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HomeMy WebLinkAbout94-038 - Santa Ana South Main Street Redevelopment Project099 REL: 6/9/94 RESOLUTION NO. 94-038 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF SANTA ANA DETERMINING THAT THE FUNDING OF THE ACQUI- SITION AND REHABILITATION OF THE SOUTHERN COUNTIES GAS COMPANY PROPERTY AND THE GRAND CENTRAL PROPERTY, LOCATED IN THE CITY OF SANTA ANA REDEVELOPMENT PROJECT, ARE OF BENEFIT TO THE SANTA ANA SOUTH MAIN STREET REDEVELOPMENT PROJECT, THAT NO OTHER REASON- ABLE MEANS OF FINANCING ACQUISITION AND REHABILITA- TION OF SUCH PROPERTIES IS AVAILABLE TO THE CITY OF SANTA ANA, AND THAT THE USE OF FUNDS FROM THE SOUTH MAIN STREET REDEVELOPMENT PROJECT FOR THE ACQUISI- TION AND REHABILITATION OF SUCH PROPERTIES WILL ASSIST IN THE ELIMINATION OF ONE OR MORE BLIGHTING CONDITIONS IN THE SANTA ANA SOUTH MAIN STREET REDE- VELOPMENT PROJECT WHEREAS, the Community Redevelopment Agency of the City of Santa Ana (the "Agency") desires to redevelop a portion of the City of Santa Ana Redevelopment Project Area (the "Central City Project Area" ) into an "Artists ' Village" providing studio, gallery and living space to artists working in the City of Santa Aha and providing a cultural and educational resource to the residents of the city; and WHEREAS, for this purpose, the Agency desires to acquire and rehabilitate the property located at 207 West Second Street, commonly known as the Southern Counties Gas Company building (the "Gas Company Property") and the property located at 200 West Second Street, commonly known as the Grand Central Building (the "Grand Central Property" ) (the Gas Company Property and the Grand Central Property are referred to collectively herein as the "Properties" ; and WHEREAS, the Agency intends to retain title to the Properties after they have been rehabilitated and to lease the Grand Central Property to California State University at Fullerton for use as an extension campus for its Art Department; and WHEREAS, the Gas Company Property has been vacant for several years and the Grand Central Property is partially vacant, and such vacancy problems are due, at least in part, to the lack of available parking for, easy vehicular access to, and visibility of both Properties; and WHEREAS, the Central city Project Area is immediately adjacent to the Santa Ana South Main Street Redevelopment Project Area (the "South Main Project Area") and the Properties are within two blocks of the common boundary of the Central city Project Area and the o -o3a 101 Page 2 South Main Project Area; and WHEREAS, there are insufficient tax increment revenues or other funds available from the Central City Project Area to fund the acquisition and rehabilitation of the Properties; and WHEREAS, there are tax increment revenues or other funds generated by the South Main Project Area which are available to fund the acquisition and rehabilitation of the Properties; and WHEREAS, the lack of cultural amenities and educational facilities in the South Main Project Area and the city as a whole is a blighting condition; and WHEREAS, the acquisition and rehabilitation of the Properties are of benefit to the South Main Project Area because the develop- ment of the Artists' Village will provide a cultural amenity and create an educational opportunity for the residents of the South Main Project Area and the city as a whole and will assist in eliminating blighting conditions due to insufficient parking and access to structures in an area less than two blocks from the South Main Project Area; and WHEREAS, there is no other reasonable means available to the community for financing the acquisition and rehabilitation of the Properties; and WHEREAS, the acquisition and rehabilitation of the Properties will assist in eliminating one or more blighting conditions in the South Main Project Area; and WHEREAS, California Health and Safety Code Section 33445 requires the legislative body of the City to determine, prior to the payment of any portion of the cost of acquisition and rehabili- tation of the Properties, that such acquisition and rehabilitation of the Properties will be of benefit to the South Main Project Area, that no other reasonable means of financing the acquisition and rehabilitation of the Properties is available to the community and that the use of funds from the South Main Project Area to pay the cost of acquisition and rehabilitation of the Properties will assist in the elimination of one or more blighting conditions in the South Main Project Area; and WHEREAS, the factual basis