HomeMy WebLinkAbout25 - NB-1 - Attachment 1 - 2/18/2014ATTACHMENT
Successor Agency Resolution No. 14-_
(attached)
RESOLUTION NO.
A RESOLUTION OF THE SUCCESSOR AGENCY TO THE COSTA MESA
REDEVELOPMENT AGENCY APPROVING AN AGREEMENT TO
RE-ESTABLISH LOAN PURSUANT TO SECTION 34191,4 BETWEEN THE
CITY OF COSTA MESA AND THE SUCCESSOR AGENCY TO THE
COSTA MESA REDEVELOPMENT AGENCY; DIRECTING SUBMITTAL OF
SUCH LOAN AGREEMENT TO THE OVERSIGHT BOARD TO CONSIDER
THAT THE LOAN AGREEMENT WAS FOR LEGITIMATE
REDEVELOPMENT PURPOSES; AND MAKING OTHER FINDINGS IN
CONNECTION THEREWITH
WHEREAS, the City of Costa Mesa ("City") is a municipal corporation organized and
operating under the laws of the State of California; and
WHEREAS, the Successor Agency is a public body corporate and politic, organized
and operating under Parts 1.8 and 1.85 of Division 24 of the California Health and Safety
Code, and the successor the former Costa Mesa Redevelopment Agency ("former Agency")
that was previously a community redevelopment agency organized and existing pursuant to
the Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL");
and
WHEREAS, Assembly Bill x1 26 ("AB x1 26") added Parts 1.8 and 1.85 to Division 24
of the California Health & Safety Code and which laws were modified, in part, and determined
constitutional by the California Supreme Court in the petition California Redevelopment
Association, et al. v. Ana Matosantos, et al., Case No. S194861 ("Matosantos Decision"),
which laws and court opinion caused the dissolution of all redevelopment agencies and
winding down of the affairs of former redevelopment agencies; thereafter, such laws were
amended further by Assembly Bill 1484 ("AB 1484") (together AB x1 26, the Matosantos
Decision, and AB 1484 are referred to as the "Dissolution Laws"), and all statutory references
herein are to the Health and Safety Code of the Dissolution Laws unless otherwise stated;
and
WHEREAS, as of February 1, 2012 the former Agency was dissolved pursuant to the
Dissolution Laws and as a separate public entity, corporate and politic the Successor Agency
administers the enforceable obligations of the former Agency and otherwise unwinds the
former Agency's affairs, all subject to the review and approval by a seven -member oversight
board ("Oversight Board"); and
WHEREAS, Section 34179 provides that the Oversight Board has fiduciary
responsibilities to holders of enforceable obligations and the affected taxing entities that
benefit from distributions of property tax and other revenues pursuant to Section 34188 of
Part 1.85 of the Dissolution Laws; and
WHEREAS, Section 34177(a) permits the Successor Agency to make payments due
for enforceable obligations; and
WHEREAS, Section 34177(1) requires the Successor Agency to prepare a
Recognized Obligation Payment Schedule ('BOPS') before each six-month fiscal period that
lists its Enforceable Obligations; and
WHEREAS, Section 34191.4(b) authorizes the City and Successor Agency to
re-establish prior loan agreement(s) between the City and the former Agency as follows:
"(1) Notwithstanding subdivision (d) of Section 34171, upon application by the
successor agency and approval by the oversight board, loan agreements entered into
between the redevelopment agency and the city, county, or city and county that
created by the redevelopment agency shall be deemed to be enforceable obligations
provided that the oversight board makes a finding that the loan was for legitimate
redevelopment purposes.
(2) If the oversight board finds that the loan is an enforceable obligation, the
accumulated interest on the remaining principal amount of the loan shall be
recalculated from origination at the interest rate earned by funds deposited into the
Local Agency Investment Fund [LAIF]. The loan shall be repaid to the city, county, or
city and county in accordance with a defined schedule over a reasonable term of years
at an interest rate not to exceed the interest rate earned by funds deposited into the
Local Agency Investment Fund. The annual loan repayments provided for in the
recognized obligations payment schedules shall be subject to all of the following
limitations:
(A) Loan repayments shall not be made prior to the 2013-14 fiscal year.
