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HomeMy WebLinkAbout02 ADOPT OB RESOLUTION NO. 15-06Agenda Item No. 2 AGENDA REPORT Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency MEETING DATE: MAY 28, 2015 SUBJECTIACTION: ADOPT OVERSIGHT BOARD RESOLUTION NO. 15-06, RECONSIDERING, AFFIRMING AND RATIFYING THE AMENDED AND REINSTATED WORKING CAPITAL LOAN AND ADMINISTRATIVE SERVICES AGREEMENT BETWEEN THE CITY OF TUSTIN AND THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY RECOMMENDATION 1 PROPOSED ACTION It is recommended the Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency adopt Oversight Board Resolution No. 15-06, reconsidering, affirming and ratifying the Amended and Reinstated Working Capital Loan and Administrative Services Agreement between the City of Tustin and the Successor Agency to the Tustin Community Redevelopment Agency, subject to the following conditions: 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.) BACKGROUND On September 7, 2010, the Tustin City Council and Tustin Community Redevelopment Agency approved the $4,650,000 Working Capital Loan to the South Central Project Area. The Original Working Capital Loan of $2,400,000 was issued June 12, 1996 for the purposes of permitting the Agency to complete the goals and objectives of the South Central Project Area. The Working Capital Loan carried over each year and the principal balance increased until the final issuance in 2010. Agenda Report May 28, 2015 Page 2 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 February 1, 2012, and the Successor Agency to the Tustin Community Redevelopment Agency became responsible for winding down redevelopment activities in the City of Tustin. 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. The ROPS included a request for Trust Funds to reimburse the City in accordance with the Working Capital Loan. On March 29, 2012, DoF denied the City's request for reimbursement, stating it was not an enforceable obligation. On April 10, 2012, the City protested DoF's denial but did not have any other recourse under the existing statute at that time. 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 believed 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 Successor Agency's May 13`h request. 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 in Sacramento County. On April 24, 2014, the Superior Court issued its ruling in the Petition under which a Writ mandated DoF issue the Successor Agency its Finding, nunc pro tunc as of May 15, 2013. On May 1, 2014, pursuant to the Writ issued by the Court, DoF issued the Finding, effective May 15, 2013. Upon issuance of the Finding, staff and the City Attorney initiated discussions with DoF regarding the Promissory Note. 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. On July 8, 2014, DoF filed a notice of cross-appeal to challenge the judgment that DoF had abused its discretion in refusing to issue a Finding until the amount due under the Promissory Note had been remitted. Agenda Report May 28, 2015 Page 3 Since May 2014, both parties have continued to work towards reaching an agreement on the Promissory Note. On December 9, 2014, the City and DoF executed a Promissory Note Settlement Agreement outlining the payment schedule for the City to pay off the Note and DoF's promise to abandon or dismiss the cross-appeal. On December 12, 2014, DoF filed an abandonment of the cross-appeal and on December 15, 2014 the abandonment became official. On January 27, 2015, the Oversight Board adopted Oversight Board Resolution No. 15- 01, amending and reinstating the Working Capital Loan. The Oversight Board determined the Amended Agreement was a loan that was entered into for legitimate redevelopment purposes. On March 19, 2015, DoF denied the reinstatement of the Working Capital Loan, stating the agreement appeared to be a reimbursement for services, rather than a loan of cash. On April 10, 2015, DoF denied the Working Capital Loan since they had denied Oversight Board Resolution No. 15-01 and indicated that if the Successor Agency provided additional documentation the item may be eligible for funding in future ROPS. The Successor Agency requested a "Meet and Confer' and, on April 27, 2015, presented the additional documentation to DoF. On May 16, 2015, DoF again denied the Working Capital Loan, stating that although the Successor Agency provided documentation supporting the loan of cash, the Oversight Board had not reconsidered the Working Capital Loan. Pursuant to Section 34179(h), the Oversight Board has reconsidered the Amended Working Capital Loan and has determined the following: 1. The Amended Working Capital Loan is a loan as defined by all standards of acceptable legal and business practice; and 2. The loan was for legitimate redevelopment purposes, causing redevelopment in accordance with the South Central Redevelopment Project Area Redevelopment Plan and Implementation Plan. The Oversight Board has determined reconsidering, affirming and ratifying the previously approved and reinstated Amended Working Capital Loan and submission to DoF is in the best interest of the City and