RRA - 01-11-94• • APPROVED
MINUTES OF THE REGULAR MEETING CITY OF ROS MEAD
ROSEMEAD REDEVELOPMENT AGENCY DAT -8
JANUARY 11, 1994 RY
The Regular Meeting of the Rosemead Redevelopment Agency was
called to order by Chairman Bruesch at 7:03 p.m. in the Conference
Room of City Hall, 8838 E. Valley Boulevard, Rosemead, California.
The Pledge was led by Vice-Chairman Vasquez.
The Invocation was delivered by Agencymember Clark.
ROLL CALL OF OFFICERS:
Present: Agencymembers Clark, McDonald, Taylor, Vice-Chairman
Vasquez, and Chairman Bruesch
Absent: None
APPROVAL OF MINUTES: DECEMBER 14, 1993 - ADJOURNED MEETING
MOTION BY AGENCYMEMBER McDONALD, SECOND BY VICE-CHAIRMAN VASQUEZ
that the Minutes of the Adjourned Meeting of December 14, 1993, be
approved as submitted. Vote resulted:
Aye: Clark, Taylor, Bruesch, Vasquez, McDonald
No: None
Absent: None
Abstain: None
The Chairman declared said motion duly carried and so ordered.
1. RRA RESOLUTION NO. 94-01 - CLAIMS & DEMANDS
The following resolution was presented to the Agency for adoption:
RESOLUTION NO. 94-01
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF
ROSEMEAD ALLOWING CERTAIN CLAIMS AND DEMANDS IN THE SUM OF
$87,250.23 AND DEMANDS NO. 2950 THROUGH NO. 2974
MOTION BY VICE-CHAIRMAN VASQUEZ, SECOND BY AGENCYMEMBER McDONALD
that Resolution No. 94-01 be adopted. Vote resulted:
Aye: Clark, Taylor, Bruesch, Vasquez, McDonald
No: None
Absent: None
Abstain: None
The Chairman declared said motion duly carried and so ordered.
2. AUTHORIZATION TO OBTAIN AN APPRAISAL FOR COMMERCIAL PROPERTY
LOCATED AT 2542-2602 SAN GABRIEL BOULEVARD
VERBATIM DIALOGUE FOLLOWS:
FRANK G. TRIPEPI, EXECUTIVE: This letter comes to you from the owner
of the property, a Mr. John Hui. He came in initially and talked to
the Planning Department about the use of this particular property and
basically wanted to put in a billiard parlor with a number of billiard
tables, arcades and a game atmosphere. He was told that would be a
rather difficult type of development to put in because billiard tables
for one are limited to a certain part of the City, indicated that what
he would really like to do is sell the property and asked if the
Agency would be interested and I said I had no idea if the
Agencymembers would be interested. It is a large parcel of property,
over two acres in size, with one acre under a roof. He went out and
got an appraisal. If the Agency is interested in responding, you have
an interest in the property, we would need to get our own appraisal
and then see how that comes back. If the Agency has no interest in
the property, just inform me of that this evening and I'll notify the
property owner.
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TAYLOR: Mr. Chairman. What use would we have for this property to
consider buying it?
TRIPEPI: Mr. Taylor, I don't have any long range plan for the use of
the property. What the Agency would be able to do is to enter into
some kind of ground lease with the City and the City or the Agency
would control the development of that particular site. You would be
able to get something in there that you feel would be a good use on
that piece of property whereas if you don't control it, you can
suggest those kinds of uses that you would like to see but if it's an
industrial zone or if their development meets whatever the zoning
requirements are, you're hardpressed to do anything but grant permits
and build it. So, I;'m not going to sit here and try to pretend that
we have some scheme. I really don't know. It would allow you to
control the property'for some future development and then the City or
Agency would hold the cards to say what you want in there.
BRUESCH: I there's some question as to whether the City can
use a portion of that property to alleviate the press of people and
programs here at City Hall. Is it... I'd like to direct a question to
Mr. Kress....
TRIPEPI: You mean the staff? The overcrowding?
BRUESCH: Yes. Have, an annex down there. Could we use Redev money
for that?
TRIPEPI: I wouldn't
ROBERT L. KRESS, AGENCY COUNSEL: 1290 severely restricts the use of
redevelopment funds for City Halls and I think that's what you're
talking about so the answer as of January 1 is probably no. I haven't
looked at that issue specifically as it relates to this property.
