HomeMy WebLinkAbout11-40 - Approving an Agreement to Transfer Tax Increment between City and the AgencyRESOLUTION NO. 11-40
A RESOLUTION OF THE CITY COUNCIL OF THE CITY
OF COSTA MESA ACCEPTING TRANSMITTAL OF THE
AGENCY'S INITIAL RECOGNIZED OBLIGATION
PAYMENT SCHEDULE; APPROVING AN AGREEMENT
TO TRANSFER TAX INCREMENT BETWEEN THE CITY
AND THE AGENCY; AND, MAKING CERTAIN FINDINGS
IN CONNECTION THEREWITH
WHEREAS, the Costa Mesa Redevelopment Agency, City of Costa Mesa,
California ("Agency") is organized and existing pursuant to the California Community
Redevelopment Law (Health and Safety Code § 33000, et seq. ("CRL") and is
responsible for the administration of redevelopment activities within the City of Costa
Mesa; and
WHEREAS, the City adopted the Redevelopment Plan ("Redevelopment Plan")
for the Costa Mesa Downtown Project ("Project Area") that was originally adopted by
the City Council by Ordinance No. 73-74 on December 24, 1973, and thereafter
amended by Ordinance No. 77-27 on July 5, 1977, Ordinance No. 80-22 on November
18, 1980, Ordinance No. 86-24 on December 15, 1986, Ordinance No. 94 15 on
November 7, 1994, Ordinance Nos. 03-12 and 03-13 on November 7, 2003, and
Ordinance No. 07-13 on June 19, 2007; and
WHEREAS, the City and Agency are responsible for implementation of the
Redevelopment Plan for the Project Area, and the Redevelopment Plan sets forth a
plan for redevelopment of the Project Area consistent with the policies and standards of
the General Plan of the City; and
WHEREAS, since adoption of the Redevelopment Plan, the Agency has
undertaken redevelopment projects in the Project Area to eliminate blight, to improve
public facilities and infrastructure, to renovate and construct affordable housing, and to
enter into partnerships with private industries to create jobs and expand the local
economy; and
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WHEREAS, continued redevelopment of the Project Area to eliminate blight,
improve public facilities and infrastructure, provide affordable housing, and enter into
public and private partnerships to improve the community, create jobs, and expand the
local economy is vital to the health, safety and welfare of the City; and
WHEREAS, AB X1 26 and AB X1 27 are trailer bills to the 2011-12 budget bills
and were approved by both houses of the Legislature on June 15, 2011, signed by the
Governor on June 28, 2011, and chaptered on June 29, 2011 (together, "2011
Redevelopment Legislation"); and
WHEREAS, Parts 1.8, 1.85 and 1.9 of Division 24 of the Health and Safety Code
were added to the CRL by the 2011 Redevelopment Legislation and such measures
purported to become effective immediately; and
WHEREAS, Part 1.8 of the CRL ("Part 1.8") provides for the restriction of
activities and authority of the Agency in the interim period prior to dissolution to certain
"enforceable obligations" and to actions required for the general winding up of affairs,
preservation of assets, and certain other goals delineated in Part 1.8; and
WHEREAS, Part 1.85 of the CRL ("Part 1.85") provides for the statewide
dissolution of all redevelopment agencies, including the Agency, as of October 1, 2011,
and provides that, thereafter, a successor agency will administer the enforceable
obligations of the Agency and otherwise wind up the Agency's affairs, all subject to the
review and approval by an oversight committee; and
WHEREAS, Part 1.9 of the CRL ("Part 1.9") provides that a redevelopment
agency may continue in operation if a city or county that includes a redevelopment
agency adopts an ordinance agreeing to comply with and participate in the Voluntary
Alternative Redevelopment Program established in Part 1.9 ("Program"); and
WHEREAS, the City is aware that the 2011 Redevelopment Legislation is the
subject of judicial challenge(s), including the action: California Redevelopment
Association, et al v. Ana Matosantos, et al ("CRA Action"); and
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WHEREAS, the Supreme Court accepted original jurisdiction of the CRA Action
on August 11, 2011, notified the parties of the briefing schedule, and, importantly,
issued a stay order affecting Part 1.85 and Part 1.9, but the court did not stay Sections
34161 to 34167 of Part 1.8, then on August 17, 2011, the Supreme Court modified its
stay order, which released the stay on Sections 34167.5 to 34169.5 of Part 1.8 and on
Section 34194(b)(2) of Part 1.9, making those laws now effective ("Supreme Court
Stay"); and
WHEREAS, Section 34169(h) of the CRL, which was added to the CRL by AB
1X 26 and is set forth in Part 1.8 of the CRL, requires the Agency to prepare an Initial
Recognized Obligation Payment Schedule, no later than September 30, 2011, and
provide it to the successor agency, if a successor agency is established pursuant to
Part 1.85 (commencing with Section 34170); and
WHEREAS, while Part 1.85 (which provides for the dissolution of redevelopment
agencies and the creation of successor agencies) and Part 1.9 (which authorizes the
City to opt into the Program) are both stayed by order of the California Supreme Court,
Part 1.8, specifically including Section 34169, of the CRL, currently remains in full force
and effect; and
