,000 900,000 ' Market
EI DoradD Building' 1,600,000 1,400,000 ' RFP
Merzlotis 2,200,000 1,200,000 Hold
340-368 Bay Blvd. 1 100 000 1 265 000 Hold
$9,000,000 $7,965,000
. RECOMMENDED SALES .5,500,000
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."progress" report in January, 1995. As
indicated in the prior report, staff believes that the exercise of developing a long-range financial
plan has been worthwhile and fruitful. Staff has laid out an ambitious plan that, when realized,
will result in positive financial benefits and ramifications. In order to keep Council apprised of
staff's~progress, a report will be presented outlining: 1) the accomplishments made toward the
attainmen~ 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 outlined in the previous budget report of June 21, staff presented a preliminary scenario
whereby the Agency could fund approximately $6,5 million in debt service payments over the
next 4 1/2 years by escrowing $5.5 million up front (presumably through cash raised by asset
sales) to defease the "non-refundable" portion of the existing bonds. --
Unfortunately, in order to realize the maximum benefit of this plan, the Agency would need to
raise $5.5 million and escrow it prior to May 1, 1995. The sale of property is the only viable
source 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 additional
interest and effectively fund some portion of this debt service obligation.
Section 3 Adootion Of 1994-95 Al!encv Budl!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 improvement expenditures in this schedule. ,The other differences are
~~ +- .3 -/6
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Page 5, Item ~
Meeting Date 08/23/94
generally the result of refinements 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
for the acquisition of the Shinohara property,
REDEVELOPMENT AGENCY
FY 93-94 FINANCIAL SUMMARY
Beginning EXPENDITURES Ending
f!2IW Fund Belence Revenue Ooer8tÏna CIP. Debt Service Fund Belence
(Deficit) (Deficit)
Southwest $ (312,113) $ 136,650 $ (263,821) $ (22,416) 0 $ (461,700)
Bayfront/TC I 881,637 3,848,764 (1,493,381) (274,744) (3,623,487) (661,211)
Town Centre II (1,129,934) 3,754,938 (2,906,590) (2671 (1,011,0441 (1,292,897)
Otay Valley Road 1,778,712 859,935 (387,786) (2,899,6971 0 (648,836)
Low & Mod 1,224,278 1,128,537 (486,905) (161,475) 0 1,704,436
Fine Arts 268.624 16415 18000) 0 0 277039
$2.711.204 $9.745.239 $15.546.4821 $13.358.5981 $/4.634.5301 $11.083.1681
Proposed F1scal Year 1994-95 Budget
The proposed Redevelopment Agency budget for 1994-95 totals $8,790,238 and is composed of
Agency ()perations ($4,163,916), Debt Service ($4,255,839), and Capital Improvements
($370,483)'> -Estimated revenues to the Agency are projected to be $11,980,496, creating a
budgetary sUrplus 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 '94/95 will be
$2,107,090.
The following tables show the proposed budget by project area, with separate presentations for
Operations, Debt Service, and Capital Improvements. Since these figures have been somewhat
refined since the June 21 report, also included is a reconciliation to those numbérS and an
explanation of significant differences.
OPERATIONS 06/21194
REPORT ADJUSTMENTS 1994195
+/(-) Proposed
981-RDA Housing $ 300,000 $ 0 $ 300,000
985-Southwest 359,150 0 359,150
990-Bayfront/Town Centre I 1,957,270 174,819 ... 2,132,089
991..fine Arts 8,000 0 8,000
992-Town Centre II 284,660 24,345 ... 309,005
993-Low Mod 604,330 0 604,330
Orange Tree MHP 16,490 0 16,490
994.{)tay Valley 401.200 ~'" 434.852
Subtotal $3,931,100 $232,816 $4,163,916
3-/7
COI ERAF Payment to Schools t~
',. <,
Page 6, Item ~
Meeting Date 08/23/94
DEBT SERVICE
06121/94
REPORT ADJUSTMENTS 1994/95
+/(-) Proposed
1986 Tax Allocation Bonds $1,709,182'" $605,778 $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
LOWIMOD Loan Repayment 574,398 (574,398) 0 h'
NIC-Bayfront Conservancy Trust 201.000 ----.Q.. 201 000
Subtotal $4,224,459 $31,380 $4,255,839
J
co! 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 -deemed unnecessary
CAPITAL IMPROVEMENT PROGRAM
06121/94
REPORT ADJUSTMENTS 1994/95
+/(-) Proposed
995-Geographic Information System $0 $ 10,000 $ 10,000
995-SD Shipbuilding Demolition 0 ~ ~
35,000 35,000
996-Auto Park - 0 50,000 50,000
996-Geographic Information System 0 MQQ MQQ
55,000 55,000
997-Paint Pit 0 267,000 267,000 CoO
997-Automated Budget System Q ll.ill ll.ill
280,483 280,483
Subtotal - CIP $0 $370,483 $370.483
Gr8nd Total. All Costs .8,155,559 .634,679 .8,790,238
CoO This expenditure may be eligible for reimbursement under 'Polanco' judgement
AGENCY REVENUE
Adoption of the resolution will appropriate funds for the FY 1994/95 Redevelopment Agency
budget totalling $8,790,238. This proposed budget is based on the recommendation to sell
property and to use proceeds from the property sales to apply 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 recommendations, staff will be pursuing the sale of a total of four
properties and issue an RFP for the El Dorado building toward the goal of generating $5.5
million, If the sales goal is realized, there will be a budgetary surplus of $3,190,258 to be
applied to the deficit as the table below indicates. ~3
~/ð'
.~- , ~-,
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
06/21/94
REPORT ADJUSTMENTS 1994/95
+/(-) Proposed
985-Southwest $218,000 ($ 65,900) '00 $152,100
990-BayfrontrrC I 3,726,263 (133,907) .. 3,592,356
991-Fine Arts 12,300 0 12,300
992-Town Centre II 671,804 (55,2731 ., 616,531 ,
993-LOW/MOD Income Housing 991,100 64,847 .. 1,045,947
994-Qtay Valley Road 821,262 0 821,262
Paint Pit Judgement 0 240,000 240,000
Property Sales 1.714.830 3.785 170 5.500000
TOTAL .8.165.569 .3.824.937 .".980.496
FY 93/94 Operating Deficit ($1,083,168) ($1,083,168)
Budgetary Surplus (Deficit) $2.107,090
Co! Decrease based on actual experience for prior year and tax sharing agreements with other agencies.
