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HomeMy WebLinkAboutcc min 1993/11/23 RDA MINUTES OF A SPECIAL MEETING OF THE REDEVELOPMENT AGENCY/ CITY COUNCIL OF THE CITY OF CHUIA VISTA Tuesday, November 23, 1993 Counc~ Chambers 7:58 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL: PRESENT: Members/Council Members Horton, Fox, Moore, Rindone, and Chairman/Mayor Nader ALSO PRESENT: John D. Goss, Director/City Manager; Bruce M. Boogaard, Agency/City Attorney; and Beverly A. Authelet, City Clerk 2. APPROVAL OF MINIFEES: None submitted. CONSENT CAI .ENDAR (None) 3. WRITIe2q COMMUNICATIONS: None Submitted. * * END OF CONSENT CALENDAR * * PUBLIC HEARINGS 4.A. JOINT AGENCY/COUNCIL PUBLIC HEARING CONSIDER THE LEASE OF PROPERTY AT 603 PALOMAR STREET (APN-#622-041-20), CHULA VISTA TO AUGUS'HE REYES--The Amended Palomar Trolley Center Disposition and Development Agreement calls for the Agency to acquire parcels necessary for the development of the proposed shopping center and to convey those properties to the developer, Cypress Creek Company. The Agency adopted Resolution 1341 on 7/27/93 to condemn subject parcels but required that the existing tenant be allowed to remain on the premises for 12 months. The Agency will take possession in November 1993 and a lease has been prepared with the tenant to govern his tenancy during the remainder of the 12 months. Staff recommends the public hearinN be continued to December 7, 1993. (Continued from the meetin~ of November 9. 1993) (Community Development Director) B. AGENCY RESOLUTION 1366 APPROVING ~ LEASE OF REDEVELOPMENT AGENCY-OWNED PROPERTY (APN 622-041-20) TO AUGUSTINE REYES, FINDING THAT CONSIDERATION IS NOT 1J~-e.S THAN FAIR MARKET VALUE, AND AUTHORIZING CHAIRMAN TO SIGN LEASE C. COUNCIL RESOLLrHON 17299 APPROVING THE LEASE OF REDEVELOPMENT AGENCY-OWNED PROPERTY (APN 622-041-20), TO AUGUSTINE RE'YES AND FINDING THAT CONSIDERATI ON IS NOT THAN FAIR MARKET VALUE This being the time and place as advertised, the public hearing was declared open. MSC (Moore/Fox) to conlinue the public hearing to the meeting of 12/7/93 as per staff recornrnendaljoll. Approved 4-0-1 with Nader absent. Minutes November 23, 1993 Page 2 5 .A. JOINT AGENCY/COUNCIL PUBLIC HEARING TO CONSIDER THE SALE OF CERTAIN PUBLIC FACILITIES AND RELATED LAND BY THE CITY OF CHULA VISTA TO THE REDEVELOPMENT AGENCY AND THE LEASEBACK OF SAID PUBLIC FACILITIES BY THE REDEVELOPMENT AGENCY TO THE CITY--Such property or properties will be sold by the City of Chula Vista to the Redevelopment Agency and leased by the Agency back to the City pursuant to and as more fully described in the Lease Agreement dated as of 12/1/93, a copy of which is on file with the Secretary of the Redevelopment Agency, known as document RACO-46-93, and available for inspection by any interested party at the Agency office. Staff recommends approval of the resolutions. (Director of Finance) B. AGENCY RESOLIJ'FION 1369 APPROVING DELIVERY AND SALE OF NOT TO EXCR. Rr} $3,500,000 CERTIFICATES OF PARTICIPATION TO ASSIST FINANCING A PUBLIC PARKING GARAGE IN THE TOWN CENTRE II REDEVELOPMENY PROJECT AREA, AUTHORIZING AND DIRECTING EXECUTION OF RELATED AGREEMENTS, AND APPROVING OFFICIAL ACTIONS C. COUNCIL RESOLUTION 17312 APPROVINGDELIVERYANDSALEOFNOTTOEXCRRI)$3,500,000 CERTIFICATES OF PARTICIPATION TO ASSIST FINANCING A PUBLIC PARKING GARAGE IN THE TOWN CENTRE H REDEVELOPMENT PROJECT AREA, AUTHORIZING AND DIRECTING EXECUTION OF RELATED AGBRRKENTS, RI.RCTING TO GUARANTEE LEASE PAYMENTS FROM MOTOR VEHICLE IN LIEU FEES AND APPROVING OFFICIAL ACTIONS This being the time and place as advertised, the public hearing was declared open. Council/Agency Member Moore questioned what the City/Agency would be obtaining for the $2.6 million. Lyman Christopher, Director of Finance, responded there would not be any ownership. There would be a substantial increase in the sales tax generated by the fact that the shopping center was expanding. There would also be an increase in the property tax increment generated from the project area. Those two revenues would more than offset the cost of the borrowing and doing the financing for the Agency's participation in the shopping center. Council/Agency Member Fox stated on page 5-3, the assets of the City used to finance the project were listed and he assumed that under the worse case scenario all of those assets, and no more, would be used. He questioned what happened to the City's assets in a worse case scenario. Charles Ariains, Bond Counsel, Jones Hall Hill & White, stated the assets were put at risk only in a situation in which the City failed to pay debt service, i.e. failed to pay the lease payments for the property. As long as the City made payments in a timely fashion that property would never be put at risk. At the end of the term of the lease it would revert back to City ownership and all the financing documents would terminate. The transaction was fairly risk free because one of the essential ingredients was that the City was pledging the Motor