2000-02-02 ARRA MinutesAPPROVED
MINUTES OF THE REGULAR MEETING OF THE
ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY
Wednesday, February 2, 2000
The meeting convened at 5:47 p.m. with Chair Appezzato presiding.
1. ROLL CALL
Present: Tony Daysog, Councilmember, City of Alameda
Albert DeWitt, Councilmember, City of Alameda
Beverly Johnson, Councilmember, City of Alameda
Barbara Kerr, Councilmember, City of Alameda
Absent: Chair Ralph Appezzato, Mayor City of Alameda
2. CONSENT CALENDAR
2 -A. Approval of the minutes of the regular meeting of the November 3, 1999.
2 -B. Mid -Year Alameda Point Budget report from the Deputy City Manager.
Member Kerr moved approval of the minutes as presented for the regular meeting
of November 3, 1999 and the Mid -Year Alameda Point Budget report from the
Deputy City Manager. The motion was seconded by Member DeWitt and passed by
the following voice vote: Ayes - 4. Noes - 0. Abstentions - 0.
3. ACTION ITEMS
3 -A. Report and recommendation from the Deputy City Manager to amend sections 2.02 and
2.03 of the ARRA By -laws to establish the Mayor and Vice -Mayor as Chairperson and
Vice - Chairperson of the ARRA Governing Body respectively.
Member DeWitt moved approval of the recommendation. The motion was seconded by
Member Kerr and passed by the following voice vote: Ayes - 4; Noes - 0; Abstentions - 0.
3 -B. Report and recommendation from the Deputy City Manager to amend ARRA Resolution
010 to establish a regular annual meeting of the ARRA Governing Body for the third
Tuesday in June and allow for special meetings as- needed.
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The public hearing was opened.
Diane Lichteinstine, BRAG Vice- Chair, expressed that some clarification was needed on how the
ARRA intends to be open to the public.
Nanette Banks, Alameda Point, Business and Special Projects Manager stated this
recommendation is to move it to the Tuesday night meeting to conform it to the same way
Council does the CIC and Housing meetings. The public would have ample notice of the
meeting and the BRAG's information would be advanced to the ARRA in the same manner. If
there was an issue which required immediate action, staff would hold an as needed meeting and
conform to meet as the same time the Council meets, which means the ARRA could hold two
meetings in one month.
Jim Flint, City Manager, indicated staffs recommendation does conform to the Council's role as
the Housing Authority and the CIC. Those meetings are frequently called if they are needed. If
there is no business, it is not necessary to conduct a meeting, unless the Governing Body desires
to meet. This gives the Board the flexibility to conduct other meetings, as needed.
Richard Neveln, 1328 Park Street, questioned why staff recommended the regular scheduled
ARRA meetings to be eliminated? He stated there should be some regularity to the meetings, so
things do not occur in a crisis mode. These meetings should be specified and canceled if there is
no business.
Jim Flint responded that staff is always planning multiple meetings in advance and always know
if they are going to have items for the Council, CIC and Housing Authority. There are no regular
scheduled meetings for the Housing Authority or the CIC, yet staff always stays contemporary
with current issues which have to be addressed by the Governing Body. This would not impede
the Boards ability to make any decisions or staff's ability to manage these projects and to move
issues through in a timely manner.
Mr. Neveln asked is it reasonable to assume that these meetings would occur concurrent or just
before Council meetings?
Jim Flint responded yes.
The public hearing was closed for Authority discussion.
Member Kerr stated that we are developing 25% of the City and this is not some minor project.
These issues may get lost within the Council meetings, as there are a lot of important issues that
occur within the ARRA meetings. It is important that we have some regularity of meetings
because it is difficult to get updates and current evaluations of what staff is doing. Member Kerr
indicated that if meetings are stopped on a regular basis and the Governing Body sits as Council
or CIC, it may be less informed than it is now.
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Member DeWitt questioned staffs recommendation about the alternative Wednesday meetings
instead of having it on Tuesday. He asked if this meant that the ARRA will continue to have its
regular meetings on Wednesday's or will it occur Tuesday's with the CIC?
