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HomeMy WebLinkAbout12-14-1999 ORA MinutesAPPROVED BY DIRECTORS ON JANUARY 11,2000 ORANGE REDEVELOPMENT AGENCY ORANGE, CALIFORNIA MINUTES OF A REGULAR MEETING December 14, 1999 4:30 P.M. SESSION The Orange Redevelopment Agency of the City of Orange, California convened on December 14, 1999 at 4:30 p.m. in a Regular Meeting in the Council Chambers, 300 E. Chapman Avenue, Orange, California. 1. ROLLCALL PRESENT - Murphy, Slater, Coontz, Spurgeon, Alvarez ABSENT - None 2, PUBLIC COMMENTS - None 3,CONSENT CALENDAR Tape 2560 3.1 Declaration of the Clerk of the Orange Redevelopment Agency, Cassandra J.Cathcart, declaring posting of Orange Redevelopment Agency Agenda of a regular meeting of December 14, 1999 at Orange Civic Center, Main Library at 101 N,Center Street, Police facility at 1107 North Batavia, the Eisenhower Park Bulletin Board, and summarized on Time-Warner Communications, all of said locations being in the City of Orange and freely accessible to members of the public at least 72 hours before commencement of said regular meeting,ACTION: Accepted Declaration of Agency Posting and authorized its retention as a public record in the Office of the City Clerk.3.2 Request Agency confirmation of warrant registers dated November 18 and 24, 1999 and December 2 and 9, 1999,ACTION:Approved. 3.3 Request approval of Redevelopment Agency Minutes, Regular Meeting, November 23,1999. ACTION:Approved. 3,4 Amendment to the Commercial Rehabilitation Loan Agreement by and between the Orange Redevelopment Agency and Robert B, Breskin. (RA2l00.0 AGR-2642.2)NOTE: Director Alvarez abstained on this item due to a property interest located within 300 feet of the subject property.PAGE 1 ORANGE REDEVELOPMENT AGENCY MINUTES December 14, 1999 3, CONSENT CALENDAR (Continued) SUMMARY: Amendment to the Commercial Rehabilitation Loan Agreement and Promissory Note between the Orange Redevelopment Agency and Robert B. Breskin originally dated August 1, 1996. The amendment will consist of a term loan in the modified amount of $334,000 with payments amortized over thirty years, due in ten years at 6% interest. ACTION: Approved the amendment to the Commercial Rehabilitation Loan Agreement by and between the Orange Redevelopment Agency and Robert B. Breskin, and authorized the Chairman and Agency Clerk to execute the amendment on behalf of the Agency. FISCAL IMP ACT: Funds have already been disbursed and are being accounted for under loan number 920-0000-840000-20028. The Agency will receive payments of 20,117.50 through the remainder of fiscal year 199912000 and will receive payments in the amount of $24, 030 annually thereafter. MOTION - Murphy SECOND - Spurgeon AYES - Murphy, Slater, Coontz, Spurgeon, Alvarez Director Alvarez abstained on Item No. 3.4. The remainder of the Consent Calendar was approved as recommended. END OF CONSENT CALENDAR 4, REPORTS FROM DIRECTORS - None 5, REPORTS FROM BOARDS, COMMITTEES, AND COMMISSIONS - None 6. REPORTS FROM EXECUTIVE DIRECTOR - None NOTE: The Agency Board convened with the City Council at 5:45 p.m. to hear Item No. 7.1.7.ADMINISTRATIVE REPORTS Tape 2105 7,1 Report from the Assistant Executive Director on the Annual Report of the Orange Redevelopment Agency. (R3500. 0)PAGE 2 ORANGE REDEVELOPMENT AGENCY MINUTES December 14,1999 7, ADMINISTRATIVE REPORTS (Continued) RESOLUTION NO, ORA- 0362 A Resolution of the Orange Redevelopment Agency approving the Annual Report of the Orange Redevelopment Agency for Fiscal Year 1998-1999 and authorizing its submittal to the City Council of the City of Orange.MOTION - Coontz SECOND - Slater AYES - Murphy, Slater, Coontz, Spurgeon, Alvarez Move to adopt Resolution No. ORA-0362. 7.2 Report from Assistant Executive Director regarding a Resolution of the Orange Redevelopment Agency approving a Purchase Agreement for acquisition of property at 190 South Olive in the City of Orange, (Continued from November 23,1999) (RA2100.0 AGR- 3380) Tape 2650 SUMMARY: Resolution No. ORA-0360 approves a Purchase Agreement between the Orange Redevelopment Agency ("Buyer") and Ann Post ("Seller") which provides for the Agency to purchase Seller's property at 190 South Olive, northwest comer of Almond and Olive ( adjacent to the Senior Center), for $250, 000.FISCAL IMPACT: Sufficient funds are available in Fund 922 for the down payment and principal and interest payments through FY 1999-2000. Thereafter principal and interest ( at 8%per annum) payments will be budgeted through the annual CIP process for FY 2000-2001 through FY 2009-2010. The costs associated with monthly principal and interest payments will be partially offset by revenues (in the form of rent) in the amount of $1,600 per month to be deposited in Account No. 922-0000-252100-0000- 20055.The Assistant Executive Director presented the report.Chairman Coontz commented that the City has been interested