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Home My WebLink About07/25/11 RDA AGENDA PACKET SPECIAL` << BAKERSFIELD REDEVELOPMENT AGENCY AGENDA SPECIAL MEETING OF JULY 25, 2011 Conference Room A, City Hall North 1600 Truxtun Avenue 4:00 p.m. SPECIAL MEETING 1. ROLL CALL 2. PUBLIC STATEMENTS 3. CONSENT CALENDAR a. Minutes of the June 13, 2011 regular meeting. b. Approval of department payments from June 3, 2011 to July 19, 2011 in the amount of $373,170.41. Staff recommends approval of Consent Calendar items 3. a. and 3. b. 4. REPORTS a. Update status of Baker Street Mixed Use Project. b. Update status of Mill Creek Area Projects. c. State of California Budget Approval and Impact to the Bakersfield Redevelopment Agency. 1. Staff report regarding the status of recent State Budget actions and significant impacts to the Bakersfield Redevelopment Agency, Staff recommends acceptance of the report. 5. NEW BUSINESS a. Indemnification and Hold Harmless Agreement with CIC South Mill Creek, L.P., for housing affordability covenants required by the State of California, Department of Housing and Community Development Department Infill Infrastructure Program Grant. Staff recommends approval of agreement. 6. ADJOURNMENT RZ- submitted, Alan andy Executive Director A ,r ADMINISTRATIVE REPORT MEETING DATE: July 25, 2011 AGENDA SECTION: Consent Calendar ITEM: 3.a. TO: Bakersfield Redevelopment Agency FROM: Roberta Gafford, Secretary DATE: July 19, 2011 SUBJECT: Minutes of the June 13, 2011 regular meeting. RECOMMENDATION: Staff recommends approval of the minutes. APPROVED DEPARTMENT HEAD r GENERAL COUNSEL EXECUTIVE DIRECTOR /V / BACKGROUND: MEETING DATE: July 25, 2011 AGENDA SECTION: Consent Calendar ITEM: 3, b, TO: FROM: DATE: SUBJECT: Bakersfield RDA Nelson K. Smith, Finance Officer July 19, 2011 Approval of department payments from June 3, 2011 to July 19, 2011 in the amount of $373,170.41. APPROVED DEPARTMENT HEA GENERAL COUNSEL EXECUTIVE DIRECTOR RECOMMENDATION: Staff recommends approval of payments totaling $373,170.41 BACKGROUND: Individual payments exceeding $3,500 in the above total are listed below. Aleshire & W nder, LLP 4,639.04 Legal services era rmnt #09-009 California Redevelopment Association 6,710.00 Membership renewal dues Goodwin Proctor LLP 4,782.45 Professional services to prepare Annual Continuing Disclosure Chicago Title Company 33,058.00 Down payment assistance era rmnt #DAP11-002 Fluoresco Lighting-Sign Maint 8,850.00 Marquee Trivision replacement era rmnt #BRDA11-003 California Eminent Domain Law Group 4,419.04 Professional services eragreement BRDA 10-019 Creekview Villas, LLC 130,952.08 Disbursement requests era rmt #RA09-001 Leverage Information Systems 35,526.64 Parkin Garage cameras era rmnt # 10-114 Law Office of Timothy L. Kleier Client Trust Account 130,000.00 Payment of balance re: Bakersfield vs Leach Family Trust Settlement Jeffrey Krausse Architect 4,600.00 Design of multipurpose building era mnt # BRDA 11-001 S:AKim MADMIN-BRDMADMIN-BRDA-AP-201 1\ADMIN-BRDA-AP-7-25-1 Ldoc ter. ADMINISTRATIVE REPORT MEETING DATE: July 25, 2011 AGENDA SECTION: Reports ITEM: q. 0. TO: Bakersfield Redevelopment Agency APPROVED FROM: Donna L. Kunz, Deputy Executive Director DEPARTMENT HEA 1lLt~! DATE: July 14, 2011 GENERAL COUNSEL EXECUTIVE DIRECTOR SUBJECT: Update status of Baker Street Mixed Use Project RECOMMENDATION: No action required. BACKGROUND: Staff will provide an update on the Baker Street Mixed Use Project, S: \Admins\RDA\ RDA Admins 201 1 \Baker Street Update 72511.Docx 711412011 10:18 AM Cg ; f ~``„oRnq~t ~r )I wJ l j' ADMINISTRATIVE REPORT 'ZM MEETING DATE: July 25, 2011 AGENDA SECTION: Reports ITEM: 4, b, TO: Bakersfield Redevelopment Agency FROM: Donna L. Kunz, Deputy Executive Director DATE: July 14, 2011 SUBJECT: Update status of Mill Creek Area Projects APPROVED DEPARTMENT HEAD GENERAL COUNSEL._V EXECUTIVE DIRECTOR RECOMMENDATION: No action required. BACKGROUND: Staff will provide an update on Millcreek Area Projects. S:\Admins\RDA\RDA Admins 2011\Millcreek Update 072511.Docx July 14, 2011, 10:22AM Cg BAK r~ Ft', OF`~covo14 ADMINISTRATIVE REPORT 71 MEETING DATE: July 25, 2011 AGENDA SECTION: Reports ITEM: 4.c. TO: FROM: DATE: SUBJECT: Bakersfield Redevelopment Agency Donna L, Kunz, Deputy Executive Director July 21, 2011 State of California Budget Approval and Impact to the Bakersfield Redevelopment Agency. (All Wards) 1) Staff report