BURBANK REDEVELOPMENT AGENCY
Tuesday, June 17, 2003
AGENDA
CITY COUNCIL CHAMBER - 275 EAST OLIVE AVENUE
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5:00 P.M. CLOSED SESSION IN CITY HALL BASEMENT LUNCH ROOM/ CONFERENCE ROOM.
Conference with Real Property Negotiator:
Pursuant to Govt. Code �54956.8
Agency Negotiator: Assistant Executive Director/Susan Georgino.
Property: 10 West Magnolia Boulevard (southerly adjacent to west side of Magnolia overpass).
Party With Whom Agency is Negotiating: AmeriCold Logistics, 10 Glenlake Parkway, South Tower, Suite 800, Atlanta GA 30328.
Name of Contact Person: Kathi Tomcho, Esquire.
Terms Under Negotiation: Potential acquisition of property.
When the Agency reconvenes in open session, the Authority may make any required disclosures regarding actions taken in Closed Session or adopt any appropriate resolutions concerning this matter.
5:30 P.M.
Staff has been requested to schedule a Study Session to provide a variety of information concerning the Redevelopment Agency. The Redevelopment and Housing Division of the Community Development Department is responsible for redevelopment, economic development and affordable housing. Since approximately half of the Agency efforts are focused on redevelopment and economic development and the other half on affordable housing, and because there are separate funding sources for affordable housing, it has been recommended that there be two Study Sessions, with the Study Session on affordable housing scheduled for July 22, 2003.
This report will provide a summary of current redevelopment and economic development projects and programs, and a discussion of the financial challenges facing the Agency including possible solutions. For the Study Session, staff will be seeking direction from the Agency on determining the Agency�s priorities in the coming years.
6:30 P.M.
INVOCATION: Chaplain John Arnold, Providence Saint Joseph�s Medical Center.
The Courts have concluded that sectarian prayer as part of City Council meetings is not permitted
under the Constitution.
FLAG SALUTE:
ROLL CALL:
6:30 P.M. JOINT PUBLIC HEARING WITH THE CITY COUNCIL:
1. Acquisition of 10 West Magnolia Boulevard � AmeriCold Corporation Property Jonathan C. Daiker:
The purpose of this report is to request Council and Redevelopment Agency consideration of the acquisition of 10 West Magnolia Boulevard; a short-term lease of that property to the Southern California Public Power Authority (SCPPA); and several related financial transactions.
The subject property is a 105,850 square foot rectangular site (2.43 acres) located at 10 West Magnolia Boulevard, and is owned by AmeriCold Logistics. The property is improved with a 68,256 square foot cold storage building. Approximately 61,616 square feet of the building has interior cooling capability. The building is a poured-in- place concrete building on a concrete slab with concrete columns supporting a poured-in-place concrete roof. The property was offered to the City for $3,800,000 in a letter dated January 13, 2003. Staff obtained an appraisal from Norris Realty Advisors dated February 13, 2003, which indicated the offer amount to be the fair market value of the property.
The property is northerly adjacent to the Downtown Burbank Station (DBS, formerly known as the Regional Intermodal Transportation Center (RITC)) parking lot on the west side of the railroad tracks at 5 West Olive Avenue. The property is also immediately east of the Burbank Water and Power (BWP) electrical generating facilities, separated only by the Burbank Western Channel.
The proposed property acquisition is being recommended for three primary reasons: 1) SCPPA has an immediate need for construction staging and the close proximity of the AmeriCold site is ideal for this use; 2) as Burbank�s transportation programs expand the site could meet the needs of providing a facility for the local transit vehicles as well as a bike station, which will enhance the linkage between the Downtown Station and the Chandler accessway; and 3) the Redevelopment Agency has identified this site as a prime redevelopment site (Opportunity Site No. 7, Burbank Center Plan) for a transit-oriented, mixed-use project.
The acquisition is being considered at this time because the property owner, AmeriCold Logistics, has indicated a desire to consolidate the Burbank facility with other facilities in Southern California and has offered the property to the City for $3.8 million. The City considered acquiring the AmeriCold property back in 1998 (the last time the AmeriCold property was offered to the City, at a price of $2.0 million) to be used in conjunction with the Downtown Burbank Station. However, funding issues prohibited the transaction from taking place at that time.
