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HomeMy WebLinkAbout12-19-1996 Adjourned City Council Minutes_~ MINUTES ADJOURNED REGULAR CITY COUNCIL MEETING CITY OF LAKE ELSINORE 130 SOUT~I MAIN STREET LAKE ELSINORE, CALIFORNIA THURSDAY, DECEMBER 19, 1996 ****~~~****.~~*****~*~*****~****~~*~**~**~****~~~~*~*~*~~,~*~**~*,~~ CALL TO ORDER The Adjourned Regular City Council Meeting was called to order by Mayor Pape at 9:06 a.m. PLEDGE OF ALLEGIANCE The Pledge of Allegiance was led by City Attorney Harper. ROLL CALL PRESENT: COUNCILMEMBERS ABSENT: COUNCILMEMBERS: ALONGI, BRINLEY, KELLEY, METZE, PAPE . NONE Also present were: City Manager Molendyk, Assistant City Manager Watenpaugh, City Attorney Harper, Administrative Services Director Boone, Community Development Director Leslie, Community Services Director Sapp, Assistant to the City Manager Best, City Engineer O'Donnell, Building & Safety Manager Russell, Police Chief Walsh, Financial Advisor Gunn and City Clerk Kasad. PUBLIC COMMENTS - AGENDIZED ITEMS None requested. CONSENT CALENDAR The following item was pulled from the Consent Calendar for further discussion and consideration: Item No. 3. MOVED BY BRINLEY, SECONDED BY METZE AND CARRIED BY UNANIMOUS VOTE TO APPROVE THE BALANCE OF THE CONSENT CALENDAR AS PRESENTEA 1. Ratified Warrant List for December 12, 1996. (F:12.3) PAGE TWO - ADJOURNED REGULAR MINUTES - DECEMBER 19, 1996 2. Approved Cost Recovery for Abatement Costs on 107 East Sumner Avenue and authorized the placement of a special Lien against the property. (F:32.4) 4. Approved Letter of Support for GFI Racing to be signed by the Mayor and directed staff to begin contract nego6ations with GFI Racing and the City for a long-term agreement. (F:62.1) 5. Adopted Resolution No. 96-67 approving the Casino Drive Bridge at San Jacinto River, Caltrans Local Seismic Retrofit Program. (F:156.2) RESOLUTION NO. 96-67 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, ADOPTING PROGRAM SUPPLEMENT NO.OlO T0 LOCAL AGENCY/STATE AGREEMENT FOR FEDERAL- AID PROJECTS NO.. 08-5074 CASINO DRIVE BRIDGE AT SAN JACINTO RIVER SEISMIC RETROFIT. 6. Approved Public Hearing Date of January 14, 1997, for the following: a. An Ordivance of the City Council of the City of Lake Elsinore amending Section 8.18.090 of the Lake Elsinore Municipal Code concerning Nuisance Abatement costs. (F:32.4) PUBLIC HEARINGS 21. Develooment Aereement between the Citv of Lake Elsinore and First Financial Crroun. Inc. (LEAI for a Project in the East Lake Snecific Plan Area and A~,reement for Purchase and Sale and Joint Escrow Instructions between the Crtv of Lake Elsinore Redevelonment A encv and First Financial Group Inc (LEA for 80-acres of Unimproved Land within the East Lake Snecific Plan Area. (F:68.1)(X:134.10) City Manager Molendyk noted the efforts by City Attorney to arrive at this Agreement and noted the presence of Mr. Shine. City Attorney Harper noted that there has been a great deal of discussion on this issue to date. He explained that there are a few key significant issues for the Council, but stressed that the Development Agreement is one of very few remaiiung steps to release the Lis Pendens to develop East Lake; and the last consideration prior to tentative tract maps. He further explained that the Development Agreement was required by the settlement agreement and was included in that agreement as an exhibit in its draft. He indicated that it memorializes the provisions of the settiement agreement. He detailed the areas of concern raised by the Councii being first, whether or not we can reasonably expect that LEA will go forward and process tentative maps and bring the project to fiuition. He noted a letter from First Financial Group letter which was faxed and read it for those in attendance as follows: PAGE TH1tEE -'ADJOURNED REGULAR MINUTES - DECEMBER 19, 1996 Ladies and Gentlemen: It is with great pleasure that we see what has been a long and arduous process coming nearly to an end. With the approval of The Development Agreement and Purchase and Sa1e agreement, combined with the adminisirative amendment to the Specific Plan and admuustrative lot line adjustment, the Lis Pendens affecting all of the Easflake Property will be released. It is our intention to file a tentative tract map application as quickly as is feasible. To that end, we have prepared a number of preliminary lot configurations and intend to meet with Planning and Engineering staff in the near future to provide and receive input. We anticipate that the remaining issues (Elsinore Valley Municipal Water District, Elsinore Unified School District, etc.) will be addressed and finalized in the context of the tentative map process. American Beauty is presently pursuing entitlements for approximately 1200+ lots in the Moreno Valley, 376 lots in the Santa Clarita Valley, approximately SOO lots in Murrieta, and is presently in escrow on a large property in the City of Rancho G~camonga which should close at the end of January. We are very anxious to proceed with our project in Lake Elsinore, of which the City Council, current residents and future home owners can be proud. Very truly yours, Jack Shine. City Attorney Harper indicated that the second issue is more substantive and generated by EVMWD, relating to concerns for the cost of oversizing. City Manager