2004-03-16 CC/RDA/CUA REG MIN - Laserfiche WebLink

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City Manager Parrish explained three points that hadn't been discussed or considered. 1. Agency does not own the property 2. Agency does not and never has, managed the Property. 3. Criticism about the condition of the property is unfair. City Manager Parrish pointed out that the Agency had worked with the Board in suing with the construction defect litigation and were successful. The Agency was being blamed for the condition of the property unfairly when the Agency has funded the project by the bonds that were funded in 1989 for approximately 6.5 million dollars. The Agency's concern is with the tenants currently living in the project and it has been demonstrated through the sensitivity in considering relocation. In regards to the wasting of money, we have consulted with construction experts who have told us that demolition costs would be 4.5 million dollars. He provided two scenarios: Scenario 1 — Relocation of Tenants temporarily, refurbishing the building and relocating them back. 5.5 million Construction defect litigation 250 thousand Litigation against the architect 5.75 million Total -1.3 million Attorney fees 4.4 million Total balance for project -4.5 million Cost to rehab building -1 million Cost to relocate tenants Agency would be in the hole over a million dollars, this doesn't include subsidy cost, as the agency would be responsible for the subsidy of that building unless the rents were raised and this alternative is something nobody wants to see. Scenario 2 — Develop a successor project. 5.75 million Total -1 million Relocation costs 4.75 million Balance -1 million Demolition of building 3.75 million Balance left to dedicate to successor project and no continuing subsidy. City Manager Parrish explained that not only do we have a responsibility to the 72 residents of Colton Palms as well as the 50 thousand residents of this community. All low and mod funds have been essentially committed to the Colton Palms Project and Rancho Med project for a very long time now and its time to spread those dollars around and let them build other projects in the community as obligated by law. CM De La Rosa expressed that this was a unique and complicated issue that the board was facing, as their concern was the health and safety of the seniors at the complex, and they were trying to provide a smooth transition. City Attorney Derleth clarified the mold report received from BB & K, that a critical piece along with all the protocols steps to be taken for safety is to have the tenants move out during the process. 2004 MAR 16 REG CC/RDA/CUA MEETING - 5 -