HomeMy WebLinkAboutMinutes - 02-14-12 Regular MeetingALSO PRESENT:
RECESSED TO CLOSED SESSION:
City Council Minutes 2/14/12 -1-
MINUTES OF THE
CITY COUNCIL OF THE CITY OF DOWNEY
REGULAR MEETING
FEBRUARY 14, 2012
The City Council of the City of Downey held a Regular Meeting at 6:30 p.m., February 14,
2012, in the Council Chamber of the Downey City Hall, 11111 Brookshire Avenue, Downey,
California, Mayor Roger C. Brossmer presiding.
PRESENT: Council Members:
Roger C. Brossmer Mayor
David R. Gafin Mayor Pro Tem
Mario A. Guerra
Luis H. Marquez
Fernando Vasquez
Gilbert Livas, City Manager
John Oskoui, Assistant City Manager /City Treasurer
Yvette M. Abich Garcia, City Attorney
Adria M. Jimenez, City Clerk
Lonnie Croom, Fire Chief
Shannon DeLong, Assistant to the City Manager
Rick Esteves, Chief of Police
John Michicoff, Finance Director
Arlene Salazar, Interim Community Services Director
Brian Saeki, Community Development Director
Gladys Chavez, Secretary
Other City Staff
Mayor Brossmer announced the Council is recessing to Closed Session (6:31 p.m.) to
discuss matters under the authority of the following sections of the Government Code:
1. Government Code Section 54956.8 — Conference with real property negotiators: Gilbert
Livas /Brian Saeki re: property at 11002 & 11012 Downey Avenue; negotiating party: Steve
Aptaker; under negotiations: price and terms of payment.
2. Government Code Section 54956.9(a) - Existing Litigation: City of Downey, et al. v. State of
California, et al., Sacramento Superior Court, Case No. 34- 2011 - 80000952.
3. Government Code Section 54956.9(b)(3)(A) - Conference with legal counsel - anticipated
litigation. Significant exposure to litigation — one potential case.
4. Government Code Section 54956.9(b)(3)(A) - Conference with legal counsel - anticipated
litigation. Significant exposure to litigation — one potential case.
5. Government Code Section 54956.9(a) — Existing Litigation:
a. City of Downey, et al. v. WRD, et al., Los Angeles Superior Court Case No. BS128136;
b. Central and West Basin Replenishment Dist. v. Adams, et al. (LASC Case No. C786656);
c. WRD, et al. v. Cerritos, et al. (Court of Appeal Case No. B226743);
d. California Water Service Co. v. Golden State Water Co. (LASC Case No. C506806);
e. Hillside Memorial Park & Mortuary Co. v. Golden State Water Co. (Court of Appeal Case
No. B225058; Supreme Court Case No. S197767).
RECONVENED:
The meeting reconvened in Open Session at 7:32 p.m. with all Council Members present.
City Attorney Abich Garcia announced that they would return to Closed Session at the end of the
regular City Council Meeting for further discussion of Item No. 5.
The Invocation was delivered by Council Member Guerra. The Flag Salute was led by Arleen
Salazar, Interim Director of Community Services.
COUNCIL MEMBER ANNOUNCEMENTS; REQUESTS FOR FUTURE AGENDA ITEMS; AND
CONFERENCE /MEETING REPORTS:
Council Member Guerra reported attending the Independent Cities Association Conference
and attended workshops on Redevelopment and Medical Marijuana Dispensaries; attended
Raytheon's new Public Safety Regional Technology Center's Grand Opening on February 13, 2012;
mentioned that he was on the United States Army Advisory Board which helps recruit for the army;
mentioned the City of Downey declared Wednesday, February 8, 2012 as Art Morris Day; reported
that on Saturday, February 11, 2012, the City of Downey gave away to the community 1,100 55-
gallon water drums (courtesy of Coca Cola) for emergency preparedness; and, requested staff to
schedule a City Council Budget Sub - Committee meeting.
