MINUTES OF THE CITY COUNCIL

SAN JOSÉ, CALIFORNIA

TUESDAY, JUNE 29, 1999

The Council of the City of San Jose convened in Adjourned Regular Session at 2:12 p.m., for a joint meeting with the Redevelopment Agency, Council Chambers at City Hall.

Present: Council Members: Chavez, Dando, Diaz, Diquisto, Fiscalini, LeZotte, Powers, Shirakawa, Jr., Woody; Gonzales

Absent: Council Members: Matthews.

ORDERS OF THE DAY

Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, the Orders of the Day and the Amended Agenda, deferring Item 8g(1)-(4) to August 24, 1999, were approved. Vote 10-0-1-0. Absent: Matthews.

BUDGET ITEMS

5c Adoption of resolutions:

(1) By the City Council making certain determinations regarding the expenditure of Agency funds on public improvements.

(2) By the Agency Board making certain determinations regarding the expenditure of Agency funds to eradicate graffiti.

Documents Filed: Memorandum from Executive Director, Frank M. Taylor, dated

June 22, 1999, outlining certain public improvements contained in the Proposed FY 1999-2000 Capital Budget, and recommending the Redevelopment Agency Board and the City Council adopt said resolutions.

Discussion/Action: Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, Resolution No. 68971, entitled: “Resolution of the Council of the City of San José Making Certain Determinations Consistent With Health and Safety Code Section 33445 Regarding the Payment of Certain Costs by the Redevelopment Agency for Public Improvements in the Agency’s FY 1999-2000 Capital Budget”; and Redevelopment Agency Board Resolution No. 4731 making certain determinations regarding the expenditure of Agency funds to eradicate graffiti were adopted. Vote 10-0-1-0. Absent: Matthews.

5d Adoption of resolutions by the City Council and Agency Board authorizing the City Manager and Executive Director to negotiate and execute the 1999-2000 Cooperation Agreements between the City and the Agency for the Merged Area Redevelopment Project for Capital Improvements and the Agreement regarding Operating Expenses.

Documents Filed: Memorandum from Acting City Manager Debra J. Figone, and Executive Director Frank M. Taylor, dated June 25, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions.

Discussion/Action: Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, Resolution No. 68972, entitled: “Resolution of the Council of the City of San José Approving the 1999-2000 Cooperation Agreement Regarding Merged Area Redevelopment Project Capital Improvements and the 1999-2000 Cooperation Agreement Regarding Operating Expenses Between the Redevelopment Agency of the City of San José and the City of San José”; and Redevelopment Agency Board Resolution No. 4732 regarding Merged Area Redevelopment Project for Capital Improvements and operating expenses, were adopted. Vote 10-0-1-0. Absent: Matthews.

RECESS/RECONVENE

The City Council recessed at 2:15 p.m. and reconvened at 2:55 p.m. to consider Items 8a-8k in joint session with the Redevelopment Agency, in Council Chambers, City Hall.

Present: Council Members: Chavez, Dando, Diaz, Diquisto, Fiscalini, LeZotte, Matthews, Powers, Shirakawa, Jr., Woody; Gonzales

Absent: Council Members: None.

8a Adoption of resolutions by the City Council and Agency Board:

(1) Authorizing the Executive Director to negotiate and execute an Owner Participation Agreement with Green Valley Corporation, the property owner, to provide for rehabilitation of the historic Hewlett Hayes Martin Building located at 90 South Second Street, providing Agency assistance in an amount not to exceed $1,552,000; and,

(2) Authorizing the Executive Director to negotiate and execute a ten year lease agreement with Green Valley Corporation for the rehabilitated Hewlett Hayes Martin Building for a total net cost to the Agency not to exceed $1,133,000; and,

(3) Authorizing the Executive Director to negotiate a sublease and operating agreement with the San Jose Museum of Quilts and Textiles and, after conducting a Public Hearing as required pursuant to Health and Safety Code Section 33431 and taking into consideration any public comments, execute the sublease and operating agreement with the Museum of Quilts and Textiles for the premises; and,

(4) Making certain determinations regarding the construction of certain public improvements.

