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HomeMy WebLinkAboutResolution No. 15-7590-Restated and Amended Loan Agreement-City of Downey and Downey Successor Agency• • • 0 m• i t ` •, • r • 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 " hereto, 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 1n 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 and AB 1484, and related amendments thereto, are collectively referred to as the "Dissolution Law." ABx1 26, as modified by the California Supreme Court Decision in California Redevelopment Association v. Matosantos (2011) 53 Cal.4th 231, dissolved all redevelopment agencies and redevelopment functions of community development commissions in California on February 1, 2012; and, RESOLUTION NO. 15- 7590 PAGE 2 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, 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 long 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(x), 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 fora 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(a)(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 a 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). RESOLUTION !' • 1 (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, 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 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, 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 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 "); and, RESOLVE NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF bOWNEY DOES HEREBY • • SECTION 1. The above recitals are true and correct and incorporated herein SECTION 2. The City of Downey hereby approves the Restated Agreement and authorizes the City Manager to enter into and execute the same on behalf of the City. RESOLUTION NO. 15 -7590 PAGE 4 SECTION 3. The City Council hereby authorizes the City Manager or his or her designee to enter into and execute any implementing documents to further the repayment of the City pursuant to the Restated Agreement. SECTION 4. The City Clerk shall certify to the adoption of this Resolution,. APPROVED AND ADOPTED this 8th day of September, 2015. UIS H. MARQUEZ, State of California County of Los Angeles )ss: City of Downey ) I, Adria M. Jimenez, CMC, City Clerk for the City of Downey, California, do hereby certify the foregoing Resolution was duly adopted by the City Council for the City of Downey at a regular meeting held on the 8th day of September, 2015, by the following vote, to wit: ADRIA M. JIMENE4 C C City Clerk RESTATED AND AMENDED G. Pursuant to Health and Safety Code section 34173 added by ABxl 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 CL _that were repealed, restricted, or revised pursuant to Part 1.85 of Division 24 of the Health and Safety Code. H. Pursuant to Health and Safety Code section 34179, added by ABx1 26 ani-I amended by AB 1484, members of the Oversight Board have been duly appointed. I. Pursuant to Health and Safety Code section 34171(d)(2), added by ABxI 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 were not "enforceable obligations." K. The Oversight Board, pursuant to resolution found that the Loan Agreement is a "loan agreement" as described in Health and Safety Code section 34191.4(b), and that the Loan Agreement was for legitimate redevelopment purposes based upon the following: (i) The CDC was implementing the redevelopment of the project area(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 • assist the CDC, and for the CDC to accept funding from any public • private agency, including the City, in furtherance • redevelopment activities authorized under the CRL; (iii) The CRL (Health and Safety Code sections 33132, 33133, and 33600) s•eci ica y authorize • 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 8821028785-0001 8783627 1 a08/3 1/15 -2- 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 33•01) 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 • the CDC, with such moneys appropriated by the City to be repaid by the CDC as a loan • 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 • indebtedness • any local agency, including the CDC, within the State • California. L. The CDC did not loan any money from its former Low and Moderate Income Housing Fund to pay the Supplemental Education Revenue Augmentation Fund (SERAF), so there is no requirement to repay the housing successor entity any amount pursuant to Health and Safety Code sections 34176(e)(6) and 34191.4(b)(2) prior to making any payments under this Restated Agreement. M. The outstanding amount owed by 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"), M Successor Agency now desires to borrow funds from City, in the amount • the Remaining OPA Amount and pursuant to the Restated Agreement, to enable Successor Agency to make the remaining payments to Champion Dodge under the OPA. Based upon the foregoing Recitals, which are incorporated herein by this reference, ant i5• r good and valuable consideration, the receipt and sufficiency • which is hereby 9,cknowledged, the City and Successor Agency agree as follows: 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 author ze eac iscal 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 • any loan repa s al . yment h I be deducted fro1 m the lo repayment amount and shall be transferred to the Low and Moderate Inco Housing Asset Fund established pursuant to Health and Safety Code sectio 34176(d). 1 3. Both the City and the Successor Agency hereby reserve any and all rights, and do not waive any rights which they may now or in the future have, for repayment under the Loan Agreement, including but not limited to the right to receive repayment under the existing Loan Agreement as may be authorized pursuant to any current or ftiture law, administrative • judicial decision, or otherwise. 4. Effective Date. This Restated Agreement shall be effective only upon the approval of the Oversight Board. 8821028785 -0001 8793627,1 a08/31/15 -4- IN WITNESS WHEREOF, the City and the Successor Agency enter into this Restated Agreement as of the date first set forth above. CITY OF DOWNEY, a California municipal corporation By: V City=Manager' ' "/ Ale" City Clerk [DOWNEY SUCCESSOR AGENCY, a public agency pursuant to Health and Safety Code section 34173 By:--- 71- &1 , eclt�—VL_-rj irector Successor Agency Stretary C(A- ?&tw % I CRY Attorney/Successor Agency General Counsel 882/028785-0001 8783627,1 a08/3 1 115 -5- r. t sm COOPERATION AGREEMENT I 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 PQ9 0 10 WHEREAS, The City has approved and adopted a Redevelopment Plan, as amended ("Amended Redevelopment Plan"), for a redevelopment project known as the Downey Redevelopment Project ("Project Area") by its adoption of Ordinance No. 553 on August 18, 1987, as amended; and WHEREAS, the Redevelopment Plan, in accordance with Section 33220 of the California Redevelopment Law (Health and Safety Code Section 33000 et seq.) provides for the cooperation of the Commission and City to carry out the Redevelopment Plan; and WHEREAS, the Commission has entered into that certain Owner Participation Agreement by and between the Commission and Downey Dodge, dated June 8, 2010 (the "Participation Agreement"); and WHEREAS, for purposes of effectuating the Redevelopment Plan, and for providing for the creation of new jobs in the City and increasing the tax revenue base of the City, the City wishes to assist the Commission by funding the Commission's obligations under that Participation Agreement. NOW, THEREFORE, in consideration of the foregoing, and in cooperation for the implementation of the Redevelopment Plan, the Commission and City hereby agree as follows: 1. The City shall withhold and retain from sales tax revenues received by the City which are attributable to the Property (as defined in the Participation Agreement) in accordance with the provisions of Section 4.5.2 of the Participation Agreement. 2. As required under the Participation Agreement, the City shall loan at an interest rate of twelve percent (12%) per annum to the Commission said sales tax revenues and shall release said revenues as provided in Section I above, to fund the Commission's obligation to make its payments thereunder. 3. No member, official or employee of the Commission or City shall have any personal interest, direct or indirect, in this Agreement nor shall any such member, official or employee participate in any decision relating to the Agreement which affects his or her personal interests or the interests of any corporation, partnership or association in which he or she is directly or indirectly, interested. 4. The Executive Director • the Commission and the Mayor • t I City, • their respective designee, are hereby authorized to execute a reasonably necessary documents to carry out and implement the term of this Agreement. IN WITNESS WHEREOF, the parties have execute t is Cooperation Agreement effective the 22 •av • June • 20 10. "Commission" D• WNEY COMMUNITY DEVELOPMENT COMMISSIO] By: Executive Director Gerald M. Caton Attest: Secretary By A&4 Kathleen L. Midstokke0,6-4Q?—/P 1. 0 • GA I ME 0