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HomeMy WebLinkAboutRDA Minutes 1992-10-14Chairman John R. Penna M I N U T E S Boardmembers: Jack Drago Redevelopment Agency Joseph A. Fernekes '-"Roberta Cerri Teglia Municipal Services Building Robert Yee Community Room October 14, 1992 AGENDA ACTION TAKEN CALL TO ORDER: (Cassette No. 1) 7:05 p.m. Chairman Penna presiding. ROLL CALL: Boardmembers present: Drago, Fernekes, Teglia, Yee, and Penna. Boardmembers absent: None. AGENDA REVIEW AGENDA REVIEW Executive Director Armas stated that there were no changes to the Agenda. CONSENT CALENDAR .~/-] tg.~ CONSENT CALENDAR 1. Motion to approve Minutes of the Regular Meeting of Approved. m 9/23/92. _. Motion to confirm expense claims of 10/14/92. Approved in the amount of $1,744.83. 3. Resolution authorizing staff to proceed with the pro- tess of adopting a redevelopment plan for the El Camino Corridor Redevelopment Project Area. A RESOLUTION OF THE REDEVELOPMENT RESOLUTION NO. 13-92 AGENCY OF THE CITY OF SOUTH SAN FRAN- CISCO AUTHORIZING STAFF TO PROCEED WITH THE PROCESS OF ADOPTING A REDE- VELOPMENT PLAN FOR THE EL CAMINO CORRIDOR REDEVELOPMENT PROJECT M/S Fernekes/Yee - To approve the Consent Calen- dar. Carried by unanimous voice vote with the exception of Item 1 wherein Boardmember Drago abstained. ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS Resolution awarding sale of up to $13,200,000 in tax Finance Director Margolis stated that staff could not allocation bonds for the Gateway project area. ask the Agency to adopt the resolution tonight as the City did not receive any bids this morning. She A RESOLUTION OF THE REDEVELOPMENT stated that the apparent concern in the under- 10/14/92 Page 1 AGENDA _ACIIQN TAKEN 1 6'7 ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS L Resolution - Continued. writing community related to the security that was being provided, and as previously discussed, did not AGENCY OF THE CITY OF SOUTH SAN FRAN- fund the reserve fund at the normal level because CISCO AWARDING THE SALE OF NOT TO EX- there were insufficient revenues to fully bond for an CEED $13,200,000 TAX ALLOCATION BONDS amount that would fund the Homart debt plus the RELATING TO THE GATEWAY REDEVELOP- reserve fund. MENT PROJECT, AND AUTHORIZING OFFI- CIAL ACTIONS She stated that staff would be going back to discus- sions with Homart about developing potential ways to pay a portion of the debt at this point or somehow to payoff the bond in part through increments. She stated that she anticipated that it would be a month or two before she would come back to Council with an alternate plan. Vice Chairwoman Teglia stated she wanted further explanations because in her memory this was the first time there had not been bidders for City bonds. Finance Director Margolis stated that what had happened through the bond planning process was that in developing the amount the City owed Homart, and the debt needed to be incurred to sell the bonds of $13.2 million; pay them off from the reserves, as well as the cost of the bonds; and come to the Agency for authorization for 13.2 million in bonds to sell. She stated that they had to drop the assessment for the Gateway area because there had been some downward assessments which meant the increment would be dropping, and they had to stretch the structure of the bond issue as thin as possible. She stated that they had only provided the increased debt service as a proportion of overall tax increment, essentially the one that is usually accepted at the market. She stated that she funded the reserve fund only part way, which was not good enough, and would need to provide a lower percentage of debt service to tax increment with a full reserve fund. She stated that usually that was 10% of the bond issue, and this was too big a risk for the underwrit- ers. She stated that the reserve fund on the bonds should have been $1.3 million on a $13.2 million bond issue, and the City would only have $810,000 and were short. She stated that with the State taking 10/14/92 Page 2 AGENDA ACTION TAKEN ,, 168 ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS L Resolution Continued. Redevelopment Agency funds away had also made the underwriters nervous. She stated that there were still properties within the Gateway that have ap- pealed their assessments of large amounts, and last week had provided more cushion in terms of debt service payment. She stated that next time staff would see what was acceptable to the underwriters if the City had to lower the bond amount. She recommended that time be spent talking to Homart for provisions to allow us to pay part of the bonds and still retain some tax increment, and put together a new bond package to present to the Agen- cy. Executive Director Armas stated that given the tax increment from this area and with the lower assessed valuations, and given the uncertainty of State action the market is very nervous about committing itself to something like this when the reserves are thin. He stated that based on that he foresaw the need for an analysis to try to structure satisfactorily to the finan- cial community a $10 million issue that would en- able us to respond to their concerns, as well as the bulk of the debt to Homart. He stated that staff had to analyze that and come back to the Agency. He stated that the Vice Chairwoman was correct, this is a rarity for this community, but the only pledge is tax increments, so the underwriters are looking carefully at that project area and are ner- vous. Discussion followed: the State holding back a third of a million dollars as a one time event; that 10% was consistent with previous bond sales; that staff had realized that they did not have the 10%, but wanted to raise funds to pay off the entire debt and did not have an alternative to raise the full million dollars and have a full reserve fund; that the re- serve would be replenished on an annual basis; but for the $500,000 could the City have floated a $13 million bond issue; staff didn't think so. Ms. Laura Stowell, Bartel Wells & Assoc., related the two significant things that happened towards the end of this process: last year the tax increment for the Gateway was $1.8 million and the assessment 10/14/92 Page 3 AGENDA ACTION TAKEN ,. 