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HomeMy WebLinkAbout24160 RESOLUTION NO. 24160 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, APPROVING AN AGREEMENT TO RE-ESTABLISH LOANS PURSUANT TO SECTION 34191.4 BY AND BETWEEN THE CITY OF PALM SPRINGS AND THE SUCCESSOR AGENCY TO THE PALM SPRINGS COMMUNITY REDEVELOPMENT AGENCY. WHEREAS, the Community Redevelopment Agency of the City of Palm Springs ("former Agency') was established as a redevelopment agency that was previously organized and existing under the California Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ("CRL"), and previously authorized to transact business and exercise powers of a redevelopment agency pursuant to action of the City Council of the City of Palm Springs("City"); and WHEREAS, Assembly Bill x1 26 chaptered and effective on June 27, 2011 added Parts 1.8 and 1.85 to Division 24 of the California Health & Safety Code, which caused the dissolution of all redevelopment agencies and wind down of the affairs of former agencies, including as such laws were amended by Assembly Bill 1484 chaptered and effective on June 27, 2012 (together, the "Dissolution Laws"); and WHEREAS, as of February 1, 2012 the former Agency was dissolved pursuant to the Dissolution Act and as a separate public entity, corporate and politic the Successor Agency to the Palm Springs Community Redevelopment Agency ("Successor Agency") administers the enforceable obligations of the former Agency and otherwise unwinds the former Agency's affairs, all subject to the review and approval by a seven-member oversight board ("Oversight Board"); and WHEREAS, Section 34179 provides that the Oversight Board has fiduciary responsibilities to holders of enforceable obligations and the affected taxing entities that benefit from distributions of property tax and other revenues pursuant to Section 34188 of Part 1.85 of the Dissolution Act; and WHEREAS, the City and Successor Agency desire to enter into that certain Agreement to Re-Establish Loan Pursuant to Section 34191.4 pursuant to the Dissolution Laws. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA HEREBY RESOLVES, AS FOLLOWS: Resolution No. 24160 Page 3 EXHIBIT A AGREEMENT TO RE-ESTABLISH LOANS PURSUANT TO SECTION 34191.4 (attached) Aft+ AGREEMENT TO RE-ESTABLISH LOANS PURSUANT TO SECTION 34191.4 This AGREEMENT TO RE-ESTABLISH LOANS PURSUANT TO SECTION 34191.4 ("Agreement") is entered into as of January 4, 2017 ("Date of Agreement")between the CITY OF PALM SPRINGS, a charter city and municipal corporation, ("City") and the SUCCESSOR AGENCY TO THE PALM SPRINGS COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic pursuant to Parts 1.8 and 1.85 of Division 24 of the California Health&Safety Code("Successor Agency"). RECITALS A. The City is 4 charter city and municipal corporation organized and operating under the laws of the State of California. B. The Successor Agency is a public body corporate and politic, organized and operating under Parts 1.8 and 1.85 of Division 24 of the California Health and Safety Code, and the successor the former Community Redevelopment Agency of the City of Palm Springs("former Agency")that was previously a community redevelopment agency organized and existing pursuant to the Community Redevelopment Law,Health and Safety Code Section 33000, et seq. ("CRL"). C. Assembly Bill xl 26 ("AB xl 26") chaptered and effective on June 27, 2011 added Parts 1.8 and 1.85 to Division 24 of the California Health& Safety Code and which laws were modified, in part, and determined constitutional by the California Supreme Court in the petition California Redevelopment Association, et al. v.Ana Matosantos, et al., Case No. S194861 ("Matosantos Decision"), which laws and court opinion caused the dissolution of all redevelopment agencies and winding down of the affairs of former redevelopment agencies; thereafter, such laws were amended further by Assembly Bill 1484("AB 1484") that was chaptered and effective on June 27, 2012 and by Senate Bill 107 ("SB 107") that was chaptered and effective on September 22,2015(together AB xl 26,the Matosantos Decision,AB 1484 and SB 107 are referred to as the "Dissolution Laws"). All statutory references herein are to the Health and Safety Code of the Dissolution Laws unless otherwise stated. D. As of February 1, 2012 the former Agency was dissolved pursuant to the Dissolution Laws and as a separate public entity, corporate and politic the Successor Agency administers the enforceable obligations of the former Agency and otherwise unwinds the former Agency's affairs, all subject to the review and approval by a seven-member oversight board("Oversight Board"). E. Section 34177(a) permits the Successor Agency to make payments due for enforceable obligations. F. Section 34177(l) requires