Minutes 2010-03-29 SP MINUTES
SPECIAL MEETING OF THE CITY COUNCIL
MONDAY, MARCH 29, 2010
COUNCIL CHAMBERS, 215 EAST BRANCH STREET
ARROYO GRANDE, CALIFORNIA
1. CALL TO ORDER:
Mayor Ferrara called the Special City Council meeting to order at 6:02 p.m.
2. ROLL CALL:
City Council: Council Member Chuck Fellows, Council Member Ed Arnold, Council
Member Joe Costello, Mayor Pro Tem Jim Guthrie, and Mayor Tony
Ferrara were present.
City Staff Present: City Manager Steven Adams, City Attomey Tim Carmel, Director of
Legislative and Information Services /City Clerk Kelly Wetmore, Director of
Administrative Services Angela Kraetsch, Director of Recreation and
Maintenance Services Doug Perrin, Chief of Police Steve Annibali, and
Community Development Director Teresa McClish.
3. FLAG SALUTE:
Mayor Ferrara led the Flag Salute.
4. CONSIDERATION OF CONTINGENCIES REGARDING REDESIGN OF SHORT STREET
AND PURCHASE AND SALE AND IMPROVEMENT AGREEMENT WITH NKT
COMMERCIAL FOR ACQUISITION OF PROPERTY AT 300 EAST BRANCH STREET AND
SALE AND DEVELOPMENT OF CITY PROPERTY AT 200 AND 208 EAST BRANCH
STREET AND THE ADJACENT PARKING AREA:
City Manager Adams presented the staff report and City Council subgroup recommendation to:
1) approve relocation of all City Hall complex staff to the 300 East Branch Street (former Farm
Credit) building; 2) direct staff to solicit proposals to lease the existing City Hall building; 3)
authorize the City Manager to execute documents to obtain debt financing of up to $1.2 million
for costs associated with acquisition of the 300 East Branch Street property through the United
States Department of Agriculture (USDA) Rural Development Community Facilities low- interest
loan program and fund debt service from Local Sales Tax funds; 4) approve funding for
proposed improvements to the 300 East Branch Street building from Local Sales Tax funds; and
further recommended the Council appoint two Council Members to work with the City Manager
on the architectural design.
Mayor Pro Tem Guthrie expressed concern as to whether a five year lease for the City Hall
building was realistic due to the costly ADA and tenant improvements that would be required
and suggested a longer lease term be considered.
Mayor Ferrara invited comments from those in the audience who wished to be heard on the
matter.
Minutes of City Council Special Meeting
March 29, 2010
Page 2
Nick Tompkins, representing NKT Commercial, spoke in support of staff recommendations;
provided a history of discussions with the City concerning purchase of the property and the
original appraisal of $2.4 million; commented on the City's request for a new appraisal; stated
that the new appraisal reduced the value of the building by $380,000 which reflected the overall
decline in commercial property values; explained that he accepted the second appraisal with a
reduction in value as part of the transaction; however, he stated he could not accept a lower
valuation of the current appraisal as the altematives for the building greatly outweigh the
benefits of such a decision; acknowledged the Council's role and how it includes difficult and
challenging decisions in light of the deteriorating economy; referred to recent criticism about the
value of the building that was set by the appraiser; stated he has never had any intention to
harm the Village or the City; offered the City a unilateral right to re- purchase the Farm Credit
building at the same price plus $80,000 or $2.1 million and that this right to re- purchase would
start in two years and run through the end of year six; stated it was difficult to predict the future
and that in the event the future does not work out as planned, if space needs are greater or
less, there will be a pre- agreed upon contract to ensure the investment of the City's money
would be returned; urged the Council to carefully consider staff's recommendations as
supported by the subcommittees and various outside consultants; and noted that NKT's
financial information was provided to the City Attorney for review.
Jolie Lucas, resident of the Five Cities, spoke regarding Oceano Airport Celebration Day on
May 8`
Frances Askins, Launa Lane, spoke in opposition of the closure of Short Street, purchase of the
building, and demolition the "malt shop ".
Dana Billing, East Branch Street, spoke in opposition of the closure of Short Street and
demolition of the "malt shop ".
Gordon Bennett, Allen Street, spoke in opposition to the Centennial Park project, including the
closure of Short Street; thanked the hundreds of local citizens in support of the continued use of
Short Street, and especially the many business owners who recognize the importance of
keeping Short Street open for their tenants and customers.