Molendyk noted a letter received from Mr. Hoagland with regard to District concerns. City Attomey Harper noted that the Water District has commented from the begimiing regarding concerns for providing capacity infrastructure to the entire East Lake Development Project. He detailed the varying thoughts on this topic; and stressed that the District has always addressed it as a potential problem for provision of adequate service to the entire development. Mr. Harper addressed Page 35 of 153, Section 10.6.2, which addresses oversizing, and clarified that it says, if the City requires the facilities to be oversized, then they are the City's responsibility; but if another agency requues oversizing, then the developer is obligated to construct the facilities subject to reimbursement agreements from the future development of adjacent~ properties. He fiuther clarified that while it says the City, the reimbursement agreement says that we assess the adjacent properties and reimburse the developer. Councilwoman Brinley further questioned the reimbursement requirement for oversized facilities. Mr. Harper explained that T'MC would reimburse this developer when they build; and stressed that the City has no obligation to reimburse; but the developer is reimbursed when the others build their developments. He clarified that the oversizing reimbursement agreement PAGE FOUR - ADJOURNED REGULAR MINiJTES - DECEMBER 19, 1996 will either be with the City or with Elsinore Va11ey Municipal Water District. He noted an existing agreement with East Lake Community Builders to pay their fair share of the costs; and stressed that there is no obligation on the City to make payrnents for the oversizing. Mayor Pro Tem Keiley questioned the property improvements on site. City Attorney Harper indicated that the on site improvements aze the responsibility of the developer. Mrs. Kelley questioned page 7, second paragraph with regard to $1.1 million of City funds for off-site facilities; and the continuing portion which states that it comes out of the City funds. Mr. Harper explained that there is some obligation for the City to put in minunum backbone infrastructure for the 400 units, with the $l.l million, leaving a City balance of $1.5 million He reminded the Council that the City purchase price was $2.6 million and clarified the negotiations and final dollar amounts. Councilwoman Brinley questioned the $500,000 figure. Mr. Harper clarified the approach used in the settlement agreement with a$600,000 credit and a$2 million check with one half million going toward the construction of off-sites. He stressed that this has always been part of the structure of the deal and clarified the distribution further. Mayor Pro Tem Keiley questioned the $3.9 million estimate. Mr. Harper stressed that it is the infi-astructure beyond what is necessary for the project which will be the responsibility of TMC. Mrs. Kelley questioned if this meant there would be no improvements to Mission Trail, Malaga or Village Drive. Mr. Harper clarified that these improvements will be made when East Lake develops to the point to require the off-sites. He stressed the requirement for a nexus of improvements to a particular project. He also noted questions with regard to ECB and what happens if they never do anything; and advised that infrastructure will only be built to support this 400 units. He noted that things look very positive with TMC and they will be responsible to step up and pay the rest. He noted a meeting involving TMC and ECB with City staff in which they agreed to underwrite the overages. Mayor Pro Tem Kelley expressed concern that the project could never happen and therefore tfiere would be no improvements and 400 new homes. City Attorney Harper concurred with tlus concem, but stressed the legal requirements only allow for the City to require those things which relate to the project. Mayor Pro Tem Kelley stressed her concern that there will be no improvements to those roads. Mr. Harper concurred. Mayor Pape noted that when the calculations are done, there is still the ability to veto the proposal. Mr. Harper noted that Mr. Shine wants to build and has no interest in gouging the City; but if either side deterniines the costs are out of line, either side would want the ability to not commit to go forward. He explained that the Development Agreement requires that the City sit down and make a more finite estimate of costs before the project proceeds any further. NI~-s. Kelley questioned page 32 section 10.5 regarding the financing of public facilities, and mello-roos or assessment districts. She questioned if this would impact the efforts to dismantle the CFD's. Mr. Harper clarified that the effort is not to dismantle the CFD's, but to take them out of the bond pool. He further clarified - that the formation of new districts would be based on a petition request from the developer. He also clarified that there is a legal requirement PAGE FIVE - ADJOURNED REGULAR MINUTES - DECEMBER 19, 1996 to allow for the formation of a CFD, and an obligation on the developer to pay for it. Councihnan Metze noted the past grief caused by the CFD's. Mr. Harper clarified the eacisting probiems with the CFD's. Mayor Pro Tem Kelley questioned the situation if bonding is given and the developer goes banlcrupt. City Attorney Harper