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HomeMy WebLinkAboutSA_2018_05_08 AgendaPacket1 On January 10, 2012, the Atascadero City Council adopted Resolution No. 2012 -002, electing to serve as the successor to the Community Redevelopment Agency of Atascadero for redevelopment purposes, and also elected to retain the housing assets and functions previously performed by the Community Redevelopment Agency of Atascadero. CITY OF ATASCADERO CITY COUNCIL IN THE CAPACITY OF SUCCESSOR AGENCY TO THE COMMUNITY REDEVELOPMENT AGENCY OF ATASCADERO FOR REDEVELOPMENT AND HOUSING PURPOSES1 ____________________________________________________________________________ AGENDA Tuesday, May 8, 2018 (Immediately following the conclusion of the City Council Regular Session) City Hall Council Chambers, 4th floor 6500 Palma Avenue Atascadero, California (Enter from Lewis Avenue) REGULAR SESSION – CALL TO ORDER: Immediately following the conclusion of the City Council Regular Session ROLL CALL: Mayor O’Malley Mayor Pro Tem Fonzi Council Member Bourbeau Council Member Moreno Council Member Sturtevant APPROVAL OF AGENDA: Roll Call Page 1 of 21 A. CONSENT CALENDAR: 1. Successor Agency Draft Minutes – January 9, 2018  Recommendation: Council, in the capacity of the Successor Agency to the Community Redevelopment Agency of Atascadero, approve the Successor Agency Draft Action Minutes of January 9, 2018. [City Clerk] COMMUNITY FORUM: (This portion of the meeting is reserved for persons wanting to address the Board on any matter not on this agenda and over which the Board has jurisdiction. Speakers are limited to three minutes. Please state your name and address for the record before making your presentation. The Board may take action to direct the staff to place a matter of business on a future agenda. A maximum of 30 minutes will be allowed for Community Forum, unless changed by the Board.) B. PUBLIC HEARINGS: None. C. MANAGEMENT REPORTS: 1. Agreement Authorizing the Repayment of Loans Made to the Redevelopment Agency from the City  Fiscal Impact: This action by the Successor Agency will provide repayment to the City in the amount of $180,000 in Fiscal Year 2019-20.  Recommendation: Successor Agency adopt Resolution approving an “Agreement Regarding Reinstatement of Loans,” between the Successor Agency to the Redevelopment Agency of the City of Atascadero and the City of Atascadero authorizing the repayment of loans made from the City to the Redevelopment Agency and, following approval by the Oversight Board to the Successor Agency, direct the City Manager to execute the agreement. [Administrative Services] BOARD ANNOUNCEMENTS AND REPORTS: (On their own initiative, the Board Members may make a brief announcement or a brief report on their own activities. Board Members may ask a question for clarification, make a referral to staff or take action to have staff place a matter of business on a future agenda . The Board may take action on items listed on the Agenda.) D. ADJOURN Page 2 of 21 ITEM NUMBER: SA A-1 DATE: 05/08/18 Atascadero Successor Agency January 9, 2018 Page 1 of 4 CITY OF ATASCADERO CITY COUNCIL IN THE CAPACITY OF SUCCESSOR AGENCY TO THE COMMUNITY REDEVELOPMENT AGENCY OF ATASCADERO FOR REDEVELOPMENT AND HOUSING PURPOSES ____________________________________________________________________________ DRAFT MINUTES Tuesday, January 9, 2018 (Immediately following the conclusion of the City Council Regular Session) City Hall Council Chambers, 4th floor 6500 Palma Avenue Atascadero, California (Enter from Lewis Avenue) REGULAR SESSION – CALL TO ORDER: Immediately following the conclusion of the City Council Regular Session Mayor O’Malley called the meeting to order at 7:23 p.m. ROLL CALL: Present: Council Members Bourbeau, Moreno, Sturtevant, Mayor Pro Tem Fonzi and Mayor O’Malley. Absent: None. Staff Present: City Manager Rachelle Rickard, Administrative Services Director Jeri Rangel, Public Works Director Nick Debar, Police Chief Jerel Haley, Community Development Director Phil Dunsmore, Fire Chief Casey Bryson, City Attorney Brian Pierik, Deputy City Manager/City Clerk Lara Christensen. Page 3 of 21 ITEM NUMBER: SA A-1 DATE: 05/08/18 Atascadero Successor Agency January 9, 2018 Page 2 of 4 APPROVAL OF AGENDA: MOTION: By Council Member Sturtevant and seconded by Mayor Pro Tem Fonzi to: 1. Take Agenda Item #C-1 prior to Agenda Item #B-1; and 2. Approve this agenda as amended. Motion passed 5:0 by a roll-call vote. A. CONSENT CALENDAR: 1. Successor Agency Draft Minutes – May 23, 2017, June 13, 2017, June 27, 2017, July 11, 2017, August 8, 2017, September 26, 2017, and November 14, 2017  Recommendation: Council, in the capacity of the Successor Agency to the Community Redevelopment Agency of Atascadero, approve the Successor Agency Draft Action Minutes of May 23, 2017, June 13, 2017, June 27, 2017, July 11, 2017, August 8, 2017, September 26, 2017, and November 14, 2017. [City Clerk] Deputy City Manager/City Clerk Christensen removed Draft Minutes for November 14, 2017 for separate discussion and vote. MOTION: By Council Member Bourbeau and seconded by Council Member Moreno to approve the Consent Calendar excluding the November 14, 2017 Draft Minutes. Motion passed 5:0 by a roll-call vote. Successor Agency Draft Minutes – November 14, 2017 Deputy City Manager/City Clerk Christensen provided the Council with a revised copy of the Minutes (Exhibit A) and noted that the Minutes had been amended to reflect Mayor Pro Tem Fonzi’s absence and City Attorney Pierik’s report that her absence was due to a potential conflict of interest and inability to participate with regards to the Closed Session item. MOTION: By Council Member Bourbeau and seconded by Council Member Moreno to approve the revised Draft Action Minutes of November 14, 2017 as presented at the meeting. Motion passed 5:0 by a roll-call vote. COMMUNITY FORUM: The following citizens spoke during Community Forum: None. Mayor O’Malley closed the COMMUNITY FORUM period. Page 4 of 21 ITEM NUMBER: SA A-1 DATE: 05/08/18 Atascadero Successor Agency January 9, 2018 Page 3 of 4 C. MANAGEMENT REPORTS: 1. Approval of Recognized Obligation Payment Schedule 18-19 July 1, 2018 – June 30, 2019  Fiscal Impact: None for this action.  