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HomeMy WebLinkAboutMinutes - City Council - 2011-03-21 - Special Meeting 43 City Council, Special Meeting Council Chambers 7.77 Cypress Avenue Redding, California. March 21,2011 5:15 p.m. The meeting was called to order by Mayor McArthur with the following Council Members present: Bosetti, Dickerson, Jones, and Sullivan. I Also present were City Manager Starman, Assistant City Attorney Frediani, Assistant City Manager Tippin, Assistant to the City Manager Clark, Assistant Public Works Director Aukland, Senior Redevelopment Project Coordinator Haddox, Senior Redevelopment Project Coordinator Bade, Associate Redevelopment Coordinator Rudolph, Management Analyst Kong, City Clerk Mize, and Executive Assistant Tipton. JOINT MEETING OF THE CITY COUNCIL AND REDDING REDEVELOPMENT AGENCY At the hour of 6:26 p.m., Mayor McArthur convened the Special Meeting of the Redding City Council for a joint meeting with the Redding Redevelopment Agency. . JOINT PUBLIC HEARING - Proposed sale of property located at 975 Grange Street; and RESOLUTION - Approving the Disposition of same real property to K2 Land & Investment, LLC and making findings [R-030-1 00-055/R-030-1 00-033] Relative to the joint public hearing regarding the disposition of Redding Redevelopment Agency (Agency)-owned property located at 975 Grange Street to K2 Land & Investment LLC (K2 L&I) and the associated Disposition and Development Agreement (DDA), The following documents are on file in the Offices of the City Clerk and the Agency: Affidavit of Publication - Notice of Public Hearing I No protests were received. Senior Redevelopment Project Coordinator Bade summarized the Report to City Council (staff report) dated March 16, 2011, incorporated herein by reference, and provided background on the subject parcel that was originally part of four contiguous parcels comprising approximately 10 acres at the south end of Grange Street, which the Agency purchased as a potential Parkview Neighborhood redevelopment opportunity, using funds from the Agency's Low- and Moderate-Income Housing Fund (LMIHF), in January 2001. Mr. Bade outlined marketing and maintenance activities that had been completed in the last decade in an effort to reduce transient-related issues and improve public safety access to the property. He mentioned that a DDA with New Urban Builders for a single-family, for-sale development had been achieved in 2004, but economic conditions precipitated termination of that agreement in 2008. Mr. Bade recalled subsequent Agency Board direction to make improvements, including a service road for police access, vegetation management/reduction, perimeter fencing,.and a property line adjustment to segregate the wetland area with acreage that could be developed at a later date. I Mr. Bade reviewed details contained in the staff report regarding: (1) a two-phase approach for disposition and development of the 10-acre parcel, citing that the first phase was to include development of an affordable single-family residence on a 1.88-acre portion of the 10 acres, the subject Property, and the second phase was to prepare and circulate a Request for Proposals for the disposition and development of the remaining acreage; (2) a Request for Qualifications (RFQ) sent to approximately 28 developers that could demonstrate experience in designing, financing, and constructing a single-family residence on the Property in July 2010; (3) analysis of four submitted Statements of Qualifications that resulted in K2 Development Company Incorporated (K2 DCI) receiving the highest rating and ranking by the interview panel; and (4) a redetermination that development of two duplexes would be more cost effective than the originally proposed single-family dwelling and would aid the Agency in its obligation to assist additional very-low-income households. He explained that a DDA had been negotiated with K2 L&I, the development arm of K2 DCI, proposing construction of two, 2,000-square-foot duplexes on the Property, each consisting of approximately one 800-square- foot, two-bedroom unit and one 1,200-square- foot, three-bedroom unit, both with attached garages, stating that the two-bedroom units would be rented at an affordable rent to very-low-income households and the three bedroom 03/21/2011 44 units would be rented at market-rate; covenants would be recorded to assure that the very- low-income units remain affordable for 55 years, and K2 L&I would initiate construction of the units prior to July 8, 2011. Mr. Bade relayed K2 L&I's estimate of development costs of the project to be $545,000, including the land value of $45,000 as established by a December 30, 2010, appraisal completed by Ted C. Carr of Carr Real Estate Appraisals. He described proposed financing terms wherein K2 L&I would provide a combination of commercial financing and cash totaling approximately $272,500, to fund the acquisition and construction costs associated with the market-rate portion of the project. Mr. Bade explained that K2 L&I is requesting that the Agency