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HomeMy WebLinkAboutRDA Agenda Packet 071409CITY OF ATASCA DERO COMMUNITY REDEVELOPMENT AGENCY AGENDA Tuesday, July 14, 2009 REGULAR SESSION 6.00 P M City Hall Council Chambers 6907 EI Camino Real Atascadero, California REGULAR SESSION 6:00 P.M. ROLL CALL. Chairperson O'Malley Vice Chairperson Kelley Board Member Beraud Board Member Clay Board Member Fonzi APPROVAL OF AGENDA. Roll Call COMMUNITY FORUM (This portion of the meeting is reserved for persons wanting to address the Board on any matter not on this agenda and over which the Board has jurisdiction. Speakers are limited to three minutes. Please state your name and address for the record before making your presentation The Board may take action to direct the staff to place a matter of business on a future agenda. A maximum of 30 minutes will be allowed for Community Forum, unless changed by the Board ) A. CONSENT CALENDAR (All items on the consent calendar are considered to be routine and non -controversial by City staff and will be approved by one motion if no member of the Agency Board or public wishes to comment or ask questions. If comment or discussion is desired by anyone, the item will be removed from the consent calendar and will be considered in the listed sequence with an opportunity for any member of the public to address the Agency Board concerning the item before action is taken DRAFT MINUTES Agency meeting draft minutes are listed on the Consent Calendar for approval of the minutes Should anyone wish to request an amendment to draft minutes, the item will be removed from the Consent Calendar and their suggestion will be considered by the Agency Board If anyone desires to express their opinion concerning issues included in draft minutes, they should share their opinion during the Community Forum portion of this meeting ) 1 Community Redevelopment Agency Draft Minutes — June 9, 2009 ■ Board Secretary Recommendation. Board approve the Community Redevelopment Agency minutes of June 9, 2009 [Board Secretary] B. PUBLIC HEARINGS None. C. MANAGEMENT REPORTS 1 Colony Square Loan Guarantee Agreements ■ Fiscal Impact: Up to $1 5 million of budgeted Redevelopment Agency funds will be pledged ■ Recommendations. Agency, 1 Authorize the Executive Director to execute a Loan Guarantee Agreement subject to approval by the City Attorney as to form of the bank's loan agreement and related loan documents, and, 2. Authorize the Executive Director to execute a Reimbursement and Indemnification Agreement between the Atascadero Redevelopment Agency and James Harrison and Peter Hilf, the owners of the Colony Square project. [Executive Director] 2. Determination for Low/Moderate Income Housing Fund ■ Fiscal Impact: None ■ Recommendation. Agency Board adopt the Draft Resolution determining that the planning and administrative expenses funded from the Low and Moderate Income Housing Fund are necessary for the production, improvement, and/or preservation of affordable housing for low and moderate income households. [Administrative Services] 2 3. Tourism, Events and Marketing Action Plan ■ Fiscal Impact: Current budgeted funds will be redirected to this effort. Total funding will be $125,000 This is a pilot program and AdPro is uniquely qualified to provide these services because of its relationship with Atascadero Main Street. Therefore staff is asking the Council to waive the formal process consistent with Section 3 0(f) of the City's purchasing policy ■ Recommendations. Agency Board 1 Authorize the Executive Director to execute a contract with AdPro for a pilot program for Tourism, Marketing and Event services not to exceed $133,000 and waive the formal process consistent with Section 3 0(f) of the City's purchasing policy; and, 2 Authorize the Executive Director to execute a revised services agreement with Atascadero Main Street. [Executive Director] BOARD ANNOUNCEMENTS AND REPORTS (On their own initiative, the Board Members may make a brief announcement or a brief report on their own activities Board Members may ask a question for clarification, make a referral to staff or take action to have staff place a matter of business on a future agenda. The Board may take action on items listed on the Agenda.) D ADJOURNMENT TO CITY COUNCIL MEETING 3 ITEM NUMBER RA A-1 DATE. 07/14/09 CITY OFATASCADEROCOMMUNITY REDEVELOPMENT AGENCY DRAFT MINUTES Tuesday, June 9, 2009 CLOSED SESSION 5:30 P M. REGULAR SESSION 6.00 P M City Hall Council Chambers 6907 EI Camino Real, Atascadero, California CLOSED SESSION: 5 30 P.M. Chairperson O'Malley announced the Agency Board will be going into Closed Session at5*33pm 1 PUBLIC COMMENT — CLOSED SESSION 2. CALL TO ORDER a. CONFERENCE WITH REAL PROPERTY NEGOTIATORS (Govt. Code Sec. 54956 8) Property address. 6005 EI Camino Real, Atascadero, California Agency Negotiator- Wade McKinney, Executive Director Negotiating Parties Carlton Hotel Investments, LLC Under Negotiation Instruction to negotiator will concern price and terms of payment. 3. ADJOURN CLOSED SESSION REPORT City Attorney Brian Pierik announced that there was no reportable action taken 5 REGULAR SESSION 6 00 P M. Chairperson O'Malley called the meeting to order at 6 01 p m ROLL CALL. Present: Board Members Beraud, Clay, Fonzi, Vice Chairperson Kelley and Chairperson O'Malley Others Present: Board Secretary Marcia McClure Torgerson Staff Present: Executive Director Wade McKinney, Assistant Executive Director Jim Lewis, Police Chief Jim Mulhall, Community Development Director Warren Frace, Administrative Services Director Rachelle Rickard, and City Attorney Brian Pierik. APPROVAL OF AGENDA. Roll Call MOTION By Board Member Beraud and seconded by Board Member Fonzi to approve the agenda. Motion passed 5.0 by a roll -call vote. COMMUNITY FORUM None A. CONSENT CALENDAR. 1 Community Redevelopment Agency Draft Minutes — April 14, 2009 ■ Board Secretary Recommendation. Board approve the Community Redevelopment Agency minutes of April 14, 2009 [Board Secretary] 2. Community Redevelopment Agency Draft Minutes — May 12, 2009 ■ Board Secretary Recommendation. Board approve the Community Redevelopment Agency minutes of May 12, 2009 [Board Secretary] MOTION By Board Member Fonzi and seconded by Board Member Beraud to approve the Consent Calendar Motion passed 5.0 by a voice vote. FV B PUBLIC HEARINGS 2009-2011 Operating and Capital Budget ■ Fiscal Impact: The total revenues are budgeted at $3,904,520 and $3,844,610 for fiscal years 2009-2010 and 2010-2011, respectively Total expenditures are budgeted at $6,199,900 and $5,173,800 for fiscal years 2009-2010 and 2010-2011, respectively ■ Recommendations Board adopt Draft Resolution of the Community Redevelopment Agency of Atascadero adopting the budgets for the 2009- 2010 and 2010-2011 fiscal years and delegating to the Executive Director authority to implement same [Executive Director] Administrative Services Director Rachelle Rickard gave the staff report and answered questions of Council PUBLIC COMMENT David Bentz, warned the Board that the City must invest in private projects that will add property value to the assessor's roles He stated that the RDA should reserve money to promote projects that will generate sales tax and property tax. Chairperson O'Malley closed the Public Comment period. MOTION By Board Member Beraud and seconded by Board Member Kelley to adopt the Draft Resolution adopting the budgets for the 2009-2010 and 2010-2011 fiscal years and delegating to the Executive Director authority to implement same. Motion passed 5.0 by a roll -call vote. (Resolution No. #RA 2009-002) C MANAGEMENT REPORTS None. BOARD ANNOUNCEMENTS AND REPORTS None D ADJOURNMENT TO CITY COUNCIL MEETING Chairperson O'Malley adjourned the meeting at 6 17 p m MINUTES PREPARED BY Marcia McClure Torgerson City Clerk / Assistant to the City Manager 7 ITEM NUMBER: RA C-1 DATE. 07/14/09 Community Redevelopment Agency of Atascadero Staff Report - Executive Director Colony Square Loan Guarantee Agreements RECOMMENDATIONS 1 Authorize the Executive Director to execute a Loan Guarantee Agreement subject to approval by the City Attorney as to form of the bank's loan agreement and related loan documents, and, 2. Authorize the Executive Director to execute a Reimbursement and Indemnification Agreement between the Atascadero Redevelopment Agency and James Harrison and Peter Hilf, the owners of the Colony Square project. DISCUSSION - One of the City's primary goals is to stimulate economic development, particularly in the downtown area. Additionally, the Atascadero Community Redevelopment Agency is focused on removing blight and improving economic conditions in the redevelopment project area, particularly in the downtown zone One of the ways to encourage development is to generate capital from banks and other sources that can be used to develop commercial projects On December 9, 2008, in an effort to encourage investment in downtown and create a public-private partnership, the Community Redevelopment Agency Board directed staff to begin discussions with Mission Community Bank and other community banking partners in the area to g uarantee/col lateral ize loans for investment in major downtown projects including Colony Square Since this time, staff has been actively working with local banks to gain participation in a guarantee program that would facilitate loans to the Colon- Square project. 