SALINAS
REDEVELOPMENT AGENCY
MINUTES OF MEETING
AUGUST 16, 2005
The Agency met in closed session at 6:15
p.m. Council/Agency member
Sanchez announced that he has potential conflicts of interest on the closed
sessions relating to Brian Baughn v. City of Salinas and the
Berkley Inc. property negotiations, and on the Redevelopment Agency
consideration items relating to the land acquisition on 25 Lincoln Avenue, the
Berkley Inc. proposal, and the issuance of a request for proposals for
development in the 100 block of Main Street.
The City Council/Agency met in closed session pursuant to:
a. Government Code Section 54956.9(a), pending
litigation, Brian Baughn v. City of Salinas, et al v.
Monterey County, Superior Court, Case No. M74502
b. Government Code Section 54956.9,
Subdivisions(b)(1) and (3)(C) Conference with Legal Counsel – Anticipated
Litigation
c. Government Code Section 54956.9(a), pending
litigation, City of Salinas v. County of Monterey, et al,
Superior Court Case No. M72983 (Rancho San Juan).
d. GovernmentCode Section 54956.8,
conference with real property negotiator City Manager/Executive Director Dave
Mora, Redevelopment Director Alan Stumpf, and City Attorney/Agency Counsel
Vanessa Vallarta to discuss the price and terms of payment for the sale or
lease of property with Gerald Kehoe, Berkley Inc., for property located at 100
Main Street (proposed hotel site on west side of 100 Main Street).
e. Government Code Section 54956.9,
Subdivision(a) Conference With Legal Counsel – Existing Litigation, Brent
Sweeney v. City of Salinas, Workers’ Compensation Appeals Board Case
Nos.: SAL 0088803, SAL 008805, and SAL 0088804.
f. Government Code Section 54956.9,
Subdivision(a) Conference with Legal Counsel – Existing Litigation, Martin Babione v. City of
Salinas, Workers’ Compensation Appeals Board Case No.: SAL 0105887.
The Agency reconvened in regular session in the
Rotunda at 7:30 p.m..
Present:
Chairperson
Anna Caballero
Agency member Janet Barnes
Agency member Gloria De
La Rosa
Agency member Jyl Lutes
Agency member Maria Giuriato
Agency member Roberto Ocampo
Absent:
Agency member Sergio Sanchez
Also Present:
Agency Counsel Vanessa Vallarta
Secretary Ann Camel
Mayor/Chairperson Caballero announced for the record that
Councilmember Sanchez abstained on the closed session items relating to 1)Baughn
v. City of Salinas, 2) anticipated litigation, and 3) the Berkley Inc.
property negotiations. Councilmember
Sanchez is absent from the 7:30 p.m. session due to his announced conflicts of
interest on the Redevelopment Agency’s consideration items.
CONSENT
RESOLUTION
Upon motion by Agency member Lutes and second by Agency member De La
Rosa, the Consent Agenda was approved.
Ayes: Agency members Barnes, De
La Rosa, Giuriato, Lutes, Ocampo, and Chairperson Caballero. Absent:
Agency member Sanchez.
1.
Approved minutes of July 19, 2005.
1. Land Acquisition/Loan
Agreement between
the Salinas Redevelopment Agency and First Community Housing Inc., in the
amount of $910,000 from the Central City Low/Moderate Income fund for
acquisition of the parcel at 25 Lincoln Avenue (corner of Lincoln Avenue and
Market Street).
Don Reynolds, Redevelopment Project Manager,
stated that the proposal would provide affordable housing.
Chairperson Caballero noted that some realignment of the street may be required if
the intermodal transportation center is developed.
AGENCY ACTION
Upon motion by Agency member
Barnes and second by Agency member Giuriato,
the Agency voted to adopt RESOLUTION 829 authorizing the Chairperson to
execute the Land Acquisition/Loan Agreement with First Community Housing, Inc.,
in the amount of $910,000 from the Central City Low/Moderate Income fund. Ayes:
Ayes: Agency members Barnes, De
La Rosa, Giuriato, Lutes, Ocampo, and Chairperson Caballero. Abstain:
Agency member Sanchez.
Consider recommendation to reject proposal by
Berkley Inc. to enter into an Owner Participation and Disposition and
Development Agreement for a Hotel/Condominium/Retail, Project; terminate all
consideration of Berkley’s purchase or development of properties owned by the
Agency and the City of Salinas; and terminate the processing of the EIR for the
project.