McDONALD: Actually John did give me a call. He wanted me to help him
get some pool tables in there. He's done some development in E1
Monte. He's got 100,000 square feet down there and it's got about 250
frontage on the front and I know ever since I've been on the Council
I've always been in favor if we can get a piece of property at the
right price and area I think our money is better off on a piece of
property than it is sitting in the bank. Most of the properties now
are selling for around $20 a square foot or so but this may be an
opportunity ...I know you have to spend money up front but we may be
able to get some nice property for $15 a square foot and then in terms
of having to move people from somewhere else if we decide to get
something and we have to relocate a business like we did the muffler
place, then we've got one ideal spot that somebody could be...
TRIPEPI: I should indicate also that there's leases generated from
that property right now at about $6850 a month and I believe that
lease goes through September. On the vacant building, the market
rents would probably be somewhere around $13,000 a month. So while
you're waiting the Agency or the City would be looking at some lease
revenues of anywhere from $7000 immediately and at such time that you
could find a tenant to lease the one-acre building under roof,
anywhere from $9000 to $13000.a month while you wait for the market to
turn around or decide if there's another use for it that you'd have in
the long run. I have never known of a City or Agency that was sorry
they bought a piece of property of a size like this. I think many
cities and agencies throughout have done this. If the properties
become available they'll purchase them and sometimes, Mr. Taylor, with
no concrete plan for it just buy it. That way they control it. They
can make sure it stays clean. They can make sure the buildings are
kept up to standard. Again, it's an outlay of cash. I bring it to
you as a policy question for the Agency and the owner did request that
it be put on in writing and he was good enough to get an appraisal and
provide us with that plus a letter.
TAYLOR: Mr. Chairman. $2.3 million and to start land banking as far
as buying up property for future use. This appraisal talks about the
depressed market right now as far as the 9-10% vacancy factor plus the
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TAYLOR CONTINUES: fact that they don't look for anything in the
forseeable future for it to pick up. The economy is still not picking
up in LA County. I have to go on record as opposing it. We've got
some money now from the bond sale; to start land banking now, I don't
think that was the intent of that bond issue.
BRUESCH: I have a worry with this particular piece of property
because I know that area. It has been on the market in the past and I
know that there's just no buyers out there right now and I also know
that one of the big problems with commercial property in Rosemead is
that it's overpriced and just a half hour ago I was talking to a
businessman who can't get rid of a piece of property down at Del Mar
because he can't make any profit off of it and he's not getting enough
off of the rents and he says the same thing that I've heard over and
over again, we really don't have a market for property right now and I
asked him a question, when do you see a turn around, he said it's
going to take a long while to take up the excess. We're looking at 3,
4, 5, maybe 6 years before prices start evening out again, so it's a
little bit risky time right now, especially along our arterials to be
investing in property.
McDONALD: Mr. Chairman. I think we need to have a vision, down the
road to make sure that the General Fund of this City is being well
taken care of, long after we're gone. The more opportunity that we
have to buy land, put it to use in a manner of speaking, to get a flow
into the General Fund, is what we have to do because if folks here
don't want to raise taxes, that means if you don't want to raise
taxes, you don't want to get any other revenues, you're only going to
provide so much service to the community and like it or not, we're at
52,000 people and that's going to grow beyond our belief, even in our
lifetime and we're going to have to provide for the funding for that
infrastructure and maintaining of the services and providing more
services and one way of doing that, if you look in long run, just like
how the Asians look at buying property in their own country, they look
at the long term and I think this is an opportunity for us and we've
had others that we didn't take advantage of that I thought were good
opportunities at the time and you may not share my thoughts on this
one but I believe it's an opportunity for us to use the money that we
have in a fashion that will in the future provide a monetary structure
to keep this City afloat and in the good position that it is right now
and maybe even better in the future.
CLARK: Mr. Chairman. I'd like to ask Mr. McDonald, what are you
thinking in terms of revenue in the future?
McDONALD: One of the major reasons that I went with the senior
housing, even though I was the first one to say the bill has passed
and we have to spend this money or we're going to lose it, I said that
for about half a dozen years that I've been on here, that we're going
to create a financial process over there that ...we lease it to the
City and the City is going to get the subsidies on the rents, so
that's an income flow to the General Fund of the City. We can also do
that with this piece of property.
