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February
3, 2003
Fernando
Armenta, Chair [Sent by Email and FAX: 831-755-5888]
Monterey County Board of Supervisors and
Redevelopment Agency of Monterey County
240 Church Street
Salinas, CA 93901
RE:
Proposed Option Agreement With East Garrison Partners
February 4, 2003 Agenda, Item #S-7
Dear
Chairperson Armenta and Members of the Board:
LandWatch
Monterey County has the following comments on the Option Agreement
submitted to you for approval on your February 4, 2003 Agenda. We
have reviewed a Draft dated 1/21/03, made available on the County’s
website.
- The
proposed Option Agreement transfers substantial control over a
large amount of public property (property that the County anticipates
receiving from the Fort Ord Reuse Authority) to a private entity.
- The
Agreement was negotiated in private, and has only recently been
made available for public review. In fact, the “Draft”
document that we have reviewed may not be exactly the same document
that the Board is being asked to approve on February 4th.
- The
Option Agreement was negotiated with East Garrison Partners under
an arrangement that permitted that entity the “exclusive”
right to negotiate. The proposed agreement is extremely complex,
and as indicated above, the negotiations were carried out in private.
Entering into the proposed Option Agreement will fundamentally
change the public’s legal rights with respect to the Fort
Ord property.
- We
believe that the Board should give the public at least two weeks
(and preferably a month) for a full review of the document, prior
to its approval, so that the Board can consider informed public
comments prior to entering into an agreement that makes such a
substantial commitment of an incredibly valuable public asset.
- On
Page 4 of the proposed Option Agreement, the County Redevelopment
Agency extends its “Exclusive Negotiating Rights Amendment
for Parker Flats (ENA)” to future possible developments on
Fort Ord. It might be more prudent, and more in the public interest,
to reserve a decision on that matter until a later time, when
the developer’s performance on the initial phases of the
project can be evaluated.
- On
Page 4, the proposed Option Agreement notes that “it may
be necessary to provide” various public facilities, including
a school site, equestrian facilities, and an area for Native American
uses. The Agreement does not require the developer to provide
the facilities. Therefore, the inference is that the public will
have to provide the facilities at a later date. If this is intended,
why?
- On
Pages 4-5, the proposed Option Agreement notes unresolved issues
relating to the interest of Monterey Peninsula College (MPC) in
certain lands in the East Garrison Area that are proposed for
development under the Option. The proposed Option Agreement also
indicates that it is expected that these issues will be resolved
by “March 2003.” Wouldn’t it be better to resolve
these issues first, prior to entering into this binding Option
Agreement? What is the need for an accelerated decision with
East Garrison Partners, particularly in view of the fact that
the subject property is not actually owned by the County?
- Paragraph
3(a), on Page 5, establishes the purchase price to be paid to
the public. This is done by incorporating an “Exhibit E,”
entitled “Financial Terms.” The provisions of “Exhibit
E” are complex, and difficult to understand, among other
reasons because they are based on the developer’s “internal
rate of return (IRR). Prior to signing away the public’s
rights, the exact financial commitments by the developer should
be better understood by the public.
- “Exhibit
E” also specifies that the development fees to be paid to
FORA will be imposed on the ultimate purchasers of the homes to
be constructed, through the establishment of a Mello-Roos District.
Other infrastructure costs are proposed to be paid for by a “Community
Facilities District” to be established on the property. In
other words, these fees and infrastructure costs are not going
to be paid for by the developer (as might normally be anticipated)
but by purchasers of the homes to be built on Fort Ord. The
effects of this, particularly on housing affordability, ought
to be better understood, prior to Board action approving the proposed
Option Agreement.
- On
Page 6, in Paragraph 3(b), the County Redevelopment Agency promises
the developer not to “negotiate with any other person or
entity relating to the use, leasing, acquisition or development
of the property without prior written consent of the developer.
This means that the developer will be substituted in, in place
of the Board of Supervisors, with respect to all the other users
of the property, including various nonprofit groups that have
traditionally looked to the Board to assist them with respect
to their future use of the lands located in the East Garrison
Area. Do these groups understand that the County Redevelopment
Agency will now not be able to work with them, but that they will
have to work with the developer exclusively?
- As
we understand Paragraph 3(d), on Pages 6-7, the County Redevelopment
Agency is granting the developer an almost unlimited right to
“assign” the developer’s rights under the Option
Agreement. It is not unusual for a local developer (who has the
confidence of local elected officials, and the public), to obtain
rights, which they then assign to other developers, who may not
have either local ties, or local support. What is to prevent this
happening in this case? If the ultimate developer isn’t Woodman
Development, but some large construction conglomerate, based elsewhere,
will the public still receive the kind of development that is
now anticipated? If there is any danger of such a “substitution”
of responsibilities (and the assignment provisions seem to indicate
that this is a significant possibility) then it is imperative
that the Option Agreement be “tight,” and strictly describe
what the public will get. Otherwise, there is a significant chance
that the public will lose the benefit of its bargain.
