2002 04 16 RDA Minutes LA QUINTA REDEVELOPMENT AGENCY
MINUTES
APRIL 16, 2002
A regular meeting of the La Quinta Redevelopment Agency was called to order by
Chairperson Henderson.
PRESENT: Board Members Adolph, Pe~a, Perkins, Sniff, Chairperson Henderson
ABSENT: None
PUBLIC COMMENT - None
CLOSED SESSION
1. Conference with Agency's real property negotiator, Mark Weiss, pursuant to
Government Code Section 54956.8 concerning potential terms and conditions
of acquisition and/or disposition of real property generally located on the west
side of Jefferson Street, south of Avenue 52 (APNs 770-200-009 through -
010; 770-260-017; 772-150-001 through -005; 772-290-001 through -007;
772-290-009 through -013; 772-310-001 through -007; and 772-310-009
through -013). Property Owner/Negotiator: KSL Land Holdings, Inc./Chevis
Hosea.
2. Conference with Agency's real property negotiator, Mark Weiss, pursuant to
Government Code Section 54956.8 concerning potential terms and conditions
of acquisition and/or disposition of real property located at 50-777 Santa Rosa
Plaza. Property Owner/Negotiator: Danny Brown.
The Agency recessed to Closed Session to and until the hour of 3:00 pm.
3:00 P.M.
PUBLIC COMMENT - None
The Agency convened in joint session with the City Council to take up Business Item
No. I at this time.
Redevelopment Agency Minutes 2 April 16, 2002
BUSINESS SESSION
1. CONSIDERATION OF AN OPTION AGREEMENT BY AND BETWEEN THE
LA QUINTA REDEVELOPMENT AGENCY AND KSL LAND HOLDINGS, INC.,
PERTAINING TO THE PURCHASE OF 525 ACRES OF PROPERTY KNOWN AS
"THE RANCH" AND GENERALLY BOUNDED BY THE CORAL REEF
MOUNTAINS, AVENUE 52, JEFFERSON STREET, AND AVENUE 54; AND
ADOPTION OF A RESOLUTION MAKING FINDINGS PURSUANT TO HEALTH
AND SAFETY CODE SECTION 33445 AND RELATED ADDITIONAL
AGREEMENT RELATING TO EQUAL OPPORTUNITIES.
Frank Spevacek, of Rosenow Spevacek Group, presented the background and
purpose of the agreements and explained the specified funds can only be used
for activities related to redevelopment.
Assistant City Manager Weiss reviewed language modifications proposed by
staff as follows: 1 ) in the Purchase Agreement on Page 60 - specifically itemize
certain tasks (improvements to south side of Avenue 52; pro-rata share of
traffic signal at Avenue 52 and Cetrina (when warranted); and continued
acceptance of off-site drainage) that will become the Agency's responsibility
once the property is acquired; 2) in the Temporary Right-of-Way Agreement on
Pages 182-183 - allow for a six-month extension to relocate the maintenance
facility, provided KSL pays a one-time $5,000 fee for the extension, also
language requiring KSL to make a good faith effort to accelerate removal of the
maintenance facility; 3) in the Agreement Containing Covenants Affecting Real
Property on Page 138 and in the Additional Agreement on Page 213 - restrict
to ownership of the hotel, the clause that provides for the covenant restrictions
to go away if the hotel is sold, as opposed to future operations of the site; 3) in
the Additional Agreement on Page 211 - delete "residential uses" under Recitals
(D) and on Page 212 (Section 1.1) - delete "...that is/are not available to the
general public..."
Agency Counsel Jenson also recommended the following additions and/or
modifications: 1 ) approval of the Option Agreement should be subject to minor
clarifications or corrections approved by the Executive Director and the Agency
Counsel; 2) under Section 2 of the resolution on Page 10 - include approval of
the Additional Agreement; 3) under Section 26 of the Option Agreement on
Page 26 - language to conform to the language in the Purchase Agreement that
provides for KSL to entertain backup offers on the property during the extension
period; and 4) under the Purchase Agreement on Page 55 - delete the last
sentence in Section 3.3.6, and on Page 62 in the first sentence, change 5
business days to 10 business days. As for the six-month extension allowance,
she advised KSL is required to use all reasonably, feasible commercial efforts to
Redevelopment Agency Minutes 3 April 16, 2002
relocate their facilities and the extension is subject to termination should the
City feel that KSL is not pursuing it. Additionally, the extension will cease 10
days after KSL is able to secure the permits offsite.