9 Update on the Colony Square Prosect There has been much discussion over the past several months regarding the status of the Colony Square Project (the "Project") The Project has become widely discussed throughout the community and it continues to serve as a symbol of downtown's future All necessary funding is now in place and the project is ready to proceed Building permits for the theater building are ready to be picked up and the road and property maintenance agreements for the property are complete and ready to be certified Cost estimates for the Project have been reevaluated once again, and as expected, costs have been reduced by over a million dollars The largest work effort over the past several months has been lining up banking partners to fund the construction loan Anita Robinson, President and Chief Executive Officer of Mission Community Bank, has served as the lead in working to pull together banking partners The approximately $80 million loan package has now been approved by- Mission y Mission Community Bank, Anita Robinson, Chief Executive Officer Santa Lucia Bank, John Hansen, President/Chief Executive Officer Community West Bank, Lynda Nahra, President/Chief Executive Officer All funding for the loan will be provided by the participating banks as funds are drawn down and the loan will be administered by Mission Community Bank as the lead bank. Loan Guarantee Program and Agreement Details The loan guarantee program is quite simple and is designed based on the SBA 7a program currently provided by the federal government. Each of the three banks participating will share the risk on a pro rata basis for the $8 0 million loan to Colony Square LLC (the "Borrower") This is the money that will be made available to build the project. As a result of the loan guarantee, the risk to the banks will be less than the actual amount being loaned The Agency will guarantee a total of up to $1,500,000 The sharing and reduction of risk resulting from the guarantee has encouraged the banks to participate The proposed program is explained in detail in the attached Loan Guarantee Agreement (Attachment A) According to the agreement, an amount of up to $1.5 million would be pledged and placed into an interest bearing deposit instrument preceding the drawdown of construction funding for Colony Square and through the duration of the loan Interest earned would be remitted to the City however; the principal would not be available while the funds were pledged The funds would ultimately only be at risk if the Project failed and the liquidation of the collateral was insufficient to cover the remaining loan balance As a construction loan, funds will be released methodically as construction progresses upon review and approval by a third party fund control company via progress billings The entire $8 0 million would only be fully loaned out at building and tenant improvement completion and exhaustion of the interest reserve 10 �4w+' Consistent with a SBA 7a Loan Guarantee, the agency would collect up to a 2 00% loan guarantee fee, or $30,000 immediately upon funding of the loan The bank would collect an annual servicing fee of 0494% ($7,410 annually) The agency's total exposure is capped at $1,500,000 Other provisions in the agreement include The bank shall keep the Agency fully informed of all material aspects of the servicing of the loan including any default by Borrower, information concerning material changes to Borrower's financial condition and assets, and all other circumstances bearing on the risk of nonpayment of the indebtedness and the nature, scope, and extent of those risks • The Agency shall be entitled at any time upon providing written notice to the Bank to examine and obtain copies of all notes, security agreements, instruments, and all other agreements and documents related to the loan • The bank shall complete and forward to the Agency a written quarterly loan status report. • Written approval from the Agency must be obtained prior to any material changes in the loan terms & conditions including renewal, compromise, extension, acceleration, or other changes in the terms of the loan, loan Agreement, or any part thereof • Bank will obtain written approval from the Agency prior to extending any loan or advance by the bank to the borrower during the term of or life of this agreement. (with the exception of any loans or commitments currently outstanding with the bank or any of its participants ) • The agency shall pay an amount not to exceed the full Guarantee to the bank within 60 days after written demand and notice by Bank together with evidence that any and all security and guarantees other than the Agency's guarantee have been exhausted and were insufficient to satisfy the loan The guaranteed amount the Agency shall be obligated to pay shall be limited to the lesser of• o $1,500,000, or the outstanding balance after credit for• ■ all payments received from Borrower; ■ all amounts received by Bank from liquidating any and all security for the loan, ■ collections from exhausting any and all guarantees other than the Agency guarantee 11 Reimbursement and Indemnification Aareement In preparing and negotiating the guarantee program with the banks, staff was mindful of the Agency Board's direction to protect the agency and taxpayers as much as possible While staff believes the aforementioned agreement achieves this, further protection can be received by having the owners of Colony Square LLC (James Harrison and Peter Hilf) sign a Reimbursement and Indemnification Agreement (Attachment B) In essence, this agreement states that if the Borrower defaults on the loan and the Agency is required to release some or all of the $1,500,000 in pledged funds, then the borrowers must pay that amount back to the Agency within 12 months plus 10% interest per annum The agreement further provides that the borrower and Mr Harrison and Mr Hilf are indemnifying the Agency against claims arising from or related to the Project. Department of Industrial Relations The City has received an opinion from the Department of Industrial Relations that a guarantee of this type does not constitute payment of public funds per Labor Code Section 1720(b) This opinion is attached as Exhibit B to the Loan Guarantee Agreement. Should the City pay out any or all of the guaranteed amount, there could be a risk that some or all of the project would be subject to prevailing wage Financial Analysis. Redevelopment funds will be pledged to collateralize the loans While the money would not be expended and will remain an asset of the City, it will be pledged as a security cannot be spent for another purpose Additionally, the funding would be at risk should the loan fail to be paid per the loan agreement. Construction of the theater will have a positive effect on the downtown economy and will generate additional sales and property tax. FISCAL IMPACT Up to $1.5 million of budgeted Redevelopment Agency funds will be pledged ATTACHMENTS Attachment 1 Loan Guarantee Agreement Attachment 2 Reimbursement and Indemnification Agreement 12 Attachment 1 LOAN GUARANTEE AGREEMENT This Loan Guarantee Agreement ("Agreement") is made this _ day of , at San Luis Obispo, San Luis Obispo County California between Mission Community Bank, and its successors and assigns or participants (hereinafter "Bank or Banks") and the Community Redevelopment Agency of the City of Atascadero (hereinafter "CRA") (collectively referred to hereinafter as the "Parties") WHEREAS, CRA wishes to support economic development activity in County of San Luis Obispo, WHEREAS, CRA is willing to provide a loan guarantee to Bank in accordance with the terms and provisions of this Agreement in order to assist Colony Square LLC, a California limited liability company, ("Borrower") in obtaining a construction loan for the construction of a commercial project located in Atascadero, CA (the "Project"), and to induce Bank to make a loan to Borrower Said loan being Loan No , evidenced by the Promissory Note dated , (hereinafter "LOAN") LOAN amount is Eight Million Dollars ($8,000,000 00) A complete copy of the Bank s Loan Agreement with Borrower, including the Promissory Note, is attached hereto marked as Exhibit "A" and is incorporated into the terms of this Agreement by reference. WHEREAS, Bank is willing to make the LOAN to Borrower on the condition that CRA provide a guarantee of up to One Million Five Hundred Thousand Dollars ($1,500,000.00) of the outstanding balance of LOAN in accordance with the terms and provisions of this Agreement. NOW, THEREFORE the Parties agree as follows 1 GUARANTEE CRA shall guarantee collection of the first $1,500,000 00 of the LOAN Outstanding Balance. "Outstanding Balance" is defined as the amount of principal, accrued interest and the cost of administering the LOAN or collecting the debt. The CRA's guarantee of collection shall be evidenced by and embodied in this Agreement. 