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HomeMy WebLinkAboutRDA Min 1981-02-09 4lf.i~ 2-9-81 Seal Beach, California February 9, 1981 The Redevelopment Agency of the City of Seal Beach met in special session at 8:42 p.m. with Chairman Seitz calling the meeting to order with the Salute to the Flag. ROLL CALL Present: Chairman Seitz Agency Members Kredell, Laszlo, Supple, Vanderstaay I Absent: None Also present: Mr. Thomas, Acting Executive Director Mr. Coughlan, City Attorney NOTICE OF SPECIAL MEETING Notice of special meeting was provided as follows for the record: Kent Seltz, 1145 Coastline Drive, Seal Beach, California Wi I lemke Vanderstaay, 13540 St. Andrews Drive, 4-G, Seal Beach, California Ronald A. Kredell, 1615 Seal Way, Seal Beach, California Frank J. Laszlo, 4480 Candleberry Avenue, Seal Beach, California George H. Supple, 1605 Merion Way, 41-F, Seal Beach, California You and each of you will please take notice that Kent Seitz, as presiding officer of the Seal Beach Redevelopment Agency hereby calls and gives notice of a Special Meeting of the Seal Beach Redevelopment Agency to be held and convened at the hour of 8:30 p.m., Monday, February 9, 1981 in City Council Chambers, 211 - 8th Street, Seal Beach, California, to transact the following business: Discussion of the purchse of the Department of Water and Power parcel and taking appropriate action relating thereto. I DATED THIS 6th day of February, 1981. (signed) Kent Seitz, Chairman (signed) Joanne M. Yeo, City Clerk Chairman Seitz called a brief recess at 8:44 p.m. The meeting reconvened at 9:02 p.m. with the Chairman calling the meeting to order. DISCUSSION - DEPARTMENT OF WATER and POWER PROPERTY City Attorney, Mr. Coughlan, reported to the Agency the results of meetings held with Mr. Perez of the Department of Water and Power Property Division and stated that the Property Division has found the offer of the City and/or Redevelopment Agency to be acceptable with basix modifications. The City Attorney cuationed that it is only I the Department of Water and Power staff that has determined the offer to be acceptable, that the D.W.P. Board of Directors or the Los Angeles City Council has not as yet ruled on the offer. Mr. Coughlan outlined the Department of Water and Power position as follows: 1) Department of Water and Power staff finds $3,000,000 offering price acceptable; 2) the Department of Water and Power is willing to take $1,5000,000 as a downpayment with two subsequent payments of $750,000 each; 3) that the Department of Water and Power will require interest on the deferred payments in the amount of ten percent; 4) noted Department of Water and Power concern regarding contingencies, dependent upon the city receiving 2-9-81 ... C;:3 'it... . I the CEIP loan; 5) that all escrow costs will be shared equally between the buyer and seller, including the cost of the title policy; 6) that the arrangement of sale would be subject to the approval of the Board of Directors of the Department of Water and Power and the Los Angeles City Council; 7) that any money owing the Department above and beyond the down payment would have to be secured in a manner satisfactory to the Department of Water and Power; 8) explained that the Department of Water and Power property appraisal on which they would be accepting the $3,000,000 price is seven and one-half months old, that by the time the offer is considered by the Board of Directors and the City Council they may require another appraisal on the property; and 9) the Department of Water and Power has indicated they are willing to sell to either the City or the Redevelopment Agency. The City Attorney again cautioned that acceptance of the city's offer is only by the Department of Water and Power staff at this time. The City Attorney stated he was providing the condltion3 of sale at this time to allow the Agency an opportunity to evaluate the impact of the terms and explained it may be necessary to make some determination by next meeting as consideration of the city's offer by the D.W.P. may be only for a short period of time. I Agency Member Kredell asked if the CEIP loan would be available to the city at one time. The Acting Executive Director stated that factor is uncertain, however it was his understanding the federal government would require a commitment for use of the full Joan proceeds within ninety days. Agency Member Kredell asked if it would be advantageous to pay the full acquisition cost at one time; It was noted that funds will have to be retained for site restoration, the cost of which is much greater than originally anticipated, in order to proceed with the development of the condominiums and commercial portion of the proposed plan. Agency Member Kredell also asked if the city would be obligated for the CEIP loan if other grant funds are not available. The Acting Executive Director stated he understood the project would be obligated, that the federal government could either