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RRA - Minutes 05-08-01S NOT OFFICIAL UNTIL APPROVED BY THE ROSEMEAD REDEVELOPMENT AGENCY MINUTES OF THE REGULAR MEETING ROSEMEAD REDEVELOPMENT AGENCY MAY 8, 2001 The regular meeting of the Rosemead Redevelopment Agency was called to order by Chairman Imperial at 7:00 p.m. in the conference room of City Hall, 8838 E. Valley Boulevard, Rosemead, California. The Pledge to the Flag was led by Agencymember Clark The Invocation was led by Agencymember Taylor ROLL CALL OF OFFICERS: Present: Agencymembers Clark, Vasquez, Taylor, Vice Chairman Bruesch, and Chairman Imperial Absent: None APPROVAL OF MINUTES: FEBRUARY 13, 2001 - REGULAR MEETING MOTION BY AGENCYMEMBER TAYLOR, SECOND BY AGENCYMEMBER CLARK that the Minutes of the Regular Meeting of February 13, 2001, be approved as corrected. Vote resulted: Aye: Bruesch,Vasquez, Clark, Imperial, Taylor No: None Absent: None Abstain: None The Chairman declared said motion duly carried and so ordered. APPROVAL OF MINUTES: FEBRUARY 27, 2001 - REGULAR MEETING MOTION BY AGENCYMEMBER TAYLOR, SECOND BY VICE-CHAIRMAN BRUESCH that the Minutes of the Regular Meeting of February 27, 2001, be approved as submitted. Vote resulted: Yes: Bruesch, Vasquez, Clark, Imperial, Taylor No: None Absent: None Abstain: None The Chairman declared said motion duly carried and so ordered. APPROVAL OF MINUTES: MARCH 27, 2001 - REGULAR MEETING Agencymember Taylor requested that the Minutes be deferred pending his corrections. APPROVAL OF MINUTES: APRIL 10, 2001 - REGULAR MEETING MOTION BY VICE-CHAIRMAN BRUESCH, SECOND BY AGENCYMEMBER VASQUEZ that the Minutes of the Regular Meeting of April 10, 2001, be approved as submitted. Vote resulted: RRANIIN:5-8-01 Page #I Yes: Bruesch, Vasquez, Clark, Imperial, Taylor No: None Absent: None Abstain: None The Chairman declared said motion duly carried and so ordered. . APPROVAL OF MINUTES: APRIL 24, 2001 - REGULAR MEETING MOTION BY AGENCYMEMBER TAYLOR, SECOND BY VICE-CHAIRMAN BRUESCH that the Minutes of the Regular Meeting of April 24, 2001, be approved as submitted. Vote resulted: Yes: Bruesch, Vasquez, Imperial, Clark, Taylor No: None Absent: None Abstain: None The.Chairman declared said motion duly carried and so ordered. 1. RRA RESOLUTION NO. 2001-08 CLAIMS AND DEMANDS The following Resolution was presented to the Agency for adoption: RESOLUTION NO. 2001-08 - CLAIMS AND DEMANDS A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF ROSEMEAD ALLOWING CERTAIN CLAIMS AND DEMANDS IN THE SUM OF $23,257.91 AND DEMANDS NO. 6315 THROUGH 6328 MOTION BY VICE-CHAIRMAN BRUESCH, SECOND BY AGENCYMEMBER CLARK that the Agency adopt Resolution No. 2001-08. Vote resulted: Yes: Bruesch, Vasquez, Imperial, Clark, Taylor No: None Absent: None Abstain: None The Chairman declared said motion duly carried and so ordered. 2. DEVELOPMENT PROPOSAL FOR A MC DONALD'S RESTAURANT WITTI INDOOR PLAYPLACE TO BE LOCATED AT 8548 E. VALLEY BOULEVARD Frank Tripepi, Executive Director, presented the staff report. Joseph Campbell, 2521 San Clemente, Alhambra, representing Benson Wu, developer of adjacent property, stated that they have accepted the modifications from the Planning Department that none of the units will be less than 2000 square feet during construction, and if necessary, they could be reduced to 1000 square feet for offices. Mr. Campbell stated that small 500/600 square foot stores would not be built. Frank Tripepi, Agency Director, clarified for the record that the 2000 square foot minimum is not during construction, but the finished project ready to be leased. Mr. Tripepi, stated that the reduction to 500 square feet was not agreed upon. Agencymember Taylor asked what the code requires. Mr. Tripepi responded that the code requires 1000 square feet. RRAWN:5-8-01 Page n2 Agencymember Taylor asked then why are we proposing the 2000 square footage. Mr. Tripepi cited Diamond Square as an example of problems created when leasing a 1000 square foot space and that becomes divided into 500 square feet cubbyholes - many times without a permit. Mr. Tripepi stated that they are recommending 2000 square feet to minimize that problem. Agencymember Taylor stated that that much space would require good tenants. Mr. Tripepi stated that they are hoping to deal with one tenant per office space. Mr. Tripepi continued that the Agency can change the recommendation and cut back the square footage if they so chose. Agencymember Taylor asked if the owner has any prospective tenants. Mr. Campbell responded that they are retaining a marketing service that is trying to attract