CEQA: Resolution No. 68839.

Documents Filed: None.

Discussion/Action: This item was deferred to September 14, 1999.

Council Member Shirakawa, Jr., left Council Chambers at this point in the meeting.

8b Approval by the City Council of the Relocation and Last Resort Housing Plan for the proposed Symphony Hall project, and direction to staff to implement the recommendations of the Last Resort Housing Committee concerning displaced residents. CEQA: Resolution No. 68905.

Documents Filed: Memorandum from Executive Director, Frank M. Taylor, dated June 16, 1999, recommending the City Council adopt a resolution approving the Symphony Hall Relocation and Last Resort Housing Plan and approving the recommendations of the Last Resort Housing Committee and directing Staff to implement same.

Discussion/Action: William J. Garbett spoke against the proposed action. Given the cost implications, Council Member Chavez requested that Staff report back to Council within 60 days on the increased costs associated with previous relocation assistance benefits. Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, the Relocation and Last Resort Housing Plan for the Symphony Hall project was approved with direction to Staff to implement the Committee recommendations concerning displaced residents. Vote 10-0-1-0. Absent: Shirakawa, Jr.

8c Adoption of resolutions by the City Council and Agency Board:

(1) Authorizing the Executive Director to negotiate and execute a lease agreement for 5½ years with California Bank & Trust for 16,000+ square feet at 84 West Santa Clara Street for the purpose of housing a Business Development Center; and a Memorandum Of Understanding between the Agency and the Small Business Administration (SBA) about formation of the Business Development Center; and making certain findings; and,

(2) Authorizing the Executive Director to negotiate and execute a sublease with the operator of the Business Development Center, providing for Agency assistance in paying rent under the sublease in an amount not to exceed $1,350,000, representing one half of the rent for a period of five and one half years, after conducting a Public Hearing as required pursuant to Health and Safety Code Section 33431 and taking into consideration any public comments.

Documents Filed: Memorandum from Executive Director, Frank M. Taylor, dated June 23, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions.

Discussion/Action: Mayor Gonzales referenced portions of a letter of endorsement from Congresswoman Zoe Lofgren. Representing Cisco Systems, Richard Styrenko spoke in support of the proposal. William J. Garbett spoke against the proposed action. Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, Resolution No. 68973, entitled: “Resolution of the Council of the City of San José Authorizing the Executive Director of the Redevelopment Agency of the City of San José to Negotiate and Execute a Lease Agreement for 5½ Years With California Bank & Trust for 16,000 + Square Feet at 84 West Santa Clara Street for the Purpose of Housing a Business Development Center and a Memorandum of Understanding Between the Agency and the Small Business Administration (SBA) About Formation of the Business Development Center; and Making Certain Findings; and Authorizing the Executive Director to Negotiate and Execute a Sublease With the Operator of the Business Development Center, Providing for Agency Assistance in Paying Rent Under the Sublease in an Amount Not to Exceed $1,350,000, Representing One-Half of the Rent for a Period of 5½ Years, After Conducting a Public Hearing as Required Pursuant to Health and Safety Code Section 33431 and Taking Into Consideration Any Public Comments”; and Redevelopment Agency Board Resolution No. 4775 regarding the lease agreements with California Bank & Trust, were adopted. Vote 10-0-1-0. Absent: Shirakawa, Jr.

8d Public Hearing and adoption of resolutions by the City Council and Agency Board:

(1) Authorizing the Executive Director to negotiate a lease with Matthew Hardin and Steve Hardin, dba Hawgs Seafood Restaurant, for 5,070 square feet of Agency-owned retail space, located between South Second and South Third Streets, adjacent to the San Jose Repertory Theatre, with Agency funding in an amount not to exceed $660,000 for a construction allowance for shell and tenant improvements and a real estate broker commission; and,

(2) Authorizing the Executive Director to, after conducting a Public Hearing as required by Health and Safety Code Section 33431 and taking into consideration any public comments, execute the lease agreement; and,

(3) Approving funding to correct incomplete and defective work in the retail space, in an amount not to exceed $50,000; and,

(4) Making certain determinations regarding the construction of certain public improvements.

