HomeMy WebLinkAboutFirst Amendment to Working Capital Loan/Administrative Svcs AgmtFIRST AMENDMENT TO THE WORKING CAPITAL LOAN
AND ADMINISTRATIVE SERVICES AGREEMENT
"WORKING CAPITAL LOAM"
(Reinstatement of Working Capital Loan Pursuant to HCS Section 34191.4)
This FIRST AMENDMENT TO THE WORKING CAPITAL LOAN AND
ADMINISTRATIVE SERVICES AGREEMENT (Reinstatement of Working Capital Loan
Pursuant to HCS Section 34191.4) ( "First Amendment') is made and entered into this
27th day of January, 2015 ( "Effective Date "), by and between the CITY OF TUSTIN,
a municipal corporation ( "City ") and the SUCCESSOR AGENCY TO THE TUSTIN
COMMUNITY REDEVELOPMENT AGENCY ( "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. ( "CRL ").
D. Assembly Bill x1 26 ( "AB x1 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, at 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 x1 26, the Matosantos Decision, AB 1484, and subsequent legislation thereto
are referred to as the "Dissolution Law "). All statutory references herein are to the Health and
Safety Code 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. The former Agency and City entered into a Working Capital Loan And
Administrative Services Agreement ( "Original Agreement' and "Working Capital Loan ")
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DOCSOC/ I691883v2l200350.0009
pursuant to Section 33610 by action and direction of the City Council on September 7, 2010,
by which contract the City Council determined it necessary to continue to loan the former
Agency $6,885,200, of which $4,650,000 is a Working Capital Loan and the balance for other
services, all to assist with carrying out programs of the former Agency then budgeted for the
2010 -2011 fiscal year.
H. Under the Original Agreement, agreed to provide administrative, planning,
engineering, design, accounting and other services as required, including direct and indirect
overhead charges to the former Agency.
I. By this First Amendment, the City and Successor Agency desire to affirm and
document an on -going cooperative arrangement regarding administrative and operational
services and payment for services by entering into this First Amendment to the Original
Agreement. The Original Agreement, as amended by this First Amendment, is referred to as
the "Agreement ". The City agrees and confirms under the Agreement, as amended, to
provide administrative and operational services to the Successor Agency, and the Successor
Agency agrees to pay the City for the cost of all such services to be provided by the City to
and for the Successor Agency in amount equal to each Successor Agency Administrative
Budget prepared pursuant to Section 341770) and approved by the Oversight Board for each
six -month period and fiscal year under the term of this Agreement.
J. The parties intend to further memorialize the loan and the Agreement and to set
forth the terms and conditions thereof.
K. At the time of dissolution, the City had loaned the former Agency $4,650,000
under the Original Agreement for the purposes of permitting the former Agency to complete
the goals and objectives of the South Central Project Area.
L. In accordance with the Dissolution Law and in order to receive Redevelopment
Property Tax Trust Funds ( "RPTTF "), the Successor Agency listed the Original Agreement as
listed on the Recognized Obligation Payment Schedule ( "ROPS ") submitted for approval by
the State of California Department of Finance ( "DoF ").
M. DoF denied the Original Agreement and Working Capital Loan thereunder,
stating it is not an enforceable obligation and indicated the Successor Agency could seek to
reinstate the Original Agreement upon receiving a Finding of Completion ( "Finding ").
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 of Completion ( "Finding ") from DoF under the Dissolution Law.
O. 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 that certain December 31, 2008 Promissory Note between the City and
former Agency, now with the Successor Agency.
P. In response, the City, the Successor Agency and the Tustin Housing Authority
filed a "Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief' with
the Superior Court, County of Sacramento, Case No. 34- 2013 - 80001623 ( "Action ").
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Q. On April 24, 2014, the Superior Court, County of Sacramento issued its ruling in
the Action under which a Writ mandated that DoF issue the Successor Agency its Finding of
Completion, nunc pro tuns as of May 15, 2013.
R. On May 1, 2014, pursuant to the Writ issued by the Court, DoF issued the
Finding of Completion, effective May 15, 2013.
S. On June 19, 2014, the City, the Successor Agency and the Tustin Housing
Authority filed a notice of appeal in response to other findings in the Petition.
T. On July 8, 2014, DoF filed a notice of cross - appeal to challenge the Writ and
judgment in the Action, alleging DoF had abused its discretion in refusing to issue a Finding
until the amount due under the Promissory Note had been remitted.
U. On December 9, 2014, the City and DoF executed a Promissory Note
Settlement Agreement outlining the City's payoff schedule for the Note and DoF's promise to
abandon or dismiss the cross- appeal.
V. On December 12, 2014, DoF filed an abandonment of the cross - appeal and on
December 15, 2014 the abandonment became official and resolved all matters related to the
issuance of the Finding.
W. City and Successor Agency have determined it is necessary and appropriate to
amend and reinstate the Agreement for the Working Capital Loan originally entered into by
and between the City of Tustin and the former Agency as an enforceable obligation by this
First Amendment thereto.
