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HomeMy WebLinkAboutFEBRUARY 5,1991 I I 33:0023 CITY COUNCIL PROCEEDINGS ARE TAPE RECORDED AND ON FILE IN THE OFFICE OF THE CITY CLERK ROLL CALL AGENCY FINANCES (Status Report) O~/()-~lJ r';'t'JliU''l/ M I NUT E S CITY COUNCIL OF THE CITY OF ARCADIA and the ARCADIA REDEVELOPMENT AGENCY ARA STUDY SESSION ADJOURNED REGULAR MEETING February 5, 1991 The City Council and the Arcadia Redevelopment Agency met in an ARA Study Session and Adjourned Regular Meeting Tuesday, February 5, 1991 at 6:30 p.m. in the Conference Room of the City Hall Council Chambers, and convened as the Arcadia Redevelopment Agency. PRESENT: Agency Members Ciraulo, Fasching, Gilb, Harbicht and Young ABSENT: None At the request of Agency Members, staff prepared a report (January 30, 1991) summarizing the Agency's current and projected general financial position. The Assistant City Manager for Economic Development guided the Agency through the summary with a brief explanation of each category as follows: AGENCY DEBT (As of June 30, 1991) The Agency debt was listed in two components; the 1989, 25 year bond issue at $3,725,000 plus interest and $6,910,111 in loans from the City. The total Agency debt (including FY 1990-91 interest on the bonds) is $10,759,984. The interest rate on the bonds varies from month to month. At this date the rate is at 8.187%, which is the prevailing rate established by the State Local Agency Investment Fund. The City Treasurer commented the interest rate on City loans to the Agency is expected to drop to under 7%, possibly by the end of March 1991. AGENCY REVENUES 1) Tax Increment - The summary indicated actual Agency revenues from tax increment from 1986 to 1990; and the proj ected revenue for FY 1991 at $1,620,000. Also other projected tax increment revenue into 1996, all totaling $17,311,523 in actual and projected revenue. Staff noted that 20% of the total tax increment will eventually go into a Housing Set Aside for Low-Moderate Income Housing Fund. The $3,460,305 estimate is staff's best guess at this time of funds owed to this Housing Fund in 1996. 2) Estimated Land Sale Proceeds - Four Redevelopment project land sales were estimated to arrive at the 1991 sale proceeds total of $6,145,000; a City parcel sold to Keith Brown Construction - $165,000; Kiewit-East to Emkay or the Chandler Group - $1,680,000; Southwest Corner site (Huntington & Second Avenue) to ArconlSchaefer Brothers - $1,200,000, possibly in September 1991; and sale of the Northwest Corner site to a prospective developer - $3,100,000, possibly in December 1991. Staff agreed that the sale of the Northwest Corner site may slip over into 1992. Member Fasching suggested that the 1 2/5/91 33:0024 Northwest Corner site could be divided up into parcels which could possibly return a higher revenue to the City instead of selling the site as one entity. Staff stated several reasons why this would not be a good idea and could limit potential development by creating parcels each with setback requirements; dividing the land would lower density. Further the Agency could be left with a remnant parcel which would be difficult to market. It is better, staff believes, to market the site as a package; better control is achieved and possibly a higher price. 3) Miscellaneous Future Revenues Estimate FY 1991 - $70,000 in earnings from interestlrentslAgency v. Bloodgood case. 4) FY 1990-91 Kiewit Pavrnents - $930,000 for FY 1991. 5) Loans from Citv to Agencv - The Agency borrowed $1,000,000 I from the City August 1990 and another $1,200,000 in December 1990 to pay for the AT&SF Railroad property purchase. The total estimated revenues to be received $6,665,000 (sale of the SW & NW Corner sites not included in this total figure; nor $600,000 in carryover funds). The $600,000 added to the estimated revenue total minus $6,870,000 estimated proj ect expenditures for FY 1990-91 would balance out to a projected balance sheet figure of approximately $400,000 to the good, according to staff. AMORTIZATION (PAYOFF) SCHEDULE OF AGENCY DEBT TO CITY Staff reported the payoff schedule assumes that there will be proceeds from land sales such as the sale of the Southwest Corner site in June 1991, and if tax increment is realized, $1,500,000 can be paid to the City in September 1991. Further, if land sale proceeds are generated from the sale of the Northwest Corner site in December 1991, $3,500,000 could be paid to the City at that time. Staff estimates the entire Agency debt of $8,000,000 to the City should be paid off by December 1993. This schedule of payments, according to staff, is fairly consistent with staff estimates of two years ago. Moreover, the actual monies the Agency will owe to the City by December 1993 will be about $750,000 rather than $1,000,000 as shown on the Payoff Schedule. 