Shirley Gibson, Town of Halcyon, spoke regarding the many moving parts of the project which
were not considered individually on their own merit; voiced concerns regarding the new debt
incurred by the purchase of the Farm Credit building; trading away of capital assets (200 East
Branch Street, 208 East Branch Street and the 15 parking spaces); the potential closure of
Short Street; and the creation of commercial buildings that represent fake history.
Manetta Bennett, Allen Street, stated that Short Street is the gateway to a historical area of the
community and it should be kept open; and she did not believe that sales tax should be used to
purchase the Farm Credit building.
Shirley Gibson, Town of Halcyon, referred to the list of people that had concerns about the
potential closure of Short Street; and stated in addition to Short Street, many people are
concerned about preserving the historical character of the Village. She displayed the list of 272
names of persons who are concerned about the potential closure of Short Street and the
preservation of the historical character of the Village; and provided a few quotes from people on
the list.
Kristen Barneich, Canyon Way, provided a history of the Silva family, who owned the malt shop
at 200 E. Branch Street; stated that the building can still be kept and adaptively reused even
though it is not historic, simply for the fact that it contributes to the Village's sense of place.
Gail Lightfoot, Mesa Drive, referred to a recent newspaper headline concerning City budget
cuts; commented on information in the article concerning the project; stated it was not the time
for governments to borrow more money, and that it is time to pay off debts and become solvent.
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March 29, 2010
Page 3
Karen Williams, Village business owner, spoke in opposition to the closure of Short Street and
commented that it would negatively affect her business.
Tim Moore, Fair Oaks Avenue, spoke in opposition to the City Hall /Centennial Park project
stating it was too much money; stated the City should be looking at what is better for the City
and its citizens, and that streets and sidewalks in the City need to be fixed first; commented that
Centennial Park could be retained if it was located in the current gazebo park and only
donations were used; opposed the use of City funds for Centennial Park; stated that if the City
has to have new offices, the building on Station Way is bigger, cheaper and newer than the
Farm Credit building, already has fire - sprinklers, is in the boundaries of the Village, and is more
fiscally responsible; stated the other City buildings could be sold in their current states and the
money could be used toward the Station Way property. He then submitted a list of questions
from concerned citizens and taxpayers.
Ira Hughes, Canyon Way, stated the City should look at the 10,000 square foot building on
Station Way to relocate the entire City Hall and Council Chambers; stated the City could then
sell the four buildings in the Village that are not ADA compliant which would enable the City to
cover the purchase of the buildings on Station Way; stated that the City could eliminate the
need for further future repairs and compliance to ADA legislation; eliminate the new parking lot
expense and the costs associated with reconfiguring Short Street; commented on past policies
to keep City offices in the same general location and stated that Station Way is considered to be
in the Village and he did not see any policy issues that could arise. He stated that the Station
Way property should be further explored, and the current City offices could then be used for
other uses to stimulate the economy.
Lynn Titus, Lierly Lane, spoke in opposition to changes in the Village.
Rachel Solerno, Short Street, spoke in opposition to the project; agreed with the relocation of
City Hall to another location; opposed more commercial buildings in the Village; and expressed
concern regarding parking issues around the Village.
Mike McConville, East Branch Street, spoke about the local sales tax; acknowledged the City's
annual report regarding local sales tax expenditures; stated a public hearing is required every
five years to determine whether the local sales tax is still necessary; opposed the use of local
sales tax money for the proposed purchase; stated that money should be used for making the
City buildings ADA compliant; and referred to the City organization chart which places citizens
at the top.
Susan Flores, East Branch Street, thanked staff for the tour of buildings and review of records;
stated she never doubted the City could get a loan; expressed concern about the use of local
sales tax; opposed the closure of Short Street; opposed debt being financed by the local sales
tax, and loss of parking; stated that the Station Way buildings are a good idea and would
increase parking; agreed with the need for an improved City Hall building; and stated that the
Farm Credit building would also need improvements and is a tight space.
Bob Lund, Linda Drive, spoke in support of the project, stated the Council had done a good job
in preparing and analyzing all the facts and data concerning the project; and expressed
concerns if this project was not approved.
Greg Steinberaer, commended the Council and City staff for listening and incorporating the
citizens' concerns and making adjustments; stated there is a need for change to keep things
viable; stated he was an eight year resident of Arroyo Grande; and noted that since the
February 23 meeting, he had met with the developer about the potential for a new building and
restaurant on the comer of Short Street.
