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HomeMy WebLinkAbout04 REINSTATING PUBLIC WORKS AGREEMENTAgenda Item Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency MEETING DATE: JANUARY 28, 2014 SUBJECT /ACTION: ADOPT OVERSIGHT BOARD RESOLUTION NO. 14 -03, AMENDING AND REINSTATING THE PUBLIC WORKS AGREEMENT BETWEEN THE CITY OF TUSTIN AND THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY RECOMMENDATION / PROPOSED ACTION It is recommended the Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency adopt Oversight Board Resolution No. 14 -03, amending and reinstating the Public Works Agreement between the City of Tustin and the Successor Agency to the Tustin Community Redevelopment Agency, subject to the following condition: a) Should any subsequent modifications be required, the City Manager and /or Finance Director, or their authorized designee, shall be authorized to make any augmentation, modification, additions or revisions as may be necessary subject to certification by the Oversight Board Chair. (Note: This Resolution shall be effective after transmittal of this Resolution to the Department of Finance ( "DoF ") and the expiration of five (5) business days pending a request for review by DoF within the time periods set forth in Assembly Bill No. 1484. In this regard, if DoF requests review hereof, it will have 40 days from the date of its request to approve this Oversight Board action or return it to the Oversight Board for reconsideration and the action, if subject to review by DoF, will not be effective until approved by DoF.) =T �60l.t On June 2, 1993, the Tustin City Council and the Tustin Community Redevelopment Agency approved and authorized the execution of the Public Works Agreement for the South Central Redevelopment Project Area. The Agreement required the Agency to reimburse the City for public improvements constructed as part of the Newport Avenue Extension Project. On June 29, 2011, Assembly Bill X1 26 became effective, causing the dissolution and wind down of all redevelopment agencies ( "Dissolution Act'). All redevelopment agencies in California were dissolved as of and on February 1, 2012, and the Successor Agency to the Tustin Community Redevelopment Agency became responsible for Agenda Report January 28, 2014 Page 2 winding down redevelopment activities in the City of Tustin. At the time of Dissolution, the City had made $38,254,807 in contracted improvements to be reimbursed under the Agreement. In compliance with Health and Safety Code ( "HSC ") Section 34177, the Successor Agency submitted a Recognized Obligation Payment Schedule ( "ROPS ") on March 15, 2012, to the State of California Department of Finance ( "DoF ") for approval. DoF recognized the Agreement as an enforceable obligation and approved the request for $8,558,775 in Redevelopment Property Tax Trust Funds ( "Trust Funds ") to reimburse the City in accordance with the Agreement. In accordance with Dissolution Act's ROPS submission deadlines, the Successor Agency included the Agreement on ROPS II and ROPS III. DoF approved payments of $1,954,712 for each period. On February 27, 2013, the Successor Agency submitted ROPS 13 -14A, including a line item request of $1,954,712 for the Public Works Agreement. On April 13, 2013, DoF denied the City's request for payment, reversing their position on the Agreement as an enforceable obligation. On April 19, 2013, the City requested and was granted a "Meet and Confer" session for May 1, 2013. After presenting documentation supporting the City's contention that the Agreement is an enforceable obligation, DoF responded with a denial letter on May 17, 2013, maintaining its position the Agreement is not an enforceable obligation and not eligible to receive Trust Funds. As a result of the passage of Assembly Bill 1484 in June of 2012, a provision was added to the Dissolution Act providing successor agencies with an opportunity to reinstate "loan agreements" through a Finding of Completion ( "Finding ") provision. On May 10, 2013, the Successor Agency remitted what it believes to be its last remaining unencumbered funds to the Orange County Auditor - Controller and on May 13, 2013, requested a Finding from DoF. On July 3, 2013, DoF informed the Successor Agency that a Finding would not be issued until after the Successor Agency remitted the principal and interest due on December 1, 2013, for the December 31, 2008, Promissory Note between the City and Successor Agency. DoF's failure to issue the required finding of completion is contrary to the requirements under HSC Section 34179.7, including their failure to provide a response within five business days of the Agency's May 13t request. In response, the City, the Successor Agency and the Tustin Housing Authority have filed a "Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief' with the Superior Court of the State of California in Sacramento County. Included in the Petition is a request for the Court to recognize the Public Works Agreement as an enforceable obligation. Agenda Report January 28, 2014 Page 3 In anticipation of the upcoming March court hearing and in consultation with the City's attorneys, Staff believes it is prudent to amend and reinstate the Public Works Agreement prior to the Judge