2. LOAN GUARANTY FEE Bank shall collect a loan guaranty fee for CRA of 2.00% of the guarantee amount ($30,000 00) from Borrower that shall be distributed by Bank to the CRA at closing. Bank may request a return of the loan guaranty fee upon cancellation of this Agreement prior to any disbursements being made to Borrower There will be no return of the loan guaranty fee at any time after Bank has made disbursements against the guaranteed LOAN 3 DISTRIBUTION OF FEE AND INSTRUMENTS. Bank shall immediately after LOAN closing distribute the guaranty fee to the CRA and submit a copy of the executed note, settlement sheet, and other instruments pertaining to the LOAN and Loan Agreement to CRA. 4 LOAN PROCESSING Bank shall process such LOAN and take other actions consistent with prudent closing practices required to fully protect and preserve the interests of both Bank and CRA. 13 17 ADMINISTRATION OF LOAN Bank shall administer and service LOAN Bank will collect an annual servicing fee of 0 494% of any remaining guarantee amount from the Borrower and remit the same to CRA. Bank shall keep the CRA fully informed of all material aspects of the servicing of the LOAN including any default by Borrower, information concerning material changes to Borrower's financial condition and assets, and all other circumstances bearing on the risk of nonpayment of the indebtedness and the nature, scope, and extent of those risks 6 INSPECTION OF RECORDS CRA shall be entitled at any time upon written notice to Bank to examine and obtain copies of all notes, security agreements, instruments of hypothecation, and all other agreements and documents, and any LOAN repayment records held by Bank which relate to the LOAN 7 LOAN STATUS REPORT Bank shall complete and forward to CRA a written quarterly loan status report including but not limited to current status and repayment history of the LOAN, as requested. 8 BANK ACTION Bank will obtain written consent from CRA prior to taking any of the following actions renewal, compromise, extension, acceleration, or other change in the time of performance of or other material changes in the terms and conditions of the LOAN, Loan Agreement, or any part thereof 9 ASSIGNMENT Bank may not assign this guarantee in whole or in part without written approval of CRA other than those disclosed as participants at time of funding and their successors and assigns. 10 SUBSEQUENT LOANS Bank will obtain written approval from CRA prior to making any loan or advance by Bank to Borrower during the life of this agreement with the exception of any loans or commitments currently outstanding with the bank or any of its participants. 11 PAYMENT CRA shall pay an amount not to exceed the full guaranteed amount to Bank within 60 days after written demand and notice by Bank that any and all security and guarantees other than this Agreement for the LOAN have been exhausted and were insufficient to satisfy the LOAN in full. The guaranteed amount CRA shall be obligated to pay shall be limited to the lesser of (a) $1,500,000; or (b) the Outstanding Balance after credit for (i) all payments received from Borrower, (ii) all amounts received by Bank from liquidating any and all security for the LOAN, and (iii) collections from exhausting any and all guarantees other than this Agreement. 12. WAIVER. CRA waives to the fullest extent permitted by law (a) any defense it may acquire by reason of Bank's election of any remedy against it or borrower or both, including, without limitation or election by Bank to exercise its rights under the power of sale in any Deed of Trust securing the LOAN and the consequent loss by CRA of the right to recover any deficiency from Borrower; (b) all rights and benefits under California Code of Civil Procedure Sections 580a, and 726, to the extent these statutory Sections have any application. 13 LIMIT OF LIABILITY Liability of CRA to Bank under this Agreement is limited to the lesser of- (a) $1,500,000; or (b) the Outstanding Balance after credit for (i) all payments received from Borrower, (ii) all amounts received by Bank from liquidating any and all security 14 for the LOAN, and (iu) collections from exhausting any and all guarantees other than this Agreement. Except for this express liability, CRA shall not be held obligated or responsible in any way for any possible liability incurred on the part of the Borrower toward the Bank, no matter how that liability may be incurred. Further, the terms and provisions of this Agreement are neither intended, nor may they be construed, to create any third -party beneficiaries, and CRA shall not be held obligated or responsible in any way for any possible liability incurred on the part of the Borrower toward any other entity, no matter how that liability may be incurred. 14 SUBROGATION Upon payment to Bank of the guaranteed amount of LOAN, CRA shall become subrogated to the extent of such payment to all rights which Bank had against Borrower 15 DEFENSES CRA retains and may assert any and all defenses of Borrower in any action brought against CRA to collect on the LOAN including any statute of limitations defense. 16 ATTORNEY'S FEES In any action or proceeding brought by either party to enforce this Agreement or any provision hereof, the prevailing party shall be entitled to all costs incurred and reasonable attorney's fees 17 PREVAILING WAGE CRA submitted a request for a coverage determination to the Department of Industrial Relations ("DIR") regarding the subject of prevailing wage requirements for the Project ansmg from CRA's entering into this Agreement. CRA received a coverage determination letter from the DIR dated May 13, 2009, a true and correct copy of which is attached hereto as Exhibit B The Parties agree that neither this Agreement, nor any actions or communications by CRA, constitutes or shall have the effect of making any representation by CRA that prevailing wages will not have to be paid in connection with the Project or any portion thereof IN WITNESS WHEREOF, Bank and CRA have caused this agreement to be duly executed on the date first above written. DATED DATED MISSION COMMUNITY BANK (and its successors and assigns) Lo Title. COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF ATASCADERO By - Title 15 Exhibit A Promissory Note will be attached to the finalized Loan Guarantee Agreement as Exhibit A 16 STATE OF CALIFORNIA DEPARTMENT OF INDUSTRIAL R OFFICE OF THE DIRECTOR 455 Golden Gate Avenue, Tenth Floor San Francisco, CA 94102 (415)703-5050 May 13, 2009 Brian A. Pierek, Esq Burke, Williams & Sorensen 2310 East Ponderosa Dr., Ste. 25 Camarillo, CA 93010-4747 Re. Public Works Case No 2009-001 Colony Square City of Atascadero Dear Mr Pierek: Exhibit B Arnold Schwarzenegger, Governor You, have requested. ,a pubhc works coverage determination as to whether a loan guaranty provided lto. a.. private developer for a development project by your client, the Community Redevelopment Agency of the City of Atascadero ("Agency"), would trigger the apphcation•of California's prevailing wage laws. You have offered a rough description of a multi -phased commercial development called Colony Square as an example of the type of development that would benefit from the availability of such a loan guaranty Coverage determinations are made with regard to "either a specific project or type of work to be performed." Cal. Code Regs., tit. 8, § 16001(a)(1) Because Colony Square is still in the planning stages, your request lacks the information necessary to enable the Department to first identify the scope of the project or projects at issue and all public funding sources, and then determine coverage. Under the circumstances, a .coverage determination cannot issue. As to the narrow question of whether Agency's proposed loan guaranty for construction of a theater and retail building in the Colony Square' development would be a consideration in the public funds portion of the coverage analysis, based on the facts presented and an analysis of the applicable law, it is my conclusion that such a loan guaranty would not entail a payment in whole or in part out of public funds. Facts Agency is planning to assist an unidentified private developer ("Developer") in financing the construction of a theater and retail building on vacant land in downtown Atascadero as part of the Colony Square development.' The assistance proposed by Agency would take the form of a -loan guaranty Broadly speaking, a loan guaranty is .a tool that facilitates the extension of credit by� a private commercial lender. The guarantor promises to use its .assets to repay a loan should; .the borrower .default on ,its obligation. In this way, -the. guarantor and the: lender share the risk that the borrower may not fulfill. its promise to repay the loan. ,I Under -the facts here, Agency's• loan guaranty would work, as follows. Developer requires a! loan of about $9 million to undertake the theater and retail building construction. In the current economic climate, and applying conventional underwriting standards, the private lender, Mission 'The construction of additional buildings to house a restaurant and commercial retail operations is encompassed in a second phase yet to be planned. 