HomeMy WebLinkAbout14 BONDS TRANSFER AGREEMENT BETWEEN THE CITY OF TUSTIN AND THE SUCCESSOR AGENCYG1�.Y
r AGENDA 1 P . R
[I: S
MEETING DATE: JUNE 17, 2014
TO: JEFFREY C. PARKER, CITY MANAGER
Agenda Item 14
Reviewed:
City Manager
Finance Director
FROM: SUCCESSOR AGENCY AND FINANCE DEPARTMENT
SUBJECT: BOND PROCEEDS EXPENDITURE AGREEMENT BETWEEN
THE CITY AND SUCCESSOR AGENCY
SUMMARY:
The City of Tustin ( "City ") and the Successor Agency to the Tustin Community
Redevelopment Agency ( "Successor Agency ") seek authorization to enter into and
approval of a Bond Proceeds Expenditure. Agreement under Section 34191.4(c) of the
Dissolution Law.
RECOMMENDATION:
1. It is recommended the City Counc it take the following actions.
a. Adopt the Bond Spending Plan for using Excess Bond Proceeds from the Tustin
Community Redevelopment Agency Tax Allocation Bonds (MCAS- Tustin
Redevelopment Project Area) Series 2010, and
b. Approve and authorize the City to enter into a Bond Proceeds Expenditure
Agreement with the Successor Agency.
.'_. It is recommended the Successor Agency approve and authorize the Successor
Agency to enter into a Bond Proceeds Expenditure Agreement with the City.
3. As to both the City's and Successor Agency's action, if approved, should any
subsequent modifications be determined necessary, the City Manager /Executive
Director and/or Finance Director, or their authorized designee, shall be authorised to
make augmentation, modification, additions, or revisions as may be necessary
provided that any changes by the Successor Agency are subject to Oversight Board
consideration and approval.
COORELATION TO STRATEGIC PLAN:
The Bond Spending Plan and Bond Proceeds Expenditure Agreement are consistent
with City's value of Fiscal Stewardsh.p.
Agenda Report
June 17, 2014
Page 2
BACKGROUND:
Pursuant to Parts 1.8 and 1.85 of Division 24 of the California Health & Safety Code
( "Dissolution Law "), in particular Section 34191.4(c), a successor agency that has
received a finding of completion ( "Finding ") is authorized to use bond proceeds from
bonds issued prior to 2011 for the purposes for which the bonds were sold, provided
that such bond proceeds in excess of amounts needed to satisfy approved enforceable
obligations shall be expended in a manner consistent with the original bond covenants,
and further provides that such expenditures shall constitute "excess bond proceeds
obligations" that shall be listed separately on the successor agency's Recognized
Obligation Payment Schedule ( "ROPS "). The Successor Agency received the Finding
from the State of California Department of Finance on May 1, 2014, dated and effective
nunc pro tunc as of May 15, 2013, as ordered by the Honorable Timothy M. Frawley,
Sacramento Superior Court, State of California in the petition titled Successor Agency to
the Tustin Community Redevelopment Agency, et al, v. Ana J. Matosantos, et al.,
Case No. 34- 2013- 80001623 ( "Petition ").
In order to facilitate the use of excess bond proceeds obligations, a Bond Spending
Plan has been prepared by the City and complies with the purposes for which the Tustin
Community Redevelopment Agency Tax Allocation Bonds (MCAS- Tustin
Redevelopment Project Area) Series 2010 ( "MCAS Bonds ") were issued. The Bond
Spending Plan is to be adopted by the City Council and is incorporated into the attached
Bond Proceeds Expenditure Agreement ( "Agreement "). The Successor Agency and the
City have negotiated the Agreement, which provides for the transfer by the Successor
Agency to the City of current and future excess bond proceeds from the MCAS Bonds,
and for the City's use of such proceeds consistent with all applicable covenants of the
MCAS Bonds. Section 34178(x) of the Dissolution Law allows a successor agency and
its sponsoring city to enter into agreements, subject to Oversight Board approval under
Section 34180(h). The Successor Agency will submit the Agreement to the Oversight
Board for their consideration and action on June 24, 2014. Upon Oversight Board
approval, the Agreement will be submitted to DoF for their review. In addition, the
Successor Agency will list the Agreement and the requirement to transfer excess bond
proceeds on its ROPS 14 -15B for the January 1, 2015 through June 30, 2015 period as
an obligation to be funded with excess bond proceeds.
