HomeMy WebLinkAbout03 HOUSING REIMBURSEMENT AGREEMENTAgenda Item 3
A~EI~T~3A REPt~RT
®versiight Board of the Successor Agency to the
Bustin Community Redevelopment Agency
MEETING DATE: MARCH 27, 2012
SUBJECT/ACTION: AFFIRM THAT THE HOUSING REIMBURSEMENT AGREEMENT
BETWEEN THE CITY OF TUSTIN AND THE TUSTIN COMMUNITY
REDEVELOPMENT AGENCY INCLUDING THE REMAINING DEBT
SERVICE SCHEDULE ARE AN ENFORCEABLE OBLIGATION (AS
SHOWN ON THE RECOGNIZED OBLIGATION PAYMENT
SCHEDULE}
RECOMMENDATION /PROPOSED ACTION
It is recommended that the Oversight Board of the Successor Agency to the Tustin
Community Redevelopment Agency affirm and reinforce that the financial
responsibilities identified under the June 5, 2007 Reimbursement Agreement between
the City of Tustin and Tustin Community Redevelopment, including the debt service
schedule far remaining obligations under the Reimbursement Agreement, as originally
agreed upon, are an enforceable and recognized obligation for the Successor Agency
(as shown and identified on the Recognized Obligation Payment Schedule).
(Note: The above action by the Oversight Board
three business days, pending any request for
(DoF). If DoF requests review of this Board acti
of its request to approve the Board action or ref
the action, if subject to review by DoF, shall n
DoF.
(Board) shall not become effective for
review by the Department of Finance
on, it shall have ten days from the date
urn it to the Board for consideration and
of become effective until approved by
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 8e Assumed by the Agency on June 5, 200T'
(the "Original Reimbursement Agreement") to assist the Agency in carrying out its
affordable housing obligations under the MCAS Tustin Redevelopment Plan. On
January 5, 2010 and February 1, 2011, the City Council and Agency approved and
authorized the execution of a First Amendment and a Second Amendment, respectively,
to the Reimbursement Agreement.
Agenda
March 27, 2012
Page 2
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. The Redevelopment Plan was developed in accordance with
California Community Redevelopment Law ("CRL"}, Health and Safety Code Sections
33000, et seq.
Under California Community Redevelopment Law, at least 15% of all new and
substantially rehabilitated dwelling units developed within a project area were required
to be made available at an affordable housing cast to, and occupied by, persons and
families of low- or moderate-income with not less than 40°l0 of the total required dwelling
units to be affordable to very-low income households. Affordable ownership units
produced in a project area must remain affordable for a period of at least 45 years. 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 far affordable housing purposes.
The 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 was
insufficient tax increment revenue in the MCAS-Tustin Project Area's early years far 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 entered into agreements to sell property at a discount
sufficient to permit developers to economically develop the required number of
affordable housing units and 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.
A total of one hundred eighteen (118) affordable housing units were produced on
property originally owned by the City and sold at a significant discount to John Laing
Homes. The affordable housing units are located at Tustin Field 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 reflecting an average
of approximately $502,600 far very low-income units, $485,900 far low-income units,
and $279,100 far moderate-income units. The City's promissory notes and deeds of
trust reflect the difference between the fair market value of the dwelling units at the time
of purchase and the affordable housing purchase price of the units. The total
Reimbursement Agreement promissory note value associated with production of these
Agenda
March 27, 2012
Page 3
affordable housing units was $23,585,726 on Tustin Field I and $22,822,010 on Tustin
Field II for a total of $46,407,736. The Reimbursement Agreement required the Agency
to repay the City $46,407,736 with interest at five percent {5%) per annum.
At the time the June 5, 2007 Reimbursement Agreement was executed, the Agency's
special redevelopment attorney on the MCAS Tustin Redevelopment Project,
McDonough, Holland and Allen, 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 a cooperation 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 reimbursed the City from tax
increment generated by the Project Areas and from its Housing Set-Aside Funds as
allowed under the CRS.
The passage of Assembly Bill 1X 26, which added Parts 1.8 and 1.85 to Division 24 of
the California Health and Safety Code, caused the dissolution and wind down of all
redevelopment agencies ("Dissolution Act"). Effective February 1, 2012, the Tustin
Community Redevelopment Agency is now a dissolved community redevelopment
agency pursuant to the Dissolution Act. By a resolution considered and approved by
the City Council at an open public meeting on January 17, 2012, the City chase to
become and serve as the "successor agency" to the dissolved Agency under the
Dissolution Act. The City serves as the "Successor Agency" and will perform its
functions as the successor agency under the Dissolution Act to administer the
enforceable obligations of the Agency and otherwise unwind the Agency's affairs, all
subject to the review and approval by the seven-member Oversight Board.