Staff is recommending that the acquisition be funded from three sources; 1) City Fund 127 Development Impact Fees; 2) Redevelopment Agency funds; and 3) a pre-paid lease payment from SCPPA. The total acquisition price is $3,800,000, plus $8,000 in anticipated closing costs, for a total of $3,808,000. SCPPA will contribute $1,089,070 as a pre-paid lease payment. The remaining balance of approximately $2,718,930 is divided equally between City contribution of $1,359,465 from Fund 127, Development Impact Fees, a contribution of $679,732.50 from a loan from the Golden State Redevelopment Project Area to the City to the South San Fernando Redevelopment Project Area and a contribution of $679,732.50 from the Golden State Redevelopment Project Area to the City.
Recommendation:
Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING THE EXECUTION OF A LOAN AGREEMENT WITH THE CITY OF BURBANK AND AN AMENDMENT OF FY 2002-3 AGENCY BUDGET REFLECTING A TRANSFER OF $679,732.50 TO THE CITY. (Golden State Project Area)
Adoption of proposed City Council resolutions entitled:
1. (4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING AND AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT WITH THE REDEVELOPMENT AGENCY GOLDEN STATE PROJECT AREA AND AN AMENDMENT OF FY 2002-2003 CITY BUDGET REFLECTING A TRANSFER OF $679,732.50 TO THE CITY. (Golden State Project Area)
2. (4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING AND AUTHORIZING THE EXECUTION OF A LOAN AGREEMENT WITH THE REDEVELOPMENT AGENCY AND AN AMENDMENT OF FY 2002-2003 CITY BUDGET REFLECTING A TRANSFER OF $679,732.50. (South San Fernando Project Area)
3. (4/5 vote required)
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING THE EXECUTION OF A LOAN AGREEMENT WITH THE CITY AND AN AMENDMENT OF FY 2002-2003 AGENCY BUDGET REFLECTING A TRANSFER OF $679,732.50. (South San Fernando Project Area)
4. (4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APRROVING AN ACQUISITION AGREEMENT AMONG THE CITY, AGENCY AND AMERICOLD CORPORATION FOR THE ACQUISITION OF 10 WEST MAGNOLIA BOULEVARD; APPROVING THE PAYMENT OF THE COST OF LAND FOR PUBLIC IMPROVEMENTS TO BE OWNED AND OPERATED BY THE CITY; APPROVING A COOPERATION AGREEMENT BETWEEN THE AGENCY AND CITY RELATING TO THE OWNERSHIP OF 10 WEST MAGNOLIA; APPROVING A LEASE AGREEMENT AMONG THE AGENCY, CITY AND SCPPA; AND APPROVING AN AMENDMENT OF FY 2002-2003 BUDGET TO RECEIVE $679,732.50 FROM GOLDEN STATE PROJECT AREA.
Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING AN ACQUISITION AGREEMENT AMONG THE CITY, AGENCY AND AMERICOLD CORPORATION FOR THE ACQUISITION OF 10 WEST MAGNOLIA BOULEVARD; APPROVING THE PAYMENT OF THE COST OF LAND FOR PUBLIC IMPROVEMENTS TO BE OWNED AND OPERATED BY THE CITY; APPROVING A COOPERATION AGREEMENT BETWEEN THE AGENCY AND CITY RELATING TO THE OWNERSHIP OF 10 WEST MAGNOLIA; APPROVING A LEASE AGREEMENT AMONG THE AGENCY, CITY AND SCPPA; AND APPROVING AN AMENDMENT TO FY 2002-20O3 BUDGET TO TRANSFER $679,732.50 FROM GOLDEN STATE PROJECT AREA TO THE CITY.
