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Home My WebLink About2012-11-15 Study Session - SA Bonds and Bond-funded Projects . , ,,,s-s f,.....**--- MY Of NUM OHERT .....-7—__-,. ._ _... :, •—•—.A.a_f: -.1 Oftle4i4 W' 73-510 FRED WARING DRIVE N bllik i � ' PALM DESERT, CALIFORNIA 92260-2578 �`r ti' Go 6— �.�o'� �. �j��:• TEL: 7 3 4 O�i I I '.•' ��3y�° info@cityofpalmdesert.org NOTICE OF STUDY SESSION OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY NOTICE IS HEREBY GIVEN that the Successor Agency to the Palm Desert Redevelopment Agency will convene Thursday, November 15, 2012, at 2:00 p.m. in the Administrative Conference Room of the Palm Desert Civic Center, 73-510 Fred Waring Drive, Palm Desert, California 92260, for the purpose of conducting a Study Session. Said Study Session will be held in order to discuss Successor Agency: 1) Bonds; 2) Bond- funded Projects; 3) Properties. RA ELLE D. KLASSEN, CITY CLER� CITY OF PALM DESERT, CALIFORNIA November 9, 2012 NO ACTIONS WILL BE TAKEN AT THE STUDY SESSION. PURPOSE OF THE STUDY SESSION IS INFORMATION ONLY. i�PRIXRED DX RF(Y(L[D RAPER 5 SUCCESSOR AGENCY TO THE 114-N PALM DESERT REDEVELOPMENT AGENCY b _ ,;�,b ?44 .!�• MEMORANDUM ALA =97'3 , TO: John Wohlmuth, Executive Director FROM: Martin Alvarez, Director of Economi Development Paul Gibson, Director of Finance Janet Moore, Director of Housing srto DATE: November 15, 2012 SUBJECT: Issues Related to the Dissolution of Redevelopment As you know AB 26 and AB 1484 have placed limitations on the Successor Agency's actions related to loans from the City to the former RDA, the use of bond proceeds and disposition of real property. In order to be allowed to repay the City loans and use bond proceeds for the purposes intended, the Successor Agency must meet several milestones between the enactment of AB 1484 and April of 2013. Upon successful completion of these requirements the State Department of Finance (DOF) will issue a "Finding of Completion" (FOC). The FOC will allow the Successor Agency to pursue its original intentions related to the bond projects. Although repayment of the City loans may be allowed, the formula restricts how much and when the payments can occur. AB 1484 provides further direction on the disposition of real property requiring the Successor Agency to prepare a Long-Range Property Management Plan (Plan) after successful receipt of the FOC. The attached schedule provides a snapshot look at the potential dates and best case scenario of when the Successor Agency could expect to see the FOC and be able to proceed with above goals. Although the FOC is not expected until late April 2013, staff is beginning the process of preparing the Plan now. Within the Plan, there are some concepts staff will be considering in order to minimize the effects the dissolution of RDA has on the City. The attached agenda outlines the discussion of the potential issues, strategies, and risks as staff currently sees them. Page 1 AGENDA Study Session November 15, 2012 Administrative Conference Room A. CITY LOANS TO THE FORMER REDEVELOPMENT AGENCY • Amount outstanding $ 22,655,000 plus applicable interest o $22.6 million total includes $9.1 million repaid in 2011 (clawed back pursuant to AB 26). Of the $9.1 million, $6.0 million was General Fund dollars and will reduce the General Fund Reserves from $68 million to $62 million. • Funds from loans were used to acquire various land parcels throughout the city of Palm Desert for the development of public facilities including public safety facilities, educational facilities, recreational facilities, affordable housing and preserving open space • AB 1484 allows for repayment of the City loans, however based on the priority of the obligations of the Successor Agency, the timing of repayment is deferred and could begin as far out as 2038. • There is a process of approval by which the Successor Agency must go through in order to "reactivate" the loan agreements. • Loan repayments are second in priority to amounts to be repaid for SERAF loan. • After SERAF is repaid, 20% of each loan repayment received by the City must go into a Low and Moderate Income Housing Asset Fund B. LAND OWNED BY THE SUCCESSOR AGENCY • Successor Agency owns approximately 570 acres. Of the 570 acres, 142 acres are for potential public benefit (public parking, educational facilities, retention basins, etc.) and 