tenants on a pre-lease prior to construction. Mr. Campbell stated that they are not opposed to the 2000 square feet modification, and the buildings will be designed to meet that requirement. If for any reason they have to reduce it to 1000 square feet, they will do so with approvals. Vice-Chairman Bruesch pointed out that the recommendation is that all tenant spaces be designed at a minimum of 2000 square feet each, regardless of eventual use. Ken Gross, Attorney for the developer, clarified that they can revisit this requirement on a tenant-to-tenant basis, should the need arise. Mr. Gross stated that any tenant, especially on the second floor, typically will not be a large business firm, but sole practitioners. Mr. Tripepi stated the owner/developer may come back and ask for relief on an individual basis. Vice-Chairman Bruesch asked for the total square footage of the buildings. Mr. Campbell responded that it is 30,201 square feet, and that includes McDonald's. Vice-Chairman Bruesch asked how many parking spaces does an all commercial development require? Brad Johnson, Planning Director, responded that it requires 4 spaces per thousand square feet. Vice-Chairman Bruesch stated that his concern is that the type of businesses will determine how parking will be impacted. Mr. Bruesch stated that the shared parking with McDonald's will be impacted due to the configuration of the buildings. If small offices are allowed with high foot traffic, then the parking will be even more impacted. Mr. Bruesch stated that his main concern is with parking. This is a heavily traveled east/west corridor with increasingly heavy north/south traffic and if people are going to be exiting and entering that corner continually, especially during rush hour, it will create major traffic problems. Mr. Bruesch stated that he wants McDonald's to have their required parking spaces, no shared parking whatsoever. Mr. Johnson stated that there is a variance request along with this application for the fast food requirement. The City code requires 1 space for 50 square feet, this design is asking 1 per 100 square feet and will share some of the parking with the adjacent buildings. Vice-Chairman Bruesch stated that the parking spaces at the existing McDonald's on Valley Boulevard are filled during rush hour with parents bringing their children to play at the McDonald's play field. Mr. Bruesch continued that the proposed McDonald's will have the RRAMIN:5-8-01 Page P3 addition of commercial businesses. Mr. Bruesch stated that he cannot vote for any project going in until every commercial business has a parking spot for every person. Agencymember Taylor asked if the original requirements are 91 parking stalls for McDonald's. Mr. Tripepi stated that our parking requirements are twice as.restrictive for fast food estsablishments than most cities. Chairman Imperial related the parking problems encountered at Diamond Square, especially on weekends, and stated that he would rather be on the safe side.. Agencymember Taylor stated that the new McDonald's at the corner of Baldwin and Valley has 31 parking parking spaces. Mr.Taylor stated that we may be overdoing it by forcing McDonald's to put in so many parking spaces. Vice-Chairman Bruesch asked how many shared parking stalls does McDonald's have? Mr. Johnson responded that they have 17 within their lease lines, but they have a separate agreement arranged with the developer. Lisa Johannson, McDonald's Corporation, stated that the parcel leased from the landlord is approximately 18,000 square feet and is considered a normal size shopping center pad. The building is approximately 4500 square feet with an enclosed playplace. Ms. Johannson continued that they have 17 parking stalls on that pad and typically, parking is always reciprocal. Ms. Johannson stated that along with their 17 stalls, they have the use of the whole development for parking. There is more parking in front of their establishment outside of the lease line (referring to the rendering). Ms. Johannson explained that there is also short-tern parking designation to prevent people from parking for hours and to keep the traffic flowing. Most employees and office workers will be parking on the wash area. Ms. Johansson continued that the majority of their customers will not be parking for long periods of time, and that many use the drive-through. Mr. Gross stated that after 5:00 p.m. and on weekends, there will not be that much parking use from the office workers. Mr. Campbell interjected that there are a total of 189 parking spaces. Chairman Imperial stated that that