Authorization for the City Manager /Executive Director or Finance Director to make any
future modifications necessary to the Agreement, provided that any changes by the
Successor Agency are subject to Oversight Board consideration and approval. A copy
of the Bond Spending Plan is attached for City Council adoption. A copy of the
Agenda Report
June 17, 2014
Page 3
Agreement is attached for City Council and Successor Agency approval. Staff is
available to answer any questions the City Council or :successor Agency may have.
Jerry Craig - -
Economic 6v o mer & Housing Manager
Succes A ndj-td the Tustin
Com edevelopment Agency
ttachments: 1. Bond Spending Plan
Pamela Arends -King
Finance Director
Successor Agency to the Tustin
Community Redevelopment Agency
2. Proposed City and Successor Agency Bond Proceeds E- xpendature
Agreement
WAS TUSTIN BOND SPENDING PLAN
The Tustin Community Redevelopment A. -ency Tax Allocation Bonds (MCAS- Tustin
Redevelopment Project Area), Series 2010, were issued in September, 2010. The initial priority project
was the extension of Tustin Ranch Road, which was completed in November, 2013. In June 2011 when
the Governor signed AB xI 26 -- the dissolution of Redevelopment, only a portion of the Bond
Procec& were under contract and eligible for expenditure as an enforceable obligation. In addition to
Tustin Ranch Road, the Bonds were issued for those projects contained in the Tustin Legacy Backbone
Infrastructure Program ( "Backbone Program "). Bond Proceeds not listed as an enforceable obligation
can only be expended upon the Successor Agency to the Tustin Community Redevelopment Agency
receivtn{, a finding of completion ( "Finding ") from the State of California Department of Finance
( "DoF "). DoF issued the Finding on May 1, 2014, dated and effective nuns pro lunc as of May 15,
2013. The projects listed are Backbone Program priorities and part of the FY 2014 -2015 Capital
Improvement Program (CIP) Budget. While the Bond Spending Plan lists the priorities and estimated
amount of Bond Proceeds to be expended on each project, Bond Proceeds will be expended on the
listed projects as needed and in a manner consistent with the original Bond Covenants.
r MCAS Tax Allocation Bond (TAB) expendilures are estimated. The listed projects are for the purposes for which the MCAS
Tustin Bonds were issued and, if additional Bond Proceeds are needed for a specific project, Bond Proceeds will be allocated to
these projects as needed.
2 Projects listed are in the FY 2014 -2015 Capital Improvement Phan (CIP) Budget and are multi -year projects with all projects
estimated to be complete in FY 20171201 S.
J Projects identified as NEW are lasted for the first time as CIP pmjects, are in the FY 2014 -2015 CIP Budget and have not been
assigned a CIP number.
' fund Balance will grow from interest generated during the period of time Bond Proceeds remain invested while awaiting State of
California Department of Finance approval to expend. Interest earned will be used for the purposes for which the MCAS Tustin
Bonds were issued.
MCAS
Other
TAB
Funding
Fund 561 i
Sources
Totiltl
Fund Balance
$32,067,978
Praiecl%
Armstrang/Warner Road Improvements (70201 & 70202)
$10,167,978
$4,400,000
$14,567,978
The Irvine Company - Reimbursement for Warner
41.3,000,000
$2,000,000
Lel;acy Park (CIP 20043)
$8,000,000
$5,500,000
$13,500,000
Barranca/Red Hill Detention Basin & Watt r Element (CIP 50038)
$750,000
$824,688
$1,574,688
Barranca Parkway Improvements (70205)
$1,500,000
$1,500,000
Bell Avenue Extension (CIP 7022 1)
$3,000,000
4:1,001),000
Obligation to Vcstar for Improvements
$20,000,001)
$20,000,000
Vestar Crossing at Barranca
$6,350,000
$3,650,001)
"' 10,000,000
Peter's Canyon Channel Improvements (50040)
$3,000,000
$18,000,000
$21,000,000
Moffett Drive Extension and Storm Drain (70224)
$2,000,000
$14,000,000
$16,000,000
Park Aventic Extension (NEW) Viclory to Mof ell (CIP 70225)
$300,000
$1,900,000
$2,200,000
Red Hill Widening - Barranca to Edinger (VIEW)'
$5,300,000
$5,300,000
$32,067,978
$78,574,688
$110,642,666
Expenditure Subtotal'
$ -
Balance
r MCAS Tax Allocation Bond (TAB) expendilures are estimated. The listed projects are for the purposes for which the MCAS
Tustin Bonds were issued and, if additional Bond Proceeds are needed for a specific project, Bond Proceeds will be allocated to
these projects as needed.
