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HomeMy WebLinkAbout07/28/2008 B A K E R S F I E L D w — Ken Weir, Chair John W. Stinson, Assistant City Manager Sue Benham For: Alan Tandy, City Manager Irma Carson Rick Kirkwood, Management Assistant AGENDA SUMMARY REPORT REGULAR MEETING OF THE BUDGET AND FINANCE COMMITTEE Monday, July 28, 2008 — 12:00 p.m. City Manager's Conference Room — Suite 201 City Hall, 1501 Truxtun Avenue, Bakersfield, CA The meeting was called to order at 12:11:34 PM 1. ROLL CALL Committee members present: Councilmember Ken Weir, Chair Councilmember Irma Carson Councilmember Sue Benham Staff present: John W. Stinson, Assistant City Manager Rhonda Smiley, Asst. to the City Manager Rick Kirkwood, Management Assistant Nelson Smith, Finance Director Ginny Gennaro, City Attorney Joshua Rudnick, Deputy City Attorney II Robert Sherfy, Deputy City Attorney II Donna Kunz, EDCD Director Others present: Tonya Short, Kern HBA Fred Drew, CAPK James Geluso, Bakersfield Californian Kristina Carey— Kern HBA 2. ADOPT APRIL 28, 2008 AGENDA SUMMARY REPORT Adopted as submitted. 3. PUBLIC STATEMENTS None. AGENDA SUMMARY REPORT Page 2 BUDGET AND FINANCE COMMITTEE MEETING Monday, July 28, 2008 4. NEW BUSINESS A. Discussion of Department of Housing & Urban Development community Block Grant and HOME Investment Partnership Action Plan Amendments (including potential Friendship House funding) — Kunz Economic and Community Development Director Donna Kunz gave an overview of the amendment to reallocate funds from completed or cancelled projects under the Community Development Block Grant (CDBG) and HOME Investment Partnership (HOME). This amendment will allow for the creation of two new projects. The first is the Green Gardens II Project, which consists of 24 units of permanent supportive housing for the chronically homeless. The second is the Community Action Partnership of Kern — Friendship House, for improvements to the outdoor sports complex at 2424 Cottonwood Road. Ms. Kunz gave a brief summary of additional activities that staff proposes to be canceled or reprogrammed. Committee member Irma Carson requested an explanation of the HOME Funds down payment assistance amount. Ms. Kunz responded that the down payment program exists in all three development project areas. The bulk of which is predominantly used in the southeast and in Old Town Kern. Committee member Sue Benham thanked staff for their work, and asked if the cancellation and substitution of funding will impact the progress of the Mill Creek Linear Park Project. Ms. Kunz responded that reprogramming of the $300,000 of CDBG is necessary to avoid complications in the monitoring requirements and does not change the time line. Other changes associated with the reprogramming of funds, is due to the acquisition of two properties from willing sellers along the Mill Creek Project. These properties will be incorporated in the overall park development plan, provide the staging and parking area for the park, and provide public parking in the future should a court house ever be established. Motion to forward staff's recommendations to the next City Council meeting for consideration was made by Irma Carson. The motion was passed by all Committee members. B. Discussion regarding Assessment Districts — Smith The following background and history was provided to the Committed by Finance Director Nelson Smith: In April of this year, the City Manager's Office administratively froze the processing of assessment district applications. Soon after, the Home Builders Association sent a letter requesting the freeze be lifted immediately. The assessment districts are generally created at the time of development to reimburse developers for construction of public improvements. The City currently has 24 active districts with approximately $84 million in outstanding debt. It is important to note that the City is not obligated to use City funds to AGENDA SUMMARY REPORT Page 3 BUDGET AND FINANCE COMMITTEE MEETING Monday, July 28, 2008 repay any of that debt. However, there are some administrative and fiduciary responsibilities that the City takes on with bonds that are issued. One of those fiduciary responsibilities is to initiate foreclosure proceedings if the delinquencies within any given district reach a certain percentage. The City takes this responsibility seriously. Staff believes it is critical that the City protect the interest of bond holders. To do otherwise might be interpreted by the investment community as an act of bad faith, and could affect the City's credit rating on existing or future debt. In 2007, the City initiated foreclosure proceedings on 296 parcels. Due to current conditions in the housing market, combined with general investor concerns about sub-prime mortgages and the housing industry, the City and its bond underwriter had great difficulty selling bonds. The City is trying to protect its ability to borrow money in the future. Assistant City Manager John Stinson added that based on the current environment, it is not prudent to continue to process assessment district applications at this time. However, there maybe a point in the future where the City might reconsider this decision. Tonya Short of Kern HBA, asked if the current environment has affected the City's credit rating. Nelson Smith replied that while it has not affected the City's credit rating, the issue of the municipal bond market has an impact on the City. Committee chair Ken Weir asked which particular type of development utilizes the assessment district. Mr. Smith responded that the districts are utilized almost all by residential development. The City's policy for forming districts requires a $2 million bond amount. So, it will be the larger projects, rather than smaller projects that utilize the assessment districts as a financing mechanism. Mr. Smith added that staff's recommendation is to allow the City to continue the administrative freeze and not process applications until a future date. Therefore, no action was required unless the Committee wanted to do otherwise. Committee chair Weir requested staff provide quarterly updates to the Committee. 5. COMMITTEE COMMENTS None. 6. ADJOURNMENT The meeting adjourned at 12:35:16 P.M. cc: Honorable Mayor and City Council S:\Council Committees\2008\08 Budget and Finance\July\July 28 Agenda Summary.doc