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HomeMy WebLinkAboutMinutes 1991-10-09 Chairman Jack Drago Boardmembers: Richard A. Haffey Gus Nicolopulos John R. Penna --Roberta Cerri Teglia M I N U T E S 0~ SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY Municipal Services Building Community Room October 9, 1991 NOTICE IS HEREBY GIVEN, pursuant to Section 54956 of the Government Code of the State of California, that the South San Francisco Capital Improvements Financing Authority of the City of South San Francisco will hold a Special Meeting on Wednesday, the 9th day of October 1991, at 7:05 p.m., in the Municipal Services Building Community Room, 33 Arroyo Drive, South San Francisco, California. Purpose of the meeting: 1. Approval of the minutes of the Special Meeting of 9/25/91. 2. Resolution authorizing the execution of an agreement with Stone and Youngberg for the sale of Conference Center bonds. Dated: A RESOLUTION AUTHORIZING THE SALE OF REVENUE BONDS RELATING TO THE CONFERENCE CENTER PROJECT AND AUTHORIZING EXECUTION OF BOND PURCHASE AGREEMENT Secretary (City Clerk) ~ City of South San Francisco October 3, 1991 AGENDA CALL TO ORDER: (Cassette No. 1) ROLL CALL: 1. Approval of the minutes of the Special Meeting of 9/25/91. 2. Resolution authorizing the execution of an agreement with Stone and Youngberg for the sale of Conference Center bonds. A RESOLUTION AUTHORIZING THE SALE OF REVENUE BONDS RELATING TO THE CONFERENCE CENTER PROJECT AND AUTHORIZING EXECUTION OF BOND PURCHASE AGREEMENT ACTION TAKEN 7:17 p.m. Chairman Drago presiding. Boardmembers Present: Boardmembers Absent: Haffey, Nicolopulos, Penna, Teglia, and Drago. None. M/S Teglia/Penna - To approve the minutes of the Special Meeting of 9/25/91. Carried by unanimous voice vote. Chairman Drago stated that the Authority would recess this meeting and reconvene during the joint meeting with the City Council. 10/9/91 Page I AGENDA --RECESS: MEETING RECONVENED - JOINT MEETING WITH CITY COUNCIL: ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center: a) Financial overview of the Project; b) Resolution approving sale of bonds while acting as the SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY A RESOLUTION AUTHORIZING THE SALE OF REVENUE BONDS RELATING TO THE CONFERENCE CENTER PROJECT AND AUTHORIZING EXECUTION OF BOND PURCHASE AGREEMENT c) Resolution of award of construction contract to Nibbi Bros. Inc. in the amount of $5,014,429 as the lowest responsible bidder. A RESOLUTION OF AWARD OF CONTRACT FOR THE CONSTRUCTION OF THE CONFERENCE CENTER d) Approval of construction mana- gement services agreement with Harris & Assoc. in the amount of $300,000. A RESOLUTION AUTHORIZING EXECUTION OF AGREEMENT FOR CONSTRUCTION MANAGEMENT SERVICES FOR THE CONFERENCE CENTER e) Motion to adopt an ordinance regarding use of the conference center. ACTION TAKEN Chairman Drago declared a recess at 7:18 p.m. Chairman Drago recalled the meeting'to order at 7:45 p.m., all Boardmembers pre- sent. ADMINISTRATIVE BUSINESS Conference Director Carl gave a compre- hensive financial overview of the project through the use of slides (the tables used for the slide projections are on file in the Clerk's Office). Finance Director Margolis related that the bonds were priced today and good rates had been received due to it being a prime time in the market for the sale of bonds. She stated that the result was a bond issue of $5,715,000, which was $200,000 below the cap set by Council. She gave the following overview: the reserve fund of $522,455 was equal to one year's annual debt service; 1.39% was the underwriters discount or $79,438; $85,000 was the cost of the issuance which also included payment to bond counsel; $5,028,107 was the net proceeds for construction that will earn $172,481 in interest that can be used for construc- tion; that the issuance was not insured; that the bond rating was BAA; that 6.86% was the net interest cost of the bond issuance for 20 years; $487,000 was the net debt service; reserve fund accrues interest of $35,000 every year, etc. Conference Center Director Carl spoke of the construction contract with Nibbi Bros. and recommended the Council adopt the resolution. Director of Public Works Parini stated that the $300,000 contract was in addi- tion to the WQCP contract, and a record would be kept of work done on each project. Vice Mayor Nicolopulos questioned what the project would cost over a 20 year 10/9/91 Page 2 AGENDA ACTION TAKEN · ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. AN ORDINANCE APPROVING A CONFERENCE CENTER USE AGREEMENT WITH THE CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY ADMINISTRATIVE BUSINESS period. City Manager Armas stated that the tables delineated the costs over a 20 year period as slightly more than $48,000,000. Discussion and answer period followed: what the direct cost to the City and its General Fund would be for this project, and any foreseeable impact on the General Fund; that there was no cost to the City; that the revenues were represented in the tables from the T.O.T. which was the only pledge to the bond holders; that $487,000 was the annual obligation; that there was $1,600,000 per year revenue from T.O.T.; potential investors were advised of the true financial picture; that 6.73% interest was based on the down side per Federal regulations on the maximum legal amount a City could earn; that Bank of America was the trustee, and a representative from Stone & Youngberg explained the investment process; that interest income was in addition to the reserve fund; that no parking lot leases were involved since these were provided by the Radisson and the Holiday Inn who would make payments to the Travel Lodge property a half mile away; that there were letters of intent from the Holiday and Radisson, but an agreement was not yet executed; that the City had the abi- lity to enforce the conditions of the use permit, and the City Attorney had other legal means of enforcement; that $5,000 in property taxes would be paid by the Conference Center, and the budget included a 4% increase per year for property taxes; the Assessor imposes a 1.1% tax on assessed value of properties, and the projected property tax figures do not include a $7,000,000 improvement of the