Loading...
2014-03-06 Oversight Board MinutesMINUTES OF THE REGULAR MEETING OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF VERNON HELD THURSDAY, MARCH 6, 2014, IN THE COUNCIL CHAMBER OF THE CITY HALL LOCATED AT 4305 SANTA FE AVENUE, VERNON, CALIFORNIA MEMBERS PRESENT: W. Michael McCormick, Jonathan S. Fuhrman, William J. Davis, Steven Reyes, Alex Cherniss, and David Vela MEMBERS ABSENT: Mary Gallagher The meeting was called to order at 4:10 p.m. by Chairperson McCormick; he also led the flag salute. CHANGES TO THE AGENDA Legal Counsel Gustavo Lamanna announced the removal of the February 6, 2014 Minutes from the agenda. PUBLIC COMMENT Chairperson McCormick announced that this was the time allotted for public comment and inquired whether anyone in the audience wished to address the Board. No one responded. ACTION ITEMS 1. Ratification of Resolutions approved by the Former Vernon Redevelopment Agency concerning Resolution Nos. RA-396 through RA-406 as part of the winding down of the Former Vernon Redevelopment Agency as follows: a. Resolution No. OB-25 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-396 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on February 1, 2011, RA-396 Appointed Financial and Legal Consultants in Connection with the Proposed Issuance of its Tax Allocation Bonds; Making Certain Determinations Relating Thereto; and Authorized Certain Other Action in Connection Therewith. b. Resolution No. OB-26 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-397 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with Oversight Board Regular Meeting Minutes March 6, 2014 Page 2 of 10 instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on February 15, 2011, RA-397 Authorized the Issuance of its Industrial Redevelopment Project Tax Allocation Bonds; Approved a Form of First Supplemental Indenture, a Form of Purchase Contract, a Form of Continuing Disclosure Agreement and a Form of Official Statement; Making Certain Determinations Relating Thereto; and Authorized Certain Other Actions in Connection Therewith. c. Resolution No. OB-27 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-398 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on March 1, 2011, RA-398 Approved the Assignment of and Assigning an Existing Obligation to Purchase and Develop a Certain Project to the Redevelopment Agency of the City of Vernon located at 4850 - 5050 Pacific Boulevard. d. A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-399 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on March 1, 2011, RA-399 Approved the Assignment By the City of Vernon of Development Costs in Return for Trading Credits for Property Located at 3200 Fruitland in the City of Vernon and Superseding Resolution No. RA-346. e. Resolution No. OB-28 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-400 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. Oversight Board Regular Meeting Minutes March 6, 2014 Page 3 of 10 i. Approved on March 7, 2011, RA-400 Approved the Execution of an Assignment and Assumption Agreement by and Between the City of Vernon and the Redevelopment Agency of the City of Vernon to Convey Rights Under an Option Agreement for the Purchase of Property Located at 4850 – 5050 Pacific Boulevard, and Authorized the Chairman of the Board of Directors to Close Escrow on Property Located at 4850 – 5050 Pacific Boulevard. f. Resolution No. OB-29 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-401 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on March 7, 2011, RA-401 Approved and Authorized the Expenditure of Development Costs Regarding Property Located at 4850 – 5050 Pacific Boulevard in the City of Vernon. g. Resolution No. OB-30 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-402 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on June 7, 2011, RA-402 Amended Section 18 of the Joint Exercise of Powers Agreement Relating to the Vernon Natural Gas Financing Authority. h. A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-403 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on June 7, 2011, RA-403 Approved and Authorized a Reimbursement Transfer in the amount of $13,865,160.10 to the City of Vernon for Funding of Capital Projects for benefit of the redevelopment project areas for the period 1996 to 2011. Oversight Board Regular Meeting Minutes March 6, 2014 Page 4 of 10 i. Resolution No. OB-31 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-404 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on June 7, 2011, RA-404 Approved and Ratified the Execution of an Engagement Letter Agreement Between the City of Vernon and DLA Piper LLP Relating to the Property Located at 3200 Fruitland Avenue in the City of Vernon. j. Resolution No. OB-32 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-405 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on August 2, 2011, RA-405 found no present need for future Low- and Moderate-Income Housing in the City of Vernon. k. Resolution No. OB-33 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon approving and ratifying the disposition of assets and properties in Resolution No. RA-406 as authorized actions under California Health & Safety Code Sections 34177 and 34181, and ratifying certain related actions pursuant to AB X1 26, as amended by AB 