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HomeMy WebLinkAbout11/07/84 MINUTES RA MINUTES BAKERSFIELD REDEVELOPMENT AGENCY Continued Meeting - November 7, 1984 The Continued Meeting, from the October 17, 1984 Redevelopment Agency Meeting, was called to order by Chairman Rockoff on Wednesday, November 7, 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 Chris Christensen Rollie Moore Art Rockoff MEMBERS ABSENT: Donald Ratty Thomas Payne REPORTS 1. Oral report from hotel developer regarding hotel project. Mr. Kennon stated that this item was placed on the agenda at the request of the developer, who was not able to attend the meeting. He explained that the Agency will be advised of any information as soon as it is received. 2. Continuation of written and oral report to the Agency regarding the Truxtun Galleria financing. Mr. Dave Beatty, Special Counsel to the Redevelopment Agency, stated that staff received correspondence from the developer at 4:40 p.m. today. He indicated that the conditions that were requested at the last meeting have been complied with in the letter received today from the Bank of America. He therefore requested that the Agency defer this issue for one week in order that staff can come back with a specific recommendation not only on the letter, but on other steps that might be necessary if this letter complies. He stated that one option before the Agency would be to accept the letter, but this would obligate the Agency to start acquiring the property. Mr. Beatty explained that time was needed to discuss the specific amendments or steps to the Disposition and Development Agreement before the Agency's acquisition of the property. Agency Member Moore requested that a five minute recess be granted in order for the consultant to confer with staff at 5:12 p.m. Agency Chairman Rockoff reconvened the Redevelopment Agency meeting at 5:23 p.m. Mr. Beatty stated that this letter and the proposed design changes by the developer will require certain changes to the DDA. He recommended that the Agency continue this matter until the November 14 meeting for a report and recommendation from the staff on this letter only, focusing on its acceptability and also recommending changes in the DDA; but no further negotiations on the financing. Agency Member Childs stated that he was prepared today to go ahead with the project if the conditions were met, or go against the project if the conditions were not met. He suggested that the material be reviewed and a recommendation be submitted in 24 hours. Mr. Beatty explained that not only would the letter need to be reviewed, but an analysis of the steps in the DDA have to be implemented. Agency Member Christensen questioned if the Agency could be held liable if they denied additional information at the next meeting. Mr. Beatty stated that if the Agency directed staff to not consider future recommendations on the letter, the Agency would not be liable. Agency Member Barton questioned if staff really needed seven days to go over the five conditions of the letter. He suggested that this effort be accomplished in 48 hours. BAKERSFIELD REDEVELOPMENT AGENCY MEETING, ~vember 7, 1984 - Page 2 Mr. Beatty responded that he would do whatever is requested by the Agency, but expressed the importance of the document to the Agency. He explained that the importance was not so much the letter for approval, but the amendments to the DDA which must be pursued. Chairman Rockoff stated that this issue is becoming emotional, but that the Agency and the developer are required to adhere to agreements and will make their judgments based upon facts, figures and agreements. Agency Member Childs stated that he is at the end of his ability to negotiate and could not wait an additional seven days. Ms. Elizabeth Van Alstein, citizen, stated that she is an upset taxpayer. She asked several questions of the Agency and staff about the deadline and commented that the Agency has betrayed the people. Mrs. Martha Walters, citizen, commented on the deadlines established for this letter of credit. She explained that it was restated that the developer was still in default and there would not be opportunity for new things to be brought in, but only to discuss the five points and to have a thorough understanding of them as to whether they could be resolved. Executive Director Caravalho reiterated that the Agency has a contractual agreement with the developer, and the contract provides that the Agency would perform specific activities given successful performance on the part of the developer. He stated that the Agency is required to respond according to the law. Mr. Caravalho suggested three alternatives: 1) not to accept the letter and terminate the agreement; 2) conditionally approve the letter of financing conditioned upon acceptable amendments to the DDA that would be presented at the next meeting. These amendments would include changes to the scheduling to delay eminent domain in accordance with the letter that was submitted, resolve the issue of dealing with $2.5 million for acquisition of property for parking, and make changes as it relates to the design of the structure. The third suggestion would be to allow staff to have a week to review the material presented and come back to the Agency with a recommendation at the next meeting with suggested amendments to the DDA. Mr. Ralph Wegis, Counsel