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2003 01 07 CC Minutes LA QUINTA CITY COUNCIL MINUTES JANUARY 7, 2003 City Clerk, June Greek, declared the 2:00 p.m. Closed Session portion of the meeting adjourned to 3:00 p.m. due to lack of a quorum. An adjourned meeting of the La Quinta City Council was called to order at the hour of 3:00 p.m. by Mayor Adolph. PRESENT: Council Members Henderson, Osborne, Perkins, Sniff, Mayor Adolph ABSENT: None Mayor Adolph led the audience in the Pledge of Allegiance. PUBLIC COMMENT - None CONFIRMATION OF AGENDA City Manager Genovese advised "Joint" should be removed in the title for Public Hearing Item No. 4 because that item is not a joint public hearing. ANNOUNCEMENTS - None PRESENTATIONS - None WRITTEN CORRESPONDENCE - None APPROVAL OF MINUTES Council Member Henderson asked that a reference under League of California Cities on Page 8 be changed to reflect that the amount the City would lose is $1.4 million. MOTION - It was moved by Council Members Sniff/Henderson to approve the City Council Minutes of December 17, 2002, as corrected. Motion carried unanimously. City Council Minutes 2 January 7, 2003 CONSENT CALENDAR 1. APPROVAL OF DEMAND REGISTER DATED JANUARY 7, 2003. 2. ACCEPTANCE OF PROJECT NO. 2001-02, WASHINGTON STREET PAVEMENT REHABILITATION. 3. ACCEPTANCE OF MODIFICATIONS TO THE OASIS 111 ART PIECE. 4. APPROVAL OF TEMPORARY STREET CLOSURE FOR SPECIAL EVENT RIVERSIDE COUNTY SHERIFF. 5. APPROVAL OF A FINAL MAP FOR PARCEL MAP 30631, SAGEBRUSH ESTATES, CHOICE ENTERPRISE. 6. AUTHORIZATION FOR OVERNIGHT TRAVEL FOR THE COMMUNITY DEVELOPMENT DIRECTOR TO ATTEND THE AMERICAN PLANNING ASSOCIATION CONFERENCE IN DENVER, COLORADO, MARCH 29 TO APRIL 2, 2003. 7. AUTHORIZATION FOR OVERNIGHT TRAVEL FOR THE COMMUNITY DEVELOPMENT DIRECTOR, PLANNING MANAGER, AND PLANNING COMMISSIONERS TO ATTEND THE LEAGUE OF CALIFORNIA CITIES PLANNERS INSTITUTE TO BE HELD IN SAN DIEGO, CALIFORNIA, MARCH 20-22, 2003. 8. ADOPTION OF A RESOLUTION GRANTING CONDITIONAL APPROVAL OF A FINAL MAP AND SUBDIVISION IMPROVEMENT AGREEMENT FOR PARCEL MAP 30834, STONE CREEK RANCH, MADISON ESTATES, LLC. (RESOLUTION NO. 2003-001) MOTION - It was moved by Council Members Sniff/Henderson to approve the Consent Calendar as recommended and with Item No. 8 being approved by RESOLUTION NO. 2003-001 respectively. Motion carried unanimously. MINUTE ORDER NO. 2003-001. BUSINESS SESSION 1. CONSIDERATION OF DOG PARK LOCATIONS. Community Services Director Horvitz presented the staff report. City Council Minutes 3 January 7, 2003 In response to Council Member Sniff, Ms. Horvitz stated the recommended size for dog parks is one acre but there is no standard size. She added separation of dogs by size is usually determined by pet owners if two areas are provided. Council Member Sniff noted the proposed dog park sites may not be large enough. Council Member Perkins referenced the dog park in Palm Desert, which is separated in two sections with approximately 2/3 for dogs over 25 lbs. and 1/3 for dogs under 25 lbs. Ms. Horvitz stated the Palm Desert dog park is 1 Y2 acres and the two sections are divided by a fence and have separate entrances. Council Member Henderson stated she brought this issue up sometime ago because she felt the Avenida La Fonda location would make a good temporary dog park site. She commented on the number of dogs being allowed to run loose on the Civic Center Campus, and suggested a dog park on La Fonda, where dogs could run and "do their thing," might keep that from happening. She asked about the distance between the proposed dog site at the Fritz Burns Park and the new skateboarding park, to which Ms. Horvitz replied, "12 feet." Council Member Henderson commented on the potential conflict of uses and stated she prefers the Avenida La Fonda site. Council Member Perkins stated he was in favor of putting a temporary dog park at the Fritz Burns Park site. In response to Council Member Osborne, Ms. Horvitz stated there would be no difference in cost between a temporary or permanent dog park. The cost estimate for the Avenida La Fonda site is higher because the irrigation system would have to be modified to make it more "public-friendly" and more fencing would be required. Council Member Sniff stated he felt both sites are inadequate but favors the Fritz Burns Park site because it is less expensive and larger. He expects within a year that the City will need to move forward with a more adequate location. He voiced concern that a dog park near the Senior Center could create bad side effects, and asked if dogs would be allowed to be left unattended, to which Ms. Horvitz responded, "no." He noted with that in mind, having the dog park at the Fritz Burns Park would make restroom access easier for pet owners. City Council Minutes 4 January 7, 2003 Council Member Perkins stated his observation at the Palm Desert dog park has been that pet owners clean up after their dogs and do not leave them unattended. He added the dog park is doubled gated and open 24 hours a day. In response to Council Member Sniff, Ms. Horvitz stated she was not aware of any dog parks that have attendants. She stated some of the irrigation system at the Avenida La Fonda site is above ground. Mayor Adolph stated he has observed the Avenida La Fonda site already being used by some dog owners. He asked how aggressive behavior between dogs of different sizes is handled. Council Member Perkins responded that he has not observed that being a problem at the Palm Desert dog park. Council Member Adolph stated he supports moving forward with a temporary dog park at Fritz Burns Park and expects that we will learn by usage. Council Member Henderson stated she would support the Fritz Burn Park site even though she feels the Avenida La Fonda site is better. She noted dog obedience classes are held next door at the Senior Center. MOTION - It was moved by Council Members Sniff/Henderson to authorize staff to solicit bids for design/build services for a dog park at Fritz Burns Park and allocate design/construction funds of $30,000 from the Quimby Account. Motion carried unanimously. MINUTE ORDER NO, 2003-002. 