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HomeMy Public PortalAboutMinutes - 2008/01/15 - RegularCOMMUNITY REDEVELOPMENT AGENCY TEMPLE CITY, CALIFORNIA REGULAR MEETING MINUTES JANUARY 15, 2008 1. CALL TO ORDER Chairman Wong called the Community Redevelopment Agency Regular Meeting to order at 7:36 p.m. in the Council Chambers located at 5938 Kauffman Avenue, Temple City. 2. ROLL CALL PRESENT: ABSENT: Member - Capra, Vizcarra, Wilson, Gillanders, Wong Member -None ALSO PRESENT: Executive Director /Agency Counsel Martin, Assistant Executive Director Lambert, Agency Secretary Flandrick 3. CONSENT CALENDAR Mayor Pro Tem Gillanders moved to approve the Consent Calendar, seconded by Mr. Capra and unanimously carried by the following roll call vote: AYES: Member - Capra, Vizcarra, Wilson, Gillanders, Wong NOES: Member -None ABSENT: Member -None ABSTAIN: Member -None A. APPROVAL OF MINUTES Approved the Minutes of the Regular Meeting of January 2, 2008, as presented. B. ADOPTION OF RESOLUTION NO. CRA 08 -931 — APPROVAL OF PAYMENT OF BILLS Adopted Resolution No. CRA 08 -931, a RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF TEMPLE CITY ALLOWING CLAIMS AND DEMANDS IN THE SUM OF $60,998.33 DEMAND NOS. 3488 THROUGH 3489. 4. UNFINISHED BUSINESS — None 5. NEW BUSINESS — None 6. COMMUNICATIONS — None 7. PUBLIC COMMENTS — None 8. UPDATE FROM EXECUTIVE DIRECTOR A. PIAZZA LAS TUNAS STATUS REPORT FROM A &W BUILDERS Executive Director Martin stated the Agency Members would now hear from the developer, A &W Builders. Mr. Randy Wang, owner of the property, was not present. Executive Director Martin advised the Agency Members to not make any decisions this evening as to a letter from the owner of the property as it has not been signed. This letter from the owner as well as a letter from AAE Incorporated (Plan Check Engineers), dated January 11, 2008, were received by the Agency Members and submitted for the record. Agency Minutes January 15, 2008 Page 2 Louie Aurelio, Senior Project Manager, A &W Builders, read into the record the following letter from owner Randy Wang, TCD Enterprises, LLC, dated January 11, 2008 and addressed to Council Members. "Re: Office Condo Conversion Dear Council Members: Year 2007 has been a year of challenges and accomplishments for The Piazza" project. It has been a year of change, resolutions and progress. Capitalizing on the People who have brought the project to where it is now is the biggest ASSET the project has ever had — The City Council of Temple City, the Staff of Temple City, the Community of Temple City, A & W Builders, HTH Architects and the other Consultants whom have put in their commitment to move forward with the project's known and undetermined challenges and risks. I believe that coming together as whole and having the same objective was, and still is, the best tested formula in weathering the storm that has come to pass. It is with this principle that I would like to employ your assistance and support once again. With consideration on the basis on the three elements of Project Management — Quality, Budget and Schedule, The Piazza" is once again being tested on the basis of finance and time of project completion due to current nationwide economic challenges in the residential sector. Financial Institutions are becoming more restrictive on term requirements to minimize risk. This is an unprecedented and unfavorable situation for TCD Enterprises, LLC and other developers and investors countrywide. An unforeseen risk, which may have been favorable at the inception of the project at three years past. The Residential Sector is in deep water, according to today's Los Angeles Times. Property values for single - family homes in Arcadia have dropped 12% in value. The condo market has dropped substantially more. Besides the property value decline, and by adding today's absorption rate, it would take the residential condominiums approximately five to six years to sell out. Ultimately the holding cost for this would be economically prohibitive. The Commercial Sector seems to be somewhat more promising to most financial loan programs in the current market but still has its own separate challenges. The "PIAZZA" will have an overall development cost of approximately $75 million. The size of this loan requires that no single bank has the ability and or the threshold of pain to fund this loan separately. If the project is funded it will require one primary lender and approximately four to eight additional banks to pony up all of the funds. During the past week, we have presented our new plan for an all commercial project, and completely