Conclusion
The Affordable Housing Reimbursement Agreement constitutes a recognized obligation,
as defined by Section 34171(g) of the Dissolution Act, of the former Agency transferred
and assumed by the Successor Agency. The Successor Agency will act and perform
the duties and obligations of the former Agency under the Reimbursement Agreement
and has all rights and benefits of the former Agency under the Reimbursement
Agreement, subject to the provisions of the Dissolution Act. The Successor Agency
desires to have the Oversight Board reaffirm and reinforce that the financial
responsibilities identified under the June 5, 2007 Reimbursement Agreement, including
the remaining debt service schedule for remaining obligations, as originally agreed
upon, are a recognized obligation of the Successor Agency. This proposed action
would in no way establish new repayment terms for outstanding loans where terms
have been previously specified, but merely reinforce the existing obligation given
questions that might be raised with regards to this debt obligation.
Agenda
March 27, 2012
Page 4
A copy of the original Reimbursement Agreement and remaining debt service schedule
are attached for approval by the Oversight Board.
Successor Agency Staff will be available to answer any questions.
~~ .~
Christine Shingleton
Assistant Executive Director
Attachments: 1) Reimbursement Agreement
2) Remaining Debt Service Schedule
REIMBURSEMENT AGREEMENT
BETWEEN THE
CITY OF TUSTIN
AND
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
RELATED TO AFFORDABLE HOUSING RESPONSILITIES TO BE ASSUMED
BY THE AGENCY
This Agreement is entered into as of the " day of c~~.Q.., , 2007 ("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 adapted a Specific P1anlReuse Plan for the former Marine Corps
Air Station-Tustin ("Specific P1anlReuse Plan") an 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").
B. The City adapted the Redevelopment Plan ("Redevelopment Plan") for the
Marine Corps Air Station Tustin Redevelopment Project ("Project"} on June 2, 2003, by
Ordinance No. 1276 which authorizes the use within the Project of the powers captained
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 Project area pursuant to Health and Safety Cade Section
33670{b} ("Tax Increment").
C. The City has acquired from the Department of the Navy certain real
property within the Project for re-sale 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.
D. The Community Redevelopment Law (Health & Safety Code §33334.2}
requires that pat less than twenty percent (20%) of the Tax Increment allocated to the
Agency must be used by the Agency far the purposes of increasing, improving, and
preserving the community's supply of affordable housing for persons and families of low
and moderate income. in carrying out the purposes of this section, a redevelopment
agency may exercise any ar all of its powers including, but not' limited to, providing
subsides to, or for the benefit of persons .and families of low and moderate income, to the
extent those households cannot obtain housing at affordable casts on the open market.
83184Sv2A 29171/0001(2}
S/2S(2007
E. Ln addition, the Community Redevelopment Law requires that at least
fifteen percent (1S%} of all new and substantially rehabilitated dwelling units developed
within a redevelopment project area shall be available at affordable housing cast to
persons and families of low or moderate incame and shall be occupied by these persons
and families (the "Inclusionary Housing Requirement"). 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.
F. Dwelling units developed pursuant to the Inclusionary Housing
Requirement are to remain available at affordable housing cost to and occupied by very
low-, law-, and moderate-income persons and families far the longest feasible time, but
for not less than fifty-five (SS} years for rental units and forty-five (4S) years far owner-
occupied units.
G. To assist in enabling the Agency to provide the required affordable
housing for the benefit of very low-,low-, and moderate-income persans and families in
implementing the Specific P1anJReuse Plan and the Redevelopment Plan, the City has re-
sold certain property ("Property"} and will resell additional Property within the Project
area far residential development at a fair reuse value for the residential use and with the
covenants and conditions under the Specific PlanlReuse Plan and Redevelopment Plan,
including the required numbers of affordable housing units..
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 very low to moderate incame 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 far 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 is represented by the gap funding assistance provided to affordable homebuyers
with promissory notes by second deeds of trust in favor of City, hereinafter referred to as
the "Housing Affordability Subsidy".
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 (S6S)
housing units will be constructed. Of the five hundred sixty-five (S6S} housing units to
be constructed, one hundred and seventeen (117) units of the required one hundred and
eighteen {I l8} .units restricted consistent with the Inclusionary Housing Requirement,
pursuant to an Affordable Housing Covenant and an Affordable Housing Deed of Trust
have provided. The City's Housing Affordability Subsidy for the units sold as of the date
of this Agreement is $46,407,736. The City anticipates reselling additional Property to
developers for residential development on which a total of two thousand one hundred
and f ve {2,105) housing units will be constructed, with two hundred (200} for sale units
to be restricted consistent with the Inclusionary Housing Requirement. The City's
~ s~2srzao~
Housing Affordability Subsidy far these additional units in the future is currently
estimated at $62,296,000.