hearing our case. On January 21, 2014, the City Council, acting as the Successor Agency, approved the First Amendment to the Public Works Agreement. In compliance with HSC Section 34191.4(b)(2), the amended Public Works Agreement provides a payment schedule at the Local Agency Investment Fund interest rate. Pursuant to HSC Section 34180(a) and 34191.4(b), the Oversight Board has the authority to reinstate loan agreements between the City and the Successor Agency as long as the Oversight Board finds the loan was for legitimate redevelopment purposes and deems it to be an enforceable obligation. Should the Oversight Board approve the amended Public Works Agreement, it will be submitted to DoF for review. A copy of the First Amendment to the Public Works Agreement is attached to Oversight Board Resolution No. 14 -03 for Oversight Board approval. Staff is available to answer any questions the Oversight Board may have. Attachment: Oversight Board Resolution No. 14 -03 OVERSIGHT BOARD RESOLUTION NO. 14 -03 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AMENDING AND REINSTATING THE PUBLIC WORKS AGREEMENT BETWEEN THE CITY OF TUSTIN AND THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY The Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency 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, at 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; and C. Assembly Bill X1 26 added Parts 1.8 and 1.85 to Division 24 of the California Health and Safety Code, which laws cause the dissolution and wind down of all redevelopment agencies ( "Dissolution Act "); and D. On December 29, 2011, in the petition California Redevelopment Association, et al v. Ana Matosantos, et al ( "Matosantos Decision "), the California Supreme Court upheld the Dissolution Act and thereby all redevelopment agencies in California were dissolved as of and on February 1, 2012, under the dates in the Dissolution Act that were reformed and extended thereby ( "Supreme Court Decision "); and E. As of February 1, 2012, the former Agency was dissolved pursuant to the Dissolution Laws and as a separate public entity, corporate and politic the Successor Agency administers the enforceable obligations of the former Agency and otherwise unwinds the former Agency's affairs, all subject to the review and approval by a seven - member oversight board ( "Oversight Board "); and F. Section 34179 provides that the Oversight Board has fiduciary responsibilities to holders of enforceable obligations and the affected taxing entities that benefit from distributions of property tax and other revenues pursuant to Section 34188 of Part 1.85 of the Dissolution Laws; and G. Pursuant to Section 34179, the Successor Agency's Oversight Board has been formed and the initial meeting occurred on March 13, 2012; and H. Section 34179(e), as amended by Assembly Bill 1484 ( "AB 1484 "), requires all actions taken by the Oversight Board to be adopted by resolution; and Oversight Board Resolution 14 -03 Page 1 of 4 On June 2, 1993, the Tustin City Council and Tustin Community Redevelopment Agency approved the Public Works Agreement for the South Central Project Area; and J. The Public Works Agreement required the Agency to reimburse the City for infrastructure improvements constructed as part of the Newport Avenue Extension Project; and K. In accordance with the Dissolution Act, the Successor Agency has listed the Public Works Agreement on the first four Recognized Obligation Payment Schedules ('BOPS ") submitted to the State of California Department of Finance ( "DoF "); and L. After recognizing and approving the Public Works Agreement as an enforceable obligation on the first three ROPS submittals, DoF denied the Agreement during the fourth ROPS submittal, stating that it is not an enforceable obligation, and indicated the Successor Agency could seek to reinstate the Agreement upon receiving a Finding of Completion ( "Finding "); and M. On May 10, 2013, the Successor Agency remitted what it believed to be its last remaining unencumbered funds to the Orange County Auditor - Controller and on May 13, 2013, requested a Finding from DoF; and N. On July 3, 2013, DoF informed the Successor Agency that a Finding would not be issued until after the Successor Agency remitted the principal and interest due on December 1, 2013, for the December 31, 2008 Promissory Note between the City and Successor Agency; and O. In response, the City, the Successor Agency and the Tustin Housing Authority have filed a "Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief with the Superior Court of the State of California in Sacramento County; and P. The City and Successor Agency have determined it is necessary and appropriate to amend and reinstate the Public Works Agreement originally entered into by and between the City of Tustin and the former Tustin Community Redevelopment Agency on June 2, 1993, as an enforceable obligation; and Q. The Oversight Board has duly considered Works Agreement was for legitimate Agreement an enforceable obligation; and all other related matters and finds the Public redevelopment purposes and deems the R. The Oversight Board has determined approval of the First Amendment to the Public Works Agreement and submission to DoF is in the best