Oversight Board for the Successor Agency - Fresno

Special Called Meeting of the
Oversight Board for the Successor Agency

To the Redevelopment Agency of the
City of Fresno

Meeting Minutes
May 21, 2012

The Oversight Board for the Successor Agency to the Redevelopment Agency of the City of Fresno met
at 3:07 p.m. in Conference Room C, City Hall on May 21, 2012.

Present were:

Terry Bradley, appointed by Fresno County Superintendent of Schools
Mary Curry, appointed by Fresno County Board of Supervisors
Jeff Reid, appointed by Chancellor of the California Community Colleges
George Smith, appointed by Mayor of Fresno (via teleconference)
Doug Vagim, appointed by Fresno County Board of Supervisors
Bob Van Wyk, appointed by Metropolitan Flood Control District (Special District)
Larry Westerlund, appointed by Mayor of Fresno

I. Call to Order

The meeting was called to order by Doug Vagim at 3:07 p.m. Roll Call was taken and the Pledge
of Allegiance was conducted.

II. Approval of Minutes

A motion was made by Mr. Van Wyk to approve the minutes of May 14, 2012 with the following
addition: “The judge also ruled that the Flood Control District is the largest special district by tax
share”; the motion was seconded by Mr. Westerlund. The motion passed on a 7-0 vote.

III. Administrative
1. Election of New Officers

Mr. Smith nominated Mr. Westerlund as Chair
Mr. Reid nominated Mr. Vagim as Chair

The vote to elect Mr. Westerlund passed on a 4-3 vote with Mr. Bradley, Mr. Reid and
Mr. Vagim voting no. The meeting was turned over to Mr. Westerlund as the Chair.

Mr. Westerlund called for nominations for Vice Chair. Mr. Van Wyk nominated Mr.
Bradley for Vice Chair; there were no other nominations. The vote to elect Mr. Bradley
passed on a 7-0 vote.

Mr. Westerlund called for nominations for Secretary. Mr. Westerlund nominated Mr.
Van Wky as Secretary. There were no other nominations. The vote to elect Mr. Van
Wyk as Secretary passed on a 7-0 vote.

Minutes 5/21/12 Page 1

Before moving into the ROPS, Mr. Westerlund said he wanted to make the board aware of information
received from the Department of Finance (DOF). Ms. Murphey reported on the conversation she and
Ms. Cantu Montoy with the DOF. It confirmed what the DOF has previously sent to Southern California
County Auditor that if they do not have an approved ROPS before June 1, then the Successor Agency
stood to forfeit property tax for July through December and instead all of the property tax that the
Agency may have been allocated to pay obligations would flow to the ATE as property tax revenue. If an
Auditor/Controller does not have an approval or denial letter in hand by June 1, then the DOF’s position
is the Auditor/Controller should provide the Successor Agency no property tax revenue that would be
associated with the ROPs for July through December. They also advised that if an Auditor/Controller
needed to lock down the system prior to June 1 in order to process approval or denial letters from DOF,
then that needed to be taken into account as the lead time. Ms. Murphey and Ms. Cantu Montoy also
contacted the Auditor/Controller’s Office, and were not advised of any lockdown date, but they did say
they would be making that determination. If they received the letter from DOF by June 1, then
distribution would go accordingly if no letter was received approving then it was going into account for
distribution to taxing entities.

Mr. Reid wanted to know if the Oversight Board was being asked today to approve the ROPS from July
through December. He also wanted to know if the Successor Agency had taken action to approve the
July through December ROPS. Mr. Reid stated that they could have taken action at the previous
Thursday’s Council Meeting since they were aware of the deadline on Tuesday.

Mr. Reid stated for the record that this is an Oversight body, to be approving and evaluating actions of
the Successor Agency; we are now being asked to approve the ROPS ahead of the action by the
Successor Agency. That is in denigration, it may not be illegal, but it probably on is the cusp of
denigrating the purposes of the whole mechanisms that were established by the governor and the
legislature for us to be approving things ahead of time. Mr. Reid stated that he would urge that at a
minimum any approval that we give for any ROPS that have not already been submitted and approved
by Successor Agency, that we are supposed to be overseeing, as oppose to acting prior to that every one
of them be conditioned upon a concurrence without amendment by the Successor Agency. Many
members of this body were denigrated, ridiculed publically by other members for urging that this body
begin meeting and the Mayor waited until the very last day to make appointments and now we are
finding out that but for our actions between now and May 25th the Agency is in the position of losing
seven million dollars of funding that we all had been urging action upon that there can be deliberations
and a proper conduct of which body was acting as oversight for which body.

