HomeMy WebLinkAbout03-03-2011 Jt. Spe MtgSan
CITY OF SAN BERNARDINO
300 N. `D" Street
San Bernardino, CA 92418
Website: www.sbcity.org
r•,rpoArr0y
Mayor Patrick J. Morris
Council Members:
Virginia Marquez
Vacant
Tobin Brinker
Fred Shorett
Chas Kelley
Rikke Van Johnson
Wendy McCammack
MAYOR AND COMMON COUNCIL AND
COMMUNITY DEVELOPMENT COMMISSION
OF THE CITY OF SAN BERNARDINO
JOINT SPECIAL MEETING
THURSDAY, MARCH 3, 2011
ECONOMIC DEVELOPMENT AGENCY BOARDROOM
201 NORTH "E" STREET
SAN BERNARDINO, CALIFORNIA
NOTICE IS HEREBY GIVEN that the Mayor of the City of San Bernardino has called
a joint special meeting of the Mayor and Common Council/Community Development
Commission to be held at 5:00 p.m., Thursday, March 3, 2011, in the Economic
Development Agency Boardroom, 201 North "E" Street, San Bernardino, California.
The purpose for which this meeting was called was to consider the following:
A Joint Mayor and Common Council and Community Development Commission
Workshop on Agency Redevelopment Projects and Housing Funds.
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 5:09 p.m. on Thursday, March 3, 2011, in the Economic
Development Agency Boardroom, 201 North "E" Street, San Bernardino, California.
Roll Call
Present: Mayor/Chairman Morris; Council Members/Commissioners Marquez,
Brinker, Kelley, Shorett, Johnson, McCammack; City Attorney Penman,
Assistant City Manager Debra Kurita, Economic Development Agency
Interim Executive Director Marzullo, Agency Counsel Sabo; and City
Clerk Clark.
Absent: None.
Vacant: Second Ward.
03/03/2011
I . 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.
The Mayor and Common Council did not recess to closed session during this
meeting.
2. Joint Mayor and Common Council and Community Development
Commission Workshop on Agency Redevelopment Projects and Housing
Funds.
Mayor/Chairman Morris convened the workshop to discuss the critical issue of
how we will protect our local tax dollars from the threat that has been issued by
the Governor to all cities in California that he is going to sweep away
redevelopment agencies across the state and take those resources and put them
elsewhere beyond our city limits. The Mayor stated that if we do not act to
protect local dollars for investment within our City and for critical projects to
rebuild our infrastructure, then we will not have done our job as elected leaders
for the local taxpayers. He called on Emil Marzullo, Interim Executive
2 03/03/2011
Director of the Economic Development Agency to explain the proposal that will
hopefully protect us from the sweeping take on economic development efforts in
this City.
Mr. Marzullo stated that he has been in local government for 35 years and he
has seen government takes, but has never seen the wholesale elimination
proposal like the one proposed by the Governor. The Governor has proposed
eliminating the redevelopment authorities throughout the state and to take the
money that we call tax increment, the money that is utilized in the
redevelopment financing and building programs, and redistribute that to taxing
entities.
Mr. Marzullo explained that since Proposition 13 came into play in 1979 the
general tax is 1 % of a property's value. So, for example, if you have a home or
a bare piece of land that is worth $100,000, the general tax for that property is
$1,000 and most people have a tax greater than that because there are add ons
such as assessment bonds, school bonds, or it could be water issues or other
things, but the 1 % ad valorem tax is based on the market value of the property.
He noted that "ad valorem" means the tax based on value. So, if you take $1 of
that ad valorem tax and split it up, it is split up to local entities, i.e., school
districts, cities, counties, park and recreation districts, lighting districts, and any
one of a number of entities. There is no exact formula of who gets what in what
area as it is all based on what taxing entities were in place at the time that
Proposition 13 was put in place.
In the case of the City of San Bernardino, we receive 17 - 18% or 17 or 18
cents of every dollar and those dollars go to the General Fund. Those are the
dollars that run municipal services; i.e., police, fire, general services of the
City. Other functions of the City such as water and sewer are generally called
enterprise functions and can charge a fee.
Mr. Marzullo explained that redevelopment was an invention of the mid to late
1940s and it came out of post WWII when we had blighted cities and older
urban areas and something was needed to bring them back to life.
Mayor Morris commented that San Bernardino is a classical older city. This is
a city with remarkably old infrastructure from sewer systems to water mains, to
streets, curbs and sidewalks and in every respect we are one of the older cities
in California, the oldest east of Los Angeles. Therefore, we have in an
immense way challenges of blight and infrastructure degradation.