Recommendation: Successor Agency Board approve the Draft Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2018 through June 30, 2019 (ROPS 18 -19), including the Administrative Budget, pursuant to Health and Safety Code. [Administrative Services] Administrative Services Director Rangel gave the presentation and answered questions from the Council. She provided the Council with a revised ROPS for review and approval (Exhibit B). PUBLIC COMMENT: The following citizens spoke on this item: None. Mayor O’Malley closed the Public Comment period. MOTION: By Mayor Pro Tem Fonzi and seconded by Council Member Moreno to approve the Draft Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2018 through June 30, 2019 (ROPS 18-19), as revised and presented at the meeting, including the Administrative Budget, pursuant to Health and Safety Code. Motion passed 5:0 by a roll-call vote. B. PUBLIC HEARINGS: 1. Sale of Creekside Building  Ex-parte Communications:  Fiscal Impact: Closing costs and fees for the seller are estimated to be $4,600. Following receipt of the proceeds of the sale, the Successor Agency will transfer the appropriate funds to the County of San Luis Obispo Auditor-Controller for distribution to the taxing agencies in accordance with Health and Safety Code Division 24, Part 1.85.  Recommendation: Successor Agency adopt Draft Resolution approving a Negative Declaration in accordance with CEQA requirements and approving a purchase and sale agreement of the Creekside Building for the purchase price of $2,200,000. [City Manager] Mayor Pro Tem Fonzi noted that she works at the same office as the broker representing Colony Creekside, LLC creating a potential conflict of interest and will step down from the dais and recuse herself from the discussion and vote for this item. City Manager Rickard gave the presentation and answered questions from the Council. Page 5 of 21 ITEM NUMBER: SA A-1 DATE: 05/08/18 Atascadero Successor Agency January 9, 2018 Page 4 of 4 PUBLIC COMMENT: The following citizens spoke on this item: Clint Pearce and Susan Funk. Mayor O’Malley closed the Public Comment period. MOTION: By Mayor O’Malley and seconded by Council Member Moreno to adopt Resolution No. SA2018-001 approving a Negative Declaration in accordance with CEQA requirements and approving a purchase and sale agreement of the Creekside Building for the purchase price of $2,200,000. Motion passed 4:0 by a roll-call vote. Fonzi abstained. BOARD ANNOUNCEMENTS AND REPORTS: None. D. ADJOURN Mayor O’Malley adjourned the meeting at 7:58 p.m. MINUTES PREPARED BY: ______________________________________ Lara K. Christensen Deputy City Manager / City Clerk The following exhibit is available for review in the City Clerk’s office:  Exhibit A – Revised Draft Action Minutes for November 14, 2017 provided by Deputy City Manager/City Clerk Christensen.  Exhibit B – Revised Draft Recognized O bligation Payment Schedule provided by Administrative Services Director Rangel. APPROVED: Page 6 of 21 ITEM NUMBER: SA C-1 DATE: 05/08/18 Successor Agency to the Community Redevelopment Agency of Atascadero Staff Report – Administrative Services Agreement Authorizing the Repayment of Loans Made to the Redevelopment Agency from the City RECOMMENDATION: Successor Agency adopt Resolution approving an “Agreement Regarding Reinstatement of Loans,” between the Successor Agency to the Redevelopment Agency of the City of Atascadero and the City of Atascadero authorizing the repayment of loans made from the City to the Redevelopment Agency and, following approval by the Oversight Board to the Successor Agency, direct the City Manager to execute the agreement. DISCUSSION: Background: Pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) (“CRL”), the former Redevelopment Agency of the City of Atascadero (“Redevelopment Agency”) had responsibility to implement the Redevelopment Plans for the Redevelopment Project Area (“Project Area”). Pursuant to Health and Safety Code Section 33220, the City was authorized to assist the Redevelopment Agency for the purpose of aiding and cooperating in the planning, undertaking, construction, and operation of redevelopment projects located within the jurisdiction of the City, upon the terms and with or without consideration as the City determined. The Redevelopment Agency, for its part, was authorized under Health and Safety Code Sections 33132 and 33601 to borrow money and accept financial assistance from the City for redevelopment projects located within the Redevelopment Agency’s jurisdiction, Consistent with the foregoing authority, the City made the following loans (collectively, the “Loans”) to the Redevelopment Agency: (a) a loan