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HomeMy WebLinkAbout10 FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT FOR MCAS TUSTIN REDEVELOPMENT PTOJECT AFFORDABLE HOUSING OBLIGATIONS 01-05-09g 10 AGENDA REPORT Reveweid m City Manager Finance Director MEETING DATE: JANUARY 5, 2010 TO: WILLIAM A. HUSTON, CITY MANAGER & AGENCY EXECUTIVE DIRECTOR FROM: REDEVELOPMENT AGENCY STAFF SUBJECT: FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT FOR MCAS TUSTIN REDEVELOPMENT PROJECT AFFORDABLE HOUSING OBLIGATIONS SUMMARY: The proposed First Amendment to the Reimbursement Agreement will clarify funding assistance for development of affordable housing units within the MCAS Tustin Redevelopment Project Area. RECOMMENDATION It is recommended that the Tustin Community Redevelopment Agency ("Agency"): Adopt RDA Resolution No. 10-02 approving and authorizing the execution of a "First Amendment to the Reimbursement Agreement Between the City of Tustin and the Tustin Community Redevelopment Agency Related to Affordable Housing Responsibilities To Be Assumed by the Agency" ("Amended Reimbursement Agreement'). It is recommended that the Tustin City Council ("City"): Adopt Resolution No. 10-10 approving and authorizing the execution of the Amended Reimbursement Agreement. FISCAL IMPACT: As was the case with the Original Reimbursement Agreement, funding under the Amended Reimbursement Agreement would be made from tax increment revenues from the MCAS Tustin Project Area and from the Agency's low and moderate income Housing Set-Aside deposits from the Town Center and South Central Project Areas Page 2 (since there are resolutions adopted for City-wide benefit) as determined by the Agency and Director of Finance BACKGROUND: On June 5, 2007, the Tustin City Council and Tustin Community Redevelopment Agency approved and authorized the execution of a "Reimbursement Agreement Between the City of Tustin and the Tustin Community Redevelopment Agency Related to Affordable Housing Responsibilities To Be Assumed by the Agency on June 5, 2005' (the "Original Reimbursement Agreemeni") to assist the Agency in carrying out its affordable housing obligations under the MCAS Tustin Redevelopment Plan. Required Housing Obligations The City of Tustin approved the MCAS Reuse/Specific Plan on February 3, 2003, as subsequently amended, and the City and Agency approved the MCAS Tustin Redevelopment Plan on June 16, 2003. The Reuse/Specific Plan and the Redevelopment Plan specify the number of affordable housing units to be produced within the Project Area. Under the California Health and Safety Code, Section 33000, et.seq. (California Community Redevelopment Law, the "CRL"), at least 15% of all new and substantially rehabilitated dwelling units developed within a project area are required to be made available at an affordable housing cost to and occupied by person and families of low- or moderate-income with not less than the 40% of the total required dwelling units to be affordable to very-low income households. Affordable dwelling units produced in a project area must remain affordable for a period of at least 45 years for for-sale unit and 55 years for rental units. In addition, the CRL requires not less than 20% of the tax increment revenues in a project area be deposited into aLow- and Moderate-Income Housing Set-Aside Fund, which may only be expended for affordable housing purposes. Both the above requirements under the CRL must be met every 10 years during the period of the Redevelopment Plan. The ten-year production and expenditure requirements under the CRL put a high financial burden on redevelopment agencies such as Tustin which have new project areas that have a high number of new dwelling units being developed during the early years of the Plan. There is insufficient tax increment revenue in the MCAS Tustin Project Area's early years for the Agency to make subsidies available to developers at the levels that would permit the development of the affordable housing on an economically feasible basis. In order to assist the Agency in meeting its affordable housing obligations in the MCAS Tustin Project Area, the City of Tustin has or will enter into agreements to sell property at a discount sufficient to permit developers to economically develop the required number of affordable housing units and has already encumbered the sale of certain properties and units with covenants, promissory notes and deeds of trust to ensure maintaining the affordability of those units in accordance with the CRL. Page 3 To date, a total of 118 affordable housing units have been produced on property originally owned by the City and sold to John Laing Homes. The affordable housing units are located at Tustin Fields I & II and are comprised of 33 Very Low-Income, 23 Low-Income, and 62 Moderate-Income units, which are secured by promissory notes and deeds of trusts by the City that reflect a total promissory note value associated with production of the affordable housing units of $46,407,736. Preliminary estimates indicate that required future affordable housing units within the remaining master developer footprint at Tustin Legacy project could exceed this amount. The Agency's special redevelopment attorney on the MCAS Tustin Redevelopment Project, McDonough Holland and Allen, originally reviewed the City and Agency's affordable housing programs at MCAS Tustin and determined that the CRL permitted the City and Agency to enter into the Original