HomeMy WebLinkAbout12/12/84 MINUTES RA MINUTES
BAKERSFIELD REDEVELOPMENT AGENCY
Regular Meeting-December 12, 1984
The Regular Meeting of the Redevelopment Agency was called to order
by Chairman Rockoff on Wednesday, December 12, 1984 at 5:00 p.m. in
the City Hall Council Chambers. The Secretary called the roll as
follows:
MEMBERS PRESENT:
James Barton
James Childs
Mark Dickerson
Rollie Moore
Arthur Rockoff
MEMBERS ABSENT:
Chris Christensen
Donald Ratty
CORRESPONDENCE
Communication received from Nathan Krevitz, dated November 8,
1984, regarding the Truxtun Galleria project.
Upon a motion by Agency Member Barton, the communication received
frora Nathan Krevitz was received and placed on file.
REPORTS
Oral report from hotel developer regarding financing for
the Convention Center Hotel.
Mr. Gordon Bell, representative of AIRCOA, stated that the financing
structure was anticipated to close November 14 until legal problems
occurred. The project was predicated on a condominimizing of the
project wherein two partnerships each own fifty percent of the hotel.
The purpose was to allow a project to be financed unrestricted by the
normal $10 million limitation imposed by the use of Industrial
Revenue Bonds by the IRS. The problem occurred when the financing
institution that was providing the guarantee on both of the partnerships
required cross default guarantees from the two ownership entities.
This has the result of destroying the separateness of the ownerships
and you then exceed the $10 million limitation. We determined at
that time that particular format could not go forward. He stated
that they are trying to achieve a substitute source of financing that
would be equivalen~ in rate terms or as closely equivalent to the bonds
as possible. He further stated that they are optimistic about the
project at this point. Security Pacific who wrote the letter of credit
on the project has agreed to stay in the project. He stated that within
the next ten days a decision would be made on the lender's part, and if it
goes forward, the project should be funded before the end of the
first quarter of 1985. The underwriting done by Security Pacific is
stil in place, and AIRCOA is pursuing a new form of financing to
replace the bonds that were used.
Agency Member Childs questioned the effect of this information
upon the DDA with the change of financing.
Mr. Kennon
with the Fourth
on November 14,
stated that the DDA has been recently restructured
Implementation Agreement that brought the financing due
1984.
Executive Director Caravalho stated that in recent weeks staff
has been informed that the developer is working on a new financing
package and until that is determined, the Agency is in a holding pattern.
Mr. Bell stated that they recognize that they are in default of
the DDA, but are pursuing the project. Mr. Bell stated that at the next
meeting he will make a presentation as to whether the project is going
forward.
Agency Chairman Rockoff requested that Mr. Bell be in attendance
at the next meeting, and Agency Member Childs requested that a written
report be available from staff.
BAKERSFIELD REDEVELOPMENT AGENCY MEETING, DECEMBER 12, 1984 - Page 2
CONSENT CALENDAR
(a) Approval of Vouchers No. 113 thru 129 totaling $27,094.39.
(b) Approval of Design Review Board recommendations:
1. Signage for Kern Federal Credit 5~nion, 1717 Truxtun Avenue
Design Review Board recommends approval.
Storefront renovation for Red Wing Shoes, American Cancer
Society Thrift Store and Tae Kwon Do, 21st and Chester,
Design Review Board recommends approval.
o
Storefront renovation for Country Classic Giftshop,
2015 Chester Avenue, Design Review Board recommends
approval.
4. Storefront renovation for American Legion, 2020 "H" Street,
Design Review Board recommends approval.
(c) Notice of Completion and Acceptance of Work for the following:
19th Street Parking Lot between "L" Street and "M"
Street, Contract No· RA10-84, was completed on
November 26, 1984. All work was completed within the
time allowed by the contract.
After discussion, Agency Member Childs made a motion to adopt
items (a), (b) and (c) of the Consent Calendar. The motion was
approved by the following roll call vote:
AYES: Barton, Childs, Dickerson, Moore, Rockoff
NOES: None
ABSENT: Christensen, Ratty
NEW BUSINESS
(a) Final appraisal letter from Bank of America on Truxtun
Galleria project.
Agency Member Dickerson questioned if there is a performance bond
on this project, and the potential liability to the City if the project
is half constructed.
Mr. Kennon stated that if the developer failed to complete the
project after construction begins, his performance bond and those of
any subcontractors would guarantee completion of the project, however,
the lender would be ultimately responsible, and they would complete
the construction.
Mr. Tom De Natale, Attorney for the Moreland Corporation, stated
that the performance is governed by the DDA and Bank of America, and
any requirements that are established will be met by the Moreland
Corporation.
City Attorney Oberholzer stated that there is no performance bond
between the City and the developer. He explained that the Agency's
security is the DDA. If there is a default on the agreement, then
there is a lien on the property and the improvements made on it.