Nanette Banks responded that the paragraph he read was inserted so that the Board could have a
choice. Staff is recommending that the Board move their meetings to Tuesday and have them on
an as- needed basis. However, the Board may continue to have meetings on Wednesday's, if it so
chooses.
Member DeWitt asked what would happen if they continued to meet on Wednesday's?
Ms. Banks responded that was their decision.
Member DeWitt stated there are some issues that are going on which are very important and he
would like to continue to meet once a month.
Jim Flint responded that there would be no material difference in what they are doing to date.
The monthly meeting would be scheduled and if there was an agenda of items, staff would
conduct a meeting. If there were no items, staff would cancel as they have previously been
doing.
Member Johnson asked Ms. Banks if staff polled the members on their preference for Tuesday or
Wednesday nights?
Ms. Banks responded staff polled the members on what their preference would be and there was
a split decision, which is why staff put forward this recommendation.
Member Kerr stated it is very important to continue as they are until the City gets title to the
Base. It is a very critical time and very important to stay on top of what is going on, as there are
constant negotiations with the Navy.
Lee Perez, BRAG Chair, expressed their concern is that whatever decision the Governing Body
makes, it should be user friendly to the Commissioners and the community. There should be
separate, regular meetings for a transitionary period that is dedicated to one issue, which is
Alameda Point. Mr. Perez stated it should continue to meet for a while and then change.
Member Johnson stated it is important to keep access open to the public. If the Board schedules
meetings on an as- needed basis, there is not an opportunity for public input. Member Johnson
voiced she has no problems with going forward with the regularly scheduled Wednesday
meetings and can cancel a meeting as needed.
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Member Kerr responded that she did not want to have a mandatory start on City Council
meetings at 5:30, as those meetings are very long. To start at 5:30 on Tuesday would detract the
Board from other City Council items later in the meeting.
Member Daysog recommended staff continue the meetings for eight (8) months and in the course
of that time, change it if the Board desires to.
Member Kerr motioned to continue the ARRA meetings on Wednesday's until January,
2001. The motion was seconded by Member DeWitt and passed by the following voice
votes: Ayes - 4; Noes - 0; Abstentions - 0.
3 -C. Report and recommendation from the Deputy City Manager to authorize the Executive
Director to execute a 10 -year lease with two five year options to renew on Building 23
with West Coast Novelty Corporation.
The public hearing was opened.
Kurt Bohan, 344 Westline Drive, #301C, expressed that Hangar 23 is the most desirable Hangar
on the Base, due to its historic nature. It was available to Zebra, but they could not take it due to
their lack of financial viability. Mr. Bohan stated it would be a big disaster to turn this building
into a Warehouse and a total communication failure on the part of the Board, especially due to
the twenty -year lease. Mr. Bohan indicated he would like to see something that is representative
of what is presently going on at the base. If staff's recommendation passes, it would be a big
political failure.
Ann Mitchum, 732 Central Avenue, #16, expressed that at the last BRAG meeting, this was
considered against what was considered the dream vision for the Base. This does not live up to
the standards of what the community wants to see at Alameda Point. The two five year options
after the ten year lease are at the discretion of the lessee, West Coast Novelty, who would have
the choice of continuing the lease, as it would not be up to the City to make that decision. We do
not want to loose control of the situation.
Bill Smith, Alameda, expressed his concern with West Coast Novelty and their intentions on
future plans at Alameda Point. Mr. Smith indicated there is a novelty show in Reno and any can
go there and pick up these fifteen cent products which are manufactured overseas and are
marketed here for $1.50. Mr. Smith expressed that Alameda Point has not been properly
marketed as there are many incubators throughout the country and more are coming.
Larry Jones, Bay Street, expressed his support for West Coast Novelty. He stated he worked
with their principals for over a year in an effort to attain one long -term facility which they could
buy. This is a corporate warehouse facility, with no semi - trucks, just a business to the fulfillment
of the Internet. This is an opportunity to take something that Oakland thinks they have and an
opportunity to bring it to Alameda. This effort is not inconsistent with what is presently going on
with the base.
