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HomeMy WebLinkAbout1994-12-22MINUTES REGULAR PALM DESERT REDEVELOPMENT AGENCY MEETING THURSDAY, DECEMBER 22, 1994 CIVIC CENTER COUNCIL CHAMBER * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * I. CALL TO ORDER Chairman Crites convened the meeting at 5:15 p.m. H. PLEDGE OF ALLEGIANCE - Councilman S. Roy Wilson III. INVOCATION - Councilmember Jean M. Benson IV. ROLL CALL Present: Member Jean M. Benson Member Richard S. Kelly Vice Chairman Walter H. Snyder Member S. Roy Wilson Chairman Buford A. Crites Also Present: Carlos L. Ortega, ACM/Director of Redevelopment Bruce A. Altman, City Manager David J. Erwin, City Attorney Doug Phillips, Deputy City Attorney (after 7:00 p.m.) Sheila R. Gilligan, City Clerk/Public Information Officer Ramon A. Diaz, ACM/Director of Community Development Richard J. Folkers, ACM/Director of Public Works Paul Shillcock, ACM//Director of Economic Development Dave Millheim, Director of Human Resources Catherine Sass, Community Arts Manager Lisa Constande, Environmental Conservation Manager V. ORAL COMMUNICATIONS None MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * VI. CONSENT CALENDAR A. MINUTES of the Regular Meeting of the Redevelopment Agency of December 8, 1994. Rec: Approve as presented. B. CLAIMS AND DEMANDS AGAINST THE, AGENCY TRi✓ASURY - Warrant Nos. 16A, 23, 23A, and 24. Rec: Approve as presented. Upon motion by Wilson, second by Kelly, the Consent Calendar was approved as presented by unanimous vote of the Agency Board. VII. RESOLUTIONS None VIII. CONSENT ITEMS HELD OVER None IX. NEW BUSINESS NOTE: AT THE REQUEST OF MR. ORTEGA, DISCUSSION OF ITEMS A AND B WERE REVERSED. B. J EOUEST FOR APPROVAL OF APPLICATION FOR DEPARTMENT OF ENERGY FUNDING FOR THE PROPOSED FUEL CELL PROGRAM. Mr. Ortega stated that Mr. Shillcock had some answers to some questions raised by the City Manager regarding what City obligations, if any, we would be encountering were we to be successful in obtaining this grant. Mr. Shillcock noted the report in the packets which summarized the minor changes in the program presented to the Board in September. He reviewed his report and said he had also provided to the Council the final draft of the full application. He said a question had come up as to the total cash being requested of the City. The final paragraph of the memorandum indicated that the Redevelopment Agency was being requested to match the cash commitment of the Schatz Energy Research Center and pledge $300,000 (wording should have said "by pledging $300,000"). He said the Schatz Energy Research Center had pledged about $305,000 in cash and had asked that the Agency match that. He added that the $300,000 would be the total commitment over a three-year period. MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Mr. Altman added that it would be by the Agency and subject to advance approval. Mr. Shillcock agreed. Mr. Shillcock stated that was a question about the utilization of the former Corporation Yard and the time period during which that commitment would be expected. He said it was proposed to be a three-year program and said there was a time table in the application showing activities that would take place during that time period. He added that staff hoped that facility would be pledged for the three-year period and noted that the second year of the timeline showed the improvements to be made to the building itself in the amount of approximately $500,000, said improvements to be paid for out of the grant funds. He said title of the building would stay with the City and that staff was requesting a three-year commitment for use of the structure. At the end of that time, the Board could decide whether it wished to continue to use the facility for this activity. He reviewed the budget for this program and offered to answer any questions. Member Wilson questioned Item #2 on Page 2 of the application for Department of Energy regarding solar and wind powered systems being set up in Palm Desert. He asked whether staff had explored utilizing some of the existing facilities north of Palm Springs to generate the hydrogen rather than trying to reinvent the system. Mr. Shillcock responded that he had an extensive discussion with Mr. Noble of Windtech, and he offered to use of one of the pieces of equipment there if that was the City's choice. This would save a bit of the grant money. He said if it was the City's desire to have it closer to the project for education and demonstration purposes, Mr. Noble agreed to erect the tower and put the turbine in at a site of the City's choosing. He said the County had verbally aut authorized the utilization of some land adjacent to Sunline Transit. Upon question by Member Snyder, Mr. Shillcock responded that the City's contribution was contingent upon the commitment from the Federal Government as well as a commitment from the Air Quality Management District. Until all of those commitments are in place, the City would not spend a dime. Member Wilson stated that an item on the City Council agenda was a proposal for things like this from Economic Development to go through the Finance Committee for review, and he asked whether this had gone through that committee. Chairman Crites responded that no proposal on anything had gone to the Finance Committee yet. Member Wilson said he