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2008-08-19 Joint CC ARRA CIC MinutesMINUTES OF THE SPECIAL JOINT CITY COUNCIL, ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY (ARRA), AND COMMUNITY IMPROVEMENT COMMISSION (CIC) MEETING TUESDAY- - AUGUST 19, 2008- -7:27 P.M. Mayor /Chair Johnson convened the Special Meeting at 8:01 p.m. ROLL CALL - Present: Councilmembers /Board Members /Commissioners deHaan, Gilmore, Matarrese, Tam and Mayor /Chair Johnson - 5. Absent: None. CONSENT CALENDAR Vice Mayor /Board Member /Commissioner Tam moved approval of the Consent Calendar. Councilmember /Board Member /Commissioner Matarrese seconded the motion, which carried by unanimous voice vote - 5. [Note: Councilmember /Commissioner Gilmore abstained from voting on the August 5, 2008 minutes.] [Items so enacted or adopted are indicated by an asterisk preceding the paragraph number.] ( *08- 339CC / *ARRA / *08- 45CIC) Minutes of Special ARRA meeting held on July 1, 2008 and the Special Joint City Council and Community Improvement Commission Meeting held on August 5, 2008. Approved. [Note: Councilmember /Commissioner Gilmore abstained from voting on the August 5, 2008 minutes.] ( *ARRA) Recommendation to authorize negotiation and execution of a Sublease for RockWall Wine Company, Inc. at Alameda Point. Accepted. ( *ARRA) Recommendation to authorize negotiation and execution of a Sublease for Auctions by the Bay, Inc. at Alameda Point. Accepted. ( *ARRA) Recommendation to authorize the Executive Director to enter a Contract, through PM Realty Group, with General Construction Company to Dredge the Alameda Point Channel and Turning Basin in an Amount Not to Exceed $2,586,675. Accepted. AGENDA ITEMS Special Joint Meeting Alameda City Council, Alameda Reuse 1 and Redevelopment Authority, and Community Improvement Commission August 19, 2008 (08340CC /ARRA /08- 46CIC) Recommendation to concur with the Non - Binding Summary of Terms and Conditions for a transfer of the Exclusive Negotiation Agreement with SCC Alameda Point LLC to a New Entity with D.E. Shaw or transfer of an Ownership Interest in the SCC Alameda Point LLC to D.E. Shaw; and (08 -340A CC /ARRA /08 -46A CIC) Recommendation to authorize the City Manager /Executive Director to negotiate a Second Amendment to the Exclusive Negotiation Agreement with SCC Alameda Point LLC. The Base Reuse and Community Development Manager gave a brief presentation. Mayor /Chair Johnson opened the public portion of the meeting. Proponents (In favor of the staff recommendation): Michael Krueger, Alameda; Helen Sause, Housing Opportunities Make Economic Sense; Doug Biggs, Alameda Point Collaborative. Neutral: Richard Bangert, Alameda; Elizabeth Krase, Alameda. There being no further speakers, Mayor /Chair Johnson closed the public portion of the hearing. Mayor /Chair Johnson stated that a financial partner is being considered; density and transportation issues are not relevant tonight. Vice Mayor /Board Member /Commissioner Tam requested clarification of the confidentiality of the term sheet. The City Attorney stated the term sheet is a confidential real property document and is being negotiated; discussing the document in Closed Session is appropriate. Councilmember /Board Member /Commissioner Matarrese inquired whether the term sheet would be disclosed at some point. The City Attorney responded the term sheet would be disclosed once the project is finalized. Vice Mayor /Board Member /Commissioner Tam stated everyone is encouraged that the Master Developer is able to secure a funding partner in difficult economic times; the Master Developer is willing to pay for the planning process as well as the $108.5 million conveyance cost; written assurance is being sought to ensure that D.E. Shaw and SunCal would be committed to each other for the duration of the Exclusive Negotiation Agreement (ENA); a Special Joint Meeting Alameda City Council, Alameda Reuse 2 and Redevelopment Authority, and Community Improvement Commission August 19, 2008 commitment has been made on behalf of the community; a lot of momentum has been generated; the process has been open and straight forward; she supports directing staff to ensure that the ENA reflects the City's commitment to have SunCal selected as the Master Developer and to ensure that the timeline in the term sheet between D.E. Shaw and SunCal comports with the timeline expected for the planning process with SunCal. Councilmember /Board Member /Commission Matarrese stated that he wants to ensure that the City would have the ability to terminate the ENA if SunCal was removed