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HomeMy WebLinkAboutR37-Economic Development CITY OF SAN BERNARDINO ORIGINAL ECONOMIC DEVELOPMENT AGENCY FROM: Emil A.Marzullo SUBJECT: American Sports University - Sale of Sewer Interim Executive Director Capacity Credits (Central City North Redevelopment Project Area) DATE: July 15,2008 --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------—---------- Synopsis of Previous Commission/Council/Committee Action(s): On July 10, 2008, Redevelopment Committee Members Estrada, Johnson and Baxter unanimously voted to recommend that the Community Development Commission consider this action for approval. ----------------------- ----------- - -- ----------- - - Recommended Motion(s): (Mayor and Common Council) MOTION A: That the Mayor and Common Council of the City of San Bernardino confirm the prior adoption of Resolution No. 84-271 and to find and determine that (i)the Financing Plan as attached thereto has not been amended or changed, (ii) the Agency may convert the Capacity Rights currently held by the Agency on a 1 for 1 basis to assist redevelopment activities anywhere within the City boundaries regardless of the then current cost of sewer connection capacity rights then determined by the City of San Bernardino, and (iii) the construction contemplated by the Financing Plan has been completed and therefore there is no basis for the Mayor and Common Council to cause any direct or indirect increase in Agency costs for the use of the Capacity Rights at anytime in the future (Community Development Commission) MOTION B: That the Community Development Commission of the City of San Bernardino authorize the Interim Executive Director of the Redevelopment Agency of the City of San Bernardino ("Agency") to transfer 33.16 Agency owned sewer capacity credits to American Sports University for a total purchase price of$86,216 to be paid to the Agency upon the transfer of the sewer capacity credits for the student dormitory project located at 340 West 01 Street, San Bernardino ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ Contact Person(s): Don Gee Phone: (909)663-1044 Project Area(s): Central City Redevelopment Project Area Ward(s): 1st Supporting Data Attached: 0 Staff Report❑Resolution(s) ❑Agreement(s)/Contract(s)❑Map(s)❑ Letter(s) FUNDING REQUIREMENTS: Amount: $ -0- Source: N/A Budget Authority: N/A SIGNATURE: Fiscal Review: �s-- Emil A.Marzullo,Interim Executive Director Barbara Lindseth,Administrative Services irector ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- Commission/Council Notes: ------------------------------------------------------------ -- --------------------------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2008\07-21-08 American Sports University-Sale of Sewer Capacity SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/21/2008 Agenda Item Number: le,5'I ECONOMIC DEVELOPMENT AGENCY STAFF REPORT AMERICAN SPORTS UNIVERSITY- SALE OF SEWER CAPACITY CREDITS (CENTRAL CITY NORTH REDEVELOPMENT PROJECT AREA) BACKGROUND: The Redevelopment Agency of the City of San Bernardino ("Agency"), pursuant to an economic development program and strategy initiated in 1984, purchased 800 Sewer Capacity Rights ("SCRs") from the City Water Department to utilize as incentives for commercial and office redevelopment. In 1989, having used only 95 SCRs, the Agency sold 605 SCRs back to the Water Department. The Agency currently holds 97.2 SCRs or the equivalent of the Water Department's current sewer capacity measurement of Equivalent Dwelling Units ("EDUs"). Council Resolution No. 84-271 established the program and financing plan for the sale of SCRs to fund a major sewer plant expansion in the mid- 1980's. Said Resolution No. 84-271 is attached for reference. The American Sports University ("ASU") is located in Downtown San Bernardino currently in 6 buildings with their main administrative and classroom building on 399 North"D" Street. The campus includes the Main Administration Building, the ASU Fox Theatre, the ASU Sports and Health Sciences Building, the 3-story ASU Fitness Center, ASU International Dining Food Court, and the Chapel. The Campus Dormitory is currently under construction and the subject of this proposed sale of SCRs. CURRENT ISSUE: The City's downtown revitalization efforts will be greatly enhanced by the construction of and the development of institutions of higher learning and education. ASU is an independent, non-profit private institution offering bachelor and master degrees in the discipline of Sports Education and has made a major investment and commitment to the revitalization of Downtown. The Campus Dormitory will house up to 270 students and resident managers in the former title company building located at 340 West 4th Street, bringing 270 students and their associates, friends, and family into the Downtown area who will participate in Downtown activities, use Downtown services, and frequent Downtown businesses and eateries. ASU has been informed by the Water Department that after certain EDU credits for the previous title office building were applied to the Sewer Capacity Fee, the applicable EDUs are 33.16 EDUs generating a fee amount of $115,996.65 for the 135 room student dormitory at the current rate for sewer capacity charges. ASU has requested assistance from the Agency. The Agency staff has looked into the situation and has found that ASU has made major and significant investments in the Downtown area with its development of the ASU Campus and with the development of its Campus Dormitory, will bring approximately over 200 people into the Downtown area. The Agency staff recommends that the use of the Agency's SCRs as an economic incentive would be appropriate in this circumstance and proposes that the 33.16 Agency EDUs be sold to ASU for the price of$2,600/EDU for a total of$86,216. ----------—--------------------------------------------------------------—---------------—----------------------------------------------------------------------------------------------- P:Wgendas\Comm