20% HOUSING SET ASIDE FOR LOW-MODERATE INCOME HOUSING Staff explained the Agency now has a deficit of $1,286,000 which is owed to the 20% Set Aside Housing Fund. In July 1996 staff estimates the Agency will owe $3,462,305 of tax increment monies to the Set Aside Fund. After July 1996 the Agency will be required to pay 20% of annual tax increment to the Housing Fund annually. Staff noted that two years ago the Agency adopted a financing plan that said, "Given the amount of money we are going to have, our best guess is that we can probably devote 25%, not 20%, of our annual tax increment to the Fund. The additional 5% will be the Agency's contribution to make up this deficit of $3.5 million". It is not known at this ti,ne if this can be actually accomplished by 1996. In response to Member Harbicht, staff replied, the Arcadia Redevelopment Agency, under the Agency's plan, will come to an ~nd June 30, 2026. A brief discussion ensued in connection wi th the cycle of properties bought and resold; expenses; estimated revenues generated; the overlap of projects; what is and is not actual income and expenses, excluding land which is Pllrchased and resold. The explanation by staff in reply to the Agency' 5 questions of, "when to we catch up", or "are we falling behind? Also, what are the expenses, and what is paid in interest each year?" Staff explained the Agency pays the bond holders $325,000 in principal and interest per year. Loans from the City of $6,000,000 accrue interest at 8% per year or $500,000. Further, the Payoff Schedule indicates if the Agency does not do anything other than finish out the I 2 2/5/91 I MANDATORY WATER CONSER- VATION PROG. 0[['70- &0 I 33:0025 projects; pay the debts; the Agency in 1993 will essentially have one basic debt of $325,000 a year for bond service and staff ... the Agency will have paid off all the City debt and interest and will be generating approximately $2,000,000 a year in income for a net of approximately $1,300,000, according to staff. Further, at that point, the debt would be reduced to approximately $3.2 million. If the Agency then decided to pay-off the bond service debt, it could be done in 1995 or 1996, with a penalty. Member Harbicht commented at the conclusion of this discussion that it is almost unheard of for a Redevelopment Agency to be as debt free as Arcadia is for the size of projects that are being done. At 6:50 p. m. the Arcadia Redevelopment Agency ADJOURNED and RECONVENED as the City Council. Addi tional information concerning the Water Conservation Plan, Agenda Item 9b Regular Meeting, was distributed by staff. The City Manager explained that a few sentences in the Water Conservation Ordinance No. 1930 were changed for clarification purposes. The billing procedure for water user violations was clarified to help residents understand the requirements of the ordinance. Council also received the two page letter that will be mailed to all water users entitled, "Mandatory Water Conservation Plan" to inform the public of the new program. This letter will cover Phase I of the program which lists the prohibi ted use of water, and Phase II which is the 10% mandatory reduction. The user would be billed for the entire amount of water units used; any units used over the allotment would then be billed at twice the rate. A discussion ensued of the base period used to compute the allotment of units permitted. Staff advised that this is based on average usage over a three year period - 1987-88, 1988-89 and 1989-90, ending June 30, 1990. Moreover the average is also computed for each billing period of which there are six. The base units allotted for each billing period will fluctuate; a greater base allotment will be given for summer months; less for winter months. Staff noted that one unit is equal to 750 gallons of water. The water bills will indicate current usage and the base allotment for the next billing period also. The water billing procedure was explained in detail, also the violation charges. The program, staff noted, will go into effect at the next billing cycle after February 5. Press releases were also distributed to Council for review and comment. The releases also list the prohibited uses of water under Phase I and Phase II of the ordinance. The press releases inform water customers that they will be required to reduce water use by 10% for the base period amount. Penalties for violations of the ordinance are outlined in the press releases. Revenues generated by the penalties will be used to offset penalties imposed on the City by the Metropolitan Water District and for operational expenses related to water conservation efforts including public instruction. Procedures are included in the ordinance for the customer to request the Water Division to review their penalty charge andlor base allotment. Staff informed Council that the formula for the base year is the same base year used by the Metropolitan Water District to give the City its allotment- 1989-90. This is part of the reason the Water Division is using 1989-90 water use in the three year averaging formula. The MWD assigns the allotment that the City can purchase. It was generally agreed that a 10% use