from the position of Master Developer; D.E. Shaw would be a financial partner, not the developer; the timeline should be kept the same; direction should be provided to the City Manager /Executive Director to negotiate the amendments to the ENA. Councilmember /Board Member /Commissioner deHaan requested background information on the timeline. The Base Reuse and Community Development Manager stated currently, the ENA has a twenty -four month term; the City is thirteen months into the term; the ENA expires July 19, 2009; the ENA has a provision for progress expansion and mutual extension; the ENA allows for an automatic progress expansion if the project moves forward; a mutual extension could be granted for up to twelve months if there are third party entities; when the ENA was initially approved, requirements were not in place mandating that a conveyance term sheet be completed within nine months from the effective date of legislation; legislation may be approved next month or may not be approved until March, 2009; SunCal has a land plan that would require approval by initiative, which is not a timeframe that is consistent with the July 2009 expiration. Councilmember /Board Member /Commissioner deHaan inquired what the ballot measure would be. The Base Reuse and Community Development Manager responded SunCal revealed a land plan showing 4,000 units; units could increase to 6,000 in the event of a long -term transit solution; both plans are not consistent with the City's Charter; SunCal understands and recognizes that the land plans would need to qualify for the ballot and be approved by initiative. Councilmember /Board Member /Commissioner deHaan inquired whether there is a land plan that represents Measure A. The Base Reuse and Community Development Manager responded SunCal Special Joint Meeting Alameda City Council, Alameda Reuse 3 and Redevelopment Authority, and Community Improvement Commission August 19, 2008 is not working on a Measure A compliant plan as part of the community process. Councilmember /Board Member /Commissioner deHaan inquired whether SunCal would have a fallback position if the measure did not qualify. The Base Reuse and Community Development Manager responded staff would recommend terminating the ENA at that point because there would not be a project. Councilmember /Board Member /Commissioner deHaan inquired whether SunCal would be willing to stay in the project if the measure did not pass. The Base Reuse and Community Development Manager responded SunCal might be willing; stated the question is whether the City would be willing to keep SunCal as a partner. Councilmember /Board Member /Commissioner deHaan inquired what SunCal's position would be if the measure did not pass. Pat Keliher, SunCal, responded that SunCal wants to have some type of fallback plan; stated SunCal is looking at Measure A compliant plans internally. Councilmember /Board Member /Commissioner deHaan inquired whether SunCal would still be willing to be in the process if the plan was Measure A compliant. Mr. Keliher responded that today, SunCal would not want to walk away from Alameda Point; stated SunCal would like to look at other alternatives. Councilmember /Board Member /Commissioner deHaan inquired whether SunCal was in for the long -term, to which Mr. Keliher responded of course. Councilmember /Board Member /Commissioner Gilmore thanked SunCal and D.E. Shaw for transparency and honesty with the public; stated the City went through a very long, public process to select SunCal as the Master Developer; D.E. Shaw has a lot of say in the term sheet provisions regarding what could potentially happen at Alameda Point; that she will be looking very closely at the Operating Agreement to ensure that SunCal remains the Master Developer; SunCal has been straight forward with the City; appropriate protections need to be in place to protect the community and retain Special Joint Meeting Alameda City Council, Alameda Reuse 4 and Redevelopment Authority, and Community Improvement Commission August 19, 2008 SunCal unless a mutual decision is made that the project would not work or would not be feasible; a commitment was made to SunCal, not to a third party. Councilmember /Board Member /Commissioner Matarrese stated the purpose of the ENA is to drive the City to a Development Agreement with SunCal as the selected developer. Councilmember Matarrese moved approval of the staff recommendation including a provision stating that the City could terminate the ENA if SunCal is terminated for reasons other than illegal activity or other malfeasance; the timeline