leased property and a new evaluation; that the property had a 45 year lease under public control; a physical defi- ciency where the ground level had hit sea level; what flood measures are included in the construction bids, etc. 10/9/91 Page 3 -ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS Mr. Charley Hamm, Group 4 Architects, spoke in detail of the flooding: that mitigation measures were based on FEMA requirements and were included in the construction bid; there was a $340,000 contingency in the construction fund. He stated that in the new portion of the building they would elevate all installa- tions of air conditioning, electrical, and transformers for flood control. He continued, the concrete slab will be provided with a gravel fill under it, as well as a membrane to keep water satura- tion from coming up through the slab. He stated that there was nothing they could do with the old portion of the building. Councilman Penna questioned what assurances Council had that the old por- tion would not flood, and questioned if there was a sump pump in the building. Mr. Hamm stated that he could not give assurances on water infiltration into the building, and he had not seen a sump pump in the building. Discussion followed: that the projec- tions were not based on the number of people, but on usage of space; two sales people were projected; that other suc- cessful hotels had 6 to 7 sales people to sell space; differences in selling hotels vs. conference centers; that S.S.F. hotels were cheaper than other hotels by $10.00; growth in occupancy; occupancy rates were capped at 80% in 1998-99; hotel room growth; that occupancy would have the same growth with or without a conference center; reserve fund is to protect the bond holders, etc. Mr. Lou Dell'Angela, 460 Gardenside Ave., stated that he had asked and had been unsuccessful in getting a copy of the parking agreement, and this evening he had been reluctantly allowed to see the document. He was concerned because this agreement was a critical document to the 10/9/91 Page 4 AGENDA ACTION TAKEN ~ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS center, yet the document was so vague and nebulous as to be meaningless. He questioned if someone who had a lease- hold interest could commit or have a deed restriction on the property without first getting approval of the owner of the pro- perty. He questioned how one could work out a parking arrangement without some sort of parking study of where these parking spaces were going to be located. He questioned where conference center people would park when the hotels were full. He stated that this did not meet the legal requirements of the use permit. He questioned why the City was treating this application differently than any other application, because he knew that if a private developer came in for this application it would be pointed out that it was in violation of the Zoning Ordinance and would be turned down. He suggested that the Council defer to their Attorney on the Zoning Ordinance, and ask if this item was properly before them tonight. He reiterated earlier concerns: on reve- nue projections made without a market study; if the Radisson was and had been up for sale, and how that would affect the conference center if it was sold; to spend $45,000,000 over a 20 year period on a rented facility; what would it cost to build a new facility on City property, etc. Mayor Drago stated that the total obliga- tion was $20,000,000 - not $45,000,000, and questioned why people rent anything. Mr. Dell'Angela stated that it was because they could not buy the property. He questioned why the City was paying $145.00 a square foot for construction. He felt that a lot of people were disap- pointed because this was not what the 10/9/91 Page 5 A G E N D A A C T I O N T A K E N 0~I~'~., --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS people voted for in Measure C, and urged the Council to defer action and hold a public hearing for public input. Mayor Drago stated that the Planning Commission did hold public hearings, and asked the City Attorney to respond to Mr. Dell'Angela's questions. City Attorney O'Toole responded: that the agreement assures every condition imposed by the use permit; that the Zoning Code allows certain latitude in dealing with uses not specifically mentioned in the Code for parking requirements such as the conference cen- ter; Planning staff had exercised that latitude in dealing with the conference center; in reference to the change of ownership - any hotel on that site would be subject to a use permit and the con- ditions of any use permit would be the same as for the Radisson. Mr. Dell'Angela stated that he was questioning Section 20.74.120 of the Zoning Ordinance, about the location of the spaces being located on the site if the owner of record submits a title report for the parcel with a covenant running with the land for the parking spaces and recorded with the County Clerk. City Attorney O'Toole stated that the agreement to be provided would be recorded with the County Clerk. Mr. Jake Jones, 12 E1Campo, stated that he had just returned from Visalia and related the following: the City now owns a large portion of the Holiday Inn, and had to dig up $1,500,000; Visalia City Manager was looking for a job because of this, and a couple of Councilmembers were not going to be returned to office. He stated that he was concerned over how much it would cost the General Fund if 10/9/91 Page 6 --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS this City's conference center's operating expenses were greater than the revenues when there was not enough money to cover the bonds. He stated that he had talked to a person who operated a gas station for many years across from the conference center site and he had seen Photo Mat dump barrel after barrel of chemicals behind the building, and he questioned if soil tests had been made or was the City going to get struck. He stated that all of Tanforan was reconstructed for $6,000,000, and he thought the construction contract for the conference center was inflated. He stated that it was good to see a busi- nessman like Mr. Penna on the Council that figures these things out. Mr. Douglas Bartlett, San Mateo County Convention & Visitors