provide an amortized loan from its LMIHF in the amount of $250,000 to assist with the construction of the affordable units and a forgivable loan in the amount of $22,500, with further details provided in the staff report. I Mr. Bade observed that K2 L&I had also agreed to construct a number of off-site public improvements at the east end of Grange Street in conjunction with the project, including the extension of electric, water, sewer, and natural gas utilities, drainage improvements, construction of curb, gutter, arid sidewalk amenities along the north side of Grange Street, and the extension of Grange Street approximately 200 feet to the east, noting that the Agency would provide LMIHF funding in an amount not-to-exceed $300,000 to K2 L&I to complete the off-site public improvements under the terms of the DDA. Pursuant to Health and Safety Code Section 33433, the sale or lease of Agency-owned property acquired with tax increment monies must be approved by the City.Council by resolution, following a public hearing, before the Agency can consider disposition. Mr. Bade detailed benefits of a good social mix of affordable and market rate units, improved marketability of parcels, and public improvements that support the Parkview Neighborhood Strategic Plan, relaying that the proposed project was approved by representatives of the Parkview Neighborhood Association (PNA), who had also requested a walking trail. He recommended that the City Council adopt a resolution making the necessary findings and approving disposition of the Agency's property located at 975 Grange Street to K2 L&I, which is detailed in the staff report, and that the Agency's Board of Directors adopt a resolution approving the disposition of the Agency's property located at 975 Grange Street to K2 L&I, making the necessary findings, and authorizing the Chair to execute the D D A and all documents necessary to transfer title of the property located at 975 Grange Street to K2 L&I. I Council Member/Agency Chair Dickerson recused himself due to a potential conflict of interest. Responding to Council! Agency Member Jones, Mr. Bade confirmed that development ofthe subject parcel satisfies the requirement to initiate construction within a ten year period and allows the Agency to issue an RFP in the most advantageous market. Assistant City Manager Tippin concurred the Agency's intent to monitor the market and expedite development of the other parcels, noting some interest from LINC Housing Corporation as a possible 2012 tax credit project. Bill Ulch confirmed the PNA's support for the project. He stated that the 1 O-acre parcel had been problematic, with frequent transient activity resulting in numerous police calls. He opined that this project could protect the wetland, provide safe access to Juniper school, and give the neighborhood a presence in the "10 acre wood." Mr. Ulch requested Council's approval of the proposed d~velopment. Vice Chair Bosetti determined that no other individual wished to address this matter and closed the public hearing. I Mayor McArthur called for a motion of the City Council. A MOTION WAS MADE by Council Member Sullivan, seconded by Council Member Jones, adopting Resolution No. 2011-34, a resolution of the City Council of the City of Redding approving the disposition of real property located at 975 Grange Street to K2 L&I; accepting the Summary Report pursuant to H&S Code Section 33433; and finding that the disposition ofthe property will assist in the elimination of blight, is consistent with the 03/21/2011 45 Implementation Plan for the Market Street Project Area, and that the consideration for the property is not less than the fair reuse value. The Vote: AYES: NOES: ABSTAIN: ABSENT: Council Members - Bosetti, Jones, Sullivan, and McArthur Council Members - None Council Members - Dickerson Council Members - None Resolution No. 2011-34 is on file in the office ofthe City Clerk. I A MOTION WAS MADE by Agency Member McArthur, seconded by Agency Member Jones, adopting Resolution No. 2011-07, a resolution of the Board of Directors of the Redding Redevelopment Agency approving the disposition of real property located at 975 Grange Street to K2 L&I; accepting the Summary Report pursuant to Section 33433 of the Health & Safety Code; making findings required by Section 33433 of the Health & Safety Code; and authorizing the Chair to execute the Disposition and Development Agreement and ancillary documents. The Vote: AYES: Agency Members - Jones, McArthur, Sullivan, and Bosetti NOES: Agency Members - None ABSTAIN: Agency Members - Dickerson ABSENT: Agency Members - None I ResolutionNo. 