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HomeMy WebLinkAboutStaff Report 4.G 06/01/2015Agenda Item #4.G DATE: June 1, 2015 TO: Honorable Mayor and Members of the City Council through City Manager Honorable Chairman and Members of the Petaluma Community Development Successor Agency through Executive Director FROM: Ingrid Alverde, Economic Development & Redevelopment Manager SUBJECT: Resolution Approving an Agreement Regarding Expenditure of Excess Bond Proceeds and Authorizing the City's Receipt and Expenditure of Excess Bond Proceeds for Purposes Consistent with the Bond Covenants RECOMMENDATION It is recommended that the City Council adopt the attached Resolution Approving an Agreement Regarding Expenditure of Excess Bond Proceeds and Authorizing the City's Receipt and Expenditure of Excess Bond Proceeds for Purposes Consistent with the Bond Covenants. It is recommended that the Successor Agency adopt the attached Resolution Approving an Agreement Regarding Expenditure of Excess Bond Proceeds and Authorizing the City's Receipt and Expenditure of Excess Bond Proceeds for Purposes Consistent with the Bond Covenants. BACKGROUND On December 29, 2011, the California Supreme Court upheld the constitutionality of ABx1 26 dissolving redevelopment agencies statewide as of February 1, 2012. The Council established the Petaluma Community Development Successor Agency (PCDSA) as its own legal body to oversee the dissolution of the former Petaluma Community Development Commission. DISCUSSION Health and Safety Code Section 34191.4(c) allows a successor agency to spend excess funds from bonds that were issued prior to December 31, 2010 once it has received a finding of completion. Petaluma received the finding on May 29, 2013. Since then, the Successor Agency has spent much of the excess eligible bond funds to pay for improvements to the Old Redwood Highway Interchange. Approximately $208,000 of the eligible funds remain unspent. Recently, the State Department of Finance rejected a request to spend the remaining funds because there is no official agreement with the Successor Agency to spend the funds. It is thus recommended that the Successor Agency enter into a formal agreement (Exhibit 1 to Attachment 1 & 2) with the City of Petaluma, to provide additional documentation supporting the request to spend the funds. If approved by the Oversight Board and the City Council, the Agreement will be placed on the Recognized Obligation Payment Schedule (ROPS) for the January — June 2016 period, which is due to be' submitted to the Department of Finance in October. If approved on the ROPS, the Successor Agency will transfer the remaining bond proceeds to the City, and the City will deposit those funds into an Excess Bond Proceeds Fund for the City's use in accordance with the Agreement. FINANCIAL IMPACTS This action will allow the Successor Agency to transfer the remaining balance (approximately $208,000) of the 2007 Bonds to the City of Petaluma to pay for eligible projects as identified in the 2007 Bond Indenture. ATTACHMENTS 1. City Council Resolution Approving an Agreement Regarding Expenditure of Excess Bond Proceeds and Authorizing the City's Receipt and Expenditure of Excess Bond Proceeds for Purposes Consistent with the Bond Covenants 2. Successor Agency Resolution Approving an Agreement Regarding Expenditure of Excess Bond Proceeds and Authorizing the City's Receipt and Expenditure of Excess Bond Proceeds for Purposes Consistent with the Bond Covenants Attachment 1 RESOLUTION NO. RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PETALUMA APPROVING AN AGREEMENT REGARDING EXPENDITURE OF EXCESS BOND PROCEEDS AND AUTHORIZING THE CITY'S RECEIPT AND EXPENDITURE OF EXCESS BOND PROCEEDS FOR PURPOSES CONSISTENT WITH THE BOND COVENANTS WHEREAS, pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) ( "CRL "), the former Petaluma Community Development Commission ( "Redevelopment Agency ") had responsibility to implement the Redevelopment Plans for the Petaluma Community Development project area and the Central Business District project area (collectively, the "Project Areas "); and WHEREAS, pursuant to that certain Indenture of Trust dated as of April 1, 2007, and executed by and between the Redevelopment Agency and U.S. National Bank Association as Trustee (the "Indenture "), the Redevelopment Agency issued Tax Allocation Bonds, Series 2007 in the original principal amount of $31,825,000 (the "Bonds "); and WHEREAS, pursuant to Resolution No. 2012 -007 N.C.S., adopted by the City Council on January 9, 2012, the City agreed to serve as the Successor Agency to the Redevelopment Agency ( "Successor Agency ") commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill xl 26 ( "AB 26 "); and WHEREAS, pursuant to Health and Safety Code Section 34179.7, the Successor Agency received its finding of completion from the Department of Finance on May 29, 2013; and WHEREAS, Health and Safety Code Section 34191.4(c) provides that once a successor agency has received a finding of completion, the successor agency is authorized to use the proceeds of bonds issued on or before December 31, 2010 for the purposes for which the bonds were sold and is further authorized to expend bond proceeds in excess of amounts needed to satisfy previously approved enforceable obligations ( "Excess Bond Proceeds ") in a manner consistent with the original bond