HomeMy WebLinkAbout- - Costa Mesa Opt In SR - 9/6/2011CITY COUNCIL AGENDA
REPORT
MEETING DATE: September 6, 2011 ITEM No.:
SUBJECT: PARTICIPATION INVOLUNTARY ALTERNATIVE REDEVELOPMENT
PROGRAM
DATE: August 25, 2011
FROM: THOMAS R. HATCH, C.E.O. AND AGENCY EXECUTIVE DIRECTOR
PRESENTATION BY: HILDA VETURIS, MANAGEMENT ANALYST
FOR FURTHER INFORMATION HILDA VETURIS, MANAGEMENT ANALYST
CONTACT: 714-754-5608
RECOMMENDED ACTIONS:
1. Adopt Costa Mesa City Council Resolution Electing to Serve as a Successor Agency
under Part 1.85 of Division 24 of the California Health and Safety Code in the Event
the Agency is Required to be Dissolved
2. Adopt Costa Mesa City Council Resolution Declaring its Intention to Enact an
Ordinance Whereby the City Elects to Comply with and Participate in the
Voluntary Alternative Redevelopment Program Set Forth in Division 24, Part 1.9 of
the California Health and Safety Code
3. Introduce and Conduct a First Reading of an Ordinance of the City of Costa Mesa
Electing to Comply with and Participate in the Voluntary Alternative Redevelopment
Program contained in Part 1.9 of Division 24 of the California Health & Safety Code
BACKGROUND:
This agenda item is presented in follow-up to the Costa Mesa Redevelopment Agency's
("Agency") special meeting on August 26, 2011 at which the Agency's Enforceable
Obligation Payment Schedule was approved. As background, on June 28, 2011
Governor Brown signed two budget trailer bills, AB X1 26 and AB X1 27, that were
chaptered on June 29, 2011 and had been adopted by the Legislature on June 15, 2011
("2011 Redevelopment Legislation") all in connection with approval of the State Budget.
AB X1 26 adds Parts 1.8 and 1.85 to the California Community Redevelopment Law,
Health and Safety Code Section 33000, of seq. ("CRL"). Part 1.8 provides for certain
immediate restrictions on the powers of redevelopment agencies and Part 1.85 provides for
agencies to be dissolved and for successor agencies and oversight boards to wind up the
affairs of the agencies. In contrast, AB X1 27 adds Part 1.9 to the CRL, the
Voluntary Alternative Redevelopment Program, which allows for an agency's host city
(or county) to commit to make annual payments to the county auditor -controller in order to
exempt the agency from dissolution by Parts 1.8 and 1.85, and thereby continue to exist
and carry out the provisions of the CRL. The amount to be paid by the City of Costa Mesa
("City') in FY 2011-12 as posted by Department of Finance ("DOF") on August 1, 2011 is
$1,475.173, which is the Agency's proportionate share of $1.7 billion pursuant to a formula
specified in AB X1 27. The Agency's proportionate share of $400 million per year and thus
the annual remittances for FY 2012-13 and subsequent fiscal years' will be calculated by
the County Auditor -Controller ("CAC") and reported to the Department of Finance ("DOF")
and State Controller's Office ("SCO").
On July 18, 2011, the California Redevelopment Association, the League of California
Cities, along with the cities of San Jose and Union City filed a petition with the
California Supreme Court seeking original jurisdiction and challenging both AB X1 26 and
AB X1 27 on constitutional grounds (California Redevelopment Association, et al. v.
Ana Matosantos, et al.) ("CRA Action"). The Supreme Court accepted the case on
August 11, 2011, notified the parties of the briefing schedule for petitioners, respondents,
and amicus curiae, 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 Section 34194(b)(2) of Part 1.9, making those laws now effective
(together, "Supreme Court Stay"). The Supreme Court also stated that the briefing
schedule "is designed to facilitate oral argument as early as possible in 2011, and a
decision before January 15, 2012."
At the July 12 joint meeting and August 26 special meeting, the City Council and
Agency Board directed staff to prepare and present for consideration and action the actions
necessary to "opt -in" to Part 1.9, the Voluntary Alternative Redevelopment Program
("Program"), which is the subject of this report and attachments. These actions include a
City Council resolution of intention ("Resolution of Intention") and an ordinance to opt -in
under Part 1.9 ("Ordinance"), along with a resolution electing that the City serve as the
successor agency in the event that dissolution and wind down of the Agency is required to
be implemented, such as if a court decision requires dissolution or if the City were to fail to
make a required remittance payment.