2011-07 is on file in the office ofthe Redevelopment Agency. . RESOLUTIONS - Approving Public Improvement and Cooperation Agreements between the Redding Redevelopment Agency and the City of Redding for the Canby-Hilltop-Cypress and Market Street Redevelopment Projects and making findings [R-030-050-310 /^R-030-145-350/R-030-100-033/C-070-200] Assistant City Manager Tippin provided a summary of the Report(s) to City Council (City Council) dated March 11, 2011, incorporated herein by reference, relative to the consideration of a Public Improvements and Cooperation Agreements (Agreements) between the Agency and the City of Redding (City) for the Canby- Hilltop-Cypress (CHC) arid Market Street Redevelopment Project Areas (Project Areas). Mr. Tippin explained that due to the State's budget deficit, Governor Brown had recommended legislation abolishing all redevelopment agencies in California as of July 1, 2011. He expounded that, if the Governor's proposal is enacted, redevelopment agencies could continue to receive annual property tax increment revenues to payoff existing contractual obligations with remaining property tax increment revenue going to the State to help balance their budget. He relayed that in order to potentially protect tax increment revenue, a number of redevelopment agencies have entered into agreements with their respective cities over the past month, whereby the city implements certain redevelopment projects and programs that the agency pays for, and that such agreements might constitute a contractual obligation of that agency and, therefore, be eligible for payment with property tax revenues. He noted that the Governor has countered with explicit language in the budget legislation that excludes agreements between an agency and its legislative body from being considered a legal contractual obligation eligible for tax increment support, and that legal challenges were anticipated. ******************** Regarding the CHC Project Area, Assistant City Manager Tippin noted the following contractual obligations on which the Agency mak.es payments: I . Tax Allocation Bonds, 2003 Series A (Capital) and 2001 Series A and B (Housing); . Repayment Agreement with City of Redding relative to City's advancement of pass- through payments to the Agency from fiscal year 1984-85 through fiscal year 2008- 09. Based on information available at this time, Mr. Tippin advised that payments on these obligations, which currently total approximately $3.4 million annually, are existing contractual obligations evidencing debt and may be excluded under the proposed state budget reforms. He explained that the Agency has contractual pass-through agreements with seven public agencies: Shasta County, Shasta Mosquito Abatement District, Redding Elementary School District, Shasta Union High School District, Shasta County Office of Education, Shasta- 03/21/2011 46 Tehama-Trinity Joint Community College District, and Enterprise Elementary School District. He also mentioned that the Agency has statutory pass-through requirements with two public agencies, City of Redding and Shasta County Water Agency, with payments currently totaling approximately $2.9 million annually. Mr. Tippin asserted that the proposed State budget is not clear on impacts to contractual and statutory pass-through payments and further explained that Agency funds in the amount of$2.7 million annually, that are not allocated for either long-term capital or housing obligations and are generally utilized for projects and administration costs, along with all unreserved balances, could be subject to potential loss if the Governor's budget is adopted as proposed, unless the City takes action. Mr. Tippin noted that under current law and by virtue ofthe Agency's past actions approving and amending the CHC Redevelopment Plan, the Agency anticipates receiving at least $363.5 million in property tax increment revenues over the life of the plan, which extends until 2041. To date, the Agency has received and expended approximately $124.5 million in property tax increment funds. These past and future totals include expenditures for contractual obligations, pass-through payments to affected public agencies, and deposits made to the Agency's Low- and Moderate-Income Housing Fund (LMIHF). I ******************* Regarding the Market Street Project Area, Assistant City Manager Tippin noted the following contractual obligations on which the Agency makes payments: . Tax Allocation Bonds, 2003 Series (Capital); . Repayment Agreement with the City relative to City's advancement of pass-through payments to the Agency from Fiscal Year 1984-85 through Fiscal Year 2008-09; and . Loan Agreement with Canby-Hilltop-Cypress Redevelopment Project Area (CHC) relative to the repayment of loan from CHC's land sales proceeds for removal of Downtown Redding Mall Roof. Based on information available at this time, Assistant City Manager advised that payments on these obligations, which currently total approximately $1 million annually, are existing contractual obligations evidencing debt and may be excluded under the proposed state budget reforms. I Mr. Tippin explained that the Agency also has contractual pass-through agreements with six public agencies relative to the Project Area: Shasta County, Shasta Mosquito Abatement District, Redding Elementary School District, Shasta Union High School District, Shasta County Office of Education, and Shasta- Tehama-Trinity Joint Community College District. Commencing in fiscal year 2011-12, the