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HomeMy WebLinkAbout01/11/84 MINUTES RA MINUTES BAKERSFIELD REDEVELOPMENT AGENCY Regular Meeting--January 11, 1984 The Regular Meeting of the Bakersfield Redevelopment Agency was called to order by Agency Member Rockoff on Wednesday, January 11, 1984, at 5:07 p.m. in the City Hall Council Chambers. The Secretary called the roll as follows: MEMBERS PRESENT: James Barton MEMBERS ABSENT: Chris Christensen Rollie Moore Thomas Payne Art Rockoff James Childs Donald Ratty Mr. Christensen made a motion that Mr. Rockoff act as Temporary Chairman in the absence of Mr. Barton. The moLion was carried by Lhe following vote: AYES: Moore, Payne, Rockoff, Christensen NOES: None ABSENT: Barton, Childs, Ratty MINUTES The minutes of the Regular ~eeting of December 14, 1983 and December 28, 1983 were approved as presented. CORRESPONDEi~CE The Secretary acknowledged receipt of correspondence dated January 5, 1984 to Richard Oberholzer from Kathleen Tran of the Chinese Toggery. The correspondence was a request for an extension on ~s. ~ran's rental agreement at 1216 19th Street. Agency Member Payne made a motion to receive and defer comment on this correspondence until Item 1 under Reports. The motion was carried by the following vote: AYES: Moore, Christensen, Rockoff, Payne NOES: None ABSENT: Barton, Childs, Ratty AGENCY STATEMENTS Agency Member Payne questioned staff as to who has Executive D~rector of the Redevelopment Agency since Mr. departure. been designated Kelmar's Mr. Russell stated that he has been designated Executive Director of the Redevelopment Agency since Mr. Kelmar's departure as defined in the ordinance establishing the Redevelopment Agency. Temporary Chairman Rockoff made a statement regarding the memoran- dum da~ed January 4, 1984 regarding the 18th and Eye Street Parking Structure. He stated that the memorandum reflects the message that staff, with a member from the Downtown Business Association parking committee, would review the proposals and the contracts for the opera- tion of the parking structure. He asked for discussion between Agency Members if one of ~he committees should be a part of the discussion and decision-making process regarding the operation of the parking garage and other matters of substantial significance that might come before this group. Agency MemOer Moore stated that in conversations he had prior to the meeting with staff, he feels it was staff's intent that a committee review this and other related activities dealing with the parking structure and ~hat he concurred with Mr. Rockoff's suggestion. Agency Member Christensen questioned which committee would handle this review process. Temporary Chairman Rockoff then stated that it could be either the Planning, Development and Project Review Committee or the Acquisition and Relocation, Personnel and Operations Committee. Agency Member Christensen n~oved that the Planning, Development and Project Review Committee be appointed to review any matters of substantial significance in regards to the 18th and Eye Street Park- ing Structure. The motion was carried by the following vote: AYES: Moore, Rockoff, Christensen, Payne NOES: None ABSENT: Barton, Childs~ Ratty REPORTS Report No. 1-84 from the Planning, Development and Project Review Committee regarding Reaffirmation of Intent to Cause a Vacation of Redevelopment Agency Property at 1212, 1214, and 1216 19th Street. Agency Member Moore read the report into the record. He then made a motion to adopt the report and take any necessary action. Mr. Thomas Fallgatter, who represents Mr. Alfred Stone of Ernie's Bar, was present. Mr. Fallgatter questioned the Agency why it is assumed that the building has to be rehabilitated; that it has been occupied in the condition that it is now in for 50 years. The only thing that has changed in the last year has been the owner- ship of the building. Mr. Fallgatter questioned why the building has to be rehabilitated because of the change of ownership. He did not recognize anything in the staff report which gave evidence that the building was inherently dangerous. [dr. Fallgatter stated that his client has been doing business at this location for 20 years and has had no structural problems, per se, it survived the earthquake, which gives some credence as to its stability. ~r. Fallgatter again questioned the underlying assumption and asked what the basis for rehabilitating the building is. Mr. Calvin Bidwell, Building Director, stated that regardless if the structure withstood the earthquake, under present day building codes, the structure is inadequate as far as meeting accepted seismic codes. He also stated that no one can predict the time or magnitude of an earthquake that might destroy the structure. The structure may last for 10-12 years or it could collapse tomorrow. Mr. Bidwell stated that the assumption was based on a code adopted by the City of Los Angeles for unreinforced masonry structures, and using the categorization they used on this type of occupancy. ThaL is an inherent danger that the City would be facing. Agency Member Payne indicated that the report states that it was determined