2 Projects listed are in the FY 2014 -2015 Capital Improvement Phan (CIP) Budget and are multi -year projects with all projects
estimated to be complete in FY 20171201 S.
J Projects identified as NEW are lasted for the first time as CIP pmjects, are in the FY 2014 -2015 CIP Budget and have not been
assigned a CIP number.
' fund Balance will grow from interest generated during the period of time Bond Proceeds remain invested while awaiting State of
California Department of Finance approval to expend. Interest earned will be used for the purposes for which the MCAS Tustin
Bonds were issued.
BOND PROCEEDS EXPENDITURE AGREEMENT
This BOND PROCEEDS EXPENDITURE AGREEMENT ( "Agreement ") is entered into
as of June _, 2014, by and between the CITY OF TUSTIN, a California municipal corporation
( "City "), and the SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY
REDEVELOPMENT AGENCY, a public body corporate and politic pursuant to Parts 1.8 and 1.85
of Division 24 of the California Health & Safety Code ( "Successor Agency ").
RECITALS
A. The City is a municipal corporation organized and operating under the laws of the
State of California.
B. The Successor Agency is a public body, corporate and politic, organized and
operating under Part 1.85 of Division 24 of the Dissolution Law (as defined in Recital D below).
C. The Tustin Community Redevelopment Agency ( "former Agency ") previously was a
California public body, corporate and politic, duly formed by the City Council of the City
( "City Council ") and was organized, existed and exercised the powers of a community
redevelopment agency under the California Community Redevelopment Law, Health and Safety
Code Section 33000, et seq. ( "CRI: ).
D. Assembly Bill xl 26 ( "AB xi 26 "), effective on June 28, 2011, added Parts 1.8 and
1.85 to Division 24 of the California Health and 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. S194861
( "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") that was effective on June 27, 2012, and
thereafter further amended by subsequent legislation (together AB xl 26, the Matosantos Decision,
AB 1484, and subsequent legislation thereto are referred to as the "Dissolution Law "). All statutory
references herein are to the Dissolution Law unless otherwise stated.
E. As of February 1, 2012, the former Agency became a dissolved community
redevelopment agency pursuant to the Dissolution Law.
F. As of and on and after February 1, 2012, the Successor Agency is performing its
functions as the successor agency under the Dissolution Law to administer the enforceable
obligations of the former Agency and is engaged in activities necessary and appropriate to wind
down the affairs of the former Agency, all subject to the review and approval by a seven - member
"Oversight Board" formed thereunder.
G. Section 34191.4(c) of the Dissolution Law allows a successor agency that has
received a Finding of Completion ( "Finding ") to use bond proceeds from bonds issued prior to 2011
for the purposes for which the bonds were sold, provides that such proceeds in excess of amounts
needed to satisfy approved enforceable obligations shall be expended in a manner consistent with the
original bond covenants, and further provides that such expenditures shall constitute "excess bond
proceeds obligations" that shall be listed separately on the successor agency's Recognized Obligation
Payment Schedule ( "ROPS ").
H. The Successor Agency received the Finding from the State of California Department
of Finance on May 1, 2014, dated and effective nuns pro tune as of May 15, 2013, as ordered by the
Honorable Timothy M. Frawley, Sacramento Superior Court, State of California in the petition titled
Successor Agency to the Tustin Community Redevelopment Agency, et al. v. Ana J. Matosantos,
et al., Case No. 34 -2013- 80001623 ( "Petition ").
