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HomeMy WebLinkAboutCitizens' Advisory Cmte PA4 - 09/21/09 & 08/17/09PALM DESERT REDEVELOPMENT AGENCY CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO.4 MINUTES SEPTEMBER 21, 2009 I. CALL TO ORDER Chairman Benford convened the meeting at 3:05 p.m. II. ROLL CALL Present: Absent: Fred Benford, Chairman Javier Lopez, Member Roberta Grubb, Vice Chair ecet. L1-Ci Charles Ash, Member U Russell Campbell, Member 13't F%a��,. Jane Daugherty, Member ON ( oZ • Robert Duncan, Member Kelly Litecky, Member 1 VERIFIED BY') Douglas Luhring, Member Original on file with City Cie 's Office Staff Present: Martin Alvarez, Redevelopment Manager Lauri Aylaian, Director of Community Development Heather Buck, Project Coordinator Mark Greenwood, Director of Public Works Shawn Kilpatrick, Code Compliance Officer Spencer Knight, Landscape Manager Monica Loredo, Administrative Secretary Justin McCarthy, ACM for Redevelopment Hart Ponder, Code Compliance Manager Ryan Stendell, Senior Management Analyst Catherine Walker, Senior Management Analyst Guests: Richard Kelly, Councilmember Robert Spiegel, Councilmember Mari Schmidt, Planning Commissioner Randy Case, Palm Desert Country Club Development LLC K. Kaufmann, The Desert Sun Steven Orr, Richards, Watson, & Gershon Lt. Andrew Shouse, Palm Desert Police Department CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 III. ORAL COMMUNICATIONS None IV. CONSENT CALENDAR APPROVAL OF THE MINUTES OF THE CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MEETING OF AUGUST 17, 2009. Mr. Randy Case, Palm Desert Country Club Development LLC, commented that they read through the minutes, and they are in disagreement with a couple of facts that he would like to clarify. He stated that there was a question from The Desert Sun to Mr. McCarthy whether or not they have provided financial information to the City, which Mr. McCarthy had answered no. Mr. Case clarified that from February of this year up to as recently as three to four weeks ago, have provided the City's consultant with information every time he has requested information. Chairman Benford thanked Mr. Case because he was going to bring that up himself. Chairman Benford asked Mayor Spiegel if there was any confusion concerning the financial reports that they were all given. Mayor Spiegel responded that he talked to Mr. McCarthy, and he said that he has been receiving the information. Mr. McCarthy clarified that the Palm Desert Country Club LLC were very forthcoming in providing financial information, a financial narrative, and operating statements for prior years to the City's advisor. The information was looked at when the City was evaluating whether or not to consider a loan. He stated that there has been other information that the City has requested for the City's advisor, which Mr. Case has provided. He made clear that the information that he thought he was (previously) responding to was information that he would call an audit or accounting nature. Mr. McCarthy commented that there have been requests made for a forensic accounting of what has transpired. There was a narrative provided, but there has not been a forensic accounting or audit from beginning to end showing where all the money went. Chairman Benford asked Mr. McCarthy if he needs more information from Mr. Case. He responded that when they need information, they contact Mr. Case through the City's advisor. He explained that the reason they go through the advisor is at the request of Palm Desert Country Club (PDCC) G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 2 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 to maintain the confidentiality of the information that they provide; therefore, the City has been respecting their request. Mr. McCarthy noted that the information goes to the advisor and not to him other than through interpretations. Mr. Case agreed with everything that Mr. McCarthy said. He stated that through the bankruptcy filing, 95% of the information that was given to the City's advisor is available through the bankruptcy for the public to view. He stated that a forensic accounting has not been done. They have not been asked to do that. Chairman Benford commented that he saw in the newspaper that there was a closed session item concerning PDCC at the City Council meeting. He asked Mayor Spiegel for the results of that meeting. Mayor Spiegel responded that nothing happened, and that he is unable to speak on the results because it was a closed session item. Chairman Benford stated that he thought that had to be made public in time, and asked if he is wrong. Mayor Spiegel replied that he is wrong. V. UNFINISHED BUSINESS None VI. NEW BUSINESS None VII. CONTINUED BUSINESS None VIII. OLD BUSINESS None IX. INFORMATIONAL ITEMS A. PALM DESERT COUNTRY CLUB GOLF COURSE Mr. Case thanked the Committee for the opportunity to give an update on what has or has not been going on at PDCC. He also thanked the people that live in the area that came out today and for their support. G:\rda\Monica Loredo\Word\PA No 4ftnutes\Minutes 9-21-09.docx G CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 He stated that approximately two weeks ago they closed the golf course and clubhouse. At that time, they kept some staff, but did have to let go most of the maintenance staff. So there has been no maintenance going on for the last couple of