Mark London, Launa Lane, commented that as a real estate broker and property manager, he
agreed with Council Member Fellows' review and valuation of the Farm Credit building;
commented that repair and maintenance of the current City Hall buildings has been
Minutes of City Council Special Meeting
March 29, 2010
Page 4
underfunded and put off for years; expressed concern about costs, fee credits, and necessary
improvements to the Farm Credit buildings, and stated that the current City buildings should be
fixed.
Patty Welsh, Pradero Court, stated the City should look at the Station Way location; expressed
concern over loss of parking where the Farmers' Market is on Saturday; would like Short Street
to stay open; and questioned the condition of the malt shop building.
Greg Moore, East Branch Street business owner, spoke in support of the project; stated it would
benefit the community overall; and believed it is better to own real estate than to lease.
Carol Pruett, Short Street, provided background history of parking behind Gina's Restaurant;
noted that deficient financing pays off sometimes; stated he served on a past Blue Ribbon
Committee that studied the relocation of City Hall and that there was a piece of property that
was available for no cost to build a new building; however, when it came back to City Council,
the turnout of people opposed relocating City Hall out of its present location; and concluded he
was an advocate of buying and owning properties by some means long before you need it.
Upon hearing no further comments, Mayor Ferrara closed the public comment period.
Mayor Pro Tem Guthrie provided the following comments:
- Acknowledged that this process began over a year ago; had originally expressed concern
that acquiring the Farm Credit building for additional space would provide more space than
was needed;
- Was willing to look at relocating City staff to the Farm Credit building and selling the City
buildings for income;
- Stated it would be possible to fit all staff in the Farm Credit building; it would be tight and
allows for a little bit of growth, but not much growth;
- Was concerned that a five year lease on the current City Hall building would not work which
is why the building would need to be sold or leased for a longer period of time;
- Stated the possibility of moving City Hall out of the core of the Village would be a good
decision if it was purely a business decision versus a political one;
- Had expressed concern with the original plan due to fundamental costs associated with the
project;
- Stated that use of local sales tax was not a direction given by the public and felt there
should be another way to finance;
- Acknowledged the buildings were not kept up due to other priorities that were identified;
- Stated the original intention was to stay within the existing City Hall; however, City Hall and
the Conrad House were declared historic, and the Conrad House was found to have
significant structural issues that will be expensive to fix, which makes it impossible to stay in
the City Hall and Public Works buildings.
- Was attracted to the idea of adding new buildings to the Village without it being fake history;
referred to example of new construction on Bridge Street;
- Stated he was open to the potential of looking into the Station Way location; however, he
was prepared to move forward with the project as proposed which is relocating all staff to
the Farm Credit building;
- Commented on the question of financial solvency, and stated the City has little existing debt
and can afford this loan quite easily over 30 years, and there is no solvency issue;
- Noted that the City is spending a lot of money on fixing City streets and sidewalks and the
City is following the intention that a majority of the local sales tax is being spent on roadway
and related;
Minutes of City Council Special Meeting
March 29, 2010
Page 5
- Commented there may be a need to decide whether City Hall needs to remain in the core of
the Village or not, or if it can be moved out of the core of the Village and the entire City Hall
campus could then be reused for retail or office use;
- Stated he is prepared to go ahead with the project as recommended but is open to
discussion regarding the Station Way buildings.
Council Member Arnold provided the following comments:
- Stated he was not prepared to approve the project tonight; acknowledged a lot of good work
was done with review of the Farm Credit building;
- Expressed concern regarding recent comments made about utilization of space in the Farm
Credit building and whether it would be too small;
- Stated his reasons for relocating staff into the Farm Credit building were related to the delay
on the ADA improvements to City Hall;
- Expressed concern with the appraisals and what the City's contribution is to this project;
- Could support the project as a stand alone project;
- Said the problem was there were good intentions at the start of the process; however,
combining the projects has created confusion;
- Could support buying the Farm Credit building, but if the City was to buy property then it
should also look at the buildings on Station Way;
- Should pursue other alternatives, including Station Way; does not believe another appraisal
makes sense;
- Could support the commercial project as a stand alone project and Short Street as one way;
- Believes the Station Way location presents a better alternative for the City to have a better
building with more square footage for less money.
