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HomeMy WebLinkAboutcc min 1993/07/27 RDA MINUTES OF A SPECIAL JOINT MEETING OF THE CITY COUNCIL/ REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tuesday, July 27, 1993 Council Chambers 11:25 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Member/Councilmember Hotton, Fox, Moore, Rindone, and Chairman/Mayor Nader ALSO PRESENT: Sid Morris, Assistant City Manager; Bruce M. Boogaard, City/Agency Attorney; and Beverly A. Authelet, City Clerk. 2. APPROVAL OF MINUTES: July 20, 1993 MSUC (Rindone/Fox) to approve the minutes of july 20, 1993. CONSENT CAkENDAR (None Submitted) 3. WRI'FIEN COMMUNICATIONS: None * * * END OF CONSENT C~T.F-NDAR * * * PUBLIC HEARINGS 4. AGENCY HEARING REGARDING THE SALE OF SPACE 110 AT ORANGE TREE MOBII.RHOME PARK - In November 1987, Orange Tree Mobilehome Park converted to resident ownership. To accomplish the acquisition, the Agency purchased 29 spaces and rented the spaces to the homeowners. The Agency is selling those spaces as new home buyers move into the Park. The Agency currently owns 22 spaces; its policy is to sell each space at the appraised value of the property. Staff recommends approval of the resolution. (Community Development Director) RESOLUTION 1346 APPROVING THE SALE OF SPACE 110 AT ORANGE TREE MOBILEHOME PARK AND AUTHORIZING THE COMMUNITY DEVFLOPMENT DIRECTOR TO EXECUTE A PURCHASE AGRRRMENT AND ESCROW INSTRUCTION Staff had no additional information to present to Council. Mayor/Chair Nader opened the meeting for public hearing. There being no one wishing to address the Agency, Mayor/Chair Nader closed the public hearing. RESOLUTION 1346 OFFERED BY CHAIR NADER, reading of text was waived, passed, and approved 4-0-1 (Couucil/Agencymember Horton had left the dias). Council/Agencymember Moore stated that we have had these spaces for some time. He wanted to see some action to sell them off and requested a report from staff containing the following information: the original MINUTES July 27, 1993 Page 2 rent, when the rent was last increased, what the rent is today, and are we going to recommend increasing it again. Chris Salomone, Community Development Director, stated that staff understood the direction. There was currently an option being considered by the Home Owners Association of Orange Tree to purchase the balance of the spaces. 5. AGENCY/COUNCIL PUBLIC HEARING REGARDING DISPOSITION OF ACQUIRED PROPERTIES (APN 622-041-20, 622-041-21, 622-041-22, AND 622-041-23) WITHOUT PUBLIC BIDDING, PURSUANT TO CALIFORNIA HEALTH & SAFETY CODE SECTION 33431 -- The Disposition and Development Agreement (DDA) between the Redevelopment Agency and Cypress Creek Company, L.P., for a 15-acre Palomar Trolley Center retail project was approved by the Agency on 11/10/92. The Agency, on 4/27/93, approved the Amended Palomar Trolley Center DDA (ADDA) which would add approximately 3 acres to the project. The ADDA is required to be executed by the Agency on or before 7/30/93, after certain conditions precedent are accomplished. If the Agency concurs with staff recommendations before it, then all of the conditions precedent will have been accomplished and the ADDA can be executed by the Chairman. The ADDA replaces all previous agreements and will govern the development of the proposed 18-acre commercial center. Staff recommends approval of this and all related resolutions. (Community Development Director) AGENCY/COUNCIL PUBHC HEARING REGARDING DISPOSITION OF ACQUIRED PROPERTIES {APN 622-041-20, 622-041-21, 622-041-22, AND 622-041-23) ACQUIRED VVITH TAX INCREMENT FUNDS, PURSUANT TO CALIFORNIA HEALTH & SAFETY CODE SECTION 33433 A. AGENCY RESOLUTION 1341 FINDING AND DETERMINING PUBLIC INTEREST AND /) NECESSITY FOR ACQUIRING AND AUTHORIZING THE CONDEMNATION OF CERTAIN REAL PROPERTY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA, CHULA VISTA, CA [PARCEL 12] This resolution does not require a public hearin~ but is a related item. B. AGENCY RESOLLrHON 1342 FINDING AND DETERMINING PUBLIC I~ AND NEf:K~SITY FOR ACQUIRING AND AUTHORIZING THE CONDEMNATION OF CERTAIN REAL PROPERTY WITHIN THE SOUTHWEST REDEVELOPMENT PROJECT AREA, CHULA VISTA, CA [PARCR. I. 13] - This resolution does not require a public hearin~ but is a related item. C. AGENCY RESOLUTION 1343 FINDING AND DETERMINING PUBLIC I~ AND NECESSITY FOR ACQUIRING AND AUTHORIZING THE CONDEMNATION OF CERTAIN REAL PROPERTY WITHIN THE SOIYI'HWEST REDEVFZOPMENT PROJECT AREA, CHULA VISTA, CA [PAR CR. I_~ 14 AND 15] - This resolution does not require a public hearin~ but is a related item. D. COUNCIL RESOLUTION 17178 APPROVING THE SALE OF AGENCY-OWNED PROPERTY (APN 622-041-20, 622-41-21, 622-041-22, AND 622-041-23) TO