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HomeMy WebLinkAboutCC RESO 2005 - 156NOT ADOPTED RESOLUTION NO. 2005-156 A "RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVING THE WRITTEN RESPONSES TO THE WRITTEN OBJECTIONS RECEIVED ON THE PROPOSED 2005 AMENDMENT TO THE NATIONAL CITY REDEVELOPMENT PLAN." This Resolution was not adopted at the City Council Meeting of July 26, 2005. DATE: August 25, 2005 A MI hael R. Da a, CMC City Clerk of the City of National City --- NOT ADOPTED --- RESOLUTION 2005 — 156 RESOLUTION OF THE CITY COUNCIL OF THE CITY OF NATIONAL CITY APPROVING THE WRITTEN RESPONSES TO THE WRITTEN OBJECTIONS RECEIVED ON THE PROPOSED 2005 AMENDMENT TO THE NATIONAL CITY REDEVELOPMENT PLAN WHEREAS, the City Council of the City of National City and the Community Development Commission of the City of National City did duly pass and adopt a Redevelopment Plan for the National City Redevelopment Project ("Plan"); and WHEREAS, in 2004, the Community Development Commission proposed to amend the Plan to expand the Community Development Commission's authority to acquire property as a last resort through eminent domain to vacant and abandoned properties (as defined in Section 7.06.020 of the National City Municipal Code), and all commercial and industrial zoned properties within the National City Redevelopment Project Area located west of Interstate 805; and WHEREAS, the Community Development Commission has formulated an amendment to the Plan ("2005 Amendment") which would permit the Community Development Commission to use eminent domain to acquire all commercial and industrial zoned properties, and all vacant and abandoned properties and buildings, regardless of their zoning designation, within in the Commercial and Industrial Corridors of the National City Redevelopment Project Area for a period of ten (10) years from the date of approval, until 2015; and WHEREAS, on June 21, 2005, the Community Development Commission and City Council held a Joint Public Hearing on the proposed 2005 Amendment and received and considered all evidence and testimony pertaining thereto; and WHEREAS, on July 26, 2005, the Community Development Commission and City Council held a Joint Public Meeting on the proposed 2005 Amendment and considered all evidence and testimony pertaining thereto; and WHEREAS, pursuant to Section 33363 of the California Health and Safety Code ("Community Redevelopment Law"), before adopting the proposed 2005 Amendment the City Council shall evaluate all evidence and testimony for and against the adoption of the amendment and shall make written findings in response to each written objection of an affected property owner or taxing entity; and WHEREAS, pursuant to Community Redevelopment Law, the Community Development Commission has prepared written responses to the written objections received on the proposed 2005 Amendment. NOW, THEREFORE, BE IT RESOLVED that the City Council of the City of National City hereby finds and determines, as follows: Resolution No. 2005 — 156 July 26, 2005 Page 2 --- NOT ADOPTED --- Section 1. That the written responses prepared by the Community Development Commission as attached hereto as Exhibit "A" adequately address the written objections submitted on the proposed 2005 Amendment. Section 2. The City Council hereby approves Exhibit "A" as the City's written responses to the written objections submitted on the proposed 2005 Amendment. PASSED AND ADOPTED this 26th day of July 2005. Nick lnzunza, Mayor ATTEST: Michael Dalla, City Clerk APPROVED AS TO FORM: George H. Eiser, Ill City Attorney NATIONAL CITY COMMUNITY DEVELOPMENT COMMISSION 2005 AMENDMENT TO THE NATIONAL CITY REDEVELOPMENT PROJECT AREA RESPONSE TO WRITTEN COMMENTS Letters from sixteen individuals, groups and organizations were received objecting to or requesting clarification regarding the proposed 2005 Amendment to the National City Redevelopment Plan ("2005 Amendment"). The 2005 Amendment would revise Section 603 of the existing National City Redevelopment Plan ("Redevelopment Plan") to permit the National City Community Development Commission ("CDC") to acquire, through eminent domain, certain properties that are zoned for commercial and industrial use along with vacant and abandoned properties (abandoned properties are those as defined by the National City Municipal Code), regardless of their zoning designation, within the commercial and industrial corridors of the National City Redevelopment Project Area ("Project Area"). Specifically excluded from eminent domain are properties that are used for residential purposes. The CDC's authority to use eminent domain to acquire property shall run for 10 years from the effective date of the 2005 Amendment to the Redevelopment Plan, until 2015. The following presents a summary of the written objections (attached) and a corresponding response. These responses were prepared to address the requirements set forth in Section 33363 of the California Community Redevelopment Law ("Law"). 1. Marion Valdez Julius — Requests clarification that residential uses are excluded from the 2005 Amendment. CDC staff sent the attached letter (June 1, 2005) to the Valdez Family Trust stating, "residential properties are excluded from the 2005 Amendment and cannot be acquired using eminent domain even if they are located on the commercial and industrial corridors." Confirming that residential uses while included in the area of the 2005 Amendment are in - fact excluded from eminent domain authority. 