in the original principal amount of $161,909, in accordance with the terms set forth in City of Atascadero Contract #99027 for the purpose of advancing funds to assist in the redevelopment of the Project Area, including funding operating costs for the Redevelopment Agency. The budget included expenditures for the Main Street Program, industrial redevelopment of the Project Area, and operations activities. The loan was shortly after the Redevelopment Agency was established, and before Page 7 of 21 ITEM NUMBER: SA C-1 DATE: 05/08/18 tax increment revenues had sufficient time to build up. This loan provided operating capital for the agency; and (b) a loan in the original principal amount of $500,000, in accordance with the terms set forth in City of Atascadero Contract #2001-009, for the purpose of advancing funds to assist in the redevelopment of the Project Area, including funding operating costs for the Redevelopment Agency. This loan also provided operating capital in the early years of the Agency, prior to build up of tax increment and prior to any debt issuance; and (c) a loan in the original principal amount of $720,000, in accordance with the terms set forth in City of Atascadero Contract #RA001 -2002, for the purpose of advancing funds to assist in the redevelopment of the Project Area, specifically the purchase of certain real property. These funds were used for the purposes of removing blight through the purchase of a downtown building that, at that time, housed an adult-oriented business and the adjacent vacant lot. The City agreed to serve as the successor agency to the former Redevelopment Agency (“Successor Agency”) commencing upon dissolution of the Redevelopment Agency on February 1, 2012. The Successor Agency came into being by operatio n of law on February 1, 2012 as part of the State’s dissolution of redevelopment in California pursuant to Assembly Bill Ext. 1 26 (ABx1 26). The Successor Agency subsequently remitted all moneys in its accounts to the County of San Luis Obispo, a sum in excess of eleven million dollars ($11,000,000) representing both housing funds and non-housing funds, as required by the dissolution legislation. The amount of non-housing funds remitted to the County exceeded the amount of housing funds borrowed by th e former Redevelopment Agency to pay its obligations under the Supplemental Educational Revenue Augmentation Fund (“SERAF”) legislation of 2009; the payment of all funds of the Successor Agency effectively mooted the SERAF loan because all funds, whether housing or non-housing, were required to be remitted and in fact were remitted as the Successor Agency moved toward completing its obligations under the dissolution legislation. When the Redevelopment Agency was dissolved in February 2012, the legislatio n that caused for the dissolution of redevelopment agencies made it so that all loans made by cities to former Redevelopment Agencies were no longer eligible for repayment. In June 2012, the dissolution law substantially changed with the passage of AB 148 4. AB 1484 provided a mechanism by which these loans could be repaid as long as the Successor took a number of administrative steps to obtain a Finding of Completion. Pursuant to Health and Safety Code Section 34191.4(b), once a successor agency completed these specified obligations (including remittance of all moneys in its accounts to the county in which it is located) the successor agency was eligible to receive a Finding of Completion and any loan agreements entered into between the redevelopment agency and the entity that created the redevelopment agency were to be deemed to be enforceable obligations provided that the successor agency’s oversight board made a finding that the Sponsoring Jurisdiction Loans were for legitimate redevelopment purposes. The Successor Agency received a Finding of Completion on March 8, 2013. Page 8 of 21 ITEM NUMBER: SA C-1 DATE: 05/08/18 In addition to requiring a Finding of Completion, AB 1484 outlined the following repayment criteria:  Interest rates have to be recalculated from origination at a statutory interest rate;  Loans have to be repaid in accordance with a defined schedule over a reasonable term of years;  The annual amount of repayments are subject to specified limitations outl ined in a complex formula; and  Twenty percent of repaid amounts have to be deposited into the City Housing Successor Agency’s housing fund. On September 22, 2015, Governor Brown signed Senate Bill 107, a budget bill including, among other things, a modification to the language of Health and Safety Code Section 34191.4(b) concerning the manner in which interest on these loans is to be calculated. The modification, among other things, sets forth a single rate of interest and means by which to calculate interest for all of the loans. Specifically, all outstanding interest as of the date of dissolution is to 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 (3%). The total outstanding amount of the loans is $1,375,174.54. One of the key requirements in 34191.4(b) states that the amount of property tax available to fund loan repayments is one-half of the difference between the Redevelopment Property Tax Trust Fund (“RPTTF”) funds available in the current fiscal year and the RPTTF payments to the affected taxing entities in fiscal year 2012 -13. In fiscal year 2012-13, the RPTTF payments to the affected taxing entities totaled $196,237.80. It is anticipated that in