ANALYSIS:
Due to the Supreme Court Stay, the action to participate in the Program would be 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.
Under the 2011 Redevelopment Legislation as adopted, cities opting to make annual
remittance payments under the Program ("Remittances") do so by an ordinance enacted by
October 1, 2011. An agency may adopt the non-binding Resolution of Intention by
October 1, 2011 that allows the Ordinance to be enacted by November 1, 2011. Cities must
notify the DOF, SCO, and CAO of adoption of resolutions of intention and ordinances.
For the City's first Remittance of $1,475,173, half is due by January 15, 2012 and the other
half is due by May 15, 2012 for FY 2011-12. Remittances due for FY 2012-13 and
subsequent years will be determined by the CAC (albeit future legislation imposing more
payment obligations is possible.) Should the City enter into additional indebtedness
subsequent to October 1, 2011, the City's annual remittances for FY 2012-13 and thereafter
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will increase to allow for additional tax increment ("net school share") to flow through to local
educational agencies.
The Resolution of Intention is a non-binding declaration by the City of its intent to adopt the
Ordinance. Although a Resolution of Intention is not strictly necessary to the extent that the
City Council adopts the Ordinance before October 1, 2011, among redevelopment
consultants and counsels there have been conflicting opinions. The prudent approach, and
one the DOF had required at one point, is for the City to adopt the Resolution of Intention
first, then consider and take action on the Ordinance.
If the City elects to opt -in and if Part 1.9 is found constitutional, the Agency will be
reactivated and may restart its redevelopment activities pursuant to the CRL. While the
Remittances are an obligation of the City, not the Agency, pursuant to Part 1.9, the Agency
may transfer a portion of its tax increment to the City in an amount not to exceed the annual
Remittance required that fiscal year "for the purpose of financing activities within the
redevelopment area that are related to accomplishing the redevelopment agency project
goals"; this commonly has been referred to as the "backfill'. The Agency and City may
enter into an agreement to receive the backfill of tax increment ("Agreement to Receive
Tax Increment'), which agreement will be presented for consideration and action if and
when second reading of the Ordinance occurs, which will enable the Agency to pay tax
increment to the City up to the Remittance amount. For FY 2011-12 only, the Agency
transfer to the City may include the full low- to moderate- income housing fund
("Housing Fund") allocation as long as the Agency makes a finding that there are insufficient
other moneys available.
As noted, the Ordinance has been prepared with knowledge of the CRA Action, therefore
the date that the Ordinance is to become is effective will be 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 introduce and adopt the Ordinance and subject to the
Supreme Court Stay in the CRA Action, then 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 (see Finance Dept. Attachment) and for limited
wind down administration; and, all Agency assets would be transferred to the successor
agency for liquidation. Any encumbered monies in the Housing Fund and housing assets
would be transferred to the Orange County Housing Authority ("OCHA") All remaining
(former) tax increment proceeds would be distributed to affected taxing entities; including
the existing unencumbered balances sourced from the Housing Fund.
The successor agency is the host city/city council that created the agency; if a city does not
elect to be the successor agency then another local public agency may become the
successor agency. The recommended actions for this agenda item include a City Council
resolution electing to serve as the successor agency in the event the Agency is dissolved.
Successor agencies are supervised by 'oversight boards", which are comprised of seven
members appointed by: Board of Supervisors (2), Mayor (1), County Superintendent of
Education (1), Chancellor of California Community Colleges (1), largest special district
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DOCSOC/1506421 v 1/022353-0002
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. Parts 1.8 and 1.85 provide that CAO, DOF, and
SCO each have additional responsibilities in the dissolution and implementation of
enforceable obligations.
Pursuant to the Supreme Court Stay and the provisions of Parts 1.8 (and pending the
effectiveness of the Ordinance, if adopted), all agencies' powers are limited to carrying out
..enforceable obligations" that are defined to include: (i) existing bonds, (ii) payment of
agency loans, (iii) payments required by federal or state government or for employee
pension obligations, (iv) pay and perform judgments or settlements, (v) pay or perform "any
legally binding and enforceable agreement or contract that is not otherwise void as violating
the debt limit or public policy"; (vi) administer contracts for administration or operation of the
agency, (vii) fund reserves for existing bonds, (viii) preserve assets and records and
minimize agency liabilities, (ix) cooperate with the successor agency and state and county
auditing agencies, and (x) avoid triggering defaults under enforceable obligations.