in this property for years. The Agency has an opportunity to purchase the property, which cannot be looked at as a stand-alone piece. The purpose of the purchase is to provide parking for the Senior Center. It has been fifteen years or longer that the Senior Center has wanted to expand.Director Slater said he would like to see the Agency buy the property for the long-term because it would be of great benefit, and it would tie in well with the Senior Center providing the needed parking. However, having concerns with the purchase price, he spoke with John Aust and Dave Valentine, both individuals with a lot of expertise in commercial property. Both individuals, as well as a third party, concurred that the property is not worth more than $200,000. He cannot support the purchase as he feels the Agency should wait until the seller is more reasonable on the price. He is aware the property has been appraised. However, experience in the business tells him no two appraisers ORANGE REDEVELOPMENT AGENCY MINUTES December 14, 1999 7, ADMINISTRATIVE REPORTS (Continued) Director Murphy commented that one thing this Council has done differently in the past few years is to look further than a year or two ahead to make land acquisition decisions. There are only going to be so many opportunities to buy land that is contiguous to properties the City currently has. The purchase is important for future potential use for seniors. The benefit is the current tenant will pay the majority of the rent payment. The seller is willing to carry back at 80% of the purchase price on a ten year note. The appraisal was done by a certified M.A.I appraiser, which he understands are recognized among the best in the business. The Agency would be shortsighted to not take advantage of the opportunity and plans for the future of the Senior Center and other facilities. Director Spurgeon expressed support for the purchase of the property, whether it is eventually connected with the Senior Center or some other City-related operation in which more facilities are provided to the community.Director Alvarez expressed concerns relative to the appraisal on the property and lease of the current tenant. The Assistant Executive Director explained the 30 day lease goes from month to month. There are unlimited options when the Agency has control of the property. The parking lot would be approximately 15-20 spaces. The price for the property is reduced the longer the tenant stays on the property. The sole reason the owner agreed to sell the property was for the annuity that would replace the rent she was receiving.The City Manager added the Agency negotiated very hard on this property. The terms of the sale were very critical to the property owner. The advantage the Agency has is that if the tenant were to leave, terms could be added to the agreement with a new tenant so the Agency would not have to pay relocation costs.Director Slater further expressed concern with an $800 per month negative cash flow based on monthly payments and that the loan cannot be prepaid. The Agency is committed for ten years.The seller is not in a big hurry to sell the property and he does not feel anyone else would pay 250,000 for the property. However, he stated that it is critical the City eventually acquires the property, but that he cannot support these terms.After reviewing the appraisal, Director Alvarez read from the appraisal and made comments for the record: "It says the first year's Net Operating Income (NOI) of $20,635 (which refers to the rent they are currently collecting on the property) relates to the value of $257,937 for the subject property via direct capitalization. The income approach estimated the present value in an " as in"condition rounded to $260,000. However, most buyers of smaller properties use a gross income multiplier to develop an offering price. The subject gross annual income is estimated at $ 27,000,and would relate to the GMI of eight to ten times the annual gross income. A mid- range of nine times the annual gross income would relate to an estimated value of $243, 000. The market participant's often enjoy the gross multiplier techniques as this type of entry level commercial ORANGE REDEVELOPMENT AGENCY MINUTES December 14,1999 7. ADMINISTRATIVE REPORTS (Continued) Director Alvarez indicated this tells him that $250,000 is well within the ballpark in using the multipliers times what is being collected in rent. Assuming the rent being collected at this time is at the low end of current market, if the tenant left and a tenant were brought in of similar use, a higher rent would be expected. At nine times annual gross income at $243,000 on a conservative side, he concludes with a new tenant that the property would appraise at $250,000 or better, based on the income approach. This would also include a vacancy. He agreed with Director Slater that the property does seem high, but