felt that procedure should be initiated and that this proposal be subject to review and approval by the Finance Committee. Member Kelly stated that this project runs into several different aspects because this is something that would not only have an economic impact but also recognition impart like the 3 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING _ DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * golf cart program where we got a lot of publicity throughout the world. He said this was that kind of project where we will get a lot of favorable publicity, and it would be an attraction for visitors to come and look at the project. Upon question by Member Benson as to whether we would be committed to put this money in, Mr. Shillcock responded that the Agency was pledging that if the Federal Government provides $2 million in funding, the Agency will match that with $300,000 and the use of the Corporation yard. Member Benson expressed concern that this would be putting the Agency in competition with private manufacturers. Member Kelly disagreed and said this was something where we are able to participate in the development of a clean energy concept and get a lot of recognition for the City worldwide for the commitment of a very small amount of money. Member Wilson said he felt there were additional safeguards here. If this project is not feasible and not a good idea, it would not get joint funding from the Air Quality Management District and the Department of Energy. He said he would be comfortable moving ahead, with the understanding that the Investment Committee would continue to monitor it, and he said he hoped that the Economic Development Advisory Committee would continue to be plugged in and monitor this as it proceeds. Member Kelly moved to, by Minute Motion, approve the application on the condition that the Finance Committee look at it next week. Motion was seconded by Wilson. Member Benson expressed concern that she did not know the finance background of this company, Schatz Energy Research Center. Member Kelly responded that he had gone with Mr. Shillcock to Humboldt State University and that Schatz Energy Research Center was part of that university. He added that it were an extremely solid organization. Member Snyder stated he had attended the Economic Development Advisory Committee meeting, and this committee did not feel that this was a project that would bring the City great profit. He said the committee could not justify the amount of investment the City was talking about and what it would bring to the City. He said he could go along with this program if the motion set forth that there would be no City money invested until the other funding was approved and was an actuality. He added that he still had doubts as to where this program takes us. Member Kelly clarified his motion that it did include that we would not spend any money until we had actually received the grant from all those other agencies that had committee funds. After further discussion, Member Kelly removed from his motion the reference to the Finance Committee meeting to review this. Member Wilson agreed. 4 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 s s s s s s s s s s*******•******** s s* s s s s s s s s s Chairman Crites clarified the motion to reflect that Member Kelly moved to, by Minute Motion, approve the Agency's participation in the grant application to the Department of Energy for Fuel Cell Program with the idea that no funds from the Agency will be expended until approval from the other agencies is granted. Member Wilson seconded the motion, and it carried by unanimous vote. A. REQUEST FOR APPOINTMENT OF TWO AGENCY BOARD MEMBERS TO ASSIST IN DRAFTING MOU WITH SCHATZ ENERGY RESEARCH CENTER. Chairman Crites suggested that Member Kelly be one of the members to assist in drafting a Memorandum of Understanding (MOU) with Schatz Energy Research Center. Member Benson suggested that Member Snyder be the other member. Member Wilson moved to, by Minute Motion, appoint Members Kelly and Snyder to assist in drafting the MOU with Schatz Energy Research Center. Motion was seconded by Benson and carried by unanimous vote. R. CONTINUED BUSINESS A. CONSIDERATION OF PORTOLA PALMS MOBILEHOME PARK ACQUISITION UPDATE. Mr. Ortega noted the report in the packets. Mr. Dennis Coleman, Administrative Assistant, reviewed the staff report and five recommendations on page 3 of the report. He said the alternative to staffs recommendation was that the Board could determine that it does not want to give them any more time or extensions, and direct staff to proceed with what is necessary to take over the park. If that is the case, staff would have to come back with the options as far as what we would have to do to accomplish this. Member Benson said she felt that Mr. Ortega and Mr. Coleman had done an admirable job of trying to get this resolved. Mr. Amos Summers, the consultant hired by the homeowners to assist in the conversion process, addressed the Board and said he had met with staff and the Board of the Acquisition Association to review the proposal prepared and presented to the Agency Board. He said they felt they would be in a position by the end of the fifth year to repay all the payments that the City had provided for this conversion process. He agreed with the proposal and said he felt