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HomeMy WebLinkAbout02-02-1993 Joint Meeting CC/RDA MeetingMINIITES JOINT SPECIAL MEETING CITY COIINCIL/REDEVELOPMENT AGENCY CITY OF LARE ELSINORE 130 S. MAIN STREET LARE ELSINORE~ CALIFORNIA TUESDAY~ FEHRUARY 2~ 1993 •*****~r+t***r**rr**,e****,t,t*,t*,t,t,t,t**,t*,t,t,t,t,t*,t**s*t**as**,t,t**st*t,t* CALL TO ORDER The Joint Special Meeting was called to order by Mayor Pro Tem Dominguez at 5:00 p.m. ROLL CALL PRESENT: COUNCILMEMBERS/BOARDMEMBERS: ALONGI, CHERVENY~ WINKLER~ DOMINGUEZ ABSENT: COUNCILMEMBERS/BOARDMEMBERS: WASHBURN Also present were: City Manager Molendyk, City Attorney Harper, Administrative Services Director Boone, Community Development Manager Shear, City Planner Christen, Community Services Director Sapp, Public Services Director Tecca, Special Projects Coordinator Wood, Director of Special Projects Watenpaugh, City Treasurer Pape and City Clerk Kasad. MAYOR PRO TEM DOMINGUEZ TURNED THE CHAIRMANSHIP OF THIS MEETING OVER TO REDEVELOPMENT AGENCY CHAIRMAN WINKLER. PUBLIC HEARING 1. (F:134.7) City Manager Molendyk explained this item and detailed the location and request for funding. He further explained that if sales tax is to be used the preference would be toward and arrangement where the first $200,000 comes to the City, the second $200,000 goes toward retiring the debt, and after that equally split between the City and the applicant. He also explained that the surplus dirt from this location will be used at a number of locations throughout the City and the rock will be used in the San Jacinto River Channel. Special Projects Coordinator Wood presented a packet of letters from the Chambers of Commerce of a number of other cities that already have Walmart in their community, noting that most comments are very favorable. He stated that he has reviewed all of the deals in the surrounding areas and the arrangement negotiated to date appears to be the best of all of them. The City Clerk reported no written comments or protests. Chairman Winkler opened the public hearing at 5:08 p.m., asking those persons interested in this item to speak. The following people spoke: Phil Williams, P.O.Box 519, Lake Elsinore, advised that he was representing some of the businesses in the Community and read PAGE TWO - JOINT SPECIAL MEETING - FEBRIIARY 2~ 1993 the names from a petition he had circulated. He indicated that while they were not against Walmart, they are against the use of sales tax to repay the loans. He requested that if this is agreed to, the same consideration be given to the other businesses in the City. He addressed the packet of letters presented by Mr. Wood, indicating that in his understanding, the City of Redlands is somewhat disappointed in their Walmart, as the revenue was far less than expected and another Walmart was constructed in the vicinity. He stressed the budget constraints the City is already facing, and that the businesses only want to be treated equally. He further stressed that existing businesses are struggling to compete with the outlet Center and survive the construction work on Mission Trail and its impact on the Christmas buying season. He also stressed the existing number of vacant commercial buildings in the City. Ben Butterfield, Manager of Sav-on, advised that he has been with this company for 42 years and in the City since 1981, but stressed that he has not been involved in City politics before. He expressed concern with the impact of Walmart on the existinq businesses and emphasized the current commercial vacancy rate. He detailed a situation in Ridgecrest where the Sav-on closed after the opening of Walmart. Ae further advised of a 20/20 news report that Walmart was using child labor and falsifying records to cover themselves. He commented that he doesn't feel the community is large enough to support Walmart. , Tom Hundshamer, Chamber of Commerce President, advised that he had done an informal phone survey of businesses which showed 60~ in support of Walmart, 35X in opposition to Walmart and 5~ with no opinion. He noted that comments were received such as "o.k. as long as they pay their own way", ~~will hurt small retailers'~, "good for business", "more jobs". He further advised that he had also called chambers of commerce in other cities including Hemet, Corona, Banning, Perris, indicating that the comments in the communities where the stores are open have been positive. He listed the businesses polled. Dick Knapp, commented that the people polled by the Chamber of Commerce were not representative of the types of businesses that would be impacted. He suggested that had that group been polled the opposition would be more like 90~. Wayne Clement, expressed concern with the use of tax dollars to compete with existing business. He indicated that all small business people in the City will be impacted. Dolores Mayhall, 138 N. Main Street, advised that she would not be directly impacted by Walmart, but her customers will be hurt. She further advised that many people do want Walmart, but they feel Walmart should pay like all of the other businesses. Dolores, Bookkeeper for Seers Lumber, commented that she feels Walmart would not be welcome in the City. She questioned the benefits provided to Walmart employees. Mark Ostoich, representing Walmart, advised that they provide a complete, competitive