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HomeMy WebLinkAbout11/14/2002 B A K E R S F I E L D Mike Maggard, Chair Harold Hanson Mark Salvaggio Staff: Darnell Haynes MEETING NOTICE BUDGET AND FINANCE COMMI'i-rEE of the CityCouncil - City of Bakersfield Thursday, November 14, 2002 - 4:00 p.m. City Manager's Conference Room, Suite 201 Second Floor - City Hall, 1501' Truxtun Avenue, Bakersfield, CA AGENDA : 1 .~ ROLL CALL 2. ADOPT OCTOBER 10, 2002 AGENDA SUMMARY REPORT 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Staff report and Committee recommendation regarding Park Development Fee -- Rojas 5. NEW BUSINESS A. Staff report and Committee recommendation regarding request for additional funding for the Bakersfield Senior Center/Retirement Housing Inc. senior housing project --Kunz 6. COMMITTEE COMMENTS 7. ADJOURNMENT S:\Darnell~.002B ud&FinanceCom mittee~f02nov 14agen.doc DRAFT B A K E R S F I E L D an TandyCi~'y M~na~ Mike Maggard, Chair A~f/'~' ~ Harold Hanson · Staff: Darnell W. Haynes Mark-Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE 'COMMITTEE MEETING Thursday, October 10, 2002 City Manager's Conference Room - City Hall 1501 Truxtun Avenue, Bakersfield, CA 1. ROLL CALL Called to Order at 4:05 p.m. Present:Councilmembers Mike Maggard, Chair; Harold Hanson and Mark Salvaggio 2. ADOPT SEPTEMBER 12, 2002 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Discussion and Committee recommendation regarding Kern Economic Development Corporation (KernEDC) funding request At the Budget and Finance Committee meeting in September, the Committee reviewed the existing agreement, which provided yearly base funding of $60,000 and the potential to earn an additional $40,000 in incentive funds. Since 1998-99 of the $160,000 incentive monies available, only $70,000 has been earned over the four years. The Committee requested staff to meet with Mr. Collins and return to the Committee with an alternate plan. David Lyman, Economic Development Principal Planner, reported that he has met with Mr. Collins, President and CEO of KernEDC, to discuss funding issues in greater detail. AGENDA SUMMARY REPORT DRAFT Thursday, October 1 O, '2002 Page - 2 - Staff is recommending.providing KernEDC with a $20,000 base contribution for FY 2002-03 and an additional $50,000 in potential incentive funding. This provides KernEDC the opportunity to earn a potential $70,000 in the current fiscal year. The term of the proposed agreement would be for one year, retroactive to July 1,2002. Five key points of the proposed funding arrangement are: * $5,000 could be earned for each increment of (50) jobs that may be created at more than one company in the first two years of the employer's existence in the City. This would be a cumulative total, for example, it could be two companies at (25) each or five companies at (10) each. The (50) would remain the trigger for any incentive payment to be made. · Payment of the incentive would be made when each cumulative (50) job benchmark has been reached, which provides for a more immediate payment for the incentive work. - · KernEDC would no longer use file numbers but would refer to the client by a name, such as ',Project Smart." · KernEDC and City staff would develop a mutual list of contacts that fall under the terms of the contract. Should the contract not immediately be"renewed, this list would document those clients that both parties agree are covered under the contract for payment once the employer creates the necessary jobs. · KernEDC would make two presentations to City Council during the term of the agreement to provide an update on activities. Mr. Lyman explained City staff and Mr. Collins were in agreement with the above recommendations; however, Mr. Collins requested an additional sixth point. He requested jobs eligible for incentive payment be expanded to 'include jobs created at companies already located in Bakersfield, which would be beyond those created at new companies moving to the City. Staff did not recommend incentive pay for jobs created at existing companies. Mr. Collins stated he is in full agreement with staff's recommendation. However, he would like the Committee to keep in mind for future discussion his request to develop some type of incentive for jobs created at existing companies by the efforts of KernEDC. He provided a copy of a letter from State Farm Insurance Company. Committee Member Salvaggio made a motion to accept staff's recommendation. The Committee unanimously approved staff's recommendation and directed staff to forward an agreement to the City Council for a base contribution of $20,000 for FY 2002-03 and an additional $50,000 in potential incentive funding as outline in the above five points and detailed in the memo from the City Manager in the Committee packet. