HomeMy WebLinkAboutRDA 02 LOAN/ADMIN RDA 08-15-05
Finance Director
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AGENDA REPORT
Agenda Item
Reviewed:
City Manager
MEETING DATE:
AUGUST 15, 2005
FROM:
WILLIAM A. HUSTON, EXECUTIVE DIRECTOR
RONALD A. NAULT, FINANCE DIRECTOR
TO:
SUBJECT:
WORKING CAPITAL LOAN AND ADMINISTRATIVE SERVICES AGREEMENT
BETWEEN THE TUSTIN COMMUNITY REDEVELOPMENT AGENCY AND
THE CITY OF TUSTIN
SUMMARY:
The approval of this loan and administrative services agreement between the Tustin Community
Redevelopment Agency and the City of Tustin will comply with Section 33675 of the
California Health and Safety Code regarding the allocation and payment of tax increment to
Redevelopment Agencies, and provide the resources necessary to carry out the adopted programs
in the Agency's three project areas.
RECOMMENDATION:
1. Extend the existing loan of $3,000,000 to the South Central Project Area until
August 31, 2006.
2. Increase the existing loan to the MCAS Tustin Project Area to $5,000,000 to be
repaid August 31,2006.
3. Authorize the Chairperson of the Agency and the Mayor to execute the attached
agreement for 2005-2006, offering and accepting a loan and various services from
the City to the Agency totaling approximately $8,500,000 for fiscal year 2005-2006.
FISCAL IMPACT:
The administrative services costs have been appropriated in the adopted 2005-2006 RDA budget.
DISCUSSION:
Section 33670 et seq. of the California Health and Safety Code stipulates that tax increment can
only be distributed to Redevelopment Agencies for the sole purpose of repaying debt. Any tax
increment collected in excess of outstanding debt will be returned to the County to be redistributed
to the original taxing agencies. This loan from the General Fund will permit the Agency to
complete the goals and objectives of the South Central and MCAS Tustin Project Areas for
Fiscal Year 2005-2006. The loans will be repaid to the General Fund from tax increment
generated by the project areas.
BACKGROUND:
When a Redevelopment Agency Project Area is formed, the assessed valuation for the area is
frozen and becomes the base year value. All property tax generated by the "incremental" growth in
assessed valuation as measured against the base year is allocated directly to the Agency. This
"tax increment" and, to a much lesser degree, interest earned on the increment, is the only source
of income made available to Redevelopment Agencies.
Section 33610 of the Health and Safety Code restricts the distribution of tax increment to
Redevelopment Agencies to the extent it is equal to or less than outstanding debt. The loan
between the City and the Agency qualifies as debt per the Code. Until such time that a long term
financing plan is completed for the South Central and MCAS Tustin Project Areas, the policy of
making annual loans between the City and the Agency will assure the full receipt of tax increment
to the Agency and maximize the Agency's ability to meet its adopted goals and objectives in these
areas.
RAN:ts
Attachment
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AGREEMENT
THIS AGREEMENT is made and entered into this 15th day of August, 2005, by and
between the CITY OF TUSTIN, a municipal corporation of the County of Orange, State of
California, hereinafter referred to as "City", and the TUSTIN COMMUNITY REDEVELOPMENT
AGENCY, a California Redevelopment Agency, hereinafter referred to as "Agency".
RECITALS
WHEREAS, the City Council of the City, pursuant to Health and Safety Code section 33610,
has deemed it necessary to continue to loan the Agency approximately $8,500,000 to assist with
carrying out programs budgeted for 2005-2006; and
WHEREAS, the City Council of the City offered said loan to the Agency; and
WHEREAS, the City has offered to provide administrative, planning, engineering, design,
accounting and other services as required, including direct and indirect overhead charges to the
Agency; and
WHEREAS, the Agency, pursuant to Health and Safety Code section 33601, has accepted
said offers; and
WHEREAS, the parties intend to further memorialize their agreement as to said loan and to
set forth the terms and conditions thereof as agreed to at the time of offer and acceptance;
NOW, THEREFORE, in consideration of the mutual covenants, agreements and
considerations contained herein, City and Agency hereby agree as follows:
1. The City will extend the Agency's outstanding loans from 2004-2005, $3,000,000 to the
South Central Project Area and $5,000,000 to the MCAS Tustin Project Area, plus accrued interest,
until August 31, 2006 at the same terms and conditions.
2. The sum loaned to the Agency is to be repaid to the City as follows:
a. Interest on said sum shall accrue at the monthly rate as reported by the
Local Agency Investment Fund (LAIF) from the date of transfer of said sum until
such time as said sum is repaid to City.
b. The sum loaned to the Agency, as well as accrued interest thereon, shall be repaid
to the City by the Agency from tax increment revenues received pursuant to
Health and Safety Code sections 33670 et seq.
c. The sum loaned to the Agency, as well as accrued interest thereon, shall be due
and payable to the City by the Agency, unless otherwise renewed by both parties,
by August 31,2006.
d. If no funds become available to the Agency to repay said sum, the money loaned
and accrued interest thereon may be forgiven and need not be repaid to the City.
3. The sum agreed upon for other services, without interest thereon, shall be paid to the
City by the Agency from tax increment revenues received pursuant to Health and Safety Code
sections 33670 et seq., based on the formula approved by the City Council and actual time as
recorded in the City's Payroll system. The estimated cost of services for 2005-2006 is $300,000 for
the Town Center Project Area, $150,000 for the South Central Project Area, and $10,000 for the
MCAS Tustin project area.
a. If no funds become available to the Agency to pay said sum, it may be forgiven and
need not be paid to the City.
Executed this 15th day of August, 2005.
"CITY"
CITY OF TUSTIN
BY:
"AGENCY"
TUSTIN COMMUNITY REDEVELOPMENT AGENCY
BY:
ATTEST:
Pamela Stoker
City Clerk
Pamela Stoker
Redevelopment Agency Secretary
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