JOINT MEETINGS WITH THE CITY COUNCIL:

 

1.         COTTAGES HOUSING AND CHILDCARE DEMONSTRATION PROJECT:

 

In July 2001, the Agency Board approved a Disposition and Development Agreement (DDA) with M. David Paul to construct the Housing and Childcare Center Demonstration Project.  The project is located at 2245-2251 North Fairview Street and 2242-2308 North Ontario Street in the Golden State neighborhood near the airport.  The project includes 20 small-lot single family homes and an 8,500 square foot childcare center that can accommodate 92 children.    Among other things, the DDA called for the developer, M. David Paul, to construct the shell of the childcare center and sell the land and improvements of the center to an entity selected by the Agency for one dollar.  In addition, the Agency is to receive certain participation in the profits of the sale of the 20 homes.  The Agency then planned to provide funding to the proposed owner of the childcare center to complete the interior improvements and playground of the childcare center.

 

The Agency has anticipated that the entity that would own the childcare center would be the Burbank Housing Corporation (BHC).  The BHC is an independent, non-profit corporation that was formed six years ago to own, manage and rehabilitate affordable housing projects throughout the City in partnership with the Redevelopment Agency.  In their neighborhood revitalization efforts, BHC operates two after-school programs, including the Achievement Center on the 100 block of West Elmwood and the Activity Center on the 200 block of West Verdugo Avenue.  In the Golden State neighborhood where the childcare center is being constructed, BHC has purchased and rehabilitated two nearby apartment buildings. 

 

Before the Agency and BHC could enter into any specific terms for completing the transfer of the Center, an experienced childcare operator needed to be identified to make sure that the long-term operation of the Center would meet the goals of the Agency.  These goals were set out in a Request For Proposal (RFP) for childcare operators. Specifically, the Agency wanted to make sure 12 of the 92 childcare spaces would be available for infants (0 to 12 months), since the City currently has a severe shortage of infant care providers.  Also, the Agency requested that 20 percent of the spaces offer affordable, below-market tuition rates. Both of these requirements reduce the feasibility or profitability for an operator to run the center without requiring an ongoing subsidy. 

 

After issuing an RFP, the Agency received five responses from potential childcare operators.  After an extensive review of the proposals, including several meetings with the City�s Childcare Committee, the Agency chose to enter into negotiations  with Knowledge Beginnings.

 

Subsequently, a Management Agreement between BHC and Knowledge Beginnings was prepared, which set forth various terms, including: a five-year operating term; the Scope of Services provided by Knowledge Beginnings, including pre-opening services, and management operating services; insurance; operating expenses and proposed tuition rates; the provision of furniture and equipment; and, the selection priority for the children.

 

As the proposed owner of the childcare center, BHC will be taking on several typical responsibilities, including the payment of property taxes and property insurance.  However, with the infant care and affordability requirements, BHC will be taking on additional responsibilities to make sure that a positive revenue flow is obtained from Knowledge Beginnings within three years after the opening of the facility.  They include paying for utilities and exterior maintenance, and installing the playground equipment.   In addition, BHC will pay for Knowledge Beginnings� start-up costs, including pre-opening staffing, initial marketing and administration, and operational shortfalls expected for the first two years of operation until the Center reaches a stabilized basis.

 

It is proposed that the Elmwood promissory note be amended to provide BHC $61,000 annually to pay for these ongoing expenses including replacement reserves.  This amount assumes that BHC will be paying $20,000 annually in property taxes.   Should the property taxes be reduced or exempted, the Agency�s note would be reduced accordingly to $41,000 per year.

 

For the one-time expenses related to start-up costs, it is proposed that BHC in its agreement with the Agency, borrow $100,000 from the Agency, and begin repaying these funds beginning in year three, when the Center has reached a stabilized basis.

 

The Agreement between the Agency and BHC outlines that BHC will be the owner of the childcare facility, and that the facility will continue to operate in perpetuity as a high quality center.   This includes the requirement that the operator obtain the highly-regarded National Association of the Education of Young Children (NYAEC) accreditation.  In addition, the Agreement outlines the scope of work for  BHC to complete the interior improvement of the Center, including the installation of playground equipment, and that the Agency provide the funds to complete these improvements. 

 

In coordination with M. David Paul and Knowledge Beginnings, plans and specifications were prepared, and BHC issued a proposal to obtain bids.  A total of five bids were received ranging from $935,447 to $1,335,000.  To completely fund this work, it is recommended that the Agency appropriate $522,447 from the Golden State Project Area.  At the same time, it is recommended that the $175,000 in Community Development Block Grant (CDBG) funds be returned to the CDBG account, and that the $200,000 in home sale proceeds be returned to the Agency�s 20 Percent Set-Aside Account.