depends on what happens to the spaces, that the shopping center across from City Hall designated specific parking for businesses at one time. Mr. Imperial stated that there is complaint after complaint about the congested parking situation at Diamond Square due to one tenant having four businesses in that space, and that the majority of the tenants are restaurants. Agencymember Taylor stated that he will not be able to vote for this tonight because of the parking arrangement, not because of the number. Mr. Taylor suggested that the two retail centers that face McDonald's, Buildings A and B, be flipped 180 degrees, and to leave those parking stalls as is for McDonald's. Mr. Taylor explained that this will alleviate the problem of McDonald's customers parking in the office stalls and vice-versa. Mr. Taylor continued that the businesses that are flip-flopped can use the parking on the wash side. Mr. Campbell stated that one of the requirements for Building A was to have a well- known sit-down restaurant. Mr. Campbell continued that 30 to 40 proposals were sent to all the major restaurant chains. So far there are no takers, but, they do have someone that will come out to take a look. Mr. Campbell stated that if Building A is converted for a sit-down restaurant, the main entrance can be on Valley Boulevard and one on the back side with parking on the wash. Agencymember Taylor stated that there will always be a percentage of people parking at McDonald's no matter how it is configured, but the majority of people want to park as close as RRAN,IIN:5-9-01 Page N4 they can to the front door. Mr. Taylor continued that if the McDonald's parking stalls are full, the office workers and clients can park on the south side or on the wash and they will have immediate access to the fronts of the buildings. Mr. Taylor stated that his biggest objection to this project is the parking situation. Chairman Imperial asked what the Traffic Engineer's recommendation is for ingress and egress. Mr. Johnson replied that the recommendation for the easterly driveway on Valley Boulevard is to have a right turn in and right turn out only signs. , Agencymember Bruesch stated that he is concerned about the ingress and egress also and that even with the installation of botts dots, he has observed people driving over them at other locations. Mr. Bruesch stated that the issue of adequate parking and ingress and egress to fit traffic patterns that will develop, needs to be looked at carefully. If strict guidelines are not required, that can ose an oth r type of development along that area. Agencymember Taylor asked Paul Pernecky, owner of the current McDonald's on Valley Boulevard, how much sales tax.do they pay to the City per year. Mr. Pernecky replied they pay approximately $25,000 per year in sales tax to the City and employ an average of 45-50 people. Agencymember Taylor stated that they pay as much sales tax to the City as does Ralph's across the street and that the City receives many benefits by having a McDonald's here. They are a world-wide organization with over 30,000 restaurants. McDonald's has given the City over $400,000 in sales tax through the years. Mr. Taylor continued that they are an excellent corporation. If the buildings can be flip-flopped, there will be 51 stalls facing McDonald's. However, Mr. Taylor stated that he doubts that people will want to park behind the offices then walk all the way to the front to go into the front doors, but he is just offering this as a suggestion. Mr. Taylor concluded that this is a good proposal and that corner needs to be improved. Agencymember Bruesch asked how much increase in business is there by having a McDonald's on the corner? Mr. Pernecky replied that they are anticipating an increase of at least 10% to 20%. Ms. Johansson stated that that is a conservative estimate, the increase may be up to 30%. Mel Cruz, Project Manager, McDonald's, stated that a traffic study was conducted at the existing McDonald's in Rosemead and one in Temple City. The studies were done at peek hours, 11:00 a.m. to 2:00 p.m., and the layout of the Rosemead McDonald's is sufficient to handle customers without any problem. Mr. Pernecky added that their parking lot is about 65% to 75% capacity at peek lunch hours, with 55% of their customers using the drive-through. Agencymember Taylor stated again that he cannot vote for this project as is with all of the traffic coming in through McDonald's. The two retail doors on Buildings A and B face McDonalds and almost force their clients to use the same parking area to access the front