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HomeMy WebLinkAbout12-15-2008 Minutes CITY OF SAN BERNARDINO 300 N. "D" Street San Bernardino, CA 92418 Website: www.sbcity.org Mayor Patrick J. Morris Council Members: Esther Estrada Dennis J. Baxter Tobin Brinker 4' Ward - Vacant Chas Kelley Rikke Van Johnson Wendy McCammat:k ~ MINUTES MAYOR AND COMMON COUNCIL AND COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO JOINT REGULAR MEETING DECEMBER 15, 2008 COUNCIL CHAMBERS The joint regular meeting of the Mayor and Common Council and Community Development Commission of the City of San Bernardino was called to order by Mayor/Chairman Morris at 1:39 p.m., Monday, December 15, 2008, in the Council Chambers of City Hall, 300 North "D" Street, San Bernardino, California. Roll Call Present: Mayor/Chairman Morris; Council Members/Commissioners Baxter, Brinker, Kelley, Johnson, McCarnmack; City Attorney Penman, Director of Development Services Ross, City Clerk Clark. Absent: Council Member/Commissioner Estrada; Interim City Manager Weinberg. Vacant: Fourth Ward. Council Member/Commissioner Estrada arrived at 2:23 p.m. 1. Closed Session Pursuant to Government Code Section(s): A. Conference with legal counsel - eXlstmg litigation - pursuant to Government Code Section 54956.9(a): 12/15/2008 J . R., etc., et al. v. City of San Benardino, et al. - United States District Court Case No. EDCV 2005-1045 JWJ; United States Court of Appeals Case Nos. 07-56375 and 08-55102; Alvarez, Jaime, et al. v. City. et al. - United States District Court Case No. 00-03048 PA (Rcx); Goldin~, Justin Ryan v. City of San Bernardino, et al. - San Bernardino Superior Court Case No. CIVSS 700791; Town of Apple Valley, et al. v. County of San Bernardino - (Waste Disposal Agreement Litigation) Los Angeles County Superior Court Case No. KC 049711 "J"; People v. Lopez - San Bernardino County Superior Court Case No. SCVSS 134051; Garrett Zimrnon - Office of Administrative Hearings - Case No. 2007080890. B. Conference with legal counsel - anticipated litigation - significant exposure to litigation - pursuant to subdivision (b) (1), (2), (3) (A-F) of Government Code Section 54956.9: Inland Communities Corp. v. City of San Bernardino (Paradise Hills) One (1) case California Aviation Services, Inc. v. City of San Bernardino Jennifer Newsome v. City of San Bernardino Beverly Rainbolt v. City of San Bernardino C. Conference with legal counsel - anticipated litigation - initiation of litigation - pursuant to subdivision (c) of Government Code Section 54956.9: City of San Bernardino v. California State University D. Closed Session - personnel - pursuant to Government Code Section 54957: Director of Code Enforcement E. Closed session with Chief of Police on matters posing a threat to the security of public buildings or threat to the public's right of access to public services or public facilities - pursuant to Government Code Section 54957. 2 12/15/2008 F. Conference with labor negotiator - pursuant to Government Code Section 54957.6. G. Conference with real property negotiator - pursuant to Government Code Section 54956.8: 1. Property Address: 450 North "E" Street APN: 0134-121-24 Negotiating Parties: Emil A. Marzullo, Interim Executive Director, on behalf of the Redevelopment Agency, and Scott Bailey, on behalf of CinemaStar Luxury Theaters, Inc. Under Negotiation: Terms and conditions of lease and occupancy arrangements. 2. Property Address: 450 North "E" Street APN: 0134-121-24 Negotiating Parties: Emil A. Marzullo, Interim Executive Director, on behalf of the Redevelopment Agency, and Moctesuma Esparza, CEO and Founder, on behalf of Maya Cinemas. Under Negotiation: Purchase price, conditions. terms and City Attorney Penman announced that the following additional case would be discussed in closed session: San Bernardino City Firefighter Michael Koster v. City of San Bernardino, et aI. - San Bernardino Superior Court Case No. CIVSS 811048. Public Comments on Closed Session Items Bob Hull with the Law Offices of Lewitt Hackman, 16633 Ventura Blvd., 11th Floor, Encino, CA, representing United Entertainment Corporation, spoke regarding Closed Session Item No. IG, real property negotiations, and Item R25, regarding the potential sale of the CinemaStar Luxury Theaters, Inc. He stated that at the end of last year and during this year, his firm had been in discussions with the City and CinemaStar to lease and then purchase the property. He stated that United Entertainment Corp. is ready, willing and able to proceed with discussions and to make an offer on the property for 3 12/15/2008 significantly more than the $4.6 million currently offered by Maya Cinemas. He added that this would all be done by private financing-there would be no government or HUD loans. He stated that Mike Ross, President of United Entertainment Corp. wanted to express that he is available for any discussions or conversations on this matter. Reading of Resolutions & Ordinances Deputy City Clerk Hartzel read into the record the titles of all the resolutions and ordinances on the regular agenda of the Mayor and Common Council and Community Development Commission. Invocation/Pledge of Allegiance The invocation was given by Councilman Rikke Van Johnson. The pledge of allegiance was led by Audreyanna Huizar, a 6th grade student at Bradley Elementary School. 2. Appointments There were no Commission appointments. 3. Proclamations & Presentations Jasmine Ragland, a 12th grade student at Rialto High School with a GPA of 4.48, was presented a commendation and recognized as Student of the Month by Council Member/Commissioner Brinker. Council Members/Commissioners Estrada and McCammack were joined by the other Council members and Council office staff in presenting a commendation and bouquet of roses to Sylvia Loza, Council Administrative Supervisor, who is retiring at the end of the year after 29 years of exemplary service to Council members past and present. The following individuals were presented a service pin award by Mayor Morris in recognition of their many years of dedicated service to the City: Name Marilyn Dixon Lynn Parker Leslie Aguirre Shirley Allen Angela Encinas Aurora Mendoza David Baughman Irma Castellanos Kirsten Fountaine Angelica Ordonez Elva Reyes Department City Manager Development Services Fire Fire Library Library Police Police Police Police Police 4 Years of Service 30 5 5 15 10 40 10 30 5 5 5 12115/2008 4. Announcements Announcements were made by the Mayor, members of the Common Council, elected officials, and a representative from the Chamber of Commerce regarding various civic, community, and chamber events and activities. 