BOOK2 Page 1693 04/06/09 2:30 P.M. MINUTES OF THE SPECIAL SARASOTA COMMUNITY REDEVELOPMENT AGENCY MEETING OF APRIL 6, 2009 PRESENT: Chair Lou Ann R. Palmer, presiding, Vice Chair Ken Shelin, Members Fredd "Glossie" Atkins, Richard Clapp, and Kelly M. Kirschner, Executive Director Robert J. Bartolotta, Attorney Robert M. Fournier, and Secretary Billy E. Robinson ABSENT: None The meeting of the Community Redevelopment Agency (CRA) was called to order by Chair Palmer at 2:47 p.m. 1. APPROVAL RE: MINUTES OF THE SPECIAL COMMUNITY REDEVELOPMENT AGENCY MEETING OF MARCH 16, 2009 (AGENDA ITEM CRA-1) Chair Palmer noted CRA consensus to approve the minutes of the Special Community Redevelopment Agency meeting of March 16, 2009. 2. REPORT RE: THE COMMUNITY REDEVELOPMENT AGENCY ADVISORY BOARD REPORT OF THE APRIL 3. 2009, SPECIAL MEETING (AGENDA ITEM CRA-2) Ronald McCollough, Chair, CRA Advisory Board, and Chief Planner Steven Stancel, Neighborhood and Development Services Department, came before the Commission. Mr. McCollough stated that the CRA Advisory Board was requested to have a special meeting on April 3, 2009, regarding the purchase of parcels of property located at 495 South Orange Avenue, 1623 Laurel Street, and 307 South Orange Avenue; that four members were not able to attend resulting in a quorum of five members; that the CRA Advisory Board is not able to provide a recommendation as one member strongly opposes the purchase of the parcels, two members had reservations concerning the appraisal and indicated a second appraisal should be conducted; that one of four members not present wrote a letter indicating the appraisal was not appropriate, a second appraisal should be conducted, and recommending a vote against the purchase of the parcels of property. A motion was made by Vice Mayor Shelin, seconded by Commissioner Clapp, and carried by a 5-0 vote to receive the Community Redevelopment Agency Advisory Board report of the April 3, 2009, Special meeting. Mr. McCollough stated that the CRA Advisory Board was informed the historic designation of the Downtown District should be obtained in the near future; that the CRA should consider establishing a board for the Downtown Historic District similar to the Downtown Improvement District. Chair Palmer noted CRA consensus to refer the matter to the Administration and Chief Planner Steven Stancel, Neighborhood and Development Services Dept, and provide a report to the CRA Advisory Board. 3. APPROVAL RE: REQUEST APPROVAL TO EXPEND UP TO $6.1 MILLION OF TAX INCREMENT FINANCING FUNDS FOR THE PURCHASE OF PROPERTY AND DEVELOPMENT OF A PARKING LOT LOCATED AT 495 SOUTH ORANGE AVENUE, SARASOTA, FLORIDA, 34236: 1623 LAUREL PARK, SARASOTA, FLORIDA, 34236: AND 307 SOUTH ORANGE AVENUE (AGENDA ITEM CRA-3) Executive Director Bartolotta gave a presentation conçerning the history of the negotiations for the purchase of parcels of property located at 307 and 495 South Orange Avenue and 1623 Laurel Street to provide public parking south of Downtown and in the Burns Square area; and stated that the Commission authorized the Administration to commence negotiations on two of the three parcels in November 2007; that appraisals conducted by Bass and Associates, Inc., in October 2007 indicated a relative value of $9.1 million; that a second appraisal was conducted in January 2009 and indicated a relative value of $6,591,360; that Staff approached the owner of the parcels of property to negotiate the purchase of 2 of the 3 parcels of properties but was met with reluctance to divide three parcels for which a site plan for development of a mixed-use project has already been approved by the City; that Staff and the owner of the parcels of property were able to negotiate a purchase price of $5,467,000 for all three parcels on March 30, 2009; that the Purchase and Sale Agreement requires the City to take action within 14 days; therefore, the CRA Advisory Board was requested to hold a Special meeting on April 3, 2009; that the City currently leases the southwest parcel which provides 73 public parking spaces at a rent of $32,400 a year; that the City would have a total of 83 parking spaces added to the original 73 parking spaces if the CRA moves forward with the purchase of the three parcels; that Staff recommends a $5.5 million purchase of land with a best estimate of $600,000 to reconfigure and restripe the parcels to maximize the number of parking spaces for a total cost of $6.1 million; that the source