17 Brian A. Pierek, Esq P.e 'public Works Case No 2009-001 F age 2 Community Bank (`Bank") is unable to lend Developer more than $7 5 million, leaving a funding gap of $1.5 million or 17 percent of total project costs. To close this gap, Agency intends to pledge as security $1.5 million of Agency funds, enabling Bank to extend a fully collateralized loan of $9 million. Agency is proposing to charge Developer a 2 percent up -front fee for the guaranty as well as an annual servicing fee of 0 494 percent. Agency will maintain the $1.5 million that is allocated for the loan guaranty in its reserves, segregated from other Agency funds in a separate account. Those funds cannot be expended for any other purpose until the guaranty is released. The guaranty will be released when Developer repays the first $1.5 million of the loan to Bank. A default by Developer would not result in Agency acquiring any interest in the Colony Square development. Discussion Labor Code section 17712 requires that prevailing wages be paid to workers employed on public works projects. Section 1720(a)(1) defines "public works" as "[c]onstruction, alteration, demolition, installation, or repair work done under contract and paid for in whole or in part out of public funds Section 1720(b) defines "paid for in whole or in part out of public funds" to mean. (1) The payment of money or the equivalent of money by the state or political subdivision directly to or on behalf of the public works contractor, subcontractor, or developer (2) Performance of construction work by the state or political subdivision in execution of the project. (3) Transfer by the state or political subdivision of an asset of value for less than fair market price. (4) Fees, costs, rents, insurance or bond premiums, loans, interest rates, or other obligations that would normally be required in the execution of the contract, that are paid, reduced, charged at less than fair market value, waived, or forgiven by the state or political subdivision. (5) Money loaned by the state or political subdivision that is to be repaid on a contingent basis. (6) Credits that are applied by the state or political subdivision against repayment obligations to the state or political subdivision. There is no dispute that the Colony Square development involves construction done under contract within the meaning of section 1720(a)(1) At issue here is whether Agency's loan guaranty constitutes a payment of public funds within the meaning of section 1720(b) In this regard, we are aided by a recent and authoritative treatment of section 1720(b) in State Building & Construction Trades Council of California v Duncan, et al. (2008) 162 Cal.App 4th 289, 294 2A11 statutory references are to the California Labor Code, unless otherwise indicated. 18 Brian A. Pierek, Esq Re Public Works Case No 2009-001 Page 3 ("Trades Council"). In that decision, the Court held that the provision of tax credits to the developer of a low-income housing development was not a public funds payment. The Court's decision was based on a close analysis of the legislative history of the current version of section 1720, as well as a review of the decisional law that construed former versions of the statute. Under the Court's interpretation, a payment of public funds is signified by a delivery or transfer of money or its equivalent. Id. at p 311 The Court stressed that the language of section 1720(b) encompasses an element of tangibility and contemplates a transaction that actually diminishes the state's economic resources The allocation of tax credits was characterized as nothing `more than a promise or an administrative assignment, the mere movement of figures from one column to another" Id. at p 318 Following Trades Council, we turn to the issue of whether Agency's loan guaranty might be considered a payment out of public funds under subdivisions (b)(1) through (b)(6) of section 1720(b) The Court in Trades Council reasoned that a given transaction would be considered a payment of public funds only if it were to come within one of these enumerated categories. Id. at p 319 It follows that section 1720(b) should not be construed to reach the range of financial arrangements outside these definitional provisions. The only two subdivisions potentially implicated under the facts of this case are subdivisions (b)(1) and (b)(4), discussed separately below The Court's analysis in Trades Council is instructive in determining whether Agency's proposed loan guaranty is a "payment" of money or the equivalent of money within the meaning of subdivision �)(1) Agency's ro osed loan guaranty involves the reservation of funds, which cannot be used for other purposes until the Developer repays the first $15 million of the Bank loan and the guaranty is released.3 Agency's proposed loan guaranty is akin to the administrative allocation of tax credits at issue in Trades Council, which the Court found not to constitute the payment of money or the equivalent of money under subdivision (b)(1) Because the loan guaranty entails the reservation, rather than expenditure, of Apricy's money, the proposed guaranty does not actually diminish the funds in Agency's coffers. As such, under the reasoning of Trades Council, Agency's guaranty does not constitute the payment of money or the equivalent of money within the meaning of subdivision (b)(1) To the extent the proposed guaranty could be characterized as a fee, cost, rent, insurance or bond premium, loan, interest rate, or other obligation that would normally be required in the execution of the contract under subdivision (b)(4), the loan guaranty is not being paid, reduced, waived or forgiven by Agency As to whether the loan guaranty is being charged at less than fair market value, Developer argues that Agency's loan guaranty is comparable to loan guaranties offered by other public entities. Under the loan guaranty program administered by the federal Small Business Administration ("SBA"), SBA authorizes guaranties for small businesses and start-ups of up to 85 percent of the value of the loan. The maximum SBA guaranty is $1.5 million. Normally, SBA charges an up -front fee on a sliding scale from 2 to 3 75 percent of the 3This determination assumes that Developer will repay the loan and Agency will make no payment of public funds. If Agency makes a payment of the guaranteed amount on account of a default on the loan by Developer, public works status could attach and, depending on the specific facts involved, prevailing wages might be owed for all or part of the work performed. 4Agency's administrative costs are covered by the annual servicing fee. 19 Brian A. Pierek, Esq Re Public Works Case No 2009-001 Page 4 guaranteed portion of the loan and an annual servicing fee of 0 494 percent.5 Loan guaranties are also made available to small businesses from the Small Business Loan Guarantee Program ("SBLGP") of the State of California. In the Atascadero area, SBLGP is administered by the California Coastal Rural Development Corporation. SGLGP criteria permit a guaranty of up to 90 percent of the value of the loan, with a maximum of $500,000 per project. SGLGP collects an up -front fee of 2.25 percent of the guaranteed portion of the loan. SGLCP does not charge an annual servicing fee but does charge a flat $250 loan documentation fee. The Department's investigation has discovered no private -sector financial institutions offering loan guaranty programs like those run by the federal SBA or the state SBLGP Strictly speaking, then, there exists no open and competitive market that might produce a fair market value for this type of financing mechanism. To the extent these public sector loan guaranty programs can be used as a basis to establish fair market value for purposes of applying subdivision (b)(4), however, there are no facts to suggest Agency's proposed loan guaranty is below market. Although Agency's guaranty would cover a far smaller percentage of the value of Bank's loan (17 percent) than the ceiling included in the SBA program (85 percent), the actual dollar amount of Agency's proposed guaranty does not exceed the maximum set by SBA ($15 million) Agency's charge of a 2 percent up -front fee is comparable to SBLGP's charge of 2.25 percent, and is within the range set by SBA. Agency's annual servicing fee will be identical to SBA's annual fee.6 By refemng to the SBA program and SBLGP for comparison, it appears that Agency's proposed loan guaranty would not be "charged at less than fair market value" within the meaning of subdivision (b)(4) For the foregoing reasons, I conclude that Agency's proposed loan guaranty for Colony Square would not entail a payment in whole or in part out of public funds and, on that basis alone, would not trigger coverage under California's prevailing wage laws. I hope this determination satisfactorily answers your inquiry Sincerely, John C Duncan Director 5 Under the American Recovery and Reinvestment Act of 2009, however, SBA's up -front fees have been temporarily discontinued. 6Agency also presented alternative terms for the proposed loan guaranty Under the alternative terms, Agency would waive the up -front fee for the loan guaranty, per current SBA practice; and it would waive the annual servicing fee, following SBLGP policy The waiver of either one or both of these fees would come within the plain language of subdivision (b)(4), which provides that fee waivers are to be considered the payment of public funds, regardless of whether the fees themselves might be reflective of fair market value. KII 1 2 3 4 5 6 7 8 9 10 11 12 13 N%Wo 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 PROOF OF SERVICE (Code Civ Proc. §§ 1011, 1013, 1013a, 2015.5) Re: Public Works Case No. 2009-001 City of Atascadero Colony Square Project At the time of service I was over 18 years of age and not a party to this action. My business address is 455 Golden Gate Avenue, Suite 9516, San Francisco, CA 94102. 