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HomeMy WebLinkAboutReimbursement of CostsAGREEMENT FOR REIMBURSEMENT OF COSTS AND CITY /SUCCESSOR AGENCY OPERATIONS LOAN This AGREEMENT FOR REIMBURSEMENT OF COSTS AND CITY /SUCCESSOR AGENCY OPERATIONS LOAN AND CITYITUSTIN HOUSING AUTHORITY OPERATIONS LOAN ( "Agreement ") is made and entered into as of March 20, 2012 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 ") RECITALS 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 ix 26 added Parts 1.8 and 1.85 to Division 24 of the California Health & Safety Code, which laws cause the dissolution and wind down of all redevelopment agencies ( "Dissolution Act "). D. On December 29, 2011, California Redevelopment Association v. Matosantos, Case No. 5194861, 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 the 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 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 so assume such housing assets and functions, and on such date also pursuant to Section 34176 the 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, any assets assigned and Page I transferred by operation of law and to be assigned and transferred by authorization of and direction from the oversight board when formed and operating pursuant to the Dissolution Act to the Successor Housing Agency 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 Successor Agency is engaged in activities necessary and appropriate to winding 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, 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, record - keeping, and other services necessary for the Successor Agency to carry out its responsibilities. K. City and City Successor Agency desire to affirm and document an on -going cooperative arrangement regarding administrative and operational services and payment for services by entering into a new contract 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 in amount equal to the City Successor Agency Administrative Budget prepared pursuant to California Health and Safety Code Section 34177 0) and approved by the Oversight Board for each fiscal year under the term of this Agreement. NOW, THEREFORE, for and in consideration of the mutual promises, covenants and conditions herein contained, the parties hereto agree as follows: 1. Reimbursement of Administrative Expenses. The City Successor Agency shall be liable to the City for the payment of its Administrative Expenses as set forth in this Agreement and as adopted as part of an Administrative Budget by the City Successor Agency, as approved by the Oversight Board, as such annual Administrative Budget may be amended, revised or reconciled from time to time. These Administrative Expenses shall be in addition to any direct program or project expenses ( "Program Expenses ") incurred and noted on the Enforceable Obligations Payment Schedule ( "EOPS ") and in the Recognized Obligation Payment Schedule ( "ROPS "), including salary and benefits of employees funded by the Successor Agency for Program Expenses. The City Successor Agency shall also be liable to the City for payment of these Program Expenses where they are adopted as part of the FOPS or RODS. 2. Cost of Administrative Expenses and Administrative Cost Allowance 2.1 City Successor Agency and City estimate that the cost of administrative and operational services to be provided by City to the City Successor Agency for the period of February 1, 2012 through June 30, 2012 is Eight Hundred Eighty Two Thousand Seven Hundred and Forty Six Dollars ($882,746). Pursuant to the provisions of Section 4 herein, City Successor Agency agrees to pay the sum of $882,746 to City to pay for the estimated administrative expenses of the City Page 2 Successor Agency for the 2011 -2012 fiscal year, subject to Oversight Board approval and City Successor Agency preparation and approval of an administrative budget estimate for such services and costs. The City Successor Agency shall also be liable to the City for payment of any Program Expenses incurred by City where they are adopted as part of the EOPS or ROPS. 2.2. Information and supporting data regarding the staffing and allocation of costs for have been prepared by City Successor Agency and City staff and are made a, part hereof by this reference. Within thirty (30) days of the expiration of the 2011 -2012 fiscal year and each year thereafter during the term of this Agreement, the parties shall determine the actual costs incurred by City Successor Agency for services provided to the City. If the actual amount incurred by City Successor Agency is less than the estimated amount, City shall reimburse City Successor Agency in the amount overpaid within 30 days of such notice, and if the actual amount incurred by City Successor Agency is greater than the estimated amount, any additional amount above the estimated amount shall be due and payable by City Successor Agency from the Redevelopment Obligation Retirement Fund and the additional amount shall be advanced to City Successor Agency by City. 3. Services to be Provided City agrees to continue to aid and cooperate and shall aid and cooperate in the planning, undertaking, construction and operation of remaining enforceable obligations of the City Successor Agency previously incurred by the former Agency as it relates to enforceable obligations of the former Agency within the City provided the cost of such services are paid by City Successor Agency. At the request of City Successor Agency through its Executive Director and duly authorized designees, City and its officers and employees shall perform services for City Successor Agency in carrying out its work related to meeting the former Agency's enforceable obligations and for winding down the activities of the former Agency and shall have access to any and all personnel and the facilities of the departments and offices of the City. Those City officers and employees who are also appointed to positions or offices with or related to the City Successor Agency shall perform services for the each agency in a dual capacity. The City Manager, and other appropriate City officials on behalf of the City, and the Executive Director of the City Successor Agency, and other appropriate City Successor Agency officials on behalf of the City Successor Agency, and their duly authorized designees shall determine and establish the procedures to be followed in requesting and rendering such services. The costs of administrative services shall be considered Administrative Expenses in the Annual Administrative Budget. The costs of other City Successor Agency Program Expenses where supported by City services are identified as specific line items on the EOPS or ROPS and not part of the estimated Administrative Expenses identified in Section 1. 