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Brian T. McCroden, West Coast Novelty Corp., stated they had an option to build their own
facility in a neighboring city. However, it was moving at a slow pace and their realtor contacted
Mike and Ed, who have moved swiftly to make their lease a reality. West Coast Novelty is one
of the leaders in the sales, creation, marketing and distribution of a wide variety of sports,
entertainment and lifestyle licensed products. This is a big business with lots of employment
opportunity and growth. West Coast employs approximately 70 people and are interested in
employing people within the community. Mr. McCroden indicated they will not have many
trucks entering their site. The company has grown from the 1980's in the six figures, to
approximately $25 million a year. They are not a basic warehouse company, as they are
continuously designing products. Mr. McCroden stated they intend to put their entire corporate
headquarters at Alameda Point and put in $500,000 for upgrades and are very sensitive to the
historic nature of this building.
The public hearing was closed for Authority discussion.
Member DeWitt asked Mr. McCroden how many people do they employ?
Mr. McCroden responded that they employ approximately 70 people and it increases and
decreases seasonally.
Member DeWitt asked about their sales tax revenue.
Mr. McCroden stated they are not a retail operation. They are a wholesale and Internet operation
and do not generate a lot of sales tax revenue.
Member DeWitt asked Mr. McCroden how much traffic would they generate at Alameda Point
in terms of large vehicles.
Mr. McCroden responded one to two large trucks and UPS and Federal Express.
Member Johnson asked what is the estimated tax revenue that would be generated for the City.
Mr. McCroden responded that whatever the City's tax rate is, put that number into $25 million a
year and that would be the annual payment to the City.
Member Johnson asked would their only warehouse be in Alameda?
Mr. McCroden responded that is correct.
Member Johnson asked how does their Internet business work?
Mr. McCroden responded they are individual orders, which are downloaded onto their system.
Once a day, UPS comes and loads these orders on their truck for delivery.
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Member Kerr asked what is the City's revenue based on, net or gross?
Jim Flint responded that he was not sure of that but he suspects it is gross.
Lance Littlejohn, CFO of West Coast Novelty, indicated that in their present facility in
Emeryville which is comparable to Alameda, they would pay Alameda approximately $20,000 a
year.
Member Kerr asked Mr. Levine on their lease renewal, would their rent be renegotiated at the
end of their ten (10) years?
Mr. Levine responded no, because they have set the rent for years from eleven through fifteen
and that is established in the lease based on a CPI increase from the first years rent. Thereafter,
the second renewal option period would be set at 90% of the appraised fair market value at that
time, for years sixteen through twenty.
Member Johnson asked are there any rental increases during that fifteen year period?
Mr. Levine responded yes, there are CIP increases each year.
Member DeWitt asked Mr. Levine what happened to the incubator plans from four or five years
ago?
Mr. Levine responded that staff has two facilities presently, which seems to be sufficient to start
up any new companies.
Member DeWitt asked what happened to the electric cars?
Mr. Levine responded that regretfully, they have not been successful. There are some companies
that have hatched out of Calstart, although Zebra was supposed to be the big success story staff
was counting on, unfortunately they could not get their finance and go ahead with the lease for
Hangar 23 as they originally intended to do.
Member DeWitt asked are we moving to fast and using all of our space at this time?
Mr. Levine responded that West Coast Novelty is a first class tenant and is consistent with the
reuse plan. They are a headquarters operation and the space is not being use for some warehouse.
Significant employment will result from this lease.
Member Johnson asked what percentage of the building would be used for warehouse space and
what percentage for headquarters.
Mr. Levine responded that it is a 65,000 square foot building, of which 40,000 square feet is the
hangar space and 25,000 square feet is office space.
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Member Johnson asked what is the amount per square foot that they are paying on the lease.
Mr. Levine responded thirty -one to thirty -six cents per square foot for the entire building. It is a
blended rate of the warehouse and office facility space. Normally when a warehouse is leased,
there is a certain amount of office space that goes with it and it is a flat rate which is applied to
all of the space.
Member Johnson asked how much of an investment are they making?
Mr. Levine responded approximately $500,000 and they are only be reimbursed for $125,000.
The building has already been improved and brought up to code compliance with EDA grant
money.
