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HomeMy WebLinkAbout05. Minutes 05-24-12Minutes of the Oversight Board to the Successor Agency to the Dissolved Downey Community Development Commission May 24, 2012 — Special Meeting The Oversight Board to the Successor Agency to the Dissolved Downey Community Development Commission held a Special Meeting at 1:00 p.m., May 24, 2012, in the Council Chamber of the Downey City Hall, 11111 Brookshire Avenue, Downey, California. PRESENT: Board Members: Brian Saeki, City of Downey — Chair Donald LaPlante, Downey Unified School District — Vice -Chair Roger C. Brossmer, LA County Sanitation Districts #2 & #18 Jessica Flores, Downey Employee Association Stephen W. Helvey, LA County Board of Supervisors, District 4 Frederick W. Latham, LA County Board of Supervisors, District 4 EXCUSED: Ali Delawalla, Community Colleges ALSO PRESENT: Ed Velasco, Housing Manager, City of Downey Adria M. Jimenez, Oversight Board Secretary 3. PLEDGE OF ALLEGIANCE The Flag Salute was led by Oversight Board Member Brossmer. 4. PUBLIC COMMENTS Board Chair Saeki opened Public Comments. Having no one come forward Public Comments was closed. 5. APPROVAL OF MINUTES — APRIL 26, 2012 It was moved by Board Member Brossmer, seconded by Board Member Helvey and carried 4 -1, with Board Member Delawalla excused, to approve the Minutes. 6. REQUEST FOR DIRECTION ON LEGAL REPRESENTATION Housing Manager Velasco provided a report on legal representation and liability insurance for Board Members. He stated he attempted to contact various agencies and was advised it was their understanding appointees did have errors and omissions coverage or legal counsel from their organizations. He stated he did not receive any satisfactory information from any agencies on whether or not this was a requirement. Mr. Velasco advised that some administrations have provided allowances in their budgets for legal representation. He requested direction from the Oversight Board on how they would like to handle this item. Oversight Board Minutes of May 24, 2012 - 1 - Board Member Brossmer asked how much have the other agencies set aside for legal representation and if Mr. Velasco anticipates the Oversight Board will need legal representation. Mr. Velasco stated agencies have allocated approximately $20,000 for legal representation and he believes it will be needed if the Board pursues options to reenter into loan agreements between the City and Successor Agency. Board Member Latham stated that it was his understanding Board Members are well protected, but in terms of the need for legal counsel there is a division of sentiments for whether or not the City Attorney can provide advice and whether it is a potential conflict of interest. He stated other cities foresee possible lawsuits among Successor Agencies to try to encourage the Department of Finance to reverse its decision on a number of issues. He asked if the Downey City Attorney will represent the Board if they decide to litigate, and does the budget contemplate any allocation to the City Attorney. Chair Saeki advised that the Downey Redevelopment Agency was not a robust Agency and most of the loans are Agency to City loans; all are in question for Downey. He noted $20,000 was allocated for next year and can be spent by the City Attorney on behalf of the Successor Agency as needed. Chair Saeki suggested that the Board participate in a very informal Request for Proposal (RFP) process in the event the Board needs an attorney. Chair LaPlante stated he believes the Board needs someone they can ask legal questions of if there becomes an issue between this Board and the City. Chair Saeki made a motion to form a subcommittee comprised of Board Members Latham and LaPlante to prepare and review RFPs for an attorney. Board Member Brossmer seconded the motion, which carried 4 -1, with Board Member Delawalla excused. 7. RECONSIDERATION OF THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR JANUARY 1, 2012 THROUGH JUNE 30, 2012. Mr. Velasco provided a report on this item noting the first Recognized Obligation Payment Schedule (ROPS) was approved by the Oversight Board on April 26, 2012 and submitted to the Department of Finance and the other agencies required for notice. On May 10, 2012, a response letter from the Department of Finance indicated that eight of the items listed in the ROPS are not enforceable obligations: five are City to Agency loans; two are master agreements; and, one is a listing of low -to- moderate income of set -aside funds. In response, those items were removed. We do not agree with Department of Finance and feel those loan agreements were entered into lawfully and permitted by law; all agreements were entered into prior to January 1, 2012. HS 34178A addresses City loan agreements and under this section the Successor Agency can opt to reenter into those agreements with the City provided the