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HomeMy WebLinkAboutcc min 1993/04/01 MINUTES OF A SPECIAL WORKSESSIONn~flg~TING OF -rH~ REDEYELOPMENT AGENCY/ CITY COUNCIL OF THE CITY OF CHt/LA VISTA Thursday, April 1, 1993 Council Co~fference Roam 6:05 p.m. City Hall Buildi~ CALL TO ORDER 1. ROLL CALL: PRESENT: Membcrs/Cotmcilmembcrs Fox, Hotton (left meeting at 8: 12), Moore, Rindone end Chairman/Mayor Nader (arrived at 6:07 p.m.) ALSO PRESENT: John D. Goss, Executive Director/City Menager; Richard D. Rudolf, Agency Counsel/Assistant City Attorney; Chris Salomone, F~xecutive Secretary/Community Development Director; end Berlin Bosworth, Secretary to the Redevelopment Agency BUSINESS 2.A. AGENCY RESOLUTION 1312 APPROV1NG FOURTH AMENDMENT TO THE AGREEMENT FOR PURCHASE OF SHINOHARA PROPERTY LOCATED AT 4705 OTAY VALLEY ROAD - On 2/5/93, the Redevelopment Agency reviewed the status of the proposed Auto Sales Park (in closed session) recommendations for ehenges. Major chenges include reduction of the first phase development site, commensurate reduction in purchase price, increased loan to the property owner to cover increased grading costs, including relocatinn of contaminated soils for eventual removal, end reimbursement of additional funds to the Auto Sales Park developers to cover losses due to delays end changes in the size of the site. In order to effectuate the chenges which were reviewed and approved by the Agency, it is necessary to consider end approve a Fourth Amendment to the Purchase and Sales Agreement, approve a Loen Agreement for the provision of additional funds to complete the grading activities, end relocate contaminated soils; end consider end approve an Implementation Agreement to the Disposition end Development Agreement. Staff recommends this item be continued to the meeting of April 13, 1993. (Director of Community Development) B. AGENCY RESOLUTION 1313 APPROVING THE FIRST IMPLEMENTATION AGREEMENT TO THE DISPOSITION AND DEVELOPMENT AGREEMENT APPROVED SEPTEMBER 15, 1992 BY AND AMONG THE REDEVELOPMENT AGENCY AND THE DGF FAMILY LIMITED PARTNERSHIP, DAVID D. ORDWAY, CHRISTINA L. ORDWAY, TRAVIS A. RENEAU, AND MARGARET L. RENEAU Community Development Director Salomone stated staff recommended continuing Items 2A, 2B, 3A, end 3B to the April 13, 1993 meeting as the legal documents being prepared were not fmalized in time for the Agency to review. MSC [Moore/Fox] to continue Item 2A and 2B, and Item 3A and 3B to the meeting of April 13, 1993, approved 4-0-1, with Nader absent. 3 .A. AGENCY RESOLUTION 1314 APPROVING THE COOPERATION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND THE CITY FOR THE PROVISION OF FINANCIAL ASSISTANCE PURSUANT TO THE TERMS AND CONDITIONS OF THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND AMONG THE REDEVELOPMENT AGENCY OF THE CITY, AND THE DGF FAMILY LIMITED PARTNERSHIP, DAVID D. ORDWAY, CHRISTINA L. ORDWAY, TRAVIS A. RENEAU, AND MARGARET L. RENEAU - The Agency approved a Disposition end Development Agreement (DDA) with the Auto Sales Park Developers on 9/15/92 for redevelopment of the Shinohara site. The DDA contained certain obligations to make certain incentive end post incentive payments to assist in the Minutes April 1, 1993 Page 2 establishment of the Auto Sales Park. The payments will require financial assistance from the City which is formalizext by the Cooperation Agreement for consideration by the Agency and Council. Staff recommends this item be continued to the meeting of April 13, 1993. (Director of Community Development) B. COUNCIL RESOLUTION 17054 APPROVING THE COOPERATION AGREEMENT BETWEEN THE REDEVELOPMENT AGENCY AND THE CITY FOR THE PROVISION OF FINANCIAL ASSISTANCE PURSUANT TO THE TERMS AND CONDITIONS OF THAT CERTAIN DISPOSITION AND DEVELOPMENT AGREEMENT BY AND AMONG THE REDEVELOPMENT AGENCY OF THE CITY, AND THE DGF FAMILY LIMITED PARTNERSHIP, DAVID D. ORDWAY, CHRISTINA L. ORDWAY, TRAVIS A. RENEAU, AND MARGARET L. RENEAU 4. MIDBAYFRONT DEVELOPMENT AGREEMENT ISSUES - On 10/27/92, the City Council approved and adopted the Chula Vista Local Coastal Program Resubmittal (LCP No. 8) based upon the Bayfront Planning Subcommittee's Alternative Plan and corresponding General Plan Amendment. On 1/15/93, the California Coastal Commission adopted LCP No. 8 with modifications. On 10/17/92, Council directed staff to tradertake development agreement negotiations. The Redevelopment Agency held a worksession/meeting on March 4, 1993 and reviewed the status of the Midbayfront project as well as eight issues in connection with the Development Agreement. The Agency gave direction to staff and requested a worksession/meeting be held on April 1, 1993 for further analysis