benefit package. Dolores indicated that their employees are paid well and she sees no need for a Walmart. PAGE THREE - JOZNT SPECIAL MEETZNG - FEBRIIARY 2~ 1993 Mr. Gatlin, representing Walmart and Oak Grove Equities, addressed comments from this meeting. Regarding the Redlands store, he advised that most stores are at least five miles apart, based on trade area figures; he also noted that the sales taxes were not as high as expected because the entire center did not open at once. Regarding the possibility of a store in Temecula, he noted that the infrastructure is already in and they have an agreement that a portion of the sales tax has been earmarked to pay back for the infrastructure. Regarding the comment that 60~ of the businesses will go out, he indicated a few stores might go out, but they were most likely marginal businesses before Walmart came to town. He stressed that Walmart, K-Mart and Target all have similar impacts in this regard. He stressed that the potential exists that they would not locate in the City and the City would loose all of the potential sales tax to Wildomar or another area. He detailed the $4 million in requested assistance. He stressed that Walmart found the location and approached to City to make it work. He stressed that "going somewhere else" is not the answer, as five miles down the road would not make a difference. He also noted that Walmart will need to hit $20 million in sales to recoup their own investment in the project and they will strive to do so. Rick Zwiefel, l01 S. Main Street, commented that he has watched the previous Redevelopment Agency Board function and spend money on Main Street. He further commented that he has seen them do nothing to maintain their investment. He indicated that a number of businesses are moving out of the Outlet Center. He questioned the ability of Mayor Washburn to vote on this issue based on previous dealings with this project. Chris Hyland, expressed concern with bringing "discount houses" into the community. She suggested that all of the residents don't spend money in discount houses. Edith Stafford, expressed concern with spending Redevelopment Agency funds on Walmart, K-Mart, etc., noting that she feels the Board continuously spends money for projects that do not return anything to the fund. She further expressed concern with the amount of money being spent on Consultants and Studies. She suggested that it should be spent on more viable projects with reasonable returns. She stated her objection to the way the City does business. Dick Knapp, questioned the mini mall at the intersection of Railroad Canyon, and suggested an alternate location which would be flatter for development. He questioned who is benefitting from this project. The public hearing was closed at 5:43 p.m. Chairman winkler questioned the option of using tax increment. , Administrative Services Director Boone detailed earlier budget discussions this date and the possible cuts which may be taken and noted that Walmart sales tax would allow the City to recoup the money anticipated to be lost. He suggested an alternative might be use of tax increment from Project Area II. PAGE FOIIR - JOINT SPECIAL MEETING - FEBRIIARY 2~ 1993 City Treasurer Pape requested clarification of the anticipated income from Walmart. Special Projects Coordinator Wood advised that the fiscal impact report shows tax increment and sales tax of $l0 million in the first 10 years, based on statistics at the time of the study. He noted that this report appeared to be very conservative. Chairman Winkler questioned tax increment further inquiring whether more could be retained in the City after the State adjustments. City Attorney Harper clarified that it is expected that the State will not be able to take the funds committed to bonded indebtedness. Ae indicated that if tax increment is committed to this use it would appear to be less touchable by the State. City Attorney Harper inquired whether the tax increment method could fund the debt service. Mr. Wood advised that the tax increment would be in excess of $200,OOA per year. Boardmember Cherveny questioned how much would be required per year. Mr. Wood clarified in general terms. Mr. Harper indicated that depending on the direction from the Board, it might be appropriate to take the debt service out of tax increment to free up sales tax. Mr. Wood further clarified that the pay back will not start until the first store opens. Boardmember Cherveny advised that she has spoken with the applicant, as well as several businesses in the Community, and stressed the need for a well rounded approach. She commented that she thinks Walmart would be great for the community, but agreed with the business owners that it is not a good idea to use sales tax. She suggested that she would support tax increment over cutting into the sales tax. She also suggested that other sites might also work. She stressed that based on what she has heard sales tax is the only thing the City has left to operate. She questioned the tax increment option further. Chairman Winkler addressed the proposed location for Walmart and stressed that this location and the intersection of I- 15/Hwy 74 are really the only key commercial areas left. He stressed the improvements made through Pardee on Railroad Canyon Road. He commented that he also does not like to use