for $1.1 million is the amount budgeted for Strategic Parking Facilities in the Tax Increment Financing (TIF) fund; that a seven-year loan with an interest rate of approximately four to five percent would be sought to fund the remaining $5 million; that the City is proposing renting the building located on the southwest parcel to the former owner at an annual rent of $78,200 resulting in approximately $110,000 in new cash flow as the City will no longer be paying $32,400 in TIF funds for the parking spaces located on the southwest parcel; that the reason for scheduling an item on the Agenda soon after the agreement was reached is the City is attempting to obtain one short-term loan for three projects to obtain the best rate possible rather than seeking three individual loans; that the owner of the parcels was not aware of the appraised value of the property until an agreement had been reached to ensure an arms-length transaction. Vice Chair Shelin requested that the qualifications of Richard Bass be provided. Mr. Bass and Robert Fletcher, Consulting Appraisers, Planners, and Economists, Bass and Associates, Inc., came before the Commission. Mr. Bartolotta stated that the City's administrative policy requires an appraisal be conducted by a Member of the Appraisal Institute (MAI) when acquiring land. Mr. Bass stated that MAI is a professional designation which takes a minimum of five years to acquire. Mr. Bartolotta stated that the City must obtain at least one appraisal which must be conducted within one year of the proposed purchase. Mr. Bass gave a presentation of his and Mr. Fletcher's qualifications as appraisers and stated that neither he nor Mr. Fletcher, nor the firm Bass and Associates, Inc., has ever appraised a property for Michael Saunders, the owner of the property, or the Michael Saunders Company. Mr. Bass and Mr. Fletcher answered CRA questions concerning using sales price rather than actual sales in the appraisal, using a property owned by the same owner with whom the City is currently negotiating a purchase as a comparable property, timing and number of completed sales considered in the appraisal, and discounting property values due to the declining real estate market. Mr. Bartolotta stated that approximately 18 months ago the three parcels of property had a value of $110 per square foot; that the current value of the three parcels of property is $80 per square foot; that the City recently obtained a value of $90 to $95 per square foot for the proposed Palm Avenue Parking Garage. In response to a question by Vice Chair Shelin asking the highest and best use of the three parcels of property, Mr. Fletcher stated that the City is recommended to use the parcels to provide additional public parking at this time due to the current real estate market and develop the three parcels in the future when the real estate market has corrected. Mr. Bass stated that he spoke with other appraisers who are MAI certified and confirmed the use of listings during a declining real estate market is appropriate. BOOK2 Page 1694 04/06/09 2:30 P.M. BOOK2 Page 1695 04/06/09 2:30 P.M. In response to a question by Member Clapp asking the number of property appraisals normally obtained when purchasing land, Mr. Bass stated that local governments usually use one appraiser in condemnation cases; that the School Board of Sarasota County uses one appraisal if the property value is less than $5 million and two appraisals if the property value is greater than $5 million; that some leases on large properties require two appraisals; that an appraisal is an opinion of value of the appraiser based on the individual appraiser's background, knowledge, and experience in the local market. Mr. Bass and Mr. Fletcher answered CRA questions concerning the use of an independent appraiser who is not from the subject area. The following people spoke: Barbara Langston inquiring as to the reason for the rush to purchase the three parcels of property as the City has the luxury of waiting for the property to decrease in value, indicating the economy is going to decrease, people have not forgotten the method by which the three parcels of property were originally acquired by the current owner, the current owner would not be selling the three parcels of property if the parcels were a desired commodity, City residents see the unprecedented national and local unemployment rates increase beginning with City employees, and the number of businesses which are able