1. The CRL pre - dissolution provided for, and the Dissolution Law post - dissolution
continues to provide for, a cooperative relationship between sponsoring cities and their
redevelopment agencies, as well as their successor agencies who have assumed the duties and
obligations of the former redevelopment agencies. Under CRL Section 33220, a city may aid and
cooperate in the planning, undertaking, construction, or operation of redevelopment projects.
CRL Section 33220(e) specifically authorizes a city to enter into an agreement with its
redevelopment agency or any other public entity to further redevelopment purposes.
Section 34178(a) of the Dissolution Law allows a successor agency and its sponsoring city to enter
into agreements, subject to Oversight Board approval under Section 34180(h) of the Dissolution
Law.
J. The Successor Agency has and will have proceeds of its Tustin Community
Redevelopment Agency Tax Allocation Bonds (MCAS- Tustin Redevelopment Project Area)
Series 2010 ( "MCAS Bonds ") (together with other funds described in Section 2.1 below,
"Bond Proceeds ") that are not otherwise obligated for a project or other enforceable obligation.
The Successor Agency desires to transfer such Excess Bond Proceeds (defined below) to the City to
enable the City to expend such Excess Bond Proceeds for redevelopment and other public purposes
consistent with all applicable covenants of the MCAS Bonds.
K. The Successor Agency desires to transfer its Excess Bond Proceeds to the City to
enable the City to use such Excess Bond Proceeds in a manner consistent with the covenants of the
MCAS Bonds and to undertake projects and programs that were not previously funded and obligated
by the former Agency pre - dissolution or by the Successor Agency post- dissolution, or by the City
pre- or post - dissolution. The City has adopted a spending plan for using such Excess Bond Proceeds
( "Bond Spending Plan ") to advance the City's community development goals while maximizing
fiscal and social benefits flowing to the affected taxing entities from successful development.
The City Council and Successor Agency Board have found that the use of Excess Bond Proceeds are
in accordance with the Bond Spending Plan to fund various capital improvements within and outside
the former MCAS Tustin Redevelopment Project Area (for which a benefit resolution shall have
been adopted by the Successor Agency), including those that are contained in the Tustin Legacy
Backbone Infrastructure Program established by the City, and are in accordance with CRL Sections
33445, 33445.1, and 33679 and other applicable law. On June 24, 2014, the Oversight Board
determined that the expenditure of Excess Bond Proceeds in accordance with this Agreement will
benefit the affected taxing entities, and approved the execution of this Agreement and the transfer of
Excess Bond Proceeds to the City for the purposes described herein.
L. In order to facilitate the use of Excess Bond Proceeds consistent with all applicable
bond covenants, the Successor Agency and the City have negotiated this Agreement requiring the
transfer of current and future excess bond proceeds by the Successor Agency to the City, and the
City's agreement to use such proceeds consistent with all applicable covenants, conditions,
restrictions and obligations under the MCAS Bonds. The parties intend that this Agreement shall
constitute an excess bond proceeds obligation within the meaning of Section 34191.4(c)(2)(A) of the
Dissolution Law to be paid from Excess Bond Proceeds. With Oversight Board approval, the
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Successor Agency will list this Agreement, and the requirement to transfer excess bond proceeds
herein, on its ROPS 14 -15B for January 1, 2015 through June 30, 2015 as an obligation to be funded
with Excess Bond Proceeds, and as and if applicable on successive ROPS if required by the
Dissolution Law.
NOW, THEREFORE, the parties hereto do mutually agree as follows:
RECITALS
The recitals above are an integral part of this Agreement and set forth the intentions of the
parties and the premises on which the parties have decided to enter into this Agreement.
2. DEFINITIONS
For purposes of this Agreement, the following terms shall have the indicated meaning:
2.1 "Dissolution Law" is defined in Recital D.