eliminating the residential, to three major banks: East -West Bank, Far East Bank, and the Bank of East Asia (BEA). Furthermore, we have made arrangements, to meet later this week, with three additional potential lenders. The new plan had a favorable economic outlook from the three previously mentioned banks with some conditions and requirements. In pursuing the project loan, at this juncture, we have divided the requirements in to four primary sections: 1. Bank Requirements: As outlined by the bank requirements, the loan process cannot be initiated without the consideration and approval of the "The New Plan" by the City of Temple City. 2. Pre - Leasing: The required pre - leasing of approximately 30% of the project prior to funding. Our group has now retained three separate brokers to work for the project — Pegasus Realty, SDC Real Estate and NAI Capital. Unfortunately, not until we get our construction financing secured will we be able to receive a legitimate letter of intent (LOI) from a major tenant. 3. Construction Cost: A & W Builders is working diligently to obtain qualified competitive bids to reduce the cost of the overall construction without reducing the quality of work. All cost 1 1 1 1 1 Agency Minutes January 15, 2008 Page 3 savings, if any, shall be required by the bank to be withheld in place in the interest reserve category. 4. Appraised Value: Each lender has requested a new appraisal on the property to substantiate the new economic conditions that we are faced. Moreover, should the appraised value be less than what is outlined in our Performa, TCD Enterprises, LLC shall be set in another opportunity to re- evaluate the economic condition of the project. On the other hand, the key challenge is to be able to pay down the development cost of the parking structure. The project, on its own, cannot support all the amenities and the Parking Structure. All the proceeds from the new proposed office condos will be swept to pay down the Parking Structure. Without the pay down of the Parking Structure, as outlined in the Performa, the income from the approximate 124,000 square foot of retail will not support and equalize the project debt. In moving forward with the project, without the purging of the agreements in place, due to the proposed change in zoning, between "The Agency" and "TCD Enterprises, LLC ", TCD would like to propose the following items to be under the consideration and approval by the Agency: 1. The conversion of the Residential Condominium use to Office /Medical Condominium use. - The overall square footage shall not be reduced; - The exterior elevations and other architectural features shall be in compliance with the agreement; - The building heights shall remain unchanged; - The parking requirements shall be met. 2. A twenty -four month extension from August 2009 to August 2011, without penalties and /or default on the agreements in place. At a minimal each potential lender on the project requires a 12 month tale on the backside of their 30 month construction loan. This will give the developer the opportunity to complete the project and additional time to stabilize the project through the lease up process. As with any project, the nature of being is a result of the effort in providing solutions to every risk that may come its way. While the final outcome may be promising, the process in getting to the finish line is the biggest challenge which may come in different forms. I believe that the key in getting the "Piazza" to the finish line is to be able to mitigate the issues with resolutions. Lastly, during the last council meeting, it was discussed in open forum of our financial situation. Ultimately, we need to be able to communicate with the City Council and the Development Team openly. As Mr. Martin had previously stated, this is a partnership between the City and the Developer. As a result of this open dialogue, after the last City Council meeting, I was inundated with individuals expressing a one sided interest of the project. Firstly, while many may question the uncertainty of the project and on the changes that have come to play, it is CERTAIN that I am determined to exhaust all avenues to make "The Piazza" a reality. Secondly, TCD's contractual obligation with A & W Builders and a like, is irrelative to the situation at hand, and would like to maintain its private nature to concerned parties only. Once again, TCD Enterprises, LLC would like to extend its gratitude, to the City of Temple City, for its enduring support to the project team and the future of The Piazza ". Please don't hesitate to contact my office should you