HomeMy WebLinkAbout03/16/81 MINUTES RA MINUTES
BAKERSFIELD REDEVELOPMENT AGENCY
Special Meeting - March 16, 1981
A Special Meeting of the Bakersfield Redevelopment Agency, held
jointly with the City Council, was called to order by Chairman Casper Monday,
March 16, 1981, at 8:50 p.m. in the City Council Chamber. The City Clerk called
the roll as follows:
MEMBERS PRESENT:
ABSENT:
STAFF PRESENT:
OTHERS:
Vincent Casper, Chairman
Jeanne Foth, Vice Chairman
Dr. Richard Bilas (Left meeting at 11:45 p.m.)
John Mooneyham
Gene Winer
Frank Lewis
Dr. Glenn D. Puder
Philip Kelmar, Executive Director
Richard Russell, Deputy Executive Director
W. D. Higginbotham, Treasurer
Richard Oberholzer, City Attorney
Dennis Needham, Director of Fire & Development Services
Jim Gilchrist and Dave Kennon, Community Development & Housing
Marjorie Friedlander, Agency Special Counsel
Calvin Hollis, Agency Financial Consultant
Mr. Tim Kelly, Keyser Marston Associates, Land Use Analyst
Mr. Daniel Donahue, President, John S. Grlfflth & Company
A copy of the Minutes of the Council of the City of Bakersfield,
Pages 8 through 19, dated March 16, 7981, marked Exhibit "A," reflecting all
action taken at this joint meeting, is attached hereto and thereby made a part
hereof.
Bernice E. Stewart, Secretary to the
Bakersfield Redevelopment Agency
Bakersfield, California, March 16, 1981 - Page 8
Mayor Shell declared a brief recess at 8:45 P.M. and
reconvened the meeting at 8:47 P.M.
Joint Meeting between the City Council
· and Redevelopment Agency for review
and consideration of the 19S1 Urban
Development Action Grant (UDAG)
Application for the Downtown Retail
Center.
The meeting was Called to order by Mayor Shell.
Mayor Shell announced that Councilman Payne would sot
participate in the following matter due to a real or imaginary
conflict of interest.
Agency Chairman Casper called the Redevelopment Agency
Special Meeting to order·
The City Clerk called the roll of the Agency as follows:
Present: Agency Members Casper, Foth, Bilas, Mooneyham, Winer
Absent: Agency Members Lewis, Puder
Director of Fire & Development Services Needham stated
the purpose of thi~ meeting is that the Department of Rousing and
Urban Development (HUD), who administers the UDAG Program, is
requesting further assurances from the Council & Redevelopment Agency
regarding the $7,500,O00 UDAG Application the City has submitted.
With the aid of a map, Mr. Needham pointed out the following changes.
The 40 acre shopping center site, as previously designed (bounded
on the east by "Q" Street, on the west by "L" Street, on the north
by 23rd Street and on the south by 20th Street), has been changed
to a differen~ configurZt'ion. It is now approximately 11 acres
smaller. The site now proposed in the UDAG Application is approxi-
mately 29 acres and the west boundary line has been changed to "M"
Street.
E X H I El I T 'A"
Bakersfield, California, March-16, 1981 - Page 9 ~'-
Mr. Needham'ing~'bduced the following persons:
Mr. Cal Hol].is, representing the firm o£ Katz,
Rollis, Coren & Associates, Financial Consultants
for the Redevelopment AEency.
Mrs. Marjorie Friedlander, Special Counsel for
the Redevelopment Agency.
Mr. Tim Kelly, representing Keyser Marston
Associates, Inc., Land Use Analyst.
Mr. Dan'Donahue, President of John S. Grif~ith
Company, developers of the project. ,
Mrs. Marjorie Friedlander, Special Counsel for the
Redevelopmen{ Agency, stated the Council decided, last July, to
approve the submission of a UDAG Application. The original agree-
ment between the Bakersfield Redevelopment Agency and developer,
John S. Grifflth Company, goes back even further than that. The
Joint Development Agreement was negotiated and approved by the
Redevelopment Agency in December, 1979. The public budget, as it
appeared at that time, looked as though there would be a gap in the
ability of the Agency to meet all the necessary public costs. At
that time a determination was made to approach the Department of
Housing and Urban Development (HUD), to seek an Action Grant to
fill that gap, so it would be possible to bring about the substantial
private investment of funds as proposed by the John G. Griffith
Company in order to develop the downtown retail cch%er. The UDAG
Program is fairly n~w. It is an off-shoot of the Community Develop-
ment Block Grant Program, which makes sums of money available for
various kinds of activities in eligible communities. Bakersfield
is an eligible community asd, as such, can apply for an Urban
Development Action Grant, and that is what we have been trying to
process since last July. The information submitted in July was
considered in September and'a decision was reached, at that time,
that there was not sufficient information available to the UDAG
Program in terms of clear and film commitments from each of the
participants for them to d~ide to fund it. It appeared that it
was a project that would be el~gibl~ for funding provided a sufficient
: '"~ Bakersfield, Calii'ornia, ~iarch 16, 1981 - Page 10
set of commitments:c~uld }e.~Ru,t,~together. T~e UDAG Program requires
that every single component,~t,hat :is identified as something to be
included in the finat :p~oject, be supported by a letter of co~nmit-
ment or intent from the developer, participating department stores
and the developer's lender. At the same time it must be shown how
the public,sectors' contribution is going to be financed. Each one
of thqse items must be:documented and part, o~ the file. Those
letters are, not commitments forever, each time the project is held-
over for a quarter each one needs to be updated. Following the
September review~we were advised that the application would be held-
over for review in December. Between the time the submission was
completed in{September and the December~quarter there were some
changes in the circumstances that the developer had to confront.