1484, AB 1585, and SB 341 with instructions to the Successor Agency to the Redevelopment Agency of the City of Vernon in conformance with this resolution. i. Approved on August 16, 2011, RA-406 Adopted a Budget for the Fiscal Year 2011-2012. Legal Counsel Gustavo Lamanna reported on the requested actions pursuant to Health and Safety Code Section 34181(a). He reported on the City of Brentwood and Foster City cases, both of which are still pending. As no decisions has been made, staff will continue to monitor and will brief the Board when results become available. Lamanna explained and presented on the Board’s role and approval process to dispose of all assets and properties. He noted the instability created by the pending cases of the City of Brentwood and Foster City. The proposed recommendations are Oversight Board Regular Meeting Minutes March 6, 2014 Page 5 of 10 consistent with the Board’s duties; furthermore, the actions approved by the Board will be reviewed by the Department of Finance. Lamanna explained that the recommendation addresses eleven (11) separate actions taken by the Former Redevelopment Agency (“RDA”). Although the Board can vote on each of the 11 proposed actions, he invites the Board to approve the ratification of the RDA Resolutions under one motion. However, Lamanna provided and presented on three different options. “Option 1,” which is staff’s recommendation, recommends the approval of the Oversight Board resolutions ratifying the prior actions of the RDA subject to the Department of Finance review. This allows the Board to continue on its path of winding down the affairs of the Successor Agency and would minimize the instability created by the uncertainty of the pending cases. “Option 2” recommends the approval of the Oversight Board resolutions ratifying the prior actions of the RDA, subject to the Brentwood and Foster City tentative decisions, and will not take effect until they are final and non-appealable. Lamanna explained that although approval would be given now, the action will not be effective until the cases have concluded. Vice Chairperson Fuhrman expressed his uncertainty on whether the proposed actions are necessary. In response, Lamanna explained how there is uncertain and the recommended actions would help move progress toward the mutual goal of the dissolution of assets and liability. “Option 3” recommends that the proposed ratification of the prior actions of the RDA be tabled until the next Oversight Board meeting following the court’s decision on the two cases. The final outcome will not be determined until the two cases have been litigated. No action on staff’s recommendations will be taken at this time. Lamanna advised that if the Board wished to approve all under one motion that would be appropriate. Vice Chairperson Fuhrman expressed his concerns with the approval of items 1.d, 1.g, 1.h, and 1.j as noticed on the agenda. Member Reyes is considering Option 3 as he is still unsure of the effects of the cases. Lamanna explained that under Options 2 or 3 the closing of the items would be pending the final determination of the two cases. In response to Member Reyes, Lamanna advised that not many other Oversight Boards have gotten as far as this Board. Should the Board approve the recommendations pursuant to Option 1, the approved items will be reviewed by the Department of Finance. Vice Chairperson Fuhrman noted that it could be a two-year process to go through the court’s appeal process. Member Reyes sought clarification from Vice Chairperson Fuhrman on the four items he objected to. Oversight Board Regular Meeting Minutes March 6, 2014 Page 6 of 10 Vice Chairperson Fuhrman reported on his objection to approve the following: 1.d. – Ratification of Resolution No. RA-399, the transfer to the City of reclaim trading credits in exchange for a project that he opined would never come to fruition. 1.h. – Ratification of Resolution No. RA-403, the $13 million cash transfer to the City. 1.g. – Ratification of Resolution No. RA-402, amendment to the Joint Powers Agreement with the Natural Gas Financing Authority. 1.j. – Ratification of Resolution No. RA-405, that determined that there is no need for low-to-moderate income housing in Vernon. It was moved by Member Davis and seconded by Vice Chairperson Fuhrman to approve items 1.a (Resolution No. OB-25), 1.b (Resolution No. OB-26), 1.c (Resolution No. OB-27), 1.e (Resolution No. OB-28), 1.f (Resolution No. OB-29), 1.i (Resolution No. OB-31), and 1.k (Resolution No. OB-33), as noticed on the agenda under Option No. 1 as proposed by staff. Motion carried, 6-0. Board addressed the remaining proposed items individually. Lamanna presented on item 1.d as noticed on the agenda, recommending the ratification of Resolution No. RA-399. The motion captured the assignment of power plan development costs in return for environmental trading credits of comparable value. Member Reyes questioned the provision of assets and resources without remuneration. Vice Chairperson Fuhrman further inquired on the status of the power plant. In response Lamanna explained that the power plant was intended to be a joint venture between the City of Vernon and the Former Redevelopment Agency. In order to build the plant, emission credits had to be purchased additionally development costs were