of these issues. Mr. Salemone noted the item was a follow-up to the March 4, 1993 meeting wherein staff sought clarification of the Development Agreement negotiations with Mr. Bill Barkett, the developer. At that meeting eight issues were identified and all were resolved with the exception of one issue: the financial participation issue. The Agency directed staff to return on April 1, 1993 with a response to the developer's proposal to share revenues in the project. Staff and the developer met in the interim and staff recommended there be no direct rebate as per Mr. Barkett's prnpesal. Staff wanted clarification by the Agency on how to provide for the cultural arts facility. Staff recommended no financial participation because of the deficit situation of the Bayfront project, the gradual revenue streams, and the somewhat speculative nature ofthe prnject. Ifthe cultural arts faeility funding issue was resolved end not a burden on the project, then perhaps staff would be amenable to revisiting the financial participation issue. Staff had proposed mechanisms that could allow for the financing of the cultural arts facility by setting up a foundation and dedicating funding to that foundation. The developer and his consultants were present and had a brief recport to make to the Agency. Mr. Bill Barkett, the land owner, 864 Prospect, La Jolla, 92037, stated he hoped to accomplish three things by the end of the meeting: [1] to determine whether the City/Agency was willing or wanted to give financial assistance to the project, and if so what kind; [2] with respect to the cultural arts facility, he understood it was a critical part of the project but he would not pay for it. He would like the issues relative to the cultural arts facility resolved; and, [3] he would like direction as it would relate to an expedited schedule should the project go forward as he needed to tell potential financiers that he would be in the ground at a time certain. Member/Councilwoman Herton asked Mr. Barkett if he was talking to people who would back him on the project. Mr. Barkett replied he was talking to people and had verbal commitments, though the commitments were not legally binding, to finance the entire project, with Phase 1 being $425 million. His proposal to the City was just that, a proposal. He did not expect the City to say yes, but he did expect give and take on the proposal. He asked for the same opportunities as any other developer as it was his land, his money, and his project. If the City/Agency wanted someone else to do the project, then the City/Agency was welcome to buy the land. Member/Councilmember Fox asked if Mr. Barkett's financial consultant agreed with staff's assessment as far as the tax rebates and if so, would he propose an alternative type of fmaneial assistance from the City. Minutes April 1, 1993 Page 3 Mr. Barkett believed the City liked to issue City Certificates of Participation Bonds and that would be okay with him. He did not want Assessment District financing as suggested by staff as he did not believe that was feasible in the current financial market. Member/Councilmember Fox asked if Mr. Barkat had proposed Certificates of Participation such as the City/Agency did with the Hemart development and how would it work. Mr. Barkett replied that would be acceptable to him if the City/Agency wanted to pursue it. He referred to the staff report wherein it was explained that the reason the Bonds were issued was to achieve greater tax revenues, the hiring of Chula Vista residents, and helping a blighted area. He said his project did that and more. Chairman/Mayor Nader requested clarification on how the issuance of Certificates of Participation would work in the context of the project. Mr. Salemone noted the issue had been discussed by staff and the Agency's legal counsel and, while agreement had not been reached, staff believed there would be a way to make Certificates of Participation viable for the project while minimizing City liability. Mr. Barkett stated he had talked to bend underwriters and they would issue Certificates of Participation based on the himre increment of what the Bonds were. In the case of Hornart, Hemart guaranteed the City seven years of interest. Fred Pierce, Price Waterhouse, 400 South Hope Street, Los Angeles, CA 90071-2889, financial consultants to the land owner, explained the difference between Assessment District Bonds and Certificates of Participation Bonds. An Assessment District Bond would be where a benefit assessment district would be set up, bends would be issued, and they would be repaid by the land owner based upon an assessment of the land in the area through an allocation formula. Using