5. Waive Full Reading of Resolutions & Ordinances Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that full reading of the resolutions and ordinances on the regular agenda of the Mayor and Common Council and Community Development Commission, be waived. The motion carried unanimously with the Fourth Ward vacant. 6. Item Deleted 7. Claims & Payroll Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that the claims and payroll and the authorization to issue warrants as listed in the memorandum dated December 8, 2008, from Barbara Pachon, Director of Finance, be approved. The motion carried unanimously with the Fourth Ward vacant. 8. Personnel Actions Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that the personnel actions, as submitted by the Chief Examiner, dated December 10, 2008, in accordance with Civil Service rules and Personnel policies adopted by the Mayor and Common Council of the City of San Bernardino, be approved and ratified. The motion carried unanimously with the Fourth Ward vacant. 9. Transfer $400,000 from the unreserved general fund to the City Attorney's budget as follows: $328,000 to Account No. 001-051-5503 and $72,000 to Account No. 001-051-5177 Council Member/Commissioner Brinker requested that this item be held over until the return of the Interim City Manager. He stated he would like to know what this could mean for the overall budget and indicated he would like discussion of the cases on a case-by-case basis as opposed to blanket approval of a dollar amount. 5 12/15/2008 City Attorney Penman indicated he had no trouble holding it over until Mr. Weinberg returned; however, this was the normal budgeted amount. Council Member/Commissioner Brinker made a motion, seconded by Council Member/Commissioner Baxter, that the matter be continued to the Council/Commission meeting of January 5, 2009. The motion carried unanimously with the Fourth Ward vacant. 10. Budget amendment to fund part-time salaries in the City Manager's Office for FY 2008/09 Council Member/Commissioner McCarnmack made a motion, seconded by Council Member/Commissioner Baxter, that the Mayor and Common Council authorize the Director of Finance to amend the FY 2008/09 budget by transferring $35,000 from Account No. 001-011-5502 (Mayor's Office Professional/Contractual Services) to Account No. 001-101-5014 (City Manager's Office Salaries Temp/Part-time.) The motion carried unanimously with the Fourth Ward vacant. 11. Resolutions authorizing the execution of Mills Act Preservation Agreements RES. 2008-446 - Resolution authorizing the execution of a Mills Act Preservation Agreement with Deborah Albert. (lIA) RES. 2008-447 - Resolution authorizing the execution of a MiUs Act Preservation Agreement with Brian and Nicole Baird. (lIB) RES. 2008-448 - Resolution authorizing the execution of a Mills Act Preservation Agreement with Ronald and Adele Corsentino. (lIC) RES. 2008-449 - Resolution authorizing the execution of a Mills Act Preservation Agreement with Kathryn Gail Mummery. (lID) RES. 2008-450 - Resolution authorizing the execution of a MiUs Act Preservation Agreement with Slawomir and Alice Niewiadomski. (lIE) Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that said resolutions A through E, be adopted. Resolution Nos. 2008-446 through 2008-450 were adopted unanimously with the Fourth Ward vacant. 6 12/151200S 12. RES. 2008-451 - Resolution of the City of San Bernardino approving an agreement with Placo San Bernardino, LLC for provision of space for temporary parking for Metrolink riders during realignment of Viaduct Boulevard (SS07-32) and construction of the Metrolink parking strncture (GB04-19). Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that said resolution be adopted. Resolution No. 2008-451 was adopted unanimously with the Fourth Ward vacant. 13. Revise salary for Fire Department Range P-3 (Fire Engineer), effective August 1, 2008 Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that the Mayor and Common Council approve the revised P-3 (Fire Engineer) salary, effective August 1, 2008; and authorize the Human Resources Department to amend Resolution No. 6429 to reflect said action. The motion carried unanimously with the Fourth Ward vacant. 14. RES. 2008-452 - Resolution of the City of San Bernardino amending Resolution No. 6429, entitled in part "A Resolution ... establishing a basic compensation plan for officers and/or employees of the Police and Fire Departments of the City of San Bernardino." Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that said resolution be adopted. Resolution No. 2008-452 was adopted unanimously with the Fourth Ward vacant. 15. Resolutions identifying employee retirement contributions to the California Public Employees Retirement System (CALPERS) to be treated as employer contributions for tax purposes RES. 2008-453 - Resolution of the Mayor and Common Council of the City of San Bernardino for employer paid member contributions. (15A) RES. 2008-454 - Resolution of the Mayor and Common Council of the City of San Bernardino for paying and reporting the value of employer paid member contributions. (ISB) Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that said resolutions A and B, be adopted. Resolution Nos. 2008-453 and 2008-454 were adopted unanimously with the Fourth Ward vacant. 