Bureau, spoke in support of this conference center and his belief in its success. Discussion followed: cost of the 7,000 sq. ft. addition; 150.00 sq. ft. for new construction, and $110.00 sq. ft. for renovation of the existing structure; $127.00 sq. ft. for reconstruction and mitigation measures; potential for the land to level off in the next 50-100 years was 3" on Airport Blvd. and that area; velocity compaction points; finished floor elevation was 8.46' and the flood elevation was 7', etc. Mr. David Connor, Radisson, stated that they were looking at $7,000,000 with bonds over a 20 year period that would be $20,000,000, while the cost to build a new building and land - $1,000,000 an acre to buy the land on So. Airport which was about $20.00 a sq. ft. for a con- ference center without any hotels around it. He continued, 9 acres of land would 10/9/91 Page 7 --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS be needed for the building and parking; it would cost $175 a sq. ft. for a state of the art conference center with the bonds came to a total of $14,640,000 plus financing of $16,000,000 - with a total price of $30,000,000. He stated that the economics of leasing were not bad, and his hotel was on leased land. He stated that his hotel was not for sale. He stated that S.S.F. hotel rooms were in the $80 range, and the Hyatt was $149.00, rather than a $10.00 spread difference. Mr. Raines, Holiday Inn, stated that his firm owned the Holiday Inn in Visalia, and it was the Radisson the hotel com- munity had petitioned against to the City Council because they knew it would not be successful because it was not a reputable developer. He stated that the hotel group had petitioned the Council for a ballot measure against adding the Radisson to the conference center, and the Council had thrown it out due to a legal technicality. He stated that they had gone ahead with the project, built the hotel, and now Visalia was now on the hook for the hotel and had to pay the prospective developer. He stated that the space in Visalia was quite a bit larger than this conference center, and he personally knew quite a lot about that particular development. He stated that that was why he had been in support of Measure C because it would not cost the taxpayers, and the hotel community was 100% in favor of having this go forward. Councilman Penna stated that he was in favor of a conference center, but viewed this as pie in the sky. He stated that the hotels had come forward with the idea to lease this building, but no effort was made to put together a committee of pri- 10/9/91 Page 8 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS vate and public individuals to develop a comprehensive market study on the poten- tial pitfalls, location or advantages to the City. He stated that Burlingame had done this and had decided not to go with a conference center. He related the following: the Council had decided on this building which needed retrofitting and refurbishing~ the building was sinking; there was no guaranty that the building will not flood; City could tear the building down and fill in the land as the lease payments are $300,000 per year. He refutted Mr. Connor's numbers on a brand new center, and pointed out that this site was a ~4 of the 9 acres the pro- jections had been on. He stated that the City did have a site on Oyster Point Blvd., the old GSA Building, which was six acres and it was an excellent loca- tion. He spoke at length: on building on City property; a lack of facts to back up staff's projections; he still wanted to see a market feasibility study so this would not be a draw on City funds; that the projected figures could lead to deficit spending; that two sales people were not sufficient to compete in the market; City should back off and do a study to see if it was worth while to go into this risk venture, and he would not vote for this. Vice Mayor Nicolopulos stated that through life things get done in one of two ways: "quid pro quo" - now you owe me one - why this is the preferred method is because the rewards often are immediate and readily visible, albeit, short term and temporary; the other process is you do something because it is good and has substance and meaning attached to it - in this path the rewards are seldom imme- diate and rarely visible, but they are lasting and enduring. 10/9/91 Page 9 AGENDA ACTION TAKEN ~ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS He stated that to him - his family as well as his word were the most important things in his life, and that credibility was paramount - and all other success to be had was secondary. He questioned when the Council majority was going to stop pursing the quid pro quo - which could prove disastrous and demoralizing for our City's financial future. He related the following: Measure C was to assess users of hotels $2.50 in special T.O.T. to acquire, renovate a conference center in the City; a leased building could not be acquired, bought or made the City's after 20 years; the lease payments are projected at about $8,000,000; a market feasibility study to determine the best location, and a market feasibility fiscal budget was never done to determine how to pay for the selected site; need to replace the traditional think tank full of assumptions and allegations; initial constructions cost were projected at over $3,000,000, and alleged to house 1,500 persons; today's revisions are $5,200,000, and it would house 600-800 persons and possibly a maximum of 1,100; concerns expressed by Peat, Marwick & Mitchell's analyses; the City must be careful not to sacrifice quality to cost savings because it could affect market potential; the Council majority has always been for this site. He spoke against the conference center site: building site lacks adequate parking for the success of the center; structure has physical deficiencies; ground level has reached sea level; future flooding will deter operations; mitigation measures were not reflected; it will not be a quality product, and incapable of competing in the market. He spoke of small towns and cities across California being faced with financial 10/9/91 Page 10 AGENDA ACTION TAKEN ~ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS disaster due to municipal