2. CONSIDERATION OF AN AMENDMENT TO CHAPTER 11.96OFTHE LA QUINTA MUNICIPAL CODE TO ADD SECTION 11.96.020, SETTING FORTH REGULATIONS FOR THE USE OF SKATEBOARDING PARKS. Community Services Director Horvitz presented the staff report. Council Member Sniff asked how the age of responsible parties would be verified and how they could be held responsible. City Attorney Jenson advised the relief of liability is for those 14 years of age and above. She stated the restriction against skate park users under 14 without a responsible party present is to help stop gap the hole in the legislation. She noted totally restricting those under 14 from using the park would not likely be accepted by the public. City Council Minutes 5 January 7, 2003 In response to Council Member Sniff, Ms. Horvitz stated the Palm Desert skateboarding park has an attendant, and skaters are required to have an identification card and their parents must sign a waiver. In response to Council Member Sniff, City Manager Genovese commented that the City's insurance company recommends against having an attendant because if interaction between individuals occurs and someone gets hurt, a claim could be made against the City due to an attendant being available to monitor the activity. He noted the special legislation defining this as a hazard activity eliminates some of the liability. Ms. Jenson stated one of the conditions to the limitations on liability is that it applies to children 14 and above. Additionally, the immunity applies specifically to unattended skate parks with posted regulations. Mayor Adolph asked if the legislation has been tested in court, to which Ms. Jenson responded, "no." Ms. Jenson stated she is not concerned that the legislation might be overturned because the Legislature is entitled to mak8 a policy on governmental immunity. Council Member Sniff questioned how fines would be issued if no attendant is on duty, and suggested "one year" be changed to "a year" in relation to second and third offenses. Mr. Genovese noted the time period of one year is based on the first offense. Council Member Sniff stated he felt the fines are a little steep, and questioned how the fines would be collected and established with legal certainty. Mr. Genovese stated it would be handled like other infractions in the City, such as bicycling without a helmet or on the Civic Center Campus, if the infraction is observed. Council Member Henderson noted a number of ordinances have fines without an attendant in place to enforce the ordinance. She stated she was surprised to learn that the legislation does not cover skateboarders under 14 years of age. Ms. Horvitz advised there has been some discussion about lowering the age to 9 and under. Council Member Henderson remarked that she feels high fines are the only way to get parents to pay attention to the ordinance. City Council Minutes 6 January 7, 2003 Council Member Perkins concurred. Council Member Osborne voiced concern about not having supervision at the park, and asked how much it would cost. Ms. Horvitz responded the annual estimate for having an attendant on duty is $60,000, and the selling of identification cards is not sufficient to offset the cost. Council Member Osborne commented that he feels most parents provide protective gear but not all skaters use it. He supports the fine amounts but feels it will be a challenge to enforce if violators don't give accurate names and addresses. Ms. Horvitz advised one of the Sheriff deputies has been attending the meetings and is establishing a relationship with the skaters. She noted the skaters are also aware that the skateboarding equipment can be easily removed if the rules are not upheld. In response to Mayor Adolph, Ms. Horvitz stated the rules will be posted on several large signs. She noted the skaters suggested some of the rules. Ms. Jenson stated the "one year" reference in regards to violations comes from an existing Code section, and she feels it is clear that it is within a one-year period. MOTION - It was moved by Council Members Sniff/Henderson to take up Ordinance No. 380 by title and number only and waive further reading. Motion carried unanimously. ORDINANCE NO. 380 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, AMENDING CHAPTER 11.96 OF THE LA QUINTA MUNICIPAL CODE TO ADD SECTION 11.96.020 SETTING FORTH REGULATIONS FOR THE USE OF SKATEBOARDING PARK AREAS. It was moved by Council Members Sniff/Osborne to introduce Ordinance No. 380 on first reading. Motion carried by the following vote: AYES: Council Members Henderson, Osborne, Perkins, Sniff, Mayor Adolph NOES: None ABSENT: None ABSTAIN: None City Council Minutes 7 January 7, 2003 3. CONSIDERATION OF AN ART PIECE FOR OMRI AND BONI'S RESTAURANT. Community Services Director Horvitz presented the staff report. In response to Council Member Sniff, Roger Hopkins, the sculptor, reviewed the art design, which he feels is appropriate given the natural stone in the valley and the location of the Arts Foundation across the street. He advised steel pins secure the upright stones in a concrete base and the overhead stone in the upright stones. He stated provisions will be made for the entire structure to rotate during an earthquake. He added the engineer is confident that the top stone will be secure. Council Member Henderson stated she feels the art piece will compliment the site. In response to Mayor Adolph, Mr. Hopkins stated the half-radius area in the landscape plan will be a decomposed granite path to the art piece, and a polished stone bench will be off to the side. In response to Council Member Osborne, Ms. Horvitz confirmed the art piece would be funded from the Art in Public Places Fund. In response to Council Member Sniff, Mr. Hopkins stated the stones would come from San Marcos, California. He added he would use local stones if the type of stones desired were available in this area. MOTION - It was moved by Council Members Henderson/Sniff to approve the art piece "Desert Dolmen" (at Omri & Boni's Restaurant), authorize the expenditure of $35,500 from the Art in Public Places Fund, and direct staff to prepare an art purchase agreement for City Council consideration. Motion carried unanimously. MINUTE ORDER NO. 2003-003. 