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HomeMy WebLinkAboutRDA Min 1989-03-20 2-21";8'9:.__ / 3-20-89 AYES: NOES: Grgas, Hunt, Laszlo, Risner, Wilson None Motion carried I ORDINANCE NUMBER 1278 - AMENDING RIVERFRONT REDEVELOPMENT PLAN - DEPARTMENT OF WATER AND POWER PROPERTY Ordinance Number 1278 was presented to Council for first reading entitled RAN ORDINANCE OF THE CITY OF SEAL BEACH AMENDING THE REDEVELOPMENT PLAN FOR THE RIVERFRONT REDEVELOPMENT PROJECT.R By unanimous consent, full reading of Ordinance Number 1278 was waived. Risner moved, second by Laszlo, to approve.the introduction of Ordinance Number 1278 and that it be passed to second reading. AYES: NOES: Grgas, Hunt, Laszlo, Risner, Wilson None Motion carried ADJOURNMENT OF REDEVELOPMENT AGENCY MEETING Grgas moved, second by Risner, to adjourn the Redevelopment Agency meeting. AYES: NOES: Grgas, Hunt, Laszlo, Risner, Wilson None Motion carried The meeting was adjourned at 7:24 p.m. ~ tl$a-- C J.rman I s Seal Beach, California March 20, 1989 The Redevelopment .Agency of the City of -Seal Beach met in regular session at 6:45 p.m. with Chairman Grgas calling the meeting to order. Agency Member Laszlo led the Salute to the Flag. ROLL CALL Present: Chairman-Grgas Agency Members Hunt, Laszlo, Wilson I Absent: Agency Member Risner Hunt moved, second by Laszlo, to excuse the absence of Agencymember Risner from this meeting. AYES: NOES: ABSENT: Grgas, Hunt, Laszlo, Wilson None Risner Motion carried Also present: Mr. Nelson, Executive Director Mr. parrington, Special Legal Counsel Mr. Barrow, Assistant City Attorney Mr. Knight, Director of Development Services Mrs. Yeo, Secretary 3-20-89 APPROVAL OF MINUTES Grgas moved,-second-by Laszlo, -to approve by one motion the minutes of the Redevelopment Agency as follows: Adjou~ned/joint-meeting of November-7, 1988, adjourned/joint meeting of December 5,- 1988, adjou~ned/joint meeting of January 3, 1989, adjourned/joint meeting of January 16, 1989, and regular meeting of February 21, 1989: AYES: NOES: ABSENT: Grgas, Hunt, Laszlo, Wilson None Risner I Motion carried Adjourned/joint meeting of November 21, 1988: AYES: NOES: ABSTAIN: ABSENT: Hunt, Laszlo None- Grgas, Wilson Risner Motion carried PROPOSED RESOLUTION - AMENDED/RESTATED DECLARATION OF COVENANTS - SEAL-BEACH-TRAILER-PARK A proposed Resolution was presented to the Agency entitled nA RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH, CALIFORNIA, APPROVING A SECOND AMENDED AND RESTATED DECLARATION OF ESTABLISHMEN~.OF-COVENANTS FOR THE SEAL BEACH TRAILER PARK.n - The Development Services Director presented-the staff-~eport-and reviewed the background of the Traile~ Park, -ope~ating pursuant to an Agreement and Declaration of-Covenants since-198l. He-reported that Mr. Dawson, through his partnership, -Seal -Beach Partners, Ltd., has -now-purchased-the fee title to the land from Riverbeach I AssocAa~es;~and has -refinanced-the loan, -which is the sub5~~tihf~~he requested amended-Declaration. Mr. Knight rev~ewed the'analysis prepared by-the Agency's- legal counsel for~the T~ailer-Park, Mr. parrington, of the proposed' Am~nded-neclaration, as-set forth in .the staff report. The analysis--noted specifically the previous loan of $1,000,000 with.:Coast Savings provided for- fixed monthly installments of-$11~b60 continuing until February, 2000, the new, thirty yea~ loan-of $1,600,000-with Glendale Federal Savings and Loan being on a-va~iable inte~est rate basis with an initial rate of-8.75 -percent until January-IS, 1989, the interest rate-changing -monthly-with the monthly-payment adjusted annually-commencing August- 15, 1989, the interest rate and monthly payment -changes based upon a-~ate--equal to 2.25 percent -over the Federal Home Loan Bank monthly average cost of funds for -savings and loan institutions, with annual payment adjustments limited-to-a-7.5 percent- increase from the prior year, and-a maximum-rate of l3.75-percent. The report-pointed-out that-M~. Dawson is -proposing that the debt service-on-the portion-of -the-proceeds of the new loan used-for pu~chase-of the property and for refinancing of the existing loan, -app~oximately 87.5 percent of the loan, be included-in the rents-for the Trailer-Park, the rental formula-and-any adjustments thereto,- to always be based on I 87.5 