regarding the status of recent State budget actions and significant impacts to the Bakersfield Redevelopment Agency OVED DEPARTMENT HEAD J GENERAL COUNSEL EXECUTIVE DIRECTOR RECOMMENDATION: Staff recommends acceptance of the report. BACKGROUND: The following report is a summary of options for Council consideration relating to the recent action by the California Legislature that significantly impact redevelopment. The budget bill and four subsequent trailer bills, relating to redevelopment, were signed by the Governor on June 30, 2011. Staff is presenting two legislative options resulting in different financial outcomes: one eliminates redevelopment entirely and the other allows the Bakersfield Redevelopment Agency to continue with the implementation of current and future redevelopment activities, We note that just last November the voters of California approved Proposition 22 which banned State captures of local revenues of this kind, The Legislature and Governor chose to ignore the voters, which will prompt legal challenge of their actions. Despite this, it is necessary to take action required by the law until and unless courts "make it right", Legislative Ootion A - Elimination of Redevelopment Two of the bills (SBXI 14 and ABX1 26 respectively) are similar to the Governor's initial proposal in January, 2011 to eliminate redevelopment agencies. These bills do not provide for any payment directly to the State to assist in addressing the budget crisis and eliminate Redevelopment Agencies entirely, effective October 1, 2011. On that date, the following would occur: All agency property and obligations would be transferred to successor groups (Cities, Counties, or other entities), except for the assets of the low and moderate housing fund. S:\Admins\RDA\RDA Admins 2011 \Redevelopment Status Update 72511.Docx July 21, 2011, 1 03PM Cg ADMINISTRATIVE REPORT • Assets in the Low and Moderate Housing Fund would be transferred to the auditor- controller for distribution to taxing agencies. • Successor agencies would be charged with repaying existing agency indebtedness, completing performance of existing contractual obligations and otherwise "winding down" operations and preserving agency assets for the benefit of taxing agencies, The Oversight Board which would largely consist of school, County and Special District representatives would have strong interest in funding their own agencies at the expense of redevelopment. Staff believes that this action will result in extremely negative repercussions in the Bakersfield community, It will destroy millions of dollars in local economic activity which supports the creation of over 3,000 full and part time private sector jobs within the City, Staff will no longer be able to leverage public funds with private resources to provide for development of parks, infrastructure and community facilities. In addition, oversight of existing and already underway projects will be taken over by the newly established Oversight Board instead of the existing Redevelopment Agency Board. Specifically, with the "winding down" of redevelopment examples of several local projects that will not occur if this legislation is enacted include the following: • Future affordable housing development at 20th Street and within the Millcreek area • Continued infrastructure improvements in the most blighted areas of Old Town Kern and Southeast Bakersfield • Downtown revitalization efforts • Future phases of the Baker Street Village Project • Future housing and Commercial development at 19th Street • South Millcreek Commercial Village infrastructure improvements Legislative Option B: - Redevelopment Continues SBX1 15 and ABX1 27 were new concept bills approved by the legislature that provide for an agency to continue to operate and function if the City (City Council) has enacted a binding ordinance by November 1, 2011. The Ordinance requires that the City make annual payments from redevelopment resources to a Special District Allocation Fund (SDAF) and Educational Revenue Augmentation Fund (ERAF) established for each county and administered by the county auditor-controller, The California Redevelopment Association has calculated an estimate of the payments for each Redevelopment Agency as follows: • The amount estimated for Bakersfield is $3,777,822 for FY 11 /12 and $888,899 for FY 2012/13, • It is expected that the annual payment amount will increase each year