expended; however, the power plant did not move forward. Lamanna advised that the credits were always under the name of the City. The action formally placed the development costs on the Redevelopment Agency’s books in case the development moved forward. Lamanna advised that some of the credits are still on the City’s books. Vice Chairperson Fuhrman stated that there are no realistic prospects to proceed with the power plant project. Lamanna advised that there is no immediate goal to build the power plant. Finance Director William Fox reported on closure of the San Onofre Nuclear Generating Station and the states internal need for a power plant. Vernon’s location would be optimal for a power plant. There is a strong likelihood for this based on the demand. Vice Chairperson Fuhrman inquired on the likelihood of winding down the affairs of the Agency if the development credits were on the Agency’s book. He opined that it may be easier to reverse the transaction and dispose of the trading credits. In response, Lamanna advised that the development costs are tied to a specific development project. There would be no Oversight Board Regular Meeting Minutes March 6, 2014 Page 7 of 10 compensation for the undoing of the transaction. He further explained that the credits were always under the City’s name. Member Reyes advised that the fair market value should be considered as it parallels the assessment of real property. By taking this approach or conducting further review would help guide the Board in its decision. Lamanna advised that staff has considered this route. He advised that there is no reason to unwind this action; the legitimacy should be ratified as an approved transfer. He questioned the ability of the Successor Agency to get the trading credits. Vice Chairperson Fuhrman advised that if no action is taken, the item remains status quo. If the Department of Finance determines that the action should be unwound, then the Board’s failure to endorse could potentially snowball the effects. Lamanna advised that if the Board decides on Option 3 then it remains status quo. It would be difficult for anyone to unwind the transaction as there is legal basis to support decisions made by the RDA during the first part of 2011. Staff’s reasoning for Options 1 or 2 is that it can expeditiously wind down the affairs of the Successor Agency and there is no potential instability. Vice Chairperson Fuhrman advised that he is sensitive to the winding down of the affairs but he does not want to be excessively generous in doing so. Lamanna noted that the financial auditors, Macias Gini and O’Connell, LLP, did not find the transaction questionable in their review of the financial statements. Lamanna advised that the goal is to expedite the process. If the Department of Finance has any concerns it will bring it to the Board’s attention. If the Board does not take an action, the Department of Finance will not review the item. Chairperson McCormick moved for Option 1 on the ratification of Resolution No. RA-399, item 1.d as noticed on the agenda. It was seconded by Member Davis. Motion fails, 2-4, with Fuhrman, Gallagher, Cherniss, Reyes, and Vela in opposition. Chairperson McCormick moved for Option 2 on the ratification of Resolution No. RA-399, item 1.d as noticed on the agenda. It was seconded by Member Davis. Motion fails, 2-4, with Fuhrman, Gallagher, Cherniss, Reyes, and Vela in opposition. Member Reyes moved for Option 3 on the ratification of Resolution No. RA-399, item 1.d as noticed on the agenda. It was seconded by Member Vela. Motion carries, 6-0. Member Vela exited the meeting. Lamanna reported on the ratification of Resolution No. RA-402, item 1.g. as noticed on the agenda, which addresses the amendment to the Joint Exercise Powers Agreement relating to the Vernon Natural Gas Financing Authority (“VNGFA”). He noted that the Successor Agency has ceased membership in the VNGFA. Oversight Board Regular Meeting Minutes March 6, 2014 Page 8 of 10 In response to Vice Chairperson Fuhrman’s concerns, Lamanna explained that there is no debt in the VNGFA, the Successor Agency has ceased membership, and the VNGFA is subject to termination. Vice Chairperson Fuhrman withdraws his objection to approval under Option 1 for the proposed item. It was moved by Chairperson McCormick and seconded by Member Reyes to approve the Ratification of Resolution No. RA-402, under Option 1, item 1.g as noticed on the agenda; memorialized as Resolution No. OB-30. Motion carries, 5-0. Lamanna reported on the ratification of Resolution No. RA-403, item 1.h. as noticed on the agenda, which addresses the reimbursement transfer in the amount of approximately $13 million to the City. Lamanna recalled that a demand letter from the Oversight Board was sent to the City and that no action had resulted. Vice Chairperson Fuhrman stated his opposition to not approve the proposed, for reasons previously established. It was moved by Member Reyes and seconded by Vice Chairperson Fuhrman to select Option 3, which is no action on the proposed; item 1.h as noticed on the agenda will be tabled until the cases have been resolved. Motion carried, 5-0. Lamanna reported on the ratification of Resolution No. RA-405, item 1.j. as noticed on the agenda, which addressed the need for low-and-moderate income housing