Alan Stumpf, Redevelopment Director,
presented his report. Mr. Stumpf stated
that this is the second time staff is recommending termination of consideration
of Berkley’s development in the 100 block of Main Street. On April 19, the Agency provided additional
time for the developer to meet his commitments. The developer has met some of the requirements, but some remain
unfulfilled. These commitments have
been the subject of discussions with the developer. Staff understands that escrow is now scheduled to close on August
30. The development team was to be in
place by March 31. There has been no
confirmation on this item to date, although staff understands there have been
discussions with parties. Staff was
provided financial statements in June.
However, there have been concerns that significant assets of the Berkley
Group have not been verified as assets of that company nor of the entity’s
status. Berkley Group Inc. had been
registered as a California corporation, which has since been suspended.
This lack of progress has stymied negotiations on the Disposition and
Development Agreement (DDA). The
developer had committed to providing details on the modified project by the end
of July, which have not been provided.
The developer appears to be ignoring staff’s requests. The transparency of a private company that
is doing business with a public entity is needed.
Steve Lazar, First Blackhawk
Financial, Walnut Creek, stated that Ray Olmscheid has been working with the
City of Bakersfield on a project for five years. The developer has kept him apprised of the issues during the
three years of their relationship to allow him to communicate with the
contractor and lenders. Lenders are
only now beginning to look at Salinas as a viable market. Bank of the West likes the project and has
met with Mr. Kehoe on four occasions.
Barry Swenson has indicated a strong interest in being the developer and
making a personal investment in the project.
They have pretty much accepted that position. Mr. Olmscheid advises that Maya Cinemas has been in anticipation
of the proposed development for some time and they anxiously await it. The housing component is critical to their
synergy. Maya Cinemas would work with
the Berkley Group to have it become a reality.
The contract with the City is required to establish a budget and for the
bank to lend the funds.
Mr. Kehoe stated that the report is
biased. In the last fifteen weeks, the
project has gotten to the stage that it is a reality and can visualize the
opening of the ground and a project.
Salinas’ experience has been with smaller projects. They were approved in October 2002. They were held up because the Redevelopment
Agency wanted to approve the cinema first.
The City’s parking garage was first discussed in 2001, and the
Intermodal Center was projected for 2004.
In July 2002, the cinema was approved, and it opened three years later
in June 2005. The cinema is a simple,
two-story building.
Mr. Kehoe stated that the design
and engineering and architecture for a fourteen-story building takes much
longer than a parking garage or cinema.
They have dealt with the only seven architects in Northern California
who are qualified to perform the design.
The project with the Greyhound is $200 million, which requires
credibility. They have met with many
international banks. Any partner would
want to know whether the project is viable.
There have been three full-time executives since April 19 to deal with
contractors, designers, purchasing and materials, spending 2,400 hours in
total. He has traveled around the world
on three occasions to look at materials.
He has traveled to California on seven occasions and European executives
have traveled here. The project would
start March 2006 and they believe they can meet or beat that deadline subject
to talking to their partners at the end of August. They accept responsibility for six months of the delay.
Mayor/Chairperson Caballero stated
that the issue is that the City signed a deal with Berkley, Inc., and the
Agency has been unable to verify that it exists. Since it is taxpayer property, the Agency must be certain that
Berkley Inc. and any partners have the financial ability to complete the
project. Staff has done its due
diligence to track down information.
The issue is whether there is a legal corporation whose information they
can verify.
Mr. Kehoe stated that they indicated
they were a private family company and they provided audited statements through
2001 as requested at that time. The accounts
were returned to them because they were not to become part of the record. They can give them more information if it
does not become part of the public record.
The company’s registered in Ireland, and the Berkley Group has existed
since 1962 and is in excellent standing.
Every company has to submit tax returns. Taxes are significant, and they would not report sales that would
create tax liability. They could look
at records from the tax auditors if it does not become public record. It is normal to accept CPA audited accounts
and that is not a problem from their perspective.
Rick Phinney stated that the
City has been attempting to develop a project for fifteen or twenty years. They have had some problems, but Mr. Kehoe
has poured a great deal of his family money into the project.
Louis Alvarez, President of the
Oldtown Salinas Association, stated they do not take a position as to Mr.
Kehoe’s project. However, he stressed
the importance of the momentum gained in the downtown during the last few years
and that any new projects should be fast tracked.
Frank
Saunders stated that independent research is required.
Catherine Kobrinsky Evans, Oldtown
Salinas Association Board member and downtown business owner, stated that the
City’s requests have been simple and the lack of fulfillment does not evoke
confidence. She spoke in support of
finding another developer.