CEQA: Resolution No. 68839.

Documents Filed: Memorandum from Executive Director, Frank M. Taylor, dated June 16, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions.

Discussion/Action: Mayor Gonzales opened the public hearing to consider the lease provisions involving the retail space on the north side of the Repertory Theater. There was no discussion from the Floor. Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, the public hearing was closed and Resolution No. 68974, entitled: “Resolution of the Council of the City of San José Authorizing the Executive Director of the Redevelopment Agency of the City of San José to Negotiate a Lease With Matthew Hardin and Steve Hardin, DBA Hawgs Seafood Restaurant, for 5,070 Square Feet of Agency-Owned Retail Space, Located Between South Second and South Third Streets, Adjacent to the San José Repertory Theatre, With Agency Funding in an Amount Not to Exceed $660,000 for a Construction Allowance for Shell and Tenant Improvements and a Real Estate Broker Commission; Authorizing the Executive Director to, After Conducting a Public Hearing as Required by Health and Safety Code Section 33431 and Taking Into Consideration Any Public Comments, Execute the Lease Agreement; Approving Funding to Correct Incomplete and Defective Work in the Retail Space in an Amount Not to Exceed $50,000; and Making Certain Determinations Regarding the Construction of Certain Public Improvements”; and Redevelopment Agency Board Resolution No. 4776 regarding the lease agreement between the Redevelopment Agency and Matthew Hardin and Steve Hardin, DBA Hawgs Seafood Restaurant, were adopted. Vote: 10-0-1-0. Absent: Shirakawa, Jr.

8e Public Hearing and adoption of resolutions by the City Council and Agency Board:

(1) Accepting the summary of costs and the findings of the Summary Report and the Estimated Reuse Valuation pursuant to California Health and Safety Code 33433, for an approximately 300,000 square foot office tower including ground floor retail and underground parking garage to be located on the northern portion of the block bounded by East San Fernando, South First, South Second Streets, and Paseo de San Antonio and making certain other findings; and,

(2) Approving the Disposition and Development Agreement (DDA) with Kimball Small Properties, Inc, for the Project, and authorizing the Executive Director to negotiate and execute all related documents; and,

(3) Approving the schematic design for the Project as recommended by the Urban Design Review Board.

CEQA: Resolution No. 68839.

Documents Filed: (1) Memorandum from Executive Director, Frank M. Taylor, dated June 23, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions. (2) Notice of Joint Public Hearing by the Council of the City of San José and the Board of Directors of the Redevelopment Agency of the City of San José on the development of property in the San Antonio Plaza Redevelopment Project Area, and Proof of Publication dated June 15, 1999, submitted by Administrative Officer, Gary Miskimon, Redevelopment Agency.

Discussion/Action: Mayor Gonzales opened the public hearing on the terms and conditions of an agreement between the Redevelopment Agency and Kimball Small Properties’ to develop the subject property. Representing AboveNet Communications, Inc., Stephen Bellamy spoke in support of the proposed lease agreement. Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, the public hearing was closed, and Resolution No. 68975 entitled: “Resolution of the Council of the City of San José Accepting the Summary of Costs and the Findings of the Summary Report and the Estimated Reuse Valuation Pursuant to California Health and Safety Code Section 33433, for an Approximately 300,000 Square Foot Office Tower Including Ground Floor Retail and Underground Parking Garage to be Located on the Northern Portion of the Block Bounded by East San Fernando, South First, South Second Streets, and Paseo De San Antonio and Making Certain Findings; Approving the Disposition and Development Agreement With Kimball Small Properties for the Project, and authorizing the Executive Director to Negotiate and Execute All related Documents; and Approving the Schematic Design for the Project as Recommended by the Urban Design Review Board”; and Redevelopment Agency Board Resolution No. 4777 accepting the reports and approving the DDA and schematic design for the Block 2 development, with authorization granted to negotiate and execute all related documents, were adopted. Vote: 10-0-1-0. Absent: Shirakawa, Jr.