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING DRAFT Thursday, October 10, 2002 Page - 3 - 5. NEW BUSINESS A. Staff update and Committee recommendation regarding Kern-Tech, Inc. repayment of 'Economic-Development-loan David Lyman, Economic Development Principal Planner, provided an update. Earlier this year Kern Tech advised the City. that they were unable to make the payment due on their Economic Development loan. Their payment was restructured at $1,000 per month with a six-month review. Kern Tech has made the monthly payments on time for the six-month period and has a loan balance of $162~797. Economic DevelOpment staff has reviewed Kern Tech's financial statements. Their financial picture has shown a slight improvement; however, Kern Tech is still in a-negative financial situation. Staff's recommendation was to maintain the existing payment schedule with a one- year review. Committee Member Hanson stated the Committee had done an extensive review six months ago and Mr. Miller, Kern Tech, has shown good faith by making payments on time. He made a motion to approve staff's recommendation. The Committee unanimously agreed and voted to maintain the existing payment schedule of $1,000 per month for one year and review again in one year. Staff will forward and administrative report and agreement to the City Council. B. Staff report and Committee recommendation regarding Park Development Fee Public Works Director Raul Rojas explained the park development fee was established to help the City develop parks that are not installed by a-developer, which occurs when a developer only builds a portion of the housing tract. Over time the City has made attempts to raise the fee to cover the cost to construct a park at the present time. The size of a park was six acres and in 1997 the standard was changed to a ten acre park. It was also noted the definition of a park should be updated sometime in the future. Is a park just grass and trees or should the cost to build a park include other amenities. Assistant to the Public Works Director Georgina Lorenzi stated the last fee increase was in January 2001. Some of the costs for parks seem to be coming in higher than anticipated. In order to have funds available to build new parks, staff is recommending the park development and improvement fee for fiscal year 2002-03 be adjusted in accordance with the inflation rate of 2.8% as indicated in the April 2002 Consumer Price Index. Public Works staff has been working with the BIA on this issue. AGENDA SUMMARY REPORT D AFT BUDGET AND FINANCE COMMITTEE MEETING Thursday, October 1 O, 2002 Page - 4 - Brian Todd, BIA of Kern County, spoke regarding the following: 1) Propositions passed by the voters for State Bonds for parks and why that money is not being credited to those who buy new homes, which could offset the need for an increase in the fees; 2) using the Cost of Construction Index instead of the Consumer Price Index when calculating the park development fee; 3) questions regarding the census information being used by the City and the calculations-on multiple and single family units; and 4) what projects have been funded with State Propositions/bond monies? City Manager Alan Tandy explained Proposition 13 was a Water Bond Issue approved for a limited range of water-related projects, which could include projects that served both water and parks. That source of funds was used for the 40 acre water storage and recharge area on Stockdale Highway, which can also Serve as a soccer field. Most of the Proposition 12 money is going to fund the Aquatics and Ice Complex. These facilities will serve all residents and are intended to enhance the livability of the community. Bond monies are .also being used for the Kern River Parkway new 32-acre regional park with lakes and an amphitheater located in a brand new development area. If the monies were being used to maintain existing. parks, the argument to credit homebuyers would be valid, but Proposition money is being used for. specific kinds of projects so all residents are beneficiaries of the bond money. The City has substantial needs in the area of Parks and Recreation and the Park and Water Bonds allow the City to address park and recreation enhancements, which serve the entire community. The Committee requested Public Works staff to'meet with the .BIA