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HomeMy WebLinkAboutrda min 1993/12/28 CC Minutes of a Special Joint Meeting of the Redevelopment Agency/City Council of the City of Chula Vista Tuesday, December 28, 1993 Council Conference Room 5:00 p.m. City Hall Building CALL TO ORDER I. ROLL CALL: PRESENT: Members/Council Members Horton (arrived at 5:07 p.m.), Fox, Moore, Rindonc, and Chairman/Mayor Nader ALSO PRESENT: Sid Morris, Assistant City Manager; Glen Googins, Deputy City Attorney; Lyman Christopher, Finance Director; Fred Kassman, Redevelopment Coordinator; William Gnstafson, Transit Coordinator; and Alicia Gonzalez, Acting Recording Secretary 2. APPROVAL OF MINUTES: None Submitted. CONSENT CALENDAR 3. WRITTEN COMMIJNICATIONS: None Submitted. * * END OF CONSENT CALENDAR * * PUBLIC HEARINGS None Submitted. ORAL COMMUNICATIONS ACTION ITEMS 4.A COUNCIL-ORDINANCE 2585 AMENDING ORDINANCE 2146 WITH RESPECT TO LIMITATIONS ON THE AMOUNT OF TAX INCREMENT REVENUES FROM THE BAYFRONT/TOWN CENTRE REDEVELOPMENT PROJECT AREAS, AND AUTHORIZING INSTITUTION OF JUDICIAL PROCEEDINGS TO DETERMINE THE VAL1DITY HEREOF fUrgencv] -- The Agency issued $7 million in Tax Allocation Bonds for the combined Bayfront/Town Centre Redevelopment Project Areas in 1979. These bonds were refinanced in 1984 and again in 1986 decreasing the total principal amount and annual debt service. Subsequent to that action, however, tax revenues accruing from the Bayfront Project Area have been reduced due to the Unitary Tax, transfer of major equipment by Rohr, Inc., and reduction in State subventions. In addition, the delay in the development of the Midbayfront has not provided additional anticipated revenues to date. Aunual debt service on the bonds exceeds revenues accruing from the Bayfront Project Area. The proposed refimding of the tax increment bonds, taking advantage of currently low interest rates, should reduce annual debt service and, consequently, reduce the Agency's annual operating deficit for the Bayfront Redevelopment Project Area. Staff recommends Council adopt the urgency ordinance and the Agency approve the resolution. [~ B. AGENCY-RESOLUTION 1383 AUTHORIZING THE ISSUANCE AND SALE OF TAX ALLOCATION BONDS 1N THE AGGREGATE PRINCIPAL AMOUNT OF NOT TO EXCEED $37,500,000 RELATING TO THE BAYFRONT/TOWN CENTRE REDEVELOPMENT PROJECT AREAS, AUTHORIZING AND DIRECTING EXECUTION OF RELATED INDENTURE OF TRUST, AND AUTHORIZING INSTITUTION OF JUDICIAL VALIDATION PROCEEDINGS Dece~ber~, Page 2 Redevelopment Coordinator Kassman presented a brief staff report. The Ordinance would keep options open to the Agency. It would not obligate the Agency to any further action. The Agency would not be issuing bonds by taking action. The Agency was keeping the option to issue bonds. The ordinance corrected an error which occurred about one and one-half year's ago. (Said error was clarified in the written staff report.) Chairman/Mayor Nader said it was his understanding the resolution authorized issuance of bonds. Was stair saying the Agency/Council, if the resolution passed, could hold the issuance of bonds in abeyance until some circumstance occurs, or in the Agency's/Council's judgment it would be desirable to issue bonds. Member/Couneil Member Rindone said he desired to also pursue the Chairman's/Mayor's point. He asked if what was in front of the Agency/Council was different than what had been sent to them prior. Finance Director Christopher said not to his knowledge. There had been no change. Member/Council Member Rindone noted on page 2 of the December 23, 1993 memorandum (printed on lavender paper), the last paragraph, first sentence stated "The action which the Agency will take will not obligate the issuance of bonds...." Staffjust stated the Agency/Council was keeping the option open. Compare that to the statement in the Staff Report, page 44, paragraph just prior to the Fiscal Impact, which stated ~Approval of the resolution authorizing the sale of the bonds and revision of the Ordinance does not obligate the Agency to any further actions to issue bonds." Was he correct in understanding the Agency/Council was authorizing the sale of the bonds but may not issue the bonds. Mr. Christopher replied it was the other way round. Staff was trying to get the authorization to issue the bonds. The reason staff needed to do so was to take a proactive step prior to the end of the calendar year in order to preclude the effect of AB 1290 on the Redevelopment Agency. Staff was asking the Agency/Council to authorize the issuance of bonds so it could be shown the Agency/Council took some action prior to the end of the calendar year. Also, that would be the basis for doing a validation action. The Agency's legal counsel, Jones, Hall, Hill and White, would then use the approval of the resolution to issue bonds. Member/Council Member Rindone said that answered his question and provided the clarity he was seeking. The Agency/Council would be authorizing the