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HomeMy WebLinkAboutRDA Minutes 1991-09-11 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 September 11, 1991 AGENDA ACTION TAKEN CALL TO ORDER: (Cassette No. 1) 7:25 p.m. Chairman Drago presiding. ROLL CALL: Boardmembers present: Haffey, Nicolopulos, enna, and Drago. Boardmembers absent: Tegl ia. AGENDA REVIEW AGENDA REVIEW Executive Director Armas stated that there were no changes to the Agenda. CONSENT CALENDAR CONSENT CALENDAR 1. Motion to approve the Minutes of the Approved. Regular Meeting of 8/14/91. 2. Motion to confirm expense claims , Removed from the Consent Calendar for of 9/11/91. discussion by Boardmember Penna. M/S Haffey/Penna - To approve the Consent Calendar with the exception of Item 2.. Carried by unanimous voice vote. 2. Motion to confirm expense claims Boardmember Penna questioned the claim of 9/11/91. of Kaysten Marsten & Assoc. for $14,300 for Price Club services. Executive Director Armas stated that in the past both Bodies had approved the retaining of this firm to evaluate pro- perty proposals and develop counter pro- posals in the vicinity of Airport Blvd. and Belle Air Road. He stated that the primary tenant was looking at other pro- perty, but had incurred this during the preparati on. Boardmember Penna expressed concern that the City had not seen anything for the expenditure of $14,300.00. 9/11/91 Page i AGENDA ACTION TAKEN --2. Motion - Continued. Executive Director Armas stated that $25,000-30,000 had been authorized for the whole thing and the final stage had not been reached. He stated that the Agency should be careful of what was said in open session because of the financial ramifications, etc. Boardmember Haffey questioned when the Agency could expect to see a project or an end result from this firm. Executive Director Armas stated that it would probably be in January. Boardmember Penna stated that 1,430 hours was represented, but he had not seen any of the work. Boardmember Haffey questioned if this particular Boardmember would see anything on this because of a conflict, but the balance of the Board would. Executive Director Armas stated that he would embellish the work in writing for the Boardmembers. M/S Haffey/Nicolopulos - To confirm the expense claims of 9/11/91 in the amount of $16,068.50. Carried by unanimous voice vote. ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS Resolution authorizing agreement ~o~ Finance Director Margolis stated that 3. with the City to create a joint this was an agreement with the City to powers authority to serve as a create a joint powers authority to serve vehicle for issuing bonds for con- as a vehicle for the conference center ference center construction, financing which had to rely solely on special T.O.T., and the bond holders A RESOLUTION APPROVING JOINT would never have a call on the General EXERCISE OF POWERS AGREEMENT WITH Fund. She explained the recommendation THE CITY OF SOUTH SAN FRANCISCO AND from the financial advisor to form the AUTHORIZING EXECUTION THEREOF JPA to issue bonds, and the City has an agreement and will pay the special T.O.T. as required to meet the debt ser- vices. She stated that staff would come back in future meetings with more details on the issuance of bonds. Boardmember Haffey pointed out that the 9/11/91 Page 2 AGENDA ACTTON TAKEN ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 3. Resolution - Continued. City would need this vehicle for financing regardless of where the con- ference center is located or what it will look like. Director of Finance Margolis stated that this only sets up the Agency that has the authority to issue bonds. Boardmember Teglia Arrived: Boardmember Teglia arrived at the meeting at 7:18 p.m. Boardmember Haffey stated that this was a vote only for a conference center, wherever it is located, and he felt the last sentence in the staff report gave a lot of latitude in the future in reference to financing of other things, and proceeded to compliment staff. Boardmember Penna questioned what the collateral was for the bonds. Director of Finance Margolis responded that there was none per se, and it was the agreement that had the obligation to pay future tax proceeds and rely on main- taining that agreement between the City and the JPA for the use of the facility. She stated that the security was a piece of paper saying we will pay you out of the special tax for debt service as pri- mary payment -- like lease financing, and it does not create outstanding debt for future proceeds from use of buildings, and does not create outstanding debt for individual members of the JPA. Executive Director Armas stated that at such time as authorization was given, the owners of those bonds can look at only one thing to pay them for their invest- ment and that one thing is the hotel tax associated with the $2.50 T.O.T. - that is the only thing to which they can lay claim. Boardmember Penna questioned how this affected bonding by the Agency for any other project. 