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HomeMy WebLinkAbout02 SUCCESSOR AGENCY APROVAL OF AN AMENDED ADMINISTRATIVE BUDGET & AUTHORIZATION TO ENTER INTO A THIRTEETH AMENDED AGREEMENT BETWEEN THE CITY & SUCCESSOR AGENCY FOR ADMINISTRATIVE SUPPORTAGENDA REPOR MEETING DATE: MAY 15, 2018 TO: JEFFREY C. PARKER, CITY MANAGER Agenda Item SA 2 Reviewed: City Manager Finance Director/A FROM: SUCCESSOR AGENCY AND FINANCE DEPARTMENT SUBJECT: SUCCESSOR AGENCY APPROVAL OF AN AMENDED ADMINISTRATIVE BUDGET AND AUTHORIZATION TO ENTER INTO A THIRTEENTH AMENDED AGREEMENT BETWEEN THE CITY AND SUCCESSOR AGENCY FOR ADMINISTRATIVE SUPPORT SUMMARY: Successor Agency approval is requested of an amended Administrative Budget and authorization for the City and Successor Agency to enter into a Thirteenth Amended Agreement for reimbursement of administrative support. RECOMMENDATION: 1. It is recommended the City, acting as the Successor Agency to the Tustin Community Redevelopment Agency ("Successor Agency"), take the following actions: A. Approve the attached amended Administrative Budget pursuant to California Health and Safety Code (HSC) Section 341770). Should any subsequent modifications be determined necessary, the City Manager and/or Finance Director, or their authorized designee, shall be authorized to make augmentation, modification, additions, or revisions as may be necessary subject to Oversight Board approval. B. Approve and authorize the Successor Agency to enter into an Agreement for Reimbursement of Costs and City/Successor Agency Operations Loan with the City for reimbursement of costs incurred by the City to support Successor Agency operations, obligations consistent with the Administrative Budget approved by the Successor Agency. The Successor Agency shall also be authorized to enter into any agreements necessary to provide administrative support services as identified in the Administrative Budget attached hereto. Agenda Report May 15, 2018 Page 2 FISCAL IMPACT: Pursuant to Health and Safety Code ("HSC") Section 34171, the Thirteenth Amended Agreement will annually capture $80,000 in administrative costs in order for the Successor Agency to reimburse the City. COORELATION TO THE STRATEGIC PLAN: The Administrative Budget and Thirteenth Amended Agreement for Reimbursement of Costs are consistent with City's value of Fiscal Stewardship. While adhering to the fiscal limitations placed on the Successor Agency by the dissolution of Redevelopment, the Administrative Budget and Amended Agreement exercise the fiscal discipline necessary to live within our means and to ensure future financial sustainability. BACKGROUND: Pursuant to HSC Section 34191.6(a), the Successor Agency may submit a "Last and Final" Recognized Obligation Payment Schedule ("ROPS") as long as the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules for debt service, loan agreements and contracts. The Thirteenth Amended Agreement, including the amended Administrative Budget, is for the administrative costs associated with the Last and Final ROPS. The Last and Final ROPS is for Fiscal Years ("FY") 2019-20 through FY 2040-41. In preparing the Last and Final ROPE, HSC Section 341770) requires the Successor Agency develop a proposed administrative budget and submit it to the Oversight Board for approval. The Successor Agency has prepared an amended administrative budget which includes all of the following: (i) estimated amounts of the Successor Agency's administrative costs; (ii) the proposed sources of payment for the costs identified in (i); and (iii) proposals for arrangements for administrative and operations services provided by the city, county, city and county, or other entity. Pursuant to HSC Section 34171, the Administrative Budget for FY 2019-20 through FY 2040-41 is payable from property tax revenues of up to three percent (3%) of property tax allocated to the Redevelopment Obligation Retirement Fund during each Fiscal Year. In any event, the amount allocated for administrative costs shall not be less than Two Hundred Fifty Thousand Dollars ($250,000) for any fiscal year unless approved by the Successor Agency and Oversight Board. In consideration of the reduced administrative activity associated with one remaining enforceable obligation, the Series 2016 Tax Allocation Refunding Bonds, staff is recommending Eighty Thousand Dollars ($80,000) be allocated for administrative costs. Agenda Report May 15, 2018 Page 3 In conjunction with the past approvals of the Administrative Budget for FY 2011-12, 2012-13, 2013-14, 2014-15, 2015-16, 2017-18, and 2018-19 including each six month ROPS time frame, the City and Successor Agency entered into an Agreement for reimbursement of costs incurred by the City to