Agency will have statutory pass-through obligations to four additional public agencies: City of Redding, Shasta County Water Agency, Anderson- Cottonwood-Irrigation District, and Enterprise Elementary School District, with payments currently totaling approximately $1.8 million annually. Mr. Tippin asserted that the proposed budget is not clear on impacts to contractual and statutory pass-through payments and further explained that Agency funds in the amount of $1 million annually, that are not. allocated for either long-term capital or housing obligations and are generally utilized for projects and' administration costs, along with all unreserved balances, could be subject to potential loss if the Governor's budget is adopted as proposed, unless the City takes action. Mr. Tippin noted that under current law and by virtue of the Agency's past actions approving and amending the Market Street Redevelopment Plan (Plan), the Agency anticipates receiving at least $317 million in property tax increment revenues over the life ofthe Plan, which extends until 2041. To date, the Agency has received and expended approximately $37 million in property tax increment. These past and future totals include expenditures for contractual obligations, pass-through payments to affected public agencies, and deposits made to the Agency's Low- and Moderate-Income Housing Fund (LMIHF). I ******************* Stating that the Agency's current budget and the CHC and Market Street 2010-2014 Implementation Plans (Implementation Plans) identify various projects and programs the Agency is currently implementing or intends to implement, Mr. Tippin outlined investing in the redevelopment of private property; economic development through public/private partnerships; development of public improvements benefitting the Project Area; and affordable housing projects and programs to meet the affordable housing obligations of the 03/21/2011 47 Agency. To ensure that these and other similar activities are able to be accomplished over the remaining life ofthe"Project Area, staff drafted proposed Agreements, including a list of projects and programs the City can implement on behalf of the Agency that are consistent with the Implementation Plans. Adoption of the Agreements will allow the Agency to obligate both existing Agency funds and future property tax increment funds for reimbursement payments to the City. Mr. Tippin advised that while there is no guarantee that State legislation will not negate use of the Agreements, adoption may provide a means to protect some Agency revenues and to allow the Agency and the City to continue with implementation of proposed projects and programs. I Noting that the public improvements included in the Agreements are of benefit to the CHC and Market Street Project Areas and will assist in elimination of blighting conditions by providing essential infrastructure improvements such as roadway improvements, upgrading of existing public utility infrastructure serving the Project Area, bicycle and pedestrian safety measures, lighting, landscaping, and related enhancements designed to increase and improve access to the area, thereby attracting investment in the Project Area in the form of new businesses and housing opportunities, Mr. Tippin observed that there were no other means of paying for the costs of these improvements at this time. He explained that the improvements represent unfunded capital improvements in the City's capital improvement plan as a result of the lack of funds available in the City's General Fund~ and that General Fund revenues are not expected to be available in the near term to fund these types of improvements. Although the City has successfully leveraged State and Federal grants to assist with costs of some public improvements in the past, and will continue to pursue all such funding opportunities, the availability of these grants are uncertain given the current budget situations at both state and federal levels. I Mr. Tippin eXplained that the Agreements can be amended or rescinded as necessary in response to State legislation affecting redevelopment agencies, as well as allowing for the addition of projects. He noted that the Agreements do not include any public improvement projects that are publicly owned buildings, due to public hearing noticing requirements, and stated that the projects contemplated for funding in the Agreements have: (1) either already undergone environmental review for the particular project or program as part of the Agency/City's approval of the project or program; (2) were contemplated and considered in the Environmental Impact Report prepared by the Agency as part of the amendment to the Redevelopment Plan adopted in 1990; or (3) are not a project under the California Environmental Quality Act (CEQA) since the approval of the Agreements provides a governmental funding mechanism for those projects not previously considered in other environmental reviews, but does not commit any funds to particular projects. To the extent that the projects and programs included in the Agreements