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BAKERSFIELD REDEVELOPMENT AGENCY
Continued Meeting-February 6, 1985
The Continued Meeting, from the January 30, 1985 Redevelopment
Agency Meeting, was called to order by Chairman Rockoff on Wednesday,
February 6, 1985 at 5:00 p.m. in the City Hall Council Chambers. The
Secretary called the roll as follows:
MEMBERS PRESENT:
James Barton
James Childs
Chris Christensen
Mark Dickerson
Rollie Moore
Art Rockoff
MEMBERS ABSENT:
Donald Ratty
NEW BUSINESS
1. Report and recommendation from staff regarding the design
proposal for the Truxtun Galleria project.
Executive Director Caravalho stated that an alternative proposal
has been submitted by the developer, and in light of his financing
commitments, staff would like to respond as soon as possible. He
explained that an implication of an outright termination of this
project will have an impact on the development community and the
development in general in the Redevelopment Area.
Mr. Cal Hollis, Financial Consultant for the Redevelopment Agency,
stated that on February 2nd, he received the proposal for the solution
to the inavailability of the Hall of Records, and received revised
square footage information this morning. Mr. Hollis discussed the
changes in the parking for the project and the elimination of the need
for the ramp next to California Republic Bank. He stated that his
analysis shows that the change resulted in a substantial cost savings
to the developer. He explained that the site plan, in response to the
Hall of Records not being available, is to leave the Hall of Records
in place, move the 14 story tower to the west and reconfigure the mall
space, eliminate all the structured parking and subterranean parking and
replace that with additional parking on the parking garage. The twenty
story tower will become 14 stories which will connect with the other tower
with retail further to the west. He stated that this proposal has
lessened the impact on the downtown. As a result this project is no
longer oriented to Chester, and the retail space is less desirable
because a substantial amount of it is up against the parking garage
rather than on the street. He stated that in his opinion this is an
entirely different project because it is not as unique in a design
sense, and it is more feasible because many of the risky elements
are absent. He stated that if the developer chose to consider design
changes, it would benefit the public investment and also make a strong
proposal.
Mr. Dave Beatty, Special Counsel for the Redevelopment Agency,
stated that the Agency's offer to the County was reasonable and was
made in good faith. He concurred with Mr. Hollis' statement that this
is an entirely different project. He stated that they are not
consistent with the site nor with the business terms of the present
DDA. Mr. Beatty listed the options available: 1) The Agency has
the option of terminating the DDA because it is impossible to
comply or implement the original terms of the DDA as it is worded;
2) The Agency may amend the DDA to be consistent with the changes
presently proposed by the developer; and 3) The Agency may enter into
negotiations with the developer at the present time keeping the agreement
alive to revise the project, alter the business terms of the agreement
to be consistent with the changes, and amend the development agreement
to be consistent with both site and project changes and with the new
business terms which implement the different project.
Mr. Beatty stated that staff recommends the third alternative. He
stated that the Agency does have the option of terminating the agreement,
but that it could send negative signals to the development community as
being unreasonable, and may have an impact upon the Agency's ability to
attract developers downtown. He stated that alternative two would simply
BAKERSFIELD REDEVELOPMENT AGENCY CONTINUED MEETING, FEBRUARY 6, 1985 - Page 2
make technical amendments to the existing DDA to conform with the proposed
plans which have recently been submitted. He stated that this would be
difficult to implement because it appears as a different project than
what the DDA indicates. He stated that the third option to enter into
negotiations to revise the DDA to match the existing proposal has
a number of advantages. It keeps a viable project alive and assists
the developer in keeping his financing in place, and allows the Agency
to review changes in the project and in the business terms. This would
allow the developer to propose alternatives for the Agency to consider.