CYPRESS CREEK COMPANY, L.P., AND FINDING THAT CONSIDERATION IS NOT LESS THAN FAIR MARKET VALUE E. AGENCY RESOLUTION 1344 APPROVING THE SALE OF AGENCY-OWNED PROPERTY (APN 622-O41-20, 622-041-21, 622-041-22, AND 622-041-23) TO CYPRESS CRRF. R: COMPANY, I,.P., AND FINDING THAT CONSIDERATION IS NOT LESS TI-IAN FAIR MARKET VALUE F. AGENCY RESOLUTION 1345 FINDING THAT THE FINAL ENVIRONMENTAL IMPACT REPORT FOR THE PALOMAR TROLLEY CENTER PROJECT CEIR-91-02), WITH ADDENDUMS, IS ADEQUATE UNDER CI~QA; MAKING FINDINGS OF FACT; ADOPTING MITIGATION MONITORING PROGRAM; AND AUTHORIZING THE CHAIRMAN TO EXECLrFE THE AMENDED PALOMAR TROLI.I~Zy CEh]'I'F.R DISPOSITION AND DEVELOPMENT AGREEMENT MINUTES July 27, 1993 Page 3 David Gustafson, Community Development Assistant Director, stated the Council/Agency was being asked to conduct hearings and adopt three resolutions of necessity for four properties not acquired through negotiations and to consider the appropriateness of selling the four condemned properties and an additional condemned property to the developer without bid at a fair market value and to accept the environmental documents for the project and approve the execution of the amended Disposition and Development Agreement. Mr. Gustarson stated that the Resolution of Necessity No.1341 is regarding the Disposition and Development Agreement Parcel No. 12 and known as APN 622-041-20, was owned by the Japanese American Citizen League consisting of 32,670 square feet with a 4600 square foot structure on it. It was currently occupied by the Mi Cabana Restaurant and Bar. Mr. Gustafson stated that staff has engaged in the following: Good Faith Ne~:otiations: The Agency has offered to purchase the property from the Japanese American Citizens League at fair market value based upon an Agency appraisal. Staff has met with the League. The position of the League was that they do not want to sell the property. They have made a proposal to participate in the project through a long-term lease of their property to the developer if building space could occur over their property; if not, to configure their ownership interest somewhere in the project and lease it on a long-term basis back to the developer. A meeting had been set up between the League and the developer to discuss that possibility. Staff recommends that the Council/Agency go forward with the Resolution of Necessity to keep on schedule, not to seek immediate possession, and to continue the dialogue between the developer and the League. The project provides public ~ood: The Palomar Trolley Center project has been designed to create a highly desirable level and quality of retail commercial development on a site which has incompatible uses and under utilization in land use and tax generation. It enhances the gateway to the southwestern redevelopment project area, generates employment opportunities for the community, and generates a more appropriate tax revenue from the commercially zoned property. It also avoids commercial redundancy because what is proposed is high volume national retailers rather than strip commercial. It would help m minimize increased vacancy factors in the area. The Center has been designed for the least private injury: If the comer property was not incorporated into the design of the Center, it would create access problems to the Center off Broadway which was critical to the Center and its ability to attract quality tenants at a desirable lease rate. It would create a visual block so people using Broadway could not see into the Center, and it basically would not provide for the ability anywhere else on the comer for the additional commercial development which was being proposed in the Center. Mayor/Chair Nader opened the meeting for public hearing on the entire project, including all six resolutions. Addressing the Council/Agency were: · Jim Moxham, 2801 Albatross Street, San Diego, 92103, representing Cypress Creek. Mr. Moxham stated that Cypress Creek looked upon the project as one development processed into two phases. The two phase approach allowed them to proceed with the initial 155,000 square feet while working to resolve the complex issues associated with the Phase 2 properties. He stated they had made good faith offers to all of the owners at or above the appraised value without success except for the one parcel which they have already acquired. Their offer to the Japanese American Citizen League would have significantly improved their net operating income on reinvestments over their current existing income. They were continuing the dialogue in hopes of reaching an agreement. Regarding the Day Care Center, he stated that the original provision for Day Care was limited to the MTDB