9/11/91 Page 3 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 3. Resolution - Continued. Finance Director Margolis stated that it in no way created an obligation for outstanding debt for the Agency, and that under JPA laws the responsibility of cre- dit for the JPA does not have any affect on the individual members. Boardmember Penna commented that the JPA needed to repay the bond through the funds it receives through the T.O.T. and it receives from the hotels and the pro- ceeds from the conference center. Executive Director Armas stated no, it was just from the hotel tax - the supple- mental hotel tax - not the 8% T.O.T. Boardmember Penna surmised that the hotel tax would be somewhere over a million dollars on an annual basis. Director of Finance Margolis responded yes with the debt service being a smaller portion. Boardmember Penna commented that there would also be the expenses to run the facility, and questioned what would hap- pen if the City could not pay the expenses. Executive Director Armas stated that the creation of this entity had nothing to do with that question - the entity was simply a vehicle to allow the bonds to be sold. He stated that when the bonds are sold they will advise the prospective investors that there was only one claim, which was the supplemental hotel tax. Boardmember Penna commented that never the less the City had the operation of the entire facility which not only had to do with the repayment of the bonds, but had to do with the lease payments on the property, plus parking lots to be leased and the total liability. Executive Director Armas stated that the 9/11/91 Page 4 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 3. Resolution - Continued. JPA the Agency was dealing with tonight was not addressing those aspects. Boardmember Penna stated that he understood there were two issues here tonight, one was the JPA that would address the bonds, however, the money that was going into the JPA was money from the hotels - $2.50, and that money was also being used to operate the facility whether or not you have the JPA. Finance Director Margolis stated that the agreement would make the debt service payment a primary obligation of the tax payment, so the tax payment must go first for the debt service payment. Boardmember Penna stated that you are saying the bonds will be guaranteed, that the first amount off the top goes towards paying them off, but you are not pro- tecting the City in terms of any opera- tional costs if there is a shortfall, then the General Fund would still have to make up the shortfall. Director of Finance Margolis stated that a bond issue is a contract saying you will do it, and they were trying to pro- tect the General Fund. Boardmember Penna stated that you have a full operation which the JPA is trying to secure and was just one part of it, and you still have a full operation that operates the center - which means all the expenses for salaries and operations including lease payments for the land, payments for the building and the bonds. He stated that the only thing this agreement was saying is that there will De a joint powers agreement with guaranteed payment of the bonds before anything else gets paid. He again expressed concern over who would pay when there was a shortfall for the center and the T.O.T., which is the $2.50 tax, is not enough and the proceeds that come in from the operations is not enough to pay for all the costs. 9/11/91 Page 5 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 3. Resolution - Continued. Executive Director Armas stated that the Council was presented a financial analysis in January which projected three things: the debt service, the lease for the various facilities, and operational expenses. He stated that balanced against that was the revenue that was coming in - both the income associated with the hotel tax together with income from the operating facility. He stated that the analysis if carried out pre- sented a positive situation, with income exceeding expenses. He stated that the condition was not being altered here, and the Council on a split vote had recognized that the analysis showed that it continued to be positive. He stated that the key question to come ultimately would be dealt with in October, and that was will we award the contract given the bid you receive, and thereby authorize the bonds which will influence what the final numbers will be because the bids will indicate whether they are attractive or not; and the condition of the market will indicate if the City was getting good rates or not. Boardmember Penna felt that the Executive Director was skirting the issue because the question was - how do you pick up and pay for all the costs in that box called conference center. He stated that the Executive Director was saying that pro- jected revenues were based on a skimpy type of market analysis that was never proven to be true. He stated that his main question was, what happens if we end up not having enough revenue coming in to pay for all costs that are in the box called conference center -- who picks it up. Executive Director Armas reiterated his earlier remarks on the financial analysis. Boardmember Penna remembered that the City had signed a contract saying it 9/11/91 Page 6 AGENDA ACTION TAKEN --ADMINISTRATIVE BUSINESS ADMINISTRATIVE BUSINESS 3. Resolution - Continued. would be the underwriter, and if there wasn't enough money coming in to pay for the total cost of this conference center, then the City was the underwriter. Finance Director Margolis stated she could not see any instance wherein the City could not repay the bonds, and the City was obligating itself with the debt service. Vice Chairman Nicolopulos stated that he also felt that Boardmember Penna's question had not been addressed, and felt that this was all predicated on assump- tions. Boardmember Haffey stated that the action this evening was to adopt the resolution that created a JPA for the conference center, and all five Boardmembers had agreed that they wanted the center. M/S Haffey/Teglia - To adopt the Resolution. RESOLUTION NO. 4-91 Carried by majority roll call vote, Boardmembers Penna and Nicolopulos voted no, 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. M/S Haffey/Teglia - To adjourn the meeting. Carried by unanimous voice vote. 9/11/91 Page 7 AGENDA ACTION TAKEN --ADJOURNMENT Time of adjournment was 7:35 p.m. RESPECTFULLY SUBMITTED, APPROVED. Barbara A. Battaya, ~-~'ack Drago, Chair~n Redevelopment Agency f /Redevelopment 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. g/ll/91 Page 8