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HomeMy WebLinkAboutMINUTES - 07222003 - C.62 TO: BOARD OF DIRECTORS OF THE - - _ Contra CONTRA COSTA COUNTY - Costa REDEVELOPMENT AGENCY 17 FROM: JOHN SWEETEN, County Administrators. u ( `�' �A cfiur�`t`r �7ko�.1� icy DATE: JULY 16, 2003 SUBJECT: RESPONSE TO GRAND JURY REPORT NO. 0306, ENTITLED "TIME TO REDIRECT THE COUNTY REDEVELOPMENT AGENCY" SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: ADOPT report as the governing body of the Contra Costa County Redevelopment Agency's response to Grand Jury Report No. 0306, entitled "Time to Redirect the County Redevelopment Agency" BACKGROUND: The 2002/2003 Grand Jury filed the above-referenced report on May 13, 2003, which was reviewed by the Board of Supervisors and subsequently referred to the County Administrator and the Redevelopment Director, who prepared the attached response that clearly specifies: A. Whether the finding or recommendation is accepted or will be implemented; B. If a recommendation is accepted, a statement as to who will be responsible for implementation and a definite target date; C. A delineation of the constraints if a recommendation is accepted but cannot be implemented within a six-month period; and D. The reason for not accepting or adopting a finding or recommendation. CONTINUED ON ATTACHMENT: YES SIGNATURE: ' ---- --------------------------------------------------------------------------------- -----—-----�� :_--------------------- ----- F RECOMMENDATION OF EXECUTIVE DIRECTOR RECOMME TION OF BOARD COMMITTEE _.APPROVE OTHER SIGNATURE(S) ------------------------- -- ----�- -------------------------------------------------------------------------------------------------- ACTION OF BOA N July 22, 2003 APPROVE AS RECOMMENDEDX OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE X UNANIMOUS(ABSENT NAND CORRECT COPY OF AN ACTION TAKEN } AND ENTERED ON THE MINUTES OF THE BOARD OF SUPERVISORS ON THE DATE AYES: NOES; SHOWN, ABSENT: ABSTAIN: ATTESTED: JULY 22,2003 CONTACT: JULIE ENEA(925)335-1077 JOHN SWEETEN,CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR CC: BOARD OF SUPERVISORS MEMBERS PRESIDING JUDGE OF THE GRAND JURY GRAND JURY FOREMAN COUNTY ADMINISTRATOR COMMUNITY DEVELOPMENT DIRECTOR DEPUTY DIRECTOR-REDEVELOPMENT BY. ,DEPUTY f t RESPONSE TO GRAND JURY REPORT NO. 0306 IT'S TIME TO REDIRECT THE COUNTY REDEVELOPMENT AGENCY FINDINGS 1. The County Beard of Supervisors is the governing board of the RDA. Response: Agree. 2. The RDA raises capital dollars primarily through the sale of tax exempt bonds. It can incur bonded indebtedness without voter approval. Response: Agree, with the clarification that the bonded indebtedness incurred by the Agency is secured by redevelopment tax increments. The sale of tax-exempt bonds allows the Agency to undertake capital improvements and to pay off the debt over a period of years as a facility is used. 3. Close to 70% of the RDA's current budget is devoted to the Pleasant Hill BART (PH BART) redevelopment area. Response: Agree. Close to 70% of the Agency's tax increment revenue comes from the Pleasant Hill BART project and must be spent in or to benefit that project. 4. The current indebtedness of the PH BART redevelopment project is just over$83 million. Response: Agree. 5. While established in 1984, the redevelopment of the PH BART area has not yet been completed. There is no specific timetable for the development of the rest of the PH BART area. Response: Agree, with the clarification that approximately 70% of the planned development program has been completed. The remaining undeveloped properties are expected to undergo development within the next five to ten years. One property— Area 7 B/8 the Equity Office holdings— will develop when market conditions allow. The second property— the BART joint development site — will develop when the required institutional business agreement has been put into place and market conditions allow. 6. A development company, Millennium Partners, has exclusive right to the development of the PH BART redevelopment area. Response: Partially disagree. Millennium Partners has an exclusive right to negotiate a ground lease with the Bay Area Rapid Transit District for the BART joint development site. They do not have any development rights with respect to other properties within the redevelopment area. 7. The RDA has purchased the Las Juntas Swim Club for the purpose of providing parking for BART. The RDA paid $2 million for the property, which had been appraised at $1.8 million. The appraisal states "The Highest and Best Use of the property was determined to be to demolish the swim club improvements to allow residential development as allowed by the General Plan and zoning" Response: Partially disagree. The RDA purchased the Las Juntas Swim Club site for the purpose of developing the residential use on the property as allowed by the City of Walnut Creek's General Plan. The residential development will include an affordable housing aspect. Prior to its development as a residential site, the RDA will use, on an interim basis, the property for temporary BART parking. With respect to the purchase price, the RDA paid$2 million in comparison to the asking price of$2.5 million. An appraisal is an estimate of value and does not necessarily reflect the final purchase price. It's Time to Redirect the Redevelopment Agency July 16, 2003 County Response to Grand Jury Report No. 0306 Page 2 8. The Swim Club property has been purchased for the use of BART parking. BART has not agreed to pay any of the costs of improvement of the property for parking, estimated at $590,000, nor for its on-going maintenance. Response: Disagree. The swim club property was not purchased for BART parking (see the County's response to Finding No. 7). However, BART and the RDA are currently negotiating a variety of agreements that will allow BART to utilize the swim club site for temporary parking and to repay the RDA for its capital costs of installing the temporary parking lot. BART will be responsible for the facilities maintenance under terms of a lease agreement. 