2.2 "Bond Proceeds" is defined in Recital J and also includes (1) proceeds from tax
allocation bonds issued on or before December 31, 2010, (2) rents, sale proceeds and other revenues
generated by properties acquired and/or improved with proceeds from tax allocation bonds issued on
or before December 31, 2010, (3) interest and principal paid on loans funded by proceeds from tax
allocation bonds issued on or before December 31, 2010, and (4) other income or revenues generated
from assets acquired or funded with proceeds from tax allocation bonds issued on or before
December 31, 2010.
2.3 "Excess Bond Proceeds" means Bond Proceeds that are not needed to satisfy
Enforceable Obligations listed on an approved RODS.
2.4 "Enforceable Obligations" mean enforceable obligations, other than Excess Bond
Proceeds obligations, as defined under the Dissolution Law.
2.5 "Bond Spending Plan" is defined in Recital J.
3. SUCCESSOR AGENCY OBLIGATIONS
The Successor Agency shall have the following obligations under this Agreement:
3.1 Current Excess Bond Proceeds. The Successor Agency shall tram-&r to the City,
no later than January 1, 2015, Excess Bond Proceeds currently held by the Successor Agency in an
amount not to exceed 32,067,977.89.
3.2 Future Excess Bond Proceeds. The Successor Agency shall transfer to the City all
future Excess Bond Proceeds held or received by the Successor Agency. Such future Excess Bond
Proceeds shall include, without limitation, (1) Bond Proceeds previously obligated to a project or
other Enforceable Obligation that become unobligated for any reason, (2) Bond Proceeds that
become available in the form of rents, sale proceeds, loan repayments, other income, or other
revenues that are generated by properties or other assets acquired and/or improved with Bond
Proceeds and that are not otherwise obligated to a project, program, or other Enforceable Obligation,
and (3) any other funds held by the Successor Agency that qualify as Excess Bond Proceeds under
this Agreement.
The parties intend that payments of future Excess Bond Proceeds be made to the City as soon
as possible after such Excess Bond Proceeds become available. The transfer of future Excess Bond
Proceeds to the City shall be made pursuant to an approved ROPS within 30 days of the
commencement of the relevant ROPS period. The Successor Agency shall be responsible for
ensuring that payments of future Excess Bond Proceeds to the City, as such funds become available,
are included on the next possible ROPS.
3.3 Projects Funded By Excess Bond Proceeds. The Successor Agency assigns to the
City all responsibilities in relation to the administration and implementation of any projects or
programs funded by Excess Bond Proceeds. The Successor Agency assigns to the City all contracts
entered into by the Successor Agency post- dissolution or the former Agency pre - dissolution related
to the expenditure of Excess Bond Proceeds and any activities to be funded by Excess Bond
Proceeds, with the exception of those contracts relating to Enforceable Obligations, including the
MCAS bond documents, which shall be retained by the Successor Agency.
4. CITY OBLIGATIONS
The City shall have the following obligations under this Agreement:
4.1 Excess Bond Proceeds. The City shall accept, hold, disburse and administer
Excess Bond Proceeds transferred to the City by the Successor Agency under this Agreement,
including current Excess Bond Proceeds and future Excess Bond Proceeds. The City shall retain any
Excess Bond Proceeds that it receives, such as revenue generated from properties acquired or
improved with Excess Bond Proceeds or payments on loans funded from Excess Bond Proceeds,
without any obligation to return such funds to the Successor Agency, and shall use such funds for
uses consistent with applicable covenants of the MCAS Bonds.
The City may spend Excess Bond Proceeds received or retained under this Agreement on any
project, program, or activity authorized under the Bond Spending Plan. Notwithstanding anything to
the contrary in this Agreement or the Bond Spending Plan, the City shall spend Excess Bond
Proceeds consistent with all covenants of the MCAS Bonds applicable to the particular Excess Bond
Proceeds. The City shall be solely responsible for ensuring that Excess Bond Proceeds are
maintained and spent in accordance with all covenants of the MCAS Bonds and other applicable
laws. The City may transfer funds between approved projects, programs and activities.