Council Member Vasquez reported attending Raytheon's new Public Safety Regional
Technology Center's Grand Opening on February 13, 2012 and advised they will be able to provide
plenty of opportunities for the youth in the community; announced the opening of La Barca
Restaurant; mentioned that the Kiwanis Club will be at Downey High School on February 24, 2012 to
sign -up students for the Key Club and also provide assistance in completing college applications.
Council Member Marquez reported attending Raytheon's new Public Safety Regional
Technology Center's Grand Opening February 13, 2012 and welcomed them to Downey.
Mayor Brossmer reported attending the Independent Cities Association (ICA) conference and
workshop and shared that realignment was the focus of the workshop; clarified that the Goal Setting
Retreat was at the Columbia Memorial Learning Center; attended the mixer at the Downey Federal
Credit Union; attended Vector Control's board meeting; noted he participated in Catholic Schools
Week, attending the breakfast held at St. Raymond's Catholic Church; attended the grand opening
of Chase Bank; and reminded us of the "Suited for Space" Smithsonian affiliated exhibition at the
Columbia Memorial Space Center.
PRESENTATIONS:
Mayor Brossmer presented a Proclamation in recognition of the American Heart
Association's Campaign for Awareness of Heart Disease in Women; Proclaiming February as
American Heart Month. A representative from the American Heart Association, Jessica Medina,
accepted the proclamations.
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Mayor Brossmer also proclaimed February 17, 2012 as National Wear Red Day.
PUBLIC HEARINGS: None.
NON - AGENDA PUBLIC COMMENT:
The following people spoke regarding the recent officer involved shooting:
Sister of Michael Nida
Jean Thaxton
Deborah (no last name provided)
Cliff Smith
Laura Cozantino
Lena Harris
Damien Ramirez
CONSENT ITEMS REMOVED:
9. APPROVE AGREEMENT WITH ECONOLITE TRAFFIC ENGINEERING &
MAINTENANCE, INC. FOR TRAFFIC SIGNAL, FLASHING BEACON AND VEHICLE
SPEED FEEDBACK SIGN MAINTENANCE SERVICES: Public Works. This item was pulled
by Assistant City Manager Oskoui and is listed under Other Business below.
CITY COUNCIL CONSENT CALENDAR:
Council Member Guerra announced he would be abstaining on Item No. 6 because of a
conflict of interest.
It was moved by Council Member Guerra, seconded by Mayor Pro Tem Gafin and
unanimously carried, with Council Member Guerra abstaining from Item No. 6, to approve the
remainder of the Consent Calendar items as presented.
1. APPROVED CITY COUNCIL /COMMUNITY DEVELOPMENT COMMISSION MINUTES:
Joint Adjourned and Regular Meetings of January 24, 2012; and, Special City Council
Meeting of January 28, 2012: City Clerk.
2. APPROVED WARRANTS ISSUED: Warrant Nos. 265137 — 265643; Wire Nos. 30002573
and 30002583 — 30002592 and 841 — 852; and, the Cashier Check Nos. are 4 — 5, in the
total amount of $ 4,762,667.55: Finance.
3. CASH CONTRACT NO. S.S. 664C — FIRE STATION #1 - SECURITY GATES PROJECT:
AWARDED CONTRACT TO HARRIS STEEL FENCE COMPANY, INC. IN THE AMOUNT
OF $63,000.00: Public Works.
4. CASH CONTRACT NO. S.S. 590 — PARAMOUNT BLVD. FIBER -OPTIC UPGRADES:
ACCEPTED IMPROVEMENTS AND FINAL CONTRACT AMOUNT OF $699,173.51; AND,
DIRECTED STAFF TO FILE THE NOTICE OF COMPLETION: Public Works.
5. CASH CONTRACT NO. S.S. 625 - LAKEWOOD BOULEVARD AT COLUMBIA WAY
INTERSECTION IMPROVEMENTS: ACCEPTED IMPROVEMENTS AND FINAL
CONTRACT AMOUNT OF $174,671.70; AND, DIRECTED STAFF TO FILE THE NOTICE
OF COMPLETION: Public Works.