being capped to take out some of the flexibility for an automatic extension; milestones being adjusted to meet the current progress and state of the project; and the matter being brought back for public review. Mayor /Chair Johnson requested that the motion include language for material cause for termination. Councilmember /Board Member /Commissioner Matarrese agreed to amend the motion. Councilmember /Board Member /Commissioner deHaan requested clarification regarding the timeline. Councilmember /Board Member /Commissioner Matarrese stated the timeline should be capped to take away the automatic extension flexibility in the current ENA; staff would come back with a proposal. Councilmember /Board Member /Commissioner deHaan inquired who was the original financial partner. The Base Reuse and Community Development Manager responded SunCal anticipated self - financing the ENA period; stated SunCal identified the need to bring on a financial partner sooner given the real estate market. Councilmember /Board Member /Commissioner deHaan stated Lehman Brothers has an investment in the project. The Base Reuse and Community Development Manager stated Lehman Brothers has some holdings within D.E. Shaw; D.E. Shaw is a $40 -$50 billion hedge fund; D.E. Shaw is SunCal's existing partner for a big project in Albuquerque, New Mexico. Councilmember /Board Member /Commissioner deHaan inquired how D.E. Special Joint Meeting Alameda City Council, Alameda Reuse 5 and Redevelopment Authority, and Community Improvement Commission August 19, 2008 Shaw builds assets. The Base Reuse and Community Development Manager responded D.E. Shaw is a typical hedge fund; stated D.E. Shaw's wherewithal to finance obligations pursuant to the ENA has been verified. Mayor /Chair Johnson inquired whether Lehman Brothers was ever a partner of the Alameda Point project, to which the Base Reuse and Community Development Manager responded in the negative. The Assistant City Manager stated D.E. Shaw is a privately held hedge fund; investors are confidential. Councilmember /Board Member /Commissioner Gilmore stated cross - default is a concern because of all the projects that SunCal and D.E. Shaw have together; the City wants to ensure that any ripples stop before reaching Alameda if something happens to another SunCal project. Councilmember /Board Member /Commissioner Matarrese restated the motion to move approval of the staff recommendation with direction to: 1) negotiate a second amendment to the ENA, which would include a provision that the City would have the right to terminate the ENA if SunCal was removed for any reason other than illegal activity or material cause; 2) place a cap on the timeline to remove the flexibility of an automatic extension; 3) insulate against the possibility of cross defaults; and 4) establish mandatory milestones which would be synced with the status of the project. Vice Mayor /Board Member /Commissioner Tam seconded the motion. On the call for the question, the motion carried by unanimous voice vote - 5. (ARRA) Oral report from Member Matarrese, Restoration Advisory Board (RAB) representative. Board Member Matarrese stated the August 13, 2008 Chronicle had an article about the Army giving the Fort Ord Reuse Authority 3,300 acres and $100 million for remediation; inquired whether information is true, to which the Assistant City Manager responded in the affirmative. Board Member Matarrese stated the City needs to talk to its federal elected officials to find out why the City cannot get less acreage at no cost and receive money for cleanup. Special Joint Meeting Alameda City Council, Alameda Reuse 6 and Redevelopment Authority, and Community Improvement Commission August 19, 2008 Chair Johnson inquired whether $100 million is enough to clean up the contamination. The Assistant City Manager responded the Environmental Protection Agency (EPA) believes the amount is sufficient; stated the Army would be liable for the waste. Board Member deHaan stated the [Fort Ord] Reuse Authority would be dissolved once the land is transferred. Chair Johnson stated cleanup would be privatized; working with the Army is different than working with the Navy. ADJOURNMENT There being no further business, Mayor /Chair Johnson adjourned the Special Meeting at 8:43 p.m. Respectfully submitted, Lara Weisiger, City Clerk Secretary, Community Improvement Commission The agenda for this meeting was posted in accordance with the Brown Act. Special Joint Meeting Alameda City Council, Alameda Reuse 7 and Redevelopment Authority, and Community Improvement Commission August 19, 2008