fiscal year 2018-19 the affected taxing entities will receive in excess of $1,592,981, so the amount available to pay the loan is one -half of the difference between $1,592,981and $196,237.80. That amounts to $698,372. The amount anticipated to be available in future fiscal years to repay the loan admittedly will vary, as it continues to be subject to the repayment formula outlined in the law. This takes into account whether former tax increment amounts increase or decrease, enforceable obligations are reduced or eliminated, and any further legislative changes that may occur. The Agreement takes these unknowns into account and allows for repayment to be extended if financial needs warrant. The Agreement also acknowledges that despite the $698,372 available for repayment, it is fiscally prudent to repay a lesser amount each year and instead pass more property tax money through to the taxing entities. In particular, as the taxing entities have come to rely on the passed-through funds, the City does not desire to cause any undue harm to any taxing entity’s budgetary process. The proposed agreement therefore assumes that payments will begin with the ROPS19 -20, and will begin at $180,000, and increase gradually. This lessens the fiscal impact on the affected taxing entities. With this proposed schedule (Exhibit A to Attachment 1), it is anticipated that it will take until 2025/2026 for the entire $1,375,174.54 and interest to be repaid. Page 9 of 21 ITEM NUMBER: SA C-1 DATE: 05/08/18 Upon approval by the City Council and the Successor Agency, the Successor Agency must present the amendment to the Agreement to the Oversight Board. An Oversight Board meeting is scheduled for May or June 2018 to consider this item. After the Oversight Board has approved the amendment, it will be provided to the Department of Finance, which has the ultimate approval authority. Upon approval by the Department of Finance, the Successor Agency will list the Agreement as an enforceable obligation on the Recognized Obligation Payment Schedules (ROPS) and receive future allocations from the County Auditor-Controller’s Redevelopment Property Tax Trust Fund (which was formally redevelopment tax increment) so that the loan can be fully repaid. FISCAL IMPACT: This action by the Successor Agency will provide repayment to the City in the amount of $180,000 in Fiscal Year 2019-20, of which $144,000 would be used to reimburse the General Fund that made the loans originally, and $36,000 would be required to be deposited in to the City’s Housing Successor Agency fund to be utilized to further affordable housing efforts in the City. Additional amounts would be repaid in future years until the full amount of the loan is repaid in Fiscal Year 2025-26. ATTACHMENT: Draft Resolution with Exhibit A (Agreement Regarding Reinstatement of Loans) Page 10 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 DRAFT RESOLUTION RESOLUTION OF THE SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF ATASCADERO, CALIFORNIA, APPROVING AN AGREEMENT REGARDING REINSTATEMENT OF CITY LOANS MADE TO THE FORMER REDEVELOPMENT AGENCY WHEREAS, pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) (“CRL”), the former Redevelopment Agency of the City of Atascadero (“Redevelopment Agency”) had responsibility to implement the Redevelopment Plans for the Redevelopment Project Area (“Project Area”); and WHEREAS, the City of Atascadero (“City”) agreed to serve as the Successor Agency to the Redevelopment Agency (“Successor Agency”) commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill Ext. 1 26 (ABx1 26); and WHEREAS, pursuant to Health and Safety Code Section 33220, the City was authorized to assist the Redevelopment Agency for the purpose of aiding and cooperating in the planning, undertaking, construction, and operation of redevelopment projects located within the jurisdiction of the City, upon the terms and with or without consideration as the City determined; and WHEREAS, pursuant to Health and Safety Code Section 33445, the Redevelopment Agency was authorized to enter into agreements with the City pursuant to which the Redevelopment Agency would agree to reimburse the City for funds provided by the City for the cost of installation and construction of public improvements, structures and facilities located within or outside the Project Areas; and WHEREAS, pursuant to Health and Safety Code Sections 33132 and 33601, the Redevelopment Agency was authorized to borrow money and accept financial assistance from the City for redevelopment projects located within the Redevelopment Agency’s jurisdiction; and WHEREAS, consistent with the foregoing authority, the City made the following loans (collectively, the “Loans”) to the Redevelopment Agency: (a) a loan in the original principal amount of $161,909, in accordance with the terms set forth in City of Atascadero Contract #99027 for the purpose of advancing funds to assist in the redevelopment of the Project Area, including the funding operating costs for the Redevelopment Agency; and (b) a loan in the original principal amount of $500,000, in accordance with the terms set forth in City of Atascadero Contract #2001-009, for the purpose of advancing funds to assist in the redevelopment of the Project Area, including the funding operating costs for the Redevelopment Agency; and Page 11 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 (c) a loan in the original principal amount of $720,000, in