3 On May /J , 20091 served the PUBLIC WORKS DIRECTOR'S DETERMINATION LETTER on the persons listed below by placing true copies thereof in sealed envelopes addressed as shown below for service as designated below - (A) By personal service. I personally delivered the documents to the persons at the addresses listed below For a party represented by an attorney, delivery was made to the attorney or at the attorney's office by leaving the documents in an envelope or package clearly labeled to identify the attorney being served with a receptionist or an individual in charge of the office. (B) By United States mail. I enclosed the documents in a sealed envelope or package addressed to the persons at the address below and. (1) ❑ deposited the sealed envelope with the United States Postal Service, with the postage fully prepaid. (a) ❑ and the sealed envelope was prepared for Certified Mail, Return Receipt Requested, with appropriate fees for such service fully prepaid. (b) ❑ and the sealed envelope was prepared for Registered Mail, with appropriate fees for such service fully prepaid. (2) Xplaced the envelope for collection and mailing, following our ordinary business practices. I am readily familiar with this business's practice for collecting and processing correspondence for mailing. On the same day that correspondence is placed for collection and mailing, it is deposited in the ordinary course of business with the United States Postal Service, in a sealed envelope with postage fully prepaid. (a) ❑ and the sealed envelope was prepared for Certified Mail, Return Receipt Requested, with appropriate fees for such service fully prepaid. (b) X and the sealed envelope was prepared for Registered Mail, with appropriate fees for such service fully prepaid. I am a resident or employed in the county where the mailing occurred. The envelope or package was placed in the mail at San Francisco, California. (C) By overnight delivery, (1) ❑ I enclosed the documents in an envelope or package provided by an overnight delivery carrier and addressed to the persons at the addresses below I placed the envelope or package for collection and overnight delivery at an office or a regularly utilized drop box of the overnight delivery carrier (2) ❑ The documents were delivered to an authorized courier or driver authorized to receive documents by an overnight delivery carrier, in an envelope or package designated by the carrier with delivery fees PROOF OF SERVICE 21 2 5 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 22 paid or provided for, addressed to the person to whom it is to be served, at the office address as last given by that person on the document filed in the cause and served on the party making service. (D) By fax transmission Based on an agreement of the parties to accept service by fax transmission, I faxed the documents to the persons at the fax numbers listed below No error was reported by the fax machine that I used. A copy of the record of the fax transmission, which I printed out, is attached. (E) By e-mail or electronic transmission. Based on a court order or an agreement of the parties to accept service by e-mail or electronic transmission, I caused the documents to be sent to the persons at the e-mail addresses listed below I did not receive, within a reasonable time after transmission, any electronic message or other indication that the transmission was unsuccessful. (F) By messenger service. I served the documents by placing then in an envelope or package addressed to the persons at the addresses listed below and providing them to a professional messenger service. (A declaration by the messenger service is attached.) TYPE OF SERVICE ADDRESS/FAX N0. (IF APPLICABLE) B2 LABOR & WORKFORCE DEVELOPMENT AGENCY ATTN MARK WOO SAM, ACTING GENERAL COUIN 801 K STREET SUITE 2100 SACRAMENTO CA 95814 A GREGORY GOVAN CHIEF DEPT OF INDUSTRIAL RELATIONS DIV OF LABOR STATISTICS & RESEARCH 455 GOLDEN GATE AVENUE 8" FLOOR SAN FRANCISCO CA 94102 A ANGELA BRADSTREET LABOR COMMISSIONER DEPT OF INDUSTRIAL RELATIONS DIV OF LABOR STANDARDS ENFORCEMENT 455 GOLDEN GATE AVENUE 9`s FLOOR SAN FRANCISCO CA 94102 A VANESSA L. HOLTON CHIEF COUNSEL DEPT OF INDUSTRIAL RELATIONS OFFICE OF THE DIRECTOR — LEGAL UNIT 455 GOLDEN GATE AVENUE 9" FLOOR SAN FRANCISCO CA 94102 A GLEN FORMAN ACTING CHIEF DEPT OF INDUSTRIAL RELATIONS DIV OF APPRENTICESHIP STANDARDS 455 GOLDEN GATE AVENUE 8" FLOOR SAN FRANCISCO CA 94102 B2 BURKE, WILLIAMS & SORENSEN, LLP 2310 EAST PONDEROSA DRIVE, SUITE 25 CAMARILLO, CALIFORNIA 93010-4747 I declare under penalty of perjury under the laws of the State of California that the foregoing is true and correct. Date May, 2009 - Declarant PROOF OF SERVICE Attachment 2 REIMBURSEMENT AND INDEMNIFICATION AGREEMENT (Atascadero, California) This Reimbursement and Indemnification Agreement ("Agreement") is entered into as of , 2009, by and between the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF ATASCADERO ("CRA") as the indemnified party on the one hand, and COLONY SQUARE LLC, a California limited partnership, JAMES M. HARRISON, an individual ("Ham son"), and PETER F HILF, an individual ("Hilf'), collectively on the other hand (collectively "Indemnitors"), who for good and valuable consideration agree as follows 1 Recitals. This Agreement is made with reference to the following facts and circumstances which the parties acknowledge to be true (a) Pursuant to that certain Construction Loan Agreement dated as of , 2009 (the "Loan"), by and between Mission Community Bank (the "Lender") as lender, and Colony Square LLC (the `Borrower") as borrower [* need to confirm name(s) of Borrower], Borrower is borrowing from Lender the principal amount of Eight Million Dollars ($8,000,000 00) to be used for the construction of a commercial project located at EI Camino Real and Santa Ysabel in the City of Atascadero, California (the "Project") , all as more particularly described in the Loan. (b) In connection with entering into the Loan with Borrower, Lender has required that CRA guarantee certain obligations of Borrower under the Loan and execute and deliver to Lender a Loan Guarantee Agreement (the "Guaranty") in the form attached hereto as Exhibit "1" (c) Harrison and Hilf have material financial interests in Borrower and will directly benefit from the making of the Loan, and Indemnitors (Borrower, Harrison and Hilf) all desire that CRA enter into, execute and deliver the Guaranty (d) CRA is willing to enter into execute and deliver the Guaranty provided that Indemnitors agree to the matters contained in this Agreement, including, without limitation, reimbursement and indemnification of CRA for any liability it may have under the Guaranty on the terms provided in this Agreement, and as a material inducement to CRA to enter into, execute and deliver the Guaranty, Indemnitors are willing to so agree and to so reimburse and indemnify CRA. 2. Reimbursement. If CRA at any time or from time to time shall be obligated to make, and actually does make, any payment pursuant to the terms of the Guaranty whether voluntarily, involuntarily or pursuant to any judgment or other court order ("Guaranty Payment"), Indemnitors agree to pay to and reimburse CRA for the full amount of such Guaranty Payment with interest at 10% per annum from the date of actual payment by CRA under the terms of the Guaranty Such payment and reimbursement shall be made to CRA without abatement, deduction, offset or counterclaim within twelve (12) months following the giving of 23 written notice by CRA to Indemnitors of the making of such Guaranty Payment; provided, that the failure of CRA to give such notice shall not release Indemnitors from their obligation to pay and reimburse CRA for the full amount of such Guaranty Payment. Such payment and reimbursement shall be made to CRA at the address to which notices to CRA are to be given pursuant to Section 8(a) of this Agreement. The obligations and agreements of Indemnitors contained in this Section 2 shall survive the expiration or termination of the Guaranty 3 Indemnification. Indemnitors agree to indemnify and hold harmless CRA, its present and future board members, officers, agents, servants and employees, and each of them, against and from any and all claims, damages, losses, liabilities, judgments, costs and expenses (including attorneys' fees and costs) which they, or any of them, may suffer or incur which arse from, relate to or are connected with the Project or any payment by or liability of CRA under the Guaranty Upon demand by any party indemnified pursuant to this Section 3 at any time, Indemnitors agree to reimburse said party for any legal or other expenses incurred in connection with investigating or defending against the foregoing. If any action, suit or proceeding arising from any of the foregoing is brought against any party indemnified pursuant to this Section 3, Indemnitors, to the extent reasonably determined by such party as necessary or advisable in order to protect the rights of such party in connection with such action, suit or proceeding, will resist and defend such action, suit or proceeding by counsel designated by CRA (which counsel shall be reasonably satisfactory to Indemnitors) The indemnities and agreements of Indemnitors contained in this Section 3 shall survive the expiration or termination of the Guaranty 4 Environmental Indemnity In addition to, and without lirruting, the obligations of Indemnitors under this Agreement, Indemnitors