Loading...
2003-11-19 Joint CC CIC ARRA MinutesMINUTES OF THE SPECIAL JOINT CITY COUNCIL, COMMUNITY IMPROVEMENT COMMISSION AND ALAMEDA REUSE AND REDEVELOPMENT AUTHORITY MEETING WEDNESDAY- - NOVEMBER 19, 2003- -5:00 P.M. Mayor /Chair Johnson convened the Special Joint Meeting at 5:10 p.m. Vice Mayor /Commissioner /Board Member Daysog led the Pledge of Allegiance. ROLL CALL - Present: Absent Public Comment Councilmembers/ Commissioners/ Authority Members Daysog, Gilmore, Kerr, Matarrese and Mayor /Chair Johnson - 5. None. Peter Clark, Allegre Associates, submitted information to the Council /Commission /Authority; stated in exchange for 140 acres at Alameda Point, he would build a transit system connecting to BART at no cost to the City of Alameda; City staff suggested that he contact APCP; however, his phone calls have not been returned. Mayor /Chair Johnson inquired whether Mr. Clark is associated with Cybertran. Mr. Clark responded cross licensing would be done with Cybertran; there are a couple of possibilities; he is affiliated with Cybertran and Morgan Town University, which has a transit system that has been in operation 30 years and has an unblemished safety record; the [Alameda Point] options are similar to Morgan Town which has a rubber tire system or with Cybertran; a historic trolley or futuristic approach could be completed for the same cost. Mayor /Chair Johnson inquired whether Mr. Clark is locked into one mode of transportation. Mr. Clark responded that he is proposing automated trolleys, which could have different looks and are on rails or rubber tires; rail is slightly cheaper, quieter and less expensive to maintain; that he uses automated construction techniques; towers are welded to steel augers in the ground; the preferred mode is over intersections and into the second floor of buildings; the proposal does not appear to be a transit - oriented development. Doug de Haan, Alameda, stated the process has been ongoing for two Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 1 Reuse and Redevelopment Authority November 19, 2003 years; three major elements are different: 1) Shea and Centex were not involved in the initial proposal; 2) Morgan Stanley's adaptive reuse experience; and 3) remediation; that he does not recognize the current team; urged cautious review; stated the City needs a long -term partner; now, the project will be taken down in segments; if major remediation is left until the end of the project and the developer leaves, the City could be left standing against the Navy; that he is concerned about piecemeal development; taking on the whole project is doable. (03- 544CC/03- 069CIC) Presentation Partners. APCP gave a PowerPoint presentation. by Alameda Point Community The City Attorney /Legal Counsel clarified that the slides labeled "Master Concept Plan and Illustrative Site Plan" represent the master developer's proposal and had not been submitted to the City; approval of the Conditional Acquisition Agreement (CAA) is not an approval of the proposal. Councilmember /Commissioner /Board Member Gilmore noted the long negotiation process; initially, there was a 22.5% Internal Rate of Return (IRR) and APCP was expected to fund predevelopment costs; the City has decided to spend $3.5 million in predevelopment costs; at the end of the 15 month predevelopment period, certain things will be known; inquired why the change [in predevelopment funding] is not reflected in the IRR; stated the IRR should no longer be 22.5%. Phil Rafton, APCP, responded the risk profile is different than when the RFP was prepared; determining where the Navy stands in the next 15 months will eliminate one component of risk; there will be the risk of entitlement and solving the traffic problems thereafter; implementing the DDA has risks of development costs and tremendous unknowns, such as unstable soil conditions, seismic conditions, market conditions and interest rates; the City's $3.5 million underwriting costs will be paid for by the development; originally, APCP was to receive excess lease revenues to cover predevelopment costs; said revenues are not available for APCP's use; APCP is still faced with tremendous dollars and will fund an additional $12 to $15 million between now and full entitlement; the risk still exists; the City is not taking on $3.5 million, bonds will be repaid from the project regardless of whether APCP is the developer; the risk profile remains the same; other base conversions have IRRs over 20%, some as high as 25%; the IRR is how the capital is attracted relative to the risk. Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 2 Reuse and Redevelopment Authority November 19, 2003 Councilmember /Commissioner /Board Member Matarrese stated the IRR is subordinate to fiscal neutrality and amenities in the development plan, including public spaces, parks and certain infrastructure. Councilmember /Commissioner /Board Member Kerr stated issuing bonds is not risk free; all developers face soil problems, seismic problems, and traffic solutions; the IRR is of concern because the land price has not been settled; the City might not be paid anything for the land; if the 22.50 IRR in the CAA is not achieved, the City will not receive profit sharing; the City should evaluate and inquire whether anyone would purchase the property "as is;" the deal involves taxpayer expense, including redevelopment tax increment and property taxes, and could end up not getting the people of Alameda any money for their land; that she is concerned about negotiations involving considerable bond money which could lead to no return for the land; the City should have reviewed the net value of the land in an "as is" condition. Mayor /Chair Johnson stated the $3.5 million must be spent for the entitlement process; the City would have to spend said money whether or