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HomeMy WebLinkAboutRPT 3 BOYS CLUB AG 07-20-81DATE: FROH: S UB,,I ECT: JULY 14, 1981 REPORTS 7-20-81 NO. 3 lnte,-Com MAYCR, CITY COUNCIL C. R. THAYER, ACTING CITY MANAGER BOYS CLUB AGREEMENT The attached letter by Jim N~urke to Mr. Walter Foster adequately explains that we have had no comments from the Boys Club ~oncerning the agreement, cn July 13th., I contacted the Executive Director, Cliff Poulscn of the Boys club and asked him if he had any information ~oncerning the status with the agreement with the Boys Club. He indicated that he felt the Attorneys had comunicated with Mr. l%~urke and that everything was O.K. I advised him that no such contact had ~n made and he assured me that he would make every effort to contact them as soon as possible. To this date, no additional action has been taken. · I did receive a telephone call approximately a week and a half ago frcm a Mr. Leonard J. Kroko who indicated that he had several concerns regarding the proposed agreement with the Boys Club and that he wished the City Council to be aware of them. I asked' him to put his concerns in writing and that I would assure him that each of you would receive a copy of this letter. That letter is also attached. Mr. Kroko prior to contacting me had had conversations with Jim Bourke and the questions he has put forth have basically ~c~n answered by Mr. l~Durke as to the legality and propriety of these items and I so advised Mr. Kroko at the time of our conversation. Mr. Krok~ is obviously unimpressed by Mr. Bourke's legal comaents and therefore, requested that Council be advise~ of his concerns. Should the Council wish to alter any previous agreements I hope to have this matter on the August 3rd. Agenda for final Council action. CR~sa LAW OFFICES OF Eourke & Woodruff SUITE I0:~0 CALIFORNIA FIRST BANK BUILDING SANTA ANA, CALIFORNIA 9:=701 July 10, 1981 Mr. Walter Foster WALTER FOSTER ART BOOKS 430 West Sixth Street Tustin, California 92680 Ronald Rus, Esq. ALVARADO, RUS & McCLELLAN Bank of America Tower #1120 One City Boulevard West Orange, California 92668 RE: Walter Foster Art Books/ City of Tustin/Boys' Club of Tustin Gentlemen: 1. This letter will confirm that Mr. Foster advised me on Monday, June 29th, that the form of agreement was satisfactory to him with the exception that he wants the provision regarding use of the parking lot by the Boys' Club in the City limited to the periods between 4:30 p.m. and 7:30 a.m. as well as on week- ends and holidays. Accordingly, we have revised page three of the proposed agreement and enclose a copy to each of you here- with for your review and consideration. 2. We have not received any advice from the Boys' Club as to whether the agreement is satisfactory to it. Very truly yours ROURKE & WOODRUFF BY City of Tustin JGR:se:D:6/26/81 CC Edgar Enclosure the properties described in Exhibits B and D, including grading, leveling, compacting, paving, installation of drives and drive approaches, striping, and landscaping, all in accordance with the requirements and specifications of the City, and to care for, repair, maintain and replace as required the said improvements to keep the same in good condition and repair at its sole cost and expense. 4. Foster agrees that Boys' Club may make mutual, non- exlusive use of the parking lot to be constructed as provided in Paragraph 3 above so long as it occupies the adjoining property, for use by Boys' Club and its members guests and invitees. Foster further agrees that City may make mutual non-exclusive use of the parking lot to be constructed as provided in Paragraph 3 above, for use by City, its lessees, sublessees, assignees, successors in interest and their respective guests, invitees and licensees. The rights of use of the parking lot provided herein shall be limited to (a) the periods between 4:30 p.m. and 7:30 a.m., and (b) weekends and holidays. 5. Foster agrees at his sole cost and expense to cause a. portion of the aforesaid parking lot to be additionally striped for a basketball court or half-court on the southerly portion of the parking lot and to cause basketball backboards and baskets to be installed, one on the exterior wall of the building to be constructed by Foster and the other on the exterior wall of the Boys' Club building. Foster agrees to maintain the said basketball court for the use and benefit of the Boys' Club and its members, guests and invitees so long as the Boys' Club occupies the adjacent premises. 6. Boys' Club agrees to assume, defend and hold Foster harm- less from any and all liability occurring or arising out of the use --3-- 12541 Catalina Dro Santa Ana, Calif. 92705 July 10, 1981 Mr. Charles K. Thayer Interim City Manager 300 Centennial Way Tustin, Calif. Dear Mro Thayer: A week or so ago we discussed the three-way arrangement being formulated between the City, the Tustin Boys Club, and Foster Art Service. As you recall, I voiced opposition to the arrangement and you suggested that I write a letter to the ~ouncil and present it at the next meeting. I have written a letter which summarizes most of my objections. If you need any more information, please feel free to call me at my office 832-8761. If I do not hear from you, I will assume that you have received the letter and transmitted it to the Council for its consideration. Very..t~ruly, Leonard J. ~ko 12541 Catalina Dro Santa Ana, Califo 92705 July 10, 1981 Tustin City Council Centennial Way Tustin, California Dear Sirs: I am a resident of county territory within the sphere of influence of the city of Tustin, and.I have conducted a con- sulting engineering business from rented space in the city of Tustin for over 5 years. I have observed with continually increasing interest the evolution of the plan to exchange services and property between the city of Tustin, the Tustin Boys Club, and Foster Art Books. After spending considerable time gathering arguments on the matter from City Hall officials, the city attorney, officials of the Boys Club, and businessmen, I am inclined to believe that the arrangement is a very poor one and should not be carried out. I would like to present the arguments which led to this conclusion as well as counter those arguments used to defend the action. Basically the issue can be divided into three parts: 1) the value of the land in question 2) the soundness and fairness of the proposed exchange 3) the long term implications° 1) The value of the land. The first