for the Moreland Corporation, stated that a recommendation was made on October 29 that five changes be made in the letter, and it was recommended that the developer have 90 days to accomplish those changes. On November 3, staff recommended that the five changes be forthcoming by November 7. He stated that on Tuesday, he contacted Mr. Beatty and took some notes as to the acceptability and clarity of the understanding regarding the five issues and how to resolve them to satisfy the Agency and present the Bank of America commitment as'exhibit one. Mr. Beatty recommended option number two. Mr. Wegis requested time to confer with the developer and the bank. Agency Chairman Rockoff called for a recess of the Agency at 6:11 p.m. The Redevelopment Agency meeting was reconvened at 6:16 p.m. by Chairman Rockoff. Agency Member Moore questioned if staff was sure that all the con- ditions were met in the correspondence, and that the Agency should not entertain any new information subsequent to this correspondence. Mr. Beatty recommended that the Agency conditionally approve the letter of financing. He stated that the five basic concerns have been resolved, therefore, the Agency would not need to consider any additional changes to that letter of financing or other letters of financing. This action would go beyond the specific concern of the Agency when it wrote the letter of default regarding the lack of financing. He stated that there are three outstanding issues with regard to the DDA: 1) delay Agency acquisition of the property until the bank has made a final BAKERSFIELD REDEVELOPMENT AGENCY MEETING, November 7, 1984 Page 3 appraisal; 2) address funding for the parking and acquisition of land for the parking by the Agency and changes to the DDA; and 3) changes in the Schedule of Performance. He stated that no matter what the Agency's action is with the letter of financing, the DDA will have to be amended because there are other issues that are not posed in the letter of financing that need to be resolved in the DDA. He stated that the DDA contemplates lease revenue bonds to fund that parking and that is no longer being discussed, therefore, the Agency needs money to acquire that. Agency Member Moore questioned what the Agency's next step would be if in the review of the correspondence the consultant finds that the Agency is not protected or this letter does not provide irrevocable proof of financing. Mr. Beatty explained that staff believes it complies with the direction of the Agency, given the last two weeks. Marla Hanson, citizen, questioned if the same individuals who signed this letter of financing were the same individuals who signed the first Bank of America financing letter. Mr. Beatty stated that it was the same individuals that staff has been meeting with. Ms. Hanson commented that she recommends that the Agency accept solution number one and three, and accept number two as the last solution in order to alleviate time constraints on staff, because of the last minute letter. Mr. Dee Jaspar, Consulting Civic Engineer, spoke in favor of the Galleria project. Agency Member Barton questioned what would happen to the time schedule if there are amendments to the DDA. Mr. Beatty responded that it would depend on how quickly the amend- ments can be solved. He stated that it would also depend on how fast the bank makes a final appraisal of the construction drawings and how fast the bank is willing to give that kind of commitment based on the evidence that is presented to them. Agency Member Christensen commented that the information is too vague to vote upon the issue with the knowledge that the members have acquired. Mr. Bob Lewis, citizen, of the Agency. He objected development. was present and asked several questions to the use of taxpayer's money for this Agency Member Childs questioned if the Moreland Corporation had the financing, would these other conditions normally be a part of negotiating the final phase of developing the project. Mr. Beatty explained that this would be normal because of the changes requested by the developer since the original conception of the financing. Agency Member Barton questioned whether, in clearing the default and accepting this as an irrevocable letter of commitment for financing, will another "catch-22" situation be created because of the delays in modifying the DDA. Mr. Beatty stated that it is a possibility, but the Agency would have to work fast to get these issues resolved. He stated that staff will be waiting for the bank to notify them of their final approval of the drawings. He stated that when the Agency goes out for acquisition, staff and the redeveloper will review the financing. The loan commit- ment expires January 31, 1985, unless extended in writing by the bank of America, and the loan should close at that time. The developer does not have to be in construction at that time. Agency Member Childs questioned if all these conditions are met today, how long would it take to begin acquisition of property and begin ground breaking. BAKERSFIELD REDEVELOPMENT AGENCY MEETING, November 7, 1984 - Page 4 Mr. Beatty responded that ground breaking could occur within a minimum of six months. Agency Member Childs questioned what events could cause the Bank of America to withdraw their commitment. Mr. Beatty stated that the change in financial status of Mr. Moreland and interest