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HomeMy WebLinkAbout05/12/83 MINUTES RA MINUTES BAKERSFIELD REDEVELOPMENT AGENCY Regular ~.~eeting Continued-May 12~ 1983 The Regular [[eetin~ was continued on ~ay 12, by Chairman Barton. of the Bakersfield Redevelopment Agency 1983 a~ 12:~0 n.m.~ and called to order MEMBERS PRESENT: James J. Barton John ~ieans Thomas Payne Art Rockoff Vernon Strong MEMBERS ABSENT: Chris Christensen Donald Ratty SCHEDULED PUBLIC STATES.lENTS Mr. McBride of Hedrick/McBride Development Company, continued his discussion regarding the proposed Convention Center Hotel. He stated that the letter of credit from the Bank of America zs critical for permanen5 financzng. He explained that the letter of credi~ does not say you have construction financing; it doesn't say you have a permanent loan for 30 years; it states that the hotel will be built. He stated thaE the manager of Bank of Amerlca~ who is in charge~ ~ 17 branches, w-ill come te Baker.s~Le.l~_~o meet with the invessors. He suggested that the Agency appoint someone from zhe City to meet with him. He. stated that the absolute minimum extension that he is requesting is 135 days, but he would prefer 150 days. Mr. Kelmar stated that when the gentleman comes from the Bank Of America, the City can have a consultant mee~ with him to make a determination and report back to the Agency. Mr. Means stated that Hr. ~{cBride alluded to some considera- tion in changzng the size and improving the project if financing were i~aproved. Mr. ~eans sza~ed ~hat if Er. McBride stands ~o ~a~{e additional money on that prolec~ he would be well advised ~o maxe sure that the Agency ge~s a percentage of that. ~ir. ~lcBride stated thaE ~[r. Corsaro made it public that he wonld get this hotel built; that many people have znvested in this and some own businesses in the downtown. He stated that if there is a change as suggested, the Corporation Commissioner will require that he go back and redo the entire offering. ~.r. ~eans qu~es-tioned the s-taff on the City's or consultant's perspective on ute a~ditional time providing the differenn kinds of fJ_~ancln%~ and the reasonableness of not committing any deal. ~ir. Xelmar stated ~na% he has no [3robiez~ with %he. e~%ension: but there is a problem with the Schedule of Performance because of the mechanism that he is using to finance the project. He statec that Mr. McBride and his investors have entered in~o a business transaction and are expecting to make a profit. When the City e~.uered ~nto this transaction, it was predicated on certain interes-~ ra-aes and on the fact ~hat a first lien holder would alsc requzre a percentage of the gross, and, based on these assumptions,, a deal was negotiated and ~,[r. McBride felt it was a fair deal, the City thought it was a fair deal and the City would never negotiate a deal that wouldn't result in the success of the project. He stated that ['~r. ~XcBride is asking for an extension which would save him money, but could result in addi- tional cost uo the City. There are two property owners zn that area that have already located sites for relocation, but the sites may non be available in the next, fe~- months, and the City zs facing increased costs for the improvev~en~s at the Civic Auditorium. Be stated tha~ the consultants feel that there should be so,ne participation on the part of the City in the enhanced develop- ment opportunity if zax-exemp5 bonds are utilized. He further stated that if the interest rates went up, staff would recommend that we renegotiate the agreement. ~r. ~eans stated that the City has an obligation to the tax- payers to see that the hotel provides a benefit to the community. It is the City's responsibility to see thaL this projec~t does not · ncur any financial liability to the City~ and that it benefits all the people. His first concern is the ~rotection of the tax- payers. ~[r. Oberholzer ssated that the Disposition and Develop~uent Agreement was signed with the developer which has certain per- formance criteria and dates that must be complied with. This is the first one to arise for which an extension is being requested. The DDA indicates that if the developer is unable to finance the equity or negotiate acceptable financing, the developer may apply for modificanion of those standards or may terminate this agree- ment and receive his interest. He stated that if the Agency consents To proceed on this issue before -the DDA can be modified, there has to be a ]oint public hearing of the City Council and Redevelopment Agency requiring two weeks notice of public hearing. ~dr. Rockoff con~ented on the forfeiture of the deposit~ that 'the City oe rei~lrsed [or any tzme, consultant fees, and costs