Oversight Board Meeting

MINUTES CITY OF MONTEREY OVERSIGHT BOARD MEETING Wednesday, July 25, 2012 – 7-9 p.m. COUNCIL CHAMBER, FEW MEMORIAL HALL OF RECORDS MONTEREY, CALIFORNIA Oversight Board Members Present : Chip Rerig, Mitchel Winick, Harvey Kuffner, Chuck Della Sala, Michael Adamson, Dave Potter, Harvey Kuffner, Stephen Ma Absent: None City Staff Present: Finance Director Don Rhoads, Housing and Property Manager Rick Marvin, City Attorney Christine Davi, and Secretary to Board Maria Buell. CALL TO ORDER Chair Rerig called the meeting to order at 7:00 PM. APPROVAL OF MINUTES 1. Chair Rerig requested one minor revision to the Minutes to reflect that, “Board directed Chair to create an Ad Hoc committee and bring back top candidate for Board to review.” On a motion by Member Potter and seconded by Member Della Sala, the Minutes of the June 27, 2012 meeting were approved by the following vote: A DOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY SUCCESSOR AGENCY this 25th day of July, 2012, by the following vote: AYES: 5 MEMBERS: Rerig, Winick, Della Sala, Adamson, Potter NOES: 0 MEMBERS: None ABSENT: 0 MEMBERS: None ABSTAIN: 2 MEMBERS: Kuffner, Ma PUBLIC APPEARANCE 2. Approval of Third Recognized Obligation Payment Schedule - January to June 2013. Staff Presentation/Board Member Questions Finance Director Rhoads presented the staff report and reviewed the ROPS line-by-line and answered Board members’ questions. Board Comments: Mr. Rhoads said the Oversight Board is reviewing this item earlier than anticipated. He said that since the last Oversight Board meeting, the State legislature adopted a new amendment pushing the timeline. One change is the submittal of the 3d ROPS to Department of Finance by September 1, 2012, This item could 1 have been reviewed at the August meeting given that there are very few changes; however, Staff did not want to risk being assessed a $10K/per day late fine if not received by DOF by September 1st. Mr. Rhoads reviewed the 3d ROPS line by line and advised the Oversight Board that the only change is to the Reimbursement Agreement. In the Schedule, the Oversight Board did NOT approve this item because of the status of the law. The administrative costs approved by State in ROPS 1 and 2. Mr. Rhoads said that Line Items 3-4 he recommends leaving as an enforceable obligation; Line 5- $2M for replacement of Low income housing. OHH units which were sold and those monies were set aside for the replacement of those units. These funds are needed and under the law and are considered an obligation which must be left on ROPS. The last time State reviewed this item, they disagreed. However, Staff’s interpretation is based on a letter from the DOF dated July 12, 2012, “…continue to work diligently with SA… we are no longer accepting revised ROPS or request to reconsider denied items nor making revisions to existing request. Any and all revised ROPS submitted to Finance are … heard by request. Requests … will be addressed in our Jan- June 2013 ROPSA review.” Mr. Rhoads stated that DOF will have 5 days to review and provide an answer. If City is turned down again, then a meet and confer process would be available. Mr. Rhoads recommends that it be kept on ROPS. Lastly, there is Line 6 an additional $1.34 for deferred payments. This item was also denied by DOF and it was not appealed and therefore is not reflected on the 3d ROPS. Board Comments: Board member Kuffner asked what happens if the $250,000 administrative expenses are not completely used during the first six (6) months. Mr. Rhoads responded that the budgeted $250,000 was for a 12 month period and that Staff has not closed books yet on the first half; however, those monies would roll-over to the next year and at some point they would be disbursed out. At the present time, there is no clear guidance on that issue but believes that DOF will provide it to Staff. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair Rerig closed public comment. MOTION: On a motion by member Potter, seconded by Member Kuffner, the Board unanimously moved to approve the Third Recognized Obligation Payment Schedule - January to June 2013. PASSED AND ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY SUCCESSOR AGENCY this 25th day of July, 2012, by the following vote: AYES: 7 MEMBERS: Rerig, Winick, Della Sala, Adamson, Potter, Kuffner, Ma NOES: 0 MEMBERS: None ABSENT: 0 MEMBERS: None ABSTAIN: 0 MEMBERS: None 3. Confirm Transfer of Former Redevelopment Agency Housing Funds in the Amount of $1,783,493 from Successor Agency to Successor Housing Agency Staff Presentation/Board Member Questions: Staff member Marvin said agenda title identified the transfer of $1.3 and the $3M RDA loan provided to the developer of the Monterey Hotel. He stated that enough notice was provided and he requests confirmation from the Board to authorize or confirm funds on ROPS 1-3 approved by Department of Finance: $1.3M to finish the Monterey hotel plus $500,000 for purposes of completing hotel. He stated that these are properly identified housing assets funds and they should be transferred to SHA. These funds were originally from the former RDA (Housing Trust); the Monterey Hotel project includes an affordable housing component and the Successor Housing Agency retains all the interests per Health and Safety Code section 34156 and therefore, should be transferred. 2 He further added that the out of $3M loan referenced in ROPS, $500,000 is in escrow with Rabobank and is the remainder of this loan. The Oversight Board must meet the August 1st deadline but the original $3M was not addressed earlier. Staff member Marvin stated that this is an asset and should any recovery of interest or payments come to the SHA it should be identified as such. He further stated that it was not identified in the title and that a Resolution was prepared and requests Oversight Board to proceed with transferring one or both. Board Comments: Member Della Sala asked if staff anticipated any challenges from the public. Staff member Marvin said he did not know but that all actions are published and that the Department of Finance reviews all Oversight Board actions and that they could be challenged by DOF or the public. Member Potter expressed concern about the way it was noticed. Staff member Marvin recognized this but he said less than $500,000 are remaining on ROPS which is the actual amount shown on the Third ROPS. He said that AB1484 has a process to add this to the list after submittal to DOF and that he could bring it back to OB in August. Board Chair Rerig asked more information about this process. Staff member Marvin stated that a 10-day public notice must be provided before the OB takes action and that he would need to provide a longer notice before bringing it to the Board. Member Kuffner asked if one of the terms of Monterey hotel, as a mixed and afford able low income and moderate houses project, are these rooms in question part of the motel; or, are they just separate condos. Staff member Marvin stated that the Monterey hotel is a mixed use project funded for the apartment component of the project only. The loan and additional monies needed to complete the project are only going to be supporting the housing asset. He further added that no funds for the commercial portion of the hotel rooms, retail, etc. were provided. The project has been split into 2 airspace portions: the condos and one hotel expansion; the other contains all 18 affordable apartments in one unit. The loan is tied to that air space unit. Member Ma asked if Rabobank’s part is strictly as Trustee of the project. Staff member Marvin said that they are the lender of the project because they provided a commercial loan and RDA provided a second loan. Member Ma asked if Board needs approval from Rabobank. Staff member Marvin said he did not think so as funds were released. City’s Finance department controlled the release of funds to that escrow and that Rabobank would have no authority for this approval. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair Rerig closed public comment. MOTION: On a motion by Board member Potter, seconded by Member Winick, the Board unanimously moved to Confirm Transfer of Former Redevelopment Agency Housing Funds in the Amount of $1,783,493 from Successor Agency to Successor Housing Agency. PASSED AND ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY SUCCESSOR AGENCY this 25th day of July, 2012, by the following vote: AYES: 7 MEMBERS: Rerig, Winick, Della Sala, Adamson, Potter, Kuffner, Ma NOES: 0 MEMBERS: None ABSENT: 0 MEMBERS: None ABSTAIN: 0 MEMBERS: None 3 4. Confirm Osio Plaza Mixed-Use Property at 351 Calle Principal, 330 and 350 Alvarado Street Should Remain Intact and Not Split into Affordable Housing and Non- Affordable Housing Components. Staff Presentation/Board Member Questions: Staff member Marvin presented a report to the Board and responded to Member comments/questions. Mr. Marvin said that this item is brought to Oversight Board as a result of some changes inaugurated with Adoption of AB1484. The impact of this trailer bill, the clarification of Dissolution Act, provides clarity on how to address mixed use buildings that contain affordable housing and commercial