Loading...
HomeMy WebLinkAbout06/02/1995 B A K E R S F I E L D Irma Garson Kevin McDermott AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Friday, June 2, 1995 12:15 p.m. City Manager's Conference Room 1. ROLL CALL Call to Order 12:20 p.m. Present: Patricia J. DeMond, Chair; Councilmember Irma Carson; and Councilmember Kevin McDermott 2. APPROVAL OF APRIL 24, 1995 MINUTES Approved as submitted, 3. PRESENTATIONS None 4. PUBLIC STATEMENTS None APPROVED AS SUB1TtTI'ED JULY 10, 1995 FlEE COPY AGENDA SUMMARY ORT BUDGET AND FINANCE COMMITTEE Friday, June 2, 1995 Page -2- 5. DEFERRED BUSINESS A. ASSESSMENT DISTRICT DISCLOSURE NOTICE It is the understanding of Councilmember DeMond that the Board of Realtors, escrow industry and builders will continue to work with staff and have a completed project available by approximately July 3, 1995, in time for the July 10, 1995 Budget and Finance Committee meeting. Issue continued until that time. B. SENIOR CENTER LEASE AGREEMENT Dolores Teubner gave a brief legislative history on the Senior Center leases (memo attached). In 1985, the City entered into two lease agreements (Agreement Nos. 85-48 and 85-49). One for the main facility, the other for the storage facility. Both leases are not to exceed a 55-year term. The second Agreement 85-49 for the storage facility is renewable on successive ten-year periods. The storage facility agreement allowed the Senior Center to sublease that property for income generation. In 1988, the City (Parks Division) entered into a sublease with the Senior Center for $15,972 per year for storage of park maintenance equipment. That lease has been renewed four times. Three times for two-year periods; the last time it was renewed until June 30, 1995. As an additional note, the original lease for the main facility specifies that the City provide landscape maintenance services. It does not require that the City do building maintenance. The City does do some building maintenance of approximately $1,000 per year. With regard to the main building lease, at the end of 55 years, the property clearly belongs to the City with the constraints placed upon it by HUD (because it was purchased with CDBG funds in 1981). Alan Tandy commented about the "image" of this issue being controversial. Rather than giving the Senior Center grants, the City entered into these agreements to lease back property the City owned. Council, earlier, gave direction to staff to bring that issue to conclusion by, . roughly, July 1, 1995. In order to do that, the City exercised an option contained in the storage building lease, which gives 60-day notice of termination. This is the overlying lease where the City leases it back for storage. That notice of termination is effective on July 5, 1995 (this does not impact the main facility in any way). AGENDA SUMMARY RI_~ORT BUDGET AND FINANCE COMMITTEE Friday, June 2, 1995 Page -3- Three options have been identified, none of which are without problems: First, if we just leave the status quo, the overlying lease for Parks purposes expires on July 5, 1995, and, at that point in time, the City could use the storage facility. In order to comply with federal laws, however, the City's General Fund would have to pay the Block Grant program $8,000 per year, or the monthly equivalent for however long it was used. Another option is that the City continue the 55-year lease to the Senior Center so that they can use the storage property to generate revenue. The City could, under that alternative, move the Parks Division storage out and relocate it, for some period of time, at the old corporation yard on Truxtun Avenue. That is not a '~orever" solution. The City has offered that old corporation yard location for the new Amtrak Station. We do not know if it will be used. Even if it is not, that property will eventually be redeveloped. At that point, we would have to lease replacement facilities. This solution gets rid of the City's "image" problem and relieves the financial problem with the Senior Center. Option three is that the City make a larger, single gesture to the benefit of the Senior Center, by deeding them both properties. Under this, the City would relocate the Parks Division storage to the old corporation yard. The Senior Center would own both properties and could lease the storage facility for revenue generating. This would remove the City from the $5,000 per year cost of providing the outside maintenance services on the main building lease. This option was reviewed by Mr. Vernell Jackson, Director of the Senior Center. He indicated they are two to three years away from being in a position where they can afford to absorb those costs and did not express comfort with this proposal. Mr. Tandy pointed out that the properties are a substantial asset and the storage facility could be leased or mortgaged to generate capital to operate the Senior Center. It has no debt or encumbrances against it which would also be a vehicle for buying '~ransitional" time. The absence of Council action leaves the termination in place on the rental, and causes the first option to take place. This will be on the June 14, 1995, Council agenda. Councilmember Carson submitted the recommendation: 1) that the 55-year lease remain intact; 2) that the City's lease to use the storage facility be terminated; and 3) based on the fact that the City contributes monies to other organizations for project operation, that the City should also contribute monies to enhance senior services. Councilmember Carson recommended that $15,000 per year be allocated to enhance senior services in Fiscal Year 1995-96 for the Bakersfield Senior Center and the Community House Senior Center, stating that the AGENDA SUMMARY RT BUDGET AND FINANCE COMMITTEE Friday, June 2, 1995 Page -4- recommendation aligns with the vision that we all have to provide equal access in the allocation of public funds. Councilmember Carson requested the support of the Budget and Finance Committee of this recommendation to the full Council. Representatives of the Senior Center made several presentations regarding activities and programs conducted by the Senior Center for seniors throughout the City of Bakersfield, including transportation programs and recreational activities. They expressed concern over Council's previous action regarding the leases. Councilmember McDermott commented about the Council's concern with on- going expenses. The City has, historically, helped organizations get things going, but we do not get involved in on-going expenses. He used the Homeless Center as an example. He stated that the community is concerned with public safety, and the funding of those services should be the City's priority. Councilmember DeMond expressed concern over providing government funds for operational costs. She indicated she has not heard any Councilmember say that this issue has come up because of the Senior Center being in Ward 1. She stated that she voted for the $20,000 appropriation so that it could be brought forward under the Block Grant budget to be utilized