1993-05-25 Special CC Meeting201
SPECIAL COUNCIL MEETING OF THE ALAMEDA CITY COUNCIL
MAY 25. 1993
The meeting convened at 7:10 p.m., with Vice Mayor Roth presiding.
The Pledge of Allegiance was led by Councilmember Lucas.
ROLL CALL - Present:
Absent:
Councilmembers Appezzato, Arnerich,
Lucas, Roth, and President Withrow - 5.
[Mayor Withrow arrived at 7:15 p.m.]
None.
REPORTS AND RECOMMENDATIONS
93-299 Report from the City Manager regarding the Ballena Bay
Lease. (Councilmember Appezzato)
[Mayor Withrow arrived, and assumed the Chair, during Mr. Shane's
comments to Council.]
Stanford Shane, Finance Committee, Alameda, suggested the City buy
it [Ballena Bay Leasehold] but not operate it as staff does not
have the type of expertise necessary; and do not let Marina
Operators obtain it, as they did not do a good job when they had
it; requested Council's careful consideration; and Council is
welcome to copies of his documents concerning operators and
operations.
Councilman Arnerich stated Council should receive a copy of the
letters and correspondence Mr. Shane has; stated the roadway
[extension of Ballena Boulevard] is atrocious, and has not been
maintained.
Mr. Shane stated the rumor is that Marina Operators would like to
take over again.
Councilmember Appezzato stated taxpayers have already paid because
Resolution Trust Corporation [RTC] has sold the note to an
investment group; if some taxpayers can reap benefits from this
real estate, that would be good.
Neil Patrick Sweeney, Alameda, stated Mr. Shane is trying to share
something that is very important and we should listen to him; and
receive his documentation.
At the request of President Withrow, the City Manager explained the
status of the Ballena Bay lease, elucidating some of the issues Mr.
Shane addressed concerning the loan and the allegation that the
taxpayers in some way "came up short;" noted the grant of submerged
May 25, 1993
land by the State of California to the City, called Tidelands Trust
Land (TTL), and in the late fifties, the lease by the City to
Marina Operators, and subsequent sale to Almar; the lease payments
are current; the loan they made with a bank in San Diego was taken
over by RTC, a division of the United States Government, because
the Savings & Loan (S&L) that held that loan, as well as many other
loans, did not meet the requirements of the federal government;
RTC bundled many of the loans and sold them to a private company.
The subject loan is owned by Gap Portfolio Partners with the
General Partner being Colony Advisors (Colony).
In response to additional questions from Mayor Withrow, the City
Manager stated he understands the Bass Brothers are limited
partners; if payments are not made on June 1st, they will
foreclose; the City has not lost money on the loan payments; the
takeover of the San Diego S&L by RTC has no impact on the structure
of the City of Alameda; the City has no direct involvement; the
lease is the only interface and payments on the lease are current;
the legal advertisement in the Times Star indicated there would be
a sale of assets of the leasehold to the highest bidder on June
1st; he checked with the title company, and Colony, and they
indicated it was probably not going to be a sale of assets but
simply a sale of the loan; they believe they have an investor who
would buy the loan so they did not believe any sale of assets would
occur; the City may negotiate with the leaseholder, or by eminent
domain, condemn some of the assets, if there is a need for the
assets, and a municipal purpose.
President Withrow commented that the issue is to look and determine
whether buying the leasehold, which is ayl asset, would be
financially prudent on the part of the City from the standpoint rf
making money.
The City Manager noted there are two possibilities: one is to
improve the quality of the leasehold by improving the maintenance,
and secondly, is to provide additional revenue to the City; the
revenue would go into the Tidelands Trust Fund (TTF); the City can
benefit by that money by maintaining, or better maintaining, some
of the other Tidelands Trust property.
Councilmember Appezzato stated he requested this matter be put on
the agenda; $170,000,000,000 that the federal government had to pay
to offset the failures of the S&L institutions is being paid by
every taxpayer in this country; the City owns the land at Ballena
Isle Marina (BIM), and lease payments to the City of $28,600 per
year, in today's money, is not an adequate return for that land or
submerged land; the owner of the leasehold improvements, Almar, had
a note taken over by RTC when the First Savings Bank of San Diego
collapsed; RTC sold the note to Colony; if Colony forecloses on
Almar on June 1st or shortly thereafter, he would like the City
Manager or staff to investigate whether it will be financially
beneficial for Alameda to acquire the leasehold improvements; we
have precedents: we currently have three enterprise funds providing
revenue to the City and also have initiated proceedings in the past
May 25, 1993
21
to acquire foreclosed properties; if the price and terms of
acquiring this property are beneficial to the City, he would
strongly recommend proceeding to purchase the leasehold after
foreclosure; if it is not beneficial, he will be the first to
recommend that the City not purchase it; and believes Council would
be remiss if it did not investigate.
Councilmember Appezzato moved to direct the City Manager to
investigate, beginning tomorrow, the financial feasibility of
acquiring the leasehold if Colony Advisors forecloses on that
property on June 1st or thereafter. Councilman Arnerich seconded
the motion.