percent of the-debt-service, also in future years the monthly loan payment amount-could-be greater or less than the total of-the-previous -land lease and loan payments. The analysis-described a proposed change of noticing requi~ements-for -rent increases, noted-high legal and accounting-expenses set forth on the Exhibit B Schedule to the Decla~ation-and a- request that Mr. Dawson provide an allocation of -rents by space, -and add~essed the lack of reference in the Declaration of long term leases and the 3-20-89 I exemption under the Civil Code as claimed by Mr. Dawson, the Agency's legal counsel in disagreement and concluding that litigation may be necessary to determine the applicability .of. the Civil Code provision. .Mr. Knight added that he. has received. a number of telephone calls regarding this issue, many from tenants of the Park requesting clarification, also a letter forthcoming from Mr. Doug LePage in opposition' to the proposed Amended Declaration, specifically with regard to the rent control provisions. The Chairman indicated his intent to allow.public comments on this item whether or not an action is taken at this meeting. Agencymember Hunt stated it. was difficult to fully understand the proposed amendment, specifically with regard to the relationship between the refinancing and rent control, questioned the motive for. the-proposed amendment, and suggested that.no action be taken on this item at this meeting given the absense of Agencymember Risner. Mr. Parrington explained that it is the Park owner's contention that there would be.an exemption from. rent control upon entering into long term leases with the tenants, and given that position it was his recommendation that the tenants be notified that if they do execute -such leases the rents, according to Mr. Dawson, could be raised in accordance with -the te~ms of the long term lease and not within the protection of-the Declaration, a position with which he disagreed. He clarified that Mr. Dawson takes the position that there was a Civil Code amendment in 1986 that exempts any mobile home park from rent control established by ordinance, -resolution, or -intiative of a city, and explained that the statute would have had that effect had the Council established a rent control policy for mobile home parks in general, howeve~ in this instance there was an agreement entered into between the lessee and the Redevelopment Agency as part of the overall redevelopment of the Park. Agencymember Laszlo inquired as to what is considered a long term lease, how many such leases there are, and why. Mr. Knight responded that Civil Code Section 798.17 refers to twelve months, and the Subdivision Land Act sets forth five years. Mr. Bill Dawson, 44 Riversea Road, stated staff had not mentioned that this -amendment had-been approved by the Agency in 1985, prior to that unanimously by-the Park tenants, and at that time there was a commitment from Coast Federal to refinance the Park for the purpose of obtaining the fee title, however Coast withdrew their commitment subsequent to the Agency approving the amendment to allow the var-iable interest loan. - He reported-that although he had simply requested the City to sign the previously appr-oved relevant documents and forward them for recordation, legal -counsel fo~ the Agency felt the matter should again be taken under consideration. Mr. Dawson stated there is no relationship between the refinancing and rent control, that the amendment proposed is the result of a request-by some twenty-five tenants.at the time the tenants were attempting to purchase the Park to not sell the Park but to acquire the fee title-and make long term leases available, the leases not a matter -for the Agency's consideration. Mr. Dawson stated that at the time he acquired the funds to purchase the Park no fixed rate loans were available, therefore the variable rate loan, the amendment merely .tying the rent increase or decrease to any increase or decrease in that portion of the loan attributable to the refinancing of the original loan and acquisition of the fee title. With regard to the time I I 3-20-89 element of a long term lease, he stated he has advised people that he would be willing to grant a lease equal to that of the term of the ground lease, year 2041. Mr. Dawson acknowledged the