HomeMy WebLinkAbout05/09/84 MINUTES RA MINUTES
BAKERSFIELD REDEVELOPMENT AGENCY
Regular Meeting ...... May 9, 1984
The Regular Meeting of the Bakersfield Redevelopment Agency was
called to order by Chairman Rockoff on Wednesday, May 9, 1984, at
5:00 p.m. in the City Hall Council Chambers. The Secretary called
the roll as follows:
MEMBERS PRESENT:
James Barton
Chris Chistensen
James Childs
Rollie Moore
Thomas Payne
Art Rockoff
MEMBERS ABSENT:
Donald Ratty
MINUTES
Upon a motion by Agency Member Moore, the Minutes of the
Regular Meeting of April 25, 1984 were approved as presented.
REPORTS
Report NO. 5-84 from the Planning, Development and Project
Review Committee regarding the request from Truxtun Tower
Associates for parking within the 18th and Eye Street
Parking Structure.
Agency Member Moore made a motion to accept Report No. 5-84 and
the recommendations contained therein.
Agency Member Childs questioned the rate currently charged to the
tenants.
Mr. Kennon responded that the rates within the Bank of America
parking structure vary. Some are low or below market, as a result
of the original agreement.
Acting Executive Director Russell stated that the rates vary
from $10 to $40 a month.
Agency Member Moore indicated that it would be unusual to increase
the charges to the individuals because this is only for a short
period of time. Their only other alternative would be to park on
the street, which would aggravate the conditions in the area.
Agency Member Childs questioned why there was such a variance in
the Bank of America parking rate.
Mr. Kennon explained that the rates in the Bank of America Tower
vary because of the agreements between the various tenants. In this
case, Bank of America agreed to take a number of spaces at a relatively
low rate, which was $10, for an extended period of time. The owners of
the parking structure are in a position of not being able to raise the
rates charged to the Bank of America, while at the same time charging
the other tenants market rates. This accounts for the differences.
Agency Member Barton stated that some discussion was held in
the committee meeting that averaging the rates within the structure,
according to staff, would average near the rates being charged in the
18th and Eye Structure which is approximately $28.
Acting Executive Director Russell stated that the $28 was slightly
lower than the average rate. However, that was an inducement to bring
them into the structure.
Agency Member Payne concurred with Mr. Childs. He commented that
item no. 3 in the committee report would not be totally correct in that
the Bank of America Building is "one of the most important properties."
He explained that the City has a lot of them, and requested that the
wording be changed to "one of the more important properties downtown."
Agency Member Moore indicated the change is satisfactory.
REDEVELOPMENT AGENCY, MAY 9, 1984 - Page 2
Agency Member Moore's motion to accept Report No. 5-84 from
the Planning, Development and Project Review Committee was approved
and carried.
2 o
Oral Report from Gordon Bell, of Aircoa, regarding the
financing package for the proposed Convention Center
Hotel.
Mr. Gordon Bell stated that efforts to acquire a 12-year letter
of credit for the $14 million in bonds has continued. He explained
that what they have been after since December, when the bonds were
sold, is two-$7million letters of credit for the full 12-year term
of the bonds. What they are asking the bank or financial institution
to do is guarantee to the bondholders that during that 12-year period,
if there was a default on the loan, that they would automatically be
paid. At the end of the 12-year period, any unamortized balance on
the loan would also be paid off.
He stated that the conditions under which a letter of credit
would be issued have changed over the last 14-month period in that the
Federal Reserve now requires that banks book those letters of commit-
ment as a loan and, therefore, the bank's balancing is directly affected.
The two basic elements of trade for this letter of credit are the local
investors, headed by Bob Corsaro, and Aircoa. Over the last two months,
they have been dealing with two institutions who have expressed an
interest and willingness to continue discussions. At 5:00 p.m., he
was informed that they have received the first commitment to issuing
a letter of credit, subject to one major condition, which is to
provide a counter-balancing set of guarantees to the institution for
their letter of credit. The investors and developer are being asked
to guarantee and provide the full guarantee. He stated that he would
have to go back toAircoa and present this to the Board for their
decision, and the investors would need to discuss this issue.
He stated that a commitment has been made that a final decision
will be rendered by the second institution by Friday, and it will be
the decision of Aircoa, with the other partners, as to whether they
are willing to pledge their assets fully behind the loan. An answer
on this commitment will be provided by the end of this week, and will
be in contact with staff by Monday as to whether this commitment is
one in which the various parties are willing to go forward with. He
stated that they are also considering the alternative of conventional
financing which would require a total reconstruction of the financing.
Agency Member Childs questioned whether the Bond Counsel had
been paid.
Mr. Bell stated that the Corporate Counsel called him and
assured him that Mr. Stradling would be paid before the end of
month.
this
Acting Executive Director Russell stated that Mr. Stradling
indicated that he was notified that a check would be in the mail
on May 15.
Agency Member Christensen stated that the project seems to be
a financial failure, and every time the Agency meets with the developer
they discuss the possibility that the project requires financial
reconstruction. He, therefore, could not support the restructuring
of the financing.