JOINT MEETING WITH THE CITY COUNCIL, HOUSING AUTHORITY, PARKING AUTHORITY AND YOUTH ENDOWMENT SERVICES FUND BOARD:
2. ADOPTION OF FISCAL YEAR 2003-04 ANNUAL BUDGET, CITYWIDE FEE SCHEDULE AND APPROPRIATIONS LIMIT:
The purpose of this report is for the Council, Redevelopment Agency, Housing Authority, Parking Authority and Youth Endowment Services (YES) Fund Board to adopt the Fiscal Year (FY) 2003-04 Annual Budget, Citywide Fee Schedule, and Appropriations Limit. Pursuant to the City Charter, a public hearing was properly noticed and conducted on June 10, 2003 at which time the Council received public comment, and provided direction to staff as to what should be incorporated into the Adopted Annual Budget.
The development of the FY 2003-04 proposed Operating and Capital Budgets began in the fall of 2002. By February 2003, it had become abundantly clear that the next five years would be financially challenging for the City. At that time, staff disclosed to the Council that starting with FY 2003-04, a trend of recurring costs growing at a much greater pace than recurring revenues would begin with no signs of relief for at least five years. This is in large part due to the following:
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Increased Public Employees Retirement System (PERS) rates - for FY 2003-04 the City is projected to have $2.48 million in additional costs and for FY 2004-05 an additional $2.15 million;
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Increased Memorandum of Understanding projected costs � for FY 2003-04 this cost is projected at $3.2 million;
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Increased Internal Service Fund costs - General Liability and Workers Compensation Self-Insurance Funds increased by $1,350,070 due to an increase in both the insurance costs and claims. This industry continues to see large increases which are being felt by every sector, public and private. The Communications Replacement Fund increased by $314,000 to provide sufficient funding to replace radios Citywide over a five or more year period, and the Computer Equipment Replacement Fund increased by $103,000.
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Several revenue categories are declining � the City�s Interest/Use of Money revenue continues to decline due to the low interest rates. The Transient Occupancy Tax (TOT) had declined by 6.2 percent before the events of September 11th and although Burbank has several new hotels, the TOT revenues are still lagging behind budget estimates. Although there are two new parking lots subject to the Transient Parking Tax (TPT), it has been negatively impacted due to the Airport reducing their daily rates. At this point, the TPT is projected to decrease by $400,000.
Due to the identified budget deficit, each General Fund department was asked to identify durable reductions and reasonable and fair increases in fees that would provide for an overall 10 percent reduction. In addition to the reductions that each department was required to achieve, the budget was developed under the following parameters agreed upon by the Executive Team: no new positions/upgrades unless there was a �rock solid� revenue offset; the FY 2002-03 frozen positions would remain, equating to an annual savings of $122,592; no allowable increase in materials, supplies and services; and, no new requests for capital outlay projects.
The first Council Budget Study Session was held earlier than usual on April 9, 2003 to present staff recommended reductions and fee increases. The Council received the Proposed Budget at their May 3, 2003 annual Goal Setting Workshop, followed by Budget Study Sessions on May 6, May 20, and May 22, 2003. Subsequently, the public hearing was held on June 10, 2003.
With the budget parameters, costs, and revenues in mind, the following chart is the proposed source of funds and appropriations for each fund or fund type for the 2003-04 Budget:
*Resources represent the total sources available to each fund, such as taxes, fees, charges, sales, interest, use of fund balance (from bond proceeds, depreciation, and available retained earnings) and includes changes disclosed in the addendums to the Proposed Budget.
** The General Fund variance between proposed sources and appropriations is a result of the following: the inclusion of the 1) reserves (Utilities Users Taxes, BWP In-Lieu and related interest earnings) previously designated for BWP competitiveness and set-aside in the General Fund, and 2) yet to be settled contracts with several bargaining groups.
CITYWIDE FEE SCHEDULE
The primary purpose of the Citywide Fee Schedule is to provide a one-stop listing of all City fees, charges, and rates. The Fee Schedule is reviewed and updated annually as part of the budget process in an effort to document all of the fees that have been revised or changed during the fiscal year.
