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HomeMy WebLinkAbout2012-08-14 e-packetREGULAR MEETING r� OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE CITY OF SOUTH SAN FRANCISCO REDEVELOPMENT AGENCY P.O. Box 711 (City Hall, 400 Grand Avenue) South San Francisco, California 94083 CITY HALL LARGE CONFERENCE ROOM, TOP FLOOR 400 GRAND AVENUE TUESDAY, AUGUST 14, 2012 2:00 P.M. PEOPLE OF SAN MATEO COUNTY You are invited to offer your suggestions. In order that you may know our method of conducting Board business, we proceed as follows: The regular meetings of the South San Francisco Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency are held on the second Tuesday of each month at 2:00 p.m. in the in the Large Conference Room, Top Floor at City Hall, 400 Grand Avenue, South San Francisco, California. In accordance with California Government Code Section 54957.5, any writing or document that is a public record, relates to an open session agenda item, and is distributed less than 72 hours prior to a regular meeting will be made available for public inspection in the City Clerk's Office located at City Hall. If, however, the document or writing is not distributed until the regular meeting to which it relates, then the document or writing will be made available to the public at the location of the meeting, as listed on this agenda. The address of City Hall is 400 Grand Avenue, South San Francisco, California 94080. In compliance with Americans with Disabilities Act, if you need special assistance to participate in this meeting, please contact the South San Francisco City Clerk's Office at (650) 877 -8518. Notification 48 hours in advance of the meeting will enable the City to make reasonable arrangements to ensure accessibility to this meeting. Chairman: Neil Cullen Selected by: Largest Special District of the type in H &R Code Section 34188 Vice Chair: Denise Porterfield Selected by: San Mateo County Superintendent of Schools Deputy Superintendent, Fiscal and Operational Services San Mateo County Office of Education Board Members: Marls Addiego Councilmember, City of South San Francisco Alternate: Barry Nagel City Manager, City of South San Francisco Gerry Beaudin Principal Planner, City of South San Francisco Barbara Christensen Director of Community /Government Relations, San Mateo County Community College District Reyna Farrales Deputy County Manager, San Mateo County Paul Scannell Counsel Craig Labadie Selected by: Mayor of the City of South San Francisco Mayor of the City of South San Francisco Chancellor of California Community College San Mateo County Board of Supervisors San Mateo County Board of Supervisors (Public Member) Advisory: Marty Van Duyn — Assistant City Manager, City of South San Francisco Jim Steele — Finance Director, City of South San Francisco Steve Mattas — City Attorney, City of South San Francisco Krista Martinelli — City Cleric, City of South San Francisco Armando Sanchez — Redevelopment Consultant, City of South San Francisco CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE AGENDA REVIEW OVERSIGHT BOARD REGULAR MEETING AUGUST 14, 2012 AGENDA PAGE 2 PUBLIC COMMENTS Comments from members of the public on items not on this meeting agenda. The Chair may set time limit for speakers. Since these topics are non - agenda items, the Board may briefly respond to statements made or questions posed as allowed by the Brown Act (Government Code Section 54954.2). However, the Board may refer items to staff for attention, or have a matter placed on a future agenda for a more comprehensive action report. MATTERS FOR CONSIDERATION Motion to approve the Minutes of the Regular Meeting of July 10, 2012. 2. Resolution adopting a Conflict of Interest Code for the Oversight Board to the City of South San Francisco Successor Agency. Report on Department of Finance inquiry pertaining to action by Resolution approving One Chestnut Avenue Leasing Criteria. 4. Presentation of Housing Asset Reporting Form provided to the State of California Department of Finance. Resolution approving Sitike Counseling Center Lease Amendment for 472 Grand Avenue (306 Spruce). 6. Resolution approving San Mateo County Medical Clinic Lease Amendment for 306 Spruce Avenue. 7. Resolution approving Successor Agency's request to include expenditures of housing bond proceeds on the Recognized Obligations Payments Schedule (ROPS). Presentation and consideration of the draft Recognized Obligations Payments Schedule (ROPS) for the period January 1, 2013 through June 30, 2013. a. Presentation of draft ROPS. b. Consideration of Resolution approving draft ROPS. 9. Report from Bond Counsel regarding the legal authority of the Oversight Board to set aside funds in an escrow account to call bonds issued by the former Redevelopment Agency. 10. Future Agenda Items. a. Report on any determination by the State of California Department of Finance on unfunded pension and liabilities being an enforceable obligation of the Successor Agency of a Redevelopment Agency. ADJOURNMENT OVERSIGHT BOARD REGULAR MEETING AUGUST 14, 2012 AGENDA PAGE 3 CALL TO ORDER ROLL CALL PLEDGE OF ALLEGIANCE AGENDA REVIEW PUBLIC COMMENTS Meeting held at: MUNICIPAI., SERVICES BIJIM,ING COMMUNITY ROOM 33 ARROYO DRIVE SOIJ'FH SAN FRANCISCO, CA TUESDAY, JULY 10, 2012 Time: 2:01 p.m. Present: Boardmembers Addiego, Beaudin, Christensen and Scannell, Vice Chairperson Porterfield and Chairperson Cullen. Absent: Boardmember Farrales. Attorney Michael Roush served as Counsel at the Meeting as Alternate to Craig Labadie. Led by Boardmember Scannell. Comments from members of the public on items not on this meeting agenda. The Chair may set time limit for speakers. Since these topics are non-agenda items, the Board may briefly respond to statements made or questions posed as allowed by the Brown Act (Government Code Section 54954.2). However, the Board may refer items to staff for attention, or have a matter placed on a future agenda for a more comprehensive action report. 1 . Motion to approve the Minutes of the Regular Meeting of June 12, 2012. Motion— Boardmember Scannell/Second— Boardmember Addiego: to approve the Minutes of the Regular Meeting of June 12, 2012. Approved by the following voice vote: AYES: Boardmembers Addiego, Beaudin, Christensen and Scannell, Vice Chairperson Porterfield and Chairperson Cullen; NOES: None; ABSTAIN: None; ABSENT: Boardmember Farrales, 2. Update on recent State Redevelopment-related Clean-up Legislation AB 1484. City Attorney Mattas provided the Board with an overview of AB 14.81, highlighting changes modifying AB 26. Much of the new legislation is intended to assist the state with recovery of funds. Significant portions of the new legislation were discussed, including that AB 1484: 1) clarifies that the Successor Agency is a separate entity from the City; 2) obligates die Successor Agency to pay the amount that the County Auditor-Controller determines is owed to the taxing entities for the period January through June 2012, based upon the December 2011 distribution of tax increment and the January -June 2012 RODS by July 12th; 3) requires submission of a compreliensive Housing Asset inventory in a newly approved DOF format and according to an expanded definition of "housing assets"; 4) moves up RODS deadlines and adds RODS subinitti-il requirements; 5) adds, due diligence review and payment, obligations; 6) authorizes the transfer of public purpose properties to the Successor Agency or otlicr public entity for whiclia public facility was constructed; 7) modifies the Administrative Budget Allowance; and 8) requires that Oversight Board actions be taken by Resolution and forwarded to DOF and establishing that Oversight Board actions are not effective for five business days pending a DOF request for review and DOF has a 40 day period to conduct review if requested. 3. Information on downgrade of all Redevelopment Agencies' Bond Ratings by Moody's Investor Services. Director of Finance Steele presented the informational report noting that Moody's downgraded all RDA Bonds in the State due to uncertainty about the timing of payments and the fact that some agencies would not be able to make their payments. There was no impact on the City's Successor Agency related to these reports, since the Agency had already received funds from the County to pay the next semi-annual RDA bond debt service in September 2012 and the debt service payments are approved in die ROPS by the Oversight Board and the DOF. 4. Resolution No. 2-2012 approving lease criteria and procedures for One Chestnut Avenue. Director of Economic and Community Development and Assistant City Manager VanDuyn presented the staff report recommending that the Oversight Board provide direction and adopt a Resolution approving leasing criteria, procedures for seeking bids froni interested parties, and selecting a tenant for a short term lease for the property at I Chestnut Avenue. Due to interest in leasing the One iChestnut Avenue property expressed by a realtor for Pet. Club at the June 12, 2012 Oversight Board Meeting, staff recommended the Board approve the following lease criteria for bids on leasing the building: 1) the tenant shall receive all City permits and pay all fees prior to occupancy; 2) the use shall be consistent with all City codes, general plan and zoning criteria; 3) the tenant shall pay market rate rent subject to a nominal discount for entering into a short-term lease; 4) as the lease is for a short-term use, the rent would not include tenant improvement. rent credits; OVERSIGHT BOARD JULY 10, 2012 Iv IWTES PAGE 2 5) die tenant would be responsible for payment of all utilities, taxes and site maintenance; 6) the lease term sliall be limited to three (3) years; 7) the lease would not grant the tenant (an) option(s) to extend tenancy beyond (lie initial three (3) years; continued occupancy would be on a month -to- month basis; 8) the lease termination would include the ability for a developer to occupy the property and prepare for a developtxicnt; (9) the tenant would be required to stop operating at the site following the City's notice of lease terminations; 10) under no circumstance would the tenant. receive a right of first refusal or any other option to purchase the property. Boardi- nembcrs questioned the proposed length of the bid application process. Director VanDuyn responded the normal bid process includes a 30 day deadline.. City Attorney Matt.as explained the Board has some flexibility since AB 1484 deemed the Successor Agency to be a separate entity. Staffs recommendation was that a public process would be the most appropriate. Motion— Boardnaember Scannell /Second— Boardmember Addiego: to approve Resolution No. 2- 2412. Approved by the following voice vote: AYES: Boardrnembers Addiego, Beaudin, Christensen and Scannell, Vice Chairperson Porterfield and Chairperson Cullen; NOES: None; ABSTAIN: None; ABSENT:. Boardmember Farrales. 