2. Kile Morgan — Is concerned that more employees will be needed to administer the Project Area, increasing the costs to the National City employees pension fund. Other concerns include schools being under funded and the 2005 Amendment not being placed on the ballot for a general vote. The 2005 Amendment will not result in an increase in CDC staffing. Currently the CDC funds its administrative positions from property tax increment (non -general fund) revenue, including all employee benefits. While there may be intermittent staffing needs from time to time to develop specific projects, the CDC has agreements with private vendors to assist in the administration of these specific one-time projects. These private vendors are not eligible for CDC employee benefits, therefore no increase in employee costs are expected from the 2005 Amendment. Prior to the establishment of National City's seven individual project areas, financial pass - through agreements were negotiated with the school districts, to ensure that adequate funds passed to the school districts to protect them from loss of revenue. The only exception is Exhibit "A" the Harbor District Project Area, where the specific amount of payments to the affected school districts is mandated by section 33607.5 of the Law. Two years prior to the adoption of the Harbor District Project Area the Law was changed to fix the percentage amount of payment to the school districts. The 2005 Amendment does not change or modify the existing payment structure to the school districts under the Law, as the boundaries of the seven individual projects areas themselves remain unchanged by the 2005 Amendment. The existing Project Area and eminent domain authority were established in 1995 after public discussion and a public hearing. All property owners, residential and business tenants were notified of the public hearing for the 2005 Amendment. If the 2005 Amendment is not adopted, the existing properties in the Project Area, with eminent domain authority would continue to have this authority, until August 17, 2007 when the current eminent domain authority expires. However, the CDC would not have eminent domain authority to acquire the commercial, industrial, vacant and abandoned properties as proposed by the 2005 Amendment. As a result, the lack of eminent domain in these areas could hamper efforts to reverse blighting conditions in the event some property owners are uncooperative or unwilling to either participate or negotiate fair market settlements for their properties. 3. Art Flaming — States that his property (National City Self Storage), while adjacent to blighted properties is not blighted and should be excluded from the 2005 Amendment area. The finding of blight refers to the proposed overall area within which this or other properties are located. Section 33321 of the Law states that a project area need not be restricted to buildings and properties that are detrimental to the public health safety or welfare, but may consist of an area in which such conditions predominate and injuriously affect the entire area. A project area may include lands, buildings or improvements which are not detrimental to the public health, safety or welfare, but whose inclusion is found necessary for the effective redevelopment of the area. There are no specific projects being considered at this time that would be implemented by the 2005 Amendment. Staff is recommending that eminent domain authority be granted for a 10-year period to allow the CDC greater flexibility in the implementation of potential community redevelopment projects. It is important to note that when a redevelopment agency/commission has eminent domain authority it is not required to use the authority. 4. Jeffrey Silverman — Writes that his property is currently being redeveloped and requests exclusion from the 2005 Amendment. There are no specific projects being considered at this time that would be implemented by the 2005 Amendment. The 2005 Amendment proposes eminent domain authority for a 10- year period. Staff is recommending that eminent domain authority be granted for the 10- year period to allow the CDC greater flexibility in the implementation of potential community redevelopment projects. As stated in the previous response, when a redevelopment agency/commission has eminent domain authority it is not required to use the authority. 2 • Exhibit "A" 5. Michael Kennedy — Believes a fagade improvement program should be used in place of the authority granted by the 2005 Amendment. The CDC has attempted many programs including fagade improvements to facilitate redevelopment in the Project Area. Unfortunately these efforts alone have not been successful in the elimination of blight from the Project Area. In -fact, the CDC's overall efforts have been limited, due to the inability to negotiate land purchase transactions with some private property owners. While the CDC has pursued land acquisition and consolidation through open market transactions and limited eminent domain actions, the lack of eminent domain in many commercial and industrial corridors has constrained redevelopment efforts. Because the CDC cannot forcefully encourage property owners to either redevelop or sell abandoned and dilapidated properties, many of the properties continue to be neglected. 6. Ernest Peterson — States the eminent domain authority proposed by the 2005 Amendment is beyond the authority granted by the law. He states that eminent domain authority is restricted for use on public building/infrastructure projects and not to be used for economic development purposes. Section 33333.2(a)(4) of the Law allows redevelopment agencies/commissions to establish and extend eminent domain authority for periods of up to 12 years, for the purpose of exercising this authority in achieving economic redevelopment. The authority to use eminent domain to facilitate economic redevelopment as granted by section 33333.2(a)(4) of the Law has been upheld by the courts. 7. Gerald Myres — Requests four properties along Cleveland and McKinley Avenues be excluded from the 2005 Amendment. While the CDC has the ability to excluded properties from the 2005 Amendment, doing so may create piecemeal development in the Project Area. It is impossible for the CDC to predict with exact certainty which properties will be needed over the next 10-year planning cycle, therefore it is for the overall Project Area's benefit that all properties meeting the criteria of the Law be included. 