9. Assembly Bill 1855 (AB1855) was passed in 2000 to allow the RDA to buy the Las Juntas property which is outside the redevelopment area and within the city limits of Walnut Creek. AB1855 permits this property to be used solely for the purpose of constructing affordable housing. AB1855 says: „The funds shall be used only for the acquisition of land for, and the design and construction of, the development of housing containing units affordable to low- or moderate-income persons.,, Response: Disagree. As to the RDA's motive for purchasing the Las Juntas Swim Club property, if the RDA wished to purchase it exclusively for interim parking, it could have legally done so without special legislation because the interim parking provides a benefit to the redevelopment project. Under state redevelopment law, the RDA can pay for public improvements such as parking anywhere outside of the redevelopment project area if those improvements benefit the project. Use of housing funds, however, is somewhat more limited. For example, the RDA can spend housing funds outside the project area and within the County unincorporated area, but not within incorporated areas, such as the City of Walnut Creek where the swim club is located. Therefore, the pD v purpose of AB 1855 was to give the RDA the additional authority to spend housing funds for affordable housing in the City of Walnut Creek, where the swim club is located. In accordance with AB 1855, the RDA has used its housing funds to acquire the swim club for affordable housing and fully intends to obtain development of the property for that purpose. The Agency has not and will not use its housing funds for any costs associated with interim BART parking. Interim BART parking will be funded from the RDA's non-housing funds, as authorized under state redevelopment law provisions other than AB 1855. 10. The request from the Board of Supervisors asking various Senators and Assembly persons to support the bill did not reveal that the purchase would be for parking, but stressed affordable housing. Response: Agree. In clarification, written correspondence from the RDA Board of Directors to legislators requesting support for AB 1855 indicated that the swim club site would serve as a future affordable housing site. Additionally, in discussions with legislative staff and with interest groups, the RDA did indicate that it would use the property on an interim basis for parking, as is permitted by law. Complete disclosure as to the intended short- and long-term use of the property occurred between the RDA and the legislative offices. The absence of the temporary use for parking from the written correspondence, rather than signifying a sinister attempt to hide information, signified the RDA's foremost and permanent goal of obtaining the property for affordable housing purposes. 11. AB1855 also grants permission for the RDA to use its funds outside the redevelopment area "anywhere in the unincorporated territory" for the "provision of low-and moderate-income housing". It's Time to Redirect the Redevelopment Agency July 16, 2003 County Response to Grand Jury Report No. 0306 page 3 Response: Disagree. Prior to passage of AB 1855, the RDA could spend its housing fund money anywhere in the unincorporated territory of the County provided the housing would benefit a redevelopment project. The only change in law made by AB 1855 was to authorize the RDA to spend its housing funds within the incorporated territory of the City of Walnut Creek on sites adjacent to the Pleasant Hill BART redevelopment project area. 12. The RDA also has plans to build a $25 million parking garage for BART on BART property. When it has been completed, RDA plans to give ownership of the garage to BART without payment. Response: Partially disagree. The RDA does have plans to finance a replacement parking structure for BART as part of the development of the BART property with residential and commercial uses, but it will not be without payment. The tentative agreement among the County, the RDA, and BART will result in the County receiving a substantial return on the RDA's investment. Over the life of a 99 year ground lease, the County will receive 75% of ground lease revenues, which will be well in excess of the RDA investment in exchange, BART will own the garage and receive the remaining 25% ground lease revenues. 13. The RDA is planning to build a bridge over Treat Blvd. (at Jones Road) for easier pedestrian and bicycle access to the BART station at a cost estimated to be $4 million. Response: Agree. 14. There has been opposition by residents in the surrounding areas to both the use of the Las Juntas Swim Club for BART parking and the construction of the bridge over Treat Blvd. Response: Partially disagree. There has certainly not been unanimity of opinion on the merits of proceeding with a temporary parking program on the former Las Juntas Swim Club site or constructing the bridge over Treat Boulevard. However, the Walnut Greek City Council, which has jurisdiction on land use issues within its city limits, weighed the merits of providing temporary parking for a regional facility against the opposition expressed by some area residents, in favor of public parking. Note also that all area residents do not support the long-term use of the property for affordable housing either. Nonetheless, the City of Walnut Creek has expressed a willingness to work with the RDA and the area residents to accomplish the development of affordable housing. This remains the common and consistent public policy objective. The construction of the pedestrianlbicycle overcrossing of Treat Boulevard has also attracted some opposition. The majority of comments have been associated with design, aesthetics, and proximity impacts of the facility. 