have not previously undergone environmental review, the City, prior to the initiation of any such project or program will conduct such environmental review of the projects in accordance with CEQA, including any required public hearings, and the City retains discretion to approve and condition such projects "and programs based on such environmental review. Mr. Tippin recommended that the City Council adopt resolutions making the necessary findings in connection with approval of Agreements with the Agency. He further recommended that the Agency's Board of Directors also adopt resolutions making the necessary findings in connection with approval of Agreements with the City. Council Member/Chair Dickerson cautioned that adoption ofthe Agreements may be viewed by legislators as an example of redevelopment agencies overstepping their bounds. " I A MOTION WAS MADE by Agency Member Bosetti, seconded by Agency Member Sullivan, adopting Resolution No. 2011-08, a resolution of the Redding Redevelopment Agency of the City of Redding approving a Public Improvements and Cooperation Agreement with the City of Redding for the Canby- Hilltop-Cypress Redevelopment Project and making certain findings. The Vote: AYES: NOES: ABSTAIN: ABSENT: Agency Members - Bosetti, Jones, McArthur, Sullivan, and Dickerson Agency Members - None Agency Members - None Agency Members - None Resolution No. 2011-08 is on file in the office ofthe Redevelopment Agency. 03/21/2011 48 A MOTION WAS MADE by Council Member Bosetti, seconded by Council Member Sullivan, adopting Resolution No. 2011- 35, a resolution of the City Council of the City of Redding approving a Public Improvements and Cooperation Agreement with the Redding Redevelopment Agency for the Canby- Hilltop-Cypress Redevelopment Project and making certain findings. The Vote: AYES: NOES: ABSTAIN: ABSENT: Council Members - Bosetti, Dickerson, Jones, Sullivan, and McArthur Council Members - None Council Members - None Council Members - None I Resolution No. 2011-35 is on file in the office of the City Clerk. A MOTION WAS MADE by Agency Member Sullivan, seconded by Agency Member Bosetti, adopting Resolution No. 2011-09, a resolution of the Redding Redevelopment Agency of the City of Redding approving a Public Improvements and Cooperation Agreement with the City of Redding for the Market Street Redevelopment Project and making certain findings. The Vote: AYES: NOES: ABSTAIN: ABSENT: Agency Members - Bosetti, Jones, McArthur, Sullivan, and Dickerson Agency Members - None Agency Members - None Agency Members - None Resolution No. 2011-09 is on file in the office ofthe Redevelopment Agency. A MOTION WAS MADE by Council Member Bosetti, seconded by Council Member Jones, adopting Resolution No. 2011-36, a resolution of the City Council of the City of Redding approving a Public Improvements and Cooperation Agreement with the Redding Redevelopment Agency for the Market Street Redevelopment Project and making certain findings. The Vote: I AYES: Council Members - Bosetti, Dickerson, Jones, Sullivan, and McArthur NOES: Council Members - None ABSTAIN: Council Members - None ABSENT: Council Members - None Resolution No. 2011-36 is on file in the office ofthe City Clerk. RESOLUTION - Approving the use of Tax Increment funds to construct public improvements within the Market Street Redevelopment Project Area [R-030-145-350] City Manager Starman explained that Assistant City Manager Tippin would defer presentation of this topic due to a potential conflict of interest. Citing the project as an excellent example of how redevelopment can make positive impacts on a community by yielding benefits such as the elimination of blight, creation of a new business opportunity with 30+ new jobs, and improvements to existing infrastructure, he introduced the proposed public/private partnership with Brent Weaver, et al. Senior Redevelopment Project Coordinator Haddox summarized the Report to City Council (staff report) dated March 15,2011, incorporated herein by reference, relative to a request by Brent Weaver to enter into a Participation Agreement (Agreement) between Brent and Leanne Weaver; Richard Weaver, Trustee of the Richard S. and Usana Weaver Trust; the Redding Redevelopment Agency (Agency); and the City of Redding (City) to provide redevelopment funds for the design and construction of certain public improvements across the frontage of property located at 5660 and 5680 Westside Road (the "Public Improvements") within the Market Street Redevelopment Project Area (Project Area), in conjunction with private development occurring at that location. She explained that the proposed Public Improvements consist (of 300 lineal feet of curb, gutter, sidewalk improvements, and the extension of sanitary sewer, with an estimated total cost of$150,000, including design. I Ms. Haddox noted that Brent Weaver is the president of Weaver Lumber, a local company that cl:lrrently occupies 5660 Westside Road, that the underlying property is owned by a family trust, and that Brent and his wife own the adjoining parcel to the south (5680 Westside Road). Citing the staff report, Ms. Haddox relayed that Mr. Weaver proposed construction of a new 6,500-square- foot building at 5680 Wests ide Road and renovation of 03/21/2011 49 an existing structure on the same property, with plans to lease the new facility to Technisoil, LLC, a local start-up company, who hopes to employ 30 individuals at this location. Ms. Haddox explained that Mr. Weaver had also agreed to: (1) install new facades on a number of the lumber storage units that face Westside Road at the Weaver Lumber parcel; (2) install irrigated landscaping across the frontages of both parcels; (3) remove all of the existing dilapidated fence and gates on both parcels; (4) install new decorative wrought iron fencing and entrance gates; and (5) install paved driveway entrances on both parcels. She noted that the private property improvements would not utilize any redevelopment financing. I Referring to the proposal detailed in the staff report, Ms. Haddox stated that the Agency would utilize up to $150,000 of its tax increment revenues from the Project Area toward the cost of the described Public Improvements and reviewed details provided in the staff report relative to Public Improvements, the City's permitting process for the private improvements, sewer extension and the remaining curb, gutter, and sidewalk improvements that are not triggered by the permitting process. Ms. Haddox cited CalifomiaHealth and Safety Code Sections 33445(a), 33678, and 33421.1, and described nece~sary findings and stipulations pertinent to this request, noting the requirement of prior consent of the legislative body in order for the Agency to provide streets, sidewalks, utilities, or other improvements which an owner or operator of the site would otherwise be obliged to provide. She pointed out that an Analysis ofthe Proposed Use of Redevelopment Funds had been completed relative to the proposed project, was included as an attachment to the staff report, and stated that under the proposed Agreement, private improvements would be undertaken and paid for by Brent Weaver and public improvements would be designed and constructed by the Agency. She advised that the Agency would work with the City's Engineering staff to design those improvements and would then put the project out for public bid. She explained that terms of the Agreement provided that Brent Weaver would initiate his improvements, and, upon substantial completion of those improvements, public improvements would commence. I Ms. Haddox recommended that the City Council adopt a resolution making the necessary findings in connection with the use of redevelopment funds to assist with the construction of public improvements along Westside Road. She further recommended that the Agency's Board adopt a resolution (1) approving the use of tax increment funds to construct public improvements within the Project Area and making the necessary findings; (2) approve the Participation Agreement between Brent and Leanne Weaver, Mr. Richard Weaver, Trustee of the Richard S. and Usana Weaver Trust, and the Agency, and (3) adopt a budget amendment providing funding in an amount not-to-exceed $150,000 to design and construct certain public improvements at 5660 and 5680 Westside Road in conjunction with private development occurring at that location. A MOTION WAS MADE by City Council Member Sullivan, seconded by City Council Member Jones, adopting Resolution No. 2011-37, aresolutionoftheCityCounciloftheCity of Redding approving the use of tax increment funds to construct public improvements within the Market Street Redevelopment Project Area and making the necessary findings. The Vote: AYES: NOES: ABSTAIN: ABSENT: Council Members: Bosetti, Jones, McArthur, Sullivan, and Dickerson Council Members: None Council Members: None Council Members: None Resolution No. 2011-37 is on file in the office ofthe City Clerk I A MOTION WAS MADE by Agency Member Sullivan, seconded by Agency Member Jones: (1) adopting Resolution No. 2011-10, a resolution of the Redding Redevelopment Agency approving the use of tax increment funds to construct publ~c improvements within the Market Street Redevelopment Project' Area and making the necessary findings; (2) approving the Participation Agreement between Brent and Leanne Weaver, Mr. Richard Weaver, Trustee of the Richard S. and Usana Weaver Trust, and the Agency; and (3) adopting a budget amendment providing funding in an amount not-to-exceed $150,000 to design and construct certain public improvements at 5660 and 5680 Wests ide Road in conjunction with private development occurring at that location. The Vote: AYES: NOES: ABSTAIN: ABSENT: Agency Members: Bosetti, Jones, McArthur, Sullivan, and Dickerson Agency Members: None Agency Members: None Agency Members: None 03/21/2011 50 Resolution No. 2011-10 is on file in the office of the Redevelopment Agency ADJOURNMENT There being no further business, Mayor McArthur declared the meeting adjourned at the hour of7:17 p.m. APPROVED: 'n.. I ATTEST: /~ 1 c. '(eIl'Y.f LfiKJ4?1- City Clerk ' I I 03/21/2011