support Successor Agency operations and obligations. The Oversight Board has previously authorized the Successor Agency to enter into subsequent amendments to this agreement to reflect the revised Administrative Budgets modified in conjunction with approval of the ROPS. The proposed Administrative Budget reflects a $80,000 twelve-month, administrative cost distribution for each FY from FY 2019-20 to 2039-40 and $40,000 for a six-month, administrative cost distribution for FY 2040-41. The Successor Agency will present the Amended Agreement to the Oversight Board for their approval on May 22, 2018. A copy of the amended agreement is attached for Successor Agency approval. Staff are available to answer any questions the Successor Agency may have. ;� John Buchanan Jerry Craig co mic Development & Finance Director Deputy DirVagen r-Ec /n96 Development Successor Agency to the Tustin Successo, to the Tustin Community Redevelopment Agency `�wra-Un`it development Agency Attachments: 1. Proposed Administrative Budget for July 1, 2019 through December 31, 2040. 2. Proposed City and Successor Agency Thirteenth Amended Agreement for Reimbursement of Costs for Fiscal Years 2019-20 through 2040-41. BUDGET FOR ADMINISTRATIVE EXPENSES (JULY 2019 THRU DEC 2040) SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY ESTIMATED REVENUES Object Code Position Percent to Admin Total FY - Admin Costs FISCAL YEAR - JULY THRU JUNE 1 3,378,723$ 3,378,723 Average Redevelopment Property Tax Trust Funds (RPTTF) allocated to Successory Agency 3,378,723 4 Administrative Cost Allowance (HSC Section 34171(b)(3)), 3% of RPTTF or, at minimum, $250,000 2%80,000$ 80,000 ESTIMATED EXPENSES EMPLOYEE DETAILS Object Code Position Fiscal Year - Total Wages, Benefits and Workers Comp Percent to Admin Total FY - Admin Costs JULY THRU JUNE Sub-Total Wages, Benefits and WC: $ 14,000 100% $ 14,000 $ 14,000 OTHER ADMINISTRATIVE DIRECT COSTS Object Code Item Total During Fiscal Year Percent to Admin Total FY - Admin Costs JULY THRU JUNE 1 6147 Bank Service Charges 3,000 100%3,000 3,000 2 6355 Telephone 200 100%200 200 3 6400 Office Supplies 100 100%100 100 4 6415 Mail and Postage Service 100 100%100 100 5 6420 Printing 100 100%100 100 6 6710 Meetings (staff)0 100%0 0 7 6715 Training Expense 0 100%0 0 8 6730 Membership/Subscriptions 0 100%0 0 9 6840 Vehicle Mileage 0 100%0 0 10 6845 Vehicle Lease Equipment 0 100%0 0 11 6848 IT Support Services 500 100%500 500 Sub-Total Admin Cost Allowances: $ 4,000 $ 4,000 $ 4,000 CITY ADMINISTRATIVE SUPPORT COSTS BASED ON COST ALLOCATION (ATTACHED) Object Code Item Total During Fiscal Year Total FY - Admin Costs JULY THRU JUNE 1 City Administrative Support Costs based on Cost Allocation 50,000 54.0%27,000 27,000$ CITY ATTORNEY (contract services) Object Code Description of Services Total During Fiscal Year Percent to Admin Total FY - Admin Costs JULY THRU JUNE 6017 City Attorney's Office - Woodruff, Spradlin & Smart (Including: Stradling Yocca Carlson & Rauth; Richards, Watson & Gershon; Remy, Thomas, Moose & Manley; Waters & Company; and Jeanette Justus). This does not include legal services from the following firms that are associated with project costs: 1) Armbruster Goldsmith & Delvac LLP; 2) Cappello and Noel LLP, and 3) Kutak Rock. 10,000$ 100%10,000$ 10,000$ Sub-Total City Attorney: $ 10,000 $ 10,000 $ 10,000 SPECIFIC SERVICES Object Code Description Total During Fiscal Year Percent to Admin Total FY - Admin Costs JULY THRU JUNE 1 Bond Administration $ 25,000 100% $ 25,000 25,000 Sub-Total Specific Services: $ 25,000 $ 25,000 $ 25,000 TOTAL ADMINISTRATIVE SERVICE COSTS Percent to Admin Total FY - Admin Costs JULY THRU JUNE TOTAL ADMINISTRATIVE SERVICE COSTS $ 80,000 $ 80,000 BUDGET - REVENUES (SURPLUS)/EXPENSES (DEFICIT)0 $ - Average Series 2016 Tax Allocation Refunding Bond Payment during FY 2019/20 thru 2040/41 Page 1 THIRTEENTH AMENDED AGREEMENT FOR REIMBURSEMENT OF COSTS AND CITY/SUCCESSOR AGENCY OPERATIONS LOAN This THIRTEENTH AMENDED AGREEMENT FOR REIMBURSEMENT OF COSTS AND CITY/SUCCESSOR AGENCY OPERATIONS LOAN (“Thirteenth Amended Agreement”) is made and entered into as of May 22, 2018, by and among the CITY OF TUSTIN, a California municipal corporation (“City”), and the CITY OF TUSTIN ACTING AS SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY (“City Successor Agency”). R E C I T A L S A. The Tustin Community Redevelopment Agency (“Agency”) was established as a community redevelopment agency that was previously organized and existing under the California Community Redevelopment Law, Health and Safety Code Sections 33000, et seq. (“CRL”), and previously authorized to transact business and exercise the powers of a redevelopment agency pursuant to action of the