looking at this approach, the tenant shouldn't be able to carry the property for the City. For the long term, this should not be a detriment to the City, since the seller is carrying the note. MOTION - Spurgeon SECOND - Coontz AYES - Murphy, Coontz, Spurgeon, Alvarez NOES - Slater Moved to: 1) adopt Resolution No. ORA-0360 - A Resolution of the Orange Redevelopment Agency finding and determining that the public interest, convenience and necessity require, and approving, the acquisition for redevelopment purposes of certain real property located at 190 South Olive from Ann Post; 2) appropriate $56,000 ($50,000 for down payment; $6,000 for escrow fees) from Fund 922 Southwest Taxable Bond proceeds to Account No. 922-9811-481102-9204-20058; and 3) Appropriate $6,670 from Fund 922 Southwest Taxable Bond proceeds to Account No. 922-9811-464101-9204 for FY 1999-2000 principal payments, and 7,890 from Fund 922 Southwest Taxable Bond proceeds to Account No. 922-9811-464201-9204 for FY 1999-2000 interest payments payable to Ann Post.DIRECTOR SLATER - MINUTE ORDER: "Councilman Alvarez, I reviewed the appraisal too. Like I said, every appraiser has their own opinion. John Aust also reviewed that appraisal and disagrees with it. Anyway, it is a matter of opinion." 8, LEGAL AFFAIRS - None 9, RECESS TO CLOSED SESSION a. Conference with Real Property Negotiator pursuant to Government Code Section 54956.8: (1)Old Towne Brewing Co., 186 N. Atchison St.; negotiating parties: Orange Redevelopment Agency and Guerin; under negotiation, loan terms (2) Citrus City Grille, 122 N. Glassell S1.;negotiating parties: Orange Redevelopment Agency and Citrus City Partners; under negotiation,loan terms.b. To consider and take possible action upon such other matters as are orally announced by the General Counsel, Executive Director of the Board of Directors prior to such recess unless the motion to recess indicates any of the matters will not be considered in ORANGE REDEVELOPMENT AGENCY MINUTES December 14, 1999 7:00 P.M. SESSION NOTE: The Agency Board convened with the City Council at 8:37 p.m. to consider Item No. 10.1. 10, PUBLIC HEARINGS 10.1 JOINT PUBLIC HEARING WITH THE CITY COUNCIL OF THE CITY OF ORANGE - DISPOSITION OF REAL PROPERTY (1800 W. KATELLA AVENUE),LOCATED IN THE NORTHWEST REDEVELOPMENT PROJECT AREA (RA2100.0 AGR- 3386) Tape 198 Time set for a joint public hearing to consider the disposition of certain real property located at 1800 W. Katella Avenue in the Northwest Redevelopment Project Area by the Orange Redevelopment Agency to Southern Counties Oil Company and Frank P. Greinke. (NOTE: See Council Agenda Item 13.3, Page 25.) Disposition and Development Agreement (DDA) in which Redevelopment Agency financial assistance will be provided for acquisition, rehabilitation, and construction of building and parking improvements at 1800 W. Katella Avenue. NOTE: See City Council Agenda Item No. 13,3 for discussion on this item. RESOLUTION NO. ORA- 0363 A Resolution of the Orange Redevelopment Agency approving and authorizing the execution of a Disposition and Development Agreement by and between the Agency, on the one hand, and Southern Counties Oil Company and Frank P. Greinke, Trustee, Greinke Personal Living Trust dated April 20, 1999, on the other hand, and making certain findings in connection therewith.MOTION - Coontz SECOND - Murphy AYES - Murphy, Slater, Coontz, Spurgeon, Alvarez Moved to adopted Resolution No. ORA-0363.10. 2 REVIEW OF REDEVELOPMENT PLANS FOR THE NORTHWEST, TUSTIN STREET, AND SOUTHWEST REDEVELOPMENT PROJECT AREAS AND ADOPTION OF THE FIVE-YEAR IMPLEMENTATION PLAN FOR FISCAL YEAR 1999-2000 THROUGH 2003-2004 (R3500.0) Tape 746 Time set for a public hearing for the purpose of reviewing the City's redevelopment plans for the Northwest, Tustin Street, and Southwest Redevelopment Project Areas and to consider the adoption of the corresponding Five-Year Implementation Plan as required by Health and Safety Code Section ORANGE REDEVELOPMENT AGENCY MINUTES December 14, 1999 10. PUBLIC HEARINGS (Continued) The Assistant Executive Director presented the report. Director Alvarez asked for information on Taft Avenue being included in a Master Plan. The Redevelopment Project Manager explained the Taft Corridor Study was completed a few years ago. A similar study found that Taft Avenue is operating as the General Plan envisioned. Businesses along Taft Avenue, west of the railroad tracks, account for 7% of the sales tax revenue generated from all businesses in the City. MOTION - Spurgeon SECOND - Alvarez AYES - Murphy, Slater, Coontz, Spurgeon, Alvarez Moved to receive and file.11. ADJOURNMENT MOTION - Coontz SECOND- Murphy AYES - Murphy, Slater, Coontz, Spurgeon, Alvarez The Orange Redevelopment Agency adjourned at 9:00 p.m.4Julf}fA/AA;;C CASSANDRA J. i\THCART, CLERK OF THE REDEVELOPMENT AGENCY COONTZ, CHAIRM THE REDEVELOPMENT AGENCY PAGE 7