accordance with the terms set forth in City of Atascadero Contract #RA001-2002, for the purpose of advancing funds to assist in the redevelopment of the Project Area, specifically the purchase of certain real property; and WHEREAS, the Successor Agency came into being by operation of law on February 1, 2012 as part of the dissolution of redevelopment in California pursuant to ABx1 26. The Successor Agency subsequently remitted all moneys in its accounts to the County of San Luis Obispo, a sum in excess of Eleven Million Dollars ($11,000,000) representing both housing funds and non-housing funds, as required by the dissolution legislation; and WHEREAS, the amount of non-housing funds remitted to the County exceeded the amount of housing funds borrowed by the former Redevelopment Agency to pay its obligations under the Supplemental Educational Revenue Augmentation Fund (“SERAF”) legislation of 2009; the payment of all funds of the Successor Agency effectively mooted the SERAF loan because all funds, whether housing or non-housing, were required to be remitted and in fact were remitted as the Successor Agency moved toward completing its obligations under the dissolution legislation; WHEREAS, pursuant to Health and Safety Code Section 34191.4(b), once a successor agency has received a Finding of Completion pursuant to Health and Safety Code Section 34179.7, loan agreements entered into between the redevelopment agency and the entity that created the redevelopment agency (“Sponsoring Jurisdiction Loans”) shall be deemed to be enforceable obligations provided that the successor agency’s oversight board makes a finding that the Sponsoring Jurisdiction Loans were for legitimate redevelopment purposes; and WHEREAS, the Successor Agency received a Finding of Completion on March 8, 2013; and WHEREAS, Health and Safety Code Section 34191.4(b)(3) as written after the adoption of Senate Bill 107 now provides that: (i) interest on the remaining principal amount of the Loans that was left unpaid after the original effective date thereof is to be recalculated from the date of origination as approved by the former Redevelopment Agency on a quarterly basis, at a simple interest rate of 3 percent, (ii) Sponsoring Jurisdiction Loans shall be repaid to the sponsoring jurisdiction in accordance with a defined schedule over a reasonable term of years and otherwise in compliance with the limitations of Section 34191.4(b)(3), and (iii) the annual amount of repayments for Sponsoring Jurisdiction Loans provided for in the Recognized Obligation Payment Schedule (“ROPS”) is subject to specified limitation; and WHEREAS, the City and Successor Agency now wish to enter into an Agreement Regarding Reinstatement of Loan (“Agreement”) pursuant to terms consistent with Health and Safety Code Section 34191.4(b)(2) and other terms of the statutes governing dissolution of redevelopment in California; and WHEREAS, in May or June 2018, the Successor Agency’s Oversight Board (“Oversight Board”) will consider a resolution pursuant to which the Oversight Board will be asked to approve repayment of the Loans in accordance with the Agreement, Exhibit A, on file in the City Clerk’s Office and incorporated herein by this reference, which findings are necessary for final approval of the Agreement. Page 12 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 NOW, THEREFORE BE IT RESOLVED, by the Successor Agency to the Former Redevelopment Agency of the City of Atascadero: SECTION 1. The Successor Agency hereby finds that the facts set forth in the recitals to this Resolution are true and correct, and establish the factual basis for the adoption of this Resolution. SECTION 2. The Agreement is approved contingent on the approval of the Oversight Board, and consistent with the Oversight Board approval the City Manager of the City of Atascadero or her designee is authorized to execute the Agreement on behalf of the Successor Agency substantially in the form presented with the staff report accompanying this Resolution. SECTION 3. Contingent on and consistent with the Oversight Board approval, the Successor Agency is authorized and directed to list the Agreement and the repayment of the Loans on the Successor Agency’s ROPS for the Fiscal Year 2018-2019 Period and for each succeeding ROPS period until the Loans are repaid in full in accordance with the Agreement. Due to the repayment of the SERAF loan by virtue of the remittance of all of the Successor Agency’s funds on hand, including an amount of non-housing funds large enough to fully pay off the SERAF loan, there is no need to comply with Health & Safety Code section 34191.4(b)(3)(B) and the City may immediately apply the repayment funds toward the Loans subject to the terms of Health & Safety Code section 34191.4(b)(3)(C). SECTION 4. The City Manager of the City of Atascadero and her designees are authorized to take such further actions as may be necessary to carry out the intent of this Resolution. SECTION 5. The City Clerk of the City of Atascadero shall certify to the adoption of this Resolution. PASSED AND ADOPTED at a regular meeting of the Successor Agency held on the ___day of ________________, 2018. On motion by Council Member __________________ and seconded by Council Member _____________________, the foregoing Resolution is hereby adopted in its entirety on the following roll call vote: AYES: NOES: ABSENT: CITY OF ATASCADERO ________________________________ Tom O’Malley, Mayor