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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