5. Discussion and Follow -up (questions Regarding Real Property Assets Listed Below, Address SCO Asset Transfer Assessment Row Number 559 Gateway Blvd 1 296 Airport Blvd 5 201 Grand Avenue 14 207 Grand Avenue 13 217 -219 Grand Avenue 12 200 Linden Avenue 9 212 Baden Avenue 10 216 Baden Avenue 11 480 No. Canal 6 432 Baden Avenue 2 616 Linden Avenue 15 700 Linden Avenue 16 905 Linden Avenue 17 938 Linden Avenue 18 323 Miller Avenue 3 356 Grand Avenue 4 472 Grand/306 Spruce Avenue 7 468 Miller Avenue 8 80 Chestnut Avenue 21 1 Chestnut Avenue 20 APN 093 - 312 -050 19 APN 093 - 312 -060 19 APN 093 -331 -050 19 APN 093 - 331 -060 19 APN 011 -326 -030 19 (OVERSIGHT BOARD JULY 10, 2012 MMTES PAGE 3 Due to dic newly legislated AB 1484 requirement pertaining to the development of a Property Management Plan, this item was not heard by the Board. 6. Future Agenda Items. a. Report from Bond Counsel regarding the legal authority of the Oversight Board to approve defeasance of bonds issued by the former Redevelopment Agency. 1). FPP,C Conflict of Interest Code. C. Administrative Budget: consideration of need for audit/RDA financial consulting assistance. d. Recommendations pertaining to disposition/demolition of properties previously held by the Redevelopment Agency. e. Report on any determination by the State of California Department of Finance on unfunded pension and liabilities being an enforceable obligation of the Successor Agency of a Redevelopment Agency. f. Report on legal analysis pertaining to Harbor District Agreement and consideration of motion approving Harbor District Agreement as enforceable obligation of the Successor Agency. Items "c" and "d" were removed as Future Agenda Items, since their respective subjects would be addressed by newly established AB 1484 requirements. The Board determined Item "f'was no longer necessary due to information received from Counsel and noted RODS payments on waive attenuators would go forward, Item "b" would appear on the August 14, 2012 Regular Meeting Agenda, U. Motion — Boardmember Christensen/Second— Boardmember Scannell: to adjourn the meeting. Approved by the following voice vote: AYES: Boardinembers Addiego, Beaudin, Christensen and Scannell, Vice Chairperson Porterfield and Chairperson Cullen; NOES: None; ABSTAIN: None; ABSENT: Boardmember Farrales. Pursuant to the above motion, Chairman Cullen adjourned the meeting at 2:52 p.m. MROTOTOW11 sta i,_.... li, eity Clerk City I of 0 ity f S San Francisco OVERSIGHT BOARD MINUTES Approved: Neil Cullen, Chairperson Oversight Board for the Successor Agency to the City of South San Francisco Redevelopment Agency JULY 10, 2012 PAGE 4 It is recommended that the Oversight Board adopt a resolution adopting a Conflict of Interest Code for the board. DISCUSSION: The Political Reform Act ( "PRA ") requires that "new agencies" adopt conflict of interest codes. After ABlx26 took effect, the Fair Political Practices Commission ( "FPPC ") issued an advice letter dated April 25, 2012 regarding the applicability of the conflict of interest code and financial disclosures provisions of the PRA to new local government agencies and officials holding positions in those agencies created by AB 1 x26. The FPPC stated that if the city serves as a successor agency, the code reviewing body of the successor agency and its oversight board is the city council. Further, the FPPC advice letter concluded that the code reviewing body could (1) determine that the successor agency or oversight board, or both, are new agencies for purposes of the PRA, or (2) determine that the city itself is the "agency" and amend its own conflict of interest code to cover designated employees in the successor agency and oversight board. Subsequent to the FPPC advice letter, the Legislature modified AB 1 x26 by adopting AB 1484. AB 1484 clarified that successor agencies are separate legal entities. As a result, staff recommends the Oversight Board adopt its own conflict of interest code. By: Steve Mattas, SuccessorAgency Counsel Attachments: Resolution, Exhibit A 1'949721.1 OVERSIGHT BOARD FOR SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO I I'll, I ii" # WHEREAS, pursuant to the Political Reform Act (Article III of Chapter 7 of the Government Code, commencing with Section 81000), each government agency is required to adopt a Conflict of Interest Code (Government Code Section 87300 et seq.); WHEREAS, pursuant to Government Code Section 87302, the Conflict of Interest Code shall provide for specific enumeration of the positions within the City, other than those specified in Government Code Section 87200, which involve the making or participation in the making of decisions which may foreseeably have material effect on any financial interest and for each such enumerated position, the specific types of investments, business positions, interests in real property, and sources of income which are reportable; and NOW THEREFORE, BE IT RESOLVED by the Oversight Board for the Successor Agency to the South San Francisco Redevelopment Agency that it hereby approves the Conflict of Interest Code including designation of positions and the applicable disclosure categories for the positions shown in the attached Exhibit A. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of South San Francisco at a regular meeting held on the day of August, 2012 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: 1949730.1 City Clerk DISCLOSURE CATEGORIES All persons holding offices or positions specified in Government Code Section 87200 shall file FPPC Form 700 for purposes of complying with the financial disclosure requirements of the Conflict of Interest Code. All other positions and offices designated in herein shall file FPPC form 700 based on the disclosure categories listed below. B. DISCLOSURE CATEGORIES Category 1: All investments, sources if income, interests in real property or business positions in which the designated employee of official is a director, officer, partner, trustee, employee or holds any position of management. (Schedule All A-E) Category 2: All interest in real property located in the city of South San Francisco, within two (2) miles of the city of South San Francisco or within two (2) miles of any land owned or used by the City of South San Francisco. (Schedule B & C) Category 3: All investments, interests in real property or sources of income subject to the regulatory, permit or licensing authority of the department, board or commission, or agency. (Schedule All A-E) Category 4: Investments in business entities and sources of income which engage in land development, construction or the acquisition or sale of real property, (Schedule A, C, D, E) Categories 5 : Investments in, income from and positions held in business entities of the types which, within the past two (2) years, have contracted with the City of South San Francisco to provide services, supplies, materials, machinery or equipment. (Schedule A, C, D, E) Category 6: Investment in, income from and positions held in business entities of the type which, within the past two (2) years, have contracted with the designated employee's department to provide services, supplies, materials, machinery and equipment, (Schedule A, C, D, E) DESIGNATION OF POSITIONS AND APPLICABLE DISCLOSURE CATEGORIES FOR THE OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO Designated Positions Disclosure Category 1. Members of the following Boards and Commissions 1.1 Oversight Board Form 700 (all categories) 2. Staff 2.1 Oversight Board Counsel Fortin 700 (all categories) 1949762.1 N, Redevelopment Successor A ency Oversight Board 9 DATE: August 14, 2012 TO,: Members of the Oversight Board FROM: Marty Van Duyn, Assistant City Manager SUBJECT: TRANSMITTAL OF HOUSING ASSET INVENTORY LISTING HOUSING ASSETS TRANSFERRED TO THE CITY OF SOUTH SAN FRANCISCO AS THE ENTITY ASSUMING THE HOUSING FUNCTIONS OF THE FORMER REDEVELOPMENT AGENCY; ACKNOWLEDGEMENT OF CONVEYANCE OF HOUSING ASSETS I's mal ij I Bola ffj. 0 M It is recommended that the Oversight Board review the attached Housing Asset Inventory listing the housing assets transferred to the City of South San Francisco as the entity assuming the housing functions of the former Redevelopment Agency and adopt a Resolution acknowledging the conveyance of the housing assets to the City. BACKGROUND /DISCUSSION On August 1, 2012, staff transmitted the attached Housing Asset Inventory to the State Department of Finance, as required under Assembly Bill 1484 ("AB 1484") which went into effect on June 27, 2012. AB 1484 requires the inventory to include assets transferred to the housing successor agency between February 1, 2012 and the date the list was created. Exhibit A of the inventory lists interests in real property, Exhibit B lists interests in personal property, Exhibit C lists obligations proposed to be funding with remaining 1999, housing bond proceeds, Exhibit D lists the housing loan receivables, Exhibit E outlines payments from property generating land lease revenue and the loans for which repayments have been received beginning February 1, 2012, and Exhibit F outlines City owned residential properties for which tenant rent revenues are collected. Pursuant to Health and Safety Code Section 34176, as enacted by Assembly Bill 26 and modified by AB 1484, the housing assets of the former Redevelopment Agency transferred to the City as the entity assuming the Agency's housing functions, by operation of law on February 1, 2012 when the Redevelopment Agency was dissolved. The attached Resolution acknowledges the conveyance of the housing assets to the City. By: & !