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HomeMy WebLinkAboutResolution 2014-149 N.C.S. 9/15/2014Resolution No. 2014-149 N.C.S. of the City of Petaluma, California AUTHORIZING THE PROVISION OF A LOAN TO THE PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY WHEREAS, Health and Safety Code Section 34173(h) authorizes the city that formed a redevelopment agency to loan funds to the successor agency to the dissolved redevelopment agency for administrative costs, enforceable obligations, and project -related expenses, provided that the use of such funds is reflected on the successor agency's Recognized Obligation Payment Schedule (BOPS), and if applicable, its administrative budget, subject to the review and approval of the successor agency's oversight board and the Department of Finance; and WHEREAS, Health and Safety Code Section 34173(h) further provides that an enforceable obligation shall be deemed to be created for the repayment of such loans; and WHEREAS, the Petaluma Community Development Successor Agency (the "Successor Agency") has incurred litigation expenses related to Successor Agency assets and obligations; and WHEREAS, Health and Safety Code Section 34171(d)(1)(F) provides that contracts or agreements concerning litigation expenses related to assets or obligations are enforceable obligations; and WHEREAS, Successor Agency staff anticipate that the Successor Agency may experience occasional cash flow shortages; NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma as follows: The City Council hereby finds that the facts set forth in the recitals to this Resolution are true and correct, and establish the factual basis for the City Council's adoption of this Resolution. Subject to approval by the Successor Agency's oversight board and the Department of Finance, the City Council hereby approves the provision of a revolving loan (the "Loan") to the Successor Agency in an amount up to a maximum of Three Hundred Thousand Dollars ($300,000), in accordance with the following terms: (i) interest will accrue on the principal balance outstanding from time to time at the Local Agency Investment Fund rate for the Pooled Money Investment Account ("LA1F Rate") as posted on the State Treasurer's website in effect from time to time immediately prior to the date on which a payment is due; (ii) the Loan will be repayable by the Successor Agency semi-annually from RPTTF funds over a period of up to five (5) years, provided however, payments may be deferred and the Loan term shall be extended accordingly if insufficient RPTTF funds are available to pay all Successor Agency enforceable obligations and the Successor Agency's administrative allowance payable during any particular six-month period; (iii) the Resolution No. 3014-149 N.C.S. Page I proceeds of the Loan shall be used to pay for Successor Agency administrative expense, litigation expenses and other enforceable obligations; and (iv) the receipt and use of the proceeds of the Loan shall be reflected on the Successor Agency's Recognized Obligation Payment Schedule and shall be subject to approval by the Successor Agency's Oversight Board. 3. The City Council hereby authorizes and directs the City Manager and his designees to execute such instruments and to take such actions as necessary to effectuate the intent of this Resolution, including without limitation the preparation and execution of a loan agreement consistent with the terms of this Resolution. Under the power and authority conferred upon this Council by the Charter of said City. REFERENCE: I hereby certify the foregoing Resolution was introduced and adopted by the Ad as to Council of the City of Petaluma at a Regular meeting on the 15°i day of September, 2014, by the following rote: City Attorney AYES: Albertson, Barrett, Mayor Class, Harris. Vice Mayor Kearney, Miller NOES: None ABSENT: Healy ABSTAIN: None 1 ATTEST: City Clerk Mayor Resolution No. 3014-149 N.C.S. Page 2 EXHIBIT A LOAN AGREEMENT THIS LOAN AGREEMENT (this "Agreement") is entered into effective as of .2014 ("Effective Date") by and between the Petaluma Community Development Successor Agency (the "Successor Agency") and the City of Petaluma, a municipal corporation (the "City'). RECITALS WHEREAS, pursuant to Resolution No. 2012-03 adopted by the Petaluma City Council, the City of Petaluma agreed to serve as the successor to the Petaluma Community Development Commission ("Redevelopment Agency") commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill x1 26 ("AB 26"); WHEREAS, pursuant to Resolution No. 2012-118 N.C.S., adopted by the Petaluma City Council on August 6, 2012, the City Council established the Successor Agency as an independent public entity pursuant to Health and Safety Code Section 34173(8); WHEREAS, pursuant to Health and Safety Code Section 34173(h), the City is authorized to loan funds to the Successor Agency for administrative expenses, enforceable obligations and project -related expenses, provided that the use of such funds is approved by the Oversight Board established for the Successor Agency ("Oversight Board") and reflected on the Recognized Obligation Payment Schedule ("ROPS"); WHEREAS, Health and Safety Code Section 34173(h) further provides that an enforceable obligation shall be deemed to be created for the repayment of such loans; WHEREAS, the Successor Agency has incurred litigation expenses related to Successor Agency assets and obligations; WHEREAS, Health and Safety Code Section 34171(d)(1)(F) provides that contracts or agreements concerning litigation expenses related to assets or obligations are enforceable obligations; WHEREAS, Successor Agency staff anticipate that the Successor Agency may experience occasional cash flow shortages; and WHEREAS, subject to approval by the Oversight Board to the Successor Agency (the "Oversight Board"), the City Council of the City of Petaluma has authorized the provision of a loan to the Successor Agency on the terms and conditions set forth in this Resolution, and the Governing Board of the Successor Agency has authorized the acceptance of such loan; WHEREAS, absent the provision of the loan described in this Agreement (the "Loan"), the Successor Agency will have insufficient funds to timely pay litigation expenses and other payments due for enforceable obligations; and Resolution No, 2014-149 N.C.S. Page 3 WHEREAS, by Resolution adopted on . 