property. Since that turned out to be an unacceptable site, the developer has worked with staff to facilitate an alternative development. They have put together a plan MINUTES July 27, 1993 Page 4 to Episcopal Community Services. The obstacle had been getting the property owner to allow Episcopal Community Services the time to put together a development plan for a Head Start facility and housing project, however, both the property owner and Cypress Creek have executed the option agreement and have scheduled to bring back an amendment to the DDA formalizing the agreement within three weeks. On behalf of Cypress Creek, he requested the Councfl/Agency's support of staffs recommendation. Mr. Gustafson stated that another property subject to Resolution of Necessity No 1342 was Parcel 13 of the DDA and APN 622-041-21. That property was also owned by the Japanese and American Citizen League. It has 22,651 square feet and has a structure on it of 5,040 square feet which was occupied by the 7-11 Convenience Store and the MLV Coin Laundry. The good faith negotiations, the public good, and the least private injury issues on that property were identical to the ones on the previous property, and Mr. Gustafson requested that the same testimony apply to this case. Council/Agencymember Hotton stated that in talking with staff, she understood that there may not be a necessity to acquire this property in the near future. She asked if it could be made more time specific; perhaps after the five year period when the building reverts back to the proper~ owner, Mr. Moxham stated that the developer's position was that they will be prepared to move forward on Phase 2 as soon as all the respective interest of the parties, the Japanese American Citizen League, Southland, MLV, and the franchise interest, were clearly established. They anticipate that it could be accomplished within twelve months. From that point they would proceed to develop the property. City/Agency Attorney Boogaard asked Mr. Moxham if the project needed those parcels within a twelve month period? Council/Agencymember Horton added if they were going to develop them within a twelve month period? Mr. Moxham responded that twelve to eighteen months would be an acceptable time period. Mr. Gustafson stated the Resolution of Necessity 1343 pertains to two parcels, 13 and 14, APN 662-041-22 and -23. They were owned by James and Sandra Willjams. The total square footage was 47,480 and their structures were approximately 6500 square feet. They house Sams Trailer Repair which was owned by the W~liams where they also reside. In terms of good faith negotiations, an offer was made to purchase at the Agency's appraised value. The Willjams, based upon their appraisal, feel the property was worth more than twice the Agency's appraisal. It has been concluded by all parties that we were too far apart to further negotiate a purchase. Both the public good and the design of the Center for the least private injury were identical to the previous Resolution. Mr. Gustafson stated that the Council/Agency needed to make findings that sale of Agency acquired property was done appropriately without public bid and at the market value. In terms of it being appropriate to sell these properties to the developer without public bid, the parcels were acquired solely to convey to the developer using the developer's funds and under terms of the DDA to allow the shopping center. There was no benefit or practicality to attempt to dispose of the property through public bid. As to fair market value, the Agency was selling to the developer the properties at fair market value through using the developer's deposit to purchase them. Subsequent project subsidies could occur based upon total acquisition costs beyond the fair market value acquisition price for the land. Those subsidies, if they occurred, would be paid by the City through sales tax rebate. Mr. Gustafson stated this concluded the necessary public testimony for these actions. · David Karamoto, 6917 Town View Lane, San Diego, 92120, current president of the Japanese American Citizens League. He stated the property was income property donated to the Chapter as a gift and MINUTES July 27, 1993 Page S owned for some time by members of the community. The property was their sole source of income for the organization which funded numerous programs. To be without the property, their community would suffer. The developer stated that his offer would increase the income they would realize. They have a long-term lease on the comer lot with the Southland Corporation. Under the terms of the lease agreement, within five years, they will assume ownership of the buildings on that property. At