weeks due to the financial situation. They have been doing key things for health and safety and to keep the key components going. He noted that during this time of year, most courses are starting the over -seeding process. So while PDCC is closed, it is in the same timeframe that other courses are drying up to prepare for over - seeding. Mr. Case stated that he cannot give a 100% guarantee of anything today other than they are not open. They have been actively pursuing a loan for $300,000 that will carry them through the over -seeding process until they re -open approximately November 1. He is hopeful in getting the loan within the next few days, and believes it will get done. If funding is done, they still need to go before a federal judge to get approval on the loan. He communicated that if they do not get this loan, they may look at several alternatives that he does not want to talk or think about. Mr. Case commented that he has driven around the property and everything looks pretty good. Obviously, they would need to staff up their maintenance people to catch up since they have not been in sync. He also commented that things have been said about the course and ownership on how dead and how bad things are. All this does is takes the City's time to come out to do another inspection, and find that none of it is accurate. He requested that if there are problems or requests, to please call Dave or Mary. He noted that the area is not Armageddon yet. Mr. Case stated that they have been silent with the media, and they have been silent on purpose because every time they speak about things it is the complete opposite of the truth of what comes out in the newspaper. He voiced that his partners and himself are not happy about some of the comments made about their integrity, honesty, and that they have been called liars. He does not appreciate that and it is unfair and has hurt their ability to get the financing. He commented that the property is going to continue being a golf course whether it is owned by them or someone else. Chairman Bedford asked Mr. Case if he were to get the loan, what prevents them from being in the same situation next May with consideration to the recession and other golf courses being in trouble. What would they do differently? Mr. Case responded nothing. They may be in the same situation next year. He believes in a solid set of expense data. They know how to operate the course now, they are able to bring 25%-30% of the expenses in previous months as opposed to a go forward basis, they know it's a quality golf course and would price it right, and they know that the membership would work with them. He stated that they are G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 4 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 confident that as they move forward they will be able to create enough surpluses so not to be back in the same place looking for a loan. Chairman Bedford inquired how important are the members to the club financially. Mr. Case responded that the members are always important. He made clear that they receive no financial support from no one. Not one homeowner pays a dime toward what they have looking out their backyard. He mentioned that at their peak since they reopened were at 125 members. At that point, it is nice and a good amount of .money in the summer that helps them pay for some of the expenses. Chairman Bedford asked if they anticipate getting back those members. Mr. Case responded that he is not sure that they will come back. They currently have approximately 65 members, if they maintain those members it would be great. Chairman Bedford mentioned that at another club they are also losing members, and they may have to raise the homeowners' fees. Mr. Case stated that is not something they or the next ownership in years to come may not look at. It is a long and complicated process. Chairman Bedford inquired if there is a possibility someone will buy the club. Mr. Case responded that there are a lot of vultures flying around and waiting for them to go into Chapter 7. Mr. Joseph Leggett, resident, asked if the loan goes through in a positive manner, would both courses be over -seeded. Mr. Case responded that they are going to completely over -seed the big course. The greens, tees, and approach ways on the short course will be done with full over -seeding but not sure about the rest of it. What he means is that they would use a less amount of seed per acre, but that they have not come to that conclusion yet. It depends on the funding and the amount of the funding. Mr. Leggett inquired if they would start watering again. Mr. Case replied absolutely. Mr. Leggett asked how it would affect the PDCC if the loan does not go through and into bankruptcy, and how is that going to affect the City Council. Mayor Spiegel explained that PDCC is not the only golf course in trouble. He stated if the City helps PDCC, there will be three other golf courses in Palm Desert in his office the next day. The City does not have the money. GArda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 5 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 He noted that last year the City ended with a budget deficit for the first time in history. This year the budget is mean and lean because the money is not there. Mr. Leggett commented that if PDCC and the other three courses go under, there will be no revenue to