4. Meeting Facilities City agrees to make available to City Successor Agency such office space and meeting space as is necessary for conducting meetings and the business of such agency, including use of the City Council Chambers and appropriate conference room(s) for open public meetings, closed session meetings, and study session meetings of the City Successor Agency and Oversight Board, and meetings of City Successor Agency staff, counsel, consultants, and other representatives. Each agency shall use such space in accordance with the rules and regulations of the City as applicable to other buildings and offices of the City. 5. Succeeding Years during Term of Agreement The procedure set forth above in Sections 2, 3 and 4 shall be undertaken by City Successor Agency, the Oversight Board, and City for each successive fiscal year during the term of this Agreement. 6. City Cost Allocation Plan; Estimated Cost of Administrative Services and Facilities Expenses shall be calculated in the manner set forth in City's cost allocation plan, or other Page 3 applicable reasonable cost allocation and accounting plan approved by the parties that conforms with generally accepted accounting principles and that is generally applicable to all users of services and facilities of the City. The specific costs to be allocated herein shall be based upon the cost of the following categories of services: 6.1 Wages and Benefits City Successor Agency Wage and Benefit expenses incurred in connection with City employees described to perform administrative services work for City Successor Agency (as opposed to direct program or project work as identified as "Program Expenses" related to enforceable obligations), including salaries, wage and fringe benefits. The costs attributable to employees who devote less than 100% of their time to the City Successor Agency shall be allocated in accordance with the City's cost allocation plan. 6.2 General Overhead A general indirect administrative operating expenses and overhead support charge which shall be determined in accordance with the City's cost allocation plan and City Successor Agency Annual Administrative Budget. 6.3 Specific Services All expenses that City may actually incur in providing specific administrative services on behalf of City Successor Agency including, but not limited to, audit services, lease of space to accommodate Successor Agency's activities, City Treasurer services, property insurance for City Successor Agency's properties, contracts for real estate data and information, department supplies, mail and postage services, equipment maintenance and IT support. Operational services which relate to specific program and projects such as engineering design, planning, contract costs, contract administration, inspection, surveys shall not be considered administrative services but direct specific program and project expenditures ( "Program Expenses "). 7. Annual Expenses Deemed City Advance For each year in which City Successor Agency does not have adequate funds to pay and reimburse for Administrative Expenses as shown in the adopted Administrative Budget each such amount shall be deemed an advance by City to City Successor Agency and such amount shall be deemed to have been loaned by City to City Successor Agency ( "City /City Successor Agency Operations Loan "). 8. Repayment of Operations Loan City Successor Agency agrees to repay the City /Successor Agency Operations Loan (and all future advances thereto) from tax increment funds allocated to City Successor Agency that are to be paid from property tax revenues deposited in the Redevelopment Property Tax Trust Fund pursuant to California Health and Safety Code Section 34177 (k). City Successor Agency shall repay to City the principal amount of the City /City Successor Agency Operations Loan on or before the last date that City Successor Agency may receive tax increment funds pursuant to the time and financial limitations required to meet all enforceable obligations of the City Successor Agency. 9. Provisions Severable If any provision of this Agreement or application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Agreement which can be given effect without the invalid provision or application, and to this end the provisions of this Agreement are severable. The City Council and City Successor Agency each hereby declares that it would have approved this Agreement irrespective of the invalidity of any particular portion hereof. 10. Effective Date of Agreement This Agreement shall become effective as of the first day noted above and shall continue thereafter until modified or terminated by the parties hereto. Page 4 11. Subordination Indebtedness The indebtedness of the City /City Successor Agency Operations Loan under this Agreement shall be junior and subordinate to other allocated moneys made from the Redevelopment Property Tax Trust Fund including those pursuant to California Health and Safety Code Section 34183 (a) (1) through (2). IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their officers thereunto duly authorized on the date first above written. Pame City Clerk P R� - OF David Kendig, City Attoniky SUCCESSORCY TO TM TUSTIN COMMUMT D P AGENCY 1B, .lohrtlielsen Successor Agency Chairman ATTEST: E s Pamela Stoker, City Cler on behalf of the Successor Agency APYROVED AS TO FORM _.. David Kendig, Legal Counsel Page 5