for negotiation purposes, and had publicly stated that she was not voting to support the actual payment of the $20,000. She went on to say that she would like the Senior Center to be independent of government and is willing to give the Senior Center the property predicated on the fact that the main facility would only be used as a Senior Center. They would be free to do what they want with the other property. Mr. Jackson suggested that if the property is deeded to the Senior Center that the storage facility be deeded immediately. Also, if the main facility is deeded immediately that we include a caveat in that transition deed that allows the City to maintain the current maintenance functions for a two-year period. Councilmember Carson stated that the City does give the Bakersfield Symphony money for operating costs, as it is part of the operation of the Convention Center. She stated that the City gives the Symphony $29,000 a year and it is unfair to give to one group and not to another. She indicated that if the policy is to not give monies, then do away with the $29,000, and be consistent. She commented that the lease for the storage facility can be terminated, and the Senior Center can use it to generate income. Councilmember Carson indicated there are some exceptions wherein the City gives money to different organizations such as Fox Theater, Bakersfield Leadership, and $60,000 for the Homeless Center. ., AGENDA SUMMARY R~I~IORT BUDGET AND FINANCE COMMITTEE ~ Friday, June 2, 1995 Page -5- .Jake Wager explained that the money to the Homeless Center is used for some repairs to the Center; the City owns the building; the Center is 100% funded from CDBG funds; it is a service provider to the City; and, operating funds are not provided. Councilmember DeMond stated that she has not always been completely supportive concerning the situation with the Symphony. Since the Fox has been refurbished, she felt the Symphony would be been well-suited to go to the Fox because the Convention Center needs the room to use for other things. She reiterated that she would like to see both parcels go with the caveat that the main parcel only be used for the Senior Center situation. In response to a question of Councilmember McDermott, Mr. Wager responded that the value of both properties is well in excess of $500,000; how close to $1,000,000 is difficult to say. Councilmember Carson explained that in terms of a transition time, the Center needs time to put their finances in place to operate in an efficient manner in order to be financially prudent, and not place the Center in an adverse economic position. The request to allow time for transition is fair. The Committee can recommend that the transition be terminated at a specific time, and the deed would convert to the Senior Center. Mr. Jackson indicated that the Senior Center could acquire a loan; however, it would require some time. In addition, it represents another problem because they lose the income from the storage facility plus they would be required to service the new debt. The transitional period would allow the Center to put together a plan that eases that hit. It makes no sense to take that hit and have services curtailed. Councilmember DeMond stated that she could not support two years. She stated that she could support a transition time within a year, with a caveat that within a year thero would be a no-return situation. Councilmember McDermott suggested January 1, 1996. Mr. Jackson commented that the Center would be acceptable to a one-year transition period, and suggested that a caveat be included in the deed that maintenance be maintained for one year. Mr. Tandy stated that Lee Andersen had a conversation with Mr. Jackson concerning the fact that the services provided by the City may not be the most economical, and Mr. Jackson may be able to hire someone for less money. AGENDA SUMMARY RLa~OFIT BUDGET AND FINANCE COMMITTEE Friday, June 2, 1995 Page -6- Councilmember Carson made a motion that we develop a resolution to keep the storage lease agreement from '59 intact,-- the 55-year lease with no changes at this time other than that the City will not lease it for storage purposes-- and that the main building and the storage building lease both be deeded at the end of one year to the seniors, and that the lease on the senior building be leased with the condition that it be used for Senior Center purposes. Councilmember DeMond commented if the Center needs to generate funds, they can lease out the storage facility, but as long as the City holds fee simple on the property they cannot use it as a basis to secure a loan. She thought that part of the idea was that if it is deeded over to the Center, they can use the storage area for the loan. Councilmember Carson stated that by leaving it intact they can sublease it to generate income. She also disagreed stating that it is not easy to get a loan. She stated her goal is to terminate the lease for rental and keep the other and maintain it. Councilmember McDermott suggested giving the Center both of the properties immediately, and set aside up to $3,600 to pay for maintenance. During the first couple of months, while the Center is trying to find a service provider, the City will continue to maintain the facility and charge their services against the $3,600. If the Center can find someone to provide the services within the budgeted amount, they can contract with that individual. It will basically get us to June 1, 1996. He felt that the Center can provide the maintenance at a cheaper rate through a private provider. In response to Councilmember Carson's question regarding giving the Center $3,600, Councilmember McDermott explained that the City can set aside the $3,600 as a trust. If the City performs the maintenance, it will be charged against the $3,600. Mr. Jackson indicated that there are no monies set aside in the Center's 1995-96 budget for maintenance. He indicated he is not adverse to the mechanism; however, he is concerned about the amount. Mr. Tandy suggested that the issue of a cash turnover or providing maintenance for a year can be covered as a part of the closing documents. Councilmember Carson stated that the cost for maintenance on her facility is $350 a month. ..' ,, AGENDA SUMMARY ORT " BUDGET AND FINANCE COMMITTEE -' Friday, June 2, 1995 Page -7- Committee members unanimously agreed to the following: 1. Property to be deeded over to the Senior Center. 2. $4,200 for maintenance be set aside for the Senior Center for one year. 3. Storage lease be terminated. Staff was directed to draft a recommendation for Council consideration. Mr. Jackson indicated that he will have to take the amount back to the board for approval. Mr. Tandy indicated that this issue will be ready for Council action on June 14, and expressed concern regarding the acceptance by the Senior Center's Board. Mr. Jackson indicated that the Board will meet next week. 6. NEW BUSINESS None 7. ADJOURNMENT The meeting was adjourned at 1:30 p.m. cc: Honorable Mayor and City Council dWS:alb