comfortable to be able to work things out. Member Wilson moved to, by Minute Motion, direct staff to proceed as outlined in the staff report on page 3, items 1 thru 5. Motion was seconded by Benson and carried by unanimous vote. 5 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * XI. OLD BUSINESS A. REQUEST FOR APPROVAL OF BANK OF AMERICA OPERATING AGREEMENT FOR LOAN SERVICING (Contract No. R09040). Mr. Ortega stated that 19 loans had been made for Portola Palms Mobilehome Park, and some of those people were ready to pay. He said staff wanted to set up some collection accounts with Bank of America so they can collect this money for the Agency. Member Snyder moved to, by Minute Motion, approve an Operating Agreement for Loan Servicing with Bank of America's Community Development Center to service Portola Palms loan payments, and appropriate $2,000 from the Agency's Unobligated Funds for this purpose. Motion was seconded by Wilson and carried by unanimous vote. XH. REPORTS, REMARKS, AND AGENCY BOARD ITEMS REQUIRING ACTION A. EXECUTIVE DIRECTOR Mr. Ortega pointed out the joint public hearing between the Agency and the City to be considered after 7:00 p.m. B. AGENCY COUNSEL None C. CHAIRMAN AND MEMBERS OF THE AGENCY None With Board concurrence, Chairman Crites recessed the meeting at 5:45 p.m. and reconvened the meeting at 7:00 p.m. RIII. PUBLIC HEARINGS A. WINT PUBLIC HEARING, WITH THE PALM DESERT CITY COUNCIL TO CONSIDER THE SPORTSPARK DISPOSITION AND DEVELOPMENT AGREEMENT (DDA). Contract No. R09390. Mr. Ortega introduced Jeff Rabin, attorney with the firm of Richards, Watson & Gershon, and Leonard Wolk of Reasco who had reviewed the developer's proforma and had prepared an independent feasibility study for the Agency so it can check on the assumptions being made by the developer with regard to the costs of construction and proposed revenues and deal points involving the loan and the lease. He reviewed the staff report, noting that it included an AB1290 report that was prepared by the independent consultant which analyses 6 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * the deal points and specifically identified whether the Agency was making an appropriate loan and whether the Agency would be receiving fair rental value for the property being leased to the developer. He said there were also two resolutions for consideration. The City resolution identified that the project was being done for a redevelopment purpose, that it approved the lease by the Agency of land, and that consideration of the lease was not less than fair market value for the property. The resolution for the Agency Board made essentially the same findings and approved the lease. In addition to the material received at this hearing was a notice of a joint public hearing referring to AB1290 which because effective on January 1, 1994, and which required some specific information that had to be provided any time the Agency proposed a deal of this type and also required that an independent report by a consultant accompany that recommendation. He said in this case, the report was done by the firm of Rosenow Spevacek and was included in the report. Mr. Ortega said there was a very important provision in this agreement which the Council/Agency Board might want to discuss, and that was the option to terminate this lease and all its provisions if an alternate site is approved at a later time. He noted this provision was on page 35, paragraph 36. He noted that Mr. Rabin was available to answer any questions of a legal nature, while Mr. Wolk would answer questions of a feasibility or fiscal nature. Mayor/Chairman Crites stated he felt it would be a good idea for the benefit of the audience for staff to briefly review the agreement since it was quite lengthy. He felt it was important to review who is responsible for insurance, who is responsible for liability claims, who is responsible if someone does not pay their bills, what collateral we have it the developer does not come through with their end of it, etc. Mr. Jeff Rabin noted the following with respect to the agreement: 1) It provides for a term of 30 years with no options to extend. It will expire in 2025. 2) It provides for a minimum rent of $100,000 per year with two exceptions. In the first few years we phase in the minimum rent to allow the developer some time to build up the cash flow, but by the fourth year the minimum rent will be $100,000 per year. Also, if there are sufficient revenues on the project in the early years to exceed a certain level, the developer will still be obligated to pay a percentage of the developer's gross revenues to the Agency as additional rent. 3) Location under this agreement is on Portola Avenue. 4) There is an obligation of the Redevelopment Agency to lend the developer $3 million for the construction of this project. Agency is obligated to lend that money only after the Agency has reviewed and approved a budget satisfactory to it and at its sole and absolute discretion showing there will be enough money pledged between the developer and the Agency to complete the project. In addition, the 7 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING - DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * developer is obligated to contribute $1.25 million minimum to this project, so if it could be built for less than $4.25 million ($3 million plus $1.25 million), the Agency would contribute less money. If it will cost more, the developer is obligated to pay the additional money. 