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HomeMy WebLinkAbout04/01/91 MINUTES RA179 Bakersfield, California, April 1, 1991 Minutes of the Regular Meeting of the Central District Development Agency of the City of Bakersfield, California, held in the Council Chambers of City Hall, 1501 Truxtun Avenue, at 3:00 p.m., April 1, 1991. The meeting was called to order by Vice-Chairperson Ruddell. City Clerk Williams called the roll as follows: Present: Agency Members Ruddell, Araujo, Paynter, Sceales Absent: Agency Members Rubin, Dunn, Gaskill CONSENT CALENDAR The following items were listed on the Consent Calendar: a. Approval of Warrant Nos. 237 to 264, inclusive, in the amount of $14,531.62. b. Minutes of the Regular Meeting of March 4, 1991, for approval Upon a motion by Agency Member Paynter, Items a and b of the Consent Calendar were adopted by the following roll call vote: Ayes: Agency Members Ruddell, Araujo, Paynter, Noes: None Abstain: None Absent: Agency Members Rubin, Dunn, Gaskill Sceales REPORTS Economic Development Director Wager gave a summary of the Tegeler Hotel Agreement and made a brief presentation regarding the following Report. Development Committee Report No. 91-3 regarding investors acquisition assistance as part of the rehabilitation of the Tegeler Hotel, as follows: On March 28, 1991, the Development Committee met to review the owner participation agreement with the Tegeler Hotel Investors. In its current form, the agreement calls for the delivery of $90,000 in assistance to be paid to the developer upon issuance of a certificate of occupancy by the City of Bakersfield. Based on the schedule of performance, this would occur in the early summer of 1992. It is critical to note that the funds will only be committed upon completion of the project. The assistance granted would be in the form of a loan to the Developer requiring repayment. Agency participation in this project is in the form of the conveyance to the Developer of the project's tax increment. The Developer Bakersfield, California, April 1, 1991 - Page 2 will then be obligated to pay this same amount to the City of Bakersfield in order to retire the $90,000 debt. Staff is estimating the generation of approximately $9,000 to $13,000 a year in tax increment from this project. The promissory note would allow the City and Agency to pursue the personal assets of the Developer in the event of a default. In regards to the occurrence of a default, it is not limited solely to requiring provisions of low and moderate income housing. There are two other significant default provisions. The first relates to a Housing Management and Operations (H.M.O.) Agreement. In considering the potential impact of this project on its immediate surroundings, two interrelated issues stand out: maintenance and management. The H.M.O. Agreement treats both issues. In regards to maintenance, the Developer must correct any deficiency management. The H.M.O. Agreement treats both issues. In regards to maintenance, the Developer must correct any deficiency brought to his attention, by the CDDA, within thirty days. Should the Developer fail to correct such substandard conditions, it would result in the Agency being authorized to correct the matter and place a lien against the property in an amount equal to the cost to correct (plus an administrative cost equal to an additional fifty percent). On the second matter of importance addressed by the H.M.O. Agreement, the Developer must submit an acceptable management plan prior to disbursement of Agency funds. The management plan will address the Agency's concern that the project have an on-site residential manager as well as other matters that may be of concern to adjacent property owners. The last significant issue is one that relates to tax credits. The Developer has stated that he does not intend to avail himself of any federal tax credits for which this project may be eligible. This is significant since a financial analysis conducted by Keyser Martson indicates that without tax credits over $1.2 million in assistance is warranted. However, if the Developer were to receive federal tax credits, the warranted assistance drops to approximately $225,000. On the basis of the representation by the Developer that he does not intend to make use of the tax credits, a clause has been inserted that if the tax credits are utilized, all assistance granted by the CDDA must then be refunded. Bakersfield, California, April 1, 1991 Page 3 The O.P.A. also addresses two other issues of some importance. The first issue requires Agency approval of any transfer of ownership for a period of ten years. This will allow the Agency to review the qualifications of any purchaser who would assume the obligations entered into by the Tegeler Hotel Investors. Lastly, a provision has been incorporated into the O.P.A. that the Developer will be held in default if property taxes are not kept current. Through this agreement, the CDDA achieves a number of long-standing goals and continues to implement the Redevelopment Plan. Among the goals achieved are: 1. Elimination of blight. 2 o An increased supply of low and moderate income housing. Provision of assistance which will result in the rehabilitation of an unreinforced masonry building. 4 o Satisfaction of the annual requirement that the Agency has made an equivalent effort to encourage the provision of low and moderate income. The Development Committee reco~nends that the CDDA approve the O.P.A. with Tegeler Hotel Investors and authorize execution by the Executive Director. At the request of Agency Member Paynter, Mr. Bruce Keith, Architect for the Tegeler Hotel, was recognized and discussed some of the changes that are going to be made to the building. He advised that the objective is to recreate some of the historical character of the building which was lost with the renovation that occurred after the 1952 earthquake, and he also responded to questions from several of the Agency Members. Upon a motion by Agency Member Paynter, Development Committee Report No. 91-3 was accepted. Approval of Agreement No. RA91-5, Owner Participation Agreement (O.P.A.) with Tegeler Hotel Investors. Upon a motion by Agency Member Araujo, the recommendations of Development Committee Report No. 91-3 were implemented, Agreement No. RA91-5 was approved and the Executive Director authorized to execute the Agreement. Bakersfield, California, April 1, 1991 - Page 4 AGENCY STATEMENTS Agency Member Araujo stated that, as the CDDA Member in charge of public relations, she wished to point out that in order to keep the public adequately informed about the current status of the Convention Center Hotel, Agency Members need to have a report from staff. She requested that she would like the report to specifically address any questions of the feasibility of funding the completion of the Hotel, and would like to have a complete public report at the next Agency meeting. City Manager Hawley advised that he just received an update from Economic Development Director Wager that he would be sending out to the Councilmembers and the Agency Members on Tuesday, April 2, 1991. He further advised that the next deadline is around May 3rd, and there may not be significant information to share until that date. Agency Member Araujo complimented staff with regard to the progress on the Tegeler Hotel and handed the City Clerk the following prepared statement: I'm very pleased to note the progress of the Te~eler project because this is truly a downtown project right in the area where redevelopment is really needed .... the central district retail core area. Furthermore, this will be a positive step in the direction of rehabilitating_~a building which has been, for such a ~on~ time, a detriment to the downtown area. Agency Member Araujo expressed her concern that the public is notified whenever Agency meetings are canceled. City Clerk Williams responded that the City Clerk's Office sends out a Notice of Cancellation that goes to the newspaper, to everyone on the mailing list who receives the Agenda, to all the City departments, and a copy is posted on the Agenda bulletin board. ADJOURNMENT There being no further business to come before the Agency, Vice-Chairperson Ruddell adjourned the meeting at 3:30 p.m. C~AIRPERSON of t~e--C~n%~al District Development Agency of the City of Bakersfield ATTEST: SECRETARY O[ ~he ~entr-al Di~tr-ict Development Agency of the City of Bakersfield ndw