not there is a developer. Councilmember /Commissioner /Board Member Matarrese stated the first share of profit that the City will reap is the amenities; the City will not lose if there is 190 return because the return follows receiving parks and City property; anything beyond 22.50 would be profit to the City; the Navy's intention was not to give cities land to make a profit; the intent was to give land back to the cities for adaptive reuse; the profit the City will reap is City - owned public amenities that the development will pay for, such as libraries and fire houses. Vice Mayor /Commissioner /Board Member Daysog stated bonds can be issued to pay for services; issuing a bond causes future generations to repay the bond and interest; that he has concerns about issuing bonds; reducing the capital or operating budgets should be contemplated in order to achieve fiscal neutrality; noted that since lease revenues cannot pay for services, lease revenue bonds issued in 1999 were used to pay for capital projects throughout Alameda to free up Public Works money for Alameda Point [services]; all steps should be taken to cut costs before bonds are issued. Mr. Rafton noted repayment of the bonds would come from the project either through lease revenues or the development; APCP is obligated to fiscal neutrality, which includes repayment of the bonds. Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 3 Reuse and Redevelopment Authority November 19, 2003 Vice Mayor /Commissioner /Board Member Daysog stated that he would consider a bond, but cutting costs should be contemplated to minimize the use of bonds. Mr. Rafton noted using public financing benefits both the City and APCP. Vice Mayor /Commissioner /Board Member Daysog stated infrastructure, tax increment, and community facilities bonds have to be issued; that he wants to minimize the use of bonds for short -term financing as outlined in the 1999 financial plan. Councilmember /Commissioner /Board Member Gilmore stated that after the City spends $3.5 million, APCP could decide to walk away; spending the $3.5 million will answer questions; however, answers are not receiving any value since the IRR remains the same; after questions have been answered, APCP can elect to walk away. Mr. Rafton stated during the period that the City spends $3.5 million, APCP would spend approximately $1.8 million; noted APCP would give the City a check for $250,000 soon. Councilmember /Commissioner /Board Member Gilmore inquired whether the $250,000 payment is a pre- existing obligation. The City Manager /Executive Director stated an additional $1.5 million is anticipated in the ENA; $250,000 was to be paid to the City upon approval of CAA term sheet; if the CAA is approved, another $250, 000 is to be paid to the City; $1 million would be paid upon approval of the Disposition and Development Agreement (DDA) . Mr. Rafton noted that APCP does not receive a return on bond money, because it is money APCP is not contributing. Councilmember /Commissioner /Board Member Kerr stated the idea was to keep APCP from continuing to spend money; the City did not know where APCP was spending money; inquired what type of accounting APCP would provide on the $1.8 million it anticipates spending. Mr. Barry stated the CAA contemplates audit predevelopment funds that have "qualified predevelopment expenses" is to complete an audit on money spent to d will be completed at the conclusi predevelopment period. Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 4 Reuse and Redevelopment Authority November 19, 2003 an obligation for APCP to been expended by APCP; the defined term; APCP has ate and an additional audit on of the ARRA funded Councilmember /Commissioner /Board Member Kerr stated APCP's initial documentation loosely defined APAR; inquired whether as to the contractual obligation between APCP and firms [on its team]; further inquired into is the relationship between APAR and APCP. Mr. Barry responded Shea Properties created the acronym APAR (Alameda Point Adaptive Reuse) for the RFQ; APAR is not a separate entity; the team introduced tonight is committed to the six -month adaptive reuse business proposal process; the firms will be APCP's paid consultants responsible for creating the adaptive reuse business proposal required in the CAA. Mr. Rafton noted that the $7 million APCP spent to date and the $1.8 million that will be spent during the next 15 months, would not receive 22.50 IRR during the 15 month period. Vice Mayor /Commissioner /Board Member Daysog stated [the City] spending $3.5 million to pay for the final predevelopment items is the City's budget decision; ARRA will decide how to pay for the $3.5 million; that he is concerned about paying via bond; the City will find a way to pay for the services; that he would like to see language about contemplating cuts elsewhere; the City might not be able to cut the budget; lowering staff levels might not be acceptable. Mr. Barry stated [APCP's] $1.8 million budget entails a reduction of APCP's overhead and work product; the budget is an exhibit to the CAA; overhead has not been stripped; APCP's goal is partner with the City in negotiations with the Navy, whether it be technical assistance or lobbying; APCP will provide partnership assistance to help in the conveyance process; that he wants the best opportunity for APCP to elect to proceed at the end of the ARRA funded predevelopment period by having APCP's team provide input. Layne Marceau, President of Shea Homes, noted that regarding APCP's option to proceed at the end of the 15 month period, APCP has risked $7 million over the two year process; APCP has funded City expenses for two years; APCP has taken on risk; APCP thought it would have vested rights to the project by now; very few risks have been taken out of the project to date; in 15 