This option recognizes that there will be changes in the business terms
and a change in the project as it is presently contemplated. Mr. Beatty
recommended the following motion: Since the Agency cannot acquire
title to the site within the time and in the manner provided by the
Disposition and Development Agreement between the Bakersfield Redevelop-
ment Agency and the Moreland Corporation; it is, therefore, impossible
to complete the project as originally contemplated by that Agreement;
the amended site plans and project presently proposed by the developer
fundamentally alters the business terms of the Agreement, and the size
and location of the project. Therefore, the Agency hereby terminates
the Agreement unless on or before February 21, 1985 pursuant to
Section 511 of that Agreement unless on or before February 20, 1985, the
Agency staff submits for Agency consideration, amendments to the
Agreement, which reduces the cost of the project to the Agency and the
Agency calls a public hearing on such amendments in accord with
Section 33433 of the Health and Safety Code in which case the Agreement
shall terminate at the end of the public hearing without further action
by the Agency unless the Agreement is amended prior to the termination.
Agency Member Moore questioned if staff was in agreement that the
new proposal presented a major change in the original project.
Mr. Beatty responded that this proposal does represent a major
change.
Mr. Hollis stated that it was a significant change,
as it is currently designed, if this would have been the
design, he would not have recommended it.
and further,
original
Mr. Beatty stated that if the DDA is amended to be consistent
with the terms of the revised proposal, that a public hearing and new
documents would be submitted before the Agency because the changes are
substantial.
Agency Member Moore stated that over the past 14 months he has
shared his concerns regarding the project because the Agency would not
be able to financially participate in any other project until 1990;
the project is in the least blighted area in the redevelopment
boundaries; the type of project as an office complex rather than retail
where there is an abundance of vacant office space in the downtown
area; and the need for solicitation of occupancy from other government
entities further questions the demand for private sector office space.
He stated that he conducted a telephone poll in Ward 5 and found nearly
unanimous opposition to the project. After hundreds of calls and
conversations, there were less than a dozen supporters of the project.
He commented that good faith has prevailed, and his votes have con-
sistently reflected the legal and more contractual responsibility he
had inherited.
He stated that at this time the project no longer meets the provi-
sions of the DDA. The contract is clear that should the site assembly
be impossible on the part of the City, the contract cannot proceed.
He stated that in the interest of both parties he felt it would be best
to terminate the DDA and afford the developer the opportunity to
initiate his recommendations and proposal for review and a possible
new contract.
Agency Member Moore made a motion that based on the inability of
the City to assemble the site as outlined in the DDA, that the DDA
be terminated effective this date.
BAKERSFIELD REDEVELOPMENT AGENCY CONTINUED MEETING, FEBRUARY 6, 1985 Page 3
Agency Member Moore made a second motion to afford the developer an
opportunity to initiate his recommendations and proposals within the
next two weeks to provide for a possible new DDA, at the recommendation
of staff. This would afford the developer a two-week period to work
with staff to see if the project is feasible. Staff could then review
it and make a recommendation as whether to establish a new DDA at that
time.
Agency Member Dickerson commented that he understood that the
reasons the County turned down the sale of the Hall of Records was
because the feasibility study on moving the structure, and the type of
security insurance was never delivered. He questioned what liability
could be placed on the Agency because of this circumstance.
Mr. Beatty responded that his understanding was that the sale was
made contingent upon those conditions which were just expressed. He
stated that the County was protected in the agreement, by the terms of
that agreement.
Mr. Kennon explained that the County's staff took part in the
engineering studies and were present during the discussions and inspection
as to the engineering feasibility and the physical feasibility of
moving the building. He stated that staff was assured by experts that
it could be relocated. He stated that the economics were in the process
of being worked out, an agreement had not been reached with the developer.
Agency Member Childs questioned if the motion and recommendation by
staff take into consideration the February 28 financing deadline.
Mr. Beatty stated that his goal was to allow the Agency time to
consider something prior to the end of the month. He stated that
it would be difficult to have the DDA amended and economically analyzed
and then allow fifteen days for review within the financing deadline.
Mr. Hollis stated that the proposal received from the architect to
reduce the second tower and to eliminate the subterranean parking were
substantial enough changes that the one dollar land value for the first
phase may no longer be an appropriate conclusion. If this is correct,
a revision to the DDA would be required, and some timing problem would
exist with the financing. If there is a substantial change, there would
have to be an amendment process of the DDA which requires a notice.