Mr. Marzullo stated that the way redevelopment works is that it takes a portion
of the ad valorem tax and establishes a redevelopment area. There are 14
redevelopment zones in the City and a large portion of this city is within
3 03/03/2011
redevelopment areas. The City of San Bernardino gets in excess of $45 million
a year in redevelopment money. That amount changes with the amount of taxes
collected and the value of property within the city. Of that $45 million, about
$26 million is dedicated to debt service to pay down loans that have already
been made in past years, some of which are decades old. The balance that is
left is a discretionary amount that funds projects.
Some of the projects for which we are paying the debt include the police station,
libraries, public places, bridges, and infrastructure. Mr. Marzullo went on to
explain that one of the biggest issues that they deal with is blighted housing.
Twenty percent of redevelopment money, by statute, is required to be spent on
low and moderate income housing. The Economic Development Agency has
been very active in trying to change neighborhoods that have been problematic.
He noted that redevelopment is not a panacea for all socio-economic problems;
however, it is a tool that we have at the local level to fix what ails a City.
In addition to using tax increment funds, the Agency also uses other tools such
as the Enterprise Zone, Community Development Block Grants and the Work
Force Investment Act. Mr. Marzullo explained that the Enterprise Zone is also
proposed to be eliminated; Congress has mandated a 10% reduction in
Community Development Block Grants; and, the Work Force Investment Act is
another program proposed to be eliminated. So, the four principal tools used to
change the city's physical characteristics are all on the chopping block.
Mr. Marzullo stated that if redevelopment is eliminated the impact on the City's
general fund will be a loss of $45 million a year at today's ad valorem tax rate
based on the value of property within the City.
Mr. Marzullo went on to explain the different options that they have considered
with regard to protecting our dollars and keeping them local. He stated that the
Agency started out in its early days as a non-profit corporation. It was a
501(c)3 corporation called the San Bernardino Economic Development
Corporation. The governing body was not the Council, but was a board
comprised of local business people appointed by the City Council. The
structure of that corporation is being utilized because a non-profit vehicle was
needed to do tax exempt financing and that corporation is called The Sustainable
Communities Reinvestment Partnership (SCRIP). The members of the SCRIP
were asked to resign subject to actions taken at this meeting and the name of the
corporation would be changed back to the San Bernardino Economic
Development Corporation.
Mr. Marzullo noted that at the last meeting of the Mayor and Council there
were some concerns expressed about a non-profit corporation being run by a
group of citizens and those concerns have been taken into consideration.
4 03/03/2011
Consequently, they have come up with an alternative solution. He noted that if
the proposed plan is approved, they will take it to court and have it tested as a
validation action to validate the contract that there is a legitimate, long-standing
contract and that the proposed structure can be used.
Mr. Marzullo read portions of the Legislative Advocate's Office and Senate
Local Government Committee's proposed language that in essence states that if
the State enacts their proposal, the Mayor and Council/Community
Development Commission will not be able to go forward with the solution being
suggested by Mr. Marzullo. The Legislative Advocate's Office and Senate
Local Government Committee's proposed language says, in part,
"...notwithstanding this part, commencing on the effective date no agency shall
incur new or expanded existing monetary legal obligations except as provided in
this pan. All provisions of this part shall take effect and be operative on the
effective date of the Act adding this part". Mr. Marzullo also read an excerpt
from section two that states: "They may also not enter into contracts with, or
incur obligations or make commitments to any entity whether governmental,
tribal, or private, or any individual or groups, or individuals, for any purposes
including, but not limited to, loan agreements, pass through agreements,
regulatory agreements, service contracts, leases, etc.... "
Mayor Morris thanked Mr. Marzullo for the historical look at the ad valorem
tax and how it is distributed and how the economic development corporations
keep dollars local for local projects that help to rebuild cities. He asked legal
counsel Timothy Sabo for comments and a general walk-through of the
resolutions that are under consideration.
RES. CDC/2011-8 - Resolution of the Community Development Commission
of the City of San Bernardino approving the appointment of certain
members to the San Bernardino Economic Development Corporation.
(2A)
Mr. Sabo stated that the first resolution appoints three of the commission
members to serve on the non-profit corporation. He noted that a copy of the
By-laws are included in the backup for informational purposes only. Mr. Sabo
stated that the most immediate prior Board of the non-profit met and voted to
modify the By-laws as they are provided in the backup. Council member Kelley
asked who were the members of the Board and Mr. Sabo responded that
Messrs. Emil Marzullo, Brian Turnbull, and Jim Morris served on that Board.
Mr. Sabo continued with an explanation of the remaining resolutions.