to survive the declining market is not known. City Auditor and Clerk Robinson repeated the Pledge of Conduct at the request of Chair Palmer. Marcia Rabinowitz, representing the Historic Burns Square Artists' Market, indicating a multi-tiered parking infrastructure is necessary in the area of Orange Avenue and Laurel Street, creating a parking facility for 150 or 180 spaces is not adequate, the chili cook-off organized by the Burns Square Merchants' Association attracted more than 700 people in necessary traffic to the Burns Square area, businesses located on Pineapple Avenue are closing as a result of the economic crisis, and urging the CRA consider building a multi-tiered parking structure on the three parcels of property if purchased. Lynn Robbins disagreeing with the purchase of the three parcels of property as property values are still declining, indicating the CRA should obtain a second appraisal, the County has offered the City the air rights to land located behind the County Administration Building at no cost to the City for a parking garage, the new Commissioners should have the opportunity to vote on the matter as they will be serving a term of four years, and thanking Chair Palmer and Vice Chair Shelin for the years of dedicated service to the City. Mark Riley disagreeing with the timing of the purchase of the three parcels of property, indicating the new revenue will be $8,900 and not $110,000 as the current property taxes on the property is approximately $101,000, the City should consider purchasing lots contiguous to City-owned property along North Tamiami Trail, a decision should be postponed approximately 6 to 18 months as the projections made by economists throughout the United States is property values will not increase, and the delinquency rate on commercial property has more than doubled since September 2008. James Derheim, representing the European Focus gift shop, indicating he and his wife will be closing their business located in Burns Square due to not having enough customers, Burns Square has the Womens' Exchange and the Burns Court Cinema as anchor tenants, the customers who visit the anchor tenants are not able to visit his business or other businesses as the customers leaving the Womens' Exchange must leave the parking lot immediately after leaving the store, patrons who visit the Burns Court Cinema use parking spaces in front of his business for two hours at a time, and Burns Square will continue to diminish if an overabundance of parking is not provided. Denise Kowal, representing the Burns Square Property Owners, indicating the City is not lacking people who wish to move forward to do things which are right for the City, the City is lacking the leadership to follow through with the plans adopted by the City, the parking study of the Burns Square area identifies the needs of the area and was presented to the City, and recommending the CRA approve the purchase of three parcels of property. Steve Long indicating the general public is concerned about the government as caretakers of their tax dollars and a second appraisal should be conducted. Michael Furen, attorney representing Michael Saunders, indicating all three parcels were acquired by Michael Saunders prior to the real estate boom, the proposal is not being fast-tracked by trying to rush something through, the City Manager was given Commission approval to negotiate a contract with Ms. Saunders in November 2007 at the request of merchants located in the Burns Square area, the appraised value of the parcels of property was not disclosed to Ms. Saunders until the contract was signed, to miss an opportunity to accept the agreement negotiated by the City Manager would be a serious mistake, and indicating the price of approximately $66 per square foot is significantly less than Ms. Saunders expected. Mr. Bartolotta answered CRA questions concerning revenue calculation, amount of loss in ad valorem taxes, and the funding sources for $6.1 million. Finance Director Christopher Lyons, Financial Administration Department, came before the CRA, and answered CRA questions concerning the risk of purchasing the three parcels of property at this time, the current rates for seven-year short-term loans, and the advantage of consolidating three projects into one loan. Mr. Bartolotta answered CRA questions concerning the offer by the County of property at no cost to the City and obtaining a second appraisal. In response to a request for clarification