regarding the use of the Cost of Construction Index, census information and calculations on multiple and single family units used to base an increase. The City Manager will provide the BIA with information on the City's anticipated projects/funding for State Water and Park Propositions/Bond monies. This item will return to' the next Budget and Finance Committee meeting. C. Staff report and Committee recommendation regarding acceptance of Financial Statements for the Bakersfield Centennial Garden and Convention Center Finance Director Gregory Klimko gave an overview on the 2001-02 Centennial Garden and Convention Center Financial Statements. Assistant City Manager John Stinson handed out a memo with a spreadsheet showing the annual savings over the last four years. Committee Member Hanson made a motion to accept the 2001-02 Centennial Garden and Convention Center Financial Statements. The Committee unanimously approved the motion and directed staff to forward the Financial Statements to the City Council. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Thursday, October 10, 2002 Page - $ -- D. Staff report and Committee recommendation regarding contract language · Risk mitigation.language · Indemnity language Deputy City Attorney Alan Daniel stated the City had received a letter from BFGC Architects requesting a change in the indemnity clause in our contracts. Mr. Daniel has met with them several times and exchanged correspondence; however, BFGC does not want to compete for City work as long as the clause is in City contracts. Basically, the firm is asking the City to change the contract standard for indemnity to a tort standard where in case of a lawsuit each party would bear whatever percent of the judgment a jury decides to award. The purpose for an indemnity is to prevent the City from being pulled into lawsuits in which the City is not actually an involved party. Under the proposed language change, an insurance company could name the City as an additional defendant in the case to be able to negotiate a settlement from the City in lieu of litigation. This indemnity clause applies only to professional liability situations (designs or plans drawn by the professional, etc.) and does not apply to general liability. This indemnity clause is fairly standard throughout the state and has been the City's indemnity clause for many years. The Risk Management division has checked with other cities and EXCEL..Except for one city considering a change, other cities are not making any changes in their indemnity clauses. The City Attorney's Office is recommending no change be made to the City's indemnity clause in contracts. Committee Chair Maggard expressed from the professionals prospective, the indemnity clause prohibits many firms from participating because their insurance companies want the clause out of the contracts. Those that are willing to assume this degree of risk, may not be in the top firms. This may put the City in a position where we have a diminishing pool of professionals who will do the work, and those willing to assume this degree of risk, may not be in the top firms. Public Works Director Raul Rojas stated there is a lot of pressure from the insurance companies on professionals that their insurance rates will be bumped if they do not get the indemnity language out of the contracts. In some instances they have a legitimate point--they should not pay for something the City does, but they should be responsible for what they do. If we have architects that have issues with the indemnity clause, he suggested the City negotiate on a case by case basis. City Manager Alan Tandy explained BFGC is the fourth or fifth firm refusing to do business with the City. BFGC is one of the top local architectural firms. It is becoming a serious concern as to whether the City can get topnotch people to work on our projects. The City Attorney's Office is charged with protecting the City and it is understandable they do not want to unilaterally give up protection for the City. However, if this trend continues, the Committee/Council may want to make a DRAFT BUDGET AND FINANCE COMMITTEE MEETING Thursday, October 10, 2002 Page - (~ - decision to accept more risk because the offset is not to be able to hire professional designers. The City Manager thought it would be sufficient at this time to just be aware of the problem. In the event the trend continues and the City has a substantial-job and does not have a qualified list of.candidates to interview, staff would like to return to the Committee at that point in time to reconsider the issue. The Committee requested staff to continue-monitoring. 