rates could cause the withdraw. Agency Member Barton made a motion to approve the letter of financing conditioned upon acceptable amendments to the DDA which would include: 1) changes in the Schedule of Performance to delay Agency acquisition of the property in accordance with the developer's letter; 2) resolve the issue of the funding of the parking; and 3) address any changes necessary because of design changes submitted by the developer. Agency Member Moore stated that if the motion does not protect the Agency, can the Agency be protected in the event that this financing does not become a reality and/or is terminated on or before January 31, 1985. Mr. Beatty stated that prior to commencement of acquisition of property by the Agency, staff will be assured that there is available financing to fund the project. Agency Member Moore suggested that within the motion the Agency should identify that this is the final financing that would be acceptable so that in the event that there is a failure, that would terminate the Development Agreement. Mr. Beatty suggested that this issue be added as a fourth condition; that the Agency accept this letter as the final evidence of financing, and at the time that the Agency is to commence acquisition of the property, if it determines that the financing commitment is not satis- factory and the development cannot proceed, the Agency has the ability to terminate the Development Agreement. Agency Member Moore concurred with Mr. Beatty's suggestion. Agency Member Barton commented that he would not accept that as an amendment. The Agency has been told that this will be sufficient as a letter of financing. Agency member Moore responded that his intent was that if the bank declares that they no longer can support this project, that the Agency would not be in a position to wait for another extended period while the developer solicits new and additional financing for the project. Mr. Beatty stated that staff has accepted this as evidence of financing, and if we get to a point prior to land acquisition and Bank of America goes broke or something should happen, then the whole deal is off. Agency Member Moore explained that if Bank of America finds they are uncomfortable and cannot continue in this arrangement, he suggested that the Agency not have an open-ended position. Agency Member Moore requested that an amendment be made to the motion that would state specifically as a fourth condition that should the Bank of America on or before January 31, 1985 decide that they could no longer support, and did terminate, their financial participation in this project, that the Agency would not allow itself to be put in a position where the Agency would have to solicit new or additional lending institutions to start this effort over again. Agency Member Barton stated that he could not concur with this amendment and suggested that it be made a substitute motion. Agency Member Moore made a substitute motion to approve the letter of financing conditioned upon acceptable amendments to the DDA which would include: 1) changes in the Schedule of Performance to delay Agency BAKERSFIELD REDEVELOPMENT AGENCY MEETING, November 7, 1984 - Page 5 acquisition of the property in accordance with the developer's letter; 2) resolve the issue of the funding of the parking; 3) address any changes necessary because of design changes submitted by the developer; and 4) should the Bank of America on or before January 31, 1985 decide that they could no longer support, and did terminate, their financial participation in this project, that the Agency would not allow itself to be put in a position where the Agency would have to solicit new or additional lending institutions to start this effort over again. The motion was defeated by the following roll call vote: AYES: Moore, Rockoff, Childs NOES: Barton, Christensen ABSENT: Payne, Ratty Agency Member Moore's motion to reconsider the previous motion because Agency Member Barton considered the motion as an amendment was approved by the following roll call vote: AYES: Moore, Rockoff, Barton, Childs NOES: Christensen ABSENT: Payne, Ratty Agency Member Christensen stated that he refused to vote on this issue until he has a chance to read and evaluate the material. Agency Member Moore's substitute motion to approve the letter of financing conditioned upon acceptable amendments to the DDA which would include: 1) changes in the Schedule of Performance to delay Agency acquisition of the property in accordance with the developer's letter; 2) resolve the issue of the funding of the parking; 3) address any changes necessary because of design changes submitted by the developer; and 4) should the Bank of America on or before January 31, 1985 decide that they could no longer support, and did terminate, their financial participation in this project, that the Agency would not allow itself to be put in a position where the Agency would have to solicit new or additional lending institutions to start this effort over again, was approved by the following roll call vote: AYES: Moore, Rockoff, Barton, Childs NOES: None ABSTAINS: Christensen ABSENT: Payne, Ratty ADJOURNMENT There being no further business to come before the Redevelopment Agency, the meeting was adjourned at 7:07 p.m. /_G~g ~o~_ Secret ary Bakersf%e/l~ Redevelopment Agency -ARTHUR n. ROCKOFF ~j~_r~n Bakersfield Redevelop~t ~ency