the City's tax exempt status, the Underwriters would float the bonds at a tax exempt rate. The difference with Certificates of Participation was that the City would issue the bonds and the bonds would be repaid, typically, by the tax revenues generated by the City. If the tax revenues of the project were pledged, for example, and the project generated tax increments, transient occupancy taxes, or retail sales taxes, then those tax revenues would be used to pay off the bonds. The manner in which the guarantee would come into play was if the project did not generate the tax revenues based upon which the City issued the bonds, then the guarantee would be exemised~-whethes a Letter of Credit from the developer or Signature Guarantee--meaning, that the developer would supplement the tax revenues so that the bond payments could be made. Member/Councilmember Rindone asked if the City would be liable to make up the difference if the tax revenue stream was not sufficient. Mr. Pierce responded the City would be liable, but the City could draw on the Letter of Credit to make up the difference. Member/Councilmember Moore stated there would be an untouchable base on the tax revenue stream and other income would be used to pay off the bonds, them would be a guarantee from the developer. Mr. Saiomone responded that was a correct assumption. Member/Councilmember Rindone amplified on what Member/Councilmember Moom's was indicating, that being that the revenue streams could be pledged to pay off the Certificates of Participation, but at the same time it would be after certain levels of those revenue streams had been achieved so basic new costs, i.e., City services, were covered. Mr. Salemone replied that was correct. Minutes April 1, 1993 Page 4 Mr. Barkett stated that was his understanding, that during the negotiations it was assumed that the dollar amount would be net after the City's costs for services. Lyman Christopher, Director of Finance, pointed out the major difference between Assessment District financing and Certificates of Participation was the risk involved and the security, or type of financing. In Assessment District financing them was no liability on behalf of the City as the City would not be using any of its revenues to repay the Assessment District bends. It would be a typical assessment district such as the City had been doing since 1985. The lands within the assessment district would be the security for the bond issue. If there would be any problem generating enough revenue through the annual assessments on the property owners in order to pay for the annual debt service, then there would be a mandatory foreclosure on the property in order to make the bondholders whole. Them would be no commitment whatsoever, or risk, of revenues that flowed to the City. The difference with Certificetes of Participation was touched on, which was that the City's credit would be used to issue bonds. If them was an insufficient amount to cover the debt service in any year on the bonds because the amount projected for property tax increment, transient occupancy tax, or sales tax was insufficient or fall short then the City's General Fund would be liable for that amount unless them was some type of credit enhancement which would state that if a certain level of revenue stream was not reached then the City could draw on. The main po'mt to be considered was that normal City revenue would be used to pay the debt service on the Certificates of Participation. The City would be using money generated from the project, instead of giving a direct robate to the developer. The City would use that revenue to assist the developer by issuing the Certificates of Participation to finance public infrastructure/facilities that would be in the project. Member/Councilmember Moore asked if there was another type of bond issue that would fall in between those two types. He asked what type financial assistance the original Home Depot received. Executive Director/City Manager Goss stated the City relocated a power line at a cost of approximately $250,000 for the Home Depot using Community Development Block Grant funds. Home Depot had that cost written off after they reached a certain level of sales tax, which they did. Member/Councilmember Moore asked what the City did for HiSpan relative to the street improvements and the tim main update to get the water pressure they needed. Fred Kassman, Re, development Coordinator, pointed out that the water line was installed using Community Development Block Grant monies as well as issuing Industrial Development Bonds, similar to those issued on behalf of Gold Coast Engineering. Member/Councilmember Moore asked if any other bond