the Successor Agency to prepare a Recognized Obligation Payment Schedule("ROPS")before each six-month fiscal period that lists its Enforceable Obligations. G. Section 34191.4(b) authorizes the City and Successor Agency to re-establish prior loans between the City and the former Agency as follows: (1) Notwithstanding subdivision (d) of Section 34171, upon application by the successor agency and approval by the oversight board, loan agreements entered into between the redevelopment agency and the city, county, or city and county that created the redevelopment agency shall be deemed to be enforceable obligations provided that the oversight board makes a finding that the loan was for legitimate redevelopment purposes. 1 (2) For purposes of this section, "loan agreement'means: (A)Loans for money entered into between the former redevelopment agency and the city, county, or city and county that created the former redevelopment agency under which the city, county, or city and county that created the former redevelopment agency transferred money to the former redevelopment agency for use by the former redevelopment agency for a lawful purpose, and where the former redevelopment agency was obligated to repay the money it received pursuant to a required repayment schedule. (B) An agreement between the former redevelopment agency and the city,county, or city and county that created the former redevelopment agency under which the city,county,or city and county that created the former redevelopment agency transferred a real property interest to the former redevelopment agency for use by the former redevelopment agency for a lawful purpose and the former redevelopment agency was obligated to pay the city, county, or city and county that created the former redevelopment agency for the real property interest. (3) If the oversight board finds that the loan is an enforceable obligation, any interest on the remaining principal amount of the loan that was previously unpaid after the original effective date of the loan shall be recalculated from the date of origination of the loan as approved by the redevelopment agency on a quarterly basis,at a simple interest rate of 3 percent.The recalculated loan shall be repaid to the city,county,or city and county in accordance with a defined schedule over a reasonable term of years.Moneys repaid shall be applied first to the principal,and second to the interest. The annual loan repayments provided for in the recognized obligation payment schedules shall be subject to all of the following limitations: (A)The maximum repayment amount authorized each fiscal year for repayments made pursuant to this subdivision and paragraph (7) of subdivision (e) of Section 34176 combined shall be equal to one-half of the increase between the amount distributed to the taxing entities pursuant to paragraph (4) of subdivision (a) of Section 34183 in that fiscal year and the amount distributed to taxing entities pursuant to that paragraph in the 2012-13 base year,provided, however,that calculation of the amount distributed to taxing entities during the 2012-13 base year shall not include any amounts distributed to taxing entities pursuant to the due diligence review process established in Sections 34179.5 to 34179.8, inclusive. Loan or deferral repayments made pursuant to this subdivision shall be second in priority to amounts to be repaid pursuant to paragraph(7)of subdivision(e)of Section 34176. (B)Repayments received by the 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 Supplemental Educational Revenue Augmentation Fund and shall be distributed to the Low and Moderate Income Housing Asset Fund established by subdivision(d) of Section 34176. Distributions to the Low and Moderate Income Housing Asset Fund are subject to the reporting requirements of subdivision(f)of Section 34176.1. (C)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, after all outstanding loans from the Low and Moderate 2 Income Housing Fund for purposes of the Supplemental Educational Revenue Augmentation Fund have been paid. H. The Successor Agency received its Finding of Completion from the State Department of Finance("DOF")by letter dated January 2, 2014. I. In 1991,the City's Wastewater Treatment Plant Fund loaned the former Agency$827,000 for funding of the renovation of the Plaza Theatre located in the Central Business District Redevelopment Project and in 1993 the City's Wastewater Treatment Plant Fund loaned the former Agency $400,000 for funding of the formation costs of the Canyon Redevelopment Project ("WWTPF Loans"). The WWTPF Loans accrued interest at 6%. J. In 2008, the former Agency agreed to repay the City's Diversion Facility Fund (now Sustainability Find) $1,221,894 advanced to the General Fund for funding of the Agency's