doors. Mr. Taylor stated that adding parking restrictions does not always help, the signs are ignored, and management does not want to police or confront potential customers: Mr. Tripepi stated that the problem is that the City is asked by the landlord to enforce the parking restrictions. The City enforces those restrictions and then the tenants start to complain because their customers are getting tickets. The tenants then complain to the landlords. Mr. Tripepi concluded that it is a problem from that standpoint. RRAMIN:5-8-01 Page n5 Mr. Campbell stated that the parking problem can be helped by having the Sheriffs or Parking Control drive through the parking lot, mainly for visibility and to act as a deterrent. Agencymember Clark stated that if the project is going to need that much enforcement then she has a problem with that because it is taxpayers money that is paying the Sheriffs and Code Enforcement. Mrs. Clark stated that the shopping center in Alhambra on Valley Boulevard is similar in design. Mrs. Clark stated that there is an entire parking lot behind that center that no one uses because people do not want to park behind the buildings, mainly for safety concerns and they want to be close to the buildings for fast access. Ms. Clark stated that she agress with Agencymember Taylor in that people will want to park as close as possible to the doors, resulting in a congested parking area. Mr. Campbell stated that parking has always been an issue with proposed projects. Many shopping centers have failed recently and developers are favoring the box type construction, which features free standing large stores with central parking. Mr. Campbell stated that this project can be redesigned, and they are still trying to generate interest in a good sit-down restaurant for Building A. Mr. Gross suggested that in all fairness, that McDonald's be approved tonight as it will be developed first anyway. Agencymember Taylor stated that once McDonald's is approved, can those old buildings on the other lot be demolished in the meantime since they are not going to be used. Mr. Taylor stated that he has no objections to the businesses or to McDonald's, but rather the terrible complaints received and the traffic congestion problems. Mr. Gross asked what does the Agency want from them and how soon? Mr. Tripepi replied that this item can be placed on the first meeting in June. Agencymember Bruesch stated that what the Agency needs is some indication of how far along the other part of the development is; the conceptual plans of the flipping of the buildings; and, what type of restaurants have they contacted. Chairman Imperial requested that this item be deferred to June 12'h. Agencymember Clark stated that there are community members that feel very strongly that they want a sit-down restaurant there. Mr. Campbell stated the restaurant chains find that the City does not fit the demographics of what they require salary wise or nationality breakdown wise to be able to establish a restaurant here. The meeting was recessed at 8:00 p.m. to meet as the City Council and reconvened accordingly at 8:52. 2. AUTHORIZATION TO CONTRACT WITH SLADDEN ENGINEERING FOR SOILS ENGINEERING SERVICES - GARVEY COMMUNITY CENTER AND SENIOR HOUSING PROJECT MOTION BY AGENCYMEMBER BRUESCH; SECOND BY AGENCYMEMBER VASQUEZ that the Agency approve the contract with Sladden Engineering for engineering services on a time and materials basis up to a maximum of $40,000. Vote resulted: Yes: Bruesch, Vasquez, Imperial, Clark, Taylor No: None Absent: None Abstain: None RRANIIN:5-8-0I Page n6 The Chairman declared said motion duly carried and so ordered. 4. APPROVAL OF CHANGE ORDERS FOR ROSEMEAD POOL RE-PIPING PROJECT Agencymember Bruesch asked why these problems were not anticipated going into the project, referring to Change Order No. 4. Michael Burbank, Director of Parks and Recreation, responded that on top of pool there is a concrete bond that goes over the gutters and when the 5' trenches were cut away, it was dowled back into the concrete. Mr. Burbank stated that they did not have any drawings that showed that. The Engineer determined that it was more appropriate to install rebar dowling. MOTION BY AGENCYMEMBER CLARK, SECOND BY AGENCYMEMBER VASQUEZ that the Agency approve Change Order Numbers 2, 3 & 4, along with the contractor's request for an additional thirty (30) days. Vote resulted: Yes: Bruesch, Vasquez, Imperial, Clark, Taylor No: None Absent: None Abstain: None The Chairman declared said motion duly carried and so ordered. 