issuance of the bonds, but not the sale. Member/Council Member Rindone then pointed out on page 4-2 of the staff report, under Discussion, it was indicated that "debt service...currently exceeded income from the Bayfront Project Area creating a yearly deficit." Would staff know what that deficit figure was. Mr. Christopher responded the deficit was about $100,000. The debt service on the Tax Allocation Bonds was approximately $3.1 million a year. The amount of money received from Property Tax Increment and the Supplemental Subvention from the State was approximately $3.0 million per year. Member/Council Member Rindone, referencing the same paragraph, ,... may be feasible and may reduce annual debt service." "May" was a maybe word, not a for sure word. Mr. Christopher said staff used the word "may~ because the 1986 Tax Allocation Bonds were looked at several times in the past two years, due to the revenue shortfall, to ascertain if the bonds could be refunded. It was a tough Issue to refund as it had several strnctuml liabilities. Staff had come up with feasible ways of refunding Tax Allocation Bonds in the past and by taking another look at this Issue, and being allowed to extend the term of the bonds, it could result in a structure whereby it would be economically feasible to refund. A problem with the Bayfront Project Area included the two major property tax owners--Rohr, Inc. and San Diego Gas & Electric. Rohr, Inc. has had problems and has made major cut backs in the past several years which made it more difficult to issue bonds in that Project Area. Another problem was the fact the Supplemental Subvention the City received from the State had dropped from $1.2 million/year down to about $620,000/year. The latter figure, at best; was tenuous as the State had talked about totally eliminating the Supplemental Subvention. That reduction was a real problem. A third problem was the Bayfront Project Area had not developed as anticipated when the Bonds were issued in 1986. Those were the structural weaknesses to that Bond Issue. Staff was looking at various ways to Minutes December 28, 1993 Page 3 structure a refunding which would result in less annual debt service. Staff used the word "may" because staff had looked at refimding in the past but had not been able to come up with a way to do the refunding. Staff was not sure it could do a refunding but wanted to look at it. Member/Council Member Rindone said the clarity was certainly appreciated. By taking action, the Agency/Council was putting in a reservation by issuing the bonds; but, because either the rate was not low enou~'or the other three problems enumerated by Mr. Christopher come into play, then the Agency/Council may never decide to sell the Issue. Agency/Council could take--and if staffdid not agree he asked to be corrected--this action, but some people might make an allegation the Agency/Council was trying to subvert the intent of AB 1290. But the fact of the matter was these projects were authorized, with the full anticipation of moving for, yard under the roles in effect prior to January 1, 1994. The fact staff was asking the Agency/Council tonight to reserve the option, since this Council and previous Councils had made certain long-term commitments which would be impossible to honor by changing the roles with new legislation, was a rational basis for the Agency/Council to act. That was the critical point. The law was changing and would impact projects that had been committed, authorized, developed, foreseen, and planned. If the State changed it rales, then the Agency/Council had to have the opportunity to allow staff to be resourceful in meeting that challenge to protect the intent of this and previous Councils who had taken actions based on the existing roles. Member/Council Member Rindone referenced staff report page 4-3, last paragraph '... the sum of $50 million for the Bayfront Project Area and the $20 million for the Town Centre 1 Project Area were erroneously listed as the aggregate amount of tax revenues which couM be received by the Agency. ~ and asked why staff just discovered that. Mr. Christopher replied staffdiscovered that fact several years prior and had been waiting for the right time to come back to Agency/Council to set the correct limit. With the advent of AB1290, which set time limits on a Project Ama's expiration, staff was better able to calculate the amount needed to be received from Property Tax Increment in order to pay off any debt that could feasibly be issued in a Project Area. Staff may have been able to come to the Agency/Council earlier, but Bond Counsel had been straggling with that issue for about one year. Member/Council Member Rindone suggested sl~ould something like this be discovered in the future, then at the least a "heads up alert" should be given to Agency/Council. Member/Council Member Moore asked if it was $50 million for the Bayfront and $20 million for Town Centre. Mr. Christopher replied