HomeMy WebLinkAbout06. Adopt Reso Approving Restated-Amended LoansStaff is recommending that Oversight Board approve the action of the Successor Agency
to reinstate a Cooperation Agreement ( "Loan Agreement ") that was initially between the
City of Downey and the former redevelopment agency. Assembly Bill 1484 provides a
path for the Successor Agency to reinstate a loan made between the host City and its
respective redevelopment agency. Further, the reinstated loan would be considered an
enforceable obligation and qualify to receive funds from the Redevelopment Property
Tax Trust Fund (RPTTF) for loan repayments to the City.
On September 8, 2015, The Downey Successor Agency and the City of Downey
approved a restated and amended Loan Agreement that incorporates certain amended
rate and terms as required by Health Safety Code (H &SC) Section 34191.4(b). The
Oversight Board has the authority to approve the Successor Agency's action to enter
into a Loan Agreement with the City. Approval by the Oversight Board will facilitate the
Successor Agency establishing the restated Loan Agreement as an enforceable
obligation.
MITS] INC] • r r e
On June 8, 2010, the Downey Community Development Commission (Commission)
approved an Owner Participation Agreement (OPA) with Champion Dodge LLC. Under
this OPA, the Commission was obligated to provide up to $1,000,000 in financial
incentives to facilitate the addition of two new car franchises (Chrysler and Jeep) to the
existing Dodge dealership located at 9655 Firestone Blvd.
A companion action, pertaining to the OPA, occurred on June 22, 2010, when the City of
Downey and the Commission entered into a Cooperation Agreement ( "Loan
Agreement"). This Loan Agreement provided the necessary authorization for the City to
RESTATED AND AMENDED LOAN AGREEMENTS
SEPTEMBER 17, 2015
PAGE 2
provide up to $500,000 in sales tax revenues for the Commission obligation as stipulated
in the OPA. Further, the Agreement stipulated that the City would provide its sales tax
revenues, to the Commission, in the form of a interest bearing loan and that the
Commission would repay the City with interest at 12 percent per year. To date, no funds
have been required or advanced by the City for the OPA, however, staff is projecting that
$192,475 in incentive payments will be required during the next three fiscal years.
In June 2012, legislation passed under Assembly Bill 1484, which amended ABx1 26
and provided a path for Successor Agencies to reinstate loans made between the host
City and its respective redevelopment agency. This legislation allowed a process to
reestablish these loans as enforceable obligations and that would allow the repayment of
the loan by Successor Agency's with funds from the Redevelopment Property Tax Trust
Fund ( RPTTF). Agency staff has initiated work to reestablish the Cooperation
Agreement pursuant to the amendment allowed under AB 1484. The process requires
that the following conditions are achieved:
1. That the Downey Successor Agency receive a Finding of Completion from the
State Department of Finance(DOF); and
2. That the Downey Oversight Board finds that the City loan to the Agency was
made for a legitimate redevelopment purpose and that it approve the loan as
enforceable obligation; and
3. That DOF approves the action of the Downey Oversight Board.
The first condition has been satisfied, with DOF issuing the required Finding of
Completion to the Downey Successor Agency, in November 2013. The remaining two
conditions will be presented to the Downey Oversight Board and the DOF for approvals.
The restated Loan Agreement is structured to comply with provision amended by AB
1484 and in the Health & Safety Code (H &SC) Section 34191.4(b). Subject to the terms
and conditions in the Loan Agreement the following address required components that
are included in the loan agreement:
• The City's loan will be repaid by the Downey Successor Agency and unpaid loan
amount will accrue interest at a rate that does not exceed the interest rate earned
by funds deposited into the Local Agency Investment Fund (LAIF). Under AB
1484, the rate on the re- entered loans cannot exceed the LAIF rate. The LAIF
rate will be substantially lower than the interest rate on the initial Cooperation
Agreement loan which accrued simple interest at 12 percent per year. Any loan
balance on the amended Loan Agreement will accrue at the LAIF rate and adjust
monthly or quarterly with the increase or decrease of the LAIF rate; and
• A provision that stipulates the City will receive one loan payment each year,
which is based on an amount equal to one -half of the RPTTF distributed to the
"taxing entities" in the prior year that is over the 2012 -13 basis year. Due to this
requirement, the available RPTTF allocated for loan repayment could be
substantially different from one fiscal year to the next; and
• A provision that twenty percent of all loan repayment to the City will be deducted
from the payment and set -aside and transferred to Successor Agency Housing
Fund for eligible housing activities.
