Loading...
HomeMy WebLinkAboutRDA 05 LOAN AG SO CENT 06-01-92_ k RDA N0. 5 Inter Cont TATE: MAY 27, 1992 TO: WILLIAM A. HUSTON, CITY OF TUSTIN FROM: RONALD A. NAULT, DIRECTOR OF FINAN SUBJECT: LOAN AGREEMENT BETWEEN THE CITY OF TUSTIN AND THE TUSTIN COMMUNITY RDA FOR THE SOUTH CENTRAL PROJECT AREA RECOMMENDATION: Authorize the Mayor and the Chairperson of the Redevelopment Agency to execute the attached Loan Agreement offering and accepting a loan from the City to the Agency of an additional $1,100,000. DISCUSSION: Section 33610 of the Health and Safety Code stipulates that a 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 additional loan from the General Fund will permit the Agency to complete the goals and objectives of the South Central Project Area. This loan will be paid back to the General Fund from the tax increment generated by the South Central Project Area. The total outstanding loan to the Agency will be $3 million as of June 30, 1992. For the benefit of the new Agency members, when a Redevelopment Agency Project Area is formed the assessed valuation for the area is frozen and becomes the base against which all future growth is measured. All of the incremental growth in taxes generated by the growth in assessed valuation as measured against the base year and comes 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 available to redevelopment agencies. As stated earlier, Section 33610 of the Health and Safety Code restricts the distribution of tax increment to redevelopment agencies to the repayment of debt. Until such time that a long term financing plan is completed, these short term loans between the City and the Agency will assure the full receipt of tax increment income to the Agency and maximize the Agency's ability to meet its goals and objectives in the South Central Project Area. AGREEMENT THIS AGREEMENT is made and entered into this 1st day of June, 1992, 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 "Agencyll. RECITALS WHEREAS, the City Council of the City, pursuant to Health and Safety Code Section 33610, has deemed it necessary to loan the Agency One Million One Hundred Thousand ($1,100,000.00) for the administrative expenses and overhead of the Agency; and WHEREAS, the City Council of the City offered said loan to the Agency; and WHEREAS, the Agency, pursuant to Health and Safety Code Section 33601, has accepted said offer; and WHEREAS, this loan is in addition to the amount of One Hundred Twenty -Five Thousand Dollars ($125,000) accepted by the Agency on June 18, 1984, and Three Hundred Seventy Five Thousand Dollars ($375,000) accepted by the Agency on June 2, 1986, and Six Hundred Thousand Dollars ($600,000) accepted by the Agency on June 1, 1987, Three Hundred Thousand Dollars ($300,000) accepted by the Agency on June 17, 1988, and Five Hundred Thousand Dollars ($500,000) accepted by the Agency on June 19, 1990 making a total Page 2 of Three Million Dollars ($3,000,000), plus accrued interest; 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 covenants, agreements and considerations contained herein, City and Agency hereby agree as follows: 1. Said loan is to be used by the Agency in carrying out the South Central Area Redevelopment Project and any other lawful purposes. 2. The sum loaned to the Agency is to be repaid to City as follows: a. Simple interest on said sum shall accrue at the rate of eight percent (8%) per annum from the date of transfer of said sum until such time as said sum is repaid to City. b. The sum loaned to the Agency, as well as accrued interest thereon, shall be repaid to City by the Agency from tax increment revenues received pursuant to Health and Safety Code Sections 33670 et seq. C. 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 City. Page 3 Executed this 1st day of June, 1992 "CITY" CITY OF TUSTIN BY: Leslie A. Pontious Mayor "AGENCY" TUSTIN COMMUNITY REDEVELOPMENT AGENCY BY: ATTEST: Mary E. Wynn, City Clerk Leslie A. Pontious Chairperson Mary E. Wynn, Redevelopment Agency Secretary a:agreemnt.rda