Mr. Bell explained that this is one reason why he would like
to have an executive session. He stated that reconstruction means
that they would have to put up more equity. He stated that a com-
mitment has been brought down and it is up to them as to whether they
want to put their assets behind that letter of credit.
Mr. Bob Corsaro was present and explained that because it is on
City-leased land, it is not like the other projects around Bakersfield.
They do have the commitment, and it is a matter of whether the commit-
ment can be worked out to satisfy certain tax exempt tests.
REDEVELOPMENT AGENCY, MAY 9, 1984 - Page 3
Agency Chairman Rockoff questioned if the investors would sign
their name to the guarantee for the obligation.
Mr. Corsaro responded that he would sign, but he would have to
contact the other individuals.
Agency Member Payne questioned what a two-week delay would cost
the Agency.
Mr. Kennon responded that no monetary costs would be incurred.
Agency Member Payne commented that the big deals are difficult
deals and they never seem to be completed on schedule. This project
would be an asset to the total community and especially to the downtown,
and he would, therefore, be in favor of granting an extension.
Agency Member Moore concurred with Mr. Payne's statement and
stated that the developers have approached this project carefully,
and they risked a great expense in trying to make it viable in our
downtown.
Agency Member Childs read the letter from Fritz Stradling,
addressed to Michael Brayton of Aircoa and Robert Corsaro of Giumarra
Vineyards, dated March 1, 1984, requesting payment of $50,068.83
for legal services in connection with the Heritage Hotel Associates
Project.
Mr. Bell indicated that they will be in touch with Mr. Kennon
and come back to the Agency on May 30.
3 o
Oral Report from Moreland Development Corporation regarding
a request to allow a feasibility study for a Sheraton Hotel
in the second phase of the Galleria, and the financing com-
mitment for the Galleria project, and the progress made in
their negotiations with California Republic Bank and Chester
Avenue Associates.
Mr. Gordon Gill of Millard Archuleta, Eddy, Paynter Associates,
the architect for Truxtun Galleria, representing the Moreland Corpora-
tion, was present and stated that a commitment letter was filed with
the Title Company for the construction loan for the first phase of
the project. He commented that they would like to proceed with the
feasibility study to consider a hotel development, in the Galleria,
with the Sheraton franchise. If the study is positive, it would
take into consideration the construction of the Convention Center
Hotel. The developer would come back to the Agency with that study to
amend the DDA to allow inclusion of the hotel in the Galleria project.
Agency Member Childs stated that in lieu of the commitment to
the Convention Center Hotel, he made a motion that the Agency support
Mr. Moreland's request for a feasibility study for another convention
hotel downtown with the understanding that it does not commit the
Agency to either agree with, or adopt, the results of that study,
and it does not involve any monetary cost to the Agency.
Agency Member Moore requested a substitute motion to offer the
Moreland Corporation to commission a marketing survey to be conducted
by an independent firm approved by the Agency, and then upon completion
of the marketing survey, they return to the Agency for review of the
survey and consideration, at that time, of an amendment to the DDA for
the hotel as part of the Galleria project.
Agency Member Childs stated that he would accept the substitute
motion with the exception of returning to the Agency for the review
and amendment to the DDA. He commented that his option would be that
the Agency support the Moreland Corporation's plan for a feasibility
study in regard to another hotel in the Galleria project only.
Agency Chairman Rockoff questioned if the study would take into
consideration the potential completion of the Convention Center Hotel
being a factor in determining the feasibility with results showing
the feasibility of the other hotel.
REDEVELOPMENT AGENCY, MAY 9, 1984 - Page 4
Agency Member Childs stated that the purpose of doing a
feasibility study is to see if downtown Bakersfield could support
two hotels.
Agency Chairman Rockoff stated that
can be supported. He indicated that the
first priority with the Agency and would
dize that project if it goes forward.
if this was included, it
Convention Hotel was the
not do anything to jeopar-
Agency Member Moore stated that the purpose of his substitute
motion was that the Agency can go ahead with the opportunity to
review the survey and consider, at that time, where the Agency
stands. He clarified that it would take a change in the DDA to do
this and that is why it was incorporated.
Agency Member Childs stated that it would require a change
to the DDA only if the Agency adopted the recommendation to consider
building another hotel downtown.
City Attorney Oberholzer explained that Member Moore's motion
states that it would only be considered after the feasibility study is
completed.
Agency Member Childs stated that Mr. Moore's motion included that
when the feasibility study is done, at that time, come back to see
about changing the DDA. He requested that this comment be deleted.
He stated that he would not support considering any change at all
to the existing DDA, therefore, Agency Member Moore supported the
deletion of "and consider, at that time, an amendment to the DDA
for the hotel as part of the Galleria project."
Agency Member Moore's substitute motion, to offer the Moreland
Corporation to commission a marketing survey to be conducted by an
independent firm approved by the Agency and then upon completion
of the marketing survey, return to the Agency for review of the
survey, was approved and carried.