RESTATED AND AMENDED LOAN AGREEMENTS
SEPTEMBER 17, 2015
PAGE -3
Pending the approval of the restated Loan Agreement by the Downey Oversight Board
and the DOF, the Successor Agency would be eligible to receive property tax reserved
in the Redevelopment Property Tax Trust Fund as the source of funds to repay the City
of Downey for any funds advanced under the Loan Agreement. The principal loan
amount will not exceed $500,000.
Attachments: "A Resolution
i i i
A RESOLUTION OF THE OVERSIGHT BOARD OF THE DOWNEY
SUCCESSOR AGENCY APPROVING A RESTATED AND AMENDED
LOAN AGREEMENT BETWEEN THE CITY OF DOWNEY AND THE
DOWNEY SUCCESSOR AGENCY
WHEREAS, the Oversight Board for the Downey Successor Agency (the "Oversight
Board ") has been appointed pursuant to the provisions of Health and Safety Code Section
34179, and
WHEREAS, the Downey Successor Agency ( "Successor Agency ") is a public agency
pursuant to Health and Safety Code Section 34173; and
WHEREAS, the City of Downey ( "City ") is a California municipal corporation operating
under the laws of the State of California; and
WHEREAS, the Downey Community Development Commission ( "CDC ") is a public
body, corporate and politic, exercising governmental functions and previously exercised powers
under the Community Redevelopment Law, Health and Safety Code Section 33000 et seq.
( "CRL "); and
WHEREAS, under the CRL, the City had the expressed authority to provide the CDC
with financial assistance for purposes of implementing redevelopment activities (see, e.g.,
Health and Safety Code Sections 33132, 33133, 33220, 33445, 33445.1, 33600, 33601, 33610,
33614; see also Government Code section 53600 et seq.); and
WHEREAS, pursuant to the authority granted Under the CRL, the City and CDC entered
into that certain Cooperation Agreement, dated June 22, 2010 ("Loan Agreement "). A copy of
the Loan Agreement is set forth in Attachment No. 1 to Exhibit "A" which Exhibit "A" is
incorporated herein by this reference. The Loan Agreement provides for the City to loan to the
CDC up to Five Hundred Thousand Dollars ($500,000) to assist the CDC with annual payments
required to be made by the CDC to Champion Dodge, LLC, a limited liability company
( "Champion Dodge") pursuant to that certain Owner Participation Agreement between
Champion Dodge and the CDC dated June 8, 2010 (the "OPA "). The annual payments required
to be made by the CDC under the OPA are to be paid from property tax increment. The amount
of such payments are measured by the amount of sales tax generated by the operation of a
Chrysler /Jeep new car franchise and Dodge new car dealership; and
WHEREAS, in January 2011, the Governor of California first proposed as part of the
2011 -12 budget the possible dissolution of redevelopment agencies to cover an estimated $25
billion shortfall. In June 2011, Assembly Bill 26 from the 2011 -12 First Extraordinary Session of
the California Legislature ( "ABA 26 ") was enacted as a bill related to the 2011 Budget Act. In
June 2012, Assembly Bill 1484 from the 2011- 2012 Regular Session of the California
Legislature ( "AB 1484 ") was enacted as a bill related to the 2012 Budget Act. ABx1 26, as
modified by the California Supreme Court Decision in California Redevelopment Association v.
Matosantos (2011) 53 CalAth 231, dissolved all redevelopment agencies and redevelopment
functions of community development commissions in California on February 1, 2012; and
WHEREAS, pursuant to Health and Safety Code Section 34173, added by ABx1 26 and
amended by AB 1484,, the Successor Agency assumed on February 1,_2012,_all authority,
rights, powers, duties, and obligations previously vested with the CDC, except for those
provisions of the CRL that were repealed, restricted, or revised pursuant to Part 1.85 of
Division 24 of the Health and Safety Code; and
OVERSIGHT • ` ii' RESOLUTION N ., •'
WHEREAS, pursuant to Health and Safety Code Section 34171(d)(2), added by ABx1
26 commencing on February 1, 2012, loan agreements between the city, county, or city and
county that created the redevelopment agency and the redevelopment agency, not entered into
within the first two years of the creation of the redevelopment agency, were not "enforceable
obligations "; and
WHEREAS, pursuant to Health and Safety Code section 34191.4(b), added by AB 1484,
loan agreements between the city, county, or city and county that created the redevelopment
agency and the redevelopment agency shall be deemed "enforceable obligations" so Jong as a
successor agency receives a "finding of completion pursuant to Health and Safety Code
Section 34179.7 and the successor agency's oversight board makes a finding that the loans
were for legitimate redevelopment purposes; and
WHEREAS, pursuant to Health and Safety Code Section 34180(a), added by ABx1 26
and amended by AB 1484, an oversight board is authorized to approve a request by a
successor agency to reestablish loan agreements between the successor agency and the city,
county, or city and county that formed the redevelopment agency in accordance with the
provisions in Health and Safety Code Section 34191.4; and
WHEREAS, pursuant to Health and Safety Code Section 34191.4(b)(2), if an oversight
board finds that the loan is an enforceable obligation, any 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, and the loan must 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 are subject to the additional following provisions:
(A) 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 for a reestablished city /redevelopment agency loan and
repayments for any amounts owed to the former redevelopment agency's Low and
Moderate Income Housing Fund as repayment for the funding of the Supplemental
Education Revenue Augmentation Fund (SERAF) shall be equal to one -half of the
increase between the amount distributed to the taxing entities pursuant to Health and
Safety Code Section 34183(x)(4) 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 to city /redevelopment agency loans are to be second in priority to
amounts to be repaid as part of any SERAF loan.