Agency Member Dickerson expressed concern that the money is being
protected.
Agency Member Dickerson made a motion directing staff to investi-
gate the performance bond issue as an alternative in protection to
the Agency and City. The motion was unanimously approved.
Dr. Anthony Falle~ti, owner of the property located at 1621 - 19th
questioned if Mr. Moreland has provided $200,000 to the Agency and
$2,000,00 for a parking structure.
St. ~
BAKERSFIELD REDEVELOPMENT AGENCY MEETING, DECEMBER 12, 1984 - Page 3
Mr.Kennon stated that the good faith deposit is in place ($200,000),
and the $2,000,000 is not the amount for the developer to provide.
He explained that originally a bond issue was going to be sold by
the developer, and the Agency was going to be responsible for $2.5 million
of that bond issue. That would be used for site acquisition. Since
the developer is using conventional financing, the bond will not be
sold, and the issue now is to determine some other mechanism for providing
the $2.5 million.
Dr. Falletti questioned the Right of First Refusal of development
in the area.
City Attorney Oberholzer stated that the California Redevelopment
Law requires that the Agency adopt an ownership participation plan,
which was initially adopted in 1972. The plan provides that an
owner may participate in substantially the same location by retaining
all or portions of his property or by retaining all or portions of his
property and purchasing adjacent property from the Agency. He stated
that the procedure for becoming an owner participant states that every
person interested in becoming a participant as a business owner or
tenant or residential owner must submit to the Agency a statement
indicating such interest. Mr. Oberholzer indicated that this is public
information and the documents are available.
Dr. Falletti questioned who would be making money from this
project.
Agency Member Moore stated that all participants involved would
stand to make money, but to provide a list could only be accomplished
by the developer.
Agency Member Dickerson stated that his concern was the impacts
of this project, the liability to the City, and funds involved.
Dr. Falletti stated that the Moreland Corporation and the City of
Bakersfield, the Bank of America, and the downtown businessmen will
probably make money. He questioned if the project could be accomplished
without taking a "financial bath."
Dr. Falletti explained that he has had discussions with six people
in California that have suffered through this and they all lost
financially on the deal. He stated that he feels that the Agency will
force him to go out into the private sector and borrow money at today's
interest rates to go back into business. He asked that when the Agency
considers the fair market value that has been determined, that the Agency
look and consider it closely. He stated that when Mr. Beaudoin
appraised the property, he did not take into account the location.
Agency Member Barton stated that he hoped that it could never be
said that the Agency "took your shirt." He stated that the purchase
offers will be presented to the Agency Members later in the meeting.
Agency Member Childs quesioned Dr. Falletti if he has seen the
Offers to Purchase and if he anticipated having to rebuild or rent.
Dr. Falletti responded that he has some idea of the offers, but has
not seen them, and that he would have to rebuild because there is
nothing available to rent.
Agency Member Barton questioned if information was available to
the public about the Redevelopment Law and its process.
Mr. Kennon stated that the information is available and is provided
to many on a routine basis. He stated that a package of information
on relocation will go with the offers to the property owners and
relocation consultants will help them interpret it and counsel them on
relocation benefits.
City Attorney Oberholzer stated that in giving out this information,
this may be an invalid procedure and requested that anyone who wants
this information come to the Economic Development/Redevelopment Office
to obtain a copy.
BAKERSFIELD REDEVELOPMENT AGENCY MEETING, DECEMBER 12, 1984 - Page 4
Agency Member Dickerson expressed concern that this will be a
sensitive area. He stated that if anyone has a concern that proper
protocol or sensitivity is not being performed, that it be brought
to his attention.
City Attorney Oberholzer stated that the negotiations on property
are not public negotiations and are not carried out on the Agency
floor. The negotiations are based upon statutory requirements that
local agencies are faced with and those are that the property owner get
fair value for his property. The government is not allowed to short
change the property owner. In addition to the property value,
he is also entitled to special relocation benefits which he would not
ordinarily get if he sold his property on the open market. The final
determination when agreement cannot be reached as to what the fair market
value is will be made by the Court in a judicial proceeding.
Ms. Martha Walters, citizen, stated that she understood that the
Redevelopment Law required that there be a committee formed to study the
impact of a proposed project area; not the beneficial aspect of it to
the community, but the detrimental aspect to the community.
Mr. Kennon stated that this committee is in reference to the
establishment of new project areas or expanded areas. This is not the
case with this development. In reference to other questions, Mr. Kennon
explained that when the Redevelopment Law refers to the "Project", it
is the Redevelopment Project Area. When referring to a certain con-
struction project, it is referenced as a "development."
Ms. Walters had further questions and comments as to the liability
to the City with regard to the millions of dollars for these projects.
