By Anna Bitong, Thousand Oaks Acorn -
The City of Thousand Oaks has roundly rejected a recommendation by the Ventura County civil grand jury that it sell its property near the Civic Arts Plaza to help pay off debt owed by its former redevelopment agency, saying that such a sale would be illegal.
The recommendation was included in a June report by the 19-person grand jury, which looked at the history of the nowdefunct RDA and its land dealings on Thousand Oaks Boulevard.
In it, the grand jury, which serves as an ombudsman over the county, encourages the city to sell the 7.5-acre site at 2200 E. Thousand Oaks Blvd. known as The Lakes, and nearly 3 acres of industrial-zoned land west of City Hall known as the Westside Property to pay back more than $200 million in RDA debt. The city is continuing its efforts to retain property assets formerly controlled by the RDA, including The Lakes site.
“What the grand jury is recommending can’t be done under the law,” Assistant City Attorney Chris Norman said at the Sept. 10 City Council meeting. “Under the RDA law, the city cannot use any proceeds gained from the sale of (RDA properties). Proceeds would have to be remitted to taxing entities (the county and the state).”
In short, Norman said, the city cannot benefit financially from the sale of the property, which the former RDA acquired using local tax dollars in 1991.
Rachel Wagner, city spokesperson, said The Lakes property was part of a larger parcel when it was acquired. The prorated cost for the 7.5-acre site was nearly $6.7 million.
“Only 6 percent of the proceeds would go to the city of Thousand Oaks,” Councilmember Al Adam said Sept. 10. “The rest would go to the so-called taxing entities. . . . Ultimately I am confident that the ownership of that property will revert to the City of Thousand Oaks and to you, the taxpayers.”
To that end, a paid consultant has been collaborating with city staff to draft a long-range plan for the management of former RDA assets, the city attorney said. The plan will be reviewed by the city’s finance department and a local oversight board formed to wind down the RDA’s financial obligations before going to a public hearing for final approval.
“It is premature to comment on the best way to dispose of assets,” said Norman of the former RDA, which in 2010-11 had an assessed value of $2.1 billion.
City responds
The grand jury’s investigation into the former RDA was initiated by a public complaint. The resulting report, which includes 27 “facts” and 12 “findings,” criticized the lease agreement between the city and Caruso Affiliated, which developed The Lakes, as a failed partnership that didn’t benefit either side.
In 2004, developer Rick Caruso signed a 55-year lease, with options to extend for four additional 10-year periods, to develop and manage the former Jungleland property east of the Civic Arts Plaza. The agreement allows Caruso to lease the property for free in years the center does not earn at least 12 percent of the $17.6 million he invested in The Lakes.
The City Council signed the deal after Caruso agreed to reduce the size of the project and provide amenities on the property, including a 2.5-acre public park and an ice skating rink. The park cost $2 million to build and requires $75,000 a year to maintain.
Since opening in 2005, the center has not been able to reach the 12 percent threshold.
According to the city, “The negotiated threshold of return on the lease is a cumulative 12 percent, (which) was in line with the typical rate of return used in development agreements statewide in 2006.”
But Mayor Claudia Bill-de la Peña, a longtime critic of The Lakes deal, said 12 percent was not the market rate.
“At the time that was still considered a high return,” she said.
“The grand jury is factually correct. There is nothing to disagree with because the threshold still has not been met in 10 years,” she said, adding, “Overall, it was a well-put-together response to the grand jury.”
In its response, the city also takes issue with the jury finding that the sales tax the city received from The Lakes dipped from about $267,000 in 2006 to $156,000 in 2012, saying that the decline was a result of the economy, not the shopping center’s shortcomings.
“Most businesses in Thousand Oaks reported declines from 2006 to 2012. The Lakes was not unique,” its response said.
Norman also noted that the grand jury report contained some factual errors—for example, the jury erroneously reported the size of the Westside Property.
And the grand jury said that the RDA used eminent domain authority to acquire the property where The Lakes and the Civic Arts Plaza and City Hall are located, contrary to city documents that state eminent domain was not used.
The city responded that “the use of eminent domain for redevelopment purposes occurred in one instance over 20 years ago to acquire a single parcel.”
The full city response to the grand jury report can be found on the Sept. 10 City Council agenda consent calendar, item 7C, on the city website, www.toaks.org.
The grand jury report can be found at www.ventura.org/grandjury under annual reports for FY 2012-13.
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