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HomeMy WebLinkAbout09 SA FOURTH AMENDED AGREEMENT TO ADMINISTRATIVE BUDGETAGENDA REPORT Agenda Item Reviewed City Manager Finance Director 9 MEETING DATE FEBRUARY 19, 2013 TO JEFFREY C PARKER, CITY MANAGER FROM SUCCESSOR AGENCY AND FINANCE DEPARTMENT SUBJECT SUCCESSOR AGENCY APPROVAL OF AMENDED ADMINISTRATIVE BUDGETS AND AUTHORIZATION TO ENTER INTO A FOURTH AMENDED AGREEMENT BETWEEN THE CITY AND SUCCESSOR AGENCY FOR ADMINISTRATIVE SUPPORT SUMMARY Successor Agency approval is requested of an amended Administrative Budget and authorization for the City and Successor Agency to enter into a Fourth Amended Agreement for reimbursement of administrative support RECOMMENDATION 1 It is recommended the City Council approve and authorize the City to enter into a Fourth Amended Agreement for Reimbursement of Costs and City /Successor Agency Operations Loan with the City acting as Successor Agency to the Tustin Community Redevelopment Agency 2 It is recommended the City, acting as the Successor Agency to the Tustin Community Redevelopment Agency ( "City Successor Agency "). take the following actions A Approve the attached amended Administrative Budget pursuant to California Health and Safety Code (HSC) Section 34177(j) Should any subsequent modifications be determined necessary, the City Manager and /or Finance Director, or their authorized designee, shall be authorized to make augmentation, modification additions or revisions as may be necessary subject to Oversight Board approval B Approve and authorize the Successor Agency to enter into an Agreement for Reimbursement of Costs and City /Successor Agency Operations Loan with the City for reimbursement of costs incurred by the City to support Successor Agenda Report February 19, 2013 Page 2 Agency operations, obligations consistent with the Administrative Budget approved by the Successor Agency The Successor Agency shall also be authorized to enter into any agreements necessary to provide administrative support services as identified in the Administrative Budget attached hereto BACKGROUND HSC Section 34177(j) requires the Successor Agency to prepare a proposed administrative budget for upcoming six month periods and submit it to the Oversight Board for approval According to the HSC Section 34177(j), the administrative budget is to include all of the following (i) estimated amounts of the Successor Agency's administrative costs for the up- coming six month fiscal period, (ii) the proposed sources of payment for the costs identified in (i). and (iii) proposals for arrangements for administrative and operations services provided by the city, county, city and county or other entity Pursuant to HSC Section 34171, the Administrative Budget for FY 2013- 2014 is payable from property tax revenues of up to three percent (3 %) of property tax allocated to the Redevelopment Obligation Retirement Fund during FY 2013 -14 In any event, the amount allocated for administrative costs shall not be less than Two Hundred Fifty Thousand Dollars ($250,000) for any fiscal year The proposed amended Successor Agency Administrative Budget for the period of July 2013 through December 2013 reflects the projected administrative costs in the Recognized Obligation Payment Schedule 13 -14A ( "ROPS 13 -14A ") Under HSC 34177(k), the Successor Agency provides these administrative cost estimates to be paid from property tax revenues deposited into the Redevelopment Property Tax Trust Fund to the County of Orange Auditor - Controller for each six month fiscal period Since the ROPS may change in the future, staff also requests that any future modifications necessary to the Administrative Budget be authorized to be made by the City Manager or Finance Director subject to Oversight Board approval In conjunction with the past approvals of the Administrative Budget for FY 2011 -12 and 2012 -2013, including each six month ROPS time frame the City and Successor Agency entered into an Agreement for reimbursement of costs incurred by the City to support Successor Agency operations and obligations (original agreement approved March 20, 2012 First Amendment on April 17, 2012, Second Amendment on June 19, 2012 and Third Amendment on August 14, 2012) The Oversight Board has Agenda Report February 19, 2013 Page 3 previously authorized the Successor Agency to enter into subsequent amendments to this agreement to reflect the revised Administrative Budgets modified in conjunction with approval of the ROPS The administrative allowance for the July 2013 through December 2013 period as determined by the amount of Redevelopment Property Tax Trust Funds allocated in ROPS 13 -14A is $218,554, a reduction from the previously approved ROPS administrative allowance of $267,837 for the period of January 1, 2103 through June 30 2013 The total administrative allowance for FY 2013 -14 as determined by ROPS 13- 14A is $342,582 A copy of the amended agreement is attached