HomeMy WebLinkAbout1999-07-08MINUTES
REGULAR PALM DESERT REDEVELOPMENT AGENCY MEETING
THURSDAY, JULY 8, 1999
CIVIC CENTER COUNCIL CHAMBER
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I. CALL TO ORDER
Chairman Spiegel convened the meeting at 4:04 p.m.
H. ROLL CALL
Present:
Member Jean M. Benson
Vice Chairman Buford A. Crites
Member Jim Ferguson
Member Richard S. Kelly
Chairman Robert A. Spiegel
Also Present:
Ramon A. Diaz, City Manager
David J. Erwin, City Attorney
Sheila R. Gilligan, Director of Community Affairs/City Clerk
Carlos L. Ortega, RDA Executive Director
Richard J. Folkers, ACM/Director of Public Works
John M. Wohlmuth, ACM/Director of Administrative Services
Patrick Conlon, Director of Building and Safety
Phil Drell, Director of Community Development
Paul S. Gibson, Director of Finance/City Treasurer
Rachelle D. Klassen, Deputy City Clerk
Upon a motion by Member Ferguson, second by Vice Chairman Crites, and unanimous vote of the
Redevelopment Agency Board, Chairman Spiegel adjourned the meeting to Closed Session at 6:20 p.m. He
reconvened the meeting at 7:01 p.m.
III. CONSENT CALENDAR
A. MINUTES, of the Regular Meeting of the Redevelopment Agency of June 24, 1999.
Rec: Approve as presented.
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PALM DESERT REDEVELOPMENT AGENCY MEETING JULY 8, 1999
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B. CLAIMS AND DEMANDS AGAINST THE AGENCY TREASURY - Warrant Nos. 58RDA,
59RDA, 58HA, 59HA, 59 Housing, and 58DR.
Rec: Approve as presented.
C. MASTER PORTFOLIO SUMMARY for the Period Ending May 31, 1999.
Rec: Receive and file.
D. REQUEST FOR APPROVAL of Financial Real Estate Analysis Consulting Contract (Contract
No. R16280).
This item was removed for separate consideration under Item IV, Consent Items Held Over.
Please see that portion of the Minutes for discussion and action.
E. REQUEST FOR APPROVAL of Professional Services Agreement (Contract No. R16290).
Rec: By Minute Motion, approve an agreement with Cotton/Beland/Associates, Pasadena,
California, for professional services in an amount not to exceed $30,000 and
appropriate funds from Account No. 850-4195-466-3092.
F. $LOUEST FOR APPROVAL of Change Order No. 7 to Contract No. R13320-D. --
Construction Services at Santa Rosa Apartments.
Rec: By Minute Motion, approve Change Order No. 7 to subject contract with Contreras
Construction Company, Indio, California, in the amount of $10,953.25, for grading
services, and authorize the appropriation of such funds from the Agency's Unobligated
Housing 20% Set -Aside Fund.
G. REQUEST FOR ACCEPTANCE OF WORK for Contract No. R13320-D -- Construction
Services at Santa Rosa Apartments (Contreras Construction Company, Indio, California).
Rec: By Minute Motion, accept the work as complete and authorize the City Clerk to file
a Notice of Completion for the subject project.
Chairman Spiegel requested Item D be held over for separate consideration.
Upon a motion by Vice Chairman Crites, second by Member Kelly, and 4-0 vote of the Agency Board
with Member Ferguson ABSENT, the remainder of the Consent Calendar was approved as presented.
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JULY 8, 1999
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IV. CONSENT ITEMS HELD OVER
D. REQUEST FOR APPROVAL of Financial Real Estate Analysis Consulting Contract (Contract
No. R16280).
Vice Chairman Crites said he realized there were probably good reasons for why the Agency
Board just now received the information on this item. Therefore, he asked if the decision could
be continued.
Mr. Ortega said staff was unaware that there would be an adjourned meeting scheduled for the
end ofJuly; therefore, it rushed to place this item on today's agenda without being fully prepared.
Vice Chairman Crites moved to continue the item to the adjourned joint meeting of the City Council
and Redevelopment Agency ofJuly 22. Motion was seconded by Chairman Spiegel and carried by 4-0 vote
with Member Ferguson ABSENT.
