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HomeMy WebLinkAbout02/06/85 MINUTES RA MINUTES 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