� a Marty Van Duyn City Assistant City Managger a d Director Attachment: Housing Asset Inventory Oversight Board Resolution Acknowledging Conveyance of Housing Assets OVERSIGHT BOARD FOR THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA RESOLUTION APPROVING HOUSING INVENTORY AND ACKNOWLEDGING CONVEYANCE OF HOUSING ASSETS TO THE CITY OF SOUTH SAN FRANCISCO IN ITS CAPACITY AS HOUSING SUCCESSOR WHEREAS, pursuant to Resolution No. 8-2012, adopted by the City Council of the City of South San Francisco on January 25, 2012, the City of South San Francisco ("City") agreed that upon dissolution of the Redevelopment Agency of the City of South San Francisco (the "Redevelopment Agency") on February 1, 2012 pursuant to Assembly Bill x 26 ("ABxI 26"), the City: (i) would serve as the successor agency to the Redevelopment Agency ( "Successor Agency"), and (ii) would assume the housing functions of the Redevelopment Agency; WHEREAS, Health and Safety Code Section 34176(a), added by Assembly Bill x1 26 and modified by Assembly Bill 1484, provides that the housing assets of a former redevelopment agency shall be transferred to the entity that assumes the housing functions formerly performed by such redevelopment agency (the "Housing Successor"); and WHEREAS, the Successor Agency has acknowledged that the housing assets identified on the Housing Assets List attached to this Resolution as Exhibit A (the "Housing Assets") were conveyed to the City by operation of law upon dissolution of the Redevelopment Agency on February 1, 2012, and the City Council of the City of South San Francisco, acting in its capacity as Housing Successor, has acknowledged the acceptance of the Housing Assets. NOW THEREFORE, BE IT HEREBY RESOLVED that the Oversight Board for the former Redevelopment Agency of the City of South San Francisco hereby: 1. Approves the Housing Assets List attached hereto as Exhibit A. 2. Acknowledges that Housing Assets were conveyed to the City on February 1, 2012 by operation of law upon dissolution of the Redevelopment Agency. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the Oversight Board of the Former Redevelopment Agency of the City of South San Francisco at a special meeting held on the th day of _, 2012 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: 1947010.1 City Clerk et .J -i A W i z 0 < :1 Lu z rn L—L U. LU 4) 0 Q) �00 Q Z L) w (L 0 W W V) C; N > 0 > E U) U) V 'a r- CD C) Cl C? 0? C) CD CD 0 0 rn > OC 0 N LL 0 U) N ;C; m G7 Q 0 E I 117 CV 0 UJ "0 x W U) us Dr c 0 0 fl O Co 2 -0 > CD C: LL . 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V v 2 co C: -0 :t—_ F X LU 'Q c m CD _0 0 CL 0 76 —2 0 E x CL C) W 0 E > E U5 0 n 0 0 .g-- .I-- -0 x m ca EE E C) ± CL U) \ 7C3 DATE: August 14, 2012 TO: Members of the Oversight Board FROM: Marty Van Duyn, Assistant City Manager SUBJECT: ADOPT A RESOLUTION APPROVING AN AMENDMENT TO THE LEASE AGREEMENT WITH SITIKE COUNSELING CENTER FOR THE FACILITY AT 306 SPRUCE AVENUE 1, , *14104 It is recommended that the Oversight Board adopt a resolution authorizing an amendment to the lease agreement with Sitike Counseling Center for the facility at 306 Spruce Avenue and authorize the City Manager or his designee to execute the Lease Amendment. wam1� w The medical facility located at 306 Spruce Avenue/472 Grand Avenue, is a 14,000 square foot parcel containing a three story building and an adjacent parking lot. The facility also has a dedicated parking lot at 468 Miller Avenue. The basement level of the building contains vacant office space, the building's mechanical systems (electrical, fire alarms, HVAC and boiler) and restrooms, The San Mateo County Health Center occupies the second floor and Sitike Counseling Center occupies the first floor. The roof of the building contains cell tower equipment installed by Sprint and the building's exhaust fans. Sitike's tenant space is partitioned into office spaces and counseling rooms, with an entry lobby, kitchen, child care facility, two disabled accessible restrooms, and access to an outdoor patio. Their lease includes four (4) on-site parking spaces and seven (7) spaces at the Miller Avenue parking lot. The Health Center is a primary care medical facility with exam rooms, a large office area, counseling rooms, a lobby, a computer server room, a meeting room and kitchen, and two disabled (men's and women's) accessible restrooms. The Health Center lease includes five parking spaces in the adjacent lot and eleven spaces in the lot on Miller Avenue Because of the Health Center, the elevator serving the building must be maintained to CAL OSHA standards and have yearly load testing. Additionally, the Health Center requires the ambient temperature be maintained at a constant 72 degrees and that the exhaust fans circulate at levels specified by CAL OSHA, thus requiring monitoring on a quarterly basis, . The two tenants, the San Mateo County Health Center and Sitike Counseling Center have held leases for 15 years and 16 years respectively. The Leases for both tenants require the Lessee's to pay for all their utilities and to provide janitorial services while landscaping and all maintenance and repairs are the responsibility of the Lessor. Sitike's lease expired in February Staff Report Subject: Sitike Lease Amendment for 306 Spruce Avenue Page 2 of 2012 and the County's lease is to expire on September 30, 2012. Both tenants have requested lease extensions for 5 years and 3 years respectively. . Sitike Counseling Center, When the former Redevelopment Agency (Agency) acquired the medical building at 306 Spruce Avenue it assumed the existing ten year lease with Sitike. That Original Lease Agreement, dated December 2, 1996, expired on February 28, 2007. The Agency amended the Original Lease Agreement with Sitike on June 13, 2007 effectuating the five year option of the Original Lease, with an expiration date of February 28, 2012, The terms of the 2007 Lease Amendment included a lease amount of $6,882.75, or $1.21 per square foot which was considered to be within the market range at that time. The Agency did not provide a five year option as the Agency did not want to limit its options to sell the property in the future. Subsequent to the June, 2007 Amendment, Agency waived all scheduled rent increases due to the soft economy that resulted in lease rates in the Downtown remaining stable or dropping. Furthermore, in March, 2010, based on a request by Sitike, the Agency Board reduced the rent I I% (from $,6,882.75/mo. to $6,125.65/mo., or $1.21 /SF to $1,08/SF). When Sitike's lease expired on February, 2012, Sitike requested a lease extension, however, the Agency was unable to accommodate the request due to ABx 1 26 which terminated redevelopment agencies. Sitike has been renting the space on a month-to-month basis since then, On June 18, 2012, Sitike's Executive Director submitted a letter asking the Successor Agency and the Successor Agency Oversight Board for a Lease Amendment which included the following terms: A 5 year Lease renewal with an option to extend the Lease for another 5 year teirn A clause stating that Sitike would receive a notice of no less than 6 months, to vacate A rent reduction of 4.63% from $1.08/SF to $1.031SF or a total annual reduction of $3,204.12 Sitike states in their request that their organization has not received cost of living increases from San Mateo County fior the last 5 years; and that insurance costs have risen by 20% over the last 3 years while contributions from foundations and donors have decreased. Sitike further states that it has been forced to offer fewer benefits at greater cost to employees and that other costs such as supplies and materials are also increasing. Sitike has made a significant investment in the facility. In 1997, they secured $150,000 to remodel their offices with a $50,000 contribution from their own reserves and matching funds from the City of South San Francisco and San Mateo County Community Development Block Grant funds. Sitike is an excellent tenant and pays rent on time. They are conscientious about caring for their facility to City standards and have good working relationships with the County Health Clinic and other immediate neighbors. Sitike pays full utility costs for their facility and their current rent generates $73,508 per year which is deposited into the Successor Agency Fund to pay for expenditures approved in the City's Recognized Payment Obligation Schedule (ROPS). The Successor Agency appreciates Sitike's presence in the building and their critical services to the community. Sitike has attempted to acquire a building of their own, however, the lack of