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HomeMy WebLinkAbout04/05/2001 B AKERSFIEL'D ~,_ ~J~,/~ .~-'~ Mike Maggard, Chair Alan Tandy,-~it~l'a~ger- .Harold Hanson Staff: Darnell Haynes Mark Salvaggio AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMrl-rEE Thursday, April 5, 2001,4:00 p.m. City Manager's Conference Room 1. ROLL CALL Call to Order at 4:03 p.m. Present: Councilmembers Mike Maggard, Chair; Harold Hanson and Mark Salvaggio 2. ADOPT MARCH 8, 2001 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. NEW BUSINESS A. Discussion and Committee recommendation on Fiscal Year 2001-02 Community Development Block Grant (CDBG), Home Investment Partnerships (Home), and Emergency Shelter Grant (ESG) Annual Spending Plan Community Development Coordinator George Gonzales gave a staff report on the Annual Action Plan for FY 2001-02. This year the City's entitlement for CDBG; HOME and ESG programs is $4.6 million. As part of the City's procedure, non-profits and City departments were asked to submit a list of their priority projects for funding. Several Public Hearings have been held and Public Notices have been placed in the newspaper concerning the projects submitted and selected. A copy of the public notice was included in the Committee packet, which included the project titles,, project descriptions, funding source and amount, priorities and target dates. The City's application for the $4.6 million has to be to HUD by May 16th. Council approval is needed prior to that date. The funds will be released to the City in July of this year. The Council may make amendments to the plan at a later date. A public notice will be run in the newspaper for 30 days to allow public comments and upon approval by the City Council, HUD will be notified of the amended change. Committee member Salvaggio requested staff to move the Phase II Sewer Installation project for the Gwendolyn Street Area, which had a target date of summer 2002, up on the target date priority list. The Committee unanimously approved the FY 2001-02 Annual ActiOn Plan of the Consolidated Plan 2005 for CDBG, HOME and ESG programs and forwarding to the Council for adoption. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, April 5, 2001 Page -2- B. Discussion and Committee recommendation regarding request for City Housing Assistance for the Canyon Hills Senior Housing Project This project is not in a redevelopment project area, but is an affordable senior housing project located off Fairfax. The project is substantially complete. Canyon Hills received tax credits for most of their financing to complete the project. Approximately two years ago, they submitted an application to the City for $293,000 of HOME funds t° cover their funding gap, which was disallowed by HUD because upon receiving their tax credit application, they began construction. When they began construction, it removed the ability to put HOME money into the project for the follow reasons: 1) they did not identify HOME funds as a public source on their tax credit application; and 2) there were issues with HUD not allowing going back to refund for a completed project. Due to the timing of construction, the project started out with a $293,000 shortfall. During construction, they had construction lending issues: 1) the lender did not loan the anticipated amount; 2) there were unanticipated reserve requirements; 3) the law changed a little and they did not receive as much tax credit as anticipated; and 4) all the units are very Iow-income, which restricts income and borrowing capacity, so the funding gap has grown to almost $600,000. Staff identified two funding sources for Committee review. Canyon Hills is in the process of converting from construction financing into permanent financing. HUD allows a percentage of associated soft costs to be funded with HOME funds. Staff has determined those costs to be about $106,000 in eligible HOME funds. The second source for Committee review is Redevelopment Agency Downtown Housing funds. There is not a great deal of housing activity in the downtown area. Historically, the City has used these funds in another project area. The Canyon Hills Senior Housing Project is not in a project area. However, it is a large project with a lot of units restricted very !oW and reserved at 60 percent or below median income. The Downtown Area would get credit for a large count of Iow-income housing. Staff has identified total funding of $460,000 between the Downtown Housing Fund and the allowed HOME funding. The Downtown Housing Set Aside allocation is about $350,000 per year, so it would be necessary to go into next year's allocation as well. With approval, staff could start negotiating and structuring some kind of loan with those funds to be repaid over time, perhaps seven to ten years. There is not enough funding available to cover the entire $600,000. City Manager Alan Tandy stated staff is comfortable recommending funding as this is a charitable organization in some trouble due to the timing of their project, and the City has contributed to other significant projects at a higher level. Also, there is a limit on how long Housing Set Aside monies can be held. In some years it has been allocated Citywide for First-Time Home Buyers programs because there were no projects in or near the downtown for which to allocate the funds. In more recent years, there are two projects: Park Place and now the Capital Vision Equity project within City Center. These are both very close to the Downtown Project Area. Itwas also noted, if this much money is loaned for seven years, there may not be funds immediately available to do another project in the downtown if the opportunity arises. To use Downtown Project Area funds outside of that Area requires approval of the Redevelopment Agency. The Agency would need to have a finding there is benefit to the Downtown Project Area to use the funds in another area. As Canyon Hills is senior Iow-cost housing, for every two units Canyon Hills provides, the Downtown Project Area would get credit for one unit to meet the inclusionary housing requirement. The Committee unanimously approved staff moving forward with the funding, contingent upon approval of the Redevelopment Agency. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, April 5, 2001 Page -3- C. Discussion and Committee recommendation regarding the City of Bakersfield's participation in the "Clean Green Yard Machines" Program ~ Ms. Kelly Malayl Air Quality Educator from the San Joaquin Valley Air Pollution Control District, gave an overview of the "Clean Green Yard Machine" program and their request for a $5,000 contribution from the City. This is a program to offer 1,200 Valley residents (300 in Bakersfield) a $200 incentive toward the purchase of a rechargeable electric mulching lawn mower that retails for approximately $400. The event is scheduled for April 28th. Residents bringing in their gas-powered mowers get a voucher toward the purchase of an approved mower. Funding is also needed to dispose of the mowers traded in. Similar programs have been used successfully in other cities. The San Joaquin Valley faces significant air-quality challenges and small gasoline-powered engines such as those used for lawnmowers are considered a major source of air quality problems as they emit ozone precursors that contribute to smog. In return for a $5,000 contribution, not only would the City be investing in air-quality improvement efforts, the District would recognize the City on all pre-event materials, advertisement, promotions, and publicity. The County of Kern has agreed to contribute $5,ooo. The Committee discussed the importance of changing life-styles to reduce smog and programs like this as a beginning. The Committee unanimously recommended funding the $5,000 contribution out of Council Contingency and forwarding the report to the Council for approval. D. Discussion and Committee recommendation regarding Proposed Policy of using 10 Percent of one-time monies to retire debts City Attorney Bart Thiltgen explained this was a referral to the Committee to review setting aside one-time monies to be able to call debt on the multi-purpose stadium, if that project moves forward. Tax counsel has advised monies can be set aside at the time of the issuance of the bonds, but would have to be disclosed in the disclosure statement, so that bond purchasers would be aware they are subject to the ten-year call date. A sinking fund can be set up to retire stadium debt, but due to IRS rulings is limited to the interest rate that can be received, as you cannot keep higher interest on a specific sinking fund than the interest being paid on the bonds. The Finance Director explained one-time monies can be set aside in an account for generic purposes to be used when there is an opportunity to save money or call debt. Traditionally, with Council approval, the City uses one-time monies to finance capital improvement projects, to avoid borrowing for needed projects. Several times in the past, the City has refinanced bond structuring to take advantage of market rate changes or has called debt when there is a savings advantage. Staff recommended having the Finance Director monitor and as staff becomes aware of one-time monies, bring a proposal to the Council to decide if they wish to use the money to call debt or build capital improvement projects. Committee Chair Maggard made a motion that the Committee has evaluated set-aside of one-time monies and recommended the issue be referred to the Finance Director to make the Council aware of their options when there are one-time monies available. The Committee unanimously approved the motion. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE Thursday, April 5, 2001 Page -4- E. Discussion and Committee recommendation regarding cooperative efforts between the City of Bakersfield and Kern County to provide sewer service to the southwest corner of Allen Road and Rosedale Highway As there were no sewer lines adjacent to the property, the County permitted an Albertson's grocery store to be built using a septic tank, which is not working properly. The City has a sewer project within one-quarter to one-half mile and Albertson's had contacted the City regarding extending the sewer line. County and City staffs met to devise a mutual solution to accommodate the request. City staff proposed putting $600,000 up front to extend the sewer line well north of Albertson's. In exchange for the up front construction monies and the benefit of providing many residents in the area access to sewer service, Albertson's would be annexed to the City. However, the City has received a letter from the County stating that they have decided to extend the sewer line to Albertson's. Under the CSA-71 Agreement, they have this right. No action was taken by the Committee. 5. COMMITTEE COMMENTS Committee Chair Maggard asked the status of the Committee's referral from Councilmember Carson regarding coordinating efforts in the Southeast Redevelopment Area. Staff has been in contact with Councilmember Carson. She is having meetings with the Southeast PAC and various interests groups to develop plans to bring to the Committee. 6. ADJOURNMENT The meeting adjourned at 5:16 p.m. Staff present: City Manager Alan Tandy; City Attorney Bart Thiltgen; Assistant City Manager John W. Stinson; Finance Director Gregory Klimko; Assistant to the City Manager Darnell Haynes; Assistant Finance Director Nelson Smith; Interim Public Works Director Jack La Rochelle; Public Works Operations Manager Brad Underwood; Economic Development Director Donna Kunz; Community Development Coordinator George Gonzales; Assistant Recreation and Parks Director Allen Abe; Solid Waste Director Kevin Barnes Others present: Reporter James Burger, The Bakersfield Californian; Dave Cross, Architect; Ms. Kelly Malay, San Joaquin Valley Air Pollution Control District cc:. Honorable Mayor and City Council DWH:jp S:/Damell/2001 BFCommittee/bf01 ap~OSsummary.wpd