those figures were in the original resolution. Member/Council Member Moore asked if the City got the fnll $50 million and $20 million. Mr. Christopher said the $50 million figure had probably not been reached. In terms of the amount received in the past, plus the amount that might be needed to pay off the existing or any future debt, would far exceed the $50 million or the $20 million. Member/Council Member Moore recalled the Bond Issue for the Bayfront was $30 million and the interest was more than the debt payment. Mr. Christopher said yes. When the 1986 Bonds were issued, the Project Area's total debt service over the term of the bonds was around $100 million. A limit of $70 million had been set. There was a imscommunieation in terms of what was trying to be done. Member/Council Member Moore, referring to staff report Ordinance, page 4-6, asked if the $50 million over the 30 year period resulted in a total of $210 million and the $20 million, over a 30 year period, amounted to $84 million. Mr. Christopher said that was tree. Member/Council Member asked if Agency/Council knew what it owed as of today. Was it anywhere near those Minutes December 28, 1993 Page 4 figures. Mr. Christopher said far less than those figures. An amount was set which would not be exceeded. Member/Council Member Moore asked what cash was in the bank drawing interest and what was the interest being earned. Mr. Christopher said the City had, which included all Agency funds, between $80 and $85 million drawing interest of 3% to4%. Member/Council Member Moore requested an update be brought back to the Agency. Member/Council Member Moore asked if the Rohr, Inc. and San Diego Gas & Electric property tax was divided between the Elementary School District, Sweetwater School District, Southwestern College, and the County. Mr. Christopher said each Redevelopment Project Area had a base year for property tax assessment. The amount of property tax collected up to the base year amount was what was distributed to all the taxing agencies. Member/Council Member Moore asked if the Bayfront Project Area was still under the old rules. Mr. Christopher said over the past several years the Legislature had mandated some Agency funds be sbh'toa to the Education Augmentation Fund. The Southwest Project Area was the only Project Area sharing property taxes under tile new rules as those rules were in existence when the Project Area was formed; the Bayfront Project Area was exempt as it was formed under the previous tax sharing formula. Member/Council Member Moore asked if the Bayfront Project Area would be exempt with the new bonds. Mr. Christopher said that would have to be negotiated, but he was not sure. Member/Council Member Moore said he believed the new tax sharing rule applied only when a new Project Area was established after the tax sharing rules changed. The Agency should receive a memorandum from staff which showed the base fee, annual debt service, and profit margin each year, if any. Redevelopment is a "push'--with redevelopment enlmncing major areas of the City, but as far as actual income--when that income was split between all the tax sharing agencies, then it was a "push~. Member/Council Member Fox asked if the instrument used to authorize the sale of bonds was an Offic'ml Statement and was that the document Agency/Council would review prior to authorizing the sell. Mr. Christopher replied the Agency/Council was reserving the option. In 1994 staff and Bond Counsel would evaluate the feasibility of issuing and selling bonds. Should staff structure a refunding that would be marketable then staff would prepare all legal documents and those would come before the Agency/Council prior to the issuance and selling of bonds. One of those legal documents would be the Official Statement. Member/Council Member Moore asked if staff saw the bond market changing in the next 90 to 120 days. Mr. Christopher said the literature he had been reading indicated the bond market would hold for about another six months. The tax exempt market had been somewhat stable for some time. Member/Council Member Rindone pointed out, on a six month anticipation forecast, that was as stable as could be anticipated. Member/Council Member Fox asked if a positive action was taken, would that result in no fiscal impact. Mr. Christopher said yes. Minutes December 28, 1993 Page 5 Chairman/Mayor Nader said his understanding was there would be a potential benefit to the City of $1.5 million which the City would lose if it waited past December 31, 1993. Mr. Christopher said what was acted upon tonight would not cause an outlay of funds. Anything that staff would recommend that would have a fiscal impact was going to occur in 1994. There would be the potential benefit to the City of about $1.5 million. MOTION TO ADOPT ORDINANCE 2585 AS AN URGENCY and OICFER RESOLUTION 1383 MEMBEPdCOUNCIL MEMBER MOORE, reading of the text was waived, passed and approved unanimously. ITEMS PULLED FROM