take over the parcel as a park, restructure the terms of repayment or sell the site to satisfy the Joan. A member of the audience stated the Coastal Conservancy would also have the legal authority to take over and develop the site. Agency Member Supple asked if the CEIP loan would come to the project in the form of cash. The City Attorney explained that under the terms of the loan, to his knowledge, $1,500,000 would go to the Department of Water and Power upon the close of escrow, $750,000 of the balance would be payable no later than two years from the close of escrow and another $750,000 payable at the end of four years, that interest payments on the balance due could not be deferred and would most likely be due quarterly or semi-annually. The Acting Executive Director reported the Coastal Conservancy would be presenting a revised cash flow statement to the Agency by the next regular meeting. The Agency discussed increased condominium units that would provide income to cover interest costs to the D.W.P. Agency Member Supple asked if the CEIP loan was negotiated on the basis of specific land use and location of facilities or if the Agency maintains the authority to make those judgements since the project is not to cause any financial burden on the city. The City Attorney stated he would further investigate that question and noted another matter for consideration is that the Department of Water and Power and the federal government both want assured debt security and reported the priority of those agencies is being researched by the Coastal Conservancy. Chairman Seitz expressed his opposition to the proposed project in light of the city's present flnancial3status, potential loss of State bail-out funds, personnel and service cuts and other anticipated federal and state funding cuts. Mr. Seitz viewed Seal Beach as a bedroom community with few financial resources except property tax and stated his desire to see maximum and on-going financial return to the city from a proposed development rather than a potential break-even project and suggested private enterprise purchase and development of the Department of Water and Power parcel compatible with the community and subject to all condi- tions imposed by the city and Coastal Commission. Chairman Seitz stated his concern with the Coastal Conservancy plan as proposed and the estimates of cost for land acquisition and site restoration, noting costs have more than doubled. Chairman Seitz moved that a vote of the citizens be I 1M 2-9-81 solicited through a mailed ballot within the next thirty days to obtain input as to whether or not the city should seek funding and pursue this project. There was no second to the motion. Agency Member Laszlo inquired if the Agency would be liable for any of the loans; the City Attorney responded that the Coastal Conservancy has stated that the Agency would not be liable. Mr. Laszlo stated that all funding sources involved have studied the project and have indicated the project appears to be financially sound and stated no city funds will be expended. Mr. Laszlo referred to the Hellman Financial Impact Analysis and spoke 1- regarding anticipated future revenues to the Agency. Hal Halldin, 633 Silver Shoais, was duly sworn by the Clerk and read his statement for the record as follows: "A couple of years ago when you were in the process of employing an appraiser for about $5,000, I advised you that the appraisal of the Water and Power property would cost a lot more than $5,000, because a good appraisal would require considerable engineering to determine the cost of removing the underground pipelines and foundations to make the property comparable to other properties that would be used in the appraisal. Two meetings ago you were told by the staff that the combination of staff time and the appraisal fee was responsible for an RDA expenditure of approximately $25,000. I also told you that I had considerable experience as a real estate appraiser and that the property in Its cleaned up condition should be close to 5 million dollars, rather than a figure near one million dollars. This is what I told you free of charge, but you were not listening. My reason for speaking to you under oath is to get you to listen carefully, because millions of Seal Beach taxpayer dollars are at stake. I The Department of Water and Power appraiser valued the property at $4,500,000 in its cleaned-up condition, with the land value at $3,000,000 and the clean-up cost estimated at $1,500,000. The City appraiser valued the property at some unknown amount. A question that needs to be answered now--With all of the negotiating that has taken place, why did the City offer Water and Power $3,000,000 for the land when the City appraisal, costing $25,000, valued the land at less? The offering price and hopefuJJy the selling price is usually negotiated somewhat between the two appraisals. I can't help but think that because the cost of this project is financed by