5) The developer is obligated to pay taxes for this property including possessory income taxes. 6) Developer is limited to use of the property for a sports park facility. 7) Developer is obligated to comply with all laws and conditions of approval relating to this project. 8) Developer accepts the physical condition of the land as is. Developer will have the opportunity to go and study the land and if the developer decides he does not like the condition, he can terminate the agreement. Mr. Rabin noted there was a short time period in the few months after it is signed for the developer to evaluate that. 9) Developer has to provide for all utilities. 10) Developer has to do all construction. If they want to make any alterations of a substantial nature, Agency approval must be obtained. 11) Developer is obligated to buy insurance for at least the amount of the Agency contribution ($3 million) with the Agency to have first call on those funds subject to rights under California law for the borrower to use proceeds to rebuild if there is enough money to do that. 12) Agency has the right to approve any assignments or subleasings of the premises, which consent cannot unreasonably be withheld. 13) Developer is obligated to fully indemnify the Agency for any losses or liabilities that might take place on the property. 14) If the developer does not pay rent on time, they would be liable after 20 days for a late charge and interest on the unpaid rent. 15) Section 30 indicates that developer's recourse against the landlord is only to the property. If the developer has any complaint with the landlord, they cannot look to any other assets of the landlord other than the property. 16) Developer is obligated to make certain warranties and representations. r 8 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * 17) Landlord has an option to terminate this agreement unilaterally if landlord approves another location. Mayor/Chairman Crites asked that Mr. Rabin discuss the initial loan for construction. Mr. Rabin stated the developer was obligated to pay principle and interest payments on that loan. The interest rate would vary between 5.5 % and up to 9 % . If the developer's gross revenues are between zero and $1.8 million per annum, the annual interest rate would be 5.5%, and it scales up to 9% if the gross revenues are above $3.5 million. In addition, he said there was a specific table of principle payments attached to the agreement. He said it was to be spread out over 30 years and at the end of the term, if the term expires before all the principle has been repaid, the developer has to make a balloon payment of the remaining principle. Upon further question by Mayor/Chairman Crites, Mr. Rabin stated that if the developer does not pay the interest or principle as set forth in the agreement, the Agency will have a deed of trust and promissory note and can foreclose. If the project is successful, the developer will be able to pay the rents and the interest; however, if the project is not successful, the developer will not have the money to pay the rents and the Agency will take the project back. Mayor/Chairman Crites declared the public hearing open and invited testimony in FAVOR of or OPPOSED to this project. MRS. MARLENE PAISOKOPF, resident of Desert Falls, asked for clarification of the developer being able to sublet the facility and asked if it was true that there would be no recourse in terms of the Council to the party who might be subletting. Mr. Rabin stated that the agreement provides that the Agency would not unreasonably withhold its consent to an assignment or sublease; however, the agreement requires the assignee or sublessee to assume the obligations of the developer and does not release the developer's obligation under the lease. If an assignee or sublessee were to come to the Agency, the Agency would have the right to evaluate their credit worthiness, their reputation, and their ability to operate this property. If the developer would want to be released of its obligations, the Agency would have the right to consider releasing the developer as well, but there is no provision for automatically releasing the developer of their obligations. Mayor/Chairman Crites stated he understood that everything that is in this that applies to the developer would also apply to any successor. Mr. Rabin responded that as a condition of any assignment or sublease, they have to assume all the obligations. Mrs. Paisokopf suggested that the Council consider reviewing any sublease should it come up and that the Council reserve the discretionary power to hear this within the agreement. 