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HomeMy WebLinkAboutRDA Min 1986-08-11 8-11-86 Seal Beach, California August 11, 1986 The Redevelopment Agency of the City of Seal Beach met in regular adjourned session at 6:45 p.m. with Chairman Wilson calling the meeting to order with the Salute to the Flag. ROLL CALL Present: Chairman wilson Agency Members Clift, Hunt, Risner I Absent: Agency Memb~r Grgas Agency Member Grgas arrived at 7:13 p.m. Also present: Mr. Nelson, Executive Director Mr. Stepanicich, City Attorney Mr. Knight, Director of Development Services Mrs. Yeo, Secretary WAIVER OF FULL READING Clift moved, second by Hunt, to waive the reading in full of all resolutions and that consent to the waiver of reading spall be deemed to be given by all Agency members after reading of the title unless specific request is made at that time for the reading of such resolution. AYES: NOES: ABSENT: PRESENTATION - SUPER 8 MOTEL I The Executive Director announced that representatives of Super 8 Motel's were in attendance to introduce their organization, acquaint the Agency-with their proposal for development of the State Lands site and financing of same, noting that Agency may be requested to participate in their proposed development. Mr. Dave Grotewohl, 989 East Hillsdale Boulevard, Foster City, introduced himself as an attorney for a group of limited partnerships. Mr. Grotewohl reported that thus far approximately thirty-six million dollars has been raised in five California limited partnerships, that all of these public registered offerings have been used to build ten hotels throughout California, required to be operated as franchises of Super 8 Motels, a nationwide franchising company with over four hundred hotels coast to coast. He described their hotels as economy oriented, comparable to a Best Western facility, ranging from sixty to one hundred twenty rooms with color televisions, direct dial telephones and most having swimming pool facilities. He noted their Santa Ana facility as the closest to Seal Beach and typical of what is envisioned for this community, and described that complex, which he referred to as a motor lodge. Mr. Grotewohl described the Seal Beach facility as it is presently proposed as one hundred thirty guest I rooms, provision for cooked breakfasts, and beer and wine evening receptions, noting that the identity of the project will most likely be described as a motor hotel, operated under the Super 8 franchise. Mr. Grotewohl reported that a publicly held limited partnership consisting of approximately four thousand investors would own the Seal Beach facility with common management under that partnership in conjunction with the Barstow and Fisherman's Wharf facilities. He explained that a motor lodge does not typically provide Clift, Hunt, Risner, Wilson None Grgas Motion carried -;t," >to:-:, 8-11-86 I room service or a full service restaurant, as would a hotel, however stated those services could be added if the market warranted, and that the capability for a full service restaurant would be built into the Seal Beach project. In response to Council, Mr. Grotewohl stated that the group's first hotel opened approximately 1979 or 1980, that ten facilities currently exist in California, three in Florida, reporting that none have been sold and none have failed, that all partnerships are showing a positive cash flow and above market rates in most, noting that the most mature partnership, with three operating motels, are realizing between fifteen to eighteen percent cash return on investment for the most recent complete year. He acknowledged that partnerships do occasionally borrow funds, however in moderation, citing the recent lease of furniture, fixtures and equipment for one facility, also explained that when desirable land is available by lease, they acquire property in that manner rather than purchase, and stated that of eleven California properties, including Seal Beach, five facilities are located on leased land. with regard to a possible requirement for a full service restaurant, Mr. Grotewohl explained that although they would have the capability of providing that use, at this time marketing studies indicate that is not the most highly recommended use of the site, stating his feeling however, that there would be a willingness to work with the City to provide whatever facilities that are desirable. He pointed out that an option could be to work with a restaurant developer to operate a restaurant on the site. Further, he explained that meeting rooms typically range from full scale dividable rooms to small guest rooms equipped for conversion to meeting rooms, one of the two concepts to be included in this project. Again in response to the Agency, Mr. Grotewohl clarified that Super 8 Incorporated is a nationwide franchising company with no financial investment in the franchised hotels, that there are eight limited partnerships, one of those partnerships being Super 8 Lodgings, Five Limited, who would have a substantial financial interest in the property. He explained that the general partners have an interest in the cash flow and equity of the partnership, their interest being compensation for services performed, such as site selection and financing. He also noted that based upon a report prepared for them by a nationwide accounting and marketing firm, it has been determined that the Seal Beach site is very desirable for a hotel and that a good return on their investment is forecast. I I Mr. Bob Rossi, architect/developer for Super 8, distributed conceptual renderings of the proposed Seal Beach project depicting an early California theme with tile roof, stucco walls, colonnades and trellises, accentuating a Spanish environment, with the project oriented towards Pacific Coast Highway and First Street, and reported the room rates are anticipated in the range of fifty dollars. Mr. Rossi stated their intent is to provide breakfast service to guests, however expressed concern with parking requirements should a full service restaurant be required. Agency Member Grgas arrived at 7:13 p.m. Mr. Grotewohl reported that the State of California has investigated the personal financial statements of the general partners with regard to assignment of the lease of this property, and although those persons do not have a financial investment, they would be obligated to fulfill any debt of the partnership. Mr. Rossi introduced Mr. Paul Ash, 8-11-86 , civil engineer with Van Dell & Associates, who has been involved in determining the necessary off-site improvements, their estimated costs and alternatives, stating that the