disagreement .between his attorney and the Agency's counsel with regard to-the interpretation of State law that provides .that .where there is a rent control ordinance and-10ng.term leases the lessee and lessor are exempt from.the rent control o~dinance, the Agency's counsel I contending that the City does not have an ordinance but rather a contract between Riverbeach and the Agency, therefore the State law does not apply. .He said he would be willing to.accept that interp~etation yet half of the Park tenants are requesting long term leases, which he stated he felt would be of benefit to the tenants and further, allow them to obtain financing for improvements. Mr. Dawson noted that the .first payment under the .refinanced loan is not due until August, that.he would agree to postponement of this matter up to that time, and that he would reject any notion that.litigation may be necessary to resolve the disagreement as suggested-by Agency Counsel. He reported that prior to refinancing and acquisition of the fee title the loan and ground lease payments we~e approximately fourteen thousand dollars, the fact that there is no longer a ground lease payment.and the loan payment attributable to the rents is less, .has served-to offset.cost increases, and noted there has been no.~ental increase in the past three years. He explained that the interest rate of the original loan was 13.5 pe~cent, the maximum rate under the variable loan is 13.75 percent, that.cost increases were largely attributable to.legal.and-accounting services resulting from the tenants attempt to purchase the Park, also that there is a formula tied to.the cost of living index with respect to his management services.and payroll. Councilman Laszlo I indicated his desire.to have the increased costs substantiated, showing the relationship to the increase of rent. With.regard to the 1985 action by the.Agency approving the variable rate financing, Mr. Parrington explained at that time.Mr. Dawson.was negotiating with Coast to refinance the Park to permit purchase of the fee title from Riverbeach, and some of the revisions made were at the request and in response to Coast's position regarding that refinancing, however the amendment approved and executed by the .Agency was never-executed by Mr. Dawson's group, and subsequently the financing was obtained from Glendale Federal, who did.not request.or- object to the provisions of the 1981 Declaration. Mr. Parrington stated the purpose of the Declaration at this point is to reflect that there is no longer a ground lease and mortgage payment, recognizing the portion.of the new loan allocable to the refinancing of the Pa~k, .and clarified that it was his opinion that it would not be appropriate fo~ .an action of 1985 to bind an Agency of 1989 without further review of the amendment proposed. Mr. Don Phillips, 66 Riversea Road, stated he was one tenant interested in a long term.lease, and read a petition that was previously presented to Mr. .Dawson, the conditions of which dealt with a lease of fifty years or more, rent control agreement suitable to the tenants, rental increase I of ten percent covering the past three years, no down payment, and first right of refusal in the event the Park is offered for sale. In response to Agencymember Laszlo's questions with regard to assignment of leases and sub- leases, Mr. Dawson stated his intent to offer leases which permit assignment o~ sub-lease so long as the provisions of the existing Covenants are complied with, such.as the low and moderate income requirement, clarifying that of the one 3-20-89 I hundred twenty-five spaces in the Park, no less than sixty are to be made available to low income -persons, sixty to moderate income persons, and five are not subject to rent control. Mr. Ed-Clute, 4 Cottonwood Lane, stated the importance to him to-continue his residence in the Park at a reasonable rate, made reference to the efforts of the residents to purchase the Park-after Mr. Dawson obtained the fee title, the reason for the collapse of that effort unknown to him, expressed confidence-in the existing agreement and covenants under which -the Park operates, and stated his desire that all of the residents fully understand the provisions of the amendment before being agreed to. Mr. Bill Orszewsky, 85 Riversea Road, made reference to the proposed Resolution, to comments of Mr. Dawson and the Agency, to Mr. Dawson~s obtaining $200,000 in capital and title to a prime-property through the refinancing, while sacrificing a fixed rate -loan.