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6. APPROVED SECURITY SERVICES AGREEMENT BEWTEEN RMI INTERNATIONAL,
INC. AND THE CITY OF DOWNEY FOR PUBLIC PARKING AREAS IN THE DOWNTOWN
AND APPROPRIATED $42,000 FROM THE CAPITAL PROJECTS FUND: Community
Development.
7. APPROVED AGREEMENT WITH THE FEDERAL EMERGENCY MANAGEMENT AGENCY
(FEMA) AND THE DEPARTMENT OF HOMELAND SECURITY (DHS) FOR THE
APPROPRIATION OF FUNDS FOR THE 2011 ASSISTANCE TO FIREFIGHTERS GRANT:
Fire Department.
8. APPROVED AGREEMENT WITH THE CALIFORNIA ENVIRONMENTAL PROTECTION
AGENCY (CAL -EPA) FOR THE APPROPRIATION OF FUNDS FOR THE CALIFORNIA
ELECTRONIC REPORTING SYSTEM (CERS) REGARDING HAZARDOUS MATERIALS:
Fire Department.
10. ADOPTED RESOLUTION NO. 12 -7321, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF DOWNEY ORDERING THE DIRECTOR OF PUBLIC WORKS TO PREPARE A
REPORT IN ACCORDANCE WITH ARTICLE 4 OF CHAPTER 1 OF THE "LANDSCAPING
AND LIGHTING ACT OF 1972 ", BEING DIVISION 15, PART 2 OF THE STREETS AND
HIGHWAYS CODE OF THE STATE OF CALIFORNIA, FOR THE MAINTENANCE,
OPERATION AND SERVICING OF STREET AND PUBLIC FACILITY LANDSCAPING,
LIGHTING, TRAFFIC SIGNALS AND APPURTENANT WORK IN THE CITY OF DOWNEY,
FOR THE FISCAL YEAR COMMENCING JULY 1, 2012 AND ENDING JUNE 30, 2013:
Public Works.
OTHER BUSINESS:
9. APPROVE AGREEMENT WITH ECONOLITE TRAFFIC ENGINEERING &
MAINTENANCE, INC. FOR TRAFFIC SIGNAL, FLASHING BEACON AND VEHICLE
SPEED FEEDBACK SIGN MAINTENANCE SERVICES: Public Works
Assistant City Manager Oskoui asked that a name change be documented. Econolite has
been going through a process of merging two sections of their company. These two sections formed
a new company by the name of Aegis ITS. Econolite is still in existence under the new name.
It was moved by Mayor Pro Tem Gafin and seconded by Council Member Guerra and
unanimously carried to approve the agreement as amended.
ADMINISTRATIVE REPORTS:
Council Member Guerra announced he has a business relationship with Downey Regional
Medical Center which is a conflict of interest and left the Council Chambers.
11. DOWNEY REGIONAL MEDICAL CENTER- HOSPITAL FINANCING AGREEMENTS:
City Attorney.
A. ADOPTED RESOLUTION NO. 12 -7322, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF DOWNEY APPROVING A DEED OF TRUST, ASSIGNMENT OF LEASES AND
RENTS, AND SECURITY INSTRUMENT TO FACILITATE THE FINANCING OF THE
DOWNEY REGIONAL MEDICAL CENTER - HOSPITAL LOCATED AT 11500
BROOKSHIRE AVENUE IN THE CITY OF DOWNEY; AND,
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B. ADOPTED RESOLUTION NO. 12 -7323, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF DOWNEY APPROVING A REIMBURSEMENT AGREEMENT BETWEEN THE
CITY OF DOWNEY AND DOWNEY REGIONAL MEDICAL CENTER TO COVER CITY'S
COSTS ASSOCIATED WITH THE FINANCING OF THE DOWNEY REGIONAL MEDICAL
CENTER - HOSPITAL LOCATED AT 11500 BROOKSHIRE AVENUE IN THE CITY OF
DOWNEY; AND,
C. ADOPTED RESOLUTION NO. 12 -7324, A RESOLUTION OF THE CITY COUNCIL OF THE
CITY OF DOWNEY APPROVING TWO COLLATERAL ACCESS AGREEMENTS TO
FACILITATE THE FINANCING OF THE DOWNEY REGIONAL MEDICAL CENTER -
HOSPITAL LOCATED AT 11500 BROOKSHIRE AVENUE IN THE CITY OF DOWNEY.