J. Pursuant to the Health and Safety Code Section 33128, the Agency is
performing a public function of the City and may have access to services and facilities of
the City.
K. The City and the Agency desire to enter into this Agreement:
1. To provide the terms and conditions under which the Agency will
reimburse the City for the Affordable Housing Subsidy.
2. To 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. To provide that the Agency will reimburse the City for actions
undertaken and costs and expensesrncurred by it for and on behalf of the Agency.
AGREEMENT
1. The Agency agrees to reimburse the City for the Affordable Housing
Subsidy from Tax Increment received by the Agency from the Project ar other available
Agency sources including funds deposited into the Agency's Low and Moderate Income
Set-Aside Funds for 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 $46,407,736.
2. The City agrees to provide for the Agency such staff assistance, supplies,
technical services and other services and facilities of the City as the Agency may require
in carrying out its functions under the Community Redevelopment Law. Such assistance
and services may include the services of officers, employees, attorneys and special
consultants.
3. The City will keep records of: (a) sales of property in the Project and the
amount of the Housing Affordability Subsidy, and (b) activities and services undertaken
pursuant to this Agreement and the costs thereof, in order to ensure that an accurate
record of the Agency's liability to the City can •be ascertained. The City shall
periodically, but not less than annually, submit to the Agency a statement of the costs
incurred by the City in rendering activities and services to the Agency pursuant to this
Agreement. Such statement of costs may include a praration of the City's administrative
and salary expense attributable to services of City officials, employees and departments
rendered for the Agency.
5!25/2007
4. The Agency agrees to reimburse the City for all costs incurred by the City
pursuant to this Agreement from and to the extent that funds are available to the Agency
for such purpose from Tax Increment ar from other sources, provided that the Agency
shall have the sole and exclusive right to pledge any such sources of funds to the
repayment of other indebtedness incurred by the Agency in carrying out the Project. The
costs of the City under this Agreement (including, without limitation, the Affordable
Housing Subsidy) will be shown an statements submitted to the Agency pursuant to
Section 3 above. Although the parties recognize that payment may not occur far a few
years and that repayment may also occur over a period of time, it is the express intent of
the parties that the City shall be entitled to repayment of the expenses incurred by the
City under this agreement, consistent with the Agency's financial ability, in order to make
the City whale as soon as practically possible.
5. The obligations of the Agency under this Agreement shall constitute an
indebtedness of the Agency within the meaning of Section 33670 et seq. of the Health
and Safety Code, to be repaid to the City by the Agency with interest at five percent (5%}
per annum.
(SIGNATURES PAGES FOLLOW}
SJZSizoa~
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
Effective Date.
.APPROVED AS FO
Douglas C. Holland, City orney
ATTEST:
Pame toker, City Cler
PROVED AS O FOR~¢.
Douglas C. Holland, Ag y
Counsel
AT ~~~
Pamela Coker, Agenc cretary
"CITY"
CITY OF TU N
By: ! ~~
Lou Bone, Mayor
"AGENCY"
TUSTINCOMMUNITY
REDEVELOP EN AGENCY
By:
Lou Bone, Chair
Board of Directors
5!25/2007
MCAS TUSTIN -AFFORDABLE HOUSING REIMBURSEMENT AGREEMENT
Debt Service Schedule
Original Principal 46,407,736
Interest 5.00%
Original terms /years 25
Principal Interest Payment to City Ending Principal After
Prior FY Activity
Fiscal Year
(i) Princi al Interest Pa went to Ci Endin Princi al After FY
2007-2008 ($3,614,375) ($2,500,000) ($6, 114,375) $42,793
361
2008-2009 ($961,605) ($2,139,668) ($3,101,273) ,
$41
831
756
(Z) 2009-2010 ($25,438,579) ($2,091,588) ($27,530,1.67) ,
,
$16,393
177
2010-2011 ($2,410,083) ($819,659) ($3,229,742) ,
$13,983
093
2011-2012 ($2,530,588) ($699,155) ~ ($3,229,742) ,
$11,452
506
Total: ($34,955,230) ($8,250,069) ($43,205,300) ,
Future FY Activity
Fiscal Year
2012-2013 ~ Princi al
($2,657,1 17) Interest
($572,625) Pa ment to Ci
($3,229,742) Endin Princi al After FY
$8,795
389
2013-2014 ($2,789,973) ($439,769) ($3,229,742) ,
$6,005,416
2014-2015 ~ ($2,929,471) ($300,271) ($3,229,742) $3,075
945
2015-2016 ($3,075,945) ($153,797) ($3,229,742) ,
($p)
Total:
($1 1,452,506) ($1,466,46
12,918,969)
Notes•
1) The agency made larger principal payment in FY 2007-2008
2) Fiscal Year 2009-2010: Issued Tax Allocation Housing Bonds (net $23.5 million) which was used as
principal payment