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1993-07-06 Special CC MinutesMINUTES OF sPECIAL COUNCIL MEETTNG OF ALAMEDA CITY COUNCIL JULY 6, 1993 The meeting convened at 11:48 p.m. (following the Regular Council Meeting) with President Withrow presiding. ROLL CALL - Present: Councilmembers Appezzato, Arnerich, Lucas, Roth and President Withrow - 5. Absent: None. 93-405 Resolution No. 12427 "Authorizing Sole Source for the Purchase of the East End Ferry Vessel." Adopted. John Scott Graham, Alameda, questioned why there was not an open bid process. The City Manager explained this matter is for acquisition, not for operation. Mr. Graham stated he would not want the matter to be extended past 1995 because of the base closure, and the basin along the breakwater would be the most ideal spot to put a ferry terminal in Alameda. Vice Mayor Roth moved adoption of resolution to approve the open market sole source purchase; Councilman Arnerich seconded the motion which was carried by unanimous voice vote - 5. 93-406 Report from Public Works Director recommending an Agreement with Harbor Bay Maritime (HBM) regarding Proposition 116 Ferry Funding. Don Roberts, Alameda, stated the new [revised] Lease Agreement incorporating recommendations by Councilmember Appezzato is an improvement over the original document; commented on changes concerning excess proceeds from charter service, and service schedules. Diane Coler-Dark, Alameda, expressed her concerns regarding the purchase of the vessel and stated the City should determine if it is willing to own a ferry prior to making decision on Agreement. Vice Mayor Roth moved to authorize the City Manager to enter into an agreement with Harbor Bay Maritime regarding Proposition 116 ferry funding. [Motion failed for lack of a second.] Councilmember Lucas requested hearing from Councilmember Appezzato before committing to a second. Councilmember Appezzato complimented staff in addressing most of his concerns and changing portions of the Lease Agreement, and commented on the changes; he addressed the revised Lease stating he has three concerns; 1) the 10-year period; he has no difficulty July 6, 1993 67 with the new lease term for 4 years upon delivery of the vessel; however, instead of two 3-year options, City should negotiate renewals; 2) he would like, in Lease paragraph 2B, page 4, Termination Prior to the End of Term to add, following "to cure the failure," the words "as determined by the City of Alameda." Vice Mayor Roth stated that is saying that any time determination that someone is at fault is made, there can be no way to satisfy, and all legal recourse is being taken away. In response to Councilmember Lucas, the City Attorney opined that Councilmember Appezzato's proposal would, in essence, give the City slightly more grounds or authority, and the response should be Harbor Bay's. Councilmember Appezzato stated his final issue 3) is in paragraph 9, on pages nine and ten; and relates to surplus monies being returned to Traffic Improvement Fund [TIF]. He would like placed in the lease agreement, that no additional TIF monies, except for the initial $200,000, will be used for ferry service; all the other changes made Lre acceptable; he complimented staff for the changes they made, and Harbor Bay for agreeing to them. Councilmember Lucas said she would like to follow the City Attorney's suggestion and inquire if Harbor Bay can live with changes. Steve Brimhall, President, Harbor Bay Maritime, stated, in response to Councilmember Appezzato's three proposed changes, [1] that HBM, HBI Associates, has put over a million dollars into the ferry service to date, and continues to support it with about $50,000 per month, therefore, there is a substantial investment and commitment by the companies he represents to establish ferry service for Alameda in perpetuity long after HB is completed and the developer is gone; there will always be a need for subsidies; to help off-set that, this is a good opportunity to acquire a boat, eliminating $15,000 a month for a boat lease; if HB continues to operate the service, HB should be entitled to the use of the boat, which will perhaps help to pay bac some of the money put in. HB will still be operating out of pocket, so he would be opposed to changing and dropping the option terms. Mr. Brimhall stated, [2] as to paragraph 2, two words in the paragraph were perhaps not given enough emphasis: "diligently" and "continues" ["Lo cure the failure"] and that goes a long way in his mind to saying the language that is in there is acceptable. The other language [proposed by Councilmember Appezzato] will be accepted, although he does not think it is fair, as an agreement should be good for both parties; one should not have advantage over another, however, on item number 2, whatever the Council decides is fine. [3] On the issue of the TIF, if there are excess funds to come back into the TIF, once the $200,000 is paid back, HB's view is that those monies should then be available to help support the future ferry service; there will be costs from time to time and July 6, 1993 268 those monies should be available; so he would be opposed, at this point in time, limiting going back to the TIF; HB could not unilaterally take any money from the TIF, the matter must come before the City so there is a self-generating mechanism in place, and we should not foreclose it at this time. The City Attorney clarified there are specific Proposition 116 requirements that state that ferry monies, and proceeds from that, cannot be used for General Fund or other expenditures, they must be limited to the purposes of the project, in this case, the ferry; and that is a requirement