9 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * MRS. DEBBIE BYK, resident of Silver Sands, stated that at the beginning of the discussion on this item, mention was made that the developer did not have the finances for paying for the permits. She said the fees involved were not mentioned but it was said that the City would be loaning the developer the money to pay for the permits. She asked for clarification. Mayor/Chairman Crites responded that in the original budget, the developer had made certain assumptions on how much the fees would be and developed the budget with that number in mind. They have found out that Palm Desert's fees are considerably higher, including some fees for traffic uniform mitigation, public art, etc. The amount of money the City was willing to potentially loan to this project had remained the same. The amount of money to be spend for fees then means the developer has to increase their component into the project in order to pay those. Mrs. Byk asked whether the developer had seen these terms and whether they had agreed to all the terms. She asked if the developer had the total financing in place. Mayor/Chairman Crites responded that if the Council and Agency approve this, the developer has to accept it or there is no project. The first money to go into the project would have to be the developer's contribution to the project. Mr. Ortega stated that the exact number in the current budget for the developer to pay was about $1,288,000 and the developer has a specific period of time within which they must raise that money and bring it in to us or the agreement goes away. That time period ends July 31, 1995. MR. MARTIN MEYERS asked if he had misunderstood that the anticipated revenue was $2,750,000 per year. Mayor/Chairman Crites responded that this was just an example for the audience to note that what happens is that the developer is responsible for the repayment of the loan. The developer is also responsible for a rental payment of a minimum amount and then depending on how much gross revenues the City would also receive a percentage of that. He said what the audience heard was that the attorney say if the gross revenues in a given year were x number of dollars, here is the amount of additional dollars that would come back to the Agency. Mr. Meyers stated he understood there was a 20-year plan on that property for the college. When Councilman/Member Wilson responded that there were 20 years in which to exercise the use for a university, Mr. Meyers asked if there was any conflict since this is a 30-year loan. Mr. Ortega responded that there would not be any conflict because there is also a buy- out provision in this agreement which would need to be modified somewhat if we consider the same project on Cook Street. Mr. Meyers stated as he understood it the payback of the loan was about $100,000 per year average plus interest. There is also $100,000 per year minimum rent. He asked if the budget indicated what revenue they would have to generate 10 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * in order to pay that, and he asked if that had been examined. Mr. Ortega answered that Mr. Wolk had done an independent feasibility analysis. Mr. Meyers said he hoped that the development of the sports park and the limiting factor to it did not exclude the possibility of bringing some of these other events into Palm Desert that were mentioned. He asked if there was a way to define use of the property further to allow such events. Mayor/Chairman Crites stated that while the Council would welcome allowing him to meet with staff and the developers, any substantive changes from the agreed upon conditions would have to then come back for public hearing and be decided in that forum. Mr. Meyers said that in the meeting held with Mr. Odekirk, he had mentioned at that time that he might be able to make a change and go back to a hard surface floor. He asked if that had been incorporated into the plans rather than a soft floor. Mayor/Chairman Crites noted that the developer was indicating that yes, this had been incorporated. JUDGE ARNOLD H. EINBINDER, 549 Desert Falls Drive East, stated he understood a feasibility study was prepared to enable the Council to intelligently review the project to determine whether it was a project it wanted to go forward with or not. His understanding about that document was that it forecast certain events and certain established amounts of monies for those events including the number of people who would be involved. He said if those events do not take place and if the reliance on events that would be categorized as "concert events" are no longer a viable activity, there may be a difference in the feasibility study. He expressed concern as to whether or not that had been taken into consideration at this point. Mayor/Chairman Crites noted that this agreement was for the site in Section 4. He said because of the time it takes to go through some State law requirements, a report of this nature for the site on Cook Street would be before the Council/Agency in late February, and those documents being public meant that anyone could look at them ahead of time. Judge Einbinder said he also understood that when certain conditions are set out by the Council some time ago as to whether or not this project would go, the request was that it go to one of the "Big Five" firms for the feasibility study. His understanding was that this was not accomplished when this particular feasibility study was prepared. He also expressed concern that the project may not comply with AB1290 in various respects such as: 1: the limitation of a 20-year loan; and 2) the requirement that an environmental impact report be presented to all taxing agencies. He also expressed concern with the issue of liability and the type of policy to be acquired. Mayor/Chairman Crites asked whether financial feasibility was examined without concerns