4. CONSIDERATION OF CITY COUNCIL COMMITTEE ASSIGNMENTS FOR THE YEAR 2003. There were no changes to the staff report as submitted and on file in the City Clerk's Office. Council proceeded to discuss and concur on the various committee assignments with the following results: City Council Minutes 8 January 7, 2003 CVAG Executive Committee: Member: Don Adolph, Mayor Alternate: Stanley Sniff, Mayor Pro Tem CVAG Environmental and Energy Resources Committee: Member: Stanley Sniff, Mayor Pro Tem Alternate: Lee Osborne, Council Member CVAG Human and Community Resources Committee: Member: Lee Osborne, Council Member Alternate: Ron Perkins, Council Member CVAG Public Safety Committee: Member: Ron Perkins, Council Member Alternate: Terry Henderson, Council Member CVAG Transportation Committee: Member: Ron Perkins, Council Member Alternate: Terry Henderson, Council Member California Joint Powers Insurance Authority: Member: Lee Osborne, Council Member Chamber of Commerce Workshop/Information Exchange Committee: Member: Ron Perkins, Council Member (will finish rotation of three meetings) Civic Center Art Purchase Committee: To be appointed at a later date. C. V. Economic Partnership (CVEP): Member: Don Adolph, Mayor Alternate: Lee Osborne, Council Member C. V. Mosquito and Vector Control District: Member: Ron Perkins, Council Member (four-year term expires June 30, 2004) C. V, Mountains Conservancy: Member: Stanley Sniff, Mayor Pro Tem Alternate: Terry Henderson, Council Member Desert Resorts Regional Airport Authority: Member: Lee Osborne, Council Member Alternate: Terry Henderson, Council Member City Council Minutes 9 January 7, 2003 League of California Cities - Riverside Division: Member: Terry Henderson, Council Member Alternate: Don Adolph, Council Member Riverside County Desert Library Zone Advisory Board: Member: Terry Henderson, Council Member Alternate: Don Adolph, Mayor Palm Springs Desert Resorts Convention & Visitor's Authority: Member: Terry Henderson, Council Member Alternate: Don Adolph, Mayor Riverside County Transportation Commission (RCTC): Member: Terry Henderson, Council Member Alternate: Don Adolph, Mayor SunLine Transit Agency: Member: Don Adolph, Mayor Alternate: Lee Osborne, Council Member Desert Sands Unified School District Ad hoc Committee: Members: Stanley Sniff, Mayor Pro Tem Lee Osborne, Council Member MOTION - It was moved by Council Members Sniff/Henderson to approve the City Council Committee appointments, in the aforementioned list, for one year, effective immediately. Motion carried unanimously. MINUTE ORDER NO. 2003-004. STUDY SESSION - None REPORTS AND INFORMATIONAL ITEMS CVAG Transportation Committee -- Council Member Henderson stated the Committee is united in its efforts to maintain funding for four projects dropped from STIP funding, including the Jefferson Street Phase II Improvements. CVAG Executive Committee -- Council Member Sniff reported interviews for the Executive Director position have concluded and the position has been offered to John Wohlmuth. He suggested the new Council representative on the Executive Committee City Council Minutes 10 January 7, 2003 encourage the Committee to be more formal in its actions and to have a formal contract with the new Executive Director. Chamber of Commerce Workshop/Information Exchange Committee -- Council Member Sniff asked if there has been any discussion in their meetings about establishing a visitor's center. He understood the Point Happy development and new Wal-Mart center were discussed as possible locations. Council Member Henderson questioned why the Chamber would assume the City would want the Chamber to run a visitor's center if one is established. Assistant City Manager Weiss stated the issue has come up but nothing formal has been submitted. C. V. Mosquito and Vector Control District -- Council Member Perkins announced the District will be holding an open house in addition to the conference at the Hilton Hotel in Palm Springs. League of California Cities-Riverside Division -- Council Member Henderson reported La Quinta will be hosting the general meeting in May at the Civic Center. Palm Springs Desert Resorts Convention & Visitor's Authority -- Council Member Henderson reported the Authority is considering a "branding" study for the purpose of finding a certain identification that all members can embrace and use to draw tourists to the community. -)(- 'K- -)(- * -X- -X- -X- -X- -X- -~ -~ All other reports were noted and filed. Mayor Adolph presented a Certification of Appointment to Council Member Osborne for his recent appointment to the City Council. DEPARTMENT REPORTS - None MAYOR AND COUNCIL MEMBERS' ITEMS - None City Council Minutes 11 January 7, 2003 Council recessed to Redevelopment Agency meeting. Council reconvened and recessed to and until 7:00 p.m. 7:00 P.M. PUBLIC COMMENT Kimberly Blunt, 51-855 Avenida Alvarado, asked for Council's assistance in settling a dispute with the Building Department so she can obtain final approval on her new home and move in. She stated the building plans were approved by the City in December 2001 and construction began in May 2002. She has since been told by the Building Department that an entry column is in the sideyard setback area and must be removed. The Building Department has admitted that the error was not noticed during plan check. Mayor Adolph advised the matter will be referred to staff with a report back to Council. Gloria Engle, 46-270 Roadrunner Lane, spoke in support of Mrs. Blunt's request for assistance in resolving this matter. PRESENTATIONS - None PUBLIC HEARINGS 1. PUBLIC HEARING ON THE ADOPTION OF A RESOLUTION TO VACATE A PORTION OF CALLE TAMPICO NEAR AVENIDA NAVARRO. The Mayor declared the PUBLIC HEARING OPEN at 7:03 p.m. Public Works Director Jonasson presented the staff report. In response to Council Member Henderson, Mr. Jonasson confirmed this is similar to previous street vacations in the Cove where street improvements have occurred. There being no other requests to speak, the Mayor declared the PUBLIC HEARING CLOSED at 7:07 p.m. City Council Minutes 12 January 7, 2003 RESOLUTION NO. 2003-002 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, VACATING A PORTION OF CALLE TAMPICO NEAR AVENIDA NAVARRO (RW-V 2002-012). It was moved by Council Members Henderson/Sniff to adopt Resolution No. 2003-002 as submitted. Motion carried unanimously. 