City Attorney Abich Garcia summarized the proposed agreements as follows:
This item involves three proposed agreements related to the Downey Regional Medical
Center and their reorganization plan to obtain exit financing from bankruptcy. Since the late 1960's
the City of Downey has leased the property at 11500 Brookshire Avenue for hospital use. The most
recent lease was entered into in February 1983 between the City and the Downey Regional Medical
Center and was approved by voters in July 1983. The current hospital lease had an original term of
55 years with an option to extend the term for an additional 44 years. The option was exercised in
1988; the hospital lease will now expire in February 2082. The hospital lease includes the property
itself, the building fixtures, improvements, personal property and equipment located on the property.
The Agenda items request that the City Council approve several agreements. City Attorney Abich
Garcia stated that the 1983 lease contained a specific provision where the City agreed to allow a
lender to take a security interest in the City's interest in the property and the City agreed to go as far
as subordinating its right and title on the property and do all of this so they can enable the hospital to
borrow money. The City agreed to this financing obligation. This Deed of Trust would subordinate
our interest in the hospital property in favor of their financing in order to exit bankruptcy. In 2009 the
Downey Regional Medical Center filled for Chapter 11 bankruptcy. Through the bankruptcy process,
the hospital sought financing from two lenders, Mid Cap Financial and RCB Equities, to provide the
financing necessary for the hospital to exit bankruptcy and to continue to operate. Pursuant to the
City's financing obligation under the lease, the lenders have requested that the City enter into a
Deed of Trust which would guarantee the loans to the hospital using the property as collateral.
Under the Deed of Trust it is possible that if the hospital does not meet its obligations to the lenders
the City would lose its interest in the property.
Mayor Pro Tem Gafin requested further explanation by the City Attorney on the 1983 voter
approved lease that stated should the hospital wish to exercise what they are trying to exercise, the
City has to go along with it. The loss to the City would be the Toss of the ground that the property is
on. Mayor Pro Tem Gafin confirmed that due to voter action 29 years ago, the City has no option but
to approve the agreements mitigated by City Attorney Abich Garcia.
City Attorney Abich Garcia answered in the affirmative.
Mayor Brossmer invited Mr. Fuller of the Downey Regional Medical Center forward to answer
questions from the City Council.
Council Member Vasquez inquired as to how the hospital got in this position.
Mr. Fuller advised that in the 1990's the Downey Regional Medical Center pursued a
business model that fell apart in 1998. In 2001, the Hospital tried putting it back together but it did
not have the infrastructure to put the business model Capitation Program back together. The
hospital filled for Chapter 11 bankruptcy in September of 2009.
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Council Member Marquez mentioned that the property needs to be kept as a medical
facility /hospital and asked what safeguards are in place in order to make it a success and provide
excellent health care.
Mr. Fuller explained that they need to continue to provide excellent health care and also
upgrade their I.T. unit in order to track the finances. He further explained that the City, hospital staff,
and lenders are committed to making sure the hospital is financially successful.
Mayor Pro Tem Gafin commented that he is concerned about losing the property due to
mismanagement. He stated that regardless of the owner of the property, it needs to remain a
hospital.
Mayor Brossmer asked how long has the new business model been in place.
Mr. Fuller explained that the new Fee Based Model has been in place for three years. The
Model is successful but business is low. It has been impacted by the recession. He stated to date
the hospital has broken even.
Council Member Marquez asked about staffing levels.
Mr. Fuller explained that all doctors are independently employed, other than the 29 residents.
Nursing staff is always100% staffed. The back office /billing /collections have been outsourced.
Mayor Brossmer opened up this item for Public Comment.
Henry Veneracion, Downey Patriot, asked how much was owed in loans.
