HomeMy WebLinkAbout11/09/83 MINUTES RAMINUTES
BAKERSFIELD REDEVELOPMENT AGENCY
Regular Meeting--November 9, 1983
The Regular Meeting of the Bakersfield Redevelopment Agency
was called to order by Chairman Barton on Wednesday, November 9,
1983 at 5:05 p.m. in the City Hall Council Chambers. The Secretary
called the roll as follows:
MEMBERS PRESENT:
James Barton
Chris Christensen
John Means
Art Rockoff
MEMBERS ABSENT:
Thomas Payne
Donald Ratty
MINUTES
Minutes of the Special Joint Meeting of September 27, the
Joint Public Hearing of October 18, and the Regular Meeting of
October 26, 1983 were approved as presented.
CORRESPONDENCE
1. Correspondence was received from Helen
of the Mental Health Association in Kern County,
1983 regarding the lease of properties owned by
Agency at 2022 "L" Street.
Smoot, President
dated October 25,
the Redevelopment
Ms. Susan Johnson, representing the Mental Health Association,
was present to explain the services of the Mental Health Association
and what it hopes to accomplish with the use of this building. She
also requested some assistance in keeping the cost down.
Agency [4ember Rockoff questioned if there would be any problem
wihh leasing Lhis structure on a short-term basis.
Executive Director Kelmar stated that it would have to be on
a year-to-year basis, and that he didn't anticipate any problem
with leasing the building on a one-year contract for at least hwo
years, maybe three.
Agency Member Rockoff guestioned ~ f a~?e would be any problem
with bringing the building u? ~_o '~!ty code.
Executive Director Kelmar responded Lhat the Building Depart-
ment has reviewed the needs, and that it would cost approximately
$7,000 to make the necessary iml~rovements to bring the building
up to code.
Agency Member Christensen commented that mental health ~s a
very importanh problem within the nation, state and community, and
that any reduction of rental fees would be of help since they have
to spend money to bring it up to code.
Executive Director Kelmar explained that he had indicated to
Ms. Johnson that on the low end of the market the rental value
would be abouh $1,000 and on the high end of the market $1,600 a
month. After making the required improvements, and amortizing that
over a two year period; from a market standpoint, the $700 is a
fair figure.
Agency Member Christeusen ~aade a motion that the rent be
reduced from $700 to $400 a month.
City Attorney Oberholzer indicated that in order to reduce the
rent, the Agency would have to make certain findings or there would
be a problem with ~he use of public funds for subsiGizing the rent.
This would be accomplished by ado[~i~in%~ a resolution with the finding
that Mental Health Association serves the community in the capacity
of assisting those who would not ordinarily be able to obtain this
service.
Agency Member Christensen made a motion that the finding be
made.
Agency Member Means stated that the building has been vacant
for some time, and that he doubted that anybody would rent it for
a year; that $700 is more than the Agency would be getting. He
stated that with the improvements beinG made, it would be financially
tough for the Association. He questioned if there were community
development monies available for any revenue sharing money for the
improvements.
Executive Director Kelmar stated that it would be a Council
decision to use the revenue sharing money.
Agency Member Rockoff stated that,
aha lows for renting the building, $700
that he felt this was a fair price.
after figuring the highs
is a low cost. He commented
Agency Member Christensen's motion to reduce the
$700 to $400 was defeated by the following group vote:
AYES: Christensen, Means
NOES: Barton, Rockoff
ABSTAINS: None
ABSENT: Payne, Ratty
rent from
Agency Member Means commented that the Agency should not pay
· the $7,000 for the improvements, but would like to assist the
Association financially. Agency Member Means made a motion that
the Redevelop~ent Agency approve a rental agreement of $700 a
month and recommend to the City Council that they allocate $1,500
of revenue sharing money to the Kern County Health Association to be
used for improvements on the property owned by the Agency at
2022 "L" Street.
Executive Director Kelmar stated that the Council would have
to change its policy on revenue sharing.
Agency Member Rockoff stated that the potential of the building
Oeing rented is not very good and, therefore, made a substitute motion
to rent the building for $600 a month.
Agency Member Christensen responded that $600 was not enough,
and that the Agency should give something worthwhile or nothing
at all.
City Attorney Oberholzer questioned if Agency Member Rockoff
had reached his $600 figure through an analysis which provided a
fair market value for the property based upon improvements being
made.
Agency Member Rockoff stated that he wanted to discount the
rent because of the lack of opportunity to rent the building at any
figure, and considering the substantial improvements to be made,
he felt that $600 is a fiar negotiated value.
City Attorney Oberholzer stated that on record Mental Health
Association has offered $700 and has asked for some contribution,
and, therefore, some findings will have to be made.
Agency Member Rockoff responded that the Mental Health Associa-
tion could afford to pay that amount; they did not offer. He stated
that the lease should be negotiated on a year-to-year basis and
terminate on thirty days notice.
City Attorney Obernolzer stated that if it is the Agency's
determination that the price is a fair market value for the property
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and the best the Agency can obtain, then there is no need for a
finding.
The substitute motion made by Mr. Rockoff, to rent the building
at 2022 "L" Street for $600 on a year-to-year basis and to terminate
upon thirty days notice, was carried by the following group vote:
AYES: Christensen, Means, Rockoff, Barton
NOES: None
ABSTAINS: None
ABSENT: Payne, Ratty
2. Correspondence was received from Dean Witter Reynolds,
Inc., dated October 31, regarding the sale of hotel bonds.