20_, the Oversight Board approved the Successor Agency's acceptance of the Loan and the listing of the Loan and the use of the Loan proceeds on the Successor Agency's ROPS; NOW, THEREFORE, the Successor Agency and the City agree as follows: 1. Loan. The City agrees to loan to the Successor Agency, and the Successor Agency agrees to borrow from and repay to City the sum of up to Three Hundred Thousand Dollars ($300,000) (the "Loan") upon the terms and conditions and for the purposes set forth in this Agreement. The Loan shall be evidenced by a promissory note (the "Note") which shall be dated as of the Effective Date and executed by the Successor Agency substantially in the form attached hereto as Exhibit A. The Loan shall operate as a revolving fund. The maximum principal amount that may be outstanding at any time is Three Hundred Thousand Dollars ($300,000). 2. Interest Rate: Maturitv Date: Prenavment. Interest shall accrue on the outstanding principal balance of the Loan at a rate equal to the Local Agency Investment Fund Average Annual Yield for the Pooled Money Investment Account ("LAIF RATE") applicable to the fiscal year in which each payment is due, as posted on the State Treasurer's website (http://www.treasurer.ca.gov/pmia-laif/historical/grtly_appor_rates.pdf), commencing upon the date of disbursement of the Loan proceeds and continuing until the Note is paid in full. Interest shall be calculated on the basis of a year of 365 days and charged for the actual number of days elapsed. Payments shall be due on a semi-annual basis on each January 15 and June 15 during the term of the Loan. The entire outstanding principal balance of the Loan together with interest accrued thereon and all other sums due under the Note shall be payable in one lump sum on the fifth (5tb) anniversary of the Effective Date (the "Maturity Date") unless the parties agree to extend such date. The Successor Agency may prepay the Loan in whole or in part at any time without penalty or premium. Partial prepayments shall be applied first to accrued interest and then to principal. 3. Subordination. Notwithstanding any contrary provision hereof, the Parties agree that the Successor Agency's obligation to repay the Loan shall be subordinate to the pledge of tax increment revenue for the payment of debt service on tax allocation bonds or other indebtedness issued by the Redevelopment Agency prior to the Effective Date. 4. Use of Loan Proceeds. The Loan proceeds shall be used solely to cover Successor Agency cash flow shortages and Successor Agency expenses for litigation and other enforceable obligations. Use of the Loan proceeds shall be listed on the Successor Agency's Recognized Obligation Payment Schedule. 5 Parties Not Co -Venturers. Nothing in this Agreement is intended to or shall establish the Parties as partners, co -venturers, or principal and agent with one another. 6. Amendments. No amendment to or modification of this Agreement shall be effective unless and until such amendment or modification is in writing, properly approved in accordance with applicable procedures, and executed by the Parties. 7. Non-Liabilitv of Officials. Emolovees and Agents. No member, official, employee or agent of the Successor Agency shall be personally liable to City in the event of Resolution No. 2014-149 N.C.S. Page 4 any default or breach by the Successor Agency, or for any amount of money which may become due to City, or for any obligation of Successor Agency under this Agreement. 8. No Third Part_v Beneficiaries. There shall be no third party beneficiaries to this Agreement. 9. Captions. The headings of the sections and paragraphs of this Agreement have been inserted for convenience only and shall not be used to construe this Agreement. 10. Governine Law. This Agreement shall be construed and enforced in accordance with the laws of the State of California. 11. Severabilitv. If any term of this Agreement is held by a court of competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall continue in full force and effect unless the rights and obligations of the Parties are materially altered or abridged by such invalidation, voiding or unenforceability. 12. Entire Aereement. This Agreement, together with the Note contains the entire agreement between the Parties with respect to the subject matter hereof, and supersedes all prior oral or written agreements between the Parties with respect thereto. SIGNATURES ON FOLLOWING PAGE. Resolution No. 2014-149 N.C.S. Page 5 IN WITNESS WHEREOF, the Parties have executed this Loan Agreement as of the date first written above. PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY By: Executive Director Attest: Successor Agency Secretary Approved as to form: Successor Agency Counsel CITY OF PETALUMA By: City Manager Attest: City Cleric Approved as to form: City Attorney Resolution No. 2014-149 N.C.S. Page 6 Exhibit A OF LOAN AGREEMENT PROMISSORY NOTE $300,000 Petaluma, California 2014 FOR VALUE RECEIVED, the Petaluma Community Development Successor Agency (the "Successor Agency') promises to pay to the City of Petaluma, a municipal corporation (the "City") in lawful money of the United States of America, the principal sum of Three Hundred Thousand Dollars ($300,000) or so much