that considerable cost would be incurred in order to bring it up to current building standards. It is estimated that the cost of completing this rehabilitation would be approximately $230,000. This is approximately twice its present market value. Agency Member Payne questioned if the Redevelopment Agency paid $115,000 for the building. Mr. Kennon responded that tile Agency paid $105,000 for the building. Agency Member Payne asked if either staff or an Agency Slember could refresh his me~nory as to why this property was to be razed~ did it have to do with parking? Mr. Kennon replied that the original decision was made simply on the basis that this was an unsafe building. He further stated that Mr. Bidwell had basically summarized staff's presentation at that time and it basically remains their position. The earlier decision was based on the fact that it was not economically viable ho rehabilitate the building. Staff still maintains that position. Agency Member Payne asked if the Agency paid cash for the building. -2- Mr. Kennon re~ied 'that the Agency had paid cash for the building. Agency Member Payne then asked how much rent the Agency derives from the building. Mr. Kennon answered that the rent is approximately 11 cents per foot. That amounts to about $500 per ~nonth for all the space in the building that is rented. Agency Member Payne questioned if that also included the Chinese Toggery. Mr. Kennon responded that it did. Agency Member Payne questioned Mr. Oberholzer, if the potential liability to the tenants or patrons would be greater to the City than to the previous owners. Mr. Oberholzer replied that the position the City is in is that the City owns the building, has had its own personnel inspect the building and they have found that the building is a potential hazard. If there is an earthquake, it doesn't meet present standards, it isn't up to tile current building codes. It is a situation that, in his opinion, you can't even fully indemnify the City if Mr. Fallgatter's client wanted to come forward and say that they will indemnify the City. The City and Agency is involved in a situation where they have a building that they know doesn't meet the standards. The City is certainly in a position that it has the ability (or the Agency) to bring that building up to code except that it is not economically feasible to do it. But you could provide for the protection of people who go into that establishment if you desire to. If the Agency were to go ahead and rent the building knowing that the building is not up to code, it is setting itself up for punitive damages. The punitive damages are damages that no one can indemnify you against. The lessee could not indemnify you for punitive damages. Thah is the position that the Agency is in. The lessee may not be able to come back and use 'the Agency or City, but the customer who is in the building and is injured could. Agency Member Payne asked if the building was inspected prior the purchase. Mr. Oberholzer replied that he believed that the inspection was made after the purchase. There was an inspection probably prior to the purchase by the appraiser, but he didn't know when the Building Department inspected the property. Mr. Bidwell stated that to his knowledge, the inspection was made after the purchase. Agency Member Payne asked what the original intent was when the Agency purchased that property. He said he was under the impression it was for landbanking. Mr. Kennon replied that it was acquired as part of the land- banking strategy. Agency Member Payne questioned staff as to what the specific reason was to purchase this property. Mr. Oberholzer responded that this property was not purchased with any particular project in mind as there was not any project proposed for this area. He stated that it was not any different than the acquisition of the American National Bank building. The City is attempting to do something with that building as it is usable. When this building was acquired, it was part of a land- banking theory that was in force at that time and that particular theory is that if some property comes available on the open market in the downtown area, that the Agency would look at it and consider whether or not the Agency would want to purchase it. This property was available on the open market and the Agency made an open market -3- purchase of the property. It was not done with any project in mind and there is no project scheduled for that area. Agency Member Payne replied that he knew that there was not a project scheduled for that area now, but that it was his understanding as relayed to him by the previous Executive Director of the Agency that the Agency's intent was to use that for parking for nearby projects because of the major shortage of parking in that area. If that was not the case, why did we inspect it after we paid in excess of market value for the property instead of before. Mr. Oberholzer responded that the Agency's purchase price of the property was based upon an independent appraisal so it was the market value of the property. It was indicated by the appraiser that the leases to the businesses were on a month-to-month basis. The Agency doesn't have to be landlord to a bar, they have the option to terminate the lease. But the overriding concern with this property is 'the safety factor and the liability of the City. The recommendation of the Building Department is for the total structure, not just Ernie's Bar. Agency Member Payne questioned if the Agency's only intent was to acquire something in the project area and that would be used as an advantage for enticing major projecas. Mr. Kennon stated that to the best of his knowledge this was the basic intent of the landbanking strategy. He also commented 'that there may have been some d4scussion as to t'.