supporting such determinations has been discussed in the Report entitled, "Acquisition and Rehabilita- tion of Properties for Artists' Village" attached hereto as Attachment No. 1; and WHEREAS, the city Council has considered such report and has held a public hearing as required by California Health and Safety Code S 33679 for the purpose of receiving public input and comment; RESOLUTION 94-038 103 Page 3 NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES HEREBY RESOLVE AS FOLLOWS: 1. It is hereby determined that: (a) The acquisition and rehabilitation of the Properties will be of benefit to the South Main Project Area; (b) No other reasonable means of financing the acquisition and rehabilitation of the Properties is available to the community; and (c) The use of funds from the South Main Project Area to pay the cost of acquisition and rehabilitation of the Properties will assist in the elimination of one or more blighting conditions inside the South Main Project Area 2. The City hereby consents to the Agency's expenditure of up to the following sums from the funds of the South Main Project Area for the acquisition and rehabilitation of the Properties: Gas Company Property Acquisition: Rehabilitation: up to $300,000.00 up to $500,000.00 Grand Central Property Acquisition: Rehabilitation up to $1,500,000.00 up to $2,000,000.00 ADOPTED this 20th day of June , 1994. ATTEST: Daniel/~ H. ' Young Mayor COUNCILMEMBERS: Young Aye Pulido Aye Lutz Aye McGuigan Aye Mills Aye Moreno Aye Richardson Ah~nt APPROVED AS TO FORM: Edwa~ ~.~Co~ city Attorney 3 104 CERTIFICATE OF ORIGINALITY & PUBLICATION State of California County of Orange I, YANICE C. GUY, Clerk of the Council, do hereby certify the attached Resolution ~ to be the original resolution adopted by the City Council of the City of Santa Ana Date: /// Clerk of theUo~o~ "' City of Santa Aha ' 105 EXHIBIT A CITY OF SANTA ANA REDEVELOPMENT PROJECT (CENTRAL CITY) SANTA ANA SOUTH MAIN STREET REDEVELOPMENT pROJECT REPORT ON ACQUISITION AND REHABILITATION OF PROPERTIES FOR ARTISTS' VILLAGE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA JUNE 20, 1994 10G RESOLUTION 94-038 EXHIBIT I. INTRODUCTION The Community Redevelopment Agency of the City of Santa Ana (the "Agency,) has prepared this report pursuant to Sections 33445 and 33679 of the California Community Redevelopment Law (Health and Safety Code Sections 33000 et seq.). This report sets forth certain information regarding the proposed expenditure of tax increment revenues or other funds from the Santa Aha South Main Street Redevelopment Project Area (the "South Main Project Area") for the purpose of acquiring and rehabilitating two properties located in the City of Santa Ana Redevelopment Project Area (the "Central city Project Area"). The two properties (collectively, the "Properties") are: (1) 207 West Second Street, also known as the Southern Counties Gas Company building (the "Gas Company Property"). The Gas Company Property is currently owned by the Resolution Trust Company. It has been vacant for over three years. The Gas Company Property is blighted because it has no on-site or off-site parking, is not accessible directly by car, and is not easily visible from nearby streets. These conditions have contributed to the difficulty in keeping tenants in the building. . (2) 200 West Second Street, also known as the Grand Central Building (the "Grand Central Property"). The Grand Central Property has a mixture of resi- dential and commercial spaces, many or which are vacant. Like the Gas Company Property, the Grand Central Property has no nearby parking, is diffi- cult to access by car and is not easily visible from nearby streets. The Agency desires to develop an "Artists' Village" in the Central city Project Area, comprised of the Properties and other faciliti~ adjacent to the Properties. After rehabilitation, the Agency will retain ownership of the Properties and lease them to various users. In particular, the Agency intends to lease the Grand Central Property to California State University at Fullerton at a nominal rent for use as an extension campus for its Art Department. The Village is an artists' community with studio and live/ work space in renovated and newly constructed buildings. Studio space is shell space from 800 square feet to 1200 square feet which will be in basements, first, second or third floors of buildings. Live/work space is an area comprised of one or more rooms which include cooking space, sanitary facilities and working space. Retail space will provide services to the artists' community