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CDC - Item 2A - Minutes 04-28-09Minutes of the REGULAR COMMUNITY DEVELOPMENT COMMISSION MEETING April 28, 2009 The regular meeting of the Rosemead Community Development Commission was called to order by Chairwoman Clark at 6:00 p.m. in the Rosemead City Hall Chamber located at 8838 East Valley Boulevard, Rosemead, California. FLAG SALUTE: Commissioner Armenta INVOCATION: Commissioner Low ROLL CALL OF OFFICERS PRESENT: Chairman Margaret Clark, Vice-Chairman Gary Taylor, Commissioner Sandra Armenta, Commissioner Polly Low and Commissioner Steven Ly. OFFICIALS PRESENT: Interim Executive Director Stewart, Agency Attorney Murphy, Assistant City Manager Saeki, Assistant City Manager Hawkesworth, Director of Finance Brisco, Economic Development Administrator Ramirez, and Commission Secretary Molleda. 1. PUBLIC COMMENTS FROM THE AUDIENCE None 2. CONSENT CALENDAR A. Minutes April 14, 2009 - Regular Meeting B. Resolution No. 2009-11 Claims and Demands Recommendation: Adopt Resolution No. 2009-11 for payment of Commission expenditures in the amount of $673,132.03 demands Nos. 10037 through 10038 and 11096 through 11102. Commissioner Low made a motion, seconded by Commissioner Ly to approve Consent Calendar items A and B. Vote resulted in: Yes: Armenta, Clark, Low, Ly, Taylor No: None Abstain: None Absent: None Rosemead Community Development Commission Meeting Minutes of April 48, 2009 ITEM NO. Page 1 of 6 C. Authorized Signers on Bank Accounts The Rosemead Community Development Commission (RCDC) requires several different bank accounts to efficiently operate its financial matters. Authorized signers on the RCDC's bank accounts include all RCDC Commissioners, the Executive Director, Assistant City Managers and the City Clerk. When new people replace incumbents, bank signature cards must be completed. Recommendation: That the Community Development Commission authorize the Chairwoman, Vice-Chairman, Commission Members, Executive Director, Assistant City Managers and City Clerk as signers on the various RCDC bank accounts. Juan Nunez - asked in regards to the signers, if there could be a flair in spending more than what they have too. Chairwoman Clark - explained that any expenditure above a certain amount must be approved by the Commission. Commissioner Armenta made a motion, seconded by Commissioner Ly, to approve signers on the various RCDC bank accounts. Vote resulted in: Yes: Armenta, Clark, Low, Ly, Taylor No: None Abstain: None Absent: None 3. MATTERS FROM THE EXECUTIVE DIRECTOR & STAFF A. Rosemead Community Development Commission (RCDC) Note Payable to the Low & Moderate Income Housing Fund On October 1, 2008, the Governor signed budget trailer bill AB 1389 that includes a $350 million Education Revenue Augmentation Fund (ERAF) shift from redevelopment agencies to the State. The payments to the State are due by May 10, 2009 and Rosemead's Share of the Shift is $297,178. As with past ERAF contributions, an agency can borrow up to 50% of the contribution from tis current year deposit into the Low and Moderate Income Housing Fund (LMIHF) and repay the fund over 10 years. Staff is requesting Commission approval to borrow $148,000 (50% of the total ERAF contribution) from the LMIHF. Recommendation: That the Community Development Commission: Approve Resolution No. CDC 2009-12 authorizing a loan from the LMIHF secured by a Promissory Note with terms. 2. Direct the Commission Chairwoman to execute the Promissory Note. Rosemead Community Development Commission Meeting Minutes of April 48, 2009 Page 2 of 6 Juan Nunez - stated that the governor is asking for money from cities, does that mean we will get an I.O.U. from the State? Chairwoman Clark - clarified that they are not paying the agency back, the agency is paying back the low/moderate income housing fund with out interest; cities have no control over what the state takes, unfortunately Proposition 1 A passed and the State can only borrow twice in ten years from cities and pay it back with interest. The redevelopment funds did not get included in that proposition. The promissory note is from the city's own agency. Interim Executive Director Stewart- stated that this allowed the agency to borrow money from the low moderate housing fund to pay back the State. Vice-Chairman Taylor- asked about the language in the promissory note. He stated that some of the language sounded unclear when referring to the borrowed amount of $148,589 dollars with out interest; however, the following paragraph stated that the accrued interest should be payable in annual installments of zero dollars beginning on May 9, 2010 and ending on May 9, 2019. Mr. Taylor asked staff to explain. Assistant City Manager Hawkesworth - stated the language of that paragraph may be stricken out. Vice-Chairman Taylor - stated it was confusing and asked that paragraphs 2 and 4 be stricken out. Chairwoman Clark - agreed with Mr. Taylor and asked why the promissory note stated zero if there was no interest being paid. Vice-Chairman Taylor- also inquired about the claims and demands, item 6, a payment to the Rosemead Housing Development Corp. Low and Moderate of 2006 to 2007 and 2007 to 2008 is a $500,000 payment, and asked staff what it was covering? Assistant City Manager Hawkesworth - explained the Housing Development Corporation has an operating agreement of the two senior complexes with the Community Development Commission; the commission contributes $250,000 annually to the housing and it was discovered that those transfers had not been made for the past two years and staff went back and made the transfers. Agency Attorney Murphy- recommended that paragraphs 2 and 4 be stricken from the promissory note but asked that a due date be included; paragraph 3 should state the due date of May 9, 2019. Commissioner Armenta made a motion, seconded by Commissioner Low, to approve Resolution No. CDC 2009-12 with the discussed corrections. Vote resulted in: Yes: Armenta, Clark, Low, Ly, Taylor No: None Abstain: None Absent: None Rosemead Community Development Commission Meeting Minutes of April 48, 2009 Page 3 of 6 B. Approval of a