THE CONSENT CALENDAR None. OTHER BUSINESS 5. DIRECTOR/CITY MANAGER'S REPORT [al Schedule of Meetings. [bi Bus Advertising -- Request for Proposals Transit Coordinator Gustafson gave a brief staff report. One shortcoming of the RFP program was a reliance on a change in State law which would permit the use of bus revenues for youth transit funding. Staff has been working on an alternative bus advertisement program and RFP to address the problem. The City Attorney's Office and staff conceived of a bus advertisemem alternative which could achieve the desired objective of enabling the City to use bus revenues for youth transit purposes without the need for a Legislative change. A Policy Paper had been prepared which provided a brief outline of the proposed alternative program. Member/Council Member Rindone asked what grounds staff would use to recommend political advertisements since that was not the direction of Council. Chairman/Mayor Nader stated staff should retain the essential features of the RFP proposal previously approved by Council but with modifications the City Attorney believed would enable the City to use the funds for the purpose Council intended. Member/Council Member Rindone had reservations about permitting political advertisements without payment in advance. Member/Council Member Fox said he would object to English only advertisements. Chairma~dMayor Nader said that was not iu the original proposal brought to Council. Member/Council Member Horton said advertisements printed in Spanish or whatever other language, could be required to be printed in English as well, as the majority of the people speak English. Chairman/Mayor Nader said he agreed with Member/Council Member Horton if it was a government advertisement; otherwise, the advertiser should choose the language he desired to use for the advertisement. Minutes Decexnber 28, 1993 Page 6 MOTION [Nader/Fox] direct staff to make only that modification suggested by the City Attorney which was contained on page 1 of the report which would facilitate implementation of Council's purpose to support certain youth and community activities and suspend formal issuance of the RFP only as long as it was necessary to effect the change and would leave, in place, the conditions previously approved by Council. Member/Council Member Fox asked if staff intended to return to Council with the revised RFP. Deputy City Attorney Googins said staff would. Member/Council Member Rindone pointed out tile memorandum before Council was marked confidential. He wanted to know if public action was taken, would that not then make the memorandum a public memorandum. Deputy City Attorney Googins distributed an outline of the existing program and the proposed alternatives ("handout") which was not marked confidential and requested Council take action only on the "lmndout". Member/Council Member Rindone had previously voted in opposition to the bus advertising issue. He would support the suspension of the formal RFP. He was concerned about the nonpayment of advertisement as it seemed the only penalty for those that did not pay would not be allowed to advertise again. He could not support a policy tbat would not ctmrge anybody to advertise with the hope tbe advertiser would pay the appropriate fee. Should the desire be to do bus advertising, then the City should seek redress through appropriate legislation. Newspapers do not run advertisements and then ask for payment, they get payment up-front. Member/Council Member Horton concurred with Member/Council Member Rindone as there could be abuse. How would the City know it was getting fair value for the advertisement. ChairmarffMayor Nader did not see the motion on the floor doing that. The motion essentially authorized advertisements in exchange for contributions. It would not leave the determination of how much the contribution was to the advertiser. Member/Council Member Horton said the word "donation" implied that. Chairman/Mayor Nader clarified his interpretation of the word "donation". It would not be left to the advertiser to determine how much the donation would be. Deputy City Attorney Googins stated staff was in the process of working out the practical considerations: · how the City supported that policy, "how to attribute value to a particular advertisement, · how to ensure donations were being given, , and how to monitor compliance to ensure the monies were being used for the appropriate purposes. Member/Council Member Horton expressed concern about the legal aspects of using the word "donation". Chairman/Mayor Nader replied that was a different set of laws as it dealt with gambling. Deputy City Attorney Googins said it was an area of law staff needed to analyze to ensure the City was not merely circumventing the existing TDA guidelines and regulatiotzs, but was in full compliance with existing laws. Member/Council Member Rindone pointed out should file City state what a required donation was to be, it would no