suitable office space, severe budget cuts and limited foundation funding has prevented them from doing so. Further, with state and county mandated accessibility requirements, there are few buildings in town Staff Report Subject: Sitike Lease Amendment for 306 Spruce Avenue Page 3 that provide the required accessibility. That was the main reason they moved from Mission Road to the Spruce Avenue facility in 1996. San Mateo County Health Center: On April 4, 2000, the Agency entered into a Lease Agreement ( "Clinic Lease ") with the County of San Mateo for the tenant space in the building located at 306 Spruce Avenue ( "Premises "), authorized by Resolution No. 63515. As noted earlier, the Premises are located on the second floor and consist of approximately 6,225 square feet. The County uses the Premises to provide health care services and a. women and infant care program for residents of South San Francisco. Prior to the Lease expiring on September 30, 2011 the County notified the City that it would like to extend the Lease for one year. Although the Lease provided the County with the option to extend its tenancy for five years, the County elected only to extend the lease by one year due to uncertainty regarding their continued presence at this location. On September 14, 2011 the City, which temporarily took possession of the property from the Redevelopment Agency, approved a Lease amendment extending the County's tenancy until. September 30, 2012. The County is currently seeking a three year extension of the Lease with a provision to terminate the Lease with six - month's notice. The proposed extension fills within the five year option period provided in the original Lease and would be unlikely to interfere with any future land disposition. Currently, the base rent is $8,771.32 with annual cost -of- living adjustments based on the consumer price index. The County Health Center has not requested a lease rate reduction and has had annual cost-of-living rent increases in the past. This has created a disparity wherein cost-of-living adjustments are eliminated for one tenant but not the other. To some extent the difference in rent rates for Sitike and the County health Center can be justified by the nature of each tenant space and the Health Center's requirements to provide a computer support room, elevator maintenance to OSHA standards and exhaust fan performance. The Health Center also receives more parking spaces than the counseling center. However, in moving forward it would be prudent for the Successor Agency treat both tenant equally. Given market conditions in South San Francisco, it would be reasonable to provide the Medical Clinic with a similar rent reduction and thus ensure they continue to provide services to South San Francisco residents at this location. Lease Extensions: The State Legislature adopted AB 1.484 on .rune 27, 2012 with the intent of clarify provisions of ABx1 26. AB 1.484 has new provision which require Successor Agencies to prepare an Asset Management Plan with respect to the properties owned by the former Redevelopment Agency. Until the Oversight. Board and DOF approve the Asset Management Plan, the Successor Agency may not take actions that would affect the long term uses of property assets. Therefore, staff recommends a one year Lease Amendment for both Sitike and the Health Center. Alternatively, the Oversight Board may consider three year lease extensions for both groups as such leases would not affect the long term use or disposition of the building. However, it should be noted that DOF called for a review of the lease criteria the Oversight Board approved for the rental of One Chestnut Avenue. This demonstrates DOF is diligently reviewing Successor Agency actions with Staff Report Subject: Sitike Lease Amendment for 306 Spruce Avenue Page 4 respect to land assets. Although DOF will have the authority to review the proposed leases, staff believes that because the medical facility is a public use property it will not be necessary to wait for ruling from DOF before moving forward with a short-term lease. One additional provision of the lease is that both tenants have requested 6 months notices to vacate which is reasonable given the complexities of moving large operations and the difficulty involved in securing a suitable space that meets their size and accessibility requirements. Current office rents in the Downtown area range between $0.89 (in the South Linden industrial area) to $1.50 (South Spruce large commercial /retail space) per square foot. A medical office space in the So. Spruce Avenue commercial corridor is currently being offered at $1.00 per square foot. Given current market conditions, staff believes that a rental rate of $1.00 to $1.34 per square foot is reasonable for an older building in the downtown core. Sitike has requested a rate of $1.03 per square foot for a total payment of $5,858.64 per month. This will decrease rent revenue by $3,204 per year to $70,304. The Health Center currently pays $8,771.32 per month, or $1.41 per square foot. Staff recommends a similar rent reduction of 4.63% (from $1.41 to $1.34 per square foot) for the Health Center, an annual rent decrease of $4,805 (see table below). CONCLUSION: Staff is recommending the Oversight Board approve one year lease extension amendments with a six - month notice to vacate without cause for Sitike Counseling Center and the County Health Center. Staff does not recommend extended leases due to State law requiring the Successor Agency to prepare a Property Asset Management Plana. Staff recommends Sitike receive 4.63 % rent reduction from $1.08 /SF to $1.03 /SF, for a total of $5,858.64 per month and that the Health. Center receive a 4.63 % reduction from $1.41 /SF to $1.34 /SF, for a total payment of $8,370.8921 per month, or $100,450.80 per year. Combined, both tenant leases provide a total of $1.70,754.40 per year in revenues. It is recommended that the Oversight Board adopt a resolution authorizing an amendment to the lease agreement with Sitike Counseling Center for the facility at 306 Spruce Avenue and authorize the City Manager or his designee to execute the Lease Amendment. By: arty Van Du Assistant City Manager Sitike Clinic Area (SF) 5,688 6,225 Current Rent/Mo. $6,125.65 $8,771,32 Current Rent/SF $1.08 $1.41' Annual Rent $73,507.80 $105,255.80 Proposed % Rent [decrease 4.63% 4.63 % Proposed Rent/Mo. $5,858.64 $8,370.89 Proposed Rent/SF $1.03 $1.34 Proposed Annual Rent $70,303.68 $100,450.80 Annual Rent Decrease $3,204.12 $4,805.09 CONCLUSION: Staff is recommending the Oversight Board approve one year lease extension amendments with a six - month notice to vacate without cause for Sitike Counseling Center and the County Health Center. Staff does not recommend extended leases due to State law requiring the Successor Agency to prepare a Property Asset Management Plana. Staff recommends Sitike receive 4.63 % rent reduction from $1.08 /SF to $1.03 /SF, for a total of $5,858.64 per month and that the Health. Center receive a 4.63 % reduction from $1.41 /SF to $1.34 /SF, for a total payment of $8,370.8921 per month, or $100,450.80 per year. Combined, both tenant leases provide a total of $1.70,754.40 per year in revenues. It is recommended that the Oversight Board adopt a resolution authorizing an amendment to the lease agreement with Sitike Counseling Center for the facility at 306 Spruce Avenue and authorize the City Manager or his designee to execute the Lease Amendment. By: arty Van Du Assistant City Manager RESOLUTION NO. OVERSIGHT BOARD TO FORMER REDEVELOPMENT AGENCY, CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA RESOLUTION OF OVERSIGHT BOARD APPROVING AN AMENDMENT TO THE LEASE AGREEMENT WITH STTIKE COUNSELING CENTER FOR THE FACILITY AT 306 SPRUCE AVENUE WHEREAS, on May 2, 2011, the City of South San Francisco ("City") acquired that certain real property located at 306 Spruce Avenue in South San Francisco, California ("Property") from the Redevelopment Agency of the City of South San Francisco ("Agency"). The City will likely convey the Property to the Successor Agency; and, WHEREAS, the City has consented to the Amendment and the authority of the Successor Agency to enter into this Amendment on behalf of the City; and, WHEREAS, pursuant to Resolution No. 08-2012, adopted January 25, 2012, the City of South San Francisco ("City") affirmed its agreement to serve as the Successor Agency to the Redevelopment Agency of the City of South San Francisco (the "Redevelopment Agency") pursuant to Health and Safety Code Section 34173 et seq.; and, WHEREAS, the former Redevelopment Agency of the City of South San Francisco leased to Sitike Counseling Center, a California nonprofit public benefit corporation ("Sitike"), the entire first floor of that certain building located at 306 Spruce Avenue, South San Francisco, CA, pursuant to that certain Retail Lease Agreement dated December 2, 1996 (the "Lease Agreement"); and, WHEREAS, Sitike subsequently exercised its option in 2007 to extend the term of the Lease Agreement for five (5) years through February 28, 2012, continuing month to month thereafter; and, WHEREAS, on June 18, 2012, Sitike submitted a letter to the Successor Agency and the Oversight Board requesting an Amendment to the Lease Agreement; and, WHEREAS, the Successor Agency recommends amending the Lease Agreement, including extending the term of the Lease Agreement for one (1) year and reducing the rent. NOW, THEREFORE, the Oversight Board, does hereby: Approves an Amendment to the Lease Agreement with Sitike at 306 Spruce Avenue, conditioned on Sitike's timely execution and submission of all required documents. 