bond debt and misused the money or let it sit idle, etc. He felt that using the Marks-Roos Act was risky and was a means to subsidize a troubled project - as was event in the City of Folsom. He felt that the Marks-Roos bonds were driven pretty much by greed on the part of the cities, and greed on the part of the underwriter. He stated that he was for a conference center, but felt that time and intelli- gence should come up with something that is safe, affordable, effective and a workable site. Mayor Drago refutted earlier statements: that the Burlingame conference center proposal was $50,000,000-100,000,000 with a net loss of $6,000,000 a year - which was significantly higher than this cen- ter; if the infrastructure was in at the Shearwater site the City would be dealing with the General Fund monies because the City property could bring in revenue to the City, and if the center was put there it would have to be subsidized; that it was untrue that the conference center site was unsafe because you do not rehab buildings that are unsafe; center capa- city was 1,200 and would be 2,000 if there was not the restriction of space for parking; that there was a budget, and the financial analysis he had asked for six months a go was received; there was a marketing study although not as specific as some might want; it is a misconception that the location of the conference center was not known; because the Council had signed a lease with contingencies; the the only obligation with the Marks- Roos Act for the project was the T.O.T.; he did not see a financial risk to the City; that even if the occupancy rate stayed status quo there will be enough T.O.T. to cover the project; that it was the Council's obligation to keep on top of the budget. 10/9/91 Page 11 ACTION TAKEN AGENDA --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY ACTION: CITY COUNCIL ACTION: ADMINISTRATIVE BUSINESS He stated that his first interest is for the City to protect the taxpayer in the case that the bonds fail. He stated that staff had said tonight that the bonds were sold - where is the liability to the City. He stated that the Conference Center Director was competent to run the center, and if the hotels are successful then the City was successful. He stated that his only concern was parking and had previously asked that the use permit be modified, and it was. M/S Haffey/Teglia - To adopt the Resolution. RESOLUTION NO. SSF-2-91 Carried by majority roll call vote, Boardmembers Nicolopulos and Penna voted no. M/S Haffey/Teglia - To adopt the resolu- tion of award of construction contract. RESOLUTION NO. 128-91 Carried by majority roll call vote, Councilmembers Nicolopulos and Penna voted no. M/S Teglia/Haffey - To adopt the resolu- tion approving the agreement with Harris & Assoc. RESOLUTION NO. 129-91 Carried by by majority roll call vote, Councilmembers Nicolopulos and Penna voted no. M/S Teglia/Haffey - To adopt the ordi- nance. ORDINANCE NO. 1106-91 10/9/91 Page 12 AGENDA ACTION TAKEN ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. Carried by majority roll call vote, Councilmembers Nicolopulos and Penna voted no. SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY: M/S Haffey/Teglia - To adjourn the meeting. Carried by unanimous voice vote. ADJOURNMENT: Time of adjournment was 11:10 p.m. RESPECTFULLY SUBMITTED, · ~ Clerk ~atta~y/Ci ty South San Francisco Capital Improvements Financing Authority APPROVED. ital ~(anci ng Authority Improvements The entries of this Authority meeting show the action taken by the South San Francisco Capital Improvements Financing Authority 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. 10/9/91 Page 13 Mayor Jack Drago Council: Richard A. Haffey Gus Nicolopulos John R. Penna .~Roberta Cerri Teglia AGENDA CALL TO ORDER: (Cassette No. 1) ROLL CALL: PLEDGE OF ALLEGIANCE INVOCATION PRESENTATIONS PROCLAMATION - RED RIBBON WEEK, OCTOBER 19-27, 1991 AGENDA REVIEW ORAL COMMUNICATIONS MINUTES City Council Municipal Services Building Community Room October 9, 1991 00110 ACTION TAKEN 7:31 p.m. Mayor Drago presiding. Council present: Council absent: Haffey, Nicolopulos, Penna, Teglia, and Drago. None. Recited PRESENTATIONS Mayor Drago read the Proclamation aloud, and presented it to Mr. Dick Noftsger of the Chamber of Commerce. Mr. Noftsger expressed appreciation for the Proclamation, and stated that the Red Ribbon Committee was composed of the Police Dept., SSFUSD, business leaders, and the 49er Alumni Assn. He stated that there would be a fund raiser auction on 10/24/91 at the Holiday Inn for the bene- fit of this program. AGENDA REVIEW City Manager Armas stated that there were no revisions to the Agenda. ORAL COMMUNICATIONS Ms. Maggie Pierson, Art Rise Theatre, invited everyone to the 4th season kick off with "Steel Magnolias" being performed on 10/11, 12, 17, 18, 20, 24-26, 1991 and that the play was suitable for the entire family. Mrs. Sandra Firpo, 809 Hemlock Ave., invited everyone to attend the All Souls Festival on Oct. 11, 12, 13, 1991. 10/9/91 Page i AGENDA ACTION TAKEN 00111 COMMUNITY FORUM CONSENT CALENDAR o Motion to approve the Minutes of of the Adjourned Regular Meeting of 9/18/91, Special Meeting of 9/25/91, and Regular Meeting of 9/25/91. Motion to confirm expense claims of 10/9/91. e Motion to waive fees for the use the Municipal Services Building Social Hall for the S.S.F. Police Assoc. Annual Dinner/Dance Fundraiser on 10/28/91. Motion to waive fees for the use of the Municipal Services Building ~ Community Room for the American Business Womens Assoc. Camino Real Chapter Candidate's Night on 10/22/91 that will be moderated by the League of Women Voters. 0 Motion to waive fees for the use of the Municipal Services Building A &~q~ B Rooms for the S.S.F. Girl Scouts Assoc. on March 8, 1992 for a fund raiser. 6. Motion to waive fees for the use of the Municipal Services Building ~4~ Social Hall and kitchen for the ~ S.S.F. Los Cerritos P.T.A. on 12/13/91 for a fund raiser. 7. Motion to accept the Forbes Blvd. ~O~~ Drainage Improvements as complete in accordance with the plans and specifications. Motion to accept the Shaw Road/San Mateo Avenue Pump Stations as ~o complete in accordance with the plans and specifications. COMMUNITY FORUM Mayor Drago announced that VFW No. 4103 would conduct a public forum with can- didates for City Office on Sunday, 10/27/91 from 3:00 - 6:00 p.m. CONSENT CALENDAR Approved. Approved in the amount of $1,466,739.00. So ordered. So ordered. So ordered. So ordered. So ordered. So ordered. 