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Home My WebLink AboutRDA MINUTES 1989 06 19 OF THE REDEVELOPMENT AGENCY OF THE CITY OF TUSTIN, CALIFORNIA JUNE 19, 1989 1. CALL TO ORDER The meeting was called to order by Chairperson Kennedy at 10:00 p.m. in the City Council Chambers, 300 Centennial Way, Tustin, California. 2. ROLL CALL Members Present: Ursula E. Kennedy, Chairperson Richard B. Edgar, Chairperson Pro Tem Ronald B. Noesterey " John Kelly Earl J. Prescott Members Absent: None Others Present: William A. Huston, Executive Director/City Manager James G. Rourke, City Attorney Mary E. Wynn, Recording Secretary/City Clerk Christine Shingleton, Director/Comm. Development Fred Wakefield, Acting Chief of Police Robert Ledendecker, Director of Public Works Royleen White, DirectOr/Community & Adm. Services Ronald A. Nault, Finance Director Susan Jones, Recreation Superintendent Steve Rubin, Senior Planner Laura Kuhn, Senior Planner Randy Westrick, Recreation Supervisor Melissa O'Neal, Recreation Consultant Valerie Whiteman, Deputy City Clerk Former Mayor and Mrs. Arthur Charleton Approximately 20 in the audience 3. APPROVAL OF MINUTES - JUNE 5, 1989, REGULAR MEETING It was moved by HoestereV, seconded bY Edgar, to approve the Minutes of June 5, 1989. The motion carried 5-0. 4. APPROVAL OF DEMANDS IN THE AMOUNT OF $11,595.65 It was moved by Noesterey, seconded by Edgar, to approve subject demands in the amount of $11,595.65. The motion carried 5-0. 60 5. MEMORANDUM OF UNDERSTANDING - TUSTIN PROMENADE PROJECT Christine Shingleton, Director of Community Development, reported the Agency, in September of 1988, had approved an Exclusive Agreement to Negotiate with CMS Development for proposed development in the vicinity of the I-5 Freeway/Newport Avenue. Staff had negotiated with CMS Development to identify major business terms for preparation of a Disposition and-Development Agreement with the developer. The subject location was a blighted, irregular site of 3.9 acres and the proposed development was a 10,240 square foot retail center, a 3,760 square foot Carl's Jr. fast food restaurant and a minimum 105 room Marriott Fairfield Inn. The business terms would provide for assistance to the developer in the amount of $1,000,000 over a 10-year period to offset land acquisition, site preparation, clearance costs and public improvement costs as authorized by California Community Redevelopment Law. Repayment was based upon an expected level of sales tax, transient occupancy tax and tax increment; and based on the projected level of revenue, the Agency's assistance would be repaid in approximately 5 years. Important business terms included in the proposal was the requirement of a covenant use restriction on the property and all Agency resources would be repaid in the event of a sale transfer or refinancing ofthe project. Alan Kotin, representing Kotin, Regan and Mouchly, Inc., stated he had been engaged by staff to review the CMS Development proposal and to assist in the negotiations of the terms. He reported on the amount of subsidy requested by the developer, the low risk factor to the City, reasonableness of projected income and prospect of repayment to City. REDEVELOPMENT AGENCY MINUTES Page 2, 6-19-89 It was moved by Edqar, seconded by Hoestere¥, to approve a Memorandum of Understanding between CMS Developme~t and the Tustin Redevelopment Agency and authorize the Chairperson and Executive Director to execute the Memorandum° Councilman Hoesterey said he viewed this as a positive project because there was no obligation to the City unless the project met revenue projections. Without resorting to eminent domain, a developer proposed to take a blighted area and convert it into income generating property that would benefit residents and ..... taxpayers. He liked the fact that rebates were tied~onlY to after a point in time when the City received tax money from the project. Councilman prescott thouqht staff and the consultant were professionals who had thoroughly researched this matter. He found no fault in their methodology but did have a philosophical difference. His mathematical computations revealed the land cost would be $31.67 per square foot and the Marriott Hotel/Carl's Jr. organizations could well substantiate land values in excess of that amount without the City providing a $1,000,000 subsidy. He noted other landowners in Tustin who did not receive financial assistance from the City. He was not critical of the individuals involved but, from a philosophical vi'ewpoint, he disagreed and felt it was a misuse of public funds° Councilman Kelly was disappointed with the amount of time and effort devoted by staff to the project and could not believe it had been authorized. He held a firm belief that the City should not enter into any speculative real estate transactions and approve loans. He could not believe that .the "two champions of free enterprise" involved in the project would approach city government and request assistance° Their presentation was very impressive but he thought it should be presented to a bank, which was the correct route. For the City to be involved in this speculative real estate transaction was wrong. ""' Mayor Pro Tem Edgar Stated the whole philosophy of a Redevelopment Agency was commitment t6 spending money in blighted areas with the anticipation that by spending that money, revenue to the City would be enhanced'. There are those that can make a profit without the assistance of the Redevelopment Agency, but the areas in question were properties in need of enhancement. The benefit derived by the City was more than just the repayment of funds, the City would benefit from this project for many years. The benefit would enable the City to maintain its strong financial position and he viewed this as an opportunity to continue that sound financial base. Mayor Kennedy said it had taken her years to'appreciate how a City could change its image through the Redevelopment philosophy and it was a tool used by people who were serious about the beautification and economic health of the City. It was also a tool to enhance areas so tangled in blight or other problems that only the assistance of the Agencycould give a developer the courage to begin a project such as this one. The Agency was assisting the developer during the first few years and then requesting complete repayment in the tenth year. This could not be called a "give away", it was a way to give the citizens of south Tustin something in which to be proud by ridding the City of two terribly blighted areas and she enthusiastically supported the project. Councilman Prescott further objected to the assistance based on the fact that the initial exclusive right to negotiate was granted by the City Council on a non-competitive basis. He said there was a "cozy" relationship between staff and the developer and, on a 5-0 vote, the Council voted to grant that exclusive right to negotitate on a non-competitive basis and he thought the City was in violation of their public trust if the non-competitive agreement was followed by a $1,000,000 subsidy° William Huston, City Manager, responded that the "cozy" relationship was factually inaccurate. Mr. Cody Small had an interest in the Page 3, 6-19-89 property and that was the basis to request from the City an exclusive right to negotiate. When a property owner asked for that right, it had been the practice to comply. Mayor Kennedy replied to Councilman Prescott that the word "cozy" was offensive to the professional staff and she requested that, although his objection was worthy of discussion, he word his comments in a manner that did not insinuate staff was engaged in illegal activity. The motion carried 3-2, Kelly and Prescott opposed. 81 --- 6. LANDSCAPE MAINTENANCE CONTRACT, EL CAMINO REAL It was moved by Hoesterey, seconded by Edgar, to authorize the renewal of the Landscape Maintenance Contract for E1 Camino Real with Porshia Alexander of America (PAA) and amend the contract to reflect the current annual Consumers Price Index which currently reflects an increase of five percent (5%) for the period fromApril 1988 - April 1989. The motion carried 5-0. 92 7. OTHER BUSINESS - None 8. ADJOURNMENT At 10:35 p.m., the meeting adjourned to the next Regular Meeting on Monday, July 17, 1989, at 7:00 p.m. (There would not be a Redevelopment Agency meeting on July 3, 1989). i C~AIRP ERSON ~ // .~ECORDING SECRETARY