and 2 RESOLUTION 94-038 EXHIBIT will include frame shops, galleries, art supplies, cafe, bookstores and other shops. The G~and Central Building is proposed to be remodeled to accommodate a graduate student art center and will include art studios, gallery space, project room, printmaking studio, gift shop, theatre, restaurant and classrooms. Interior remodeling includes integrating classroom space, a computer lab, installation of an elevator, installation of a new storefront system, new interior walls, installation of new electrical lighting, bringing restrooms up to ADA standards, adding new restrooms, new flooring, new trellis, new roofing, heating and air conditioning installed in residential units, new carpet, vinyl floor covering and oabinets will also be installed. All improvements will be according to building code requirements. The Handlebars Saloon is presently uninhabited and needs a major interior renovation. The entire roof needs to be replaced within five years; asbestos in the flooring and roof needs to be mitigated or removed; a Phase I environmental report indicates a previous history of storing hazardous materials. This needs remediati0n by a previous owner who is liable for cleanup. Off-site parking will be provided for both of these buildings on a site owned by the Redevelopment Agency and leased to an adjacent property owner. This property owner is responsible for completing all parking lot improvements including lighting and security. The rehabilitation of the properties will alleviate the blighting conditions outlined in (1) and (2), above. This report includes information on the following topics: (1) an estimate of the amount of tax increment revenues or other funds to be used to pay for the acquisition and rehabilitation of the Properties; (2) the facts supporting the determinations required by Section 33445 of the California Redevelopment Law to be made by the Agency and the City Council; and (3) the redevelopment purpose for which tax increment revenues or other funds are being used to pay for the acquisition and rehabilitation of the Proper- ties. II. EST.~MATED TAX INCREMENT OR OTHER AGENCY FUNDS TO BE USED TO PAY FOR THE ACQUISITION AND REHABILITATION OF THE PROPERTIES The Agency estimates that the cost Of acquisition and rehabilitation of the Properties will be approximately as follows: Gas Company property Acquisition: Rehabilitation: up to $300,000.00 up to $500,000.00 3 RESOLUTION 94-038 Exhibit Grand Central Property Acquisition: RehabiLitation: up to $1,500,000.00 up to $2,000,000.00 III. DETERMINATIONS REQUIRED BY SECTION 33445 Section 33445 of the California Redevelopment Law requires that certain determinations or findings be made by the city Council and the Agency before the Agency agrees to pay all or part of the value of the land for and the cost of the installation and construction of any building, facility, structure, or other improvement which will be publicly owned. Those determinations are: That the buildings, facilities, structures, or other improvements are of benefit to the project area or the immediate neighborhood in which the project is located, regardless of whether the improvement is within another project area. (2) That no other reasonable means of financing the buildings, facilities, structures, or other im- provements, are available to the community. (3) That the payment of funds for the acquis%tion of land or the cost of buildings, facilities, struc- tures, or other improvements will assist in the elimination of one or more blighting conditions inside the project area. THE ACQUISITION AND REHABILITATION OF THE PROPERTIES ARE OF BENEFIT TO THE PROJECT As shown on the map attached as Exhibit A, the Proper- ties are less than two blocks outside cf the South Main Project Area. Due to its proximity to the south Main Project Area, the Artists' Village will serve and enhance the South Main Project Area. The South Main Project Area and the city as a whole lack cultural and educational facilities. The staff believes that this deficiency is a blighting influence due to the extreme cultural diversity in Santa Ana, and the lack of cultural and educational facilities needed to promote intercultural understanding and appreciation. The creation of the Artists' Village, in part by the acquisition and rehabilitation of the Properties, will provide such cultural and educational facilities to the residents of the South Main Project Area and of the entire city. Further, as described above, the Properties themselves are blighted. The South Main Project Area will benefit by the 4 