6. COMMI'I-rEE COMMENTS 7. ADJOURNMENT The meeting adjourned at 5:37 p.m. Attendance: City Manager Alan Tandy; City Attorney Bart Thiltgen; Assistant City Manager John W. Stinson; Assistant to the City Manager Darnell Ha.ynes; Public Works Director Raul Roi, as; Finance Director Gregory Klimko; Deputy City Attorney Alan Daniel; Assistant Rnance Director Nelson Smith; Assistant to the Public Works Director Georgina-Lorenzi; _and Economic Development Principal Planner David Lyman. Centennial Garden and Convention Center Executive Director Jim Foss and Director of Finance Steve Wornack. Patrick Collins, President and CEO of KernEDC; Brian Todd, BIA of Kern County; and Mike Miller, Kern-Tech. cc: Honorable Mayor and City Council S:\Darnell~02Budget and Finance\02octl0summary B A K E R S 'F I E L D CITY OF BAKERSFIELD MEMORANDUM October 16, 2002 TO: ALAN TANDY, CITY MANAGER FROM: RAUL M. ROJAS, PUBLIC WORKS 'DIRECTOR~ SUBJECT: .BIA MEETING OF OCTOBER 14, 2002 On October 14, 2002 City staff met with Brian Todd, Executive Vice President of the Building Industry Association of Kern County (BIA). As instructed by the Budget and Finance .Committee, staff was to meet _with Mr. Todd to' address outstanding issues the BIA had with staff's recommended 2.8% increase in the Park Development Fee. ' In this meeting, the 2 issues included in the BI-Ns letter of October 11, 2002 (copy of letter attached) were discussed. As indicated in the BIA's letter, their poeition is that any increases in the Park Development Fee should be calculated in.the same manner as the Transportation Impact Fee (TIF). The TIF fee is based upon the Cost of Construction Index. For the last TIF increase, the annual averages fro.m calendar years 1997 to 2000 were used in computing the new fee. It is staff's Opinion that the BIA is correct on this point. The C~CI would be more appropriate to use in this case than the CPI, as originally proposed by staff. Mr. Todd indicated that a fee adjustment based upon' the annual averages for the most current calendar years for which a full 12 months of actual indexes are available would be acceptable to the BIA. This would be the 2001 and 2000 annual averages index, which computes to a 1.95% increase. This would increase the current fee of $635 per single family unit to $647. This is $6 less than staff's initial recommendation of a 2.8% increase (from $635 to $653 per single family unit). Staff recommends approval of the 1.95% fee increase. Mr. Todd was given the attached 2 worksheets summarizing potential uses of several bond grants applied for by the City. He indicated that philosophically, the BIA believes that the Park Development Fee should be adjusted by a credit for new development's share of the recent Bonds. Mr. Todd stated that one way to compute this credit would be to use the .percent of new homes per year (3,000), divided by 85,000 which is the number of homes within the City. He indicated that this issue could be tabled until a future date if the Park Development Fee was increased by no more than 1.95% as discussed earlier. It is important to note that staff does not share the BIA's view on this issue. Recent State Bond measures have provided some funds for local Recreation and Park projects; however, they are being used for enhancements beyond basic facilities and are distinct from those provided by the Park Development Fees. In addition, these are one time funds with special requirements which cannot be relied on for basic park development. C:\Documcnts and Scttings\glorenzi.00OXLzx:al Settings\Temp\BlA Mtg 10_14_02.doc Pa~, ~er~, Fee Page 2 of 2 Staff also indicated a desire to work with the BIA in the near future to work towards a common understanding of the basic amenities of a 10 acre park and the associated costs. PreliminaG, staff estimates show a significant increase in these costs for which input from the BIA would.be beneficial. In conclusion, staff recommends that the *proposed fee increase be based upon annual averages indexes for calendar years 2000 and 2001. This yields a 1.95% ($'i2) increase for single family units. With an increase no greater than 1.95%, the BIA has agreed to table its issue on the State Bond funds as previously explained.' Cc: Ken Trone Georgina Lorenzi C:~Documents and Settings~gk)mnzi.000~ocal Settings\Temp\BIA Mtg 10_14_02.doc Oct-11-02 09:28A BIA of KQrn County 661 6331317 P.01 M.e-mo To: Georgina Lorenzi, City Pu~ic Works From; Brian Todd Date: 10/11/02 Re; Park Development Fee Dear