the City and asked if that would create a problem for the City. Mayor Spiegel responded not necessarily but obviously appearance would. For that reason there is Code Enforcement to make sure the facility is maintained. If it is not maintained, the City would take care of it and put a lien on the property. Mr. McCarthy interjected that the City's bankruptcy counsel is present to clarify what the City can and cannot do. Chairman Benford clarified that the lakes would be taken care of safety wise, and a lien would be put on the property. Mayor Spiegel replied that it is like any other foreclosure in the City of Palm Desert. Member Ash commented that Mayor Spiegel stated that there are three golf courses in the City that have financial problems, and asked if any of the courses operate under a contract that was signed between the golf course and the City for the maintenance. Mayor Spiegel answered to his knowledge no. Member Ash asked if it makes a difference when the whole thing was sold to the homeowners' to allow the building of the houses. The whole idea was the City was going to oversee this and never again find ourselves in a position that we are in now. It was sold with the idea that the Planning and Building Departments were to have a contract with the developers so this would never happen. Mayor Spiegel stated that they all have a responsibility to keep up their course. Mr. McCarthy communicated that there are two agreements; a development agreement and an operations and maintenance agreement that was executed between the City and PDCC Development LLC with respect to the development and maintenance. PDCC Development LCC is in Chapter 11 and in default, which technically can be called a breach of contract. He stated that at this time there are certain authorities under regulatory authority to require a certain level of Code Enforcement. He noted that the development and operations and maintenance agreement are pre-empted by the court. G:\rda\Monica Loredo\Word\PA No. 4\MinutesUnutes 9-21-09.docx .�J CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 Mr. McCarthy reported that the City conducted an inspection on Friday morning. The course has some deficiencies and a fallen tree. It was not quite dire as they had anticipated. The City did receive reports that the water and electricity were turned off. Based on the visual inspection they could see that the aerator was operating within the ponds. One thing that they might not be able to do under Code Enforcement or regulatory authority is keeping the golf course green. He stated that the City could look at the health and safety of the course. Mr. McCarthy mentioned that they were gearing to facilitate the drainage of the ponds if necessary, and the relocation of the fish so that they would not become a nuisance. Secondly, if the trees were deteriorating rapidly, the City was looking into how to address that issue. At this time, it does not seem that either one of those items are imminent. Mr. Steve Orr, City Counsel with Richards, Watson, & Gershon, indicated that there are two agreements between the golf course and the City. Both agreements are subject to the bankruptcy court jurisdiction. Any actions that the City wants to take would need to go through the bankruptcy court. Under the City's municipal code, the City has the right to prevent public nuisances from existing on the property. He explained that the City cannot compel a bankrupt entity to keep the property green; the City could compel to have the lawn cut down so that there are no animals or the danger of a grass fire. The City could make sure that the ponds do not become stagnant or odoress or harboring mosquitoes for breeding. He explained that the City's right to contractual obligations is circumscribed somewhat by a bankruptcy filing. That means that the City would have to go through the bankruptcy court to have anything happen, which the City is in that process. He noted that the City is monitoring the bankruptcy on a weekly basis. There is not much that the City can do in terms of making the golf course succeed as a business. Member Ash commented that any contract with the City is worthless. Mr. Orr stated that under the United States bankruptcy laws that is true of any contract. He noted that the City would be active in the bankruptcy proceedings. Member Ash voiced that the people of PDCC could sue the City for breach of contract. Mr. Orr stated that he did not believe they could. Member Ash asked if the City is free and clear. Mr. Orr responded that the City is spending money inspecting the property and working with the G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09 docx 7 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 owners. He noted that the owners have been performing under the operations and maintenance agreement by letting the City go on the property and allowing access to look at everything. He communicated that the City of Palm Desert cannot compel that business to succeed. Member Ash interjected that the City could now go on any Palm Desert property under Code Enforcement rules. Mr. Orr replied that was correct. Member Ash stated that it has nothing to do with a contract that exists between the City and the LLC. Mr. Orr explained that the contract requires more than the municipal code requires. Because there is a bankruptcy, they have to force the City's contractual rights against PDCC