Ms. Murphey stated that the Successor Agency Board has not taken any formal action to approve the
ROPS she sought advice from two attorneys as to whether or not ROPS required a formal Successor
Agency approval, and their read of the law was, no it did not. However, depending on the will of this
body we are prepared to notice a special meeting for Thursday of the Successor Agency and FRC to take
this matter to them and your approval could be subject to their approval.

Mr. Reid suggested that if the Successor Agency is intending to act, then all of the Oversight Boards
motions be construed as though they are condition upon the Successor Agency’s subsequent actions.
Ms. Cantu Montoy suggested and advised that the Oversight Board continue meeting today to approve
ROPS 1 and 2 and try to complete today with the condition that it be submitted to the Successor Agency
board for approval.

Minutes 5/21/12 Page 2

Mr. Bradley asked Ms. Murphey if she submitted the July-December ROPS to the DOF. She responded
yes, in April. Mr. Bradley asked if she had heard anything back from them regarding the January-June or
July-December ROPS. Ms. Murphey responded that prior to this body convening DOF requested a
significant amount of backup material that was sent.

Mr. Bradley stated he wanted to make a few comments. He has said many times that there is nothing in
this game for school districts, and based on AB1 x 26, that is absolutely correct. However, in the
Governor’s main revise he did make one minor change. School districts would receive 1% of whatever
additional revenues the taxing agency receives. Rather than all of it being offset against our state aid,
99% will be offset against the state aid. Statewide it is estimated to be $10 million dollars. The same
thing would be true of any withdrawal or sale of RDA or Successor Agency properties. School districts
would receive 1%. That is based on the Governor’s revise. Mr. Bradley heard today that the DOF is
backing off somewhat on their May 25th required deadline. If they have 3rd party loans in hand they will
release that information to the Successor Agency if they have that information by June 1.

Mr. Vagim stated that he heard the opposite. They said that even if they get a letter and get the ROPs in
and they decide that they are going to reject some of them but not all of them and you are past June 1,
you are out for six months. He also stated that he is concerned about the second half ROPS if the
Successor Agency has not had an opportunity to weigh in on this. He is also concerned that there is a
significant amount of items to go through and it will take us beyond the amount of hours that some of
the folks want to spend in any one given meeting. He urged everyone to discuss amongst themselves on
what day they want to have a special meeting.

Mr. Westerlund suggested getting through as many items on the list as possible today. As we get close
to the end of the meeting, consider whatever amount that we get through plus the additional, that we
pass the ROPs first January-June, then July-December contingent upon us continuing through our walk
through each of them individually which can then be taken out as we go through a more methodical
method.

Mr. Vagim stated that he cannot support the second half (July-December) ROPS without the process of
the Successor Agency bringing them forth as a formal vote.

Mr. Bradley stated that he must leave at 5:15pm and would like to address all of the ROPS prior to him
leaving the meeting.

Mr. Van Wky suggested that the City Council have a special meeting to review and approve the ROPS
prior to the Oversight Board approving them. Mr. Westerlund stated that he would discuss having a
special meeting with the Successor Agency Chair, Mr. Baines. They could hold an emergency session
with 24 hours notice to post.

IV. ROPS – Bonds/Bank Loans

Mr. Reid made a motion to approve:

1. Mariposa Line 4,
2. Roeding Line 3,
3. SW Fresno GNRA Line 2

Minutes 5/21/12 Page 3

ROPS for January through June timeframe; the motion was seconded by Mr. Smith. Mr.
Westerlund opened the item up to the public for comment; there was none. The motion
passed on a 7-0 vote.

Mr. Reid made a motion to approve:

1. Mariposa Line 4,
2. Roeding Line 3,
3. SW Fresno GNRA Line 2

ROPS for July through December timeframe, subject to whatever other approvals required
by the Successor Agency as determined by the Successor Agency’s counsel; the motion was
seconded by Mr. Smith. Mr. Westerlund opened the item up to the public for comment;
there was none. The motion passed on a 6-1 vote with Mr. Vagim voting no.

