HomeMy WebLinkAbout2018.03.14 Regular meeting TranscriptMarch 14, 2018 South San Francisco City Council meeting
Item 6
6. Report regarding a Special Landowner Election for Community Facilities District, a resolution
Declaring Results of Special Landowner Election and Directing Recording of Notice of Special Tax Lien
for City of South San Francisco Community Facilities District No. 2017-01 (Public Services and
Facilities), and introduction of Ordinance Levying Special Tax within Community Facilities District No.
2017-01 (Public Services and Facilities). (Jason Rosenberg, City Attorney)
6a. Resolution No. 37-2018 declaring results of special landowner election and directing
recording of notice of special tax lien within the City of South San Francisco Community
Facilities District No. 2017-01 (Public Services and Facilities)
6b. Ordinance levying special tax within the City of South San Francisco Community
Facilities District No. 2017-01 (Public Services and Facilities).
PARTICIPANTS:
COUNCIL
Mayor Liza Normandy
Vice Mayor Karyl Matsumoto
Councilmember Mark Addiego
Councilmember Rich Garbarino
Councilmember Pradeep Gupta
STAFF
City Manager Mike Futrell
Assistant City Attorney Steve Mattas
City Clerk Krista Martinelli
PUBLIC
David Cincotta, Attorney representing Kashiwa
Scott Ynis, Kashiwa’s Leasing Broker for Oyster Point Plaza
Jill Vivanko, General Manager of Kashiwa’s property
John Ullom
NORMANDY Next item Madame Clerk.
MARTINELLI Item 6. Report regarding a Special Landowner Election for Community Facilities
District, a resolution Declaring Results of Special Landowner Election and Directing
Recording of Notice of Special Tax Lien for City of South San Francisco Community
Facilities District No. 2017-01 (Public Services and Facilities), and introduction of
Ordinance Levying Special Tax within Community Facilities District No. 2017-01
(Public Services and Facilities). 6a. Resolution No. 37-2018 declaring results of special
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landowner election and directing recording of notice of special tax lien within the City of
South San Francisco Community Facilities District No. 2017-01. 6b. Ordinance levying
special tax within the City of South San Francisco Community Facilities District No.
2017-01.
NORMANDY Thank you Krista. I have one speaker card under Item 6. I do need to let my fellow
Councilmembers know that I do have a script from out City Attorney to make sure I don’t
leave anything out. Speaker card is David Cincotta.
CINCOTTA Madam Mayor, Mayor Pro Tem, thank you, good evening, my name is David Cincotta,
of Jeffer, Mangels, Butler and Mitchel. I’m here on behalf of Kashiwa Fudosan America.
I’m not going to repeat some of things I’ve said to you in the previous hearings. Tonight,
I’m only going to speak about why we believe it’s clear that the City cannot vote for this
to create this facilities district tonight. There’s no dispute with your lawyers that city
owned property can’t be used to vote for a district, to create a community facilities
district. Unless, it qualifies for an exemption at the time of that vote. There are two
exceptions that allow that. One is, that there’s already a promise to pay the special tax
assessment just as every other property owner in the district. That’s not occurring. City of
South San Francisco has not promised to pay that tax assessment from the day it starts.
The other exception is that a tenant intends to transfer the property, its city owned
property. But it also requires that until that occurs, there’s a commitment to pay the
special tax assessment on the same basis as every other property owner in that district.
That’s not occurring here. You have not done that. Nowhere in any of the resolutions that
you have adopted, has it said that the City is going to pay the special tax assessment. And
the way the code works, is that you cannot vote if you’re not going to pay. It doesn’t
make any sense. To interpret the code any other way, is ludicrous. You have to be
committed to pay. So, this entire community facilities district has been unfairly
manipulated to hurt Kashiwa Fudosan America. The first year’s payment, that’s
estimated to come from this, is about $178,000. All of that is from Kashiwa Fudosan
America. That’s not fair. I urge you tonight, to not take the step of trying to create this
district in this way. I urge you to vote against this or not vote tonight. Thank you.