that point, the monthly fees would be up for renegotiation. He read the following statement from their attorney into the record: "With respect to the findings which must be made by the Redevelopmeat Agency pursuant to Code of Civil Procedure Section 1245.230, it is our belief they cannot be made in good faith. The public interest and necessity do not require acquisition of 3ACL's fee interest. Since the JACL is willing to negotiate a ground lease on reasonable terms for its property as a free standing building site integrated within the project, either in its present configuration or in a different configuration or location, such a long-term ground lease should pose no hardship to the Agency or the developer since it can be Fmanced easily as a fee and would also, therefore, 'be most compatible with the greatest public good and the least private injunf. Also, while the use of our property may be necessary for the proposed project, obtaining the property in fee and depriving the JACL of all of the income from the property which it has used for decades to support a variety of worthwhile charitable efforts, is not necessary for the success of the project." Council/Agencymember Horcon asked if on Parcel 12 they felt that their return would be greater with the proposal made by the developer than have the City condemn the property? Mr. Karamoto replied that if the parcel was to be sold or claimed by the City, and they were given fair market value, its likely they would realize greater returns. Council/Agencymember Hotton asked that if the Council/Agency left Parcel 13 in tact at this time and proceeded with what was recommended with Parcel 12, would that be acceptable. Mr. Karamoto stated that on behalf of the organization, they would like to retain the entire property. To lose only half would be better than losing the entire property. If they had their choice, they would prefer retaining Parcel 13 at this time because of the way the lease was written. Mayor/Chair Nader asked how wide Broadway and Palomar were ultimately expected to be at the intersection? Mr. Gustarson responded that Broadway would remain as it was currently. Palomar would be expanded to six lanes. Only a small portion of the property was needed for the widening for mitigation measures. The remainder of the property was needed for the development of the shopping center. On those parcels, there would probably be a parking lot. Mayor/Chair Nader asked why it was necessary for redevelopmeat to have fee title rather than a long-term lease? Mr. Gustarson stated it was a concern on the developer's part that they have fee ownership control of their entire property. He stated that one of the problems was that fee ownership in itself would solve the problem. If a long-term lease occurred on Parcels 13 and 14, there wouldn't be a whole lot of economic return on those leases to the League because it would be a parking lot. If the lease were done at market value, the parking lot would have less market value than a more desirable portion of the Center that had buildings over it and was producing income. MINUTES July 27, 199:3 Page 6 \ Mayor/Chair Nader stated that you don't pay for a property interest be it fee ownership or long term lease based on the use the buyer intended to make of it, you pay for it based on its market value. Michael Homes, representing Sunbelt Management Company, stated their preference was to own the property in fee. It was brought up at the last minute regarding the possibility that the League was interested in transferring it into a lease situation. They would entertain that; perhaps there would be a way to work this out. · Masaaki Hironaka, 2640 National Avenue, San Diego 92113, Executive Director of the San Diego Chapter of the JACL. He stated that the proposal declared the property would be free of contaminants, free of leases, and free of any liens. There was a Shell Oil Station on that property. Therefore, there was a gasoline tank there. To get this free of contaminants and free of leases would cost them more than it was worth. This was one of the reasons they resisted selling the property. Council/Agencymember Moore asked if the cost of buying out leases were negotiated in any way. Mr. Gustarson stated that they have had their condemnation special counsel look at this. His opinion was that the League appears to be in good shape on Parcel 12, but have a greater problem on Parcel 13. City/Agency Attorney, Bruce Boogaard, stated that the courts would divide the fee value between the lease holder and the remaining property holder. They value the lease hold. A portion of the fee value was attributable to the tenant and a portion to the property owner. Generally, the