7 12/1512008 16. RES. 2008-457 - Resolution of the Mayor and Common Council of the City of San Bernardino recognizing the Green Valley Initiative and endorsing participation as a Green Valley Jurisdiction. Jay Lindberg, 6340 Orange Knoll, San Bernardino, CA, stated that this is all well and good, but we need to start investing in alternative fuels in order to face the energy challenges ahead. Council Member/Commissioner Brinker made a motion, seconded by Council Member/Commissioner Baxter, that said resolution be adopted. Resolution No. 2008-457 was adopted unanimously with the Fourth Ward vacant. 17. RES. 2008-455 - Resolution of the Mayor and Common Council of the City of San Bernardino authorizing the City Manager to execute a revised Facility Use Agreement with the San Bernardino City Unified School District relative to the use of 156 parking spaces in the parking lot at Speicher Park, and ratifying any action taken between October 7, 2008 and the date that this resolution is adopted. City Attorney Penman stated that he would abstain because his wife is a member of the school board. Council Member/Commissioner McCarnmack stated she would abstain because the school district is one of her clients. Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that said resolution be adopted. Resolution No. 2008-455 was adopted. Ayes: Estrada, Baxter, Brinker, Kelley, Johnson. Nays: None. Abstentions: McCammack. Vacant: Fourth Ward. 18. Budget amendment and Personnel motions to implement in-house graffiti removal and property abatement services Joe Ortiz, 387 West 25th Street, San Bernardino, CA, spoke in opposition to this item, stating that those members of the Council who voted out Los Padrinos don't have a clue about the business of graffiti removal services. Council Member/Commissioner McCarnmack expressed concerns regarding the proposal insofar as personnel and budget. She felt there was a lack of foresight in the proposal; and stated that if staff had worked a little harder to help Los Padrinos to work through their contractual issues, reporting issues, and accountability issues, the problems could have been resolved. Council Member/Commissioner Kelley stated that the Council spent a great deal of time on this particular subject, and the City needs to try something new-that Los Padrinos is not interested in working past 12/31/08. He stated that if this 8 12115/200S new program fails, he will be the first one to say they need to try something else. Council Member/Commissioner Estrada stated that she also was concerned about this proposal because she does not see a plan. She stated that she needs to see a plan that identifies the problem, states how the problem is going to be addressed, identifies the participants and when and how they are going to participate, and what the cost will be. Carolina Chavez, speaking in support of Los Padrinos, stated that the Probation Department had received 102 calls not to close Los Padrinos. She stated that she wanted to make clear that they are trying to keep the program going-that many of those involved have given 5-15 years to Los Padrinos and have been mentors to the kids involved in the program. Mayor/Chairman Morris stated that his office has been working with Ms. Chavez regarding a new nonprofit board for Los Padrinos. C. Patience Summers, 868 E. Rialto Avenue, San Bernardino, CA, stated that Operation Phoenix is a nonprofit scam and expressed disdain for the Mayor and his programs. Council Member/Commissioner Brinker made a motion, seconded by Council Member/Commissioner Kelley, that the Mayor and Common Council authorize the addition of five (5) Maintenance Worker 1 (Flex) positions, Range 1350, $2,543 to $3,092 per month, to Public Services Graffiti Removal Section; authorize the addition of one (1) Maintenance Worker 1 (Flex) position, Range 1350, $2,543 to $3,092 per month to Public Services Right of Way Section; authorize the addition of one (1) Lead Maintenance Worker position, Range 1420, $3,606 to $4,383 per month to Public Services Right of Way Section; authorize the Director of Human Resources to update Resolution 97-244 (position control) to reflect the above actions; and authorize the Director of Finance to amend the FY 2008/09 adopted budget as outlined in "Attachment I" to the staff report dated December 8, 2008, from Ken Fischer, Director of Public Services. The motion carried. Ayes: Baxter, Brinker, Kelley, Johnson. Nays: Estrada, McCammack. Absent: None. Vacant: Fourth Ward. 19. RES. 2008-456 - Resolution of the Mayor and Common Council of the City of San Bernardino authorizing an agreement between the City of San Bernardino and the County of San Bernardino for participation in the San Bernardino County Sheriff Department's Prisoner Work Release Program. 9 12/1512008 Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Brinker, that said resolution be adopted. Resolution No. 2008-456 was adopted unanimously with the Fourth Ward vacant. 20. Item deleted 21. Public Hearing - Resolution authorizing the obligation and expenditure of the allocated Citizens' Option for Public Safety (COPS) monies for FY 2008/09 to supplement front-line law enforcement support services RES. 2008-458 - Resolution of the City of San Bernardino authorizing the obligation and expenditure of the allocated Citizens Option for Public Safety (COPS Option) monies for FY 08/09 to supplement front-line law enforcement support services. Mayor/Chairman Morris opened the hearing. Jay Lindberg, 6340 Orange Knoll, San Bernardino, CA, stated that what is currently being done to fight drugs is not working-that a different approach is needed. Council Member/Commissioner Brinker made a motion, seconded by Council Member/Commissioner Baxter, that the hearing be closed; and that said resolution be adopted. The motion carried and Resolution No. 2008-458 was adopted unanimously with the Fourth Ward vacant. 