for City and Successor Agency approval Staff is available to answer any questions the City Council may have 'Jerry Craig Program Ma age Successo I. - - cy to the Tustin Comity Redevelopment Agency Attachments Pamela Arends -King Finance Director Successor Agency to the Tustin Community Redevelopment Agency 1 Proposed Administrative Budget for July 1 2013 through December 31, 2013 2. Proposed City and Successor Agency Fourth Amended Agreement for Reimbursement of Costs for Fiscal Year 2013 -2014 Proposed Administrative Budget For July 1, 2013 through December 31, 2013 ;/STIMATED REVENUES BUDGET FOR ADMINISTRATIVE EXPENSES (JUL THRU DEC 2013) SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY Object Position Code Enforceable Obligations Paid with Redevelopment Property Tax Trust Fund Estimated Property Tax a ocated to Successory Agency 4 Administrative Cost Allowance for FY 13/14 fl Percent to Total FY - Admin Admin Costs 1.,119,3 3% $ 342,582 1UL THRU DEC 2013 7,285,126 7,285,126 218,554 ESTIMATED EXPENSES EMPLOYEE DETAILS Object Position Code Sub Total Wages Benefits and WC. Fiscal Year - Total Wages, Benefits and Percent to Total FY - Admin Admin Costs $ OTHER ADMINISTRATIVE DIRECT COSTS JUL THRU DEC 2013 $ Object Item Total During Fiscal Code Year 2013/14 Percent to Total FY Admin Admin Costs JUL THRU DEC 2013 1 6147 Bank Service Charges 3,000 100% 3,000 1,500 2 6355 Telephone 4,800 100% 4,800 2,400 3 6400 Office Supplies 5,200 100% 5,200 2,600 4 6415 Mail and Postage Service 1,600 100% 1,600 800 5 6420 Printing 9,000 100% 9,000 4,500 6 6710 Meetings (staff) 0 100% 0 0 7 6715 Training Expense 0 100% 0 0 8 6730 Membership /Subscriptions 0 100% 0 0 9 6840 Vehicle Mileage 200 100% 200 100 10 6845 Vehicle Lease Equipment 6,800 100% 6,800 3,400 11 6848 IT Support Services 36,500 100% 36,500 18,250 Sub -Total Admin Cost Allowances $ 67,100 $ 67,100 $ 33,550 CITY ADMINISTRATIVE SUPPORT COSTS BASED ON COST ALLOCATION (ATTACHED) Object Item Total During Fiscal Code Year 2013/14 Total FY - Admin Costs JUL THRU DEC 2013 I City Administrative Support Costs 835,000 based on Cost Allocation 15.0" < ", 125,427 $ 110,004 CITY ATTORNEY (contract services) Object Description of Services Total During Fiscal Code Year 2013/14 Percent to Total FY - Admin Admin Costs JUL THRU DEC 2013 6017 City Attorney's Office Woodruff, $ 150,000 Spradlin & Smart (Including Stradling Yocca Carlson & Ruth. Remy Thomas Moose & Manley, Waters & Company Jeanette Justus) This does not include legal services from the following firms that are associated with project costs 1) Armbruster Goldsmith & Delvac LLP 2)Cappello and Noel LLP, and 3) Kutak Rock 100% $ 150,000 $ 75,000 Sub Total City Attorney: $ 150,000 $ 150,000 $ 75,000 SPECIFIC SERVICES (3rd Revised EOPS and Draft ROPS) Object Description Total During Fiscal Code Year 2013/14 Percent to Total FY - Admin Admin Costs JUL THRU DEC 2013 1 6315 Lease of Office Space 0 °oi, 0 Sub -Total Specific Services 5 $ $ - TOTAL ADMINISTRATIVE SERVICE COSTS Percent to Total FY - Admin Admin Costs JUL THRU DEC 2013 TOTAL ADMINISTRATIVE SERVICE COSTS $ 342,582 $ 218,554 BUDGET REVENUES (SURPLUS) /EXPENSES (DEFICIT) 0 $ City Administrative Support Costs City Successor Agency Administrative Support Cost An indirect administrative support cost allocation methodology has been used by the City since Fiscal Year 1999 -2000 The cost allocation method has been presented to the City's independent auditors as ajustification for indirect administrative costs charged to various departments/ funds, including the former Redevelopment Agency Water Enterprise and special revenue funds The general cost allocation overhead rate that the City uses is 15% This is consistent and conforms with generally accepted accounting principles and is generally applicable as a cost allocation methodology to all users of services and facilities. The indirect administrative support cost allocation will permit the City s General Fund to recover a portion of the indirect administrative support overhead costs associated with providing general administrative functions to various funds For purposes of application to the City Successor Agency the calculation of the indirect administrative support overhead costs has looked at only specific internal services (City Council City Clerk City Manager, Finance, Public Works, and non- department services) or those department which generally support and whom spend time on City Successor Agency related activities and items including but not limited to enforceable obligations of the City Successor Agency While the indirect administrative support allocation methodology described above would generate estimated costs in excess of $836,000 as shown below for purposes of the Administrative Budget, the City has capped the level of indirect administrative support overhead reimbursement to $152,364 which reflects only approximately 18% of the actual costs associated with City indirect administrative