V. All Previously Discussed Approved ROPS
1. CBD Line 4 – Hotel Fresno (July-December)

Mr. Westerlund stated that this item was previously discussed in regards to the January
through June timeframe. This item is for the July through December timeframe. Mr.
Westerlund made a motion to approve the ROPS for the July through December timeframe,
subject to whatever other approvals required by the Successor Agency as determined by the
Successor Agency’s counsel; the motion was seconded by Mr. Van Wyk. Mr. Bradley asked
staff to explain why there were small payments, then suddenly on large payment? Ms.
Murphey responded that the small costs were project staff costs and the large payment was
the first distribution for the commencement of the project. Mr. Bradley asked if there has
been any additional information regarding where we are? This was a major discussion we
had a week ago Monday, and my motion and Mary’s second was conditioned upon the
private party action being approved. Ms. Murphey stated this was their estimate of what
they thought was achievable by the developer having an eight month period to get the HUD
money in place. It is an estimate in time. There was more discussion regarding the funds.
Mr. Westerlund opened the item up to the public for comments, there were none. The
motion passed on a 5-2 vote with Mr. Reid and Mr. Vagim voting no. Mr. Bradley and Ms.
Curry’s votes are conditioned upon the December payment.

2. CBD Line 5 – PBID (July-December)

Mr. Westerlund made a motion to approve the ROPS for the July through December
timeframe, subject to whatever other approvals required by the Successor Agency as
determined by the Successor Agency’s counsel; the motion was seconded by Mr. Reid.
The item was opened to the public for comments, there were none. The motion passed
on a 7-0 vote.

3. Central City Line 1 – Apple Valley (July-December)

Mr. Westerlund made a motion to approve the ROPS for the July through December
timeframe, subject to whatever other approvals required by the Successor Agency as
determined by the Successor Agency’s counsel; the motion was seconded by Ms. Curry.

Minutes 5/21/12 Page 4

Mr. Vagim asked if there was an engineering report for this item on how much work has
been done. Ms. Murphey replied we have the engineer’s estimate and the total amount
of the project. The item was opened to the public for comments, there were none. The
motion passed on a 6-1 vote with Mr. Vagim voting no.

4. Central City Line 2 – Mathews Harley Davidson (July-December)

Mr. Reid recused himself from participating on this item due to business and financial
conflicts. Mr. Westerlund made a motion to approve the ROPS for the July through
December timeframe, subject to whatever other approvals required by the Successor
Agency as determined by the Successor Agency’s counsel; the motion was seconded by
Mr. Van Wyk. The item was opened to the public for comments, there were none. The
motion passed on a 5-1-1 vote with Mr. Vagim voting no and Mr. Reid recusing himself.

5. Convention Center Line 7 – PBID (July-December)

Mr. Westerlund made a motion to approve the ROPS for the July through December
timeframe, subject to whatever other approvals required by the Successor Agency as
determined by the Successor Agency’s counsel; the motion was seconded by Reid. The
item was opened to the public for comments, there were none. The motion passed on a
7-0 vote.

VI. Recognized Obligation Payment Schedule (ROPS)

1. Consider ROPS for the following projects;
i. Airport Line 1 – Developer Reimbursement Agreement (Jan-June)
Mr. Westerlund made a motion to approve the ROPS for the Jan-June
timeframe; the motion was seconded by Ms. Curry. The item was opened to
the public for comments, there were none. The motion passed on a 7-0 vote.

Airport Line 1 – Developer Reimbursement Agreement (July-December)
Mr. Westerlund made a motion to approve the ROPS for the July through
December timeframe, subject to whatever other approvals required by the
Successor Agency as determined by the Successor Agency’s counsel; the motion
was seconded by Mr. Reid. The item was opened to the public for comments,
there were none. The motion passed on a 6-1 vote with Mr. Vagim voting no.

ii. Airport Line 2 – Palm Lakes (Jan-June & July-December)
Mr. Vagim made a motion to bring the item back as an asset. The motion dies
due to the lack of a second.

Mr. Reid wanted to make the board aware of Section 34167.5 of the Health and
Safety Code. Mr. Reid stated that based upon that statute the Controller sent
out guidance to everyone on March 15 that set forth the fact that those things
were not to be transferred and on an April 2nd letter confirmed that all transfers
were ordered undone. Those transfers include a transfer of money to the City

Minutes 5/21/12 Page 5

for receipt of the property. It doesn’t seem like it’s an appropriate expenditure
of the Redevelopment Agency funds to be spending money to rezone property
when the property is still an asset of the City and the monies that were paid
need to be returned to the Redevelopment Agency.