2. PUBLIC HEARING ON THE ADOPTION OF A RESOLUTION TO VACATE A PORTION OF MADISON STREET BETWEEN AVENUE 58 AND 60 RESERVING ALL THE NECESSARY EASEMENTS FOR THE EXISTING UTILITIES. The Mayor declared the PUBLIC HEARING OPEN at 7:10 p.m. Public Works Director Jonasson presented the staff report. Council Member Henderson asked if the other property owners are in agreement with this portion of the street being vacated, to which Mr. Jonasson responded, . "yes." In response to Council Member Osborne, Mr. Jonasson confirmed the developer will pay the cost of making the change, including the maintenance of the wider median. Mayor Adolph asked if the existing asphalt would be removed once the realignment is complete. Mr. Jonasson referred the question to the developer. Pat O'Doud, 79-205 Nueva Drive, stated the abandoned roadway will be removed and the area will be incorporated into the development. In response'to Council Member Perkins, Mr. O'Doud confirmed the median on Madison Street will be set back from Avenues 58 and 60 to accommodate turns in all directions. Brian Decoster, 80-900 Calle Conchita, owner of one of the eight lots along this portion of Madison Street, stated he has questions regarding water drainage, use of the vacated land, and how it may affect the entrance to his street. City Council Minutes 13 January 7, 2003 There being no further requests to speak, the Mayor declared the PUBLIC HEARING CLOSED at 7:23 p.m. In response to Council Member Henderson, Mr. O'Doud stated he looks forward to working with Mr. Decoster and is confident their interests are similar and that they will come up with an arrangement that meets everyone's needs. He noted the final map and other project plans will be coming back to Council for approval. RESOLUTION NO. 2003-003 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, VACATING PORTIONS OF MADISON STREET BETWEEN AVENUE 58 AND AVENUE 60, RESERVING ALL THE NECESSARY EASEMENTS FOR EXISTING UTILITIES (RW-V 2002-011). It was moved by Council Members Sniff/Henderson to adopt Resolution No. 2003-003 as submitted. Motion carried unanimously. Council recessed to the Redevelopment Agency meeting. Council reconvened into Joint Session with the Redevelopment Agency. 3. JOINT PUBLIC HEARING FOR CONSIDERATION OF: 1) AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA PLAZA, LLC., PURSUANT TO WHICH THE AGENCY WOULD PURCHASE FROM SANTA ROSA PLAZA LLC. 6.81 ACRES OF PROPERTY (THE HOTEL PARCEL); 2) AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE AGENCY AND SANTA ROSA LLC., PURSUANT TO WHICH THE AGENCY WOULD PURCHASE FROM SANTA ROSA PLAZA LLC. 2.4 ACRES OF PROPERTY (COMMERCIAL PARCELS); AND 3) A DISPOSITION AND DEVELOPMENT AGREEMENT BY AND BETWEEN THE AGENCY AND BISON HOTEL GROUP, LLC., (THE DEVELOPER) PURSUANT TO WHICH THE AGENCY WOULD SELL THE HOTEL PARCEL AND THE COMMERCIAL PARCELS TO THE DEVELOPER TO FACILITATE THE DEVELOPMENT OF AN EMBASSY SUITES HOTEL IN THE VILLAGE OF LA QUINTA. The Mayor declared the PUBLIC HEARING OPEN at 7:27 p.m. Community Development Director Herman presented the staff report. City Council Minutes 14 January 7, 2003 Consultant Frank Spevacek reviewed three proposed changes to the DDA. The first change modifies Section 605 (Agency Option to Acquire Plans) to give the Agency the unilateral right to secure the plans for the hotel after the ¢1.6 million of Phase I assistance is provided and provided the developer defaults on the agreement. The second change modifies the Schedule of Performance to require the developer to secure building permits, securities, and performance bonds for Phase I no later than 60 days after the City approves building permits and no later than one year after the DDA is executed. This would place an end date on the time frame that the process to start the transaction would occur, and if it takes longer than one year to accomplish it, the DDA would either expire or the Agency and developer would agree to extend the time frame. The third change adds additional language to the DDA and Purchase Agreement designating that the $1.6 million will go toward clearing the title first for the hotel parcel and any funds left over would be used for construction of the hotel In response to Council Member Perkins, Mr. Spevacek confirmed the funds proposed to be used for the loan are unappropriated tax increment revenue from Redevelopment Project Area No. 1. Council Member Sniff questioned where these last changes came from and why. He also asked about acquiring the hotel plans. Mr. Spevacek stated the developer brought up the issue of the time frame on the building permits, and staff agreed. As for the option to purchase the hotel plans, the developer noted the original wording would leave him no alternative but to surrender the plans if for whatever reason the agreement was terminated and the Agency did not fund the $1.6 million. The third change was added by staff as a way to tighten control on the funds, to which the developer agreed. Mr. Herman confirmed the hotel plans have been submitted to the Building Department for plan check. Mr. Spevacek explained by securing rights to obtain the hotel plans, if the developer defaults on the agreement after it is funded, the Agency would be able to obtain the construction plans at no charge and select another developer to use the plans to build an Embassy Suites on the site, should that be the Agency's desire. Council Member Sniff noted the plans would be of negligible value if the Agency decided not to use them. In response to Council Member Osborne, Mr. Spevacek stated prior to the developer receiving funding, the Agency has to approve the construction City Council Minutes 15 January 7, 2003 lending, and receive final review and approval of the construction budget and performance bonds. He added the developer has several construction loan options but cannot get a loan commitment until the lender sees the final construction plans and bid estimates. City Attorney Jenson advised the completion performance bond provides the Agency with another entity to sue should there be a default. It does not guarantee the hotel will be built but does guarantee that the contractor will perform if the developer complies with his agreement. In response to Council Member Sniff, Mr. Spevacek stated the total construction value is anticipated to be approximately $28 million and the construction loan would fund $15-$18 million, with the balance being a combination of the Agency funding and developer equity. He deferred to the developer for specifics on those figures. In response to Mayor Adolph, Mr. Spevacek stated recent legislation regarding prevailing wages provides that a transaction structured as a market-rate loan, is not viewed directly as assisting construction of the project. If a challenge is made to the project regarding prevailing wages, payment of such wages would be the developer's obligation and not the Agency. He stated the opinion of the developer's legal