Dev Commission\CDC 2008\07-21-08 American Sports University-Sale of Sewer Capacity SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/21/2008 Agenda Item Number: Economic Development Agency Staff Report ASU Sale Agreement Page 2 If the SCR Agreement is approved, this would provide an economic incentive of approximately $29,781 to bring approximately over 200 new residents to Downtown. The Agency's SCR balance would be approximately 64 EDUs. ENVIRONMENTAL IMPACT: Approval of the Sewer Capacity Sales Agreement has no environmental impact under the California Environmental Quality Act("CEQA") Guidelines and is categorical exempt per Section 15300, et seq. FISCAL IMPACT: There is no fiscal impact to the City and the Agency would receive $86,216 in proceeds for the sale of its 33.16 EDUs. RECOMMENDATION: That the Mayor and Common Council and the Community Development Commission adopt the Motions. Emil A. Marzullo,Interim Executive Director -------------------------------------------------------—---------------------------------------------—----------------------------------------------------------------------------------------------- P:\Agendas\Comm Dev Commission\CDC 2008\07-21-08 American Sports University-Sale of Sewer Capacity SR.doc COMMISSION MEETING AGENDA Meeting Date: 07/21/2008 Agenda Item Number: Q7/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 02 1 RESOLUTION NO. 84-271 2 3 RESOLUTION OF THE CITY OF SAN BERNARDINO A.DOrTING THE SAN BERNARDINO 41 WASTEWATER FINANCING PLAN. 5 WHEREAS, the San Bernardino Waste-.4ater Treatment Plant is currently at S maximum capacity, thus rendering treatment as unreliable; and 7 WHEREAS, Engineering studies are completed, and plans and speciFications are developed to construct treatment facilities to add up to six million gallons 9 per day capacity to the plant; and 10 WHEREAS, a plan has been developed to raise the capital funds necessary 11 to construct facilities; and 12 WHEREAS, a public hearing has been concluded on the plan. 13 NOW THEREFORE BE IT RBSOLVED BY THE MAYOR AND CObL�iO�I COUINCIL OF THE CITY F SAN BERNARDINO AS FOLLOWS: 14 15 SECTION 1. That the City of San Bernardino does hereby approve and adopt 16 the San Bernardino Wastewater Financing Plan, a copy of said plan is attached 17 hereto, marked Exhibit "A" and made a part hereof as fully as though set forth 18 at length herein. 19 1 HEREBY CERTIFY that the foregoing resolution was duly adopted by the 20 Mayor and Common Council of the City of San Bernardino at a regular 21 meeting thereof, held on the 16th day of Jul ,1984 by the follow- 22 ing vote to wit: 23 /II!l/// 24 25 26 27 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 03 AYES: Council ;Members Castaneda k2eill Marks 2 _QI Li c}1 3 NAYS: Council Member Hernandez 4 ABSENT., None a 6 ? 7 'City Clerk 8 .. The foregoing resolution is hereby approved vhis� ,2 day of July 1984. _ 10 12 Ky 13 n Bernardino Y 14 15 Approved as to fora: 16 I GG 18 City Attorney 19 20 21 22 23 24 25 26 27 28 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 04 EXHIBIT "A" SAN BERNARDINO WASTEWATER FINANCING PLAN The San Bernardino Wastewater Treatment Plant has reached a point where current flows are coming very close to utilizing all of the existing capacity. At best, the current treatment capacity of the plant is unreliable. The solids handling treatment process needs major additions and rehabilitation. Engineering studies are completed, and plans and specifications are developed to reinstate six (6) million gallons per day capacity at the plant. The estimated project cost to complete the required work is approximately $25 million. Construction on the Project must begin immediately to ensure continued development in the greater San Bernardino area. A program is needed to raise capital funds immediately so that the project can begin. A possibility exists of obtaining state and federal grants for approxi- mately $8.5 million of the total project cost. If the grant funding is ap- proved, local share revenues of $16.5 million are needed. This is the best economic case. State and federal funding may not be approved placing the total burden of funding the project with local money. The addition of six (6) million gallons per day of capacity allows for the connection of an additional 21,350 equivalent dwelling units. If state and federal grants are not received, the construction program will have to be phased_ Phase I would bring the plant capacity for solids treatment capacity to a reliable 24.5 mgd. To fund Phase I cost of $13 million, sale of capacity rights for 6,900 equivalent dwelling units is needed to provide funds for this phase of the project. -1- 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 05 One plan to raise the necessary funds is to sell "Sewer Capacity Rights" to anyone who owns property or has an interest in property (long lease in excess ° of 5 years) in the service areas of the City of San Bernardino, East Valley Water District, and the City of Loma Linda. The capacity rights are assigned to the property. This right is a guarantee to a sewer capacity now or at any time within the next five (5) years. After the five (5) year period, the value of the sewer capacity rights are fixed at the value stated for the fifth year. The sewer capacity right can be resold through the City or be applied toward the sewer connection fee designated for construction and improvements of the Wastewater Treatment Plant in existence at that time. There are some basic premises for this program which are as follows; Future sewer users must expect: to xP pay for their expansion rights in advance. If the treatment plant is not rehabilitated, it is doubtful how many more connections should be allowed. To not purchase now will only guarantee substantially greater costs in the future for the same service. • If the state and federal grants are not received and sufficient funds are raised through this program, the project will be segmented and construction will proceed. Those who do not