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CDC - Item 3B - Transcripts of October 28, 2008 CDC MeetingROSEMEAD COMMUNITY DEVELOPMENT COMMISSION STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL FROM: OLIVER C. CHI, CITY MANAGER &LC DATE: JANUARY 13, 2009 SUBJECT: COMMISSIONER GARY TAYLOR'S TRANSCRIPTS OF THE OCTOBER 28, 2008 COMMUNITY DEVELOPMENT COMMISSION MEETING SUMMARY At the request of Commissioner Gary Taylor the attached October 28, 2008 Community Development Commission meeting transcripts taken by Mr. Taylor have been agendized for discussion. Staff Recommendation Staff requests that the Commission provide further direction. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: JCITY CLERK Attachment A - Transcripts of the October 28, 2008 CDC meeting APPROVED FOR CITY COUNCIL AGENDA: 0 ' ITEM NUMBER'? Pagel of 9 1/6/2009 Rosemead Community Development Commission No official audio or video tape was made, or available, for the Rosemead Community Development Commission meeting held on October 28, 2008. Transcript by agency member Gary Taylor of three of several items discussed at that meeting. Full copy of the audio tape of the meeting was given to the city manager on January 6, 2008 by agency member Taylor. Item #1: Approval of September 23, 2008 minutes Chairman Tran: Next item is the consent calendar. Vice-chairman Nunez: Move for approval Agency member Low: Mr. Chairman. Chairman Tran: Yes Mrs. Low: For the minutes of September 23, 2008, can we remove them since I was absent? Taylor: Mr. Mayor Tran: Yes Taylor: I'm glad Mrs. Low pulled those minutes. I needed the same question but I asked the... I have to ask our Agency attorney the reason I had the minutes pulled and were not approved at the last meeting (10-14-08) I asked for a clarification on the minutes. Let me read the way that they were written here on... "Closed session (Item number S on page 2 of 3 of the minutes for 9123108) It states that we basically had a closed session to discuss property. The Commission recessed the closed session at 7.1Opm to open the City Council meeting. (The City Council adjourned at 7.20pm) The Commission reconvened at 7.30pm and immediately recessed back to closed session. The Community Development Commission reconvened to open session at 8pm Chairman Tran reported that the Commission took action to continue negotiations with the property negotiators. Vote resulted in: Yes-- Low, Nunez, and Tran; No-- Clark and Taylor" The Agency attorney just mentioned tonight (10-28-08), Mr. Montes stated that he still owed me (Member Taylor) a memo on what I asked for at that meeting (9-23- 08) and we had a short discussion there. It is in the agenda tonight (10-28-08) that we are paying the 3.8 million dollars and I asked him at the last meeting. These minutes tell us nothing about what we did. I believe that as Agency members and such we are entitled to an explanation and he needs to tell us why. Because what I read a minute ago it tells us nothing. But that vote had to do with Page 2 of 9 1/6/2009 approving 3.8 million dollars. I think that is extremely important that we be recorded that that happened. So, Mr. Montes still owes me, us an explanation. I don't think that's proper where we vote to use 3.8 million dollars and there is nothing in the records of what happened. Tran: I will defer to the attorney Agency Attorney Montes: Yes, Mr. Chairman and members of the Commission. We did discuss me returning with an opinion with regard to what information is required to be disclosed out of a closed session verses what information may be disclosed our of a closed session. I do apologize for not getting that back to you. Very briefly, the concept of a closed session generally speaking is the opportunity for the Agency to conduct certain types of limited business behind closed doors and make announcements when certain types of actions were taken with respect to those discussions. So I can certainly give a little more clarification in regard to which items are required disclosure verses which items the disclosure out of closed session would be at the discretion of the Commission. Taylor: I do believe that during that short talk we had, correct me if I am wrong, you stated the amount could be in the minutes. Attorney Montes: The amount could be in the minutes at the discretion of the Commission, but it would not be required to be disclosed. At that.... unless certain final actions are taken, that disclosure is not mandated. I don't want to go into any more details about what was discussed at that particular meeting in open session but I would be happy to, as I said clarify the scope of what's required to be disclosed verses what is in the discretion of the Commission. Taylor: I would appreciate that, but I believe you understand the point I am trying to make is that is a major expense. And that was the reason for I believe my "no" vote. And the public is entitled to know that we are going ahead with 3.8 million dollars though we disagreed on that. So bring back your memo. Thank you, Nunez: Mr. Mayor Tran: Mr. Nunez Nunez: As I look at this, as 1 remember our