(B) Payments received by 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 of the former
redevelopment agency for purposes of the SERAF and shall be distributed to the
Low and Moderate Income Housing Asset Fund established pursuant to Health and
Safety Code Section 34176(4).
(C) Twenty percent of any loan repayment for a city /redevelopment agency loan shall
be deducted from the loan repayment amount and shall be transferred to the Low
and Moderate Income Housing Asset Fund established pursuant to Health and
Safety Code section 34176(d), after all outstanding loans from the Low and
Moderate Income Housing Fund for purposes of the SERAF have been repaid; and
OVERSIGHT BOARD RESOLUTION a
PAGE 3
WHEREAS, the CDC did not pay for the SERAF requirement with any funds from the
former Low and Moderate Income Housing Fund; and
WHEREAS, the Successor Agency received its "Finding of Completion" on or about May
15, 2013.
WHEREAS, the Loan Agreement is a proper and legally- authorized loan agreement
under the CRL made by the City to the CDC for legitimate redevelopment purposes, including
but not limited to the elimination of blight in the redevelopment project areas, administrative
functions, and construction of public infrastructure; and
WHEREAS, the outstanding amount owed by the Successor Agency to Champion
Dodge under the OPA is One Hundred Ninety -Two Thousand Four Hundred Seventy -Four
Dollars and Ninety Cents ($192,474.90) (the "Remaining OPA Amount"); and
WHEREAS, the Successor Agency now desires to borrow funds from City, in the
amount of the Remaining OPA Amount and pursuant to the Loan Agreement, to enable the
Successor Agency to make the remaining payments to Champion Dodge under the OPA; and
WHEREAS, upon the City's loan of funds to the Successor Agency pursuant to the Loan
Agreement, if the amounts loaned were not paid back to the City, then other public services
provided by the City, such as public safety, fire protection, wet and dry utilities, and waste and
water management, would be impacted, thereby negatively impacting the other taxing entities
and their provision of services that use and benefit from these City services; and
WHEREAS, the Loan Agreement, upon approval by the Oversight Board, will have a
Restated and Amended Cooperation Agreement (attaching the original Loan Agreement) with
the Restated and Amended Cooperation Agreement restating the terms and conditions of the
original Loan Agreement and amending it to conform to the loan repayment terms required by
Health and Safety Code Section 34191.4(b), added by AB 1484. The Restated and Amended
Cooperation Agreement is attached hereto as Exhibit "B" and incorporated herein by this
reference (the "Restated Agreement ").
NOW, THEREFORE, BE IT RESOLVED by the Oversight Board as follows:
Section 1. The above recitals are true and correct and incorporated herein:
Section 2. The Oversight Board hereby finds and declares as follows
A. The Loan Agreement is a "loan agreement" as described in Health and Safety
Code Section 34191.4(b).
B. The Loan Agreement was for legitimate redevelopment purposes, including the
following:
(i) The CDC was implementing the redevelopment of the projectarea(s)
under the duly adopted redevelopment plan(s) and the CRL as referenced and
identified in the Loan Agreement;
(ii) The redevelopment plan(s) for the project area(s) specifically authorized
the City to assist the CDC, and for the CDC to accept funding from any public or
OVERSIGHT BOARD RESOLUTION NO.