In light of the budgetary deficit, a conscious effort was made to review all City fees, charges and rates. It was agreed that making reductions in costs alone would not be the most prudent course of action, as many more services, programs and employees would be affected. Thus, each department that has fees, charges and rates, spent a great deal of time researching the current rates, identifying areas of concern, and conducting surveys of other cities to ascertain a fair and reasonable charge. In addition, some departments were able to identify new fees that were being charged by surrounding communities that made sense for Burbank to consider.
At the June 10, 2003 public hearing, the City Council approved all but one of the recommended changes to the Fee Schedule. Staff had recommended increasing the TPT from 10 to 12 percent to offset the fact that this revenue category is projected to decrease by $400,000 in FY 2003-04. Staff had projected that the 2.0 percent increase would only cause the revenue category to decrease by $100,000. However, following public testimony and Council discussion, staff was directed to remove the proposed increase in the TPT from the Fee Schedule. The Council directed staff to revisit the issue at the mid-year report in 2004.
After all reductions have been made, and the proposed revenue from the fee increases have been accounted for in addition to removing the staff recommended increase in the TPT, it is projected that the City will need to use $1,486,925 from the Burbank Water and Power Set-Aside Fund to balance the FY 2003-04 Budget. (These are the incremental revenues that have been collected on the Utility Users Tax and In-Lieu Tax as a result of the most recent electric rate increases. These revenues were set-aside in a holding account because the Council did not want to count on these revenues as recurring since it was understood that the electric rates would eventually decrease.) With this use of funds, there is still projected to be $7.0 million in the BWP Set-Aside holding account on June 30, 2004.
GANN INITIATIVE APPROPRIATION LIMIT
The City is required by State law to establish an appropriation limit each fiscal year. The City�s FY 2003-04 appropriation limit is estimated to be $116,607,407. The actual amount of the appropriations contained in the budget that is subject to the limit is $85,871,028. The difference between the City�s appropriation limit and the amount subject to it is $30,736,379. As a result, the City has a significant gap between its legal limit and the actual appropriations subject to the limit. The exact figures will be calculated and made available after the Council adopts the budget on June 17, 2003.
The City staff has worked diligently over the past few months to develop a balanced approach to address the long-term structural problem that the City is now faced with. The proposed recurring deficit for FY 2003-04 was originally projected to be approximately $9.5 million and does not include any potential hits from the State. A deficit this large is extremely intimidating, and will no doubt have a negative impact on the delivery of our services and programs, and most importantly on our employees. This approach is balanced and buys time for the Executives to re-group following the adoption of the FY 2003-04 Budget, and begin the process of developing and producing a strategic plan that will help the City effectuate reasonable and prudent changes to the way we currently conduct business. This process will be all encompassing in that the Executives will work with the unions to ensure that all avenues are explored and that together the City�s future is contemplated and determined. This strategy will include among many ideas, finding efficiencies in our own business practices while also looking to regional synergy and efficiencies to reduce on-going costs.
Recommendation:
Adoption of proposed City Council resolutions:
1. (4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK ADOPTING THE BUDGET FOR FISCAL YEAR 2003-2004, PROVIDING FOR THE TRANSFER OF REVENUE FROM THE BURBANK WATER & POWER DEPARTMENT TO THE GENERAL FUND, AND MAKING APPROPRIATIONS FOR AMOUNTS BUDGETED.
2. (4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK DETERMINING AND ESTABLISHING THE CITY�S APPROPRIATIONS LIMIT FOR FISCAL YEAR 2003-2004.
3. (4/5 vote required)
A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK AMENDING THE BUDGET FOR FISCAL YEAR 2002-2003 PROVIDING FOR THE PURPOSE OF MAKING APPROPRIATIONS FOR AMOUNTS DELINEATED.
4. A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK ADOPTING THE BURBANK FEE RESOLUTION.
Adoption of proposed Redevelopment Agency resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK ADOPTING THE BUDGET FOR FISCAL YEAR 2003-2004.
Adoption of proposed Housing Authority resolution entitled:
A RESOLUTION OF THE HOUSING AUTHORITY OF THE CITY OF BURBANK ADOPTING THE BUDGET FOR FISCAL YEAR 2003-2004.