interest of the City and Agency and in the health, safety, and welfare of its residents, and in accord with the public purposes and provisions of applicable state and local laws and requirements. NOW, THEREFORE, BE IT RESOLVED BY A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY: Oversight Board Resolution 14 -03 Page 2 of 4 Section 1. The foregoing recitals are incorporated into this Resolution by this reference, and constitute a material part of this Resolution. Section 2. The Oversight Board approves the First Amendment to the Public Works Agreement attached hereto as Attachment No. 1 and incorporated herein, and further authorizes the Successor Agency to transmit this Resolution to the State Department of Finance ( "DoF "). Section 3. The Executive Director of the Successor Agency or his authorized designee is directed to post this Resolution on the City /Successor Agency website. Section 4. This Resolution shall be effective after transmittal of this Resolution to DoF and the expiration of five (5) business days pending a request for review by DoF within the time periods set forth in Assembly Bill No. 1484, which amended the Dissolution Act and was approved by the Governor on June 27, 2012. In this request, if DoF requests review hereof, it will have 40 days from the date of its request to approve this Oversight Board action or return it to the Oversight Board for reconsideration and the action, if subject to review by DoF, will not be effective until approved by DoF. Section 5. The Secretary of the Oversight Board shall certify to the adoption of this Resolution. APPROVED AND ADOPTED this 28th day of January, 2014. Doug Davert, Chairman Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency /yffiffi31 Charles E. "Chuck" Puckett, Secretary Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency Oversight Board Resolution 14 -03 Page 3 of 4 STATE OF CALIFORNIA ) COUNTY OF ORANGE )SS CITY OF TUSTIN ) I, CHARLES E. "CHUCK' PUCKETT, Secretary of the Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency, do hereby certify that the whole number of the members of the Agency Board is seven; that the above and foregoing Resolution No. 14 -03 was duly passed and adopted at a regular meeting of the Oversight Board, held on the 28th day of January, 2014, by the following vote: :•_:� a u: :�_ \���_1I�I��7i Charles E. "Chuck" Puckett, Secretary Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency Attachment No. 1 — First Amendment to the Public Works Agreement Oversight Board Resolution 14 -03 Page 4 of 4 ATTACHMENT NO. 1 FIRST AMENDMENT TO THE PUBLIC WORKS AGREEMENT [Attached] FIRST AMENDMENT TO THE PUBLIC WORKS AGREEMENT SOUTH CENTRAL REDEVELOPMENT PROJECT This FIRST AMENDMENT TO THE PUBLIC WORKS AGREEMENT ( "First Amendment ") is entered into as of this 21st day of January, 2014 ( "Effective Date ") by and between the CITY OF TUSTIN, a municipal corporation ( "City "), and the SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic ( "Successor Agency "). RECITALS A. By Ordinance No. 891 adopted on July 18, 1983, the City Council of the City of Tustin adopted and approved a certain Redevelopment Plan ( "Redevelopment Plan ") for the South Central Redevelopment Project (the "Project "); and B. Pursuant to the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.), the former Tustin Community Redevelopment Agency ( "former Agency ") and then the Successor Agency have been carrying out the Redevelopment Plan for the Project in the Redevelopment Project Area ( "Project Area "); and C. In furtherance of the Project, the former Agency and the City entered into that certain Public Works Agreement ( "Public Works Agreement ") under which the City caused the installation and construction of certain street, utility and other public improvements and facilities to serve the Project ( "Improvements ") as described in EXHIBIT `A' attached hereto and incorporated herein, and the former Agency is obligated by such contract to pay the City for the costs of such public improvements by periodic payments over a period of years according to the terms of this Agreement; and D. The former Agency and the City Council of the City found and determined that the public improvements to be provided and thereafter provided pursuant to the Public Works Agreement were of benefit to the Project Area and that no other reasonable means of financing such improvements were available to the community; and E. The Successor Agency is a public body corporate and politic, organized and operating under Parts 1.8 and 1.85 of Division 24 of the California Health and Safety Code, and the successor the former Tustin Community Redevelopment Agency ( "former Agency ") that was previously a community redevelopment agency organized and existing pursuant to the Community Redevelopment Law, Health and Safety Code Section 33000, et seq. ( "CRL "); and F. Assembly Bill xl 26 ( "AB xl 26 ") added Parts 1.8 and 1.85 to Division 24 of the California Health & Safety Code and which laws were modified, in part, and determined constitutional by the California Supreme Court in the petition California Redevelopment Association, et al. v. Ana Matosantos, et al, Case No. 5194861 (" Matosantos Decision "), which laws and court opinion caused the