5 03/03/2011
RES. CDC/2011-9 - Resolution of the Community Development Commission
of the City of San Bernardino approving a Certain Project Funding
Agreement by and between the Redevelopment Agency of the City of San
Bernardino ("Agency") and the San Bernardino Economic Development
Corporation, Inc., relating to the $525,000,000 principal amount for the
Redevelopment Project Areas - Capital Improvement Projects. (211)
Mr. Sabo explained that this resolution is really the agreement that is the
substance of the action proposed. He indicated that an extensive amount of
work has been put into the exhibits to identify the projects that came from both
the Redevelopment Agency's administration plan, which is done every five
years and is updated regularly, plus the City's CIP Program. He noted that staff
worked with the Public Works Director and City staff to develop a
comprehensive list that is broken out by ward. Also attached to this resolution is
an exhibit that lists ongoing contractual obligations; i.e., bonded indebtedness
where bonds are issued to public investors and private indebtedness which is in
a form of owner participation agreements, reimbursement agreements,
disposition development agreements and those are carried as debt.
RES. CDC/2011-10 - Resolution of the Community Development
Commission of the City of San Bernardino authorizing (1) that Certain
Loan Agreement in connection with the issuance of the Redevelopment
Agency of the San Bernardino Promissory Note Series 2011 (City
Redevelopment Activities and Public Works Projects), and (2) that Loan
Agreement in connection with the issuance of the San Bernardino
Promissory Note Series 2011 and the forms of legal documents related
thereto. (2C)
Mr. Sabo explained that this resolution is the loan agreement that matches the
public improvement list so that we now have a document that we have
$525,000,000 of projects. He indicated that some of the projects may become
something else; they may be funded by a Federal grant, may be done by a
developer, may be done by other sources, but they have identified all of the
projects so that we have an expectation.
RES. CDC/2011-11 - Resolution of the Community Development
Commission of the City of San Bernardino approving a Certain Housing
Capitalization Funding Agreement (Sub -Recipient Agreement) by and
between the Redevelopment Agency of the City of San Bernardino
("Agency") and Affordable Housing Solutions, Inc., a California non-profit
corporation ("AHS"), Inc., relating to the financing of certain housing
programs and activities. (2D)
6 03/03/2011
Mr. Sabo explained that this resolution is very similar to the second resolution
(213) and it deals with the housing component. He explained that for the last
couple of years a lot of the housing programs have been operating through the
Affordable Housing Solutions because they are acquiring and disposing of
foreclosed homes through the NSP Program. This agreement quantifies housing
programs that have an origin in some already approved document and then
projecting forward for the next 30 years what would be the cost of some of these
ongoing programs; i.e., the down payment assistance, rehabilitation,
beautification of homes, and other types of activity.
RES. 2011-47 - Resolution of the Mayor and Common Council of the City
of San Bernardino approving and authorizing a Certain Reimbursement
and Project Implementation Agreement by and between the City of San
Bernardino and the San Bernardino Economic Development Corporation,
Inc., authorizing the form of certain legal documents related thereto and
authorizing and directing their preparation. (2E)
Mr. Sabo explained that he thought it would be very beneficial to have a
separate City obligation with a non-profit corporation only for the CIP projects
so that this is not just an agency issue. This is a reimbursement agreement
whereby the non-profit will agree to undertake the City CIP Project to the extent
that if they do not or cannot, there would be a reimbursement back to the City.
It's another way to insure that the CIP projects will be done.
City Attorney Penman stated that he and Mr. Sabo met for quite some time and
he and Sr. Asst. City Attorney Easland have also spoken with the Mayor. He
indicated that he declined to sign off on Resolution 2E due to a number of legal
issues that are uncertain; however, the validation action is a way to resolve
those legal issues. He commented that if the validation action comes out in our
favor, it gives us some additional insulation from a challenge by the State. Mr.
Penman recommended that the following language be added to the motion on
2E: "subject to legal review and approval by the City Attorney's Office and the
outcome of the validation action ".
City Clerk Clark read the title of Resolution 2E into the record.
Council member/Commissioner Shorett made a motion, seconded by Council
member/Commissioner Marquez, to add the following verbiage to Resolution
2E: subject to legal review and approval by the City Attorney's Office and the
outcome of the validation action. The motion carried with Kelly and
McCammack voting "no."
Discussion ensued concerning the validation action. Mr. Sabo indicated it
would probably take three to four weeks to get the validation action filed, do all
7 03/03/2011
the research, and prepare the documents; and it would probably have a final
judgment the latter part of this year.
Council member/Commissioner Shorett made a motion, seconded by Council
member/Commissioner Marquez, to approve Resolutions 2A, 213, 2C, 21), and
2E. The vote was taken following discussion.