Georgina: To provide a starting point for you and I to meet and further discuss BIA's questions about the proposed Park Development Fee increase: ~. Roger Mclntosh and I were involved in negotiating the Cost of Con,strur..,tion Index as the basis for Increases in the Metropolitan Transportation Impact Fee. Pursuant to that, we believe any increases in the Park Development Fee should be calculated the same way as for the TIF. We also need confirmation of the 1.95 percent figure you mentioned yesterday.for the Park Fee increase. (3 To assist you, I am including with this memo a list of the state bond funds we are asking to know how and on which projects the city has budgetecl spending them. ! will be away at meetings part of next week, October 16-18. The week of October 21 is probably best, in order to allow you to gather the information we need; if you prefer, I can also meet as soon as October 14 or 15. Please let me know. Bdan Todd Cc: Roger Mclntosh, Chairman, Legislative Committee Alan Tandy, City Manager Oct-11-02 09:28A BIA of Kern County 661 6331317 P.02 Brian J. Todd From: Sent: vveone~oay, ,~u~y '~v, xVv,, ~:~'~ To: 'briant(~kembia.com' Cc: 'tonya@kemOla,com' Subject: FW; City of Bakersfield a;locatJons .... Ocigi~l Me;sage-- ~eKl:; we~lt~uoay, July lO, 2003 3;2a PM .... j~CL: ~ILy or ~akersfield alloca~o:ls City o[ Baker$£ield alloca=ions: Prop 12 Rober~i-Z,Bet,g httP://www.parks.ca.gov/pages/]OOS/files/ALLOCATiON~.OR2OOOBONDACT Prop 12 Per Capita $1.357 million h~cP://www.parks.ca.gov/pa~es/lOOS/fileS/ALLOCATiONSFO~2¢¢¢BONDACT.pdf Prop 12 Socccr£ield Grants $50,000 htLp://www.parks.ca.~ov/pages/lOOS/file~/ysb.pdf Prop 12 Prop 40 RobercJ.E,Berg $61~,000 (prelimJnary) h~t~//www.~ark~-¢:a.gov/pa~es/!OOS/file~/2002BondAct RZH.PDF Prop {0 Per Capita $I.0%9 million (preliminary) h~P://Www.parks.ca.gov/pages/lOOS/~tle~/2OO2~ondPe. Capita.PDF You can also see t~e kisco~ical aJ]ocatlon Lo Bake£sfie£d hL. tp://www.par~$.ca gov/paga~/lOOS/£i]e~/AGENCY.PDF Also, remember 2.5 million for Kern River Parkway in Prod 13 BIA Request for Information on State Bond Funds Funding Sources: Prop 12 Roberti-Z'Berg $ 615,000 Prop 12 Per Capita 1,357,000 Subsequent Prop 12 Per Capita Allocation By State(not identified on request) 402,865 Total Funding Sources ~ Uses: Community Ice Facility $ 615,000 Community Aquatic Facility 1,759,865 Total Uses ~ Additional Information: 1. The Prop 12 Soccer field Grant of $50,000 was not awarded to the City of Bakersfield. This grant was awarded to the Police Activities League which is a not for profit organization, separate from the City of Bakersfield. 2. As noted on the attached email, the 2 Prop 40 funds totaling $1,633,000 are preliminary and have not yet been allocated to the City of Bakersfield. Therefore, uses for these funds have not been identified. It is anticipated these funds would be utilized to address unmet community wide recreation and park needs. G:\GROUPDAT~GeorginaX~B IA REQUEST.doc Water Bond and Park Bond Grant Funding for the Kern River Parkway Proposition 12 Projects: Expand greenbelts signage and kiosks 155,000 Acquistion of privately owned property along the Kern River 102,000 Expand and improve trailhead parking 181,500 Bellvue Weir and Bikepath Bridge 375,000 Kern River Bikepath extension east (3 miles-Alfred Harrell Hwy to Lake Ming) 450,000 Kern River Bikepath widening-Stockdale to Manor 600,000 Kern River Shoreline Improvements 300,000 Kern River Bikepath extension west (9 call boxes) 45,000 Complete equestrian trail alignment 150,000 Administrative cost retained by State 141,500 2,500,0001 Proposition 13 Projects: Bellevue Weir and Bikepath Bridge 1,220,000 2 recharge lakes.(part of ~40 acre soccer park) 300,000 Kern River Bikepath extension west (9 miles) 980,000 1 2,500,0001 DRAFT P:~Fees~Prop 13-Water Dept BAKERSFIELD Economic and CommunitY Development Department MEMORANDUM November 7, 2002 TO: Budget and Finance Committee ~C~F~' ~xcfl''~''~ FROM: Donna Kurtz, Economic Development Director SUBJECT: Request for Additional Funding of $360,000 for the Bakersfield Senior Center Low Income Senior Housin9 Project Nearly eighteen months has passed since the Bakersfield Senior Center and Retirement Housing Inc., co-sponsors of an affordable 80-unit senior housing project received their financing award from HUD for a 202 Capital Advance in the amount of $6,670,500. The City's prior financial involvement with the project resulted from a decision to change the project boundaries to enhance the project design and quality of life of the seniors in the new