HomeMy WebLinkAbout- - RDA - 9/20/2011COSTA
AESAAM
REDEVELOPMENT AGENCY
AGENDA REPORT ITEM NO. IV.
MEETING DATE:
9.20.11
SUBJECT: CITY AND AGENCY ACTIONS UNDER 2011 REDEVELOPMENT
LEGISLATION: OPT -IN ORDINANCE, INITIAL RECOGNIZED
OBLIGATION PAYMENT SCHEDULE, AND AGREEMENT TO
TRANSFER TAX INCREMENT
DATE: SEPTEMBER 14, 2011
FROM: THOMAS R. HATCH, CEO AND AGENCY EXECUTIVE DIRECTOR
CONTACT: HILDA VETURIS, MANAGEMENT ANALYST 7141754-5608
RECOMMENDED ACTIONS:
1. Conduct Second Reading and Adoption of City Ordinance 11-09 Electing
to Comply with and Participate in the Voluntary Alternative
Redevelopment Program Contained in Division 24, Part 1.9 of the
California Health and Safety Code.
2. Approve City Council Resolution Accepting Transmittal of an Initial
Recognized Obligation Payment Schedule and Approving an Agreement
to Transfer Tax Increment between the City and the Agency pursuant to
Part 1.9 of Division 24, California Health and Safety Code.
3. Approve Agency Resolution Adopting the Initial Recognized Obligation
Payment Schedule pursuant to Part 1.8 of Division 24 of the California
Health and Safety Code and Approving an Agreement to Transfer
Tax Increment between the City and the Agency pursuant to Part 1.9,
Division 24, California Health and Safety Code.
DISCUSSION:
At a special meeting on August 26, 2011 and at the regular meeting of
September 6, 2011, the City Council and Redevelopment Agency ("Agency")
considered and took action on several agenda items relating to Assembly Bills
X1 26 and X1 27 ("2011 Redevelopment Legislation"). The agenda items
presented in this report are the next and recommended steps pursuant to the
2011 Redevelopment Legislation.
DOCSOC/ 1513127v 1 /022353-0002
At the special meeting on August 26, 2011, the Agency adopted an Enforceable
Obligation Payment Schedule ("EOPS"); on September 6, 2011, the City Council
adopted a non-binding Resolution of Intention, conducted first reading of the
Ordinance to opt -in to Part 1.9, and made its election to be the successor agency
in the event the Agency were to be dissolved. The City has notified the
Department of Finance ("DOF"), State Controller's Office ("SCO"), and County
Auditor's Office ("CAO") of the adoption of the Resolution of Intention and filed
the EOPS with those entities pursuant to Section 34169(g).
Section 34169(h) of Part 1.8 requires all agencies subsequent to the EOPS to
prepare an "Initial Recognized Obligation Payment Schedule" ("IROPS") and
submit the IROPS to the successor agency. On August 15, 2011, the City took
action to designate the City to be the successor agency under Part 1.85 if and
when the Supreme Court Stay is lifted and if the Supreme Court's decision were
to require the CDA to be dissolved. The City's Finance Director has prepared the
Agency's IROPS, which is attached to this agenda report. Staff recommends
that the IROPS be approved by the Agency, transmitted to the City, as successor
agency, and accepted by the City pursuant to the attached resolutions.
With due acknowledgement to the Supreme Court Stay, many cities/counties and
their redevelopment agencies are proceeding with opt -in actions and "backfill"
agreements ("Agreement to Transfer Tax Increment", as attached) that include
conditional effectiveness provisions due to the stay order. An Agreement to
Transfer Tax Increment will establish the City's and Agency's mutual objective for
the Agency to pay an amount equivalent to the Remittance ($1,475,173) to the
City pursuant to Part 1.9, Section 34194.2 and to list such obligation on the
Statement of Indebtedness to be filed by October 1, 2011. As explained at the
prior meetings, while the Remittances are an obligation of the City, not the
Agency, pursuant to Section 34194.2 the Agency may transfer a portion of its
tax increment to the City in an amount. not to exceed the annual Remittance
required that year "for the purpose of financing activities within the
redevelopment area that are related to accomplishing the redevelopment agency
project goals" pursuant to such agreement. For FY 2011-12 only, the Agency
transfer to the City may include an amount equal to the Housing Fund annual
allocation that would have been deposited as long as the Agency makes a
finding that there are insufficient other moneys available, which finding is
included in the Agreement to Transfer Tax Increment.