of trymng to schieve a new project. He feels the City should be monetarily ?rotected against the failure of the developer to perform. Mr. McBride explained that you cannot be certain of what might happen in the stages of financing. He stated that he cannot meet the requirements of the forfeiture because he has to stand behind the people who are investing in this project. ~]r. Payne stated that Mr. McBride should be sure that the number of days he ms requesting is sufficient because he will no~ support another extension. He stated that the City has a risk and has advanced funds, and has an obligation to prosect the ~ax- payers of the City. ~ir. McBride stated that he requests the City gmve an extension of 135 days to solve these problems with the understanding that he and 'the Bank of America regional vice-president will work with the City to ~uake this letter of credit satisfactory. [Pr. Payne questioned whether this would be evidence of permanenr~ financln~ in that the Bank of Ar.~erica is guaranteeing that this hotel will be built. ~ir. Kelmar suggested that the Agency grant a one-month exten- sion in order to get the letter o~ credit. If this is acceptable and the City has the permanent financing, mhen he sees no problem with allowing another four months or so from that time. Mr. Oberholzer stated that a new Schedule of Performance in the DDA to reflect that'extension is required. Also, the DDA provides that until you give the developer written notice to cure 6. default, they can continue on in that default status. Once the written notice is received, he has 30 days to cure the default. If the Council and Redevelopment Agency simply proceed, then the May 14 date will continue. Mr. Strong stated that there are three positions on the part of the Agency, one is whether to grant an extension, the other ms whether the Agency will insist upon participating in any potential proceeds accruing from the interest rate; and three, an additional default of deposit. Mr. Strong stated that he could not see how the City could insist on a specific amount of money accruing with some potential favorable interest rate because the interest rate is unknown. Mr. Strong asked if the Attorney could explain wha5 can be done zn order to protect the City and participate monetarily in the bond financing process. Mr. Oberholzer questioned Mr. McBride if he needs to present to them a document or can the Agency simply let time run without issuing a letter. Mr. McBride stated that he needs a letter. He stated that if the regional director of the Bank of America and the Attorney agree that the letter of credit is the evidence of financing he needs, the Agency can start acquiring property, and the $100,000 becomes nonrefundable. ~r. Oberholzer said that if the terms o~ the DDA are not altered, the Agency can recommend an extension and it would be appropriate for the Redevelopment Agency to recommend that an extension be granted and that a resolution be adopted regarding the terms of the extension. Mr. McBride stated that if this body made that recommendation and voted for it, then he can take that to the Corporation Com- missioner and probably get the stamp of approval on the syndication. ~'~ir. Oberholzer stated that a copy of the minutes would )e sufficient for ~qcBride to process the paper through ~he Co~missioner. [[r. Strong made s motion to set a public hearing if required and grant the extension. Mr. Rockoff stated he would oppose the motion because he does have sufficient information on the $100,000 deposit. Mr. Barton motioned to recess, in order that Mr. Obemholzer could get the information requested, at 1:45. ~[eeting commenced at 1:50. Mr. Oberholzer stated that the DDA has specific provzsions with respect to the right of the developer ~o get his deposit Dack. Those conditions are: 1) If the Agency is unable 5o deliver the lease holder interest of the site; 2) If the feasibility re~ozt indicates it was not a feasible project; this has been claimed feasible. 3) If the developer is unable ~o deliver permanent financing. ~here is a provision that he can ask for modification or termzna~e his deposit~ and 4) In the event the City's ordinance prohibits the building of this project on the property. Once the City passes this stage, all of those conditions will proceed along, anything else will be a default, and the Agency would have the right of the deposit. Mr. Means stated 5hat the motion should include that staff, on June 8, will show the Agency how they would be able to recover the costs associated with this project and the City's interest and revenue as part of the bond financing. Mr. McBride stated that he needs the minutes of the Agency recommending the extension, and that