~e disposition of this site, but he did not k~ow of any actual pla~!s for it_ except that it was a very substandard structuze and would p-obably be demolisMed. Agency hember Payne questioned if that was the only structure the Agency owned in that particular vicinity on that particular side of tile street, in that block. Mr. Kennon stated that this was correct. Mr. Oberholzer commented that it was his understanding that this ls the or, ly property for sale on 19th Street in 'that particular area and that the City Council and Redevelopment Agency have been under a lot of pressure to try to redevelop 'this particular area. Agency Member Payne stated that the Agency and Council have also been under a lot of pressure to find tenants for the properties acquired by landbanking to offset or attempt to justify the acquisition price. Referring to Mr. Fallgatter's letter of December 19, 1983, which questions the Agency's policy wi~h regard to compensation for a business person required to move as a result of the City's acquisition, Mr. Payne questioned whether the lease ~ransfers with ownership under the same terms. Mr. Oberholzer stated that %he lease is in essence a month-to- month verbal rental agreement, and this includes the usual 30-day notice. Mr. Oberholzer stated that it was not a five-year lease; that if it was, it would have affected the appraisal. Mr. Fallgatter questioned Mr. Bidwell that the problem of the building is that it was not up to current codes. He then questioned if there were any other buildings in the downtown area that are occupied by businesses that do not meet certain codes, particularly the earthquake code mentioned for the City of Los Angeles. Mr. Bidwell stated that there were buildings in the downtown that did not meet the codes~ including the earthquake code, but he could not state how many and that none of these buildings are City- owned structures. ~r. Fallgatter questioned Mr. Bidwell if there has been an inspection done on the old Sears building, now the American National Bank building, and if it would meet the standards of the Los Angeles earthquake code. -4- Mr. Bidwell on this building, structure. stated tha.. such an inspection hadn't been performed but that ih wasn't an unreinforced masonry Mr. Fallgatter questioned that there was nothing inherently defective in the building, but simply that the unreinforced type of building has caused concern for the City. Mr. Bidwell stated that this type of construction is inherent in all unreinforced masonry structures. Mr. Fallgatter questioned if there was a written report done when the building was inspected. Mr. Bidwell stated that there was a report done, but it is very brief. Mr. Fallgatter questioned if the Agency would make this report available to him. Mr. Oberholzer stated that if there was no protected information that would establish liability for the Agency, then the Agency could make the report available to Mr. Fallgatter. Agency Member Christensen made a motion to allow the City Attorney to review this report and then under his discretion, submit it to Mr. Fallgatter. Agency Member Payne questioned Mr. Fallgatter as to how this would help him if the Agency acts on the proposal tonight. ~4r. Fallgatter stated that he was going to request that the Agency delay acting on this proposal, that there is nothing pendin9 since the Agency has given the tenant until March 1. He also stated that this would give him time to review the inspection report and make further investigations as to the situation of the structure and have the opportunity to present this information back to the Agency before a decision is made. Agency Member Payne questioned how the Agency's position will improve if the tenants are instructed to vacate the property. He questioned whether the building would be razed, or if it would be boarded up in its existing condition. Mr. Russell stated that possibly tearing down the building had been discussed. The final determination has not been made as yet. Agency Member Payne questioned what the Agency would do with the property if the building were torn down. Mr. Russell stated that some discussions had been made as to parking, but it would depend upon the surface. Agency Member Payne questioned Mr. Oberholzer that if the Agency did order the vacation of the property and the determination is made not to raze the building, how would the City's liability change in regards to a pedestrian being injured in a parking area, or, in the case of an earthquake, a person being injured by the