Reimbursement Agreement permitting the City to be reimbursed for its financial assistance to the Agency in carrying out the Redevelopment Plan, including the production of affordable housing units. The Agency may reimburse the City from tax increment generated by the Project Area and from its Housing Set-Aside Funds as allowed under the CRL. Since the City and Agency have adopted resolutions finding that the affordable housing units at MCAS Tustin benefit not just the MCAS Tustin Project Area but also the Town Center and South Central Project Area, reimbursement may come from the Housing Set-Aside Fund for all three project areas as was identified in the Original Agreement staff report to City Council dated June 5, 2007. The Original Agreement also included terms of the City's assistance and the Agency's obligations, which allows for flexibility regarding when periodic payments may be made by the Agency to the extent that funds are available to the Agency for such purpose. The Agreement will allow the Agency to reimburse the City to cover both sales of properties occurring prior to approval of the Original Reimbursement Agreement as well as those made afterward. Conclusion McDonough Holland and Allen have recently recommended some minor clarifying amendments to the Original Reimbursement Agreement (the "Amended Reimbursement Agreement") to make the more explicitly clear the Agency's original reimbursement intentions which are attached for approval by the Agency and City Council. Staff will be available at the January 5th City Council meeting to answer any questions. Christine Shingleto Assistant City Manager Attachments: RDA Resolution 10-02 City Council Resolution 10-10 (the above resolutions include copy of First Amendment to Reimbursement Agreement) RESOLUTION NO. 10-02 RESOLUTION OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AUTHORIZING THE EXECUTION OF A FIRST AMENDMENT TO THE REIMBURSEMENT AGREEMENT WITH THE CITY OF TUSTIN WHEREAS, the City of Tustin ("City") adopted a Specific Plan/Reuse Plan for the former Marine Corps Air Station-Tustin ("Specific Plan/Reuse Plan") on February 3, 2003, by Ordinance No. 1257, which provides the policies, regulations, implementation strategies and procedures necessary to guide the civilian reuse of the former Marine Corps Air Station-Tustin ("MCAS"); WHEREAS, the City adopted the Redevelopment Plan ("Redevelopment Plan") for the Marine Corps Air Station Tustin Redevelopment Project ("MCAS Project") on June 2, 2003, by Ordinance No.1276, which authorizes the use within the MCAS Project of the powers contained in the California Community Redevelopment Law (Health & Safety Code §33000 et seq.), including, without limitation, the authorization to receive an allocation of a portion of the property taxes paid in the MCAS Project area pursuant to Health and Safety Code Section 33670(b) ("Tax Increment"); WHEREAS, the City has acquired from the Department of the Navy certain real property within the MCAS Project for re-sale to developers for the development of residential uses pursuant to the Specific Plan/Reuse Plan and the Redevelopment Plan; WHEREAS, the Community Redevelopment Law requires that not less than twenty percent (20%) of the Tax Increment allocated to the Tustin Community Redevelopment Agency ("Agency") must be used by the Agency for the purposes of increasing, improving, and preserving the community's supply of affordable housing for persons and families of low and moderate income; WHEREAS, the Community Redevelopment Law also requires that at least fifteen percent (15%) of all new and substantially rehabilitated dwelling units developed within a redevelopment project area shall be available at affordable housing cost to persons and families of low or moderate income and shall be occupied by these persons and families (the "Inclusionary Housing Require-ment"). Not less than forty percent (40%) of these dwelling units must be available at affordable housing cost to very low-income households and shall be occupied by these persons and families; 1271387v 1 29171 /0001 WHEREAS, the Specific Plan/Reuse Plan also requires specified numbers of affordable housing units be developed in the MCAS Project area; WHEREAS, in order to assist the Agency with carrying out the Redevelopment Plan and specifically the implementation of the Inclusionary Housing Requirement, the City has re-sold and will re-sell certain real property ("Property") within the MCAS Project area for residential development at a price below market rates in order to permit developers to economically develop the required number of affordable housing units and has encumbered or will encumber such Property with covenants and deeds of trust requiring that housing units developed on such Property remain available at affordable housing costs to, and occupied by, persons and families of low or moderate income for at least the periods of time prescribed by Health and Safety Code Section 33334.3(f). The difference between the market price of such Property (including the affordable units developed thereon) and the discounted price received by the City is hereinafter referred to as the "City Discount;" WHEREAS, pursuant to Section 33128 of the Health and Safety Code, the Agency is performing a public function of the City and may have access to services and facilities of the City; and WHEREAS, on June 5, 2007 by minute action, the City and Agency authorized and the City and the Agency entered into an agreement ("Reimbursement Agreement") to: 1. Provide the terms and conditions under which the Agency will reimburse the City for the City Discount; 2. Set forth activities, services and facilities that the City will render for and make available to the Agency in furtherance of the activities and functions of the Agency under the Community Redevelopment Law; and 3. Provide that the Agency will reimburse the City for actions undertaken and costs and expenses incurred by it for and on behalf of the Agency; and WHEREAS, the repayment obligation under the Reimbursement Agreement currently applies only to the MCAS Project, the Agency desires to encumber tax increment deposited into the low and moderate income housing fund of the City's two other redevelopment projects, Town Center Redevelopment Project ("Town Center Project") and South Central Redevelopment Project ("South Central Project") to repay the City its obligation under the Reimbursement Agreement. WHEREAS, the time limit on incurring indebtedness for both the Town Center Project and South Central Project has seemingly expired and no ordinance eliminating the time limit on incurring indebtedness pursuant to California Health and Safety Code Section 33333.6(e)(2)(b) has been adopted, California Health and Safety Code Section 33333.6(e)(4)(A) provides for a suspension of the time limit on 1271387v1 29171/0001 2 incurring indebtedness as follows: "A time limit on the establishing of loans, advances, and indebtedness to be paid with the proceeds of [tax increment] shall not prevent an agency from incurring debt to be paid from the agency's Low and Moderate Income Housing Fund or establishing more debt in order to fulfill the agency's affordable housing obligations, as defined in paragraph (1) of subdivision (a) of Section 33333.8." Section 33333.8(a)(1) goes on to define an agency's affordable housing obligations as including: (a) the obligation to make deposits to and expenditures from the low and moderate income housing fund;(b) eliminate deficits in the housing fund; (c) expend or transfer an excess surplus; (d) provide relocation assistance; (e) provide replacement housing; (f) provide inclusionary housing." WHEREAS, the Agency has previously adopted resolutions for the MCAS Project, Town Center Project and South Central Project finding that the expenditure of monies from the low and moderate income housing fund outside of each project area will be of benefit to each redevelopment project. Specifically, Resolution Nos. RDA 05-01 and RDA 05-02 adopted by the Agency on March 21, 2005, for South Central Project and Town Center Project respectively, each state that such monies will be used to provide low and moderate income housing at an affordable housing cost to persons and families of low and moderate income within the territorial jurisdiction of the Agency, and for other purposes authorized by the Community Redevelopment Law. Additionally, the Agency on page 17 of its Mid-Term Report for the Town Center and South Central Redevelopment Project Areas' Third Five- Year Implementation Plan (FY 2005/06 to FY 2009/10) made specific reference to its intention that the Agency would reimburse the City for its financial assistance to the Agency in producing affordable housing units, said reimbursement to possibly come from tax increment generated from the MCAS Project and from housing set aside funds not only from the MCAS Project, but from Town Center Project and South Central Project as well. NOW, THEREFORE, THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY DOES HEREBY RESOLVE AS FOLLOWS: 1. The Agency finds and determines that: (1) the purpose of this First Amendment to Reimbursement Agreement is to enable the Agency to sell bonds and pledge as security therefor money from the Low and Moderate Incoming Housing Fund of the MCAS Tustin, South Central and Town Center Redevelopment Projects, and (2) the First Amendment to Reimbursement Agreement is therefore a contract within the meaning of Government Code Section 53511, subject to the validation procedures set forth in Code of Civil Procedure Section 860 et seq. 2. The "First Amendment to Reimbursement Agreement" between the City and the Agency, in the form attached to this resolution as Exhibit A and incorporated herein by reference, is hereby approved, and the Executive Director is hereby directed and authorized to execute said First Amendment to Reimbursement Agreement on behalf of the Agency. 1271387v 1 29171 /0001 PASSED AND ADOPTED at a regular meeting of the Tustin Community Redevelopment Agency held on the 5th day January, 2010. JERRY AMANTE CHAIRMAN PAM STOKER CITY CLERK STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the Tustin Community Redevelopment Agency of the City of Tustin, California, do hereby certify that the whole number of the members of the Tustin Community Redevelopment Agency of the City of Tustin is five; that the above and foregoing Resolution No. 10-02 was duly passed and adopted at a regular meeting of the Tustin Community Redevelopment Agency, held on the 51h day of January, 2010 by the following vote: REDEVELOPMENT AGENCY BOARD MEMBER AYES: REDEVELOPMENT AGENCY BOARD MEMBER NOES: REDEVELOPMENT AGENCY BOARD MEMBER ABSTAINED: REDEVELOPMENT AGENCY BOARD MEMBER ABSENT: PAMELA STOKER CITY CLERK 1271387v1 29171/0001 4 EXHIBIT A FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT [To Be Inserted.] 