Loading...
HomeMy WebLinkAboutrda min 1989/10/05 ADJOURNED REGULAR MEETING OF THE REDEVELOPMENT AGENCY Thursday, October 5, 1989 Council Chamber 7:00 p.m. Public Services Building 1. ROLL CALL Present: Chairman Cox, Member Malcolm, Member Moore Absent Members McCandliss, Nader Staff Present: Deputy City Manager Morris, City Attorney Harron, Acting Community Development Director Dave Gustafson, Redevelopment Coordinator Kassman, Principal Management Assistant Popek 2. APPROVAL OF MINUTES: Regular meeting of September 21, 1989 and Special Joint Meeting of the City Council/Redevelopment Agency of September 21, 1989. (Moore/Malcolm) to approve the minutes. The motion carried 3-0-2 (Member McCandliss and Nader out). CONSENT CALENDAR /Items 3 through 5) 3. RESOLUTION Appropriating funds for the Downtown Business Association for the purpose of purchasing Christmas decorations to be installed along Third Avenue between E and H Streets Recently, the Downtown Business Association requested that the Redevelopment Agency provide matching funds for the purchase of Christmas decorations for a period of four years beginning with the Christmas of 1989. According to the program as proposed by the Association, the initial cost of the decorations for the Christmas of 1989 is $9,852. The Downtown Business Association requested that the Redevelopment Agency contribute half of the total cost towards the purchase of these decorations. The Agency referred this item to staff for analysis at the meeting of August 17, 1989. Staff recommended certain changes to the program. Chairman Cox noted Items 3 and 4 needed a 4/5 vote. MOTION -(i~6-~T~oore)to continue Items 3 and 4 to after the City Council meeting on Tuesday. Councilman Malcolm asked if it was possible to appropriate the money from the contingency reserve if there was a rush on this. Mr. Blakely responded that it was crucial to him because they need the money to order the merchandise. Member Malcolm asked the City Attorney if it was possible to ratify the resolution and reschedule this item to Tuesday. At least this way Mr. Blakely would know the money is there and on Tuesday the funds can be taken out of the Promotions account with a 4/Sth vote. Minutes - 2 - October 5, 1989 Redevelopment Agency . '~ ~ City Attorney Harron noted there was no problem with this. MODIFIED MOTION (Cox/Moore) to continue Item 4 to after the Council meeting on Tuesday, October 10, 1989. The motion passed 3-0-2 (Members McCandliss and Nader out). MEMBER MALCOLM OFFERED THE RESOLUTION, the reading of the text was waived, passed and approved 3-0-2 /Members McCandliss and Nader out) Member Malcolm requested that Item 3 still be docketed for Tuesday night to make sure the funds will come out of the Promotions fund after a 4/Sth vote. 4. RESOLUTION Appropriating funds for the purchase of 415 Fourth Avenue and authorizing the opening of escrow Acquisition costs of $1,715,000 for purchase of the property and $7,000 for escrow fees and closing costs will be required. Agency approval will appropriate funds from the unencumbered balance of the Bayfront/Town Centre II Redevelopment Project Bond Fund in the amount of $1,722,000 to account no. 990-9901-5517, Real Estate Purchases. 5. RESOLUTION 1038 Approving an Exclusive negotiation Agreement with Scripps Memorial Hospital for the redevelopment of the northeast corner of Fifth Avenue and H Street within the Town Centre II Redevelopment Project Area At the meeting of May 23, 1989 the Agency selected the proposal submitted by Scripps Memorial Hospital for expansion of their hospital facilities as the most desirable alternative for the redevelopment of the northeast corner of Fifth Avenue and H Street which lies within the Town Centre II Redevelopment Project Area. Staff was directed to bring back an Exclusive Negotiation Agreement with Scripps for this project. The agreement and an appropriate resolution are attached to this agenda statement for consideration by the Agency. Jeff Bills, Scripps Memorial Hospital, 435 H Street, Chula Vista responded to Member Malcolm's question regarding the time schedules and noted they are allocating significant resources to do everything they can to make it go quickly. James Eischer, lO1 West Broadway, representing TRM, distributed a letter to the Agency noting they have reviewed various documents that reflect what it will