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Home My WebLink AboutRes SA-RDA 042 SA34200 Re-Establish Loan AgmtCONTRACT N0. SA34200 SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: ADOPT RESOLUTION NO. SA-RDA 042 ADOPTING THE RESOLUTION OF THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY REQUESTING THE OVERSIGHT BOARD TO MAKE A FINDING TO RE-ESTABLISH LOAN AGREEMENT RELATING TO FORMER AGENCY PROPERTY ACQUISITIONS AS AN ENFORCEABLE OBLIGATION AND TAKING CERTAIN RELATED ACTIONS SUBMITTED BY: Veronica Tapia, Management Analyst II DATE: February 12, 2015 CONTENTS: Resolution SA-RDA o42 Recommendation By Minute Motion that the Successor Agency Board adopt Resolution SA-RDA o42 Requesting the Palm Desert Oversight Board to make a finding to re-establish the loan agreement relating to the former agency property acquisitions as an enforceable obligation and taking certain related actions. Executive Summary Prior to the dissolution of the Palm Desert Redevelopment Agency (RDA), the former RDA borrowed money from the City for redevelopment purposes. Currently there remains a balance of $22,655,000 outstanding to the City. AB 1484 provides that loans may be re-established and deemed an enforceable obligation once a Finding of Completion is received from the DOF and the Oversight Board makes a finding that the loans were made for legitimate redevelopment purposes. Based on AB 1484, only 80% of the total amount outstanding may be repaid to the City with the remaining 20% paid to the Low and Moderate Income Housing Asset Fund for the purposes of affordable housing. Adoption of the attached resolution will allow the Agency Board to request that the Oversight Board make such a finding. Backqround Pursuant to AB X1 26 and the California Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al. (53 Cal.4th 231(2011)), the G:\rda\Veronica Tapia\Word Files\Staff Reports\Successor Agency\SR Restoration of CiTy Loans - 2-12-15.docx Resolution No. SA-RDA 042 Staff Report Approving the Restoration of City Loans February 12, 2015 Page 2 of 4 Palm Desert Redevelopment Agency (the "Former RDA") was dissolved as of February 1, 2012, and the Successor Agency was constituted. Pursuant to AB X1 26, with narrow exceptions, agreements by and befinreen the City of Palm Desert (the "City") and the former RDA, including any loan agreement, became unenforceable, invalid and non- binding on the Successor Agency as of February 1, 2012, when the Former RDA was dissolved. Before dissolution, the Former RDA borrowed money from the City from time to time for redevelopment purposes, including multiple property acquisitions. Currently, amounts borrowed by the Former RDA from the City in connection four separate property acquisitions remain outstanding and unpaid (collectively, the "Loan"). Such Loan is consisted of: (i) $6,000,000 in principal amount borrowed in 1986 pursuant to the City Council's Resolution No. 86-112A (as superseded and replaced by City Council Resolution No. 93-54) and the Former RDA's Resolution No. 203 (as superseded and replaced by Resolution No. 275), (ii) $8,000,000 in principal amount borrowed in 1995 pursuant to the City Council's Resolution No. 95-15 and the Former RDA's Resolution No. 305, (iii) $2,055,000 in principal amount borrowed in 1997 pursuant to the City Council's Resolution No. 97-23 and the Former RDA's Resolution No. 376, and (iv) $6,600,000 in principal amount borrowed in 1999 pursuant to the City Council's Resolution No. 99-114 and the Former RDA's Resolution No. 384. The Former RDA's repayment obligations with respect to the Loan was memorialized by the above-mentioned City Council resolutions, as supplemented and amended by the City Council's Resolution No. 02-64, and the above-mentioned Former RDA resolutions, as supplemented and amended by the Former RDA's Resolution No. 448 (collectively, such City Council resolutions and Former RDA resolutions, constituting the "Loan Agreement"). Because of AB X1 26, the Loan Agreement became unenforceable upon the Former RDA's dissolution. AB 1484, which became effective at the end of June 2012, amended and