court makes a final determination if it is not resolved by consensus. · RoyMuraoka, 1478 First Avenue, Chula Vista 91911. He stated his concern was that the JACL was a non profit organization which did not have the finances to fight the condemnation. He asked the Council/Agency to eliminate the "walk away~ clause. In the resolution it stated the buildings were a blight. They were built fifteen years ago, but he did not feel they could be considered a blight. He wanted that corrected. Mayor/Chair Nader asked for an explanation of the walk-away clause. Mr. Gustafson stated he was referring to a clause in the DDA that the developer has the right to walk away from the project if environmental clean up costs were estimated to exceed a threshold on any of the properties. We would not move forward on seeking possession on any of the properties until we had received a letter that was required in the DDA from the developer accepting the properties "as is" and taking on the responsibility for any contamination. We have received a letter like that for Parcel 12 because we were intending to seek immediate possession of that parcel. Mayor/Chair Nader asked Mr. Muraoka what his objection was to the clause. Mr. Muraoka responded that in Section 8.4, he thought it meant that after it went over $20 per square foot, they could walk away from it. Mr. Gustafson stated there was a different provision in the environmental contamination provision which was a walk away right by either party if they discover property was going to exceed $20 per square foot for total acquisition cost in the aggregate in Phase 2. At that point, if the developer owned any of the parcels, the Agency would buy those parcels back and remarket them. If the Agency owned the parcels, they would simply remarket them. \ MINUTES July 27, 1993 Page 7 · Agustin Reyes, 96 Sherwood, Chula Vista, 91911, owner of the Mi Caban La Mision. He asked what was he going to do when they took possession of his business; where was he going to go? How long would it take? He would not only lose his business, but also his customers. Mr. Gustafson stated that Mr. Reyes would be eligible to all the relocation rights, good will, fixtures and equipment, and relocation benefits which were required by law. We have a relocation consultant who was attempting to find a relocation site for Mr, Reyes. Mr. Reyes' business was on Parcel 12. Mr. Holmes responded they would like to get possession in the 90 days, but they do not have to move his business for a twelve month period. In regards to the possible soil contamination, he stated they had put in two test wells at the corner of Broadway and Palomar and did not find anything. However, they needed to do some additional testing. Southland Corporation will be the responsible party for cleaning up any contamination in the ground. · Clifton Reed, 357 Third Avenue, Chula Vista, 91910, attorney representing Paul and Dorothy Ireland and James and Sandra Willjams. He asked for a clarification of the Council/Agency's intent on the Southland parcel. He was asking because his clients, the Irelands, were the lessees and the franchisees of the 7-11 Store. Nobody from the Agency has been talking to them. There was litigation pending in Superior Court against the Agency which he was representing the Irelands on. His clients have relocation benefits coming, and they shouldn't have the property sold out from underneath them since they have a significant interest in that property. He was prepared to dismiss that law suit if there was going to be an unequivocal commitment to go forward with condemnation, then he could protect his client's interest in that condemnation action pending. City/Agency Attorney Boogaard recommended that once the Resolution of Necessity was filed, to move forward with the condemnation action and work out the rights of occupancy in the interim while the litigation was pending. We will not just sit on the Resolution of Necessity, we have hired outside counsel. Mr. Reed addressed the issue regarding the Willjams' parcel. He stated that before the Agency has the jurisdiction or authority to hold a public hearing, the Agency has to get an appraisal. The owner has a right to have input into the appraisal. There was an appraisal. He has been informally informed by Mr. Gustarson that the appraisal represented by the letter dated December 25, 1992 was the appraisal upon which the offer was based. If the Agency would confirm that was the appraisal that they have relied on for the record, then he would withdraw any objection to the Agency's jurisdiction to proceed under the Eminent Domain Code. Although they have not been provided the basis by letter, he did have a