Member Daysog stated there is a vision that they would like to see in place but there is a need for
revenue to pay the bills at Alameda Point. Does staff have any leverage to move companies to
different locations on the base even though staff has entered into a lease agreement?
Mr. Levine responded that it would have to be negotiated, as we do not have leverage through
the lease. There are leases with Termination Provisions, should the need arise to redevelop the
property. We reserve the right to terminate the lease at some point during the term of the lease.
This provision is done with the lease primarily in the Inner Harbor area, not in the central core
area, as all of those buildings are designated for long -term use according to the Reuse Plan.
Member Johnson asked Mr. Levine would it be reasonable to renew at fair market value when
the option to renew carne up?
Mr. Levine responded it is strictly a matter of negotiation. This was one aspect staff had to give
on to make this deal.
Member Johnson asked what has CPI been most recently?
Jim Flint responded the most recent CPI for the Bay Area is 4.8 %.
Mr. Levine indicated staff is using Bay Area CPI rates.
Member Daysog expressed that we are moving forward as part of the vision for Alameda Point
with the West Coast Novelty lease. Although each company may not be perfect, there is space to
accommodate this company and other companies for the future which will accommodate our
vision for Alameda Point.
Member DeWitt moved approval of the recommendation. The motion was seconded by
Member Kerr and passed by the following voice vote: Ayes - 4; Noes - 0; Abstentions - 0.
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Discussion.
Member Kerr indicated she is encouraged that there is 25,000 square feet of office space, which
allows for flexibility for future use should West Coast Novelty decide not to renew, we will have
an upgraded facility and office space.
3 -D. BRAG recommendation to the ARRA Governing Body against including an option to
purchase in Alameda Point leases prior to the adoption of the General Plan Amendment.
The public hearing was opened.
Richard Neveln, 1328 Park Street, expressed he agrees with the BRAG recommendation against
purchase options unless there can be some wording crafted by Mr. Levine, in the way he has
crafted the West Coast Novelty lease, so that everyone benefits. Mr. Levine has shown that a
good lease can be crafted without the purchase option as shown tonight.
Kurt Bohan, 344 Westline Drive, #301C, expressed staff should preserve their right to not have
to purchase the property. Mr. Bohan encouraged the Board to make the option to buy, a universal
vote of all members for a profitable lease.
Bill Smith, Alameda, expressed his concern over renting out Hangar 23 for twenty years. He felt
that there should be more electronic and interne type of companies at Alameda Point. The
incubators should be given more opportunities, as the property value at Alameda Point is going
to double in the near future.
Ann Mitchum, 732 Central Avenue, #16, stated she did not understand how the Governing Body
could approve the recommendation to go forward on Hangar 23 for twenty - years. She expressed
to the Board that if they are going to make a decision on a twenty -year lease and think they have
the power to do that, they had better think again.
Diane Lichteinstein, BRAG Vice - Chair, expressed that it behooves the BRAG to take a stand as
an.advisory body to reiterate the BRAG's position they have taken. BRAG is very cognizance of
the need for economic viability for Alameda Point. BRAG does not want a warehouse at
Alameda Point permanently with the option to purchase, as there are already two leases with that
option. Option to purchase for some buildings is a disservice to the community. Ms.
Lichteinstein indicated that the option to purchase not be given until the general plan is amended,
because at that time rezoning will be done. The twenty -years with West Coast Novelty should
not be permanent. We should keep our options open and have the opportunity to develop the
neighborhood.
The public hearing was closed for Authority discussion.
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Member Kerr stated her concerned over the use permits, which go through the Planning Board
under the zoning paragraph, is always industrial planning. The current zoning at the base is not
harmonious with the Community Reuse Plan. Member Kerr would like to see a movement
towards rezoning the base, although there are arguments against doing it until the City gets title
from the Navy, because it would influence economic transfer. This would require a general plan
amendment. In the future when use permits go to the Planning Board after the City gets title,
there would already be in place a consideration of use in terms of zoning, which would be
compatible with the Reuse Plan which was developed by the community. To continue to send
use permits to the Planning Board with the current zoning in place is a very dangerous thing to
do.