Council Member Costello provided the following comments:
- Supported moving forward with the project;
- Does not support selling City Hall, but does support leasing;
- Believed that staff could be moved to the Farm Credit building for a short time for several
years, but will need more counter space to serve customers;
- Does not support closing Short Street; it will be kept open under this plan;
- Have been working on expanding parking in Village to make it more pedestrian oriented;
noted that parking is not being eliminated;
- Stated the appraisal process has been fair and complete;
- Acknowledged the City's tight budget; however, the economics of the project make sense as
a way to deal with the problems of space and ADA requirements in the current building and
the shortcomings of the 200 and 208 and 214 E. Branch Street buildings;
- Stated if the project was turned down and we started over, more money will be spent from
the General Fund and the sales tax to accomplish the same goal;
- Referred to the City's capital improvement plan which includes projects to fix streets and
sidewalks, and that the City would continue to fund the plan;
- Believed that in both the long term and the short term, this is the best course of action;
- Did not think the new commercial buildings would create fake history;
- Responded to comments regarding recent efforts to pursue a grocery store in the Village
and that no one has come forward with a proposal;
- Would support the project tonight.
In response to questions from Council Member Fellows, City Manager Adams explained the
three contingencies of the approval to: 1) develop an agreement on whether or not to relocate
Minutes of City Council Special Meeting
March 29, 2010
Page 6
all the City staff in the City Hall complex buildings to the Farm Credit building; 2) to determine
whether to sell or lease City Hall or to continue to use it for City operations; and 3) to determine
the appropriate funding source or agreed upon funding for costs associated with the project. He
also noted that the redesign of Short Street is part of the Purchase and Sale Agreement which
was already approved. City Manager Adams also responded to questions regarding the cost of
the lease; monthly rent; expenses related to improvements to the Farm Credit building
(including the fire sprinklers); costs to repair the Conrad House (Public Works building); that the
City has deferred maintenance to the buildings because this planning process has been
underway since 2004; issues regarding the new appraisal as it relates to the purchase price;
that the City was not opposed to another appraisal, however, there were issues regarding cost
and timing and identifying the objective for a new appraisal. Council Member Fellows expressed
concern about potential subsidies through the waiver of in -lieu fees; commented that the cost of
a new appraisal could be worth it if the price were lower; stated a local appraiser /realtor had
questioned the values of the City properties and he requested an explanation of the value of the
parking lot. City Manager Adams explained the City would be selling the property to the
purchaser as a vacant lot and therefore, the City would be removing the parking and replacing it
with another parking lot.
Council Member Fellows expressed concerns with the financial aspects of the proposal; and did
not support the applicant's offer to give the City an option to force a re- purchase of the building
at some future date.
City Manager Adams briefly reviewed the alternatives listed in the staff report.
Council Member Fellows provided the following comments:
- Does not support forgiving $112,000 in parking in -lieu fees;
- Stated a lot of people do not want the Village enhanced by tearing down and creating new
buildings;
- Does not support tearing down buildings;
- Stated that modifying Short Street and creating Centennial Plaza is going to be expensive;
- Believed the appraisal was way off, and the City would be paying too much;
- Does not support the project.
Mayor Ferrara provided the following comments:
- Supported the project;
- Believed the Station Way location is too noisy next to the freeway; available parking does
not appear adequate, however there is no parking analysis available; may need a traffic
analysis at that location;
- Has been around long enough to remember surveys regarding the location of City Hall
which indicate City Hall should stay in the Village;
- Commented on the favorable economics of the project;
- Stated that the main goal is the economy of the Village and of the City; has supported from
the beginning anything that could be done to bring more people into the Village to get out,
walk around, and experience the charm of the Village;
- Has discussed the benefits of co- locating staff; space needs may be an issue, but will not be
known unless it is tried; if it works, the City's operation will be much more efficient and result
in better service to the community;
- Agreed that this is a complex proposal, but as a whole, it is a good project for the City;
- Clarified that Short Street is not being closed, it would be a one -way street;
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March 29, 2010
Page 7
- Stated that the Building and Safety building was deemed to be not historic;
- Recognized that if the project was not approved, the entire project goes away;
- Stated that more consideration needs to be made by Mr. Tompkin's offer to buy the Farm
Credit building back; that this was an ideal situation to look at a buy -back agreement in
conjunction with the lease of City Hall;
- Addressed issue of frustration with government and distrust of the State legislature; stated it
did not feel good that there was distrust at the local level;
- Referred to sentiments expressed by community members that support the project;
- Acknowledged that there has been a lot of talk about parking; stated the project would gain
parking; and noted this project was approved by the Downtown Parking Advisory Board
which is made up of business owners in the Village;
- Stated that the City's obligation towards the local sales tax has been fulfilled and will
continue to do so; referred to two street projects that are funded and in progress;
- Acknowledged the sales tax advisory measures which prioritized the funds to be used for
City projects;
- Referred to the City's Design Guidelines and Formula Business Ordinance to keep chain
stores from coming into the Village;
- Does not believe creating anything new in the Village would create fake history;
- Expressed concern about what would happen to the JJ's Market building if there is a sense
that the Village should not be changed at all;
- Believed the City can take the initiative to chart a more dynamic economic course for the
Village while still preserving its charm;
- Stated that there are 17,000 people in the City and many of them have expressed support
for the future of the Village outside of the Council meetings;
- Supported the project;
- Supported extending the City Hall lease for a longer period, maybe for 7 years, and
including a buy back provision in the agreement.