WHEREAS, the City has made an election to become the successor agency in
the event the Agency is dissolved; and
WHEREAS, the Agency by resolution has adopted an Initial Recognized
Obligation Payment Schedule ("IROPS") and has directed the Executive Director to
transmit the IROPS to the City, as required by Section 34169(h) of the CRL; and
WHEREAS, the City desires to accept the transmittal of the IROPS; and
WHEREAS, each city and county electing to participate in the Program, as a
condition of its redevelopment agency's continued existence and operation, is required
to make certain annual remittances ("Program Remittances") to the county auditor -
controller ("CAC") pursuant to Chapter 3 of Part 1.9, beginning with a larger upfront
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remittance for FY 2011-12 ("First Remittance"), to be paid in two equal installments on
January 15, 2012 and May 15, 2012; and
WHEREAS, the City expects it will have sufficient moneys and revenues to fund
an amount equal to the City's payment of the First Remittance and further expects to
have sufficient moneys and revenues to fund the subsequent annual remittances
required by Part 1.9; and
WHEREAS, the City is opting into Part 1.9 in order to allow the Agency to
continue in operation and perform its functions; and
WHEREAS, the City and Agency desire to enter into an agreement pursuant to
CRL Section 34194.2 whereby the Agency shall make an initial transfer of a portion of
its tax increment to the City in an amount equal the First Remittance, and thereafter
transfer amounts of tax increment equal to any subsequent remittance which the City is
required to make to the CAC pursuant to the City's participation in the Program
("Agreement to Transfer Tax Increment"); and
WHEREAS, the City, by the adoption of this Resolution, does not represent,
disclaim, or take any position whatsoever on the issue of the validity of AB X1 26 or AB
X1 27, but rather the City seeks to comply with the Constitution and laws of the State of
California, in order to preserve the ability of the Agency to continue to operate and
thereby benefit the community; and
WHEREAS, the dissolution of the Agency would be detrimental to the health,
safety, and economic well-being of the residents of the City and cause irreparable harm
to the community, because, among other reasons, the redevelopment activities and
projects made possible, implemented, and funded by the Agency are highly significant
and of enduring benefit to the community and the City, and are a critical component of
its future; and
WHEREAS, the City has duly considered all other related matters and has
determined that the City's acceptance of the IROPS and the approval and execution of
the Agreement to Transfer Tax Increment is in the best interests of the City and the
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Agency and the health, safety, and welfare of its residents, and in accord with the public
purposes and provisions of applicable state and local laws and requirements.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF COSTA MESA:
Section 1. The foregoing recitals are incorporated into this Resolution by this
reference, and constitute a material part of this Resolution.
Section 2. The City Council hereby accepts transmittal by the Agency of the
IROPS on behalf of the City, as successor agency, pursuant to Section 34169(h) of the
CRL.
Section 3. The City Council hereby approves that certain Agreement to
Transfer Tax Increment in substantially the form attached hereto as Attachment No. 1
and incorporated herein, with such changes mutually agreed upon by the CEO, the
Executive Director, the City Attorney, and Special Counsel, respectively, as are minor
and in substantial conformance with the form of the Agreement to Transfer Tax
Increment submitted herewith. The Mayor and the City Clerk are hereby authorized to
execute and attest the Agreement to Transfer Tax Increment on behalf of the City. In
such regard, the Mayor is authorized to sign the final version of the Agreement to
Transfer Tax Increment after completion of any such non -substantive, minor revisions
completed by the Executive Director, CEO, City Attorney and Special Counsel. Copies
of the final form of the Agreement to Transfer Tax Increment, when duly executed and
attested, shall be placed on file in the office of the City Clerk. Further, the CEO (or his
duly authorized representative) is authorized to implement the Agreement to Transfer
Tax Increment and take all further actions and execute all documents referenced therein
and/or necessary and appropriate to implement the purposes of the Agreement to
Transfer Tax Increment. The CEO (or his duly authorized representative) is hereby
authorized to the extent necessary during the implementation of the Agreement to
Transfer Tax Increment to make technical or minor changes, modifications,
amendments and interpretations thereto after execution, as necessary to properly
implement and carry out the Agreement to Transfer Tax Increment; provided any and all
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such changes shall not in any manner materially affect the rights and obligations of the
City thereunder.
