HomeMy WebLinkAboutPH 3 TOWN CTR PROJ 08-17-81 CITY COUNCIL PUBLIC HEARING
No. 3
8-17-81
DATE: August 17, 1981 Inter-Corn
TO:
FROM:
SUBJECT:
Redevelopment Agency and City Council
R. Kenneth Fleagle, Community Development Consultant
Amendment to Redevelopment Plan, Town Center Project Area
RECOMMENDED ACTION
Following the joint public hearing at 7:30 p.m. on August 17, 1981,
it is recommended that the Redevelopment Agency and City Council as
a joint agency:
1. Adopt Resolution No. 81-94.
2. Introduce Ordinance No. 855, amending the financing plan for
the Town Center Area Redevelopment Project.
BACKGROUND
Pursuant to Section 33359, Health and Safety Code, when a joint
public hearing is held where the City Council is also the Agency,
action to approve and adopt the plan need be taken only by the City
Council.
An amendment to the redevelopment finance plan was advertised for
July 20, 1981. The law requires three consecutive hearings which
would have required continuing the hearing to August 3, 1981. The
initial notice proposed increasing the annual tax increment from
$600,000. to $1,500,000. and the limitation on bonded indebtedness
from $6.5 million to $10 million.
The City Council on July 20 directed that the annual tax increment
be increased to a $3 million annual ~imitation and an outstanding
bonded indebtedness of $20 million.
The proposal was readvertised in the Tustin News on July 23, 30 and
August 6, 1981. Notice was mailed to all property owners within
the redevelopment area and by certified mail to all taxing
agencies.
The Town Center Redevelopment Plan was adopted by Ordinance No. 701
on November 22, 1976. The financial limitations of the plan
restricted tax increment average revenues to $600,000 per year and
bonded indebtedness to $6.5 million. At that time land could be
purchased for $1.00 per sq. ft. and bonds sold with 6 1/2%
Amendment to Redevelopment Plan,
Town Center Project Area
August 17, 1981
Page Two
interest. Property values now exceed $20 per sq. ft. and interest
rates have increased three-fold. Incremental tax revenue amounted
to $208,791 the first year of the agency's life and $712,238 for
1980-81. By 1983-84 the tax increment will exceed the $600,000
yearly average. The financial plan is obsolete based upon trends
and pro~s.
DISCUSSION
Existing law restricts interest rates on redevelopment bonds to
10%. There are no bonds being issued presently at this rate except
for short term (4 year) or with bond insurance. It was anticipated
that interest rates would lower in the Fall of 1981 making
redevelopment bonds marketable at the 10% rate. Tax increment
revenues of $1.5 million would finance a $10 million bond issue.
The Council was furnished a report from Dr. A1 Gober showing the
amount of bonded indebtedne.ss that can be financed under various
alternatives. Unless there is a change in the prime rate or state
law, bonded indebtedness is a moot point. The legislature refused
to increase the maximum interest rate above 10% for redevelopment
bonds. For the immediate future, the Redevelopment Agency will be
restricted to current revenues.
There is a body of legal opinion that the City's redevelopment
finance plan may be amended without being subject to the 1976
legislative amendments that required the 20% set aside for housing
and the finance review committee of the county. If the plan were
to be amended to increase the project area, it would then be
subject to the Montoya Bill requiring the 20% set aside. This
amendment does not increase the size of the project.
Section 33367(f) of the Health and Safety Code requires the Council
to state that it is convinced that the effect of tax increment
financing will not cause a severe financial burden or detriment on
any taxing agency deriving revenues from a tax increment project
area. The Council can make this finding on the basis of the
diminished reliance of other agencies upon the property tax and the
decline of services by other agencies to the area. The
justification for the proposed increase in the limitation on the
tax increment is due to inflationary factors which prohibit
achieving the objective of the redevelopment plan.
Amendment to Redevelopment Plan,
Town Center Project Area
August 17, 1981
Page Three
Upon approval and validation of this amendment, the Redevelopment
Agency and Council wilq be presented a program for consideration to
create other project areas and to finance improvements within the
Town Center area.
