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HomeMy WebLinkAboutrda min 1995/02/14 MINUTES OF A SPECIAL MEETING OF THE REDEVELOPMENT AGENCY OF THE CITY OF CHULA VISTA Tuesday, February 14, 1995 Council Chainbern 7:58 p.m. Public Services Building CALL TO ORDER 1. ROLL CALL; PRESENT: Members Fox, Moot, Padilia, Rindone, end Chair Herton (arrived at 8:02 p.m.) ALSO PRESENT: John D. Goss, Director; Bruce M. Boogaard, Agency Attorney; end Beverly A. Authelet, City Clerk 2. APPROVAL OF MINUTES: February 7, 1995 MSC (Fox/Rindone) to approve the minutes of February 7, 1995 as presented. Approved 4-0-1 with Hertan absent. BUSINESS 3. REPORT FISCAL YEAR 1994/95 MID-YEAR AGENCY BUDGET REVIEW - At the time the Agency approved the FY 1994/95 budget, Members requested a mid-year report be compiled for Agency review end discussion. Staff recommends the Agency accept the report. Continued from the meeting of February 7, 1995. (Community Development Director) Mr. Goss stated that during the process of looking at the RDA budget for FY 1994/95 a number of negative impnets on the RDA had been identified. Meny of those impacts were due to actions by the State, the reassessment of Rohr's proparty several years ago, end the down turn of the economy. Because of the aggressive nature of the RDA's activities in the pest there was currently a situation where there was a need to transform assets of the Agency into liquid assets in order to maintain its ability to pay for its operations as well as debt service end other obligations. At that time staff outlined a number of areas end activities the Agency was focusing on end staff made a commitment at that time that it was a number one priority. Staff was prepared to answer eny questions. Member Fox stated former Councilmember Moore was consistent in reminding everyone that the RDA was unique end not run like eny other agency/business end that much of the revenue were not retained by the Agency, but went to the general fund. He~referred to page 3-8, Broadway Plaza, end questioned if the net annual sales tax revenues were for the remainder FY 1995/96 or for a full fiscal year. Lyle Haynes, Principal Community Development Specialist, replied that the figure was at year three at a stabilized revenue after the full build-out of the center. Member Fox questioned if staff was able to estimate annual sales tax revenue for FY 1995196. Mr. Haynes responded that he was uncertain as to when the City would receive revenues from FY 1995196. Member Fox stated the Agency had to take risks at times end one of the biggest risks taken was the commitment to build a project on the Mid-Bayfront. That development had not occurred and he questioned if the project did not materialize in the next 10-15 years what impact it would have on the Agency. If the Agency end general fund would be in serious jeopardy. Mr. Salemone replied that decisions were made in the late 70's to support the project. Staff felt there were very positive things currently going on in the State end with the new owner of the Bayfront. 5taft was currently watching the budget end reporting back to Council. Absent its development the affect would be very negative. ~4inutes February 14, 1995 Page 2 Mr. Goss replied that he was not sure that it would put the general fund in jeopardy because it was a larger fund and there was more discretion there. There would be an oppoB"unity to modify operating expense if the RDA funds and genend fund were interlinked financially. Clearly, it would have a major down side for the Agency. Member Fox stated that was one of his greatest fears, i.e. too much reliance had been placed on the Mid-Bayfront project. He did not want the City to have its back against the wall and have to accept any project for the Bayfront. He questioned what else could be done to mitigal~ those concerns and spread that reliance around to other projects. Mr. Salomone felt the things happening in the other project areas were very positive, He then reviewed projects within those areas. The Bayfront was important, but it was not the whole solution. Member Fox stated he wanted to see the Agency aggressively pursue those other projects. Member Rindone stated he did not feel if the Mid-Bayfront was not developed it would cause insolvency of the general fund, but it would severely impact and negatively cuffall the services provided by the City through the general fund. Under Item 3, page 3-2, tax allocation refunding bonds and savings, it did not point out the increase in debt service from the year 2011-2024. He felt that should be included in future reports. He questioned what the other proposals were for Southbay Chevrolet. Mr. Salomone replied that the Agency had received an unsolicited proposal that staff felt was very attractive. The result of the RFP would be before the Agency at their next meeting. He felt the RFP should be dealt with prior to discussing other options. Member Rindone requested that the information be made available to the Members. The option listed to the RFP for the El Dorado building was raising rents sod assessments to the tensots and the tenants were the City end Southbay Community Services. Southbay Community Services provided services to the City and he was uncertain whether they ceuld pay the higher rates. Mr. Goss stated it had been clearly identified during the process, and the El Dorado building was an example, that the Agency had belpe~l subsidize some of the City's general operations by buying the building and providing expansion space for the Civic Center and for City functions. One question that could be raised was whether or not the City was paying the fair amount for that occupancy. In reviewing the balance betwean the general fund and the Agency that probably needed to be addressed. The City helped subsidize Southbay Community Services rent even before they were in the El Dorado building. There was an argument that other community agencies did