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HomeMy WebLinkAbout06/20/2013 - City Council - Oversight Board - Successor Agency - Redevelopment AgencyREGULAR MEETING OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE COSTA MESA REDEVELOPMENT AGENCY JUNE 20, 2013 These meeting minutes represent an "action minute" format. A copy of the meetings can be obtained at the Costa Mesa Housing Authority Office located on the 2"d floor of the Costa Mesa City Hall. The Oversight Board of the Successor Agency to the Costa Mesa Redevelopment Agency met in a Regular Meeting held on Thursday, June 20, 2013 at 2:00 p.m. in Conference Room 1A of the Costa Mesa City Hall, 77 Fair Drive, Costa Mesa. Vice -Chair Jeff Trader called the meeting to order at 2:00 p.m. Vice -Chair Jeff Trader led in the Pledge of Allegiance. I. ROLL CALL Members Present: Jeff Trader, Vice -Chair Andy Dunn, Board Member Rick Francis, Board Member Dan Baker, Board Member Members Absent: Jim Righeimer, Chair Tom Hatch, Board Member Gary Monahan, Board Member Officials Present: Gary Armstrong, Economic and Development Services Director/Deputy CEO Bobby Young, Finance and IT Director Colleen O'Donoghue, Asst. Finance Director Hilda Veturis, Management Analyst Celeste Brady, Successor Agency Special Counsel Martha Rosales, Recording Secretary II. CLERK'S STATEMENT The Agenda for the June 20, 2013 Oversight Board meeting was posted at the City Council Chambers, Adams Postal Office, Headquarters Police Department, Neighborhood Community Center and the Mesa Verde Public Library on Friday, June 14, 2013. III. PUBLIC COMMENTS Any person wishing to address the Oversight Board on any matter, whether or not it appears on this Agenda, is requested to complete a "Request to Speak" form, available at the door and with the Secretary. The completed form is to be submitted to the Secretary prior to an individual Agenda item being heard by the Oversight Board. No action will be taken on any item not on the Agenda unless the Oversight Board makes a determination that an emergency exists or that the need to take action on the item rose subsequent to the posting of the Agenda. Public comments shall be limited to a maximum of three (3) minutes per person and an overall time period of 15 minutes for items not considered on the regular Agenda. IV. MINUTES Approval of the February 21, 2013 Regular Oversight Board Meeting MOTION: Approve Minutes of the February 21, 2013 Special Oversight Board meeting. Moved by Vice -Chair Jeff Trader, second by Board Member Andy Dunn. The motion carried by the following vote: Ayes: Vice -Chair Jeff Trader, Board Members Andy Dunn, Rick Francis, and Dan Baker Noes: None Absent: Chair Jim Righeimer, Board Members Tom Hatch and Gary Monahan V. NEW BUSINESS 1. Update on communications with and actions by the State Department of Finance (DOF). Finance and I.T. Director Bobby Young requested that Successor Agency Special Counsel Celeste Brady report on this item. City received a report from the State DOF disallowing two payments for two separate years on the City/Agency Loan. The State of California is inconsistent in approving ROPs 2, and disallowing approval of ROPs 4. The City's law firm, Jones Mayer, has obtained the services of outside counsel who specialize in litigation. They will be evaluating this matter. Vice Chair Trader asked if the Oversight Board has provided direction on this issue. Ms. Brady stated that the Successor Agency and City will make the decision on whether to pursue litigation or not, but first will seek input from the Oversight Board. Ms. Brady stated that there are currently 109 cases against the State of California regarding the Dissolution Act. Ms. Brady pointed out that the DOF instead of approving the ROPs and sending the City the related funds, the City of Costa Mesa was required to issue a check for $2.4 million to the State of California, which is a reimbursement on the two payments which were previously allowed. The two options provided were either to file a lawsuit immediately and receive a temporary restraining order, or to make the payment under protest. Ms. Brady mentioned that to receive a restraining order, the City would need to show there is irreparable harm to the point the City would need to shut down. Costa Mesa did not have sufficient facts to support a temporary restraining order. As a result, the City of Costa Mesa made the $2.4 million payment under protest and are evaluating their liberal rights and determining which petition to file against the State. She further stated