As explained at the September 6t" meeting, due to the Supreme Court Stay, the
Ordinance and the Agreement to Transfer Tax Increment provide each will
become effective upon the later to occur of: (i) thirty (30) days after the date of
the final passage and adoption of the Ordinance, 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
are valid and enforceable.
If the Agency does not desire to complete second reading and adoption of the
opt -in Ordinance, then subject to the Supreme Court Stay and the court's
DOCSOC/ 1513127v l /022353-0002
decision in the CRA Action that is expected prior to January 15, 2012, pursuant
to Parts 1.8 and 1.85, the Agency will be dissolved. Likewise, if the City fails to
make any Remittance payment, then the DOF will cause a determination of
non-compliance and the Agency will be dissolved. Revenues formerly allocable
as tax increment would be distributed to the "successor agency" to pay
recognized enforceable obligations and for limited wind down administration;
and, all Agency assets would be transferred to the City, as successor agency, for
liquidation. Encumbered monies in the Housing Fund and housing assets would
be transferred to the Orange County Housing Authority. All remaining (former)
tax increment proceeds would be distributed to affected taxing entities; including
the existing unencumbered balances sourced from the Housing Fund. The City
has elected to be the successor agency in the event the Agency is dissolved.
Successor agencies are supervised by "oversight boards" comprised of seven
appointed, members: Board of Supervisors (2), Mayor (1),
County Superintendent of Education (1), Chancellor of California Community
Colleges (1), largest special district taxing entity (1), and a former agency
employee (appointed by Mayor) (1). The oversight board is empowered to cause
early termination of enforceable obligations if determined to be in the best
interest of the taxing entities, including arrangements between the agency and
another local agency that obligate the agency to fund debt service or to pay for
construction or operation of public facilities. AB X1 26 provides that CAO, DOF,
and SCO each have additional responsibilities in the dissolution and
implementation of enforceable obligations.
FISCAL REVIEW:
Subject to the outcome of the CRA Action and lifting the Supreme Court Stay, the
City will expend $1,475,173 for the FY 2011-12 Annual Remittance Payment;
half due January 15, 2012 and half due May 15, 2012. The Finance Director
prepared the attached IROPS based on the filed EOPS. By the Agreement to
Transfer Tax Increment, the Agency will provide a backfill payment to the City in an
amount equal to the Remittance.
ENVIRONMENTAL IMPACT:
None.
LEGAL REVIEW:
Agency special counsel prepared this report, the Ordinance, and Resolutions
approving, transmitting and accepting the IROPS, and approving the Agreement to
Transfer Tax Increment.
PUBLIC NOTIFICATION:
Through the regular meeting agenda requirements under the Brown Act.
DOCSOC/1513127v 1/022353-0002
CONCLUSION:
Staff recommends that City Council conduct second reading and adoption of the
Ordinance; that the Agency adopt the Resolution approving the IROPS,
transmitting it to the City and approve the Agreement to Transfer Tax Increment;
and that the City Council adopt the Resolution accepting the IROPS and approve
the Agreement to Transfer Tax Increment.