1271387v1 29171/0001 Exhibit A FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT BETWEEN THE CITY OF TUSTIN AND TUSTIN COMMUNITY REDEVELOPMENT AGENCY RELATED TO AFFORDABLE HOUSING RESPONSIBILITIES TO BE ASSUMED BY THE AGENCY This First Amendment ("First Amendment") is entered into as of the 5th day of January, 2010 ("Effective Date"), by and between the CITY OF TUSTIN, a municipal corporation ("City") and the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency"). RECITALS A. The City has previously acquired from the Department of the Navy certain real property within the Marine Corps Air Station-Tustin Redevelopment Project ("MCAS Project") for resale to developers for the development of residential uses including specified numbers of affordable housing units pursuant to the Specific Plan/Reuse Plan and the Redevelopment Plan. B. On June 5, 2007, the City and the Agency entered into an agreement ("Reimbursement Agreement") pursuant to which the Agency agreed to reimburse the City from Tax Increment received by the Agency from the MCAS Project and other available Agency sources, including funds deposited into the Agency's low and moderate income housing fund for the MCAS Project, the difference between the market value of the affordable units and the affordable sale price of such affordable housing units. This difference, represented by the gap funding assistance provided to affordable homebuyers with promissory notes by second deeds of trust in favor of the City, was referred to in the Reimbursement Agreement as the "Housing Affordability Subsidy." C. While the repayment obligation under the Reimbursement Agreement applies s to the MCAS Project and other available Agency sources and was intended to also apply to the Town Center and South Central Project Area as identified in the Reimbursement Agreement City Council and Agency staff reports and authorizations dated June 5, 2009 , the Agency desires to make it explicitly clear that the Agency may also encumber tax increment deposited into the low and moderate income housing fund of the City's two other redevelopment projects, Town Center Redevelopment Project ("Town Center Project") and South Central Redevelopment Project ("South Central Project"), to repay the City its obligation under the Reimbursement Agreement. 1271 102v 1 29171 /0001 D. Though the time limit on incurring indebtedness for both the Town Center Project and South Central Project has seemingly expired and no ordinance eliminating the time limit on incurring indebtedness pursuant to California Health and Safety Code Section 33333.6(e)(2)(b) has been adopted, California Health and Safety Code Section 33333.6(e)(4)(A) provides for a suspension of the time limit on incurring indebtedness as follows: "A time limit on the establishing of loans, advances, and indebtedness to be paid with the proceeds of [tax increment] shall not prevent an agency from incurring debt to be paid from the agency's Low and Moderate Income Housing Fund or establishing more debt in order to fulfill the agency's affordable housing obligations, as defined in paragraph (1) of subdivision (a) of Section 33333.8." Section 33333.8(a)(1) goes on to define an agency's affordable housing obligations as including: (a) the obligation to make deposits to and expenditures from the low and moderate income housing fund; (b) eliminate deficits in the housing fund; (c) expend or transfer an excess surplus; (d) provide relocation assistance; (e) provide replacement housing; (f) provide inclusionary housing." E. The Agency has previously adopted resolutions for all three redevelopment projects finding that the expenditure of monies from the low and moderate income housing fund outside of each project area will be of benefit to each redevelopment project. Specifically, Resolution Nos. RDA OS-O1 and RDA OS-02 adopted by the Agency on March 21, 2005, for South Central Project and Town Center Project respectively, each state that such monies will be used to provide low and moderate income housing at an affordable housing cost to persons and families of low and moderate income within the territorial jurisdiction of the Agency, and for other purposes authorized by the California Community Redevelopment Law (Health & Safety Code §§33000 et seq.). Additionally, the Agency, on page 17 of its Mid-Term Report for the Town Center and South Central Redevelopment Project Areas' Third Five-Year Implementation Plan (FY 2005/06 to FY 2009/10) made specific reference to its intention that the Agency would reimburse the City for its financial assistance to the Agency in producing affordable housing units, said reimbursement to possibly come from tax increment generated from the MCAS Project and from housing set aside funds not only from the MCAS Project, but from Town Center Project and South Central Project as well. F. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Reimbursement Agreement. THEREFORE, the parties agree as follows: 1. Project: All references to the defined term "Project" in the Reimbursement Agreement shall be deemed to refer to the Marine Corps Air Station- Tustin Redevelopment Project. 