by Member Clapp concerning the commencement of the term of 14 days to approve the agreement, Mr. Bartolotta stated that the language in the agreement indicates the 14 days begins 14 days from the date the agreement was signed. In response to a question by Mayor Palmer asking if the 14-day term commences upon the signature of the Mayor, Mr. Bartolotta stated no; that the approval of the Commission must be obtained within 14 days of the Seller's written acceptance of the Purchase and Sale Agreement; that the signature of the Mayor on the document shall constitute evidence of approval of the agreement; that the City's ability to obtain funding is the only contingency remaining once the Purchase and Sale Agreement is approved and signed by the Mayor. Attorney Fournier stated that Paragraph 12 () of the Purchase and Sale Agreement indicates the Purchase and Sale Agreement will expire if not approved by the Commission and fully executed by both parties on or before April 7, 2009. Michael Furen, Attorney, law firm of Icard, Merrill, Cullis, Timm, Furen and Ginsburg, P.A., representing Michael Saunders, came before the Commission and stated that Ms. Saunders is not willing to extend the term of the contract. A motion was made by Vice Chair Shelin to approve the expenditure of up to $6.1 million for the purchase and development of the three parcels located at 307 and 495 South Orange Avenue and 1623 Laurel Street, which died for lack of a second. A motion was made by Member Kirschner to postpone action on the contract pending the budget discussion with the future Commission after which further discussion regarding parking in Burns Square should occur. Chair Palmer stated that she understands the proposed motion is to postpone action on the item pending budget discussions with the new Commission over the next few months and revisit the purchase and BOOK2 Page 1696 04/06/09 2:30 P.M. BOOK2 Page 1697 04/06/09 2:30 P.M. development of a parking lot located at 307 and 495 South Orange Avenue and 1623 Laurel Street, Sarasota, Florida, 34236, with the owner of the property following the budget workshops in July 2009. Member Kirschner stated that a budget workshop is scheduled for the end of April 2009. Secretary Robinson stated that the budget workshop is scheduled for April 23, 2009; however, the Purchase and Sale Agreement expires April 7, 2009; therefore, Commission action would not be required. In response to a question by Chair Palmer asking if the proposed motion includes a request to extend the April 7, 2009, deadline, Member Kirschner stated that the request to extend the April 7, 2009, deadline will be included in the motion. In response to a comment by Executive Director Bartolotta indicating the Administration only has one hour allocated to provide an overview of the budget at the April 23, 2009, Commission Workshop, Member Kirschner stated that additional time may be allotted to allow for a more detailed discussion of the generation of TIF revenue, if necessary. Chair Palmer requested the proposed motion be clarified. Member Kirschner repeated the motion for clarification as to request the Seller agree to extend the April 7, 2009, deadline and to postpone final decision on the Purchase and Sale Agreement to the May 4, 2009, Regular Commission meeting. Chair Palmer asked for a second to the motion. Member Clapp seconded the motion to request the Seller extend the April 7, 2009, deadline and to postpone final decision on the Purchase and Sale Agreement to the May 4, 2009, Regular Commission meeting. Mayor Palmer repeated the motion as to postpone the final decision of the CRA to the May 4, 2009, Regular Commission meeting and postpone any final discussion pending budget information which will be obtained at the April 23, 2009, Budget Workshop. A motion was made by Member Clapp, seconded by Member Atkins, and carried by a 4-1 vote with Vice Chair Shelin voting no to amend the main motion to require a second appraisal be obtained. Chair Palmer called for a vote on the amended motion to request the Seller extend the April 7, 2009, deadline of the Purchase and Sale Agreement, to postpone final decision on the Purchase and Sale Agreement to the May 4, 2009, Regular Commission meeting, and to require a second appraisal be obtained, which carried by a 4-1 vote with Vice Chair Shelin voting no. 3. ADJOURN Chair Palmer adjourned the meeting at 4:27 p.m. LOU ANN R. PALMER, CHAIR ATTEST: 3ewy E Robnson BILLY.E. ROBINSON, SECRETARY