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HomeMy WebLinkAbout03-17-2011 Jt. Special MinutesCITY OF SAN BERNARDINO 300 N. "D "Street San Bernardino, CA 92418 Website: www.sbcity.org Mayor Patrick J. Morris Cnl/nPil iM—h-- MINUTES MAYOR AND COMMON COUNCIL AND COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF SAN BERNARDINO virginia marquez Vacant Tobin Brinker Fred Shorett Chas Kelley Rikke Van Johnson Wendy McCammack JOINT SPECIAL MEETING MARCH 17, 2011 ECONOMIC DEVELOPMENT AGENCY BOARDROOM 201 NORTH "E" STREET SAN BERNARDINO, CALIFORNIA NOTICE IS HEREBY GIVEN that the Mayor and Common Council of the City of San Bernardino have called a joint special meeting of the Mayor and Common Council for 6 p.m., Thursday, March 17, 2011, in the Economic Development Agency Boardroom, 201 North `B" Street, San Bernardino, California. The purpose for which this meeting was called was to consider the following: Discuss and take action to appoint Commission members to the Board of Directors of the San Bernardino Economic Development Corporation and granting of certain approvals under the Project Funding Agreement. The joint special 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 6 p.m., Thursday, March 17, 2011, in the Economic Development Agency Boardroom, 201 North `B" Street, San Bernardino, California. Roll Call Present: Mayor/Chairman Morris; Council Members/Commissioners Marquez, Brinker, Shorett, Johnson; Sr. Assistant City Attorney Roth; Economic Development Agency Interim Executive Director Marzullo and Agency Counsel Sabo; City Clerk Clark. Absent: Council Members/Commissioners Kelley, McCammack Vacant: Second Ward. 1 03/17/2011 1. Closed Session Pursuant to Government Code Section(s): A. Conference with legal counsel - existing litigation - pursuant to Government Code Section 54956.9(a). 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. C. Conference with legal counsel - anticipated litigation - initiation of litigation - pursuant to subdivision (c) of Government Code Section 54956.9. D. Closed Session - personnel - pursuant to Government Code Section 54957. 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. 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. 2. Discuss and take action to appoint Commission members to the Board of Directors of the San Bernardino Economic Development Corporation and granting of certain approvals under the Project Funding Agreement. Mayor/Chairman Morris stated that this special meeting was called for the purpose of discussing and taking action with regard to the Economic Development Agency and its successor. He asked Emil Marzullo, Economic Development Agency Interim Executive Director, to give background information. Mr. Marzullo stated that a few weeks ago the Mayor and Council/Community Development Commission had a special meeting to talk about a proposal by Governor Brown concerning the restructuring of redevelopment. At that time, 2 03/17/2011 Mr. Marzullo presented a number of issues and actions, some of which have already been taken. Additional actions were pending until it became clear what action the State Legislature was taking as opposed to the Governor's budget proposal. Mr. Marzullo explained that two bills were introduced in the State Legislature - Senate Bill No. 77 and Assembly Bill No. 101. Mr. Marzullo provided copies of extracts from the two bills as well as the analysis of AB 101 by the Senate Rules Committee. He commented that when they first looked at the bills they knew that they would be far reaching with deep cuts in redevelopment as proposed by the Governor if they went through as he had proposed. When the bills were agendized as Assembly and Senate bills, there were additional changes to the Governor's language which Messrs. Marzullo and Sabo believe will be devastating to this City today and in the future. He noted that under existing law if an agency ceases to function, any surplus funds or assets would be considered local vested assets of a community. Senate Bill No. 77 would repeal that language. The proposed legislation provides that upon the dissolution or change of governance of a local redevelopment agency, the assets would be distributed according to the rules or guidelines set down in the bills. In essence, what would happen is that following the effective date of the Act, the Agency would be prohibited from taking any action to issue or sell bonds, to incur indebtedness, to refund, restructure, or refinance indebtedness, to take out or accept loans or advances, to execute any trust deeds or mortgages, to pledge or encumber for any purpose any revenues or assets, to take any action that would conflict with the legislation. In essence, it would eliminate the ability to do any business as a redevelopment agency once the Act takes effect. Mr. Marzullo stated that the most profound effect is that all of our physical assets, our properties, our buildings, anything that we have assembled or have assembled with the intent of doing a deal, would effectively be nullified as the potential to do the deal and the assets would be acquired by the successor entity. He believes that the successor entity would be the City. The City would take control of the physical assets of the Agency, but the City would be required to sell the assets in an expeditious manner. The proceeds of that sale would then be transferred under the Act to the County of San Bernardino and those proceeds would then be redistributed to the taxing entities according to a formula that is already in place. The General Fund would receive a portion of the proceeds which is about 17 cents on the dollar. Mr. Marzullo went on to talk about where they saw some of the problematic challenges. The EDA building is owned by the Agency, as are the parking lot, the Convention Center, the California Theater, Sturges Center for the Performing Arts, Carousel Mall, the 66ers Ballfield, Shandin Hills Golf Course, 3 03/17/2011 the Bice property, the Arden -Guthrie properties that have been assembled for the Home Depot deal, and the properties that the Agency has acquired to try and bring forth future housing projects. All of those properties would be sold if the legislation is approved as stated and they would be sold in what in essence is a fire sale and the Agency would not be able to do any deal with any contractor or any developer once the legislation is approved. That means that the Home Depot deal is dead; the theater deal is dead; the deal to move the Salvation Army is dead, the project at 5`' and "G" to move In N Out Burger is dead and on and on. He did clarify that the only deals that would be preserved are those that are already inked. So, if there is a contract, a bond sale, a loan or something that is already encumbered, they