cost to acquire the leasehold interests and to pay "good will" damages. They feel the estimates are optimistic; $200,000 for 11 businesses is inconsistent; the letter notes the estimated costs which are significantly less than what is reflected; would like to know how the "good will" losses were estimated; willing to make full disclosure to the Agency as to why they feel they will suffer a far greater financial loss than what is reflected. A letter from Wayne Wencke received prior to the meeting and the letter from Lillick & McHose, presented by Mr. Eischer were incorporated as part of the minutes and are attached hereto. RESOLUTION OFFERED BY MEMBER MALCOLM, the reading of the text was waived, passed and approved 3-0-2 (Members McCandliss and Nader out) Minutes - 3 - October 5, 1989 Redevelopment Agency OTHER BUSINESS 6. Public Hearing regarding the sale of spaces 5 and 69 at the Orange Tree Mobilehome Park RESOLUTION 1039 Approving the sale of Spaces 5 and 69 at Orange Tree Mobilehome Park and authorizing the Community Development Director to execute a purchase agreement and escrow instructions This is a request to authorize the sale of Spaces 5 and 69 at the Orange Tree Mobilehome Park. One mobilehome on Space 5 is occupied by a resident wishing to purchase while the mobilehome on Space 69 is currently in escrow with the potential buyer also wishing to buy the space. The recommendation is to authorize the Community Development Director to execute purchase contracts and escrow instructions and take such other actions as deemed necessary to consummate the sales. The sales prices are~based on recent appraisals of $31,000 and $31,110, respectively. This being the time and place as advertised, the public hearing was declared open. Chairman Cox noted space 69 has fallen out of escrow and asked staff if there was a need to proceed on this space. Acting Community Development Director Gustafson noted they wanted to proceed with a subsequent buyer at that price and would like authorization to do so. There being no public testimony, the public hearing was closed. RESOLUTION OFFERED BY MEMBER MALCOLM, the reading of the text was waived, passed and approved 3-0-2 {Members McCandliss and Nader out). OTHER BUSINESS 7. ORAL COMMUNICATIONS None. 8. DIRECTOR'S REPORT a. Update on Auto Park Deputy City Manager Morris noted a status report on the auto park was in the Agency's packets. MSC (Moore/Malcolm) to accept the report. The motion carried 3-0-2 {Members McCandliss and Nader out. 9. CHAIRMAN'S REPORT None. Minutes - 4 - October 5, 1989 Redevelopment Agency .. 10. MEMBERS' COMMENTS None. The City Council/Redevelopment Agency adjourned to Closed session at 7:20 p.m. to discuss potential acquisition of property located at: 4555 Otay Valley Road (Shell Oil Co., owner); 4501 Otay Valley Road {Roderick and Patricia Davies, owners); Parcel 624-060-27 on Otay Valley Road {Vincent and Margaret Davies, owners); Parcel 624-060-09 on Otay Valley Road {Vincent and Margaret Davies, owners); 4705 Otay Valley Road {Jimmie and Judi Shinohara, owners); Parcel 644-040-14 {N&S Materials, owner); Parcel 644-040-40 (Walker Scott Properties/ South Bay, owner); Parcel 624-040-45 {Atomic Investments, Inc., Leonard Teyssier, owner); East H Street - Paseo Del Rey and Tierra Del Rey {Rancho Del Rey Partnership, owner; 263 Fig Avenue {City of Chula Vista, owner, County of San Diego, Lessee); Fourth and F Street, Santa Fe Railroad Right-of-Way {Southern Pacific Industrial Development Co., owner). ADJOURNMENT AT 7:55 p.m. to the an adjourned regular meeting on October lO, 1989 immediately following the City Council meeting and to the regular meeting of Thursday, October 19, 1989 at 4:00 p.m. R~~ec re a ryt~ 1659C LILLICtK & McHOSE INTERNATIONAL TE~-EX-S59755 SAN DIEGO, CALIFORNIA 921OI (619) 544-3173 ............. October 5, 1989 City of Chula Vista 276 Fifth Avenue Chula Vista, CA 92010 Attention: Chula Vista Redevelopment Agency Re: Town Center II Redevelopment Project Area Arby'a Restaurant 465 "H" Street, Chula Vista, CA Dear Mr. Chairman and Members of the Chula Vista Redevelopment Agency: We represent The RTM Companies. San Diego RTM, Inc., leases property currently accommodating a successful Arby's Restaurant franchise at 465 "H" Street, Chula Vista, California. RTM, as a long-time business operator in Chula Vista, California, wants to