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2003-10-21 Special CIC MinutesMINUTES OF THE SPECIAL COMMUNITY IMPROVEMENT COMMISSION MEETING TUESDAY- - OCTOBER 21, 2003- -7:27 P.M. Chair Johnson convened the Special Meeting at 8:19 p.m. ROLL CALL - Present: Commissioners Daysog, Gilmore, Kerr, Matarrese and Chair Johnson - 5. Absent: None. CONSENT CALENDAR (03 -057) Minutes of the Special Community Improvement Commission (CIC) Meeting (Closed) ; the Special Joint City Council, CIC and Housing Authority Board of Commissioners Meeting; the Special Joint City Council, Alameda Public Financing Authority and CIC Meeting; and the Special CIC Meeting of October 7, 2003. Approved. Commissioner Matarrese moved approval of the minutes. Commissioner Kerr seconded the motion, which carried by unanimous voice vote - 5. (03 -058) Recommendation to direct the Executive Director to take all actions necessary or appropriate to support the formation and approval of Community Facilities District No. 03 -1 (Bayport Municipal Services District) and implementation of its purposes. [Note: A transcript of the October 21, 2003 Special Meeting of the Housing Authority Board of Commissioners regarding Bayport Municipal Services District is attached hereto, as Exhibit A. for reference purposes.] Commissioner Kerr moved to continue the matter to November 4, 2003. Commissioner Matarrese seconded the motion, which carried by unanimous voice vote - 5. AGENDA ITEMS None. ADJOURNMENT There being no further business, Chair Johnson adjourned the Special Meeting at 8:20 p.m. Respectfully submitted, Lara Weisiger, Secretary Community Improvement Commission Agenda for meeting was posted in accordance with the Brown Act. Special Meeting Community Improvement Commission 1 October 21, 2003 EXHIBIT A Transcript of the October 21, 2003 Special Meeting of the Housing Authority Board of Commissioners Commissioner Daysog: When we last met on October 7, during the study session on formation of Bayport Municipal Services District (MSD), it was moved and approved that we would have specific language added to ensure that the Municipal Services District cost would be completely covered when the District formation returned. In reading it, I did not see any language regarding, in instances when we calculated that the costs were not covered, how we were going to take sales taxes or other forms of taxes from the non - residential side to cover the deficit. Given that there was a specific motion in the minutes, I found that a little surprising. If there is a response to that, it would be great. Executive Director, Jim Flint: Doug Cole, Project Manager, will respond. Project Manager, Doug Cole: You are correct. That language is not directly reflected in the resolution. However, the rate and method of apportionment, which was attached to the initial Resolution of Intent, makes reference to funding that will be used for specific services provided in the MSD. Commissioner Daysog: I have seen the Exhibit B — Rate and Method of Apportionment of Special Taxes. It does not say how the revenue reference would be used even on a guaranteed basis, even more so when we realize that indeed the revenues generated by the residential side are not covering police, fire and all the other services. Two weeks ago, it was really close. The per -unit average was $3,900 per unit in revenues, versus $3,600 in expenses. Over a period of time, expenses of $3,600 per unit would grow at a rate faster than the revenue of $3,900, such that over a period of time we could run the risk of having a deficit. As a result of that conversation, we spoke about having some kind of mechanism, which was included in the motion and seconded. I did not see it [mechanism]. Doug Cole: Unfortunately, we are limited in terms of the Disposition and Development Agreement that set caps for the maximum amount of special tax that we can apply to the homeowners, with the exception of increases for cost of living. One of the things we have have discussed internally is that the services that are being provided are conservative in terms of the dollar allocation for the services, and that there could be a minor adjustment there to bring expenses more in line with revenues as the project goes on. Commissioner Daysog: Thank you, Mr. Cole. I appreciate that. I think the specific thing I am asking for, just so that the public understands, the specific language that I was looking for was some kind of language in there that said that, given the analysis conducted by Keyser Marston regarding the per -unit expenditures versus per -unit revenues, in the event that expenditures exceeded revenues, there would be a policy in place to ensure that sales taxes generated by, should there be a Fleet Industrial Supply Center (FISC) retail site, would cover the costs — guaranteed. Or, property taxes from the FISC, from the office and commercial would cover [costs]. It is just that the language is not Special Meeting Community Improvement Commission 2 October 21, 2003 there. We are not going to be Councilmembers forever, so we have to also think about the year 2010, 2012, and I thought that was the whole point of that conversation last time and the subsequent motion, which passed. Doug Cole: I have to rely on outside counsel for this, but one of the things we had