---Mr. Orszewsky stated within his income-category he could not afford uncertainty based upon an interest-rate spread to refinance a loan gaining only one person title over that land, paid for by the tenants.- He urged that the-1985 actions be-deemed -null and void by the Agency, and that any waiver in the current consideration be rejected. Mr. Paul Jeffers, 8 Cottonwood Lane, stated the redevelopment of the Park-and the provision for low and moderate cost housing was meant to benefit the entire City, yet the rents have -increased, that there are now-some $300,000-to $400,000-residences in the Park, that he understood that some leases have already been let, and that trailers are being sold from $30,000 to $90,000 and up. Mr. -Jeffers expressed concern-that-there will soon be no low cost housing in the Trailer Park, and-questioned why the tenants should pay for Mr. Dawson's purchase of-the property. He also reported- tenants with older trailers have been told those trailers -must be -moved because they do not meet Code, and in a number of cases -the-Park owner has purchased the trailers, they have not been moved from-the Park, and people have lived in them. -Mr.- Jeffers stated he would like to-see regulations -that -everyone is aware of and understands, that provisions of the original -Covenants should be looked -into, and-referred to a prior requirement for thirty day notice-of-any-change-to the Covenants. Ms. Terry Brennan, 57 Riversea Road, reported she has sought a long-term lease for a number -of -years,-however did not wish to waive her rent control rights, and-that-the terms of the lease -she was offered does not supercede current rent control provisions, as determined by her attorney. Ms. Brennan presented a-letter-from her neighbor, Mr. Steve Cook, 62 -Riversea Road, expressing similar thoughts. She also spoke favorably of a more detailed discussion of this issue with the members of the-Agency. Ms. Ellen Taylor, 9 Cottonwood Lane, stated that-there are a number of relatives of Mr. Dawson who live in the Park and many-residents who have worked for him, which may influence their-feelings with regard to long term leases,-something that should be considered. She spoke in support of the Covenants as they exist, stating that changing them could risk the lives of the residents. I I Mr. Dawson again addressed the Agency stating that for the two years -preceding the refinancing he did not request a rent increase because he and the tenants were negotiating for the sale of the Park, increases he said he was entitled to. He stated-that if the-Covenants-were to remain as they presently-exist, a ruling may be necessary from the Agency's legal -counsel given the-prior versus present payments, interest, etc., where based on the original Covenant, he 3-20-89 would be-entitled to a substantial.-rent_ increase,_which' would not be in the tenants best interest.' ,He acknowledged that there is a-need for the tenants to understand the issues and suggested-that a workshop be held with the",- tenants.and representatives of the' Agency. With regard to the long ter,m leases, he again advised--that is. something that has been r,equested, they are-optional and not something required. - In response to the Agency, Mr. Dawson acknowledged one existing long term lease on terms of. $1 per year, -two others having been. issued however not recorded at this-time due to -the City's position on this matter. In response-to Chairman-Grgas, -Mr,. Parrington explained that ther,e are no -conditions.in-the:Covenant that -would require Agency approval for long ter,m leases, the -restriction being that-the rents-be-within the-guidelines set for,th.in, the agreement, also that-the-Agency has the right to review_all records of the Trailer Park, and if the rent were to be an issue on behalf of-a-tenant and_if -determined in excess of the allowable formula, a-court interpretation of that_ . provision-could be requested. Chair,man Grgas noted the requir,ement-that the units be-set.aside for low and moderate income persons, also a requir,ement that qualification_be verified, -and