2. Authorizes the City Manager to execute the Amendment to the Lease Agreement on behalf of the Successor Agency and Oversight Board, and to take such other actions reasonably necessary to carry out the intent of this Resolution. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the Oversight Board to the former Redevelopment Agency of the City of South San Francisco at a meeting held on the day of August, 2012 by the following vote: AYES: NOES- ABSTAIN: ABSENT: V, gut mi 1.949639.1 City Clerk AMENDMENT TO LEASE AGREEMENT THIS AMENDMENT TO LEASE AGREEMENT ("Amendment") is entered into effective as of , 2012 ("Effective Date"), by and between the Successor Agency to the Redevelopment Agency of the City of South San Francisco ("Lessor") and Sitike Counseling Center, a California nonprofit public benefit corporation ("Lessee"). Lessor and Lessee are hereinafter collectively referred to as the "Parties". A. The Lessee and Janet Siniora entered into that certain Retail Lease Agreement dated December 2, 1996 (the "Lease") pursuant to which Lessee leases the entire first floor (the "Premises") of that certain building located at 306 Spruce Avenue, South San Francisco, CA (the "Building"). B. On May 2, 2011, the City of South San Francisco ("City") acquired that certain real property located at 306 Spruce Avenue in South San Francisco, California ("Property") from the Redevelopment Agency of the City of South San Francisco ("Agency"). The City will likely convey the Property to the Successor Agency. The City has consented to the Amendment and the authority of the Successor Agency to enter into this Amendment, C. The original term of the Lease expired February 28, 2007. D. Lessee has exercised its option to extend the term of the Lease for an additional period of five (5) years commencing March 1, 2007, through February 28, 2012, E. The Lease has been month to month since February 28, 2012 F. Accordingly, the Parties desire to amend the Lease pursuant to the terms and conditions set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: I . Term of the Lease. Notwithstanding anything to the contrary contained in the Lease, the term of the Lease shall be extended for one (1) year commencing on September 1, 2012 and continuing until August 31, 2013 under the same terms and conditions as contained in the Lease and any amendment(s) thereto except as specifically set forth herein, 2. Rent. Commencing on September 1, 2012 the monthly rental payment shall be $5,858.64. 3. 6-Month Notice to Terminate. Notwithstanding anything to the contrary contained in the Lease, commencing on March 1, 2013, Lessor may terminate the lease six (6) months after delivery of a written notice to vacate the Premises. Termination of the Lease will be effective six (6) months after receipt of written notice. 4. Amendment. This Amendment may be amended or modified only by a written instrument executed by the Parties. 5. Construction, The section headings and captions used herein are solely for convenience and shall not be used to interpret this Amendment, 6. Action -2LApproval. Whenever action and/or approval by Lessor is required under this Lease as amended hereby, Lessor's City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his or her discretion that such action or approval requires referral to Lessor's Governing Body for consideration. 7. Counterparts. This Amendment may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument, 8. Severability. If any term, provision, or condition of this Amendment is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Amendment shall continue in full force and effect unless an essential purpose of this Amendment is defeated by such invalidity or unenforceability. 9. No Third Partv Beneficiaries. Nothing contained in this Amendment is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder. 10. Entire Agreement. This Amendment, together with the Lease contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements between the Parties with respect thereto. 11. Authorization, The undersigned each hereby represent and warrant that each is duly authorized to execute this Amendment, 12. Effectiveness of Lease. Except as expressly set forth in this Amendment, the Lease remains unmodified and in full force and effect, 2 IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of the date first written above. South San Francisco Successor Agency and City of South San Francisco a public body, corporate and politic M Its: UA City Clerk M City Attorney Sitike Counseling Center, a California nonprofit public benefit corporation M Its 1947092.1 3 Redevelopment Successor Agency Oversight Boarii DATE., August 14, 2012 'ek TO: Members of the Oversight Board FROM: Marty Van Duyn, Assistant City Manager SUBJECT: ADOPT A RESOLUTION APPROVING AN AMENDMENT TO THE LEASE WITH THE COUNTY OF SAN MATEO EXTENDING THE LEASE FOR ONE YEAR It is recommended that the Oversight Board adopt a resolution authorizing an amendment to the lease agreement with the County of San Mateo extending the lease for one year for the facility at 306 Spruce Avenue and authorize the City Manager or his designee to execute the Lease Amendment subject to City Attorney approval of final form. The medical facility located at 306 Spruce Avenue/472 Grand Avenue, is a 14,000 square foot parcel containing a three story building and an adjacent parking lot. The facility also has a dedicated parking lot at 468 Miller Avenue. The basement level of the building contains vacant office space, the building's mechanical systems (electrical, fire alarms, HVAC and boiler) and restrooms. The San Mateo County Health Center occupies the second floor and Sitike Counseling Center occupies the first floor. The roof of the building contains cell tower equipment installed by Sprint and the building's exhaust fans. Sitike's tenant space is partitioned into office spaces and counseling rooms, with an entry lobby, kitchen, child care facility, two disabled accessible restrooms, and access to an outdoor patio. Their lease includes four (4) on-site parking spaces and seven (7) spaces at the Miller Avenue parking lot. The Health Center is a primary care medical facility with exam rooms, a large office area, counseling rooms, a lobby, a computer server room, a meeting room and kitchen, and two disabled (men's and women's) accessible restrooms. The Health Center lease includes five parking spaces in the adjacent lot and eleven spaces in the lot on Miller Avenue Because of the Health Center, the elevator serving the building must be maintained to CAL OSHA standards and have yearly load testing. Additionally, the Health Center requires the ambient temperature be maintained at a constant 72 degrees and that the exhaust fans circulate at levels specified by CAL OSHA, thus requiring monitoring on a quarterly basis, . The two tenants, the San Mateo County Health Center and itike Counseling Center have held leases for 15 years and 16 years respectively. The Leases for both tenants require the Lessee's to pay for all their utilities and to provide janitorial services while landscaping and all Staff Report Subject: Medical Clinic Lease Amendment for 306 Spruce Avenue Page 2 maintenance and repairs are the responsibility of the Lessor. Sitike's lease expired in February of 2012 and the County's lease is to expire on September 30, 2012. Both tenants have requested lease extensions for 5 years and 3 years respectively, . Sitike Counseling Center: When the former Redevelopment Agency (Agency) acquired the medical building at 306 Spruce Avenue it assumed the existing ten year lease with Sitike. That Original Lease Agreement, dated December 2, 1996, expired on February 28, 2007. The Agency amended the Original Lease Agreement with Sitike on June 13, 2007 effectuating the five year option of the Original Lease, with an expiration date of February 28, 2012. The terms of the 2007 Lease Amendment included a lease amount of $6,882.75, or $1.21 per square foot which was considered to be within the market range at that time, The Agency did not provide a five year option as the Agency did not want to limit its options to sell the property in the future. Subsequent to the June, 2007 Amendment, Agency waived all scheduled rent increases due to the soft economy that resulted in lease rates in the Downtown remaining stable or dropping. Furthermore, in March, 2010, based on a request by Sitike, the Agency Board reduced the rent I I% (from $6,882.751mo. to $6,125,65/mo., or $1.21 /SF to $1.08/SF). When Sitike's lease expired on February, 2012, Sitike requested a lease extension, however, the Agency was unable to accommodate the request due to ABx 1 26 which terminated redevelopment agencies. Sitike has been renting the space on a month-to-month basis since then. On June 18, 2012, Sitike's Executive Director submitted a letter asking the Successor Agency and the Successor Agency Oversight Board for a Lease Amendment which included the following terms: A 5 year Lease renewal with an option to extend the Lease for another 5 year term A clause stating that Sitike would receive a notice of no less than 6 months to vacate A rent reduction of 4,63% from $1.08/SF to $1.03/SF or a total annual reduction of $3,204.12 Sitike states in their request that their organization has not received cost of living increases from San Mateo County for the last 5 years; and that insurance costs have risen by 20% over the last 3 years while contributions from foundations and donors have decreased. Sitike further states that it has been forced to offer fewer, benefits at greater cost to employees and that other costs such as supplies and materials are also increasing. Sitike has made a significant investment in the facility. In 1997, they secured $150,000 to remodel their offices with a $50,000 contribution from their own reserves and matching funds from the City of South San Francisco and San Mateo County Community Development Block Grant funds. Sitike is an excellent tenant and pays rent on time. They are conscientious about caring for their facility to City standards and have good working relationships with the County Health Clinic and other immediate neighbors. Sitike pays full utility costs for their facility and their current rent generates $73,508 per year which is deposited into the Successor Agency Fund to pay for expenditures approved in the City's Recognized Payment Obligation Schedule (ROPE). The Successor Agency appreciates Sitike's presence in the building and their critical services to the community. Sitike has attempted to acquire a building of their own, however, the lack of suitable office space, severe budget cuts and limited foundation funding has prevented them from doing so, Staff Report Subject: Medical Clinic Lease Amendment for 306 Spruce Avenue Page 3 Further, with state and county mandated accessibility requirements, there are few buildings in town that provide the required accessibility. That was the main reason they moved from Mission Road to the Spruce Avenue facility in 1996. San Mateo Count Health Center: On April 4, 2000, the Agency entered into a Lease Agreement ("Clinic Lease") with the County of San Mateo for the tenant space in the building located at 306 Spruce Avenue ("Premises"), authorized by Resolution No. 63515. As noted earlier, the Premises are located on the second floor and consist of approximately 6,225 square feet. The County uses the Premises to provide health care services and a women and infant care program for residents of South San Francisco, Prior to the Lease expiring on September 30, 2011 the County notified the City that it would like to extend the Lease for one year. Although the Lease provided the County with the option to extend its tenancy for five years, the County elected only to extend the lease by one year due to uncertainty regarding their continued presence at this location. On September 14, 2011 the City, which temporarily took possession of the property from the Redevelopment Agency, approved a Lease amendment extending the County's tenancy until September 30, 2012. The County is currently seeking a three year extension of the Lease with a provision to terminate the Lease with six-month's notice. The proposed extension falls within the five year option period provided in the original Lease and would be unlikely to interfere with any future land disposition. Currently, the base rent is $8,771.32 with annual cost-of-living adjustments based on the consumer price index. The County Health Center has not requested a lease rate reduction and has had annual cost-of-living rent increases in the past. This has created a disparity wherein cost-of-living adjustments are ,eliminated for one tenant but not the other. To some extent the difference in rent rates for Sitike and the County Health Center can be justified by the nature of each tenant space and the Health Center's requirements to provide a computer support room, elevator maintenance to OSHA standards and exhaust fan performance. The Health Center also receives more parking spaces than the counseling center. However, in moving forward it would be prudent for the Successor Agency treat both tenant equally. Given market conditions in South San Francisco, it would be reasonable to provide the Medical Clinic with a similar rent reduction and thus ensure they continue to provide services to South San Francisco residents at this location. Lease Extensions: The State Legislature adopted AB 1484 on June 27, 2012 with the intent of clarify provisions of ABxI 26. AB 1484 has new provision which require Successor Agencies to prepare an Asset Management Plan with respect to the properties owned by the former Redevelopment Agency, Until the Oversight Board and DOF approve the Asset Management Plan, the Successor Agency may not take actions that would affect the long term uses of property assets. Therefore, staff recommends a one year Lease Amendment for both Sitike and the Health Center. Alternatively, the Oversight Board may consider three year lease extensions for both groups as such leases would not affect the long term use or disposition of the building. However, it should be noted that DOF called for a review of the lease criteria the Oversight Board approved for the rental of One Chestnut Avenue. This demonstrates DOF is diligently reviewing Successor Agency actions with Staff Deport Subject: Medical Clinic Lease Amendment for 306 Spruce Avenue Page 4 respect to land assets. Although DCF will have the authority to review the proposed leases, staff believes that because the medical facility is a public use property it will not be necessary to wait for ruling from DOF before moving forward with a short -term lease. One additional provision of the lease is that both tenants have requested 6 months notices to vacate which is reasonable given the complexities of moving large operations and the difficulty involved in securing a suitable space that meets their size and accessibility requirements. Current office rents in the Downtown area range between $0.89 (in the South Linden industrial area) to $1.50 (South Spruce large eommercial /retail space) per square foot. A medical office space in the So. Spruce Avenue commercial corridor is currently being offered at $1.'00 per square foot. Given current market conditions, staff believes that a rental rate of $1.00 to '$1.34 per square foot is reasonable for an older building in the downtown core. Sitike has requested a rate of $1.03 per square foot for a total payment of $5,858.64 per month. This will decrease rent revenue by $3,204 per year to $70,304. The Health Center currently pays $8,771.32 per month, or $1.41 per square foot. Staff recommends a similar rent reduction of 4.63% (from $1.41 to $1.34 per square foot) for the Health Center, an annual rent decrease of $4,805 (see table below). Staff is recommending the Oversight Board approve one year lease extension amendments with a six - month notice to vacate without cause for Sitike Counseling Center and the County Health. Center. Staff does not recommend extended leases due to State law requiring the Successor Agency to prepare a Property Asset Management Plan. Staff recommends Sitike receive 4.63 % rent reduction from $1.08 /SF to $1.03 /SF, for a total of $5,858.64 per month and that the Health Center receive a 4.63 % reduction from $1.41 /SF to 51.34/SF, for a total payment of $8,370.8921 per month, or $100,450.8'0 per year. Combined, both tenant leases provide a total of $170,754.40 per year in revenues. It is recommended that the Oversight Board adopt a resolution authorizing an amendment to the lease agreement with the County of San Mateo extending the lease for one year for the facility at 306 Spruce Avenue and authorize the City Manager or his designee to execute the Lease Amendment subject to City Attorney approval of final farm. Marty Van Duyn Assistant City Manager Sitike Clinic Area (SF) 5,688 6,225 Current Rent/Mo. $6 „125.65 $8,771.32 Current Rent/SF $1.08 $1.41 Annual Rent $73,507.80 $105,255.80 Proposed % Rent Decrease 4.63% 4.63% Proposed Rent/Mo. $5,858.64 $8,370'.89 Proposed Rent/SF $1.03 $1.34 Proposed Annual Rent $70,303.68 $100,450.80 Annual Rent Decrease $3,204.12 $4,806.09 Staff is recommending the Oversight Board approve one year lease extension amendments with a six - month notice to vacate without cause for Sitike Counseling Center and the County Health. Center. Staff does not recommend extended leases due to State law requiring the Successor Agency to prepare a Property Asset Management Plan. Staff recommends Sitike receive 4.63 % rent reduction from $1.08 /SF to $1.03 /SF, for a total of $5,858.64 per month and that the Health Center receive a 4.63 % reduction from $1.41 /SF to 51.34/SF, for a total payment of $8,370.8921 per month, or $100,450.8'0 per year. Combined, both tenant leases provide a total of $170,754.40 per year in revenues. It is recommended that the Oversight Board adopt a resolution authorizing an amendment to the lease agreement with the County of San Mateo extending the lease for one year for the facility at 306 Spruce Avenue and authorize the City Manager or his designee to execute the Lease Amendment subject to City Attorney approval of final farm. Marty Van Duyn Assistant City Manager 01wel w1i I rel ► lk k MIS OVERSIGHT BOARD TO FORMER REDEVELOPMENT AGENCY OF THE CITY OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA A RESOLUTION OF THE OVERSIGHT BOARD APPROVING AN AMENDMENT TO LEASE WITH THE COUNTY OF SAN MATEO EXTENDING THE LEASE FOR ONE YEAR WHEREAS, on May 2, 2011, the City of South San Francisco ("City") acquired that certain real property located at 306 Spruce Avenue in South San Francisco, California ("Property") from the Redevelopment Agency of the City of South San Francisco ("Agency"). The City will likely convey the Property to the Successor Agency, WHEREAS, the City has consented to the Amendment and the authority of the Successor Agency to enter into this Amendment on behalf of the City; WHEREAS, the Property is subject to that certain Lease Agreement ("Lease") dated April 4, 2000 by and between the Agency and the County of San Mateo ("County") pursuant to which the County leased the Property from the Agency to operate health services clinic; WHEREAS, the City assumed the Lease from the Agency pursuant to that certain Assignment of Leases dated May 2, 2011 by and between the Agency and the City; WHEREAS, the current term of the Lease will expire on October 31, 2012; WHEREAS, the City and the County desire to extend the lease for an additional year and to decrease the rent; and WHEREAS, pursuant to a proposed Amendment to Lease, a copy of which is on file with the City Clerk, the term of the Lease would be extended for one (1) additional year under the same terms and conditions contained in the Lease except that the rent will decrease to $8,315.21 per month, as of the effective date. NOW, THEREFORE, BE IT RESOLVED that the Oversight Board hereby: 1. Approves the Amendment to the Lease Agreement with the County of Sail Mateo at 306 Spruce Avenue, conditioned on County's timely execution and submission of all required documents; and 2. Authorizes the City Manager to execute the Amendment to the Lease Agreement on behalf of the Successor Agency and Oversight Board, and to take such other actions reasonably 1949603.1 necessary to carry out the intent of this Resolution. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the Oversight Board to the former Redevelopment Agency of the City of South San Francisco at a meeting held on the day of August, 2012 by the following vote: AYES: NOES: ABSTAIN: ABSENT: ATTEST: 19496011 Clerk THIS AMENDMENT TO LEASE ("Amendment") is entered into effective as of October 1, 2012 ("Effective Date"), by and between Successor Agency to the Redevelopment agency of the City of South San Francisco ("Lessor") and the County of San Mateo, a political subdivision of the State of California ("Lessee"). Lessor and Lessee are hereinafter collectively referred to as the "Parties". RECITALS A. On May 2, 2011, the City of South San Francisco ("City") acquired that certain real property located at 306 Spruce Avenue in South San Francisco, California ("Property") from the Redevelopment Agency of the City of South San Francisco ("Agency"). The City will likely convey the Property to the Successor Agency. The City has consented to the Amendment and the authority of the Successor Agency to enter into this Amendment on behalf of the City. B. The Property is subject to that certain Lease Agreement ("Lease") dated April 4, 2000 by and between the Agency and the County of San Mateo ("County") pursuant to which the County leased the Property from the Agency to operate a health services clinic. C. The City assumed the Lease from the Agency pursuant to that certain Assignment of Leases dated May 2, 2011 by and between the Agency and the City; D. The original term of the Lease will expire on September 30, 2011. E. The term of the lease was extended for one year through September 30, 2012. F. The Parties desire to amend the Lease pursuant to the terms and conditions set forth in this Amendment. NOW, THEREFORE, for good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties agree as follows: 1. Term of the Lease. The Term of the Lease shall be extended for one (1) year commencing on November 1, 2012 and continuing until October 31, 2013 under the same terms and conditions as contained in the Lease except as specifically set forth herein. 2. Rent. Commencing on the Effective Date, the Base Rent shall be $8,370.89 per month, 3, 6-Month Notice to Terminate. Notwithstanding anything to the contrary contained in the Lease, commencing on May 1, 2013, Lessor may terminate the lease six (6) months after delivery of a written notice to vacate the Premises. Termination of the Lease will be effective six (6) months after receipt of written notice. 1947105.1 4. Parties. The term "Agency" as used in the Lease shall mean the Successor agency as the Redevelopment Agency's and City's successor in interest. 5. Amendment, This Amendment may be amended or modified only by a written instrument executed by the Parties. 6. Construction. The section headings and captions used herein are solely for convenience and shall not be used to interpret this Amendment, 7. Action or Approval. Whenever action and/or approval by Lessor is required under this Lease as amended hereby, Lessor's City Manager or his or her designee may act on and/or approve such matter unless specifically provided otherwise, or unless the City Manager determines in his or her discretion that such action or approval requires referral to Lessor's City Council for consideration. 8. Counterparts, This Amendment may be executed in one or more counterparts, each of which shall be an original and all of which taken together shall constitute one instrument. 9. Severability. If any term, provision, or condition of this Amendment is held by a court of competent jurisdiction to be invalid or unenforceable, the remainder of this Amendment shall continue in full force and effect unless an essential purpose of this Amendment is defeated by such invalidity or unenforceability. 10. No Third Party Beneficiaries. Nothing contained in this Amendment is intended to or shall be deemed to confer upon any person, other than the Parties and their respective successors and assigns, any rights or remedies hereunder. 11. Entire Agreement. This Amendment, together with the Lease contains the entire agreement between the Parties with respect to the subject matter hereof and supersedes all prior oral or written agreements between the Parties with respect thereto. 12. Authorization, The undersigned each hereby represent and warrant that each is duly authorized to execute this Amendment. 13. Effectiveness of Lease. Except as expressly set forth in this Amendment, the Lease remains unmodified and in full force and effect, SIGNATURES ON FOLLO WING PAGE 1947105.1 2 IN WITNESS WHEREOF, Lessor and Lessee have executed this Amendment as of the date first written above. South San Francisco Successor Agency and City of South San Francisco, a municipal corporation Ra Its: ATTEST: M City Clerk M City Attorney County of San Mateo, a political subdivision of the State of California M Its: ATTEST: By. County Clerk APPROVED AS TO FORM: By: County Counsel 1947105.1 3 DATE, August 14, 2012 TO: Members of the Oversight Board FROM: Marty Van Duyn, Assistant City Manager SUBJECT: ADOPT A RESOLUTION REGARDING USE OF UNSPENT HOUSING BOND PROCEEDS 1 111$ 101 It is recommended that the Oversight Board adopt a resolution authorizing the use of unspent housing bond proceeds for affordable housing projects, and directing staff to include such expenditures and housing bond debt service payments on the next Recognized Obligations Payment Schedule (ROPS). I It X I tw I MR a, 01110 ElMI LTA A M I$] Z I On June 27, 2012 the Governor signed AB 1.484, the budget trailer bill applicable to the dissolution of redevelopment agencies. Per AB 1484, the proceeds of housing bonds issued before December 31, 2010 may be used for purposes consistent with the bond covenants. The Finance Director estimates the Successor Agency is holding $2.38 million in unspent housing bond proceeds. Prior to AB 1484, the Oversight Board had committed funds in the BOPS to pay down the outstanding housing bonds. Consistent with AB 1484, City staff has recommended that the City, as Housing Successor, consent to retain these funds for affordable housing projects, and the City Council and Successor Agency governing board have requested the Successor Agency and the Oversight Board to include future expenditures of housing bond proceeds and continued housing bond debt service payments on the BOPS. The former Redevelopment Agency (Agency) originally issued the housing bonds for Mid- Peninsula Housing Coalition's (Mid-Pen) Willow Gardens redevelopment project. Ultimately, Mid Pen concluded it was in its interest to structure the Willow Gardens financing as a loan, but IRS rules do not permit tax exempt bonds to be used for loans. Thus, the loan structure precluded the Agency from using the bond funds as originally intended. Since that time, the Agency has sponsored many other affordable housing developments with loans to nonprofit housing developers. Since the Agency structured all of these projects as loans, it was not able to utilize the tax-exempt bond proceeds. Although the State of California ended redevelopment and will recapture the former Agency's unencumbered funds on deposit in the low- and moderate-income housing fund, AB 1484 provides an opportunity for the City, acting as the Housing Successor, to use unspent housing bond proceeds for future affordable housing projects. AB 1484 provides that review of commitments to use the proceeds of housing bonds issued prior to December 31, 2010 is limited to a determination that the commitments are consistent with the bond covenants and that sufficient funds are available. Staff Report Subject: Housing Asset Inventory; Acknowledgement of Conveyance of Housing Assets Page 2 The City is currently considering several housing projects that could be affordable or include an affordable housing component. Potential projects include (but are not limited to) 418 Linden Avenue, 310 -314 Miller Avenue, a project on Grand Cypress and Shelter Network's HOT program, Staff will continue to evaluate these projects that are at various stages of development from conceptual to entitled, and return in the near future with a recommendation for utilizing the bond funds. Given IRS requirements, the bond funds will be used for a city -owned affordable housing project or granted to a private nonprofit or for - profit developer that will develop affordable housing or construct affordable units within a market -rate project. At its July 25, 2012 meeting, the City Council and the governing board of the Successor Agency adopted resolutions authorizing the use of unspent housing bond proceeds for affordable housing projects, and directing staff to include such expenditures and housing bond debt service payments on the next Recognized Obligations Payment Schedule (BOPS). FUNDING If approved by the Oversight Board and the