22. Municipal Code Section 2.01.010 Mayor Pro-Tempore - Election of Mayor Pro-Tempore Council Member/Commissioner Estrada stated she did not support this action and read into the record a statement regarding same. Council Member/Commissioner Baxter made a motion, seconded by Council Member/Commissioner Kelley, to nominate Councilman Rikke Van Johnson to serve as Mayor Pro-Tempore until March 16, 2009. The motion carried. Ayes: Baxter, Brinker, Kelley, Johnson. Nays: Estrada, McCammack. Absent: None. Vacant: Fourth Ward. 23. National League of Cities Congress of Cities & Exposition Update Council Member/Commissioner Kelley made a motion, seconded by Council Member/Commissioner McCarnmack, that the matter be continued to the Council/Commission meeting of January 5, 2009. The motion carried unanimously with the Fourth Ward vacant. IO 12/15/200S COMMUNITY DEVELOPMENT COMMISSION Present: Mayor/Chairman Morris; Council Members/Commissioners Estrada, Baxter, Brinker, Kelley, Johnson, McCarnmack; City Attorney Penman, Economic Development Agency Interim Executive Director Marzullo and Agency Counsel Sabo, City Clerk Clark. Absent: None. Vacant: Fourth Ward R24. Joint Public Hearing - Waterman Holdings, LLC - Amendment No.4 to the 2004 Disposition and Development Agreement (Central City East Redevelopment Project Area) (Continued from November 17, 2008) RES. 2008-459 - Resolution of the Mayor and Common Council of the City of San Bernardino consenting to the disposition of certain real property by the Redevelopment Agency of the City of San Bernardino ("Agency") to Waterman Holdings, LLC (4" and Waterman Avenue - APN: 0135-191-17) (Central City East Redevelopment Project Area). (R24A) RES. CDC/2008-46 - Resolution of the Community Development Commission of the City of San Bernardino approving the sale of certain real property by the Redevelopment Agency of the City of San Bernardino ("Agency") to Waterman Holdings, LLC, and authorizing the Interim Executive Director of the Agency to execute Amendment No. 4 to the 2004 Disposition and Development Agreement, as amended, between the Agency and Waterman Holdings, LLC (4" Street and Waterman Avenue - APN: 0135-191-17) (Central City East Redevelopment Project Area). (R24B) The hearing remained open. Emil Marzullo, Interim Executive Director of the Economic Development Agency, advised that this public hearing was continued from November 15, 2008; and at that time, staff presented testimony and there were questions both from the Council and the City Attorney about the language in terms of sale of the property and issues related to the Development Services Department and other permits from federal and state agencies. He stated that staff has added the appropriate language to Section 2.15 at the request of the City Attorney, which requires in essence that the developer/builder be completely through the entitlement process with state, II 12115/2008 federal and local agencies before the Agency would actually do a transfer of title. Council Member/Commissioner McCarnmack stated that the issue she had raised was the issue of who would bear the liability if something should happen when a flood control or drainage canal is sold. For example, dumping something upstream or creating a blockage upstream which created some other ancillary problems. Mr. Marzullo stated that they are really dealing with more of a local drainage issue here rather than a Flood Control issue. He stated that this area was originally part of the Warm Creek drainage system, and when that facility was built and cut the Warm Creek drainage off, this remnant piece remained. It no longer serves as a flood control, but it does serve to take some of the drainage from Waterman Avenue. He stated that the challenge they have is that even though this is just local drainage and would be handled through the development process, it had in its historic context been identified as a blue line stream. That challenge created another procedural process which the applicant is going through with the Fish and Game and the Flood Control people. He stated that if they look at this as a non-blue line stream, which they believe it is and needs to be corrected, then it would really be an issue of the property owner, just like any other drainage easement is on any other private property. Ms. McCarnmack again questioned who would bear the liability if something unusual or out of the ordinary happens that this pipe clogs, breaks or disintegrates and ends up causing ancillary property damage to properties upstream of it, or to this property owner's property. Agency Counsel Sabo stated that what he added in the new Section 2.15, which are the conditions of the close of escrow on page 7 of the amendment, items (vi) and (vii), requires a Defense, Indemnification, and Hold Harmless Agreement approved by the City Council and also a Maintenance and Operation Agreement. Under those two agreements, the City will notify the Agency if those conditions have been met-that the City has a satisfactory maintenance agreement and an indemnification agreement; otherwise, they don't close the escrow. City Attorney Penman stated that originally his office did not sign off on this agreement because they were concerned about these very issues; however, the language that has been added, as mentioned by Mr. Sabo, basically gives the Mayor and Council the authority to impose restrictions that they want. He added that there will also have to be CEQA and NEPA mitigation measures adopted; therefore, he thinks there's enough in there now to give the City the protection that he didn't think was in the document previously. No public comments were received. 