HomeMy WebLinkAbout04/12/1995 - City Council Special Meeting - Redevelopment Agency'•'� } ti •1d7 �4
SPECIAL JOINT MEETING OF THE
CITY COUNCIL AND REDEVELOPMENT AGENCY
CITY OF COSTA MESA
APRIL 12, 1995
The Costa Mesa City Council and Redevelopment Agency met in
special joint session April 12, 1995, at 6:40 p.m., in the Council
Chambers of City Hall, 77 Fair Drive, Costa Mesa, following the
regularly scheduled Redevelopment Agency meeting. Notice of the
special joint meeting was given as required by law. The meeting
was called to order by the Mayor.
ROLL CALL Council/Agency Members
Present: Mayor/Agency Member Joe Erickson
Mayor Pro Tem/Agency Member
Peter Buffa
Council Member/Agency Chairperson
Mary Hornbuckle
Council Member/Agency Vice
Chairperson Sandra Genis
Council Member/Agency Member
Gary Monahan
Council/Agency Members
Absent: None
Officials Present: City Manager/Redevelopment
Executive Director Allan Roeder
City Attorney Thomas Kathe
Agency Attorney Sally May
Redevelopment and Housing Manager
Muriel Berman
Principal Planner Mike Robinson
Assistance Finance Director Marc
Davis
Accounting Supervisor Diane Butler
Executive Secretary Marie T1,0mpson
NEW BUSINESS
The Executive Secretary presented the Comprehensive Settlement
Settlement Agreement
Agreement regarding the Orange County Investment Pools, United
Regarding Orange
States Bankruptcy Court (USBC) Case No. SA 94-22272 JER.
County Investment
Pool; USBC Case
The City Attorney referred to a resolution and his Report No. 95-35
SA 94-22272 JER
to the City Council, and a resolution and his Report No. 95-37 to
the Redevelopment Agency, concerning the settlement agreement,
noting that the information is the same for both the Council and the
Agency except for the dollar amounts. He reported that the Pool
Committee transmitted Comprehensive Settlement Agreements to the
City Council and the Redevelopment Agency after completion of
negotiations with the County.
The City Attorney reviewed the options for Council consideration:
Under Option A, the City would receive over $2.9 Trillion or
113 percent of its investment, and the Agency' would-rv.-feW�b
over $500,000.00 or 111 percent ol'its. Investment.
recommended approval of this option: In addition,- Option A
provides for deferred payments by Orange County
Recovery Notes, Settlement Secured Claims,., -.Repayment
Claims, and remaining withheld proceeds.
Under Option B, Orange County would make a cash payment
of $2,208,873.03"(84.86 percent) to the City and $435,725.07
(82.68 percent) to the Agency; however, there would be no
deferred payments by Recovery Notes, Settlement Secured
Claims, or Repayment Claims. The City and Agency would
retain some rights to litigate to recover the deficiency.
The third option would be to reject the settlement agreement
and no cash payments would be received. Recovery of
remaining funds in the Pool, would be contingent upon
litigation.
The City Attorney referred to the California State Auditor's March,
1995, audit of the Orange County Investment Pool and Treasurer's
functions, and reported that the audit establishes that rights which
would be waived under Option A with reference to Pool -related
claims may have merit. On the other hand, under Option B, some
of the rights are given back but the "trust" claim may be waived
under Options A and B. The City Attorney noted that a closed
session has been requested pursuant to Government Code Section
54956.9(a) should it be necessary for consultation on the various
legal issues raised by the Agreement.
Council Member Genis had very little confidence in anything being
recovered from the Notes, and requested the City Attorney to outline
the specific rights that would be. waived under Option A. He
responded that the rights are all related to Pool claims - every
potential claim the City would have against the County concerning
its handling of Costa Mesa's investment in the Pool. Option B
returns. the right to sue the County for fraud, misappropriation,
negligence, and a variety of misconduct -oriented claims. He added
that the Trust claim is not specifically identified in the enumerated
rights transferred back, and several cities objected to the rights
referred to in Option B as not including the Trust Theory. In the
City Attorney's opinion, the Trust Theory would be waived under
this option; however, this could change because of the objections to
- . the inclusion in the waiver. < ;
In reference to Council Member Genis's question concerning Option
A, the City Attorney stated that this option would waive all rights to
reimbursement of City and Redevelopment Agency funds except
those paid through Option A. All rights for further collection of
deficiencies would be assigned to the County; however, this does not
occur in Option B wherein the right to sue the County is included.
He reported that the State Auditor identified inappropriate transfers
of $406 million whereas the County shows a theft interest dividend
of $281 million, and the Agreement does purport to give less of a
theft dividend than would be shown under the State Auditor's
Report. Council Member Genis reported that she had attended most
of the bankruptcy meetings held -,by the County and the League of
California Cities, and the only -real repayment of "embezzled" funds
would be $54 million; the rest would be lost. As a point of
clarification concerning Council Member Genis's question, the City
Manager asked if an individual agency selected Option B and was
successful in its litigation on the issue of the theft dividend, would
that city automatically trigger distribution of some additional funds
to all those agencies which selected Option B? The City Attorney
responded that the Agreement does not go into that level of detail.