obligation to make an upfront sublease payment for the 1.77 acre parcel located in the Tahquitz-Andreas Redevelopment Project directly across from the entrance to the Convention Center ("Sustainability Fund Loan"). The Sustainability Fund Loan accrued interest at 6%. K. In fiscal year 2010-11, the City advanced $2,011,785 to the former Agency for Agency operating expenses and in fiscal year 2011-12, the City advanced $1,605,000 to the former Agency for Agency operating expenses (the "General Fund Loans" and together with the WWTPF Loans and the Sustainability Fund Loan,the"Loans"). The General Fund Loans accrued interest at 6%. L. The redevelopment purpose for the WWTPF Loans and General Fund Loans was that the former Agency did not have adequate funds to carry out redevelopment purpose projects while making mandatory Low and Moderate Income Housing Fund payments, mandatory pass through payments to affected taxing entities,and ongoing mandatory ERAF/SERAF payments to the State of California. M. The redevelopment purpose for the Sustainability Fund Loan was that the cost to control the property immediately across the street from the Convention Center was properly charged to the former Agency,who would also assist in the development of the parcel with potential for outdoor,park-like seating areas and/or drop off areas necessary for the success of the newly expanded Convention Center. N. Since the loans were established, and prior to the Dissolution Laws approval, the former Agency made payments on some of the loans as shown in Exhibit A,therebyreducing the principal on such Loans in accordance with the method contained in SB 107(where all payments are first applied to principal and interest only accrues at 3%);the current amount due under the Loans will be$5,714,572 as of June 30, 2017,including principal and accrued interest calculated accordance with the method contained in SB 107. O. By this Agreement,the City and Successor Agency desire to re-enter into and re-establish the Loans on the terms and conditions set forth in this Agreement pursuant to the authority of Section 34191.4 of the Dissolution Laws. P. By this Agreement,the City and Successor Agency also establish a repayment schedule for the re-established Loans over a reasonable term of years, at a 3% interest rate, and agree to list the Agreement and loan thereunder as an enforceable obligation of the Successor Agency on each successive ROPS prepared by the Successor Agency, approved by the Oversight Board, and reviewed and approved by the DOF until such loan is repaid in full both principal and interest. 3 Q. The former Agency did borrow funds from the low to moderate income housing fund to make State-mandated ERAF/SERAF payments,which will be repaid by June 30,2017,and which payment will be made prior to any repayment of the re-established Loans. AGREEAMNT NOW THEREFORE, in consideration of the mutual covenants and agreements hereinafter set forth, the City and Successor Agency agree as follows: Section 1. Recitals. The City and Successor Agency represent and warrant to each other that each and all of the respective recitals are true and correct, are a material part hereof, and are hereby incorporated into this Agreement by reference as if fully set forth and such Recitals evidence the intent of the parties regarding the Loan. Section 2. Loan Amounts. The City's Wastewater Treatment Plant Fund will have outstanding to the Successor Agency in the amount of Two Hundred One Thousand Six Hundred Twenty Dollars($201,620) loans as of June 30, 2017 ("WWTPF Loan Amount"). The City's Sustainability Fund will have an outstanding loan to the Successor Agency in the amount of One Million One Hundred Eighty-four Thousand Seven Hundred Eighty-Nine Dollars($1,184,789)as of June 30,2017("Sustainability Fund Loan Amount"). The City's General Fund will have outstanding loans to the Successor Agency in the amount of Four Million Three Hundred Twenty-Eight Thousand One Hundred Sixty-Three Dollars ($4,328,163) as of June 30, 2017 ("General Fund Loan Amount"). The WWTPF Loan Amount, the Sustainability Fund Loan Amount and the General Fund Loan Amount are referred to herein as the"Loan Amounts." Section 3.Interest. The principal balances of the Loans shall accrue interest at a simple rate of interest of 3%, not compounded, in accordance with calculation method described in Section 34191.4(b)(3) of the CRL. Section 4.Payment.Annual payments of the principal of the Loans together with accrued interest at a 3% rate described above commence as shown in the repayment schedule attached hereto at Exhibit "A" and installments shall be payable annually. The schedule of payments set forth in Exhibit "A" hereof is a projection of payments representative of the statutory formula outlined in