Mr. Fuller stated that there was a total amount of $57 million in loans.
Harold Tseklenis, resident, asked if there were any provisions in the lease that the hospital
be required to remain a non - profit entity.
City Attorney Abich Garcia stated that such a provision is not in the Deed of Trust. There is
language in the lease that states it must remain a non - profit entity.
City Manager Livas mentioned that we are a member of the Independent Cities Association,
who is financing the loan to Downey Regional Medical Center, and asked Finance Director Michicoff
to advise if there was a conflict of interest.
Finance Director Michicoff explained that we are a paid member of the Independent City
Association but foresees no conflict at this time.
Michael McCormick President of Independent Cities Association explained that the City had
no financial liability exposure or conflict of interest.
Mayor Pro Tem Gafin clarified that with the existing 1983 voter approved lease, as long as
that lease is in affect it has to be a non - profit hospital. Should it go into foreclosure the lease is void,
therefore, the voter approved initiative requiring it to remain a non - profit organization would be
tossed out. There is a stipulation that it has to be at least 50% a hospital facility in one form or
another, but we can not mandate that it be non - profit.
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Mr. Fuller explained that there was an additional protection to keep a non - profit status. The
bonds, both old and new are tax free. The old bonds are triple tax free (Federal /State) and the new
bonds are tax free State and Local. In order to maintain the tax free nature of the bonds the
investors would have to insure that a non - profit hospital continue to operate or else there would be
extreme tax consequences.
A. RESOLUTION NO. 12 -7322, A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF DOWNEY APPROVING A DEED OF TRUST, ASSIGNMENT OF LEASES AND
RENTS, AND SECURITY INSTRUMENT TO FACILITATE THE FINANCING OF THE
DOWNEY REGIONAL MEDICAL CENTER - HOSPITAL LOCATED AT 11500
BROOKSHIRE AVENUE IN THE CITY OF DOWNEY. It was moved by Mayor Pro Tem
Gafin, seconded by Council Member Vasquez, motion carried 4 -0, with Council Member
Guerra abstaining, to adopt the resolution.
B. RESOLUTION NO. 12 -7323, A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF DOWNEY APPROVING A REIMBURSEMENT AGREEMENT BETWEEN THE CITY
OF DOWNEY AND DOWNEY REGIONAL MEDICAL CENTER TO COVER CITY'S
COSTS ASSOCIATED WITH THE FINANCING OF THE DOWNEY REGIONAL
MEDICAL CENTER - HOSPITAL LOCATED AT 11500 BROOKSHIRE AVENUE IN THE
CITY OF DOWNEY. It was moved by Mayor Pro Tem Gafin, seconded by Council
Member Vasquez, motion carried 4 -0, with Council Member Guerra abstaining, to adopt
the resolution.
C. RESOLUTION NO. 12 -7324, A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF DOWNEY APPROVING TWO COLLATERAL ACCESS AGREEMENTS TO
FACILITATE THE FINANCING OF THE DOWNEY REGIONAL MEDICAL CENTER -
HOSPITAL LOCATED AT 11500 BROOKSHIRE AVENUE IN THE CITY OF DOWNEY.
It was moved by Mayor Pro Tem Gafin, seconded by Council Member Vasquez, motion
carried 4 -0, with Council Member Guerra abstaining, to adopt the resolution as amended.
STAFF MEMBER COMMENTS:
City Manger Livas thanked City Attorney Abich Garcia for her work on the hospital
agreements and also thanked Jeff Melching from Rutan and Tucker for his assistance.
The meeting recessed to Closed Session at 9:06 p.m. and reconvened at 9:35 p.m. with all
Council Members present.
The meeting adjourned at 9:35 p.m. to February 28, 2012, in memory of Homer Ellison, City
of Downey retiree and father of Shane Ellison, Public Works Facility Maintenance Division; and,
Dhani Patel, long -time Downey resident.
7- 70„,
ADRIA M. JIM NEZ,, CMC
City Clerk
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RME BROSSMER, Mayor