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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 March 14, 2018 City Council Item 6 Page 2 of 9 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 March 14, 2018 City Council Item 6 Page 3 of 9 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 March 14, 2018 City Council Item 6 Page 4 of 9 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. March 14, 2018 City Council Item 6 Page 5 of 9 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? March 14, 2018 City Council Item 6 Page 6 of 9 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 March 14, 2018 City Council Item 6 Page 7 of 9 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 March 14, 2018 City Council Item 6 Page 8 of 9 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. March 14, 2018 City Council Item 6 Page 9 of 9 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