talked about quite a while ago was that, while there is no commercial development currently, we would be creating a separate Community Facilities District (CFD) for the commercial, so at that point in time — I do not know if there some flexibility to then go back and amend the rate and method of apportionment or amend the existing Municipal Services District to allow for that crossover. Commissioner Daysog: Thank you very much; I appreciate the help. Commissioner Kerr: As far as I am concerned, this was direction from the Council and included in a motion in the last meeting, and it is not there and I am not willing to support the action tonight until it is put in. I have a lot of other questions, but I just wanted to make that statement following Councilmember Daysog's comment, because I do not think that direction from the Council included in a motion should be ignored by staff as a general principle — period. I do have some other questions on this: When will the taxes start coming in? Doug Cole: In fiscal year 2003 -04. Commissioner Kerr: 2003 -04. The conveyance of some of the property to Catellus has already taken place and we are putting in infrastructure and we are providing police and fire out there as we speak. Why would we be waiting that long to start collecting taxes on the property that is privately owned? Doug Cole: It is my understanding that police and fire services are being provided through FISC lease revenues that are being generated from the warehouses currently. Commissioner Kerr: My question was since we are also providing police and fire to support for the East Housing site, why would wait that long to start collecting CFD on privately owned property in the East Housing area. Doug Cole: The tax liens will go into effect in this fiscal year, 2003 -04. Commissioner Kerr: They are getting a six -month free ride on the services they are getting even though part of the property is now privately owned. Doug Cole: Correct, one of the conditions in the subdivision improvement agreement was that we form the district within four months from recordation of the final map, which is this month. Commissioner Kerr: Adopt it, but that does not say when it goes into effect. What about ACET? Are they going to be paying any CFD? Doug Cole: Not currently, no. The MSD that we are forming, as I mentioned before, is just for the Special Meeting Community Improvement Commission 3 October 21, 2003 residential area. We have not yet addressed the commercial area. Commissioner Kerr: I see that, and I see that for the commercial portion the amount right now is zero, but ACET is going to build sooner than anything else in the commercial area, so when are we going to start assessing them for CFD? Doug Cole: Right. They will be expected to contribute to the MSD; we just have not yet formed a district for the commercial portion. Commissioner Kerr: It says Enterprise Landing, the commercial portion of the 215 acre mixed use Catellus Project, is included within the boundaries of the CFD. Doug Cole: Right. The property is, but the actual taxes would just be under this CFD under the residential boundaries. Commissioner Kerr: It is the same CFD for the whole piece and, yes, the RMA's might be different, but should we not adopt an RMA that would be collecting taxes from any privately owned developed part of the commercial area? I am really addressing this to my fellow colleagues. I am concerned about the fact that if the last 133 residential units are never built, the revenues from the CFD will not cover the proposed level of municipal services. Therefore, one way to handle this would be to defer the construction of the 4 -acre community park. They claim that there is some agreement that we would have to do this because of the timeframe for the new elementary school. We have agreed to build a playground and a park. We have let them move in adjacent to the community park, but I do not think that agreement should put us into operating in the red. It is something we promised to do, so we should uphold that promise. But, I do not think we should be put in the position of losing money because of that agreement. I really question whether there is anything in our agreement with Alameda Unified School District that would require us to build that playground equipment if we did not have the money coming in to do it. Doug Cole: That is correct. Commissioner Kerr: I have been making comments because this is the same resolution that is going to come up before the City Council and I did not want to approve it here. I mean, making the motion is fine, but I just wanted to point out why we are discussing it. Commissioner Gilmore: This is getting back to Vice Mayor Daysog's point about the specific language. I do not want to beat a dead horse or anything, but I really did think it was my understanding that we wanted language in there because we wanted to make sure that the CDF would cover the cost of the services that were provided out there. Is that not correct? Is that not what the intent was? Page 3 of the Staff Report states a combination of General Fund and CDF revenues will be sufficient to fully offset the cost of providing these services. How did the General Fund get back in there if we were thinking that it was going to be self- sufficient, and is that why the