supplemented AB X1 26. AB 1484, among other things, added Section 34191.4(b) of the California Health and Safety Code ("HSC"), which provides that the Loan will be re-established and the Loan Agreement will be deemed an enforceable obligation, if certain prerequisites have been met and other requirements are followed. One prerequisite is the Successor Agency's receipt of a Finding of Completion from the State Department of Finance (the "DOF"). The Successor Agency received its Finding G:UdalVeronica Tapia\Word Files\Staff Reports\Successor Agency\SR Restoration of City Loans - 2-12-15.docx Resolution No. SA-RDA 042 Staff Report Approving the Restoration of City Loans February 12, 2015 Page 3 of 4 of Completion on May 13. 2013. Another prerequisite is a finding by the Oversight Board that the City Loan was made for legitimate redevelopment purposes. By adopting the attached resolution, the Board will be making a request to the Oversight Board to make such a finding. Any repayment of the Loan must be listed on a Recognized Obligation Payment Schedule (the "ROPS"), as approved by the Oversight Board and the DOF. The Successor Agency is required to prepare two ROPS each year. Each ROPS lists the Successor Agency's enforceable obligations payable during the six month fiscal period covered by such ROPS. The adoption of the attached Resolution (and the Oversight Board's adoption of the related resolution soon after) will enable the Successor Agency to include the repayment of the Loan on future ROPS. AB 1484 provides that 20 percent of each Loan repayment will be deducted and transferred to the Low and Moderate Income Housing Asset Fund (the "Housing Asset Fund"). The Housing Asset Fund is a fund established and held by the Palm Desert Housing Authority, in its capacity as the housing successor to the Former RDA. Moneys in the Housing Asset Fund must be used for qualified low and moderate income housing purposes in accordance with the Community Redevelopment Law. Previously, on February 24, 2014, the Oversight Board adopted Resolution No. OB-062 approving the Successor Agency's repayment on a loan incurred by the Former RDA in connection with a statutorily required remittance to the Riverside County Supplemental Educational Revenue Augmentation Fund for fiscal year 2009-10 (the "SERAF Loan"). The DOF issued its correspondence on March 3, 2014, indicating the DOF's approval of Resolution No. OB-62. The repayment of the SERAF Loan will have priority over the repayment of the Loan. The Successor Agency will have to repay the SERAF Loan in full before making any repayment on the re-established Loan. AB 1484 requires that interest on the Loan must not exceed the interest rate payable by the Local Agency Investment Fund ("LAIF") administered by the State Treasurer. AB 1484 also provides that all accumulated unpaid interest must be recalculated from the origination of the Loan at the LAIF rate. Per the DOF's interpretation of AB 1484, the accumulated unpaid interest must be recalculated at the LAIF rate in effect at the time when the Oversight Board adopts its resolution re-establishing the Loan. AB 1484 also imposes an annual cap on the amount that may be repaid for the Loan. Under the Dissolution Act, twice a year (on January 2 and June 1), taxing entities receive residual moneys ("Taxing Entities Residual"), if any, remaining in the Redevelopment Property Tax Trust Fund ("RPTTF"), after the County Auditor- Controller's disbursement of pass-through payments and disbursement to the Successor Agency for enforceable obligation payments and administrative costs allowance, as listed on the DOF-approved ROPS. Under AB 1484, each fiscal year, the aggregate repayment amount for the SERAF Loan and the Loan to be repaid by the Successor Agency must not exceed one-half of the increase between the amount of the G:Uda\Veronica Tapia\Word Files\Staff Reports\Successor Agency\SR Restoration of City Loans - 2-12-15.docx Resolution No. SA-RDA 042 Staff Report Approving the Restoration of City Loans February 12, 2015 Page 4 of 4 Taxing Entities Residual in that fiscal year and Taxing Entities Residual