types would be available to the project. Mr. Christopher replied that Mello-Roos type financing could be used, which was similar to assessment district financing, except it was a special tax instead of an annual fee. Member/Couneilmember Moore wanted to know what the City did in the Focus Area as it pertained to the parking stmctore built in Town Centre 1. Mr. Christopher stated it was financed in 1982 with City-issued Certificates of Participation. The City entered into a lease agreement with the Redevelopment Agency and the Redevelopmerit Agency was actually making the debt service payments to the City for payments on the bonds. The Agency owned the parking structure. Member/Couneilmember Moore pointed out that was a subsidy for the development. Member Fox/Councilmember asked what guarantee the City had with Hemart and if the City was held liable. Mr. Christopher noted there was a Sales Tax Guarantee. Minutes April 1, 1993 Page 5 Member Fox/Councilmember pointed out that if a certain level of sales tax was not reached, the City would incur potential liabilities. Mr. Christopher replied the City had the liability for the total debt, but the Sales Tax Guarante~ stated that if project sales tax revenues from the project did not reach a certain level, then it would be made up by Hornart. The ultimato liability was with the City so that if Hornart did not honor the Sales Tax Guarantee the City would have to make the payments. Mr. Barkett asked the type security used to guarantee. Mr. Christopher stated Hornart provided a coqoorate guarantee. Chairman/Mayor Nader asked what that meant. Mr. Pierce responded it was a promise to pay from the corporation, an unsecured guarantee. Member/Councilmember Fox noted the argument for that type of guarantee was more of a certainty of earning the revenue from a shopping center than a project such as the Midbayfront. However, the big difference was that with the Midbayfront the City could conceivably get a Letter of Credit which might alleviate some of the City's/Agency's concerns, though some City funds would be committed that would otherwise go to the City, which presented an issue to be resolved. He asked Mr. Barkett for a response. Mr. Barkett replied he was not asking for anything the City/Agency had not given to any other developers coming into Chula Vista that created jobs and revenues for the City. Member/Councilmember Rindone disagreed, saying that was not quite correct as Mr. Barkett put on a caveat and said he would not accept an assessment district which had been an offer of the current and previous Councils. Mr. Barkett said he placed that caveat only because it would not be worth the exercise. The issuance of a $6 million bond on a $400 million first phase was worthless. It would not be worth the time and cost because no one was buying Melhi-Roos bonds in the real estate market. He believed that was an incredible risk in today's market given that even the biggest real estate developer in the world, i.e., Olympic & York, went bankrupt. Their corporate guarantee proved worthless. Referring to the Hornart project, Mr. Barkett stated the project was financed in the late 1980s when a lot of financing was available. It was his belief that Hornart did not have one cent in the job, that they probably took the devehiper's fees out of the project. Mr. Christopher interjected stating that Homart put in $35 million. Mr. Barkett continued, saying Hornart borrowed $35 million. The developer went to the bank and stated there was $42 million, the City had given him $7 million. There was no mortgage on the land, so it was equity. Hornart was borrowing $35 million, 80 percent, at a time when you could borrow more than 80 percent. He said be was guessing, that they did not have one cent of their own money in the project and that they took a developer's fee. He further said that he had $30 million in the Midbayfront and had been trying to develop a project for five years. Mr. Goss said the various City/Agency-assisted projects were done with a variety of assistance. He cited the Rancho del Rey Power Center, which had three components: relative to the Price Club there was a fairly significant subsidy and the other two, K-Mart and Home Depot, very little subsidy. It would be difficult to define what every developer got because it ranged all over the board. Member/Councilmember Moore asked if the City/Agency would be subsidizing the Price Club. Minutes April 1, 1993 Page 6 Mr. Goss stated the City/Agency would be. The Price Club would be loaning the City/Agency money to make improvements. As related to K-MaR, the subsidy consisted ofwriting-off fees. When looking at what other cities were doing, relative