12 12/151200S Council Member/Commissioner Brinker made a motion, seconded by Council Member/Commissioner Baxter, that the hearing be closed; and that said resolutions A and B, be adopted. The motion carried and Mayor and Common Council Resolution No. 2008-459 and Community Development Commission Resolution No. CDC/2008-46 were adopted unanimously with the Fourth Ward vacant. R25. Joint Public Hearing - Maya Cinemas North America, Inc. Disposition and Development Agreement (Central City Redevelopment Project Area) (Continued from November 25,2008) - 2008 North RES. 2008-460 - Resolution of the Mayor and Common Council of the City of San Bernardino consenting to the disposition of certain real property by the Redevelopment Agency of the City of San Bernardino ("Agency") to Maya Cinemas North America, Inc. ("Developer") (450 North "E" Street - APN: 0134-131-24, 25, 26, 27 and 28) (Central City North Redevelopment Project Area). (R25A) RES. CDC/2008-47 - Resolution of the Community Development Commission of the City of San Bernardino approving the sale of certain real property by the Redevelopment Agency of the City of San Bernardino ("Agency") to Maya Cinemas North America, Inc. ("Developer"), and authorizing the Interim Executive Director of the Agency to execute the 2008 Disposition and Development Agreement by and between the Agency and the Developer (450 North "E" Street - APN: 0134-131-24, 25, 26, 27 and 28) (Central City North Redevelopment Project Area). (R25B) Note: The Resolution for R25A was not distributed with the backup materials. Mayor/Chairman Morris opened the hearing. Emil Marzullo, Interim Executive Director of the Economic Development Agency, stated that the Agency has been working on this particular project for more than a year-that prior to his time with the Agency, staff was working with the CinemaStar Corporation and looking for a successor tenant to their leasehold interest in the CinemaStar property, which the Agency currently owns. He advised that the process went on for about six or seven months with United Entertainment Corporation from Minneapolis in that first succession attempt. In April, the Agency, through the Community Development Commission, essentially turned down the offer and the deal points that they had on the table. Staff subsequently put together a process with the Maya Entertainment Group to look at the same project with the same conditions. At that time the CinemaStar 13 12/1512008 was still in business and it was still a lease assumption project that they were working on. Subsequent to that, and during the time that they were under negotiation, CinemaStar carne to the Agency for an extension on their forbearance agreement-the Agency had been reducing their rent by about 50 percent for the past 18 months. Staff brought that to the Commission and recommended against that forbearance because they saw that as an impediment to getting a deal done in a timely fashion. Subsequent to that denial of the forbearance agreement, CinemaStar went out of business within days or weeks. Mr. Marzullo advised that the Agency is now in a different deal with Maya, having gone from a lease assumption deal to a property purchase deal. He stated that the deal before the Council/Commission today was essentially a deal to rebuild the entire cinema-to gut the infrastructure internally-the seating, the concession stands, etc.-and bring back a state of the art theatre with new digital equipment, new seating, new carpeting and tile-and also to bring in a large format cinema with an IMAX Theatre component to that theatre. Additionally, staff has asked in the DDA for work in the future to use the value of that theatre to create other economic benefits within the neighborhood of the downtown cinema and theatre district. Within three years they have asked that buildings be constructed within the grass area out in front of the cinema property and to begin a new retail entertainment complex. Moctesuma Esparza, CEO, and Frank Garfar, President, Maya Cinemas, made a Power Point presentation regarding previous cinema projects they have completed in the cities of Salinas, CA and Bakersfield, CA, and their concepts for the reopening and total renovation of the CinemaStar building. Council Member/Commissioner Estrada clarified that this project had not been recommended for approval at the Redevelopment Committee meeting as indicated on the agenda-that the committee members made a decision to take it to the full Council, but without the approval of the Redevelopment Committee. She stated that her only reservation was the additional money the Agency has to contribute to make this deal work. She asked how long it would take to make the additional money available. Agency Counsel Sabo advised that as far as the financing, whether it's an assumption of the existing 108 Loan or a new 108 Loan in the $8 million plus range, if they started this week with the application to HUD, they would lose the rest of the year due to Christmas. He stated it would probably be a 60-day process by HUD; therefore, he would not expect an answer from HUD with documents for the City Council to approve until sometime in early March. That would mean that they would then have one key piece of the funding; and Maya would then have to put together the new money market tax credits, and there's enough pieces of the financing for that. He stated that he thought they would be 14 12/151200S able to open on a limited basis sometime in the first or second quarter of next year, but to really have the fmancing in place, close of escrow, and everything funded to do the full improvements, it's going to be at best the March time frame. Relative to the financing, Council Member/Commissioner Estrada stated that if they are talking about March for the tax credit money to be available, what about the money market tax credit money itself. Mr. Esparza advised that the new market tax credits are committed; in fact, they have prepaid for the right to that commitment, so they own those tax credits. The only thing that they need is to have a matching loan that allows for the leverages of the way that they are structured by the purchaser of the credits, but the credits have already been purchased by U.S. Bank. Mr. Esparza indicated that they are also prepared to immediately spend money from their own pockets without waiting for the loan. So when they talk about opening up the theatre for Phase I, they are going to do that on their own dollar. He stated that they have provided a schedule to the City, and that once they have the right to be able to spend money in the theatre, they are prepared to spend $1 million of their own money before the loan is fully committed and closed. This would allow them to change the