City Council (“City Council”) of the City. B. The Tustin Housing Authority is a housing authority and public body corporate and politic organized, existing, and operating pursuant to the California Housing Authorities Law, Health and Safety Code Section 34200, et seq. C. Assembly Bill 1X 26 added Parts 1.8 and 1.85 to Division 24 of the California Health & Safety Code, which laws caused the dissolution and wind down of all redevelopment agencies (“Dissolution Act”). D. On December 29, 2011, California Redevelopment Association, et al. v. Matosantos, Case No. S194861, the California Supreme Court upheld the Dissolution Act and thereby all redevelopment agencies in California are subject to the Dissolution Act and were dissolved effective February 1, 2012. E. The Agency is now a dissolved community redevelopment agency pursuant to the Dissolution Act. F. By a resolution considered and approved by the City Council at an open public meeting on January 17, 2012, the City chose to become and serve as the “City Successor Agency” to the dissolved Agency under the Dissolution Act. G. As of and on and after February 1, 2012, the City serves as the “City Successor Agency” and will perform its functions as the successor agency under the Dissolution Act to administer the enforceable obligations of the Agency and otherwise unwind the Agency’s affairs, all subject to review and approval by a seven-member Oversight Board formed thereunder. H. By a resolution considered and approved by the City Council at an open public meeting on January 17, 2012, and pursuant to California Health and Safety Code Section 34176 of the Dissolution Act, the City declined to assume the housing assets and functions of the Agency and selected the Tustin Housing Authority to assume such housing assets and functions, and on such date, also pursuant to Section 34176, the Tustin Housing Authority accepted and assumed the housing assets and functions of the Agency and as of February 1, 2012 became and serves as the “Successor Housing Agency” of the former Agency pursuant to the Dissolution Act. At this time, assets Page 2 assigned and transferred by operation of law and to be assigned and transferred to the Successor Agency by authorization of and direction from the Oversight Board and operating pursuant to the Dissolution Act, are not adequate to fund administrative support costs and expenses unless any future Low and Moderate Income Housing fund balances are authorized to be transferred under State Law to the Successor Housing Agency. If this occurs, a future modification to this Agreement may be necessary. I. City as the Successor Agency is engaged in activities necessary and appropriate to wind down the activities of Tustin Community Redevelopment Agency’s Redevelopment Plans (“Redevelopment Plans”) for the MCAS Tustin Project, the Town Center Project and the South Central Project (“Project Areas”) that were originally adopted and amended by ordinances of the City Council. J. Employees of the City will perform day-to-day administration and operation of the Successor Agency’s duties and functions. Since the Tustin Community Redevelopment Agency was originally formed and upon Successor Agency’s effectiveness as of February 1, 2012, the City has provided and shall continue to provide services to the Successor Agency, including but not limited to providing administrative, accounting, auditing, planning, engineering, legal, risk management, financial, clerical, recordkeeping, and other services necessary for the Successor Agency to carry out its responsibilities. K. City and City Successor Agency entered into an Agreement for Reimbursement of Costs and City/Successor Agency Operations Loan on March 20, 2012 (the “Original Agreement”), as amended by the First Amended Agreement on April 17, 2012, the Second Amended Agreement on June 19, 2012, the Third Amended Agreement on August 14, 2012, the Fourth Amended Agreement on February 19, 2013, the Fifth Amended Agreement on September 24, 2013, the Sixth Amended Agreement on February 25, 2014, the Seventh Amended Agreement on September 30, 2014, the Eighth Amended Agreement on February 24, 2015, the Ninth Amended Agreement on September 22, 2015, the Tenth Amended Agreement on January 26, 2016, the Eleventh Amended Agreement on January 24, 2017 and the Twelfth Amended Agreement on January 23, 2018 (the Original Agreement and all amendments shall be collectively referred to as the “Agreement”) to document an on-going cooperative arrangement regarding administrative and operational services and payment for services whereby City agrees to provide administrative and operational services and City Successor Agency agrees to pay City for the cost of all such services to be provided