dissolution of all redevelopment agencies and winding down of the affairs of former redevelopment agencies; thereafter, such laws were amended further by Assembly Bill 1484 ( "AB 1484 ") (together AB xl 26, the Matosantos Decision, and AB 1484 are referred to as the "Dissolution Laws "), and all statutory references herein are to the Health and Safety Code of the Dissolution Laws unless otherwise stated; and G. As of February 1, 2012 the former Agency was dissolved pursuant to the Dissolution Laws and as a separate public entity, corporate and politic the Successor Agency administers the enforceable obligations of the former Agency and otherwise unwinds the former Agency's affairs, all subject to the review and approval by a seven - member oversight board ( "Oversight Board "); and H. Section 34179 provides that the Oversight Board has fiduciary responsibilities to holders of enforceable obligations and the affected taxing entities that benefit from distributions of property tax and other revenues pursuant to Section 34188 of Part 1.85 of the Dissolution Laws; and 1. At the time of Dissolution, the City had made $38,254,807 in contracted public improvements that the former Agency was obligated to reimburse under the Public Works Agreement; and J. In accordance with the Dissolution Act and in order to receive Redevelopment Property Tax Trust Funds ( "RPTTF "), the Successor Agency submitted the Public Works Agreement on a Recognized Obligation Payment Schedule ( "ROPS ") for approval by the State of California Department of Finance ( "DoF "); and K. After approving the Public Works Agreement as an enforceable obligation and authorizing funding therefor from RPTTF funds on the Successor Agency's first three ROPS submittals (ROPE I, II and III), DoF denied the Public Works Agreement in the fourth ROPS (ROPS 13 -14A), reversing its prior determinations that such contract is an enforceable obligation and to be funded from RPTTF monies; and L. On April 19, 2013, the Successor Agency requested and was granted a "Meet and Confer" session with the DoF that occurred on May 1, 2013; and M. After considering the Successor Agency's (and City's) documentation supporting the Public Works Agreement as an enforceable obligation, DoF issued its decision letter dated May 17, 2013 that denied funding pursuant to thereto, re- asserted its position regarding ROPS 13 -14A that the Public Works Agreement is not an enforceable obligation and indicated the Successor Agency could seek to reinstate the Public Works Agreement upon receiving a Finding of Completion ( "Finding "); and N. On May 10, 2013, the Successor Agency remitted what it believed to be its last remaining unencumbered funds to the Orange County Auditor - Controller and on May 13, 2013, requested a Finding from DoF; and 0. On July 3, 2013, DoF informed the Successor Agency that a Finding would not be issued until after the Successor Agency remitted the principal and interest due on December 1, 2013 for the December 31, 2008 Promissory Note between the City and Successor Agency even though such monies were not due at the time of the "true -up" payment in July 2012 nor at the time of completion of DoF's review of the due diligence review reports in late 2012 and early 2013; and P. In response, the City, the Successor Agency and the Tustin Housing Authority have filed a "Petition for Writ of Mandate and Complaint for Declaratory and Injunctive 2 Relief' in the Superior Court, County of Sacramento, pursuant to the Dissolution Laws ( "Petition "); and Q. While the Finding has been withheld from the Successor Agency under the Dissolution Laws, nonetheless as a part of the facts and information to be submitted to the Superior Court in connection with advancing the Petition, the City and the Successor Agency have determined it necessary and appropriate to amend and reinstate the Public Works Agreement originally entered into by and between the City of Tustin and the former Agency as an enforceable obligation; and R. Under the Dissolution Laws, by this First Amendment the Public Works Agreement will be reinstated and re- established and thereafter will be submitted to the Oversight Board for review and determination that such contract, as amended, is an enforceable obligation and if approved then the matter will be submitted again to the DoF for review and approval; and S. This First Amendment sets forth the terms for repayment of the Public Works Agreement as reinstated and re- established pursuant to a new, defined repayment schedule over a reasonable term of years, which is set forth in EXHIBIT `B' attached hereto and fully incorporated by this reference with interest accruing at the rate earned by funds deposited into the Local Agency Investment Fund ( "LAIF ") pursuant to Section 34191.4 and other terms as set forth hereinafter. NOW THEREFORE, in consideration of the mutual covenants, agreements and considerations contained herein, the City and the Successor Agency hereby agree the following sections shall be amended: 1. Modification to the Original Public Works Agreement. The following sections of the Original Public Works Agreement are hereby amended as follows: a) Section 2. Payment by the Agency is hereby deleted in its entirety and replaced as follows: "In