support overhead being provided to the City Successor Agency for the entire fiscal year The table below reflects the actual reimbursements that will be assigned to each City operating department or function Department FY 2014 Estimated Expenditures General Overhead (15 %) Admen Overhead Cost Allowance for Period of Jul - Dec, 2013 Admin Overhead Cost Allowance for Entire Fiscal Year Notes City Council $125 800 $18,900 $4 941 $7,745 City Clerk $386,200 $57,900 $15,137 $23,727 City Manager $818,700 $122,800 $32,103 $50,322 Finance $1,140,000 $171,000 $44,704 $70,074 Public Works - Admin & Facilities $2,561,600 $384,200 $100,441 $157 440 Non - Departmental Other $541,200 $81,200 $21,228 $33,275 Total $5,573,500 $836,000 $218,554 $342,583 Proposed City and Successor Agency Fourth Amended Agreement for Reimbursement of Costs for Fiscal Year 2013 -2014 FOURTH AMENDED AGREEMENT FOR REIMBURSEMENT OF COSTS AND CITY /SUCCESSOR AGENCY OPERATIONS LOAN This FOURTH AMENDED AGREEMENT FOR REIMBURSEMENT OF COSTS AND CITY /SUCCESSOR AGENCY OPERATIONS LOAN ( "Fourth Amended Agreement ") is made and entered into as of , 2013 by and among the CITY OF TUSTIN, a California municipal corporation ( "City ") and the CITY OF TUSTIN ACTING AS SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY ( "City Successor Agency ") RECITALS A. The Tustin Community Redevelopment Agency ('Agency ") was established as a community redevelopment agency that was previously organized and existing under the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq ( "CRL ") and previously authorized to transact business and exercise the powers of a redevelopment agency pursuant to action of the City Council ( "City Council ") of the City B. The Tustin Housing Authority is a housing authority and public body corporate and politic organized, existing, and operating pursuant to the California Housing Authorities Law Health and Safety Code Section 34200, et seq C. Assembly Bill l X 26 added Parts 1.8 and 1 85 to Division 24 of the California Health & Safety Code, which laws caused the dissolution and wind down of all redevelopment agencies ( "Dissolution Act ") D On December 29, 2011. California Redevelopment Association, et al v Matosantos, Case No S194861, the California Supreme Court upheld the Dissolution Act and thereby all redevelopment agencies in California are subject to the Dissolution Act and were dissolved effective February 1, 2012 E The Agency is now a dissolved community redevelopment agency pursuant to the Dissolution Act F. By a resolution considered and approved by the City Council at an open public meeting on January 17, 2012, the City chose to become and serve as the `City Successor Agency" to the dissolved Agency under the Dissolution Act G As of and on and after February 1, 2012, the City serves as the "City 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 review and approval by a seven - member Oversight Board formed thereunder H By a resolution considered and approved by the City Council at an open public meeting on January 17, 2012, and pursuant to California Health and Safety Code Section 34176 of the Dissolution Act, the City declined to assume the housing assets and functions of the Agency and selected the Tustin Housing Authority to assume such housing assets and functions, and on such date, also pursuant to Section 34176 the Tustin Housing Authority accepted and assumed the housing assets and functions of the Agency and as of February 1, 2012 became and serves as the "Successor Housing Agency" of the former Agency pursuant to the Dissolution Act At this time, assets Page 1 assigned and transferred by operation of law and to be assigned and transferred to the Successor Agency by authorization of and direction from the Oversight Board and operating pursuant to the Dissolution Act, are not adequate to fund administrative support costs and expenses unless any future Low and Moderate Income Housing fund balances are authorized to be transferred under State Law to the Successor Housing Agency If this occurs, a future modification to this Agreement may be necessary I City as the Successor Agency is engaged in activities necessary and appropriate to wind down the activities of Tustin Community Redevelopment Agency s Redevelopment Plans ( "Redevelopment Plans ") for the MCAS Tustin Project, the Town Center Project and the South Central Project ( "Project Areas') that were originally adopted and amended by ordinances of the City Council J. Employees of the City will perform day -to -day administration and operation of the Successor Agency's duties and functions Since the Tustin Community Redevelopment Agency was originally formed and upon Successor Agency's effectiveness as of February 1 2012, the City has provided and shall continue to provide services to the Successor Agency including but not limited to providing administrative, accounting, auditing, planning, engineering, legal, risk management, financial clerical