110 acres are Desert Willow properties • Original cost of the property was $59.5 million. The purchases were funded by bond proceeds, loans from the City, and tax increment • AB 26 requires that the Successor Agency disposes of real property expeditiously and to the greatest benefit of the taxing entities. • AB 1484 also adds the suspension of the disposition of property until a Long- Range Property Management Plan (PMP) is approved by DOF. • The PMP must be submitted within 6 months of receiving the finding of completion. • Staff is researching the potential to "repurchase" the Desert Willow parcels in exchange for the loan repayment to the City. o Appraisals are currently being completed for all Desert Willow lot pads that are subject to disposition. o Staff will review the appraisals and evaluate the feasibility of requesting retention of the Desert Willow lot pads in exchange for repayment of the City Loan Page 2 • The PMP will also identify other parcels that are of public benefit such as retention basins, higher education parcels, and parking lots to be retained by the City. C. UNSPENT TAX ALLOCATION BONDS AND POTENTIAL USES Rules for unspent proceeds: 1. With a FOC and approval from DOF, unspent proceeds MUST only be used for the purposes identified in the original bond documents, or to pay the debt. 2. AB 26 and AB 1484 do not provide for substituting projects. 3. Listed projects are not limited to the original costs estimates but they are limited to the unspent bond proceeds by project area. 4. Ultimate use cannot be determined now because of the unknowns related to cash availability. • The Successor Agency currently has approximately $105 million available in bond proceeds for projects • Upon receipt of the FOC proceed with a request to the Department of Finance to use bond proceeds for their original purpose • Earliest commencement for projects if approved through the process (FOC, DOF review, etc.) would be 2014 D. STRATEGY • Consider options related to the repayment of City loans • Retain land for intended public purposes through the Long Range Management Plan • Prioritize bond projects and consider options for debt repayment • Sell land after Long-Range Property Management Plan for private development and return funds to the taxing agencies E. RISKS • Obligations including loans, bond projects and land disposition may be disallowed by DOF • Delay of FOC due to DOF objections throughout process • Availability of cash sources to pay obligations • Assumes that assessed values will maintain a 2% growth factor • Assumes future Recognized Obligation Payment Schedules will be approved by DOF with the anticipated added obligations noted above Page 3 Successor Agency to the Palm Desert Redevelopment Agency Required Dates/Deadlines Pursuant to AB 26 and AB 1484 Deadline Action Complete Monday,October 01,2012 OB reviews DDR for LMIHF Funds(Public Comment Session)by this date x Monday,October 15,2012 OB approves DDR for LMIHF Funds and submits to DOF by this date x Friday,November 02,2012 Meet and Confer on ROPS3 x Friday,November 09,2012 Last Day for DOF to review and notify SARDA of any issue with the DDR for LMIHF x Friday,November 16,2012 Pay to County available cash on hand for LMIHF or file Meet and Confer Saturday,December 01,2012 County reports amounts paid by Agencies to DOF Saturday,December 15,2012 OB reviews DDR for RDA Funds(Public Comment Session)by this date(Schedule for PD 0B on 12/3/12) Tuesday,January 01,2013 ROPS3 Period Begins Wednesday,January 02,2013 CAC makes distributions of property tax for ROPS3 period Tuesday,January 15,2013 OB approves DDR for RDA Funds and submits to DOF by this date(Scheduled for PD OB on 1/7/13) Sunday,March 03,2013 OB approved ROPS4 must be submitted to DOF(Scheduled for PD OB on 2/4/13) Monday,April 01,2013 Last Day for DOF to review and notify SARDA of any issue with the DDR for RDA Funds Saturday,April 06,2013 Pay to County available cash on hand for Other Funds or file Meet and Confer Saturday,April 20,2013 County reports amounts paid by Agencies to DOF Thursday,April 25,2013 Earliest date FOC is issued "Upon full payment of amounts determined by DDR review as reported by CAC,DOF has 5 days to issue Finding of Completion"§34179.7 Page 4 BOND PROJECTS LIST FROM ROPS Project Area Debt Obligation Description Est.Project Amount Project Area No.1 Improve traffic