8. The Brothers 2002 Trust & Home Furniture — Is concerned that the 2005 Amendment will require the closure of their business, creating a negative financial effect. The Law places certain requirements on the CDC before it can acquire property through the eminent domain process, so as to protect business and property owners. First, the CDC is required to pay fair market value for property as determined by the Superior Court. For those who need to be moved to other sites, the CDC is required to develop a relocation plan, which is done so at the expense of the CDC. A business may also be eligible to receive loss of business goodwill payments if the business owner can demonstrate that the business suffered a decline in business at the new location. 3 Exhibit "A" 9. Guevara, Phippard & James Attorneys at Law — Request two properties owned by their client, Wells Fargo Bank be excluded from the 2005 Amendment.. Specific exclusions of individual properties, carry the risk creating piecemeal redevelopment in the Project Area. It is impossible for the CDC to predict with exact certainty which properties will be needed over the next 10-year planning cycle, therefore it is for the overall Project Area's benefit that all properties meeting the criteria of the Law be included in the area of the 2005 Amendment. This will provide the CDC with the proper tools to implement the Redevelopment Plan to the Project Area's overall benefit. 10. Laura Marquez — States that it has taken too long to acquire building permits for her property and that this is the reason her property is blighted and opposes the 2005 Amendment. The 2005 Amendment has been researched and analyzed for more than two years, during this time several property owners have improved their properties or are in the process of making improvements. Without improvements to the property being completed it is premature to assess an exclusion for the Marquez property. Also, it is unknown what specific development proposals will be received by the CDC during the next 10-year planning cycle, spot exclusions jeopardize the overall redevelopment of the Project Area as it may be necessary to include an improved property into a larger property assemblage to benefit the overall Project Area. 11. Dixon Le Gross — Contends that he is improving his property and should therefore be excluded. This objection centers around a property owner pursuing improvements to their site, as these improvements have not started let alone been completed it would be premature to exclude them from the 2005 Amendment. Also, it is unknown what specific development proposals will be received by the CDC during the next 10-year planning cycle, spot exclusions jeopardize the overall redevelopment of the Project Area as it may be necessary to include an improved property into a larger property assemblage to benefit the overall Project Area. 12. Environmental Health Coalition ("EHC') — Is concerned the 2005 Amendment to the Redevelopment Plan is an amendment to the National City General Plan ("General Plan') and requests that the Old Town/Westside Area be excluded or implementation of the 2005 Amendment be postponed until a specific plan for the Old Town/Westside Area has been approved. The EHC also requests clarification on the residential exemption in the 2005 Amendment. The Law specifically mandates that redevelopment plans and amendments must be consistent with the general plan, as the 2005 Amendment does not propose any new change to land use designations the 2005 Amendment will not require any amendment to the General Plan. However, the 2005 Amendment may be used as a tool to assist the CDC with the implementation of specific plans within the Project Area. With respect to residential uses, any property being legally used for residential purposes is excluded from the 2005 Amendment, which includes multi -family apartment units. 4 Exhibit "A" 13. Highland Avenue Baptist Church ("Church') — Raises sixteen overall objections to the 2005 Amendment with most centering around the Church's belief that eminent domain for the purposes of economic development is a violation of state and federal law Objection 1: The use of eminent domain to raise tax base The Church objects to the plan amendment as not being intended to eliminate blight, but to increase the tax base. The Church states that this same objection was made in argument before the United States Supreme Court in the recently decided decision Kelo v. City of New London. Connecticut (2005) 2005 U.S. Lexis 5011. In Kelo, the condemnor was not a redevelopment agency, but the City of New London. In acquiring property through eminent domain, New London was not required to base its actions on the elimination of blight; rather, its actions were based on a state statute that specifically authorized the use of eminent domain to promote economic development. Kelo did not override or change the California Community Redevelopment Law. Under California law, an ordinance adopting a redevelopment plan must include findings that properties within a project area are blighted, and that redevelopment is necessary to remedy blighted conditions. Redevelopment agencies can acquire property by eminent domain, but the "public use" justifying such activity is the redevelopment of blighted areas. Unlike the Connecticut statute in Kelo, the California Redevelopment Law does not declare economic revitalization to be a public use. Similarly, increasing the tax base is not a public use under California law. The 2005 amendment to the National City Redevelopment Plan is supported by findings of blight; reference is made to the June 21, 2005 Report to the City Council prepared by the RSG. Objections 2, 8, 9,10, 12, 13 and 15 These objections claim the eminent domain of properties used to facilitate economic redevelopment are against federal and state law and cite arguments from the recent federal Supreme Court ("Supreme Court') case Kelo v New London. After this letter was received by the CDC, the Supreme Court upheld the use of eminent domain for achieving economic development in the New London case, invalidating objections 2, 8, 9, 10, 12, 13 and 15. Objection 3: The Creation of an Unstable Business Environment Claims existence of eminent domain authority will create an unstable business environment. Businesses affected by relocation, due to eminent domain actions must be compensated for relocation under the Law to the mitigate loss in value as well as moving expenses. A business owner may also be eligible to receive loss of business goodwill payments if the business owner can demonstrate that the business suffered a decline in business at the new location. Also, relocated businesses that are property owners may under certain conditions transfer their current property tax base to a new property. 