Beginning in the 2013-14 fiscal year, the maximum repayment amount
authorized each fiscal year for repayments made pursuant to this subdivision
and paragraph (7) of subdivision (e) of Section 34176 combined shall be equal
to one-half of the increase between the amount distributed to the taxing entities
pursuant to paragraph (4) of subdivision (a) of Section 34183 in that fiscal year
and the amount distributed to taxing entities pursuant to that paragraph in the
2012-13 base year. Loan or deferral repayments made pursuant to this
subdivision shall be second in priority to amounts to be repaid pursuant to
paragraph (7) of subdivision (e) of Section 34176.
(B) Repayments received by the city, county or city and county that
formed the redevelopment agency shall first be used to retire any outstanding
amounts borrowed and owed to the Low and Moderate Income Housing Fund
[LMIHF] of the former redevelopment agency for purposes of the Supplemental
Educational Revenue Augmentation Fund [SERAF] and shall be distributed to
the Low and Moderate Income Housing Asset Fund established by subdivision
(d) of Section 34176.
(C) Twenty percent of any loan repayment shall be deducted from the
loan repayment amount and shall be transferred to the Low and Moderate
Income Housing Asset Fund, after all outstanding loans from the Low and
Moderate Income Housing Fund for purposes of the Supplemental Educational
Revenue Augmentation Fund have been paid."
WHEREAS, the Successor Agency received its Finding of Completion from the State
Department of Finance ("DOF") by letter dated May 24, 2013; and
WHEREAS, the former Agency did not have any outstanding amounts borrowed or
owed to the LMIHF for purposes of the SERAF; and
WHEREAS, pursuant to authority granted to both the City and the former Agency in
the Redevelopment Plan for the Downtown Project Area the City made a series of cash
advances to the former Agency from April 16, 1973 and advances continued pursuant to such
original borrowing to March 16, 1981; and
WHEREAS, each advance was documented by a promissory note, and both the
former Agency and City booked and accounted for this series of advances as a single loan
with a revolving balance (together, "City/Agency Loan"); and
WHEREAS, the cash advances were to fund redevelopment activities of the start-up
of the former Agency (commencing more than 40 years ago) and then for implementation of
the original Redevelopment Plan, acquisition of properties, public improvements related to
and benefiting the Project Area, and development projects all of which were authorized by
the Community Redevelopment Law and were made for legitimate redevelopment purposes;
and
WHEREAS, on July 7, 1982, the cumulative total of monies loaned, including accrued
interest, was consolidated and evidenced in a single promissory note in the principal amount
of $6,747,050.00 bearing interest with such City/Agency Loan continuing to be booked and
accounted for by the former Agency and City as a single loan; and
WHEREAS, from 1982 to 1993, this promissory note was refinanced via another
promissory note each year (or less than a year), and the interest rate was changed to 8% to
reflect then -current market conditions, and each such consolidated promissory note was
payable "upon demand"; and
WHEREAS, the last consolidated promissory note dated July 1, 1993, which note was
not refinanced or replaced and the balance remains due and owing from the Successor
Agency to the City; and
WHEREAS, from approximately 1978 through 1992, as the community's
Redevelopment Plan progressed, the former Agency made sporadic repayments of interest
due to the City on the City/Agency Loan when cash was available, and in 1992, the City
requested more regular loan repayments from the former Agency according to a payment
schedule; and
WHEREAS, in response, the former Agency began making regular loan repayments
and then in In 2004, the City required that the former Agency change its loan repayment
schedule to require regular amortized loan repayments so as to reduce the loan balance to
zero after 20 years, and the loan repayment and amortization schedule required the former
Agency to make loan repayments once per year in a fixed amount of $1,299,705; and