RESOLUT O 94-038 109 EXHIBIT elimination of blighting conditions on properties within two blocks of the boundary of the South Main Project Area. The proximity of the Properties to the south Main Project Area also makes it possible for .persons patronizing businesses in the South Main Project Area to park in parking facilities in the Central City Project Area. Therefore, the increased availability of parking near the South Main Project Area will also be of benefit to the South Main Project Area. B. NO QTHER REASONABLE MEANS OF FINANCING THE PUBLIC FACILITIES AND IMPROVEMENTS IS AVAILABLE TO THE COMMUNITy If the funds were available, the acquisition and rehabil- itation of the Properties could be funded with tax increment revenues or other funds generated from the Central City Project Area. However, due to the fact that all tax increment revenues from the Central City Project Area have been pledged to repay tax allocation bonds, sufficient funds are not currently auailable. The City itself is not in a position to finance the acquisition and rehabilitation of the properties from any source of funds. In California, municipal or tax-exempt financing has traditionally taken one of two basic forms: general obligation bonds or revenue bonds. General obligation bonds pledge ad valorem property taxes without limit as to rate or amount; hence they were highly regarded by investors.and commanded the lowest borrowing rate because of their minimal credit ~isk. However, the affirma- tive vote ~f two-thirds of the people is required to issue such bonds. Dud to the costs involved~in such a b~nd issue, this type of financing is not feasible for the acquisition and rehabilitation of the Properties. Revenue bonds are payable from a specific revenue source other than property taxes. These bonds have been used extensively for financing water, sewer, or other utility systems, toll bridges and airports, where revenues of the enterprises are reasonably well assured. Issuance of conventional revenue bonds generally requires a simple majority vote. However, the Properties are not expected to generate sufficient revenue to support a revenue bond issue. The City's general revenues are another possible source of revenue for funding the acquisition and rehabilitation of the Properties. However, since the passage of Proposition 13, severe strains have been placed on the city's revenues. Most devastating of the causes for revenue curtailment has been the withholding from cities by the State' of California of revenues traditionally subvented to local ~overnment. Some of these sources simply have been commandeered by the State. Other sources of subvented revenues have been withheld on an allegedly temporary basis, but there is no certainty that the reduction of the subvention stream might not be permanent. The fact of diminished revenue, and the need to provide a suitable level of services, dictate that the City 5 110 RESOLUTION 94-038 EXHIBIT explore alternative means of financing public facilities while maintaining an adequate level 0f ..yital services with its General Fund revenues. The South"Main Project Area, however, has sufficient funds to finance the acquisition and rehabilitation of the Properties due to the recent refinancing of Tax Allocation Bonds and the generation of additional bond proceeds. C. THE BLIGHTING CONDITION WITHIN THE PROJECT AREA THAT THE EXPENDITURE OF AGENCY FUNDS WILL HELP TO ELIMINATE As discussed above, the South Main Project Area and the City as a whole are lacking in cultural and educational resources. The Artists' Village will partially meet the need for such resources. In addition, due to the proximity of the Properties to the South Main Project Area, parking facilities on the Properties may also serve residents and businesses in the South Main Project Area. IV. THE REDEVELOPMENT PURPOSE FOR WHICH TAX INCREMENT FUNDS ARE BEING USED TO PAY FQR THE ACQUISITION AND REHABILITATION OF THE PROPERTIES As discussed above in sections III.A. and III.C. of this report, the funding of the acquisit~gn and rehabilitation of the Properties wi~h f~nds from the South Main Project Area will assist in the elimination of blight within the South Main Project Area and within the Central City Project Area. The rehabilitation of the Properties will eliminate physical blight, which is one of the major goals listed in section 100 of the Redevelopment Plan for the South Main Redevelopment Project Area. centcit¥, rpt RESOLUTION EXHIBIT 94-038 111 FOURTH THIRD LI.I I/-I/-I ...... I--E'II"I'!J~I STREET STREET SECOND FIRST i STREET EXtlIB IT A