Mr. Gill explained the negotiations with California Republic
Bank and Chester Avenue Associates and outline the boundary lines of
the property proposed to be acquired, which is in excess of 10,000
square feet,and includes the ramp going to the second level. He
indicated that the concern has been that people coming into the
Galleria project would come in and use the Bank's parking. Another
concern was the consideration of developing an elevator access from
the future third level in the Bank building and the second level
people would have to walk down. He stated that with the existing
study, it didn't make any difference by adding the 18 feet of depth
over what is proposed in the present layout as far as providing
additional parking. He explained that agreement has been reached
with California Republic Bank, and Moreland Corporation has agreed
to replace the present number of parking spaces (approx. 136) and
add an additional 28 spaces for the Bank.
Agency Member Childs questioned why the parties could not get
eleven parking spaces within 11,000 square feet.
Mr. Guay representing Chester Avenue Associates explained that
the Bank uses the ground level primarily for customer parking and
drive-up windows. He expressed concern with more parking in the
lower level for the Bank and the use of a wider access and discharge
of drive-up windows. He stated that it is very important that they
maintain the parking on the ground level.
Mr. Gill stated that the issue is one parking space. They have
attempted to see where that could be accomplished. He indicated
another issue is the basement alignment in the project. If they
cannot maintain the proposed appropriate line, the basement parking
will be removed and an existing row of 14 parking spaces will have
to be realigned from 90 degree to 60 degree in which they could lose
approximately 25 additional parking spaces in the basement.
REDEVELOPMENT AGENCY, MAY 9, 1984 - Page 5
Agency member Barton questioned Mr. Gill's reference to 11,000
square feet of retail space.
Mr. Gill stated that Mr. Guay's requirement eliminates the shops
on that side of the mall on the first and second level. He stated
that the depth is not adequate to provide any usable area which is
11,000 square feet. He indicated another concern was that there are
structural components that move from the south to the north, and the
line proposed is in the second structural bay which holds the existing
structure. The proposal by Mr. Guay would be to cut it and a new
structural member would have to be structured to go across the altered
bay.
Benjamin Benton, owner of the Haberfelde Building, was present
and expressed concern on the effects of the Galleria and what it
would have on the existing businesses and properties. He commented
that the Council will be held responsible for any negative influences.
He stated that what the Galleria is asking for (parking) is what the
other businesses need in the downtown. He explained that viable pro-
perties need attention, and ~he economics of the new building effecting
the existing merchants.
Mr. Guay stated that Mr. Moreland has requested to go down one
level in some areas and two levels for parking and they are going
west straight across form the existing property lines of the Bank.
The existing footings are four inches in the ground and, therefore,
as long as they are going to have subterranean parking, it will not
matter.
Mr. Gill commented that their request to the Agency would be to
have the Agency amend the DDA which would be prepared and brought
back to the Agency and thus allow for the use of eminent domain to
acquire the particular property.
Agency Member Barton questioned if the parties feel they have
reached an impasse in their negotiations.
Mr. Gill stated that he feels Mr. Guay is very firm in his
decision on the sourtherly property line of the building, and that
the numbers will not work.
Mr. Guay stated that he has met half way with the Moreland
Corporation and believes that they should not have to give up so much
of the garage in order that Mr. Gill can build a shopping mall.
Agency Member Childs stated that he would not support considera-
tion of eminent domain at this time, and that a meeting is set for
the 30th of May and questioned if both parties could go back to
negotiate and try to work out this final issue.
Mr. Guay
area with the
of Eye Street.
responded
amount of
that he would like to see a study of the
land that would be crossed and the study
Agency Member Barton made a motion that the Agency refer this
issue to the Planning, Development and Project Review Committee and
have the two parties meet with the Committee and staff to determine
if some decisions can be made. The motion was approved and carried.
NEW BUSINESS
(a) Appointment of Mr. Fred McKenna and Mrs. Jeannine Bushnell
to the Design Review Board.
Mr. Kennon stated that the Guidelines indicated that the nomina-
tion of members for the Design Review Board are provided by the
Downtown Business Association and are approved by the Agency.
Agency Member Childs made a motion
the next Redevelopment Agency meeting.
carried.
to defer this issue until
The motion was approved and
REDEVELOPMENT AGENCY, MAY 9, 1984 - Page 6
(b)
Contract Change Order No. 7 - 18th and Eye Street
Parking Structure.
Agency Member Childs made a motion to approve the Contract
Change Order No. 7 for the 18th and Eye Street Parking Structure.
Mr. Kennon stated that item one of the Change Order involves
the reconstruction of the alley north of the structure; the second
item involves bumper pads; and item three was required by Public
Works Department for the relocation of existing conduits.
Agency Member Childs' motion to approve the Contract Change
Order No. 7 was approved and carried.
ADJOURNMENT
There being no further business to come before the Redevelopment
Agency, Agency Member Moore made a motion to adjourn the meeting at
6:74 p.m.
t
BW~lg~nRbe°~e~io~t ~ernecQrY
ARTHUR L. ROCKOFF~_~irman
Bakersfield Redev~ld~ment Agency