NORMANDY Thank you. May I have a staff report please.
ROSENBERG Hello. Is this, is this on? It’s not showing its on. Okay. Jason Rosenberg, City Attorney.
Good evening Madam Mayor, Madam Mayor Pro Tem, Council Members. I’m going to
present a brief staff report for you and as well I have our special bond council, Scott
Ferguson, here to answer some of the specific questions raised by Kashiwa’s attorneys
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today and in the letters. So, as way of background, there were proceedings leading up to
this. On October 11th, the City Council adopted a resolution of intention. On November
20th, it had a notice of public hearing, regarding formation of this CFD. It was continued
to December 4th. On December 4th, that public hearing was concluded, and the City
Council took two actions. It adopted resolution of formation of the CFD, and it also
adopted a resolution calling the special landowners election for the CFD with today as
being the date when that vote was held. In order to form a CFD, you need two thirds vote
of the landowners, to levy a special tax. The property owners within this area, was Oyster
Point Development, also known as OPD, Kashiwa, and the City. And City Council
designated the City Clerk to conduct the election, receive the votes, and declare the vote.
So, tonight, before you is an action to hold the election, form, adopt, canvas the votes,
adopt a resolution declaring the results of a special election directing recorders so the,
excuse me, directing recording of a notice of a special tax lean, and then introducing an
ordinance levying that tax lean. So, that’s the proceeding before you. Staff recommends
that you can proceed. And let me speak briefly to some of the letters that are in front of.
So, you received, since the agenda was published, you received two letters from Jeffer,
Mangels, Butler and Mitchell, discussing this issue of whether or not the City is a proper
landowner that may vote in this election, and you also received two subsequent letters
from Jones Hall, Scott Ferguson, and working with our office regarding the allegations
raised in Kashiwa’s attorney’s letters. And really it comes down to the issue of whether
or not the City qualifies as a landowner to be able to vote. To count its votes in the
tabulation of the votes for the necessary two thirds ratio. We believe that the City does
meet those exemptions and can do so. I am going to briefly touch on this and then I’ll ask
Scott Ferguson to come up here briefly as well to expand upon my comments. Basically,
the two parcels, that are the City owned parcels, that are the subject of this CFD, is
known as parcel five and parcel six. These are the eastern most parcels on, on, the
attachment to the staff report, there is an amended boundary map and that shows the
parcels five and six. So, first I’m going to talk about parcel five. It’s scheduled for
commercial recreation uses, restaurant uses, and open space, subject to BCDC approval.
That would qualify for one of the exemptions because those properties, the ones that are
commercial recreation, and open, and restaurant uses, would be subject to taxation and
the City has made that intent clear of subjecting those properties’ operators to taxation.
Second, parcel six is the, also known as the hotel parcel. This is the parcel that the City
has had plans all along to subject to a long-term ground lease for a hotel use, which
would be subject to a lease. The City issued an RFP. They went through a lengthy RFP
development process. It selected a preferred developer and is now in ENRA negotiations
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with the ultimate intent to enter into a long-term ground lease with that developer in order
to have a ground lease for the entire parcel. The other thing that I want to add is that, in
addition, parcel five is part of the DDA. It’s subject to a right of first refusal, which gives
OPD the right to purchase the property if the City ever choses to sell that or dispose that
of to a long-term lease. So, all of these scenarios add up to the fact that these are, would
be subject to taxation and private taxation activity, which the City has addressed in its
formation documents throughout the proceedings and on that basis, I think the City can
act tonight and properly count the votes. And I will ask Scott Ferguson to just fill in any
details that I left out.
