Oversight Board Meeting

MINUTES OVERSIGHT BOARD MEETING Wednesday, September 26, 2012 – 7-9 p.m. COUNCIL CHAMBER, FEW MEMORIAL HALL OF RECORDS MONTEREY, CALIFORNIA Oversight Board Members Present: Chip Rerig, Harvey Kuffner, Chuck Della Sala, Michael Adamson, Dave Potter, Stephen Ma Absent: Mitchel Winick City Staff Present: Finance Director Don Rhoads, Housing and Property Manager Rick Marvin, Legal Counsel Richard Glenn, and Clerk to Board, Maria Buell. CALL TO ORDER Chair Rerig called the meeting to order at 7:00 PM. APPROVAL OF MINUTES 1. The Minutes of the August 22, 2012 meeting were approved by the following vote: ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY SUCCESSOR AGENCY this 26th day of September, 2012, by the following vote: AYES: 5 MEMBERS: Rerig, Della Sala, Adamson, Potter, Kuffner NOES: 0 MEMBERS: None ABSENT: 1 MEMBERS: Winick ABSTAIN: 1 MEMBERS: Ma PUBLIC APPEARANCE 2. Transfer of Former Redevelopment Agency (RDA) $3,000,000 Construction Loan Agreement, Promissory Note, Deed of Trust, Development Agreement and Regulatory Agreement between RDA and PRI, LLC from the Successor Agency to the Successor Housing Agency as a Housing Asset pursuant to Health and Safety Code Section 34176(a) Staff Presentation/Board Member Questions Staff member Marvin presented the staff report and requested confirmation of the $3 million loan being transferred to Successor Housing Agency (SHA) as a housing asset. He recommends that Board transfer the loan and thereby transfer housing assets. He indicated transfer will mean SHA has a right to receive payment on the loan and enforce the loan requirements. He indicated this loan was given for the development of 18 affordable units as part of a mixed use project in the Monterey Hotel and the transfer is allowed by Health and Safety code because the funds were 1 set-aside RDA funds dedicated to development of affordable housing for moderate and low income housing. Mr. Marvin advised the Board this is a late transfer of this asset because it was not included in the August 1st housing asset list sent to DOF. He indicated AB 1484 requires public notice for late transfers and that Notice of Public Meeting was published on September 15th. Mr. Marvin concluded that the transfer is proposed according to Health & Safety code procedures. He also indicated DOF had previously agreed that other assets related to the Monterey Hotel are SHA housing assets. Board Comments Member Kuffner asked if these 18 units have been “standing incomplete” for a while and asked Mr. Marvin what the future of this development is. Staff member Marvin said that the Successor Housing Agency & City Council, sometime in July, directed staff to keep the units as affordable. He stated that City staff is creating a strategy to complete an assessment of the condition of this construction and a detailed cost estimate completion. He indicated that the City is reviewing alternatives that include the City as developer. He stated the City’s objective is complete the apartments units as affordable units. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair Rerig closed public comment. Board Comments: Board member Della Sala asked what the process is in amending the documents sent earlier to the DOF. Staff Member Marvin said he did not know the specifics of the process, but that DOF will be notified that this asset list has been modified. DOF should then reply whether this was the correct process or if there is another format needed. Board member Kuffner asked why this item was not added before. Staff member Marvin said that AB 1484 makes it clear that this is a housing asset. However, he added that if it had been decided the apartments were not to be completed as affordable housing units, they would not have been placed on list. He advised that the decision to complete the units as affordable was made after the list was prepared and reviewed by the Oversight Board. Board Member Kuffner asked if Staff felt that this is an appropriate transfer. Mr. Marvin stated that it is a correct transfer. MOTION: On a motion by member Potter, seconded by Member Kuffner, the Board unanimously moved to approve the transfer of Former Redevelopment Agency (RDA) $3,000,000 Construction Loan Agreement, Promissory Note, Deed of Trust, Development Agreement and Regulatory Agreement between RDA and PRI, LLC from the Successor Agency to the Successor Housing Agency as a Housing Asset pursuant to Health and Safety Code Section 34176(a). ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY SUCCESSOR AGENCY this 26th day of September, 2012, by the following vote: AYES: 6 MEMBERS: Rerig, Della Sala, Adamson, Ma, Potter, Kuffner NOES: 0 MEMBERS: None ABSENT: 1 MEMBERS: Winick ABSTAIN: 0 MEMBERS: None 3. Receive Due Diligence Report and Solicit Public Staff Presentation/Board Member Questions 2 Finance Director Rhoads presented the staff report and said that the State is requesting that each Successor Agency (SA) conduct a Due Diligence Review to ensure that the transfers are made; and to try and determine if there are any amounts of unobligated Low and Moderate Income Housing funds due to the County. He indicated the purpose of tonight’s review is to give Board a report and to solicit public comment. Mr. Rhoads briefly described the Review report completed by the independent auditor. He indicated Independent Auditor said that the City had correctly transferred and accounted for funds and that a balance of $100,209 was identified as assets that could be disbursed to County. Mr. Rhoads advised the Board that they cannot take any action tonight other than accept public comment. He indicated that another meeting needs to be scheduled in order for Board to approve the Due Diligence Review. He indicated the meeting must occur before October 15th. Board Comments Board member Kuffner asked if the amount had to be remitted no later than July 12 per the letter by the Monterey County Auditor, Mr. Miller in which he stated that over $3M is owed. Finance Director Rhoads stated that AB1484 put a very stringent timeline and that by July 9 the County was alerted of the payment due on July 12th. He indicated the July 12th letter was in response to very tight and confusing time lines established in AB1484. He indicated the County of Monterey Controller had been reasonable in their approach and that the City is working as best as possible to meet all of the deadlines established in AB 1484. He indicated the state asked that Housing funds be reviewed first and the others later. He stated the reference $744,000 was related to housing only and the rest will be looked at later. Board member Kuffner asked what was the purpose of the September 19th letter to R.J. Ricciardi. Finance Director Rhoads said that this letter was his representation to the outside auditors that all the records were true and accurate, that this type of statement is common and that auditors want disclosures of this type from the agency that is responsible for managing the funds. Board member Ma asked if the amount of funds ultimately remitted to the County would then going to LEA’s as part of the distribution of monies for funding public education. Mr. Rhoads stated he understood school districts would get monies from this source and that whatever funds received would lessen the amount of funds coming from the State. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair Rerig closed public comment. Chair Rerig recommended Wednesday, October 10 at 5 p.m. as the date for the Special meeting and asked the Board to confirm this date at the end of tonight’s meeting. 4. Initial Report and Request for Direction on Long-Range Property Management Plan Staff Presentation/Board Member Questions Staff member Marvin presented the staff report and answered Board members’ questions. He stated that this was not a request for action, merely for information only. He indicated the purpose is to provide the Board an introduction to three (3) properties. He indicated the SA is required to prepare a Long Range Property Management Plan and no decisions by the Oversight Board were needed tonight. He indicated the staff report contains analysis of 3 properties with summaries and acquisition history. He indicated all 3 properties were acquired by the Urban Renewal Agency which predates the RDA. He indicated staff has initially concluded that these 3 properties need to be transferred to the City because of their government purpose use or their size and shape. Mr. Marvin suggested that appraisals might not be needed because there would not be a competitive 3 market for the parcels. He indicated that no value has been assigned to these properties at this time. Mr. Marvin briefly related the history of the properties as known today. He indicated there are some questions as to missing documents given the age of the files. He advised these 3 properties are still operated consistent with their initial purpose as described in the Custom House Redevelopment Area Plan. He concluded that staff is requesting direction on the need for appraisals and whether there is other information needed by the Board. He stated that at a future meeting, 2 additional properties presented; however, staff is still gathering additional research on them. Board Comments Board member Della Sala asked if State was asking for any appraisals. Staff member Marvin said that Section 34191.5 lists the long-range property management plan and the requirement is to provide the date of the acquisition of the property and the current value of the property. Chair Rerig asked if the taxing agencies would benefit from an appraisal by knowing the current value of the property. Staff member Marvin replied by posing the question of how would the value be established for these properties if they are providing public access. Board member Dela Salla said that if staff is not going to have an appraisal, then how is staff going to reach that estimate without it because it can’t be just any figure. Staff member Marvin said that he would be speaking to brokers in the community on this issue. He indicated that the safest position is to go out for an appraisal, but many questions would have to be addressed in defining the appraisal scope of work such as value based on fair market or the value of use. Board member Potter said that there is value in having an appraisal, but that if the retention is for government use