conversation we a... Tran: We can't disclose.. Nunez: Well what I am saying,.. What I remember our conservation was basically to ask staff to renegotiate. That's how we did it and that's what it says here. Tran: and you can come back with an opinion for Mr. Taylor Attorney Montes: I will bring... prior to your next meeting, you will all have a copy. Tran: Can I ask you a quick question about this? Would it be possible to include in the amount? Attorney Montes: That's up to the discretion of the Commission Tran: When we get the memo back to Mr. Taylor? Page 3 of 9 1/6/2009 Taylor: That's discretionary, that's not the law? Attorney Montes: In terms of disclosing the amount? Taylor: Right Attorney Montes: Yes. Taylor: I mean that's the only important thing about it. What are we voting on back there... the public. Did we vote 10 dollars, a hundred dollars, or 3.8 million? That's the important thing I think ...just for the living record so to speak. Tran: Alright Nunez: Mr. Mayor, there is a motion on the floor for action item.. Number one.(?) Taylor: Mrs. Low made the request to defer (actually remove and vote? separately as she stated she was not at that meeting on the 23rd(absent for the 1" half) Tran: Let me just take ...first of all let's take the September 91h meeting first. Taylor: Move the approval Tran: Is there a second? Nunez: Second Taylor: Oops Tran: Cast your votes. (Yes Vote, 5-0) Taylor: I can't vote my screen just went out on me. Tran: You have to touch it Taylor: Okay Now was that clear on just September 9m ? Tran: Correct Taylor: and defer the 23`d? Tran: Correct Item # 2: Claims and Demands Tran: Item 13-which is resolution 2008-31 claims and demands. Need a vote for that. Nunez: Move for approval Mrs. Low: Second Taylor: We have a motion by whom? Tran: It is moved by Vice-chairman John Nunez and seconded by Low. Cast your votes. Taylor: Mr. Mayor, Chairman: Page one, City of Rosemead reimbursement city payroll cash. 2,230,425 dollars. That's a quarter of a million dollars almost. You have an explanation of what that is? Page 4 of 9 1/6/2009 Mr. Chi (City Manager): Mr. Hawksworth? Mr. Hawksworth: Sure, because the, because of how our system is set up we actually cut paychecks bi-weekly and those paychecks are cut our of the general payroll account. We only reimburse the city for the portion that the CDC pays for. We only reimburse that periodically. We don't do that every single time. So when we do the reimbursement it is usually for a large sum that covers numerous pay periods. Taylor: Okay, I would like a breakdown of what that is. I'm just ill at ease, I don't normally see 2 1/2 million, 2,230,000 dollars, come though our payroll like this. Mr. Hawksworth: Right, that was for all of last year. That's last fiscal year's payroll. Taylor: That makes a big difference now that you tell me that. But I can't tell that by looking at all of a sudden this big amount. The other question is right below it. Promissory note-the interest $131,140 dollars. What is that for? Mr. Hawksworth: That's the promissory note that the city holds for the CDC pre- existing loan that the city made to the CDC. Taylor: What's it for? We made a loan in-house but what is that loan? Mr. Hawksworth: I believe that was the loan for the initial loan that was made to Project Area 2. To get Project Area 2 started. We can give you the details on that too. Taylor: I would appreciate that also. Tran: The loan for..Mr. Hawksworih Project 2 Mr. Hawksworth: The loan for Project Area 2 was made... Mr. Chi: Last year, Steve? Staff?: that was made last year when the city loaned the agency 2million, 2 '/2 million dollars..(Inaudible) Taylor: What I don't understand is why are these things coming in so late and not current. Mr. Hawksworth?: While the interest payment is current , the interest payment wasn't due until now. Taylor: Okay Mr. Hawksworth: The interest payments are made once a year, so it was due now. The annual interest payment. Taylor: Thank you, Tran: Alright we have a motion. Motion by Vice-chairman Nunez, seconded by Commissioner Low. Would you vote. Tran: 4-0-1 vote-{Taylor abstained) Page 5 of 9 1/6/2009 Item # 3: Pham Property Acquisition Chairman Tran: Mr. Chi Mr. Chi: Thank you. As was discussed earlier at our previous meeting on October 14`h the CDC did authorize staff to complete negotiations to acquire the Pham parcel which is in the Glendon Way Redevelopment Project. That parcel is located at 3520 S. Ivar Ave. The final agreed purchase price was 3.855 million dollars. At his point in time...