cooperate with the City's desire to facilitate well-planned redevelopment. We are concerned that the analysis supporting a resolution authorizing an Exclusive Negotiation Agreement with Scripps Memorial Hospitals may require a more detailed evaluation. The cost to condemn our leasehold interest reflected in the Redevelopment Agency's Agenda Statement dated May 23, 1989 is optimistic. The Agenda Statement reflects the recommendation that the Chula Vista Redevelopment Agency and Scripps Memorial Hospital should enter into an exclusive negotiation agreement for approximately 8.9 acres of real property that includes our restaurant. Attachments to the Agenda statement reflect evaluations of fiscal impact in entering the exclusive negotiation agreement, and proceeding with development activity by Scripps Memorial Hospitals. One of the attachments appears to evaluate various acquisition and site clearances costs, and property tax revenues, for several redevelopment proposals. A copy of this document is attached as Exhibit "A" to this letter. City of Chula Vista October 5, 1989 Page 2 Proposal B is identified as "Scripp's Expansion/Bank and Readicare Remain on Site." Proposal C is identified as "Scripps Hospital Expansion." Both Proposal B and Proposal C reflect a "lease buy out" cost of $0. We request clarification as to why negotiating or condemning the various leases would require no expense. Proposal B identifies business relocation costs at $110,000. We assume that this is pursuant to California Government Code § 7262 (relocation assistance). The estimation of $10,000 per business is frankly optimistic. California Government Code § 7262(a) states: (a) As a part of the cost of acquisition of real property for a public use, a public entity shall compensate a displaced person for his: (1) Actual and reasonable expense in moving himself, family, business, or farm operation, including movinq personal property. (2) Actual direct losses of tangible personal property as a result of movinq or discontinuinq a business or farm operation, but not to exceed an amount equal to the reasonable expenses that would have been required to relocate such property, as determined by the public entity. (3) Actual and reasonable expenses in searching for a replacement business or farm. [Emphasis added.] Of course, a displaced person or business can accept the statutory payment of $10,000 in lieu of California Government Code ~ 7262(a). However, it is conceivable that we will be entitled to relocation assistance in excess of the $10,000 statutory election of California Government Code ~ 7262(c). The evaluation that causes us the greatest concern is the estimation of good will payments. Proposal C reflects an estimated cost of good will payments of $800,000. Proposal B, which apparently allows two business to remain on site, reflects evaluation of good will payments of $200,000. In other words, the estimated loss of good will through relocation City of Chula Vista October 5, 1989 Page 3 by not only our Arby's Restaurant, but by ten other businesses, will only require payment of $200,000. We respectfully disagree with this analysis. The Arby's Restaurant in question enjoys over $1 million dollars a year in sales. The restaurant, staffed by 35 employees, has enjoyed the benefits that accompany remaining at a favorable location for over nine years. The 15 year lease we entered into in 1980 includes options to extend the lease well into the future. Our current rent, $4,500 per month, is extremely competitive. We have estimated that a comparable location, if any exists, could requi~e monthly rental payments of approximately $7,000 per month. Loss of good will is defined by California Code of Civil Procedure ~ 1263.510(b) as "benefits that accrue to a business as a result of its location, reputation for dependability, skill or quality, and any other circumstances resulting in probable retention of old or acquisitign of new patronage." In attempting to obtain a possible alternative location for the Arby's Restaurant, we believe that it is entirely conceivable that the relocation from an established and favorable location could diminish annual gross sales by $300,000. In short, we question whether the potential costs in proceeding to acquire various business leasehold interests on the subject property has been fully evaluated. We trust that the