depending on the amount of tax increment collected by the redevelopment agencies. S:\Admins\RDA\RDA Admins 2011 \Redevelopment Status Update 72511.Docx July 21, 2011, 1:03PM Cg ADMINISTRATIVE REPORT To compare this payment impact to previous years State actions, Bakersfield Redevelopment Agency paid $2,780,910 for 2009/10 and $572,392 for 2010/11. Staff will be filing an appeal by August 15, 2011 of the amount due for FY2011/12, as our Redevelopment Agency incurred additional bonded indebtedness shortly after the filing of our 2009 State Controllers Report, This is the document that will be used by the California Department of Finance as the basis for the payment calculation formula for 2011/12. As a result of the correction of the debt amount reflected on this report, the Bakersfield Redevelopment Agency payment could be reduced if the appeal is approved by the State, Redevelopment investment in our community is significant: approximately $47 million since the formation of the Downtown Project Area and the subsequent Old Town Kern and Southeast Project Areas. In addition, redevelopment efforts have leveraged over $25 million in grant and loan funds, which are currently at work in our community, Redevelopment is the reason new housing is finally being built in all three project areas, The use of redevelopment housing funds means that projects such as City Place Apartments, Courtyard and the Creekview Villas are becoming a reality, Without redevelopment these types of projects would not occur. Under Option B these types of projects will continue uninterrupted and future projects will be planned. Financial Summary Charts for both bills: Financial Option A: Abolish Two summary charts have been prepared and are attached depicting the financial impacts to the Bakersfield Redevelopment Agency for the next five years as a result of the State budget actions. The first chart demonstrates the impact of ABX1 26 and SBX1 14, (Abolishment of Redevelopment), Under this scenario, the Agency must do the following: • First identify and satisfy all of its debt obligations and then transmit all remaining resources for local pass-through to schools and other agencies, • The Redevelopment Agency is permitted to keep up to $250,000 of its revenues to cover the administrative costs of handling its affairs as it winds down operations, • The City as a local agency recipient could receive approximately 17% of the local tax dollars that revert back to County control, For FY 2011-12, this amount is estimated to be $418,757, This chart displays the City estimated pass through receipt information for the next five years, It is not the recommendation by staff to pursue this option, In addition, to the loss of future revenue for programs and projects the most negative impact is that the City will lose local control over our plans and developments that the City Council, the Redevelopment Agency and various community groups such as Vision 2020 have established over the years as a result of the requirement to dispose of Agency assets in winding down its operations. S: \ Admins \ RDA\ RDA Admins 2011 \Redevelopment Status Update 72511,Docx July 21, 2011, 1:03PM Cg ADMINISTRATIVE REPORT Financial Option B: Continue The second chart depicts the financial conditions of the Agency if it is continued under ABXI 27 and SBX1 15 and adoption of the Ordinance, The large payment of $3,777,822 (subject to appeal as previously discussed) is required for FYI 1/12 and results in the use of all available resources including operating fund reductions, cancellation or delay of various capital improvements and the cancellation of the funding commitment for an affordable housing project planned in South Mill Creek, This housing project will be reworked and refinanced with NSP 3 (federal) funding assistance. This chart also demonstrates that beginning in FY 2013/14, the Agency will have net resources in excess of $2 million dollars annually that can be used for new programs and projects, Legal Action On July 18, 2011, the League of Cities and CRA filed a law suit with the California Supreme Court to challenge the constitutionality of the legislation with a ruling on a possible Stay anticipated by mid-August 2011. The Stay is intended to maintain the status quo and prevent automatic dissolution of agencies on October 1, 2011. Staff will also be watching for additional trailer bills that may have additional impacts on