V. RESOLUTIONS
A. RESOLUTION NO. 376, - A RESOLUTION OF THE PALM DESERT REDEVELOPMENT
AGENCY AGREEING TO TERMS OF A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF PALM DESERT MAKING A FURTHER APPROPRIATION TO THE
REDEVELOPMENT REVOLVING LOAN FUND (JOINT CONSIDERATION WITH THE
PALM DESERT CITY COUNCIL).
Mr. Ortega said the subject matter was a housekeeping item; it recognized the loan made to the
Agency for purchase of the property known as the Ahmanson property.
In response to Councilman/Member Ferguson's question about the loan's term, Mr. Ortega said
there was no date certain when it needed to be repaid, the Agency just kept paying interest to
the City.
Councilman/Member Ferguson moved to waive further reading and adopt Resolution No. 376. Motion
was seconded by Councilman/Member Kelly and carried by unanimous vote.
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VL NEW BUSINESS
A. REQUEST FOR APPROVAL OF BUSINESS SUPPORT LOAN PROGRAM (JOINT
CONSIDERATION WITH THE PALM DESERT CITY COUNCIL).
The following is a verbatim transcript of this item.
may:
RAS Robert A. Spiegel, Mayor/Chairman
RAD Ramon A. Diaz, City Manager
RAM Ruth Ann Moore, Business Support Manager
JF Jim Ferguson, Councilman/Member
DL Dan Lanager, Business Support Technician
BAC Buford A. Crites, Mayor Pro-Tempore/Vice Chairman
JMB Jean M. Benson, Councilmember/Member
RSK Richard S. Kelly, Councilman/Member
BP Bill Powers, President, First Community Bank
PD Phil Drell, Director of Community Development
SRG Sheila R. Gilligan, Director of Community Affairs/City Clerk/Agency Secretary
RAS Request for approval of Business Support Loan Program. Joint consideration with the Palm
Desert Redevelopment Agency.
RAD Yes. Ruth Ann Moore will give this report.
RAM Honorable Mayor, Members of the Council, when the Business Support Center was created, one
of the goals the City Manager and the Council had was the exploration of a business loan
program. Just as the City works with developers of large projects, so a loan program will work
toward the success of individual businesses. Before you is a staff report that contains the review
for a loan program, goals and general criteria, loan process and performance flow charts, loan
descriptions, committee member recommendations, an example of the application we would use
for the program, and loan recommendations from both the RDA and City Attorneys. Staff would
ask that you act on the recommendations, as outlined in the report, and Dan Lanager, our
Business Support Technician, and myself are available for questions.
RAS Council have any questions of...Ruth Ann...I should mention that this went before the Finance
Committee and was approved by the Finance Committee.
JF Yeah. I have a number of questions.
RAS Okay.
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JF Who in your department is qualified to examine loan portfolios?
RAM Dan is...qualified for that. He...came from the banking world with us. He was...manager of
a...with VIB.
JF Okay. And would that include assessing moral risk, business risk, noncontrollable factors, and
business plans, both before, during, and after the loan?
RAM Yeah. Dan, would you like to come up front, please, and speak on that?
JF Thank you.
RAS Page nine has the committee that will approve the loans.
JF I read the staff report.
DL In reference to your question, Councilman Ferguson, we do anticipate...forming the loan review
committee with specific people in our community to...to look over the moral risk...the credit risk,
and also the pro formas, and that's one of the reasons why we're requesting to form this review
committee.
JF Okay. So when we say moral risk, even if something fits within our existing zone, we'll be taking
a second moral review of whether or not we want to loan them money? Or am I just reading
this...
DL No...that's going to be written in the criteria, and we find that to be most important that when we
stipulate criteria, that we're going to follow what's already...considered for moral risk.
JF And as I understand this, none of these expenses can be used for operating expenses or capital
equipment? So are we really talking about tenant improvements and building improvements?
RAM Our suggestion would be that that would...that's our recommendation to write within the criteria.
JF Well there's a letter from our Agency Counsel that, in fact, says we're prohibited by law from
doing anything but, essentially, building improvements.
RAM That's the Redevelopment money?
JF Yeah.
RAM The City money you can actually use for other purposes.
JF So you would envision subsidizing operating expenses?
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RAM That would not be our envisioning, just because you can.
JF Okay. So back, are we back to...
