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HomeMy WebLinkAboutRDA 04 RDA LOAN 09-15-97DATE: September 10, 1997 Inter-Com RDA NO. 4 9-15-97 TO: FROM: SUBJECT: William &. Huston, Executive Director Ronald &. Nault, Finance Director LOAN AGREEMENT BETWEEN THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AND THE CITY OF TUSTIN RECOMMENDATION: Authorize the Chairperson of the Redevelopment Agency and the Mayor to execute the attached Loan Agreement offering and accepting a loan from the-City to the Agency of $1,902,000. DISCUSSION: Section 33670 et seq. of the California Health and Safety Code stipulates that tax increment can only be distributed to Redevelopment Agencies for the sole purpose of repaying debt. Any tax increment collected in excess of outstanding debt will be returned to the County to be redistributed to the original taxing agencies. This loan from the General Fund will permit the Agency to complete the goals and objectives of the South Central Project Area for Fiscal Year 1997-98. The loan will be repaid to the General Fund from tax increment generated by the South Central Project Area. BACKGROUND: When a Redevelopment Agency Project Area is formed, the assessed valuation for the area is frozen and becomes the base year value. All of the property taxes generated by the "incremental" growth in assessed valuation as measured against the base year is allocated directly to the Redevelopment Agency. This "tax increment" and, to a much lesser degree, interest earned on the increment, is the only source of income made available to Redevelopment Agencies. Section 33610 of the Health and Safety Code restricts the distribution of this tax increment to Redevelopment Agencies to the extent it is equal to or less than outstanding debt. The loan between the City and the Agency qualifies as debt per the Code section. Until such time that a long term financing plan is completed, the policy of making annual loans between the City and the Agency will assure .the full receipt of tax increment to the Agency and maximize the Agency's ability to meet its goals and objectives in the South Central and MCAS Tustin Project Areas. Finance Director RAN:ts Attachments RAN6:RDA Loanl.Sep THIS AGREEMENT is made and entered into this 15th day of September, 1997, by and between the CITY OF TUSTIN, a municipal corporation of the County of Orange, State of California, hereinafter referred to as "City", and the TUSTIN COMMUNITY REDEVELOPMENT AGENCY, a 'California Redevelopment Agency, hereinafter referred to as "Agency". RECITALS WHEREAS, the City Council of the City, pursuant to Health and Safety Code section 33610, has deemed it necessary to loan the Agency $1,902,000 to assist the Agency in carrying out the programs budgeted for 1997-98; and WHEREAS, the City Council of the City offered said loan to the Agency;.and WHEREAs, the City has offered to provide administrative, planning, engineering, design, accounting and other services as required, including direct and indirect overhead charges to the Agency; and -- WHEREAS, the Agency, pursuant to Health and Safety Code section 33601, has accepted said offers; and WHEREAS, the parties intend to further memorialize their agreement as to said loan and to set forth the terms and conditions thereof as agreed to at the time of offer and acceptance; NOW, THEREFORE, in consideration of the mutual convenants, agreements and considerations contained herein, City and Agency hereby agree as follows: 1. The City will loan to the Agency $1,902,000. Said loan is to be used by the Agency in carrying out programs in the South central and MCAS Tustin Redevelopment Project Areas and any other lawful purposes. 2. The sum loaned to the Agency is to be repaid to the City as follows: ae $1,750,000 from the South Central Project Area Tax Increment. b. $152,000 from the MCAS Tustin Project Area Tax Increment. Ce Interest on said sum shall accrue at the monthly rate as reported by the Local Agency Investment Fund (LAIF) from the date of transfer of said sum until such time as said sum is repaid to City. do The sum loaned to the Agency, as well as accrued interest thereon, shall be repaid to the City by the Agency from tax increment revenues received pursuant to Health and Safety Code sections 33670 et seq. eo The sum loaned to the Agency, as well as accrued interest thereon, shall be due and payable to the City by the Agency, unless otherwise renewed by both parties, by August 31, 1998. fo If no funds become available to the Agency to repay said sum, the money loaned and accrued interest thereon is forgiven and need not be repaid to the City. 3. The sum agreed upon for other services, without interest thereon, shall be paid to the City by the Agency from tax increment revenues received pursuant to Health and Safety Code sections 33670 et seq., based on the formula approved by the City Council and on actual time as recorded in the City's Payroll system. The estimated amount is as follows: $360,000 from the Town Center Project Area and $406,000 from the South Central Project Area. ao If no funds become available to the Agency to pay said sum, it~is forgiven and need not be paid to the City. Executed this 15th day of September, 1997. *tCITY- CITY OF TUSTIN BY.- "AGENCY" TUSTIN COI~UNITY REDEVELOPNENT AGENCY BY: ATTEST: Pamela Stoker, City Clerk Pamela Stoker, Redevelopment Agency Secretary RAN6:RDA Agrel .Sep