clarified the difference between putting the districts in the pool vs. stand alone pools. He stressed that the pool acquired the bonds, but if they are purely stand-alone's, it is a different situation. He noted that ttus is only an option with the Development Agreement, but in reality Mr. Shine has never formed a CFD on any project that he has built and is not fond of the idea. Mayor Pro Tem Kelley questioned the next paragraph of the agreement with regard to participation in any existing or future financing; and questioned the ability to require them to participate in a flood, fire or library district imposed as a result of Proposition 218. Mr. Harper explained that this prevents the City from imposing on the developer a District, but would not preclude a City-wide voter imposed tax. Mayor Pro Tem Kelley questioned Section 10.6.1b with regard to park fees and park site dedicarions. City Attorney Harper indicated that this is a function of the change in relationship between ECB and the Lehr's; by which the Park site will be provided in the future within the TMC development. He clarified that , TMC is picking up the obligafion for the park facility. Mrs. Kelley questioned ' Item c with regard to School fees requirnig that the City use its best efforts to negotiate an agreement. City Manager Molendyk noted the former Council's position, that the development needs to provide educational faciliries. Mr. Haiper noted a joint meeting with the School Board and discussion of Eastlake and ttus project, and the source of the schools for the project. He further noted that Easflake is committed to provide turnkey schools as dictated by the development. He noted that there has been a dedication of tax increment to go toward construction of a school. Councilwoman Brinley questioned whether ~ the land has been set aside. Mayor Pro Tem Kelley noted that she sees the same problem if this project is developed and the balance is not, there will be no school for the residents of this project. City Attorney Harper clarified the requuements to build a new school based on student generation, and reiterated the use of tax increment. Mrs. Kelley questioned Page 68 with regard to schools where it indicates that the project could generate 313 students; and indicated that she feels that is way off and the school won't be up and nuuiing. Mr. Harper clarified that these are School District numbers. Mrs. Kelley indicated that she does not feel they are realistic at all. Mr. Harper indicated that they are required to update the formula annually, but the Developer has agreed to provide t~vnkey schools based on student generation and the taac increment will go directly to that. He noted that school fees from 400 units will never build a school. Mrs. Kelley expressed further concern with the student generation numbers; but stressed that the school will not be there when the houses are built. Mr. Harper advised that the School District has indicated that this is an adequate approach for them; and the City has already exceed the obligation by providing the tax ~ ;increment to assist with the schools, which is more than they can get out of school fees. . rv - . ~ . .,,, . PAGE SIX - ADJbURNED REGULAR MTNUTES - DECEMBER 19, 1996 Mayor Pro Tem Kelley questioned the EIR mitigation issues for fire, and questioned the timing for construction of a Fire Station. She further questioned the R-2 and R-1 lot sizes. Mr. Harper indicated that the agreement calls for R-1 to be 5,000 square foot and 3,200 square feet for R-2. Community Development Director Leslie explained that the land use designarion is primarilyR-1 with a miivmum of 5,000 square foot lots, and a portion is R-2 with a minimum lot size of 3,500 square feet. He stressed that the lot size cannot be less than 5,000 square feet. Mayor Pro Tem Kelley questioned the average lot size in the City now: Mr. Leslie indicated that the zoning code calls for a minimum of 6,000 square feet, with an average of 7,200 existing. Councilman Metze indicated that lot size is imxnaterial with a specific pian in place. Mr. Leslie concurred. City Attorney Harper clarified that this is a 400 unit density. , Councilman Metze questioned the letter from 1VIr. Shine with regard to tentafive tract map timing. Councilwoman Brinley questioned the date he could be working on it. Mayor Pape opened the public hearing at 9:45 a.m., asking those persons interested in this item to speak. The following persons spoke: Jack Shine, indicated that feasibility is based on what the City requires; but normally they can put together a tentative tract map layout following the marketing study and discussion with staff in 2 to 8 months. Gouncilman Metze questioned the timing if approval is received today. Mr. Shine indicated that he has already anticipated approval and 2/3rds of the marketing is done and the layouts have been prepared. He indicated that he would expect to provide that information in a number of weeks, but probably closer to 2 or 3 months if all goes as anticipated. Councilwoman Brinley questioned the ability to add a condition to give the Council a comfort level of within 7 months in good faifli, to show an effort to work together. Councilman Metze noted that they have 15 years to submit the maps following approval of a development agreement. Councilwoman Brinley