Enforceable obligations exclude agreements or arrangements between the agency and city
and between the agency and another local public agency, which are declared to be invalid
and not binding unless the monies were committed by contract to a third party.
Such provisions do not apply to (i) an agreement entered into prior to December 31, 2010
for issuance of bonds, notes, certificates of participation or other similar bonded
indebtedness, and (ii) an agreement between an agency and its host city that was entered
into within two years of formation of the agency. Technical reporting requirements listing all
enforceable obligations are a critical part of the wind down process and the timing and
completeness are critical.
Petitioners in the CRA Action allege the legislation violates the California Constitution,
including: (1) Article XIII, Section 24 that prevents the Legislature from restricting the use of
taxes imposed by local governments for their local purposes; (2) Article XIIIA, Section 25.5
that prohibits city or county property tax from being used for schools, proscribes indirect
allocation of tax increment to schools, transit districts and fire protection districts, and
prohibits city and county property tax from being transferred to special districts without a
2/3 vote; and Section 1 that prohibits the transfer of property tax to transit districts;
(3) Article XIIIB that prohibits the diversion and use of property taxes to fund state
mandates; (4) Article XVI, Section 6 that bans the transfer of city or county revenues to
schools and transit districts and fire protection districts as an unlawful gift of public funds;
and (5) Section 16 that mandates tax increment to be expended only to repay indebtedness
of redevelopment agencies and to pay for implementation of redevelopment projects.
Even with the Supreme Court Stay, most likely the status of redevelopment agencies will
remain unresolved until lawsuit(s) are concluded.
As of the preparation of this agenda report, the Legislature is back in session and is
expected to consider and approve "clean up" legislation relating to the 2011 Redevelopment
Legislation; however, due to the Supreme Court Stay this may or may not occur. From an
advisement to CRA members, apparently, one bill would be technical clean-up legislation to
correct internal inconsistencies, ambiguous drafting and omissions that require clarification;
another bill would contain language to correct specific problems identified by individual
agencies and their legislators; and a third bill may include substantive policy changes,
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including requiring repayment of monies to the Housing Fund if the Agency and City avail
the provisions of Sections 34194.2 and 34194.3 that allows no deposit to the Housing Fund
for FY 2011-12 based on certain findings and that authorizes the backfill of this amount as
part of an Agreement to Receive Tax Increment between the City and Agency, as above
described. If more information is available by the meeting date, we will update the Council
and Agency.
LEGAL REVIEW:
Agency special counsel prepared this report and the attached Resolution of Intention,
the Ordinance, and the successor agency resolution.
ALTERNATIVES CONSIDERED:
The City Council may choose not to adopt the Resolution of Intention, or conduct first
reading of the Ordinance, and/or may reject becoming the successor agency. If the City
does not opt -in, then subject to the Supreme Court Stay, this would result in the Agency
being dissolved as discussed above. As explained in the Finance Department attachment,
the Agency would stand to lose significant Agency funds if the City does not opt -in to
Part 1.9 of the 2011 Redevelopment Legislation.
FISCAL REVIEW:
The City will expend $1.475,173 for the FY 2011-12 Annual Remittance Payment, half due
January 15 and half due May 15, 2012. The Agency would backfill an amount equal to the
Remittance pursuant to the Agreement to Transfer Tax Increment, if later approved.
CONCLUSION:
It is recommended that City Council adopt the attached successor agency resolution, the
Resolution of Intention, and introduce and conduct a first reading of the Ordinance. Due to
the Supreme Court Stay, the effective date of the Ordinance would be the later to occur of:
(i) thirty (30) days after the date of the final passage and adoption, 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.