Development LCC in the context of its bankruptcy, which is what the City is doing. Member Ash mentioned that in his opinion, the people at PDCC has had supreme confidence in the City Council, and that this has been a letdown in the inability to reinforce a contract that was signed and is now at the disposal of the bankruptcy court. Chairman Benford commented that it seems that it is in the best interest of the community, if Chapter 7 was declared to let the vultures come in and start a new club. Mr. Orr responded that he could not comment on that. He stated that if they were to go into a Chapter 7 in the bankruptcy proceedings, there is likely to be a trustee sale, and it would be auctioned to someone. When the new buyer would resume normal golf course operations; one could not tell. Chairman Benford stated that it seems that it would be in the best interest of the bank to provide the loan to PDCC Development LCC to keep it going. Mr. Gary Houtz, resident, stated that assuming they go into Chapter 7, he asked if the bank would own it. Mr. Orr responded not necessarily. In his opinion, if through the bankruptcy process there is not a successful trustee sale it remains in the debtor's estate until it is otherwise disposed of. He explained that in his experience, all across southern California you do not see banks wanting to take on real estate owned property. He does not think the bank would want to get into the golf course business, but it is a possibility. G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 1.1 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 Mr. Houtz commented that the property is not going to be taken care of due to the bankruptcy, and asked what is going to happen to the 2,200 homeowners' that live there. Mr. Orr responded that the City could take steps to mow the lawn down to take the health and safety hazards out. He stated that it is up to the City if they want to be involved in something that might not be successful. Vice Chair Grubb asked Mr. Case what type of loan is he asking for, $300,000? He replied yes. It is in the amount of $300,000 with half being from Wilshire's State Bank and the other half from another party. Vice Chair Grubb inquired if the $300,000 loan would be able to maintain the course, seed the course, and pay off the City for their maintenance. Mr. Case interjected that the City has not done anything. He communicated that the $300,000 is the amount they need to reopen the business the first week of November. Vice Chair Grubb asked Mr. Case if his biggest hurdle right now is the paperwork. He answered that the paperwork is very easy. The issue is a couple of outstanding items between one lender and the bank, and that he did not want to go into any details. Chairman Benford commented that it was indicated that $1.5 million is for the general maintenance of the course. He inquired if $300,000 would only get them into the season. Mr. Case replied yes. They need it for September and October to open in November. Chairman Benford asked if they would have to lower their prices. Mr. Case responded that they are going to be very creative with a lot of things and be successful. Ms. Donna Theodore, resident, inquired about the timeframe that the golf courses (both) would be over -seeded. Mr. Case replied that the course could be over -seeded in November, and they are okay as far as the timing. He noted that the loan is critical because over -seeding is a very expensive proposition. Chairman Benford asked Mr. Case if there has been any discussion of the possibility of an assessment with the bank. He replied no. Mr. Gary Houtz, resident, commented that they he has nothing against the two 15% owners. They were told that Mr. Sung Sang Cho would be out of the picture, but is still 70% owner. He voiced that Mr. Cho has let the golf GArda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 0 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 course go to hell before the other owners bought in. Mr. Houtz noted that there has not been a forensic accounting. He would like the City, if possible, to go into that. He indicated that the amount of money that is shown in the bankruptcy paperwork and the amount of money that was obtained by the sale of lots and homes does not add up to him. He noted that the vast majority of the $18 million plus owed by the LLC is unsecured, which is a terrible thing. All of the secured debt is to whom? Mr. Cho? Again, Mr. Houtz asked for the forensic accounting because somebody received some money somewhere and it did not all go into the golf course. Mr. Houtz voiced that he does not want the golf course to close. He would be happy if LLC kept the golf course, as long as the golf course is there. He commented that it was mentioned that the City checked out the golf course. He asked Mr. McCarthy if they looked at the short course. He replied no. Mr. Houtz said that he does not have a house on the short course, but owns six houses in PDCC. He stated that the short course is dead. It is not getting a drop of water, and a lot of tree branches are down on both courses. He also stated that the water was shut off for about a week. He mentioned that he read in the newspaper that somebody complained about the smell of the ponds, and all of sudden the irrigation comes back on and the ponds start to circulate. Mr. Houtz communicated to not come to him for more money; he was burned