WHEREAS, the former Agency began making such scheduled annual loan
repayments to the City in 2004, which continued to 2011-2012 fiscal year; and
WHEREAS, in 2012 as an approved line item in ROPS II for the fiscal period July 1 to
December 31, 2012, the DOF approved as an enforceable obligation the monies necessary
to make the loan payment for fiscal year 2012-2013, however, as a result of the DOF's review
of the Successor Agency's Other Funds and Accounts Due Diligence Review submitted
pursuant to Section 34179.6, and in April 2013 the DOF disallowed the loan repayments
made to the City allocable to the 2010-2011 and 2011-2012 fiscal years and clawed back
$2,492,747; and
WHEREAS, further, the DOF reversed its position from ROPS II and determined that
the City/Agency Loan is not an enforceable obligation; and
WHEREAS, these DOF decisions are the subject of a pending lawsuit filed by the City
and Successor Agency against the State, the County of Orange, Auditor -Controller ("CAC")
and other interested parties filed in Sacramento Superior Court; and
WHEREAS, even though the City and Successor Agency disagree with the DOF's
determinations, Section 34191.4 of the Dissolution Laws authorizes the Successor Agency
to re-establish the City/Agency Loan after the issuance of a finding of completion; and
WHEREAS, the DOF sent a letter to the Successor Agency dated May 24, 2013 that
issued a Finding of Completion and therefore, the City and Successor Agency desire by that
certain Agreement to Re -Establish Loan Pursuant to Section 34191.4 ("Agreement") to
reinstate and re-establish and set forth the terms of the City/Agency Loan pursuant to
34191.4; and
WHEREAS, the Agreement sets forth the terms of the reinstated loan with a remaining
principal balance of $12,596,073.58 with repayments to the City in accordance with a new,
defined repayment schedule over a reasonable term of years, which is set forth in Exhibit A
to the Agreement with interest accruing at the rate earned by funds deposited into the Local
Agency Investment Fund ("LAIF") pursuant to Section 34191.4 and other terms as set forth
therein; and
WHEREAS, by the Agreement the Successor Agency agrees to list the Agreement
and loan thereunder as an enforceable obligation of the Successor Agency on each
successive ROPS prepared by the Successor Agency, approved by the Oversight Board, and
reviewed and approved by the DOF until such loan is repaid in full both principal and interest.
NOW, THEREFORE, BE IT RESOLVED BY THE SUCCESSOR AGENCY TO THE
COSTA MESA REDEVELOPMENT AGENCY 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 the Dissolution Laws, the Successor Agency finds and determines
that the City/Agency Loan monies were advanced were for legitimate redevelopment
purposes within the meaning of Section 34191.4 and the Agreement reinstates and re-
establishes the City/Agency Loan as an enforceable obligation.
SECTION 3. The Successor Agency approves that certain Agreement to Re -Establish Loan
Pursuant to Section 34191.4, which is attached to this Resolution as Attachment 1. and fully
incorporated by this reference.
SECTION 4. The Successor Agency approves the re-establishment of the City/Agency Loan
by the Agreement and approves inclusion of the Agreement as an enforceable obligation on
each subsequent ROPS until the loan is repaid in full, commencing with ROPS 14-15A for
the fiscal period July 1, 2014 to December 31, 2014. In addition, the Successor Agency
requests that the Oversight Board authorize and approve the Agreement, find the loan was
for legitimate redevelopment purposes, find the Agreement is an enforceable obligation, and
authorize its inclusion on each ROPS of the Successor Agency until repaid in full.
SECTION 5. This Resolution shall be effective as of the date of adoption by the Successor
Agency.
SECTION 6. The Successor Agency shall certify to the adoption of this Resolution and
maintain on file as a public record this Resolution.
PASSED, APPROVED, AND ADOPTED at a regular meeting of the Successor
Agency to the Costa Mesa Redevelopment Agency, held on the 18th day of February 2014
by the following vote, to wit:
AYES:
NOES:
ABSENT:
ABSTAIN:
James M. Righeimer
ATTEST:
Brenda Green
Secretary, Successor Agency