ATTEST: Lara K. Christensen, City Clerk Page 13 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 APPROVED AS TO FORM: Brian Pierik, City Attorney Page 14 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 1 AGREEMENT REGARDING REINSTATEMENT OF LOAN (City of Atascadero/Successor Agency to the Atascadero Redevelopment Agency) THIS AGREEMENT REGARDING REINSTATEMENT OF LOAN (this “Agreement”) is entered into effective as of ___________________, 2018 (“Effective Date”) by and between the Successor Agency to the City of Atascadero Redevelopment Agency (“Successor Agency”) and the City of Atascadero, a municipal corporation (“City”). The Successor Agency and the City are hereinafter collectively referred to as the “Parties.” RECITALS A. Pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) (“CRL”), the former Redevelopment Agency of the City of Atascadero (“Redevelopment Agency”) had responsibility to implement the Redevelopment Plans for the B. Redevelopment Project Area (“Project Area”); and B. The City agreed to serve as the successor agency to the former Atascadero Redevelopment Agency commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill X1 26; and C. Pursuant to Health and Safety Code Section 33220, the City was authorized to assist the Redevelopment Agency for the purpose of aiding and cooperating in the planning, undertaking, construction, and operation of redevelopment projects located within the jurisdiction of the City, upon the terms and with or without consideration as the City determined; and D. Pursuant to Health and Safety Code Section 33445, the Redevelopment Agency was authorized to enter into agreements with the City pursuant to which the Redevelopment Agency would agree to reimburse the City for funds provided by the City for the cost of installation and construction of public improvements, structures and facilities located within or outside the Project Area; and E. Pursuant to Health and Safety Code Sections 33132 and 33601, the Redevelopment Agency was authorized to borrow money and accept financial assistance from the City for redevelopment projects located within the Redevelopment Agency’s jurisdiction; and F. Consistent with the foregoing authority, the City made the following loans (collectively, the “Loans”) to the Redevelopment Agency: (a) a loan in the original principal amount of $161,909, in accordance with the terms set forth in City of Atascadero Contract #99027 for the purpose of advancing funds to assist in the redevelopment of the Project Area, including the funding of operating costs for the Redevelopment Agency; and Page 15 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 2 (b) a loan in the original principal amount of $500,000, in accordance with the terms set forth in City of Atascadero Contract #2001-009, for the purpose of advancing funds to assist in the redevelopment of the Project Area, including the funding of operating costs for the Redevelopment Agency; and (c) a loan in the original principal amount of $720,000, in accordance with the terms set forth in City of Atascadero Contract #RA001-2002, for the purpose of advancing funds to assist in the redevelopment of the Project Area, specifically the purchase of certain real property; and G. The Successor Agency came into being by operation of law on February 1, 2012 as part of the dissolution of redevelopment in California pursuant to Assembly Bill 26 (1st Extraordinary Session). The Successor Agency subsequently remitted all moneys in its accounts to the County of San Luis Obispo, a sum in excess of Eleven Million Dollars ($11,000,000) representing both housing funds and non-housing funds, as required by the dissolution legislation; and H. The amount of non-housing funds remitted to the County exceeded the amount of housing funds borrowed by the former Redevelopment Agency to pay its obligations under the Supplemental Educational Revenue Augmentation Fund (“SERAF”) legislation of 2009; the payment of all funds of the Successor Agency effectively mooted the SERAF loan because all funds, whether housing or non-housing, were required to be remitted and in fact were remitted as the Successor Agency moved toward completing its obligations under the dissolution legislation; I. Pursuant to Health and Safety Code Section 34191.4(b), once a successor agency completed certain specified obligations (including remittance of all moneys in its accounts to the county in which it is located) the successor agency was eligible to receive a Finding of Completion pursuant to Health and Safety Code Section 34179.7; at such time any loan agreements entered into between the redevelopment agency and the entity that created the redevelopment agency (“Sponsoring Jurisdiction Loans”) shall be deemed to be enforceable obligations provided that the successor agency’s oversight board makes a finding that the Sponsoring Jurisdiction Loans were for legitimate redevelopment purposes; and J. The Successor Agency received a Finding of Completion on March 8, 2013; and K. Health and Safety Code Section 34191.4(b)(2) provides that: (i) interest on the remaining principal amount of the Loans that was left unpaid after the original effective date thereof is to be recalculated from the date of origination as a pproved by the former Redevelopment Agency on a quarterly basis, at a simple interest rate of 3 percent, (ii) Sponsoring Jurisdiction Loans shall be repaid to the sponsoring jurisdiction in accordance