at the time. In response to Vice Chairperson Fuhrman’s concerns Lamanna explained that due to public safety no additional low-and- moderate income housing was determined to be needed. Member Reyes questioned whether the ratification by the Board of the proposed was appropriate. Lamanna explained that it is the ratification of the RDA actions in terms of the disposition of assets or funds; therefore, it is appropriate for the Board to consider. It was moved by Member Davis and seconded by Chairperson McCormick to approve item 1.j as noticed on the agenda, pursuant to Option 1. Motion fails, 2-2-1, with Reyes and Cherniss in opposition, and Fuhrman abstaining. Kung explained that the Agency went through the state’s process to make this determination. This is the usual determination as there are few areas zoned for housing and the City is primarily industrial. Because there is a rendering plan in Vernon, there was not a desire to place additional housing in the area. Kung explained how the resident community decreased as industry grew over the years. A low-moderate income housing project is now being developed near Maywood in accordance with the good governance reforms in order to double the City’s population. Kung noted that historically these were the findings that the state approved. In response to Vice Chairperson Fuhrman’s reasoning that now a location for additional housing has been identified, Kung explained that the property was previously obtained by the City Oversight Board Regular Meeting Minutes March 6, 2014 Page 9 of 10 in order to build a new Fire Station, but that due to budgetary constraints the project never came to fruition. The property was recently rezoned to address the housing need. Staff confirmed for Member Reyes that there are no other properties in Vernon that could accommodate housing. Chairperson McCormick added that the site became available after the occupant went out of business. He noted that there is industry on both sides of the property. After considering staff’s reporting, Member Reyes is in support of Option 1. The board reconsidered the motion. It was moved by Member Davis and seconded by Chairperson McCormick to approve item 1.j as noticed on the agenda, pursuant to Option 1; memorialized by Resolution No. OB-32. Motion carried, 4-0-1, with Fuhrman abstaining. 2. Resolution No. OB-34 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon allowing the Successor Agency of the Vernon Redevelopment Agency to create an enforceable obligation to conduct the work of winding down the former Vernon Redevelopment Agency, including the approval of contracting of the professional services of a qualified appraisal firm to complete the appraisal of 4528 Bandini Boulevard pursuant to California Health & Safety Code Section 34177.3(b). Legal Counsel Gustavo Lamanna advised that at the previous meeting staff had proposed to implement the long-range property management plan and convey the Austin Trucking site to the City of Vernon. The Board directed staff to conduct a request for proposal (“RFP”) process to obtain a firm in order to conduct an appraisal of the site. The RFP process has been conducted and two proposals were received. Lamanna reported on the proposals. He noted that the County Department of Finance will most likely object to the expense, as it is not part of the long-range property management plan. It was moved by Vice Chairperson Fuhrman and seconded by Member Cherniss to select Curtis Rosenthal to conduct the appraisal and approve Resolution No. OB-34. Motion carried, 5-0. 3. Resolution No. OB-35 - A Resolution of the Oversight Board of the Successor Agency to the Redevelopment Agency of the City of Vernon adopting, approving, and ratifying the Recognized Obligation Payment Schedule for the period July 1, 2014 through December 31, 2014, and approving certain related actions pursuant to California Health & Safety Code Sections 34177(l), 34177(m) And 34180(g). Legal Counsel Gustavo Lamanna explained that this is a new Recognized Obligation Payment Schedule (“ROPS”) that will supersede and replace the previously approved ROPS during the February 6, 2014, meeting. He advised that much discussion was had with the County Auditor Controller’s Office. Vice Chairperson Fuhrman noted that the $5,000 for the appraisal cost was listed as a non-administrative item. In response Lamanna explained that it is considered part of the property disposition and has been previously noted as such. Oversight Board Regular Meeting Minutes March 6, 2014 Page 10 of 10 It was moved by Vice Chairperson Fuhrman and seconded by Member Davis to approve Resolution No. OB-35. Motion carried, 5-0. ORAL REPORTS Successor Agency Staff Alex Kung reported that demolition at the Angelus Can property has commenced. Vice Chairperson Fuhrman inquired whether there was a need for Oversight Board meetings in the upcoming months. It was determined that there was no need. The Board is to meet in June at its regularly scheduled date. Should there be a need, a special meeting can be called. All other meetings until said date are cancelled. All were in agreement With no further business, at 5:12 p.m., Chairperson McCormick adjourned the meeting. ________________________ W. Michael McCormick Chairperson ATTEST: _________________________ Ana Barcia Secretary