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Home My WebLink About10/20/1999 - STAFF REPORTS (2) DATE: OCTOBER 20, 1999 TO: COMMUNITY REDEVELOPMENT AGENCY FROM: DIRECTOR OF ECONOMIC DEVELOPMENT APPROVAL OF ALOAN TO THE COMMUNITYREDEVELOPMENT AGENCYFOR THE PURPOSE OF FUNDING APORTION OF THE AGENCY'S OPA WITH LINSU DEVELOPMENT COMPANY,LLC RECOMMENDATION: It is recommended that the City approve a loan to the Community Redevelopment Agency in the amount of$60,000 to fund certain public improvements made by Linsu Development Company,LLC via an Owner Participation Agreement with the Agency BACKGROUND.- The Community Redevelopment Agency approved an Owner Participation Agreement(OPA) with Linsu Development Company,LLC on December 13, 1995. The OPA provided for the Agency to provide its powers to acquire the parcel adjacent to the owner's property,as welt as provide reimbursement for the additional costs associated with the purchase of the parcel(over and above the cost of the land,borne by the developer). Lim paid for the land. The largest "additional"cost over the land purchase was legal costs,the costs due to the Agency's Counsel, Rutan&Tucker,were paid f3om a fund deposited by Linsu with the Agency at the execution of the OPA. In 1996,Linsu asked to be able to use their own attorney to finish the eminent domain process,and were allowed to do so. OnDecenber4,1996,the Agency approved theFirst Amendment to the OPA,reimbursingUnsu $79,000 for unanticipated off-site improvement costs, mostly for additional work on Indian Canyon Drive and Vista Chino Road, requirements of Caltraw and Sunhne. As part of the Amendment,Lmsu agreed that theywouldnotbereimbursedforanyoftheiracquisitioncostsu til the net tax increment generated by the project exceeded the$79,OW figure, since the Agency needed to borrow those finds fromtheCitytonukethereimbursement. The Amendment did not release the Agency from the agreement to reimburse for acquisition costs,it only postponed that payment. In addition,Lim was only to be reimbursed for the legal fees paid to Rutan&Tucker and not their own attorney,as well as other incidental acquisition costs,such as appraisals, sons reports,and engineers'reports. The total eligible costs are expected to be between$50,000 and $60,000,of which$47,500 was the amount deposited with the Agency for legal fees. The reimbursement is not a general obligation ofthe Agency but rather only the tax increment of the project itself; which means that the Agency carrot advance the entire reimbursement in a single payment,unless it has actually received the tax increment fiomtheCounty. Theprojectbas generated $93,652 in tax increment over the three prior years. This is after subtracting pass- through payments and housing setaside. Therefore,the amount theDevelopercan be reimbursed priorto theDecenber 1999 tax paymed,is$14,652. In addition,there was an amount of$8,588 in unexpended legal feesthat theDeveloper is entitled to,which has already been paid. Therefore, the combined amounts to be paid to the Developer in October 1999 are$23,240. An additional payment of approximately $20,000 will be due the developer after the Agency receives tax increment from the County in January,2000. The final payment,estimated to be about$10,000, will be due in May,2000. The latter two payments will be made after the Agency has verified that the project's property takes have been paid to the County and received by the Agency craaw6 Crab-�. Staff did not anticipate having to make payments to Linsu in the 1999-20M year bey very conservative estimates of tax increment generation were used at the time ofthe agreement. It was anticipated that the generation ofthe first$79,000 in revenue would take about fauyears(A took lessthatthree). The project has perfonnedextremelywell,with resales selling for quite a bit more than the original sales prices,which will lead to additional increases in tax increment. The anticipated sale ofthe Agency-owned parcel at Stevens Road and North Palm Canyon Drive, which could occur this fiscal year,would give the project area the funds to repay the General Fund GPA THOMAS M. KANARA Director of c Dev Director of Finance&Treasurer Approved by City Manager Attachments 1. Resolution 2. Promissory Note 3. Budget Resolution , ai MEMORANDUM DATE: November 22, 1999 TO: Community Redevelopment Agency /�� y .t FROM: Office of the City Clerk-Evelyn? RE: Financing Agreement and Promissory Note CC: File Attached is a copy of the above mentioned agreement between the City of Palm Springs and the Community Redevelopment Agency of the City of Palm Springs, ^ approved by the City Council on October 20, 1999, by Resolution 1086,A397C1t-7 I have retained the necessary