Agency Member Dickerson questioned if the County was carrying
through with its agreement to lease space in the project.
Mr. Caravalho stated that staff was not aware of the status of
that issue.
Agency Member Dickerson questioned how much money has been
expended by the Agency and staff since the previous Wednesday for
this project.
Executive Director Caravalho responded that approximately $3,000
to $4,000 has been expended.
Mr. Ralph Wegis, Attorney for the Moreland Corporation, stated
that they disagree with the conclusion that absolutely nothing can be
done to satisfy the County. He stated that the Board of Supervisors
voted based on the information they had received, and they failed to
receive certain information after numerous requests.
He stated that the County had two reasons for not proceeding with
the sale. He stated that the feasibility study was supposed to be
provided, and a signed contract was to be provided with the restorer,
which had not been accomplished at the time of the meeting. He
urged the Agency to seek some type of resolution of those issues by
negotiations or presentation of the documents and terms which were
complained about. He stated that there has not been a clear showing
that all diligent efforts have been expended to acquire the site
from the County.
He clarified that the County executed a lease for space in the
Galleria building, and the County is obligated to the lease. He stated
that the developer was given the hope that the consultants would be
BAKERSFIELD REDEVELOPMENT AGEN~ CONTINUED MEETING, FEBRUARY 6, 1985 - Page 4
available to meet with them to have some mutuality as to what might
work. He stated that many of the problems could have been resolved, an
they could have presented a number of alternatives that might have
been agreeable by staff with the original agreement. He explained that
if both parties set down together to work within the deadlines, and
notice a Resolution of Necessity in fifteen days, and notice an
amendment to the DDA hearing within 15 days and work within that time,
they can come with a recommendation. If it is approved by the Agency,
then the hearings can be conducted and be accomplished within the
deadline.
Mr. Hollis stated that when he spoke with the architect they had
eliminated six floors in one office building and eliminated sub-
terranean parking, replacing it with structured parking. Because
the project is now located in mid-block, it substantially affects
the project.
Mr. Beatty explained that it makes more sense to revise the project
than to go back to the County, because the project has more potential
of being approved. He explained that the Agency cannot negotiate two
different projects at the same time.
Agency Member Moore questioned what legal protection is involved
if the Agency terminates the DDA and then opens it up for renegotiation
as a new project.
Mr. Beatty concurred that starting a new project is the cleanest
way to approach this, but that keeping the agreement alive is an
accommodation to the developer and would also send a positive signal
to the development community.
Mr. Hollis stated that if the agreement is terminated, it is pos-
sible that the leasing documents could have provisions that should be
terminated.
Executive Director Caravalho stated that this development sets
the tone for how the Agency will conduct its business and its
relations with people in the development community, especially in the
downtown.
Mr. Gordon Gill, of Millard Archuleta, Eddy, Paynter Associates,
architect for the Galleria, stated that they definitely agree with
option number three. He clarified that when Mr. Wegis spoke in regards
to 6,000 leasable square footage in phase one, it was interpreted by
Agency consultants to refer to the total project, which is incorrect.
Ms. Martha Walters, citizen, in reference to Mr. Beatty's state-
ment that terminating the project might be unreasonable to the develop-
ment community, stated that any further consideration of this project
would be unreasonble to the taxpayer community.
Agency Member Barton questioned the time table for the project
if the Agency provides a two week extension.
Mr. Beatty stated that in two weeks if the Agency agreed to set a
public hearing, ti would take a minimum legal time period of an
additional two weeks which would be March 6.
Agency Member Childs stated that he is committed to the redevelop-
ment of downtown and suggested that Mr. Moore amend his motion to include
the third option recommended by staff.
Agency Member Moore responded that the reason for his two motions
is to terminate the current DDA because it would be a monumental task
to modify it, and also to give the developer an opportunity to present
his recommendation and proposals to the City for their review.