In response to Board Member Perkins, Mr. Spevacek confirmed the agreement
provides for 250 hotel rooms and 300 condo/hotel rooms that have a maximum
of 500 keys. A two-bedroom condo with two keys is considered one unit.
In response to Board Member Adolph, Mr. Weiss stated it appears KSL is open
to the concept of dedicating the acreage above the toe of the slope as open
space. That issue is not part of this agreement and should not have any impact
on the purchase price.
Robert Tyler, 44-215 Villeta Drive, stated he was appalled to find out how
much work has been done on this purchase consideration without any public
announcement or hearing. He voiced concern that some may have the
perception that this is a sweetheart deal for KSL, and stated he found it
interesting that the per-acre price is above the mid point of the value range. He
also felt it's interesting and inconsistent that the City is willing to accept the
seller's use restrictions on the property when only a few weeks ago it felt
different about Wal-Mart setting use restrictions on their existing building. He
questioned how Council could rationalize not having a competitive bid process
on this $42.5 million item, yet feel it's necessary for a $25,000 item discussed
earlier, and why only a $5,000 penalty is imposed on KSL if they fail to move
their facility on time, when the City will be penalized $212,000 every month the
escrow hasn't closed. He also questioned why this has been handled in such
a closed-door manner without any public awareness and wonders how the
public will feel when they read about it in the newspaper tomorrow.
Chairperson Henderson noted property negotiations are always done in closed
session, and that this item was made public over a week ago.
Board Member Pe~a stated the City has been contacted by a number of people
regarding this matter, with some having negative comments until the facts were
learned. He noted the color of money (type of funds) used for this is different
from General Fund monies.
Ms. Jenson advised the proposed Option Agreement only gives the Agency the
right to complete the due diligence and move forward. A joint public hearing
will be held May 15, 2002, to consider the environmental documents before the
Agency determines whether or not they want to proceed with the purchase.
Redevelopr~,ent Agency Minutes 4 April 16, 2002
Board Member Sniff commented that the City has looked at multiple pieces of
property to maximize the use of its bonding capacity and has looked for the best
location to maximize income to the City. He felt this is a very positive business
transaction that will benefit the City for many years.
Board Member Adolph stated he was assured by staff that everything will be
completed by July 2nd and that additional monthly fees will not be necessary.
He supports the purchase of what he feels is the last piece of prime property in
the City and has talked to Marriott representatives who are interested in having
a resort hotel on a golf course.
RESOLUTION NO. RA. 2002-06
A RESOLUTION OF THE LA QUINTA REDEVELOPMENT AGENCY OF
LA QUINTA, CALIFORNIA, MAKING CERTAIN FINDINGS PURSUANT TO
HEALTH AND SAFETY CODE SECTION 33445(a) AND AUTHORIZING THE
EXECUTION OF AN OPTION AGREEMENT (KSL LAND HOLDINGS)
It was moved by Board Members Pe~a/Sniff to adopt Resolution No.
RA 2002-06 with amended language (as discussed) and subject to minor
clarifications or corrections approved by the Executive Director and Agency
Counsel. Motion carried unanimously.
The Agency concurred to take up Business Item No. 3 at this time.
3. CONSIDERATION OF CLOSING AGREEMENT OF FINAL DETERMINATION
COVERING SPECIFIC MATTERS BETWEEN THE LA QUINTA REDEVELOPMENT
AGENCY, U.S. BANK, AND COMMISSIONER OF INTERNAL REVENUE.
There were no changes to the staff report as submitted and on file in the City
Clerk's Office.
Bond Counsel Bill Marticorena advised of the following changes to the
agreement: 1) Page 1, Paragraph F - replace "without any fault or culpability
on the part of the Issuer" with "in violation of the terms and conditions of the
escrow agreement"; 2) Page 2, Paragraph 9(a) delete the underscored
language (butnot the Escrow Agent); and 3) Paragraph 9(b) - reinsert the strike-
out language (or an agent of the Issued.
MOTION - It was moved by Board Members Pe~a/Sniff to approve the Closing
Agreement, as amended, on Final Determination Covering Specific Matters
Redevelopment Agency Minutes 5 April 16, 2002
between the La Quinta Redevelopment Agency, U.S. Bank, and Commissioner
of Internal Revenue.
In response to Council Member Sniff, Mr. Marticorena explained the amendment
clarifies that the bank acted in violation by failing to make the guaranteed bond
escrow investments. Due to the bank's error, the Agency earned too much
money on its investment in violation of the tax laws and that money now goes
to the Internal Revenue Service (IRS). In exchange, the IRS is absolving all
parties from any liability related to the transaction.