by City for City Successor Agency pursuant to California Health and Safety Code Section 34177 (j). L. Pursuant to Health and Safety Code (HSC) Section 34180(e), the Oversight Board, on May 29, 2012, approved the acceptance of financial assistance for the Phase 1 and Phase 2 Tustin Ranch Road Improvements Project conditioned upon the provision of matching funds to the City from the MCAS Tustin 2010 Tax Allocation Bonds by the Successor Agency. In compliance with HSC Section 34180(h), the Oversight Board also authorized the Successor Agency to enter into an amended reimbursement agreement with the City for the Successor Agency’s matching contribution to the Tustin Ranch Road Improvements Project in the amounts of $5,983,863 for Phase 1 and $8,164,931 for Phase 2 to be disbursed from MCAS Tustin 2010 Tax Allocation Bonds to the City. M. On December 18, 2012, the Department of Finance issued a determination denying the Successor Agency’s use of MCAS Tustin 2010 Tax Allocation Bonds to provide a matching contribution to the Tustin Ranch Road Improvements Project and, consequently, the Agreement has been modified to delete the reference under Section 1.2. Page 3 N. Pursuant to HSC Section 34191.6(a), the City Successor Agency may submit a “Last and Final” Recognized Obligation Payment Schedule (“ROPS”) as long as the remaining debt is limited to administrative costs and payments pursuant to enforceable obligations with defined payment schedules including, but not limited to, debt service, loan agreements and contracts. The Thirteenth Amended Agreement is for the administrative costs associated with the Last and Final ROPS for the period of July 1, 2019 through December 31, 2040. O. The City Successor Agency will seek Oversight Board authorization on May 22, 2018, to enter into an Amended Agreement for Reimbursement of Costs with the City to reflect modifications to the Administrative Budget. NOW, THEREFORE, for and in consideration of the mutual promises, covenants and conditions herein contained, the parties hereto agree as follows: 1. Modification of Section 2 of the Original Agreement as it relates to the Cost of Administrative Expenses and Administrative Cost Allowances for Fiscal Year 2018-19. (a) Section 2.3 of the Original Agreement is hereby deleted and replaced as follows: “Section 2.3 City Successor Agency and City estimate that the cost of administrative and operational services to be provided by the City to the City Successor Agency annually under the Last and Final ROPS for the periods of July 1, 2019 through December 31, 2040, is Eighty Thousand Dollars ($80,000) annually for each twelve month fiscal year period between July 1, 2019 and June 30, 2040 and is Forty Thousand Dollars ($40,000) for a six-month fiscal year period from July 1, 2040 through December 31, 2040. Pursuant to the provisions of Section 4 herein, City Successor Agency agrees to pay the sum of $80,000 to the City to pay for the estimated administrative expenses of the City Successor Agency for the period of each fiscal year, beginning 2019-20, through fiscal year 2039-40 and $40,000 to the City for administrative expenses for the first six month period of fiscal year 2040-41, subject to Oversight Board approval and City Successor Agency preparation and approval of an administrative budget estimate for such services and costs for the fiscal period of July 1, 2019 through December 31, 2040. The City Successor Agency shall also be liable to the City for payment of any and all direct Project and Program Expenses incurred by City where they are adopted as part of the ROPS.” 2. Miscellaneous. (a) THIRTEENTH Amended Agreement Ratified. Except as specifically amended or modified herein, each and every term, covenant and condition of the Original Agreement as amended is hereby ratified and shall remain in full force and effect. (b) Binding. This THIRTEENTH Amended Agreement and the Original Agreement shall be binding upon and inure to the benefit of the parties hereto. <<<<<<<<<<<<<<<<<<<<<<<<<<< Signature Page Follows>>>>>>>>>>>>>>>>>>>>>>>>>>> Page 4 IN WITNESS WHEREOF, the parties have caused this THIRTEENTH Amended Agreement to be executed by their officers thereunto duly authorized on the date first above written. “CITY” CITY OF TUSTIN, a California municipal corporation By: __________________________________ Al Murray, Mayor ATTEST: ____________________________________ Erica N. Rabe, City Clerk APPROVED AS TO FORM David Kendig, City Attorney “CITY SUCCESSOR AGENCY” SUCCESSOR AGENCY TO THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY By: Al Murray Successor Agency Chairman ATTEST: Erica N. Rabe, City Clerk on behalf of the Successor Agency APPROVED AS TO FORM David Kendig, Legal Counsel