Council Member Genis referred to the separate Bond Pool which had
a greater recovery of funds than other portions of the Pool, and
stated that the State Auditor noted that there appeared to be separate
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sub -pools. She asked if anyone had seen evidence that the Bond
Pool sustained a lesser loss. The City Attorney responded that his
office had not received information verifying how the Bond accounts
were treated; however, the State Auditor did identify $20 million for
some agencies and $7 million for another city.
Council Member Hoinbuckle pointed out that the numbers seemed
to fluctuate and were questionable, and felt it was a terrible
indictment of how business was conducted by the County. She
wondered if the dollar amount remaining in the Pool for
disbursement could be considered accurate. The City Attorney
responded that significant risk does exist that the numbers are not
correct.
Motion to Approve A motion was made by Council Member Hornbuckle, seconded by
Option A Failed to Council Member Monahan, to adopt a resolution approving Option
Carry A as presented by the City Attorney. Council Member Hornbuckle
commented that she was not happy about this choice, but felt the
City should take the money while it was still available.
Council Member Buffa asked that Council consider Option B which
he believed would promise a better return. He noted that both
Options A and B would result in an outstanding balance of
approximately $485,000.00 of the initial investment, and he believed
that the settlement under Option B would recover more money for
the City.
Council Member Genis stated that she tended to prefer Option B,
and estimated that the cost to litigate the overall claim would be at
least half of the differential. Because the County has not been
forthcoming with information, she opposed locking into a waiver of
all rights until complete information is available. Council Member
Genis then referred to a report published by Arthur Anderson which
the County has not been willing to make available to creditors. She
also was interested in negotiating against the cash value and gave an
example of the changes Costa Mesa might wish to make to the
Master Plan of Highways, annexation considerations, etc. She felt
that these negotiating tools were more important than cash value,
and that Option B would give a little more leverage in these areas.
Council Member Monahan preferred Option A because additional
costs would be involved in litigation under Option B.
Council Member Hornbuckle still supported Option A which she felt
would have more leverage in that the City is holding Notes which
the County has sworn are as -good as gold, and would provide more
leverage for the City' in discussions concerning amendments to the
Master Plan of Highways, of perhaps making County land available
to Costa Mesa.
Council Member Genis responded that all Notes are not claimed to
be as good as gold. The City Manager noted that should Council
choose Option B, the City would be in the position to take up that
conversation once the Pool Settlement is resolved. He also stated
that the assets or changes suggested are under the ownership or
authority of the County and will be discussed in the County's
bankruptcy proceedings.
The motion to adopt a resolution approving Option A failed to carry
3-2, Council Members Erickson, Buffa, and Genis voting no.
4 ! '
MOTION A motion was made by Mayor Pro Tem Buffa, seconded by Council
Adopted City Council Member Genis, ' and carried 5-0, adopting Resolution 95-27, A
Resolution 95-27 RESOLUTION OF THE CITY COUNCIL OF THE CITY
Approving Option B OF COSTA MESA, CALIFORNIA, CONCERNING THE
COMPREHENSIVE SETTLEMENT AGREEMENT IN RE
ORANGE COUNTY INVESTMENT POOLS (USBC CASE
NO. ; SA 94-22272 JER), accepting the settlement offer under
Option B. Mayor Pro Tem Buffa stated that the City is well advised
in taking this action. Council Member Genis commented that it was
important to select Option A or B because failure to do so could
have placed Costa Mesa "at the back of the line". The City
Attorney stated that Council would have the opportunity to change
its decision.
Mayor Erickson turned the meeting over to the Chairperson of the
Redevelopment Agency. Chairperson Hornbuckle requested a
motion to adopt a, resolution for the settlement agreement.
MOTION - Adopted A motion was made by Agency Member Buffa, seconded by Vice
Redevelopment Chairperson Genis, and carried 5-0, adopting Resolution 184-95, A
Agency Resolution RESOLUTION OF THE COSTA MESA REDEVELOPMENT
184-95 Approving AGENCY CONCERNING THE COMPREHENSIVE
Option B SETTLEMENT AGREEMENT IN RE ORANGE COUNTY
INVESTMENT POOLS (USBC CASE NO. SA 94-22272 JER),
accepting the settlement offer under Option B.
Newport Boulevard Mayor Erickson referred to a memorandum from the City Manager
Study Committee on appointing members to the Newport Boulevard Study Committee.
The, City Attorney reported that this was an issue that arose after the
Agenda for this evening's meeting was posted. He advised Council
that a four-fifths vote was required to- amend the Agenda to include
this item under City Manager's Reports.
Council Member Genis thought that under the Brown Act, it was
necessary to find that an item was of an urgent nature, and findings
were necessary to consider the matter before the next regularly
Referred to Council - - scheduled meeting. Council Member Genis saw no urgency in
Meeting of April 17, making these appointments at this time, and Mayor Erickson
1995 concurred. The City Manager was directed to place the item on the
Council Agenda for April 17, 1995.
SPECIAL MEETING At 7:10 p.m., Mayor Erickson adjourned the special joint
ADJOURNED Council/Agency meeting to a closed session of the Redevelopment
Agency.
May of the City of Costa Mesa
ATTEST:
- _ Deputy City lerk of the City of Costa Mesa