Agency Member Childs made a substitute motion to accept option three
as recommended by staff because the other motion would terminate the
financing and the lease agreements.
BAKERSFIELD REDEVELOPMENT AGENCY CONTINUED MEETING, FEBRUARY 6, 1985 - Page 5
Agency Member Moore questioned why option three would be better
than his combined motions.
Mr. Beatty reiterated that option three would have a better chance
of keeping the project alive, but there are risks involved in furthering
the project.
City Attorney Oberholzer concurred with Mr. Beatty's statement.
Mr. Wegis stated that there will be serious jeopardy to the financing
agreement and the lease agreements if the project is killed. He
commented that they agree with option number three in concept. He
stated that the developer will meet every day to negotiate until the
matter is resolved.
Mr. Beatty questioned if Mr. Wegis wants the Agency
option number three rather than spend the next two weeks
with the County.
to pursue
negotiating
Mr. Wegis responded that the DDA provides two options: 1) to
acquire the Hall of Records site; and 2) to consider reasonable alter-
natives to achieve the project's end. He explained that they are not
convinced that the County is unwilling to sell the Hall of Records.
If there were a signed agreement and the documents were available,
they can put this back on the agenda for the Board of Supervisors.
Mr. Beatty reiterated that it would not be possible to pursue two
conflicting courses of action; the developer would have to commit to
only one.
Agency Member Christensen made a motion for a 30-minute recess, which
was defeated.
Agency Member Barton made a motion to recess the Redevelopment
Agency meeting for ten minutes. The motion was unanimously approved.
The Redevelopment Agency meeting was reconvened by Chairman
Rockoff at 7:33 p.m.
Upon request by Agency Member Dickerson, roll call was taken as
follows:
PRESENT: Dickerson, Moore, Rockoff, Barton, Childs, Christensen
ABSENT: Ratty
Agency Member Barton made an amended motion to the substitute
motion that the Agency direct staff to present to the Agency on February 11
a report on the economics, legality, and description of the last
proposed plan, and call a special meeting for that date.
Mr. Hollis commented that staff has been forced into a position to
create their own economic model of the project. He stated that with
other developers, they present income expense assumptions and cost
assumptions on the project, in which the Agency's consultants have
never had in this case. He stated that it would be impossible to
develop a model and have a report on the economics and legality by the
February 11 deadline.
Agency Member Barton withdrew his amended motion.
Executive Director Caravalho expressed concern that some direction
should be given from the developer as to which course he wants the
Agency to take in order to accomplish the project. He clarified that
the Agency will diligently devote all its energies in the direction of
the Hall of Records if that is what the developer requests. If the
developer requests to go the course of a redesign, then all the Agency's
efforts will be devoted in that area.
Mr. Wegis stated th~if staff says they prefer to pursue a certain
option, which in their opinion has the greatest potential for success,
the developer will agree to pursue the option that the staff selects
during this interim period before other negotiations. He explained
that if he knew what was needed to be provided to the consultants, and
have a chance to meet with the consultants and staff, then a lot of
problems can be solved in a few meetings. He stated that he would like
BAKERSFIELD REDEVELOPMENT AGENCY CONTIN[~ED MEETING, FEBRUARY 6, 1985 - Page 6
to work on the course that will have the greatest chance of succeeding.
Agency Member Christensen made a motion to call for the question,
if there were not other comments.
Agency Member Dickerson questioned if the Agency has accomplished
all its efforts with the County legally.
Mr. Beatty responded that the Agency has exercised due diligence
in trying to acquire the Hall of Records, which is the only duty of
the Agency specified in the DDA.
Agency Member Moore made a substitute motion to the substitute
motion that the Agency proceed with the original motion to terminate
the agreement and allow the developer to come back tothe Agency
within two weeks after working with staff and present any proposals.
Agency Member Moore questioned if the Agency made the selection for
the developer, would it put the Agency in a vulnerable position if it
failed.
Mr. Beatty responded that the Agency could accomplish this on the
basis of the best information provided. He stated that the Agency
should not be the only party taking the risks; the developer should
take some risk and clarify which option they want to pursue.