Section 4. This Resolution shall in no way be construed as requiring the City
(or the Agency) to abide by the 2011 Redevelopment Legislation in the event either, or
both, bills are found unconstitutional or otherwise legally invalid in whole or in part, nor
shall this Resolution effect or give rise to any waiver of rights or remedies the City
(and/or the Agency) may have, whether in law or in equity, to challenge 2011
Redevelopment Legislation. This Resolution shall not be construed as the City's
(and/or the Agency's) willing acceptance of, or concurrence with the 2011
Redevelopment Legislation, either AB X1 26 or AB X1 27; nor does this Resolution
evidence any assertion or belief whatsoever on the part of the City (and/or Agency) the
2011 Redevelopment Legislation is constitutional or lawful.
Section 5. This Resolution shall be effective immediately upon adoption.
Section 6. The City Clerk shall certify to the adoption of this Resolution.
PASSED AND ADOPTED this 20th day of September, 2011.
ATTEST:
Jul' Folcik, ty Clerk
t;
Gary Monahan, Wayor
APPROVED AS TO FORM:
Tho as Du e, tity Attorney
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STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss
CITY OF COSTA MESA )
I, JULIE FOLCIK, City Clerk of the City of Costa Mesa, DO HEREBY CERTIFY that
the above and foregoing is the original of Resolution No. 11-40 and was duly passed and
adopted by the City Council of the City of Costa Mesa at a regular meeting held on the 20th
day of September, 2011, by the following roll call vote, to wit:
AYES: COUNCIL MEMBERS: MONAHAN, RIGHEIMER, BEVER, LEECE, MENSINGEF
NOES: COUNCIL MEMBERS: NONE
ABSENT: COUNCIL MEMBERS: NONE
IN WITNESS WHEREOF, I have hereby set my hand and affixed the seal of the City
of Costa Mesa this 21 st day of September, 2011.
(SEAL)
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Q�� —il eetit
JUA FOLCIK, 6TY CLERK
AGREEMENT TO TRANSFER TAX INCREMENT
This AGREEMENT TO TRANSFER TAX INCREMENT ("Agreement") is entered into
as of September 20, 2011 ("Date of Agreement"), by and between the CITY OF COSTA MESA, a
California municipal corporation ("City") and the COSTA MESA REDEVELOPMENT
AGENCY, CITY OF COSTA MESA, CALIFORNIA, a public body, corporate and politic
("Agency").
RECITALS
A. The Agency is a community redevelopment agency organized and existing under the
California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq.
("CRL") and has been authorized to transact business and exercise the powers of a redevelopment
agency pursuant to action of the City Council ("City Council") of the City of Costa Mesa.
B. The Agency receives and has available to it tax increment revenues in accordance
with and pursuant to CRL Section 33670(b) and Article XVI Section 16 of the California
Constitution ("Tax Increment").
C. Assembly Bills X1 26 and X1 27, which are trailer bills to the 2011-12 budget bills,
were approved by both houses of the Legislature on June 15, 2011, signed by the Governor on
June 28, 2011, and chaptered on June 29, 2011 (together, "2011 Redevelopment Legislation").
D. Parts 1.8, 1.85 and 1.9 of Division 24 of the Health and Safety Code were added to
the CRL by the 2011 Redevelopment Legislation and such measures purport to have become
effective immediately.
E. Part 1.8 of the CRL ("Part 1.8") provides for the restriction of activities and authority
of the Agency in the interim period prior to dissolution to certain "enforceable obligations" and to
actions required for the general winding up of affairs, preservation of assets, and certain other goals
delineated in Part 1.8.
F. Part 1.85 of the CRL ("Part 1.85") provides for the statewide dissolution of all
redevelopment agencies, including the Agency, as of October 1, 2011, and provides that, thereafter,
a.successor agency will administer the enforceable obligations of the Agency and otherwise wind up
the Agency's affairs, all subject to the review and approval by an oversight committee.
G. Part 1.9 of the CRL ("Part 1.9") provides that a redevelopment agency may continue
in operation if a city or county that includes a redevelopment agency adopts an ordinance agreeing to
comply with and participate in the Voluntary Alternative Redevelopment Program established in Part
1.9 ("Program").