The major change was a decision by one of the department stores,
that originally intended to build his own store, to have the developer
build that store for him and then lease it from the developer. That
made a very substantial difference in the ability of the developer
to undertake the project, because that was a change in his private
cost. The siiu&tion was evaluated by the Agency's consultants,
Keyser ~arston Associates, and it was determined the developer would
no longer be able to afford the original land price that he had
proposed to pay. The reasonable cost to the developer for that
opportunity was su6stantially less. That meant that the Redevelop-
ment Agency would have a smaller sum of money from the sale of land
that it was to acquire~for the shopping center~ Therefore, there
would be a problem getting~the Agency to provide sufficient funds
to carry out its obligations. The developer went back to look at
the site to see what could be done to reduce the cost to the
Redevelopment Agency so,that no additional funds would be required
from the Agency in order to fulfill its obligation. At that point
~r. Cal Rollis became involved. Be reviewed what was now being
asked of the Agency. A way was worked out so that the Agency could
Bakersfield, California, ~larch 16, 1981 - Page 11 ';". ~
continue to part'ieipa.te~nd,assemble'a site within the b~dget
limitations that~'exis~ed~!'! A.proposal was made to reduce the'site
which would reduce the cost'of ncquiring the land and relocating
the occupants of that site2 It became necessary to pull all'that
together, rather hastily~ so that when the time came for the
December review we did not have every letter in place and HUD held
the proposal ove~ for the Ma~ch review period.
This is a rather dynamic process. The figures do not
remain the same, things are always changing and we are trying to
keep the UDAG Program people advised of where the project stands
at the present time. Each quarter the costs and sources of income
need to be verified to make sure they are still true or revised to
bring them up to date. The project is substantially the same except,
at this point, instead of four department stores being committed
there are three.
Mr. Dan Donahue, President of John S. Griffith Company,
stated when the plans were first submitted they encompassed three
additional City blocks, to the west of the project as it is now
proposed. There were also two other parcels to the north, running
south of Highway 178. In the original scheme there were five
department stores, however, because of problems encountered by
Montgomery Wards, in their capital expenditure budgets, they were
deleted from the project. As a result John S. Griffith Company has
finalized agreements..with their Joint venture partners. The May
Company has a proposal for a 2~level store of 120,000 square feet.
Gottschalk's is planning a 80,000 square foot store~ which may be
expanded to 90,000 square feet' Today verbal approval was received
from J. C. Penney's'for a 21level 138,000 square foot store. There
is also a site in ~the middle Of the center for a fourth major store.,
2 levels with 80,000-90,000 Square feet, and that will be deter-
mined as the development ~goes~ahead. There are four or five potentia~
prospects for this site. 'The ~emainder of the center will contain
Bakersfield, California, ~a~ch 16, 1~81 - Page 12
271,000 square feeti~ah~,.h~Ys~pproximatel~.~12$ shops. The entire
center will be~two~ levels'~wiZh~ou~ major department stores and
125 shops. There will~also~ be a 2 level,' 3,§00 car parking structure.
Mr. Donahue then explalned the traffic Patterns around the shopping
center and parking structure.
Nr. Tim. Kelley, representing Keyser Narston Associates,
Inc., stated when the original UDAG Application went out, before
the project changed, the land disposition value was estimated at
$7,000,000 with the parking lease. Now the value is $3,000,000.
