2009 10 06 RDA MinutesLA QUINTA REDEVELOPMENT AGENCY
MINUTES
OCTOBER 6, 2009
A special meeting of the La Quinta Redevelopment Agency was called to
order at 2:30 p.m. by Chairperson Franklin.
PRESENT: Agency Members Adolph, Evans, Henderson, Sniff,
Chairperson Franklin
ABSENT: None
PUBLIC COMMENT -None
CLOSED SESSION
1. Conference with Agency's real property negotiator, Douglas R. Evans,
pursuant to Government Code Section 54956.8 concerning potential
terms and conditions of acquisition and/or disposition of real properties
identified as APNs/Property Owners/Negotiators (listed as followsl:
773-142-021 - 51-685 Avenida Mendoza/Cwabs, Inc. Series 2005-12;
773-212-017 - 52-125 Avenida Rubio/Jose Jesus Perez & Maria Angela Munoz;
773-325-010 - 52-930 Avenida Herrera/Federal National Mtg Assn FNMA;
773-333-027 - 52-830 Avenida Mendoza/Litton Ln Svcng;
774-082-008 - 53-404 Avenida Ramirez/Curt L. Wheeler;
774-235-009 - 54-440 Avenida Rubio/First Boston ARMT 2005-1;
774-251-020 - 54-421 Avenida Velasco/Bank of America Securities
2. Conference with Agency's real property negotiator, Douglas R. Evans,
pursuant to Government Code Section 54956.8 concerning potential
terms and conditions of acquisition and/or disposition of real property
regarding property located at the northwest corner of Dune Palms
Road and Avenue 48. Property Owner/Negotiator: Coachella Valley
Housing coalition, John Aguilar.
3. Conference with Agency's real property negotiator, Douglas R. Evans,
pursuant to Government Code Section 54956.8 concerning potential
terms and conditions of acquisition and/or disposition of real property
located southeast of the Miles Avenue and Washington Street
Intersection and north of the Whitewater Storm Channel. Property
Owner/Negotiator: CP Development La Quinta, LLC, Richard Oliphant.
Redevelopment Agency Minutes 2 October 6, 2009
4. Conference with Agency's real property negotiator, Douglas R. Evans,
pursuant to Government Code Section 54956.8 concerning potential
terms and conditions of acquisition and/or disposition of real properties
identified as APNs/Property Owners/Negotiators: 770-121-009,
770-123-001, and 770-124-005, Old Town La Quinta, LLC, Wells
Marvin; 770-123-010 and -006, NIS Yield Partners, LP, Ted Newell;
770-124-009, Nispero Properties, Bob Hill; 770-123-002, -003 and
-004, Virginia Garbutt; 770-124-002 and -003, James F. Kelly Trust;
and 770-124-007, Michael Fischer.
The Redevelopment Agency recessed to Closed Session to and until the hour
of 4:00 p.m.
4:00 P.M. .
The Redevelopment Agency meeting was reconvened in regular session with
no decisions being made in Closed Session which require reporting pursuant
to Government Code Section 54957.1 (Brown Act-.
BLIC COMMENT -NONE
CONFIRMATION OF AGENDA -Confirmed
APPROVAL OF MINUTES
MOTION - It was moved by Agency Members Sniff/Henderson to approve
the Redevelopment Agency Minutes of September 15, 2009, as submitted.
Motion carried unanimously.
CONSENT CALENDAR
1. APPROVAL OF DEMAND REGISTER DATED OCTOBER 6, 2009.
2. APPROVAL OF A MASTER PURCHASE AND SALE AGREEMENT WITH
BANK-OWNED PROPERTIES IN PROJECT AREA NO. 1 AND PROJECT
AREA NO. 2.
Redevelopment Agency Minutes 3 October 6, 2009
3. ADOPTION OF A RESOLUTION APPROVING A FINANCING
AGREEMENT AMONG THE CITY OF LA QUINTA, LA QUINTA
REDEVELOPMENT AGENCY, AND THE LA QUINTA HOUSING
AUTHORITY AND AUTHORIZING THE EXECUTIVE DIRECTOR TO
EXECUTE THE SAME, AND A RESOLUTION AGREEING TO PROVIDE
STAFF SERVICES FOR THE LA QUINTA HOUSING AUTHORITY.