agree to indemnify and hold harmless CRA, its present and future board members, officers, agents, servants and employees, and each of them, against and from (a) any and all claims, actions, losses, liabilities, costs and expenses, including, without limitation, all foreseeable and all unforeseeable consequential damages, directly or indirectly ansing out of the use, generation, storage or disposal of Hazardous Materials on or about the Project by Colony Square LLC or any of it agents, employees, servants, contractors, customers, guests or invitees, and (b) the cost of any required or necessary action, repair, clean-up or detoxification and the preparation of any closure or other required plans to the full extent that such action is attributable, directly or indirectly, to the use, generation, storage, release, threatened release or disposal of Hazardous Materials on or about the Project by Colony Square LLC or any of its agents, employees, servants, contractors, customers, guests or invitees. As used herein, Hazardous Materials means any flammable explosives, radioactive materials, asbestos, PCBs, hazardous waste, toxic substances or related materials, including, without limitation, substances defined as "Hazardous Substances", "Hazardous Materials" or "Toxic Substances" in the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, 42 U S C. Section 9601, et seq , the Hazardous Materials Transportation Act, 49 U S C. Section 1801, et seq , the Resource Conservation and Recovery Act, 42 U S C Section 6901, et seq , the Toxic Substances Control Act, 15 U.S C. Section 2601, et seq, any other federal, state or local law now or hereafter applicable to the Project; and in the rules and regulations now or hereafter adopted or promulgated under or pursuant to any of said laws. The provisions of this Section 4 shall survive the expiration or termination of the Guaranty 24 5 Obligations Absolute. The obligations of Indemnitors hereunder are absolute and �'" unconditional, and shall not be affected, diminished, impaired nor released by reason of the unenforceability or invalidity of the Loan or the existence of any defense to or right of offset res- pecting payment or performance of the obligations under the Loan which Colony Square LLC or its heirs, administrators, representatives successors or assigns may now possess or hereafter have, it being the express intent of the parties hereto that Indemnitors be obligated to provide reimbursement, payment and indemnity as herein provided notwithstanding any such unenforceability invalidity, defense or right of offset, including but not limited to, (i) any defense that may arse by reason of Lender's election of any remedy to enforce the Loan against Borrower including, without limitation an election by Lender to exercise its rights under the power of sale in any Deed of Trust securing the Loan, (ii) any rights and benefits that may anse in favor of Borrower under California Code of Civil Procedure Sections 580a, 580b, 580d, and 726, to the extent these statutory Sections may have any application, (iii) all rights and benefits under Civil Code Section 2809 purporting to reduce a guarantor's obligation in proportion to the principal obligation, or (iv) any defense based on any statute or rule of law that provides that the obligation of a guarantor must be neither larger in amount or in any other respects more burdensome than that of a principal. 6 Notices to CRA. Indemnitors shall immediately give to CRA a complete copy of any notice given by Lender, or its successors or assigns, to Indemnitors, including, without limitation, any notices of nonperformance or default with respect to the Loan, and a complete copy of any notice given by Indemnitors, or any of them, to Lender, its successors or assigns. err` 7 Guaranty Fee. In consideration of and as a material inducement to CRA to enter into, execute and deliver the Guaranty, and in consideration thereof, Indemnitors agree to pay the Loan Guaranty Fee and annual servicing fee for the CRA's guarantee as specified in the Guaranty ("Guaranty Fee") Payment of the Guaranty Fee shall be made without counterclaim, abatement, deduction or offset. The obligations and agreements of Indemnitors contained in this Section 7 shall survive the expiration or termination of the Guaranty 8 Prevailing Wage. CRA submitted a request for a coverage determination to the Department of Industrial Relations ("DIR") regarding the subject of prevailing wage requirements for the Project ansing from CRA's entering into the Loan Guarantee Agreement. CRA received a coverage determination letter from the DIR dated May 13, 2009, a true and correct copy of which is attached hereto as Exhibit B to Exhibit 1 The Parties agree that neither the Loan Guarantee Agreement, nor any actions or communications by CRA, constitutes or shall have the effect of making any representation by CRA that prevailing wages will not have to be paid in connection with the Project or any portion thereof 9 Miscellaneous. (a) Notices. All notices which any party is required or desires to give hereunder shall be in writing and shall be deemed given when delivered personally or three (3) days after mailing by registered or certified mail (return receipt requested) to the following 25 address or at such other address as the parties may from time to time designate by written notice in the aforesaid manner - If to CRA. Community Redevelopment Agency City of Atascadero Atascadero, CA 93422 Attention. If to Indemnitors (b) BindingEffect. ffect. This Agreement shall be binding upon and inure to the benefit of each party to this Agreement and their respective heirs, administrators, representatives, successors and assigns, provided, that Indemnitors shall not assign any of their rights or obliga- tions under this Agreement. (c) No Waiver; Remedies Cumulative. No failure or delay by CRA in exercising any remedy, right, power or privilege under or with respect to this Agreement shall operate as a waiver of such remedy, right, power or privilege, nor shall any single or partial exercise of any such remedy, right, power or privilege preclude any other or further exercise of such remedy, right, power or privilege, or the exercise of any other remedy, right, power or privi- lege. No remedy, right, power or privilege of CRA under or with respect to this Agreement is intended to be exclusive of any other such remedy, right, power or privilege of CRA but each shall be cumulative and in addition to every other such remedy, right, power or privilege of CRA and each may be exercised concurrently or independently from time to time and as often as may be deemed expedient by CRA. (d) Amendment. The terms and provisions of this Agreement may not be amended, modified or waived, except by an instrument in writing signed by the parties (e) Entire Agreement. This Agreement constitutes the entire agreement of the parties with respect to the subject matter hereof and supersedes all prior or contemporaneous agreements, whether written or oral, with respect thereto (f) Severability If any term, provision, covenant or condition of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions of this Agreement shall remain in full force and effect and shall in no way be affected, impaired or invalidated. Q (g) Late Payment. Any amounts required to be paid to CRA hereunder which are not paid when due shall bear interest from the date due until actually paid at the rate of ten percent (10%) per annum. (h) Attorneys' Fees and Costs. In addition to the amounts to be reimbursed under this Agreement, Indemnitors jointly and severally agree to pay reasonable attorneys' fees and all other costs and expenses incurred by CRA in enforcing this Agreement in any action or proceeding ansing out of, or relating to, this Agreement. (i) Construction and Interpretation of Aj2,reement. The parties agree that this Agreement was jointly prepared through negotiations of the parties and the provisions of the Agreement are not to be strictly or liberally construed for or against any of the parties The titles to the sections and subsections of this Agreement are inserted for convenience only and are not a part of this Agreement and shall have no effect upon the construction or interpretation of any part of this Agreement. This Agreement shall be governed by and construed in accordance with the substantive and procedural laws of the State of California. 0) Counterparts. This Agreement may be executed in any number of counterparts, each of which shall be an original, but all of which taken together shall constitute but one and the same instrument. (k) Joint and Several Obligations Each and all of the agreements, obligations and liabilities of Indemnitors hereunder are joint and several. 