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HomeMy WebLinkAbout09/19/2013 - City Council - Oversight Board - Successor Agency - Redevelopment AgencyREGULAR MEETING OF THE OVERSIGHT. BOARD .OF THE SUCCESSOR AGENCY TO THE COSTA MESA REDEVELOPMENT AGENCY SEPTEMBER 19, 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 2nd 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, September 19, 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 2:07 p.m. Vice -Chair Jeff Trader led in the Pledge of Allegiance. i. ROLL CALL Members Present: Jeff Trader, Vice -Chair Tom Hatch, Board Member Rick Francis, Board. Member Dan Baker, Board Member Members Absent: Jim Righeimer, Chair Andy Dunn, Board Member Gary Monahan, Board Member Officials Present: Gary Armstrong, Economic and Development Services Director/Deputy, CEO Colleen O'Donoghue, Asst. Finance Director Hilda Veturis, Management Analyst/Recording Secretary Celeste Brady, Successor Agency Special Counsel II. CLERIC'S STATEMENT The Agenda for the September 1.9, 2013 Oversight Board meeting was posted at the City Council Chambers and at the Headquarters Police Department on Friday, September 16, 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 i to amaximum .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 June 20, 2013 Regular Oversight Board Meeting MOTION: Approve Minutes of the June_ 20, 2013 Regular Oversight. Board meeting. Moved by Member Toon Hatch, second by Member 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 Righe'imer, Board 'Members Andy Dunn and Gary Monahan V. PRESENTATIONS None VI. NEW BUSINESS 1. Oversight Board review and approval of the Successor Agency's Administrative Budget for the 13-1413-six=month fiscal pciriod of January 1, 2014 to June.30, 2014. Ms. O'Donoghue introduced the .Successor Agency's. Administrative. Budget which the State Department of Finance requires to be reviewed and submitted semi-annually. This budget is for the period of January 1'. 2014 to June 30, 2014 and relates primarily to matters which affect the Successor Agency. The budget attached to the Agenda is not correct, but a correct/loose copy was provided. Ms. O'Donoghue further stated the Successor Agency is guaranteed $250,00.0, which is broken -up into two installments .to pay for staff support, audit services and ;consulting matters. regarding the Successor Agency. Ms. Brady, added that these expenses are essentially the same .as what has been reviewed in- the last four BOPS, with this now being the 5th BOPS. Each ROPS includes an administrative budget which must be reviewed and approved prior to submittal to the State. Vice -Chair Trader asked if this, budget has been difficult to absorb. Ms. O'Donoghue responded that typically the expenses are greater than what is provided. Therefore, the City has had to absorb staffing costs. to the general fund. Board Member Hatch stated it might change as the City gets through the, majority of the related items. Ms. Brady stated there is still the, issue of the outstanding Agency/City loan, which may cost a little more. But hopefully., by this time next year it may be Less, as "staff .with Ms. Brady's assistance has refined the process considerably. She further stated 'that it is much less labor intensive now than it use to be, however there. is still a lot: going on which, will be addressed in a later -agenda item. 1 1 Vice -Chair Trader asked if the City was suing the State. Ms. Brady responded .that the City will be, as authorization has been given by the City Council and Successor Agency to do proceed on this matter and an update will be provided. Vice -Chair Trader asked if those costs would be charged to the State. Ms. Brady stated that the Cityy is attempting to recover those costs by including it on the next ROPSin a line item. However, it is not known whether the DOF will approve it or not, but we believe it is litigation -related expenses which are an eligible ROPS item. There are quite a few agencies who have attempted to put these costs on their ROPS; as there 150 cases already pending against the State. of California related to the Dissolution Act. Mr. Armstrong asked if those agencies are realizing any net benefit after the costs of their legal expenses. Ms. Brady responded, no the Sacramento Superior Court Judges have been more aligned with the State, than with the Successor Agencies. Last week Ontario lost its request for a temporary restraining order. It is about $21 million in property and sales tax that the State is seeking to- take from the City of Ontario. Notices have gone out to other Successor Agencies istafing that if payment is not made in the amount demanded those funds will be taken from the respective property tax and sales tax. Costa Mesa did make its payment under protest and will be challenging it. MOTION: Approve the Successor Agency's proposed. Administrative Budget for the period of January 1, 201.3 to. June 30 and adopt -Oversight Board Resolution No. 2013-04. Moved by Member Tom Hatch, second by Member Rick Francis The motion carried ..by the following vote: Ayes: Vice -Chair Jeff Trader, Board Dan Baker Noes:. None Absent: Chair James M. Righeimer, Monahan Members Tom Hatch, Rick Francis, and Board Members Andy Dunn and Gary 2. 