Mr. Childs questioned if there was any way, if the developer
provided the staff with all the necessary documents, that the Agency
could come back with some recommendation by February 11.
Mr. Hollis stated that if they had the pro forma of development
and economic date in hand, then it is conceivable that they can come
back with what their opinion should be on the economic terms and
any revisions on the design. He stated that it is highly unusual that
staff's conclusion would be the developer's conclusion, and they would,
therefore, not have an agreement.
Agency Member Dickerson questioned if it would show due diligence
by the Agency if it went before the Board of Supervisors once again
and, therefore, mitigate their ability to sue the Agency for failure
to perform.
Agency Chairman Rockoff made a motion for a 5-minute recess in
order for the attorneys to confir on the legal posture of the Agency.
In response to Mr. Dickerson's question, Mr. Caravalho stated that
it is important that the Agency know which direction the developer
wants to go. He stated that the Agency has made a diligent effort to
comply in acquiring the Hall of Records, and if the developer wants to
pursue further efforts with the County, then the Agency will do that.
Mr. Hollis explained that one of the difficulties in pursuing two
alternatives at once is if one of the parties prefers one of the
alternatives, it will be difficult to get them to work diligently on
the other alternative.
Chairman Rockoff's motion to recess for five minutes was unanimously
approved at 8:20 p.m.
The Redevelopment Agency Meeting was reconvened at 8:35 p.m. by
Chairman Rockoff.
Mr. Wegis stated that they are agreeable on working on option
three as suggested on only the redesign of the project during the
interim period. He requested that the Agency keep an open mind if
their efforts fail to redesign the project. He stated that if the
County changes its mind, and the Agency could not be satisfied that
the project is acceptable as redesigned, that the Agency have an open
mind because the developer sees this as a potential.
BAKERSFIELD REDEVELOPMENT AGENCY CONTINUED MEETING, FEBRUARY 6, 1985 Page 7
Mr. Beatty stated that given the circumstances this would be
acceptable.
Agency Member Dickerson questioned if the Moreland Corporation had
any concerns about the motion.
Mr. Wegis reiterated that they concur with option three during this
interim period. They also agreed, during this time, not to criticize
the Agency in any litigation for not pursuing the Hall of Records issue.
He understood that if, after unsuccessful negotiations on the redesign,
the County decides to change their mind, that the Agency and developer
will still be able to utilize the County's sale of the Hall of Records
as a solution to going forward with the project.
Mr. Beatty concurred that he understood their discussion to mean
that the Agency will keep an open mind if the Agency is not able to
resolve the differences to the project, and if the County wanted to sell
the property, the Agency would keep an open mind.
After further discussions, Agency Member Childs' substitute motion,
that the Agency cannot acquire title to the site within the time and
in the manner provided by the Disposition and Development Agreement
between the Bakersfield Redevelopment Agency and the Moreland Corporation;
it is, therefore, impossible to complete the project as originally con-
templated by that Agreement; the amended site plans and project
presently proposed by the developer fundamentally alters the business
terms of the Agreement, and the size and location of the project.
Therefore, the Agency hereby terminates the Agreement effective
February 21, 1985, pursuant to Section 511 of that Agreement unless on
or before February 20, 1985, the Agency staff submits for Agency con-
sideration, amendments to the Agreement, which substantially revise the
business terms and the design of the project to the Agency, and the
Agency calls a public hearing on such amendments in accord with
Section 33433 of the Health and Safety Code in which case the Agreement
shall terminate at the end of the public hearing without further action
by the Agency unless the Agreement is amended, was approved by the
following roll call vote:
AYES: Dickerson, Rockoff, Barton, Childs
NOES: Moore, Christensen
ABSENT: Ratty
ADJOURNMENT
There being no further business to come before the Redevelopment
Agency, Agency Member Childs made a motion to adjourn the meeting at
8:59 p.m.
/ 6~re~K~ko, Secretary
Ba~ef~fiaqd Redevelopment Agency
Bakersfield ReSevel e , Agency