10/9/91 Page 2 AGENDA ACTION TAKEN O0117 CONSENT CALENDAR e Resolution approving construction management services contract for the Water Quality Control Plant to Harris & Assoc. in the amount of $459,000. A RESOLUTION AUTHORIZING EXECUTION OF AGREEMENT FOR CONSTRUCTION MANAGEMENT SERVICES FOR THE WATER QUALITY CONTROL PLANT e Resolution approving construction management services contract for the Water Quality Control Plant to Harris & Assoc. in the amount of $459,000. A RESOLUTION AUTHORIZING EXECUTION OF AGREEMENT FOR CONSTRUCTION MANAGEMENT SERVICES FOR THE WATER QUALITY CONTROL PLANT CONSENT CALENDAR Removed from the Consent Calendar for discussion by Vice Mayor Nicolopulos. M/S Teglia/Haffey - To approve the Consent Calendar with the exception of Item No. 9. Carried by unanimous voice vote. Vice Mayor Nicolopulos stated that he wanted clarification on this item for there were two items to hire one con- sultant, and he wanted to vote for one and not the other. Director of Public Works Parini stated that this agreement was only for the Water Treatment Plant, however they were interrelated and the maximum amount relied on this firm also getting the con- ference center management agreement. He stated that if the Council approved this and not the conference center agreement, then staff will have to negotiate a new agreement. Vice Mayor Nicolopulos also questioned, if there was extra work this project would go out to bid again. City Manager Armas stated that if the Council voted on this and chose not to use this firm for the conference center, then staff would go back with the firm and discuss the Council action. Vice Mayor Nicolopulos questioned who had initiated this action. City Manager Armas stated that staff had initiated it because looking at two pro- 10/9/91 Page 3 ^CT ON T^KE, 00112 ~ 9. Resolution - Continued. SOUTH SAN FRANCISCO CAPITAL IMPROVE- MENTS FINANCING AUTHORITY MEETING __RECONVENED: ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center: a) Financial overview of the Project; b) Resolution approving sale of bonds while acting as the SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY c) A RESOLUTION AUTHORIZING THE SALE OF REVENUE BONDS RELATING TO THE CONFERENCE CENTER PROJECT AND AUTHORIZING EXECUTION OF BOND PURCHASE AGREEMENT Resolution of award of construction contract to Nibbi Bros. Inc. in the amount of $5,014,429 as the lowest jects occurring simultaneous could put the City in a better position for price with both, but they did not support each other. Vice Mayor Nicolopulos felt that the two bids should have been separate, and questioned whether it was $459,000 or $556,000. Director of Public Works Parini stated that $556,000 was the maximum cost for the Plant, and it was $300,000 for the conference center. M/S Haffey/Teglia - To adopt the Resolution. RESOLUTION NO. 127-91 Carried by unanimous voice vote. Reconvened at 7:45 p.m., all Boardmembers .present. ADMINISTRATIVE BUSINESS Conference Director Carl gave a compre- hensive financial overview of the project through the use of slides (the tables used for the slide projections are on file in the Clerk's Office). Finance Director Margolis related that the bonds were priced today and good rates had been received due to it being a prime time in the market for the sale of bonds. She stated that the result was a bond issue of $5,715,000, which was $200,000 below the cap set by Council. She gave the following overview: the reserve fund of $522,455 was equal to one year's annual debt service; 1.39% was the underwriters discount or $79,438; $85,000 was the cost of the issuance which also included payment to bond counsel; $5,028,107 was the net proceeds for construction that will earn $172,481 in interest that can be used for construc- 10/9/91 Page 4 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. responsible bidder. A RESOLUTION OF AWARD OF CONTRACT FOR THE CONSTRUCTION OF THE CONFERENCE CENTER d) Approval of construction mana- gement services agreement with Harris & Assoc. in the amount of $300,000. e) A RESOLUTION AUTHORIZING EXECUTION OF AGREEMENT FOR CONSTRUCTION MANAGEMENT SERVICES FOR THE CONFERENCE CENTER Motion to adopt an ordinance ~o~ regarding use of the conference center. AN ORDINANCE APPROVING A CONFERENCE CENTER USE AGREEMENT WITH THE CITY OF SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY ADMINISTRATIVE BUSINESS tion; that the issuance was not insured; that the bond rating was BAA; that 6.86% was the net interest cost of the bond issuance for 20 years; $487,000 was the net debt service; reserve fund accrues interest of $35,000 every year, etc. Conference Center Director Carl spoke of the construction contract with Nibbi Bros. and recommended the Council adopt the resolution. Director of Public Works Parini stated that the $300,000 contract was in addi- tion to the WQCP contract, and a record would be kept of work done on each project. Vice Mayor Nicolopulos questioned what the project would cost over a 20 year period. City Manager Armas stated that the tables delineated the costs over a 20 year period as slightly more than $48,000,000. Discussion and answer period followed: what the direct cost to the City and its General Fund would be for this project, and any foreseeable impact on the General Fund; that there was no cost to the City; that the revenues were represented in the tables from the T.O.T. which was the only pledge to the bond holders; that $487,000 was the annual obligation; that there was $1,600,000 per year revenue from T.O.T.; potential investors were advised of the true financial picture; that 6.73% interest was based on the down side per Federal regulations on the maximum legal amount a City could earn; that Bank of America was the trustee, and a representative from Stone & Youngberg explained the investment process; that interest income was in addition to the reserve fund; that no parking lot leases were involved since these were provided 10/9/91 Page 5 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS by the Radisson and the Holiday Inn who would make payments to the Travel Lodge property a half mile away; that there were letters of intent from the Holiday and Radisson, but an agreement was not yet executed; that the City had the abi- lity to enforce the conditions of the use permit, and the City Attorney had other legal means of enforcement; that $5,000 in property taxes would be paid by the Conference Center, and the budget included a 4% increase per year for property taxes; the Assessor~imposes a 1.1% tax on assessed value of properties, and the projected property tax figures do not include a $7,000,000 improvement of the leased property and~a new evaluation; that the property had a 45 year lease under public control!; a physical defi- ciency where the ground level had hit sea level; what flood measures are included in the constructionlbids, etc. Mr. Charley Hamm, G~oup 4 Architects, spoke in detail of ~he flooding: that mitigation measures were based on FEMA requirements and were included in the construction bid; there was a $340,000 contingency in the construction fund. He stated that in the new portion of the building they would elevate all installa- tions of air condit:oning, electrical, and transformers for flood control. He continued, the concrete slab will be provided with a gravel fill under it, as well as a membrane =o keep water satura- tion from coming up through the slab. He stated that there was nothing they could do with the old por=ion of the building. Councilman Penna questioned what assurances Council had that the old por- tion would not flood, and questioned if there was a sump pump in the building. Mr. Hamm stated tha= he could not give assurances on water infiltration into the building, and he had not seen a sump pump 10/9/91 Page 6 A G E N D A A C T I 0 N T A K E N O(q~Irq ~ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS in the building. Discussion followed: that the projec- tions were not base¢ on the number of people, but on usage of space; two sales people were projected; that other suc- cessful hotels had 6 to 7 sales people to sell space; differerces in selling hotels vs. conference centers; that S.S.F. hotels were cheaper than other hotels by $10.00; growth in o~cupancy; occupancy rates were capped at 80% in 1998-99; hotel room growth; that occupancy would have the same growth with or without a conference center; reserve fund is to protect the bond holders, etc. Mr. Lou Dell'Angela, 460 Gardenside Ave., stated that he had asked and had been unsuccessful in getting a copy of the parking agreement, and this evening he had been reluctantly allowed to see the document. He was concerned because this agreement was a critical document to the center, yet the document was so vague and nebulous as to be meaningless. He questioned if someone who had a lease- hold interest could commit or have a deed restriction on the property without first getting approval of the owner of the pro- perty. He questioned how one could work out a parking arrangement without some sort of parking study of where these parking spaces were going to be located. He questioned where conference center people would park when the hotels were full. He stated that this did not meet the legal requirements of the use permit. He questioned why the City was treating this application differently than any other application, because he knew that if a private developer came in for this application it would be pointed out that it was in violation of the Zoning Ordinance and would be turned down. He suggested that the Council defer to their Attorney on the Zoning Ordinance, 10/9/91 Page 7 AGENDA ACTION TAKEN ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS and ask if this item was properly before them tonight. He reiterated earlier concerns: on reve- nue projections made without a market study; if the Radisson was and had been up for sale, and how that would affect the conference center if it was sold; to spend $45,000,000 over a 20 year period on a rented facility; what would it cost to build a new facility on City property, etc. Mayor Drago stated that the total obliga- tion was $20,000,000 - not $45,000,000, and questioned why people rent anything. Mr. Dell'Angela stated that it was because they could not buy the property. He questioned why the City was paying $145.00 a square foot for construction. He felt that a lot of people were disap- pointed because this was not what the people voted for in Measure C, and urged the Council to defer action and hold a public hearing for public input. Mayor Drago stated that the Planning Commission did hold public hearings, and asked the City Attorney to respond to Mr. Dell'Angela's questions. City Attorney O'Toole responded: that the agreement assures every condition imposed by the use permit; that the Zoning Code allows certain latitude in dealing with uses not specifically mentioned in the Code for parking requirements such as the conference cen- ter; Planning staff had exercised that latitude in dealing with the conference center; in reference to the change of ownership - any hotel on that site would De subject to a use permit and the con- ditions of any use permit would be the same as for the Radisson. Mr. Dell'Angela stated that he was 10/9/91 Page 8 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS questioning Section 20.74.120 of the Zoning Ordinance, about the location of the spaces being located on the site if the owner of record submits a title report for the parcel with a covenant running with the land for the parking spaces and recorded with the County Clerk. City Attorney O'Toole stated that the agreement to be provided would be recorded with the County Clerk. Mr. Jake Jones, 12 E1Campo, stated that he had just returned from Visalia and related the following: the City now owns a large portion of the Holiday Inn, and had to dig up $1,500,000; Visalia City Manager was looking for a job because of this, and a couple of Councilmembers were not going to be returned to office. He stated that he was concerned over how much it would cost the General Fund if this City's conference center's operating expenses were greater than the revenues when there was not enough money to cover the bonds. He stated that he had talked