sales tax either, but sometimes it is necessary. He noted that Redevelopment Agency funds have been used previously to help entice the Outlet Center, K-Mart and Rancon. He further noted that Redevelopment Funds have been spent on Main Street and will assist those businesses in the long run. He sugqested that it is important to take aggressive action and try not to turn down a retailer at a key location. He concurred that it would be better to use tax increment so sales tax is not lost, but allow for sales tax as a back-up. He questioned the ability to develop a formula for this approach. City Attorney Harper advised that it would be necessary to redraft the agreement and return for further consideration. Mr. Gatlin, representing the applicant, requested a two week continuance to allow for re-evaluation of the situation. He also noted that they found this to be a key location, as it will draw from Canyon Lake and Temecula. PAGE FIVE - JOINT 8PECIAL MEETING - FEBRIIARY 2~ 1993 City Attorney Harper commented that most of the fees for which assistance is being requested go to the Water District, not the City. Mr. Gatlin further commented that the sales tax option was pursued because it is more self-regulating and encourages efforts to gain higher sales. Chairman Winkler inquired whether a continuance to February 9th would be adequate. Mr. Gatlin indicated he was not sure this would be adequate. Boardmember Cherveny requested that all future meetings on this subject be regular rather than special. City Manager Molendyk suggested that this item be continued for three weeks to allow for agendizing. Chairman winkler indicated that he would support the package as is if the tax increment will not work. City Attorney Harper asked that the public hearing be reopened prior to continuance. Boardmember pominguez advised that he has no problem with the project, but noted as a small businessman, location is 75~ of the business. He noted previous concerns with competition between markets which really did not become issues. He stressed that this location was chosen by Walmart after much analysis. He commented that he doesn't feel this project will put anyone out of business, only provide competition. Boardmember Cherveny requested clarification of Mr. Dominguez's position on the use of sales tax. Mr. Dominguez indicated he would support the packaqe as presented. Boardmember Alongi advised that if this item is continued, at the next meeting he would like a new elevation showing where the dirt will go and information as to whether the Corps of Engineers has been consulted on the sites. Ae also inquired whether the City would be charged for the rock from the site and how much would be lost by small businesses, noting he wants information from businesses which have related sPrvices and products. He stressed that the improvements ~~o ~e provided are strictly to service Walmart and do not serve t"t~e entire community. He inquired whether the City's bonded indebtedness is forgiven by the State. He noted t~at K-Mart was a good investment and was paying off very well for the Community. He expressed concern in competing witl~ ~~-Mart after the Redevelopment Agency assisted them. He stressed the need to assist smaller businesses. He sug4ested more developments like Rancon which used a CFD witYi renayir.ent through Redevelopment Agency funds. He indicated that the outlet Mall is marginal because they have not done what they anticipated. He further indicated that Main Street was done to create an image for City Hall. He agreed that the location was a good choice for Walmart and agreed with Boardmember Cherveny that it is not fair to ask that the Redevelopment Agency pay to prepare a site to build on for the developer. PAGE SIB - JOINT SPECIAL MEETING - FEBRIIARY 2~ 1993 City Attorney Harper clarified the bonded indebtedness and the potential cuts at the State level in the upcoming budget. He also clarified that a CFD is an alternative, however he was uncertain as to Walmart's position on this type of District. Boardmember Cherveny questioned the potential of a CFD. Mr. Wood indicated that this was a possibility for infrastructure, but the applicant prefers to advance the money and be paid back over a period of years. Boardmember Cherveny requested that the final agreement include a"continuous operation" clause to ensure that they would remain in the building for the full term of the agreement. Mr. Gatlin indicated this tends to be a self regulating situation. MOVED BY CHERVENY, SECONDED BY DOMINGUEZ AND CARRIED BY UNANIMOUS VOTE OF THOSE PRESENT TO REOPEN THE PUBLIC HEARING AT 6:20 P.M. AND CONTINUE TH25 ITEM FOR THREE WEEKS TO FEBRUARY 23, 1993. BIISINESS ITEM Appointment of Plannina Commissioner.(F:60.2) Councilman Winkler indicated that this appointment was to be done by the Mayor with Council concurrence, and since the Mayor was caught in traffic and unable to attend, it needed to be postponed. Councilwoman Cherveny indicated that she had reviewed the applications received and suggested the Mr. Schiffner would be a good Commissioner. MOVED BY DOMINGUEZ, SECONDED BY CHERVENY AND CARRIED BY UNANIMOUS VOTE OF THOSE PRESENT TO ADJOURN THE JOINT SPECIAL MEETING AT 6:25 P.M. ~~~ ~ ~~ . ~' ~%~~" \ ~~' ~ FRED DOMI UNG EZ ~ MA O'Y R PRO TEM CITY OF LAKE ELSINORE A~' EST: V CKI KAS~L'IT?.' CLERK CITY OF LAKF ELSINORE