to the subsidy for Price Club. that was something that was fairly standard in the sense that it could actually be determined what was occurring within the State that other jurisdictions were doing. Regarding the Auto Sales Park, one could get an idea as to what other jurisdictions were doing, that was, arriving at a definition of what the market was for those kinds of subsidizes to attract and/or retain those type businesses. Member/Councilmember Rindone acknowledged there had been various participation by the City in a variety of ways for many projects. The question he wanted answered was what projects had the City actually used the credit of the City to fund and to what degree. Mr. Christopher replied in the Hornart deal, the Certificates of Participation were issued by the City and backed by a Sales Tax Guarantee. Should there be a shortfall and should the Sales Tax Guarantee not 'kick in' or Homart did not provide the money, then the City would be held liable for making the debt service payments. Member/Councilmember Fox noted the City was at risk in the particular deal with Hornart. He desired to know if, in the scenario with Mr. Barkett's project, where there would be Certificates of Participation and a Letter of Credit and if there would not be less risk compared to the Hornart deal. Mr. Christopher responded a Letter of Credit would be a very good credit enhancement. Member/Councilmember Fox reiterated there would be less of a risk if the two projects were compared. Would there not be less of a risk with the Midbayfront project with Certificates of Participation with a third-party guarantee or Letter of Credit as opposed to an unsecured guarantee with Hornart. Mr. Christopher stated in the case of a shopping center that that was a known quantity, the market could be easily ascertained. There would be an established track record in terms of a shopping center, as well as familiarity with sales tax generated by shopping centers. Very good projections could be made using that information. The Midbayfront project was much more difficult to get a handle on, as to revenues generated over a period of time. Member/Councilmember Fox pointed out that with a guarantee it should not be any more risky. Mr. Christopher said the City's credit would still be used as well as using City revenues to pay off the debt service unless it was not sufficient and then the L~tter of Credit "kicked in". A letter of credit was an excellent credit enhancement and would get a good rating in the bond market. Chairman/Mayor Nader wanted to know if there would be a credit risk to the City even with a Letter of Credit beyond the City revenues up to the guarantee. Mr. Christopher replied there would be no risk to the City. Assessment District financing provided tax exempt financing at better interest rates than one would get in the market and would benefit the developer. It would mount to savings on interest that the developer would have to pay on an annual basis. The issue was that the developer did not feel that he could do as large of an assessment district financing as he would want. In negotiations over the past two years staff had been using a figure of $25 million in assessment district financing. Member/Councilmember Fox thought it was favorable to the City/Agency to go that way, i.e., the City would not be at risk and no City funds would be committed. He asked Mr. Barkett why he did not want to go with the assessment district. Mr. Pierce stated the major difference was the benefit to the owner of the land from assessment district or Mello- Roos, which would effectively do the same thing. The developer instead of borrowing the money and having to pay it back to a bank, could borrow it at a lower interest rate. Mr. Pierce poin¢~l out the difference between assessment district financing and Certificates of Participation was that the developer would be required to pay back Minutes April 1, 1993 Page 7 through assessment district financing and the Certificates of Participation were paid back through the taxes generated by the project. Mr. Barkett said he had missed the market and did not want to do assessment district financing. The rata of assessment bonds with an LC were between 7¼ and 8 percent. He would borrow the first increment of money at 7~h percent and rhetorically asked the question: Why would he go through the expense of doing bonds when he could borrow money at the same rata. There would be no advantage to him to issue the bonds. Two yeats ago, the scenario of issuing assessment district bonds would have been correct; but not in the current market. Member/Couneilmember Moore wanted to know what the Letter of Credit would be based