Vehicle In-Lieu fees which was a new device authorized in the last two to three years by the State Legislature. The possibility that those fees would fall below the level needed to pay debt service was very slight. Mr. Christopher stated that staff anticipated they would only have to use one or possibly two of the assets listed in the report in order to secure the financing. It would definitely be less than those listed in the reporL Council/Agency Member Moore stated if the City was really serious about relocatlng the public works yard they should not cloud the title of that in potential redevelopment. Mr. Adams responded that the documentation before Council/Agency did permit the Ci~, should they decide to utfiize one of the properties for any other purpose, to substitute as long as the property value was at least $3.2 millon. Minutes November 23, 1993 Page 3 Mr. Christopher stated the reason it was included was because it was within a redevelopment project area and they were looking for assets that were within a redevelopmerit project area in which the Redevelopment Agency could act as lessor. Staff did anticipate that sometime in the future they would need to substitute assets quickly for the corporation yard. Council/Agency Member Rindone stated there were other properties in the redevelopment area, the municipal gym, Memorial Bowl, recreation hall, etc. He questioned if the public works corporation yard was deleted from the list if there would be adequate assets to pledge for the asset transfer. Mr. Christopher responded that based on the preliminary information received from the appraiser they felt if Council direction was to remove the corporation yard there would be sufficient assets lef~ to secure the financing. There being no further public testimony, the public hearing was declared closed. Council/Agency Member Moore questioned why the property south of "F" Street in the western portion of the City was not included. Mr. Christopher stated the property was not included because it was in the Bayfront Development Project and would eventually be a park area. They were looking for properties owned by the City in a redevelopment project area so that those assets owned by the City could be sold to the Redevelopment Agency. RESOLUTIONS 1369 and 17312 OFFERED BY COUNCIL/AGENCY MEMBER RINDONE, reading of the text was waived. The corporation yard property is to be deleted from the list of assets. City/Agency Attorney Boogaard questioned whether the assets were listed in the resolutions. Mr. Adams responded that the assets were listed in the Notice of Public Hearing and notice was made in the resolution of the notice. He suggested that staff be directed to remove the corporation yard property from the transaction. Councilmember Fox questioned what the impact would be if Sacramento took away the Motor Vehicle In- Lieu fees from the City. Mr. Adams responded that it was an effort to protect the City's claim to those funds against any effort by the State. Should the State make an effort to do so, it would be pointed out that the City used a legislatively approved financing technique that pledged the monies. It put the City in a much better position to preserve that income stream. City/Agency Attorney Boogaard questioned if there was a Call Option if the Motor Vehicle In-Lieu fees were reduced. Mr. Adams responded no. VOTE ON RESOLIYYIONS: approved 4-0-1 with Nader absent ORAh COMMUNICAT/ONS None. Minutes November 23, 1993 Page 4 ACTION ITEMS 6. AGENCY RESOLLrlION 1361 APPROVING A PROFESSIONAL SERVICES AGRERMENT WITH ROSENOW SPEVACEK GROUP (RSG) IN THE AMOUNT OF $6S,000 FOR A FOCUSED ECONOMIC FEASIBILITY, ZONING, AND LAND USE STIJDY FOR THE MAIN STREET CORRIDOR AND SOUTH THIRD AVENUE AREAS LOCATED PRIMARILY WITHIN THE SO~ REDEVELOPMENT PROJECT AREA--On 6/22/93 the Agency authorized issuance of a Request for Proposals to perform professional planning and development consultant services for a focused economic feasibility, zoning, and land use study. Based upon proposals and subsequent interviews, the consultant team led by RSG was selected to conduct this work. Staff recommends approval of the resolution. (Community Development Director) Agency Member Rindone questioned how much time staff estimated would be necessary to conduct the study. Lyle Haynes, Principal Community Development Specialist, responded it was estimated to be between six to eight months. It would be difficult to estimate the time if staff were to do the study. The primary driving force of the study was an economic feasibility study and they did not have the expertise on staff to do that portion. Chris Salomone, Director of Community Development, stated that staff time to do the study had not been calculated. Director Goss questioned how many hours the consultant needed to perform the study. Frank Spevacek, representing the Rosenow Spevacek Group, responded that they estimated it would take approximately 500 - 550 hours to complete the study. That did not include meeting components or