There are a couple of major differences in the proposal. There
will be one less department store and one department store has
decided a~ainst buildin~ their own. store. They will have the
developer build it and then lease it back from them. Other than
that the mall shop spmce is exactly the same as before. In the
last year, with interest rates ~oinE up, the department store took
the position that they were not goin~ to absorb the increase, the
developer will, and they will pay a fixed rent· The parking lease
payment originally was $800,000 going tO $900,000, and now it will
be $7R2,000 going to $812,000. The reduction is due to the omission
of one department store and pro rata reduction across the board for
that store. In essence we feel the developer is payinE a reasonable
price, ~iventhe risk of the center, ~nd the major changes were not
unique.
Mr. Cal Hollis, President of Katz, Hollis, Coren &
Associates, Financial Consultants for the Redevelopment AEency,
stated they have been workin~ with the Redevelopmen~ Agency and
City of Bakersfield throuEhout this UDAG process. The changes that
have been explained this evening have caused significant changes in
the way a financing plan has been developed in order to put this
together. The financing plan that ~s now proposed, for your
consideration and explained in the information contained in the
agend~ packase, is one which we feel is viable· It is one that
meets the needs of this particular development, both from the
Bakersfield, Ca%ifornia, March 16, 1981 - Page 13 .
Agency's and City's p~rspe~ti~e~ ,~What Is being asked tonight is
to basically give the staff permission to continue with the UDAG
process, meaning completing this quarter's filing. The staff'needs
the Council's and Agency's input and that can be accomplished
through the resolutions presented tonight for adoption. Tonight
is not the final decision, there will ~be a number of decisions
later.
The basic financing for this project is coming from three
areas: (1) the developer who will pay the Agency $3,000,000 and an
annual parking lease payment of $722,000 for the first four years,
going to $812,000 for the balance of the lease; (2) the Federal
Government is being asked to grant the City of Bakersfield $7,500,000;
and (3) the Redevelopment Agency is asking to use tax increments,
generated by this development and other developments within the
redevelopment project area, to fund the project. The primary
mechanism for funding this project is a debt instrument called a
Lease Revenue Bond. It is the exact type of financing used for the
"K" Street Parking Garage. The Redevelopment Agency issues Lease
Revenue Bonds to fund part of the acquisition and construction of _~j
the parking facility. This facility will be publicly owned by the
Redevelopment Agency. The City will lease that garage from the
Redevelopment Agency and agree to make an annual lease payment equal
to debt service on the bond that was sold to finance the facility.
The developer will agree to sublease the parking facility from the
City and maintain and operate it at their cost. These leases
typically run.for a term of no less than 25 years and very often
go to 50 years, with additional rights to extend the term. This
will be a major long-term lease. The difference between what the
developer pays the City and what the City must pay in its annual
lease paymen~ will be reimbursed ~o the City, annually, from tax
increments generated by this development and other developments ~
within the project area.
Bakers£J.e[d. Ca[il~m~ia. March 16, [981 - Page 14
This ls;th~,i~.mary .me¢l~anism bY which bonds will be
sold for a total of $15,395,000, secured by the lease £rom ~h~
paying, includes $7,500,000 ill UDAG [unds, $l,198,000 of interest
earnings (i~terest earned on the bond proceeds during the acquisition
and construction period), and a deferred compensation to the City
Bakersfield, California,. March 16, 1981 - Page 15 -.~
Demolition-si~t~'~preparation.and on and off site improve-
ments have been re-estimated, ns of this mouth, by the City staff
for that parking facility at $6 ~ 000, 000. In negotiations witb tbe
the $6,000,000 would be tile dew~]oper's responsibility.
The last major item of cost is $4,600,000 and called
interest. The Agency will sell the bonds 2 years prior to the time
the facility is completed and the City cannot start making lease
borrowed money is being held by the Agency it is invested and earns
interest and that interest is available to the Agency for this
project. Tbat interest is estimated to be $1,198,000.
payments, is $72,545,000; or 84Q. of all the money being put into
the prt~ject. The Redevelopmen~ Agency is placing $'1,156,000 of its
own funds into the project and issuing bonds, supported by tax
$3,057,000, for a total of $4,200,000 of public funds not supported
by this particular development. The City of Bakersfield is asked
to put in $500,000, in the. form of land it currently owns. The
Federal Government i~ asked to put in $7,500,000 of UDAG funds.
Baker~ficl(i, (-ktLit,,rnia, Mai'cb 16, 1951 - Page
Interest earnings of'!$1;198;O00. 'The total from all sources is
jnsl under $86,000,000.
Mr. Skip i¥igham; representing th~.~ Downtown Business
Mr, John Corcoran, 201 Wether]y Drive, stated he is
concerned about what this project wJ]l ultimately cost the City of
Bakersfield and asked several questiun.~ about the public financing
the projec~ over a 25-50 year length of time.