Purchase "Sewer Capacity Rights" may find their development programs are delayed due to insufficient capacity for sewage treatment. The purchaser of this right shall still be responsible for any installation -2- 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 06 fees, other sewer connection fees, and off-site improvements as the situation requires, before sewer service is granted. The number of connection rights sold to any one individual owner/buyer (or one buyer per parcel(s) - co--ownership will be treated as an individual owner/buyer) shall be limited to the type development allowed under the General Plan and size Of parcel, up to a maximum of 800 equivalent dwelling units, whichever is less. A purchaser wanting sewer capacity rights in excess of what the entitlement above allows will be required to submit a separate application and purchase agree- ment. If sewer capacity rights are available after the initial sale period, the City can allocate the remaining rights to qualified buyers on the same basis as the initial offering. The procedure to purchase sewer capacity rights is for an applicant to submit the following: 1. Application and Purchase Agreement; and certified check, cashier's check or letter of credit in the amount of the sewer capacity Tights value being acquired. 2. Application and Conditional Purchase Agreement; and certified check or cashier's check in the amount of the down payment for all sewer capacity rights being acquired. The sale of sewer capacity rights will be carried out and administered through the Board of Water Commissioners, City of San Bernardino and their staff. 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 07 �-' The program trust be structured in such a way as to show the purchaser a "savings" ' by purchasing the rights now with guaranteed relief from any future increases in the capacity fees. A schedule of future capacity rights is listed below. The fees increase at an annual rate of 15% for first three years and 10% for the fourth and fifth years. This schedule is essential to show the purchaser future costs and savings by buying now. The fee schedule is guaranteed for the five year period; thereafter, it is subject to adjustment. This schedule of increased sewer capacity rights is based upon our estimate of increased construc- tion costs and cost of money. Escalation in construction costs are based upon projected increases in the Construction Cost Index published in "Engineering News Record". Future cost of money is estimated to increase an average of 5% per year, Recent, changes in the prune rate are escalating faster than this anticipated rate. SEWER CAPACITY FEES AMOUNT PER CAPACITY RIGHT April 9, 1984 $1,230 January 1, 1985 1,410(1 January 1, 1986 1,620 January 1, 1987 1,860 January 1, 1988 2,050 January 1, 1989 2,260 This program would allow the purchaser of sewer capacity rights the ability to resell unused or unwanted sewer capacity rights through the City at a sizeable profit. The City would not guarantee purchase of these sewer capacity rights (1)The amount per capacity right commencing January 1, 1985 may be adjusted upward to reflect the loss of income due to parcels grandf athered prior to April. 1 , 1984. 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 08 but act as an exclusive resale agent. The owners of the sewer capacity rights would receive repayment only after the rights had been sold. A. period of time must be established during which a specified number of sewer capacity rights will be sold. During this period, an intensive marketing effort will be required to reach as many interested parties as possible to "sell" the concept. The program should be designed to reach all known property owners within the service area of the plant, real estate agents, banks, engineers, architects, service clubs, and contractors in the region. A certain number of fully qualified staff will be required to handle the program on a full-time basis during the "sale" period to handle inquiries and related duties. Sewer capacity rights will be sold on a first-couie, first-serve basis. Once the specified number of sewer capacity rights are sold, there may be no addi- tional connections allowed until the construction improvements at the plant are completed. Each public agency, the City of San Bernardino, the City of Loma Linda, and Fast Valley Water District are entitled to purchase up to 800 sewer capacity rights within thirty (30) days of adoption of this plan. This entitlement shall be over and above the initial offering of 6,900 sewer capacity rights. The Board of Water Commissioners will accept applications for sewer capacity rights during the specified sale period. Should the total requests for sewer capacity rights exceed the initial offering, the Board reserves the right to 07/14/2008 14:32 9093845592 SBMWD ACCT/FINANCE PAGE 09 l J a, recommend an increase in the amount of rights to be sold to the Mayor and Common Council. The recommendation for increase will be based upon an analysis of treatment facilities that can be constructed to accommodate increased demand. Additionally, any developer who has submitted building plans to the appropriate Jurisdiction for plan check review by July 9, 1984 will be allowed to connect to the public sewer system upon payment of all applicable sewer connection fees for the development in effect at the time sewer connection permits are issued. Below is a proposed schedule for the program: July 9, 1984 Public Hearing on plan to sell capacity rights. Approval of Plan by Honorable Mayor and Common Council. July 10, 1984 through August 17, 1984 Preparation of materials and mailing notices to all property owners in plant service area. August 20, 1984 through September 14, 1984 Sale period for receipt of application and purchase agreements for sewer capacity rights. September 14, 1984 Close of sale period. Attached are copies of the proposed application, purchase agreement sample letter of credit, assignment fom, log of purchase agreements, and planned development . schedule.