language did not make it in there? Special Meeting Community Improvement Commission 4 October 21, 2003 Doug Cole: In the workshop that we had two weeks ago, what was presented were all revenues that were generated from this project. Yes, there are revenues that are generated from this project that would go to the General Fund, but the point we were trying to make is that they are not drawing on other sources of funding from the City outside of this project. In other words, were it not for the development of this project, you would not have those General Fund revenues nor the MSD. Commissioner Matarrese: I think we also discussed the lifespan of this District with regard to potential for other build -out, particularly on the commercial side when that sector returns, and I did not see that. I think there are enough questions to send this back for a rewrite to include the direction that was given at the last meeting. Legal Counsel, Carol Korade: May I seek additional direction here? I do understand what we are talking about, and perhaps what we need talk about if you could indulge outside counsel here in some legal parameters of bond documents versus budget documents and talk about the legal ability to actually include it in this document. I am not saying that we cannot do this — achieve your goal — but it cannot be within this particular District and document. I am just saying you could hold it over to have additional appropriations language, because what you would actually be doing would be committing — talking about a future appropriation. Commissioner Kerr: I do not understand what you are saying. Carol Korade: Could you just have Chip answer the question and tell you how you can do this? There is a way to achieve your goal, but it is not in this resolution and he can explain to you. He will talk a lot of words and if it is two big words, I will translate it into yes and no. Legal Counsel Consultant, Chip Eady: There are two solutions to achieving what you are discussing. One of them is in the ongoing budgeting and appropriations process. It is important to understand that the Municipal Services District, itself, does not have the power to allocate General Fund monies or to use monies from the FISC lease revenue or even from commercial revenue. The purpose ofthis particular MSD is very narrow; it is simply to levy a special tax on residential property. Now, within the same geographic area, you will also have commercial property. But the solution there - the other solution — is to begin proceedings to form an overlapping district that would share many of the territory but would be targeted to commercial development in the area that would allow taxing of those types of properties if and when that development occurs. But, that would be done as a separate district. Commissioner Daysog: Thank you, Mr. Eady. I kind of anticipated that — and I think that for me — the response is a little easier than for Councilmember Matarrese's, because I do believe the way that Councilmember Matarrese's language was incorporated last week does speak to the substance ofthe legal issues that we are dealing with because if does deal with sun setting, et cetera. It is a policy question that I am really getting at. This is a legal document to start up a bond district, the ability to self -tax — I understand that. The policy question that I am getting at can be addressed and satisfied Special Meeting Community Improvement Commission 5 October 21, 2003 just by simply having a memo, a resolution, or something that is a part of the vote, so that future Councilmembers or future City residents or whatever would know that, as a matter of record, there is a paper trail. For Councilmember Matarrese's question, though, because it does deal with sun setting, I think that does get into the substance so it might be more logistical to take two weeks and then come back. Carol Korade: You could take two weeks and come back. You certainly could, however, within the scope of this, adopt it as a preliminary action, if you want to do it as a prerequisite — a motion giving direction to staff as a policy matter to satisfy this concern by initiating procedures for an overlapping district dealing with the commercial issue to specifically address these issues in each and every budget document as it comes along in the future. We could actually incorporate that into the minutes and I could do it as a resolution if you would like. It is your choice. Commissioner Kerr: Incorporating it into the minutes? Who ever goes back and reads the minutes ten years from now? Carol Korade: I could actually memorialize that into a resolution and work with Vice Mayor Daysog to make sure the language is what he desires — talking about direction to staff, policy direction to staff all the things that you talked about, the term "fiscal neutrality" that we have used so many times and also talking about direction to staff to initiate procedures to do an overlapping district dealing with the commercial issue, directing the staff that each budget document specifically identify any deficits in the funding and do a detailed analysis. We can include those things, and your motion could be to direct the City Attorney to work with Vice Mayor Daysog to draft a resolution on this that would address those issues as a policy