Successor Agency and in accord with the public purposes and provisions of applicable state and local laws and requirements. A copy of the First Amendment to the Working Capital Loan and Administrative Services Agreement is attached to Oversight Board Resolution No. 15-06 for Oversight Board approval. Staff is available to answer any questions the Oversight Board may have. Attachment: Oversight Board Resolution No. 15-06 OVERSIGHT BOARD RESOLUTION NO. 15-06 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY RECONSIDERING, AFFIRMING AND RATIFYING THE AMENDED AND REINSTATED WORKING CAPITAL LOAN AND ADMINISTRATIVE SERVICES 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 City of Tustin ("City") is a municipal corporation organized and operating under the laws of the State of California; and B. 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 C. Assembly Bill x1 26 ("AB x1 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. S194861, 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 and subsequent legislation (together AB x126, the Matosantos Decision, and subsequent legislation are referred to as the "Dissolution Law"). All statutory references herein are to the Health and Safety Code of the Dissolution Laws unless otherwise stated; and D. As of February 1, 2012 the former Agency was dissolved pursuant to the Dissolution Law 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 E. 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 Oversfght Board Resolution 15-06 Page 1 of 4 F. Section 34177(a) permits the Successor Agency to make payments due for enforceable obligations; and G. Section 34177(1) requires the Successor Agency to prepare a Recognized Obligation Payment Schedule ("ROPS") before each six-month fiscal period that lists its Enforceable Obligations; and H. Section 34191.4(b) authorizes the City and Successor Agency to reestablish prior loan agreements between the City and the former Agency; and I. On June 12, 1996, the Tustin City Council and Tustin Community Redevelopment Agency approved a $2,400,000 Working Capital Loan and Administrative Services Agreement ("Working Capital Loan") to the South Central Project Area for the purposes of permitting the Agency to complete the goals and objectives of the South Central Project Area; and J. The Working Capital Loan carried over and increased as needed from year-to-year until the final issuance of $4,650,000 on September 7, 2010; and K. In accordance with the Dissolution Act and in order to receive Redevelopment Property Tax Trust Funds, the Successor Agency submitted the Working Capital Loan on the Recognized Obligation Payment Schedule for approval by the State of California Department of Finance ("DoF"); and L. DoF denied the Working Capital Loan, stating it is not an enforceable obligation and indicated the Successor Agency could seek to reinstate the Loan 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 filed a "Petition for Writ of Mandate and Complaint for Declaratory and Injunctive Relief' from the Superior Court of the State of California; and P. On April 24, 2014, the Superior Court, County of Sacramento issued its ruling in the Petition Case No. 34-2013-80001623 under which a Writ mandated DoF issue the Successor Agency its Finding of Completion, nunc pro tunc as of May 15, 2013; and Q. On May 1, 2014, pursuant to the Writ issued by the Court, DoF issued the Finding of Completion, effective May 15, 2013; and Oversight Board Resolution 15-48 Page 2 of 4 R. 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; and S. On July 8, 2014, DoF filed a notice of cross-appeal to challenge the judgment that DoF had abused its discretion in refusing to issue a Finding until the amount due under the Promissory Note had been remitted; and T. 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; and U. On December 12, 2014, DoF filed an abandonment of the cross-appeal and on December 15, 2014 the abandonment became official; and V. On January 27, 2015, the Oversight Board duly considered all other related matters and found the Amended Working Capital Loan was for legitimate redevelopment purposes and deemed the Amended Working Capital Loan an enforceable obligation by adopting Oversight Board Resolution No. 15-01; and W. On March 19, 2015, the DoF did not approve Oversight Board Resolution No. 15-01, stating the Loan was for services and it did not involve an exchange of cash, and returned it to the Oversight Board for reconsideration; and X. On April 10, 2015, the DoF did not approve the Amended Working Capital Loan listed on ROPS 15-16A, stating that it was not a loan of cash but an agreement for services between the City and former Redevelopment Agency; and Y. On April 27, 2015, the Successor Agency met with DoF during a "Meet and Confer" and presented documentation demonstrating the City loaned cash to the former Redevelopment Agency; and Z. On May 15, 2015, the DoF acknowledged the Loan was an exchange of cash but denied the Amended Working Capital Loan since the Oversight Board had not reconsidered the Loan after DoF did not approve Oversight Board Resolution No. 15-01; and AA. The