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HomeMy WebLinkAboutNB 1 SO CENT PROJECT 06-07-93AGENDA NEW BUSINESS NO. 1 6-7-93 DATE: JUNE 2, 1993 Inter-Com TO: FROM: SUBJECT: WILLIAM A. HUSTON, CITY MANAGER RONALD A. NAULT, DIRECTOR OF FINANCE APPROVAL OF PUBLIC WORKS AGREEMENT BETWEEN THE CITY OF TUSTIN AND TUSTIN COMMUNITY REDEVELOPMENT AGENCY FOR THE SOUTH CENTRAL PROJECT AREA RECOMMENDATION: The City Council should; make a finding as to the lack of other means of financing this project; make a finding as to the benefit of the Newport Avenue Extension Project to the Project Area as discussed in the staff report and authorize the Mayor to execute the attached Public Works Agreement between the City and the Agency. FISCAL IMPACT: There is no immediate fiscal impact to the City. The Agency will transfer tax increment to the City on an annual basis. The City will accumulate the tax increment, and accrued interest, until such time as sufficient funds are available to proceed with the project. DISCUSSION: The Health and Safety Codes of the State of California govern redevelopment agencies throughout the State. The Code dictates that tax increment revenues generated within a Redevelopment Agency Project Area, can only be transferred to that Agency to the extent that the Agency has incurred debt that will be repaid from the tax increment and, the debt must be equal to or greater than the total tax increment. There are many allowable debt alternatives for an Agency to utilize. The most typical form of debt is the issuance of bonds. Loans between agencies and cities, short term bank loans and even notes between developers and agencies are common debt activities that support an Agency's annual tax increment flow. In the South Central Project Area we have utilized loans between the City and the Agency to secure our annual tax increment. For the 1992-93 fiscal year the City lent the agency $3 million to carry out the purposes of the South Central Project Area. This loan is scheduled to be repaid prior to June 30, 1993. Agency/City Staff has been working with our Redevelopment Consultant, Diane Hadland of Katz Hollis, to review our existing loan agreements between the City and the Agency for the South Central Project Area. The annual loans between the City and Agency were only intended to be used as short term financing vehicles which would allow for small projects to be undertaken in the South Central Project Area and also to accumulate funds for several major projects that have been identified as critical to the future development of the project area. Idle cash in the General fund that is necessary to cover annual cash flow needs, is available for investments and otherwise available for loans to the Agency has been severely impacted by the economy in general and the State of california directly over the past three years. In a subsequent item to be taken up by the Agency, a formal loan agreement between First Interstate Bank and the Agency will be discussed that addresses the immediate short term debt that is required by the Health and Safety Code. The Public Works Agreement brought to the Agency at this time is a commonly used vehicle to facilitate the accumulation of funds for major projects. It also qualifies as a debt under the current definition of the Code. This Agreement addresses the Newport Avenue Extension to Edinger Project within the South Central Project Area. This project was identified' as a necessity to development during negotiations with a major developer on a development agreement which includes a plan for the development of a significant portion of the South Central Project Area. Due to the economic conditions of the past few years the development has not taken place as anticipated but, staff feels that the Agency should continue to take steps to be prepared to make the improvements to the project area that will facilitate future development. As a means to that end, staff and our consultant have prepared the attached Public Works Agreement for review and approval. The Agreement basically says that the City will undertake the public improvements described in Exhibit A on behalf of the Agency and that the Agency will pay the city for these improvements from future tax increments to the South Central Project Area. The Newport Avenue Extension Project, that is briefly described in the Agreement's Exhibit A, has been determined by staff to be the single largest impediment to development within the project area. Current infrastructure inadequacies in the South Central project area in the vicinity of Newport Avenue and Edinger are a major constraint to development and redevelopment. Proper traffic flow, adequate north/south access to the project area and proper alignment of the SR-55 Freeway off ramp are a few of the problems that will be addressed by the proposed project. It has been determined that blighted conditions within the project area, which include under utilized properties, continuity and cohesiveness, would likely not be reversed or alleviated without action by the Agency. New development in the project area would not be able to 2 occur without the infrastructure improvements described in the attached Exhibit A. The improvements will enable parcels to be reconfigured to facilitate redevelopment of the Southerly portion of the South Central Project Area. Future development in the vacinity of the improvements will be obligated to contribute toward these improvements as will be negotiated. Staff has evaluated financing alternatives currently available to the Agency and finds that there are no other means available to finance this project. By making the findings and approving the Agreement as recommended by staff, the Agency and the City will be safeguarding future tax increment accruing to the Agency. Ron~~~ Director of Finance/Treasurer RAN:is PUBLIC WORKS AGREEMENT SOUTH CENTRAL REDEVELOPMENT PROJECT THIS AGREEMENT, entered into this