structure. Mr. Oberholzer stated that if there was an earthquake, and the building did fall, and it was foreseeable that it could injure pedestrians, this could create a potential problem if the City did not take action within a reasonable period of time. As for a trespasser, if he were injured in the event of an earthquake, it would be hard to believe that he could sue the Agency unless the Agency were negligent in closing up that building, such as knowing that it was being used by transients~ and allowing that use to continue. The other possibility is that the Agency could decide to rehabilitate the building if they found a tenant who was willing to make a substantial investment in the building because it would take a substantial investment to rehabilitate it. -5- Agency Member Payne stated that he was opposed to spending that kind of money to rehabilitate the building if it would cost $230,000, and the Agency has already spent approximately $130,000. He stated that the rents would have to be extremely high to make an effective type of investment. Agency Member Payne then stated that he would support the vacating of the property if it was the Agency's intent to raze the building for parking in the immediate vicinity. He stated that he would not support the vacating of the property if the building were to be left vacant, and that determination must be made before the Agency can act on the report. Mr. Oberholzer stated that this is the liability issue the City is concerned with, to continue to let the building be inhabited with the knowledge that the Building Director has presented certain problems with respect to liabili'ty that might be established, and this would invite anybody to sue for punitive damages because the building is being utilized and the problems are known, but they go ignored. This is a very dangerous situation as far as liability is concerned. Agency Member Payne stated that he would not like the building standing there if the liability is increased; that he would be in support of tearing the building down to where the Agency has no liability. If the liability is low in relationship to the surrounding structures or to other owners, this would affect his feelings. Mr. Oberholzer stated that liability would be greater if the building were allowed to continue to be used as opposed to closing it up and leaving it there until the Agency makes a decision as to what to do with the building. But there is a greater liability if the tenant is allowed 'to stay, with people entering and leaving the building. Agency Member Payne stated that he would like to entertain a motion to defer ac%ion on this committee report until the next Agency meeting until a determination can be made that the full Agency is in support of razing the building and, in the interim period, with approval from the City Attorney, to provide Mr. Fallgatter with the document he has requested. Mr. Fallgatter stated that the Agency is not in a position to order the immediate vacation of the building. The lease is until March 1, so the Agency's exposure has not changed. Agency Member Rockoff questioned if to the next meeting, would this have any date of the lease. a continuance was granted effect on the termination Mr. Oberholzer stated that notice has already been given to the tenant and vacation date is i~arch 1, unless some other notice is given stating otherwise. Agency Member Payne questioned what would happen if the tenant failed to vacate the premJ_ses on or before ~4arch 1. Mr. Oberholzer stated that the City Attorney's office would begin eviction procedures. This would require a three day notice, then file for a hearing within 15 days~ and then physical eviction takes place. The whole process takes about one month. Mr. Fallgatter questioned Mr. Bidwell as to how many unreinforced buildings are in the downtown area. Mr. Bidwell stated that he could only approximate the number, but he stated it would probably be more than 10. ~ir. Fallgatter questioned if the appraiser 'the property from a structural standpoint prior acquired it. did an inspection of to the time the City -6- Mr. Oberholzer respondeG that he did not know for the record that an appraiser did an inspection from a structural standpoint. He stated that as far as he knew, they did not have an inspection from a structural standpoint. Mr. Fallgatter questioned Mr. Bidwell as to whether or not the ordinance that the City based its report on has been adopted by the City of Bakersfield. Mr. Bidwell responded that it has not been adopted and that it is not being considered for adoption at this time. Mr. Fallgatter questioned the Agency Members as to whether or not they had considered alternatives to razing the building, such as selling it to another party with an option to purchase the property back after a certain period of time. Agency Member Christensen stated that several of the points that Mr. Fallgatter had mentioned had been brought to his attention by several realtors. They felt one of the faults of the Redevelopment Agency is that it tends to drive family businesses out of downtown for the benefit of outside businesses without proper due consideration. He