matter and include it in the action item tonight. Commissioner Kerr: We directed staff at the last meeting on this and they did not do it, so I am sort of out of patience with directing staff to do something in the future. I would rather vote on the language that is going to be in it and then all future Councils will know what was done. I would like to take the two weeks to bring it back. Chair Johnson: I do not have a problem, with two weeks. If we want to have a motion to do what Council has directed and bring it back at the next meeting, I think that is fine, if somebody wants to make that motion. Carol Korade: Let me see if there are any noticing requirements. I would request that you could proceed to the point of opening the public hearing on behalf of the Council so that both bodies would take action opening the public hearing, continuing the public hearing to the next meeting. That way, you do not have the extensive noticing requirements, because you are merely adjourning both meetings. If we could do that, then it is no problem. Commissioner Matarrese: Maybe outside counsel can help us on this. The intent of asking about the sun setting of this special tax levied on residential property, which is going to carry the services at the moment is in the event that the commercial development has great success, it should be able to carry Special Meeting Community Improvement Commission October 21, 2003 enough load so that this neighborhood is basically treated as any other neighborhood within the City as far as assessments go. I was looking for a provision at least to evaluate at the point where we have a critical mass of commercial development and re -look at this district so that, again, the residents do not carry a heavier load than the rest of the City. Can you advise how that might be done for continuing this? Chip Eady: Procedurally, what you would do is initiate a review of the rate and method of apportionment on the residential property in the future and, with the consent of the voters in the district, move to amend that. Presumably, the success of the commercial property would allow you to lower the special tax burden on the residential property, which is what would induce the voters to support that. Commissioner Matarrese: Now, is that something that we could incorporate into this resolution? Chip Eady: It really would not be binding, even if you did it. That would have to be a separate legislative act done at the time. Chair Johnson: I think that just having it in there shows intent. Carol Korade: It sounds like what we need to do is an accompanying policy memorandum that talks about policy directives for both future action — whether it is binding or not, it certainly indicates legislative intent, which I think is what you are talking about. It is important because people do not read minutes, may not watch this TV show, even though it is rerun a couple of times. It is important that we indicate policy directive so that staff notes it for future pertinent actions and that it does not get lost in future legislation as time goes by, because it could take a bit of time. Commissioner Kerr: Not all people are taxed equally. I know the Mello -Roos burden at Harbor Bay Isle is heavier than some of our older neighborhoods have, so it is true that newer neighborhoods can carry a heavier payload than some of the older neighborhoods. That does reflect the higher cost of infrastructure going to the newer neighborhoods. I do not think there is any way we can make everything equal because then I think we might get into a tangle with some of our other newer neighborhoods. Commissioner Daysog: I do want to add one thing. I do appreciate the suggestions by the City Attorney's office, City Manager's office, and Chip Eady. However, I do have to say, though, that the City Council made a specific motion last time so, to the extent that it was not incorporated in some fashion is a disappointment. Jim Flint: Madam Mayor, it is my responsibility. I will extend my apologies to the Council for not incorporating that. I was unaware that the information was not in there. However, if you read the minutes for that meeting, it says Vice Mayor Daysog requested language to be added to ensure — and I presume that the Clerk's office got it right — the following, and I think that it is something that, for whatever reason, we in fact failed to include that in the documentation this evening, so we will make Special Meeting Community Improvement Commission October 21, 2003 sure we correct that in two weeks time. Chair Johnson: I do not think we have a motion yet. Do we have a motion? Carol Korade: I apologize for stepping in, but if we could have a recommended motion that includes adjournment language that would be helpful. Can we have that? Commissioner Kerr: I would be happy to accept a friendly amendment. Carol Korade: To incorporate the adjournment portion? Commissioner Kerr: I would be happy to incorporate adjournment language. Chip Eady: Simply move to adjourn the meeting until the date that is two weeks from today to continue this meeting. Commissioner Kerr: I will make that my substitute motion. Commissioner Matarresse: Second. Chair Johnson: We have a motion and second. All in favor? [Vote.] Special Meeting Community Improvement Commission 8 October 21, 2003