Mr. Calvin Hollis was present to give an oral report and an
update on the status of the developer's evidence of financing
concerning the hotel project. He stated that the Schedule of
Performance required the developer to submit evidence of financing
by October 15, and for the Agency, within 30 days of that date, to
approve or disapprove that evidence of financing. The developer
is proposing to finance this project through the issuance of
industrial revenue bonds together with equity that has been raised
locally. Two letters were received from Dean Witter and submitted
as evidence of financing. The first listed several conditions, the
second narrowed those conditions that his commitment was subject
to. It is not a commitment letter which obligates Dean Witter to
provide financing, and because of the tax-exempt nature of this
financing, it is going to be impossi~le 'to get such a letter.
?!r. Hollis outlined the discussions with the developer and
recommended that the Agency extend for 60 days the time it has
to approve the developer's evidence of financing.
As a result of the changes in the market condition, the de-
veloper has re-evaluated the scope of the hotel project and has
submitted a proposal to the Agency to increase the size of tile
hotel from 239 rooms to 297, to remove ali i~he meeting rooms in the
Auditorium,~ and to refurbish the exisi~ing meei~ing rooms in the
Auditorium. The estimated cost for these changes would be $800,000
to $1,000,000, and he is proposing thak ih be an Agency obligation.
The developer is asking that the Agency subordinate its right to
receive rental income, to the bond holders and to subordinate its
right to receive rental income to h~e equity investors until a
minimum return of 10 percent has been reached by those equity
investors. After the two obligations are met, the Agency would have
a minimum rent payment to it of $200,000. The developer is asking
that the Agency relieve him of some upfront obligations in the early
years of the project and in return providing the Agency with a
significant ownership interest in the revenue generated by the
project. Before staff can make a recommendation, it has to deal
with the method of calculating of Agency's additional rents and the
concerns as to the coordination of operating the meeting rooms.
The process would require an amendment to the DDA and a public
hearing would be scheduled and a full analysis of the costs and
revenues would be available to the Agency prior to taking any
action. The Federal Government has created a time constraint
regarding the bonds. They must be issued and must be purchased by
the end of December. A public hearing would have to be held in
the middle of December which would allow the developer to secure
his financing.
It is the recommendation to the Agency that it take action to
extend the time period in which it must approve the developer's
evidence of financing, and within the 60-day period, there would
be an amended Disposition and Development Agreement which would
incorporate the provisions as mentioned.
Agency Member Christensen questioned the assurance the Agency
has that the developer would not ask for another extension. He also
questioned the relationship with the hotel having the right to
operate the rooms of the Auditorium.
Executive Director Kelmar stated that since AIRCOA has become
involved in the project, they are taking a more realistic approach.
He commented that if the developer is not able to sell the bonds
and cannot quickly secure other financing, the project should not
go forward. In answer to Mr. Christensen's second question, he
stated that staff is not proposing, at this time, that the developer
run the Auditorium.
Chairman Barton questioned when the inducement resolution will
be ready, and the time for this process.
Mr. Hollis indicated that by the end of the week details as to
the amendment would be available. By the first week of December
the DDA would be completed, and two weeks later would be the public
hearing.
Agency Member Rockoff stated, for the record, that after
hearing the potential terms of the agreement, he has a problem with
the basic rent being subordinate to a 10 percent return to the
equity owners. He stated that he understood subordinating to the
bond servicing, but the way he understood the proposal was that the
equity owners would be assured a 10 percent return on their invest-
ment before the City received any rent which includes basic rent
and that this presents a problem.
Executive Director Kelmar stated that the marketing study
showed a 50 percent occupancy for the first few years; that
they may not be willing to invest their money on such a risk.
He indicated that if the developer is no[: able to sell the bonds
by the end of the year, the agreemenh outfit to be terminated
because of their inability to proviae financing.
Agency Member Christensan s~ated that ~ concurred with
Mr. Kelmar's statement.
Agency Member Christensen made a mot ~n [inat the correspondence
from Dean Witter Reynolds, da[~e(~ October 3i, be received and
placed on file. The motion was carried by the following group
vote:
AYES: Christensen, Means, Rockoff, Barton
NOES: None
ABSTAINS: None
ABSENT: Payne, Ratty
Agency Member Rockoff made a motion to give the developer 60
days (January 15, 1984) to provide their evidence of financing.
The motion was carried by the following group vote:
AYES: Christensen, Means, Rockoff, Barton
NEOS: None
ABSTAINS: None
ABSENT: Payne, Ratty
3. Correspondence was received from Keith Breskin, representing
Katz, Hollis, Coren & Associates, dated October 27, 1983 regarding
the Truxtun Galleria Section 33433 Report.
Agency Member Means made a motion to receive and place the
cc ~ 'aspondence on file. The motion was carried by the following
.,.,~p vote:
Christensen, Means, Rockoff, Barton
None
.... rAINS: None
.... ~NT: Payne, Ratty
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CONSENT CALENDAR
(a) Approval of Vouchers No. 127 through 138 totaling
$800,749.86.
Agency Member Rockoff made a motion, to approve item (a)
of the Consent Calendar, which was carried by the following roll
call vote:
AYES: Christensen, Means, Rockoff, Barton
NOES: None
ABSTAINS: None
ABSENT: Payne, Ratty
ADJOURNMENT
There being no further business to come before the Redevelop-
ment Agency, Mr. Christensen made a motion to adjourn tke meetin9
at 5:59 p.m.
/ J/AMES J~//~BARTON, Chairman
~ ~Bakersfield Redevelopment Agency
W. [~:~L~NBOTHAM,/~Secretary
Bake~eld Redeve~nt Agency
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