on. Mr. Pierce replied the Letter of Credit was typically issued by a financial institution. The developer would have to post some type of collateral. Member/Councilmember Moore asked if the City/Agency wanted to assist and what would be the rationale for doing so. Mr. Goss noted, historically, City policy was no subsidy and there should have been no expectation of that. Member/Councilmember Moore stated the original concept was not to subsidize with the developer's original plan but what was approved by Council was not the developer's original plan. The developer's original plan did not contain a cultural arts center, it did not have a donation of the land for the cultural arts centar, it did not have the degree of park land now in it, it had a larger number of units in the residential section, and it had more hotel/motel rooms in it. That was why he changed his opinion about subsidy to a certain degree. Should the City want the cultural arts centar, want the owner to donata the land, want additional park land, and delete the number of hotel/motel rooms and number of residential units, then the City had decreased the income potential considerably. If the developer's original plan before them, he would not advocata any type subsidy. Chairman/Mayor Nader noted Member/Councilmember Moore made a valid point. If the City was expecting the developer to shoulder the financial burden of the cultural arts centar or even a significant portion thereof, then the argument for a subsidy became much stronger than it originally was. The developer's position was somewhat unclear to him as he did not know if the developer was saying there would be no financial participation in the cultural arts cantar or whether he was saying he could not take it on in its entirety. It was not reasonable to expect the developer to actually put forth the entire expense of building the cultural arts centar; but the Council had said it expected significant, though undefined, participation. If Council/Agency expected significant participation, and got significant financial participation for the construction of the cultural arts center, then the ease for a significant City/Agency subsidy became much stronger. Without that, it was much weaker. Mr. Goss agreed with Chairman/Mayor Nader, based upon the significant cost of a cultural arts center. He continued, stating there was uncertainty in the amount of revenues because of the uncertainty at the State level, not only in terms of the City's revenues but the possibility of the State taking away the tax increment or the property tax revenue that went to redevelopment agencies. The City did not expect a net positive revenue flow from the project, even assuming the City/Agency revenues were not jeopardized by the State, until the fifteenth year. Chairman/Mayor Nader asked Mr. Goss if the project would not have a positive cash flow to the City for tiPteen years or that the City would not realize any money from this development for fifteen years. Mr. Christopher replied the City would realize a positive cash flow in Year 8 (see Schedule B of the staff report, page 4-13), but them wonld not be a net cumulative positive cash flow to share with the developer until Year 15. Mr. Pieme asked how much of the deficit had to do with Mr. Barkett's project. Minutes April 1, 1993 Page 8 Mr. Christopher replied that none of the deficit would be attributed to the construction of Mr. Barkett's project. Chairman/Mayor Nader asked what it was attributed to. Mr. Cluistopher explained it was attributed to the fact that the Agency had to do a pass-through of 20 percent to low- and moderata-income housing, property m-sharing agreements with other taxing agencies, as well as the existing annual deficit, and the Governor's proposed budget for next year to transfer 27 percent of property tax increment to the school district; all that was built into Schedule B. Staff tried to come up with a net figure that would actually be available to the Agency for spending in the Bayfront Project Area. There was a combination of net revenues taken into consideration. There were monies that would go to the Agency and revenues that would accrue to the City. In terms of reaching a net annual positive flow to sham with the developer, that would not occur until Year 8, using Schedule B. Mr. Pierce wanted to know under Schedule B (page 4-13), "Annual Revenues to City", what was included in the net calculation. Mr. Christopher stated it included the transient occupancy tax, sales tax, and also net of the projected costs of providing City services--police, fire, all traditional City services--to the project area. Mr. Pierce continued, asking if any property tax increment