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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