months, there will still be many risks. Councilmember /Commissioner /Board Member Gilmore stated APCP's adaptive reuse specialist, Plant Construction, has a lot of adaptive reuse experience, but not with military bases; inquired Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 5 Reuse and Redevelopment Authority November 19, 2003 whether other military sites Plant is involved with are farther along than Alameda. Mr. Barry noted IRG is involved with the McClellan Park project and is developing teams to orchestrate adaptive reuse. Bob Burke, Plant Construction, stated the other military bases that Plant Construction is involved with, Hamilton, Fort Ord and Tustin, are behind Alameda; Plant has been in existence since the early 1970's and has converted tilt buildings constructed for industrial uses to offices, which have adaptive reuse characteristics; APCP was extremely careful in selecting its team. Mr. Barry noted Morgan Stanley and IRG's roles changed as far as further investment, but both have a substantial investment in the project and remain available as resources. Councilmember /Commissioner /Board Member Gilmore stated the original MOU contemplates distributions among the partnerships and sets a floor for the IRR of 180; there are incentives beyond the 18% for the partners; the amended MOU indicates anything not specifically addressed remains the same; inquired whether the 18% remains the same. Mr. Barry responded APCP is drafting its operating agreement, which will spell out each of the components in the MOU. Mr. Marceau stated the 18% cash distribution section is in the original MOU; the amendment addresses new priorities for cash distribution; the 18% no longer exists; there is a new priority of how cash is distributed out of the partnership; now that operating partners, Centex and Shea, are committing all of the future capital, there is no longer the promote [18o incentive]. Mr. Rafton stated 18% was never an underwriting criteria, rather a threshold incentive for the managing member. Councilmember /Commissioner /Board Member Kerr stated APCP's incorporation date has not changed; inquired whether APCP's ability to have insurance and a bank account has changed. Mr. Barry responded the money spent to date is a soft asset; until property is transferred, there will not be any physical, hard assets; the commitment is that APCP will fund all capital required to move forward; APCP was always able to have insurance; the insurance requirements for the property management agreement had unique twists; APCP has the ability to get insurance, which is not Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 6 Reuse and Redevelopment Authority November 19, 2003 an issue relative to APCP's standing. The Special Meeting was adjourned to closed session to consider: (03- 545CC /03- 070CIC) Conference with Real Property Negotiator; Property: Alameda Naval Air Station; Negotiating Parties: Alameda Point Community Partners, Navy, City of Alameda, Community Improvement Commission and Alameda Reuse and Redevelopment Authority; Under negotiation: Price and terms. Following the Closed Session, the Special Meeting was reconvened and Mayor /Chair Johnson announced that the City /Commission/ Authority obtained a briefing from Real Property Negotiators. AGENDA ITEM (03- 546CC /03- 071CIC) City Council Resolution No. 13665, CIC Resolution No. 03 -121, ARRA Resolution No. 33, "Authorizing the Alameda City Manager, Executive Director of the Commission and the Executive Director of the Authority to Enter into a Conditional Acquisition Agreement By and Between the Alameda Point Community Partners for Real Property at Alameda Point." Adopted. Councilmember /Commissioner /Board Member Gilmore stated that she appreciates the time and effort that APCP has put into answering questions and providing the presentation. Vice Mayor /Commissioner /Board Member Daysog moved adoption of the CAA with notes [adoption of the resolution], with direction that the ARRA /CIC /City Council, in performing its responsibilities, shall contemplate reducing the operational and capital budgets in an effort to achieve fiscal neutrality; clarified that said language is not added to the CAA, but is part of the motion. Councilmember /Commissioner /Board Member Matarrese seconded the motion, with the added policy statement and the annotated language. Under discussion, Councilmember /Commissioner /Board Member Matarrese noted that the Agreement is conditional and addresses how to move forward, including the City's investment over the next 15 months; noted said investment is needed, regardless of who will be the developer. Special Joint Meeting Alameda City Council, Community Improvement Commission and Alameda 7 Reuse and Redevelopment Authority November 19, 2003 Councilmember /Commissioner /Board Member Gilmore stated that she needs time to digest what was presented tonight; some member entities were introduced for the first time. Councilmember /Commissioner /Board Member Gilmore made a substitute motion to continue the matter for a week or two. Councilmember /Commissioner /Board Member Kerr seconded the motion. THE SUBSITUTE MOTION FAILED by the following roll call vote: Councilmember /Commissioner /Board Member Daysog: No; Gilmore: Aye; Kerr: Aye; Matarrese: No; Mayor /Chair Johnson: No. Ayes: 2. Noes: 3. On the call for the question on the original motion, the motion carried by the following roll call vote: Councilmember/ Commissioner /Board Member Daysog: Aye; Gilmore: No; Kerr: No; Matarrese: Aye; and Mayor /Chair Johnson: Aye. Ayes: 3. Noes: 2. Adjournment There being no further business, Mayor /Chair Johnson adjourned the Special Joint Meeting at 7:35 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, Community Improvement Commission and Alameda 8 Reuse and Redevelopment Authority November 19, 2003