(RESOLUTION NO. RA 2009-007 AND 2009-0081.
MOTION - It was moved by Agency Members Sniff/Adolph to approve
the Consent Calendar as recommended with Item No. 3 being
approved by RESOLUTION NOS. RA 2009-007 and 2009-008.
Motion carried unanimously.
BUSINESS SESSION -None
STUDY SESSION
1. DISCUSSION REGARDING SILVERROCK RESORT.
Chairperson Franklin stated she requested this item be discussed in a
study session because she received many questions about SilverRock
during her campaign. She stated we need to ask ourselves is this
what we need, what does it provide to our residents, and will it be a
financial burden in the future. She stated conditions that created the
original plan have changed dramatically over the last six months.
Executive Director Genovese stated staff will present an overview of
the project and be available to answer questions.
The presentation consisted of Executive Director Genovese reviewing
the economic goals of the project; Redevelopment Consultant
Spevacek reviewed the funding aspect and financing structure;
Assistant City Manager-Development Services Evans reviewed the
master plan, infrastructure, development program, and public
recreation opportunities.
In response to Agency Member Henderson, Redevelopment Consultant
Spevacek explained the funding would be appropriated to the school
districts if not captured by the Redevelopment Agency. He confirmed
the Agency must sell bonds to capture cash funds and explained the
Agency must be in debt. Agency Member Henderson noted most
people are not aware of the debt and bonding process, and that the
Redevelopment Agency Minutes 4 October 6, 2009
Redevelopment Agency is the only avenue available to think "outside
of the box."
Agency Member Adolph noted that what has happened in the
economy was not anticipated. He stated although he is not happy
about the amount of funds needed to subsidize the golf course, he
does not feel it was a mistake to develop the golf course. He stated
no services to the community have been denied and the Agency needs
to stay the course with the plan. He asked if the Agency could sell the
property at this time.
Redevelopment Consultant Spevacek explained the most viable option
might be to sell the property but it is a depressed market at this point
for land surrounding golf courses. Agency Member Adolph stated he
feels this discussion is a waste of time at this time and expressed
support for staying the course.
Agency Member Sniff requested confirmation of the S85 million
allocated. Finance Director Falconer explained the S85 million refers
to Phase I of the project, including purchasing the property, and the
$89 million includes the $4 million expended for Phase I1. He stated
that the amount of staff time charged to the Redevelopment Agency
Project Area No. 1 is 55 million and that the staff time for
Redevelopment Consultant Spevacek is charged to the Redevelopment
Agency, but not to any specific project.
Agency Member Sniff asked if the Agency has a firm evaluation of
Lowe's financial status, prognosis, and current agreements.
Redevelopment Consultant Spevacek explained the company is not a
stock exchange firm or reported in the public domain because they are
a private company; the entity itself is in good financial standing but
individual projects where they developed limited liability companies,
have suffered challenges because of not. receiving funding from
lenders as required. He stated staff is currently negotiating an
extension to Lowe's agreement because they have not been able to
receive the final financing commitments needed to construct the
boutique hotel. Agency Member Sniff asked if the entity is in default.
Agency Counsel Jenson explained the Disposition and Development
Agreement (DDA- has a time period for an additional increase in the
deposit and that time period has passed; the time period for taking all
necessary steps to remove the hotel is November 2009; and she
explained steps have not been taken to put them in default because
the Agency has continued negotiations with them.
