Reso 2011-053 Attachment - Laserfiche WebLink

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City of San Leandro Notes to Basic Financial Statements For the year ended June 30, 2010 NOTE 12 — POLLUTION REMEDIATION OBLIGATION In 2009, the City conducted an evaluation of the treatment process at the Water Pollution Control Plant (WPCP). The evaluation identified capacity deficiencies in various processes that, if left unmitigated, would eventually result in an unacceptable level of service to the City's customers. Furthermore, the possibility that the WPCP could fail to meet future discharge requirements opens up the potential for significant fines and other Federal and State regulatory actions against the City, as well as increased environmental damages to the San Francisco Bay ecosystem. In August 2009, the city purchased properties for the WPCP expansion project. State regulations require the city to notify the State Environmental Protection Agency of the results of the site assessment and the transfer of ownership of the property to the City. The City was aware that the properties will require cleanup action and contracted with a licensed waste hauling contractor to remove, clear, grade, excavate, segregate hazardous and non -hazardous materials and dispose of soil and debris at a state -approved disposal facility. The City's WPCP expected outlay is approximately $790,000 (per bid for the remediation work) and the liability was recorded in the WPCP enterprise fund statement. Separately, as part of a road expansion project, the City acquired a Quality Tune up Facility (an automobile service and smog inspection facility) . State regulations require the City to notify the State Environmental Protection Agency of the results of the site assessment and the transfer of ownership of the property to the city. The City is aware of the pollution underground on the property. The City presumed that pollution is present and paid a lower price for the property than it would have without pollution risks and, as part of the sale agreement, assumed all remediation ' obligations. The city hired Geotechnical and environmental consultants and estimated the current incremental cleanup outlay would be approximately $235,000. These expenditures are expected to begin sometime in 2011; a liability for the cleanup has been recorded in the government -wide statement of Net Assets. This estimate could increase as more information becomes available. NOTE 13 - COADUTMENTS AND CONTINGENCIES A. Downtown Plaza Shopping Center MOREA An agreement was entered into between San Leandro Plaza Associates, Plaza Partners, and the San Leandro Redevelopment Agency (Agency) for the maintenance and operation of the public parking and common area of the shopping center. The Agency's share of the costs associated with the Maintenance, Operation and Reciprocal Easement Agreement (MOREA) is 22.2%. The Agency's share for 2009-10 was approximately $37,000. B. Century Theaters Reimbursement and Performance Agreement The agreement requires the Agency to guarantee the ground lease by M&J Wilkow (or its successors and assigns) for property adjacent to the Bayfair Mall as part of the development of the Century Theatres complex. The obligation only occurs in the event of a default by the mall ownership. The amount of the obligation is subject to change over time as provided in the lease. C. Alameda at San Leandro Crossing Financing The Alameda at San Leandro Crossings, a 100-unit affordable rental housing project which will be developed by the nonprofit BRIDGE Housing Corporation, is part of the proposed 300 unit Phase I development in San Leandro Crossings. Westlake Development Partners LLC will develop the remainder of Phase 1. The City Redevelopment Agency approved a development loan of $9.1 million in Set -Aside Funds in April 2009. Due to unforeseen factors beyond the developers' control, the Alameda was delayed in April 2010. The RDA will be assisting in financing $6.9 million (of the $9.1 million loan) through the future issuance of tax allocation bonds. The RDA designated the remaining $1.2 million for eligible pre -development costs for BRIDGE. As of Fall 2009, the estimated TAB loan term was expected to be 15 years with interest rate for taxable bonds to be approximately 7.7% to 8%. The RDA will be able to reimburse itself from the proceeds of future TAB financing for expenditures made in advance of the issuance of the financing. 76