8f Public Hearing and adoption of resolutions by the City Council and Agency Board:

(1) Accepting the summary of costs and the findings of the revised Summary Report and the reuse value and findings of the revised Reuse Appraisal pursuant to California Health and Safety Code 33433, for an amendment to the Fairmont Hotel Annex Project in the San Antonio Plaza Redevelopment Area, located south of the Paseo de San Antonio between South First Street and Market Street; and,

(2) Approving the Second Amendment to the Disposition and Development Agreement (DDA) between the Agency and Light Tower Associates, L.P. (Developer) for the Project, providing that the Montgomery Hotel shall be moved from the Site, the new garage shall not be built, certain related changes shall be made, and increasing Agency assistance by $4,400,000, for a total Agency assistance of $18,713,000; and,

(3) Authorizing the Executive Director to negotiate and execute all related documents.

CEQA: Resolution No. 68096.

Documents Filed: (1) Supplemental memorandum from City Attorney, Joan R. Gallo, dated June 28, 1999, transmitting the Council Policy on Preservation of Historic Landmarks which sets forth the process to be completed before Council/Board approves the “demolition or alteration” of a building eligible for historic status. (2) Memorandum from Executive Director, Frank M. Taylor, dated June 23, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions.

Discussion/Action: Mayor Gonzales opened the public hearing on the summary of costs and the findings of the revised Summary Report for an amendment to the Fairmont Hotel Annex Project located in the San Antonio Plaza Redevelopment Area. There was no discussion from the Floor. Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, the public hearing was closed and Resolution No. 68976 entitled: “Resolution of the Council of the City of San José Accepting the Summary of Costs and the Findings of the Revised Summary Report and the Reuse Value and Findings of the Revised Reuse Appraisal Pursuant to California Health and Safety Code Section 33433, for an Amendment to the Fairmont Hotel Annex Project in the San Antonio Plaza Redevelopment Area, Located South of the Paseo De San Antonio Between South First Street and Market Street; Approving the Second Amendment to the Disposition and Development Agreement Between the Agency and Light Tower Associates, L.O. for the Project, Providing That The Montgomery Hotel Shall be Moved From the Site, the New Garage Shall Not be Built, Certain Related Changes Shall Be Made, and Increasing Agency Assistance by $4,400,000, for a Total Agency Assistance of $18,713,000; and Authorizing the Executive Director to Negotiate and Execute All Related Documents”; and Redevelopment Agency Board Resolution No. 4778 regarding the Summary Report, the second amendment to the DDA between the Redevelopment Agency and Light Tower Associates, L.C., Developer, and execution of related documents, were adopted. Absent: Shirakawa, Jr.

8g Adoption of resolutions by the City Council and Agency Board:

(1) Accepting the summary of costs and findings of the revised Summary Report and Reuse Value pursuant to the California Health and Safety Code 33433 for the 17,000 square foot retail/office rehabilitation project located at 35 – 49 East Santa Clara Street; and,

(2) Approving the Termination and Settlement Agreement relating to the Disposition and Development Agreement dated January 6, 1998, including the related Ground Lease and Purchase Agreement, between the Agency and Dr. James Kim-Tzong Eu and Ling Yu Eu regarding the acquisition, lease and rehabilitation of the property; and,

(2) Approving the Owner Participation and Loan Agreement with Dr. James Kim-Tzong Eu and Ling Yu Eu, providing for Agency assistance in an amount up to $808,000; a loan of funds borrowed by the Agency from the U.S. Department of Housing and Urban Development in the principal amount of $1,350,000 with interest subsidized by the Agency; and an Economic Development Initiative Grant of $200,000 for rehabilitation of the property; and,

(4) Authorizing the Executive Director to execute other related documents and approve minor and technical changes to those documents.

CEQA: Resolution No. 68839.

Documents Filed: None.

Discussion/Action: This item was deferred August 24, 1999.

8h Adoption of resolutions by the City Council and Agency Board authorizing the Executive Director to negotiate and execute an agreement, in an amount not to exceed $300,000, with the lowest responsive bidder for purchase and installation of a permanent metal boundary fence for the Washington Elementary School, and making certain findings. CEQA: Resolution No. 65657.

Documents Filed: None.

