HomeMy WebLinkAbout08 WORKING CAPITAL LOAN TO RDA 09-02-08Agenda Item 8
~` Reviewed:
`Y AGENDA REPORT City Manager
Finance Director
MEETING DATE: September 2, 2008
TO: William A. Huston, City Manager
FROM: Ronald A. Nault, Finance Director
SUBJECT: WORKING CAPITAL LOAN AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN THE CITY OF TUSTIN AND THE TUSTIN COMMUNITY
REDEVELOPMENT AGENCY
SUMMARY:
The approval of this loan and administrative services agreement between the City of Tustin and
the Tustin Community Redevelopment Agency will comply with Section 33675 of the California
Health and Safety Code regarding the allocation and payment of tax increment to Redevelopment
Agencies, and provide the resources necessary to carry out the Agency's programs.
RECOMMENDATION:
1. Approve Working Capital loan of $4,650,000 to the South Central Project Area
through August 31, 2009.
2. Authorize the Mayor and the Chairperson of the Agency to execute the attached
agreement for 2008-2009, offering and accepting a loan and various services from
the City to the Agency totaling $5,725,000 for fiscal year 2008-2009.
FISCAL IMPACT:
The administrative services costs have been appropriated in the adopted 2008-2009
Redevelopment Agency budget.
DISCUSSION:
Section 33670 et seq. of the California Health and Safety Code stipulates that tax increment can
only be distributed to Redevelopment Agencies for the sole purpose of repaying debt. Any tax
increment collected in excess of outstanding debt will be returned to the County to be
redistributed to the original taxing agencies. This loan from the General Fund will permit the
Agency to complete the goals and objectives of the South Central Project Area for Fiscal Year
2008-2009. The General Fund will continue to provide administrative and management services
to the Agency, the cost of which will be recovered from tax increment generated by the various
Project Areas.
BACKGROUND:.
When a Redevelopment Agency Project Area is formed, the assessed valuation for the area is
frozen and becomes the base year value. All property tax generated by the "incremental" growth
in assessed valuation as measured against the base year is allocated directly to the Agency. This
"tax increment" and, to a much lesser degree, interest earned on the increment, is the only source
of income made available to Redevelopment Agencies.
Section 33610 of the Health and Safety Code restricts the distribution of tax increment to
Redevelopment Agencies to the extent it is equal to or less than outstanding debt. The loan
between the City and the Agency qualifies as debt per the Code. Until such time that a long term
financing plan is completed for the South Central Project Area, the policy of making annual loans
between the City and the Agency will assure the full receipt of tax increment to the Agency and
maximize the Agency's ability to meet its adopted goals and objectives in this area.
Ronald A. ault
Finance Director
Attachment
City2008LoanAgreementWithRDAStaffReport. doc