g0M'<.;tw
Thomas R. Hatch, Chief Executive Officer
Agency Executive Director
Hilda Veturis
Management Analyst
w
0'i.._A
ATTACHMENTS:
A - City Council Resolution Making Election re Successor Agency under Part 1.85
B - City Council Resolution of Intention under Part 1.9
C - City Council Ordinance Electing into Voluntary Alternative Redevelopment Program
D - Finance Department Fiscal Analysis of Opt -in versus Opt -out
DOCSOC/ 1506421 v 1/022353-0002
ATTACHMENT A
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
COSTA MESA ELECTING TO SERVE AS A SUCCESSOR AGENCY
UNDER PART 1.85 OF DIVISION 24 OF THE CALIFORNIA HEALTH
AND SAFETY CODE IN THE EVENT THE AGENCY IS REQUIRED TO
BE DISSOLVED; AND TAKING CERTAIN ACTIONS IN CONNECTION
THEREWITH
RECITALS
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
Ordnance 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, 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, Parts 1.8, 1.85 and 1.9 of Division 24 of the CRL were added by Assembly Bill
X1 26 and Assembly Bill XI 27 (together, "2011 Redevelopment Legislation"), which laws purport
to become effective immediately; and
WHEREAS, the 2011 Redevelopment Legislation is a part of multiple trailer bills to the
FY 2011-2012 California budget bills that were approved by both Houses of the State Legislature on
June 15, 2011, signed by the Governor on June 28, 2011, and chaptered on June 29, 2011; and
WHEREAS, Part 1.8 of the CRL added by the Redevelopment Legislation ("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
81000-0163\1381541vl.do -1-
WHEREAS, Part 1.85 of the CRL added by the 2011 Redevelopment Legislation
("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 of 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 is the subject of judicial challenge(s), including the action:
California Redevelopment Association, et al v. Ana Matosantos, el 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, pursuant to Part 1.85 Sections 341710) and 34173(a) provide that a successor
agency is designated as successor entity to the former redevelopment agency and the host city that
created the agency may elect to serve, or not to serve, as the successor agency under Part 1.85, albeit
subject to the Supreme Court Stay; and
WHEREAS, as of the date of adoption of this Resolution, the City Council has not
completed the process and/or the time for the "opt -in" ordinance to become effective has not elapsed
due to the Supreme Court Stay in for order the Agency to participate in the Alternative Voluntary
Redevelopment Program, therefore, the City Council desires to adopt this Resolution making an
election in connection with the City to serve as the successor agency under Part 1.85 in the event the
Agency is dissolved pursuant to Part 1.85.
NOW, THEREFORE, the City Council hereby finds, determines resolves and orders as
follows:
Section 1. The above Recitals are true and correct and are a substantive part of this
Resolution.
Section 2. Subject to the Supreme Court Stay, this Resolution is adopted pursuant to
Part 1.85, Sections 34171 and 34173.
Section 3. The City Council hereby elects to serve as a successor agency under Part 1.85
in the event the Agency is required to be dissolved pursuant to Part 1.85.
Section 4. The City Clerk is hereby authorized and directed to file a certified copy of
this Resolution with the County Auditor -Controller.
81000-0163\ 1381541 v l .dm -2 -
Section 5. The Chief Executive Officer (and designees, as officers and staff of the City)
is hereby authorized and directed to do any and all things which they may deem necessary or
advisable to effectuate this Resolution and any such actions previously taken by the CEO
(and designees) are hereby ratified and confirmed.
Section 6. Subject to the Supreme Court Stay and at such time as the City and Agency
become exempt from Parts 1.8 and 1.85 based on the effectiveness of its actions to "opt -in" pursuant
to Part 1.9, this Resolution shall be of no further force or effect.
Section 7. This Resolution shall in no way be construed as requiring the City
(or 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 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 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/are
constitutional or lawful.
Section 8. This Resolution has been reviewed with respect to applicability of the
California Environmental Quality Act ("CEQA"), the State CEQA Guidelines (California Code of
Regulations, Title 14, Sections 15000, et seq., hereafter the "Guidelines"), and the City's
environmental guidelines. The City Council has determined that this Resolution is not a "project" for
purposes of CEQA, as that term is defined by Guidelines Section 15378, because this Resolution is
an organizational or administrative activity that will not result in a direct or indirect physical change
in the environment. (Guidelines Section 15378(b) (5)).
Section 9. This Resolution shall take effect upon the date of its adoption.
Section 10. The City Clerk shall certify to the adoption of this Resolution.
PASSED AND ADOPTED this 6TH day of September 2011,
CITY OF COSTA MESA, a California municipal
corporation
Mayor
ATTEST:
City Clerk
81000-0163\1381541 vl.do 3-
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF COSTA MESA
1, , City Clerk of the City of Costa Mesa, do hereby certify that the foregoing
Resolution No. was introduced and adopted at a regular meeting of the City Council held on
the 6th day of September 2011 by the following vote of the members thereof:
AYES:
COUNCILMEMBERS:
NOES:
COUNCILMEMBERS:
ABSENT:
COUNCILMEMBERS:
ABSTAIN:
COUNCILMEMBERS:
CITY OF COSTA MESA, a California municipal
corporation
City Clerk
81000-0163\ 13 8 l 5 41 v l . do o- 4 -
FAMAMOT09AAWIL Is0
RESOLUTION NO.