uses. Osio Plaza was partially funded with a RDA loan; located on RDA land; developed subject to loans and disposition development agreement and provides affordable units, retail and café. It is a mixed use building partially funded by Housing set aside funds and Housing Trust monies and has 30 units of affordable housing. Outside counsel advised to treat it as 100% affordable housing asset and transfer it to SHA. An Exit memo was provided as a summary of the RDA properties to SA. Staff recommends that it should remain intact; being used namely for housing; the entire project addresses the benefit to the community; the project would not have been built without the housing loan; the project meets goals of affordable housing in the area; this building meets goals of General plan $2.5 loan was given to them by the Housing Trust. Retaining intact as a housing asset maximizes the income flow (program income needed to assist future housing projects) – therein a benefit to community. Program income cannot be used for anything but affordable housing programs only. Mr. Marvin further stated that sharing revenue would be difficult and should the Oversight Board wish to share the revenue, then staff would have to come back in August with a recommendation for this process. He stated that all actions of Oversight Board need to be documented in a Resolution and that this is also subject to review of DOF (5 days) to either approve or deny. Board Comments: Member Ma asked if this project has a condo map and noted that to split it would be impossible. Staff member Marvin responded that AB1484 does indicate that OB could look into review sharing as a means to address this and that a division is not the only method of splitting. Member Winick asked if at the time this was originally developed as a project was there any expectation that revenue would be distributed in a manner that would incorporate these taxing entities or that it would go back to a housing fund? Staff member Marvin responded that it would be going back to the Housing fund and the rental income generated for it and loan principal and interest payments that are scheduled to pay in 2019 and 2020. Those sources of revenue are going to the Housing fund. Member Kuffner said that taking another point of view of splitting the property to commercial and non commercial, if this could be done, that if split caused monies to go to the county treasurer, then what would happen to those funds? Staff member Marvin said that if this was the desire of Board, that revenues generated by this property would be analyzed and separated; the net revenue comes from housing and then distributed to the County and other taxing entities; then the HACM may potentially lose those funds. He further added that they would not be going to the SHA nor program income. Member Adamson commented that the benefits of 30 units far outweighs any other need and makes a motion to retain those units as 100% affordable. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair Rerig closed public comment. MOTION: On a motion by Board member Adamson, seconded by Member Potter, the Board unanimously moved to Confirm Osio Plaza Mixed-Use Property at 351 Calle Principal, 330 and 350 Alvarado Street Should Remain Intact and Not Split into Affordable Housing and Non-Affordable Housing Components. 4 PASSED AND ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY SUCCESSOR AGENCY this 25th day of July, 2012, by the following vote: AYES: 7 MEMBERS: Rerig, Winick, Della Sala, Adamson, Potter, Kuffner, Ma NOES: 0 MEMBERS: None ABSENT: 0 MEMBERS: None ABSTAIN: 0 MEMBERS: None PUBLIC COMMENTS No member of the public provided input. Public Comments closed. Richard Glenn, a candidate for the position of legal counsel to the Oversight Board introduced himself. MEMBER COMMENTS Board member, Adamson thanked Staff member Marvin for taking time to provide background about RDA. Chair Rerig stated that Ms. Davi volunteered to field individual questions in the Dissolution Act and RDA for any member that wants to meet individually. ADJOURNMENT There being no further business, the meeting adjourned at 7:55 PM. Respectfully Submitted, Approved, _______________________ _______________________ Maria Buell Chip Rerig Clerk, Oversight Board Chair, Oversight Board The next regular meeting of the Oversight Board is scheduled for August 22, 2012 at 7:00 p.m. The remaining Oversight Board meetings are September 26, October 24 and November 28. All regularly scheduled meetings begin at 7 p.m at the City Council Chambers. There is no meeting for December due to holiday schedule. 5