seats, put in the digital projectors, spiffy up and make presentable that part of the theatre that they can renovate in that time period so that at least part of the theatre is presentable and quality. He stated that one of the things that they are concerned about is that when they open the theatre again its got to look and feel different; it's got to be quality, and it has to have enough pizzazz that people feel differently about it than they did about the old version of the theatre. And they are prepared to spend that million dollars to do that work out of their own pocket before the loan closes at all-they are not going to wait. He stated that in this new proposal they are proposing that they are going to invest in equity dollars, approximately $4 million. He noted that the Council/Commission has to vote on the proposal before them today, and there will still be a negotiation of how that gets done and that will still come back to them for approval. He explained that basically what they are saying is that for every dollar the City/Agency increases their loan beyond the existing loan, they are going to put in $1 themselves. So, that's how they are approaching this, as partners in order to transform downtown and in order to bring something to the residents that they think is quality. Council Member/Commissioner Kelley stated that he was deeply committed to getting the theatre open again. He asked Mr. Esparza to share briefly what he envisioned as part of his marketing plan to bring folks back to the theatre. 15 12/15/200S Mr. Garfar stated that they hoped to do aggressive marketing, whether it is in the newspaper, some promotions, working with the community, or working with the schools. He stated that was why he would like to open it on a big movie-a different movie-and that's why the last time he was here he had set a goal of December 19, because a couple of new movies were set to open that they could promote. Hopefully, they are now talking about February 27-Jonas Brothers with 3-D-it would be promoted and there would be profits. Council Member/Commissioner McCarnmack stated she was very impressed when she first saw their proposal; and she was struck by something Mr. Esparza said that she would never forget, and that was their commitment to build this project without City funds. Therefore, she was having great difficulty in buying into this. She stated that she understood how the market is right now relative to borrowing capacity, but if the project is the right project, the Council/Commission would be willing to talk to anybody about incentives or assistance of some sort. Based on the document in front of them, she assumed that after all is said and done in Phase I they will have invested approximately $12 million. Mr. Esparza stated it might be a little more. Ms. McCarnmack asked Mr. Esparza what he thought the building with its improvements would be worth after his investment of $13 million in Phase 1- just the building. Mr. Esparza stated that an operating building that has cash flow would then be valued based on the cash flow and there would be a multiple applied to it-a capitalization rate-and he believed that that value could quickly go over $20 million. He stated it would go up after it is operating, and that is a reflection of what would be there when they open. He stated that the County would go through its normal procedures and they would reassess them, and if they employ the typical appraisal technology, it would be in that vicinity. Ms. McCammack stated she was not worried about what they would pay in taxes-she was worried that if they approved the loan, and for some reason within the first three years the business wasn't there to support any additional expenditures, and they had to walk for whatever reason, what would the building be worth at that point in time. Mr. Esparza stated that at a minimum it would be worth the $13 million that they have invested in it. Ms. McCarnmack pointed out that that was not the case now. Mr. Esparza stated that was true, but they are talking about gutting the interior and completely redoing it and putting in an island. There are both tangible and 16 12/15/2008 intangible values for that. Also, the contract for IMAX is an exclusive agreement-somebody else cannot get it. The renovations and the design features that they are going to bring to it are their talents and their commitments. He stated he was having a hard time thinking about how it could be worth less, since the theatre was grossing about $3.9 million last year from ticket sales, about $5 million the year before that, and $6 million the year before that-and that's not including concessions. In addition, there is no real significant competition nearby. He noted that going to the movies is a neighborhood driven kind of activity. You don't want to drive more than 10 minutes, you want to know that there is going to be easy parking, you want to know that the movie you want to see is going to be playing when you want to see it, and you want to know that it is safe and that it's comfortable, and that you don't have to think about anything except that you want to see a movie. Ideally, you want to know that you can window shop, have a coffee, an ice cream, or have dinner before or after. And you want to do that by not having to drive more than 10 minutes. So, in this market area, and he's talking behavior on a national level, you don't have a competing theatre within 10 minutes. So what is needed here is a transformation of perception, of attitude, of how people feel about it-because it was successful. Council Member/Commissioner McCarnmack stated she had read the letter from Wells Fargo regarding the take-out loan, and asked Mr. Esparza how soon they provided the payoff after opening Salinas. Mr. Esparza answered that it was done in about two and one-half years; however, they didn't apply for it right away. Ms. McCammack asked if he would compare the situation in downtown San Bernardino to downtown Salinas. Mr. Esparza replied that he thought Salinas was more depressed. Relative