Mr. Shane stated the last ten years under Almar has cost the City
hundreds of thousands of dollars; the City Attorney's office was in
litigation for five years with Almar who hired the largest law firm
in the world, Baker & McKenzie; after 5 years, the Ballena Isle
Maintenance Agreement was signed but does not mean anything; and we
do not want these kinds of people here again.
Responding to President Withrow, the City Attorney stated she
started working for the City in 1989, there was never any
litigation filed between the City and Almar; there were discussions
and problems with maintenance but never litigation; Baker &
McKenzie represented Almar later when they were discussing the
hotel; the original attorneys were McCutcheon, Doyle, et al., and
there was an agreement but it was not pursuant to litigation; and
she did not hire any outside counsel.
Vice Mayor Roth stated that the $28,600 per year the City received
for under-water land, is a good return for water; he watched the
area filled, buildings and marina built, and leaseholder spent a
lot of money on improvements; it is not right to say that now the
improvements are done, we should get more money; if, in the year
2029, the City has taken over the area including improvements and
decides to lease, then a lot of money would be discussed; the City
cannot purchase the loan; he does not think a foreclosure will
occur; he discussed possible equity and that community-owned
marinas are losing money; and he cannot support trying to buy the
leasehold at this time.
President Withrow noted the motion is not to buy, only to
investigate and determine what the options are.
Councilmember Appezzato reiterated he would like the City Manager
to begin investigating and discussing with Colony the potential of
acquiring the property if it is foreclosed upon on June 1st; the
City Manager would report his findings to Council in public
session; his motion is to give City Manager backing to begin to
investigate, not to purchase the loan, not to act on the
foreclosure but to investigate.
Councilmember Lucas stated she believes Vice Mayor Roth has
analyzed the problem very well; the City leased land under water
May 25, 1993
and would not have had anything if someone had not decided to
develop it; the improvements will revert to the City by 2029,
including the filled land which will be quite valuable at that
time; if just the note and deed of trust are being sold, the City
Attorney has stated the City cannot buy those; foreclosure is a
lengthy proceeding with constant delays and buying foreclosed
property is a complicated subject, all of the angles should be
looked at; and she suggests the City Attorney consult a person
well-versed in foreclosure law.
Vice Mayor Roth stated it appeared to him that Councilmember
Appezzato wanted the meeting so that the City could be in a
position to act on June 1st, however, an ordinance would be
necessary and could not be done by June 1st.
Councilmember Lucas stated she is also concerned about the June 1st
deadline; if the City Manager is to investigate, he should have a
reasonable time to evaluate the opportunities; and requested the
motion be read.
The City Clerk stated the motion is to direct the City Manager -o
investigate financial feasibility of leasehold if Colony Advisors
forecloses on June 1st.
Vice Mayor Roth stated his problem is, if they foreclose, the
matter is to be pursued June 1st; but Councilmember Appezzato wants
it pursued before June 1st; if the foreclosure is to be the trigger
point, that should be stated.
President Withrow stated he would be more comfortable addressing
the motion if the language was less specific and more general, th&;..
would request that the City Manager investigate and assess options
that may be available, given the transactions that are taking place
with respect to Almar, Ballena Bay and any others as it relates to
that; that way it would not mislead people.
Councilmember Appezzato stated he has talked to Colony and the
principal; as an individual citizen, they advised him that they
have a contract that may be delayed through June, and if this
Council gave the City Manager authority to investigate, they would
be happy to talk to the City Manager; and his motion, for
clarification, is that the City Manager investigate, not purchase
the loan; he will stand by his motion that Council allow the City
Manager to investigate the benefits for the City of Alameda.
Councilmember Lucas inquired if Councilmember Appezzato would be
averse to removing the June 1 date from his motion.
Councilmember Appezzato stated the June 1 date only has relevance
to the fact that it has been posted and noticed in the paper as the
foreclosure date. He wants the City Manager to begin tomorrow to
initiate discussion; June 1st is an immaterial date.
President Withrow stated he leans toward eliminating the June 1st
May 25, 1993
date, and also believes the motion would have more impact if Colony
was removed; the City Manager should investigate all options and
connections.
Vice Mayor Roth further commented on his concerns.
President Withrow inquired if Vice Mayor Roth would be more
comfortable with general language, and the Vice Mayor replied
affirmatively.
President Withrow stated Mr. Shane has made a good point and
Councilmember Appezzato has made a good point; if there is an
opportunity for the City to gain, we should be involved.
Vice Mayor Roth commented on the possibility of limiting staff's
time and money spent on the investigation.
Councilmember Lucas made a substitute motion that Council request
the City Manager look into the acquisition of the Ballena Bay lease
and report back to Council with his recommendation; and stated he
should be given adequate time, and not given a June 1st deadline.
Vice Mayor Roth seconded the motion.
Councilmember Appezzato stated the motion is stronger than his
motion and he can accept that.
The motion carried by unanimous voice vote - 5.
ADJOURNMENT
President Withrow adjourned the meeting at 8:15 p.m.
Respectfully submitted,
n
Diane B. Felsch, CMC
City Clerk
The agenda for this meeting was posted in advance in accordance
with the Brown Act.
May 25, 1993