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HomeMy WebLinkAboutRDA Minutes 1991-01-23 Chairman Jack Drago M I N U T E S Boardmembers: Richard A. Haffey Redevelopment Agency Gus Nicolopulos John R. Penna Municipal Services Building ~Roberta Cerri Teglia Community Room January 23, 1991 AGENDA ACTION TAKEN CALL TO ORDER: (Cassette No. 1) 7:07 p.m. Chairman Drago presiding. ROLL CALL: Boardmembers present: Haffey, Nicolopulos, Penna, Teglia and Drago. Boardmembers absent: None. AGENDA REVIEW AGENDA REVIEW Assistant to the City Manager Haskins stated there were no modifications to the Agenda. CONSENT CALENDAR CONSENT CALENDAR __1. Motion to approve the Minutes of the Removed from the Consent Calendar for Special Meeting of 1/9/91, and the discussion by Boardmember Teglia. Regular Meeting of 1/9/91. 2. Motion to confirm expense claims _~o~ Approved in the amount of $2,195.02. of 1/23/91. M/S Teglia/Haffey - To approve the Consent Calendar with the exception of Item 1. Carried by unanimous voice vote. 1. Motion to approve the Minutes of the Boardmember Teglia requested a clarifica- Special Meeting of 1/9/91, and the tion on the Regular Minutes of 1/9/91, Regular Meeting of 1/9/91. page 5, so that the Motion/Second would read, "To begin the process for forming an assessment district to obtain financing for the sole purpose of generating the Shearwater financial obligation for the Oyster Point Over- crossing Project; and the satisfaction of that obligation." M/S Teglia/Haffey - To approve the ---- Minutes of the Special Meeting of 1/9/91; and the Regular Meeting of 1/9/91 with the clarification as stated above. Carried by unanimous voice vote. 1/23/91 Page i AGENDA ACTION TAKEN ITEMS FROM AGENCY ITEMS FROM AGENCY 3. Request from Boardmember Penna Chairman Drago stated that he had been for discussion of the Price Club~o~ asked to agendize the Price Club lease property, and negotiations for property in the redevelopment area, and after review and some discussion had learned that Boardmember Penna wanted to deal with both the Council and the Redevelopment Agency. He stated that he had put it on the Redevelopment Agenda only for discussion, since the Pyramid Van & Storage agreement was prior to the formation of the redevelopment area it was now in, it would have to wait for the next Council agenda for discussion. He stated that tonight after an opinion from the Acting City Attorney on Boardmember Penna's letter, he thought they could safely discuss this under redevelopment after Councilman Penna speaks (a copy of the letter is attached and a permanent part of the minutes of this meeting). He asked the City Attorney if it would be proper to discuss what had gone on two weeks ago in the Closed Session on property acquisition. Acting Counsel Haile stated that it would be proper to discuss the subject of the Closed Session. Boardmember Penna stated that he had asked that it be agendized because he was uncomfortable because of the outline and the history of the lease and actions that the City had taken since the inception of the lease. He stated that he was trying to get a clear understanding of proce- dure, policy, intent, and where the City was headed. He retraced the history of the original lease: entered into a contract on City owned property where the City was going to be reimbursed for the cost of improving City owned property; Price Club would have a base lease of $400,000, plus a percentage of the gross once the gross went over $80,000,000 a year. 1/23/91 Page 2 TO; MAYOR DgGO FROM; JOHN PENNA _~~ SUBJECT: Price Club Lease I have several concerns which center around the policy the council follows to negotiate with the Price Club or any other developer when the Council is approached and asked to use the process of eminent domain to develop re-development areas7 At the next Council meeting,~ would like to aaendize the Price~ Club lease and negotiations for property in Redevelopment Areas. I wish to discuss the following: /~P~-ioA- lcace f~A- CALy owned property including purchase of the ~Pyramid Van site and the option agreement given to the Price Clu~.../ Discuss the request of the Price Club to allow them the exclusive rights to develop property adjacent to the Pyramid site and the use of eminent domain to do so. Discuss and agree on a policy that will determine before we act, the following: 1. What is the Price Glub plan exactly? 2. Who are the tenants the Price Glub is working with? 3. Council member liaison serving with the City Manager and City Attorney to negotiate with the Price Club. 1-23-91 Page 2a AGENDA ACTION TAKEN ITEMS FROM AGENCY ITEMS FROM AGENCY 3. Request - Continued. He stated that it was unusual for a pro- perty owner to allow a developer to go in and develop a property and charge them back for the on-site improvements of $2,000,000. Chairman Drago pointed out that Boardmember Penna was going into Council areas, and asked Acting Counsel to intervene if there were any violations. Boardmember Penna discussed the following: that the entire project was done prior to the Redevelopment Agency being put in place and it had been put on the Council; the City owed the Price Club $2,000,000 that is paid back through the percentage of the lease that is generated in excess of $80,000,000; why would the City put together a contract that would be so unusual from the standpoint of paying to have a developer improve your property. Chairman Drago stated that whatever had been put in the contract had been to attract a high tax generator in this City, and it could occur over and over in the future. Boardmember Teglia replied that the City was not a developer, and did not have a lot of extra dollars laying around at the time to improve the site which was fallow land. She stated that from the Council's point of view it had been to attract a major sales tax generator over a period of time, and the Price Club was looking at other sites in adjacent cities. Chairman Drago stated that six years ago City Manager Birkelo had been the major person dealing with this, and the only one who could explain the rationale of reimbursement for improvements. Boardmember Penna stated that he wanted to understand the policy that the Council made and the staff had carried out. 1/23/91 Page 3 AGENDA ACTION TAKEN ITEMS FROM AGENCY ITEMS FROM AGENCY 3. Request - Continued. Boardmember Haffey stated that he had been on the Council at the time and some ten City acres across from the sewage treatment plant was for lease for a hotel site, and when he had come on Council there had been no takers and in the mean- time the Price Club came available for the site. He continued, the