(Inaudible) for consideration. Mr. Saeki: Mr. Chi and members of the Commission. As Mr. Chi stated we have been negotiating with the property owner at 3520 Ivar Ave. for the potential acquisition of that piece of property for the past several months. Recently we have come to an agreed upon purchase price of 3.855 million (dollars). That particular parcel is in the overall Glendon Way redevelopment project, proposed redevelopment project. So tonight, if it is still the Commissions intention to purchase that property, three actions need to be taken. Number one: Approve the purchase and sale agreement. The second action to adopt Resolution CDC 2008- 32, approving the promissory, I'm sorry,.. (Inaudible) with the purchase of the property with the provided 800,000 dollars from the unrestricted tax increment funds that are available today. And the remaining 3 million 55 thousand dollars would be in the form of a loan from the City to the Agency. Therefore the second action would be adopt a resolution approving a promissory note between the City and the Commission in the amount of 3 million and 55 thousand dollars. And then finally the third action would be to approve the CDC 2008-33 which would appropriate the full 3.855million dollars for the purchase of the property. At this point, are there any questions that the Commissioners may have? Thank you Tran; Questions, if any? Nunez: Just to verify the conditions that in the event that the other project does not happen that we are not purchasing the property. Mr. Saeki: Correct Nunez: (inaudible) Mr. Saeki That is..(Inaudible) Taylor: Mr. Mayor, Mr. Chairman, Is Mr. Nunez done? Tran: Mr. Taylor Taylor: I am still concerned about the lease. When is that going to come back? We're buying the property, we will end up with the property. If we end up owning it, how do we know what the lease is going to be with the tenant? Mr. Chi: The tenant on the other parcel, Mr. Taylor? Is that what you're referring to? The... Taylor: It's a 122,000 (dollars) on this particular 3 million 55 thousand (dollars) on the city loan. 4% interest payment each year of a 122,000 (dollars). The tenant going to pa y that? Page 6 of 9 1/6/2009 Mr. Chi: Mr. Hawksworth, can you explain in some detail the terms of that loan from the City to the Agency, that's related to the pay back from the Agency to the City? Taylor: So what is the lessee going to pay? we are buying the property. Mr. Chi: the item... the terms of the process agreement between the Agency and the City. is a loan from the City to the Agency. We haven't seen that lease yet and .(Inaudible) refer to the repayment The terms they're ? are referring to Taylor: Yes. I understand that. Mr. Chi: For 3 million 55 thousand dollars. The way that the loan terms are set up is that the Agency would pay down interest only payments for the first 20 years with a balloon payment due at the end of 20 years for the full amount. That payment is going to be due, it's a portion we're going to have to budget into the CDC budget from this point moving forward. Taylor: And we end up paying back 5 million 499 thousand dollars. Mr. Chi: From the city's perspective (?inaudible) Taylor: That's where we differ. What's the lessee going to give us back? Mr. Chi: The lessee is the Agency (inaudible-cross-talk between Mr. Chi and staff) Taylor: Mr. Mayor, the name of the company is right in this information. Mr. Chi: Oh, Okay, I think that ...we're talking about ...(inaudible) Taylor: Okay, We have the company right in this information. Mr. Chi: It is. Taylor: What are they going to pay us back? Mr. Chi: The company isn't. The company is not obligated to pay us aLlything. The purchase and sales agreement is contingent upon the execution of that ? It's purchasers will be allowed to execute per the terms of the purchase agreement (before you tonight. The second issue you raised, Mr. Taylor, relates to what the lessee is going to be paving. There is no direct payment from the lessee to the City. There will be sales tax however, that will be generated from that use that the city will be collecting as soon as the store is operating. Taylor: We have over a thousand businesses in this community. This is the first time this has come up where we have a multi-million dollar property where the lessee isn't going to be... they are not going to be 12Uing anything to the city. . Mrs. Low: I think that's (inaudible) Taylor: We've never had a project like this, Mrs. Low. A thousand businesses and all of a sudden we're taking millions of dollars and letting somebody develop it. Page 7 of 9 1/6/2009 Mr. Saeki? Or Mr. Hawksworth: If I can explain it Mr. Taylor, I think there are two separate.... And I see your point. There are two separate projects here if you will. The project that you are referring to, the lessee and the lessor on the Levitz's property. That is completely separate from this transaction that we are talking about tonight. Other than if it is the intent of the Commission to still purchase this property we need to see a signed lease between those two individuals before we close on this property. We will not close on this property unless we see a lease and executed lease from that particular user. With ? (inaudible) Taylor: This is for their benefit. Mr. Saeki: It's for both parties benefit, I believe. In the sense that this parcel we are attempting to purchase tonight will still be able to be developed and be integrated into a larger redevelopment project which would be of benefit to that area. Mr. Chi: Correct. ? understanding that the Commission's goal on the overall redevelopment of that site would include other uses on the parcels we are currently acquiring. The hotel parcel which the