Member DeWitt stated are we selling property now for peanuts that could be worth billions of
dollars in ten or twenty years? The solution to the problem would be to not have a contract that
made purchase a total option, but have a contract that has a lease period for five or ten years with
the option to purchase, but the option to purchase will be based on the market value at the time
and it will be at the City's discretion. There should be a procedure that allows the lease and
purchase, but the purchase has to be based on what the City wants to do at that time. The master
plan is not sufficient to go and sell pieces of the land right now. Maybe in five or ten years from
now there should be a better idea of what the market value is. There should be a policy or
procedure with the option to buy, but the option should be in the City's control, market value and
our vision.
Ed Levine stated there are currently two purchase options in place, one with AVTS and the other
with Bladium. In both cases, they have the option to purchase. The market value they would
pay for the property is the appraised market value of the property at the time of the purchase.
They would not be able to lock up the property at the present, cheaper rates, they would have to
pay the appraised amount.
Member DeWitt asked what if we want to change businesses? Since they have the option to
purchase, does it mean the Board can deny them or are they going to be competitive with
everyone else?
Mr. Levine stated the Board does not have the option to change businesses.
Member Johnson indicated she understands the BRAG's position on this, however she does not
want to take away the option to purchase on a really good deal we want to go forward with. It
could take some time before the General Plan is amended and the option to purchase has been
used sparingly, only two facilities have the option to purchase. Member Kerr raised the issue of
zoning, which might be a better to have control of the property.
Member Kerr asked staff to prepare a report for rezoning the property and implication of
rezoning the property when title passes.
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Jim Flint indicated staff can respond to that direction, however they are unsure as to how long it
may take to prepare such a report. It will entail a good deal of thought and study before a report
could be given to the Governing Body. It would take sixty to ninety to respond thoroughly. In
order to respond fairly staff cannot give the Board a timeline although staff can prepare an off -
agenda report at some time to reflect the concerns the Board has expressed.
Member Kerr stated it has been brought up before and the answer was that the Navy might look
amiss at the City rezoning the property before title is received, because it might effect the
economic development. Since the City may get title within the next six months and the issues of
planning are very important, it is dangerous to leave the present industrial zoning over the entire
base as it stands now. Ninety days is fine if staff thinks it can get it to the Board.
Jim Flint stated that the president has signed a no -cost legislation so this should not affect
rezoning during negotiations, because staff is not negotiating the economic value of the property
and we are not talking about taking an action until after conveyance of the property occurs. For
these reasons, this should not have any affect on the conveyance of the property.
Member DeWitt asked in the leases that have been done, is there a clause to renegotiate the
lease?
Ed Levine responded that typically there is a provision allowing the tenant the first right to
negotiate for renewal of the lease, but that is subject to staffs decision to extend the lease. At the
conclusion of a ten -year lease, if staff decides no more because the building is going to be
demolished or something else, then the tenant cannot exercise the right to negotiate. It is our
decision and in our control.
Member DeWitt asked how many buildings are left since most of the base is leased out?
Mr. Levine responded that most of the smaller and medium buildings are leased out. There are
approximately ten large buildings left, totaling approximately 1.7 million square feet, which staff
will be concentrating on over the next year. There are real interest from perspective tenants on
Buildings 2, 3 and 4, the former Bachelor's Quarters. Staff is talking with developers in
converting those into incubator offices, in line with the Community Reuse Plan. There is a
developer who is interested in the 300,000 square foot Building 8 who will do a similar type of
conversion whose been working with Dot Com companies in San Francisco and thinks he can
successfully reuse Building 8 and redevelop it for those kind of tenants.
Diane Lichteinstein stated the BRAG felt that the right for option to purchase be denied until the
General Plan is in place, but rezoning for the BRAG would accomplish that purpose. Until the
BRAG has a much better idea of what the community wants at Alameda Point, staff did not want
to make permanent decisions.
Member Johnson asked what about a policy that the Board's preference is not to give an option to
purchase, without completely eliminating it?
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Ms. Lichteinstein stated the BRAG is cognizant of the need for income and economic viability.
Perhaps a trade off is the best that can be accepted, although ultimately the BRAG would like
their recommendation to succeed.