'Oversight Board review and approval of Recognized Obligation Payment Schedule 13-14B for the six-month fiscal period of January 1, 2014 to June 30, 2014 Ms. O'Donoghue presented the Recognized Obligation Payment Schedule (ROPS)13- 14B for the period of January 1, 2014 to June 30, 2014. She referred to the handout, provided to replace the original ROPS that had inadvertently been included. Ms. O'Donoghue showed the Board Members where the Administrative Budget amount of $125,000 was listed. She also stated that the City/Successor Agency is seeking reimbursement on a few items from the State. Those items include the. $55,000 interest payment on the debt, the $3,000 for the required annual report, and the $1,299,000 service payment on the RDA loan. If litigation is .needed, the City is seeking monies to fund it and that is why it is listed on the ROPS. Ms. Brady added that there is still disagreement with the DOFs, two decisions .stating that. the City/Agency Loan is invalid, and their determination on ROPS 4 that they would not reimburse the funds pertaining to the loan. It is important to keep this item listed on the BOPS until a resolution from a court has been made on whether this: is a valid enforceable obligation. It is expected that DOF will reject this item again, however for litigation purposes; the City will continue to list it on the ROPS to show that it is a valid and enforceable obligation. Ms. O'Donoghue mentioned line -item No. 52 pertains to assigning_ litigation costs with the State:. Ms. Brady further mentioned the City is seeking the reimbursement/payment of. those. costs related to the costs estimated and anticipated to be incurred between January 1 and June 30 of next year. Member Francis asked that when cities are litigating and they get these hearing dates. or trials, do they all have to go up to Sacramento. Ms. Brandy responded yes, everything :has to be handled though Sacramento Superior Court. Pursuant to the original ABx126,. the jurisdiction for anything related to the Dissolution. Act lies solely in Sacramento Superior Court. There have been a couple of agencies that felt they had issues that were sort of outside the Dissolution Act related to their enforceable obligations and they filed in their county Superior Court and the venue was moved up. to Sacramento. A Jones Mayer client tried to file in a federal court on an issue thought to be federally related and they could not_get it out of Sacramento Superior Court. Ms. Brady stated that in discussions with City Attorneys there are some interesting conflict/ethical issues because there are three branches of government; executive, judicial,.,and legislative, and normally the judicial branch would identify a budget and it would to be approved by the. Governor ;without much review as the judicial branch determines how much money is needed. However, with Jerry Brown, the executive branch is reviewing the judicial branch and yet they have to go through the DOF to get funding to fund the courts. There are some interesting conflict issues which have resulted in there being several agencies that have lawsuits pending against the State bringing .this up as the cause of action for conflict of interest. We .do not receive money unless Successor Agency prepares a ROPS, submits it to the .Oversight Board, who then sends it to the DOF. The DOF then authorizes what is allowed to be on the ROPS and they tell the County what funds can'be released to the City of Costa Mesa. The City would not receive any funds without going through this process. Therefore staff will present a ROPS every six months to .the Oversight Board until 2016 when the boards are consolidated into three boards which will be located in Orange County. In comparison to other Successor Agencies, Costa. Mesa's ROPS is quite simple. Economic and Development Services Director/Deputy CEO, Gary Armstrong, stated that he get about 3 calls a week asking if;the. City has. any surplus property as a result of the Dissolution and they are surprised that we do not. Ms. Brady confirmed that the City does not have any surplus, property. The one asset in which we own the underlying fee is the housing asset. The Costa Mesa Housing Authority has the .underlying fee, but it is on a long-term ground lease for 50 years. MOTION: Approve proposed Recognized Obligation Payment Schedule 13-1413' for the six-month fiscal period of January 1, 2014 to June. 30, 2014 and adopt Oversight Board Resolution No. 2013-05. Moved by Member Rick Francis, second by Member Dan Baker The motion carried by the following vote: r_j 1 Ayes: Vice=Chair Jeff Trader, Board Members Tom Hatch, Rick Francis, and