Proposed Operating Budget for the Glendon Hotel On July 2, 2008, the Rosemead Community Development Commission acquired the Rosemead Inn located at 8832 Glendon Way. As the Commission may recall, the purchase of this site is part of an overall larger redevelopment project (the Glendon Way Project). Immediately following the purchase of the property, staff solicited proposals from reputable company's specializing in hotel operations and received responses from Grand Inn, Inc. and Rosemead Inn Hotel Partners, LLC. On August 28, 2008 the Commission approved a contract with the Rosemead Inn Hotel Partners, LLC, as the operator for the hotel. Since then, the hotel has been completely renovated and began operating in late January 2009. The operating agreement with the Rosemead Inn Hotel Partners requires that a proposed operating budget be submitted to the Commission for consideration within 60 days from the execution of the agreement. This document was submitted to the City in late March 2009. Since then, staff has been reviewing the document and is comfortable with the monthly expenses proposed by the Operator. The operating budget and revenue estimates are attached for the Commission's review. In addition to this documentation, the Operator is also required to submit monthly financial statements recapping all revenue activity for the previous month. Financial statements for February and March 2009 are also attached to this report for the Commission's use. The operator has informed the City that they have recently finalized their room reservation software and will be able to provide the monthly reports in greater detail in the coming months. Based upon the information given to the City for February and March 2009, the hotel is operating at approximately a 20% occupancy rate. However, the Operator is optimistic that occupancy will improve as they continue to aggressively market the hotel. Recommendation: That the Community Development Commission approve the proposed operating budget submitted by the Rosemead Inn Hotel Partners, LLC. Juan Nunez - expressed concern regarding the Rosemead Inn Hotel and stated it was only operating on a 20 percent occupancy rate and felt the city is loosing 80 percent of money, asked how the city would make up the money. Vice-Chairman Taylor- explained the city was not loosing 80 percent of the money being made; it receives a $6,000 monthly payment from the hotel. Added that the hotel operator was the one loosing money not the city. Interim Executive Director Stewart - explained that the city is guaranteed a minimum payment of $6,000 under the terms of the agreement. Vice-Chairman Taylor- asked if the city was obligated to pay any portion of the operating cost. Assistant City Manager Saeki - stated no, if the operator would have made more profit, it would have been shared with the Commission. Rosemead Community Development Commission Meeting Minutes of April 48, 2009 Page 4 of 6 Vice-Chairman Taylor - stated that the transit and occupancy tax were not going to be paid by the operator of the hotel. Asked how property taxes were going to be paid. Interim Executive Director Stewart - stated that the property owner will be paying the property taxes. Economic Development Administrator Ramirez - stated the County is reviewing the documents because the City had to report that the hotel in now being operated by an operator. Vice-Chairman Taylor - asked if the occupier of the property be obligated to pay the property taxes. Interim Executive Director Stewart - explained that the agreement states that the operator will pay for the taxes; the assessor will indicated that the operator will have to pay because he is the operator. Vice-Chairman Taylor- expressed concern that there will be approximately $50,000 or $4,000 a month someone is going to need to come up with. Mr. Nunez asked if the city owned the hotel property. Vice-Chairman Taylor- stated that as far as the agency, the city as a public agency, we do own it. Property tax can be levied. Mr. Nunez asked who will be blamed for the taxes. Interim Executive Director Stewart - reiterated that contractually the operator is responsible for the taxes; the agency will not be left responsible to pay the taxes. The assessor will assets the property tax to the operator, they will not assets it back to the agency. Mr. Nunez asked if the operator cannot pay, can he terminate the contract and if the contract is terminated there would not be any taxes. Interim Executive Director Stewart - stated that the hotel has only been open a few months and it was too early to tell. Assistant City Manager Saeki- stated that there is language in the contract where it allows both parties to terminate the contract. Mr. Saeki reiterated that contractually the operator would pay for the levied taxes and clarified that property tax and bed tax are two different taxes. Commissioner Armenta - inquired if there was any relation between the previous owner and the operator do to the similarity of the name of the hotel, Rosemead Inn. Assistant City Manager Saeki - stated there was no relation between the previous owner of the hotel and the new operator. Rosemead Community Development Commission Meeting Minutes of April 48, 2009 Page 5 of 6 Commissioner Ly made a motion, seconded by Commissioner Low, to approve the Proposed Operating Budget for the Glendon Hotel. Vote resulted in: Yes: Armenta, Clark, Low, Ly No: None Abstain: Taylor Absent: None Chairwoman Clark - clarified she had voted against the purchase of the hotel, but is voting yes on the operating budget because the hotel needs to operate. Vice-Chairman Taylor - abstain because there might be a $5,000 dollar a month expense coming up, plus the $6,000 dollars that the operator pays totaling $11,000; stated he hopes that the Hotel succeeds. 4. MATTERS FROM THE CHAIRMAN & COMMISSIONERS None 5. ADJOURNMENT The meeting adjourned at 6:30 p.m. The next Community Development Commission meeting will take place on May 12, 2009 at 6:00 p.m. ATTEST: Gloria Molleda Commission Secretary Margaret Clark Chair Rosemead Community Development Commission Meeting Minutes of April 48, 2009 Page 6 of 6