FERGUSON Good evening. Scott Ferguson with Jones Hall. Just to add a little bit to what Jason was
saying, the big picture is that City’s property is exempt, I mean is exempt from tax unless
there’s an exception. And in the proceedings, we have met the exemption, or the
exception to the rule being that the City has declared its intent to transfer, by sale or
lease, these two parcels to private parties. The act, I have to disagree with Mr. Cincotta,
the act does not require any kind of promise to pay special taxes while the City is an
owner. It’s not part of the exceptions. So, and there is no link between the eligibility to
vote on a special tax and the later payment. And the whole structure of this, this
exception to the rule is so that property that is intended to be taxed in the future has a say
and will be voted on during the course of the election. So, in summary, we’ve worked
real closely with the City Attorney’s office, and we have concluded that the City parcels
are properly included in this ballot process. And the Council has the authority to proceed
tonight if you so choose.
MATSUMOTO One clarification please. You stated parcel five because that was parks and rec, beaches,
whatever that would be exempt from paying taxes? Whatever the definition of parcel five
is.
ROSENBERG There will be potential commercial uses on that property that are open space, and are
consistent with open space uses, such as commercial, recreation, restaurant uses. Types
that serve and further the purposes of open space and BCDC regulations but nonetheless,
would be subject to taxation. Let’s say a commercial recreation use.
MATSUMOTO So, commercial recreation is subject to taxation?
ROSENBERG Yes.
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MATSUMOTO And, where would we pay, which one of our many funds would we pay this taxation
money from?
ROSENBERG The private operator would pay the tax.
MATSUMOTO The private operator. Yet to be determined.
ROSENBERG Yet to be determined. Exactly. But the intent was clear and stated in the proceedings that
that was the intent.
MATSUMOTO Any other questions for Jason? Councilmember Gupta.
GUPTA Yeah, perhaps to Jason and also Mr. Ferguson. I just wanted to be clear, in my mind,
about the objection that was pointed out by the attorney, Kashiwa, that there is no link in
the rules that forces the parties to the CFD voter, voting parties to right away assume the
responsibility of taxation even though the future transactions of some commercial nature
might transfer those obligations later on. I just wanted to be sure that we are not missing
that point that the attorney was making there.
FERGUSON Yeah, that’s correct. There is no link. If it’s a City owned property, even though the City
won’t be paying taxes initially, the City is still entitled to vote as long as its stated the
intent to transfer it to private, private ownership which would be taxable at some point in
the future.
GUPTA So, in your legal opinion, the City would be working in a legal manner in the way we are
proceeding right now, by recognizing the election and getting the results done.
FERGUSON Yes, that’s correct.
ROSENBERG Madam Mayor, I have one more point of clarification. Mr. Cincotta mentioned that the
entire CFD’s initial year levy would only be payed by Kashiwa and that is incorrect.
There are a number of developed properties in this area that are owned by OPD and those
are subject to taxation in the initial levy. OPD has acknowledged that and understands
that they will be paying tax on the existing buildings that exist in their property right
now. So, Kashiwa is not the only property owner that will be paying taxes on the initial
year levy.
NORMANDY Thank you for the clarification, Jason. Anything Councilman Addiego?
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ADDIEGO Yeah, my last comment was my question because I had not heard that before. So, I am
satisfied both by Mr. Rosenberg’s response and the bond counsel and it will be
interesting to see how this plays out.
ROSENBERG In conclusion, Madam Mayor. I recommend that the City Council hold that election. The
special land owner election for the CFD, known as City of South San Francisco
Community Facilities District No. 2017-01. Following the, holding the election, if the
tabulations of the votes by the City Clerk show a two thirds vote. You adopt a resolution
declaring those results and then introduce an ordinance. And I can answer any questions
on that process if you have them.
NORMANDY Thank you, Jason. So, my next step is to follow with these opening remarks. This is the
time and place for the landowner election for the City of South San Francisco
Community Facilities District No. 2017-01, public services and facilities. Will the Clerk
please announce the result of the property owner vote?