consideration of the undertakings of the City under Section I of this Agreement, and after first making adequate provision for the annual payment of principal and interest due on any bonds or other indebtedness of the former Agency which may be incurred by the former Agency in carrying out the Project and for which the annual tax allocations to the former Agency from the Project ("Tax Allocations ") are pledged or committed, the former Agency shall reimburse the City for constructed improvements. At the time of Dissolution, the Successor Agency owed the City $38,254,807 in contracted improvements. Pursuant to the Dissolution Act, the Successor Agency shall reimburse the City from Redevelopment Property Tax Trust Funds ( "RPTTF ") allocated through the Recognized Obligation Payment Schedule process. To date, the Successor Agency has reimbursed the City $12,468,199 in RPTTF, leaving a principal and interest balance of $25,934,993. Upon meeting the requirements outlined in Health and Safety Code ( "HSC ") Section 34191.4(b)(2)(A), the Successor Agency will make five annual payments in the amount of $5,190,371. In the event the RPTTF received are not sufficient to make a $5,190,371 payment, principal and interest balances will be rolled over into subsequent payments. The attached payment schedule, EXHIBIT `B', is in accordance with HSC Section 34191.4(b)(2), utilizing an interest rate not to exceed the interest rate earned by funds deposited into the Local Agency Investment Fund." b) Section 4. Termination of Agreement is hereby deleted in its entirety and replaced as follows: "This Agreement and the obligations of the City and the Successor Agency hereunder shall terminate with the improvements completed by the City at the time of Dissolution and upon the Successor Agency completely paying off the principal balance of $38,254,807 plus accrued interest." 2. Incorporation of Recitals. Each recital set forth above in this First Amendment shall be deemed to be part of the Public Works Agreement as amended by this First Amendment. 3. First Amendment. This First Amendment constitutes a part of the Public Works Agreement and any reference to the Public Works Agreement shall be deemed to include a reference to such Public Works Agreement as amended hereby. 4. Full Force and Affect. Except as otherwise amended previously and herein, all terms, covenants, conditions and provisions of the Public Works Agreement shall remaining full force and effect. 5. Loan for Legitimate Redevelopment Purpose: Submittal of First Amendment to Oversight Board and DoF. The Successor Agency agrees to submit this First Amendment (with copies of the original Public Works Agreement and attachments) to the Oversight Board for its review, approval and determination that the Public Works Agreement and monies advanced by the City to the Successor Agency occurred for legitimate redevelopment purposes, specifically for public improvements of benefit to the Project Area. Thereafter, this First Amendment shall be submitted to the DOF for its review and approval pursuant to the Dissolution Laws. 6. Successor Agency to List First Amendment (and original Public Works Loaned Are Re amid. The Successor Agency agrees to list this First Amendment (and original Public Works Agreement) as an enforceable obligation on each ROPS during each six -month fiscal period until repaid in full pursuant to the provisions of the Dissolution Laws. This first ROPS to so list this Agreement will be ROPS 14 -15A for the six -month fiscal period of July 1, 2014 to December 31, 2014. [signatures on next page] IN WITNESS WHEREOF, the City and the Successor Agency have executed the First Amendment to the Public Works Agreement as of the Effective Date. CITY: CITY OF TUSTIN, a California municipal corporation IM ATTEST: CITY CLERK By: Jeffrey C. Parker APPROVED AS TO FORM: By: David E. Kendig, City Attorney ATTEST: CITY CLERK TO SUCCESSOR AGENCY am Jeffrey C. Parker APPROVED AS TO FORM: M Celeste Brady Successor Agency Special Counsel Elwyn A. Murray, Mayor SUCCESSOR AGENCY: SUCCESSOR AGENCY TO TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a public body corporate and politic In Elwyn A. Murray, Chair Attachments: EXHIBIT 'A' — South Central Project Area Critical Public Improvements and Facilities EXHIBIT 'B' — Public Works Agreement Payment Schedule 5 EXHIBIT 'A' SOUTH CENTRAL PROJECT AREA CRITICAL PUBLIC IMPROVEMENTS AND FACILITIES Project Description: Extension of Newport Avenue south, under an existing railroad right of way and County flood control channel. The project will include the construction ofa new on and off ramp configuration for Newport Avenue and the SR -55 Freeway; the relocationand improvement to water and other utilities and storm drains and other improvements to Edinger Avenue. Estimated Project Costs: Newport Avenue Extension SR -55 Freeway Ramps Utility and Storm Drain Upgrade Relocation Edinger Avenue Improvements A -1 $18,300,000 4,700,000 4,200,000 6.300.000 $33,500,000 WO-51-1-rum PAYMENT SCHEDULE (attached) A -1 m m h d Y w U b d 6 W L 4 3 u a 0 CD OD 7 8 a W y a d IN QI iM a w Fa N 4A U C 6M9 N N M 0 0 0 3 � o O + O V M N V 00 h 0p �O M oo v a a n" y r N N y= n h t q oVp�t^ a a G Vi �R 69 M t{ N N M Nyy NCC N M � O O O v n a aaoo as