Member Johnson stated she would be more comfortable with a policy which is what they have
been following against the option to purchase until the rezoning is done.
Member Johnson asked can there be a motion made adopting a policy?
Assistant City Attorney, Terri Highsmith responded yes, as the agenda item is more regarding
formulating a policy.
Member Johnson motioned to establish a policy against granting options to purchase, but
making it clear that the Governing Body can grant options to purchase if they feel it is
appropriate and move forward as member Kerr suggested towards rezoning the base.
Motion was seconded by Member Kerr. Ayes - 4; Noes -0; Abstentions - 0.
Discussion.
Mr. Flint indicated staff could be directed to draft a policy for the Board's consideration, perhaps
in an off - agenda report, so that by the next meeting of the ARRA the Board could consider it.
Member Johnson asked would there be an opportunity for the BRAG to review the language
before it came to the Board?
Mr. Flint responded staff could prepare a draft policy, incorporate it into an off - agenda report,
present it to the Council acting as the Governing Body for ARRA and simultaneously distribute
it to the BRAG prior to the next Board meeting.
Ms. Lichteinstein expressed her concern over the timing of these things, as they are out of sync.
It would be helpful if the BRAG could get it in time to review and make a formal
recommendation to the ARRA.
Mr. Flint responded the BRAG could call a special meeting so they could have the time to
review and reflect on it prior to the next ARRA meeting.
Member Johnson agreed that it is a good idea that the BRAG have a special meeting so that the
Governing Body can get it in place soon, rather than later.
4. ORAL REPORTS
4 -A. Oral report from BRAG.
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Lee Perez stated that on March 25, 2000 at the old historic Alameda High School cafeteria, from
9 -12 PM, the BRAG will be holding their next town meeting to discuss the issues that are going
on, maintaining the open forum of communication and allowing the public participation in this
meeting.
4 -B. Oral report from the Deputy City Manager (non- discussion items).
None.
5. ORAL COMMUNICATIONS, NON - AGENDA (PUBLIC COMMENT)
Doug deHaan, 1305 Dayton Avenue, expressed that seven years ago when things first started,
everyone felt things would move quickly. Now that there is a twenty -year lease in place, the
Board may be short changing itself to give itself the flexibility it needs. If the Board starts
selling off property or giving the options to purchase, you have to worry about the remediation
that may occur. The vast majority of the cleaning up at Alameda Point will occur with the
redeveloper, not the Navy. Mr. deHaan cautioned the Board in the use of the way they choose to
use the purchase options.
Ann Mitchum, 732 Central Avenue, #16, expressed that Member Kerr's suggestion of rezoning at
the Base is a very good idea. Ms. Mitchum recommended there should be extra staff based on
the Planning Department in order to fulfill that, when that time comes. This also fits in with the
FISC property. The property should be used as a lot -by -lot, zone -by -zone infrastructure of
personal use products such as office, commercial housing, in terms of the architecture.
Bill Smith, Alameda, stated if we appreciate the infrastructure that the developers can put in the
Base, food, shelter, clothing the kind of amenities we can build upon, then more jobs can be
created. Mr. Smith indicated someone brought Zebra Motors $50 million for industrial use and
the Board has just lost it in approving the West Coast Novelty lease.
Richard Neveln, 1328 Park Street, encouraged the public to attend the Public Transit Committee
meetings, as it will play an important part in the development of the entire City and reduce
congestion.
6. COMMUNICATIONS FROM THE GOVERNING BODY
Member Kerr asked could the Board get a one -time list of what the various entities are paying in
monthly and annual rents?
Jim Flint responded yes.
Jim Flint asked the Board to endorse the Mayor in sending a letter to Congresswoman Barbara
Lee, Wilma Chan and to the Mayor's and Council's of both the City of Oakland and San Leandro
for their participation on the ARRA Governing Body.
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Member Daysog suggested that it was a great idea and perhaps we should give them a plaque, in
addition to the letter.
Member Johnson stated she agreed with Member Daysog's suggestion and also felt that it was a
good idea.
7. ADJOURNMENT
The meeting was adjourned at 7:30 p.m.
Respectfully,
Lucretia Akil
ARRA Secretary
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