the Council is the Agency. He commented that this will sell th~ idea. Mr. Means stated that he would like, in the future if the bond issue goes, to look at the issue of revenue that may come J. nto the City. Mr. Oberholzer stated that no bonds will be issued without the approval of either the Agency or the City Council. The Agency or Council can say they do not want ~o agree no the issuance of bonds, and if that happens, he has to find a method of financing that will be done within 150 days. ~Ir. Strong made a motion to recommend a 150-day extension of the date for approving permanent financing and that a public hearing, if it is required, be held on that issue for the purpose of modifying the DDA on June 6, which was followed by the following roll call vote: AYES: Strong, Barton, [leans~ Payne, Rockoff NOES: None ABSTAINS: None ABSENT: Christensen, Ratty AGENCY STATEMENTS Mr. Payne made a motion to approve all documents of the Tax Allocation Bonds for the proceeds no be used for the Agency's 18th and ~ye parking structure bonds and for other Redevelopment Agency projects. The ~otion was carried. AYES: Barton~ Nean~, Payne, Rockoff, Strong NOES: None ABSTAINS: None ABSENT: Ch~i.s~ensen~ Ratty REPORTS ~r. Payne read Repor-c No. 1~3 ~roYr the Landbanklng and Parking Committee. Nr. Payne made a motion ~o approve the recommendations. motion was carried. AYNS: ldeans, Payne, Rockoff, Strong, Barton NOES: None ABSTAINS: None ABSENT: Christensen, Ratty The CONSENT CALENDAR [ir. Bidwell was present no give the recommendations of Design Review Board for the approval of signage at 1631-17th Street and the 18th and }Lye Parking Structure. the The Design snrucnure. subject 1) 2) 3) ,~) Review Board revie_we_d_ the_ 18. th~ Board recommends approval of the parking s-crucnure · ao hhe following considerations: The screening of the automobiles above the third level · ~.uid be better achieved ~eitlT solid mas'cnnry The masonry walls that are on the east and west elevation are plain concrete blocks. It is suggested that there be some hex-cure. The landscaping plan be submitted along with the irrigation plans to the City. Cable barriers are sonething to consider in the building code. There is a requirement than there be a guardrail or barrier where you have an open floor to prevent anyone from being able to ge-c through the cables. Hr. Kelmar questioned Nr. Bidwell as to the cost of the cables vs. 'the cost of the [aasonry 3anels. Mr. Bidwell stated that the only example was one that other members of staff had prepared and could provide that figure. (f) Resolution of the Redevelopment Agency committing Lo provide interest d~e October 31, 19~ on its $6,130,000 Downtown Bakersfield Redevelo~men~ ?roject Tax Allocation Bonds, 1983 Mr. Stradling stated that funds were taken out for payment of interest, and Standard and Poor wants Lo be assured the Agency would use other Agency funds in the event tha~ tax increments were not available. ~ir. Payne made a motion to adopt Resolution No. RA9-83, of the Redevelopmen~ A~ency committing to provide interest due October 31, 1953 on its S6,130,000 Downtown Bakersfield Redevelopment Project Tax Allocation Bondsf 1983, which was carried by the following roll call vote. AYES: Strong, Barton, Christensen, Payne, Rockoff NOES: None ABSTAINS: None ABSENT: Means. Ratty (g) Adopt motion that reimbursement payments required pursuant 5o Agreemen~ No. 74-67 are subordinate to all pledges of Lax revenues for the payment of the Redevelopment Agency of the City of Bakersfield Redevelopment Project Tax Allocation Bonds, Issue 1983. ~r. Stradling indicated that when the Agency entered into the financing of the "K" Street garage, there was an agreement to pay the City any excess amount required for payments. In order to get these payments, the Agency agreed to make those payments from tax increments and any other funds of the Agency. Standard and Poor wants to be assured that you understand that those pay!~ent will no~ have a priority over the tax revenues that are going to be allocated for the payment of debt for the tax allocation bonds. ~r. Strong made a moLion to adopL a motion that reimbursement paynents required pursuant to Agreement No. 74-~7 are subordinate to all pledges of tax revenues for the paymenL of the Redevelopment Agency of the City of Bakersfield Redevelopment Project Tax Alloca- tion Bonds~ Issue 1983~ which was carried by the following roll call AYES: Barton, Christensen, Payne, Rockoff, Strong NO~M: None ABSTAINS: None A~E~T: i~eans: Ratty ~Y: ': OU~[~.NMENT There being no further business to come before the Redevelopment L~ncy~ ~r. Payne made a motion to adjourn the meetin~ at 5:21 p.~. ~irman akersfield Redevelop~{~nt Agency