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HomeMy WebLinkAbout04/21/2003 B A K E R S F I E L D ~1~~"~4~/.~Y'~' Mike Maggard, Chair Alan Tandy City li~l~ger Harold Hanson Staff: Darnell W. Haynes Mark Salvaggio AGENDA SUMMARY REPORT · BUDGET AND FINANCE COMMITTEE MEETING Monday, April 21,2003 · 4:00 p.m. City Manager's Conference Room - City Hall 1. ROLL CALL Called to Order at 4:08 p.m. Present: Councilmembers Mike Maggard, Chair; Harold Hanson and Councilmember Mark Salvaggio (arrived at 4:28 p.m.) 2. ADOPT MARCH 17, 2003 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS 4. DEFERRED BUSINESS A. Staff report and Committee recommendation regarding future park amenities B. Staff report and Committee recommendation regarding additional review of park fee credit Public Works Director Raul Rojas suggested combining Items 4.A and 4.B as the park development fee is directly affected by the amenities included when the park is built. Recreation and Parks and Public Works staffs have reviewed the cost to build a typical 10-acre park and feel the fee is lower than it should be to actually build a 10-acre park. The current Park Development Fee is $647 per unit (house) for new development based upon the cost of $884,000 to build a 10-acre (neighborhood) park. After review of current costs, it would actually cost $1,350,380 to build a neighborhood park and based on that calculation, the estimated Park Development Fee should be $1,013 per unit. As the Park Development Fee is directly affected by the amenities, such as rest rooms, basketball courts, etc., there was discussion on what should be included in AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Monday, April 21, 2003 Page - 2 - a standard neighborhood park. Staff provided an overview of the memo and exhibits included in the Committee packet, which gave a breakdown of costs to build parks if additional amenities were added. For example, Centennial Park has rest rooms, tennis courts, basketball courts and soccer field in the flood control area on about nine acres and with current prices, construction would cost about $1.6 million. Staff explained with large subdivisions, the developer builds the park. When there are many small developers, the City contracts for the park to be built and it is paid for with Park Development Fees. Committee Member Hanson said he had received a call from Brian Todd of the BIA of Kern County who asked to have this item deferred so staff could meet with the BIA to discuss the level of amenities to be included in a standard neighborhood park. Committee Chair Maggard asked staff to meet with the BIA and do the groundwork so a recommendation could be reached at the next Budget and Finance Committee meeting on the standard amenities to be included in a neighborhood park and based on that, what the Park Development Fee needs to be to construct a 10-acre (neighborhood) park. Committee Chair Maggard requested staff to also contact NOR Recreation and Parks District to get their input on amenity standards in a neighborhood park and invite them to attend the next Budget and Finance Committee meeting. C. Review and Committee recommendation on Economic Development Loan Policy Guidelines City Manager Alan Tandy explained this issue was put back on the Committee's agenda at the request of Councilmember Carson who has concerns that no one would apply or qualify for the Iow-interest loans that are available for projects in the southeast area. Since the passage of SB 975, any project using government funds must pay prevailing wage and this increases the cost of projects by about 20%. Loans available through Economic Development usually contribute 20% to 30% of the project cost. Due to the requirement to pay prevailing wage if government funds are used on a project, the City's loan of 20% is negated by the fact that it triggers prevailing wage, which raises the cost of the project by 20%. In order to offset the SB 975 prevailing wage issue, staff provided the following options for the Committee's consideration: 1. In the past, forgivable loans were granted for projects that would create jobs in economically depressed areas. A percentage of the loan was forgiven each year the employment levels were met. When the Economic Development Loan Guidelines were approved a few months ago, this option was no longer included. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Monday, April 21, 2003 Page - 3 - 2. Loans could be made for a higher percentage of the project's total cost. Instead of loaning 10% to 30%, the range could be raised to allow loans for up to 50% of the project's total cost. 3. Currently only the land (property) is accepted as collateral. This could be changed to allow real estate and/or equipment as collateral, as were allowed in the past. Although there have been complaints about the amount of paperwork, the City Manager did not recommend changes to the application process as outlined in the current loan guidelines. The loan application process (information required) is in the same form as required by financial institutions. If needed, technical assistance to complete the application forms is provided to loan applicants through the Small Business Administration. Staff explained with the current loan policy guidelines, the benefits to apply for the money are not going to offset the cost to comply with SB 975. If relaxing the guidelines is not desirable, these funds could be put into other kinds of infrastructure costs for projects, such as sidewalks, street lights, streetscapes or for equipment as incentives for businesses to locate, rather than carrying a line item that is not spent because the regulatory costs exceed the benefit for applicants. The City competes with other cities to get businesses to locate in Bakersfield in order to create jobs. To get projects in depressed areas there must be incentives, or they will locate in better areas of the City. Vernon Strong spoke regarding the loan policies not working to meet the needs of small entrepreneurs when there are requirements to have bank financing before the City will loan money, and also the need to have appraisals and loans or grants based on equity in property instead of on a total project. Staff gave an overview of the many successful projects that have been done in the southeast area and the loans granted. Committee Chair Maggard stated he was agreeable with allowing flexibility on other collateral for loans and allowing loans for more than 30% of the project cost. However, the Committee has made its position clear that loans should be repaid, so the money will return to be used again for other projects. There could be wording for exceptions to allow unique financing for special projects, but it must be concise to avoid this returning to the Committee again for further review. The City Manager suggested exceptions that are quantifiable would be tax base growth or job generation, which is clearly a benefit in a high unemployment area. AGENDA SUMMARY REPORT BUDGET AND FINANCE COMMITTEE MEETING Monday, April 21,2003 Page - 4 - Committee Member Salvaggio was in agreement with the Chair, but had concerns that even if the Committee makes changes to the loan guidelines, it might not satisfy those who want to apply but do not want to fill out the paperwork and go through the loan application process, which is necessary and good business practice. Committee Member Hanson stated he would look at all opportunities available for developers or entities for projects and review the loan guidelines. However, he expressed the City cannot just give money away, because there would be no incentive to succeed. Committee Chair Maggard requested staff to meet with Mr. Strong to explore if there is another aspect of the appraisal process that needs to be considered. And, without making changes to the Loan Policy Guidelines at this time, bring written examples of the changes discussed today including information on the appraisal process back to the Committee for further review. 5. NEW BUSINESS 6. COMMITTEE COMMENTS 7. ADJOURNMENT The meeting adjourned at 5:40 p.m. Attendance: City Manager Alan Tandy; City Attorney Bart Thiltgen; Assistant City Manager John W. Stinson; Assistant to the City Manager Darnell Haynes; Economic Development Director Donna Kunz, Public Works Director Raul Rojas; Development Services Director Jack Hardisty; Recreation and Parks Director Stan Ford; Assistant to the Public Works Director Georgina Lorenzi; PW Civil Engineer Arnold Ramming; Economic Development Associate Charles Webb; and Parks Supervisor Ken Trone. Others: Vernon Strong; and James Burger, reporter, The Bakersfield Californian. cc: Honorable Mayor and City Council S:\Darnell\03Budget and Finance~bf03apr21summary