Motion carried unanimously.
2. CONSIDERATION OF A REQUEST BY BUILDING HORIZONS FOR AN
AFFORDABLE HOUSING AGREEMENT FOR A 9TM YEAR OF FUNDING BY AND
BETWEEN THE REDEVELOPMENT AGENCY AND BUILDING HORIZONS.
Community Development Director Herman presented the staff report and
advised of a correction on Page 23 under IV(A)(1) changing "30 years" to "45
years."
MOTION - It was moved by Board Members Sniff/Adolph to approve the
Affordable Housing Agreement, as amended (changing 30 years to 45 years on
Page 23), with Building Horizons and authorize the Chairperson to sign the
necessary documents and appropriate $210,000 from Redevelopment Project
Area No. 1 Low and Moderate Income Housing Fund. Motion carried
unanimously.
4. CONSIDERATION OF REVISIONS TO LA QUINTA'S AFFORDABLE HOUSING
PROGRAM.
Frank Spevacek, of Rosenow Spevacek Group, presented the staff report.
In response to Board Member Adolph, Mr. Spevacek advised the asset limitation
includes cash, interest, dividend income, annuities, inheritances, and cash gifts
but not personal belongings.
Board Member Sniff asked how the assets are verified, to which Mr. Spevacek
responded tax returns and credit reports, in addition to the loan application. He
· - - stated, although assets fluctuate over a period of time, ongoing asset or income
checks are not done.
Redevelopment Agency Minutes 6 April 16, 2002
Board Member Pe~a asked if qualified homebuyers whose income increases in
a few years, can sell their home back into the affordable housing program.
Mr. Spevacek stated under the resale restrictions the buyer is restricted from
selling the unit for more than what is affordable and if they do, any appreciation
in the unit must be shared with the Agency.
Chairperson Henderson commented on the complications involved with AB 637
but noted the Agency has to make the adjustments. She felt the $50,000 cap
is reasonable.
MOTION - It was moved by Board Members Sniff/Adolph approve the revisions
to the Agency's existing Affordable Housing Programs resulting from the
adoption of AB 637, and the proposed policies to clarify the Agency's
Affordable Housing Loan Programs, and appropriate $50,000 for Project Area
No. 1 Non-Allocated Reserve Account. Motion carried unanimously.
CONFIRMATION OF AGENDA - Confirmed
APPROVAL OF MINUTES
MOTION - It was moved by Board Members Pe~a/Adolph to approve the Minutes of
March 22, 2002, as submitted. Motion carried unanimously.
MOTION - It was moved by Board Members Sniff/Adolph to approve the Minutes of
April 2, 2002, as submitted. Motion carried unanimously.
CONSENT CALENDAR
1. APPROVAL OF DEMAND REGISTER DATED APRIL 16, 2002
2. TREASURER'S REPORT FOR THE PERIOD ENDING FEBRUARY 28, 2002.
3. REVENUE & EXPENDITURES REPORT FOR THE PERIOD ENDING FEBRUARY
28, 2002, AND INVESTMENT SUMMARY FOR THE PERIOD ENDING MARCH
31, 2002
Redevelopment Agency Minutes 7 April 1 6, 2002
4. APPROVAL OF PLANS, SPECIFICATIONS, AND ENGINEER'S ESTIMATE OF
PROBABLE CONSTRUCTION COST AND AUTHORIZATION TO ADVERTISE FOR
BIDS FOR THE WASHINGTON STREET/EISENHOWER DRIVE REHABILITATION
PROJECT AND ADOPTION OF A RESOLUTION MAKING CERTAIN FINDINGS
PURSUANT TO HEALTH AND SAFETY CODE SECTION 33445(a).
(RESOLUTION NO. RA 2002-07)
MOTION - It was moved by Board Members Sniff/Adolph to approve the
Consent Calendar as recommended. Motion carried unanimously.
STUDY SESSION - None
DEPARTMENT REPORTS - None
CHAIR AND BOARD MEMBERS' ITEMS - None
PUBLIC HEARINGS - None
The Agency recessed to Closed Session as delineated on Page 1. ·
The Agency meeting reconvened with no decisions being made in Closed Session
which require reporting pursuant to Section §4957.1 of the Government Code (Brown
Act).
ADJOURNMENT
There being no further business the meeting was adjourned.
Respectfully submitted,
JUNE S. GREEK, Agency Secretary
La Quinta Redevelopment Agency