meeting time. Agency Member Rindone questioned what the special talents and abilities were that staff did not have that the consultant would provide. Mr. Salomone responded that it took a financial consulting experience that staff did not have. The study had market analysis and compilation of statistical data which was expertise the City did not recruit for when hiring staff. They had the ability to interpret that data, but they did not have the ability to generate it or the expertise on where to locate that information in the market area. Agency Member Rindone stated when certain projects started to impact a certain department/division there could come a time where the total number of employees within that department needed to be looked at. As that was done, specific expertise could be hired into that department. When looking at the budget in future years, total staffing needs and expertise needed should be looked at. Agency Member Horton questioned what the additional consulting services outside of the defined scope would be. Mr. Haynes responded that staff did not anticipate the need for additional services. Mr. Salomone stated it was standard language within the contract. RESOLUTION 1361 OFFERED BY AGENCY MEMBER MOORE, reading of the text was waived, passed and approved 4-0-1 with Nader absent_ 7. AGENCY RESOLUTION 1370 APPROVING UP TO AN $85,000 PREDEVELOPMENT LOAN TO SOUTH BAY COMMUNITY SERVIfu~_q TO BE USED TO COVER A GOOD FAITH DEPOSIT AND Minutes November 23, 1993 Page 5 PREDEVELOPMENT COSTS ASSOCIATED W~ITH THE ACQUISITION OF THE PALOMAR APARTMENTS; AUTHORIZING CITY ATrORNETS OFFICE TO PREPARE NECESSARY DOCUMENTATION TO IMPLEMENT THE LOAN ON TERMS SET FORTH IN REPORT; AUTHORIZING CHAIRMAN TO EXECUTE ~ ON BEHALF OF THE AGENCY--The 168-unit Palomar Apar~nent complex located at 171 Palomar were built in 1972 under the Federal Government HUD 236 loan program which provided financial incentives to the owner in exchange for maintaining very affordable rents for a period of 20 years. Having reached this time frame, the owner has selected to sell the units on the market rather than accepting additional Federal incentives to keep the rents affordable. South Bay Community Services is proposing to acquire the units and is requesting financial assistance from the Agency. Staff recommends approval of the resolutions. (Community Development Director) Chairman Nader questioned whether the item was time sensitive. Juan Arroyo, Housing Coordinator, stated it was time sensitive. The Housing Advisory Commission met and unanimously voted to suppor~ the recommended resolution. In addition they suggested that the City consider having an appraisal review of the appraisals in order to confirm the value of the properly. If South Bay Community Services bought the project HUD would give Chula Vista approximately 145 Section 8 cerfificates for the aparu-nents. The certificates were estimated to have a value of approximately $43,000/month or $500,O00/year. Agency Member Fox questioned if HUD had already issued the guarantee and if the funds would be disbursed before that was received. Dave Gustarson, Deputy Director of Community Development, stated it would be necessary to disburse the $85,000 ahead of any final commiunent by HUD. The City would issue tax exempt mortgage revenue bonds that were backed by that guarantee by HUD. If the guarantee did not come in the $50,000 of the $85,000 was a good faith deposit into escrow to the seller and would be reimbursable unless South Bay Community Services defaulted in that agreement. If they did, the money would be secured against their other project. The additional $30,000 was predevelopment money for some of the activities required to acquire the property. If the deal was not completed and if South Bay did not default it was not refundable. Councilmember Horton requested a breakdown of the $35,000 that was not refundable. Mr. Arroyo responded that it would be for physical inspection of the properly, title escrow costs, legal fees, financial and development consultant fees, sponsor staff and overhead, and contingencies. Agency Member Hor~on questioned if the City was paying for the pest control which was normally done by the seller. Mr. Gustarson stated all of the costs were stipulated by the HUD regulations involved with the transaction. It was one of the most regulated transactions they had ever encountered. Agency Member Hotton questioned why the City did not purchase the propen-y as they were in the process of developing a Housing Authority. Mr. Gustafson responded that staff looked at that and there were a number of issues, some of them logistical and some philosophical. They tried to analyze the benefit to the Agency if they acquired the property and were unable to identify a strong benefit. The problem was that the project, with the Section 8 subsidy and the federal financing at a favorable rate, was a sound project and could pay the debt service from the tax exempt revenue bonds issued, but ir did not represent an