PAGE
private agency, including the City, in furtherance of redevelopment activities
authorized under the CRL
(iii) The CRL (Health and Safety Code Sections 33132, 33133, and 33600)
specifically authorized the CDC to accept financial assistance from public sources,
including the City, and to expend those moneys for any redevelopment project
within the CDC's area of operation or for the CDC's activities, powers, and duties;
(iv) The CRL (Health and Safety Code Section 33220) specifically authorized
the CDC to enter into agreements with any other public body, including the City, for
the purpose of aiding and cooperating in the planning, undertaking, construction, or
operation of redevelopment projects upon the terms and with or without
consideration as determined necessary by the CDC;
(v) The CRL ( Health and Safety Code Sections 33445 and 33445.1)
specifically authorized the CDC, with the consent of the City, to pay all or a part of
the value of the land for and the cost of the installation and construction of any
publicly owned building, facility, structure, or other improvement;
(vi) The CRL (Health and Safety Code Section 33601) specifically authorized
the CDC to borrow money from any public agency, including the City, for any
redevelopment project within its area of operation, and comply with any conditions
of such loan or grant;
(vii) The CRL (Health and Safety Code Section 33610) specifically authorized
the City to appropriate to the CDC such amounts as the City deemed necessary for
the administrative expenses and overhead of the CDC, with such moneys
appropriated by the City to be repaid by the CDC as a loan on such terms and
conditions as the City may have provided;
(viii) California law (Government Code sections 53600 et seq. and 53601(e)
specifically) authorized the City to invest moneys not required for the immediate
needs in evidences of indebtedness of any local agency, including the CDC, within
the State of California.
C;; Based on the facts applicable to the Loan Agreement, the amended repayment
terms in the Restated Agreement complies with the limitations on the terms of
repayment for the Loan Agreement.
D: The Loan Agreement, as restated and modified by the Restated Agreement, is an
"enforceable obligation."
Section 3. The Oversight Board hereby approves the Restated Agreement and
authorizes the City and Successor Agency to enter into and execute the same.
Section 4. The Secretary shall certify to the adoption of this Resolution.-
ATTEST'
SECRETARY, OVERSIGHT BOARD
STATE OF CALIFORNIA
COUNTY OF
) SS
CITY OF
1,
Secretary to the Oversight Board, hereby certify that the foregoing
resolution was duly adopted at a meeting of the Oversight Board, held on the 17th of September,
2015.
AYES:
Board Members:
NOES:
Board Member:
ABSENT:
Board Member:
ABSTAIN,
Board Member:
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99210')8785-000 1
8783627-1 08!3W5
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. Annual repayments on
the Remaining OPA Amount, or any portion thereof that is loaned by City to Successor Agency,
shall be subject to the following:
(A) The maximum repayment amount au orize eac fiscal year for repayments
made shall be equal to one-half of the increase between the amount distributed to
the taxing entities pursuant to Health and Safety Code section 34183(a)(4) in that
fiscal year and the amount distributed to taxing entities pursuant to that paragraph
in the 2012-13 base year.
(B) 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 established pursuant to Health and Safety Code section
3176(d).
1 Reservation of Rights. Both the City and the Successor Agency hereby reserve
any • all rights, . • •i not waive any i or i;
judicial reymisment under the Loan Agreemel-it,,:i#,rJi.L*Ytik*n�wr*Y,
under the existing Loan Agreement as may be authorized pursuant to any current or future law,
administrative or • or otherwise.
4. Effective Date. This Restated Agreement shall be effective only upon the
approval of the Oversight Board.
882i02878` -00
87836:7e1 a08131?45 -4-
IN WITNESS WHEREOF, the City and the Successor ARency enter into this Restated
Agreement as of the date first set forth above.
City Clerk
Successor Agency Secretary
• •
City Attorney/Successor Agency General Counsel
982/028785-0001
879362? 1 08/31/15 -5-
CITY OF DOWNEY, a California municipal
corporation
By:__
City Manager
IVOWNEY SUCCESSOR AGENCY, a public
agency pursuant to Health and Safety Code
section 34173
By:
Executive Director
mm
882XI28'B5-00W
8763627 � 08/3h'15
6 I Wy q
This Cooperation Agreement ("Agreement") is made and entered into by
and between the DOWNEY COMMUNITY DEVELOPMENT COMMISSION
(the "Commission"), a public body, corporate and politic, and the CITY
OF DOWNEY (the "City"), a municipal corporation.
12 Pitt y f2l
EXHIBIT A
the interests of any corporation, partnership or association in which hS
• she is directly • indirectly, interested.
4. The Executive Director of the Commission and the Mayor of the
City,
• their respective designee, are hereby authorized to execute all
reasonably necessary documents to carry out and implement the terms
of this Agreement.
IN WITNESS WHEREOF, the parties have executed this
Cooperation Agreement effective the 22 day of June of 2010.
'Commission"
DOWNEY COMMUNITY DEVELOPMENT COMMISSION
Gerald M. Caton
By: *A&.X)W. ft4wlk)
Kathleen L. Midstokke,/,rf-C2,F-A0
91