Discussion/Action: This item was deferred to August 24, 1999.

8i Adoption of resolutions by the City Council and Agency Board approving the Amended and Restated Owner Participation Agreement between the Redevelopment Agency and Electroglas, Inc. to fund public improvements to facilitate a phased development of a 403,000 square foot research and development office and manufacturing facility located at Silver Creek Valley Road and Piercy Road in the Edenvale Redevelopment Project Area, for a total amount of Agency assistance not to exceed $3,300,000, and making certain findings. CEQA: Resolution No. 67245.

Documents Filed: Memorandum from Executive Director, Frank M. Taylor, dated

June 16, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions.

Discussion/Action: Upon motion by Vice Mayor Fiscalini, seconded by Council Member Matthews and unanimously carried, Resolution No. 68977, entitled: “Resolution of the Council of the City of San José Approving the Amended and Restated Owner Participation Agreement Between the Redevelopment Agency of the City of San José and Electroglas, Inc., to Fund Public Improvements to Facilitate a Phased Development of a 403,000 Square Foot Research and Development Office and Manufacturing Facility Located at Silver Creek Valley Road and Piercy Road in the Edenvale Redevelopment Project Area, for a Total Amount of Agency Assistance Not to Exceed $3,300,000, and Making Certain Findings”; and Resolution No. 4779 regarding the owner participation agreement and related actions, were adopted. Vote: 10-0-1-0. Absent: Shirakawa, Jr.

Council Member Shirakawa, Jr. returned to the meeting at 3:11 p.m.

8j Adoption of resolutions by the City Council and Agency Board:

(a) Approving Business Terms with San Jose Investors II, LLC for the development of a Convention Center Hotel of up to 25 stories on the southwest corner of San Carlos and Market Streets, authorize the Executive Director to negotiate a Disposition and Development Agreement and Ground Lease.

(b) Authorizing the City Manager to negotiate an agreement to transfer contiguous City land to the Agency and to negotiate reciprocal easement and parking agreements for hotel parking under the Convention Center and for other use and public access covenants.

CEQA: Resolution No. 68839.

Documents Filed: (1) Supplemental memorandum from Executive Director, Frank M. Taylor, dated June 28, 1999, attaching revised language pertaining to actions for the development of a convention center hotel. (2) Memorandum from Executive Director, Frank M. Taylor, dated June 18, 1999, recommending the Redevelopment Agency Board and the City Council adopt said resolutions. (3) Notice of Joint Public Hearing by the City Council of the City of San José and the Board of Directors of the Redevelopment Agency of the City of San José on the development and ground lease of property adjacent to the Convention Center in Guadalupe-Auzerais Redevelopment Project Area, and Proof of Publication dated June 8, 1999, submitted by the Administrative Officer, Redevelopment Agency.

Discussion/Action: Upon motion by Vice Mayor Fiscalini, seconded by Council Member Powers and unanimously carried, Resolution No. 68978, entitled: “Resolution of the Council of the City of San José Authorizing the City Manager to Negotiate an Agreement to Transfer Contiguous City Land to the Redevelopment Agency of the City of San José and to Negotiate Reciprocal Easement and Parking Agreements With San José Investors II, LLC for Hotel Parking Under the Convention Center and For Other Use and Public Access Covenants”; and Resolution No. 4780 regarding the Convention Center Hotel, were adopted. Vote: 11-0-0-0.

8k Adoption of resolutions by the City Council and Agency Board authorizing the Executive Director to award a construction contract to the lowest responsive bidder, in an amount not to exceed $1,400,000, for site remediation and construction of a temporary parking lot at the former Center for Employment Training Development Corporation properties located at 425 South Market Street, 78, 86, 96, 104 Viola Street, and 107, 119, 127, 137, 139 Balbach Street, and establishing a construction contingency of $140,000, and making certain determinations.

Documents Filed: None.

Discussion/Action: This item was deferred September 14, 1999.

ADJOURNMENT

The Council of the City of San José adjourned at 3:15 p.m.

RON GONZALES, MAYOR

ATTEST:

PATRICIA L. O’HEARN, CITY CLERK