once already. Last he mentioned that a proper notice was not given that the golf course closed. He stated that someone has to be accountable for the mess they are in. He thanked the Committee for their time. He commented that he would like to see the golf course succeed, but not at $50 a round because he could play at Desert Willow for $45. And Desert Willow is in much better shape with a much nicer clubhouse than PDCC. Mr. Case commented that he respects everyone's right to have an opinion. He wished that things would have turned out differently, and they are hopeful that the golf course will be able to reopen and get it back to what it was. They made some mistakes, and they are sorry for those mistakes. Chairman Benford mentioned to Mr. Case that Mr. Cho owns 70%, and he never shows up to the meetings. He asked what is wrong with him. Mr. Case responded that he could only say that if he came here it would not be a good situation. He could only say that he and Mr. Kosmont are happy to come in front of the City Council and the Committee. G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 10 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 Mr. Houtz inquired if Mr. Case has the ability of making decisions since he is only a 15% minority holder. He answered that he could make certain decisions. It would depend on the operating agreement and how it is structured. It also depends on what type of decision it is, and other decisions would require all three owners. Mr. Houtz asked if Mr. Case has contact with Mr. Cho on a frequent basis. He replied daily. It was asked if the loan goes through, is the short course going to be over - seeded. Mr. Case responded that he was not sure how much of the short course would be over -seeded. A member from the audience asked if it is over if the loan does not go through this week. Mr. Case answered that it is not over, and that they would continue to work on it. B. UPDATE ON COUNTRY VILLAGE SENIOR APARTMENTS AND CASEY'S RESTAURANT (Catherine Walker, Senior Management Analyst / Heather Buck, Project Coordinator) Ms. Heather Buck, Project Coordinator, presented a Power Point update for Country Club Village. Senior Apartments and Casey's Restaurant. Ms. Catherine Walker, Senior Management Analyst, reported that the Country Village Senior Apartments is to be named the "Carlos Ortega Villas." They received 31 proposals for architectural services, and that they are currently in the review process. Staff estimates awarding the proposal in 30 to 45 days. Member Daugherty stated that at the last meeting she requested a report on Redevelopment funds, and asked if it could be added to the next agenda. Mr. McCarthy asked Member Daugherty what type of information she would like to see. She responded that she would like to know the amount and the ins and outs of the budget. C. UPDATE ON PDCC UTILITY UNDERGROUNDING (Catherine Walker, Senior Management Analyst) Ms. Walker stated that Willdan (consultant) will be collecting various estimates. Southern California Edison (SCE) has submitted an G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 11 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 engineering estimate for the undergrounding. Verizon has sent a request for additional funding, which staff will take to the City Council for an action. Chairman Benford commented that the undergrounding is going to be a horrendous cost to the community. He asked if it is voted on by the City or the community. Member Ash interjected that the cost has been kicked forward for months. He mentioned that Ms. Aria Scott was going to bring back figures, and they have not received anything. Mr. McCarthy stated that the City Council has authorized a substantial amount of money to conduct the engineering, and that the City is working through SCE and Verizon to secure the estimates of the cost so that staff could bring it back to the community. He noted that $600,000 has been authorized, which has been a substantial commitment made by the City to try to get the necessary information for the community to make an informed decision with respect to an assessment for the undergrounding at PDCC. Chairman Benford commented that there were estimates of an assessment but were really high. Mr. McCarthy interjected that the estimates were really high, but there was no definitive understanding whether they were accurate or not. He stated that the Project Area 4 Advisory Committee is the body that requested that the City Council move forward with securing an actual design so that estimates could be provided so that the community could vote on it. He reaffirmed that staff is acting pursuant with the direction that they have been given by this body and the City Council. He noted that there has been a great deal of work that has been performed, and a great amount of financial commitment made on behalf of the community and by the City Council. Member Ash commented that he has found that if no one commits to a schedule nothing gets done. He mentioned that Ms. Scott promised the Committee a couple of years ago in providing a rough estimate, and asked Mr. McCarthy provide a schedule of when it is going to be done. Mr. McCarthy responded that rough estimates have been provided to the Committee in the past, and staff will work on a schedule that they could bring forward with estimates that will have the kind of information that the Committee