thereof as may be advanced by City from time to time pursuant to the Loan Agreement referred to below, in the manner provided below, together with interest on the outstanding principal balance in accordance with the terms and conditions described herein. Interest shall accrue on the outstanding principal balance at a rate equal to the Local Agency Investment Fund Average Annual Yield for the Pooled Money Investment Account ("LAIF RATE") applicable to the fiscal year in which each payment is due, as posted on the State Treasurer's website Chttp://www.treasurer.ca.gov/pmia-laif/historical/grtly_appor_rates.pdf), commencing upon the date of disbursement thereof. Interest shall be calculated on the basis of a year of 365 days and charged for the actual number of days elapsed. This Promissory Note (this "Note") has been executed and delivered pursuant to and in accordance with that certain Loan Agreement dated as of . 2014, by and between Successor Agency and City (the "Loan Agreement"), and is subject to the terms and conditions of the Loan Agreement which is by this reference incorporated herein and made a part hereof. Capitalized terms used but not defined herein shall have the meaning ascribed to such terms in the Loan Agreement. PAYMENTS 1.1 MATURITY DATE. Payments shall be due on a semi-annual basis on each January 15 and June 15 during the term of the Loan. The entire principal balance outstanding under this Note, together with interest accrued thereon and any other sums accrued hereunder, shall be due and payable in one lump sum on the date (the "Maturity Date") which is the fifth (501) anniversary of the date of this Note. 1.2 PREPAYMENT. Successor Agency may, without premium or penalty, at any time and from time to time, prepay all or any portion of the outstanding principal balance due under this Note provided that each such prepayment is accompanied by accrued interest on the amount of principal prepaid calculated to the date of such prepayment. Prepayments shall be applied first to any unpaid late charges and other costs and fees then due, then to accrued but unpaid interest, and then to principal. 1.3 MANNER OF PAYMENT. All payments of principal and interest on this Note shall be made to City at 11 English Street, Petaluma, California or such other place as City shall designate to Successor Agency in writing, or by wire transfer of immediately available funds to an account designated by City in writing. Resolution No. 2014-149 N.C.S. Page 7 1.4 SUBORDINATION. Notwithstanding any contrary provision hereof, Successor Agency's obligation to repay the Loan shall be subordinate to the pledge of tax increment revenue for the payment of debt service on tax allocation bonds or other indebtedness issued by the Redevelopment Agency prior to the Effective Date. DEFAULTS AND REMEDIES 2.1 EVENTS OF DEFAULT. The occurrence of any one or more of the following events shall constitute an event of default hereunder ("Event of Default'): (a) Successor Agency fails to pay when due the principal and interest payable hereunder and such failure continues for ten (10) days after City notifies Successor Agency thereof in writing. (b) Successor Agency breaches any other provision of this Note or the Loan Agreement and does not cure such breach within thrity (30) days following written notice from City. 2.2 REMEDIES. The rights and remedies of City under this Note shall be cumulative and not alternative. Upon the occurrence of an Event of Default hereunder, City may, at its option: (i) by written notice to Successor Agency declare the entire unpaid principal balance of this Note, together with all accrued interest thereon and all sums due hereunder, immediately due and payable regardless of any prior forbearance, (ii) exercise any and all rights and remedies available to it under lay or equity, and (iii) exercise any and all rights and remedies available to City pursuant to the Loan Agreement. 3. MISCELLANEOUS 3.1 WAIVER: AMENDMENT. No waiver by City of any right or remedy under this Note shall be effective unless in writing signed by City. Neither the failure nor any delay in exercising any right, power or privilege under this Note will operate as a waiver of such right, power or privilege, and no single or partial exercise of any such right, power or privilege by City will preclude any other or further exercise of such right, power or privilege or the exercise of any other right, power or privilege. There shall be no amendment to or modification of this Note except by written instrument executed by Successor Agency and City. 3.2 SEVERABILITY. If any provision in this Note is held invalid or unenforceable by any court of competent jurisdiction, the other provisions of this Note will remain in full force and effect. Any provision of this Note held invalid or unenforceable only in part or degree will remain in full force and effect to the extent not held invalid or unenforceable. 3.3 GOVERNING LAW: VENUE. This Note shall be construed and enforced in accordance with the laws of the State of California. 3.4 SECTION HEADINGS. CONSTRUCTION. The headings of Sections in this Note are provided for convenience only and will not affect its construction or interpretation. 3.5 RELATIONSHIP OF THE PARTIES. The relationship of Successor Agency and City under this Note is solely that of borrower and lender, and the loan evidenced by this Note will in no manner make Successor Agency the partner or joint venturer of City. Resolution No. 2014-149 N.C.S. Page 8 IN WITNESS WHEREOF, Successor Agency has executed and delivered this Note as of the date first written above. SUCCESSOR AGENCY: PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY Executive Director Attest: Successor Agency Secretary Approved as to form: Successor Agency Counsel Resolution No. 2014-149 N.C.S. Page 9