in the 2012-13 base year. Assuming the Oversight Board's approval of the re-establishment of the Loan (and no objection from the DOF upon the DOF's review of the Oversight Board resolution), the actual dollar amount to be repaid by the Successor Agency for each Loan repayment will be subject to the availability of RPTTF funds after the repayment of the SERAF Loan and the annual cap imposed by AB 1484. The attached resolution authorizes the Finance Officer of the Successor Agency to develop a repayment schedule in accordance with AB 1484 requirements and also authorizes the Finance Officer to modify the repayment schedule from time to time based on AB 1484 requirements and the actual circumstances. Staff recommends that the Board of Directors of the Successor Agency to the Palm Desert Redevelopment Agency adopt Resolution N�-�A o42 approving the request to the Oversight Board to make the finding to re-establish the loan agreement relating to former agency property acquisitions as an enforceable obligation. Fiscal Analysis If approved by the Oversight Board and Department of Finance, the City Loans will be included on the next ROPS cycle and repaid upon their allowable period. The Housing Authority's SERAF Loan must be repaid in full prior to any payments being made on the City Loans. AB 1484 requires that 20% of each payment be paid directly to the Low and Moderate Income Housing Asset Fund for the purposes of affordable housing. Sub ' d by: . �,�i��y1,�� Veronica Tapia, Manage nt Analyst II Approval: . _ __ , an t M. Moore, Director of Housing , ,, 1 / / / � � 1/ , ` ibson, Director of Fin ce �� SI�.-�1� � � � (1Rt �>�� — / � ,��/� VERIFIED �Y. /J hn M. Wohlmuth, Executive Director Original an �e wirh C;iry C 's C)f�ce f}�� : f--ft�r� �i�, JC� �u'), �' l�c l, �C�l�l l� c� �� CC,�� G:\rda\Veronica Tapia\Word Files\S[aff Reports\Successor Agency\SR Restoration of it� ��'- - 2-�1 .�� RESOLUTION NO. sa-xnA o42 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY REQUESTING THE OVERSIGHT BOARD TO MAKE A FINDING TO RE- ESTABLISH LOAN AGREEMENT RELATING TO FORMER AGENCY PROPERTY ACQUISITIONS AS AN ENFORCEABLE OBLIGATION AND TAKING CERTAIN RELATED ACTIONS RECITALS: A. The Palm Desert Redevelopment Agency (the "Former Agency") was a duly constituted redevelopment agency pursuant to provisions of the Community Redevelopment Law (the "Redevelopment Law") set forth in Section 33000 et seq. of the California Health and Safety Code ("HSC"). B. Pursuant to the Redevelopment Law, the Former Agency undertook a program to redevelop four project areas and, in that connection, borrowed money from the City of Palm Desert (the "City") from time to time to finance the acquisition of real property for redevelopment purposes. C. As of the date of this Resolution, amounts borrowed by the Former Agency from the City in connection four separate property acquisitions remain outstanding (collectively, the "Loan"), with such Loan consisting of: (i) $6,000,000 in principal amount borrowed in 1986 pursuant to the City Council's Resolution No. 86-112A (as superseded and replaced by City Council Resolution No. 93-54) and the Former Agency's Resolution No. 203 (as superseded and replaced by Resolution No. 275), (ii) $8,000,000 in principal amount borrowed in 1995 pursuant to the City Council's Resolution No. 95-15 and the Former Agency's Resolution No. 305, (iii) $2,055,000 in principal amount borrowed in 1997 pursuant to the City Council's Resolution No. 97-23 and the Former Agency's Resolution No. 376, and (iv) $6,600,000 in principal amount borrowed in 1999 pursuant to the City Council's Resolution No. 99-114 and the Former Agency's Resolution No. 384. D. All of the $22,655,000 in principal amount of the Loan, and accrued interest thereon, are currently outstanding and unpaid. 