prior estimates were based upon the best information obtained. We are more than willing to provide the additional information we believe is necessary for you to more fully evaluate the estimated costs of proceeding with the development proposed by Scripps Memorial Hospitals~ We have not been previously contacted to provide this information. A fully and complete understanding of the various costs necessary to facilitate redevelopment should be acquired and carefully analyzed before further redevelopment activity takes place. We respectfully request that the redevelopment agency acquire more information regarding condemnation and relocation damages before a resolution is adopted authorizing the exclusive negotiation agreement with Scripps Memorial Hospitals. While we understand that entering into this agreement represents preliminary activity prior to actual redevelopment, we are sincerely concerned that the information providing the underlying basis for entering into the agreement may require supplemental investigation. City of Chula Vista October 5, 1989 Page 4 We look forward to working in cooperation with the Redevelopment Agency to assist in providing whatever information may be necessary to fully evaluate various options. Forcing the Arby's Restaurant to relocate will cause significant greater economic loss than previously estimated. The Redevelopment Agency should more fully evaluate the compensation that will be required should the Arby's Restaurant premises be acquired. Should you have any questions or comments with regard to the above, please feel free to contact the undersigned. I would be more than happy to answer any questions, or provide further information, that may assist you in your task of accomplishing beneficial redevelopment activity for the City of Chula Vista. Very truly yours, JJE:wpc ~~schen Jr 4664B Enclosure cc: Jay Russell Welch City of Chula Vista October 5, 1989 Page 5 bcc: Marshall M. Taylor, Esq. William A. Reavey, Esq. FOOTNOTES: 1. Figures include tax on improvements plus tax on land value. 2. Represents Total Property Tax revenue minus current assessed tax on existing improvements and land, 3. $1,071,100 represents current assessed value of the 8,9 acres site. 4. Represents existing sales based on 1987-88 fiscal year figures: it excludes sales generated by the Wherehouse Store and the Swap Meet. 5. Taxable land is equal to 53% of total site area. Taken from Champion Development proposal. 7. Champion Sales figure has been decreased from $20.3 million to $18.5 in order to more accurately reflect market conditions. 8. Champion proposal assumes $3.2 million contribution from developer for land acquisition expenses. 9. Includes the purcha~ of business leases and payments on Ground Lease. WAYNE WENCKE P.O.Box95 Rancho Sana, Fe, CA 92067 (619) 566-7503 October 2, 1989 John D. Goss, City Manager Lyman Christopher, Director of Finance David Gustafson, Acting Community Development Director Thomas Harron, City Attorney City of Chula Vista 276 Fourth Avenue Chula Vista, California 92010 Re: Retail Center N.E. c/o 5th and H Street, Chula Vista Dear Sirs, I have received your notice for the regular meeting of the city council on October 5, 1989. We still object to the "Exclusive Negotiating Agreement" on the grounds raised in our May 23, 1989 letter. We particularly object to the lack of regard by the City and Redevelopment agency for the Town Centre II Development Plan (including amend- ment). Specifically, some noteworthy sections are: 410.1,410.2,410.3,450.5,460.6, 120.C. These sections pertain to owner participation and the enhancement of retail trade. The owners of the Master Ground Lease have not been shown the same lawful courtesy of full disclosure including the entire plan, correspondence, meetings, requirements and desires of the city as they were formulated. We would have been, and still are, ~nore than willing and able to re develop the complete property. This can occur with less or no cost to the city compared to other developers proposals. We would also be able to meet the same time frame allowed (and co~:tinually extended to) other p~u:ties. Please make this correspondence a matter of rccord in the October 5, 1989 meeting. We will be observing your responses and actions carefully. Sincerely, Wayne Wcuckc For the Master Grotmd Lease cc: l)onald K. Mc Credie James P. Pehier