CLARK: You mean housing? Is that what you mean?
McDONALD: Any type of structure we want, commercial or residential
housing just like that, and have the flow come back to the City. We
can lease it to the City for a dollar a year and let them collect the
leases on it and the rents off it that are on the property right now
or build on the property later on.
CLARK: We're allowed to go into commercial ventures like that?
McDONALD: You're allowed to do just about anything. This actually is
something that should be more advantageous to us because it's in the
redevelopment area and the redevelopment agency's buying it and even
putting more businesses in there is creating an economic raising of
the property that's there and you could actually build the buildings
there to make it improved and then lease those.
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BRUESCH: But those buildings are not in good shape right now.
McDONALD: Well, what you're looking at right
looking for a major profit on those businesse
and they said I'm just going to break even on
to make a little bit so I'm only going to let
in there. As the Agency here, all we have to
we know that property is going to, as we come
recession, increase in value.
now is somebody else is
so they can lease them
that or I'm just going
this type of business go
do is break even because
out of the economic
TAYLOR: Mr. Chairman. Do we have any documentation on what this
gentleman paid for the property?
TRIPEPI: Other than what I think he said he paid, no. That's
obviously public record that we could find out.
TAYLOR: What did he say he paid for it?
TRIPEPI: I believe he said he paid in the neighborhood of $3.1 or
$3.2 million.
TAYLOR: I'd like that verified to see what he actually paid for it.
McDONALD: So, if he's in a tight squeeze, if we can get it for $15 a
square foot...
TRIPEPI: Understand that this is just his appraisal. It doesn't mean
it's worth $2.3 million.
TAYLOR: I understand. I want to see what he paid for it that he's
willing to sell it a loss now.
TRIPEPI: Sure. I want it understood that that's from a month ago and
that was casual conversation with him and I believe he said he paid,
I'll confirm it with him what he paid and then I'll write the Agency a
memo.
TAYLOR: I'd like it verified, not just what he says. Check the
record, tax records.
TRIPEPI: It's no problem. It's public record once it closes escrow.
McDONALD: We wouldn't buy it unless we had a real whale of a deal on
it.
TRIPEPI: I don't recommend that you overpay for it, either.
McDONALD: We're not going to pay $25 a square foot for it.
TRIPEPI: And that's why I said on those leases, in a normal market
they may generate $13,000 but maybe more like $9,000, that's more
realistic right now. The market for those kind of leases, it's not
something that everybody wants right now so you have to be fairly
competitive on your pricing, so you maybe generate $9,000.
TAYLOR: Well, I think we're getting into a speculative market and
that's not the Agency's business as far as I've stated, I believe the
free enterprise system, let it buy and sell on its own. We've got a
1,000 businesses according to the Chamber in the City of Rosemead.
Now, if we start buying up, land banking, parcels of land that we're
going to decide who goes in and what they're going to do, I think
we're crossing a line... we've got a similar condition with Diamond
Square, an agreement with them, that they're going to pay so much
money ...that's one business out of a 1,000. If we buy another piece
of parcel then it's gets very disproportionate to what we're really
doing with the tax increment money, bond proceeds.
TRIPEPI: That's fine.
McDONALD: We're economically developing an area that you say right
now is depressed and that's exactly what the redevelopment agency is
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TAYLOR: When did I say it was depressed?
McDONALD: You just said the recession and you're talking about the
area's depressed.
TAYLOR: I'm talking about generally throughout LA and southern
California.
McDONALD: All right. But we're going to go in there and provide
space by breaking the building up, put some smaller leases in the
smaller areas there, we're investing our money. So we get the return.
TAYLOR: Let him do it.
McDONALD: What?
TAYLOR: Let him split it up.
McDONALD: Why? When we can make money for the citizens in this
community to provide them more services?
TAYLOR: We're not making money, Dennis. We're losing money, even on
the housing project. You realize that the last memo we got on that,
they can't get enough people to rent it so they got to change the
criteria. Did you read that memo?
McDONALD: Yes.
TAYLOR: So, what was proposed is falling through the cracks now.
McDONALD: We can revise the criteria.
TAYLOR: I know, take a loss on it.
