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HomeMy WebLinkAbout12 CITY DECLINE OF HOUSING ASSETS~~ ~~ ~`~ ~ ACIENDA ~.EP4RT Agenda Item ~ 2 Reviewed: City Manager .~ Finance Director ~, MEETING DATE: TO: FROM SUBJECT: SUMMARY JANUARY 17, 2012 JEFFREY C. PARKER, CITY MANAGER &TUSTIN HOUSING AUTHORITY EXECUTIVE DIRECTOR CITY MANAGER'S OFFICE CITY DECLINE OF HOUSING ASSETS AND HOUSING FUNCTIONS OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AND AGREEMENT BY THE TUSTIN HOUSING AUTHORITY TO ASSUME THE HOUSING ASSETS AND HOUSING FUNCTIONS PREVIOUSLY PERFORMED BY THE AGENCY PURSUANT TO HEALTH & SAFETY CODE SECTION 34176 AND MINOR AMENDMENT TO THE TUSTIN HOUSING AUTHORITY BYLAWS Given the recent California Supreme Court decision upholding AB X1 26, and the anticipated dissolution of redevelopment agencies by February 1, 2012, certain City and Tustin Housing Authority ("Housing Authority") actions are necessary to confirm that the City will not assume housing assets and housing functions of the Tustin Community Redevelopment Agency ("Agency") and confirming that the Tustin Housing Authority will assume the housing assets and housing functions previously performed by the Agency pursuant to California Health & Safety Code Section 34176. A minor amendment to the Housing Authority Bylaws is also proposed. RECOMMENDATION 1. It is recommended that the City Council adopt City Council Resolution 12-08 declining to assume the housing assets and functions of the Agency and confirming that such housing assets and housing functions be assumed by the Tustin Housing Authority pursuant to Section 34176. 2. It is recommended that the Housing Authority take the following actions: A. Adopt HA Resolution No. 12-01 confirming its assumption of the housing assets and functions previously performed by the Agency pursuant to California Health & Safety Code Section 34176 in the event the Agency is dissolved. B. Adopt HA Resolution 12-02 amending the Bylaws of the Housing Authority to adjust the annual meeting date. Agenda Report January 17, 2012 Page 2 FISCAL IMPACT The Agency currently owns one dwelling unit located at 14554 Newport Avenue #3 which was acquired as the result of a recent default of an affordability agreement. The Agency also has numerous other housing covenants and promissory notes for affordable housing units within the following projects: Tustin Grove (16 units, with 6 of the 16 homeowners not having a loan with the Agency but still affected under a "Resale Restrictions Agreement and Option to Purchase"), Arbor Walk (9 units) and Ambrose Lane (5 units, with all homeowners not having a loan with the Agency but still affected under a "Resale Restrictions Agreement and Option to Purchase"). The Agency also holds a number of promissory notes associated with the Agency's Residential Rehabilitation Program (two loans for multifamily properties and four loans on single family properties) and holds a promissory note on Heritage Place (the 64 unit senior project) in the amount of $300,000. These assets will be assumed by the Housing Authority after dissolution of the Agency, if the actions recommended in this report_are_taken. One of the on-going obligations of the Housing Authority as it relates to housing functions will be managing the enforceable obligations in the covenants, promissory notes and other agreements that restrict affordable units in the City under the Agency's various affordable housing programs which are currently monitored by the Agency. There will be a staff cost for this oversight which is identified as an enforceable obligation on the Revised Enforceable Obligations Payment Schedule for which current and future Low and Moderate Income fund balances may be made available, subject to the review and approval of any future oversight board appointed after dissolution of the Agency. DISCUSSION On December 29, 2011, the California Supreme Court upheld AB X1 26 which dissolves all redevelopment agencies in California, and invalidated AB X1 27 that had allowed redevelopment agencies to remain in existence if the agency opted into the "Voluntary Alternative Redevelopment Program" ("Voluntary Opt-in Program"). The City had previously opted into the Program by ordinance soon after the passage of AB X1 26 and subsequently on September 20t" adopted a resolution confirming that the City of Tustin would become the "Successor Agency" of the Agency in the event of any ultimate dissolution of the Agency. Now that the Program has been invalidated by the Supreme Court, the City Council must make another election pursuant to AB X1 26, specifically regarding the