that there are many successor agencies in similar situation that also made their payments under protest. The City has not filed a petition regarding this matter yet. Vice -Chair Trader asked if the costs of litigation were known. Ms. Brady stated that there is no estimate yet, but the information should be forthcoming via Litigation Counsel. Vice -Chair Trader asked if the State would reimburse the City for costs related to a law suit against the State. Ms. Brady responded, "No". Ms Brady informed the Board Members that the City will receive a 10% surcharge against the State, if we are successful against the State. The 1971 City/Agency Loan arrangement fits the "safe harbor' provisions of the definition of enforceable obligations, as the loan was entered into within the first two years of the Agency's creation. For the last 40 years, the City/Agency Loan has been treated as a single loan with renewals occurring on an on-going basis to prevent the constitutional issue of it being a long-term debt. However, the DOFs Decision letter treats the loan as 36 different loans due to the 36 related promissory notes. The CAFER and all City Financial Statements support the City/Agency loan as being one loan. Board Member Baker asked if other Cities were in the same situation. Ms. Brady responded yes, that several other cities made payments under protest and they are considering litigation, like Tustin, Fountain Valley, and Mission Viejo who are all filing petitions. Board Member Francis asked if the cities are filing individually, or if it is something that could be done collectively. Ms. Brady stated that the cases are typically consolidated when the facts are similar. However, the facts in these cases are different for each city. Board Member Trader asked who is paying the bill? Ms. Brady stated that it is in the ROPs but it could ultimately be the City. Through the Successor Agency, the City only gets $125,000 every 6 months for administration, which does not cover in-house staff that works on these matters. For example over that last 6 months the Assistant Finance Director has spent about 70 percent of her time on this matter. In short, the money the City loaned the Redevelopment Agency for start-up costs is basically gone, taken by the State. The State is denying everyone and saying if you have those funds, come and get them. However, the City of San Francisco has not had a single ROPs declined, as they are represented by Willie Brown. They have $6 million in staffing given to them. There are several bills pending regarding changing the existing legislation related to redevelopment. Board Member Francis asked," What is the LAIF rate currently and is there any basis to pursue this issue at a federal level? Mr. Young responded LAIF is at .35 percent. Ms. Brady stated that one city attempted it, but the federal government stated it is a State issue. Ms. O'Donoghue stated that the LAIF rate today is different than it was in 1970. Ms. Brady stated that the LAIF rate should apply as of the date of resurrection of the loan. Mr. Young stated that because the City did not have much debt, (50%) fifty percent of the residual amount would return to the City which is more than for most agencies. Each successor agency has various obligations. that must be met before funds are returned to the Successor Agencies. MOTION: Receive and file report, and affirm and support the petition that the City/Successor Agency may file with the State to litigate the matter regarding the loan between the City of Costa Mesa and the Costa Mesa Redevelopment Agency, which provided start-up costs for the Costa Mesa Redevelopment Agency and which funds need to be reimbursed to the City as part of the Dissolution Act. Moved by Board Member Rick Francis, second by Board Dan Baker. The motion carried by the following vote: Ayes: Vice -Chair Jeff Trader, Board Members Andy Dunn, Rick Francis, and Dan Baker Noes: None Absent: Chair Jim Righeimer, Board Members Tom Hatch and Gary Monahan VI. CHAIR AND BOARD MEMBERS' COMMENTS AND SUGGESTIONS Management Analyst Hilda Veturis introduced the new Economic and Development Services Director/Deputy CEO, Gary Armstrong. VII. ADJOURNMENT — Vice -Chair Jeff Trader adjourned the meeting at 2:35 p.m. APPROVED AND ADOPTED this 19th day of September 2013. Df 6�, Syk&[_-P g- 0 g 4,411qcok, JWeM.-Righeimer,` Chair Oversight Board of the Successor Agency to the Costa Mesa Redevelopment Agency (SEAL) ATTEST: Hilda Veturis, Secretary . Oversight Board of ttie Successor Agency to the Costa Mesa Redevelopment Agency