flow, provide accessible public parking and Alessandro Alley Frontage Rd Imps reconfigure adjacent arterial access for the commercial properties on the north side of Highway 111 from Las Palmas Ave to Monterey Ave. Improve public infrastructure and encourage private sector Core Commercial Parking Improvements investment near Westfield shopping center, Highway 111 and El 5,000,000.00 Paseo. President's Plaza Parking Lot Imps Improve parking and traffic conditions in the area along the 5,000,000.00 businesses fronting Hwy 111. Undergrounding Utilities Improve community facilities&public facilities - Portola Avenue Widening Address traffic circulation and deficiencies 2,000,000.00 12,000,000.00 Unspent Project Funds(Amounts Originally Intended for Capital Projects) $ 16,013,333.61 Balance to Call Bonds/Pay Debt Service/Fund Projects listed in Bond Documents 4,013,333.61 Project Area No.2 Construct of a new four-bay University Village Fire North Sphere Fire Station Station/headquarters facility located at the Cal State University Palm 7,000,000.00 Desert Campus. Monterey Ave On/Off Ramp Imps Improve arterial access inbound and outbound from Interstate 10. 6,000,000.00 Portola Avenue On/Off Ramp Construction Design and completion of interchange to provide arterial access 6,800,000.00 inbound and outbound from Interstate 10. Undergrounding Utilities Improve community facilities&public facilities - 19,800,000.00 Unspent Project Funds(Amounts Originally Intended for Capital Projects) $ 29,277,385.05 Balance to Call Bonds/Pay Debt Service/Fund Projects listed in Bond Documents 9,477,385.05 Project Area No.3 Portola Avenue On/Off Ramp Construction Design and completion of interchange to provide arterial access 8,200,000.00 inbound and outbound from Interstate 10. Undergrounding Utilities Improve community facilities&public facilities - Portola Avenue Widening Address traffic circulation and deficiencies - 8,200,000.00 Unspent Project Funds(Amounts Originally Intended for Capital Projects) $ 15,333,124.96 Balance to Call Bonds/Pay Debt Service/Fund Projects listed in Bond Documents 7,133,124.96 Project Area No.4 Undergrounding Utilities Improve community facilities&public facilities Unspent Project Funds(Amounts Originally Intended for Capital Projects) $ 21,955,019.27 Balance to Call Bonds/Pay Debt ServicelFund Projects listed in Bond Documents 21,955,019.27 Housing Set-Aside Carlos Ortega Villas Reconstruct approximately 70 untis to increase the availability of 16,500,000.00 affordable units in the City. Desert Pointe Rehabilitation Upgrade deteriorating conditions at an affordable housing property. 2,000,000.00 Buydown Subsidies for Low-Mod Housing Provide subsidies to developers or first time homebuyers for the provision of affordable housing. Sagecrest Reconstruction Reconstruct approximately 24 units to increase the availability of 4,100,000.00 affordable units in the City. 22,600,000.00 Unspent Project Funds(Amounts Originally Intended for Capital Projects) $ 22,646,960.69 Balance to Call Bonds/Pay Debt Service/Fund Projects listed in Bond Documents 46,960.69 *Amounts reflected are greater than originally estimated in Tax Certificate based on Staff's Updated Recommendation. Page 5 �D K_ CITY COUNCIL STUDY SESSION November 15 , 2012 Dissolution of Redevelopment and Related Issues Requirements of AB 1484 BACKGROUND INFORMATION AB 26 — Places limitations on Actions related to: City Loans Disposition of Real Property Use of Unspent Bond Proceeds AB 1484 — Updates AB 26 Increases power of Department of Finance (DOF) and County Auditor-Controller (CAC) Provides safe harbor (Finding of Completion) IF certain requirements are met FINDING OF COMPLETION FOC) Earning an FOC requires i res that agencies encies meet q several milestones Requiremen Deadline Due Diligence Review (DDR) for Low Mod Income Housing Fund (LMIHF) October I , 2012 Remittance of LMIHF Cash, if required November 16, 2012 DDR for Other RDA Funds to Oversight Board December 15, 20 12 Remittance of Other Funds Cash, if required April 6, 2013 Earliest FOC will be issued April 25, 2013 BENEFITS OF RECEIVING AN FCC Loan Agreements between the City and former RDA may now be enforceable obligations Real Property may be retained for governmental uses Bond proceeds may be used for original purpose REPAYMENT F CITY LOANS Total Outstanding Balance $22,655,000 (includes $9. I Million 