with a defined schedule over a reasonable term of years and otherwise in compliance with the limitations of Section 34191.4(b)(2), and (iii) the annual amount of repayments for Sponsoring Jurisdiction Loans provided for in the Recognized Obligation Payment Schedule (“ROPS”) is subject to specified limitations. L. This Agreement provides for repayment of the Loans in accordance with the requirements of Health and Safety Code Section 34191.4(b), and commits the City to use the Loan repayment proceeds in accordance with Health and Safety Code Section 34191.4(b). Page 16 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 3 M. On ______________, 2018, the Oversight Board for the Successor Agency (“Oversight Board”) adopted Resolution No. ___ pursuant to which the Oversight Board adopted findings determining that the Loans were made for legitimate redevelopment purposes as authorized by and consistent with the CRL, authorized the Successor Agency to enter into this Agreement, and authorized the Successor Agency to list this Agreement and repayment of the Loans on the ROPS. NOW, THEREFORE, the Successor Agency and the City agree as follows: 1. Reinstatement of Loans; Outstanding Principal Balances. The Parties acknowledge and agree that pursuant to the facts stated in the foregoing Recitals, which by this reference are incorporated into this Agreement, the Loans constitute enforceable obligations, eligible to be listed on the Successor Agency’s ROPS and repaid pursuant to and in accordance with Health and Safety Code Section 34191.4(b). The Parties acknowledge and agree that as of the Effective Date, the outstanding principal balance of the Loans is as follows: (a) The Loan evidenced by City of Atascadero Contract #99027 has an outstanding principal balance in the amount of $155,174.54; and (b) The Loan evidenced by City of Atascadero Contract #2001-009 has an outstanding principal balance in the amount of $500,000; (c) The Loan evidenced by City of Atascadero Contract #RA001-2002 has an outstanding principal balance in the amount of $720,000. Thus, the total amount outstanding is $1,375,174.54. The Parties acknowledge and agree that the former Redevelopment Agency regularly made interest payments on the Loans but did not pay off the principal as of the Redevelopment Dissolution Date. 2. Interest Rate. In accordance with Health and Safety Code Section 34191.4(b)(3), commencing upon the Effective Date of the Amendment, interest shall be recalculated on the outstanding principal balance of the Loans at a rate equal to the rate set forth in Health and Safety Code Section 34191.4(b)(3) (the “Interest Rate”). Interest shall be calculated from February 1, 2012, in light of the fact that the Redevelopment Agency was current on its interest payments as of the date that its activities were frozen by Assembly Bill 26, and interest shall continue to accrue in accordance with this Section until the total amount of the Loans is repaid in full. Interest shall be calculated on the basis of a year of 365 days and charged for the actual number of days elapsed. 3. Repayment Term. The Loans shall be repaid in in annual or semi-annual installments in an amount not to exceed the sum determined pursuant to Health and Safety Code Section 34191.4(b)(3)(A) (i.e., in the aggregate, the payments made in each fiscal year shall not exceed one-half of the increase between the amount distributed to the taxing entities pursuant to paragraph (4) of subdivision (a) of Section 34183 in each fiscal year and the amount distributed to the taxing entities pursuant to that paragraph in the 2012-13 base year). Payments shall be applied first to outstanding principal, and then to accrued interest. Notwithstanding the foregoing, if the amount of funds available to be distributed by the San Luis Obispo County Auditor-Controller from the Redevelopment Property Tax Trust Fund for any ROPS period is not sufficient to fully fund the other enforceable obligations on the Successor Agency’s ROPS, Page 17 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 4 payments due on the Loans, and the administrative costs of the Successor Agency for that period, then the amount of the Loan payments due shall be reduced to the extent necessary to fully fund the other enforceable obligations and administrative costs. The reduced Loan payments shall be applied first to outstanding principal, and then to accrued interest. In that event, the unpaid portion of the payment shall be deferred and the term for repayment of the Loans shall be extended for additional, successive ROPS periods as necessary until all outstanding principal and accrued interest has been repaid in full. As reflected in the attached Exhibit A, based on current projections, the Parties anticipate that the Loans will be repaid in full by not later than 2026. 4. Use of Loan Repayment Funds. The City shall use the required portion of Loan repayments in accordance with the requirements of Health and Safety Code Section 34191.4(b)(2)(C) to fund the City’s Low and Moderate Income Housing Asset Fund established by the City in its capacity as the housing successor to the Redevelopment Agency. The Parties agree that the Successor Agency’s remittance of an amount in excess of $11,000,000 to the County of San Luis Obispo pursuant to the redevelopment dissolution law, including an amount of non-housing funds sufficient to fully retire all amounts previously borrowed from the Low and Moderate Income Housing Fund of the Redevelopment Agency has eliminated the need for the City to comply with Health and Safety Code Section 34191.4(b)(2)(B). Therefore, any repayment amounts remaining after the City complies with Health and Safety Code Section 34191.4(b)(2)(C) may be used by the City for general purposes identified in the discretion of the City Council. 