RKF/dat
Enclosure:
Revenue Projections
Resolution No. 81-94
Ordinance No. 855
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RESOLUTION NO. 81-94
A JOINT RESOLUTION OF THE REDEVELOPMENT AGENCY
AND CITY COUNCIL OF THE CITY OF TUSTIN RECOMMENDING
AMENDING THE FINANCIAL PLAN FOR THE TOWN CENTER AREA
REDEVELOPMENT PROJECT
The Redevelopment Agency and City Council of the City of Tustin
does hereby resolve as follows:
I. The Redevelopment Agency and City Council finds and determines
as follows:
ae
be
A Redevelopment Plan was approved and adopted by the City
Council of the City of Tustin by Ordinance No. 701 on
November 12, 1976 for the Town Center Area Redevelopment
Project.
Title VI (Sec. 600) LIMITATION ON FINANCES of said plan
established a limitation of $600,000.00 in the average
yearly tax increment which may be collected and allocated
to projects and programs within the project area.
Title VII (Sec. 700) LIMITATION ON BONDED INDEBTEDNESS of
said plan established a maximum of $6.5 million of
outstanding bonded indebtedness to be paid for through tax
increment funds.
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The Redevelopment Plan for the Town Center project Area is
for the purpose of eliminating and preventing the spread
of blight and deterioration in the project area by the
acquisition and development of properties and the
construction of public buildings and improvements.
The redevelopment plan was adopted prior to Proposition 13
when tax increments bore a relationship to increasing
property values. The Redeveloment Plan was adopted when
land within the project area could be purchased for $1.00
per square foot and redevelopment bonds could be marketed
at 6 1/2% interest. The first years property tax increment
from the project area amounted to $210,320. Subsequent to
the original adoption of the redevelopment plan the market
value of land has increased 20 times and interest rates
have increased three-fold thereby making obsolete .the
financing limitations for tax incremental revenues and the
amount of bonded indebtedness to achieve the objectives of
the redevelopment plan.
An amendment to the financing plan for the Town Center
Project Area is essential to carry out the intent and
purpose of the redevelopment plan.
The Redevelopment Plan as adopted satisfies the
requirements of Section 33367 of the Health and Safety
Code of the State of California.
Resolution No. 81-92
Page Two
he
A public hearing was duly noticed and jointly held by the
Redevelopment Agency and City Council at 7:30 p.m. on
August 17, 1981.
II. The Redevelopment Agency and City Council of the City of
Tustin, pursuant to Section 3345 of the Health and Safety Code
of the State of California, hereby resolves that Titles VI and
VII of the Redevelopment Plan for the Town Center Area
Redevelopment Project should be amended to read as follows:
VI. (Sec. 600) LIMITATIONS ON FINANCES
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As required by law the Agency establishes a limitation
on itself as to the amount of tax increment dollars
which it may collect and allocate to projects and
programs within the project area. The average yearly
tax increment which
$3 million. Dollar
yearly figure shall
taxing agencies who
generated below the
may be collected shall not exceed
amounts in excess of this average
revert back to the individual
are collecting those taxes
incremental level. This
limitation does not apply to funds received by the
Agency in the form of gifts, loans; from the sale of
property or services or from funds obtained from
services other than tax increment financing.
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The length of time that the Town Center Project Area
exists shall not exceed thirty years. No loans,
advances, bonds, and other forms of indebtedness
necessary to finance this plan, shall be incurred or
established by the agency beyond the period of 30
years from the adoption of the Ordinance approving the
Redevelopment Plan. This limitation on the time of
indebtedness shall not be construed to place any
limitation on the formation or financing of another
Redevelopment Project Area.
VII. (Sec. 700) LIMITATION ON BOND INDEBTEDNESS
The Town Center Redevelopment Area may not exceed $20
million of outstanding bonded indebtedness to be paid for
through tax increment funds. This limitation may not be
exceeded unless there is an amendment to the Redevelopment
Plan.
PASSED AND ADOPTED at a joint meeting of the Redevelopment Agency
and City Council held on the 17th day of August, 1981.