Mr. Kennon stated that the Agency is participating in the project in
the hope that it has a growth-inducing impact to the downtown. It is an
investment. He stated that there are risks involved, but that the
greatest risk is to the developer. He stated that the $5.5 million
investment will hopefully be returned with the growth and revenue
generated by the project in the long term.
Agency Member Moore questioned the effect of this action in regards
to the action taken by the Agency on November 7, 1984 which approved
the Bank of America letter of financing stipulating four conditions.
Mr. Kennon explained that the changes to the DDA will still occur,
however, the requirement for an appraisal represents a condition that
was contained within the committment letter from the lender, and this
letter indicating acceptance of the lender of the project value can be
accepted in terms of clearing that condition.
City Attorney Oberholzer stated that the conditions remain the
same. Each condition will have to be approved as they are met.
Agency Member Barton's motion to accept the letter from Bank of
America and authorize staff to proceed with site acquisition and
development of the project was approved by the following roll call vote:
AYES: Barton, Childs, Dickerson, Moore, Rockoff
NOES: None
ABSENT: Christensen, Ratty
(b) Plans and specifications for 1325 19th Street.
Upon a motion by Agency Member Dickerson, New Business item (d)
regarding agreement with Gannon Enterprises for the Hall of Records
relocation was moved forward to be heard at this time.
(d) Agreement with Gannon Enterprises, Inc., for the relocation
and restoration of the Hall of Records.
Agency Member Dickerson questioned why the parties to the agreement
could terminate the agreement within 30 days written notice.
BAKERSFIELD REDEVELOPMENT AGENCY MEETING, DECEMBER 12, 1984 - Page 5
City Attorney Oberholzer stated that a final agreement will be
entered into which would not have this provision for termination.
Agency Member Barton made a motion to refer this item to the
Development Committee for review and recommendation.
Agency Member Childs questioned why this issue was not being
referred to the Personnel and Relocation Committee.
City Attorney Oberholzer explained that relocation,
State law means the discussion of relocation benefits of
properties are being acquired for a development.
pursuant to
persons whose
Agency Member Dickerson requested that staff provide a structural
diagram of the Agency, the personnel associated with the
Agency, the committees, and the personnel on the committees.
Agency Member Barton's motion, to refer the Agreement to the
Development Committee for review and recommendation, was approved.
(b) Plans and specifications for 1325 - 19th Street.
Agency Member Moore made a motion to approve the plans and
specifications and direct staff to solicit bids for this work. The
motion was approved by the following roll call vote:
AYES: Barton, Childs, Dickerson, Moore, Rockoff
NOES: None
ABSENT: Christensen, Ratty
(c) Request for Proposals for moving County Recorder's function
to 1325 - 19th Street.
Agency Member Childs made a motion to approve the issuance of
Request for Proposals for moving the County Recorder to 1325 19th
Street.
AYES: Barton, Childs, Dickerson, Moore, Rockoff
NOES: None
ABSENT: Christensen, Ratty
(e) Purchase Offers to Property Owners of the Truxtun Galleria
site.
Agency Member Moore made a motion to recess into Closed Session
at 6:30 p.m.
Agency Chairman Rockoff reconvened the meeting at 7:00 p.m.
Agency Chairman Rockoff recessed the meeting in order to allow
the City Council to meet at 7:00 p.m.
Agency Chairman Rockoff called the Agency meeting to order and
convened the meeting into Closed Sessions at 10:12 p.m.
After discussions in Closed Sessions, the meeting was reconvend
at 10:41 p.m.
Agency Member Moore made a motion finding that Offers to Purchase
are based upon examination of fair market value of the subject
properties, and direct staff to initiate conditional offers for the
purchase of said properties; to forward Offers to Purchase Hall of
Records to County Board of Supervisors and to notice a public hearing
for the meeting following acceptance of the offer for the Hall of
Records; and to consider any required Resolutions of Necessity to acquire
properties on the proposed Truxtun Galleria site. The motion was
approved by the following roll call vote:
AYES: Barton, Childs, Dickerson, Moore, Rockoff
NOES: Christensen
ABSENT: Ratty
Agency Member Barton made a motion that Agency Member Dickerson
fill the position on the Personnel and Relocation Committee.
Agency Member Dickerson declined the nomination at this time.
BAKERSFIELD REDEVELOPMENT AGENCY MEETING, DECEMBER 12, 1984 - Page 6
(f) Redevelopment Agency Program/Performance Budget for 1984-85.
Upon a motion by Agency Member Moore, the Redevelopment Agency
Program Performance Budget for 1984-85 was approved by the following
roll call vote:
AYES: Barton, Childs, Christensen, Dickerson, Moore, Rockoff
NOES: None
ABSENT: Ratty
ADJOURNMENT
There being no further business
Agency, Agency Member Childs
at 10:47 p.m.
to come before the Redevelopment
made a motion to adjourn the meeting
Bakersfield Redev~~gency