- On
Page 14, the proposed Option Agreement indicates that the developer
will protect the Redevelopment Agency and the County from third
party liability claims, but only “to the extent that it is
able to obtain environmental insurance on commercially reasonable
terms.” This is not strictly defined. It is quite likely
that this language provides no real protection to the Agency or
the County.
- Beginning
on Page 15, the proposed Option Agreement outlines a series of
“conditions precedent” to actual implementation of the
arrangements outlined in the Agreement. They include a requirement
that the County of Monterey will have entered into a Development
Agreement with the developer, promising to approve the development
outlined in Exhibit D. How the timing of this relates to the rest
of the implementation program needs to be outlined with more specificity,
since that step will take substantial time and, most likely, additional
environmental review.
- On
Page 16, the “conditions precedent” list outlines a
procedure that will allow a Disposition and Development Agreement
to be signed prior to a project approval that includes full public
participation and environmental review, with the DDA to be “conditional”
on the subsequent project approval. This will unfairly burden
the public review process with a “pre-commitment” to
a particular project. It is legally questionable, and will certainly
undermine the public’s belief that the project approval process
will be fair and open.
- On
Page 20, the developer is given the right to “serve as the
land development entity,” which means that public rights
are being transferred to this private developer, specifically
including the right to determine the style of the new development
through a “Pattern Book.”
- Paragraph
5(b), on Page 20, says that at least one-half of the market rate
units in the project will be built by “members of the Developer.”
This is not clear. What is clear is that the developer under the
Proposed Option Agreement will be acting as a “wholesaler”
of the property. The project level developments may be constructed
by other firms, identified as “merchant homebuilders.”
This could include large, out-of-county builders without local
ties, and without the confidence of the local public.
- The
following sentence in Paragraph 5(c), on Page 20, is ambiguous:
“…the Developer will enter into an agreement with the
Agency whereby the Developer agrees to maintain and manage the
Property at its expense….” Whose expense? The reference
is unclear, and there is a major difference between maintaining
and managing the property at the developer’s expense, or
the Agency’s.
- Paragraph
6(a) on Page 22 says that the “Agency and County” have
already made a final and conclusive determination that the Redevelopment
Plan is the controlling land use document for the property. This
eliminates the public’s right to amend any item in that Redevelopment
Plan, and is inconsistent with other language in the proposed
Option Agreement that purports to preserve the County’s retained
land use authority. The provisions relating to the General Plan
Update now in process also eliminate any right for the County
to adopt planning policies that may require a different approach
from what the developer is proposing, and short circuits the CEQA
process in a way that is probably not legally appropriate.
- Page
24 says that the “County Board of Supervisors has taken an
appropriate action to reserve a sufficient water allocation [of
470 acre feet] exclusively for the Project, pending environmental
review.” In fact, it would not be legal, under CEQA, for
the County to make a decision prior to full environmental review.
- On
Page 24, the proposed Option Agreement limits completely the public’s
ability to hear from anyone other than the developer about possible
alternative development options for either the East Garrison and
Parker Flats areas of Fort Ord. This prohibition goes beyond the
Project Area, and transfers the public’s right to plan for
the future of the County’s lands on Fort Ord to a private
development partnership.
- On
Page 32, the proposed Option Agreement turns over public responsibility
for legislative actions relating to the Redevelopment Plan to
the developer.
- Also
in Paragraph 9(a), on Page 32, the proposed Option Agreement purports
to promise that the Agency staff will not make any recommendations
that have not been “pre-approved” by the developer.
This gives the developer the right to review Agency staff reports,
and to demand that they be changed.
- A
proposed “Consent and Agreement of the County of Monterey”
is found on Page 36 of the proposed Option Agreement. The County
of Monterey is not a party to the Agreement, which is between
East Garrison Partners and the Redevelopment Agency. This page
refers to “Woodman Development Company,” instead of
East Garrison Partners, and is a pledge to carry out all if its
future activities consistent with what the Redevelopment Agency
has promised. This “consent” by the County signs away
its legislative and police powers, and appears to be without consideration.
Conclusion
We hope that the above list of comments and concerns underscores
for the Board our basic point: the proposed Option Agreement could
have far-reaching impacts on the future of the County’s lands
on the former Fort Ord. It is complex, and should be submitted to
outside comment and analysis prior to execution.
We
specifically urge the Board of Supervisors, acting as the Board
of Directors of the Redevelopment Agency, to take the following
actions:
- 1.
Ask County Counsel to prepare a thorough legal review of the proposed
Option Agreement, responding to the concerns articulated in this
letter, and any other concerns that he may identify himself, or
that are identified by any other person.
- 2.
Continue consideration of the proposed Option Agreement for one
month, to allow for a full legal and public review, prior to action
entering into this legally binding commitment.
Thank
you for taking our comments and concerns into consideration.Very
truly yours,
Gary
A. Patton, Executive Director
LandWatch Monterey County
cc:
Woodman Development
County Administrative Officer
County Counsel
Nicholas Chiulos
Other Interested Persons
[Return
to Fort Ord Issues and Actions]
02/05/03
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