day of , 1993, by and between Tustin community Redevelopment Agency, a public body corporate and politic (the "Agency"); and the City of Tustin, a municipal corporation, (the "City"). Recitals A. By Ordinance No. 891 adopted on July 18, 1983 , the city Council of the City of Tustin adopted and approved a certain Redevelopment Plan (the "Redevelopment Plan") for the South Central Redevelopment Project (the "Project"). B. Pursuant to the Community Redevelopment Law of the State of California (Health and Safety Code Section 33000 et seq.), the Agency is carrying out the Redevelopment Plan for the Project in the Redevelopment Project Area (the "Project Area").to C. Under the Redevelopment Plan, the City shall aid and cooperate with the Agency in carrying out the Project and take actions necessary to ensure the fulfillment of the purposes of the Plan and to prevent the recurrence or spread of conditions causing blight in the Project Area. D. In furtherance of the Project, the Agency and the City desire to enter into an Agreement under which the City will commence the installation and construction of certain street, utility and other public improvements and facilities to serve the Project (the "Improvements") as described in Exhibit A attached hereto and incorporated herein, and the Agency will pay the city for the costs of such improvements by periodic payments over a period of years according to the terms of this Agreement. Eo The Agency and the City Council of the City have determined that the improvements are of benefit to the Project Area and that no other reasonable means of financing such improvements are available to the community. Aqreements The Agency and the City hereby agree as follows: 1. Public Improvement Work. Within the Project Area, the City shall cause to be designed, constructed and installed the street, utility and other public improvements and facilities which are specified in Exhibit A. Said improvements shall be constructed and installed in a satisfactory and proper manner pursuant to plans and specifications prepared by the City and any affected developer. The city may acquire land and other property interests as necessary in order to complete the improvements. (The City's obligation hereunder is conditioned upon the receipt of sufficient funds from the Agency under Section 2 of this Agreement, and the City shall be under no obligation to complete any of the improvements until it has adequate funds therefor.) The parties contemplate that the cost of the improvements will be approximately the amounts shown on Exhibit A, but it is understood that said amounts are estimates only and that the actual costs of any of the improvements will be determined at the time said Improvement is completed and closed out by the City. Upon completion of any of the improvements, the City shall submit a statement to the Agency indicating the actual costs therefor. 2. Payment by the Aqenc¥ In consideration of the undertakings of the City under Section 1 of this Agreement, and after first making adequate provision for the annual payment of principal and interest due on any bonds or other indebtedness of the Agency which may be incurred by the Agency in carrying out the Project and for which the annual tax allocations to the Agency from the Project (the "Tax Allocations") are pledged or committed, the Agency shall advance to the City the sum of $5,000,000 prior to June 30, 1993 and shall pay to the City such Tax Allocations in order to provide the city with sufficient moneys to pay for the cost of the improvements plus accrued interest on unreimbursed accounts due the City pursuant to this Agreement at the rate equal to one-half of one percent (0.5%) above the City's average yield on investments. The Agency shall pay the Tax Allocations to the City in semi-annual installments. The City shall deposit the Tax the Tax allocations into a special fund of the City which shall earn interest. The Agency shall have no liability hereunder except as set forth in this Section 2 after first making adequate provision for annual payments of principal and interest payments on bonds and other indebtedness of the Agency secured by said tax allocations. 3. Indebtedness of Aqenc¥. This Agreement constitutes an indebtedness of the Agency incurred in carrying out the Project, and a pledging of Tax Allocations from the Project to repay such indebtedness, under the provisions of Section 16 of Article XVI of the California Constitution and Sections 33670-33674 of the Health and Safety Code; provided, however, that such pledge of Tax Allocations shall always be subordinate to the right of the Agency to pledge or commit Tax Allocations from the Project to repay bonds or other indebtedness incurred by the Agency in carrying out the Project. 4. Termination of Aqreement This Agreement and the obligations of the city and the Agency hereunder shall terminate upon the completion of the improvements by the city. At such time, any moneys paid by the Agency to the City hereunder and not needed by the City to pay for the improvements, as well as any interest earned on said sums, shall be returned by the City to the Agency. CITY OF TUSTIN Mayor ATTEST: APPROVED AS TO FOP~: City Clerk city Attorney TUSTIN COMMUNITY REDEVELOPMENT AGENCY By¸ Chairman a: socent r [. fda Exhibit A SOUTH CENTRAL PROJECT AREA CRITICAL PUBLIC IMPROVEMENTS AND FACILITIES Project Description: Extension of Newport Avenue South, under an existing railroad right of way and County flood control channel. The project will include the construction of a new on and off ramp configuartion for Newport Avenue and the SR-55 Freeway; the relocation and improvement to water and other utilities and storm drains and other improvements to Edinger Avenue. Estimated Project Costs: Newport Avenue Extension SR-55 Freeway Ramps Utility and Storm Drain Upgrade/Relocation Edinger Avenue Improvements $18,300,000 4,700,000 4,200,000 6,300,000 $33,500,000