wants. G:\rda\Monica Loredo\Word\PA No MMinutesUnutes 9-21-09.docx 12 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 Member Ash voiced when is staff going to provide a timeline. McCarthy remarked that he just committed to a timeline. Chairman Benford commented that he does not imagine the community approving a huge assessment per household. Member Ash indicated that the City was going to contribute the costs to get the estimates. The estimate is going to provide a figure of what it will cost to actually do the undergrounding itself, and how much it would cost for each homeowner. Mr. McCarthy stated that staff would put together a timeline, bring back the earlier estimates, and add it to the next agenda. He made clear that staff has been acting on and spending a lot of money trying to do exactly what this Committee has asked staff to do in the past. He clarified that there are Redevelopment funds available for a portion of the work, but it does contemplate for it to be completed with an assessment that has to be approved by the property owners. He stated that staff would put some of the history together and bring the information back for the Committee's consideration. Mayor Spiegel mentioned that his street was undergrounded over a year ago. It cost him $23,000 to underground the electricity, Time Warner cable, and Verizon with the City paying for a part of that or it would have been more than $23,000. He said that was the cost, and that it was not because the City charged that, that is what the utility companies charge. Chairman Benford asked Mayor Spiegel if he thinks that the community would pay that amount. He responded that he did not know, and pointed out that Member Ash has wanted this for a long time. Mayor Spiegel reminded the Committee that the assessment would have to go to a vote. If it does not pass and it is done again, the City will not put any money in to it. Member Ash commented that on top of the undergrounding assessment, there is a possibility of an additional tax assessment to maintain the golf course. He stated that it is going to be a tough sell. X. REPORTS AND REMARKS A. COMMITTEE CHAIRPERSON/MEMBERS B. AGENCY BOARD LIAISONS G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx 13 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES SEPTEMBER 21, 2009 C. PLANNING COMMISSION LIAISON D. STAFF XI. ADJOURNMENT There being no further business, the meeting was adjourned at 4:25 p.m. G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 9-21-09.docx Monica Loredo, Recording Secretary 14 PALM DESERT REDEVELOPMENT AGENCY CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 CALL TO ORDER Chairman Fred Benford called a regular meeting to order on Monday, August 17, 2009, at 3:00 p.m. II. ROLL CALL Members Present: Fred Benford Jane Daugherty Robert Duncan Kelly Litecky Javier Lopez Members Absent: Charles Ash Russ Campbell Roberta Grubb Douglas Luhring Susan McMillen Also Present: a� Martin Alvarez, Redevelopment Manager U Lauri Aylaian, Director of Planning ► c Y N Justin McCarthy, ACM for Redevelopment Robin McCormick, Recording Secretary < � Hart Ponder, Code Compliance Manager �. 0 Lt. Andrew Shouse, Palm Desert Police Department m Dave Simmons, Palm Desert Country Club {. Robert Spiegel, Councilmember ' Ryan Stendell, Senior Management Analyst Catherine Walker, Senior Management AnalystCZ i z ORAL COMMUNICATIONS 0 > O Dave Simmons with Palm Desert Country Club requested an update on the situation with Casey's Restaurant. Per Martin Alvarez, Redevelopment Manager, it is the City's understanding that Casey's is just closed for the summer. The City is continuing to work on a plan to rehabilitate the entire site. The Redevelopment Agency owns the site and Casey's is the tenant. The plan is to develop some plans that will bring the parking lot and structure up to CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 compliance with City standards. Also, work with the tenant to negotiate a possible transfer of the property (by sale) to them. Justin McCarthy, Assistant City Manager for Redevelopment added that the intent is to facilitate it's clean up and transfer sale to Casey's. At one time, it was a possibility that Casey might be interested in selling his restaurant, but has since backed off that. Discussions and negotiations with Casey are ongoing as this time. IV. CONSENT CALENDAR APPROVAL OF MINUTES OF THE CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MEETING OF JUNE 15, 2009. With Committee concurrence, the Minutes of the June 15, 2009 meeting were unanimously approved. V. UNFINISHED BUSINESS None VI. NEW BUSINESS None VII. CONTINUED BUSINESS None VIII. OLD BUSINESS None IX. INFORMATIONAL ITEMS A. STATUS ON PALM DESERT COUNTRY CLUB GOLF COURSE Justin McCarthy, Assistant City Manager for Redevelopment, reported that the annual inspection was conducted at Palm Desert Country Club the latter portion of July. There were a number of deficiencies that were noted and communicated to PDCC and we have sent them a notice of items that we think need to be corrected. One of the issues is our ability to enforce our contracts as they are somewhat encumbered by the Chapter filing. The agreements we have, both the Development Agreement and the Operation and G:\rda\Monica Loredo\Word\PA No 4\Minutes\Minutes 8-17-09.docx2 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 Maintenance Agreement, are