5. Subordination. Notwithstanding any contrary provision hereof, the Parties agree that the Successor Agency’s obligation to repay the Loans shall be subordinate to the pledge of tax increment revenue for the payment of debt service on tax allocation bonds or other indebtedness issued by the Redevelopment Agency, the payment of the Successor Agency’s other enforceable obligations, and the payment of the Successor Agency’s administrative costs. 6. Amendments. No amendment to or modification of this Agreement shall be effective unless and until such amendment or modification is in writing, properly approved in accordance with applicable procedures, and executed by the Parties. 7. Severability. If any term, provision, covenant, or condition set forth in this Agreement is held by the final judgment of a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions, covenants, and conditions shall continue in full force and effect to the extent that the basic intent of the Parties as expressed herein can be accomplished. In addition, the Parties shall cooperate in good faith in an effort to amend or modify this Agreement in a manner such that the purpose of any invalidated or voided provision, covenant, or condition can be accomplished to the maximum extent legally permissible. 8. No Third-Party Beneficiaries; Assignments. Nothing in this Agreement is intended to create any third-party beneficiaries to this Agreement, and no person or entity other than the Successor Agency and the City, and the permitted successors and assigns of either of them, shall be authorized to enforce the provisions of this Agreement. Page 18 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 5 9. Further Assurances. Each Party agrees to execute, acknowledge and deliver all additional documents and instruments, and to take such other actions as may be reasonably necessary to carry out the intent of the transactions contemplated by this Agreement. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 11. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. SIGNATURES ON FOLLOWING PAGES. Page 19 of 21 ITEM NUMBER: SA C-1 DATE: ATTACHMENT: 05/08/18 1 6 IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. CITY: CITY OF ATASCADERO By: City Manager Attest:__________________________ City Clerk Approved as to form: By: City Attorney SUCCESSOR AGENCY: SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF ATASCADERO By:________________________________ City Manager of the City of Atascadero Attest:_____________________________ City Clerk of the City of Atascadero Approved as to form: By:________________________________ City Attorney and Legal Counsel to Successor Agency Page 20 of 21 Principal Accrued Interest Payable (Simple) Outstanding Loan Amounts Loan #1 155,174.54$ 34,488.13$ Loan #2 500,000.00 111,126.88 Loan #3 720,000.00 160,022.71 Total Outstanding 7/1/2019 1,375,174.54$ 305,637.71$ Maximum Payment Amount 1,592,981.00$ Less: 2012-2013 Residual RPTTF distributed (196,237.80) 1,396,743.20 Times .5 0.50 Maximum Payment Amount 698,372.00$ Date Payment Amount to Low/Mod Principal Payments Interest Payments Interest Earned Principal Balance Accumulated Interest Beginning Balance 1,375,174.54$ 305,637.71$ 7/1/2019 90,000.00$ (18,000.00)$ 72,000.00$ -$ -$ 1,303,174.54 305,637.71 10/1/2019 - - 9,854.14 1,303,174.54 315,491.86 1/1/2020 90,000.00 (18,000.00) 72,000.00 - 9,854.14 1,231,174.54 325,346.00 4/1/2020 - - 9,208.51 1,231,174.54 334,554.51 7/1/2020 115,000.00 (23,000.00) 92,000.00 - 9,208.51 1,139,174.54 343,763.02 10/1/2020 - - 8,614.03 1,139,174.54 352,377.05 1/1/2021 115,000.00 (23,000.00) 92,000.00 - 8,614.03 1,047,174.54 360,991.08 4/1/2021 - - 7,746.22 1,047,174.54 368,737.31 7/1/2021 140,000.00 (28,000.00) 112,000.00 - 7,832.29 935,174.54 376,569.60 10/1/2021 - - 7,071.46 935,174.54 383,641.06 1/1/2022 140,000.00 (28,000.00) 112,000.00 - 7,071.46 823,174.54 390,712.51 4/1/2022 - - 6,089.24 823,174.54 396,801.75 7/1/2022 165,000.00 (33,000.00) 132,000.00 - 6,156.89 691,174.54 402,958.64 10/1/2022 - - 5,226.42 691,174.54 408,185.06 1/1/2023 165,000.00 (33,000.00) 132,000.00 - 5,226.42 559,174.54 413,411.47 4/1/2023 - - 4,136.36 559,174.54 417,547.83 7/1/2023 190,000.00 (38,000.00) 152,000.00 - 4,182.32 407,174.54 421,730.15 10/1/2023 - - 3,078.91 407,174.54 424,809.06 1/1/2024 190,000.00 (38,000.00) 152,000.00 - 3,078.91 255,174.54 427,887.97 4/1/2024 - 1,908.57 255,174.54 429,796.54 7/1/2024 215,000.00 (43,000.00) 172,000.00 - 1,908.57 83,174.54 431,705.10 10/1/2024 - 628.94 83,174.54 432,334.04 1/1/2025 215,000.00 (43,000.00) 83174.54 88,825.46 628.94 - 344,137.51 4/1/2025 - - - 344,137.51 7/1/2025 215,000.00 (43,000.00) - 172,000.00 - - 172,137.51 10/1/2025 - - - 172,137.51 1/1/2026 215,171.89 (43,034.38) - 172,137.51 - - - Exhibit A SUCCESSOR AGENCY CASH FLOW FORECAST - CITY LOAN REPAYMENT SCHEDULE 3% Interest earned- simple interst calculated quarterly until principal is paid off (simple interest means no interest on outstanding interest payments) Estimated Residual RPTTF 2018 ITEM NUMBER: SA C-1 DATE: 05/08/18 ATTACHMENT: 1 Page 21 of 21