McDONALD: We're not taking a...Oh, Gary, you don't... what's going to
happen to the General Fund down the road when you don't get the money
from the State?
TAYLOR: Dennis, I've been on this Council for 20 years and every time
it comes up, we're going down a rat hole, we're going down a rat hole.
Management by crisis. It hasn't happened. We're one of the best run
cities in this State.
McDONALD: We're not managing by crisis. I'm asking for a long-term
vision of investing this money in property. Now, you tell me anywhere
in California...
TAYLOR: We're one of the best run cities in this State.
McDONALD: I realize that...
TAYLOR: Don't tell me we're going down a rat hole and we got to do
this or we're going to be in trouble.
McDONALD: But 90% of the stuff that we're doing fine here in the
City, Gary, you vote NO on.
BRUESCH: Gentlemen...
TAYLOR: Mr. Chairman. I'd make a recommendation that we not take any
action on this item.
BRUESCH: Is there a second?
CLARK: I'll second it.
BRUESCH: Moved and seconded. Further discussion? Mr. Vasquez?
VASQUEZ: The only thing that's going through my mind is that I have
to side with Dennis because we want to put money into the community
and that's what we have redevelopment money for. And all it is is
just an appraisal, that's all it is. RRA 1-11-94
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TAYLOR: Mr. Chairman. What did we do when we adopted a resolution
stating the improvements that we were going to do as a City? Was it
189 we did that, Bob? We listed a bunch of projects that had...now
where does land banking come into this?
KRESS: That was a specific purpose for the limited purpose of
deferring the housing set aside obligation and that list is in essence
been superseded by your funding of the housing set aside funds through
the various bond issues.
TAYLOR: Let me get it straight. That has been superseded, that
resolution has no bearing any longer.
KRESS: I would say the answer to that is yes. It was the reason that
the Agency at that time was able to defer the 20% set aside for that
year but we're currently paying it and we have a plan to make up the
portion of the housing fund that was...
TAYLOR: Now, you understand the list I'm talking about.
KRESS: I understand.
TAYLOR: It was for improvements throughout the City, it had nothing
to do with the housing project.
KRESS: Right. I understand.
TAYLOR: It was dozens and dozens of projects that we had to list.
Was land banking one of them?
KRESS: I don't believe so.
TAYLOR: In any case, I'd like a memo back at our next meeting and
whatever you decide to do with it, we can discuss that and also,
Frank, I'd like a copy of that information that you provided a month
ago that you gave to the State hearing about Rosemead was constructing
public works projects, that we created thousands of jobs.
TRIPEPI: Oh, sure, get you another copy of that.
TAYLOR: And now we're getting into land banking with our bond
proceeds. I want both of those items.
TRIPEPI: That's fine. I should just clarify, Mr. Taylor, that when
you go out and do a bond sale no one holds any Agency to a list of
projects that are provided. However, what they will hold you to is if
you are taking some kind of an action that one, impairs your ability
to generate enough tax increment to service the debt or two, taking an
action which actually causes a decrease in the assessed valuation of
your project area as opposed to an increase and if by purchasing
property, constructing new buildings, putting them back on the tax
rolls through a lease or some other sort of an agreement, you increase
the tax increment, I mean, I really, I really don't think anybody's
going to come and take this Agency or any Agency to task for doing
that but I'll get that memo, the information that I provided to the
State because I know what you're looking for and that's fine but I
think that's something that maybe the Agency attorney didn't say it,
but I'm sure if asked he would agree with that. As long as you don't
impair your ability to pay back the debt and as long as you don't do
anything to decrease the assessed valuation because in effect that
will cause you to generate less tax increment, nobody's going to say
anything about if you build streets and if you decide not to build
those five, we're going to take that money instead and develop a
corner. Agencies in this area do it all the time. Again, it's a
policy issue for the Agency to decide.
TAYLOR: It's a critical policy issue from where I stand as far as
taking these types of money and start buying up parcels. We buy one
and then not buy the next one that comes along. What about the Mormon
church down there? Has that appraisal come back yet?
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TRIPEPI: There's no appraisal ordered because I will not order the
appraisal until Mr. Foutz provides me with a letter from the parent
organization saying they want to sell it and some kind of a price on
it as I promised the Agency I wouldn't do and I should also tell you
the appraisal cost is not $6,000 which was authorized but it's
actually come in at $5,000. But again when I get a letter from Mr.