reduction is reasonable and should not create a hardship for any user within the City. 3 2/5/91 33:0026 Council examined the City notice to violators, "Please Use Water Wisely". This notice will be given to water customers based upon receiving information of a possible violation. Councilmember Gilb suggested the revised form contain instruction to residents to turn off their automatic sprinklers immediately when it rains. Staff noted that the duplicate of this form will be kept on file for future reference. Councilmember Harbicht suggested that the form also contain a check-off line stating "Watering gardens too often or for too long a period of time". Examples of surcharge penalties (Phase II only) for residential water users was distributed to Council for their review. It was noted in the discussion that the penalty surcharge at the low end for the 1st violation would be 2 x the rate over the base allotment charges. The high end for I the 3rd violation at 4 x the rate over the base allotment. The penalties in some cases for the surcharge could be more than the total of the base bill. Staff explained the penalty computation in detail. The City Manager commented that the desired response of the penalty surcharge was to make it high enough to get the person's attention and result in a correction of the water usage. But not so high that people would think the City was just trying to generate revenue from this program. Councilmember Fasching commented that consideration should be given to businesses or residents who must hose off their cemented areas for health reasons. Certain chemicals that get on cement can become hazardous over a period of time. He cited his own business as an example. Staff noted that as the program progresses adjustments will be made as these issues come to their attention. The City Attorney added that within the ordinance there is a general exception in certain instances where the public health and safety is involved. The situation would be verified and an option exercised. The ordinance can be amended when necessary. , . Mayor Young reported that some cities have citizen appeals committees or commissions. She noted that the City's plan is to have employees serve as members of the Appeals Board. The City Manager said he supported a City employee board, which would be better suited to reflect the intent of the Council . .. staff is totally oriented toward a majority direction of the City Council. Council may not get this with a citizen appointed board. Also there is a need for a timely response, added Councilmember Harbicht ... the ordinance calls for a 10 day decision. The City Attorney added that another rationale would be the technicalities involved. Inhouse expertise is needed to really adjudicate the appeals and to obtain a quick response. Councilmember Fasching questioned why would an employee board be any more empowered or in a position to listen to appeals that were denied by the Water Department than a board of qualified citizens. The City Attorney responded that in context with an urgency ordinance that is designed for a very specific police power purpose as conservation, an employee board is the most expeditious way to really meet the intent of the ordinance. Further, a lay board might be more fair, but less efficient. Councilmember Fasching said perhaps staff people who reside in the City and are concerned residents could serve on the Board. Staff informed him that the City does not have any employees that live in, the City. Mayor' Young also liked the idea of a citizen board which would ,be more equitable to the citizens. After further discussion, Council generally agreed that an employee Appeals Board be formed. If this does not work out well or Council is dissatisfied this can then be changed, the City Attorney added. . .. Further, .in any case the first step would be an office conference to resolve an issue; after that, I 4 2/5/91 I I CHAMBER MTG. (Antonovich, Speaker) FTHL.APT. ASSOC. (City Seal) PARKING PL. COMSN. (Mason Resignation) OIl..P-3tt CLOSED ^' 'S P SESSION ADJOURNMENT ATTEST: 33:0027 an appeal could be made to the Appeals Board if the matter is unresolved. The City Manager announced that the regular legislative meeting at the Chamber will be held at Howard Johnson's Hotel in Monrovia. Supervisor Mike Antonovich will be the guest speaker. The Foothill Apartment Association has requested permission to use the City Seal on the cover of their "Featuring Arcadia" publication. By majority consent Council denied this request. It was MOVED by Councilmember Gilb, seconded by Councilmember Ciraulo and CARRIED that the resignation of Bardella Mason from the Parking Place Commission be accepted with regrets. The City Manager requested a Closed Session before the Regular Meeting this date; also a Closed Session after the Regular Meeting. At 7:26 p. m. the City CouncillArcadia Redevelopment Agency ADJOURNED TO A CLOSED SESST,ON, RECONVENED AND ADJOURNED sine die at 7:40 p.m. ~-t~~~f7 Mary B Young, ayor 5 2/5/91