counsel at this point is that the current structure would not require payment of prevailing wages. Potential impacts should that happen, are increased construction costs and it could bring into question the viability of financing in terms of the whole package. Mayor Adolph asked what the Agency's liability would be, in order to recoup the redevelopment funds invested, if the project stops in the middle of construction due to financial problems. Mr. Spevacek stated at that point, the Agency would have a total of $1.6 million invested and would be in second position to the construction loan. The lender would determine whether or not to complete the project or to foreclose on the Agency's position and eliminate it from the project. The Agency would then seek legal remedies against the developer. He noted the $1.6 million would be in a subordinate position to the construction loan, and once the construction lending amount exceeds the Agency's investment amount, then the lender is in control in terms of disposition of the project. Mayor Adolph stated his major concern is that the City's investment be protected and that the City doesn't end up with a vacant building. He noted the agreement provides for repayment of the loan over a five-year period from City Council Minutes 16 January 7, 2003 revenue generated from hotel operations, and asked what happens if hotel occupancy and cash flow are less than expected. Mr. Spevacek stated the Agency could demand payment from other assets of the development by: foreclos)ng on the commercial parcels, which are worth in excess of $1.8 million, if they have not been developed and sold, and recoup a portion of the monies from the sale of those parcels; by negotiating repayment from other assets the developer may have; and/or by extending the term of repayment to 8 to 10 years. The Agency would be in a position to do whatever is most equitable for the Agency and keep the developer afloat for operations flow long enough to recoup the full repayment. He confirmed there are no guarantees. In response to Mayor Adolph, Ms. Jenson stated the Agency should view the $1.6 million loan amount as "at risk" funds since the Agency would be in a subordinate position on the deed of trust. Should the Agency be asked in the future to invest additional funds to protect its $1.6 million investment, that is something the Agency would have to determine at that time. The Agency will be in first position on the deed of trust for the commercial parcels but if the hotel is not successful it could impact the value of the commercial parcels. She stated staff has attempted to minimize the risk but it has not been eliminated. Council Member Sniff referenced the requirement for the Embassy Suites Hotel to remain in operation from the time a certificate of occupancy is issued through the five-year purchase period, and asked how that could be enforced. Ms. Jenson stated the developer would be in default if the hotel is not operational and the Agency would have the ability to foreclose with regard to the commercial parcels. Howard Thompson, 48-200 Via Solana, questioned why the developer is not able to get a construction loan. He understood the developer has talked to a construction lender and that the lender is holding back. He noted lenders are in the business of knowing when to loan money and that the Agency may not be as knowledgeable about the situation. Mr. Spevacek advised the developer has a first trust deed note on the hotel property and lenders like to see the land free and clear. The Agency's notes will provide a means to retire the existing loan against the property, and with the Agency being the subordinate on the loan, the lender would look at the property as being free and clear. Palm Desert National Bank has indicated an interest in financing the project but wants to first see the final construction drawings and bid estimates based on those drawings. He added the developer is looking at City Council Minutes 17 January 7, 2003 other lenders to obtain the best financing, and the Agency funds will not be released until the Agency has approved of the construction loan. David Brudvik, 77-435 Calle Colima, spoke in support of the proposal. He owns property in the Village and views the hotel as an asset. Wells Marvin, 79-258 Cetrino Street, stated he supports the hotel project and feels it will be an asset to the City. As for the loan, he feels it's an interesting way to raise equity and will provide a good precedent for other property owners who wish to pursue projects in the City as a source of equity funding. He questioned when a city is a bank or equity lender, and if loans would be provided to future hotels in the City. He further questioned the size of the redevelopment fund pool and the best place to allocate those funds. He stated his investors for the Old Town project demanded a 25% annualized rate of return, and questioned why the City is not requiring a 15-18% return on its money as is stated as an objective in the City's Economic Development Plan. He commented on the construction of the condominiums, and noted they must have increased the value of the property since the Agency is proposing to purchase one quarter of the site for $1.6 million and the developer purchased the entire site three years ago for $1.4 million. He feels this is a worthy project and encouraged the Council to look at it very carefully. Bill Ivey, 78-665 Descanso Lane, stated he is not opposed to the project but is opposed to the way it is being financed. He quoted Will Rogers saying, "I'm not so concerned about the return on my money as the return of my money." Albert Sutcliffe, 48-145 Via Solana, questioned why the developer is looking to the City for financing. He noted Cathedral City has ended up in the theater business and voiced concern about La Quinta ending up in the hotel business. Given the current economic conditions, he felt the proposal is a big risk with money that shouldn't be used in this manner. He only learned about the proposal today when he read it in the newspaper, and feels it should be given a lot of consideration before a decision is made. Wally Reynolds, 79-860 Fiesta Drive, noted the City will slowly die unless it has businesses to supply a viable revenue stream for the City's public services. He encouraged Council to take a shot at the proposal because he feels the hotel is needed. Kay Wolff, 77-227 Calle Ensenada, asked