David Mora stated that the issue is
not with the October 2002 proposal. The
Agency has been extremely patient with the Berkley group. He asked why the October 2002 proposal did
not have some element of design and engineering in order to put together
costs. The Agency consistently has been
asking for specific identification of the development team members. A financial partner could have been brought
in since the project was brought to Council two and one half years ago. Given the scope of the project, there is no
way the project could be underway by March 2006. The draft EIR is not complete because commitments have not been
made in order to finalize the EIR.
There has been inadequate evidence during the last three or four
months. The project is complicated, but
the problem is with the lack of performance and the major outstanding issues.
Council/Agency member Lutes stated
that Berkley has not provided verifiable evidence of ownership of other
projects of comparable size and scope, or of legal entity existence and
financial capability. She is also
concerned with the representation that ground would be broken by March
2006. She is uncertain whether it is
the naiveté of a developer who is unaccustomed to California operations.
Council/Agency member Ocampo stated
that he is compelled to agree with staff due to lack of performance.
Council/Agency member De La Rosa
stated that the vision is not coming to fruition. They have a duty as public officials.
Council/Agency member Barnes
stated that this is not personal or about the project, but it is about the
developer performing. She had asked for
addresses and names of European hotels three years ago that she never
received. Mr. Kehoe could submit
anotherk proposal along with other responding to the request for proposal.
Council/Agency member Giuriato stated
that the Council needs to be accountable for public property. particularly in
light of the City’s financial situation.
There are hotels interested in locating in the downtown.
Mayor/Chairperson Caballero asked how
there could be a $100,000 investment in the Environmental Impact Report, and
then the information requested in April is not provided. There must be the financial resources to
finish the project once it is initiated.
An individual with contacts in Ireland was brought in but was unable to
verify the company exists. She believes
that the company exists but requires verifiable proof. There have been inconsistencies such as
other property being held by individuals instead of by the corporation. There has been too much time and energy on
the project to let it go. She hopes
what needs to be done will be done. But
she no longer can support negotiating exclusively with Mr. Kehoe. There was another proposal when this project
was accepted in 2002. Mr. Kehoe can
use this opportunity to do his due diligence.
Ms.
Vallarta noted for the record that no exclusive agreement is currently in
effect.
COUNCIL/AGENCY ACTION
Upon motion by Council/Agency
member Lutes and second by Council/Agency member Giuriato, the Council/Agency
voted to adopt RESOLUTION 830 rejecting the proposal by Berkley Inc. to enter
into an Owner Participation and Disposition and Development Agreement for a
Hotel/Condominium/Retail, Project; terminate all consideration of Berkley’s
purchase or development of properties owned by the Agency and the City of
Salinas; and terminate the processing of the EIR for the project. Ayes:
Council/Agency members Barnes, De La Rosa, Giuriato, Lutes, Ocampo, and
Mayor/Chairperson Caballero. Abstain: Council/Agency member Sanchez.
The City Council
recessed at 9:15 p.m..
Authorization For
The Issuance Of A Request For Proposals For A Hotel And/Or Mixed Use
Development On Agency Property In The 100 Block Of Main Street Within The
Central City Redevelopment Project Area
Alan Stumpf, Redevelopment Director,
presented his report. The RFP is for a
hotel with at least 100 rooms on the 1.6 acres. The proposals should have a downtown urban flavor that may
include retail and residential components.
Considerations include quality of team by experience, oriented toward
business/leisure; financial capability and work in public/private
environment. Proposals are due by
October 15, 2005 and it is anticipated that a new development team would be
selected by November 2005.
Catherine Kobrinsky Evans asked about the study in the 1990s
on the hotel feasibility and size. She
wondered if the company could be engaged to reassess the viability given the
establishment of Marriott’s since that time.
Frank Saunders expressed concern regarding the viability of
a hotel in the 100 block. He wondered
whether it should be a mandatory part of the project.
Mr. Mora stated
that staff could contact the consultant to determine the timeframe.
AGENCY ACTION
Upon motion by Agency
member Giuriato and second by Agency member Barnes, the Agency voted to adopt
RESOLUTION 828 authorizing the Executive Director to issue a Request for
Proposals and to carry out the process of selecting a development proposal for
a hotel and/or mixed use development on Agency property in the 100 Block of
Main Street. Ayes: Agency members Barnes, De La Rosa, Giuriato,
Lutes, Ocampo and Chairperson Caballero.
Abstain: Council/Agency member
Sanchez.
Adjournment
The meeting adjourned at 9:25 p.m..
APPROVED:
___________________________
Mayor
ATTEST:
_____________________________
City Clerk
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