The City hereby assumes all contracts entered into or assumed by the Successor Agency
post dissolution or entered into by the former Agency pre - dissolution related to the expenditure of
Excess Bond Proceeds and any activities to be funded by Excess Bond Proceeds, with the exception
of those contracts relating to Enforceable Obligations, which shall be retained by the Successor
Agency. The City shall perform its obligations hereunder, and under such assumed contracts, in
accordance with the applicable provisions of federal, state and local laws, including the obligation to
comply with environmental laws such as CEQA and /or NEPA, and shall timely complete the work
required for each project commenced by the City pursuant to this Agreement and the Bond Spending
Plan.
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4.2 BOND SPENDING PLAN. The City shall be solely responsible for maintaining,
administering, and implementing the Bond Spending Plan. The City may amend the Bond Spending
Plan as the City deems reasonably necessary in its sole discretion. Any amendments to the adopted
Bond Spending flan will consider uses that advance the City's community development goals while
maximizing fiscal and social benefits [lowing to the affected taxing entities from successful
development. Notwithstanding any contrary provision hereof, unless the City expressly agrees
otherwise, the City shall not be obligated to provide funding for any program or project in an amount
exceeding the Excess Bond Proceeds provided to the City pursuant to this Agreement.
ENTIRE AGREEMENT; WAIVERS; AND AMENDMENTS
5.1 This Agreement constitutes the entire understanding and agreement of the parties
with respect to the transfer and use of Excess Bond Proceeds. This Agreement integrates all of the
terms and conditions mentioned herein or incidental hereto, and supersedes all negotiations or
previous agreements between the parties with respect to the subject matter of this Agreement.
5.2 This Agreement is intended solely for the benefit of the City and the Successor
Agency. Notwithstanding any reference in this Agreement to persons or entities other than the City
and the Successor Agency, there shall be no third party beneficiaries under this Agreement.
5.3 All waivers of the provisions of this Agreement and all amendments to this
Agreement must be in writing and signed by the authorized representatives of the parties.
6. SEVERABILITY
If any term, provision, covenant or condition of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall
continue in full force and effect unless the rights and obligations of the parties have been materially
altered or abridged by such invalidation, voiding or unenforceability. In addition, the parties shall
cooperate in good faith in an effort to amend or modify this Agreement in a manner such that the
purpose of any invalidated or voided provision, covenant, or condition can be accomplished to the
maximum extent legally permissible.
7. DEFAULT
If either party fails to adequately perform an obligation required by this Agreement within
thirty (30) calendar days of receiving written notice from the non - defaulting party, the party failing to
perform shall be in default hereunder. In the event of default, the non- defaulting party will have all
the rights and remedies available to it at law or in equity to enforce the provisions of this contract,
including without limitation the right to sue for damages for breach of contract or to seek specific
performance. The rights and remedies of the non - defaulting party enumerated in this paragraph are
cumulative and shall not limit the non - defaulting party's rights under any other provision of this
Agreement, or otherwise waive or deny any right or remedy, at law or in equity, existing as of the
date of the Agreement or hereinafter enacted or established, that may be available to the non -
defaulting party against the defaulting party.
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8. BINDING ON SUCCESSORS
This Agreement shall be binding on and shall inure to the beneft of all successors and
assigns of the parties, whether by agreement or operation of law.
9. FURTHER ASSURANCES
Each party agrees to execute, acknowledge and deliver all additional documents and
instruments, and to take such other actions as may be reasonably necessary to carry out the intent of
this Agreement.
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In witness whereof, the undersi{}ned parties have executed this Bond Proceeds Expenditure
Agreement as of the date first above written.
"CITY"
CITY OF TUSTIN, a California municipal corporation
ATTEST:
Jeffrey C. Parker, City Clerk
APPROVED AS TO FORM
David Kendq., City Attorney
Elwyn A. Murray, Mayor
"SUCCESSOR AGENCY"
SUCCESSOR AGENCY TO THE TUSTIN
COMMUNITY REDEVELOPMENT AGENCY,
a public body corporate and politic
IA
ATTEST:
Jeffrey C. Parker, City Clerk
on behalf of the Successor Agency
APPROVED AS TO FORM
David Kendig, Legal Counsel
Elwyn A. Murray
Successor Agency Chairman