to a person who operated a gas station for many years across from the conference center site and he had seen Photo Mat dump barrel after barrel of chemicals behind the building, and he questioned if soil tests had been made or was the City going to get struck. He stated that all of Tanforan was reconstructed for $6,000,000, and he thought the construction contract for the conference center was inflated. He stated that it was good to see a busi- nessman like Mr. Penna on the Council that figures these things out. Mr. Douglas Bartlett, San Mateo County Convention & Visitors Bureau, spoke in 10/9/91 Page 9 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS support of this conference center and his belief in its success. Discussion followed: cost of the 7,000 sq. ft. addition; 150.00 sq. ft. for new construction, and $110.00 sq. ft. for renovation of the existing structure; $127.00 sq. ft. for reconstruction and mitigation measures; potential for the land to level off in the next 50-100 years was 3" on Airport Blvd. and that area; velocity compaction points; finished floor elevation was 8.46' and the flood elevation was 7', etc. Mr. David Connor, Radisson, stated that they were looking at $7,000,000 with bonds over a 20 year period that would be $20,000,000, while the cost to build a new building and land - $1,000,000 an acre to buy the land on So. Airport which was about $20.00 a sq. ft. for a con- ference center without any hotels around it. He continued, 9 acres of land would De needed for the building and parking; it would cost $175 a sq. ft. for a state of the art conference center with the bonds came to a total of $14,640,000 plus financing of $16,000,000 - with a total price of $30,000,000. He stated that the economics of leasing were not bad, and his hotel was on leased land. He stated that his hotel was not for sale. He stated that S.S.F. hotel rooms were in the $80 range, and the Hyatt was $149.00, rather than a $10.00 spread difference. Mr. Raines, Holiday Inn, stated that his firm owned the Holiday Inn in Visalia, and it was the Radisson the hotel com- munity had petitioned against to the City Council because they knew it would not be successful because it was not a reputable developer. He stated that the hotel group had petitioned the Council for a ballot measure against adding the 10/9/91 Page 10 AGENDA ' ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ACTION TAKEN ADMINISTRATIVE BUSINESS Radisson to the conference center, and the Council had thrown it out due to a legal technicality. He stated that they had gone ahead with the project, built the hotel, and now Visalia was now on the hook for the hotel and had to pay the prospective developer. He stated that the space in Visalia was quite a bit larger than this conference center, and he personally knew quite a lot about that particular development. He stated that that was why he had been in support of Measure C because it would not cost the taxpayers, and the hotel community was 100% in favor of having this go forward. Councilman Penna stated that he was in favor of a conference center, but viewed this as pie in the sky. He stated that the hotels had come forward with the idea to lease this building, but no effort was made to put together a committee of pri- vate and public individuals to develop a comprehensive market study on the poten- tial pitfalls, location or advantages to the City. He stated that Burlingame had done this and had decided not to go with a conference center. He related the following: the Council had decided on this building which needed retrofitting and refurbishing; the building was sinking; there was no guaranty that the building will not flood; City could tear the building down and fill in the land as the lease payments are $300,000 per year. He refutted Mr. Connor's numbers on a brand new center, and pointed out that this site was a ~4 of the 9 acres the pro- jections had been on. He stated that the City did have a site on Oyster Point Blvd., the old GSA Building, which was six acres and it was an excellent loca- tion. He spoke at length: on building on City property; a lack of facts to back 10/9/91 Page 11 AGENDA "-'ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ACTION TAKEN ADMINISTRATIVE BUSINESS up staff's projections; he still wanted to see a market feasibility study so this would not be a draw on City funds; that the projected figures could lead to deficit spending; that two sales people were not sufficient to compete in the market; City should back off and do a study to see if it was worth while to go into this risk venture, and he would not vote for this. Vice Mayor Nicolopulos stated that through life things get done in one of two ways: "quid pro quo" - now you owe me one - why this is the preferred method is because the rewards often are immediate and readily visible, albeit, short term and temporary; the other process is you do something because it is good and has substance and meaning attached to it - in this path the rewards are seldom imme- diate and rarely visible, but they are lasting and enduring. He stated that to him - his family as well as his word were the most important things in his life, and that credibility was paramount - and all other success to be had was secondary. He questioned when the Council majority was going to stop pursuing the quid pro que - which could prove disastrous and demoralizing for our City's financial future. He related the following: Measure C was to assess users of hotels $2.50 in special T.O.T. to acquire, renovate a conference center in the City; a leased building could not be acquired, bought or made the City's after 20 years; the lease payments are projected at about $8,000,000; a market feasibility study to determine the best location, and a market feasibility fiscal budget was never done to determine how to pay for the selected site; need to replace the traditional think tank full of assumptions and allegations; initial 10/9/91 Page 12 ACTION TAKEN AGENDA "-ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. ADMINISTRATIVE BUSINESS constructions cost were projected at over $3,000,000, and alleged to house 1,500 persons; today's revisions are $5,200,000, and it would house 600-800 persons and possibly a maximum of 