stressed the need to have a coinfort level. Mr. Shine agreed to the addition of verbiage to require the tract maps within six months, or by July 1, 1997. Bud Attridge noted that with regard to upsizing of the pipes, it is not as costly as may be anticipated that it is only the cost of the pipe and fittings in the lazger sizes, as the trenching work would b e the same. He clarified the reimbursement clauses which distort the cost of opening a project. He stressed the advantage to the City and to the developer; reiterated that while they are fronting the money, there is a good chance they will receive the money back. He stressed the need to know the intent to start on this project to a11ow for additions to the treatment plant. Councilwoman Brinley stressed her concems for the money coming back. Mr. Attridge noted that there is a limit on the tiining to pay back the money. Dick Knapp questioned the miiumum height elevarion for the pads to be built and questioned the fill. City Attorney Harper clarified that the fill will come from PAGE SEVEN - ADJOURNED REGULAR MINUTE5 - DECEMBER 19, 1996 adjacent properties, as part of the Lehr agreement. Councilman Metze stressed the e7cisting height requirements. Mr. Knapp questioned the real height elevation for the pads. Mr. Metze indicated they would be at the Corps ~ approved level. Community Development Leslie indicated that the specific plan requires a minimum pad elevation of 1265', based on the new 100 year flood elevation after lake management improvements. City Attomey Harper noted the golf course planned through the project which will serve as a source of fill dirt. Mariana Mohylyn noted the Buccanan case with regard to inconsiderate procedwes, and reminded the Council of those who have gone baukrupt, because the Council was instrumental in it. She addressed the future developments and stressed that the Council should be fair, reasonable, cooperarive and democratic in their actions. A Resident in the audience noted that this project will bring more smog and questioned the nnpact of traffic. She expressed concern that the streets are not good enough for the tra~'ic it will bring in. Mayor Pape closed the public hearing at 9:55 a.m. Mayor Pro Tem Kelley questioned the library mitigation fees and whether they are waived. Mr. Harper advised that they are obligated to pay a11 development fees, including library fees; and the only waiver is the park fee portion. City Manager Molendyk noted that the pazk will be built by ECB. Councilman Metze rexninded the Council that this is the settlement of a lawsuit and under normal circumstances he would wholeheartedly agree with Plaunnig Commission, but this is the oniy way to move forward. Mr. Harper concurred that this is a unique situation and he would never propose a development agreement without the DAG fees. Councilwoman Brinley noted that she has . never seen a settlement agreement become a development agreement; and clarified that the settlement agreement was reached by the prior Council, not the sitting Council. Councilman Alongi indicated that the agreement should not be transfenable; so if Mr. Shine does not do it, no one else can. Councilman Metze noted that it. allows for transfer within the agreement. Councilman Alongi stressed that this has never been done before and is very unusual; and it is being done because of a lawsuit. He stressed if tlus individual moves forward fine, but if he does not it does not apply. City Attorney Harper clarified the development agreement language and noted the changes in land development company arrangements. He stressed that if the project is sold the same obligation remains with the project. Councilman Alongi indicated that if this was a regular agreement he would agree, but this is a legal settlement and it is not the same. Councilwoman Brinley noted the ability to transfer in other agreements, and stressed that development agreements have always allowed for the sale of the property with them living up to the requirements. Mr. Harper noted that LEA was not the original plaintiff, Russell Grosse was, and noted that the real obligee is probably - PAGE EIGH'T - ADJOURNED REGULAR MINUTES - DECEMBER 19, 1996 American Beauty Homes rather than LEA. Councilman Alongi stressed that the City would not consider this document if it was a normal development agreement with no litigation. City Attorney Harper noted that as a matter of law the City could not preclude Mr. Shine from assigning his obligations to another. Councilman Alongi stressed the special considerations in this development agreement and noted considerations made to make the settlement good for both sides. He questioned if payment of a settlement would have cost less. He indicated that if the Council wants to approve it, he will agree, but he would like to limit it to this developer. City Attorney Harper indicated that realistically with regard to any assignment, no other party will do what is in this development agreement; the next developer would probably want to do things a little differently. There was general discussion of the potential for another developer being held to this agreement. Councilman Metze stressed that this will allow action to go forward. Councilman Alongi noted that it will only come back if a consideration is requested. City Attorney Harper further