Mr. Bradley made a motion to deny the ROPS (January-December); the motion
was seconded by Mr. Vagim. The item was opened to the public for comments,
there was none. The motion passed on a 7-0 vote.

iii. Airport Line 5 – Shields (Chestnut to Winery) Design (Jan-June)

Mr. Reid made a motion to approve the Jan-Jun ROPS; the motion was
seconded by Mr. Van Wyk. The item was opened to the public for comments,
there was none. The motion passed on a 7-0 vote.

iv. CBD Line 1 – Downtown Stadium Agreement (Jan-December)

There was discussion on whether or not this item was an enforceable obligation
or not.

Mr. Westerlund made a motion to approve the January through June ROPS; and
July-December ROPS subject to whatever other approvals required by the
Successor Agency as determined by the Successor Agency’s counsel; the motion
was seconded by Mr. Bradley. The item was opened to the public for
comments, there was none. The motion passed on a 5-2 vote with Mr. Reid and
Mr. Vagim voting no.

v. Convention Center Line 2 – Radisson Hotel Promissory Note #24 & #25 (Jan-Jun
& Jul-Dec)

Mr. Westerlund made a motion to approve the January through June ROPS; and
July-December ROPS subject to whatever other approvals required by the
Successor Agency as determined by the Successor Agency’s counsel; the motion
was seconded by Mr. Smith. The item was opened to the public for comments;
Barbara Hunt spoke on this item. The motion passed on a 4-3 vote with Mr.
Bradley, Mr. Reid and Mr. Vagim voting no.

vi. Fwy 99 Line 1 – Fultonia West OPA (Jan-Jun & Jul-Dec)

Mr. Reid recused himself due to business conflicts. Ms. Cantu Montoy
reminded the board that the only issue before them is whether or not the item
is an enforceable obligation. They can decide if they want to discuss the item
further at a future meeting.

Mr. Westerlund made a motion to approve the January through June ROPS; and
July-December ROPS subject to whatever other approvals required by the
Successor Agency as determined by the Successor Agency’s counsel; the motion
was seconded by Mr. Smith. The item was opened to the public for comments;

Minutes 5/21/12 Page 6

Barbara Hunt and Mr. Frazier spoke on this item. The motion passed on a 5-1-1
vote with Mr. Vagim voting no and Mr. Reid recusing himself.

vii. Mariposa Line 2 – Warehouse Row/Ice Row (Jan-June)

Mr. Westerlund made a motion to approve the January through June ROPS; the
motion was seconded by Mr. Vagim. The item was opened to the public for
comments; Barbara Hunt spoke on this item. The motion passed on a 7-0 vote.

viii. Southeast Line 3 – Fairground Improvements (Jan-June)

Mr. Westerlund made a motion to approve the January through June ROPS; the
motion was seconded by Ms. Curry. The item was opened to the public for
comments; Barbara Hunt spoke on this item. The motion passed on a 7-0 vote.

VII. Discussion and Selection of Counsel to Oversight Board

Mr. Westerlund announced that the process will be to go around the table and board
members can state which attorney they chose as their number one choice to represent the
Oversight Board. He began stating his number one choice as Lozano Smith (Jerry Behrens &
Dale Bacigalupi). Doug Vagim stated his number one choice as Phil Jay of (Kahn, Soares &
Conway). Bob Van Wyk stated his number one choice as Lozano Smith and number two
choice was Dowling, Aaron, Inc. Mr. Bradley stated his number one choice was Lozano
Smith and number two was Dowling, Aaron, Inc. Mr. Reid stated that he had Lozano Smith
ranked number seven. His number one choice was Atkinson Andelson who did not submit
their information in time. Ms. Curry chose Griswold, LaSalle, Cobb Dowd & Gin, LLP as her
number one choice. Mr. Smith’s number one choice was Lozano Smith.

Mr. Westerlund made a motion to hire Lozano Smith with Mr. Behrens as the primary
counsel to represent the Oversight Board; the motion was seconded by Mr. Bradley. The
motion passed on a vote of 6-1 with Mr. Reid voting no. Mr. Westerlund stated that will
notify them and plan to have them attend the next meeting.

VIII. Remaining ROPS

Mr. Westerlund made a motion to add the remaining ROPS for Jan-Jun and Jul-Dec with the
same caveat regarding the Successor Agency; and the board will continue to meet and go
line by line during the Monday meetings in order to go over all of the items; the motion was
seconded by Ms. Curry.

Mr. Reid, Mr. Bradley and Mr. Vagim expressed their concerns about pushing these items
through in a blanket vote without going over them first. Board members are willing to meet
on Wednesday or Thursday to get through the items. It was suggested that the board meet
on Wednesday, May 23, 2012 at 9am in the same room. Ms. Cantu Montoy stated that
there is no need to post the meeting, just continue it until that date and time according to
the Brown Act. At that point Mr. Westerlund withdrew his motion.