if this is a loan or mortgage, and suggested it be reviewed by the Investment Advisory Board with a report back to Council. She encouraged Council to take some time with this and find out how the residents want to spend the redevelopment funds. She questioned City Council Minutes 18 January 7, 2003 why the developer has not secured a loan through normal channels and stated if it's a bad investment for a bank, it's a worse investment for a City. She also questioned why the City would purchase 9.21 acres for $3.4 million when the developer paid only $1.4 million for 13 acres two years ago. What happens if the developer defaults and the City ends up in the hotel business? She asked if the proposed loan falls within redevelopment law requirements for controlling blight, and noted the State is looking at cities who have abused redevelopment funds by using them to subsidize luxury developments. She urged Council not to rush to spend uncommitted funds on foolish ventures. She believes the developer will find financing on his own if this is a viable project. Tom Harms, 79-605 Cetrino, asked if the developer is supplying any equity or personal guarantees for the loan, and if income projections from the hotel have been looked at for the likelihood of sufficient revenue to repay the loan. He also asked about the first and second positions on the two loans and what commercial properties secure the loans. Mr. Spevacek explained the $1.6 million will be secured by the hotel parcel. If before the construction loan funding exceeds $1.6 million and there is a default, the Agency would be in a position to secure repayment through selling the hotel parcel. The $1.84 million would be funded after the hotel is completed, and the security for that is the three commercial parcels. He stated the properties have been appraised by an appraisal company, and they have indicated the properties would be worth the amount the Agency will be investing if this is approved. Staff has reviewed a market feasibility study that was prepared for the construction lender to look at occupancy rates over a twelve-year period, and they have looked at the cash flow from the hotel to see if sufficient funds would be available to repay the loan. Mr. Harms noted the commercial lender can pull the plug on the project and the Agency would lose all of its money unless there is an iron-clad agreement with Embassy Suites for the City to complete construction of the hotel plans. He also voiced concern about having to sacrifice other retail commercial projects, such as Old Town, in order for the City to get its money back should the commercial property end of this deal not prove viable. He questioned whether or not the time is right for the proposed lending arrangement if the developer is not able to get commercial financing at any price or with any guarantee, or isn't willing to take that risk. Joyce $ivley, 79-775 Westward Ho Drive, stated she is still in support of the hotel development, and feels it will be a catalyst for regulated growth in the Village. She stated many members of the Westward Ho Property Owners Association support this project, and Colonel Paige has asked her especially to City Council Minutes 19 January 7, 2003 urge Council to move forward with it. She believes the bed tax and sales revenue is needed to sustain City services, including police, fire, and recreation. She noted the Council has the opportunity to fulfill the vision of many City leaders over the years to develop the Village. Hovak Najarian, 78-395 Palm Garden Place, commented that the developer threatened to pull out when the project was before the City Council a few years ago, and he felt it's ironic that now he wants to bail out. He feels the proposal has too much potential for litigation, and questioned that Council would have considered the hotel project at all if the current transaction had been a part of the original application. Richard Hughes, 57-138 Medinah, stated he feels the hotel is vital to the Village. He noted Rancho Mirage gave away $25-$40 million of real estate to get The River project, which has done more for the Valley than any other single development. He feels this project provides the same type of opportunity for La Quinta because if the Village is developed properly, it could mean a great deal to the entire City. As for the increase in the purchase price of the property, he noted the developer has improved the property since he purchased it three years ago. Loren McGuire, 78-732 Sienna Court, noted if the project fails, the City would not only lose the redevelopment funds but also the investment on those dollars. He urged Council to continue this item until additional research is done to make sure it is a sound investment for the City. There being no further requests to speak, the Mayor declared the PUBLIC HEARING CLOSED at 8:36 p.m. Council Member Perkins stated whatever decision is made this evening, it is not a quick one because the potential and risks of the proposal have been studied for a long time. He stated the City is trying to provide an incentive to keep the Village moving in a properly-controlled, small town atmosphere. He believes a mid-range priced hotel is desperately needed in the Village. He commented on the need for additional bed tax and commercial development to provide public services because the City receives very little revenue from property tax. He stated there is a certain amount of risk in everything, and he is willing to support this proposal because he feels the project will be an asset to the City. Council Member Henderson noted this project has been an issue for the last three years, and during that time she has discussed the project with a lot of residents. Some of them oppose a hotel in the Village unless it meets certain criteria, which she feels would be impossible to acquire. She stated there has City Council Minutes 20 January 7, 2003 been a perception for years that a village exists in the Cove, however, there is no viable economic place where people can gather and say, "they've been to the Village." She feels the City is now at that point because great progress has taken place, such as the street improvements and the Civic Center Campus. She noted the hotel project has undergone a cost of approximately $2 million due to delays imposed by the litigation, drawing of new construction plans, and the tightening of the lending institution after the