clarified that the tentative maps would most likely be in place and sold, at which poi. t the Development Agreement would be somewhat of a moot point. Councilman Alongi stressed the special considerations in this agreement. City Attorney Harper clarified that the development agreement contemplates much larger developments, and is only necessary because of the settlement. '£here was fiuther discussion of the potential for sale of the e~cisting agreement. Mayor Pro Tem Kelley suggested that this will make the property worth a lot more. Councilman Metze questioned the difference between builders. Councilman Alongi indicated that they would not necessarily be entitled to the special considerations. Mayor Pro Tem Kelley commented that tlus document was originally provided in January, she did not like it then, but the Council was told that the City was locked in. She indicated that she is tired of having to settle for things the Council does not like, but she is willing to talce responsibility for what she has done. She stressed that this action is taking responsibility for what otliers have done. City Attorney Harper concurred and noted that this is a similaz comment to what happens every two years. Councilwoman Brinley commented that no one wants the mark on them for this action, but stressed that the Council is saddled with this situation. She indicated that while she does not like the agreement the added condition for six months timing on tentative tracts will allow the City to see some movement, homes being built and make the best out of a bad situation. Mayor Pape concurred that this would allow for development and get things moving. MOVED BY BRINLEX, SECONDED BY METZE TO APPROVE THE DEVELOPMENT AGREEMENT BETWEEN 'I'HE CITY OF LAKE ELSINORE AND FIl2ST FINANCIAL GROUP, INC. WITH THE ADDITION OF A CLAUSE FOR A SIX MONTH ALLOWANCE FOR TRACT MAPS BY JULY 1,1997, CLARIFICATION OF THE COSTS OF INFRASTRUCTURE, BASED ON THE FIlVDINGS LISTED BELOW; APPROVE THE MITIGATED NEGATIVE DECLARATION NO. 96-6; ADOPTION OF ORDINANCE NO. PAGE NINE - ADJOURNED REGULAR MINUTES - DECEMBER 19, 1996 1024 UPON FIRST READING BY TITLE ONLY AND APPROVAL OF THE AGREEMENT OF PURCHASE AND SALE AND JOINT ESCROW INSTRUCTIONS. ORDINANCE NO. 1024 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF LAKE ELSINORE, CALIFORNIA, APPROVING DEVELOPMENT AGREEMENT WITH FIRST FINANCIAL GROUP, INC. UPON THE FOLLOWING ROLL CALL VOTE: AYES: COUNCILMEMBERS: ALONGI, PAPE NOES: COUNCILMEMBERS: KELLEY ABSENT: COUNCILMEMBERS: NONE ABSTAIN: COUNCILMEMBERS: NONE Findines BRINLEY, METZE, The Development Agreement and contemplated project is consistent with ~ the objectives, policies, general land uses and programs specified in the General Plan and with the East Lake Specific Plan. 2. The Development Agreement and contemplated project is compatible with the uses authorized therein, and the regulations prescribed for, the ~ land use district in which the real property is located. 3. The Development Agreement is in conformity with public convenience, ~; general welfare and good land use practices. ~` 4. The Development Agreement will not be detrimental to the health, safety , and general welfare. i' 5. The Development Agreement will not adversely affect the orderly ~i development of property or the preservation of property values. ~ 6. The Development Agreement is consistent with the provisions of ~ Government Code Section 65864-65869.5. ~ 22. Public Hearing on Loca1 Law Enforcement Block Grant Pro~ram Award. (F:84.8) City Manager Molendyk explained the award of this Block Grant and the related criteria for the Grant. PAGE TEN - ADJOURNED REGULAR MINUTES - DECEMBER 19, 1996 Police Chief Wa1sh advised that the local committee convened and reached agreement as contained in the report. He indicated that feels they developed good ideas from a cross section of the community. City Manager Molendyk detailed the actions talcen to establish a committee and the recommendations by the committee and the programs to be provided by the funds. Mayor Pape opened the public hearing at 10:18 a.m., asking those interested in this item to speak. The following person spoke: Mariana Mohylyn questioned the group discussed and indicated that she is interested in the area and would like to be on the committee. Hearing no further comments the public hearing was closed at 10:20 a.m. Councilwoman Brinley responded to Ms. Mohylyn that the committee is set and detailed the representatives. City Manager Molendyk noted that the federal grant outlines who should be on the committee and noted who participated. Councilman Metze stressed that there are set guidelines and further detailed the representatives, and advised that they have already met. City Manager Molendyk clarified that this is not a standing committee, but only a one time advisory committee. Mayor Pape noted that this funding is available unmediately. Councilman Alongi noted that the committee wanted to see programs to allow the judges to sentence juveniles to community service. MOVED BY BRINLEY, SECONDED BY ALONGI AND CARRIED BY UNANIMOUS VOTE TO APPROVE THE USE OF THE GRANT FUNDS AS RECOMMENDED BY THE ADVISORY BOARD. BUSINESS ITEMS 31. 