longer be a donation and would be in direct conflict of the TDA current guidelines. He asked staff if they were comfortable in recommending a policy of required donations that was in conflict with TDA. Deputy City Attorney Googins replied staff was not rex:ommending that particular policy. That was another important issue staff would need to evaluate further. Staff did not believe the proposed alternative structure had yet been pronounced on by MTDB. Minutes December 28, 1993 Page 7 Member/Council Rindonc asked would staff come back within several weeks with a report after the issues had been researched. Deputy City Attorney Googins stated staff's recommendation was to have Council authorize the City Attorney and staff, should the proposed alternative bus advertising program be attractive, to suspend issuance of the approved RFP to ailow analysis of the legal and practical issues of concerns raised. Staff was recommending the recommendation ms it appeared on page 2 of the ~handout". Member/Council Member Moore asked staff to also analyze the implication to a business between paying for bus advertising as an expense, and the making a donation. The write-off for a business expense was 100 percent; but what was the write-off for a donation. Mayor/Chairman Neder said file intent of his motion was to authorize staff to suspend issuance of the RFP to give staff time to research tuffy that issue which had been identified by the City Attorney, to wit, potential exchange of donations to specified organizations in exchange for advertising for the purpose of enhancing the City's ability to use advertising space to promote purposes identified by the City Council to youth serving transit and bring back any revised RFP as soon as practical. Member/Council Member Fox asked what was meant by specified organizations. Mayor/Chairman Nader said staff would look at the issue in terms of how the organizations would be specified; whether it be done in advance by Council, by staff, or according to certain criteria. Vote on Motion: Passed 5-0. Member/Council Member Rindone expressed concern all members of Council had not been polled about the special meeting. He met with Community Development Director Salomonc on the Wednesday prior to Christmas and Mr. Salomona indicated staff was going to poll the Council to find an appropriate date and time for the special meeting as Tuesday, December 28, at 5:00 p.m. was not a desirable time and he had suggested several alternatives. He received no call, either at home or file office. Friday morning, prior to Christmas, he met with the Mayor who informed him of the date and time for the special meeting. There needed to be better communication between staff and all Council Members. No menther should ever be excluded from being polled regarding a potential meeting. After reviewing the Agenda, he changed plans as the Agenda clearly stated four members were necessary for a vote to pass. Staff added items to the Agenda, i.e., the bus advertising item, without prior permission of the Chair/ Mayor. Chairman/Mayor Nader said staff in the Conununity Development Department needed to be reminded special meetings are tuffy called by the Chair or Mayor, as the case may be, and not by staff. Items could not to be added to an Agenda after the fact, without prior approval of the Chair or Mayor. Member/Council Member Horton stated she was informed Member/Council Member Riodone was uuable to make the meeting. As four votes were needed, she cancelled plans to be in town in order to attend the meeting to ensure four members were present. Member/Council Member Rindone said staff was not following through. It was not a problem in the Mayor's Office. As elected officials, when an Agenda stated four votes was required, they could not leave the City in a lurch. He, too, cancelled vacation plans to attend the meeting. All Council Members did no~ have tile same courtesy of being polled and informed and it should not be repeated again. Chairman/Mayor Nader said when four votes was needed, it would be helpful if he were informed at the time he gave directions to staff to poll the Council. Member/Council Member Moore said the Agency worked differently than Council. There was a difference between how the Cotrunuulty Development Deparm~ent works versus the Mayor and Council Office. When therc was a meeting it should be coordinated by the Mayor and Council Office, not a department within the City. Minutes December 28, 1993 Page 8 Member/Council Member Rindone said a time should be sought when all Members would be able to be present. Not seek the mlnlmllm number. 6. CHAIRMAN/MAYOR'S REPORT None. 7. MEMBERS/COUNCIL MEMBERS' COMMENTS None. ADJOURNMENT ADJOURNMENT AT 5:05 P.M. to the Regular Redevelopment Agency Meeting on January 4, 1994 at 4:00 p.m., immediately following the City Council meeting, Council Chambers, Public Services Building. Respectfully submitted, Berlin D. Bosworth Secretary to the Redevelopment Agency