5 Exhibit "A" Objection 4: The Eroding of Property Value to Owners This objection refers to a Mesa, Arizona case where property was acquired through eminent domain for less then the appraised value of the land. The United States and California Constitutions require that property cannot be acquired by the government without payment of just compensation to the owner. California statutory law requires that before property is acquired, the government must have the property appraised, and the property owner must be offered the fair market value of the property based on that appraisal. Under state and federal law, property owners may also be entitled to relocation assistance payments to relocate their business or home. In the case of a business owner, there may additionally be compensation for loss of goodwill, a statutory requirement in California. Objection 5: The Fact that Eminent Domain is In Violation of Court Standards to be Used In The Removal of Blight and Overcoming Economic Depression — The Polestown Example Discusses court standards to justify eminent domain for economic development and whether or not the properties affected by the 2005 Amendment are blighting as well as who makes that determination. The Law allows for the inclusion of unblighted properties because the facilitation of blight removal for surrounding blighted properties may require the inclusion of some unblighted properties. Therefore, to ensure the best overall redevelopment for the Project Area, it is necessary to include some unblighted properties. The determination of blight is made by CDC as it applies the requirements of the Law with respect to the characteristics of the properties affected by the 2005 Amendment. Objection 6: The Placing of Risk all Community Service Organizations because they do not contribute to the property tax base, but provides community service Discusses a state law that was not passed to exclude non profit organizations from eminent domain. The CDC will take into account the services provided by any non profit or for profit business before a decision to proceed with an eminent domain action is approved. As stated earlier businesses including non profits would be eligible for relocation assistance in the event of an eminent domain action. Objection 7: The Violation of United States Constitutional Rights Afforded the Church by the First Amendment of the Constitution — hindrance of freedom to maintain and our Establishment of Religion Maintains that the 2005 Amendment including the Church's property would violate the federal constitutional protection of the First Amendment. This argument would only apply if it could be shown that the eminent domain action was done to prohibit a particular religious belief. There are several churches of different denominations in the area of the 2005 Amendment, therefore no particular church is being excluded against. Also, the CDC has not identified a specific development for the Church's property and merely including the property itself in the 2005 Amendment area does not by itself constitute an action to prohibit the free exercise of religion. 6 Exhibit "A" Objection 11: The Use of Police Power in Eminent Domain of the City to enhance the Financial benefit of a private developer Claims that the CDC will not follow the Law if it pursues eminent domain actions. Because the eminent domain process is a court administered process, the CDC will be required by the court to follow the Law as it administers the eminent domain procedures, including the appraisal and relocation processes. Even prior to the filing of an eminent domain action the CDC must exercise its Owner Participation Rules that give existing property and business owners the first right to participate in site specific redevelopment projects. Objection 14: Places the City of National City in the Business of Land Speculation Claims the CDC will engage in the land speculation business for its own benefit if the 2005 Amendment is approved. As mentioned above, before the CDC would engage in property acquisition through eminent domain authority the CDC must follow its Owner Participation Rules procedures. The CDC has a history of working with local property owners and businesses. This includes the Trophy Lounge where an existing small business owner was assisted by the CDC in rehabilitation and expansion of an existing business and MSI, a National City business who was seeking expansion opportunities outside of National City until the CDC facilitated their expansion within the City. Objection 16: Violates the spirit of Brown Act by not allowing the people to vote on the matter Claims that the 2005 Amendment violates the spirit of the Brown Act by not allowing the general population to vote on the 2005 Amendment as proposed. The spirit of the Brown Act is to conduct public meetings in an open process and to limit the use of closed session by governmental bodies. To -date the CDC has conducted two public hearings and one public workshop regarding the 2005 Amendment. Neither the Brown Act nor the Law require a vote of the general population for adoption of the 2005 Amendment. 