 

The Housing and Childcare Demonstration Project was intended to accomplish many things, including the elimination of blighted properties in the Golden State neighborhood, and providing new home ownership opportunities with 50 percent of the homes designated for moderate-income homebuyers.   However, the centerpiece of the project is the childcare center, which is the City�s first major effort to address the chronic shortage of quality childcare within the City.

 

When the Center is completed in December of this year, the public will have available a high quality center both in terms of architecture and program elements, and it will have been accomplished without any cost to the City�s General Fund.  It is therefore recommended that the Agency and Council approve the proposed agreements.

  

Recommendation:

 

1.  Adoption of proposed City Council resolutions entitled:

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING AND AUTHORIZING THE REDEVELOPMENT AGENCY TO EXECUTE AN AGREEMENT WITH BURBANK HOUSING CORPORATION PERTAINING TO THE IMPROVEMENT, USE AND OPERATION OF THE CHILD CARE CENTER OF THE HOUSING AND CHILDCARE DEMONSTRATION PROJECT.

 

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK APPROVING THE TERMS AND PROVISIONS OF A COOPERATION AGREEMENT BETWEEN THE CITY AND THE REDEVELOPMENT AGENCY RELATING TO THE HOUSING AND CHILDCARE DEMONSTRATION PROJECT.

 

2.  Adoption of proposed Redevelopment Agency resolutions entitled: 

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING AND AUTHORIZING AN AGREEMENT WITH BURBANK HOUSING CORPORATION PERTAINING TO THE IMPROVEMENT, USE AND OPERATION OF THE CHILD CARE CENTER OF THE HOUSING AND CHILDCARE DEMONSTRATION PROJECT.

 

 

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING THE TERMS AND PROVISIONS OF A COOPERATION AGREEMENT BETWEEN THE AGENCY AND THE CITY OF BURBANK RELATING TO THE HOUSING AND CHILDCARE DEMONSTRATION PROJECT.

 

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK AMENDING THE BUDGET FOR FISCAL YEAR 2003-2004 IN THE AMOUNT OF $622,447 FOR THE PURPOSE OF FUNDING THE INTERIOR IMPROVEMENTS AND PRE-OPENING COSTS FOR THE CHILD CARE CENTER OF THE HOUSING AND CHILDCARE DEMONSTRATION PROJECT.

 

 

2.         Remarketing of $25 Million Redevelopment Agency of the City of Burbank Golden State Redevelopment Project, Subordinated Taxable Tax Allocation Bonds, issue of 1993:

 

The purpose of this report is to request authorization to remarket $25 million Redevelopment Agency of the City of Burbank (Agency) Golden State Redevelopment Project, Subordinated Taxable Tax Allocation Bonds, issue of 1993.

 

On June 17, 2003, the Agency authorized the appointment of a Financing Team as it relates to the remarketing of the $25 million Redevelopment Agency of the City of Burbank Golden State Project Area Subordinated Taxable Tax Allocation Bonds, issue of 1993.  The bonds were originally purchased by the City and were used to help finance the construction of the Police/Fire facility.  The Agency has consistently included the subordinated bonds on its annual Statement of Indebtedness filed with Los Angeles County.  The subordinated bonds bear interest at the Local Agency Investment Fund (LAIF) interest rate plus one percent and are due December 1, 2043.  The subordinated indenture provides provisions for remarketing the bonds.  As a result, the remarketed bonds will bear current market interest rates and will amortize principal payments beginning on December 1, 2022 and ending December 1, 2043.

 

The proposed remarketed tax allocation bonds are anticipated to generate approximately $24,645,000 in net proceeds assuming the use of a reserve fund surety and a bond rating in the �A� category.  A bond rating in the �A� category by Standard and Poor�s would allow for the remarketed bonds to be insured.  Should the Agency not receive the anticipated bond rating and not be able to obtain a reserve fund surety, net bond proceeds will be significantly less that the anticipated amount.  In the event that this happens, Staff recommends that the City and Agency enter into a loan agreement for the difference between the current $25 million subordinated debt owned by the City and the net bond proceeds.  The loan agreement would have the same interest rate terms as the current subordinated debt; however, the principal would be due by December 1, 2020.