copy of the appraisal. However, the appraisal did not represent the Redevelopment Agency, but the Community Development Department. City/Agency Attorney Boogaard asked Mr. Gustarson if that was the appraisal upon which the decision was based to establish the value at $415,000 and an offer was made. Mr. Gustarson responded that it was. · Carolyn Butler, 97 Bishop Street, Chula Vista, 91910. She stated there were four tanks on this property. She did not believe there was a need for another shopping center. She felt they were over developed. AGENCY RESOLUTIONS 1341, 1342, 1343, 1344, 1345, AND COUNCIL RESOLUTION 17178 OI~P'ERED BY MAYOR/CHAIR NADER, reading of the text was waived. Council/Agencymember Hotcon requested that Resolution 1342 be bifurcated and dealt with last. MINUTES July 27, 1993 Page 8 AMENDMENT TO MOTION REGARDING RESOLUTION 1341, Parcel 12, (Nader/Moore) to provide that Mr. Reyes' business could remain on the parcel for twelve months beginning with the effective date on the Resolution. Motion carried 5-0. VOTE ON MAIN MOTION passed and approved 5-0. B. AGENCY RESOLUTION 1342 M (Horton) to continue the item and have staff come back with a possible alternative worked out with the developer and property owner to postpone any type of condemnation proceeding for the next few years, or as an alternative, work on a lease situation. City/Agency Attorney Boogaard recommended that staff be instructed to negotiate as part of a seffiement discussion and the eminent domain action, and that there be consideration of a long-term lease or ground lease option with the property owners. AMENDMENT TO MOTION: (Nader/Fox) to authorize condemnation of interest in the property but direct staff to work with the owner, franchisee, and the developer to determine what the appropriate interest should be to acquire the parcel. Prior to fling the authorized suit, the matter be returned to the Agency for further consideration. Amendment approved 5-0. VOTE ON APPROVAL OF RESOLUTION 1342 carded 5-0. ORAL COMMUNICATIONS There were none. ACTION ITEMS MSUC (Nader/Rindone) to continue items 6 and 7 to the August 3, 1993 meeting. 6. REPORT STATUS OF MIDBAYFRONT NEGOTIATIONS -- At the City Council's direction, staff has been negotiating with the Midbay~'ont developer, William Barkett, concerning City/Agency financial participation in the project and the developer's contribution towards development of a cultural arts center. Negotiations have been concluded with the parties in general agreement on most issues, but in disagreement on several major issues concerning terms and formula for sharing, and total amount of revenue to be shared. Staff recommends this item be continued to the meeting of August 3, 1993. (Community Development Director/Director of Finance) [continued from the meetin~ of July 20, 1993] 7. COUNCiL/AGENCY REPORT FUTURE ROLE OF THE MONTGOMERY PLANNING COMMI-i-rF..E AND THE POSSIBLE MERGER OF THE MPC WITH THE SOUIh'WE~T PROJECT AREA COMMI'I'II:E PURSUANT TO CHULA VISTA ECONOMIC DEVELOPMENT COMMISSION fiX)C) PERMIT STREAMLINING RECOMMENDATION #17 -- The Chula Vista EDC established a subcommittee to develop recommendations to streamline the City's development review process to create a more "user friendly" environment for business development, One of the recommendations (#17) concerned the future role and function of the Montgomery Planning Committee and the possible merger of the MPC with the Southwest Project Area Committee. It is recommended that Council/Agency discuss the alternatives presented in the report and provide additional direction to staff. (Community Development Director/Planning Director) Staff recommends this item be continued to the meeting of August 3, 1993 [continued from the meetin~ of June 22, 1992] MINUTES July 27, 1993 Page 9 OTHER BUSINESS 8. DIRECTOR/CITY MANAGER'S REPORT(S) There were none. 9. CHAIRMAIq/MAYOR'S REPORT There were none. 10. MEMBERS/COHNCILMEMBERS' COMMENTS There were none. Added Item: City/Agency Attorney Boogaard stated he needed to have two items considered in Closed Session which came up after the Agenda was posted: Litigation of Texaco versus the City of Chula Vista and the Instructions to Negotiators regarding changes in the Auto Park transaction. MSC (Nader/Fox) to approve adding the two items to the Closed Session agenda. The motion passed 4-1-0 (Rindone opposed). The meeting adjourned at 12:45 p.m. The Agency to its next scheduled meeting on Tuesday, August 3, 1993, and the City Council to a Closed Session thence to a Special Meeting on Monday, August 2, to interview Commissioners and to its next scheduled meeting on Tuesday, August 3, 1993. Respectfully submitt/ed, Beverly A.~Authelet, CMC City Clerk