RAM We wouldn't want to set that...it wouldn't be our staff recommendation to set that within the
criteria, and the criteria would be coming back to Council for review prior to enacting it.
JF So are we talking about tenant...?
RAM No. In my...as the staff recommendation, mine would be no.
JF All right. What are we funding, then, I guess is more the way to...
BAC Let me just throw a quick comment in that might help, Jim. When this was discussed at the
Finance Committee, there was, I think, broad conceptual support for it. But, as an example,
should we choose to go ahead this evening, I would suggest that we, rather than appropriate
monies, that we reserve monies until we look at the design loan criteria and purposes that really
we don't have yet, and those are the kinds of issues that I think you're addressing.
JF Ah...no, I'm more at a philosophical level on why on earth good government needs to get
involved in the banking business, and if we are talking about financing building improvements,
why the private sector can't take care of it. And if we're talking about funding it with a million
dollars, I'm wondering if this is the road we ought to even be embarking on, and if I wasn't a part
of discussions about that previously, I apologize, but I still have the same questions.
JMB It's my understanding that this kind of parallels the HIP program, the home improvement one,
that we loan money to the people to fix up their homes, their fences, their roofs, and all that, and
that's what this was an answer to the business community to fix up buildings, et cetera, like along
the north side of 111 that needed cosmetic work, and all that.
JF Yeah. As I understand the housing program, the HIP program is a County program that we help
administer and help applicants qualify for a County program. I think it's different than us
undertaking...I guess the correct analogy would be us...
JMB But we do have Redevelopment money in the HIP program.
JF Pardon me?
JMB We have Redevelopment money in the HIP.
JF No, I understand that, and we have grants and a whole series of things, but...I guess I would draw
the distinction between those two would be if our Business Support Center helped work with
commercial lenders, Small Business Administration, loan guarantees for minority and women -
owned businesses and assisted them using private market and other governmental entities for
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PALM DESERT REDEVELOPMENT AGENCY MEETING JULY 8, 1999
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business support, as opposed to funding it ourself staffing it ourself, and running a loan program,
and basically becoming a bank to the tune of a million dollars. I just...open up those questions.
I'm not passing judgment on it.
JMB Yeah. I know. Yeah.
RSK You have a philosophy disagreement with that.
JF Perhaps.
RSK Me, too.
RAS Well...from my standpoint, there are commercial parts of Palm Desert that we'd like to see
improved from an appearance standpoint, primarily. And where the owner of these businesses
does not have the ability to go to one of our banks and get a loan because there's not enough
there, but if that owner then puts together a proposal that is reviewed by two Palm Desert
commercial lenders, a member of the Palm Desert Small Business Finance Corporation, a member
of the Inland Empire Lenders Community Development Corps, a member of the California Small
Business Development Corporation, and our City Finance Director, and then they feel that from
a lot of reasons it makes sense to loan the money to this person even though his assets don't really
warrant it, and there is some collateral there, and that would be up to them to make the decision,
it could help improve the...way the City looks. And it would also give us more of a hammer when
it comes to Code Enforcement. We have areas in our City that, in my opinion, are substandard,
and it's difficult to go in and tell a commercial business that you've got to do something when
they don't have the money to do it. And so I look at this as...an asset to the City and an asset to
our small businesses. We happen to have a member of the banking community that is with us
tonight, I don't know that he's there for that reason, but...maybe Mr. Powers would like to come
forward and give us his thoughts on...the program.
RSK I'd like to hear them.
JMB Jim, I might, before Bill speaks, I was just going to say that on that Inland Empire Lenders
Community Development Corps, they made a presentation the same, similar program, if I'm not
mistaken, to Riverside County at one of Roy's breakfasts. A lot of our own local banks put
money into that program, so they're helping that program along and not being a bank, but the
bank's giving them money.
BP I was just walking by.
RAM He didn't plan it, I swear.
BP One of the issues that you may want to consider, because we participate in these throughout the
Valley and in the High Desert, and what they usually do is you'll set up a pool of funds, like the
million dollars you're talking about, and use that as a guarantee. And then the bank can go ahead
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and make the loan, and then we keep you out of the banking business and just as a friendly
guarantor, just in case the borrower would default or something, we'd have something to fall
back on.
RAS You got a partner.