A., i , -L-z A'
S
Thomas R. Hatch, Executive Dir ct Er
Costa Mesa Redevelopment Agency
Vjofin
:finjhceDirector
JA) VIJ.— L,�j
Hilda Veturis
Management Analyst
Exhibit A — Opt -in Ordinance
Exhibit B — Agency Resolution re IROPS and Agreement to Transfer Tax
Increment
Exhibit C — City Council Resolution re IROPS and Agreement to Transfer
Tax Increment
DOCSOC/1513127v 1/022353-0002 °
EXHIBIT "A"
ORDINANCE NO. 11-09
AN ORDINANCE OF THE CITY OF COSTA MESA ELECTING TO
COMPLY WITH AND PARTICIPATE IN THE VOLUNTARY
ALTERNATIVE REDEVELOPMENT PROGRAM CONTAINED IN
DIVISION 24, PART 1.9 OF THE CALIFORNIA HEALTH & SAFETY CODE
WHEREAS, the Costa Mesa Redevelopment Agency, City of Costa Mesa, California
("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 ("City"); and
WHEREAS, the Agency adopted the 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 17, 2003, and
Ordinance No. 07-13 on June 19, 2007; and
WHEREAS, AB X1 26 and AB 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"); 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 purport to have
become effective immediately; and
WHEREAS, Part 1.8 of the CRL ("Part 1.811) 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 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"); and
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D O C S O C/ 15 06095 v3/0223 53 -0002
WHEREAS, 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; and
WHEREAS, 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; 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, as a condition of the Agency's continued existence and operation of its
community redevelopment agency, the City is required to make certain annual remittances to the
County Auditor -Controller ("CAC") pursuant to Chapter 3 of Part 1.9, beginning with FY 2011-12
("First Remittance"), to be paid in two equal installments on January 15, 2012 and May 15, 2012;
and
WHEREAS, the City will have sufficient moneys and revenues to fund an amount equal to
the City's payment of the First Remittance and expects to have sufficient moneys and revenues to
fund the subsequent fiscal years' remittances required by Part 1.9; and
WHEREAS, the City's needs are such that it can commit to spend the funds received from
the Agency pursuant to the Agreement to Transfer Tax Increment (defined below) ) "for the purpose
of financing activities within the redevelopment area that are related to accomplishing the
redevelopment agency project goals", including but not limited to payment for the land for and/or
installation and/or construction of public improvements, better and more advantageous use of land
and a reduction of incompatible land uses in the Project Area, improvement or replacement of
obsolete and/or deteriorating commercial and residential structures, improvement of disadvantageous
parcelization pattern, improvement of defective or hazardous traffic conditions and infrastructure,
improvement of public facilities; and elimination of blight; and
WHEREAS, the City and Agency desire to enter into an agreement pursuant to new CRL
Section 34194.2, whereby the Agency will make an initial transfer of a portion of its tax increment to
the City in an amount equal 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 to Transfer Tax Increment");
and
WHEREAS, due to and based on the stay issued by the Supreme Court if, as and when this
Ordinance is adopted the City intends that it become effective only upon the later to occur of:
(i) thirty (30) days after the date of the final passage and adoption hereof, or (ii) upon order of a court
of competent jurisdiction and/or upon a determination that the California Supreme Court, or other
court of competent jurisdiction, has made a final determination that AB XI 27 are valid and
enforceable; and
9
DOCSOC/ 1506095v3/022353-0002
WHEREAS, the City is the lead agency concerning this Ordinance pursuant to the California
Environmental Quality Act (codified as Public Resources Code Sections 21000 et seq.) ("CEQA")
and the State CEQA Guidelines; and
WHEREAS, the Ordinance is exempt from CEQA pursuant to CEQA Guidelines
Section 15378 (b)(4) because such authorization is not considered a project subject to CEQA review
because the City's First Remittance and each subsequent years' remittances are government funding
mechanisms and fiscal activities that do not involve any commitment to any specific project which
may result in a potentially significant environmental impact; and
WHEREAS, while the City currently intends to make the City's First Remittance and all
subsequent years' remittances under the'Program under protest and without prejudice to the City's
right to recover such amounts and interest thereon, to the extent there is a final determination by the
Supreme Court (or other court(s)) that AB IX 26 and AB IX 27, all or parts thereof, are
constitutional or unconstitutional; and
WHEREAS, the City reserves the right, regardless of any community remittance made under
the Program pursuant to this Ordinance, to challenge the legality of AB 1 X 26 and AB 1 X 27; and
WHEREAS, in connection with the stay issued by the California Supreme Court in the
CRA Action on the effectiveness of the Program's payment obligation of AB 1X 26 and AB 1X 27,
the City shall not be obligated to make the City's First Remittance and each subsequent years'
remittances for the duration of such stay or other court order; and
WHEREAS, all other legal prerequisites to the adoption of this Ordinance have occurred;
and
WHEREAS, the City has duly considered all other related matters and has determined that
the City's participation in the Program is in the best interests of the City, 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, THE CITY COUNCIL OF THE CITY OF COSTA MESA
DOES ORDAIN AS FOLLOWS:
Section 1. The foregoing Recitals are true and correct and a substantive part of this
Ordinance.