not have their rent subsidized sod that Southbay Community Services had grown sod was more successful in obtaining grants and other support. Msoy of the grants had administrative funds that could be used for rent, utility services, etc. Perhaps that should be revisited as an issue. Cireumatances for Southbay Community Services and the City had changed. Chair Horton questioned if it was staffs opinion that the best thing to do was to go out with an RFP to sell the El dorado building or keep it long term and lease it for future financial benefits. Mr. Goss replied that earlier in the year he would have recommended selling the building because of the prospects of getting enough cash for the current fiscal year. There were currently three properties that looked promising, i.e. Southbay Chevrolet end the Mid-Bayfront properties being sold to the Port. Therefore, he would be more inclined to rent the building and review it again In conjunction with the FY 1995/96 budget. He recommended moving forward with the RFP process. Member Rindone stated the report :nude some assumptions but there was no solid short term plan presented. Of the four items presented in the Proposed Financial Plso Recommendations the only one that had been completed was the mid-year progress report. There was a serious financial problem and it was evident that there had been a lack of progress toward developing a solution, especially a long term solution. He questioned if the assumptions in Table A and Table B were completed, what potential shortfall the Agency would be lunkdng at in FY 1995/96. Mr. Goss replied that there could be a similar shortfall sod that was why the mid-year review had been established. ~lt was not only going to be the Agency, but other funds within the City that would have to be examined. The action Minutes February 14, 1995 Page 3 plan addressed in the report was for the Current fiscal year and they would have to address the issue next year also. He did not feel the State would be taking any more money away from the Agency, but they would also not be giving back any of the money they had taken away in the past. Staff was moving forward regarding the sale of the Fuller Ford site and had completed the RFP process for the Chevrolet site, and would be coming back with a recommendation that the RFP process be terminated. Staff felt there was a good proposal outside of that process to be considered. He had met with the past Port Commissioner, current Port Commissioner, and Acting Port Director regarding the sale of two properflee to the Port and felt confident that it could be accomplished during the current fiscal year. Member Rindone stated it was encouraging that incremental steps had been made hut none of the sales had been consummated and the Pd:P had not been issued for the El Dorlsdo building. The question that had to be asked, if Table B was completed, would there still be a significant funding shortfall in FY 1995/96. Mr. Goss felt the Agency would probably have to face that issue, but he was not prepared to address it as it would be part of the overall review of City and Agency finances during the budget process. Member Rindone staled the Agency could not continue solllng off assets in order to make up the budget shortfall because they would run out of assets. It was not the solution, the solution was Item 7, page 3-5, Development Projects. The Agency needed to push those four projects heavily because the problem would not be solved by selling off assets but by generating revenue. He requested support by Agency Members to push for one or more of the projects to be completed within two years or less. He questioned whether the Agency needed to look at staffing in order to get the projects going. Mr. Goss stated there was a need to try to develop and improve the revenue stream within the Agency over the next several years. Staffing would be looked at in terms of the 1995/96 budget process. Staff was working very hard but he was not sure that he had observed where staffing had slowed down any projects. Delays had been outside the ability of the City, staff, or Agency. Member Moot stated Town Centre I and II appeared to be the biggest drain on the budget and questioned if that was something that would turn around at a certain point and become a positive. Mr. Salomone replied that Town Centre II included Chula Vista Center; and bonds had been issued to do the first expansion. Again, bonds were issued to do the expansion and add Mervyns so there was bonded indebtedness. Ultimately, they did come into the black over a period of years, but because of the bonded indebtedness it imperil that area in particular. Staff would be presenting the Agency with tables regarding that issue during the budget process. Mr. Haynes state~l there were three certificates of participation issued for Town Center II. One would fall out FY 1997/98, $150,000 - $2D0,000. The other two went on for a significant period of time afinr that. Chair Horton questioned what sales lax revenues would be received by the general fund from the project area. Mr. Salomene stated staff would have to report back to the Agency with those figures. Member Moot questioned what the relationship was between the sales lax revenues of completed projects versus the Redevelopment Agency's net shortfall. It did not appear that there was a one to one relationship. Mr. Salomone stated the Agency was dependent upon property tax alone, but the task the Agency was chargad with by the State was to do a whole lot of things including generate revenue for the general fund that took care of a lot of blighting influences, police protection, parks, etc. It was not a one to one relationship. All agencies in the State were in debt and had to be to justify getting the increased property tax when they adopted the Agency. Member Moot asked if there was some level of debt that was normal or expected. Mr. Salomone replied that there was not, it