23rd Year C.D.B.G. An lication. (F:84.2) City Manager Molendyk noted that this is part of the annual process, and this money being applied for will go to support the Senior Center; from County funding. Mayor Pro Tem Kelley questioned how much the City will receive in total funds. Community Services Director Sapp clarified that this is not the City allocation, tlus is for the County allocation to the Senior Center, being sought to supplement the City funds. He explained that the City allocation would be about $215,000. MOVED BY METZE, SECONDED BY BRINLEY AND CARRIED BY UNANIMOUS VOTE TO DIRECT STAFF TO COMPLETE AND SUBMIT AN PAGE ELEVEN - ADJOURNED REGULAR MINUTES - DEC. 19, 1996 APPLICATION TO THE COUNTY OF RIVERSIDE REQUESTING CONTINUED FUNDING OF THE OPERATIONS OF TI~ LAKE ELSINORE SENIOR ACTIVITY CENTER THROUGH THE COUNTY'S 23RD YEAR PUBLIC SERVICE COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS; AND AUTHORIZED STAFF TO SUBMIT THE APPLICATION TO THE COUNTY OF POSSIBLE FUNDING OF THE LAKE ELSINORE MASTER PLAN OF TRAILS. 22. A~poinhnent of Representative - League of California Cities Riverside Division. (F:108.9) Mayor Pape suggested himself for appointment to the Riverside Division Representation and noted the other committees for possible appoinhnents. Councilwoman Brinley offered to serve on the Transportation Committee. MOVED BY PAPE, SECONDED BY ALONGI AND CARRIED BY UNANIMOUS VOTE TO APPOINT MAYOR PAPE AS THE REPRESENTATIVE TO THE RIVERSIDE DIVISION AND COUNCILWOMAN BRINLEY AS REPRESENTATIVE TO THE TRANSPORTATION COMMITTEE. Staff was directed to bring other possible commitments back to the Council at its next regular meeting. 23. Readoption of the Official Statement for Lake Elsinore Recreation Authoritv. (F:133.1) City Manager Molendyk noted for those present what has transpired to this point. He explained the need to look at financial strategy due to the recession, State take aways, properiy tax reductions, RDA responsibilities and Proposition 218. He noted the goals and objectives set in April, and detailed those and the efforts to comply with those goals. He stressed that this is all part of the effort to establish a foundation for the future. Mayor Pape concurred that this is one piece of the puzzle. Rod Gunn, started by reviewing the schedule for this financing, and noted that he would be providing a revised draft of the Official Statement, as a work in progress. He indicated that since the last meeting there is a slightly different direction being considered. He noted that this draft has not yet gone to the financing team, and over the next three weeks he will be receiving comments from the team and staff. He further noted that there will be a meeting of the team the fust week in January and a final polished draft distributed in January for consideration on January 14th. He e~lained that from that point the Official Statement will be printed and circulated to the financial community; with the close of the bond issue the first Wednesday and Thursday in Februazy. He noted that it is a very sensational comment to say that "the City is hawking the Lake°. He explained the City is leasing the Lake to the Authority, with a leaseback to the City; and stressed that the Title for the La1ce will remain with the City. He indicated that in case of disaster and default of bonds, the Lake is not mortgaged PAGE TWELVE - ADJOURNED REGULAR MINUTES - DEC. 19, 1996 or pledged as collateral. He further indicated that there will be no change in the public ownership. City Attorney Harper noted that the collateral is the in-lieu fees. Mr. Gunn noted that the original documentation did not define what we rmean by the Lake. Assistant City Manager Watenpaugh noted the e~ibit in two different colors, which represent the Lake and the City ownership wluch is being placed as security. He indicated that no part of the levee, island or inlet channel is included. He indicated that a reduced copy will be included in the packet. Mr. Gunn noted that e~sting restrictions in place would remain. He further indicated with regard to ownership, a title report has been ordered with tifle insurance on the property subject to the lease. Mr. Gunn noted the change in direction since The last discussion and explained his changed recommendation to the Council. He noted that he is now recommending removal of the Lake Improvement portion from the package. He explained that the bonds may not be marketable because of the size with tat inclusion. He detailed the debt service vs. Motor Vehicle in-lieu fee ratio, and estimated payments. He noted that the figures are based on current market and will vary slightly with the bond sales in January; as there is some refuiing which will not occur until the last week. Councilman Metze questioned why it is necessary to do a leaseback with the Lake, if it is covered with in-lieu fees. Mr. Gunn explained that the Lake provides a legal financing mechanism to back tax exempt bonds. He clarified that the pledge is a general fund financing, and detailed the payment process. He indicated that the City, because of the current condition, needed to give additional security to insure bond payments would be made; so pledging motor vehicle in-lieu fees was appropriate under a program adopted by the State legislature about two years ago. Councilman Alongi questioned if paying off the $10 miliion will make the ball field free and cleaz of encuxnberances. Mr. Gunn confirmed. Mr. Gunn explained with