., Decrease or Increase based on actual experience for prior year.
Section 4:, Future Positive ImDact~ - 1995/96 and Bevond
Previously;' staff provided a long term plan based on various growth scenarios. The result
showed an annual operating d~ficit 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 stares opinion that this scenario is highly
unlikely, given the following major factors:
'--
1. Additional Agency Assets
As provided in the Agency current year plan, the maximum amount of $5.5 million in sale
proceeds from the recommended properties could be generated and added to fund balance in
order to balance the budget ,and earn interest. Additional assets are also 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 oc Major Projects
Major projects such as the Mid-Bayfront, MCA Amphitheater, andlor phase n of the Auto Park
will result in major "spikes" of tax increment revenue to the Agency that were not previously
estimated in the cash flows, The prior cash flows were estimated utilizing historic growth trends
and projecting similar trends for the future. Completion of these projects or some other projects
that may come on-line, will significantly increase tax increment revenue to the Agency.
~ 3~/7
Page 8, Item ~ .'-",.
Meeting Date 08/23/94
3. Growth of Southwest Project Area
It is anticipated that the Agency's newest 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 of industrial 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 Su:eet while also in
the midst of an economic feasibility and land use study for the purposes of developing a long
range economic 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
economic 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 1990s,
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 ~?roperty 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 10.5% reduction in assessed values as a result of
state-wide litigation. This is especially important in the BayfrontITown Centre I Project Area,
since almost 50% of that project's tax increment revenues are derived from this so~,
Other Expected Cost Savings and Revenue Increases
Although the above described items are significant, they are difficult, if not nearly impossible,
to estimate specific positive impacts. However, the following three items can be determined:
1. 1986 Bayfront TABS Refunding
The Redevelopment Agency issued $7 million in Tax Allocation Bonds for the combined
BayfrontITown Centre Redevelopment Project Areas 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.
~ .3 -.2-D
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Page 9, Item -i-
Meeting Date 08/23/94
Agency Resolution No. 1383, authorizing the issuance refunding of Tax Allocation Bonds in an
amount not 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 financial 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. I
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 %. 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 fina1 Agency approval of the refunding and related
legal documents in late September.
2. "PainìPit" Judgement
"
As Council is aware, the City! Agency has 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, '.0-
Currently, the Agency has submitted approximately $800,000 in invoices for reimbursement.
Approximately $240,000 is expected to be paid by October 1994 ($212,513,30 + interest). The
remaining amount (approximately $590,000) will be argued before a jury tria1 to determine if
they are eligible costs for reimbursement. Under the policy, expenditures related to clean-up
of the "soil and water" are 1IQ1 covered. Disposition of the jury tria1 is expected by January
1995. However, for the purposes of projecting revenue, only 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 reimbursement.
3. Final Year of ERAF Payment
The current fiscal year is 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
~ ..3 ~::2-1
~ . "
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 year 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 CUITent year I
. Maximum amount of $5.5 million
2. Additional property assets to sell including Merziotis, Shangri-La and Bay
Boulevard
. Maximum amount of $6,0 million
0 Merziotis $4 , 000,000
0 Shangri-La $ 900,000
0 Bay Blvd. $1,100,000
3. On-going savings from the 86 TABS
:. ~ annual savings in excess of $650,000 through 2011
4. Còmpletion of major projects
. " Undetennined impact but projects include Mid-Bayfront, MCA Amphitheater and
Auto Park Phase II
5. Outstanding growth potential from the Southwest Project Area
. Undetennined, but expect tax increment revenue to take-off by the late 1990's
6. General improvement in the economy ---
. Undetennined, but will increase property tax revenue to the Agency
7. Possible reimbursements from "Paint Pit" expenditures
. $230,000 increase in current year revenue
. Possibility of another $857,000 over the next two years ($590,000 + $267,000)
8. Reduced Agency expenditures for the CIP
. Reduction of approximately $200,000 from current year expenditure level
9. F1na1 year of ERAF payment
. Reduction of $233,000 from current year expenditure level
10. Stabilization of Unitary Tax Revenue
. Undetennined, but Unitary Revenue will not be reduced as has been the case over
the past several years ~ 3 ~;2- 2---
T .. l
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 financial revenue versus
expenditure improvements identified above, that the Agency will again emerge from the current
deficit situation.
FISCAL 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. The
projected surplus will be applied to the current fund balance deficit.
C;IWP5l iliA YNESIREPORTSICD95BUGT.113
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MEMORANDUM
February 9, 1995
TO: The Honorable Chairman and Agency Members
FROM: Secretary to the Redevelopment Agency
SUBJECT: Agency Agenda Item #4
Enclosed with your packet is a Confidential Memorandum (in a separate
envelope) which details the history and current status of the Auto Park.
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