opportunity for the Agency to make excess proceeds to be used for another purpose. It was a highly regulated project and HUD required them to keep it in perpetuity as a low income housing project at restricted rents. They could not set just any rent and take away profit from the rental income as the rental income was regulated by HUD at a level that would service the debt and pay a reasonable cost of overhead. They could not even take an extraordinary administrative or management fee from the project as it was regulated by HUD. The additional concern was that the way the legislation was set up to allow the transactions, the project would be offered in stages and Minutes November 23, 1993 Page 6 the only possible purchasers would be the tenants or a non-profit that was supported by at least 50% of the tenants. The Agency would not even have the option of buying the project until that six months had expired. During the next six months the Agency could make a proposal for the project, but would not have access to the 5% that was not guaranteed by the HUD guarantee. The Agency would then have to put up the entire $485,000. Agency Member Hotton questioned what would happen if the Agency had to put in the 5%. Mr. Gustarson stated he could not say that was not a possibility, but staff hoped there were a number of outside sources that could be tapped first. Staff did feel that if they had to do that to see the project acquired by South Bay it represented a good investment for the Agency. If the Housing Authority was established they would be an eligible buyer during the second six months which started in March. Agency Attorney Boogaard stated he wanted the record to reflect that there was no identified source of funds for the $400,000 and the Agency was not committing, at this stage, that $400,000. Agency Member Hotton questioned what the seepage problem was and if there was a value set for correcting the problem. Mr. Gustafson stated they did not have a value. Staff had been talking to HUD regarding the problem. The purchase price was established by the appraisal process with inspection by HUD inspectors. HUD inspected the project and identified certain rehabilitation costs, but did not identify a seepage problem. Staff learned of the problem after that transaction. HUD had requested that a City inspection crew look at the problem end if the City felt there was a problem, HUD would go back out and look at it again and at that point the purchase price would have to be adjusted down to accommodate the problem. Agency Member Moore stated he would support the resolution as it was something that was in the City Housing Element and would probably be supported if the Housing Authority had been established. RESOLUTION 1370 OFFERED BY MEMBER MOORE, reading of the text was waived, passed and approved unanimously. The Agency recessed at 8:16 p.m. and reconvened at 8:50 p.m. with Chainnan/Mayor Nader absent. ITEMS pLII.I.FT) FROM THE CONSENT CALENDAR Items pulled: none. The minutes will reflect the published agenda order. OTHFA1, BUSIHESS 8. DIRECTOR/CITY MANAGER'S REPORT - None 9. CHAIRMAN/MAYOR'S REPORT - None 10. MEMBERS/COUNCILMEMBERS' COMMENTS A~encv Member Hotton: · Agency Member Hotton questioned when staff would return with the report on the Housing Authority. Minutes November 23, 1993 Page 7 Mr. Salomone responded that staff would return on 12/14 with the By-Laws and appointment of the Council as the Commissioners for the Housing Authority. Agency Member Horton requested something more defined as to what staff anticipated the Housing Commission would be, i.e. scope of what services would be offered and economic aspects regarding the hiring of staff to address the social needs of the City in order to be more proficient. Agency Member Rindone stated the direction given to staff when the Agency authorized the formation of the Housing Commission was that there would be no additional staff hired. Agency Member Horton stated she understood that, but some of the programs available provided funds to pay for employees and that staff should look into that. Agency Member Rindone stated he did not feel that would be a conflict with previous direction to staff. A~encV Member Rindone: · Agency Member Rindone stated the Members had been receiving their packets for the Redevelopment Agency meetings anywhere from Friday to Monday rather than on Thursday. It was creating a situation where Members did not know what they had when attending the meetings. lfstaff was having a problem in meeting the Thursday timeline, which was the direction given by the Agency, if the items were not prepared they should be trailed. As one Member, he felt that was more acceptable than having them drag in over several days. ADJOURNMENT ADJOURNMENT AT 9:18 P.M. to a regular meeting of the Redevelopment Agency on Tuesday, December 7, 1993 at 4:00 p.m., immediately following the City Council meeting, Council Chambers, Public Services Building. Respectfully submitted, BEVERLY A. AUTHELET, CMC, City Clerk '\