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HomeMy WebLinkAbout04/24/85 MINUTES RA M I N l~ T E S BAKERSFIELD REDEVELOPMENT AGENCY Regular Meeting--April 24, 1985 The Regular Meeting of the Bakersfield Redevelopment Agency was called to order by Chairman Rockoff on Wednesday, April 24, 1985, at 5:09 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 MINI~TES Upon a motion by Agency Mel~ber ~oore, Regular Meetings of March 13 and April 10, presented. the Minutes of the 1985 were approved as REPORTS Report from staff regarding the proposed Downtown Shopping Center. Executive Director Caravalno gave a status report on the efforts toward the Regional Shopping Center for the downtown. In late February, material and planning ~nformation regarding the City of Bakersfield was distributed to twelve major retail companies throughout the [,nited States. 7~equests for Qualifications were sub- mitted to developers in March. These developers are presently being contacted by staff. He stated that staff is at a point where they will be evaluating some interested developers which may involve some expense to the Agency in terms of background references and travel to meet with them and visit some of ~heir projects. It is hoped that within the next 30 days staff can come forward with a developer and have a better sense of what kind of project will be proposed. 2 o Report from the hotel developer regarding the status of the financing commitment for the proposed Convention Center Hotel. Mr. Gordon Bell, representative of AI[~COA, gave a brief review of his last discussions with the Agency. He stated that they received a letter of commitment from Bank of America for $14 million which required an additional credit enhancement of $4 million. Essentially an $18 million hotel becomes a $22 m~llion hotel, and the parties which are negotiating with the developer to provide the additional credit are looking for a return on taking that risk. He stated that they are dealing with four entities, and the two that seem to be the most promising will be meetJng with the developer late this week and Monday of next week. ~{e stated that they are approaching the deadline for the Bank of America letter of credit commitment. He stated that the bank has agreed, based on the strength of the credit enhancement negotiations, to extend the deadline, but it will cost money to do that. The developer will make that decision on April 29th or 30th. Mr. Bell explained that two of the parties that they are negotiating with are proposing to syndicate a second partnership which would invest $4 million in cash in limited partnership shares. That cash would buy investment paper that would be used as collateral with Bank of America, and that paper would have a return on it to those investors. They, additionally, would receive returns from the hotel both in the form of tax shelter and cash on cash return. The partnership would have two sources of income and would be coterminous in its existence with the length of the Bank of America letter of credit. BAKERSFIELD REDEVELOPMENT AGENCY, April 24, 1985 Page 2 Agency Member Childs questioned the additional expense for the extension. Mr. Bell stated that the developer had to pay for the commit- ment letter which is a 60-day commitment. In order for the bank to extend the letter, they will charge an additional fee on a per- centage basis. Agency Member Childs questioned if there is a penalty or default phase in effect. Mr. Kennon explained that the project is in a technical default, but the developer is still working with the financing which was to have been completed late in 1984. Executive Director Caravalho stated that the issue at hand is; does the Agency feel that the developer is making progress toward the completion of the project. If so, they can proceed. If the Agency feels they are not making progress as to what is indicated in the DDA, the Agency would give him notice that he will be placed in default and proceed with terminating the DDA. He indicated that staff feels that the developer is making progress towards the financing. Mr. Bell stated that he will notify the Agency at its May 22 meeting of the decision by the developer as to whether they will extend with Bank of America. Agency Member Christensen read the following letter from John A. Smith, General Contractor: April 22, 1985 Councilman Chris Christensen City of Bakersfield 1501 Truxtun Avenue Bakersfield, CA 93301 Dear Councilman Christensen: It is apparent that a renewed interest is taking place regarding the redevelopment of the East Bakersfield business area. This is a subject of great interest to me since I am the owner of a large commercial building locatec[ at 312 Kentucky Street. I purchased this building in November of 1983 with the belief that the cities commitment to re¢~evelopment would assist me with my plans to remodel the building. Following many months of frust- ration, it became apparent that my time could better be spent on other things. I have to date spent approximately $60,000 on repairs and cosmetic improvements. The funds that remain will not allow me to make the kind of improvements that will attract the quality tenants that would be desirable. I believe that this property is ideal for the cities rehabili- tation project. It is difficult for me to understand why I have been unable to find a fo!-mula for mutual benefit. It is for this reason that I write you today. Is it possible that with your involvement a way could be found. Best regards, John A. Smith BAKERSFIELD REDEVELOPMENT AGENCY, April 24, 1985 Page 3 Mr. Kennon stated that Mr. Smith had applied for a Commercial Rehabilitation Loan and it was supported by staff, but the bank may have turned down the loan. Mr. Kennon indicated that he will follow- up with a response to the correspondence. Agency Chairman Rockoff explained that this issue should be brought before the Council because it is not a part of the Redevelopment Agency. In answer to Agency Member Christensen's question, City Attorney Oberholzer stated that in order for the Baker Street area to be considered as a Redevelopment Project Area, the Agency would have to adopt a Redevelopment Plan that would include that area, and it would have to be approved by the Council. City Attorney Oberholzer stated that there can be another Redevelopment Project Area within the City. Deputy City Manager Strenn stated that the issue of Baker Street becoming a Redevelopment Project Area is being studied as part of the planning in the Baker Street area. She stated that this effort would depend on the type of development which takes place, since that is what causes tax increments to occur. Agency Member Dickerson questioned if the Lakeview area was being considered as a redevelopment area. Mr. Kennon responded that the Council, three years ago, conducted a study of Census Tract 22 relative to making it a Rede- velopment Project, and that analysis at that time indicated that the economics did not make redevelopment feasible. The recommendation was to consider expanding the area being considered. A large base is needed in order to make redevelopment economically feasible in those areas. He stated that this will be re-addressed because of the changes that have occurred. [,nder existing economic conditions, it would take five years to have tax increments that are large enough to pay for its administration. CONSENT CALENDAR (a) Approval of Vouchers No. 233 through 249 totaling $20,358.80. [,pon a motion by Agency MeIaber Barton, item (a) of the Consent Calendar was approved by the following roll call vote: AYES: Christensen, Dickerson, ~4oore, Rockoff, Barton, Childs NOES: None ABSENT: Ratty ADJOt~RNMENT There being no further business to come before the Redevelopment Agency, Agency Member Christensen made a.motion to adjourn the meeting at 5:35 p.m. Bakersfield Redeve ~-'Agency