Minutes 5/21/12 Page 7

Mr. Reid has business conflicts and will recuse himself from participating in any discussion
and votes for the following items: VIII. 1-9, 11-12, 15 and IX. 1.

1. Convention Center Line 6 – Court Judgment (Historic Homes) (Jan-Jun & July-Dec)
Mr. Westerlund made a motion to include this item in the Jan-Jun and Jul-Dec ROPS
subject to whatever other approvals required by the Successor Agency as determined by the
Successor Agency’s counsel; the motion was seconded by Mr. Van Wyk. The item was
opened to the public for comments; Barbara Hunt spoke on this item. The motion passed
on a 5-0-2 vote with Mr. Bradley absent and Mr. Reid recusing himself.

2. Convention Center Line 5 – Old Armenian Town, LLC (Jan-Jun & July-Dec)
Mr. Westerlund made a motion to include this item in the Jan-Jun and Jul-Dec ROPS
subject to whatever other approvals required by the Successor Agency as determined by the
Successor Agency’s counsel; the motion was seconded by Mr. Van Wyk. The item was
opened to the public for comments; Barbara Hunt spoke on this item. Mr. Vagim feels that
this item is an asset. The motion passed on a 4-1-2 vote with Mr. Vagim voting no, Mr.
Bradley absent and Mr. Reid recusing himself.

3. Fwy 99/GS Line 6 – Brawley Industrial Development (Jan-Jun)
Mr. Westerlund made a motion to include this item in the Jan-Jun ROPS; the motion was
seconded by Mr. Van Wyk. The item was opened to the public for comments; Barbara Hunt
spoke on this item. The motion passed on a 5-0-2 vote with Mr. Bradley absent and Mr.
Reid recusing himself.

Fwy 99/GS Line 6 – Brawley Industrial Development (July-Dec)
Mr. Westerlund made a motion to include this item in the July-Dec ROPS subject to
whatever other approvals required by the Successor Agency as determined by the Successor
Agency’s counsel; the motion was seconded by Mr. Van Wyk. The motion passed on a 4-1-2
vote with Mr. Vagim voting no, Mr. Bradley absent and Mr. Reid recusing himself.

4. Fwy 99/GS Line 7 – Clinton/Weber Commercial Development (Jan-Jun)
Mr. Westerlund made a motion to include this item in the Jan-Jun ROPS; the motion was
seconded by Mr. Van Wyk. The motion passed on a 5-0-2 vote with Mr. Bradley absent and
Mr. Reid recusing himself.

Fwy 99/GS Line 7 – Clinton/Weber Commercial Development (July-Dec)
Mr. Westerlund made a motion to include this item in the July-Dec ROPS subject to
whatever other approvals required by the Successor Agency as determined by the Successor
Agency’s counsel; the motion was seconded by Ms. Curry. The item was opened to the
public for comments; Barbara Hunt spoke on this item. The motion passed on a 4-1-2 vote
with Mr. Vagim voting no, Mr. Bradley absent and Mr. Reid recusing himself.

5. Fulton Line 1 – L Street Project/OPA (Jan-Jun)
Mr. Westerlund made a motion to include this item in the Jan-Jun ROPS; the motion was
seconded by Mr. Smith. The item was opened to the public for comments; Barbara Hunt
and Kathy Omachi spoke on this item. The motion passed on a 4-1-2 vote with Mr. Vagim
voting no, Mr. Bradley absent and Mr. Reid recusing himself.

Minutes 5/21/12 Page 8

Fulton Line 1 – L Street Project/OPA (Jul-Dec)
Mr. Westerlund made a motion to include this item in the Jul-Dec ROPS; the motion was
seconded by Mr. Van Wky. The motion failed on a 3-1-3 vote with Mr. Vagim voting no, Ms.
Curry abstaining, Mr. Bradley absent and Mr. Reid recusing himself. This item will be
brought back on Wednesday.

There was a motion by Mr. Westerlund to continue the meeting on Wednesday, May 23, 2012 at 9a.m.,
the motion was seconded by Ms. Curry. The motion passed on a 5-0-2 vote with Mr. Bradley and Mr.
Reid absent.

The minutes of May 21, 2012 were approved as amended at the June 4, 2012 meeting on a motion by
Mr. Van Wky and a second by Mr. Smith. The motion passed on a vote of 5-0-2 with Mr. Bradley and Ms.
Curry Absent.

Minutes 5/21/12 Page 9