regard to bond sizing, this is not a traditional refunding; but rather a negotiation for a purchase of the bonds from Sumitomo, the sole bondholder. He indicated that this will help in getting the size down fiuther. He noted that this will be occurring in January and distributed the Draft Official Statements. THE MEETING WAS RECESSED AT 10:44 A.M. THE MEETING RECONVENED AT 10:54 A.M. Mr. Gunn noted recent references in the press to the duties of the City Council on an official statement. He explained that within his interpretation, Councilpeople are not professionals in this area and are not expected to laiow how to write an official statement and that is why his firm or others are hired to do it. He fiuther explained that they interpret the data and information on the City and how it should go into the official statement. The City provides the PAGE THIRTEEN - ADJOURNED REGULAR MINUTES - DEC. 19, 1996 information and data and they interpret it into the official statement. He indicated that the first duty of staff and Council is to ensure they have all related data. The second duty is to read how it is presented and whether it fairly represents the standing of the City. He stressed that the Council is not expected to be experts on how it is written, but merely address whether it fairly represents the City. He expressed hopes that the Council would have sufficient time to review the document by January 14th; and indicated if it is not a good job it will be reworked. He stressed that the Council can not merely rubber stamp • documents like this. City Attorney Harper commented that with regard to specific details, the Council is entitled to legitimately rely on staff, as long as nothing is factually inaccurate. Mr. Gunn introduced Mr. Weatherby, principle with O'Conner & Company securities, the fiim marketing the bonds to the investing public. E-Ie indicated that they are already out testing the market for this issue. Mr. Gunn finther indicated that they are reevaluating the situation beyond the financial statements, as they are accurate but do not do a good job of foretelling the future and where the City stands. He noted that this is a very dynamic situation with changes occurring quiclcly, and stressed the importance of looking forward based on the bast. He indicated that he would like the Council to concentrate on pages 64 to 69 of the draft statement, keeping in mind that these pages will go through some refinement; and noted that ttus is an initial attempt to interpret the financial health of the City at present. He noted in going through that section, the General Fund revenues have increased each year in spite of adverse factors. He furkher noted that the City has been reliant on the RDA in the past for administrative charges in excess of $1 million, so as the. RDA has experienced its own financial diii"iculties, the City lost $1 million in revenue. He indicated that over the last year The council and staff have done a great job of making the cuts necessary to bring the operating fund in balance with the expenditures; and expenditures aze now less than revenues. He eacplained that this has been accomplished through extensive cuts in the operating deparhnents. He noted that his firm has never been involved in an issue that went into default, but the important first step is for the City to recognize that there is a problem and second they must be willing to go through the pain to balance the budget. He also noted that the financial statements don't necessarily show the standing of the interrelationship between the RDA, the Lake and Stadium funds. He noted that the City is not legally obligated to pay a11 the RDA debt, but the City has agreed in someagreements to make the payments when the agency can not; and they are presently working to separate out those agreements in which the City is obligated to pay. He specifically noted the Camelot DDA and EVMWD Agreements wluch obligate about $420,000. He also noted that The stadium and the Lake are both enterprise funds which do not . generate enough revenue to pay expenses each year with the Stadium or the Lake. He advised that the numbers on Page 68 with regazd to current standings are still being validated. He explained the future need to meet the debt service on the proposed bonds in three years and noted that RDA disclosure is also an issue, but the City is not obligated to make the payments on those issues. He noted the moral obligation between the City and the RDA. He expressed concern with the press reporting which made wrong assumptions that the PAGE FOURTEEN - ADJOURNED REGULAR MINUTES - DEC. 19, 1996 Council was gambling on the future economic growth. He indicated that is not what the financing orthe Council is about; and stressed that in the last year there have been budget cuts of $1.3 million dollars and staff has identified further budget cuts of $848,000 to be implemented in the 1997-98 fiscal year. He further stressed that the City is not looking to future economic growkh to address its problems, but the magnitude of the problem is too big to solve with budget cuts alone. He advised that with regard to the revenue picture, in spite of recent problems, the revenues have increased each year, and it is reasonable to assume that the same revenue increases are possible in the next three