City, acting as Successor Agency, has determined it is necessary and appropriate to amend and reinstate the Working Capital Loan originally entered into by and between the City of Tustin and the former Tustin Community Redevelopment Agency as an enforceable obligation; and BB. The Oversight Board has duly reconsidered all other related matters and finds the Working Capital Loan is a loan and the loan was for legitimate redevelopment purposes and deems the Working Capital Loan an enforceable obligation; and CC. The Oversight Board has determined reaffirming and re -ratifying the previously approved Amended Working Capital Loan and submission to DoF is in the best interest of the City and Agency and in the health, safety, and welfare of its residents, Oversight Board Resolution 15-06 Page 3 of 4 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: Section 1. The foregoing recitals are incorporated into this Resolution by this reference, and constitute a material part of this Resolution. Section 2. Pursuant to Section 34191.4 of the Dissolution Law, the Oversight Board finds and determines: (i) the Working Capital Loan was entered into for legitimate redevelopment purposes, and (ii) the reinstated loan is an enforceable obligation. Section 3. The Oversight Board, in reconsideration, reaffirms and ratifies the previously approved and reinstated First Amendment to the Working Capital Loan attached hereto as Attachment No. 1 and incorporated herein, and further authorizes the Successor Agency to transmit this Resolution to the DoF. Section 4. The Executive Director of the Successor Agency or his authorized designee is directed to post this Resolution on the City/Successor Agency website. Section 5. 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 the Dissolution Law. 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 6. The Secretary of the Oversight Board shall certify to the adoption of this Resolution. APPROVED AND ADOPTED this 28thday of May, 2015. Doug Davert, Chairman Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency FUNiN&W Charles E. "Chuck" Puckett, Secretary Oversight Board of the Successor Agency to Oversight Board Resolution 15-06 Page 4 of 4 the Tustin Community Redevelopment Agency Oversight Board Resolution 15-06 Page 5 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. 15-06 was duly passed and adopted at a regular meeting of the Oversight Board, held on the 28thday of May, 2015, by the following vote: BOARD MEMBER AYES: BOARD MEMBER NOES: BOARD MEMBERS ABSTAINED: BOARD MEMBERS ABSENT: Charles E. "Chuck' Puckett, Secretary Oversight Board of the Successor Agency to the Tustin Community Redevelopment Agency Attachment — First Amendment to the Working Capital Loan and Administrative Services Agreement Oversight Board Resolution 15-06 Page 6 of 4 ATTACHMENT FIRST AMENDMENT TO THE WORKING CAPITAL LOAN AND ADMINISTRATIVE SERVICES AGREEMENT 'WORKING CAPITAL LOAN" FIRST AMENDMENT TO THE WORKING CAPITAL LOAN AND ADMINISTRATIVE SERVICES AGREEMENT "WORKING CAPITAL LOAN" (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 Califomia Redevelopment Association, et at v. Ana Matosantos, et at, Case No. 8194861 ("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") 1 977646.1 OOCS001691883 v2l200350-0009 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. 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 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"). 2 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 tunc 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 (LAIFj. 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 3 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 [LM1HF] 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 34194.4, 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 ERAFISERAF 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. 4 2. Modification to the Workina Capital Loan and Administrative Servi es 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 3419.1.4. 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 Amou t. 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-Lealtimate R2dqvelopment Purpose: Smbmi11111 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. 5 7. Successor Aaency to List Agreement/Working Agreement/WorkingCa ital Loan as an Enforceable Obligation on Each ROPS 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 Do at the time that the Successor Agency submits its ROPS 15-16A. B. 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. 6 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. 9.91. 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 corporatia By: Charles E. Puckett, Mayor ATTEST: CITY CL By: G /efeJ C. Parker APP VEDA TO OR '77, By:A 10 David E. Kendig, ltlwq. City Attorney [signature block continues on next page] [signature block continued from previous page] ATTEST: CLERK T CCESSO ENCY By: e e y . Parker APPROVED By: Counsel SUCCESSOR AGENCY: SUCCESSOR AGENCY TO TUSTIN COMMUNITY REDEV OPMENT AGENCY, a public o By: Charles E. Puckett, Chair EXHIBIT A Working Capital Loan Payment Schedule (ATTACHED) EXHIBIT A Page 1 of 1 I rt .. .. .. .. ..