neither party can alter. In response to Councilman Arnerich, the City Attorney stated the moneys generated cannot go into the General Fund; it would be appropriate to reimburse the TIF for the $200,000: that is, in essence, the repayment of a loan, after that, it would go into the TIF to be used for ferry purposes. In response to Councilman Arnerich, the Public Works Director stated his understanding of Prop 116 is that any surplus money generatad by ferry activities could go to repayment of the loan which would be the first choice, and after that, they would probably need to be utilized for the ferry project, this whole thing [purchase and operation] is a project: the 1.1 million from Prop 116 plus the $200,000 from the TIF, and it would seem appropriate that the monies would go back into the TIF and be available for e.g., ferry operation, terminal improvement; if the boat is sold, all the proceeds must go back to the state. The City Attorney stated that is also her understanding. The City Manage-r- stated, in this section, the situations are somewhat academic; the discussion is about when operating revenues exceed operating costs and he does not believe that will happen; $50,000 to $70,000 is being lost now; by not having to lease the boat is their [HBM's] loss, which means their subsidy will drop; however, even in the most advantageous scenario, he does not ever see the ferry service breaking even, let alone producing a profit to worry about; however, the situation has been addressed [in the lease]. Councilmember Appezzato stated he has to probably agree. The City Manager stated every transit system looks at 20 to 30 percent of funds to come from the fare box; the rest comes from public subsidies, whether property or sales tax; in the cases of AC Transit and BART, it comes from both; so he does not believe the City will ever have this [ferry service) produce a profit. Councilmember Lucas stated the City Manager has reached the core of the problem: public transit is not a profit-making operation; by definition, it has to be a subsidized operation; she understands Councilmember Appezzato's concern but she finds that the City has a committed operator, the City wanted as much ferry service as July 6, 1993 69 possible because Alameda is an island community, and wants to attract new industries, is fortunate to obtain funding, has an operator willing to put in some of their own funds; no other operator would be stepping forth to commit their funds, so it means working with HBI or not having the service, and she prefers having the service; she understands Mr. Brimhall's concern, that they need the options; he is willing to go along with Councilmember Appezzato's suggestion for the words "as determined by the City" so she would like to include that. Councilmember Lucas moved to approve the lease with the inclusion of the options. Councilmember Appezzato stated he would like to vote on each option separately, then on the lease as a whole. Councilmember Lucas changed her motion to moving to approve the options. Vice Mayor Roth seconded the motion. Councilmember Lucas clarified motion is on paragraph 2A. The motion was carried by the following voice vote: Councilmembers Arnerich, Lucas, Roth and President Withrow - 4. Nayes: Councilmember Appezzato - 1. Absent: None. Councilmember Lucas moved to amend Paragraph 2B as proposed by Councilmember Appezzato. Councilmember Appezzato seconded the motion which carried by unanimous voice vote- 5. Councilmember Lucas stated, if she understood the City Attorney correctly, voting on Councilmember Appezzato's third proposal would have no bearing because there are other laws that govern the use of the funds. Councilmember Appezzato explained he is saying that, after the $200,000 contribution, any new TIF monies will not be used for the ferry service but surplus funds would be fine because he does not think there will be any. Councilmember Lucas requested clarification that before TIF monies are spent on additional ferry expenditures, approval would be required. The Public Works Director confirmed Council approval would be required. The City Attorney stated, in answer to the question as to whether or not Councilmember Appezzato's proposal is legal under various laws and agreements, under Prop 116, Council would need to take any surplus and apply it back to the ferry operations; secondly, the TIF agreement itself provides that TIF money shall be jointly determined by a vote of both HB and the City Council therefore, Council cannot unilaterally impose that; since HB is disapproving that blanket restriction for the future, the Council does not have July 6-, 1993 270 the right to impose it unilaterally at this time. Councilmember Lucas moved to accept that part of the proposed lease [paragraph 9] as it is drafted. Vice Mayor Roth seconded the motion which carried by the following voice vote: Ayes: Councilmembers Arnerich, Lucas, Roth and President Withrow - 4. Nayes: Councilmember Appezzato - 1. Absent: None. Councilmember Lucas moved to approve the balance of the lease. Councilman Arnerich seconded the motion which was carried by unanimous voice vote - 5. 93-407 Report from Public Works Director recommending allocation of $200,000 from the Harbor Bay Isle Traffic Improvement Fund for the East End Ferry Vessel Purchase and $150,000 for the Bay Farm Island Bike Bridge. Vice Mayor Roth moved acceptance of the recommendation, which was carried by consensus of Council. ADJOURNMENT President Withrow adjourned the meeting at 12:35 p.m. Respectfully submitted, DIANE B. FELSCH, CMC City Clerk The agenda for this meeting was posted in advance in accordance with the Brown Act. July 6, 1993