State Department of Finance, the City will retain the balance of housing bond proceeds, approximately $2.38 million, for use in future affordable housing projects. Future property taxes that would have flowed to taxing entities in the amount of approximately $289,000 annually will be needed to pay debt service until the bonds are retired in 2018. . Those dollars will come from property tax revenue deposited into the Redevelopment Property Tax. Trust Fund (RPTTF). By. Marty Van Duyn Assistant City Manager Attachment: Resolution authorizing the use of unspent housing bond proceeds for affordable housing projects RESOLUTION 1`1xO. OVERSIGHT BOARD FOR THE FORMER REDEVELOPMENT AGENCY OF THE CITE' OF SOUTH SAN FRANCISCO, STATE OF CALIFORNIA RESOLUTION CONSENTING TO THE USE OF UNSPENT HOUSING BOND PROCEEDS FOR AFFORDABLE HOUSING PROJECTS AND THE INCLUSION OF SUCH EXPENDITURES AND HOUSING BOND DEBT SERVICE PAYMENTS ON THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPE) WHEREAS, pursuant to Resolution No. 8 -2012, adopted by the City Council of the City of South San Francisco on January 25, 2012, the City of South San Francisco ( "City ") agreed that upon dissolution of the Redevelopment Agency of the City of South San Francisco (the "Redevelopment Agency ") on February 1, 2012 pursuant to Assembly Bill xI 26 ( "ABxl 26 "), the City: (i) would serve as the successor agency to the Redevelopment Agency ( "Successor Agency "), and (ii) would assume the housing functions of the Redevelopment Agency; WHEREAS, Health and Safety Code Section 34176(8), added by Assembly Bill 1.484 enacted June 27, 2012, modified ABxl 26 to provide that the entity that assumes the housing functions formerly performed by a redevelopment agency (the "Housing Successor ") may designate the use of, and commit unobligated proceeds of bonds that were issued prior to January 1, 2011 for affordable housing purposes, provided that the Housing Successor provides notice to the successor agency of such proposed designations and commitments at least 20 days prior to the deadline for submission of the Recognized Obligation. Payment Schedule (BOPS) to the oversight board established for the successor agency; and WHEREAS, the City Council of the City of South San. Francisco, acting in its capacity as Housing Successor, has adopted a resolution requesting the Successor Agency to include on the ROPE: (i) commitments for the expenditure of unspent housing bond proceeds for affordable housing projects, and (ii) housing bond debt service payments. NOW THEREFORE, BE IT HEREBY RESOLVED that the Oversight Board for the former Redevelopment Agency of the City of South San Francisco hereby: 1. Subject to approval by the Department of Finance to the extent required by law, consents to (i) the City's use of unspent housing bond proceeds for affordable housing projects, and (ii) the inclusion on the RODS of such commitments and housing bond debt service payments. 2. Authorizes the Executive Director and designees to undertake all actions necessary to implement this Resolution. I hereby certify that the foregoing Resolution was regularly introduced and adopted by the Oversight Board of the Former Redevelopment Agency of the City of South San Francisco at a special meeting held on the th day of , 2012 by the following vote; AYES: NOES. ABSTAIN: ABSENT: VIUM1N 1947029.1 City Clerk Redevelopment Successor Agency Oversight Board DATE: August 14, 2012 J TO: Members of the Oversight Board FROM: Jim Steele, Finance Director SUBJECT: APPROVAL OF T14E DRAFT RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD JANUARY THROUGH JUNE 2013 It is recommended that the Oversight Board approve the attached draft Recognized Obligation Payment Schedule (ROPS) for the period January through June 2013. BACKGROUND/DISCUSSION Attached please find the next six month period proposed ROPE. This third ROPS will form the basis for the County's distribution of property taxes to the City as Successor Agency to pay enforceable obligations for the period January through June 2013. Assembly Bill 1484 requires the RODS to be submitted to the State and County no later than September 1, 2012 in form approved by the Oversight Board. The proposed BOPS was approved by the City Council in its capacity as the governing board of the Successor Agency on August 8, 2012. CONCLUSION Adoption of this resolution and schedule will fulfill the requirements of Health and Safety Code Section 34177(1) regarding adoption of a RODS for the period January through June 2013. By: Approve Jim m sie' el e Marty "Van. Duyn Finance Director Assistant City Manage nd Director of Economic and Community Development Attachments: Resolution Draft ROPS Support for Other Revenues Appearing on the Draft RORS KR/J&BN:ed MSOLUTION NO. III 1 6 ■ MUNVA 01111,13 1 K"wo WA01112KI19.11SE I APPROVING A RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS) FOR THE PERIOD JANUARY 1 —TUNE 30,2013, PURSUANT TO HEALTH AND SAFETY CODE SECTION 34177(1) WHEREAS, pursuant to Health and Safety Code Section 34177(1), before each six-month fiscal period, the successor agency to a dissolved redevelopment agency is required to prepare a draft Recognized. Obligation Payment Schedule ("ROPS") that lists all of the obligations that are "enforceable obligations" within the meaning of Health and Safety Code Section 34177, and which identifies a source of payment for each such obligation from among (i) the Low and Moderate Income Housing Fund, (ii) bond proceeds, (iii) reserve balances, (iv) the administrative cost allowance, (v) revenues from rents, concessions, interest earnings, and asset sales, and (vi) the Redevelopment Property Tax Trust Fund established by the County Auditor- Controller to the extent no other source of funding is available or payment from property tax is contractually or statutorily required; WHEREAS, the draft ROPE must be concurrently submitted to the County Administrative Officer, the County Auditor-Controller, the State Department of Finance and the Oversight Board established to review Successor Agency actions; and WHEREAS, once the ROPE is approved by the Oversight Board, the ROPE must be posted on the Successor Agency's website and transmitted to the County Auditor-Controller, the State Department of Finance, and the State Controller. NOW, THEREFORE, the Oversight Board for the Successor Agency to the Redevelopment Agency of the City of South San Francisco does hereby resolve as follows: 1. The Recitals set forth above are true and correct, and are incorporated herein by reference. 2. The Recognized Obligation Payment Schedule (ROPE) and administrative budget for the period January 1, 2013 through June 30, 2013 attached hereto as Exhibit A are hereby approved. 3. The Finance Director is authorized to modify the ROPE to correct errors and provide clarifications consistent with requirements of the Department of Finance and the intent of this Resolution, 4. The City Manager or designee is authorized and directed to take all actions necessary to implement this Resolution, including without limitation, the submittal of the RODS to the County Auditor - Controller, the County Administrative Officer, the State Department of Finance, and the State Controller, and the posting of this Resolution and the RODS on the Successor Agency's website. I hereby certify that the foregoing Resolution was regularly introduced and adapted by the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of South San. 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Mattas, Successor Agency Counsel SUBJECT: Consideration of Bond Counsel Opinion Regarding Payment to Defease 2006 RDA Bonds Recommendation: It is recommended that the Oversight Board consider the opinion of bond counsel regarding the authority to pay funds into an irrevocable trust account to be used with other funds to call the 2006 Redevelopment Agency bonds on September 1, 2016, the first call date for the bonds. It is further recommended that staff be directed to implement the direction provided on Line 75 of Jan/June 2012 ROPS to place the funds in an irrevocable trust to be used to call the 2006 RDA bonds. Discussion: The Oversight Board approved the ROPS for the time period January 1, 2012 through June 30, 2012 on May 17, 2012. The Department of Finance approved that ROPS on May 27, 2012. Line 75 of the ROPS authorized the expenditure of up to $60 million dollars to be placed in an irrevocable trust account to be used along with other funds to be set aside in subsequent ROPS to call the 2006 Redevelopment Agency bonds on September 1, 2016. The decision of the Successor Agency and the Oversight Board to include Line 75 on the ROPS was based in part on the benefit provided to taxing entities through interest payment savings, reduced administrative expenses incurred to service the debt in the future and through a predictable stream of revenue to taxing entities over ensuing years. The Oversight Board also asked for an opinion of bond counsel as to the authority to place the funds in the irrevocable trust account for use to call the 2006 RDA bonds. Steve Taber, bond counsel, provided the Oversight Board with a reasoned opinion in which he concludes that the Oversight Board is authorized to make the payment identified in the BOPS. Staff Report August 14, 2012 Page 2 of 2 Once the Oversight Board has completed its consideration of the opinion, staff recommends that the Oversight Board direct staff to implement the direction by placing the funds into an irrevocable trust to be used along with other funds to be authorized by the Oversight Board in the future to call the 2006 Redevelopment Agency bonds on September 1, 2016. Y ;St/ Steven Mattas, Successor Agency Counsel 1950111.1