BP Yeah. And nine times out of ten, these folks that are trying to, or you would like to see them fix
up their businesses, whoever made the comment, they probably don't qualify for a bank loan.
RAS Dick.
RSK Rather than just...because that's basically kind of like securing a loan. Rather than securing a
loan, could we consider subsidizing part of the interest rate so it would be more affordable, and
that way we wouldn't be sticking in there and securing the loan and wind up paying.
RAD It's also in...
RAM Councilman Kelly?
RSK I can see where a citizen might criticize us doing that. Where there would be no criticism, I
wouldn't think, in subsidizing part of the interest so that they could afford to get the loan.
CounciU
Agency Members That's part of the program.
RSK Well that's the part that I would rather do, that.
JF I don't disagree with the Mayor. I would love to help these businesses. There's a State program
called the Storefront Abatement Program that helps communities help small businesses put new
facades on their businesses and clean them up. As I read the report, it looked to me like it was
mostly building improvements, which owners of property ought to be responsible for. If they
need a little incentive to do the storefronts, there's existing programs for it, and if we want to buy
down some of the interest, just on a straight assistance program, that's great. But when we have
our staff going out, monitoring business plans, and telling them how to run their business to
secure our loan and taking their equipment out of their store when our loan doesn't get repaid,
that to me is just an uncomfortable involvement for a small community, like ours, with business.
RAM And that may be an idea not to go with the revolving loan fund, because that's actually what the
revolving loan fund would do versus setting up the guarantees that Mr. Powers was talking
about...
JF And if I were a bank, I'd love the City of Palm Desert to guarantee my loans.
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RSK Well...generally speaking, where you see these used, it's some, they have some reason for a block,
or two blocks, or something where they're redoing the whole thing and trying to bring the city
up to a better level. It's not usually a store here and a store there, and so I'm inclined to agree
with Councilman Ferguson that...
BP If I could, one other point, my experience in these kinds of loans, the default rate is very, very
low. People take pride in what they're doing, they do everything they can to pay it back. And
I haven't seen one yet that defaulted with the first payment, ever. So by the time it moves on
through the process, your exposure, you know, goes down every single month.
JF Yeah, but Bill you're asking us to guarantee loans that your bank would reject, otherwise.
BP Not necessarily. But it's easier if there's a guarantee.
JF Well, of course.
RSK (Unclear)
BP Of course, some people just absolutely no...no way to do it. I mean, it's up to you.
PD If I can add a little bit here. In terms of the philosophical question of why we would participate
in loans where the banks don't, and that is, very simply, that banks loan money to receive income
off repayment of loan. That is their sole reason for doing it. If they feel the risks outweigh their
financial...direct financial return for repayment of the loan, they don't do the loan. We have a
much broader goal— we're, in essence, a partner with all our businesses. We receive one percent
of the gross, in terms of sales tax. We receive the visual benefits of a successful business. So we
have a much broader objective to see the improvements that successful businesses bring to the
City, and that's why a marginal loan, which a banker would not participate in purely based on the
financial return of the repayment, while when we take it into our broad objectives, that tips the
balance. We're talking about nearly bankable loans; ones which almost make sense to the lender
but don't because of their narrow objective. We have this much broader benefit from successful
businesses, and therefore, that would tip the balance, and that would justify our participation.
RAS Any other questions of staff?
BAC One other thing, at least when I was in the meeting that I asked for is, I believe, or intended to,
was to bring to us some examples. I remember, you know, I had palpitations about the potential
nonpayment rates that are tucked into here, and so on, and so you were going to go look at
examples of programs...that were successful that did not have default, or whatever, rates that
approached some of the issues of 20% a year, and so on, and so forth.
RAM We did...look at some of those programs, and what we found was that they did not have a criteria
written out prior to it. In other words, they were not looking, they did not decide ahead of time
how much they wanted to risk on a high risk loan. For example, if we had a certain set fund, we
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PALM DESERT REDEVELOPMENT AGENCY MEETING JULY 8, 1999
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may only want to put aside 20% of that fund to loan to what would be defined as a high risk,
typically a restaurant is considered a high risk, various products like that. We tried to talk to a
bank about, the banks about getting a listing, and we did not receive that from them prior to this.
BAC So we still don't have examples of those?