estimated cost of the improvements are quite extensive and more than likely could not be absorbed totally by the partnership. Mr. Ash stated his firm had been retained to look into the utility contraints, off-site improvements, and engineering concerns regarding development of the subject property, much of the information compiled through discussions with the City staff. Mr. Ash reported that due to the elevation of the site, the property would need to be served by a lift station, at an estimated cost of $68,000, and the construction of a new sewer line parallel to that that exists on First Street, at a cost of approximately $50,000 if it is determined the existing line is not usable. with regard to water service, Mr. Ash reported the city has indicated they would require two points of connection, one possibility would be connection to the line that serves Oakwood Apartments, the other to the line that is within the First Street extension, however City staff has concern as to its reliability, therefore there is a potential requirement to replace approximately one thousand feet of that line at an estimated cost of $150,000. Mr. Ash noted that the Fire Department requires only one point of connection, therefore the second point of connection could possibly be used as a backup. He reported the costs of undergrounding power is of great concern, noting that undergrounding of the 66KV line in what would be First Street has been estimated by the Edison Company to be about $364,000, explaining that if that line were removed and those facilities placed elsewhere, the cost could be similar however not necessarily borne totally by this project, also suggesting that the power poles could be utilized as an interim measure pending improvements to First Street at which time the power lines could be placed within the median. Mr. Ash stated that the 12KV lines are on the opposite half of First Street from the project, and the cost of that undergrounding is not felt to be attributable to this project. Mr. Ash suggested that the street could be designed in such a way that the power lines could be located behind the curb, therefore not necessitating undergrounding. Mr. Ash stated it is anticipated that improvements to First Street would be similar to those to the south of Pacific Coast Highway, widening with a landscaped median strip, each half of that improvement estimated at $71,000, and an additional $20,000 for signal improvements, adding that the cost for undergrounding gas and cable services would not be significant. He noted that no improvements are anticipated to Pacific Coast Highway as that is a State roadway. Agency members inquired if it is the intent to request Redevelopment Agency participation in providing the off-site improvements, $633,000 the estimated total cost. Mr. Ash responded that that would be a matter of negotiation between the Agency and the developer, however stated that given the extensive off-site public facility improvements required for development of the site, it would not be unusual for the local agency to participate in such funding that could not be totally borne by a project, or to provide an alternative funding source such as an assessment district. with regard to additional sidewalk on Pacific Coast Highway, Mr. Ash responded that the City could incorporate a requirement for sidewalk improvements, subject to approval by Caltrans. The Executive Director clarified that the intent of this presentati~n is to introduce the Agency to the Super 8 I I I ...~ A ";_.1_" ",. :-"......... 8-11-86 I organization and their conceptual development, stating he has not received a formal request for participation in providing the off-site improvements to date. Agency Member Grgas recommended that the proforma for the project be closely reviewed to determine if the improvements are extraordinary costs that could not be borne by the development, specifically a cash flow analysis, cost estimates, anticipated rate of return, room rates, etc. Mr. Rossi acknowledged that there is a dollar estimate for the off-site improvements, however stated it is not yet certain that all of the improvements will be necessary or to what degree, and requested that the Agency only indicate their support for the type of development proposed and possible participation in the off-site improvement costs. Mr. Rossi noted that preliminary estimates anticipate $130,000 annual revenue to the City from bed tax alone, stating that the proposed development for this site will generate more revenue than from any other use, a viable development asthetically and economically. On behalf of the Agency, Chairman wilson expressed appreciation to the Super 8 organization for the presentation. I ORAL COMMUNICATIONS Chairman Wilson declared Oral Communications open. Mrs. Barbara Rountree, 316 - 13th Street, inquired as to the cost of the project and the estimated room rates. Mr. Rossi responded that the project is estimated to cost 3.5 million dollars, that the rate for a single room, projected a $250,000 participation in off-site improvement costs, would be around $55, or approximately $50 if that expenditure were not necessary. Mr. Scott Wildman, 99 Welcome Lane, inquired if any difference between the natural and finished grade of the site is foreseen. Mr. Rossi responded that a preliminary report indicates a problem with on-site soil conditions, and that it may be necessary to replace soil with a special fill to stabilize the site, which could change the grade up to three feet. Christopher Marra, 1009-1/2 Seal Way, complained that the public was not notified of the presentation relating to the State Lands site, and spoke in support of a quality hotel development with a restaurant and banquet facilities. Mr. Bruce Stark, 204 Ocean Avenue, expressed his opposition to acceptance of the first proposal for development of the State Lands site. The Executive Director explained that if the development proposal is consistent with the design criteria established by the City, plans would be processed pursuant to provisions of law, which include public hearings before the Planning Commission and Council. The City Attorney noted that this property is owned by the State and leased to a private party, and should the development proposal meet all criteria established by the City, it would be difficult to establish grounds for denial of it's consideration. There being no other communications, Chairman Wilson declared Oral Communications closed. I: ADJOURNMENT Clift moved, 8:15 p.m. AYES: NOES: second by Risner, to adjourn the meeting at Clift, Grgas, Hunt, Risner, Wilson None Motion carried .