subject to the sharing agreements with other agencies was in the top line. Mr. Christopher said that was correct. Mr. Pierce asked, how much of the negative existed today and was a negative to the Bayfront Project Area that had nothing to do with the construction or lack thereof on those properties. Mr. Christopher responded, $2,000,000 per year negative was built into the annual operating deficit. Mr. Pierce continued, saying in looking at the net, it was showing the benefits created by the Bayfront project and how that could offset the current negative situation and the negative would continue to go un. Chairman/Mayor Nader requested clarification on the subsidy Mr. Barkett was seeking; specifically, how much the City or Agency would be expected to pay from its revenue stream in order to do Certificates of Occupancy. Mr. Barkett stated he did not know; he did not expect to come to that type of conclusion at the meeting, that would have to be worked out in negotiations. Member/Councilmember Fox asked if the figures contained in Schedule B would change with Certificates of Deposit. Mr. Christopher said they would as the annual debt service would be backed out. Member/Councilmember Fox commented that under Schedule B it would be eight years before the City/Agency realized a positive revenue flow and under the Certificates of Participation concept it would probably be more than eight years. Chairman/Mayor Neder asked if the $2 million annual Bayfront deficit was subtracted out of Schedule B, what year would the City/Agency see a positive revenue flow. Mr. Christopher replied the existing deficit had been there for several years and had to be addressed in some way. Schedule A did not show the existing deficit. Minutes April 1, 1993 Page 9 Chairman/Mayor Nader said he understood the Agency had a $2 million annual Bayfront deficit even though nothing was built on the Bayfront. The Agency was paying now and would be paying whether Mr. Barkett built his original project, the project now before the Council/Agency, or nothing. Mr. Christopher said that was correct. Agency Counsel Rudolf requested an urgency vote on a closed session item: APTEC versus the City of Chula Vista as it came about after the agenda was prepared. Chairman/Mayor Nader stated the request would be acted on after completion of the closed session on the Bayfront. The Agency recessed to closed session meeting at 7:06 p.m. to discuss: Instruction to negotiate/property acquisition for Midbayfront (William Barkett, owner, parcel bounded by Chula Vista Nature Interpretire Center to the north; Bay Boulevard to the east; San Diego Bay to the west; and "F" Street to the south) pursuant to Government Code Section 54956.8. The Agency reconvened in open session at 8:20 p.m. *** Member/Councilwoman Hotton left the meeting at 8:12 p.m. MSC [Nader/Fox] direct staff to continue negotiations with the property owner; that all options for City participation that had been discussed at the meeting be on the table for those negotiations, and the extent of City participation be linked with the extent of developer participation or cooperation in making the cultural arts complex a reality; and if agreement on all other points was reached, then staff was directed to provide expedited processing to the devdoper. Member/Councilmember Moore felt it should be clarified that if and when Mr. Barkett presented a Development Agreement coveting major conditions that were agreeable to staff and had a substantial financial partnership obligation in writing, then the Agency could hold a special meeting within two working days and make its best offer as a partner in developing Phase 1. The key would be the fmalization of the Development Agreement and Mr. Barkett conring through with the financial commitment(s) necessary to assure building the project, then the Agency/City could make its best commitment as a partner in the development of the Bayfront. Member/Councilmember Fox asked if it would be possible to estimate a time at which staff would be back to the Agency with the Development Agreement. Mr. Salomone replied that staff would be back as quickly as possible. Mr. Barkett requested the Agency set a meeting date so as to force a time limit on the negotiations. Chairman/Mayor Nader clarified the aspect of the motion dealing with the cultural arts complex. He stated the thrust of the motion was to encourage Agency staff and the developer to look for a reasonable middle ground on making the cultural arts facility a reality. Member/Councilmember Rindone asked that it be understood that the negotiations be commenced immediately with the direction given by the Agency, and staff was to initiate the first