14. Michael Filson — Objects to the lack of time allowed to review the revised Report to the City Council (Report') for the 2005 Amendment and the changes from the draft Report to the revised Report. He also, contends that the surveyor's used by Rosenow Spevacek Group, Inc. (`RSG'), the CDC's consultants for the 2005 Amendment did not have adequate experience and questions the credentials of the real estate brokers interviewed. Other objections include; citing steel buildings as blighted, the perception that long-term property owners will lose their land for less than fair market value if the CDC uses eminent domain authority and the process for distributing and reviewing the Five -Year Implementation Plan approved on June 14, 2005. To allow the community maximum involvement a draft Report was made available for public review at the same time the 30-day notice of public hearing for June 21, 2005 was sent to property owners, tenants, businesses and taxing entities in the Project Area. To produce a draft Report for public review 30-days prior to the public hearing of June 21, 2005, estimates were made for the total number of individual properties comprising the 1,560 parcels of the 2005 Amendment Area. When the total amount of individual properties was finalized from the total amount of parcels there was a change in the percentages, however the individual blighting conditions for each parcel did not change from the field survey. 7 Exhibit "A" Mr. Filson also questioned why Table B-2 depicting property size was removed from the revised Report. RSG typically confirms field observations in the areas of small parcel size and building age with available tax assessor's parcel data. From the field survey it was clear that there were a significant number of smaller sized parcels as well as older buildings, however when RSG reviewed parcel information from the San Diego Tax Assessor only 222 of the 1,560 total parcels (14%) had a parcel size, which were skewed towards larger properties and only 789 of the 1,560 total parcels had year built information. Because parcel size and building age were a significant blighting factor based on RSG's field observations, it was determined to release the draft Report with the best information and go back out into the field to make estimates as to building age and parcel size for the revised Report. After obtaining this information RSG did insert it into the narrative of the revised Report. The two primary surveyor's used by RSG for the field survey have a combined 5 years experience with RSG as cited by Mr. Filson. However, it is important to note that both surveyor's have an additional 10 years (combined) of experience in the community redevelopment and real estate fields prior to their employment with RSG. The project itself has been managed by Frank Spevacek, Principal with RSG who has over 25 years experience in the field of redevelopment. Real estate brokers interviewed, included brokers from firms such as: CB Richard Ellis, Flocke & Avoyer, RGP, Voit Commercial and others were interviewed as to their perspective on the National City verses San Diego County real estate markets. It would be impossible to qualify all brokers interviewed with respect to their credentials, although it can be assumed that if property owners are using these brokers/firms to list their properties then the brokers/firms have displayed expertise in the local market. Regarding the comment indicating that steel buildings are being cited as blighted buildings, steel buildings in and of themselves are not a blight. However, these buildings especially older steel structures suffer from warping and structural integrity if not properly maintained. Mr. Filson states that "...metal siding, when properly maintained, is a very effective building material." Unfortunately, many of the older steel structures have not been properly maintained and therefore present a threat to the health and safety of persons inside these buildings as well as surrounding structures. This letter states that long-term property owners will lose their land for less than fair market value if the CDC uses eminent domain authority. As mentioned previously, there are several steps to first encourage owner participation in the development and if that fails the Law requires a court process to ensure fair market value is paid, in addition to relocation assistance if necessary. If approved, the 2005 Amendment would allow the CDC to acquire property through eminent domain only: • After a site specific redevelopment proposal has been first been considered and approved by the CDC, after property owner notification and public discussion; • After property owner and business tenants are given the first right to submit proposals to participate in the site specific redevelopment proposal; • After the CDC determines (during a public meeting) that property owners and business tenants located within the site specific redevelopment area do not have the capacity to participate in the site specific redevelopment proposal; 8 Exhibit "A" • After MAI appraisals are prepared for all properties that must be purchased in order to facilitate the site specific redevelopment proposal; • After a relocation plan is prepared and adopted by the City Council (after property and business owner, tenant and public review) that details how the specific relocation needs will be accommodated; • After the CDC approves MAI appraisals and directs staff to submit property purchase offers and to initiate property acquisition negotiations; • After appraisals are prepared to identify the leasehold interest value of each tenant's lease; • After property acquisition negotiations do not result in a negotiated property purchase, and the CDC determines that it must proceed with property acquisition using eminent domain; • After the CDC holds a public hearing to consider the property owner's testimony as to why their property should not be purchased through eminent domain; • After four of the five CDC governing board members vote to proceed with property acquisition through eminent domain; and • After the CDC files a Superior Court action to acquire the property through eminent domain. This is a long and expensive process, and historically, the CDC has not used its existing eminent domain authority to acquire property unless it is implementing a site specific redevelopment project that is both economically feasible and will benefit the greater Project Area. The noticing requirements for the Five -Year Implementation Plan do not require a notice be sent out to all property owners, tenants and business owners as was done for the public hearing on June 21, 2005 for the 2005 Amendment. The Law requires the notice for implementation plans to be published in a newspaper of general circulation and publicly posted in four separate locations, which was done for the June 14, 2005 public hearing for the Five -Year Implementation Plan. The Five -Year Implementation Plan was also available for public review, prior to release of draft Report for the 2005 Amendment. 