Mayor Pro Tem Jim Guthrie offered the following additional comments:
- Stated he had reviewed the pluses and minuses of the project and came up with different
answers; acknowledged there were many pieces to the project;
- Stated it has always been about the most financially feasible way to accomplish what needs
to be accomplished for a better City Hall;
- Noted it would be very expensive to fix the current City Hall and finding an alternative was
key;
- Stated he was not hearing any support from the Council to sell the buildings, so he was
prepared to support and approve the recommendations as proposed;
- Reiterated that the City Hall lease should be longer than 5 years, possibly up to 10 years to
make it feasible;
- Noted that the Council voted 4 -1 to replace the Building and Safety building in order to
facilitate the commercial project;
- Preferred that this wasn't funded from the local sales tax;
- Would have adequate facilities for City Hall; would have the economic development project
that is key; and would have ADA compliance in the City Hall project;
- Supports with instruction to staff to provide for a 10 -year lease; if more space is needed
prior to that time, the Farm Credit building can be expanded;
- As far as parking, the new parking lot may not be development concurrently; however, there
will not be a shortage of parking in the Village;
Minutes of City Council Special Meeting
March 29, 2010
Page 8
- Suggested not putting in the elevator at this time, and staying within the budget that was set
forth with the less expensive alternative.
City Manager Adams suggested a Council subcommittee to work on design and selecting an
architect. There was consensus that Council Member Arnold and Mayor Pro Tem Guthrie
would continue to serve as subcommittee members.
Action: Council Member Costello moved to adopt the City Council subgroup recommendations
to: 1) approve relocation of all City Hall complex staff to the 300 East Branch Street building; 2)
direct staff to solicit proposals to lease the City Hall building and explore a 10 year lease; 3)
authorize the City Manager to execute documents to obtain financing up to $1.2 million for costs
associated with the acquisition of 300 East Branch Street property through USDA Rural
Development Community Facilities low interest loan program and fund debt service from local
sales tax funds, and 4) approve funding for proposed improvements to the 300 East Branch
Street building from local sales tax funds with the inclusion of the offer from Nick Tompkins to
repurchase the building within 6 years at $2.1 million, contingent also with the flexibility that the
Council would make a final decision on whether to go forward with completion of the second
story and the elevator based on the proposals brought back by staff. Mayor Pro Tern Guthrie
seconded.
Brief discussion ensued with the applicant regarding the term of the lease, the proposed buy-
back agreement, and the proposed remodeling improvements in the Farm Credit building.
Council Member Arnold noted that while he would be voting against the project tonight because
he believed the Station Way location should be explored as an option, he believed the project
was good and would support it moving forward after tonight as far as selecting an architect.
Council Member Fellows reiterated that by subsidizing Mr. Tompkin's proposal, there should be
caution regarding the buy -back agreement to avoid further subsidies.
The motion passed on the following roll -call vote:
AYES: Costello, Guthrie, Ferrara
NOES: Arnold, Fellows
ABSENT: None
5. ADJOURNMENT:
The meeting was adjourned at 8:30 p.m. to the next Regular City Council Meeting on April 13,
2010.
Tony F rn rrg7Mayor
ATTEST:
Kelly We ' or/ City Clerk
(Approved at CC Mtg q.27-24))0)