as part of the funding base. Mr. Wolk noted that the latest version of his study did not include the fact that there would not be concerns at the sports park. 11 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * Councilman/Member Wilson asked whether Mr. Wolk was in the process of looking at the financial impact of not having concerts, and Mr. Wolk said he was. Councilman/Member Wilson asked whether in Mr. Wolk's judgment there were enough other revenue streams to make this a profitable venture without concerts. Mr. Wolk responded that it would be profitable but not as profitable without concerts. MR. RON ODEKIRK stated that the study Mr. Wolk did and the information the developer gave included no concerts. He said all the activities that Mr. Wolk analyzed were sporting events and that no concerts had been included in any of their projections. Mr. Wolk added that the study he prepared did not include concerts, but it did include special events. Mayor/Chairman Crites asked for an answer to the question asked relative to AB1290. Mr. Rabin said the question was whether or not AB1290 limits loans to 20 years, and he said he was not aware of that requirement. He said there was also a question as to whether or not redevelopment law required a copy of the Environmental Impact Report to be delivered to all taxing agencies, and he said he did not know enough about that requirement to answer the question. Mr. Ortega added that when a redevelopment plan is created, there are all those requirements, and there is a provision by which all taxing agencies be met with and that they be given a copy of the plan and the EIR. He said this had been done with regard to this project area. Other than that, he said he was not aware that pursuant to AB1290 specifically those reports were to be provided to taxing agencies. Mayor/Chairman Crites asked that staff check into this to make sure. He asked for an answer relative to the issue of insurance policies. Mr. Rabin responded that the Judge was correct that this was a very important provision. He said this lease provides for a $5 million liability insurance policy and the developer is obligated to indemnify and hold the landlord harmless and to name the Agency and the City as additional insured on the policy. Mayor/Chairman Crites asked that Mr. Odekirk define "special events" and asked if he was correct in understanding that all special events have to have permits approved. Mr. Diaz responded that Mayor Crites was correct in his understanding that no matter what they are, all special events must be approved by this body before they happen. Mr. Ron Odekirk said the special events they had been projecting would be no more than six per year and up to as many as 5,000 visitors. They would be charity softball games, charity basketball games, etc., with celebrities in most cases. He said they were all sporting events. 12 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * MR. GERALD FORREST, 10 Las Cruces, Palm Desert, questioned Mr. Wolk's qualifications to make a true analysis based on financial data. Mr. Wolk responded that he was not an accountant but had been doing these studies of larger and smaller sized developments since 1983 and he believed he was very well qualified to do what he was doing. Mr. Ortega added that in this case a "Big 6" firm would not be the type of consultant we would want to hire to do this. Upon question by Mayor/Chairman Crites, Mr. Ortega responded that staff, the Finance Department and the attorneys had all look at the financial data. MR. ED BYK addressed Council and questioned who had supplied the figures Mr. Wolk worked with. Mr. Ortega responded that Mr. Wolk's report indicated he did an independent feasibility study on his own. In fact, his proforma differed from that of the developer, so he did not use their numbers. Upon question by Mrs. Paisokopf, Councilman/Member Wilson explained that the developer had provided information to Mr. Wolk as to the types of activities. Mr. Wolk then did a financial analysis of what that kind of activity would bring in. Judge Einbinder asked to read into the record the digest of AB1290 sponsored by Representative Eisenberg 09/08/93. He said it provided in the digest term limits on redevelopment plans and that it had two categories: new redevelopment plans and existing redevelopment plans. He said the new plans limited the time to incur debt to a maximum of 20 years, and this time limit may be extended through a plan amendment for up to 30 years upon a finding by the Agency that substantial blight remains within the project area and that the blight cannot be reasonable eliminated without the establishment of additional debt. He said he did not think that was relevant to this particular instance. He said it also indicated in regard to existing redevelopment plans that it limited the terms for the incurrence of debt under the redevelopment plan to a maximum of 20 years or the year 2004, whichever is later. Mr. Ortega stated that the Judge was correct but that was talking about the Agency incurring debt when it issues debt. He said the Agency had just come through the process in the last several months of amending all its redevelopment plans to comply with AB1290 in accordance with what the Judge read. He said what the Judge was talking about was the Agency incurring debt, not making