2. Amendment of Recital H: Recital H of the Reimbursement Agreement is hereby deleted in its entirety and replaced with the following: 1271102v129171/0001 2 "H. To assist the Agency in ensuring that such affordable housing units developed on such Property are sold and remain available at affordable housing costs to, and occupied by, persons and families of low or moderate income at a subsidized affordable sale price for at least the periods of time prescribed by Health and Safety Code Section 33334.3(f), and to provide for future ongoing monitoring requirements for such affordable units under Health and Safety Code Section 33418, the City has encumbered or will encumber such units with covenants and deeds of trust. The difference between the market value of such units and the affordable sale price of such affordable housing units (which difference includes the discounted sale price of the Property received by the City) is represented by promissory notes and secured by second deeds of trust in favor of City, hereinafter referred to as the "Housing Affordability Subsidy." 3. Amendment of Recital I: Recital I of the Reimbursement Agreement is hereby deleted in its entirety and replaced with the following: "I. As of the date of this Agreement, the City has resold to developers for residential development Property on which a total of Five Hundred Sixty Five (565) housing units will be constructed. Of the Five Hundred and Sixty Five (565) housing units to be constructed, One Hundred Eighteen (118) units are restricted consistent with the Inclusionary Housing Requirement, pursuant to an Affordable Housing Covenant and an Affordable Housing Deed of Trust. The City's Housing Affordability Subsidy for the units sold as of the date of this Agreement is Forty Six Million Four Hundred Seven and Seven Hundred and Thirty Six DOLLARS ($46,407,736) which amount has not yet been repaid to the City. The City also anticipates reselling additional Property to developers for residential development on which a total of two thousand one hundred and five (2,105) housing units will be constructed, with two hundred (200) additional for sale units currently to be restricted with the Inclusionary Housing Requirement. The City's Housing Affordability Subsidy for these additional units in the future is currently estimated at $62,296,000." 4. Amendment of Paragraph l: Paragraph 1 of the Reimbursement Agreement is hereby deleted in its entirety and replaced with the following: "1. The Agency agrees to reimburse the City for the Affordable Housing Subsidy from (a) Tax Increment received by the Agency from the MCAS Project or other available Agency sources, and (b) tax increment deposited into the low and moderate income housing fund from the MCAS Project, Town Center Project and South Central Project for 1271102v1 29]71/0001 use within the territorial jurisdiction of the Agency. The City and the Agency agree that as of the date of this Agreement, the amount of the Affordable Housing Subsidy is Forty Six Million Four Hundred Seven and Seven Hundred and Thirty Six DOLLARS ($46,407,736) which amount has not yet been repaid to the City." 5. Incorporation of Recitals: Each recital set forth in the Reimbursement Agreement and above in this First Amendment shall be deemed apart of the Reimbursement Agreement as amended by this First Amendment. 6. First Amendment. This First Amendment constitutes a part of the Reimbursement Agreement and any reference in any document to the Reimbursement Agreement shall be deemed to include a reference to such Reimbursement Agreement as amended hereby. 7. Full Force and Effect: Except as otherwise amended hereby, all terms, covenants, conditions and provisions of the Reimbursement Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the Effective Date. CITY OF TUSTIN, a municipal corporation ATTEST.• Bv: "CITY" By: PAM STOKER William A. Huston CITY CLERK City Manager APPROVED AS TO FORM: DOUG HOLLAND CITY ATTORNEY 1271 102v 1 29171 /0001 4 TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic "AGENCY" By: William A. Huston Executive Director 1271 102v 129171 /0001 RESOLUTION NO. 10-10 RESOLUTION OF THE CITY OF TUSTIN AUTHORIZING THE EXECUTION OF A FIRST AMENDMENT TO THE REIMBURSEMENT AGREEMENT WITH THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY WHEREAS, the City of Tustin ("City") adopted a Specific Plan/Reuse Plan for the former Marine Corps Air Station-Tustin ("Specific Plan/Reuse Plan") on February 3, 2003 by Ordinance No. 1257, which provides the policies, regulations, implementation strategies and procedures necessary to guide the civilian reuse of the former Marine Corps Air Station-Tustin ("MCAS"); WHEREAS, the City adopted the Redevelopment Plan ("Redevelopment Plan") for the Marine Corps Air Station Tustin Redevelopment Project ("MCAS Project") on June 2, 2003, by Ordinance No.1276, which authorizes the use within the MCAS Project of the powers contained in the California Community Redevelopment Law (Health & Safety Code §33000 et seq.), including, without limitation, the authorization to receive an allocation of a portion of the property taxes paid in the MCAS Project area pursuant to Health and Safety Code Section 33670(b) ("Tax Increment"); WHEREAS, the City has acquired from the Department of the Navy certain real property within the MCAS Project for re-sale to developers for the development of residential uses pursuant to the Specific Plan/Reuse Plan and the Redevelopment Plan; WHEREAS, the Community Redevelopment Law requires that not less than twenty percent (20%) of the Tax Increment allocated to the Tustin Community Redevelopment Agency ("Agency") must be used by the Agency for the purposes of increasing, improving, and preserving the community's supply of affordable housing for persons and families of low and moderate income; WHEREAS, the Community Redevelopment Law also requires that at least fifteen percent (15%) of all new and substantially rehabilitated dwelling units developed within a redevelopment project area shall be available at affordable housing cost to persons and families of low or moderate income and shall be occupied by these persons and families (the "Inclusionary Housing Require-ment"). Not less than forty percent (40%) of these dwelling units must be available at affordable housing cost to very low-income households and shall be occupied by these persons and families; 1271366v129171/0001 WHEREAS, the Specific Plan/Reuse Plan also requires specified numbers of affordable housing units be developed in the MCAS Project area; WHEREAS, in order to assist the Agency with carrying out the Redevelopment Plan and specifically the implementation of the Inclusionary Housing Requirement, the City has re-sold and will re-sell certain real property ("Property") within the MCAS Project area for residential development at a price below market rates in order to permit developers to economically develop the required number of affordable housing units and has encumbered or will encumber such Property with covenants and deeds of trust requiring that housing units developed on such Property remain available at affordable housing costs to, and occupied by, persons and families of low- or moderate-income for at least the periods of time prescribed by Health and Safety Code Section 33334.3(f). The difference between the market price of such Property (including the affordable units developed thereon) and the discounted price received by the City is hereinafter referred to as the "City Discount;" WHEREAS, pursuant to Section 33128 of the Health and Safety Code, the Agency is performing a public function of the City and may have access to services and facilities of the City; and WHEREAS, on June 5, 2007, by minute action, the City and Agency approved and the City and the Agency entered into an agreement ("Reimbursement Agreement") to: 1. Provide the terms and conditions under which the Agency will reimburse the City for the City Discount; 2. Set forth activities, services and facilities that the City will render for and make available to the Agency in furtherance of the activities and functions of the Agency under the Community Redevelopment Law; and 3. Provide that the Agency will reimburse the City for actions undertaken and costs and expenses incurred by it for and on behalf of the Agency; and WHEREAS, the repayment obligation under the Reimbursement Agreement currently applies only to the MCAS Project, the Agency desires to encumber tax increment deposited into the low and moderate income housing fund of the City's two other redevelopment projects, Town Center Redevelopment Project ("Town Center Project") and South Central Redevelop-ment Project ("South Central Project") to repay the City its obligation under the Reimbursement Agreement. WHEREAS, the time limit on incurring indebtedness for both the Town Center Project and South Central Project has seemingly expired and no ordinance eliminating the time limit on incurring indebtedness pursuant to California Health and Safety Code Section 33333.6(e)(2)(b) has been adopted, California Health and Safety Code Section 33333.6(e)(4)(A) provides for a suspension of the time limit on 1271366v1 29171 /0001 2 incurring indebtedness as follows: "A time limit on the establishing of loans, advances, and indebtedness to be paid with the proceeds of [tax increment] shall not prevent an agency from incurring debt to be paid from the agency's Low and Moderate Income Housing Fund or establishing more debt in order to fulfill the agency's affordable housing obligations, as defined in paragraph (1) of subdivision (a) of Section 33333.8." Section 33333.8(a)(1) goes on to define an agency's affordable housing obligations as including: (a) the obligation to make deposits to and expenditures from the low and moderate income housing fund; (b) eliminate deficits in the housing fund; (c) expend or transfer an excess surplus; (d) provide relocation assistance; (e) provide replacement housing; (f) provide inclusionary housing." WHEREAS, the Agency has previously adopted resolutions for the MCAS Project, Town Center Project and South Central Project finding that the expenditure of monies from the low and moderate income housing fund outside of each project area will be of benefit to each redevelopment project. Specifically, Resolution Nos. RDA 05-01 and RDA 05-02 adopted by the Agency on March 21, 2005 for South Central Project and Town Center Project respectively, each state that such monies will be used to provide low- and moderate-income housing at an affordable housing cost to persons and families of low and moderate income within the territorial jurisdiction of the Agency, and for other purposes authorized by the Community Redevelopment Law. Additionally, the Agency on page 17 of its Mid-Term Report for the Town Center and South Central Redevelopment Project Areas' Third Five- Year Implementation Plan (FY 2005/06 to FY 2009/10) made specific reference to its intention that the Agency would reimburse the City for its financial assistance to the Agency in producing affordable housing units, said reimbursement to possibly come from tax increment generated from the MCAS Project and from housing set aside funds not only from the MCAS Project, but from Town Center Project and South Central Project as well. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF TUSTIN DOES HEREBY RESOLVE AS FOLLOWS: 1. The City finds and determines that: (1) the purpose of this First Amendment to Reimbursement Agreement is to enable the Agency to sell bonds and pledge as security therefor money from the Low and Moderate Incoming Housing Fund of the MCAS Tustin, South Central and Town Center Redevelopment Projects, and (2) the First Amendment to Reimbursement Agreement is therefore a contract within the meaning of Government Code Section 53511, subject to the validation procedures set forth in Code of Civil Procedure Section 860 et seq. 2. The "First Amendment to Reimbursement Agreement" between the City and the Agency, in the form attached to this resolution as Exhibit A and incorporated herein by reference, is hereby approved, and the City Manager is hereby directed and authorized to execute said First Amendment to Reimbursement Agreement on behalf of the City. 1271366v 1 29171 /0001 PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on the 5th day January, 2010. JERRY AMANTE MAYOR PAMELA STOKER CITY CLERK STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Pamela Stoker, City Clerk of the City of Tustin, California, do hereby certify that the whole number of the members of the Tustin City Council of the City of Tustin is five; that the above and foregoing Resolution No. 10-10 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 51h day of January, 2010 by the following vote: CITY COUNCIL MEMBER AYES: CITY COUNCIL MEMBER NOES: CITY COUNCIL ABSTAINED: CITY COUNCIL MEMBER ABSENT: PAMELA STOKER 1271366v1 29171/0001 4 EXHIBIT A FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT [To Be Inserted.] 1271366v1 29171/0001 Exhibit A FIRST AMENDMENT TO REIMBURSEMENT AGREEMENT BETWEEN THE CITY OF TUSTIN AND TUSTIN COMMUNITY REDEVELOPMENT AGENCY RELATED TO AFFORDABLE HOUSING RESPONSIBILITIES TO BE ASSUMED BY THE AGENCY This First Amendment ("First Amendment") is entered into as of the 5th day of January, 2010 ("Effective Date"), by and between the CITY OF TUSTIN, a municipal corporation ("City") and the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency"). RECITALS A. The City has previously acquired from the Department of the Navy certain real property within the Marine Corps Air Station-Tustin Redevelopment Project ("MCAS Project") for resale to developers for the development of residential uses including specified numbers of affordable housing units pursuant to the Specific Plan/Reuse Plan and the Redevelopment Plan. B. On June 5, 2007, the City and the Agency entered into an agreement ("Reimbursement Agreement") pursuant to which the Agency agreed to reimburse the City from Tax Increment received by the Agency from the MCAS Project and other available Agency sources, including funds deposited into the Agency's low and moderate income housing fund for the MCAS Project, the difference between the market value of the affordable units and the affordable sale price of such affordable housing units. This difference, represented by the gap funding assistance provided to affordable homebuyers with promissory notes by second deeds of trust in favor of the City, was referred to in the Reimbursement Agreement as the "Housing Affordability Subsidy." C. While the repayment obligation under the Reimbursement Agreement applies s to the MCAS Project and other available Agency sources and was intended to also apply to the Town Center and South Central Project Area as identified in the Reimbursement Agreement City Council and Agency staff reports and authorizations dated June 5, 2009 , the Agency desires to make it explicitly clear that the Agency may also encumber tax increment deposited into the low and moderate income housing fund of the City's two other redevelopment projects, Town Center Redevelopment Project ("Town Center Project") and South Central Redevelopment Project ("South Central Project"), to repay the City its obligation under the Reimbursement Agreement. 1271102v 129171 /0001 D. Though the time limit on incurring indebtedness for both the Town Center Project and South Central Project has seemingly expired and no ordinance eliminating the time limit on incurring indebtedness pursuant to California Health and Safety Code Section 33333.6(e)(2)(b) has been adopted, California Health and Safety Code Section 33333.6(e)(4)(A) provides for a suspension of the time limit on incurring indebtedness as follows: "A time limit on the establishing of loans, advances, and indebtedness to be paid with the proceeds of [tax increment] shall not prevent an agency from incurring debt to be paid from the agency's Low and Moderate Income Housing Fund or establishing more debt in order to fulfill the agency's affordable housing obligations, as defined in paragraph (1) of subdivision (a) of Section 33333.8." Section 33333.8(a)(1) goes on to define an agency's affordable housing obligations as including: (a) the obligation to make deposits to and expenditures from the low and moderate income housing fund; (b) eliminate deficits in the housing fund; (c) expend or transfer an excess surplus; (d) provide relocation assistance; (e) provide replacement housing; (f) provide inclusionary housing." E. The Agency has previously adopted resolutions for all three redevelopment projects finding that the expenditure of monies from the low and moderate income housing fund outside of each project area will be of benefit to each redevelopment project. Specifically, Resolution Nos. RDA OS-O1 and RDA OS-02 adopted by the Agency on March 21, 2005, for