reorganization filing. Without the cannot enforce these agreements. listed as issues under their bankruptcy court's approval, we Mr. McCarthy informed the Committee that we have received a request for an interim loan to facilitate completion of operations during the summer, over -seeding, etc. We are evaluating that at this time. Discussions with the City Council will be forthcoming. We are in discussions with our bankruptcy attorneys and also council for Palm Desert Country Club. Evidently there are some discussions relative to the reorganization, but we have no information and have received no formal information regarding what is transpiring, other than the fact that people are talking to each other. Nothing has been tendered to the court that would require our review. When that does happen we will take a look at it and if it is appropriate for us to respond we will do so. Other than monitoring the proceedings, and being prepared to insert our comments or interests at the appropriate time, that is the current situation. Chairman Benford said he received a note from Cindy Finerty stating that hopefully there could be a settlement, but that we need time for the process to work. His understanding is that Coachella Valley Water District is owed a lot of money and hopes that they are not going to cut them off. If they do so, will the City come in and keep it from going brown? Mr. McCarthy replied it would be a policy decision on the part of the City Council. However, we are in discussions with CVWD and they have indicated to us that they would notice us if they contemplated turning off the water. Chairman Benford stated he doesn't see a resolution to the assessment on the homeowners coming anytime soon, which was discussed in the previous meeting. Mr. McCarthy said he could not see an assessment district being contemplated while you are in a chapter preceding. Right now, the biggest creditor is the primary lender, and he is just speculating that the majority of the discussions are between the owners and primary lender to determine if there is the ability to adjust the loan to some level, given their anticipated operations, so they could service it. We are not privy to those discussions, so it is all speculation. Chairman Benford asked Dave Simmons if there is any indication of someone wanting to buyout the Club. Mr. Simmons replied that there have been ongoing discussions for two years. And yes, there are people again interested, but it wouldn't be very prudent to make any offer to a property that is in Chapter 11, when you don't know what the debt on the property is until you come out of bankruptcy. The first GArda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 8-17-09.docx3 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 substantial meeting will be the 26th of this month. Mr. McCarthy added that he thinks this will continue on a month to month basis. Looking at their numbers, as presented to us, they feel that they have about six good months out of the year, where there is a positive cash flow. The question is, can they get their debt service down low enough that the positive cash flow can service whatever residual debt is left over plus maintain operations. More clarity may come in the next month or two as things move forward. Kris Stefferd, 42675 Iowa Street, stated it was her understanding that the owners of the golf course were to put some monies into an escrow account of some sort, held by the City of Palm Desert in case there was a problem and is that true and is it available? Mr. McCarthy responded saying yes, it is true, but there was not an escrow account set up in the development to do that. What was contemplated in the operation and maintenance agreement was over time, they would make deposits from operating cash flows to a capital reserve. The problem is they never achieved the level of operations, coming out of the rehabilitation that permitted them to do that, so there are not funds in that capital reserve. And quite frankly, they would not be adequate at this time to satisfy any of the meaningful deficiencies out there, even if they had not had the economic problem. Her thoughts were that maybe there was enough money to help pay for the watering of the golf course rather than letting it go brown. Mr. McCarthy again explained that CVWD indicated that they would inform the City if they were going to turn off the water and then what the City does in reaction to that is a policy decision that has not been determined yet. Chairman Benford asked when would something like that be determined? Mr. McCarthy's response was when it happens. He also reminded the Committee that we could get into all kinds of hypothetical situations, but right now his understanding is that watering is going on. Dave Simmons concurred that they are watering at the normal levels that they always watered in the summer. He said they have not received any indication at this time that CVWD is considering shutting off the water. He thinks they would get some sort of cushion first. Question from the audience to Dave Simmons: Does the Club have any plans to make arrangements for special offers for the snowbirds when they come down? His response was no, no one has stopped and said what do we do next season. What we are trying to figure out is what to do next week. There is a finite budget and there is no money to put people on board to do