Oversight Board approves those items. Mr. Velasco stated he is recommending the Board approve the revised ROPS and Agenda Item #8, a Resolution approving ROPS for the period of July 1, 2012, through December 31, 2012. Oversight Board Minutes of May 24, 2012 - 2 - Board Member LaPlante confirmed that what is listed on the ROPS are the items the Department of Finance has approved and what is requested of the Board is to approve the items to which the State has agreed. Mr. LaPlante asked if the Board has received clearance from the County Auditor Controller on the items, or has there been documentation that the Board has resubmitted the information to the County. Mr. Velasco stated that the County does not have issues with these items and a procedure for a final audit with the County is scheduled for a later date. Board Member Latham asked if the City has taken position to pull those items or has staff discussed a way in which to go on record, in case there is litigation, so the Department of Finance cannot return to the City or Oversight Board stating protest was never established. Chair Saeki stated Rutan and Tucker advised Cities to send a cover letter stating the City and Oversight Board feels these are recognized obligations and we reserve the right, at a later date, to discuss these agreements. A letter for the Board's approval will be presented within the next couple of months. Board Member Latham asked if it is staff's intent to have this Board endorse the cover letter. Chair Saeki stated yes. Board Member Helvey asked how much money is being left on the table by reducing the ROPS. Chair Saeki advised $2.9 million for ROPS 1; $4.8 million total. Board Member Helvey stated the City has left money up for grabs. If the City is taking this action, it gives up the fight and advocates a claim of money for the 2012/13 fiscal year. Board Member Saeki advised that it does leave money on the table for June 30. At the advice of counsel, it is probably a City investment. Mr. Velasco stated that the money left on the table is equivalent to the low- moderate housing fund; and potentially money left under the City loan agreements. Chair Saeki stated that the City will re -coop funds we should have received but, he is not sure if we are going to be able to do that. Board Member Latham asked would it not provide more weight to the transmittal of ROPS 1 if that too is someway communicated to the Department of Finance; that we stand in protest. The letter attached was prepared by counsel and addressed both ROPS letting the County and the State know of our position. Board Member LaPlante asked Mr. Velasco to address the low- moderate income housing funds. Mr. Velasco stated in the legislation it clearly states that those funds are to be returned to the State and are not a part of the tax increment. Oversight Board Minutes of May 24, 2012 - 3 - Board Member Latham pointed out that the conflict is over obligations to the City via contractual obligations. In the case of housing, it is simply a program, an activity, not a contract to fund low- moderate housing; there is no contract to provide to the State. Board Member Brossmer made a motion to approve the Reconsideration of the Recognized Obligation Payment Schedule for January 1, 2012 through June 30, 2012; Board Member Flores seconded the motion, which carried 4 -1, with Board Member Delawalla excused. 8. ADOPTED RESOLUTION NO. OB 12- 0007, A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY TO THE DISSOLVED DOWNEY COMMUNITY DEVELOPMENT COMMISSION APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS) FOR THE PERIOD OF JULY 1, 2012, THROUGH DECEMBER 31, 2012, PURSUANT TO HEALTH AND SAFETY CODE SECTIONS 34177 AND 34180. Mr. Velasco provided a staff report and advised that staff is requesting the Oversight Board adopt the Resolution approving the ROPS for the next six months, and authorize staff to submit a cover letter that addresses the Board's position. Board Member Latham asked Mr. Velsco to explain Item #5 under agreements: The Los Angeles County Deferral Agreement. Mr. Velasco advised that the agreement affects both the Downey Project and Woodruff project areas. The Agreement specified when the County would receive its share of the tax increment, and further stated that he does not anticipate that the threshold will be reached as a result of AB 26. The agreement did not provide for a specific payment schedule. Board Member Latham asked if the City has initiated discussions with the County of abandoning the agreement. Chair Saeki stated the City has been working on having this information and the ROPS approved; there have not been any discussions with the County. Board Member Helvey requested the Board be provided with asset information. He stated he does not know how it is reasonable to ask for tax increment on an unknown amount. Mr. Velasco stated that the need for the money is based on the fact there