South Central Project and Town Center Project respectively, each state that such monies will be used to provide low and moderate income housing at an affordable housing cost to persons and families of low and moderate income within the territorial jurisdiction of the Agency, and for other purposes authorized by the California Community Redevelopment Law (Health & Safety Code §§33000 et seq.). Additionally, the Agency, on page 17 of its Mid-Term Report for the Town Center and South Central Redevelopment Project Areas' Third Five-Year Implementation Plan (FY 2005/06 to FY 2009/10) made specific reference to its intention that the Agency would reimburse the City for its financial assistance to the Agency in producing affordable housing units, said reimbursement to possibly come from tax increment generated from the MCAS Project and from housing set aside funds not only from the MCAS Project, but from Town Center Project and South Central Project as well. F. Capitalized terms used but not defined herein shall have the meaning ascribed to them in the Reimbursement Agreement. THEREFORE, the parties agree as follows: 1. Project: All references to the defined term "Project" in the Reimbursement Agreement shall be deemed to refer to the Marine Corps Air Station- Tustin Redevelopment Project. 2. Amendment of Recital H: Recital H of the Reimbursement Agreement is hereby deleted in its entirety and replaced with the following: 1271102v 1 29171 /0001 2 "H. To assist the Agency in ensuring that such affordable housing units developed on such Property are sold and remain available at affordable housing costs to, and occupied by, persons and families of low or moderate income at a subsidized affordable sale price for at least the periods of time prescribed by Health and Safety Code Section 33334.3(f), and to provide for future ongoing monitoring requirements for such affordable units under Health and Safety Code Section 33418, the City has encumbered or will encumber such units with covenants and deeds of trust. The difference between the market value of such units and the affordable sale price of such affordable housing units (which difference includes the discounted sale price of the Property received by the City) is represented by promissory notes and secured by second deeds of trust in favor of City, hereinafter referred to as the "Housing Affordability Subsidy." 3. Amendment of Recital I: Recital I of the Reimbursement Agreement is hereby deleted in its entirety and replaced with the following: "I. As of the date of this Agreement, the City has resold to developers for residential development Property on which a total of Five Hundred Sixty Five (565) housing units will be constructed. Of the Five Hundred and Sixty Five (565) housing units to be constructed, One Hundred Eighteen (118) units are restricted consistent with the Inclusionary Housing Requirement, pursuant to an Affordable Housing Covenant and an Affordable Housing Deed of Trust. The City's Housing Affordability Subsidy for the units sold as of the date of this Agreement is Forty Six Million Four Hundred Seven and Seven Hundred and Thirty Six DOLLARS ($46,407,736) which amount has not yet been repaid to the City. The City also anticipates reselling additional Property to developers for residential development on which a total of two thousand one hundred and five (2,105) housing units will be constructed, with two hundred (200) additional for sale units currently to be restricted with the Inclusionary Housing Requirement. The City's Housing Affordability Subsidy for these additional units in the future is currently estimated at $62,296,000." 4. Amendment of Para~r~ph 1: Paragraph 1 of the Reimbursement Agreement is hereby deleted in its entirety and replaced with the following: "1. The Agency agrees to reimburse the City for the Affordable Housing Subsidy from (a) Tax Increment received by the Agency from the MCAS Project or other available Agency sources, and (b) tax increment deposited into the low and moderate income housing fund from the MCAS Project, Town Center Project and South Central Project for 1271 102v 1 29171 /0001 3 use within the territorial jurisdiction of the Agency. The City and the Agency agree that as of the date of this Agreement, the amount of the Affordable Housing Subsidy is Forty Six Million Four Hundred Seven and Seven Hundred and Thirty Six DOLLARS ($46,407,736) which amount has not yet been repaid to the City." 5. Incorporation of Recitals: Each recital set forth in the Reimbursement Agreement and above in this First Amendment shall be deemed apart of the Reimbursement Agreement as amended by this First Amendment. 6. First Amendment. This First Amendment constitutes a part of the Reimbursement Agreement and any reference in any document to the Reimbursement Agreement shall be deemed to include a reference to such Reimbursement Agreement as amended hereby. 7. Full Force and Effect: Except as otherwise amended hereby, all terms, covenants, conditions and provisions of the Reimbursement Agreement shall remain in full force and effect. IN WITNESS WHEREOF, the parties have executed this First Amendment as of the Effective Date. CITY OF TUSTIN, a municipal corporation ATTEST: Bv: PAM STOKER CITY CLERK "CITY" By: APPROVED AS TO FORM: DOUG HOLLAND CITY ATTORNEY William A. Huston City Manager 1271 102v 1 29171 /0001 4 TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic "AGENCY" By: William A. Huston Executive Director iz~>>o2~t 2y»~iooo~