 

Based on current market conditions, annual interest only payments would be due on the remarketed bonds of $1,187,500 through 2021 with full amortization beginning in 2022 for a total principal and interest payment of approximately $1,855,000 annually through 2043.  The anticipated arbitrage yield on the remarketed debt is 4.75 percent.

 

The proposed remarketing anticipates generating $24,645,000 which can only be used for capital projects of the City.  A cooperation agreement will be entered into between the City and Agency to ensure that the net proceeds will be expended for capital purposes.  The anticipated net proceeds will change pending final pricing of the remarketed bonds and factors such as the bond rating, if credit enhancement is obtained via bond insurance, as well as the ability to obtain a debt service surety bond.  Compensation for the Financing Team will be paid as part of the bond remarketing costs.  Based on the remarketing calendar, bond pricing has been scheduled for late September with funding by mid-October 2003.

 

Recommendation:

 

1.  Adoption of proposed City Council resolution entitled:

A RESOLUTION OF THE COUNCIL OF THE CITY OF BURBANK REQUESTING THE REPURCHASE BY THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK OF ITS AGENCY�S $25,000,000 REDEVELOPMENT AGENCY OF THE CITY OF BURBANK GOLDEN STATE REDEVELOPMENT PROJECT, SUBORDINATED TAXABLE TAX ALLOCATION BONDS, ISSUE OF 1993.

 

2.  Adoption of proposed Redevelopment Agency resolution entitled:

A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF BURBANK APPROVING AND AUTHORIZING AND DIRECTING EXECUTION OF CERTAIN DOCUMENTS RELATING TO THE PURCHASE AND REMARKETING OF THE AGENCY�S $25,000,000 REDEVELOPMENT AGENCY OF THE CITY OF BURBANK GOLDEN STATE REDEVELOPMENT PROJECT, SUBORDINATED TAXABLE TAX ALLOCATION BONDS, ISSUE OF 1993, AND AUTHORIZING AND DIRECTING ACTIONS WITH RESPECT THERETO.

 

 

CONSENT CALENDAR:  (Item 3)

 

The following item may be enacted by one motion.  There will be no separate discussion on this item 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.

 

3.         Bid Schedule R-1147 - Demolition of Agency Buildings located at 118-152 south san fernando boulevard and 1819 grismer avenue:

 

Opportunity Site No. 2 (the former police block) is bounded by Olive Avenue, Third Street, Angeleno Avenue and San Fernando Boulevard (except the parcel known as the �Radio Shack� parcel at the corner of Olive Avenue and San Fernando Boulevard).  Development of this site consists of two separate projects.  The first project is Burbank Village Walk (the Olson Company) which includes 140 for-sale residential units and 14,000 square feet (sf) of restaurant/retail space along the San Fernando Boulevard frontage.  This project was approved by the Council and Redevelopment Agency Board on February 11, 2003.  The second project is the Burbank Civic Plaza (Cusumano Real Estate Group) and was approved on March 11, 2003.  The project was approved for a 96,000 sf office building including 12,000 sf of commercial space on the ground floor.

 

One of the Agency responsibilities required in the Disposition and Development Agreements (DDAs) for both projects is to convey the portions of the block associated with each project to the respective developers free of any buildings, structures, tenancies and active utilities.  To date, only the buildings along San Fernando Boulevard remain to be demolished (except for the two buildings located on the Radio Shack parcel). 

 

Also, on July 16, 2002, an Acquisition and Sale Agreement for purchase of 1819 Grismer Avenue was approved by the Housing Authority.  The Authority transferred title to the Redevelopment Agency through a Cooperation Agreement dated July 23, 2002.  The property was purchased as part of the Peyton-Grismer Acquisition/Rehabilitation Project and will be the future home of the Peyton-Grismer Achievement Center.  The project is designed to remedy substandard conditions relating to deteriorated buildings, parking structures below code requirements, difficult vehicular ingress and egress, and inadequate recreation space within the Peyton-Grismer neighborhood.  These remedies will require demolition of some of the existing buildings in the neighborhood.  The building located at 1819 Grismer is one of the buildings to be demolished. 

 

Bid Schedule R-1147 was advertised on May 28, 2003 and May 31, 2003.  Pre-bid project meetings were held on June 5, 2003, June 11, 2003 and June 17, 2003.  On June 24, 2003, seven bids were received as follows:

 

Viking Demolition                             $85,328

Three D Service                                $92,505

American Wrecking Inc.                   $93,700

Interior Demolition Inc.                      $95,000

Pena Grading & Demolition Inc.      $125,375

William L Olson Inc.                          $127,750

J & G Industries Inc.                          $178,000