1,100; concerns expressed by Peat, Marwick & Mitchell's analyses; the City must be careful not to sacrifice quality to cost savings because it could affect market potential; the Council majority has always been for this site. He spoke against the conference center site: building site lacks adequate parking for the success of the center; structure has physical deficiencies; ground level has reached sea level; future flooding will deter operations; mitigation measures were not reflected; it will not be a quality product, and incapable of competing in the market. He spoke of small towns and cities across California being faced with financial disaster due to municipal bond debt and misused the money or let it sit idle, etc. He felt that using the Marks-Roos Act was risky and was a means to subsidize a troubled project - as was event in the City of Folsom. He felt that the Marks-Roos bonds were driven pretty much by greed on the part of the cities, and greed on the part of the underwriter. He stated that he was for a conference center, but felt that time and intelli- gence should come up with something that is safe, affordable, effective and a workable site. Mayor Drago refutted earlier statements: that the Burlingame conference center proposal was $50,000,000-100,000,000 with a net loss of $6,000,000 a year - which was significantly higher than this cen- ter; if the infrastructure was in at the Shearwater site the City would be dealing with the General Fund monies because the 10/9/91 Page 13 AGENDA ACTION TAKEN ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY ACTION: ADMINISTRATIVE BUSINESS City property could bring in revenue to the City, and if the center was put there it would have to be subsidized; that it was untrue that the conference center site was unsafe because you do not rehab buildings that are unsafe; center capa- city was 1,200 and would be 2,000 if there was not the restriction of space for parking; that there was a budget, and the financial analysis he had asked for six months a go was received; there was a marketing study although not as specific as some might want; it is a misconception that the location of the conference center was not known; because the Council had signed a lease with contingencies; the the only obligation with the Marks- Roos Act for the project was the T.O.T.; he did not see a financial risk to the City; that even if the occupancy rate stayed status quo there will be enough T.O.T. to cover the project; that it was the Council's obligation to keep on top of the budget. He stated that his first interest is for the City to protect the taxpayer in the case that the bonds fail. He stated that staff had said tonight that the bonds were sold - where is the liability to the City. He stated that the Conference Center Director was competent to run the center, and if the hotels are successful then the City was successful. He stated that his only concern was parking and had previously asked that the use permit be modified, and it was. M/S Haffey/Teglia - To adopt the Resolution. RESOLUTION NO. SSF-2-91 Carried by majority roll call vote, Boardmembers Nicolopulos and Penna voted no. 10/9/91 Page 14 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS 10. South San Francisco Conference Center - Continued. CITY COUNCIL ACTION: SOUTH SAN FRANCISCO CAPITAL IMPROVEMENTS FINANCING AUTHORITY: ADJOURNMENT: PUBLIC HEARINGS 11. Public Hearing - Comprehensive Housing Affordability Strategy (CHAS) for the Community Development Block Grant Program; 1) Conduct Public Hearing and pro- vide staff guidance on goals and objectives; 2) Approve submittal of CHAS; 3) Continue the Public Hearing to 11/13/91. ADMINISTRATIVE BUSINESS M/S Haffey/Teglia - To adopt the resolu- tion of award of construction contract. RESOLUTION NO. 128-91 Carried by majority roll call vote, Councilmembers Nicolopulos and Penna voted no. M/S Teglia/Haffey - To adopt the resolu- tion approving the agreement with Harris & Assoc. RESOLUTION NO. 129-91 Carried by majority roll call vote, Councilmembers Nicolopulos and Penna voted no. M/S Teglia/Haffey - To adopt the ordi- nance. ORDINANCE NO. 1106-91 Carried by majority roll call vote, Councilmembers Nicolopulos and Penna voted no. M/S Haffey/Teglia - To adjourn the meeting. Carried by unanimous voice vote. Time of adjournment was 11:10 p.m. PUBLIC HEARINGS Mayor Drago opened the Public Hearing. Director of Economic & Community Development Costello stated that this was the first of two public hearings for submitting a CHAS to HUD for the purpose of applying for and receiving CDBG funds in compliance with federal regulations, etc. 10/9/91 Page 15 AGENDA ACTION TAKEN --PUBLIC HEARINGS 11. Public Hearing - Continued. ITEMS FROM COUNCIL GOOD AND WELFARE CLOSED SESSION 12. Closed session for the purpose of discussion of personnel matters, labor relations, property nego- tiations and litigation. ADJOURNMENT 13. Motion to adjourn the meeting to Wednesday, 10/16/91, 7:15 p.m., Municipal Services Building, Community Room, 33 Arroyo Dr. for the discussion of: 1) Joint Meeting with BART Advisory Committee; 2) Joint meeting with Parking Place Commission; 3) Parking District Capital Improvements; 4) Closed Session pursuant to Government Code. ADJOURNMENT: PUBLIC HEARINGS Mayor Drago invited those wishing to speak for or against the item - no one did, and he closed the Public Hearing. Consensus of Council - To approve submit- tal of the document to CHAS. Consensus of Council - To continue the Public Hearing to 11/13/91. ITEMS FROM COUNCIL No one chose to speak. GOOD AND WELFARE No one chose to speak. CLOSED SESSION Council chose not to hold a Closed Session. M/S Haffey/Penna - To adjourn the meeting to Wednesday, 10/16/91, 7:15 p.m., Municipal Services Building, Community Room, 33 Arroyo Dr. for discussion of the items listed on the agenda. Carried by unanimous voice vote. Time of adjournment was 11:20 p.m 10/9/91 Page 16 A G E N D A A C T I O N T A K E N O?~i~rS'~' ,~ '' RESPECTFULLY SUBMITTED, Barbara A. Battaya, City C~'rk City of South San Francisco APPROVED. /~ J~_ck Dr_ago, Mayor / /~ity of South San Francisco The entries of this Agency meeting show the action taken by the City Council 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. 10/9/91 Page 17