Section 2. The City hereby finds that (i) the dissolution of the Agency would be
detrimental and cause irreparable harm to the community and to the health, safety, and economic
well-being of the citizens of the City, and (ii) the types of 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.
Section 3. The City hereby commits 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
7
DOCS OC/ 1506095v3/0223 53-0002
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 4. The City hereby ordains that the City shall comply with the Constitution and
the laws of the State of California, including Part 1.9, including the determination of remittance
amounts, appeal rights in relation thereto, and the making of the remittances referred to in
CRL Section 34194(b) and (c) at the times and in the manner described in Part 1.9. This Ordinance
is that ordinance referred to in CRL Section 34193 and shall be interpreted and applied in all respects
so as to comply with Part 1.9, to the fullest extent permitted by law.
Section 5. On or before November 1, 2011, the City's Chief Executive Officer is hereby
authorized and directed to notify the County Auditor -Controller, the State Controller's Office, and
the State Department of Finance that the City agrees to comply with the provisions of Part 1.9 as
provided under Section 34193, such notice to be in accordance with CRL Section 34193.1.
Section 6. The City's remittances to the County Auditor -Controller made pursuant to
Part 1.9 may be paid from any legally available funds of the City not otherwise obligated for other
uses in accordance with Section 34194.1. Nothing herein is intended or shall be interpreted to
require any payments or impose any financial or other obligation of the City other than in accordance
with the Constitution and laws of the State of California, including Part 1.9.
Section 7. The City Council detennines that approval of this Ordinance is exempt from
CEQA, pursuant to CEQA Guidelines Section 15378 (b)(4), because such approval is not considered
a project subject to CEQA review; the commitment to make the remittance payments is a government
funding mechanism and fiscal activity that does not involve any commitment to any specific project
that may result in a potentially significant environmental impact.
Section 8. The City Council hereby authorizes and directs that a Notice of Exemption
shall be filed with the Clerk of the Board of Supervisors of the County of Orange, California, within
five (5) working days following the date of adoption of this Ordinance.
Section 9. The documents and materials that constitute the record of proceedings on
which these findings are based are located at the City Clerk's office located at 77 Fair Drive,
Costa Mesa California 92628. The custodian for these records is the City Clerk.
Section 10. If any provision of this Ordinance or the application thereof to any person or
circumstance is held invalid, such invalidity shall not affect other provisions or applications of this
Ordinance which can be given effect without the invalid provision or application, and to this end the
provisions of this Ordinance are severable. The City Council hereby declares that it would have
adopted this Ordinance irrespective of the invalidity of any particular portion thereof.
Section 11. This Ordinance shall become effective upon the later to occur of.
(i) thirty (30) days after the date of the final passage and adoption hereof, 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 X 1 27 are valid and enforceable.
DOC SOC/ l 506095v3/022353-0002
Section 12. The City Clerk shall certify to the adoption of this Ordinance and cause it, or
a summary of it, to be published once within fifteen (15) days of adoption in a newspaper of general
circulation printed and published within the City, and shall post a certified copy of this Ordinance,
including the vote for and against the same, in the Office of the City Clerk in accordance with
Government Code § 36933.
PASSED APPROVED AND ADOPTED this to day of September 2011.
CITY OF COSTA MESA,
a California municipal corporation
Mayor
ATTEST:
City Clerk
0
DOCSOC/ 1506095v3/022353-0002
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF COSTA MESA
I, , City Clerk of the City
foregoing Ordinance No.