169 ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS ~. Resolution Continued. went down by 15% which reduced the anticipated revenues; the $15 million in assessment appeals filed with the County of San Mateo and if successful would drop the assessment further. Vice Chairwoman Teglia stated that the City needed to pay that $12 million off, because it.was becoming very costly, and wondered what the effects would be in the shortfall in covering a $12 million bond issue. She questioned if there was some other source to plug money in to make up the $500,000 from either the General Fund or through creative financing. She asked that those alternatives be brought forward to the Agency. Executive Director Armas stated that staff's analysis and discussions with Homart, because of the OPA, would provide data for the Agency within 30 to 60 days. Discussion followed: could the bonding be for 80% of the debt and then come back later with the other 20%; staff would explore that alternative; the collateral for a $13 million bond issue, etc. Chairman Penna stated that direction had been given to staff. 5. Motion providing direction to staff on a method for Director of Finance Margolis stated that staff was funding the payment to schools required under the asking for direction on how we implement the pay- current State budget, ment to schools required under the current State budget. She stated that the State did in settling its budget enact a Bill that presumably has a one time payment due from Redevelopment Agencies throughout the State for the Educational Reserve Augmentation Fund. She stated that the payments based on the 1991-92 tax increment received by the Agency will be equal to $377,722.00 that is due to the County or this fund from this City. She stated that the law allows us to take the money from virtually any source available to the Redevel- opment Agency except for the housing set aside funds that we have received to date. She stated that they do allow that up to 50% of housing set aside funds received in this year and in 1993, may be borrowed for the purpose of making the payments. She stated that this was only a loan that has to be paid back within 10 years, and in addition can only 10/14/92 Page 4 AQENDA A~!!QN TAKEN 170 ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS ~. Motion - Continued. be done if there are no alternatives. She stated that she could not provide exact figures on how much money will be available at this time to make the payment because we have not received the calculation of tax increment from the County. She stated that given the projections of tax increment and the Agency payment for the Gateway bonds and other assumptions she found that $170,000 would be 'available out of current revenue to make the pay- ment due to the County. She stated that various funds are committed to repaying the advance from the General Fund or being held for contingencies for the Project to proceed, so we believe its going to be necessary to borrow close to the maximum 50% of the 1992-93 housing funds, which has to be paid back within l0 years, and the $170,000 from Shearwater to make the payment. She stated that when the exact figures were known she would come back to the Agency for a budget amendment if they were in agreement. Vice Chairwoman Teglia questioned when the $377,000 had to be paid. Director of Finance stated that it has to be paid by May 1st, and we have to notify the County by March 1st on how we intend to do it. Vice Chairwoman Teglia questioned what would happen if the Agency did not make the payment because of the fact it does not have those kinds of dollars. Director of Finance Margolis stated that the County is empowered to withhold it from the normal tax increment payments from taxes they have collected. She stated that if that happened it would come out of current revenue for which we already have intended uses, like the Gateway money that we may have pledged for bond payments. Executive Director Armas stated that the other alter- native they have is - to the extent that the Agency -- has committed all its dollars this does not relieve the City of that obligation - so the burden goes to the General Fund. 10/14/92 Page 5 AGENDA ACTION TAKEN aDMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 5. Motion - Continued. M/S Teglia/Yee - To give direction to staff to basi- cally adopt their recommendation as to how to meet the payments required by the current State budget. Carried by unanimous voice vote. GOOD AND WELFARE,. GOOD AND WELFARE No one chose to speak. CLOSED SESSION CLOSED SESSION 6. Closed Session for the purpose of the discussion The Agency chose not to hold a Closed Session. of personnel matters, labor relations, property negotiations and litigation. M/S Teglia/Yee - To adjourn the meeting. Carried by unanimous voice vote. ADJOURNMENT Time of adjournment was 7:32 p.m. ESPECTFULLY SUBMITTED, APPROVED. Barbara A. Battaya, Clerk U Redevelopment Agency Re~ncy City of South San Francisco City of South San~Francisco The entries of this Agency meeting show the action taken by the Redevelopment Agency to dispose of an item. Oral communications, arguments, and comments are recorded on tape. The tape and documents related to the items are on file in the Office of the City Clerk and are available for inspection, review and copying. 10/14/92 Page 6