City was chosen but we had to be competitive and the gamble or risk was minimal and the City collected millions of dollars and it was a successful venture and used strategy that the City may want to use again. He stated that the policy was for staff to get a major tax generator and conduct business - and they did that. Discussion followed: whether Council was aware of any competing sites and of deve- lopers involved; that it was a long time ago, but the City had been disappointed in not getting a hotel and T.O.T., but had taken the opportunity to get sales tax; Price Club went into business in 1986 and in 1988 had sales in excess of $80,000,000; that the sales tax dollars were confidential figures; that a per- centage of the gross was in turn paid back to the Price Club for the improve- ments to the property; that improvements to the site included sewage, utilities, and traffic signals; the City receives 1% of Sales Tax the State collects that is turned over to the Price Club for site improvements, etc. Acting City Attorney Haile stated that after the termination of the lease all of the building structures revert to the City. Discussion followed: a projection of ten twelve years of payments for the site including what was involved in the Pyramid site; that "eminent domain" appeared in the document as a benefit to the seller; Boardmember Penna felt that eminent domain should 1/23/91 Page 4 --ITEMS FROM AGENCY ITEMS FROM AGENCY 3. Request - Continued. only be used when Government needs a spe- cific piece of property for the benefit of the public, and the seller will not sell for a public use, yet this was done for a private use and the seller will not have to pay a capital gain; that it had been a benefit for the public for parking; that the City owned the property without spending a dime; Boardmember Penna had a problem with the Price Club option to purchase the property for as long as the lease exists, including the option period of up to 34 years at the same price the City paid of $2,750,000; that with the forgiveness of the note there would be a complete wash; unless the property changed hands it would not increase in value. Boardmember Penna related: concern about the building being bought for $2,275,000 and the Price Club turning around and selling it for $30,000,000 thirty years from now; he felt the City had given the Price Club an exceedingly good deal; he had voted against the Price Club having an exclusive right to purchase the property; now the Price Club was coming back to get the City to help purchase more property through redevelopment or condemnation procedings in the surrounding area in the coming year. Executive Director Armas stated that it was extremely common for a public agency to enter into a variety of developments that provide a specific time during which negotiations will take place and the benefits are enjoyed by both parties as well as the public. Boardmember Penna stated that on one of the properties being considered by the Price Club the tenants are not ready to move, even though the seller is ready to sell, and it will be a cost to the City to move the tenants. 1/23/91 Page 5 --ITEMS FROM AGENCY ITEMS FROM AGENCY 3. Request - Continued. He stated that made him uncomfortable to know that the Price Club was the City's Agent without knowing what their plans were, and he would like a highest and best use study made of the area. He stated that lastly he would like to see a liaison Councilmember to serve with the City Manager and City Attorney to negotiate whatever the Price Club is doing, and report back to Council. He stated that it was possible that contracts coming before Council are not fully understood and yet are acted upon. Chairman Drago stated that it was thanks to the Price Club being number one and for other sales tax generators that the City was in a good financial state. He stated that one of the contracts in question was six years old, and the other was effected last year. He questioned if Boardmember Penna thought to renegotiate those contracts. Boardmember Penna replied in the affirmative. Chairman Drago stated that it appeared that the option was the biggest objection to Boardmember Penna that they can buy back the property that the City paid for with their money. He questioned how the Boardmembers felt about not having that type of clause included in future contracts. He questioned how the Board felt about a Council liaison sitting in on negotiations. Boardmember Teglia stated that subcommit- tees were set up to go out and interact, but the political people fall away and it goes to the professional staff and any negotiations are done at the direction of the full Council; and it is brought back to the full Council for discussion and direction. She stated that when the two contracts came before the Council they 1/23/91 Page 6 A G E N D A A C T I 0 N T A K E N ~ITEMS FROM AGENCY ITEMS FROM AGENCY 3. Request - Continued. were understood, and she did not feel that any one Councilmember could do a better job than a subcommittee, etc. Vice Chairman Nicolopulos stated that Boardmember Penna needed to understand the difference between individual needs, and organizational needs. Boardmember Haffey stated that this had been a lengthy rehashing of prior actions, and after a memory refresher, he still felt that it was an outstanding deal for the City. He fe~t that an indi- vidual liaison of Council was not of benefit to the otheR four members and could give rise to conflicts. Boardmember Penna stated that he really meant -- two members to serve as a liaison, if the Council agreed. Chairman Drago stated that it probably would be good to have Boardmember Penna's real estate expertise, but he did not see an advantage for other members of Council without that expertise to serve. He hoped Boardmember Penna's concerns had been addressed and it could be put to rest. Boardmember Penna stated that the Agency did not want to go back and renegotiate the two agreements. Boardmembers Nicolopulos and Teglia responded negatively. GOOD AND WELFARE GOOD AND WELFARE No one chose to speak. CLOSED SESSION CLOSED SESSION 4. Closed Session for the purpose of The Agency chose not to hold a Closed the discussion of personnel Session. matters, labor relations, -.- property negotiations and litigation. 1/23/91 Page 7 AGENDA ACTION TAKEN M/S Teglia/Haffey - To adjourn the meeting. Carried by unanimous voice vote. ADJOURNMENT Time of adjournment was 8:10 p.m. RESPECTFULLY SUBMITTED, APPROVED. Barbara A. Battaya, b~erK~_~/ airman Redevelopment Agency ledevelopment Agency 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. 1/23/91 Page 8