low interest government loans and grants very little attention has been paid to the actual cost to Seal Beach citizens. Let's consider the following proposed expenditures of public money on this project: $3,100,000 450,000 450,000 200,000 CEIP loan Federal Federal Grant County Grant State Coastal Conservancy Loan This totals $4,200,000 of public funds - but not City funds - to be spent to provide the City with 6 acres of park area including a $750,000 cultural center. This seems like a very dear and exorbitant price $4,200,000 for so little. I But this isn't even the total expenditure of public funds. The condominiums, restaurants and other commercial developments are projected to generate $152,000 revenue per year in the form of property tax, possessory interest tax and sales tax. This annual revenue that would ordinarily come to the City Is also committed to be spent on the project. The present worth of these payments 2-9-81 455 of City funds amounts to over $2,000,000. So we are talking about a lot of Federal, State, County and City Funds. I Not too many years ago several private developers were interested in developing this property in a way that would provide 3 acres of park land free to the City without spending $4,200,000 of public funds and allow Seal Beach to keep the $152,000 per year to spend for police protection, fire protection, street lighting and landscape maintenance. The $450,000 County grant money could then be used for development of the proposed 12 acre park In College Park East and the proposed 20 acre park on the Hellman property. Both of these active parks would be heavily used by Seal Beach residents compared to the transient use of the youth hostel, fishing pier and restaurants now proposed. In view of these alternatives, I really think you should have an election on this controversial project which has not one but two parties ready to sue the City depending upon the City's action. The two parties I'm referring to are the Department of Water and Power and Bill Dawson. I feel Seal Beach citizens are being led down the Primrose Path to disaster after having read the peaches and cream "Park Update" letter to the Editor of the Seal Beach Journal, signed by Jim Hagadorn, Gordon Shanks and Barbara Rountree. Three of you were elected to the City Council with considerable help from the Barbara Rountree's Civic Star bunch and its group of writers, including Gordon Shanks, Jay Covington and Gil Nelson, because of your support of the "Right to Vote on Projects costing more than $250,000. I This same group now seems intent on pushing this project through the City RDA and City Council without a public hearing, without exposing the facts and without an election. So, I'd like to ask each of you--What's wrong with negotiating an option to purchase the property while a comprehensive financial report is prepared by competent people and Is reviewed by the publ ic prior to an election?" Discussion continued relating to the property appraisal, private development of the site, previously proposed developments, a communica- tion referred to several times throughout the discussions from archi- tectural consultants, Gruen and Associates, zoning, and site acquisition and development costs. Other members of the audience expressed their views regarding the proposed Department of Water and Power site development. A letter was submitted to the Agency for the record from Thomas I. McKnew, Jr. and read by the Acting Executive Director as follows: "February 9, 1931 Members of the Seal Beach Redevelopment Agency and City Council 211 Eighth Street Seal Beach, California 907~0 I Re: Acquisition and Development of DWP Property Dear Redevelopment Agency and City Council Members: This letter is to strongly protest the Agency's acquisition of the Department of water and Power property as a site for a youth hostel, park, condominium and commercial development. As a former mayor, councilman and Redevelopment Agency member, I believe I have an Insight into the economIcs of the proposed project and the political pressures that have given rise to the ass 2-9-81 consideration for the acquisition. I believe that to be pressured by a small number of people into acquiring a "white elephant" at the expense of voter-taxpayers without giving them an opportunity to express their opinion to be totally without concern for them now fulfilling the public trust they have placed in you. The reasons for my objections appear in the following paragraphs. Economic Considerations (I) In brief, as the City is cutting back In services and personnel, I- I think it can ill afford to permit the Redevelopment Agency to acquire an extremely valuable piece of property and remove most of it from the tax rolls. I question the ability of the condominiums and commerciaJ aspects of the current plan to support the development and maintenance of the proposed project. It seems to me that prospective purchasers of a high priced condominium on leased