27 IN WITNESS WHEREOF the parties hereto have executed this Agreement as of the date first above written. COLONY SQUARE LLC COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF ATASCADERO (Print Name) (Print Title) JAMES M. HARRISON PETER F HILF Ng C (Print Name) (Pent Title) ITEM NUMBER. RA C-2 DATE. 07/14/09 Community Redevelopment Agency of Atascadero Staff Report — Executive Director Determination for Low/Moderate Income Housing Fund RECOMMENDATION Agency Board adopt the Draft Resolution determining that the planning and administrative expenses funded from the Low and Moderate Income Housing Fund are necessary for the production, improvement, and/or preservation of affordable housing for low and moderate income households. DISCUSSION Pursuant to Section 33334 3(d) of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.), when planning and administrative expenditures are made from the Low/Moderate Income Housing Fund, the Agency is required to prepare a written determination showing that planning and administrative expenditures are necessary for the production, improvement, or preservation of low - and moderate -income housing The determination must be made annually in writing Planning and administrative expenditures will be made for the formation of policies and procedures, research, evaluation and management of projects, and legal compliance These costs are reasonable and necessary for the production and maintenance of affordable housing As projects are defined, they are brought before the Council for approval and are then budgeted There are currently no identified projects, however staff anticipates that projects will come forward during this budget cycle Staff recommends that the Agency Board adopt the Draft Resolution as presented FISCAL IMPACT None ATTACHMENT Draft Resolution 29 ITEM NUMBER: RA C-2 DATE 07/14/09 DRAFT RESOLUTION A RESOLUTION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF ATASCADERO DETERMINING THAT THE PLANNING AND ADMINISTRATION EXPENSES FUNDED IN FISCAL YEARS 2009/2010 AND 2010/2011 BY THE LOW AND MODERATE INCOME HOUSING FUND ARE NECESSARY FOR THE PRODUCTION, IMPROVEMENT, AND/OR PRESERVATION OF AFFORDABLE HOUSING FOR LOW AND MODERATE INCOME HOUSEHOLDS WHEREAS, on July 13, 1999, the City Council of the City of Atascadero adopted the redevelopment plan for the Community Redevelopment Agency Project Area, and, WHEREAS, pursuant to Section 33334.2(a) of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq ) not less than 20% of all taxes which are allocated to the Community Redevelopment Agency of the City of Atascadero (Agency) shall be set aside by the Agency in a Low and Moderate Income Housing fund and used by the Agency for the purpose of increasing, improving and preserving the community's supply of low and moderate income housing available at affordable housing costs to people and families of low and moderate income, and, WHEREAS, Pursuant to Section 33334.3(d) of the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq) it is the intent of the California State Legislature that the amount of money spent for planning and general administration from the Low and Moderate Income Housing fund not be disproportionate to the amount actually spent for the cost of production. NOW, THEREFORE BE IT RESOLVED, that the Community Redevelopment Agency hereby determines. 1 That it was necessary to allocate $42,040 of the $42,040 Low and Moderate Income Housing Fund budget for planning and administrative expenses necessary for the production, improvement, and/or preservation of low and moderate income housing during the 2009/2010 fiscal year 2. That it was necessary to allocate $42,770 of the $42,770 Low and Moderate Income Housing Fund budget for planning and administrative expenses necessary for the production, improvement, and/or preservation of low and moderate income housing during the 2010/2011 fiscal year On motion by Board Member Member following roll call vote: 30 and seconded by Board the foregoing Resolution is hereby adopted Community Redevelopment Agency of Atascadero Draft Resolution Page 2 of 2 AYES NOES ABSENT ABSTAINED - ADOPTED , 2009 CITY OF ATASCADERO ATTEST I: Marcia McClure Torgerson, C.M.0 Agency Secretary APPROVED AS TO FORM. LIM Brian A. Pierik Agency Counsel Tom O'Malley, Chairperson 31 ITEM NUMBER. RAC -3 DATE. 7/14/09 Community Redevelopment Agency of Atascadero Staff Report - Executive Director Tourism, Events and Marketing Action Plan RECOMMENDATIONS Agency Board Authorize the Executive Director to execute a contract with AdPro for a pilot program for Tourism, Marketing and Event services not to exceed $133,000 and waive the formal process consistent with Section 3 0(f) of the City's purchasing policy; and, 2 Authorize the Executive Director to execute a revised services agreement with Atascadero Main Street. DISCUSSION General The City Council has identified Economic Development as its top priority and the Redevelopment Agency assists with the implementation of action plans Two recent reports, the Atascadero Tourism Marketing Plan and the Atascadero Economic Development Strategy, highlight tourism and marketing activities for the community to implement. Currently the City and the Redevelopment Agency implement the tourism, events and marketing efforts in a variety of ways including the Chamber of Commerce, Atascadero Main Street, the countywide Visitors and Conference Bureau and a City effort. The City Council asked Staff to investigate opportunities to better coordinate resources and bring the tourism, events and marketing efforts under one umbrella. While there are a variety of potential solutions including • Coordinating all of the efforts through the City • Contracting with the Chamber of Commerce for additional tourism related services 33 • Contracting with the Atascadero Main Street for additional tourism related services Staff is recommending a pilot program to contract with a consultant to conduct these activities In this way, a new focus would be established that can coordinate the efforts of all of the existing organizations and further the new action plans It would provide for a more direct relationship with the Agency Board/City Council and not be directly connected with any existing board or constituency Impact on Main Street Main Street has evolved over the years and is currently focusing their efforts on a wider audience and more promotion or event activities. Staff would propose to split those efforts, focusing the Atascadero Main Street on the original purposes of the Downtown Parking and Business Improvement District which are 1 The acquisition, construction, or maintenance of parking facilities for the benefit of the area. 2. Decoration of any public place in the area. 3 Promotion of public events which are to take place on or in public places in the area 4 The general promotion of business activities in the area The Agency would provide Atascadero Main Street an amount equivalent to the current assessment. The current assessment is approximately $8,500, and has been as high as $10,500 in past years, staff is proposing to fund it at $10,000 per year at this time Main Street would not receive the funding from the City or Agency that it received in prior years, those funds would be focused on the new effort. The second part of the Main Street effort which staff sees as promotion and events would be shifted to the new effort in the pilot program This has become a large portion of the Main Street effort and will continue as a City effort through an independent contract. The City will continue to provide some administrative support to Main Street through the independent contract. In summary, Main Street would be refocused to the areas listed above and would receive $10,000 from the Agency plus administrative support. In return Main Street would provide office space and equipment for the Agency's consultant and represent downtown businesses The new Program The new program would combine several funding sources including • A portion of the RDA funds previously directed to the Main Street Program, approximately $59,160 • RDA special event funds directed as a match for Main Street events of $25,000 • City marketing funds equivalent to 1% of TOT approximately $40,000 • Potential specific promotion of City assets like the Zoo, approximately $5,000 34 The new program would generally be responsible to the Executive Director for Tourism, �"'r Events and Marketing The following are examples of work products to be included • Implementing the Atascadero Tourism Marketing Plan • Implementing the Tourism elements of the Atascadero Economic Development Strategy • Coordinate and conduct events • Promote Atascadero, businesses, events, etc. • Act as liaison to the County Visitor and Conference Bureau • Prepare monthly news articles from the City Manager • Prepare positive press releases weekly on City issues • Improve Public Relations through o City departments support o Out of Market promotions o In Market promotions • Provide visitor information and assistance • Manage and guide website and internet use • Participate in trade shows as directed by the City Manager • Coordinate activities with the Chamber of Commerce • Provide administrative support and City liaison services to Main Street • Assist the Office of Economic Development with Brand Building FISCAL IMPACT Current budgeted funds will be redirected to this effort. Total funding will be $125,000 This is a pilot program and AdPro is uniquely qualified to provide these services because of its relationship with Atascadero Main Street. Therefore staff is asking the Council to waive the formal process consistent with Section 3 0(f) of the City's purchasing policy ATTACHMENTS 1 Proposal for services from AdPro 2. Draft Amended Downtown Revitalization Services 35 Attachment 1 ADPRO 1015 Samantha Way — Paso Robles CA 93446 — (805) 238-9380 To Wade McKinney Fr- Steve Martin Re Tourism Marketing Proposal Dt: 7/6/09 As per your request, I am submitting the attached as a draft of a three-year Tourism Marketing Proposal for the City of Atascadero. The proposal consists of - I. Statement of Qualifications H. Proposed Responsibilities III. Evaluation Criteria IV Annual Cost Estimates Please feel free to contact me with any questions. Thank you. W on I. Statement of Qualifications - Steven W Martin EXPERIENCE 1998 - Present The Tourist LLC Paso Robles, CA Founder — Managing Member Developed West Coast travel magazine, The Tourist, as official publication for Amtrak's Coast Starlight, circulation. 