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HomeMy WebLinkAbout10/26/83 MINUTES RA MINUTES BAKERSFIELD REDEVELOPMENT AGENCY Regular Meeting--October 26, 1983 The Regular Meeting of the Bakersfield Redevelopment Agency was called to order by Chairman Barton on Wednesday, October 26, 1983 at 5:00 p.m. The Secretary called the roll as follows: MEMBERS PRESENT: Thomas Payne James Barlon John Means Art Rockoff MEMBERS ABSENT: Chris Christensen Donald Ratty MINUTES Minutes of the Regular Meeting of September 28, 1983 were approved as corrected. CORRESPONDENCE 1. Memorandum and diagram received from McDonald Group Ltd. defining the boundaries for the proposed downtown shopping center development. Agency Member Rockoff questioned staff as lo where the boun- daries on the shopping center are in relation to ~he adjacent roadways. mr. Kennon responded that nhe boundaries shown on hhe dia- gram are located in the middle of the street but they are not the actual boundaries of the development. Mr. Kennon indicated the diagram was intended to define on a block by block basis the general location of the proposed development and the actual or precise boundaries would be defined as the development and design process continues. Agency Member Means questJ, oned about the west side of Chester Avenue being developed. Executive Director Kelmar answered that development on the west side of Chester was not totally out of the question and ~hat McDonald Group may consider future development on the other side of Chester, but at this point it is premature insofar as the developer is looking at only four stores. Agency [.!eraber Rockoff moved ~o receive and file the memorandum and. diagram from McDonald Group Ltd. The motion carried by a voice vote. REPORTS 1. Oral Report from the Executive status of the Hotel Development and the financing. Director regarding the required evidence of Executive Director Kelmar indicated that as a result of meet- ings between staff and Mr. Bell of AIRCOA regarding the design and economic issues of the Hotel, AIRCOA was going to submit a proposal that was somewhat different from the existing agreement. Mr. Bell indicated that from a standpoint of economics and being assured that adequate convention facilities would be provided with the best and most competitive convention facilities, they are going to propose to construct a larger hotel of approximately 300 rooms and are going ho propose that the Agency provide additional meet- lng rooms and banquet facilities in the existing auditorium con- vention center. Similar ihings like this have been done in Monterey and Long Beach. At their expense ~hey would send their archi- tectural and design people to Bakersfield who would then lek us know what we are looking at from the standpoint of cost. We have learned that these people have already been here and that they will be sending their proposal shortly. The estimated cost is approximately $800,000 to provide for the banquet room, the addi- tional meeting room facilities and the modification and upgrading of the existing meeting rooms. Once we receive that proposal, we will determine if it makes sense relative to the economics of the project. The auditorium was built 20 years ago and these modifi- cations would certainly give us more flexibility in providing better and more competitive facilities that would result in in- creased revenue received from this area. The financing was also discussed. Agency Members have received a letter from Dean Witter. The Agency's consultants have reviewed this letter and feel that it is clearly not a Bond Purchase Agreement. However, in their conversations with the Bond Counsel for the hotel deve- loper there will be another letter forthcoming shortly which will clarify the letter we have received and in it they will commit to purchasing the bonds subject to four conditions which the developer has already agreed to. They are: 1. The bond issue will be subject to a 12-year term; 2. The security for the bonds will be a letter of credit or a form of insurance that is available 3. The interest rate will be the market rate for like rated bonds on that particular date of sale with the condition that; 4. The economics of the hotel project have not materially changed. Executive Director Kelmar stated that there are apparently some changes that are going to be made on the federal level re- garding Industrial Development Bonds. It is understood that changes will be made effective January 1, 1984. What the bond- ing company is contemplating doing is selling the bonds before the end of the year and placing the money in escrow. The Agency's consultants have suggested tha~L we'accept this letter as progress towards the financing. The second letter will be as close as you can get in terms of when the bonds are going to be sold. How- ever, the consultants do suggest that we do not go out and make any commitments on land until the bonds have been sold and secondly, that we get an indemnification from AIRCOA in regards to any commitments we may make in terms of acquiring the land so that the Agency is completely covered. If this proposal is ac- ceptable to the Agency, it is their intention that the bonds will be sold very shortly and, once that is done, the project will move forward very quickly. I would like to get some direction from the Agency as to whether they want staff to continue on this basis and also if the Agency wishes to accept this letter as progress towards the financing of the Hotel with the under- standin~ that at the next ~eeting we would have the second letter. Agency Member Rockoff asked staff what is the time frame the Agency is working in. He was under the impression that today was supposed to be the go-ahead date, but it is now obvious that it is not that date. Executive Director Kelmar responded that the Agency has 30 days from receipt of the evidence of financing to approve the financing. He feels that as rapidly as AIRCOA is working on this project that staff can be back before the Agency within the 30 days in terms of the alternative proposal. This is certainly a step forward towards the financing and they feel we should pro- ceed. This is very common in bond purchase situations and the additional letter will represent a strong commitment. - 2 - Agency Member Rockoff stated that he didn't feel this letter was a very strong commitment letter to financing and he would like an opinion from staff or the city Attorney as to whether this should be accepted as evidence of financing. Executive Director Kelmar responded that this should be ac- cepted as progress towards the evidence of financing and there- fore the clock hasn't begun yet. Chairman Barton asked if the 30 days would begin then when the Agency receives the second letter. Executive Director Kelmar answered in the affirmative and stated that the Agency shouldn't be able to get anything better than the second letter in a bond purchase type of situation. The second letter will eliminate all the