recordkeepmg and other services necessary for the Successor Agency to carry out its responsibilities K City and City Successor Agency entered into an Agreement for Reimbursement of Costs and City /Successor Agency Operations Loan on March 20, 2012 (the "Original Agreement "), as amended by the First Amended Agreement on April 17, 2012, the Second Amended Agreement on June 19 2012, and the Third Amended Agreement on August 14, 2013 (the Original Agreement and all amendments shall be collectively referred to as the "Agreement ") to document an on -going cooperative arrangement regarding administrative and operational services and payment for services whereby City agrees to provide administrative and operational services and City Successor Agency agrees to pay City for the cost of all such services to be provided by City for City Successor Agency pursuant to California Health and Safety Code Section 34177 (j) L Pursuant to Health and Safety Code (HSC) Section 34180(e), the Oversight Board, on May 29, 2012, approved the acceptance of financial assistance for the Phase 1 and Phase 2 Tustin Ranch Road Improvements Project conditioned upon the provision of matching funds to the City from the MCAS Tustin 2010 Tax Allocation Bonds by the Successor Agency In compliance with HSC Section 34180(h), the Oversight Board also authorized the Successor Agency to enter into an amended reimbursement agreement with the City for the Successor Agency s matching contribution to the Tustin Ranch Road Improvements Project in the amounts of $5,983,863 for Phase 1 and $8,164,931 for Phase 2 to be disbursed from MCAS Tustin 2010 Tax Allocation Bonds to the City M. On December 18, 2012, the Department of Finance issued a determination denying the Successor Agency's use of MCAS Tustin 2010 Tax Allocation Bonds to provide a matching contribution to the Tustin Ranch Road Improvements Project and consequently, the Agreement has been modified to delete the reference under Section 1 2 N The Oversight Board on August 28 2013, authorized the City Successor Agency to enter into an amended reimbursement agreement with the City to reflect modifications to the Administrative Cost Allowance and Administrative Budget for Fiscal Year 2011 -12 and Fiscal Year 2012 -13, as requested by the California Department of Finance Page 2 NOW, THEREFORE, for and in consideration of the mutual promises. covenants and conditions herein contained, the parties hereto agree as follows 1 Modification of Section 1 of the Original Agreement as it relates to Reimbursement of Administrative. Expenses. (a) Section 1 2 Reimbursement of Phase 1 and Phase 2 "I ustin Ranch Road Improvements Project Expenses is hereby deleted 2 Modification of Section 2 of the Original Agreement as it relates to the Cost of Administrative Expenses and Administrative Cost Allowances for Fiscal Year 2013 -14 (a) Section 2.3 of the Original Agreement is hereby deleted and replaced as follows "Section 2 3 City Successor Agency and City estimate that the cost of administrative and operational services to be provided by City to the City Successor Agency for the period of July 1, 2013 through June 30, 2014 is Three Hundred Forty -Two Thousand Five Hundred and Eighty -Two Dollars ($342,582) Pursuant to the provisions of Section 4 herein City Successor Agency agrees to pay the sum of $342,582 to City to pay for the estimated administrative expenses of the City Successor Agency for the period of fiscal year 2013 -14 subject to Oversight Board approval and City Successor Agency preparation and approval of an administrative budget estimate for such services and costs for the two upcoming six -month fiscal periods 1) July 1, 2013 through December 31 2013 and 2) January 1 2014 through June 30 2014 The City Successor Agency shall also be liable to the City for payment of any and all direct Project and Program Expenses incurred by City where they are adopted as part of the ROPS " 3 Miscellaneous (a) Fourth Amended Agreement Ratified Except as specifically amended or modified herein, each and every term, covenant and condition of the Original Agreement as amended is hereby ratified and shall remain in full force and effect (b) Binding This Fourth Amended Agreement and the Original Agreement shall be binding upon and inure to the benefit of the parties hereto ««« « «« « « « « « « «« Signature Page Follows » » » » » » » » » » » » »> Page 3 IN WITNESS WHEREOF, the parties have caused this Fourth Amended Agreement to be executed by their officers thereunto duly authorized on the date first above written "CITY" CITY OF TUSTIN, a California municipal corporation By Al Murray, Mayor ATTEST Jeffrey C Parker, City Clerk APPROVED AS TO FORM David Kendig, City Attorney "CITY SUCCESSOR AGENCY" SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY By Al Murray Successor Agency Chairman ATTEST Jeffrey C Parker City Clerk on behalf of the Successor Agency APPROVED AS TO FORM David Kendig. Legal Counsel Page 4