is no other source. He hopes to have additional information for the Board as we go through the process. Board Member Helvey stated it would be helpful to have an April or March cash balance which would allow him to find out if Portos, Bobs, Chrysler, and Renaissance have satisfied their portion of the contract. Mr. Velasco stated the Commission provided incentives to Porto's Bakery in the amount of $750,000, towards the development process which consisted of tearing down an existing building and constructing a new building. The Agreement provided an initial $500,000 incentive when the business opened, and $250,000 at the time the business created 40 full - time jobs. Oversight Board Minutes of May 24, 2012 - 4 - In regards to the Bob's Big Boy project, the Agency provided $1 million in financial assistance. A debt obligation of $200,000 remains, which will be paid out over the next eight years. The project's objective was historic preservation and creating 40 full -time jobs. The Chrysler Dealership brought in two new car lines. The Agency assisted the dealership owner with a maximum of $1 million in incentives. Board Member Helvey asked if there was a performance deadline for those contracts. Chair Saeki advised there are benchmarks for both the Jeep and Chrysler dealerships: attain a certain sales number, 12 full -time positions, and reaches a sales threshold of $35 million. Board Member Helvey asked if the agreement is based on a sales tax rebate; do sales trigger potential to return subsidy. Mr. Helvey asked if the owner believes he has a pledge from the City to give him sales tax. Chair Saeki advised that it is intertwined to job count: 12 full -time positions. Mr. Velasco commented on the housing project which was encumbered in 2010. The developer of the housing project has submitted an application to obtain tax credits. Board Member Helvey asked if the developer of the housing project does not perform is he entitled to hold on to the property. Chair Saeki advised that the developer can submit an application for tax credits up to four times; this is the developer's second time submitting an application. Board Member Helvey inquired about administration costs and whether or not there are any funds allocated specifically to the Oversight Board for the conduct of meetings and for anything they may need to accomplish their duties. Chair Saeki stated the City is absorbing the costs and will be allocated when the City receives $250,000 into the General Fund. Board Member Latham stated that it must be allocated and there should be a specific allocation for personnel services. Chair Saeki advised it will be reflected in this year's budget. Board Member Latham asked if the Successor Agency have titles to specific properties. Mr. Velasco advised that the Agency's housing assets were transferred via resolutions to the Housing Successor. There are four properties, including The View Project, which is listed on the ROPS obligated by a DDA and funding commitment of low and moderate housing funds. The other three properties were purchase with low mod housing funds but were not under agreements when the legislation took effect. These sites were proposed for mixed -use, residential and retail projects. Board Member Latham asked if this Board will have to deal with the existence of properties or liquidation of properties. Oversight Board Minutes of May 24, 2012 - 5 - Chair Saeki stated yes, with the exception of The View Project; the City believes they will develop. No one has come across this issue with property owned by the Redevelopment Agency. We believe housing is a little different. We believe we will be asked at some point how we want to deal with those properties. Board Member Latham asked if there are any public use facilities that the agency still has title to. Chair Saeki stated no. Mr. Velasco stated that he does not think the Oversight Board would have decision making authority over housing assets if they are transferred to the Housing Successor Agency. Board Member Helvey requested additional information be provided to the Board on agreement performance standards and the expectations for them to perform. Board Member Brossmer made a motion to approve the Recognized Obligation Payment Schedule for July 1, 2012 through December 31, 2012; Board Member Helvey seconded the motion, which carried 4 -1, with Board Member Delawalla excused. Board Member LaPlante asked: 1) If the agreements the State did not approve will be brought back to the Board; 2) Will the Board be required to amend the ROPS 2; and, 3) Is the Board waiting for more direction from legal counsel on strategy regarding ROPS 1. Chair Saeki advised the agreements are anticipated to be brought back to the Board at their June meeting. ADJOURNED: at 1:46 p.m. ADRIA M. JIMENEZ, CMC BRIAN SAEKI, Oversight Board Secretary Oversight Board Chair Oversight Board Minutes of May 24, 2012 - 6 -