4. CONSIDERATION OF PROPOSAL FROM JR PROPERTIES FOR THE DEVELOPMENT OF THE NORTHEAST CORNER OF TEMPLE CITY BOULEVARD AND VALLEY BOULEVARD AS A FOOD 4 LESS SHOPPING CENTER Frank Tripepi, Executive Director, presented the staff report. Steve Copenhaver, GRC Consultants, stated that the unknown factor is the cost of the land. Mr. Copenhaver pointed out that as the land increases from $8.00 to $25.00 a square foot, the amount of assistance required in order to capture the supermarket escalates rapidly. The risk is the property acquisition cost. Mr. Tripepi stated that Mr. McCoy, developer of that same property, called him today and said that the ARCO property at the corner is worth $5 million because it would take that much to buy out the lease. Agencymember Taylor asked about the status of Mr. McCoy's project. Mr. Tripepi responded that Mr. McCoy is concerned that should the Agency be interested in developing that corner and begins discussions with JR Properties, he will have to carve out that property from his proposed Eaton Village. Mr. Copenhaver stated that the underlying lease figure is unknown, but most service stations average $600,000 to $800,000. Agencymember Taylor asked if the cost per square foot could be capped at $25.00. The actual cost will probably be from $35 to $45. Mr. Tripepi stated that it will be 50 years before the City realizes a profit. The next twenty years will be spent recouping what was spent in the first 20 years. Agencymember Taylor commented that shopping centers are torn down in 30 years. Richard Cisakowski, JR Properties, stated that they do not know what the figures will be at this point. The question is, does this project make sense for the Agency to move forward with it? RRAMIN:5-8-01 Page d7 Mr. Tripepi stated that there is no point in going further if there is no interest, as a supermarket is very expensive to develop. The Agency has to be willing to subsidize heavily in order to make this project happen. Chairman Imperial stated that the Agency has tried their best over the years but has had many problems, i.e., seven furniture stores in one block. Mr. Imperial stated that we should be giving something more to the people of this community, and if we have a chance to then we should do it. Mr. Imperial concluded that decisions have to be made concerning this project. Agencymember Taylor asked if anyone has had a conversation with the lumberyard owners. Jeff Rothbart, JR Properties, replied that they have spoken to a number of different property owners and that they can acquire those properties for various prices with a maximum amount being $20 a square foot. Mr. Rothbart stated that the highest value is at $20 a square foot. Mr. Rothbart stated that if the corner gas station property is worth $5 million per Mr. McCoy, then the Arco Station would have to pay $500,000 a year in rent. There are very few tenants that could afford that kind of rent. Mr. Tripepi stated that an indication is needed as to whether they want staff and JR Properties to engage the Agency to begin preparation of the Disposition Development Agreement (DDA). Tonight's action would not approve anything, but would be a move forward toward getting a DDA. Mr. Tripepi explained that a cap per square foot for land acquisition costs can be written into the agreement. Agencymember Taylor stated that he needs more clarification before moving ahead, such as what happens to the sales tax in the next 20 years. Mr. Taylor stated that it is discouraging for the Agency to have to pay 50% of the cost to such a major company as Kroger, when the McDonald's Corporation (previous item) is not asking for any money. Chairman Imperial stated that this market will be a start in doing what is best for the community. Agencymember Bruesch stated he initially felt that this proposal was highway robbery, but in reflecting over the years, residents have long complained that a new market is needed in this area. The residents need a market with decent prices, decent selection levels and without having to travel 5 or 6 miles out of the City. Mr. Bruesch stated that he believes that the City is here for the services of the people and that decision should be to service that need that has been expressed over and over again. Mr. Bruesch stated that he would like this to proceed with some type of cap, but a first step needs to be taken. Agencymember Taylor asked where does the $2,548,000 in Total Sales Tax and Property Tax go to, as listed in Exhibit 1 Steve Copenhaver responded that it goes back into the project and will fund approximately $1.2 million of that economic gap through a 20 year period. Agencymember Taylor