also questioned staff as to why the building is placing the City in any more jeopardy today that it did before. [ir. Oberholzer responded that now the Redevelopment Agency owns the building and before it did not. The prior owner of the building may have wanted to assume certain liabilities of the building because he may not have had the same financial backing or liability or exposure that the Agency would have. It is common practice today in the court system that attorneys will go after the "deep pocket." The "deep pocket" is the Redevelopment Agency or the City of Bakersfield, where the money is. There is a difference in exposure. Agency Member Christensen stated that he felt in that case that · the Agency should not negotiate until it is ready to move in. Mr. Oberholzer re-stated Agency Member Christensen's motion that the Agency authorize the release of the information in that report if that release is cleared through the City Attorney's office. The motion carried by a group vote. AYES: Moore, Payne, Christensen NOES: Rockoff ABSENT: Childs, Ratty ABSTAINS: Barton Agency Member Rockoff explained the reason for his no that he was voting in favor of the report and that he felt delay was not going Lo help the lessee. vote was that a Agency Member Payne asked if Agency Member Moore had made a motion to adopt the report. Agency Member Moore responded that he had made a motion that the Agency adopt the report and approve the conLents therein. Agency Member Payne stated that he would like to make a substitute motion that the Agency defer action on the report until the next Agency meeting. AYES: Rockoff, Barton, Christensen, Payne NOES: Hoore ABSENT: Childs, Ratty 2. Oral report from staff regarding the status of the Hotel Project. [4r. Kennon stated that hhe bonds for the Hotel Project were sold. It was a conditional sale. Much of the paperwork and exerci~3 ~ that normally attends bond sale was not completed. There were thre~ major conditions of that sale. One was the acquisition of a letter -7- of credit, also the assignment of the trustee for the bonds and the final structuring of the partnership. The structuring of the partnership has been completed and word is expected on the letter of credit within about three to five weeks. Once that occurs we should receive our confirmation in terms of construction financing and the acquisition process would begin immediately. AGENCY ACTION 1. Consent Calendar - approval of Design Review Board recommendations: (a) Signage for California Republic Bank, 1675 Chester Avenue. (b) Exterior painting of building at the northeast corner of lSth and ]Eye Streets. (c) Exterior renovation of building, 1860-20th Street. Agency Member Barton made a motion to approve items (a), (b), and (c) of the Consent Calendar. The motion carried by the following roll call vote: AYES: Moore, Barton, ChrJstensen~ Payne, Rockoff NOES: None ABSENT: Childs, Ratty 2. New Business (a) Agreement between the Redevelopment Agency and Rod Gunn and Associates for property acquisition and relocation consulting services. Agency Member Payne stated that some of the properties can be acquired without the use of some type of representation. He then questioned if there is a reason that it is necessary to have someone represent the Agency in making all acquisitions or was that the intent of the report. Agency Member Payne agreed that this is a reasonable fee for the acquisition representation, but does this refer to acquisitions being made on behalf of the Agency. Mr. Kennon replied yes~ when a consultant is required. There are opportunities to make a very simplified deal and the agreement would allow staff to do that. Agency Member Payne then asked if, prior to the acquisition of property, a determination could be made as 'to 'the habitability of the property so as to avoid a re-occurrence of 'the situation which arose regarding Ernie's Bar and the Chinese Toggery. Mr. Kennon responded that acquisitions made by Rod Gunn and Associates would pertain to an actual project and while there may be some delays, that would not ordinarily be an issue because the Agency would be looking for acquisition for site preparation for a ?roj ect. Agency Member Barton made a motion to adopt the motion carried by the following roll call vote: AYES: Moore, Barton, Christensen, Payne, Rockoff NOES: None ABSENT: Childs, Ratty Agreement. The Agency Member Payne made a motion ~o receive and file the received from the Chinese Toggery. The motion carried by the following vote: AYES: Moore, Barton, Christensen, Payne, Rockoff NOES: None ABSENT: Childs, Ratty letter -8- Agency Member Barton kendered his resignation as Chairman of the Reuevelopment Agency. Agency Member Barton then moved that Agency ~i~ember Rockoff be selected as Chairman of the Agency. The raotion carried by the following vote: AYES: Moore, Barton, Christensen, Payne, Rockoff NOES: None ABSENT: Childs, Ratty ADJOURNMENT There being no furth~ business to come before the Redevelopment Agency, Agency Member Ci%c~:~ensen made a motion to adjourn the meeting at 6:12 p.m. ARTHUR L. ROCX©F .F~airman Bakersfield Redevel~pment Agency W. . =GINBOTHAM, J~., /~ecretary ncy -9-