X. Section 34191.4(b) authorizes the City and Successor Agency to re- establish
prior loan agreement(s) between the City and the former Agency as follows:
"(1) Notwithstanding subdivision (d) of Section 34171, upon application by the
successor agency and approval by the oversight board, loan agreements entered into
between the redevelopment agency and the city, county, or city and county that
created by the redevelopment agency shall be deemed to be enforceable obligations
provided that the oversight board makes a finding that the loan was for legitimate
redevelopment purposes.
(2) If the oversight board finds that the loan is an enforceable obligation, the
accumulated interest on the remaining principal amount of the loan shall be
recalculated from origination at the interest rate earned by funds deposited into the
Local Agency Investment Fund [LAIF]. The loan shall be repaid to the city, county, or
city and county in accordance with a defined schedule over a reasonable term of years
at an interest rate not to exceed the interest rate earned by funds deposited into the
Local Agency Investment Fund. The annual loan repayments provided for in the
recognized obligations payment schedules shall be subject to all of the following
limitations:
(A) Loan repayments shall not be made prior to the 2013 -14 fiscal year.
Beginning in the 2013 -14 fiscal year, the maximum repayment amount
authorized each fiscal year for repayments made pursuant to this subdivision
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and paragraph (7) of subdivision (e) of Section 34176 combined shall be equal
to one -half of the increase between the amount distributed to the taxing entities
pursuant to paragraph (4) of subdivision (a) of Section 34183 in that fiscal year
and the amount distributed to taxing entities pursuant to that paragraph in the
2012 -13 base year. Loan or deferral repayments made pursuant to this
subdivision shall be second in priority to amounts to be repaid pursuant to
paragraph (7) of subdivision (e) of Section 34176.
(B) Repayments received by the city, county or city and county that
formed the redevelopment agency shall first be used to retire any outstanding
amounts borrowed and owed to the Low and Moderate Income Housing Fund
[LMIHF] of the former redevelopment agency for purposes of the Supplemental
Educational Revenue Augmentation Fund [SERAF] and shall be distributed to
the Low and Moderate Income Housing Asset Fund established by subdivision
(d) of Section 34176.
(C) Twenty percent of any loan repayment shall be deducted from the
loan repayment amount and shall be transferred to the Low and Moderate
Income Housing Asset Fund, after all outstanding loans from the Low and
Moderate Income Housing Fund for purposes of the Supplemental Educational
Revenue Augmentation Fund have been paid."
Y. In accordance with the Dissolution Law, this Agreement establishing the
amended and reinstated Working Capital Loan will also require the Oversight Board to deem
it an enforceable obligation and then such Agreement for the Working Capital Loan will be
submitted to the DoF for review and approval.
Z. This Agreement sets forth the terms of the reinstated Working Capital Loan with
a remaining principal balance of $4,650,000 with repayments to the City in accordance with a
new, defined repayment schedule over a reasonable term of years, which is set forth in
Exhibit A attached hereto and fully incorporated by this reference, and the interest rate
accruing on such principal shall be at the rate earned by funds deposited into the Local
Agency Investment Fund ( "LAIF) pursuant to Section 34191.4, and establishing other terms
as set forth hereinafter.
AA. The former Agency did not borrow any monies from the from the low to
moderate income housing fund (LMIHF) to make State - mandated ERAF /SERAF payments.
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
considerations contained herein, the City and the Successor Agency hereby agree the
following sections of the Original Agreement shall be amended:
1. Recitals. The City and Successor Agency represent and warrant to each other
that each and all of the respective recitals are true and correct, are a material part hereof,
and are hereby incorporated into this Agreement by reference as if fully set forth and such
Recitals evidence the intent of the parties regarding the Loan.
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2. Modification to the Working Capital Loan and Administrative Services
Agreement.
a. Section 2. The sum loaned to the former Agency is hereby deleted in its
entirety and replaced as follows:
"2. The sum loaned to the Successor Agency is to be repaid to the City as
follows:
a. Pursuant to Section 34191.4(b)(2), interest on $4,650.000 shall
accrue at the monthly rate as reported by the Local Agency Investment Fund
(LAIF) from the date of transfer of until such time is repaid to the City.
b. The sum loaned to the Successor Agency, as well as accrued
interest thereon, shall be repaid to the City by the Successor Agency from
RPTTF received pursuant to Section 34177, 34183, and 34191.4.
C. The sum loaned to the Successor Agency, as well as accrued
interest thereon, shall be paid to the City by the Successor Agency in
accordance with EXHIBIT 'A' — Working Capital Loan Payment Schedule.
Payment shall commence upon and be subject to Oversight Board approval
and DoF approval."
b. Section 3. is hereby deleted in its entirety."
3. Loan Amount. The reinstated Work Capital Loan amount is affirmed; the City
has loaned to the Successor Agency the principal sum of $4,650,000 ( "Loan Amount ").
4. Interest. From the Effective Date, the Loan Amount shall accrue interest at the
LAIF rate of interest, which is the rate earned by the City on other short -term investments of
the City, compounded daily, and as computed by the City's Finance Director.