Redevelopment Agency Minutes 5 October 6, 2009
Agency Member Sniff stated he recalls asking about Lowe's financing
and one of their representatives indicated it would never be a problem
because they are self-financed, but apparently that statement was not
totally accurate. He stated his concerns are more immediate and
current a§ opposed to what has been expended. He would like to
know what can be done to stop the financial erosion, and noted this
project was launched to provide long-term, sustainable sources of
revenue for the City; the idea was to plan now, act now, and secure
the future; a lot has been done but the hotels that were to provide a
lot of the revenue have not happened; and we need to stop the
"bleeding" of money. He suggested continuing working with Lowe's
but receiving proposals from other revenue-producing entities to
expand our options of which hotels must be a component. He further
suggested renegotiating the agreement with the Bob Hope Classic to
reduce the City's costs; and directing staff to produce reasonable
options for additional cost reductions and development proposals at
SilverRock. He stated SilverRock Resort is a grand design but we
must reduce the costs.
Agency Member Evans stated SilverRock is a grand plan with 1,100
hotel rooms proposed to generate Transient Occupation Tax (TOT) for
the City; and utilizing a portion of the property temporarily for farming
is good, but the need for hotel rooms is great in the overall plan. She
suggested the issues with the canal be resolved to be ready for the
next step.
Chairperson Franklin referenced Page 6 of the staff report and asked
what rate of occupancy was used to forecast the TOT and if it meets
with other occupancy criteria throughout the Valley. Redevelopment
Consultant Spevacek explained the rate of occupancy began at 50%
for the first two years with an increase to 70% and stabilizing at 80%
by the fifth year; and stated similar resorts averaged a 75-80%
occupancy rate during the first half of this decade with La Quinta
Resort being the leader.
Chairperson Franklin asked for clarification regarding the ability to
make a profit from the Palmer Golf Course. Agency Counsel Jenson
explained the course can make a profit under City ownership but the
City cannot sell it to a private entity.
Chairperson Franklin asked which properties are under tax-exempt
bonds. Agency Counsel Jenson explained the designations are based
on acreage and development cost; the bonds can be re-designated as
long as a specific number of acres remains in public ownership.
Redevelopment Agency Minutes 6 October 6, 2009
Chairperson Franklin asked how staff came up with the 85.43
acreage. Agency Counsel Jenson stated that is the acreage specified
in the Specific Plan for private use and includes the southerly two
areas not currently part of the DDA with Lowe. Chairperson Franklin
asked how much has been spent for the permanent clubhouse.
Finance Director Falconer stated 52,068,000 was expended for
clubhouse design, as part of the Phase II development, and $422,000
was expended for design of the second golf course.
Chairperson Franklin stated she agrees SilverRock is a grand idea but
has concerns with some of the expenditures such as 535 million to
build a clubhouse that is not a revenue generator. Assistant City
Manager-Development Services Evans stated the clubhouse was
originally intended to be a smaller facility; after looking at comparable
facilities in the Valley, it was determined that the addition of dining
facilities and an event lawn would be beneficial to host events; and
explained the budget was increased to enable the facility to be at a
four-to-five-star rating.
Agency Member Henderson stated the 535 million was the cost given
at the peak time of development; and the Agency was looking at the
types of use for the public.
Chairperson Franklin thanked staff for their presentation, including the
cost breakdown; and expressed hope that the Agency will keep an
open mind on this issue in the future. Agency Member Adolph stated
he is willing to revisit this issue upon changes in the economy.
Agency Member Henderson stated the 5800,000 expended for the
golf course is not wasted money as there are some benefits from
those currently playing golf at the property; and stated she doubts the
company is self-funded in today's market.
Agency Member Adolph stated the Agency Members are all on the
same page concerning the amount of funds expended for the project,
but it has no choice but to maintain the project.
Agency Member Sniff suggested staff explore ways to reduce the
outflow of funds to maintain the property; and stated he would like to
know if Lowe will ever be able to develop the hotel and if anything
can be done to reduce the Bob Hope Classic costs.
Redevelopment Agency Minutes 7 October 6, 2009
CHAIR AND AGENCY MEMBERS' ITEMS -None
PUBLIC HEARINGS -None
ADJOURNMENT
There being no further business, it was moved by Agency Members
Sniff/Evans to adjourn. Motion carried unanimously.
Respec ully submitted,
c
VERONICA J. NTECINO, Secretary
City of La Quinta, California