require any attention concerning this matter. Sincerely, Randy Wang TCD Enterprise, LLC" Executive Director Martin asked when owner Randy Wang would sign the letter and Mr. Aurelio responded that Mr. Wang would sign the letter tomorrow. Agency Minutes January 15, 2008 Page 4 Executive Director Martin asked if A &W Builders had any comments regarding the letter from AAE dated January 11, 2008, and attached hereto as Exhibit A, containing comments regarding the third plan check. Mr. Aurelio responded that A &W Builders just received the letter yesterday and would like time for their team to digest the comments. Executive Director Martin stated AAE's letter seems to suggest that the project has not gotten off the ground yet. Nothing has been approved and the conditions attached to the letter are negative. Mr. Aurelio stated most of the comments are on the legal side for clarity. He felt AAE was doing a good job in making sure the project was in compliance with the codes. It is his responsibility to make sure that those codes are put on paper and his engineers are working on it. He asked for a few weeks to digest the contents of the letter with his engineers and to come up with a good answer to the Agency. Executive Director Martin asked if A &W was asking for two more weeks to be able to explain the letter. Mr. Aurelio said he could not comment on it as his engineers have not had time to digest the information. Executive Director Martin stated when A &W first came on board, they assured the Agency that the project will be finished on time and the changes were slight up until the last meeting when A &W said they would not be able to meet the timeline and now are saying they want an additional two years. He asked for an explanation for their change of position. Mr. Aurelio stated if they could do it, they would, but these are requirements being given to A &W by banks. They were put in this situation where they need to work together to finish the project. Executive Director Martin stated A &W is now asking for a full 2 -year extension to the year 2011 and not offering any reimbursement to the Agency for that. David Wilson, Rresident/CEO, A &W Builders, stated the time extension was required by the lender to make sure there wasn't a sunset before the property would stabilize. So the additional 12 months was a surprise somewhat to them. But looking at the big picture, once the project is completed, they want to make sure that we are in total compliance and want additional time to lease out the property. As far as the time of construction they are still looking at approximately 24 months of construction, but they want time to complete the project and lease it out and not be in default of the agreement. In response to Executive Director Martin, Mr. Wilson confirmed that the Pro Forma submitted to the Agency was the same as given to the banks and that he felt it was realistic. He also responded that A &W will have to be aggressive in shopping for contractors at those prices, but felt they could do it. 9. MATTERS FROM AGENCY MEMBERS — None RECESS /RECONVEN E At 7:52 p.m., the Community Redevelopment Agency recessed to the time of the Closed Session and reconvened at 8:24 p.m. with all Members present. 1 1 1 Agency Minutes January 15, 2008 Page 5 10. CLOSED SESSION At 8:24 p.m., the Community Redevelopment Agency recessed to a closed session for the purpose stated below. Purpose: Potential Litigation Cases: One (1) — The Agency Counsel has recommended the Agency hold a closed session regarding potential litigation based on existing facts and circumstances not yet known to potential defendants (and if known could prejudice possible settlement) Authority: Government Code Section 54956.9(b)1 and 54956.9(b)(3)(A) Representatives: Executive Director /Agency Counsel. RECONVENE The Community Redevelopment Agency reconvened at 8:55 p.m. with all Members present. CLOSED SESSION STATEMENT Executive Director Martin stated the Agency met in closed session regarding possible litigation, and because he had a conflict of interest in the matter, authorized him to retain outside counsel with a starting retainer not to exceed $50,000, to discuss alternative methods of proceeding from this point forward with regard to the Piazza. Vice Chairman Gillanders so moved this action, seconded by Mr. Capra and unanimously carried by the following roll call vote: AYES: Member - Capra, Vizcarra, Wilson, Gillanders, Wong NOES: Member -None ABSENT: Member -None ABSTAIN: Member -None 11. ADJOURNMENT The Community Redevelopment Agency Regular Meeting adjourned at 8:57 p.m. ATTEST: Y K. Agency 1 Se etar