Council member/Commissioner Kelley stated that he strongly opposed the
attempt by Governor Brown to take San Bernardino's redevelopment dollars. In
order to prevent Sacramento's money grab, he supports the City Council taking
action to protect our city funds; however, he stated that he is very concerned
that the non-profit idea being discussed lacks the necessary accountability to
protect city taxpayers from financial abuse. Mr. Kelley stated that he would
support the creation of a non-profit to handle City redevelopment funds if, and
only if, the non -profit's board consisted of all seven City Council members to
insure that the residents of each ward have an equal voice in the expenditure and
use of City redevelopment funds and also provide the public the level of
accountability required by the taxpayers.
Mayor/Chairman Morris asked Mr. Sabo to explain why there is a need to
create a separate legal entity with a distinctive separate board from the seven
council persons who also act as the EDA Board.
Mr. Sabo indicated that his concern is that just as those cities that are trying to
do this between the City Council and they are wearing the same hat as the
Redevelopment Agency Board members, again you have the transparency that
you are one and the same. He stated that their goal was to set up a very legal
structure and there are still going to be administrative procedures, policies, as
far as how monies will be spent, the accountability, reporting, what type of
approvals might still be required by the Commission or the City Council. Mr.
Sabo believes it's best to leave the framework in place; that there are still
administrative policies and procedures that can be adopted and other limitations
that can be imposed once this action has been taken.
City Attorney Penman stated that it is a real challenge to form a non-profit
corporation that is sufficiently separate from the City so as to survive the
argument that it is sort of our alter ego. Mr. Penman stated that he agreed with
the Mayor that the proposed actions give us more insulation than just changing
hats and having the exact people on the board.
Mayor Morris explained that the construct of the board is a six member board of
directors that consists of three citizen electeds; a member of the school board
who is elected and is a resident of the City; a member of the Chamber of
Commerce Board of Directors, who although not elected is a local citizen living
8 03/03/2011
locally and has a business background; and, a County Supervisor who has
general oversight by way of jurisdiction of our City.
Council Member/Commissioner McCammack stated that since Mr. Shorett's
motion includes items with which she must abstain from, she was going to
abstain on the entire motion. Mrs. McCammack left the room.
Mr. Penman stated for the record that Mrs. McCammack informed him that
after reviewing Exhibit A projects, there are a number in the Uptown
Redevelopment Project Area that she would have to abstain from because she
owns property in the Uptown Redevelopment Project Area. Also, Omnitrans is
a client of hers and they are part of the construction of a TOD Center and
parking for the sbX bus.
Council Member/Commissioner Kelley made a substitute motion that the new
Board include representatives from the wards that do not have an elected
representative. The motion died for lack of a second.
Public Comments:
Warner Hodgdon, San Bernardino, CA;
Kathy Mallon, San Bernardino, CA;
Robert Jenkins, San Bernardino, CA;
Amelia Sanchez Lopez, San Bernardino, CA;
Rita Arias, San Bernardino, CA;
John Valdivia, San Bernardino, CA.
City Clerk Clark read the titles of each resolution and requested that the motion
to approve resolutions 2A through 2E include waiving further reading of the
resolutions. The maker of the motion and the seconder of the motion agreed to
include waiving further reading of the resolutions.
Council member/Commissioner Brinker stated that one of the projects listed on
page seven of Exhibit A is in the Third Ward, it is the construction of the
railway grade separation on Hunts Lane, south of Hospitality Lane, and that
project is within 500 feet of his house so he was not sure if he should recuse
himself on that particular item. Legal Counsel Sabo recommended that he
abstain on that item.
Council member/Commissioner Brinker made a motion, seconded by Council
member/Commissioner Kelley, to delete project construction of railway grade
separation on Hunts Lane, south of Hospitality Lane, from the list of projects
listed for Resolution 2E. The motion carried with McCammack abstaining.
9 03/03/2011
The original motion made by Council member/Commissioner Shorett, seconded
by Council member/Commissioner Marquez, to approve Resolutions 2A, 2B,
2C, 2D, and 2E (as amended), carried and Mayor and Common Council
Resolution No. 2011-47 and Community Development Commission
Resolution Nos. CDC/2011-8, CDC/2011-9, CDC/2011-10 and CDC/2011-11
were adopted with Kelley voting "no" and McCammack abstaining.
Council member/Commissioner Shorett made a motion, seconded by Council
member/Commissioner Marquez, to add to Exhibit A of Resolution 2E, the
project construction of railway grade separation on Hunts Lane, south of
Hospitality Lane. The motion failed by the following vote: Ayes: Marquez,
Shorett, Johnson. Nays: Kelley. Abstentions: Brinker, McCammack.
3. Adjournment
At 6:58 p.m., the meeting was adjourned. The next joint regular meeting of the
Mayor and Common Council/Community Development Commission is
scheduled for Monday, March 7, 2011.
RACHEL G. CLARK, CMC
City Clerk
10 03/03/2011