redevelopment and housing reform, The City adopted a Non-Binding Resolution of Intent to Continue to Operate, Conclusion: As a result of this State budget action we must decide our best course of action concerning redevelopment for the City of Bakersfield, There are two options; 1) to eliminate redevelopment and the City continues to receive a portion of the local tax dollars estimated to be between $400,000 to $750,000 annually and; 2) continue redevelopment and receive approximately $2.0 million annually to continue with planned and future redevelopment efforts, Staff is actively working on the plan as to how to meet the $3,8 million payment amount, There are a number of legal questions that need to be addressed in a scheduled conference with our redevelopment attorney, Finally, due to the fact that our projects have multiple funding sources and corresponding rules that come along with those sources, there are related issues to be explored, Staff believes that the $3.8 million amount can be met; however, it will be very painful. More details will be provided at a later date, In summary, it will be necessary for the Economic and Community Development Department to scale back its Redevelopment funded operations until FY 2013-14 at which time we can explore new programs and projects. Staff will continue to focus on completing the contractually obligated projects along Mill Creek and Baker Street and will implement the infrastructure projects funded with the Prop 1C grant relating to Mill Creek, Our best hope is that the League and CRA prevail in their legal challenge and the State is forced to abandon this illegal plan. S: \Admins\RDA\RDA Admins 2011 \Redevelopment Status Update 72511,Docx July 21, 2011, 1:51 PM cg ADMINISTRATIVE REPORT MEETING DATE: July 25, 2011 AGENDA SECTION: New Business ITEM: 57. c TO: Bakersfield Redevelopment Agency FROM: Donna L. Kunz, Deputy Executive Director DATE: July 14, 2011 APPROVED DEPARTMENT HE n'C F ` GENERAL COUNSEL EXECUTIVE DIRECTOR SUBJECT: Indemnification and Hold Harmless Agreement with CIC South Mill Creek, L.P, for housing affordability covenants required by the State of California, Department of Housing and Community Development Department Infill Infrastructure Program grant. RECOMMENDATION: Staff recommends approval, BACKGROUND: On September 23, 2008, the Bakersfield Redevelopment Agency entered into an agreement with Chelsea Investment Corporation and CIC South Mill Creek, L.P, to construct a medium rise 70 unit affordable multi-family apartment complex known as CityPlace Apartments, In March of 2009, the Bakersfield Redevelopment Agency authorized staff to apply for and receive a State of California, Department of Housing and Community Development Department (HCD) Infill Infrastructure Program grant in the amount of $10,847,200 for the Southeast Bakersfield and Old Town Kern Redevelopment Project Areas, This grant will be used for the construction of infrastructure improvements which directly supports five affordable housing developments along Millcreek, CityPlace Apartments is one of the five housing developments and benefits with new streets, curb and gutter, lighting, and landscaping surrounding the complex. California Community Redevelopment Law requires affordability covenants on housing projects for 45 to 55 years, Due to this statutory requirement HCD is requiring the recording of covenants on the five (5) housing projects in the Millcreek area to ensure affordability of the housing projects for the required time period. CIC South Mill Creek, L,P, has requested the Bakersfield Redevelopment Agency enter into an Indemnification & Hold Harmless Agreement to ensure that their responsibility to the HCD covenant is only for that portion of the grant which affects their housing project, CIC South Mill Creek, L,P,'s responsibility of the Infill grant is $2,100,000. The HCD covenant requires CIC South SAAdmins\RDA\RDA Admins 2011 \Cityploce Indmnification Agreement.Docx July 14, 2011, 9:40AM RWB ADMINISTRATIVE REPORT Mill Creek, L.P. to ensure affordability of the units for 55 years. This is a statutory requirement of the Prop. 1C grant program and cannot be waived. The CityPlace Apartments construction is expected to be completed by the end of November. Applications for very-low income tenants are currently being qualified. S:\Admins\RDA\RDA Admins 2011 \Cityplace Indmnification Agreement.Docx July 14, 2011, 9:40AM RWB