Section 34191.4(b)(3)(A)of the CRL. The estimated term of repayments may be rendered longer or shorter, depending on the residual amount that will actually be available each fiscal year to repay the total Loan Amounts plus interest. Twenty percent (20%) of any loan repayment shall be deducted from the Loan Amounts repaid and shall be transferred to the Low and Moderate Income Housing Asset Fund, after all outstanding loans from the Low and Moderate Income Housing Fund for purposes of the SERAF loans and housing deferral repayment have been paid. Transfers to the Low and Moderate Income Housing Asset Fund are subject to the reporting requirements of Section 34176.1(f) of the CRL. Moneys repaid toward the Loan Amounts shall be applied first to the principal,and second to the interest. Section 5. Subordination. Payment of the Loans and accrued interest thereon is subordinate to the outstanding tax allocation bonds of the former Agency or the Successor Agency. The obligation of the Successor Agency to make payment to the City shall,without necessity of further action by the Successor Agency or City,be junior and subordinate to all other obligations or indebtedness heretofore or hereafter voluntarily incurred by the Successor Agency, including without Imitation,to the bond payments- Section 6.Loan for Legitimate Redevelopment FuLpo en Submittal of AgreementtoOversightBoard and DOF. The Successor Agency agrees to submit this Agreement to the Oversight Board for its review, approval and determination that the Loans were for a legitimate redevelopment purpose. Thereafter, this 4 Agreement shall be submitted to the DOF for its review and approval pursuant to the Dissolution Laws. Section 7.Successor Agency to List Agreement as an Enforceable Obligation on Each ROPS until the Loan is Renaid.The Successor Agency agrees to list this Agreement as an enforceable obligation on each ROPS during until repaid in full pursuant to the provisions of the Dissolution Laws,with the amount of that listed enforceable obligation to be the Loan Amounts(or such lesser amount as remains outstanding.) Section 8. Term. This Agreement shall be in full force and effect from the Date of Agreement until such time as the entire Loan Amounts with interest to accrue thereon have been repaid in full. Section 9. Entire Agreement. This Agreement constitutes the entire agreement by and between the parties with respect to the subject matter of this Agreement, and may be amended only in writing. Section 10. Remedies. In the event of a default, the parties hereto shall be entitled to pursue any and all remedies available at law or equity under California law for purposes of enforcing the terms and conditions of this Agreement. [Signature blocks on next page] 5 IN WITNESS WHEREOF, said parties have caused this Agreement.to Re-Establish Loans Pursuant to Section 34191.4 to be executed by their officers duly authorized on the Date of Agreement. CITY P GS Robert Moon,Mayor ATTEST: APPROVED Kathleen Hart n�{� Interim City Clerk -s•u APPROVEao TO FORM: City A mey SUCCESSOR AGENCY TO THE PALM RIN UNITY REDE A ENCY Robert Moon, Mayor acting as Chairman of the ATTEST: Successor Agency Kathleen Hart APPROVED t Interim City Clerk acting as Secretary of the Successor Agency 6 EXHIBIT A SCHEDULE OF LOAN REPAYMENTS W WTPF Loans -ROPS Line Item 35 and 36 combined Payment Payment Applied to Accrued Applied to Ending Principal Dal Principal Interest Interest Balance 6/30/2017 103,540 - 103,540 6/30/2018 - - (103,540) - WWTPF Loans -ROPS Line Item 37 Payment Payment Applied to Accrued Applied to Ending Principal Bal Principal Interest Interest Balance 6/30/2017 - 98,080 98,080 6/30/2018 - (98,080) - Sustainability Fund Loan-ROPS Line Item 41 Payment Payment Applied to Accrued Applied to Ending Principal Bal Principal Interest Interest Balance 6/30/2017 918,576 266,213 - 1,184,789 6/30/2018 918,576 (200,280) 27,557 - 1,012,066 6/30/2019 718,296 (200,000) 21,549 - 833,615 6/30/2020 518,296 (200,000) 15,549 - 649,164 6/30/2021 318296 (200,000) 9,549 - 458,713 6/30/2022 118:296 (118,296) 3,549 (343,966) General Fund Loans -ROPS Line Item 38 and 39 combined Payment Payment Applied to Accrued Applied to Ending Principal Bal Principal Interest Interest Balance 6/30/2017 2,011,785 422,478 2,434,263 6/30/2018 2,011,785 60,354 2,494,617 6/30/2019 2,011,785 1,400,000 60,354 - 1,154,971 6/30/2020 611,785 611,785 18,354 561,540 - Exhibit A General Fund Loans-ROPS Line Item 40 Payment Payment Applied to Accrued Applied to Ending Princi al Bal Principal Interest Interest Balance 6/30/2017 1,605,000 288,900 1,893,900 6/30/2018 1,605,000 48,150 1,942,050 6/30/2019 1,605,000 48,150 1,990,200 6/30/2020 1,605,000 (200,000) 48,150 1,938,350 6/30/2021 1,405,000 (1,405,000) 42,150 475,500 (475,500) - Exhibit A