City Council of the City of Costa Mesa, held on the 6�'
was duly passed and adopted at a regular meeting of
September 2011.
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
of Costa Mesa, do hereby certify that the
was introduced at a regular meeting of the
day of September 2011, and that the same
said City Council held on the 20`" day of
CITY OF COSTA MESA, a California municipal
corporation
City Clerk
DOCSOC/1506095v3/022353-0002 /0
EXHIBIT "B"
RESOLUTION NO.
A RESOLUTION OF THE COSTA MESA REDEVELOPMENT AGENCY,
CITY OF COSTA MESA, CALIFORNIA ADOPTING AN INITIAL
RECOGNIZED OBLIGATION PAYMENT SCHEDULE, TRANSMITTING
SUCH SCHEDULE TO THE CITY, AS SUCCESSOR AGENCY, APPROVING
AN AGREEMENT TO TRANSFER TAX INCREMENT BETWEEN THE
AGENCY AND THE CITY OF COSTA MESA, 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
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
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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
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 X 1 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, except Section 34194(b)(2), (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, on September 6, 2011 the City by resolution confirmed its election to become
the successor agency in the event the Agency is dissolved and adopted and thereafter caused to be
transmitted to the State and County its Enforceable Obligation Payment Schedule; and
WHEREAS, the Agency desires to adopt the Initial Recognized Obligation Payment
Schedule attached to this Resolution as Attachment No. 1 and incorporated herein ("IROPS") and to
transmit the IROPS to the City, as successor agency, pursuant to Section 34169(h) of the CRL; 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 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
DOCSOC/ 1513125v 1/022353-0002
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, subject to the Supreme Court Stay, 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 Agency, 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
Agency 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 Agency has duly considered all other related matters and has determined
that the Agency's adoption of the IROPS, submission of the IROPS to the City, and approval and
execution of the Agreement to Transfer Tax Increment are in the best interests of the City and the
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 COSTA MESA
REDEVELOPMENT AGENCY:
Section 1. The foregoing recitals are incorporated into this Resolution by this reference,
and constitute a material part of this Resolution.
Section 2. ' The Agency hereby approves the IROPS attached hereto as Attachment No. 1
and incorporated herein and authorizes the Executive Director to transmit the IROPS to the City
(CEO, City Clerk, and Finance Director), as successor agency, in the event the Agency is dissolved
and to the extent authorized and/or required by law, including Part 1.85.
Section 3. The Agency hereby approves that certain Agreement to Transfer Tax
Increment in substantially the form attached hereto as Attachment No. 2 and incorporated herein,
with such changes mutually agreed upon by the Executive Director, the CEO, the Agency's Counsel
and the City Attorney, respectively, as are minor and in substantial conformance with the form of the
Agreement to Transfer Tax Increment submitted herewith. The Chairman and Secretary are hereby
authorized to execute and attest the Agreement to Transfer Tax Increment on behalf of Agency. In
such regard, the Chairman 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 Executive Director (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 Executive Director (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
DOCSOC/l 513125v l /022353-0002 I✓
out the Agreement to Transfer Tax Increment; provided any and all such changes shall not in any
manner materially affect the rights and obligations of the Agency thereunder.
Section 4. For fiscal year 2011-12 pursuant to CRL Section 34194.3, the Agency shall
be exempt from making the full allocation required to be made to the Low and Moderate Income
Housing Fund pursuant to Sections 33334.2, 33334.3 and 33334.6. The Agency hereby finds and
determines based upon substantial evidence provided in the record before it including the reports and
information that were presented in connection with and made a part of the Agency's and City's and
prior other actions pursuant to the 2011 Redevelopment Legislation, that there are insufficient other
moneys to meet its debt and other obligations, current priority program needs, or its obligations under
Section 34194.2 and the Agreement to Transfer Tax Increment.