copies for the City's files, and forwarded a copy to the Finance Department. Thanks Evelyn XI cc: Finan CRA - Financing Agr & - Promissory Note AGREEMENT #397C - R19673, #4169 R1086, 10-20-99 related " FINANCING AGREEMENT AND PROMISSORY NOTE n THIS FINANCING AGREEMENT PROMISSO N T ("Agreement") �s made and entered into this ay of ("Effective Date") , by and between the CITY OF PALM SPRINGS ("City") , and the COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS ("Agency") . $ LQ ,ITBL - A. City is a municipal corporation and a charter city of the State of California. B. Agency is a public body, corporate and politic, organized and existing under the California Community Redevelopment Law (Health & Safety Code 533000 pt sea• (11CRL14) . C. City is authorized by the CRL to provide financial assistance to the Agency, including in the form of a loan, and Agency is authorized by the CRL to obtain loans from the City. D. City and Agency mutually desire to enter into this Agreement to effect a loan from the City to the Agency on the terms hereinafter provided. NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter contained, and for good and valuable consideration, the sufficiency and receipt of which are hereby acknowledge, City and Agency agree as follows: 1. City Loan: Interest Rate. City hereby loans to Agency the principal amount of SIXTY THOUSAND Dollars ($60, 000.00) ("Loan Principal") . Interest shall accrue on the outstanding Loan Principal at the rate of six percent (0) per annum from and after the Effective Date. Interest shall be compounded annually. 2. Aaency Repayment. The Loan Principal and accrued interest shall be repaid by Agency out of tax increment funds allocated to and received by Agency. Agency shall make such repayment(s) when feasible in the sole discretion of Agency; provided, however, that the outstanding principal balance and accrued interest shall be repaid in full no later than June 30, 2002, All amount due shall be payable at the office of City at 3200 E. Tahquitz Canyon Way, Palm Springs, CA 92262, or at such other address as City may designate to Agency. 3. Indebtedness of Agency. The Loan Principal and accrued interest described in this Agreement shall constitute an indebtedness of Agency. 4. Subordination. The repayment of Loan Principal and accrued interest by Agency shall be junior and subordinate to (i) 394/014084-0006/3034575.1 a09/28/99 CR4- 3 • i RESOLUTIONNO. 1086 OF THE COMMUNITYREDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA, ACCEPTING A LOAN FROM THE CITY OF PALM SPRINGS AND APPROVING THE "FINANCING AGREEMENT AND PROMISSORY NOTE" IN THE AMOUNT OF SIXTY THOUSAND DOLLARS ($60,000) FOR PROPERTY ACQUISITION COSTS BY LdNSU DEVELOPMENT COMPANY,L.L.C. WIdEREA,S,the ComnwnityRedevelopment Agency oftere City ofPalm Springs,California("Agency) isconstitutedunderConunu*Redevelopment)aw(Caffin iaHealthand Safety Code§33000et.seq.) to carry out the purpose as the redevelopment agency in the City ofPalm Springs("C"i ),and WHEREAS,on December 13, 1995,the Community Redevelopment Agency entered into an Owner Participation Agreement with Linsu Development Company,LLC("Project' ;and WHEREAS, on December 14, 1996, the Community Redevelopment Agency approved the First Amendment to the Owner Participation Agreement with Lum Development Company,LL C,and WHEREAS,pursuant to California Health and Safety Code§33132 and 33601,the Agency is authorized to borrow money from other public agencies to fulfill its obligations;and WHEREAS,the Agency has awc ted a"Financing Agreement and Promissory Note"in the amount of SIXTY THOUSAND DOLLARS($60,000),and WHEREAS,the Agency has considered all the mfomration,testunony and evidence provided during the public hearings on December 13, 1995 and December 4, 1996. NOW,THEREFORE,BE IT RESOLVED by the Community Redevelopment Agency of the City of Palm Springs that: SECTION 1. A loan for SIXTY THOUSAND DOLLARS($60,000)from the City o0alm Springs to the Cominurdy Redevelopment Agency to reimburse Lmsu Development Company, L.L.C.for costs pertaining to the acquisition oftheir site is hereby accepted in the form of an"Agreement and Promissory Note,"as on file in the Office oftere City Clerlr,and shall accrue interest at the rate of 6% per annum and be repayable from net tax increment accrued from the project. SECTION 2. Any payments made to Linsu shall be in accordance with the OPA, as amended. ADOPTED this 20th day of October , 1999, AYES: Agency Members Barnes, Hodges, Reller-Spurgin and Chairman Kleindienst NOES: None ABSEUr* Agency Member Oden ATTEST: COM[MUN]TY REDEVELOPMENT AGENCY OF THE CITY OF PALM SPRINGS, CALIFORNIA BY Assistant Secretary Chairman REVIEWED&APPROVED C.ra-o 64