5. Payment. The Successor Agency agrees to repay the principal and all accrued
interest bi- annually corresponding to the time that is within ten (10) days of the date that the
Successor Agency receives monies allocated from the RPTTF for this Agreement and the
reinstated Working Capital Loan is an enforceable obligation to be listed on the applicable
ROPS for each six -month fiscal period until repaid in full pursuant to the provisions of the
Dissolution Law.
6. Loan for Legitimate Redevelopment Purpose; Submittal of Agreement to
Oversight Board and DoF. The Successor agrees to submit this Agreement to the
Oversight Board for its review, approval and determination that (a) the Working Capital Loan
advanced by the City to the former Agency (now Successor Agency) was made for a
legitimate redevelopment purpose, (b) this Agreement is an enforceable obligation, and
(c) certain other findings. Thereafter, if approved by the Oversight Board, the reinstated
Working Capital Loan and this Agreement shall be submitted to the DoF for its review and
approval pursuant to the Dissolution Law.
7. Successor Aaencv to List AgreemenyworKing capivai Loan as an
Enforceable Oblioation on Each ROPE until the Loan is Repaid. The Successor Agency
agrees to list the Agreement and Working Capital Loan as an enforceable obligation on each
ROPS during each six -month fiscal period until repaid in full pursuant to the provisions of the
Dissolution Law, with the amount of that listed enforceable obligation to be the Loan Amount
(or such lesser amount as remains outstanding.) Section 34179(h) provides that DOF
"may also agree to an amendment to a Recognized Obligation Payment Schedule to reflect a
resolution of a disputed item[.]" In this regard, the Successor Agency intends to seek DOF's
review and determination that this Agreement may be included to ROPS 15 -16A as an
enforceable obligation payable from the RPTTF, even if the Agreement has not been
approved by the DoF at the time that the Successor Agency submits its ROPS 15 -16A.
8. Term. This Agreement shall be in full force and effect from the Effective Date
until such time as the entire Loan Amount of the Working Capital Loan has been repaid in full.
9. General Provisions
9.1. Time. Time is of the essence in this Agreement.
9.2. Notices. Any notice requirement set forth herein shall be deemed to be
satisfied as follows: (i) three (3) days after mailing of the notice first class United States
certified mail, postage prepaid, or (ii) the next business day after the notice or communication
has been delivered by hand or sent by telecopy or overnight delivery service, addressed to
the appropriate party. The designated person for delivery of notices hereunder shall be as
follows: (i) to the Successor Agency Executive Director for notices to Successor Agency, and
(ii) to the City Manager for notices to City.
9.3. Attorneys' Fees. If either party brings an action or proceeding to enforce,
protect or establish any right or remedy hereunder, the prevailing party shall be entitled to
recover from the other party its costs of suit and reasonable attorneys' fees.
9.4. Successors and Assigns. The terms hereof shall be binding upon and
inure to the benefit of the successors and assigns of the Parties.
9.5. Construction of Words. Except where the context otherwise requires,
words imparting the singular number shall include the plural number and vice versa, words
imparting persons shall include firms, associations, partnerships and corporations, and words
or either gender shall include the other gender.
9.6. Partial Invalidity. If any provision of this Agreement shall be declared
invalid, illegal, or unenforceable, then the validity, legality, and enforceability of the remaining
provisions hereof shall not in any way be affected or impaired.
9.7. Severability. If any term, provision, covenant or condition of this
Agreement is determined 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
judicial determination.
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9.8. Governing Law. This Agreement and instruments given pursuant hereto,
if any, shall be construed in accordance with and be governed by the laws of the State of
California.
9.9. Captions and Headings. Captions and headings in this Agreement are
for convenience of reference only, and are not to be considered in construing the Agreement.
9.10. Counterparts. This Agreement may be executed in counterparts, which
when taken together, shall constitute a single signed original as though all Parties had
executed the same page.
9.11. Waivers and Amendments. 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 each of the parties.
9.12. Entire Agreement. This Agreement constitutes the entire agreement by
and between the parties with respect to the subject matter of this Agreement, and may be
amended only in writing.
10. Remedies. In the event of a default, the parties hereto shall be entitled to
pursue any and all remedies available at law or equity under California law for purposes of
enforcing the terms and conditions of this Agreement.
IN WITNESS WHEREOF, the City and the Successor Agency have executed the
First Amendment as of the Effective Date.
CITY:
CITY OF TUSTIN, California municipal
corporatio
By: ....-
Charles E. Puckett, Mayor
[signature block continues on next page]
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[signature block continued from previous page]
ATTEST:
CLERK T CCESSO ENCY
By: e
r
e r y P. Parker
M
Counsel
SUCCESSOR AGENCY:
SUCCESSOR AGENCY TO TUSTIN
COMMUNITY REDEV OPMENT AGENCY,
a public bo
By:
Charles E. Puckett, Chair
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EXHIBIT A
Working Capital Loan Payment Schedule
(ATTACHED)
EXHIBIT A
Page 1 of 1
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