September 11th incident. She commented on the inability to use redevelopment money for City services, and stated she feels the best use of those funds is to generate general fund revenues that can be used for City public services. As for the 525 acres recently purchased by the Agency, she feels the municipal golf course will be an immediate benefit to the City but a resort probably won't happen for up to 10 years. She doesn't feel these things will happen unless the City continues to develop and increase its assessed value and have the funds so the City can be a dynamic place. She felt, in essence, Mr. Hughes comments summed up her feelings for the City, the Village, and the City's future. She noted there are no risk-free business deals, and she feels the biggest risk here is the faith and trust in the community in what can be done and the people who have a strong desire to be a part of the City. Council Member Osborne stated he has researched a lot about this proposal since he learned about it last Friday, and believes the project as a whole will do very well for the City by bringing in some financial strength. As a past member of the Investment Advisory Board for seven years, he stated the proposal may not qualify under the Board's investment plan but this is not the same type of investment. Redevelopment money is meant to invest for the City's future and its operational funding. Although there are definite risks involved, he understands a franchise agreement with Embassy Suites exists, and that the developer is looking at a management contract with Hilton. He stated he would like to have asked the developer a few questions but feels from a redevelopment standpoint, the proposal is meant to do what is intended, which is to increase the revenues of the City and help the Village community. Council Member Sniff stated he believes a major enterprise is needed in the Village to serve as a catalyst for other businesses to locate there and to be able to expect reasonable success. He doesn't feel this should be viewed as a carte blanche to support equity financing for all types of businesses. He complimented Mr. Marvin and others who have made a major financial commitment to help develop the Village, and stated he hopes there will be a synergy to make all of the businesses successful. He realizes there are risks in the proposal, and complimented staff for drafting the most risk-free secure agreements possible. He stated he also would like to have asked the developer some questions. He commented on the possibility of the State taking away City Council Minutes 21 January 7, 2003 funds from the City and the need for the City to utilize its financial resources to maximize the results. He noted there is potential for $700,000 annual revenue in Transient Occupancy Tax for the City if the hotel is built, and pointed out no funding will be provided unless construction financing is obtained. He is not totally comfortable with the proposal but feels the need to get the Village as viable as possible is, to some degree, an overriding item. He feels the built-in safety factors in the agreements allow the City to be as secure as possible. Mayor Adolph stated he has never been against the hotel but is against the height element because it is over the City's height limit of 35 feet in the Village. He will continue to oppose the hotel until it meets the criteria, and therefore feels it would be hypocritical for him to support a loan for the hotel. He agreed commercial development is needed to help support residential growth, and that the need for a hotel in the Village is a good need, but he doesn't like the height. He also agreed the City needs a mid-priced range hotel and additional Transient Occupancy Tax but noted the Marriott project is moving forward and are not asking for any money from the City. He didn't feel it's necessary to rush into a decision. As for redevelopment funds, he noted the State has taken away some redevelopment money and could take these monies as well. He stated redevelopment funds available to the City need to be earmarked and projected to projects so the State cannot take them. He is concerned the height element of the hotel will destroy the ambience of the Village along with the conceptual idea of early residents of the community. Should the hotel move forward, he feels the City should protect its investment the best it can, and noted "security" is the mission statement of the City's Investment Advisory Board. He is concerned what will happen if the project doesn't go to completion. In response to Council Member Sniff, Mr. Spevacek confirmed the $1.6 million will not be advanced until construction financing is approved by the City and is secured. Council Member Osborne stated he has questioned staff about the same issues the public has asked, and he felt each question has been answered in a positive manner. RESOLUTION NO. 2003-004 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, APPROVING A DISPOSITION AND DEVELOPMENT AGREEMENT BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND BISON HOTEL GROUP, LLC FOR PROPERTY LOCATED AT THE NORTHWEST CORNER OF CALLE TAMPICO AND DESERT CLUB DRIVE. It was moved by Council Members Sniff/Henderson to adopt Resolution No. 2003-004 as submitted. Motion carried with Mayor Adolph voting NO. City Council Minutes 22 January 7, 2003 4, PUBLIC HEARING TO CERTIFY A MITIGATED NEGATIVE DECLARATION OF ENVIRONMENTAL IMPACT FOR ENVIRONMENTAL ASSESSMENT 2002-466 REGARDING THE APPROVAL AND CONSTRUCTION OF 149 SENIOR AFFORDABLE DETACHED HOUSES AND 36 SINGLE FAMILY MARKET RATE DWELLING UNITS ON APPROXIMATELY 32 ACRES LOCATED AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET. The Mayor declared the PUBLIC HEARING OPEN at 9:15 p.m. Community Development Director Herman presented the staff report. In response to Council Member Perkins, Mr. Herman stated the entrance on Avenue 48 is a left-in/right-in/right-out turning movement. Council Member Sniff asked about the dimensions of the property, to which Mr. Herman responded approximately 430 feet north to south and 1,160 feet east to west. In response to Mayor Adolph, Mr. Herman confirmed the units are single-story, twoto three bedroom, detached units. (unidentified speaker) confirmed these units will be comparable in appearance to the Miraflores units but slightly smaller. Jim Murat, of Santa Rosa Development, stated they propose using the front courtyard