Section 6. This Resolution shall in no way be construed as requiring the Agency (or the
City) 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 Agency (and/or the City) may have, whether in law
or in equity, to challenge 2011 Redevelopment Legislation. This Resolution shall not be construed as
the Agency's (and/or the City's) willing acceptance of, or concurrence with the 2011 Redevelopment
Legislation, either AB 1 X 26 or AB 1 X 27; nor does this Resolution evidence any assertion or belief
whatsoever on the part of the Agency (and/or City) the 2011 Redevelopment Legislation is
constitutional or lawful.
Section 7. This Resolution shall be effective immediately upon adoption.
Section 8. The Agency Secretary shall certify to the adoption of this Resolution.
APPROVED AND ADOPTED this 20th day of September 2011.
Chairman
(SEAL)
ATTEST:
Agency Secretary
DOCSOC/1513125v 1/022353-0002 Ay
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF COSTA MESA )
I, , Secretary of the Costa Mesa Redevelopment Agency, City of
Costa Mesa, California hereby certify that the foregoing resolution was duly adopted by the Agency
Board at its regular meeting held on the 201" day of September, 2011, and that it was so adopted by
the following vote:
AYES:
NOES:
ABSENT:
Secretary
(SEAL)
DOCSOC/ 1513125v 1 /022353-0002 1-15'
ATTACHMENT NO. 1
INITIAL RECOGNIZED OBLIGATION PAYMENT SCHEDULE
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ATTACHMENT NO.2
AGREEMENT TO TRANSFER TAX INCREMENT
[Attached on following pages.]
DOCSOC/1513125v1/022353-0002 8
1
AGREEMENT TO TRANSFER TAX INCREMENT
This AGREEMENT TO TRANSFER TAX INCREMENT ("Agreement") is entered into
as of , 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.
DOCSOC/1506115v1/022353-0002 / 9
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
DOCSOC/ 1506115v 1 /022353-0002
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 parry must be in writing; and, such waiver by a
DOCSOC/1506115v1/022353-0002 f�
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 party agrees to consider in good faith and exercise
reasonable discretion in its consideration of a request by another party to amend this Agreement.
[signature blocks on next page]
DOCSOC/1506115v1/022353-0002 `' A
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
Lo
ATTEST:
City Clerk
APPROVED AS TO FORM:
City Attorney
Mayor
AGENCY:
COSTA MESA REDEVELOPMENT AGENCY,
CITY OF COSTA MESA, CALIFORNIA, a public
body, corporate and politic
IM
Chairperson
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
STRADLING YOCCA CARLSON & RAUTH
Agency Special Counsel
DOCSOC/1506115v1/022353-0002 1073
EXHIBIT "C"
RESOLUTION NO.
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
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
DOCSOC/1513126v2/022353-0002 011
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
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 1 X 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 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
DOCSOC/1513126v2/022353-0002 425,
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 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
DOCSOC/1513126v2/022353-0002
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 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.
APPROVED AND ADOPTED this 20th day of September 2011.
Mayor
(SEAL)
ATTEST:
City Clerk
DOCSOC/1513126v2/022353-0002 097
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF COSTA MESA )
I, , City Clerk of the City of Costa Mesa, hereby certify that the foregoing
resolution was duly adopted by the City Council of said City at its regular meeting held on the
20th day of September 2011, and that it was so adopted by the following vote:
AYES:
NOES:
ABSENT:
City Clerk
(SEAL)
DOCSOC/1513126v2/022353-0002 �8
ATTACHMENT NO.1
AGREEMENT TO TRANSFER TAX INCREMENT
[Attached]
DOCSOC/1513126v2/022353-0002 lq
AGREEMENT TO TRANSFER TAX INCREMENT
This AGREEMENT TO TRANSFER TAX INCREMENT ("Agreement") is entered into
as of , 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.
DOCSOC/1506115v1/022353-0002 20
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
DOCSOC/ 1506115v 1 /022353-0002 ,3 /
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
DOCSOC/1506115v1/022353-0002 3A
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 parry 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]
33
DOCSOC/1506115v1/022353-0002
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
LIM
ATTEST:
Agency Secretary
APPROVED AS TO FORM:
STRADLING YOCCA CARLSON & RAUTH
Agency Special Counsel
3y
DOCSOC/ 1506115v ] /022353-0002
Chairperson