housing assets and functions of the Agency. Pursuant to new Section 34176, the City may elect to retain the "housing assets and functions previously performed by the Agency if the City elects to retain the responsibility, then "all rights, powers, duties, and obligations, Agenda Report January 17, 2012 Page 3 [but] excluding any amounts on deposit in the Low and Moderate Income Housing Fund, shall be transferred to the [C]ity ... ". If the City does not elect to retain the responsibility for performing housing functions, then all such rights, powers, assets, duties, liabilities and obligations associated with the housing activities of the former Agency, again excluding the existing balances in the Housing Fund, must be transferred to: (1) the local housing authority, or (2) if there is more than one local housing authority in the jurisdiction, then to the housing authority selected by the City, or (3) if there is no local housing authority, then to the State Department of Housing and Community Development (HCD). AB X1 26 is not clear as to the scope of housing responsibilities, if assumed by the City. For example, if a redevelopment agency had prior compliance issues and the City is required to carry out those prior housing duties, what funding source(s) will be available to_the City?...The City, .and its_ General Fund, _should__not_be_exposed_ to unforeseen financial andlor legal duties. Last year the City Council formed the Tustin Housing Authority and as a California housing authority it is vested with the powers and duties under the Housing Authorities Law, Health & Safety Code Section 34200, et seq.; therefore, the Tustin Housing Authority may assume this function and the City's General Fund should not be exposed to uncertain legal and financial responsibilities, albeit these issues do not now have clear answers. The City Attorney and special counsel recommend that the City Council decline, i.e., that the City not assume the housing duties, but recommend that the Housing Authority assume the housing assets and duties of the Agency upon its dissolution. Alternatively, the City Council may recommend that the Orange County Housing Authority assume the housing duties. Since the decisions about the locations and projects where significant covenant restricted affordable units occur have been made at the local City level and the City retains certain affordable housing obligations under its General Plan and related statewide requirements associated with the Regional Housing Needs Assessment ("ANNA"), staff believes that assignment of the responsibilities to a regional agency like the County would not ensure that local City policies, preferences, priorities and objectives are met. We note that Section 34176 does not include a date by which the City must elect whether or not to assume the housing assets and duties; however, since under the Supreme Court decision "dissolution" of the Agency occurs and the City becomes the Successor Agency on February 1st, it is recommended action be taken at this time. With the Housing Authority assuming the duties, then as of February 1, 2012, the Housing Authority may enforce affordability covenants and perform related activities pursuant to applicable provisions of the Community Redevelopment Law (Part 1, Agenda Report January 17, 2012 Page 4 commencing with Section 33000), including, but not limited to, Section 33418 as provided in Section 34176. In review of the Housing Authority recently adopted Bylaws, a minor needed clean-up that affects the Housing Authority's meeting scheduling has been identified by the City Attorney's Office and City Clerk. The purpose of the amendment will be to change the date of the Housing Authority Annual meeting. Currently the Bylaws require the meeting to occur on the first Tuesday of December of each year. Staff recommends that the meeting date be changed to coincide with the Housing Authority's annual report. Resolution No. 12-02 has been prepared to address this scheduling issue. f° Christine Shingleton Assistant Executive Direcr cc: City Council Resolution No. 12-08 Tustin Housing Authority Resolution No. 12-01 Tustin Housing Authority Resolution No. 12-02 RESOLUTION NO. 12-08 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF TUSTIN DECLINING TO ASSUME THE HOUSING ASSETS AND FUNCTIONS OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AND CONFIRMING THAT THE TUSTIN HOUSING AUTHORITY WILL ASSUME THE HOUSING ASSETS AND HOUSING FUNCTIONS PREVIOUSLY PERFORMED BY THE AGENCY PURSUANT TO HEALTH & SAFETY CODE SECTION 34176 The City Council of the City of Tustin hereby finds, determines and