requested that all cost be presented upfront to the Agency. Mr. Taylor requested clarification on the ground lease. Steve Copenhaver replied that the developers will improve the site, put in the utilities and parking lot, and ground lease the pad to the Kroeger Corporation, who will then build the supermarket. Kroeger will then pay the developer the lease payments. Additional tenants will also pay monthly ground leases for their pad space of floor area. Agencymember Taylor stated that the Agency buys all that land and gets nothing back. RRAMIN:5-8-01 Page 08 Chairman Imperial stated that a benefit is that other people will shop at the market also. Mr. Imperial continued that a decision needs to be made as to what the Agency wants to do for the people in this community. Agencymember Bruesch asked for a comparison of what other cities have paid for their supermarket developments. Steve Copenhaver responded that this is a very expensive project in that the land is inordinately expensive for the rents that people can get. That is the problem. Ron Wade, Kosmont Partners, stated that these figures are realistic and that this shows the reality of the situation. Agencymember Bruesch stated that all along Valley Boulevard there is an inflation of land values that will not come down, that people are landbanking along there. Chairman Imperial stated that the Agency needs to approve the DDA in order for them to move ahead. MOTION BY VICE-CHAIRMAN BRUESCH, SECOND BY AGENCYMEMBER VASQUEZ that the Agency approve the engagement of Agency Counsel and GRC Consultants to prepare a Disposition and Development Agreement with a cap of "C" with JR Properties. This DDA would come back to the Agency for consideration. Before vote could result, more discussion ensued. Agencymember Clark asked if the City of El Monte will share the risk with Rosemead as was originally proposed for the Eaton Village development? Mr. Tripepi responded that it would not. The only reason it would have was because the project was spread over both city boundaries. Mr. Tripepi stated also that there is a good chance that eminent domain may be used, especially on the gas station property. Agencymember Taylor clarified that there is no commitment tonight and by approving the DDA, it will be brought back with more realistic costs, including total costs of bonds and financing. Mr. Taylor stated that Mr. McCoy also came to the Agency with similar figures and these figures are still hypothetical. Vote resulted: Yes: Bruesch, Vasquez, Imperial No: None Absent: None Abstain: Taylor, Clark Mr. Tripepi stated that this item needs a 4/5 vote for approval to proceed with the DDA, and if there wasn't a 4/5 vote, he would then recommend that there be no more movement on this project. Agencymember Clark stated that she was unaware that the 4/5 vote was required and because she needs more time to digest this information, she will change her vote in order not to stop the project tonight. Agencymember Taylor stated that in this case, eminent domain is being used as it should if the corner gas station is going to be condemned. MOTION BY VICE-CHAIRMAN BRUESCH, SECOND BY AGENCYMEMBER BRUESCH that the Agency approve that the engagement of Agency Counsel and GRC Consultants to prepare a Disposition and Development Agreement with a cap of "C" with JR Properties. Vote resulted: RRAnnN:5-8-01 Page s9 Yes: Bruesch, Vasquez, Imperial, Clark No: None Absent: None Abstain: Taylor The Chairman declared said motion duly carried and so ordered. Agencymember Taylor stated that he abstained again until more information is forthcoming. Mr. Taylor requested information on what the two parcels, Bottlemate and Jiangs Valley sold for a few years ago. Mr. Johnson replied that they sold for approximately $18.00 a square foot and they got them below market value because they purchased them by cash through bankruptcy proceedings. Mr. Tripepi stated that he would provide the Agency with a report. 6. MATTERS FROM OFFICIALS Agencymember Taylor corrected the earlier deferred Minutes of March 27, 2001. Mr. Taylor requested that his comment be clarified that he was referring to Bottlemate when referring to them being willing to sell their property for the same price as the Quercio property. ORAL COMMUNICATIONS FROM THE AUDIENCE ON REDEVELOPMENT AGENCY MATTERS - None 8. ADJOURNMENT There being no further action to be taken at this time, the meeting was adjourned at 9:50 a.m. The next regular meeting will be held on Tuesday, May 22, 2001, at 7:00 p.m. Respectfully submitted: Agency Secretary APPROVED: CHAIRMAN RRAMIN:5-8-01 Page #10