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
COSTA MESA DECLARING ITS INTENTION TO ENACT AN
ORDINANCE WHEREBY THE CITY ELECTS TO PARTICIPATE IN
THE VOLUNTARY ALTERNATIVE REDEVELOPMENT
PROGRAM SET FORTH IN DIVISION 24, PART 1.9 OF THE
CALIFORNIA HEALTH AND 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, 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"); 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 1.8") provides for the restriction of activities and
authority of the Agency in the interim period prior to dissolution to certain "enforceable obligations"
and to actions required for the general winding up of affairs, preservation of assets, and certain other
goals delineated in Part 1.8; and
WHEREAS, Part 1.85 of the CRL ("Part 1.85") provides for the statewide dissolution of all
redevelopment agencies, including the Agency, as of October 1, 2011, and provides that, thereafter,
a successor agency will administer the enforceable obligations of the Agency and otherwise wind up
the Agency's affairs, all subject to the review and approval by an oversight committee; and
WHEREAS, Part 1.9 of the CRL ("Part 1.9") provides that a redevelopment agency may
continue in operation if a city or county that includes a redevelopment agency adopts an ordinance
agreeing to comply with and participate in the Voluntary Alternative Redevelopment Program
established in Part 1.9 ("Program"); and
WHEREAS, the City is aware that the 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. Ann Matosantos, et al ("CRA Action"); and
DOCSOC/1506108v 1/022353-0002
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, pursuant to Part 1.9, 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") commencing with Fiscal Year 2011-2012
("First Remittance") that is due 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 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'; and
WHEREAS, the City intends to adopt the ordinance required by Part 1.9, in order to allow
the Agency to continue in operation and performing its functions ("Ordinance"); and
WHEREAS, the City intends to adopt the Ordinance and desires to adopt flus Resolution as
a first step thereto, albeit this resolution is non-binding pursuant to Part 1.9 and may be subject to the
Supreme Court's stay as set forth hereinafter; 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 to transfer amounts of tax increment
equal to any subsequent remittance 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, the City Council, by the adoption of this Resolution, does not represent,
disclaim, or take any position whatsoever on the issue of the validity of the 2011 Redevelopment
Legislation, but rather the Agency seeks to comply with the Constitution and laws of the State of
California, including the 2011 Redevelopment Legislation, in order to preserve the ability of the
Agency to continue to operate and perform its obligations and thereby benefit the community; 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
DOC SOC/ 1506108v 1/022353-0002
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 RESOLVE AS FOLLOWS:
Section 1. The foregoing Recitals are incorporated into this Resolution by this reference,
and constitute a material part of this Resolution.
Section 2. Pursuant to CRL Section 34193(b), the City hereby expresses its intent to
adopt the Ordinance to comply with Part 1.9. This resolution is that "nonbinding resolution of
intent" referred to in CRL Section 34193(b) and shall be interpreted and applied in all respects in
accordance with such section and Part 1.9, to the fullest extent permitted by law provided however
the City Council acknowledges the pending CRA Action and to the extent the City is not authorized
to cause this Resolution to be effective at this time, then this Resolution shall be effective 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 X1 27 are valid and
enforceable.
Section 3. On or before October 1, 2011, the City Manager is hereby authorized and
directed to notify the CAC, the State Department of Finance, and the State Controller's Office
concerning this Resolution in accordance with Section 34193(b).
Section 4. The City Clerk shall certify to the adoption of this Resolution.
PASSED, APPROVED AND ADOPTED this 6"' day of September 2011.
CITY OF COSTA MESA,
a California municipal corporation
Mayor
ATTEST:
City Clerk
DOCSOC/1506108v 1/022353-0002
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF COSTA MESA )
1, , City Clerk of the City of Costa Mesa, do hereby certify that the
foregoing Resolution No. was introduced and adopted at a regular meeting of the
City Council held on the 6°i day of September 2011 by the following vote of the members thereof:
AYES: COUNCIL MEMBERS:
NOES: COUNCIL MEMBERS:
ABSENT: COUNCIL MEMBERS:
ABSTAIN: COUNCIL MEMBERS:
CITY OF COSTA MESA, a California
municipal corporation
City Clerk
DOCSOC/1506108v 1/022353-0002
ATTACHMENT C
ORDINANCE NO.