declares as follows: A. The Tustin Community Redevelopment Agency ("Agency") is a community redevelopment agency organized and existing under the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq. ("CRL") and has been authorized to transact business and exercise the powers of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of Tustin ("City"); and B. The City of Tustin is a municipal corporation of the State of California ("City"); and C. On December 29, 2011, in California Redevelopment Association v. Matosantos, Case No. S194861, the California Supreme Court upheld AB X1 26, which dissolves all of the redevelopment agencies in California, and invalidated AB X1 27 that had allowed redevelopment agencies to remain in existence if they opted in to the "Voluntary Alternative Redevelopment Program" ("Program"); D. Previously the City had opted into the Program by ordinance(s) soon after the passage of AB X1 26 and by resolution the City elected to became the Successor Agency of the Agency; and E. Now that the Program has been invalidated by the Supreme Court, pursuant to Health & Safety Code Section 34176, the City may elect to assume the housing assets and functions previously performed by the Agency or allow transfer of those assets and functions to the Tustin Housing Authority; NOW, THEREFORE, BE IT RESOLVED BY THE TUSTIN CITY COUNCIL.: Section 1. The above recitals are true and correct, are a substantive part of Resolution No. 12-08 Page 1 of 3 this Resolution, and are adopted as the findings of the City Council. Section 2. Pursuant to Section 34176 of AB X1 26, the City Council hereby declines to assume the housing assets and functions of the Agency and states its intention that the Tustin Housing Authority assume all rights, powers, assets, duties, and obligations associated with the housing activities of the former Agency. Section 3. The City Manager is hereby authorized and directed to take such other and further actions, and sign such other and further documents, as are necessary and proper in order to implement this Resolution on behalf of the City. Section 4. This Resolution shall take effect immediately upon its adoption by the City Council, and the Clerk of the Council shall attest to and certify the vote adopting this Resolution. PASSED AND ADOPTED at a regular meeting of the Tustin City Council held on the 17th day of January, 2012. JOHN NIELSEN MAYOR ATTEST: PAMELA STOKER City Clerk Resolution No. 12-08 Page 2 of 3 STATE OF CALIFORNIA ) COUNTY OF ORANGE )SS CITY OF TUSTIN ) I, Pamela Stoker, City Clerk and ex-officio Clerk of the City Council of the City of Tustin, California, do hereby certify that the whole number of the members of the City Council of the City of Tustin is five; that the above and foregoing Resolution No. 12- 08 was duly passed and adopted at a regular meeting of the Tustin City Council, held on the 17t" day of January, 2012, by the following vote: COUNCILMEMBER AYES: COUNCILMEMBER NOS: COUCILMEMBER ABSTAINED: COUNCILMEMBER ABSENT: PAMELA STOKER City Clerk Resolution No. 12-08 Page 3 of 3 RESOLUTION NO. 12-01 A RESOLUTION OF THE TUSTIN HOUSING AUTHORITY OF THE CITY OF TUSTIN CONFIRMING AND AGREEING TO ASSUME THE HOUSING ASSETS AND FUNCTIONS OF THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY PREVIOUSLY PERFORMED BY THE AGENCY PURSUANT TO HEALTH & SAFETY CODE SECTION 34176 The Tustin Housing Authority hereby finds, determines and declares as follows: A. The Tustin Community Redevelopment Agency ("Agency") is a community redevelopment agency organized and existing under the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq. ("CRL") and has been authorized to transact business and exercise the powers of a redevelopment agency pursuant to action of the City Council ("City Council") of the City of Tustin ("City"); and B. The City of Tustin is a municipal corporation of the State of California ("City"); and C. On December 29, 2011, in California Redevelopment Association v. Matosantos, Case No. S194861, the California Supreme Court upheld AB X1 26, which dissolves all of the redevelopment agencies in California, and invalidated AB X1 27 that had allowed redevelopment agencies to remain in existence if they opted in to the "Voluntary Alternative Redevelopment Program" ("Program"); D. Previously the City had opted into the Program by ordinance(s) soon after the passage of AB X1 26 and by resolution the City elected to become the Successor Agency of the Agency; and E. Now that the Program has been invalidated by the Supreme Court, pursuant to Health & Safety Code Section 34176, the City could elect to assume the