meeting between Agency staff and the developer for next week. Minutes April 1, 1993 Page 10 Member/Councilmember Moore asked when staff would return to the Agency/Council. Mr. Salomone pointed out that staff would be holding weeMy meetings with Mr. Barkett and his representatives. Chairman/Mayor Nader requested that regular staff reports indicating the progress of those meetings be provided to Council. Member/Councilmember Moore stated he could not support the motion as he did not believe the Agency had "bit the bullet." Member/Councilmember Rindone inquired as to what Member/Councilmember Moore would like to see contained in the motion that would enhance it so that he could support it. Member/Councilmember Moore acknowledged that it was appropriate for the motion to contain the wording relating to the cultural arts facility but he would like to see reference to the key points the Agency would like in the Development Agreement and some obligation, in print, that showed a financial partnership was eminent. Member/Councilmember Rindone replied he did not think any other Member/Councilmember would disagree with the concerns expressed by Member/Councilmember Moore. Mr. Barkett conamented he did not believe he and the Agency were anywhere closer to resolution than when the meeting started. The Agency/City was willing to participate but on the condition that the developer do something with the cultural arts center. Chairman/Mayor Nader stated he believed progress had been made as the Agency had given staff broader parameters in the negotiation process. Assuming, for the sake of argument, what Mr. Barkeft had just stated was tree, there could be ways in which the Agency/City could participate, over time, financially, that would be easier for the Agency/City to do than putting an amount into the cultural arts center up front and that Mr. Barkett's participation would help the Agency/City get the cultural arts facility built. Under those circumstances more Agency/City financial participation might be justified where it might not be otherwise. The Agency was directing staff to consider concessions, that had been off-limits before in return for additional assistance on getting the cultural arts canter built. SUBSTITUTE MOTION: [Moore/Fox] the City Council make a commitment that if Mr. Barkett presents the key elements of a Devdopment Agreement that covers major conditions which include the cultural arts center, that are substantially agreed on by staff, plus a final financial partnership in writing, the Agency will hold a special meeting within three working days and make its best offer as a partnee in devdoping Phase 1 of the Bayfront Plan. Chairman/Mayor Nader noted his concern regarding the time line to the Agency/Council making its hast offer. He stated he had no objection to amending the original motion to include a timeline of one week for the Agency to meet after a Development Agreement was reached. VOTE ON SUBSTITUTE MOTION: Failed 1-3-1, with Rindone, Fox and Nader opposed and Horton absent. AMENDMENT TO MOTION: [Nader/Fox] when there was something new on the table, the Agency ngendize the Bayfront within one week to proceed seriously as new moveanent is made. Mr. Barkett requested a date specific for the next meeting. Chairman/Mayor Nader declined to make that part of the motion. Minutes April 1, 1993 Page 11 Mr. Peterson amplified on Mr. Barkett's request for a specific date for the next me~ting. Chairman/Mayor Neder pointexl out that Mr. Barkett and his representatives could be placed on the agenda at any time at their own request. VOTE ON AMENDED MOTION: Approved 3-1-1, with Moore opposed and Horton absent. Mayor Nader requested a vote on the urgency of meeting in closed session on the APTEC versus the City of Chula Vista item. MSC [Nader/Fox] to find in the matter of APTEC versus the City of Chula Vista that an emergency arose after publication of the agenda as a dosed session item. Approved 40-1, with Horton absent. ORAL COMMUNICATIONS OTHER BUSINESS 5. DIRECTOR'S REPORT(S) - Advised that a Council Meeting/Worksession had been scheduled for April 22, 1993 at 4:00 p.m. if there was no joint meeting with the County; if there was a joint meeting with the Council the Worksession would be scheduled for 6:15 p.m. 6. CHA1RMAN'S REPORT(S) - None. 7. MEMBERS' COMMENTS - None. ADJOURNMENT ADJOURNMENT AT 8:52 P.M. to the closed session and thence to a Joint Special Meeting of the Re, development Agency/City Council of Tuesday, April 13, 1993 at 6:00 p.m., immediately following the City Council Meeting, in the Council Chambers, Public Services Building. Respectfully submitted, Berlin D. Bosworth, Secretary to the Redevelopment Agency