property will think twice before making such an expenditure which will be situated in essence in the middle of a park open to the general public. I cannot believe any responsible consultant would advise you to do what you are considering. (2) There has been interest by the private sector in developing this property and dedicating park space without obligating any public funds. The cost in doing this wouJd not only relieve the taxpaying public, regardless of which agency may be providing a portion of the funds to this project, from underwriting the project but also would have allowed Seal Beach to keep a substantial amount of money to spend for other services. (3) At one time half of the children of Seal Beach lived in the College Park area. Although I do not know what the current ratio is, obviously there is a substantial need for the proposed park within the confines of the Los Alamitos military facility. If so much money and effort is devoted to the DWP property I am very concerned about the source of funds for the development of the North Seal Beach park. Also, there is a proposed twenty-acre park on the Hellman property which, of course, would mainly be used by Seal Beach residents. I believe that the North Seal Beach and the Hellman parks would have much greater support by Seal Beach residents than the DWP proposal under consideration which, of course, will receive a lot of use by transients. Political Pressure I have been through many political turmoils in Seal Beach. Many of those now advocating the acquisition of the DWP property were the very people who cried out that large public projects should not be undertaken without a vote of the public. These people made such statements at a time when there was more money available for public projects and services. Furthermore, in those times the public was less sensitive than today to the cost of acquiring and maintaining public facilities. Public opinion has shifted. I need not remind you of Proposition 13, the City's Proposition 0, and the myriad of state laws that followed and are now being proposed for further clarification of the effects of Proposition 13. The most recent general election swept in fiscally conservative politicians. Those people didn't get there because they propose spending substantial amounts of public funds for whimsical, parochial programs. To proceed with the DWP proposal is in my opinion to ignore what your employers, the voting taxpayers, have expressed to you. For the past several years I have remained silent in this city and have used my energies elsewhere. I have been generally satisfied with the manner in which the city has conducted its affairs. However, I cannot and will not remain silent if the Department of Water and Power property is acquired and developed at public expense. It Is wrong to say that because most of the initial funding comes from other public agencies outside of the city that use of such money is therefore justified. Use of public funds from any source for such a I I 2-9-81 457 small return to the taxpayIng public Is inexcusable. vote no to the present proposal under consideration. pleased to meet and discuss the matter with you or a of the Agency. I urge you to I would be representative Very truly yours, Thomas I. McKnew, Jr." I Discussion continued. Agency Member Supple stated he had been actively Involved in formulating the proposed D.W.P. site plan at which time the city was financially stable and did not appear that revenue from that property would be a necessity, and cautioned, however, that in light of the city's present financial status it would be unwise to remove the parcel from the tax rolls and develop it with a non-revenue producing project. Brief discussion followed, this item to be discussed at the next Agency meeting. I The City Attorney reported receipt of a letter from Riverbeach Associates to the Acting Executive Director proposing that the Agency relnitiate the process for obtaining SB 99 Mortgage Revenue Bonds and if successful in obtaining said bonds, the Agency would benefit financially in an amount approximately $450,000 as follows: I) $250,000 from the bond proceeds; 2) the condominium project to be accellerated by at least one year thereby providing tax increment revenue to the city at an earlier date, approximately $200,000; 3) Seal Beach Partners, Ltd. would withdraw requests for rent increases due to Trailer Park construc- tion overruns in the amount of $500,000; and 4) withdraw the lawsuit re- lating to the Department of Water and Power property and waive any rights to that property. The City Attorney suggested the Agency may wish to consider this item at next meeting with discussion of the lawsuit reserved for closed legal session. Agency members briefly discussed SB 99 bonds; no action was taken. ADJOURNMENT Laszlo moved, second by Vanderstaay, to adjourn the meeting at 11:34 p.m. AYES: NOES: Kredell, Laszlo, Seitz, Supple, Vanderstaay None Motion carried ;iJ/ I