Agency Member Bilas expressed his concerns about the
entire l)roject, not the initial lunding or UDAG funds, but the
long-term prospect for surviwtl of the downtown mall. Dr. Bilas
stated he is scared to death of puhlic.-private enterprises, because
they become public enterprises. The fr~e enterprise system should
be preserved in its purest form, il' possible. His philosophical
belief is that subsidies are not necessary. He stated he is all
for what is being done, but not at a cost to the taxpayers of the
City of Bakersfield or the U.S.A.
Councilman Christensen, speaking in opposition, made the
following prepared statement and requested that it be spread in the
minutes:
It seems paradoxical, if not hypocritical; that
some of the people in our community who strongly
support a program to get government out of
business, even voted for a President who chafed
at the bit and said that, have suddenly changed
their minds and want this Council to support a
request for $7,500~000 of Federal grant to
build a downtown mall. It seems that the
guiding principal~o£ whether government should
be in business or not, is whether it is pro-
ratable for a particular individual or a group.
A great philosopher once stated that "truth is
truth so long as it works, when it no longer
Bakersfield, Califor~ia, 5larch 16, 1981 - Page 17 ' · -
works it iSq'nO~']onger truth,:!! When private
enterprise has to call on government for help'
then private enterprise is no longer working
or truth. It was Shakespeare who, through one
of his characters stated "Oh consistency, thou
art a jewel," philosophy. The government is
like a dope pusher today, he has made everyone
become addicted. This applies to conservatives
and liberals alike. In looking at the audience
I've never seen so many conservative solialists
sitting out there. How in good conscience can
the government cutoff the income of needy
children and turnaround, ~riving millions to
the business commuuity l'or beautification~
expansion and not for survival. Beautification
should be left up Co the individual owner and
not milked out or the taxpayer. In conclusion,
I should ]~ke to state the pashers or advocators
of the downtown mall all have something to gain
without spending a nickel. Furthermore, want
the taxpayers to finance their speculative pro-
jec~ and guarantee the bonds. There is a lot
more I could say. I hope I've expressed the
honest, the goodwill of the Second Ward.
thank you.
During a very lengthy discussion, Mr. Tom SchrJber,
Executive Vice-President ¢,f John S, Grif£ith Company, answered
some questions nbout the package for HUD for the UDAG funds and
traffic in the surrounding area.
Councilman Strong stated he is concerned about the
certainty of the acquisition costs. Public costs over the next
25 years will be at least $35,000,000 and the City will be liable
for another $20,000,000, in addition to all the money that has gone
into the project so far. Something should be done in this area,
but he stated he is not sure this is the answer. Councilman Strong
also stated he is not going to be rushed or stampeded into making
a decision which will be a liability on this community for the
next 25 years and'he urged that every Councilman take this into
consideration.
Upon a motion by Councilman Chrisgensen a brief recess
was declared a~ 11:45 P.M., in order to change the ~ape on the
recording equipment. The 3oint meeting was reconvened at 12:00
Midnight.
Upon a motlon by Councilman Means the staff was requested
to prepare a Housing Plan for the Downtown Area for all income
Bakersfield, Calilo~'nia, March 16, 1981 - Page 18
levels with timetables and specific numbers to be presented to
the Agency and Council for apgroval, by the following roll ca] 1
vote:
Ayes:
Noes:
Absent:
Councilman Ratty
Abstaining:
Upon a motion by Councilman Barton, Resolution No, 19-8]
of the Council of the City of Bakersfield setting forth the intent
of the City Council ti) sell certain real property to the Bakers-
field Redevelopment Agency ant{ to lease public parking facilities
in connection with the development of the Downtown Bakersfield
Retail Center, subject to a condition, was adopted by the following
roll call vote:
Ayes: Councilmen Barton, Means, Ratty, Rockoff
Noes: Councilmen Christensen, Strong
Absent: None
Abstaining:
Councilman Payne
· Adoption of Resolution No. RA1-81 of
the Bakersfield Redevelopment Agency
(The "Agency") setting forth the
Agency's intent to accept a Revised '
Development Proposal from Bakersfield
Associates and to issue Lease-Revenue
Bonds to finance a portion of the
public costs for the Downtown Retail
Center Development subject to certain
conditions.
Upon a motion by Agency Member Foth, seconded by Agency
Member Winer, Resolution No, RA1-81 of the Bakersfield Redevelopment
Agency (The "Agency") setting forth the Agency's intent to accept
a Revised Development Proposal from Bakersfield Associates and to
issuo Lease-Revenue Bonds to ['illtlllce a portion of the public costs
RECESS
MARY K. SHELL
~,IAYOR of the City of Bakersfield, Calif.
,j
ATTEST:
PHILIP YET.MAR
CITY CLERK and Ex Officio Clerk of the Council
of the City of Bakersfield, California
ma