Adoption of proposed Parking Authority resolution entitled:
A RESOLUTION OF PARKING AUTHORITY OF THE CITY OF BURBANK ADOPTING THE BUDGET FOR FISCAL YEAR 2003-2004.
Adoption of proposed Youth Endowment Services Fund Board resolution entitled:
A RESOLUTION OF THE YOUTH ENDOWMENT SERVICES FUND OF THE CITY OF BURBANK ADOPTING THE BUDGET FOR FISCAL YEAR 2003-2004.
CONSENT CALENDAR: (Items 3 through 4)
The following item may be enacted by one motion. There will be no separate discussion on these items unless a Commissioner so requests, in which event the item will be removed from the consent calendar and considered in its normal sequence on the agenda. A roll call vote is required for the consent calendar.
Approval of minutes for the regular meetings of March 25 and April 1, 2003.
Recommendation:
Approve as submitted.
4. APPOINTMENT OF FINANCING TEAM � GOLDEN STATE REDEVELOPMENT PROJECT AREA:
The purpose of this report is to request Redevelopment Agency approval for a Financing Team as it relates to the potential remarketing of existing Golden State tax allocation bonded indebtedness and purchase in-lieu of redemption of the remaining 1993 Golden State Project Area Tax Allocation Bonds.
At the Budget Study Session on May 22, 2003, staff presented three options related to the Golden State Redevelopment Project Area Subordinated Taxable Tax Allocation Bonds which were issued in 1993 in the amount of $25 million. Staff was directed to proceed with remarketing the subordinated debt.
Tax allocation bonds were most recently issued in 2003 in the amount of $87.265 million. The 2003 Tax Allocation Bonds were in part issued to purchase in-lieu of redemption $50.24 million of the 1993 Tax Allocation Bonds. For tax reasons, $8.53 million remains outstanding and eligible to be purchased in�lieu of redemption no earlier than September 1, 2003.
The subordinated bonds include provisions to remarket the debt. The potential remarketing of the 1993 Subordinated Bonds will help to complete needed capital projects such as the Development and Community Services Building.
Due to financing and remarketing issues related to the Golden State Project Area�s outstanding bonded indebtedness, it is to the Agency�s benefit to appoint a Financing Team with experience in the issuance of tax allocation bonds, as well as familiarity with the Project Area. Preliminary bond analysis has been undertaken and will assist in resolving the financing challenges which should result in the successful financing of the remaining 1993 Tax Allocation Bonds and the remarketing of the 1993 Subordinated Bonds.
Peter Ross, Ross Financial Financial Advisor
Rich DeProspo, E.J. De La Rosa & Co., Inc. Underwriter
Brian Quint, Quint & Thimmig, LLP Bond Counsel
The Financing Team will also review Golden State�s capacity to issue new bonded indebtedness due to the growth in tax increment before the expiration of Golden State�s ability to issue debt on January 1, 2004.
It is recommend that the Agency proceed with the potential remarketing of the 1993 subordinated debt as well as the purchase in-lieu of redemption of the remaining 1993 Tax Allocation Bonds, review other costs associated with issuance of these bonds and authorize the Financing Team to review the capacity for bonded indebtedness and potential new issuance for the Golden State Project Area.
Recommendation:
Adoption of proposed resolution entitled:
A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AUTHORIZING THE COMMENCEMENT OF PROCEEDINGS IN CONNECTION WITH THE REMARKETING OF THE OUTSTANDING 1993 GOLDEN STATE REDEVELOPMENT PROJECT SUBORDINATE LIEN TAXABLE TAX ALLOCATION BONDS AND THE PURCHASE IN-LIEU OF REDEMTPION OF A PORTION OF THE OUTSTANDING 1993 GOLDEN STATE REDEVELOPMENT PROJECT SENIOR LIEN TAX ALLOCATION BONDS AND RETAINING AN UNDERWRITER, A FINANCIAL ADVISORY, A BOND COUNSEL AND A DISCLOSURE COUNSEL.
END OF CONSENT CALENDAR
RECESS to continue the Housing Authority and the City Council meetings.
ADJOURNMENT.