9 Exhibit "A" 15. Phillip Teyssier — Wrote two letters of objection; the first dated: June 15, 2005 claims that he had not received any of the previous notices and that the San Diego Tax Assessor ("Assessor') has the wrong mailing address listed for his properties. The other dated June 21, 2005 requests the CDC/City Council postpone approval of the 2005 Amendment for 120 days to allow further time for review and take no further action until all property owners have received written responses. The letter further requests the CDC to exclude the properties listed by assessor's parcel number and in Attachment A lists twenty perceived deficiencies in the Report. A review of mailing records shows that notices for the September 21, 2004 and June 21, 2005 public hearings were mailed to the mailing address listed by the Assessor as well as the site address for all properties. The Law states that using the Assessor's parcel mailing addresses, site addresses and business license addresses is satisfactory with respect to notices, as additional requirements would place an unreasonable burden on agencies attempting notification of those in a project area. As Mr. Teyssier has submitted a list of twenty perceived deficiencies with respect to the revised Report, a 120-day postponement for review does not appear necessary. The written responses to written objections were made available for public review at the CDC's offices on July 19, 2005, which was announced at the June 21, 2005 public hearing. In addition, on July 19, 2005 all persons submitting written objections (with return addresses) were mailed (by certified mail) a copy of the CDC's written response to their objections. However, mailing the written responses to all property owners in the Project Area would be an unreasonable hardship on the CDC as all those in attendance at the June 21, 2005 public hearing were notified of the public availability of the written responses on July 19, 2005. The following is a response to the twenty items discussed in Attachment A (which is attached to the CDC responses) of Mr. Teyssier's letter dated June 21, 2005: Item: 1 This conclusion from page 1 of the Report does not state there has been no development, but states; "Projects requiring land assembly in non -eminent domain areas were not developed". MSI and Wal-Mart are the only projects where the CDC pursued eminent domain actions. Any other developments requiring eminent domain in the last 10 years have not been pursued by the CDC. Evidence for parcel consolidation can be found throughout the Report with respect to small parcel size. Item: 2 Industrial and commercial properties not highlighted (green font) on the map of the proposed 2005 eminent domain area (Attachment #1-revised Report) do not require specific exclusion as they are not listed as properties affected by the 2005 Amendment. Residential exclusion is specifically intended for residential properties that are highlighted on the map of properties affected by the 2005 Amendment. The clear purpose of the residential manager is the management of a commercial/industrial property. As the intent of the residential manager is primarily commercial/industrial in nature a residential exclusion would not be reasonable for this use. 10 Exhibit "A" Item: 3 These conditions along with the rest of the paragraph cite the conditions found in 1995 to give the reader of the Report a background for adoption of the 1995 Redevelopment Plan, which expanded eminent domain authority into the Harbor District. Taking one sentence out of a paragraph, related to conditions 10 years ago and expecting that sentence by itself to prove blight 10 years later is in -effect taking pieces of the Report out of context. Item: 4 The statement cited on page 6 is a typographical error and should read "2005 Amendment area" instead of "Project Area", this will be corrected in the Report to Council for the July 26, 2005 CDC meeting. It should be noted that in the first paragraph of page 6 that blight findings were restricted to the properties of the 2005 Amendment area as stated, "However, additional blight documentation is required when eminent domain authority is established for new properties. As the 2005 Amendment expands the CDC's eminent domain authority to additional properties within the existing Project Area, a re -substantiation of blight for these new properties is required." Items: 5, 6 and 7 On page 7 the list referred to in items 5, 6 and 7 is not portrayed to be a new legal definition for blight under the Law, but clearly states the "list describes the condition(s) that are present when a property/parcel is designated as having physical deficits." This item is also critical of surveys from the public right-of-way, but it would be an unreasonable burden to require every building be inspected from the inside. It is RSG's professional experience that outside building conditions oftentimes reflect the inside condition of the structure. Item: 8 This item removes information from its context. In addition, to painting, exposed wiring and damaged exterior buildings materials, other physical conditions such as deteriorated wood eaves/overhangs/framing, broken deteriorated roofing materials, inadequate vehicle access, substandard