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
Conummity Redevelopment Law, Health and Safety Code Sections 33000, el seg. ("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 XI 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 1.8") provides for the restriction of activities and
authority of the Agency in the interim period prior to dissolution to certain "enforceable obligations"
and to actions required for the general winding up of affairs, preservation of assets, and certain other
goals delineated in Part 1.8; and
WHEREAS, Part 1.85 of the CRL ("Part 1.85") provides for the statewide dissolution of all
redevelopment agencies, including the Agency, as of October 1, 2011, and provides that, thereafter,
a successor agency will administer the enforceable obligations of the Agency and otherwise wind up
the Agency's affairs, all subject to the review and approval by an oversight committee; and
WHEREAS, Part 1.9 of the CRL ("Part 1.9") provides that a redevelopment agency may
continue in operation if a city or county that includes a redevelopment agency adopts an ordinance
agreeing to comply with and participate in the Voluntary Alternative Redevelopment Program
established in Part 1.9 ("Program"); and
WHEREAS, the City is aware that the validity, passage, and applicability of the
2011 Redevelopment Legislation are the subject of judicial challenge(s), including the action:
California Redevelopment Association, el al v. Ana Matosantos, el al ("CRA Action"); and
DOCSOC/1506095v 1/022353-0002
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 amoral 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 X1 27 are valid and
enforceable; and
2
DOCSOC/M 506095v 1/022353-0002
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 seg.) ("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 environnental 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 1X 26 and AB 1X 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 1X 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 IX 26 and AB IX 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 pant 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
DOCSOC/1506095v 1/022353-0002
redevelopment agency project goals" or as otherwise determined by the covets 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 Pant 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 determines 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 X1 27 are valid and enforceable.
0
DOCSOC/1506095v 1/022353-0002
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 _o, day of September 2011.
CITY OF COSTA MESA,
a California municipal corporation
Mayor
ATTEST:
City Clerk
DOCSOC/1506095v 1/022353-0002
STATE OF CALIFORNIA
COUNTY OF ORANGE
CITY OF COSTA MESA
1, , City Clerk of the City of Costa Mesa, do hereby certify that the
foregoing Ordinance No. was introduced at a regular meeting of the
City Council of the City of Costa Mesa, held on the _'' day of September 2011, and that the same
was duly passed and adopted at [an adjourned regular] a regular meeting of said City Council held on
the _m day of September 2011.
AYES:
COUNCIL MEMBERS:
NOES:
COUNCIL MEMBERS:
ABSENT:
COUNCIL MEMBERS:
ABSTAIN:
COUNCIL MEMBERS:
CITY OF COSTA MESA, a California municipal
corporation
Clerk
DOCSOC/1506095v 1/022353-0002
ATTACHMENT D
Costa Mesa Redevelopment Agency
80% Tax Increment
Expenditures:
Enforceable Obligations
Administration
Opt In Payment to State
Subtotal Expenditures
Available for Allowable Projects
Increase in General Fund Property Tax Revenue
(2,003,272)
(435,431)
(1,475,173)
(3,913,876)
930,265
20% Tax Increment
Current Available Fund Balance 676,383
Total Revenues 833,250
Subtotal Fund Balance and Revenues 1,509,633
(2,003,272)
(250,000)
(2,253,272)
Expenditures:
Administration (416,342)
Rehabilitation Program and Grants (167,200) -
Subtotal Expenditures (583,542)
Available for Allowable Projects 926,091 -
FY 11-12
FY 11-12
Opt In
Opt Out
Current Available Fund Balance
1,485,831
1,872,214
Total 80% Revenues
3,358,310
3,358,310
Total 20% Revenues
-
833,250
Subtotal Fund Balance and Revenues
4,844,141
5,230,524
80% Tax Increment
Expenditures:
Enforceable Obligations
Administration
Opt In Payment to State
Subtotal Expenditures
Available for Allowable Projects
Increase in General Fund Property Tax Revenue
(2,003,272)
(435,431)
(1,475,173)
(3,913,876)
930,265
20% Tax Increment
Current Available Fund Balance 676,383
Total Revenues 833,250
Subtotal Fund Balance and Revenues 1,509,633
(2,003,272)
(250,000)
(2,253,272)
Expenditures:
Administration (416,342)
Rehabilitation Program and Grants (167,200) -
Subtotal Expenditures (583,542)
Available for Allowable Projects 926,091 -