H. The City is aware that the validity, passage, and applicability of the
2011 Redevelopment Legislation are the subject of judicial challenge(s), including the action:
California Redevelopment Association, et al v. Ana Matosantos, et al ("CRA Action").
I. On August 11, 2011 the California Supreme Court issued a stay as to Parts 1.85 and
1.9, but not as to Part 1.8, Sections 34161-34167.
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J. On August 17, 2011 the Supreme Court modified its stay affirming its order that Part
1.85 is stayed, that Part 1.9 is stayed except Section 34194(b)(2) is not stayed, and that Part 1.8,
Sections 34161-34169.5, is not stayed, and therefore Sections 34161-34169.5 of Part 1.8 are effective
laws.
K. Those cities or counties electing to participate in the Program, as a condition of its
redevelopment agency's continued existence and operation, are required to make certain annual
remittances ("Program Remittances") to the county auditor -controller ("CAC") pursuant to Chapter 3
of Part 1.9, beginning with an larger upfront remittance for FY 2011-12 ("First Remittance"), to be
paid in two equal installments on January 15, 2012 and May 15, 2012.
L. The City will have sufficient funds and revenues to fund an amount equal to the
City's payment of the First Remittance and expects to have funds and revenues sufficient to fund
amounts equal to the subsequent fiscal years' remittances required by Part 1.9.
M. The City and Agency desire to enter into this Agreement pursuant to CRL Section
34194.2 whereby the Agency shall transfer portions of Tax Increment to the City in an amount equal
to the First Remittance, and thereafter to transfer amounts of Tax Increment equal to each and all
subsequent fiscal years' remittances that the City is required to make to the CAC pursuant to the
City's participation in the Program.
AGREEMENT
NOW, THEREFORE, for and in consideration of the mutual promises, covenants, and
conditions herein contained, the parties hereto agree as follows:
Section 1. The Agency shall be liable to City for the payment of the Program Remittances in
connection with the City's participation in the Program. The Agency agrees that no later than
fifteen (15) days prior to the date upon which the City shall be statutorily required to make any full or
partial payment of a Program Remittance in any fiscal year, the Agency shall transfer funds to the
City in an amount equal to such payment; each such payment by the Agency shall be referred to
herein as a "Required Agency Payment" and, as such payments are combined, "Required Agency
Payments." Interest shall accrue on any unpaid balance of the Required Agency Payments at an
annual interest rate equal to the maximum rate permitted by Section 53531 of the Government Code.
Interest on amounts paid as Required Agency Payments shall be deemed to begin accruing on the
date upon which the City makes any required Program Remittance to the County Auditor -Controller.
Section 2. The Agency pledges Tax Increment revenues available to the Agency under Section
33670(b) of the California Health & Safety Code toward repayment of its indebtedness to the City
hereunder; provided that such pledge is junior and subordinate to all outstanding bonds of the
Agency (including without limitation the Agency's obligations under the following: 2003 Tax
Allocation Refunding Bonds, and all refundings thereof), any refunding bonds issued by or through
the Agency, and any additional bonds issued hereafter by or through the Agency. The City and
Agency agree that such obligation by Agency to City may be further subordinated by agreement of
the City and the Agency.
(a) As used in this Section 2, "Tax Increment" means all taxes annually allocated to the
Agency with respect to the Project Areas in each year following the Date of Agreement, pursuant to
Article 6 of Chapter 6 (commencing with Section 33670) of the CRL and Section 16 of Article XVI
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of the Constitution of the State of California and as provided in the Redevelopment Plans for the
Project Areas, including all payments, subventions and reimbursements (if any) to the Agency
specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations;
but excluding (i) all amounts of such taxes required to be deposited into the Low and Moderate
Income Housing Fund of the Agency in any Fiscal Year pursuant to Sections 33334.2 or 33334.6 of
the CRL, (ii) all amounts of such taxes required to be paid to taxing entities under Sections 33607.5
and 33607.7 of the CRL to the extent such required payments create a prior lien on such taxes,
(iii) amounts, if any, payable by the State of California to the Agency under and pursuant to the
provisions of Chapter 1.5 of Part 1 of Division 4 of Title 2 (commencing with Section 16110) of the
Government Code of the State of California, (iv) amounts retained by the County of Orange as costs
of collection pursuant to Chapter 466, Statutes of 1990, and (v) such taxes, to the extent subject to a
prior express pledge by the Agency.