exterior building materials, poorly constructed additions and inadequate (unsafe) pedestrian access are cited. Item 8 contends that the severity of each condition should be noted, while the notation of severity for every blighting condition observed is not documented on page 7, "RSG acknowledges that different degrees of deterioration or deficiencies are present in each parcel. RSG staff at a minimum cites a condition as present if a reasonable person, shown the condition, could see the damage. In most circumstances, this deterioration was visible from the right-of-way (streets or alleys)." If a condition is significant enough to be observed a far from the public right-of-way then it is likely this condition is significant in nature. Item: 9 While the Law does not define the seriousness of code violations this item cites some code violations may not be as serious as others. With respect to the examples cited: canvass tarps are fire hazards, A -frame signs and inventory displays on public sidewalks are a tripping hazard and unlicensed businesses, particularly those using chemicals are all potential threats to the health and safety of those persons coming into contact with these code violations. Upon touring the 2005 Amendment area with code compliance staff it was noted that due to budgetary constraints, staff focuses on protecting housing units before commercial and industrial properties as the safety of persons, particularly children in residential structures takes precedence over commercial and industrial properties. 11 Exhibit "A" Item: 10 This item claims that because section 17920.3 of the Law is not directly referenced by sections 33030 and 33031 of the Law, then it does not apply towards a finding of blight. In - fact section 17920.3 defines a substandard building and it is a substandard building under the Law that affects the health and safety of those using a building and is defined as blight in section 33031 of the Law. Item: 11 This citation refers to the reduced economic return a building/property is likely to generate when it is already suffering from obsolescence and is also allowed to physically deteriorate. The item states that forgoing refurbishment is not a "realistic" option for income property owners. However, based on the large amount of physical dilapidation observed during the field survey, it appears many owners in the area affected by the 2005 Amendment are reducing or all together forgoing property refurbishment. Item: 12 This item claims readers are mislead into believing all 375 properties suffering from substandard building materials are due to usage of metal or canvass materials. Page 19 states, "There were several examples of substandard building materials observed in the properties affected by the 2005 Amendment." Then discusses the two "primary" substandard materials; metal and canvass. Item: 13 The reduction of grocery store and bank outlets in the Project Area is cited to illustrate that some companies do not view continued, let alone new and expanded operations in the Project Area to be financially beneficial to them as investors. While Food 4 Less (in the City of Chula Vista) and Ralph's are near the Project Area, they are in -fact not in the Project Area. boundaries. It should be noted that this item cites the existence of a newer Wal-Mart store on Highland Avenue. The Wal-Mart which primarily provides general merchandise retail goods was facilitated by an eminent domain amendment to the Redevelopment Plan in 2001. Item: 14 While the length of time the car dealership has been using the bank building for some of its operations may be incorrect the fact remains a banking outlet has been lost to the community and replaced with a used car facility, in a community where there are already many used car facilities and few banks. Item: 15 This item states that large-scale projects (Albertson's site) can be accomplished without eminent domain. What the item does not mention is that the project is far from being realized and the site itself is over 1.5 acres and the parking area nearly 9.5 acres, which is larger than most sites in the Project Area. 12 Exhibit "A" Item: 16 Mr. Filson alleges that lower capitalization rates will justify an investment. RSG took an average capitalization rate expected by investors of income properties, which was higher that the capitalization rate enjoyed by the typical Project Area property. Using a substandard rate to justify investment as cited in this item, provides an excellent example of why typical commercial and industrial properties in the 2005 Amendment area do not provide an adequate rate of return, forcing investors to forgo returns on investment and/or reduce improvements in property maintenance. Item: 17 While most of the contaminated sites have been identified by various agencies as stated in the item, until the properties are remediated (cleaned up) eminent domain may be required to facilitate complete remediation. Item: 18 The statement cited in this item illustrates that overtime some unblighted properties (hotels) may become blighted either due to being adjacent to other blighted properties or surrounding economic conditions. Therefore, given the 10-year planning cycle of the 2005 Amendment it is important to include all properties that may benefit from the 2005 Amendment, as it may be infeasible to go through an expensive redevelopment plan amendment process to add a few properties into the 2005 Amendment area at a later date. Item: 19 The changes proposed by the 2005 Amendment do not require new findings for every section of the Report as many of these issues remain unchanged from the original Redevelopment Plan, such as Section D of the Report. An example of a new finding required for the 2005 Amendment is the previously mentioned re -substantiation of blight for properties with new eminent domain authority. Item: 20 This item states the formation of a Project Area Committee ("PAC") is required before the adoption of the 2005 Amendment. This is not accurate as residential properties are excluded from eminent domain authority by the 2005 Amendment and the Law only requires formation of PAC's when either: granting the authority to the agency (CDC) to acquire by eminent domain property on which persons reside in a project area in which a substantial number of low- and moderate -income persons reside; or adding territory in which a substantial number of low- and moderate -income persons reside and granting the authority to the agency to acquire by eminent domain property on which persons reside in the added territory. As residential uses are excluded by the 2005 Amendment these two requirements do not apply. 