believe they can salvage those deals, but all of the other deals are all in process and they're not done deals. The leases are in negotiation as are the property sales. Mayor/Chairman Morris noted that the Council/Commission clearly has a challenge to complete the development of the non-profit and given the proposed legislation discussed by Mr. Marzullo, there is a need to transfer real property assets to the non-profit corporation. Mayor/Chairman Morris asked legal counsel Tim Sabo if he had anything to add to Mr. Marzullo's comments. Mr. Sabo stated that what they are asking the Council/Commission to do is on Motion C (Mayor and Common Council) to provide authorization that allows the transfer of properties to take place. Council Member/Commissioner Shorett made a motion, seconded by Council Member/Commissioner Marquez, that the Mayor as Chair of the Commission hereby recommends the appointment of Council Member/Commissioner Johnson, Council Member/Commissioner Brinker, and Mayor Morris to the SBEDC Board of Directors and that the names of said Commission members shall be inserted into Commission Resolution No. CDC/2011-8 as approved on March 3, 2011; and that the Community Development Commission of the City of San Bernardino ("Commission") hereby consents to and approves the appointments of Council Member/Commissioner Johnson, Council Member/ Commissioner Brinker, and Mayor Morris to the SBEDC Board of Directors and authorizes the insertion of such names into Commission Resolution No. CDC/2011-8. Note: The vote was taken following further discussion. Senior Assistant City Attorney Diane Roth suggested that the language on Motion A be changed since Charter Section 51 states that the Mayor shall appoint. Consequently, she suggested that the motion be changed to read: "That the Mayor as Chair of the Commission hereby appoints and the Commission hereby approves the appointment of Council Member/ Commissioner Johnson, Council Member/Commissioner Brinker, and Mayor Morris to the SBEDC Board of Directors and that the names of said 4 03/17/2011 Commission members shall be inserted into Commission Resolution No. CDC/2011-8 as approved on March 3, 2011. Council Member/Commissioner Shorett stated that he wanted the record to note his rationale for making the three appointments. First of all, he feels it is significant that the Mayor is elected at large and that the senior members of the RDA Committee are Tobin Brinker and Rikke Van Johnson, so that should help maintain some continuity. Mr. Shorett went on to say that he believes Mr. Marzullo has done a great job in being very frank and direct. He indicated that as a result of the State's poor management over many, many years, they are balancing their budget on the backs of local cities and redevelopment agencies, and in his view it's nothing more than thievery and taking of our city assets. Council Member/Commissioner Shorett amended his original motion, seconded by Council Member/Commissioner Marquez, that the Mayor as Chair of the Commission hereby appoints and the Commission hereby approves the appointment of Council Member/Commissioner Johnson, Council Member/ Commissioner Brinker, and Mayor Morris to the SBEDC Board of Directors and that the names of said Commission members shall be inserted into Commission Resolution No. CDC/2011-8 as approved on March 3, 2011; and that the Community Development Commission of the City of San Bernardino ("Commission") hereby consents to and approves the appointments of Council Member/Commissioner Johnson, Council Member/Commissioner Brinker, and Mayor Morris to the SBEDC Board of Directors and authorizes the insertion of such names into Commission Resolution No. CDC/2011-8. The motion carried with Kelley and McCammack absent. Council Member/Commissioner Shorett made a motion, seconded by Council Member/Commissioner Brinker, that the Mayor and Common Council and Community Development Commission of the City of San Bernardino approve the transfer of real property assets to the San Bernardino Economic Development Corporation pursuant to Section 2.01(C) of the Project Funding Agreement (CDC/2011-9). The vote was taken after the following discussion. Senior Assistant City Attorney Diane Roth made the following comment on behalf of City Attorney James F. Penman: "It is the position of our office the transferring to a non-profit organization for the property that's owned by the Agency is not in the City's best interest. Instead, we recommend joining the League of Cities and other cities in a lawsuit they intend to file against the Governor and other appropriate state entities to thwart the action of the Governor and the Legislature to order properties owned by the San Bernardino Redevelopment Agency to be sold and the proceeds transferred to the County for distribution. " 5 03/17/2011 Council Member/Commissioner Brinker commented that he concurred that we should join the lawsuit. He also stated that in many ways maybe the model that has been set up might provide us some protections that others don't have if they have just been transferring assets to their City. Council Member/Commission Johnson stated that he sees a long drawn out battle with the State; however, he does believe that we have taken the best course of action possible for our City and our citizens to protect all of the assets that we can. Mayor/Chairman Morris asked Mr. Marzullo for final comments and Mr. Marzullo stated that two weeks ago he recommended that we put a validation hearing together to go to the San Bernardino County Superior Court. The revised legislation would preclude us from doing a validation action after the enactment of the legislation so the Agency is prepared to file tomorrow morning a validation action that requests the Court to evaluate our contractual relationships between the non-profit, the City, and the RDA. Secondly, they have prepared grant deeds and quitclaim deeds to do all of the property transactions tomorrow morning so if the Council/Commission votes aye tonight, they will make those property transactions effective tomorrow. The original motion made by Council Member/Commissioner Shorett, seconded by Council Member/Commissioner Marquez, that the Mayor and Common Council and Community Development Commission of the City of San Bernardino approve the transfer of real property assets to the San Bernardino Economic Development Corporation pursuant to Section 2.01(C) of the Project Funding Agreement (CDC/2011-9) carried with Kelley and McCammack absent. 3. Adjournment At 6:20 p.m., the meeting adjourned. The next joint regular meeting of the Mayor and Common Council/Community Development Commission is scheduled for 1:30 p.m., Monday, March 21, 2011. RACHEL G. CLARK, CMC City Clerk 6 03/17/2011