loans. With no further testimony offered, Mayor/Chairman Crites declared the public hearing closed. Councilmember/Member Benson stated she did not see how the figures on Section 4 could pertain to the section where the ball park is going to be built. She said it seemed that everything would be different and there would be no point in approving this one. She said 13 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * * she did not agree with approving a financial agreement for the Portola site when the figures could change as well as everything else for the facility to go on the Cook Street site. Councilman/Member Wilson responded that the Council approved the Conditional Use Permit for Section 4 with a 90-day sunset clause that if the project is relocated on the Cook Street site, then the Conditional Use Permit on Section 4 goes away. But if something should happen to stop the project on Cook Street, this would then revert back to this location. He said that as Mr. Ortega indicated, there is also an abort clause in this agreement that says if we approve a different location, this approval dies on this project. He added that Council would have to do this all over again on the Cook Street site. Councilman/Member Kelly stated it was his understanding that there was no rent for the first 12 months. Mr. Rabin responded that there was no minimum rent in the first 12 months. If the developer is successful enough to reach $1.8 million in gross revenues in the first 12 months, there would be 6% of the gross revenues payable as rent during that period of time. If the developer realizes only $1.799 million in gross revenues in the first 12 months, there would be no rent. Councilman/Member Kelly asked what would be included in gross revenues. He said when he was looking at these types of installations around the country, one of their biggest revenues came from things like, for example, by agreeing to use nothing but Budweiser beer they would derive a lot of revenue from that. He asked if that was included. Mr. Rabin stated that gross revenues were defined in the agreement as all revenues relating to the project minus special authorized exceptions like sales taxes. He said if there was some special concession paid for an exclusive, we should include that so there is no question that it be included. Councilman/Member Kelly stated for the record that he would like the definition to state this is included as well as any other kind of revenue such as that. Councilmember/Member Benson said she felt that even before the fiasco in Orange County, no one could convince her that the City putting $3 million into a project and the developer putting in $1 million was a good investment for the City. In the wake of Orange County, she said she would reiterate that and felt the Council must be more fiscally responsible. She did not think this was something the City needs. She said the City had spent millions over the last 20 years providing sports facilities for the youth of the Valley, and now to provide a facility to bring in other communities for something that is not necessary at this time was just fiscal irresponsibility. Mayor/Chairman Crites stated that this facility was sought because it would bring in new revenues for the City and it would provide access for both adults and children for needed 14 MINUTES PALM DESERT REDEVELOPMENT AGENCY MEETING DECEMBER 22, 1994 * * * * * * * * * * * * * * *.* * * * * * * * * * * * * * * * * * * * * * * fields since the ones we have now are full. He said the guarantee on this was a facility for which someone else has paid over $1 million to build and the City would get back way more than it put in. Councilman/Member Snyder agreed and said it was the responsibility of the Council to find ways to keep our city fiscally strong and also to appeal to all the people, not just a small group. He said this was an opportunity to create a facility that would also be a money maker for the City. Councilman/Member Snyder moved to: 1) Waive further reading and adopt Redevelopment Agency Resolution No. NZ making certain findings with regard to the transfer of land for the use of a Sportspark in the area of the NW quarter of Section 4 and approving the Disposition and Development Agreement for such use (Contract No. R09390); 2) waive further reading and adopt City Council Resolution No. 94-127 approving the leasing by the Palm Desert Redevelopment Agency of approximately 22 acres of real property located on the east side of Portola Avenue, south of Frank Sinatra Drive, Palm Desert, California, to Ronald Odekirk and Rick Odekirk. Motion was seconded by Wilson. Councilmember/Member Benson asked whether if before any money is disbursed on this the financial check that the Investment Committee has set forth would apply to this as well. Mayor/Chairman Crites responded that staffs indication was that this would be run through the new process. Mayor/Chairman Crites called for the vote. Motion carried by a 3-2 vote, with Councilmembers/Members Benson and Kelly voting NO. Mayor/Chairman Crites noted that in February the Council/Agency Board would look at an agreement somewhat similar to this on the Cook Street site. XIV. ADJOURNMENT With Agency Board concurrence, Chairman Crites adjourned the meeting at 12:30 a.m. ATTEST: SHEILA R GILLIGAIN, SEC, C F1 TY TO THE PALM DESERT REDEVEL AGENCY 15