marketing, unfortunately. GArda\Monica Loredo\Word\PA No 4\MinutesUnutes 8-17-09.docx4 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 Question from K. Kaufmann of the Desert Sun: Last Council meeting there was talk that nothing could happen until the residents got a full financial accounting from the owners, is that happening? Mr. McCarthy responded that he has not seen anything. Dave Simmons added that the bankruptcy filing is public knowledge and is available online. He is not sure how you access it, but knows of others that have accessed it. Everything is there. Chairman Benford asked if the City Attorney is looking into that. Mr. McCarthy replied that we have requested financial information through our legal council, but have not seen it. On another matter, Member Daugherty stated she would like to have a discussion/report regarding Redevelopment funds in view of the State's budget chaos, which trickles down to every other agency's chaos. She would like more information on how and where the funds are being used or how much has been taken by the State. Mr. McCarthy replied by saying that the State has enacted a number of actions in its budget process to take monies from local government. Some of that has been in the form of "loans" from the City's general fund which supposedly will be paid back over time. A very large taking, in the aggregate state wide was about $1.75 billion from redevelopment agencies. That has roughly the impact for this year and next year of about $30 million, that is our estimate. We are trying to understand how to calculate that. There are some variances on the appropriate way to calculate it. That will have some impact; it requires us to look at what our funding priorities are, some projects might get deferred, things of that nature. However, that is going to be litigated. The Los Angeles Redevelopment Agency has filed suit or is going to file suit, challenging the constitutionality of that proposed taken. Last year the State did the same thing, the amount was significantly less, and the redevelopment agencies were successful in stopping the State at the judicial court level. That issue is on appeal; however the State has modified its approach to try a different strategy this time around. Ultimately, the impacts depend on whether we prevail or the State prevails in the law suit. We, as an agency, have built our projections and our models around a fairly sizeable taking over time. We have some flexibility to adapt to it, but we don't know the full impact just yet. Member Daugherty asked to have a discussion at the next meeting regarding current things happening in Project Area 4. Mr. McCarthy agreed to provide a report at that meeting. Chairman Benford asked the Mayor how the City is doing against the budget and what is the projection going forward. Mayor Spiegel Wrda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 8-17-09.docx5 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 replied that last year (our year ended June 30th) was the first year in our history that we ended up in a deficit and had to take money out of our general fund in the amount of approximately $5 million. We still have a substantial amount in our general fund, but that is about what our loss was. Since then, we have gone through different procedures. One was offering two years additional time service to our employees if they chose to retire. There have been 14 or 15 people taking advantage, and a few have left through attrition bringing the total at possibly 19 or 20. The Director of Finance and the City Manager are finalizing their report to the City Council, so the full report will come out probably at our next Council meeting. We also have a hiring freeze in place so we are not replacing any of these people, and one of the things that our City Manager is doing is realigning responsibilities for the current personnel that we have at the City. Most everyone is getting more responsibilities. On the other hand, there are less people going out making inspections, etc. Consequently, our budget for this year is considerably less, approximately $8 or $9 million less than last year. But the important thing to our residents is we have added to our police force. So the things that are being cut back are things you won't see. We may not be resurfacing all the streets in the manner that we normally would do, it may be delayed for a year. It is nothing that will really impact our citizens. Chairman Benford asked if there would be layoffs or one day off a month implemented. Mayor Spiegel said no to both and hopefully, things will soon begin to turn around. Our two biggest hurts are 1) the interest rates that we get on the money that we have in the bank, which has gone from either five or six percent down to one percent; and 2) our retail sales. They are the two things that are hurting us the most and that is where we stand as of right now. X. REPORTS AND REMARKS A. COMMITTEE CHAIRPERSON/MEMBERS B. AGENCY BOARD LIAISONS C. PLANNING COMMISSION LIAISON D. STAFF GArda\Monica Loredo\Word\PA No 4\Minutes\Minutes 8-17-09.docx6 CITIZENS' ADVISORY COMMITTEE FOR PROJECT AREA NO. 4 MINUTES AUGUST 17, 2009 XI. ADJOURNMENT The next meeting is scheduled for September 21, 2009 at 3:00 p.m. There being no further business, the meeting was adjourned at 3:27 p.m. Cecording Ro in McCormick, Secretary G:\rda\Monica Loredo\Word\PA No. 4\Minutes\Minutes 8-17-09.docx7