Commission now owns. And coming up with a comprehensive project that benefits that area and really redevelops that site. Taylor: You are talking about the other project, the hotel. That's 4 million dollars we put into that and we haven't... Tran: Let me make a comment. Right now this purchase is contingent on the lease agreement with a particular retail dealer. And right now we are not making any money off this Levitz's building or the parcel we have. The potential of us garnering the sales tax to pay back the loan for exceeds....? Mr. Chi: And in some respects we're tying two separate issues that are (inaudible) The issue again tonight is if the Commission still wished to purchase the property we've come to affectionately call the Pham property. To acquire that parcel would assist the City? in its efforts to redevelop the Glendon Way Project. Now, we make the purchase of this Pham parcel contingent on an action that is occurin on a separate private deal between Primestore and a lessee and a retailer. If that were to occur then we would acquire this property. The reason for that particular link between the two properties is that there are certain parking requirements that the lessor ( who) is looking for that would impact the City's or Agency's redevelopment project. Taylor: At that point they become a direct beneficiary of (Agency) buying the property. Nunez: I think ...It's not they become a beneficiary councilman. What happens is it allows that decision will allow the project to happen is basic. If they cannot come to an agreement on that then we don't purchase the property. That's why it has to be, that's why they have to, yeah, there is a benefit in there but the large ? ability to hold parcels that are all going to be included all together. That's where Page 8 of 9 1/6/2009 the benefit comes to all of us. But we can't we cannot, what we're saying we're not going to purchase that unless you get an agreement with the oh... your retailer. Mrs. Low: I think (inaudible) part is to make sure that we do have (inaudible) because the... if the agreement works out with the lessee. I think the project will (inaudible) because now we have a good sized parcel that has a good business coming in as well as we can also allow more additional maybe a restaurant or other business to come into that parcel. I think that is the key. (inaudible) Mr. Chi: another component that is important to keep in mind that the separateness of the two projects we're talking about is the current project, the proposed project on the parcel that we're not talking about the Primestore property and the proposed project on that site. It parts itself further east. There is no mandated requirement for the City. Taylor: Excuse me, where does this additional 65 parking spaces come in that they are required to have. Mr. Chi: There are certain, the acquisition of this parcel would be, make the potential use of that site. Give the City more options as relates to allowing and accommodating... Taylor: Excuse me. Clarify that, when you say allowing and accommodating. Is it not true that they need 65 more parking spaces? Mr. Chi: No, they... Taylor: Then why are we (Agency) doing it? Mr. Chi: They are requesting. The reason we are moving forward in this incident. It's staff's understanding the Commission would like to see the entire site redeveloped. That's the reason we've been involved in the Glendon Way project for the last two years. The reason why we have an ENA with the Jacobsen Family Trust currently. The reason why we've gone through several different developers in looking at different ways to comprise and build a project on that site that would give benefit (..inaudible) redevelopment law. The reason that we're proposing we've been discussing the acquisition of the site it's a key piece in the overall redevelopment of that site. Taylor: Bottom line right now. What we are doing tonight is we (Agency) are buying that parking space, that parking lot for 3.8 million dollars, plus or minus and they don't need it. You are telling me. Mr. Chi: Per our code they do not need it. Correct. Taylor: Okay Mr. Chi: Per our code requires parking at that site 4per 1,000 (square feet of building) and that site has 4 per 1,000 square feet. Taylor: And they told us they need 65 more spaces to make it work. Mr. Chi: There are additional conversations that we had in closed session as regards as it relates to more specific details for that particular project. None of those details again have been finalized. In the finalization many of those details as Page 9 of 9 1/6/2009 relates to uses on our site will have to come back before the Commission for ? (inaudible) Taylor: Alright, Thank you, Mr. Chairman Mrs. Clark: Mr. Mayor Nunez: ? (inaudible) Tran: I saw you. Mrs. Clark, Mrs. Clark: 1 plan to vote against. One of the major reasons is it is way overpriced. Tran: We have a motion by vice-chairman Nunez: The motion is to accept the recommendation. Tran: I have it here, Vice -chairman Nunez and second by Commissioner Low. To also include that (inaudible) Would you vote. Vote: Yes, Low, Nunez, & Tran No, Clark, and Taylor