12812-0001\1774443.1 RESOLUTION NO. SA- xnA o42 E. The Former Agency's repayment obligations with respect to the Loan was memorialized by the above-mentioned City Council Resolution No. 86-112A (as superseded and replaced by Resolution No. 93-54), Resolution No. 95-15, Resolution No. 97-23 and Resolution No. 99-114, together with the City Council's Resolution No. 02-64, and the Former Agency's Resolution No. 203 (as superseded and replaced by Resolution No. 275), Resolution No. 305, Resolution No. 376 and Resolution No. 384, together with the Former Agency's Resolution No. 448 (collectively, such City Council resolutions and Former Agency resolutions, constituting the "Loan Agreement") F. Pursuant to AB X1 26 (enacted in June 2011), and the California Supreme Court's decision in California Redevelopment Association, et al. v. Ana Matosantos, et al., 53 Cal.4th 231 (2011), the Former Agency was dissolved as of February 1, 2012, the Successor Agency was established, and an oversight board to the Successor Agency (the "Oversight Board") was established. G. Pursuant to HSC Sections 34171(d) and 34178, the Loan Agreement became unenforceable on the Successor Agency as of February 1, 2012; provided, however, that pursuant to HSC Section 34191.4(b), the Loan shall be re-established and the Loan Agreement shall be deemed to be an enforceable obligation after the Successor Agency receives a finding of completion (a "Finding of Completion") from the State Department of Finance (the "DOF") under HSC 34179.7, if the Oversight Board makes a finding that the Loan was for legitimate redevelopment purposes. H. The DOF issued a Finding of Completion to the Successor Agency on May 13, 2013. I. The Board desires to adopt this Resolution and requests the Oversight Board to make a finding that the Loan was made for legitimate purposes in order to re- establish the Loan as an enforceable obligation for the purposes of HSC Section 34191.4(b). J. It is recognized that, pursuant to HSC Section 34191.4(b), the repayment amount authorized each fiscal year for the all loans re-established pursuant to HSC Section 34191.4(b) to be repaid by the Successor Agency to the City shall not exceed one-half of the increase between the amount distributed to taxing entities pursuant to HSC Section 34183(a)(4) in that fiscal year and the amount distributed to taxing entities pursuant to HSC Section 34183(a)(4) in the 2012-13 base year. K. It is further recognized that HSC Section 34191.4(b)(2) provides that 20 percent of each Loan repayment will be deducted and transferred to the Low and Moderate Income Housing Asset Fund established and held by the Palm Desert Housing Authority, in the Housing Authority's capacity as the housing successor to the Former RDA pursuant to HSC Section 34176. 12812-0001\1774443.1 2 RESOLUTION NO. SA- xnA o42 NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: Section 1. The above recitals, and each of them, are true and correct. Section 2. The Board hereby requests the Oversight Board to make a finding that the Loan was for legitimate redevelopment purposes and the Loan Agreement is an enforceable obligation, with the recognition that the repayment terms thereunder shall be modified in accordance with the requirements of HSC Section 34191.4(b). The Secretary of the Successor Agency is hereby authorized and directed to transmit a copy of this Resolution to the Oversight Board. Section 3. The Finance Officer of the Successor Agency is hereby authorized to develop a repayment schedule for the Loan in accordance with the requirements of Section 34191.4(b). Recognizing that the actual dollar amount to be repaid by the Successor Agency for each scheduled repayment is subject to the availability of funds from the Redevelopment Property Tax Trust Fund and the limitations set forth in HSC Section 34191.4(b), the Finance Officer of the Successor Agency is hereby authorized to modify the repayment schedule from time to time based on the requirements of HSC Section 34191.4(b) and the actual circumstances at the time of the modification. Section 4. The members of the this Board and the officers of the Successor Agency are hereby authorized, jointly and severally, to do any and all things which they may deem necessary or advisable to effectuate this Resolution. APPROVED and ADOPTED this day of , 201 AYES: NOES: ABSENT: ABSTAIN: ATTEST: RACHELLE D. KLASSEN, SECRETARY SUSAN MARIE WEBER, CHAIR 3 12812-0001\1774443.1