13 Exhibit "A" 16. Robert, Suzanne and Anthony Leif (Letter) — Object to lands west of Interstate 5 being included in the "blight designation zone", as they are not related to the portions of Highland Avenue or the Mile of Cars affected by the 2005 Amendment. The letter also contends that no evidence has been provided that property owners west of Interstate 5 are not willing to work with the CDC and implies small business has been defamed in the Project Area by the Report. While the lands west of Interstate 5 might not be directly adjacent to the portions of Highland Avenue and the Miles of Cars affected by the 2005 Amendment, the properties west of Interstate 5 in the existing Project Area are already subject to eminent domain and therefore the extension of eminent domain authority for properties west of Interstate 5 does not require a re -substantiation of blight for the CDC's continued eminent domain authority in this area. The Leifs contend there is no evidence that property owners are not willing to work with the CDC, when in -fact the Leifs themselves were involved in the only eminent domain action initiated for properties west of Interstate 5 in the last 10 years. There is no evidence to support the allegation that small business has been defamed in the Project Area. Robert Leif (Critique of the Report to the National City Council by Rosenow Spevacek Group, Handout at June 21, 2005 public hearing) — Contends the Report to the City Council was produced for the CDC by its consultant Rosenow Spevacek Group, Inc. to "bolster" the case for redevelopment and claims the Report is defective because it makes no mention of the pending Kelo v. New London case. In addition, it is reasoned that an upgrade in zoning is needed instead of the 2005 Amendment. The Report including all of its sections is required by the Law for adoption of the 2005 Amendment. If there were not findings of blight for the new properties proposed for eminent domain authority the CDC could not adopt the 2005 Amendment. The Report makes no mention of the New London case as at the time of the June 21, 2005 Report a decision had not been made by the court in this case. Since, that time the court has upheld the ability of redevelopment agencies (the CDC) to use eminent domain to facilitate economic development rendering this point moot. Redevelopment plans and amendments are specifically prohibited by the Law from being used to facilitate zoning changes. Therefore Mr. Leif would need to pursue a zoning change through the typical planning process. Robert and Suzanne Leif (RSG Report is Wrong for National City, Handout and power point presentation at June 21, 2005 public hearing) — Contends code compliance options should be exhausted before properties are condemned. This handout also claims that buildings 25 years and older could be historical buildings and the Report encourages the removal of historic buildings as well as advocates for the removal of low income housing opportunities. Even if all code deficiencies were cured, which does not appear feasible given the General Fund budget situation for National City, the issue of small parcels under multiple ownerships would still impede economic development in the Project Area and require adoption of the 2005 Amendment. 14 Exhibit "A" The handout claims that buildings 25 years or older may be historical sites, while some properties may have historical value the high rate of physical deterioration combined with older building creates a blighting condition for these properties in the Project Area. It is this combination of factors the Report cites and not the outright destruction of buildings just for the sake of buildings something new. The allegation that the 2005 Amendment will remove low-income housing is without merit, as the 2005 Amendment specifically excludes properties used for residential purposes. While the Report does cite low lease rates, it is the goal of the CDC that affordable housing should not be substandard housing in dilapidated and deteriorated units. Stephanie Leif (in an earlier letter from 2004, which she requested a response to at the June 21, 2005 public hearing) — Is concerned about the term blight and its' possible negative affect on property values, ability of property owners to negotiate long-term leases, overall desire of owners to improve their property, as well as possible plans the CDC may have for property located in existing Harbor District Redevelopment Project Area. The Harbor District Redevelopment Project Area ("Harbor District") has satisfied all legal requirements for blight findings required at the time of its adoption in 1995, this adoption included eminent domain authority for all new properties, except properties occupied for residential use, in the Harbor District. The 2005 Amendment proposes the same eminent domain authority for properties in commercial and industrial use, as well as vacant and abandoned properties. Over the last 10 years since the Harbor District was included in the Project Area, there is evidence that tenants have been able to obtain long term leases. While the field study did clearly find evidence of blight, it also observed some property owners such as MSI making improvements to their properties. The CDC will continue to follow the Harbor District Master Plan when facilitating rehabilitation and redevelopment activities in the Harbor District. 15 Exhibit "A"