point of note is that an independent appraiser, apparently the only one called upon, valued the property at approxi- mately $67,000. In opposition to this stated value, I have heard arguments such as: "Nobody around here believes the land is worth that much"; "It's only a weed covered patch of ground"; "Because of the ease- ment you can't put a building on it," etc. Ail of these statements are to one extent or another true° However, they miss the point of the value of the land. As an iso- lated entity, the land, like almost any other isolated island of land anywhere, has little value until coupled to either the present Foster land, or to the Boys Club land, or until used as an access route to a valuable entity like a water well for the city of Tustino Stated simply, the value of land, or any. other object for that matter, depends heavily on what can be done with it. -2- In the present instance there are at least two very valuable utilizations possible. The most obvious is that of adding it to the already very large land area operated by Foster Art Services° In this case the land can easily be argued to have a value in every way equal to any other equal area on the site. This is so because acquisition of this so-called "unusable" land allows substitution of this land for usable land within the development. Specifically, the construction of a parking lot on the subject land allows a larger building to be con- structed on the adjacent land. Another use is the proposed or potential well site. If the city drills a well, it could comfortably use this property as part of its water facility and perhaps free far more valuable acreage at its other water department sites. In this ease, a dramatic gain in value could be realized. As a practical matter, the substitution of part of the present water department property on Main Street for the property already purchased by Foster Art Services would have made a great deal of sense. The third potential use of the property is that which it already had, utilization by the Boys Club or attached to that property for some later use. In any case, for the reasons given the land has great value and one can't help wondering what value a commercial entity like Coldwell Banker, Bank of America, the Irvine Co., Foster Art Books, Saltarelli Realty, etc., would place on the property if they were offering it for sale to the city of Tu§tin. 2) The soundness and fairness of the deal. To the outside observer the three-way swap, as it has been described to me, appears questionable. It has all the earmarks of the kind of arrangement one finds among devious individuals attempting to circum- vent the law, or at least deceive observers. The fact that the city attorney describes it as "legal" does not ennoble it. Stripped of its facade, the deal is simply a case where Foster Art Books gets real, valuable land literally for nothing, while the Boys Club gives a long term I.O.U. for unneeded services to the city as pay- ment. The supposed "gift" of playing facilities by Foster Art Books is at best contrived. The so-called city access to a well is suspect also. Even a financial amateur would suspect that Foster Art Books would in effect be buying land and paying for it with a tax deductible gift. In detail my objections are these: The idea of selling land to one person (Foster) and being compen- sated by a second (Boys Club) makes little sense. The value of the proceeds to the city are very much in question. The idea that for 37 years the Boys Club will be able to deliver the stated services is not palatable. As recently as a year ago the very -3- existence of the Boys Club was in doubt° Without question the same conditions can and will occur again. I doubt that one could find anyone who would accept that paper as collateral for any kind of loan, or as payment for a piece of real property. The supposed benefit to the city from having access to a well site also fails to ring true. At present the city has unlimited access by virtue of its ownership, while it would later have limited access. This is a clear and simple net loss to the city. The $10,000 cash payment has without doubt already been spent in the effort to produce the present arrangement. Hence it represents a zero net gain to the city. From the standpoint of the Boys Club, contrary to what is said in public, the entire affair is a great misfortune. At some point a year or more ago the Boys Club had the land in question in addition to that already sold to Foster Art Service. It had two baseball fields, a basketball court, a shuffleboard court, and free outdoor area for all sorts of activities. All of this was on a 50 year lease with about 37 years to go. The city legally, of course, stripped the Club of this property without any compensation and now proposes to "give" something to the Boys Club via Foster Art Books. In the final analysis the Club will have significantly less facilities than it had a year ago, along with all sorts of restrictions on its use. Another item often mentioned is the valuable parking privilege which the Boys Club and the city will gain in the exchange. It is my guess that most if not all reputable businesses in Tustin would donate off hours use of its parking lots for non-profit civic activities such as the Boys Club. In times past they donated parking lots for fireworks sale, as an example. In summary then, it appears that the only certain beneficiary of this arrangement is Foster Art Books, since it gets its part of the bar- gain now. The city and the Boys Club won't know for oertain for 37 years° Long term implications° It seems apparent that the Boys Club has been stripped of a major fraction of its former facilities so as to provide to a profitable business some room for expansion. It leads one to wonder whether the city intends to destroy the club completely when it has another oppor- tunity and Foster Art Books chooses to expand again. A further concern is the questionable practice of interweaving the activities of a nonprofit organization, the Tustin Boys Club, and a profit making business, Foster Art Services, 'in such a manner that the nonprofit agency essentially'subsidizes private profit makers. In my estimation, good ethics would not permit such a mix; it is neither defensible nor necessary. -4- Finally, I wonder how most businessmen would react if they knew that the city went to such extreme effort and expense to accommodate the demands of one business. Very~ruly, Le n d . ~K~oko