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ATTEST:
Mary E. Wynn
City Clerk
James B. Sharp
Chairman and Mayor
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ORDINANCE NO. 855
AN ORDINANCE OF THE CITY COUNCIL OF THE
CITY OF TUSTIN, CALIFORNIA, AMENDING THE
FINANCIAL LIMITATIONS OF THE REDEVELOPMENT
PLAN FOR THE TOWN CENTER AREA REDEVELOPMENT
PROJECT
The City Council of the City of Tustin, California, hereby ordains
that Title VI (Sec. 600) LIMITATIONS ON FINANCES Title VII (Sec.
700) LIMITATION ON BONDED INDEBTEDNESS of the Redevelopment Plan
for the Town Center Area Redevelopment Project be amended as
follows:
1. Title VI is hereby amended to read as follows:
VI. (Sec. 600) LIMITATIONS ON FINANCES
As required by law, the Agency establishes a limitation on
itself as to the amount of tax increment dollars which it
may collect and allocate to projects and programs within
the project area. The average yearly tax increment which
may be collected shall not exceed $3 million. Dollar
amounts in excess of this average yearly figure shall
revert back to the individual taxing agencies who are
collecting those taxes generated below the incremental
level. This limitation does not apply to funds received
by the Agency in the form of gifts, loans; from the sale
of property or services or from funds obtained from
services other than tax increment financing.
The length of time that the Town Center Project Area
exists shall not exceed thirty years. No loans, advances,
bonds, and other forms of indebtedness necessary to
finance this plan, shall be incurred or established by the
agency beyond the period of 30 years from the adoption of
the Ordinance approving the Redevelopment Plan. This
limitation on the time of indebtedness shall not be
construed to place any limitation on the formation or
financing of another Redevelopment Project Area.
2. Title VII is hereby amended to read as follows:
VII. (Sec. 700) LIMITATION ON BONDED INDEBTEDNESS
The Town Center Redevelopment Area may not exceed $20 million
of outstanding bonded indebtedness to be paid for through tax
increment funds. This limitation may not be exceeded unless
there is an amendment to the Redevelopment Plan.
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Ordinance 855
Page Two
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The findings required by Section 33367 of the Health and Safety
Code of the State of California and as contained in City of
Tustin Ordinance No. 701 are reaffirmed including the finding
that the City Council is convinced that the effect of tax
increment financing will not cause a severe financial burden or
detriment on any taxing agency deriving revenues from the tax
increment project area.
This amendment pertains only to the finance plan for subject
redevelopment project area and does not include a change in the
boundaries of the project area to add land to or exclude land
from the project area.
PASSED AND ADOPTED at a regular meeting of the City Council, City
of Tustin, California, held on the day of 1981.
ATTE ST:
James B. Sharp
Mayor
Mary E. Wynn
City Clerk
JOINT
NOTICE OF PUBLIC HEARING
TO AMEND THE FINANCE PLAN
OF THE CITY OF TUSTIN REDEVELOPMENT PLAN
Notice is hereby given that the tiLT of Tustin Redevelopment Agency
and City Council will hold a joint public hearing on August 17, 1981
at 7:30 p.m., in the Council Chambers at 300 Centennial Way. This
hearing was initially adver:ised for July 20 and has been continued
to August i7 to consider the following:
An amendment to Paragraph VI (Sec. 600) Limitations on
Finances of the Redevelopment Plan for the Town Center Area
Redevelopment Project to increase the average yearly tax
increment which may be collected from the amount of
$600,000 to $3 million.
An amendment to Paragraph VII (Sec. 700) Limitation on
Bonded Indebtednes~ of the Redevelopment Plan for the Town
Center ReUevelopmept Project to increase outstanding bonded
indebtedness from the maximum of $6.5 million to $20
million.
The above proposed amendment~ will not increase the tax assessments
for any property owner within the City but will authorize a greater
portion of the taxes collected within the project area to be
returned directly to the area for redevelopment.
For further information, contact Dr. Ken Fleagle, Redevelopment
Coordinator, Tustin City Hall, 544-8890, extension 253.
Publish Tustin News
July 23, 30 and August 6, 1981
Mary Wynn
City Cler~