HomeMy WebLinkAboutRDA 02 WORKING CAPITAL LOAN & AGRMNT RDA & CITY 08-07-06AGENDA REPORT
MEETING DATE: AUGUST 7, 2006
TO: WILLIAM A. HUSTON, EXECUTIVE DIRECTOR
FROM: RONALD A. NAULT, FINANCE DIRECTOR
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 31,2007.
2. Extend the existing loan to the MCAS Tustin Project Area of $5,000,000 to August
31,2007.
3. Authorize the Chairperson of the Agency and the Mayor to execute the attached
agreement for 2006-2007, offering and accepting a loan and various services from
the City to the Agency totaling approximately $8,684,000 for fiscal year 2006-2007.
FISCAL IMPACT:
The administrative services costs have been appropriated in the adopted 2006-2007 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 2006-2007. 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
RDA2006LoanAgreementWithCityStaffReporl.doc