was up to the individual Boards. i~iinu'tes February 14, 1995 Page 4 Member Moot questioned how the completed projects reduced the Agency's debt. Mr. Salomone responded that completed projects generated tremendous amounts of property taxes. Once completed the prope~y value would be reassess~d and the increment above the property tax from when it was adopted would go to the Agency. Member Rindone stated the costs end expenses of the Agency helped to bear the expenses of City staff that would normally be charged to the general fund. It was correct that the Agency had to be in debt to operate but not to the point where it would cause an insolvency or a tremendous impact on the general fund. Member Moot felt the City bene~ted more from the projects than the Redevelopmerit Agency. He questioned if that was the reason some cities lent money from their general funds to their agencies. Mr. Goss informed Members that the Agency owed the City of Chula Vista money that had not been paid back. That was very typical also and had happened in all the project areas. It was seed money with the hopes that there would be a pay back. Member Padilia referred to the Sale of Agency Assets and the contamination issues on the Capos property. He questioned who would be bearing the cost of clean-up. Mr. Salomone replied that all the analysis on the Capos property had been done by the Port District. Staff expected to propose to the Port if they were going to purchase the properly that they deal with the mitigation as pafi of their CIP. The Agency would go after the actual contaminators and their insurance companies. Staff had had success in doing that on a number of contaminated sites. Member Padilia questioned if staff for the budget process of 1995/96 would have specific ideas for increasing the general fund percentage share of funding community development and deferring low yield capital improvements. Mr. Goss stated staff would examine that in light of the clarification of State law as to what would be appropriate and how much of the economic development activity could be funded by the Redevelopmerit Agency and how much by the general fund. If it appeared to be appropriate, staff would provide a modification in the formula. Member Padilia felt that would be the case as they neared the end of the fiscal year and felt the Agency may want to look at those areas outside of the asset sales. He agreed with Member Rindone regarding the need for long term completions to generate revenues. Member Fox stated the real problems were with the projects that were not happening. The work plan listed four projects but staff had verbally referred to several other projects that had not been listed. Mr. Salomone responded that the report h~d emphasized the biggest projects with the greatest return. Staff was actively staffing the Southwest Project Ares and working with those projects concurrently with other projects. Staff did not know exactly what would happen there but felt the potential was there. Mr. Goss stated there were projects staff were working on, i.e. expansion of the auto park and Mid-Bayfront, that were almost givens and had to be listed as high priority projects. The Southwest Project Area was 1,100 acres and given the way the t~x increment worked, even without any spoci~c projects, any project would help the increment. MS (Fox/Padilla) to approve the report and the proposed work plan for January through July 1995 us described in Section B, and inform the City's Port represenlafive of the Agencfs desire to move the sale of the Bayfront properties to the FY 1994/95 Port CIP from the FY 1998/99 Port CIP. Member Rindone questioned how many of the items in the work plan, excluding Item 7 could be completed by tha end of FY 1994/95. Mr. Salomone replied: 1) the RFP for the El Dorado building could be completed; 2) an agreement had been reached with the Port District and he felt it could be completed; 3) Lower Sweetwater Valley was not figured into the Table, but staff felt it could be completed by the end of the fiscal year or shortly thereafter; 4) there was a Minutes February 14, 1995 Page 5 proposal on Southbay Chevrolet that the Agency would feel asc~ptable and would be done shortly; 5) staff was in the process of evaluating the feasibility of funding economic development with more participation by the general fund and, therefore, could no give any indication on it at the present time; and, 6) staff had been directed to evaluate the feasibility of eliminating or deferring all or some of the Agency CIP as a high priority and he felt they would be returning with a one year CIP. He felt five of the six could produce results by the end of the fiscal year. VOTE ON MOTION: approved unanimously. 4. REPORT REQUEST FROM AUTO PARK DEALERS FOR ADDITIONAL FINANCIAL ASSISTANCE - On 1117/95, Council apprnvad a conditional payout of $1.3 million to the Auto Park developers for construction of[public streets within the Auto Park under Asseasment Distfict92-2. On l119/95, staff met with the Auto Park developers and their attorney to discuss financial problems associated with a lower Assessment District payout than anticipated. Staff recommends this item be continued to the meetin~ of 2/28/95. (Community Development Director) MSUC (Fox/Horton) to continue to the report to the regular meeting of the RDA on Februar~ 28, 1995. ORAL COMMUNICATIONS None OTHER BUSINESS 4. DIRECTOR'S REPORT(S) - None 5. CHAIR REPORT(SI - None 6. MEMBER COMMENTS Member Rindone · Member Rindone questioned when ground breaking would begin at Third and ~J" Street and what would go into the old Lucky Market. He requested a written update. ADJOURNMENT AT 9:19 P.M. to the Regular Redevelopment Agency Meeting on February 21, 1995 at 6:00 p.m., immediately following the City Council meeting, in the City Council Chambers. Respectfully submittad, BEVERLY A. AUTHELET, CMC, City Clerk by: . ~'AtA:,~ Vicki C. Soderquist, Depu~ity Clerk