housing assets and functions previously performed by the Agency or allow transfer of those assets and functions to the Tustin Housing Authority; NOW, THEREFORE, BE IT RESOLVED BY THE TUSTIN HOUSING AUTHORITY: Section 1. The City declined, pursuant to Resolution 12-08 to assume such housing assets and functions and stated its desire for the Tustin Housing Authority to assume all rights, powers, assets, liabilities, duties, and obligations associated with the housing activities of the former Agency. THA Resolution 12-01 Page 1 of 3 Section 2. The above recitals are true and correct, are a substantive part of this Resolution, and are adopted as the findings of the City Council. Section 3. Pursuant to Section 34176 of AB X1 26, the Tustin Housing Authority confirms and agrees to assume all rights, powers, assets, duties, liabilities, and obligations associated with the housing activities of the former Agency. Section 4. The Tustin Housing Authority Executive Director is hereby authorized and directed to take such other and further actions, and sign such other and further documents, as are necessary and proper in order to implement this Resolution on behalf of the Tustin Housing Authority. Section 5. This Resolution shall take effect immediately upon its adoption by the Tustin Housing Authority, and the Recording Secretary of the Housing Authority shall attest to and certify the vote adopting this Resolution. PASSED AND ADOPTED by the Tustin Housing Authority at a meeting on the 17th day of January, 2012. JOHN NIELSEN Chairman ATTEST: PATRICIA ESTRELLA Recording Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS THA Resolution 12-01 Page 2 of 3 CITY OF TUSTIN I, Patricia Estrella, City Clerk Services Supervisor of the City of Tustin and ex-officio Recording Secretary of the Tustin Housing Authority of the City of Tustin, California, do hereby certify that the whole number of the Commissioners of the Tustin Housing Authority is five; that the above and foregoing Tustin Housing Authority Resolution No. 12-01 was duly passed and adopted at a regular meeting of the Tustin Housing Authority, held on the 17t" day of January, 2012, by the following vote: COMMISSIONERS AYES: COMMISSIONERS NOES: COMMISSIONERS ABSTAINED: COMMISSIONERS ABSENT: PATRICIA ESTRELLA City Clerk Services Supervisor THA Resolution 12-01 Page 3 of 3 RESOLUTION NO. 12-02 A RESOLUTION OF THE TUSTIN HOUSING AUTHORITY AMENDING THE BYLAWS OF THE TUSTIN HOUSING AUTHORITY TO ADJUST THE ANNUAL MEETING DATE The Tustin Housing Authority finds, determines and declares A. The Tustin Housing Authority adopted its bylaws at a regular meeting on the 19t" day of April 2011; and B. The Tustin Housing Authority desires to amend the bylaws to adjust the annual meeting date, as stipulated in Section 501, of the bylaws; and C. Article 600 of the bylaws requires that the Commissioners of the Housing Authority be given at least seven days written notice of the general nature of the proposed amendment; and D. Written notice of the proposed amendment was provided to the Commissioners of the Housing Authority more than seven days prior to the meeting; NOW, THEREFORE THE HOUSING AUTHORITY OF THE CITY OF TUSTIN, CALIFORNIA RESOLVES AS FOLLOWS: Section 501 of the Bylaws of the Tustin Housing Authority shall be replaced in its entirety with the following: Section 501: Annual Meeting The Housing Authority Commissioners shall meet not less than once annually. The annual meeting of the Housing Authority Commissioners shall occur at the same time and location as the regular Tustin City Council meeting on the first Tuesday of September each year. The Housing Authority annual report shall be presented at the Annual Meeting. PASSED AND ADOPTED by the Tustin Housing Authority at a meeting on the 17t" day of January, 2012. JOHN NIELSEN Chairman THA Resolution 12-02 Page 1 of 2 ATl"EST: PATRICIA ESTRELLA Recording Secretary STATE OF CALIFORNIA ) COUNTY OF ORANGE ) SS CITY OF TUSTIN ) I, Patricia Estrella, City Clerk Services Supervisor of the City of Tustin and ex-officio Recording Secretary of the Tustin Housing Authority of the City of Tustin, California, do hereby certify that the whole number of the Commissioners of the Tustin Housing Authority is five; that the above and foregoing Tustin Housing Authority Resolution No. 12-02 was duly passed and adopted at a regular meeting of the Tustin Housing Authority, held on the 17th day of January, 2012, by the following vote: COMMISSIONERS AYES: COMMISSIONERS NOES: COMMISSIONERS ABSTAINED: COMMISSIONERS ABSENT: PATRICIA ESTRELLA City Glerk Services Supervisor THA Resolution 12-02 Page 2 of 2