RAM No.
BAC Okay.
RAS Comments?
DL If I could just make one more comment, Councilman Crites. One thing we found with talking
with other cities as far as the risk and involvement, they strongly suggest that we piggyback with
the financial institutions and work with the financial institutions. For instance, we wouldn't be
writing the business plan, telling them how to run their business. But doing adminis-...the banks
would actually do the administration, as Mr. Powers had mentioned, when you work with the
banks, and they're doing the administration, number one, that alleviates an extensive amount of
cost to the City. And number two, we...we are not a bank, and we don't anticipate being set up
as a bank but working with the resources that are available to us within the City to assist in
different areas, and we would look at each business and each criteria very specifically once we
have the standard criteria set to complement the objectives of the City of Palm Desert.
BAC Let me rephrase my question, then. Who in this Valley operates a kindred program that you
would consider a worthy model?
DL To be honest, what we found...
JF Please do.
DL ...for a program, none. The City of Palm Desert, or excuse me, Palm Springs actually has specific
programs, but what they use are in conjunction with the other banks in a HUD program which
they haven't done any loans with as of this time.
JF Can I follow up on that, then? You say in your staff report that you've contacted various
California cities, and if we're going to embark on this road, I would at least like to have the
opportunity to take a look at several other cities' programs, how they...what their definition is
of moral fitness for a loan-- there's just a lot of questions I have in it.
DL Right. And what I've found, we found that the City of Long Beach has a very good program,
a very successful program.
JF Can we consider, perhaps, continuing this for a little bit so we can get some more information?
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PALM DESERT REDEVELOPMENT AGENCY MEETING JULY 8, 1999
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RAS Anything you want.
JF That would...and I'll tell you where I'm coming from; if this is like, as Councilmember Benson
said, like a HIP program where you aren't funding a business, but you're trying to assist marginal
operators to do marginal improvements to make it look better, that's one thing. It's another thing
to have a million dollar revolving loan program where, you know, basically, we're in a lending
function, and I'll be the first to admit it's my learning curve that needs to get a little steeper. But
based on what I got with this report, I didn't get very far along, and I'd like to get some more
information.
RSK Was that a motion?
JF That was a motion to continue.
RSK I'll second that.
BAC Also it would be, I think, useful if you had, let's say, four, say you had four different arenas in
which you wish to do this...this type...this type...this type...to give us an example or two of the
kind of application that you think would be reviewed favorably. You know, what...what are we
going to look at, say yes to, the kinds of amounts, and what do we believe, then, that we'll have
four years later, two years later as a result of it. Does that...?
RAS Councilman Kelly.
RSK Well, you know, I'd be in favor of loans that would clean something up, existing business, but it
doesn't make sense to me to help somebody start a business. If it's that marginal, maybe they'd
better not start one.
JMB Yeah. I would be in favor of the existing rehabilitation and to see something, but not to
have...(unclear).
JF Well and along those lines, I, it would be breathtaking to use Redevelopment money to actually
do redevelopment with older neighborhoods that need it, and...
RAS No, we don't want to do that.
JF ...I'm not wild about taking a million dollars of General Fund money and supplying it to this
program.
RAS Well why don't we do this, I haven't commented yet. Why don't we do this, after hearing what
everybody said, suggest that the Business Support Center do a little more homework on, you've
mentioned Long Beach, let's find three or four other cities out there that have successful
programs, and if it's necessary to take a trip, take a trip; come back and show us some
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applications that were successful; show us some of the things that they've been able to accomplish
with the program, and then come back to us with your recommendations.
RSK You have a motion and a second already.
RAS Yes we do. Yes we do. Please vote. I just wanted to...
SRG Motion carries by unanimous vote. Are you continuing this until the information's ready, no
specific date? Thank you.
For purposes of clarification, Councilman/Member Ferguson moved to continue consideration of the
Business Support Loan Program to a date uncertain. Motion was seconded by Councilman/Member Kelly
and carried by unanimous vote.
VH. CONTINUED BUSINESS
A. CONSIDERATION OF APPROVAL OF THE DISPOSITION AND DEVELOPMENT
AGREEMENT BETWEEN PALM DESERT REDEVELOPMENT AGENCY AND
CALIFORNIA STATE UNIVERSITY (JOINT CONSIDERATION WITH THE PALM
DESERT CITY COUNCIL) (Continued from the meeting of June 24, 1999).