community. To date, $575,000 of HOME funds has been expended acquiring several single family homes and a dilapidated apartment complex to assemble the property required for the new site. In recent weeks, development activity (design and engineering) has been completed and a contractor, S.C. Anderson has been selected to construct the project. The construction estimates have been completed. It was initially determined that the project has a shortfall of funding in the amount of $676,072. A letter was sent to city staff requesting these additional funds from the City. Staff met with the developer, contractor and Bakersfield Senior Center to try to work out a financing plan in which all parties contributed to eliminate the shortfall. The parties have reduced the original gap of $676,072 in several ways; (1) Bakersfield Senior Center and the developer have agreed on a lower price for the land, from $176,000 to $145,000. This lower price was negotiated based on a notification that HUD will only allow the senior's property to be purchased in the current "as-is" condition. This amount is $31,000 lower than the original negotiated price and is the result of a lower appraisal that S:~DEBBIE'S~Budget & Finance~Bakersfield Senior Center4.doc removes the estimated value of the property that is abandoned by the City's planned 5th street vacation and the assumed demolition of some structures that are currently on the senior's property. (2) The developer has a 2% contingency in the amount of $106,678 in the budget as required by HUD. Their initial construction estimate requested an additional contingency of $153,439. Since the contractor has received bids for most of the construction costs, the lower contingency amount was agreed to be sufficient. (3) Lastly, further engineering allowances are expected in landscaping and furnishings. You can see that all parties involved with the project have sustained financial cuts in order to make the project financially feasible. Below is a financial summary of how the project shortfalls were taken into consideration: Original Shortfall $ 676,072 LeSs - Cancelled Contingency - 153,439 Less - Lower appraisal for BSC Land - 31,000 Less - construction value engineering - 131,633 Net Shortfall remaining $ 360,000 November 30 is the official deadline given by HUD for the developer to close the escrow on the property required for the project and finalize the. 202 advance. If this is not accomplished, HUD has indicated that the 202 funding will be cancelled. Staff has identified two funding sources for the remaining shortfall. Staff recently audited, reconciled and closed out all of our old completed HOME projects resulting in available funds of $215,000. In addition, $145,000 of HOME funds is available from savings in our new construction account. These funds are not currently earmarked for other Iow income projects and exist as the result of savings generated from a multifamily housing project slated for Union and 4th Street. Using $360,000 of these funds for this project from these two HOME sources will not impact our other commitments. Meeting the financial gap to create affordable housing is challenging. Affordable housing developers look to localities and HUD to meet the gap. Despite the fact that this project received a HUD capital grant for construction costs, the HUD program does not take into consideration local costs and conditions. The 202 project is a Iow income senior project with services. The restrictive rent structure does not allow it to debt service loans. For information purposes, a schedule of recent Iow income projects that received City assistance is also attached to show the amounts received and types of financing these projects obtained in order to show how the City has participated in affordable financing in the past. Staff recommends approval of the additional funds of $360,000 to the Bakersfield Senior Center Affordable Housing Project from the identified HOME resources. S:~DEBBIE'S~Budget & Finance~akersfield Senior Center4.doc HOUSING COMPARISON TABLE ECONOMIC AND COMMUNITY DEVELOPMENT DEPARTMENT California Avenue Senior Housing $1,700,000 $1,000,000 $11,900,000 180 14.29% 22.69% $15,000 Canyon Hills Senior Housing $107,000 $310,000 $5,127,553 74 2.09% 8.13% $5,635 Park Place Senior Housing $550,000 $800,000 $6,179,756 80 8.90% 21.85% $16,875 Haven House $261,000 $0 $661,000 24 39.49% 39.49% $10,875 Madison Place Apartments $550,000 $0 $4,812,500 56 11.43% 11.43% $9,821 Proposed Bakersfield Senior Housing Project $935,000 $0 $7,605,500 80 12.29% 12.29% $11,688