years. He noted that development is starting to occur again and he is very confident that the City will acMeve the additional revenues needed in three years He indicated that this would not allow for salary increases and increased expenses. He noted the June 3rd Election and the need to look at service reductions vs. a new General Fund T~. He noted that even this effort would leave the RDA problem unsolved and he is now begivning to look at the Agency again, but with two more reductions in assessed value with the new rolls in July or August, there will be a need to look at restructuring the Agency debt as well. He reiterated that the Draft Official Statement is being refined further, as the audits are just now becoming available and he will be doing conformance with those. He indicated that he wants to discuss this matter fiuther and make sure the relationship between the Agency and the City is clear; as well as discussing Proposition 218 and reviewing the market study which was prepared for the Redevelopment Agency, and report back to Council in January. Mayor Pape requested that the final version be provided before the meeting in January; and requested that the final changes to the document be delineated. Mayor Pro Tem Kelley requested that Mr. Gunn address the Stadium debt service now and what it will be after this action Mr. Gunn indicated that the debt services was $1.1 million last year and under current sizing of $1,050,000 for five yeazs, the first three years wiil be paid out of ht bond proceeds, the fourth and fifth obligation is debt service of approximately $1 million, interest only; and in years 6 thereafter, the principle would be retired with payments of $1.2 million. Councilwoman Brinley noted there is still a need to address the issue with the stadium. Mr. Gunn indicated that one of the financial strategies is the renegotiation of the lease with the team on the Stadium. City Manager Molendyk emphasized that next year they are prepared to downsize to conform with the budget strategy. He fiuther noted that if the voters support an assessment in June it will help. He noted that when this financial effort is complete, tlus Council is locking itself and the next Council into the solution. He noted that this program will start foundation and build slowly, but stressed the need to set aside monies to meet the future debt. Councilwoman Brinley stressed that the Council is not gambling with the future of the City, as they have made budget cuts and are looking at more budget cuts. She further stressed that the Council is taking a professional approach. Mr. Gunn addressed the • potential risk with bonds in terms of bond owners for the first 5 or 6 years, PAGE FIFTEEN - ADJOURNED REGULAR MINUTES - DEC. 19, 1996 because the in-lieu fees will be very close to debt service, but it is still a reasonable invesUnent. He stressed the need for the City to make the necessary cuts to meet this pree~sting obiigation. He indicated that this is not the full solution, but buys time to put the financial strategy into place. City Manager Molendyk noted that another solution is if future obligations are increased, they must have a revenue stream to maintain them. Councilman Alongi addressed the ball field obligation, and noted the dramatic part in played in the impact on the Redevelopment Agency. Mayor Pape indicated that this action is in line with the goals and objectives previously set and all conhibute to the solution. He noted that the Council has just received the Draft Official Statement and can begin to review it for the first meeting in January. City Manager Molendyk noted that the Consultants will stay after ttris meeting to clarify any questions for the press. Mayor Pape noted that the press is the City's best opportunity to keep the people appropriately informed. ITEM PULLED FROM THE CONSENT CALENDAR 3. Resolution No 96-66 of Intention - Initiating an Amendment to Secrions 17.82 ' and 16 04 of the Municipal Code ZCA 97-~ to Transfer the Authori ~ of ' Annroval of Various Types of Projects from the Citv Council to the PYannin_g Commission. (F:172.1) City Manager Molendyk noted a previous study session w~:`~h the Plawuiig Commission and a discussion regarding the delegation of ceriain a~zthorities to the Commission with the Council serving as an Appeal board. He r.~ted the potential for questions and suggested continuance of the item. MOVED BY BRINLEY TO CONTINUE THIS ITEM FOR FURTHER INFORMATION, AND ONE MORE CAANCE TO REVIEW TI~ CHANGE5. MOTION DIED FOR LACK OF A SECOND. Mayor Pape suggested that this item be tabled. MOVED BY BRINLEY, SECONDED BY METZE AND CARRIED BY UNANIMOUS VOTE TO CONTINUE THIS ITEM TO A STUDY SESSION TO BE SCHEDULED AFTER THE FIRST OF THE YEAR, WITH THE PLANNING COMMISSION. THE CITY COUNCIL MEETING WAS RECESSED AT 11:31 A.M. THE CITY COUNCIL MEETING RECONVENED AT 12:06 P;M: PUBLIC COMMENTS None requested. PAGE SIXTEEN - ADJOURNED REGULAR MINUTES - DEC. 19, 1996 CITY 1k~ANAGER COMMENTS Wished all a Merry Christmas. CITYuCOUNCIL::COMMENTS"' Councilmembers all conveyed best wishes for the Christrnas and New :-~i'ear's Holidays. ADJOURNMENT TH.E•- ADJOURNED REGULAR CITY COUNCIL ME•~TING ~'VAS ADJOURNED AT 12:09 P.1VI. Gf~ VIN . APE, MAYOR CITY OF LAKE ELSINORE A~'T~S'i': ~ ~~/`-~~(I`,. ~C:KI 'L?,SrL~, CITY CLERK ~:'~~ ~ UF LAKE ELSINORE