concept that was developed for Miraflores because it works great for senior housing. Council Member Henderson asked about the size of the Miraflores senior apartments. (unidentified speaker) stated the one-bedroom units will be 700 sq. ft. and the two-bedroom units will be 850 sq. ft. Council Member Henderson questioned why the senior housing would have three bedrooms. Mr. Murar stated those units are for 55 years and up and for someone investing in a house at that age there would be a den, a guest room, and a master bedroom. In response to Council Member Osborne, Mr. Murar stated the price of the two-bedroom, affordable housing units range from $120,000 to $130,000, and City Council Minutes 23 January 7, 2003 the three-bedroom units range from $130,OOO to $140,OOO. The cost of the market-rate units will be in excess of $300,000. Grady Sparks, 48-145 Via Vallarta, noted the swimming pool area is across the street from houses in Rancho La Quinta. He also noted the headlights of vehicles exiting at the Avenue 48 entrance will shine into houses across the street at Rancho La Quinta, and he hoped there would be an entrance/exit to the north to reduce that problem. Mayor Adolph voiced concern about having only one exit from the development, and stated he didn't want to end up with a situation similar to The Fairways. Mr. Herman advised there will be an emergency exit through the market-rate units development. A brief discussion ensued regarding the inability for residents of the senior housing development to make a left turn onto Avenue 48. Mr. Herman explained the distance between the two entrances for the senior housing and the market-rate development is insufficient to meet the General Plan spacing requirements for a full-turn movement. Council Member Henderson noted there are no adjoining streets to the development to place another entrance. Council Member Perkins suggested the possibility of moving the market-rate development entrance more to the east to provide sufficient spacing for both to have full-turn movements. Mr. Herman noted these are preliminary drawings at this time. Council Member Sniff commented on the number of sand dunes on the property and asked how the sand would be kept from drifting onto Avenue 48. Mr. Herman advised there will be a wall and landscaping along the perimeter. Trevor Jones, 79-195 Rancho La Quinta Drive, referenced a previous proposal for a driving range on the property wherein he and several of his neighbors did not receive public hearing notices. He implored the Council to make sure public notices are mailed to surrounding property owners so that they have sufficient time to support or oppose whatever project the Council or Planning Commission is considering. City Council Minutes 24 January 7, 2003 Mr. Herman explained developers are required to submit a certified list of property owners within 500 feet of the exterior boundaries of the project. In addition to that, staff can mail notices beyond 500 feet if deemed necessary and homeowner associations are notified if the mailing information is known. He noted the information provided by the County for the certified list of property owners is not always current, which results in previous property owners being notified instead of the new owners. This particular public hearing was noticed in the newspaper and notices were sent to the property owners to the east and north of the property. He noted this project will go through a minimum of two more public hearings. There being no further requests to speak, the Mayor declared the PUBLIC HEARING CLOSED at 9:41 p.m. RESOLUTION NO. 2003-005 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, CERTIFYING A MITIGATED NEGATIVE DECLARATION OF ENVIRONMENTAL IMPACT FOR A DEVELOPMENT AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET (EA 2001-466 - CITY OF LA QUINTA / RGC COURTHOMES, INC.). It was moved by Council Members Sniff/Osborne to adopt Resolution No. 2003-005 as submitted. Motion carried unanimously. Council reconvened into Joint Session with the Redevelopment Agency. 5. JOINT PUBLIC HEARING FOR CONSIDERATION OF AN AFFORDABLE HOUSING AGREEMENT BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC., A CALIFORNIA CORPORATION, FOR THE SALE AND DEVELOPMENT OF 20.04 ACRES OF AGENCY PROPERTY LOCATED NORTHEAST OF THE INTERSECTION OF AVENUE 48 AND ADAMS STREET IN LA QUINTA REDEVELOPMENT PROJECT AREA NO. 2. The Mayor declared the PUBLIC HEARING OPEN at 9:44 p.m. Community Development Director Herman presented the staff report. In response to Council Member Henderson, Consultant Frank Spevacek advised the number of years on covenants for single family, owner-occupied units is 45 years, and 55 years for rentals. City Council Minutes 25 January 7, 2003 There being no other requests to speak, the Mayor declared the PUBLIC HEARING CLOSED at 9:47 p.m. RESOLUTION NO. 2003-006 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, APPROVING AN AFFORDABLE HOUSING AGREEMENT BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC., FOR PROPERTY LOCATED AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET. It was moved by Council Members Henderson/Sniff to adopt Resolution No. 2003-006 as submitted. Motion carried unanimously. 6. JOINT PUBLIC HEARING FOR CONSIDERATION OF AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BY AND BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, LLC., A CALIFORNIA CORPORATION, FOR THE SALE OF 11.9 ACRES OF AGENCY PROPERTY LOCATED NORTHEAST OF THE INTERSECTION OF AVENUE 48 AND ADAMS STREET IN THE LA QUINTA REDEVELOPMENT PROJECT AREA NO. 2. The Mayor declared the PUBLIC HEARING OPEN at 9:48 p.m. Community Development Director Herman presented the staff report. There being no requests to speak, the Mayor declared the PUBLIC HEARING CLOSED at 9:50 p.m. RESOLUTION NO. 2003-007 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LA QUINTA, CALIFORNIA, APPROVING AN AGREEMENT FOR PURCHASE AND SALE AND ESCROW INSTRUCTIONS BETWEEN THE LA QUINTA REDEVELOPMENT AGENCY AND SANTA ROSA DEVELOPMENT, INC., FOR PROPERTY LOCATED AT THE NORTHEAST CORNER OF AVENUE 48 AND ADAMS STREET. It was moved by Council Members Sniff/Henderson to adopt Resolution No. 2003-007 as submitted. Motion carried unanimously. City Council Minutes 26 January 7, 2003 ADJOURNMENT There being no further business, the meeting was adjourned. Respectfully submitted, JUNE S. GREEK, City Clerk City of La Quinta, California