2011 payment clawed back pursuant to AB 26 which includes $6.0 Million from the General Fund) ., 1 • •m a Capital Projects Fund $8,000,000 New Construction Tax Fund $654,000 Park and Rec Facilities Fund $4,765,000 Liability Self Ins Fund $381 ,000 General Fund $8,855,000 Total $22,655,000 Funds were used to acquire various land parcels for development of public facilities. AB 1484 provides for repayment, however deferred based on priorities (possibly as far out as 2038). RULES FOR REPAYMENT OF QT\ LOANS Loan Agreement must be "reactivated" by Oversight Board (OB) approval, as long as original loan was for "legitimate redevelopment purposes". DOF has the right to request review and approve or direct OB to reconsider approval. Terms and conditions of loan must meet requirements set forth in AB 1484. Loan repayments are second in priority to amounts to be repaid to the Housing Successor Entity for SERAF loan. After SERAF is repaid, 20% of each loan repayment received by the City must go into Low and Moderate Income Housing Asset Fund DISPOSAL OF REAL PROPERTY SA owns approx 570 acres which includes 142 acres for potential public benefit and 110 acres at Desert Willow Acquisition cost of property was $59.5 million Funded by bond proceeds, city loans, and tax increment. Requirements to Dispose of Property AB 1484 allows Agencies that received an FOC to retain properties while preparing a long-range property management plan (PMP). ❖ Consider exchange of Desert Willow parcels for City loans ❖ Other parcels that are of public benefit such as retention basins, higher education parcels, and parking lots will be identified by PMP to be retained. . ita% aft1 . ' • . 1 1 . .g. ——-- -Z A ..,---...44.,„, ;, SUCCESSOR AGENCY 7.:'nti-`77:4" . • :....,t7 :,/iz-- ---X-,,, '•••,_ , rtigt-',v . . E TO 1-H E Ilk. ':•'.4 . ,..4 --•74-4, ,,,. 4 --'1,:j . • ; ri. . •„, - ,...----m., ••0_•.„,!, .1 00 0.. , ... • ../. ' . : . ...001.'t 1 l'A LM DES ERT . vi '. ility t-, A ., , ro- _ .1 ._,....:71:,,, ti . sk. . ,*, - ' - '4,.1- .:...1: --ir, REDEVELOPMENT AGENCY ....- ,. ,t', k . 1-:' - - -_./3?..-sr-P"--- , '4-c., //00,` . ,... , t' ." IF ' ,,,,I. . / /, .- 'IP 'r• - .4 3%-- -1( //,/ ,0, '..... •.0*.?...4 s" ,...f,„,„„t,,,0114, 4'1.,l"._ti4F.,.. ,1 • : 17.. t ,'-' 1'' ... .. 414#11011111*ElfibUI , , ,r: ri.giiiklia4 glj MI' 1 DES E itT WILLOW :,00„ - • • ' -A-r: 4 , '‘ ri 0 r 1r i ir : 7 ' .., , PROPERTIES , i '. -- . _ • .,,,,, .,, " -,- ,. '' eir- --"Irloiii.Altu41,--t,#, '..T, . _11,1 (110.57 ACRES) It '. 0 t;i. - ibigfir 4 ' ' • 440P ti.4 - ; e.;_lt 7;1 ... i , •i• I itk \7, 'Y. () 86 &AI.-S ' -0'4 'if - • ,..4 10111141d.41, 1 • , ; , •,t7'-- • , i, . - 4,44Pri,. 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SA must prepare a PMP and submit it to the OB and the DOF within 6 months of receiving its FOC from DOE If a PMP has not been approved by January I , 2015, the SA is required to dispose of all real property expeditiously and to the greatest benefit of the taxing entities Except for governmental use NO transfers of property are to occur unless a PMP has been APPROVED. Housing Assets transferred to the Successor Housing Entity are not subject to the PMP. RCWJflPROCEEDc $ 105 million in unspent bond proceeds When the SA receives a FOC, the SA can submit requests to DOF to use bond proceeds for uses identified in original bond documents Earliest commencement date for any bond funded projects (if approved) would be 2014. RULES FOR USE OF UNSPENT BOND PROCEEDS Can only be used for purposes stated on original Bond Documents or to pay debt Neither AB 26 nor AB 1484 provide for the substitution of projects Projects are limited to total amount remaining in unspent proceeds Ultimate use will depend on many factors including the results of the DDRs Depending on certain factors proceeds may also be used to defease bonds STRATEGY Consider options related to repayment of City Loan Retain land for intended public purposes through PMP Prioritize bond projects and consider options for debt repayment Sell remaining land after PMP and distribute proceeds in accordance with the law RISKS Obligations (including bond funded projects) may be disallowed by DOF Delay of FOC Availability of Cash Resources Assumes Assessed Values maintain a 2% growth factor annually Assumes future ROPS will be approved by DOF QUESTIONS ‘t\,, ,itti Or/ wHo WHERE HOW 77 WHAT