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HomeMy WebLinkAbout10/19/01 BAKERSFIELD CITY MANAGER'S OFFICE MEMORANDUM October 19, 2001 TO: Honorable Mayor and City Council FROM: Alan Tandy, City Manager SUBJECT: General Information 1. The California League met today, October 19th. They approved the lease with the City, the purchase agreement, and the management agreement with Mandalay Sports. 2. As you may have seen in the media, a referendum will be held in March on a park land measure that could bring Bakersfield $1.0 million. Assemblyman Florez is holding a town hall meeting regarding that subject on Tuesday, October 23rd from 10:00 a.m. to 12:00 p.m. at the Martin Luther King Center. We will be participating. 3. The High Speed Rail Authority will hold their monthly meeting in Bakersfield on Wednesday, November 14th. The agenda will include a presentation on the proposed route and station locations for the Sacramento to Bakersfield segment. As the enclosed memo indicates, the meeting will be at the Superintendent of Schools building on 17th Street. Typically, the meetings start at 10:00 a.m, but that has not been confirmed yet. 4. Bakersfield received certification as a Keep America Beautiful city on October 5th, We are pleased to inform you that KAB will use our manual as the model for future applicants. 5. The Halloween Haunted Trail will be at Yokuts Park on October 27th, starting at 6:13 p.m. This year's trail, themed as "Hollyweird", is expected to be the best ever. Staff anticipates several thousand participants again this year. 6. Enclosed you will find a memo regarding risks and rewards associated with the Riverwalk Plaza project. Some of the information on financial issues - avoiding risk and the "reward" aspects, have not been discussed in months. This is an update. 7. We note that clean up actions are underway at the American Homes (Dave Cross) property. Honorable Mayor and City Council October 19, 2001 Page 2 8. Welcome to Becky Jamison, who has joined Recreation and Parks as their new business manager this week. 9. The site plan for Rio Vista Park, the 30 acre site on Stockdale Highway, should be completed in the next few weeks. One exciting new feature will be that the lake in the eastern part of the park will be "fed" by a waterfall. AT:rs cc: Department Heads Pam McCarthy, City Clerk Trudy Slater, Administrative Analyst BAKERSFIELD .............. ;: OCT 17 001 i PUBLIC WORKS DEPARTMENT !~ MEMORANDUM ........... ~' TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS DIRECTOR DATE: OCTOBER 16, 2001 SUBJECT: HIGH SPEED RAIL On November 14, 2001, the High Speed Rail Authority will be meeting here in Bakersfield. This regularly scheduled monthly meeting will include a presentation of the proposed route and station locations for the Sacramento to Bakersfield segment of the High Speed Rail Program. Typically, these meetings begin at 10:00 a.m., however the exact time for this meeting has not been determined. The meeting will be held in the Board Chambers of the Superintendent of Schools building at 1300 17'" Street. I would encourage all of those who have an interest in the High Speed Rail Program to come, and not only listen to the presentation, but to give input and to encourage the Authority to place the station in the downtown Bakersfield area. Once information is provided as to the actual time of the meeting, we will forward it to you. / / / / / / / GAGROUPDAT~VI~nlt)~20OI~HSR AT 10-16-01.wpd B A K E R S F I E L 'D OFFICE OF THE CITY MANAGER MEMORANDUM October 12, 2001 TO: Honorable Mayor and City COu~ .~ FROM: Alan Tandy, City Manager SUBJECT: Riverwalk Plaza / Risk and Reward Issues Much reference has been made about "risk" associated with the Riverwalk Plaza project. The theory of the concern is that the private sector side of the project may not do well and that tax increment and other revenues will not be able to equal the debt service, thus exposing the City to direct costs. To place such a concern into its proper context, we point out that the project also has substantial opportunities and positives that are both known and which grow over time. Comments on both risks and rewards follow: Risk Issues 1 ) The annual debt service under'the most recent set of numbers is $717,000. The payment for that amount is to come from tax increment ($317,000), direct and indirect other revenues ($288,000), and the baseball franchise ($115,000). Those three sources generate $720,000 or $3,000 more than the annual debt services. The tax increment, and direct and indirect revenue estimates come from an independent study the City contracted for with GRC. 2) To place the numbers in context - with none of the three sources coming in, $717,000 is 3/1000 of 1% or .002579% of the City budget. It is 7/1000 of 1% or .006726% of the City's General Fund. 3) With respect to the baseball franchise payment of $115,000 per year, the following should be noted: There is $2.5 million cash being put up for the right to have a lease in the new stadium. In addition, they are paying a very large amount - call it $3.5 million (as an example only) to buy the'franchise. It is inconceivable that anyone would pay $6.0 million in cash for an asset and then lose it over an $115,000 annual payment. Riverwalk Plaza / Reward and Risk Issues Page 2 In addition, the lease requires that the payments be secured by the value of the franchise itself. Again, no one would lose an asset of $3 - 4 million for $115,000. In addition, we will have .a lease with'the California League obligating the League to make the payments. The League has the financial strength of its members - 10 highly valued businesses. The League has backed its position with a management agreement with Mandalay Sports Entertainment - an extraordinarily successful business that has outstanding references and several other franchises at different levels of minor league baseball. They will act as agent for the League. In addition, there was a long list of interested .buyers for the team even with the $2:5 million capital contribution. If there was a default, it.would be very easy to get a replacement tenant since the capital contribution would be fully paid. $115,000 a year is a bargain rate for a new stadium - the list of interested buyers would be huge. In short, the $115,000 per year is in fact very secure. 4) With respect to the tax increment annual contribution of $317,000, the following should be noted: · The Assessor's Office initially bases their assessed valuation on construction value. GRC, in projecting the number, did the same. Traditionally, even if a business does not do as well as projected, it takes several years before that business has a case to document that it should be taxed at a lower rate. Even if that should happen to all of the new businesses, and a very large reduction occurs, say 25%, the annual value of that is $79,250, which equates to 3/10,000 of 1% or .000285% of our City budget, or 7/10,000 of 1% or .000749% of our General Fund - an easily affordable number. 5) With respect to the direct and indirect tax projections of $288,000, the following should be noted: · GRC actually estimated these revenues at $441,000 - not $288,000. In order to be extremely conservative, City staff unilaterally reduced the estimate by 34%! The number.is already conservatively forecast! · These numbers are based only on the City share of revenues produced by the project, which are not a part of the tax increment. The City receives only about 17% of the property taxes. To properly compare the value of the project to the community, the remaining 83% of these taxes which go to the schools, County and other taxing jurisdictions, could also be factored in. In summary, the $288,000 is already a highly conservative number which does not fully reflect the benefits to the community. Riverwalk Plaza / Reward and Risk Issues Page 3 Opportunities 1) The numbers presented reflect no additional redevelopment or property value appreciation in the area beyond what is scheduled to' go in as a part of the Riverwalk Plaza project. Yet we know that one company across the street from the stadium has already expanded. We know that Dave Cross and his partners are advancing improvements on an acre and a half surrounded by the Riverwalk Plaza project. We also know that the probability is that there will be more .redevelopment in the area - adding to, not subtracting from, the "coverage" for the stadium debt. It is entirely within the realm of possibility that within a few years, we will not only generate the $31'7,000 tax increment and $288,000 alternate revenues, but that, in fact, we may double it! 2) The proposed numbers include no assumption about naming rights revenues - even though' Mandalay has a very strong history of landing such deals in other cities. The City could realize a large amount from that source. Let us estimate between $100,000 and $200,000 per year. 3) Another way to look at the debt of $717,000 is that a previous decision of the City Council to build Centennial Garden pays that full bill annually. The decision to build the Garden carried far more risk than the stadium - it was 2 ~ times as large a budget with n_Do dedicated retail going in with it. 4) None of the above couhts the sOcial or economic values of creating 700 jobs in the Enterprise Zone, redeveloping 16 blocks, creating 500 construction jobs, creating an annual payroll of $6.4 million, making.Bakersfield a stronger attraction for conventions, successfully resolving the community demands for an ice skating facility, enhancing youth recreational opportunity, enhancing community pride, nor addressing several City ~Council goals. Summary The numbers presented are already on the conservative side. The "risk" of this project is not high nor unaffordably costly. A singular focus on risk ignores substantial opportunities and community improvements created by the 'project. The positive financial opportunities far outweigh the negative ones, both in dollars and profitability. The .improvements that would be constructed, both private and public, represent long-term asset additions to Bakersfield.