Foutz from the elders of the church I will proceed with that appraisal
but as of yet I have not received a written correspondence from the
elders stating to me in writing that they want to sell the property.
And this is what we're looking for.
BRUESCH: But there is a meeting next week of the...
TRIPEPI: Supposed to be. On the 19th or something like that I
believe.
BRUESCH: I can be at that meeting.
TRIPEPI: When I get the letter, Mr. Taylor, then I'll go ahead and
order the appraisal because as of right now, Mr. Foutz says somebody
wants to sell the church property but I haven't gotten anything in
writing.
TAYLOR: It's very interesting. Go back and look at the minutes and
see the conversation that it was put to him to say well does the City
or the Agency want to buy the property and at least this gentleman
here has an appraisal up front.
TRIPEPI: Well, that's why I gave him the courtesy of putting it on,
Mr. Taylor. One of the Agencymembers asked me over the weekend what's
this doing on here. I gave him the courtesy of putting it on because
at least he spent his money to get an appraisal, sent us a letter
saying I want to sell it and here's what I'm looking at and here's a
copy of an appraisal I had done. Again, I informed Mr. Foutz that
when I get the letter from the elders I'll order the appraisal. So
that's where that one sits right now.
TAYLOR: I'd call for the question then.
BRUESCH: The question has been called for. The motion that was made
was that we...
TRIPEPI: Take no action.
BRUESCH: ...take no action on this. All in favor of the motion say
aye.
TAYLOR: Aye.
CLARK: Aye.
BRUESCH: Aye. All opposed?
McDONALD: Aye.
VASQUEZ: Aye.
BRUESCH: Three to two.
TAYLOR: Mr. Chairman. I'd like this in the minutes verbatim.
BRUESCH: I look at this a lot over the weekend and I went down and
saw the property and my major hesitancy is the fact that we don't have
a clear plan for that piece of property. If we had a real idea of how
we were going to use that as a job development program or something
but we don't. It's just going out and buying a piece of property
without any type of clear idea of what we wanted to do and I was not
too impressed with the shape of the buildings either. So those are
the two reasons why I...
RRA 1-11-94
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TAYLOR: The buildings that are there now are 18 years old and
warehouse facilities, again they're tilt-up buildings. It's a total
renovation and a total rebuilding for whatever use it may be so if we
pay this kind of money for basically warehouses I just don't think
that we belong in the speculative business competing with the other
1,000 businesses that are in the City.
CLARK: Mr. Mayor. I'd just like to say that I concur with what the
Mayor said in the sense that if we had a specific plan, that would be
different and also my feeling is if it's that good of a deal, why
doesn't the developer develop it? I think we're taking a risk that is
too risky.
McDONALD: Mr. Chairman. Did these people understand that this was
just an okay for an evaluation of the property? We weren't buying the
property and that if we could get it at a particular... if you could
buy your house today for $20,000 would you buy it Gary?
TAYLOR: Definitely.
McDONALD: Gotcha.
TAYLOR: That's not saying I'd buy this property but we're just
spending another $6,000 just because we've got a slush fund.
McDONALD: You've got to invest a little bit of money to find out
where you're going.
TAYLOR: I don't want to be competing with free enterprise.
McDONALD: How are we competing with,free enterprise?
TAYLOR: This is the best government in the world but it's got itself
into trouble trying to manage everything. The federal government's
got a deficit it can't pay, the State government can't raise enough
money, the County government can't raise enough money, and we're
diving in the pit with them. We've got a slush fund, spend it. (I think the
bond sale has created a slush fund and land banking is not a prudent way to spend the money.)
McDONALD: Gary, you don't have any vision. Down the road the City's
going to need the money coming into the General Fund. Wouldn't it be
nice to build up those properties?
END OF VERBATIM DIALOGUE
3. MATTERS FROM OFFICIALS - None
4. ORAL COMMUNICATIONS FROM THE AUDIENCE ON REDEVELOPMENT AGENCY
MATTERS - None
There being no further action to be taken at this time, the
meeting was adjourned at 7:33 p.m. The next regular meeting is
scheduled for February 11, 1994, at 7:00 p.m.
Respectfully submitted: APPROVED:
a,~z a (~C~r~ C~i o
ency Secretary C
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