250,000 per year Functioned as marketing/management consultant for various entities including Atascadero Main Street, Inc. 1995 - Present AdPro Paso Robles, CA Founder - Owner Provided full-service advertising agency services for local retailers 1989-1995 Twin Cities Community Hospital Templeton, CA Director of Marketing and Community Relations 1986-1989 Paso Robles Country News Paso Robles, CA Managing Editor 1981-1986 KPRL-AM/KDDB-FM Paso Robles, CA Director of News and Operations 1977-1981 Paso Robles Public Relations Paso Robles, CA Founder/Owner Founded the area's first full-service advertising agency/public relations office 1970-1977 KPRL-AM/KPRA-FM Paso Robles, CA Announcer/Production Director COMMUNITY ACTIVITIES Chairman, Colony Days Board of Directors Chairman, Paso Robles Library Foundation Member, ECHO Board of Directors Member, Atascadero Historical Society Board of Directors Member, CommunityLink Board of Directors Paso Robles City Council, 1987 — 1996 37 COMPUTER SKILLS 0. Paso Robles Mayor, 1988 — 1990 Chairman, Paso Robles Redevelopment Agency, 1990 — 1992 Founding chairman, Mission Oaks Unit, American Cancer Society Former board member, San Luis Obispo County Hospice Past president, Paso Robles Kiwanis Past president, Paso Robles Optimist Club Current member, Atascadero Kiwanis Chairman, Media & Marketing Committee, Atascadero Chamber Founder/chairman, Great Americana Festival, Paso Robles, CA Former president, Paso Robles Main Street Board of Directors Former member, Legislative Committee, Paso Robles Chamber Database programming — Developed commercially marketed office management. Other computer proficiencies include. Microsoft Word, Microsoft Excel, Microsoft Power Point, Microsoft Works, QuarkXpress, PageMaker, Photoshop, Illustrator, Filemaker, Microsoft Front Page, ISLA Web Easy Millennium, Pinnacle Studio 12, Magix Music/Video Deluxe 6, Namo Web Editor, PERL, Joomla 1.5 II. Proposed Responsibilities Implement Tourism Plan 1 Establish elements of implementation including brand building 2. Prioritize projects 3 Create timeline 4 Establish project budgets 5 Work with agencies such as the Chamber, Colony Days Committee, Histoncal Society, Wine Festival, Charles Paddock Zoo and the Art Association Coordinate and Conduct Events 1 Calendar of events to be coordinated with city 2. Each event to be budgeted 3 Operations binder to be created and updated for each event Promote Atascadero, businesses, events etc. 1 Assist with production of City Manager news articles 2. Create a regular schedule and submission plan for city press releases 3 Create a plan for editorial coverage by local and out of area media Visitor Information and Assistance 1 Work with Chamber to enhance and maintain visitor information via Internet, digital media and traditional methods Website/Internet 1 Enhance and maintain tourism website Trade Shows 1 Schedule attendance at trade shows/scheduled determined in coordination with city Liaison to Main Street 1 Function as consulting manager of the Main Street. Organization/details of contract to be negotiated with the Main Street Board of Directors. III. Evaluation Criteria With the assistance of the City, the following indices will be tracked to determine the effectiveness of tourism promotion strategies 1 Lodging occupancy 2 Transient occupancy tax 3 Retail sales tax 4 Website inquiries 5 Mail inquiries 6 Telephone inquiries 7 Attendance at special events 8 Participation by local tounsm-onented businesses 9 New business development in the Colony District and citywide 10 Amount and variety of media coverage IV Annual Cost Estimates Implement Tourism Plan. $75,00000 Coordinate/Conduct Special Events $20,00000 Promote Atascadero $20,00000 Visitor Information/Assistance $10,00000 Website/Internet. $5,00000 Trade Shows $3,00000 Liaison to Main Street. $0,000.00 Estimated Annual Total $133,00000 PAYMENT To be made in four quarterly payments Also AdPro will be named as the agency of record for all city/RDA advertising during the effective dates of the agreement. (Sample agreement is attached) .m Attachment 2 AMENDED AGREEMENT FOR DOWNTOWN REVITALIZATION SERVICES THIS AGREEMENT is made and entered into by and between the COMMUNITY REDEVELOPMENT AGENCY of ATASCADERO, a public body, corporate and politic, hereinafter called the "Agency", and ATASCADERO MAIN STREET, INC., a non-profit mutual benefit corporation, hereinafter called "Main Street." WHEREAS, The Agency desires to revitalize the downtown area and support the Main Street Program, and WHEREAS, The Agency continues to implement the Downtown Revitalization Plan with community members and downtown stakeholders, and WHEREAS, a primary goal of the Agency and Redevelopment Plan is the revitalization of the downtown, and WHEREAS, Main Street has been specifically created and organized to revitalize downtown Atascadero utilizing the National Main Street approach, NOW, THEREFORE, in consideration of the premises, covenants and promises hereinafter set forth, the parties hereby agree as follows 1 That the foregoing recitals are true and correct and constitute statements of fact herein. 2. Main Street shall carry on activities of the Downtown Parking and Business Improvement District including• • The acquisition, construction, or maintenance of parking facilities for the benefit of the area. • Decoration of any public place in the area. • Promotion of public events which are to take place on or in public places in the area • The general promotion of business activities in the area 3 Main Street shall provide office space, furnishings and equipment for administrative personnel who will support Main Street efforts and those efforts of the Agency/City in the areas of Tourism, Events and Marketing. 4 Main Street shall furnish an annual report outlining the accomplishments of the preceding year and a work plan for the upcoming year by April 30th of each year 41 The Agency shall fund Main Street in the amount of $10,000 (Ten Thousand Dollars for Fiscal Year 2009-2010 and 2010-11 6 Payment shall be made to Main Street in equal quarterly payments in advance as follows • first quarter payment in July• • second quarter payment in October; • third quarter payment in January; • fourth quarter payment in April. 7 This agreement shall become effective upon execution by the Executive Director and shall continue in effect until June 30, 2011, provided, however, that this agreement shall be automatically renewed each year hereafter, for periods of one year, commencing July 1 through June 30 of the succeeding year, by action of the Agency Board of Directors budgeting funds as provided in Paragraph 4 hereof, and Main Street's acceptance thereof of said budget allocation. 8 The Agency reserves the right to award separate bids for more specific advertising and promotional projects approved by the Agency Board during the term of this agreement. 9 In the event, in the opinion of the Agency Board of Directors, Main Street is not functioning effectively, then Agency may give Main Street notice of this fact, specifying in detail the alleged default or defaults, and Main Street must within 60 days correct said default or defaults, or the provisions in this Agreement for financial sponsorship of Main Street may be terminated by action of the Board of Directors. 10 This agreement may be amended or modified only by written agreement signed by both parties, with the exception of the procedure outlined in Paragraph 4 Failure on the part of either party to enforce any provision of this Agreement shall be construed as a waiver of the right to compel enforcement of such provision or provisions 11 It is understood that the contractual relationship of Main Street to Agency is that of independent contractor 12 Main Street agrees to keep all necessary books and records in connection with the services performed under this Agreement, and agree to make them available to the Agency at all reasonable times for audit purposes. Main Street furthermore agrees to provide, at no cost to Agency, an annual financial report of Main Street's financial records. 13 Main Street agrees to hold the Agency harmless from, and indemnify Agency for, any liability or injury to any persons or damage to any property arising out of the performance of activities under this Agreement by Main Street, the employees, officers or agents of Main Street. Main Street shall provide a Certificate of Liability 42 Insurance in the amount of $1,000,000 naming the Agency as an additional insured within thirty (30) days of signing of this Agreement. IN WITNESS WHEREOF the parties hereto execute this Agreement in Atascadero, California, this day of , 2009 APPROVED AS TO FORM. Brian A. Pienk, City Attorney ATTEST Marcia McClure Torgerson, City Clerk COMMUNITY REDEVELOPMENT AGENCY of ATASCADERO Lo Tom O'Malley, Board Chairman ATASCADERO MAIN STREET, INC. 43