MARTINELLI Yeah, so I will read the voted ballots. So, I have the ballot submitted by the City of South
San Francisco with 8.41 acres and number of votes of nine and the vote is yes. I have a
ballot voted by Oyster Point Development LLC., a Delaware limited liability company,
acreage 44.24, number of votes 45. And the vote is yes. I have a ballot voted by Kashiwa
Fudosan America Incorporated, a California corporation, acreage 22.51, number of votes
23, and the vote is no. This yields the following canvass of votes. Canvass and statement
of result of election, City of South San Francisco Community Facilities District No.
2017-01. I hereby certify that on March 14th, 2018, I canvassed the returns of the election
held on March 14th, 2018, in the City of South San Francisco Community Facilities
District No. 2017-01, public services and facilities, and the total number of ballots cast in
such community facilities district and the total number of votes cast for and against the
measure are as follows and the totals as shown for and against the measure are full, true
and correct: City of South San Francisco Community Facilities District No. 2017-01.
Qualified Landowner Votes – 77; Votes Cast – 77; Yes votes total - 54; No votes total-
23. That is 70.1% in favor and 29.9% opposed. This has my signature, the City seal and
the date of March 14th, 2018.
NORMANDY Thank you, Madam Clerk. The record shows at least two thirds of the property owner
votes are in favor of the levy of the special taxes and establishment of the appropriation
limits. We many now proceed with the final action for the district: consider of a
resolution declaring results of special landowner election and directing recording of
notice of special tax lien within the City of South San Francisco Community Facilities
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District No. 2017-01, public services and facilities, which will declare the results of the
election and direct the City Clerk to record the Notice of Special Tax Lien and (ii)
introduction of an Ordinance levying special tax within the City of South San Francisco
Community Facilities District No. 2017-01 public services And facilities). After its
introduction, this Ordinance will be considered for adoption at our March 28, 2018
meeting. Council will now consider the following actions: Item 6a is a motion to adopt
the resolution declaring the results of the special landowner election and directly
recording a notice of special tax lien within the City of South San Francisco community
facilities district No. 2017-01 public services and facilities. Do I have a motion to adopt
the resolution?
GUPTA So moved.
NORMANDY Thank you.
ADDIEGO And I’ll second that.
NORMANDY Perfect. Motion made by Councilmen Gupta, seconded by Councilmen Addiego. May I
have a roll call please.
MARTINELLI Yes. Mayor Normandy?
NORMANDY Aye.
MARTINELLI Councilman Gupta?
GUPTA Yes.
MARTINELLI Mayor Pro Tem Matsumoto?
MATSUMOTO No.
MARTINELLI Councilman Addiego?
ADDIEGO Yes.
MARTINELLI And Councilman Garbarino is absent.
NORMANDY Thank you. Next item is a motion to, to introduce item, 6b is a motion to introduce an
ordinance levying special tax within the City of South San Francisco community facilities
district No. 2017-01, public services and facilities in late further reading. Do I have a
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motion to introduce the ordinance?
ADDIEGO Madam Mayor I would make that motion.
NORMANDY Thank you Councilman Addiego. Is there a second?
GUPTA Second.
NORMANDY I have motion made by Addiego, seconded by Gupta. May I have a roll call please?
MARTINELLI Mayor Normandy?
NORMANDY Aye.
MARTINELLI Mayor Pro Tem Matsumoto?
MATSUMOTO No.
MARTINELLI Councilman Addiego?
ADDIEGO Yes.
MARTINELLI Councilman Gupta?
GUPTA Yes.
MARTINELLI Councilman Garbarino is absent.
GARBARINO Still? Huh, for the whole meeting?
NORMANDY Jason, is there anything further I need to do? Okay great, thank you.
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CERTIFICATION
I, LISA POPE, Master Municipal Clerk/Transcriptionist, do hereby certify that the foregoing
Pages 1 through 9 are a full, true and correct transcript of the proceedings of the South San
Francisco City Council consideration of Item 6 at its meeting of March 14, 2018.
Dated at Moorpark, California, this 15th day of May, 2018.
_______________________________
LISA POPE, MMC