ambiguities and really pin- point the type of things that are normally in a commitment letter. Chairman Barton asked if we still have to have the equity owner instrument. Executive Director Kelmar responded that normally you look at the financial statements of the quity participants. In this case with AIRCOA's strength and if we receive some guarantee or indemnity from them, our consultants feel that would be adequate. Chairman Barton stated that if we are not starting the clock until sometime in the future and they are making the bond sale sometime before the first of the year, we are not going to be making a decision until sometime in December if we utilize the full 30 days. Executive Director Kelmar replied that staff should be back to the Agency very quickly, just as soon as we receive financing information. Agency Member Means stated that it seems that the Agency keeps extending deadlines for the developers. Executive Director Kelmar responded that the Agency is now dealing with a different situation. AIRCOA is very responsible and they have given every indication that they want to do this project. What we have had here is a change in the leadership role and also they are talking of upgrading the quality of the hotel. They didn't feel 'that what had been budgeted for the rooms was adequate. They felt that in order to attract conventions they wanted to have a quality type of situation and that is part of the problem in that we are now talking about a hotel that is $3-4 million more in cost. I believe that we are going to get a better product. They also are ~etting into the project late. Agency Member Means stated that it appears that the developer always seems to have control over the projects. At least with the Retail Center, the Agency has set up a time line. Agency Member Means indicated that if we set aside the land, give them exclusive negotiating rights, and they come in and sell us with an idea without having to put up any money that we will continue to get poor performance from the developers. That is something that needs to be looked at, even with the Hotel. Executive Director Kelmar stated that if everything appears o.k. that the developer for the hotel has indicated a willingness to put up additional good faith money. Agency Member Means questioned at what point. Executive Director Kelmar responded that after the Agency had determined if the economics of the modifications make sense then at that time he would be willing to put up the money. - 3 - Agency Member l~eans asked if we could do that on the 30-day period. Executive Director Kelmar responded that the Agency could make that a requirement. Executive Director Kelmar stated that he believed that the Agency could have an agreement before that time. Agency Member Means stated that he thought that if the pro- ject did not go through because of the developer that the City should be able to keep the deposit. Executive Director stated that the developer has indicated that if he is able to get this change, he is willing to do that. He will put up that money and be willing to forfeit it if the project does not go forward. Agency Member Means asked City Attorney Oberholzer if the terms on the deposit are clear. City Attorney Oberholzer responded that the developer has submitted a letter of financing which is not acceptable to the Agency and we have a 30-day period in which to review that and comment to them. What hr. Kelmar is stating is that the deve- loper is agreeable to putting up some money after that letter has been approved. The financing of the project was one where he would get all of the deposit back if he was unable to get the financing. When the extension was granted, Agency Member Rockoff brought up to ~he Agency if there should be a forfeiture of some kind and the agency said no. ?he position of the Agency right now is that there would be no forfeiture; but if we work some- thing out for an additional deposit then a forfeiture might be added. We cannot move for the acquisition of property until we have the project. Agency Member Rockoff stated that he would like to see some- thing at the November 9th meeting and then something happen as quickly after so things can be finalized. Executive Director Kelmar stated that staff should be able to report back to the Agency on the 9th with the consultants' recommendations and the feasibility of doing the whole project and if they feel it's adequate, have the attorneys begin draft- ing the changes in the Disposition and Development Agreement. Agency Member Rockoff then asked if the 9th of November would be the action date. Executive Director Kelmar stated that it would not because the Agency would have to advertise for two weeks %~henever you amend the Development Agreement. Staff could possibly have everything in such shape i~hat we could have the hearing for the Development Agreement in the end of November. Agency Member Rockoff questioned how long after the 9th of November meeting until the action dahe. Executive Director Xelmar stated that the Agency would have to advertise for 14 days. Agency Member Rockoff questioned if it could be back before the Agency on the 23rd, if that is within the fourteen days. Executive Director Xelmar replied that it is difficult to respond until he has seen the second letter. He said that if it is necessary, a brief special meeting will be called to dis- cuss the hotel project. - 4 - Chairman Barton asked if J.t is staff's intention to call meetings on scheduled dates or give the proper notice and call special meetings if necessary. If there is action to be taken, give the proper notice and call a special meetin9. Executive Director Kelmar responded that we can call special meetings and let you know the progress. The developer has already been here and taken back to his office plans of the Civic Auditorium to work on. Agency Member Means asked if there needed to be a motion to give direction to staff to proceed. Executive Director Kelmar replied that he felt he had the direction of the Agency and would move as rapidly as possible. AGENCY ACTION 1. Consent Calendar (a) Approval of Vouchers No. 100 through 126 totalling $25,885.38. (b) Approval of Design Review Board recommendations. (1) Signage for The Shoe Connection, 20th & Chester Avenue Comment: Design Review Board recommends approval. (2) Exterior remodel of the Haberfelde Building, 1706 Chester Avenue. Comment: Design Review Board recommends approval. (3) Signage for Big Brand Tire Company, 1401 - 21st Street. Comment: Design Review Board recommends approval. Agency Member (b) of the Consent Roll Call Vote: Payne made a motion to approve items (a) and Calendar. This motion carried by the following AYES: Rockoff, Means, Payne, NOES: None ABSTAINS: None ABSENT: Christensen, Ratty Barton ADJOURNMENT There being no further business to come before 'the Redevelop- ment Agency, Mr. Rockoff made a motion to adjourn the meeting at 5:30 p.m. ~E~'J. B~TON, ~hairman B~.kersfield Redevelopment Agency