to parking, Ms. McCammack pointed out that historically there have been problems with parking at this theatre. She asked whether he had thought about how he was going to address this issue, since part of the parking they should be using if the theatre is full doesn't even belong to the theatre. Mr. Esparza stated that those are conversations that they have been having with staff and that they believe there is a solution. Ms. McCarnmack asked if staff was prepared to help them get to that solution. He answered that he believed they were-that they have been working cooperatively and on that he was prepared to spend his company's money.c 17 12/15/2008 Council Member/Commissioner Brinker stated that a lot of what Mr. Esparza said tonight reaffirms things that he has seen and heard from other folks. He stated that he was a middle school teacher, and his teachers union routinely gives away tickets and movie passes to different movie theatres, and the one that always had the bad rep was the one in our town here. As a City Councilman here he would always stand up and say, hey, you know, it's safe, it's clean, it's a good place to go-but you've got to overcome those perceptions, and he liked what they were doing. Relative to marketing plans, Mr. Brinker asked whether they would be talking with the school districts and how the Council and staff could help with that, because he thinks that is a key element to this-not just in terms of getting them to come see the movies, but to help with the employment and get some of our young people jobs. He stated that there is a group called Inland Communities United for Change, and one of their key things is that these young people want jobs. Mr. Esparza stated that they would very much appreciate introductions and that is part of their plan. They will, in fact, make the theatre available to the local schools during the morning hours, if they have programs that require digital projection or 35 millimeter projection for instructional purposes. They will make those theatres available at cost-no markup, no profit. This is something that they have done and continue to do. And yes, they will definitely hire locally and train. He added that he is chairman of the board and founder of a charter school and very committed to education, and they look forward to working with all the educational institutions in the area. Council Member/Commissioner Johnson thanked them for their patience, stating that he liked the commitment they have shown throughout this process and the quality of work they have done in the past is exemplary. He stated that one of the things that excites him about it is the partnerships that they are willing to form as far as working with our area for scholarships and giving back to the community. He asked what numbers they would need on a daily basis going through the turnstiles to break even. Mr. Esparza answered that the numbers to achieve the dollar volume of last year, would be better than break even. He stated he did not understand why the theatre wasn't paying full rent and what was going on; but a $4 million box office with the concessions on top of that, which would be about $6 million, would be more than enough to pay for the debt service that they are talking about. City Attorney Penman noted that Mr. Esparza had mentioned that he worked with Frank Dominguez, and inquired about some of the projects that they worked on. 18 12/1512008 Mr. Esparza stated that back in the '80s he worked with Mr. Dominguez on the Colton cable TV system; however, they had not worked together on any projects in San Bernardino. Mr. Penman inquired about what their marketing strategy would be. Mr. Esparza explained that they will prepare printed materials that they will circulate. They will prepare press releases that they will give to radio, print, and television. They will go on radio and TV and give interviews. They will buy advertising in the local newspapers. Depending on what they discover is the best way to speak to the local community, they may do door hangers, they may do a direct mail. They will actively communicate to the residents of the trade area and let them know that it's going to be a brand new theatre, with new amenities, and a new commitment to quality. City Attorney Penman noted that they had said they believe there is a solution to the parking problem. He asked if they could share anything about that. Mr. Esparza replied that there are a number of parking structures in the area that they will seek out and be able to sign agreements to allow for parking-not just one, but quite a few. He stated that they are looking forward to working with staff to be able to approach them and to figure out what is going to be the most appropriate solution. Bob Hull with the Law Offices of Lewitt Hackman, 16633 Ventura Blvd., 11th Floor, Encino, CA, representing United Entertainment Corporation, reiterated his comments that United Entertainment Corp. is ready, willing and able to proceed with discussions and to make an offer on the property for significantly more than the $4.6 million currently offered by Maya Cinemas. He stated that all financing would be private, using no HUD loans; and that Mike Ross, President of United Entertainment Corp. was available at any time for discussion regarding this matter. Gene Harvey, 1851 Midvale Drive, Pomona, CA, Gene Harvey Theatres, stated that he had given the Mayor and Council his proposal a couple of weeks ago. He stated that he owns and operates the only other theatre in San Bernardino-the Sterling 6. He emphasized that he lives locally, that relative to financing he was not talking about any HUD loan, but private money; and he would like the opportunity to discuss his proposal with the Mayor and Council. Council Member/Commissioner Estrada asked Agency Counsel Sabo to explain where they were in the process. Mr. Sabo advised that the Agency has had an Exclusive Right to Negotiate (ERN) Agreement with Maya since October, and that has restricted them from 19 121I5/2008 accepting any other proposals or