only, then he would not want to require spending the money getting an appraisal for this land. Board member Kuffner agreed with Mr. Potter and said the Spanish plaza is approximately 18,000 square feet long and is not very large. He asked if these were properties as part of larger parcel or land nobody wanted. Staff member Marvin said that this triangle was initially part of 2 properties it also had some street right of way. The 3-story development goes back to the Custom House Redevelopment Area Plan, which looked at the overall parcel and its configuration in an area within the Plan and divided it into “smaller areas” and designated them by different standards. This was part of a larger area designed for 3 story buildings. Once roads dedication was made this was the left-over piece. This section remains in an area that would remain in a 3-story. Board member Della Sala said that if the overriding plan was “open” space, was this project in a potentially developable 3-story project. If this is possible, then the price would go up. Staff member Marvin said that more analysis would be needed, but that use of the property is quite limited because of size, shape and location. Board member Ma asked if the lots adjacent to Spanish Plaza are owed by the City. Staff member Marvin said that the Plazas are open areas by the waterfront and surrounded by buildings on two sides. The lots adjacent are owned by Portola Hotel and the City. Legal Counsel Glenn stated that because Monterey is a charter city, the zoning ordinance does not need to conform with the general plan. In general, the Board is faced with making a decision about getting an appraisal. He also commented that the staff report was well written nailing down the appropriate use. Board member Adamson said that Osio Plaza has a commercial value because of the closeness to the Theater. Board member Potter asked if in Staff’s opinion, the retention would fall into 4 government use. Staff responded that they did. Member Potter also pointed out circulation problems. Chair Rerig asked Board members if this information was adequate or if more information is needed to take a decision in these 3 assets. Board member Kuffner said the only issue is to resolve whether or not to get an appraisal on the Spanish plaza. He did not believe it would bring any value because of it is not a commercial purpose. Board member Della Sala said he did not need to hear more, unless Portola Plaza wanted to do an expansion. Board member Ma said he appreciated Staff’s work on this analysis and that if his determination is that this recommendation is best intended for government use, then there is no need for an appraisal because he does not see it as a compelling reason. Chair Rerig asked if Board’s general consensus was to go forward and that no appraisals were needed. Board member Kuffner said it was good to explore this issue. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair Rerig closed public comment. 5. Receive a Report on California State Department of Finance Determination on City of Monterey Housing Asset Transfer Form Staff Presentation/Board Member Questions Staff member Marvin presented the staff report and answered Board members’ questions. Mr. Marvin said that this report is intended to be brief. He indicated that DOF reviewed the list and the Board agreed with the some of the list of items as being transferable housing assets. DOF disagreed with 5 assets. He indicated staff is going through a Meet and Confer process to show why the disputed assets are housing assets. He indicated that staff anticipates that a meet and confer will be conducted in Sacramento. Staff is confident that these are housing assets and properly classified. He concluded the Board will be informed as information is made available to Staff. Board Comments Chair Rerig asked if the DOF does not accept the deed restricted housing, would they need to be sold as deed restricted units? Mr. Marvin responded in the affirmative. Public Comments: Chair Rerig opened discussion to members of public on this item. Having no additional requests to speak, Chair Rerig closed public comment. PUBLIC COMMENTS No member of the public provided input. Public Comments closed. MEMBER COMMENTS Board member Adamson shared that he serves on another Board and that they recently received $68,000. Board members Kuffner and Della Sala commented on Staff’s good job. Chair Rerig state that every Board member currently sits on a Board or Commission and asked if any member would benefit from a primer on the Brown Act presented by Legal Counsel. Board members replied that maybe individual members should contact Mr. Glenn directly requesting it. 5 Chair Rerig confirmed with Board members present the agreed upon date for the Special Meeting: Wednesday, October 10th at 5 p.m. Members agreed to that date and time. Chair Rerig requested Clerk to contact Mr. Winick and advise of Special meeting of October 10th. ADJOURNMENT There being no further business, the meeting adjourned at 8:07 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 October 24, 2012 at 7:00 p.m. The remaining Oversight Board meeting is 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. 6