15. Affordable housing goals as required by RDA law, have been met by subsidizing rents in apartment complexes within the PH BART redevelopment area. Response: Agree. The Housing element of the County General Plan has identified the housing needs of very low and low-income households as the area of most significant need, and where scarce resources should be devoted. A total of 1,183 residential units have been built within the redevelopment area. Nineteen percent of these units (221 in total) are affordable units, exceeding the legal requirement by more than 40 units. Furthermore, all 221 of the affordable units are targeted to very low- income households, exceeding the legal standard of only 71 very low-income units. It's Time to Redirect the Redevelopment Agency July 16, 2003 County Response to Grand Jury Report No. 0306 page 4 The Pleasant Hill BART affordable housing program is consistent with this public policy objective. The BART property, when built, will also include residential units. A minimum of 95% of the units will be affordable housing. Given financing sources, it appears that the BART property affordable housing units may also be highly targeted to very low and low-income families. Up to 67 additional affordable units could be built on the BART property(assuming build-out at 446 residential units in total). 16. There has been no owner-occupied, affordable housing built within this redevelopment area. Response: Agree. Instead, a priority has been given to the production of affordable rental units for two interrelated reasons: ♦ First, the RDA's policy objective for affordable housing is to serve very low- and low-income households that have the highest need and the fewest opportunities; and ♦ Second, affordable rental housing requires less public subsidy than affordable ownership housing. For example, the per-unit public subsidy costs for the Pleasant Hill BART area projects targeted to very low-income households is in the range of$35,000 - $60,0001unit. By comparison, a for-sale unit with the same target income level would require a public subsidy of$950,000 - $200,0001unit. 17. Health and Safety Codes 33421 and 33445 are cited by the RDA as its authority for the actions it proposes to take within the redevelopment area. Response: Partially disagree. Health and Safety Code Sections 33421 and 33445 provide for the authority of the RDA to undertake financing of land for, and construction of, public infrastructure improvements within the area. Other activities, including the financing of land acquisition for private development and a provision of affordable housing, for example, are enabled in other sections of the Health and Safety Code. CONCLUSIONS 1. The County Redevelopment Agency is a separate legal entity with its own revenue, budget, staff and power to issue debt and condemn property. Comment: The statement with respect to the Agency's power is largely correct. However, the RDA does not hire its own staff, rather the RDA utilizes County employees for its staffing needs. 2. Redevelopment law, specifically Health and Safety Codes 33421 and 33445, is being interpreted liberally by the RDA to justify its decisions and actions. Comment: The RDA has consulted with its legal counsel prior to implementing all of its projects and has complied with redevelopment law in all respects. 3. The continued development of the PH BART area is moving very slowly under the agreement with Millennium Partners. Comment: The Pleasant Hill BART Station Area is 70% developed within the first twenty years. The remaining pieces appear to be moving forward with development It's Time to Redirect the Redevelopment Agency July 16, 2003 County Response to Grand Jury Report No. 0306 page 5 expectations within the next five to ten years, lengthy build-out of a program that is in large part market driven and of the complex nature that is characteristic of redevelopment sites, infill sites, and mixed-use/transit-oriented sites is not unusual. 4. The obligation for providing parking for the convenience of BART and its riders lies with BART and/or Millennium Partners, not with the RDA. Comment: While providing replacement parking for BART patrons is a function of BART policy, parking needs at BART cannot be resolved outside the context of the development of the entire BART site, which falls within the purview of the RDA, the County, and BART. The partnership among the RDA, the County, and BART on this project is a successful model of how public agencies can work constructively and cooperatively to address issues that cross constituencies. 5. The use of$25 million in redevelopment funds to build a parking garage on BART property is inappropriate. Again, parking for its riders should be BART`s obligation. If parking is displaced by a developer, it should also be the responsibility of that developer to replace it. Comment: See the County's comment on Conclusion No. 4. 6. AB1855 does not give the RDA authority to acquire the Las Juntas Swim Club property for the purpose of BART parking. Comment: See the County's response to Finding No. 7. 7. The expenditures of $2.6 million of redevelopment funds to provide BART parking on the swim club site is inappropriate. Comment: See County's response to Finding Nos. 7 and 8. 