Section 3. Pursuant to Sections 34194.2 and 34194.3 and for FY 2011-12 only, the Agency
finds that that there are insufficient other moneys to meet its debt and other obligations, current
priority program needs, and/or its obligations under Section 34194.2 therefore the Agency is
exempted from making the annual deposit to the Housing Fund and an amount equal thereto shall be
part of the tax increment transfer hereunder. The Agency's debts and obligations are set forth and
summarized in the EOPS, the Statement of Indebtedness, and reports and information presented to
the City and Agency in actions relating to the 2011 Redevelopment Legislation.
Section 4. The obligations of the Agency under this Agreement shall constitute an indebtedness
of the Agency within the meaning of Section 33670, et seq. of the Community Redevelopment Law.
Section 5. The City agrees to spend those funds received under the Agreement to Transfer Tax
Increment or otherwise pursuant to CRL Section 34194.2 "for the purpose of financing activities
within the redevelopment area that are related to accomplishing the redevelopment agency project
goals" or as otherwise determined by the courts or subsequent law and in accordance with the laws of
the United States and the State of California, all as applicable.
Section 6. This Agreement shall become effective upon the later to occur of: (i) thirty (30) days
after the date of the final passage and adoption of the Ordinance to opt -in under Part 1.9, or
(ii) upon order of a court of competent jurisdiction and/or a decision or order from the California
Supreme Court, or other court of competent jurisdiction, that the provisions of AB X1 27 (including
Sections 34194.2 and 34194.3) are valid and enforceable.
Section 7. If any provision of this Agreement or the application thereof to any person or
circumstance is held invalid, such invalidity shall not affect other provisions or applications of this
Agreement which can be given effect without the invalid provision or application, and to this end the
provisions of this Agreement are severable. The City Council and Agency hereby declare that it
would have approved this Agreement irrespective of the invalidity of any particular portion hereof
so long as and subject to Part 1.9 being declared valid and enforceable.
Section 8. An event of default occurs under this Agreement when: (a) there is a breach of any
condition, covenant or promise set forth herein; (b) written notice thereof has been given to the
defaulting party; and (c) such breach has not been cured within thirty (30) days after such notice was
given to the defaulting party or, if such breach cannot reasonably be cured within such thirty (30) day
period, the defaulting party fails to commence to cure the breach and/or fails thereafter to diligently
proceed to complete such cure. A waiver, if any, by a party must be in writing; and, such waiver by a
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party of a breach shall not be construed as a waiver of any succeeding breach of the same or other
condition, covenant or promise.
Section 9. The occurrence of an event of default hereunder shall give the non -defaulting party
the right to proceed with any and all remedies available at law or equity, including without limitation
an action for damages, an action or proceeding for specific performance, and/or an action or
proceeding for injunctive relief.
Section 10. City shall maintain authority of this Agreement and the authority to implement this
Agreement through City Manager and Finance Director (or duly authorized representative(s)) and
Agency shall maintain authority of this Agreement and the authority to implement this Agreement
through the Executive Director and Treasurer (or duly authorized representative(s)); each shall have
the authority to make approvals, issue interpretations, waive provisions hereof.
Section 11. This Agreement shall be binding upon City and Agency and their successors and
assigns. Whenever the terms "City" or "Agency" are used in this Agreement, such terms shall
include any other successors and assigns as herein provided.
Section 12. This Agreement shall be governed by and construed in accordance with the laws of
the State of California.
Section 13. If any term, provision, condition or covenant of this Agreement or its application to
any party or circumstances shall be held, to any extent, invalid or unenforceable, the remainder of
this Agreement, or the application of the term, provision, condition or covenant to persons or
circumstances other than those as to whom or which it is held invalid or unenforceable, shall not be
affected, and shall be valid and enforceable to the fullest extent permitted by law.
Section 14. Any amendment, alteration, change or modification of or to this Agreement, in order
to become effective, shall be made in writing and in each instance signed by a duly authorized
representative on behalf of each party. Each parry agrees to consider in good faith and exercise
reasonable discretion in its consideration of a request by another parry to amend this Agreement.
[signature blocks on next page]
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IN WITNESS WHEREOF, the parties have executed this Agreement to Transfer Tax
Increment as of the date first above written.
CITY:
CITY OF COSTA MESA
a California municipal corporation
Mayor
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
AGENCY:
COSTA MESA REDEVELOPMENT AGENCY,
CITY OF COSTA MESA, CALIFORNIA, a public
body, corporate and politic
L -In
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
STRADLING YOCCA CARLSON & RAUTH
Agency Special Counsel
DOCSOC/ 1506115 v 1 /022353-0002
Chairperson