actively negotiating with any other party during that period of time. He stated that they certainly have the obligation to respond to public information requests, but to actually negotiate with someone, they did not have liberty to do that. However, even under the Exclusive Right to Negotiate Agreement there is no pre-commitment that this Commission would approve a DDA, or on what terms a DDA would be approved-the ERN does not take away the Commission's discretion to do whatever they want to do at a public hearing. Mr. Sabo stated that he needed to bring to the Commission's attention two other instances over the past where there have been other parties who have attended these hearings. Most of the time there is no one else who attends the public hearing for the sale of property, but it is not uncommon for other parties to come in and make an offer. So the Commission has the full discretion to accept the Maya DDA, to modify it, or to reject it; and to direct whatever other negotiations they would want. He stated there was nothing in the ERN that commits them to proceed with Maya, even though that is the direction that they have been going for the last several months. Ms. Estrada asked whether at this point in time, they could legally close the public hearing. Mr. Sabo answered in the affirmative, unless there were any other comments. Council Member/Commissioner Estrada made a motion, seconded by Council Member/Commissioner Baxter, that the public hearing be closed; and that said resolutions A and B, be adopted. Council Member/Commissioner McCarnmack stated that she felt a little lacking in information relative to the other two interested parties, and she didn't want to discount anybody's desire to step before the Commission and offer more money for City-owned property. She stated that the Commission would be irresponsible if they didn't understand what the offers were, and from what she was reading and from what she was hearing in terms of an investment, unless the others were offering any other information at this point in time, this was all the Commission had. They did have Mr. Hull's verbal and Mr. Harvey's written proposal, but information was still lacking. Agency Counsel Sabo advised that additional language needed to be added to the DDA by interlineations to add clarification to the definition of the HUD 108 loan on page 3, and it says "Any modification of the HUD 108 Loan, including, but not limited to, an assumption of the existing HUD 108 Loan or the undertaking of a new HUD Loan (as defined in Section 3.05), requires an independent action of the City of San Bernardino. Conditions or covenants appearing herein concerning actions to be taken by the Agency with respect to the HUD 108 Loan and the New HUD Loan (as defined in Section 3.05) are in 20 121I5/2008 addition to and separate and apart from the actions of the City. The Developer is hereby placed on notice that it shall not act in reliance on any representations as may appear to be contained herein, or as made by any persons, whether or not a party to this Agreement, concerning whether the City will initiate an action for modification of the HUD 108 Loan or approval of a New HUD Loan (as defined in Section 3.05) as to the outcome of such action as may be initiated." He stated this was really a clarification stating what he had mentioned to the Council/Commission in the past that this is a separate discretionary action on the part of both HUD and the City Council. Mr. Penman stated that that was the language Mr. Wilson and Mr. Sabo had agreed on, which took care of the City Attorney's concerns. Agency Counsel Sabo advised that the other change was the change of one word on page 47, subparagraph C, the next to the last line, which says the "Agency hereby agrees to use its best efforts to", and here they have eliminated the word "cause" and inserted the word "request that", and it takes up with "City to subordinate . . ." Council Member/Commissioner Estrada amended the motion, seconded by Council Member/Commissioner Baxter, that the hearing be closed; and that said resolutions A and B, be adopted, with additional language added by interlineations to the DDA to add clarification to the definition of HUD 108 loan on page 3, and a change of one word on page 47, subparagraph C, next to the last line, changing the word "cause" to the words "request that." The motion carried and Mayor and Common Council Resolution No. 2008-460 and Community Development Commission Resolution No. CDC/2008-47 were adopted unanimously with the Fourth Ward vacant. 26. Public Comments Joe Ortiz, 387 West 25"' Street, San Bernardino, CA, stated that there is a myth in San Bernardino that crime is down and spoke in opposition to Operation Phoenix and the Mayor. Jay Lindberg, 6340 Orange Knoll, San Bernardino, CA, spoke regarding the post oil economy that we are getting ready to enter and legitimate energy supplies. C. Patience Summers, 868 E. Rialto Avenue, San Bernardino, CA, spoke in opposition to Operation Phoenix and Mayor Morris. 21 12/1512008 Reverend Reginald Beamon, 1730 W. Gilbert Street, San Bernardino, CA, stated he is a field representative for Congressman Joe Baca and invited all constituents to Mr. Baca's annual Christmas party to be held at his office at 201 North "E" Street, from 5-9 p.m. on Wednesday, December 17. He asked everyone who comes to bring a gift for a child. He announced that the 51" Annual Kiwanis Basketball Tournament would be held December 26, 27, and 29, with the championship game on Tuesday night, December 30, at San Gorgonio High School. He noted that Caltrans has removed San Bernardino from its freeway signs and replaced it with Redlands, leaving San Bernardino out altogether. Charles Greenwood, thanked those who are supporting Los Padrinos and asked that the City find other activities for these kids to do. 41. Adjournment At 7:25 p.m. the meeting adjourned. The next joint regular meeting is scheduled for 1:30 p.m., Monday, January 5,2009. RACHEL G. CLARK City Clerk By: ~H~~e~ Deputy City Clerk 22 12115/2008