8. The expenditure of some $4 million for a bridge over Treat Blvd. is improper. Whatever the increase in pedestrian or bicycle traffic, the building of the bridge is not an appropriate use of redevelopment dollars. Comment: The purpose of the bridge or overcrossing is to provide better access to the Pleasant Hill BART Station Area for pedestrians and bicyclists. The overcrossing will greatly enhance both accessibility and safety by providing an additional access route in which pedestrians and bicyclists will be able to avoid direct interaction with vehicle traffic on Treat Boulevard. The overcrossing is an appropriate use of RDA funds because it directly supports a County redevelopment project area. The conclusion also appears to misrepresent the extent to which redevelopment funds are being used for the facility. The $4 million dollar cost of the overcrossing includes a $1 million dollar appropriation of redevelopment funds. The remaining $3 million dollars, 75% of the funding commitment, is supported by Measure C funds, developer impact fees, and federal transportation dollars. Clearly, other County, regional, and federal authorities have likewise found the expenditure of funds for the Treat Boulevard overcrossing to be appropriate. 9. A more proper use of these funds would be to provide more low- and moderate- income housing either within the PH BART redevelopment area or elsewhere within the county as permitted by AB 1855. Comment: The RDA is strongly committed to providing affordable housing within its redevelopment areas. At the present time the RDA has exceeded its obligation to provide affordable housing within its project areas, including the Pleasant Hill BART Area. With the development of the BART property, even more affordable housing is planned within the project area. It's Time to Redirect the Redevelopment Agency July 16, 2003 County Response to Grand Jury Report No. 0306 Page 6 The County and RDA are proud of their record in providing a balanced range of affordable housing opportunities through their redevelopment programs. RE+CtJM IENDATIONS The Contra Costa County Grand Jury recommends the following actions to the Contra Costa County Board of Supervisors as the governing board of the RDA. 1. Since the purchase of the Las Juntas Swim Club property has been finalized, use the property as AB 1855 intended, for multi-family affordable housing. Response: Will be implemented. The RDA has already committed to the City of Walnut Creek its intention to develop affordable housing on the former Las Juntas Swim Club site within five years as a condition of securing a land use permit for interim uses and temporary BART parking. The RDA fully intends to fulfill its obligation under State Redevelopment Law and to the City of Walnut Creek to meet the agreed-upon conditions. 2. Do not spend any redevelopment dollars to turn the Swim Club property into a parking lot. Response: Will not be implemented because it is not reasonable. Funding decisions for County redevelopment projects are strictly within the purview of the RDA Board of Directors. The RDA has secured the necessary land use permit from the City of Walnut Creek, who agreed to participate in a cooperative solution to address replacement parking needs related to removal of BART parking on the former Iron Horse Corridor. Furthermore, BART will, over time, return the investment of redevelopment dollars for construction of the temporary parking on the Swim Club site to the RDA. 3. Do not build the parking garage for BART. Response: Will not be implemented because it is not reasonable. Carried to its logical conclusion, this recommendation would preclude any development on the BART joint development site, nor would it provide BART with any revenue with which to pursue development of a replacement parking garage. All opportunities to establish a mixed- use transit village on the BART development site would be forfeited. A significant opportunity for housing, including affordable housing and for-sale housing near BART, would be forfeited. 4. Do not proceed further with plans to build the bridge over Treat Blvd. Response: Will not be implemented because it is not reasonable. The overcrossing is an integral element of the overall plan for the BART redevelopment area and is consistent with the Board's goals for that area. On June 90, 2003, the Board of Supervisors made a determination on final design and directed the staff to proceed with the final construction pians for the overcrossing. 5. Redirect the monies designated for BART parking and the Treat bridge into low- and moderate--income housing within the PH BART redevelopment area or elsewhere within the unincorporated territory of the county. Response: Will not be implemented because it is not reasonable. Funding decisions for County redevelopment projects are strictly within the purview of the RDA Board of Directors. While affordable housing is an important goal that the RDA is pursuing, it is also important that the RDA provide a proper balance of uses and facilities within higher density, mixed-use areas. The provision of alternative forms of public access to the BART area and transit facility is consistent with regional accessibility goals. It's Time to Redirect the Redevelopment Agency July 16, 2003 County Response to grand Jury Report No. 0306 Wage 7 6. The Board of Supervisors, in its capacity as the Redevelopment Agency Board of Directors closely supervise the Redevelopment Agency to insure that the agency is spending redevelopment money in prudent and appropriate ways and in the best interest of the public. Response: Has been implemented in as much as it is reflective of the existing conditions. The Board of Supervisors sits as the Governing Board of the Redevelopment Agency and, in that capacity, adopts budgets and sets priorities for the use of redevelopment funds.