inquired who -conducts, the verification. Mr. Knight responded that according to the 1981-Covenants, Riverbeach_.has the-final- authority over situating tenants in the park, verification.possibly-thr,ough -the yearly audit. With regar,d -to the-original debt -service/ground lease payments versus the refinanced-costs, Mr. Parrington explained that the 1981 Declaration provided that a fixed amount adjustable -every five year,s could be included in the rent-formula, excepting the ground lease payment, the Declaration also providing that if other -permanent financing were obtained-for-the par,k then the rents would adjust upwards or -down based upon that financing, and under that scenario would be-appr,oximately-what Mr. Dawson is proposing. In response to a question of Agencymember Wilson with regard to low or-moderate-income qualification, Mr. Parrington-confirmed that if there is a change of ownership or occupancy qualification would-be necessary for the new tenant. Agencymember-Laszlo inquired if-the amended Declaration is-not ratified, could long -term leases still be issued. Mr. Dawson responded that he would negotiate such leases-on-a-case basis -with a tenant, that he has the right to negotiate -term however not price, -and would see no reason to enter, into-a long- term lease given a month to month situation if there would be no benefit to him. He stated he has informed-those interested per,sons he would-enter such lease for a one time rent increase of ten to twelve percent, that percentage based upon the increase calculated by the tenants during the-time the purchase-of the Park was being considered, and explained that he would not be willing to provide a fifty year-lease at the rate that is currently set forth in the Covenants. Mr. Parrington suggested that in order to not bind the Agency to a pr,ior financing action, at such-time as the Agency acts to hold-this matter over, he would recommend that Resolutions 85-4 and 86-2 be repealed. Chairman Grgas summar,ized this issue as a-request for appr,oval of rent-increases due to the increase of costs associated-with the-debt service and acquisition of land under-the-new loan with the argument that there is substantially-no difference from-the original debt service and ground -lease payment, and acknowledged that from a numerical standpoint that may be valid. However he I I I 3-20-89 I questioned what would prevent an-individual in the future from refinancing the-Park and cause further rental payment increases, possibly through a larger loan secured by letters of credit or guarantee -of personal assets other than the Trailer Park. Mr. Parrington responded that by the-proposed amendment the Agency would -be-approving the final permanent financing, a thirty year -amortized loan, and to obtain additional monies would require the Agency's approval, explaining that in this -case the amount that was attributable to-rents under the rent control formula was only that amount that-went to actual construction costs or land acquisition. - -Chairman -Grgas stated that should this amendment be approved by the Agency, he would support including, language that would disallow further refinancing for construction-improvements and land value, and that no further increases would be- allowed -above the cap provided for under this financing-for-the term of the original agreement. Mr. Parrington stated he felt such provision could be provided. Chairman Grgas-moved that-this item be-held over for at least four weeks, -allowing adequate -time for staff to arrange for a workshop -meeting to- -be - held with the tenants of the-Trailer Park, -and that-Resolution Number 85-4 and Resolution Number- 86-2 be repealed. Agencymember Wilson seconded the motion. AYES: NOES: ABSENT: Grcgas, Hunt, Laszlo, Wilson None - Risner Motion carried I AGENCY ITEMS- There were no items of discussion by the members of the Agency. ORAL COMMUNICATIONS There were no Oral Communications. ADJOURNMENT Laszlo moved, second by Wilson, to adjourn the meeting at 8:17 p.m. AYES: NOES: ABSENT: Grgas, Hunt, Laszlo, Wilson None -- Risner Motion carried ~ fY'~... " r- aJ..rman I ~' IN' ~~ ....at__41....~ ... ...."-- .. . r"-' ..(i~r..:.(, \i ," f!; ; i .,~; I.... 'CIoIllv. ..\,;i:;.; 7 ~ -. ..' '''Jt ..",':1>..... '..',,'" ft..~., .. ,I!: - ,..c, ...... l.... .." l~~