Mayor Pro-TemporeNice Chairman Crites moved to continue the item to a time uncertain. Motion
was seconded by Councilmember/Member Benson and carried by a 4-1 vote with Councilman/Member
Ferguson voting NO.
VHI. OLD BUSINESS
None
IX. REPORTS, REMARKS, AND AGENCY BOARD ITEMS REQUIRING ACTION
A. EXECUTIVE DIRECTOR
None
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PALM DESERT REDEVELOPMENT AGENCY MEETING JULY 8, 1999
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B. AGENCY COUNSEL
Request for Closed Session:
Conference with Real Property Negotiator pursuant to Section 54956.8:
1) Property: Land located in Section 4 - Desert Willow
Negotiating Parties:
Agency: Carlos L. Ortega
Property Owner: Palm Desert Redevelopment Agency
Under Negotiation: Price x Terms of Payment
2) Property: APN 653-360-010, APN 653-360-011
APN 653-360-012
Negotiating Parties:
Agency: Carlos L. Ortega/Dave Yrigoyen
Property Owner: ART PALM/Basic Capital Management
Under Negotiation: Price x Terms of Payment
3) Property: APN 620-400-015
Negotiating Parties:
Agency: Carlos L. Ortega/Dave Yrigoyen
Property Owner: Empire Parkway Centre, LP
Under Negotiation: _ cZ Price _ x Terms of Payment
4) Property: APN 620-400-016
Negotiating Parties:
Agency: Carlos L. Ortega/Dave Yrigoyen
Property Owner: Hinton Financial Services, Inc., et al.
Obed Enterprises, Inc.
Under Negotiation: x Price x _ Terms of Payment
C. CHAIRMAN AND MEMBERS OF THE AGENCY
None
X. AWARDS, PRESENTATIONS, AND APPOINTMENTS
None
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PALM DESERT REDEVELOPMENT AGENCY MEETING JULY 8, 1999
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XI. PUBLIC HEARINGS
A. REQUEST FOR APPROVAL OF THE SALE OF MOBILE HOME LOT NOS. 26
(APN 622-351-026) AND 57 (APN 622-3 51-05 7), LOCATED AT 43-155 PORTOLA
AVENUE (PORTOLA PALMS MOBILE HOME PARK) AT FAIR MARKET VALUE
(JOINT PUBLIC HEARING WITH THE PALM DESERT CITY COUNCIL).
Mr. Diaz said this was a continuation of the sale of mobile home lots at Portola Palms Mobile
Home Park.
Mr. Ortega stated the purpose of the public hearing was to allow anyone who objected to the sale
of the lots opportunity to express those opinions. Staff recommended approval.
Mayor/Chairman Spiegel declared the public hearing open and invited testimony FAVORING or
OPPOSING the subject sale of mobile home lots. With no testimony offered, he declared the public
hearing closed.
Mayor Pro-TemporeNice Chairman Crites moved to: 1) Waive further reading and adopt Resolution
No. 99-74, authorizing the Palm Desert Redevelopment Agency to sell mobile home Lot Nos. 26 and 57,
located at 43-155 Portola Avenue (Portola Palms Mobile Home Park) at fair market value; 2) waive further
reading and adopt Redevelopment Agency Resolution No. 375, making and finding that the sales price for
the lots are not less than their fair market value in accordance with the highest and best used under the
Redevelopment Plan for Project Area No. 1, Amended. Motion was seconded by Councilman/Member Kelly
and carried by 4-0 vote with Councilman/Member Ferguson ABSENT.
XH. ORAL COMMUNICATIONS
None
XIII. ADJOURNMENT
Upon a motion by Vice Chairman Crites, second by Member Kelly, and 4-0 vote of the Agency Board
with Member Ferguson ABSENT, Chairman Spiegel adjourned the meeting at 8:20 p.m. to 3:00 p.m.
Thursday, July 22, 1999, for a Joint Meeting of the City Council and Redevelopment Agency.
EST:
-"SHEILA R. GILLIGAN, S' ' TARY TO THE
PALM DESERT REDE
OPMENT AGENCY
/W.l‘AY: ,� L
ROBERT A. SPIEGELX
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