Dan Baker Noes: None Absent: Chair James M. Righeimer, Board Members Andy Dunn and Gary Monahan 3. Oversight Board review and approval of the Successor Agency's Long Range Property Management Plan (LRPMP) Ms.. Brady presented the Successor Agency's LRPMP mentioning that last summer language was added to AB 1484 regarding the disposition of real property interests of a. Successor Agency that are non -housing, by stating that the. Agency has no property. And although Costa Mesa's Redevelopment. Agency has no property, the DOF requires staff to complete the LRPMP have it reviewed and approved by the Successor Agency and the Oversight Board then submit it to the DOF for their review and approval. The LRPMP must be submitted along with the related checklist Vice - Chair Jeff Trader asked. if there were Vehicle Parking Districts that -would_ be included in this plan. Ms. Brady responded that none of the Vehicle Parking Districts are vested with the. Redevelopment Agency. They are vested with the City of Costa Mesa. The Vehicle Parking District Commission apparently was with the former Redevelopment Agency, but the ownership of the properties was the City of Costa Mesa. Those two lots off Newport Boulevard remain City parking lots. There are adjoining business owners who think they have vested rights in those lots through their frequent use. However, there are no prescriptive rights in public property no matter how .long you might have used them. MOTION: Approve proposed Successor Agency's Long Range Property Management Plan (LRPMP) and adopt Oversight Board Resolution No. 2013-06. Moved by Member Dan Baker, second by Member Rick Francis The motion carried by the following vote: Ayes: Vice -Chair Jeff Trader, Board Dan Baker Noes: None Absent: Chair James M. Righeimer, Monahan Members Tom Hatch, Rick Francis, and Board Members Andy Dunn and Gary 4. Update from Successor Agency Staff regarding Dissolution Matters Ms., Brady stated that the Finding of Completion was issued by the Stater on May 24,. 2013. That meant that the Costa Mesa Successor Agency had paid the monies due and demanded by the State for the housing due diligence review and for the non- housing due diligence review, both which were made under protest particularly the non -housing due diligence review and which are related to the claw -back of $2.4 .Million related to the. City/Agency loan. Because those -payments were made, within a day the. DOF provided a Finding 'of Completion to'.Costa Mesa's Successor Agency, without the City applying for it. Staff will return to the Oversight Board, who is vested with the responsibility to determine that the original City/Agency loan was for redevelopment purposes, which from Ms. Brady's perspective was. Staff is .waiting for direction from litigation counsel as to when to agendize this item for the Board. But as we have received the Finding of Completion, if we' were to. concede that itis not .an enforceable obligation, it is not a City/Agency loan,. it is within that safe. harbor those that were determined not to be. valid can be placed on. RO.P,S and we. ask request repayment. The. repayment. is subject.. to 'reduced LAIF rates and ince do`not. know how long they, go back. These are some of the issues that, will be a part of that petition and the challenge to the note. We will be saying that it is an enforceable obligation initially incurred within two years of creation :of the redevelopment agency. If the court does not agree with that. the alternative is'that we want them to declare that the LAIF rate is going 'forward not retroactive. If the LAIF rate is retroactive there is very significant reduction in the principal amount due, if any, on the City/Agency loan. Mr. Armstrong asked is there any light at the end of the tunnel beyond the 2016 obligation. Ms. Brandy, responded that the Successor Agency will survive until 100 percent of the Agency's debts are repaid including tax allocation bonds, the resolution of the City/Agency loan and the payback of that City/Agency loan. The initial bonds were issued in 1987 and then refinanced in 1994 with the proceeds used to pay down the principal due on the City/Agency loan with, a healthy interest rate which was the prevailing rate at that time, which did create a lot of accrued interest. 1n 2004 the bonds were amortized and the fixed payments that were being made were intended to pay down 100 percent of the loan; principal and interest by 2024. Report from Successor Agency Staff regarding Dissolution. Matters Received and Filed 1/ll. CHAIR AND BOARD MEMBERS' COMMENTS AND -SUGGESTIONS -None Vlll. ADJOURNMENT — Vice -Chair Jeff Trader adjourned the meeting at 2:35 p.m. APPROVED AND ADOPTED this 19th day of September 2013. Je ra Aice Chair Oversight Board of the Successor Agency to the Costa Mesa Redevelopment Agency (SEAL) ATTEST: r Hilda Veturis, Secretary Oversight Board of the Successor Agency to the Costa Mesa Redevelopment Agency