covenants; and WHEREAS, Health and Safety Code Section 34191.4(c) further provides that the expenditure of Excess Bond Proceeds must be listed separately on the Recognized Obligation Payment Schedule ( "ROPS "); and WHEREAS, Successor Agency staff have prepared an Agreement Regarding Expenditure of Excess Bond Proceeds ( "Agreement ") that provides for the transfer of Excess Bond Proceeds to the City and commits the City to use the Excess Bond Proceeds for purposes consistent with the Bond covenants; and WHEREAS, The Agreement is attached to this Resolution as Exhibit 1 and incorporated herein; and WHEREAS, the execution of the Agreement and the transfer of Excess Bond Proceeds to the City were approved by the City Council acting in its capacity as the governing board of the Successor Agency by Resolution adopted on , 2015; and WHEREAS, the execution of the Agreement and the transfer of Excess Bond Proceeds to the City were approved by the Oversight Board to the Successor Agency by resolution adopted on , 2015; and WHEREAS, the Oversight Board directed the Successor Agency to include the Agreement on the Successor Agency's ROPS for the period January through June, 2016. NOW, THEREFORE, BE IT RESOLVED by the City Council of the City of Petaluma: 1. The facts stated in the foregoing Recitals are hereby acknowledged and affirmed. 2. The Agreement is approved, and the City Manager or his designee is authorized to execute the Agreement on behalf of the City substantially in the form presented to the City Council. 3. The City is authorized to accept the Excess Bond Proceeds and shall use such funds for purposes consistent with the Agreement, the Bond covenants and the applicable provisions of the CRL. 4. The City Manager and his designees are authorized to take such further actions as may be necessary to carry out the intent of this Resolution. vote: PASSED AND ADOPTED by the City Council of the City of Petaluma by the following AYES: NOES: Exhibit I AGREEMENT REGARDING EXPENDITURE OF EXCESS BOND PROCEEDS This Agreement Regarding Expenditure of Excess Bond Proceeds (this "Agreement ") is entered into effective as of , 2015 ( "Effective Date ") by and between the Petaluma Community Development Successor Agency ( "Successor Agency ") and the City of Petaluma, a municipal corporation ( "City "). The Successor Agency and the City are hereinafter collectively referred to as the "Parties." RECITALS A. Pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) ( "CRL "), the former Petaluma Community Development Commission ( "Redevelopment Agency ") had responsibility to implement the Redevelopment Plans for the Petaluma Community Development Project and Central Business District Project (collectively, the "Project Areas "). B. Pursuant to that certain Indenture of Trust dated as of April 1, 2007 executed by and between the Redevelopment Agency and US National Bank Association as Trustee (the "Indenture "), the Redevelopment Agency issued Tax Allocation Bonds, Series 2007 in the original principal amount of $31,825,000 (the "Bonds "). C. Pursuant to Resolution No. 2012 -007 N.C.S., adopted by the City Council on January 9, 2012, the City agreed to serve as the successor agency to the Redevelopment Agency commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill xl 26 ( "AB 26 "); D. Pursuant to Health and Safety Code Section 34179.7, the Successor Agency received its finding of completion from the Department of Finance on May 29, 2013; E. Health and Safety Code Section 34191.4(c) provides that once a successor agency has received a finding of completion, the successor agency is authorized to use the proceeds of bonds issued on or before December 31, 2010 for the purposes for which the bonds were sold, and is further authorized to expend bond proceeds in excess of amounts needed to satisfy previously approved enforceable obligations ( "Excess Bond Proceeds ") in a manner consistent with the original bond covenants; F. Health and Safety Code Section 34191.4(c) further provides that the expenditure of Excess Bond Proceeds must be listed separately on the Recognized Obligation Payment Schedule ( "ROPS"). G. The Parties desire to enter into this Agreement to address the use of Excess Bond Proceeds for the purposes identified herein and consistent with the Bond covenants, and to provide for the transfer of Excess Bond Proceeds to the City to be used for such purposes. H. The execution of this Agreement was approved by the City Council and by the governing board of the Successor Agency by resolutions adopted on , 2015. I. The execution of this Agreement by the Successor Agency was approved by the Oversight Board by resolution adopted on , 2015. NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises herein contained, the Parties hereby agree as follows. 1. Incorporation of Recitals. The Parties acknowledge the truth of the foregoing Recitals which by this reference are incorporated into this Agreement. 2. Term. The term of this Agreement shall commence on the Effective Date, and shall continue in effect until the date that all Excess Bond Proceeds are expended in accordance with the requirements of this Agreement. 3. Use of Excess Bond Proceeds. The City agrees that it shall use the Excess Bond Proceeds solely for the purposes identified in this Section 3, or for other public improvement projects consistent with the Bond covenants and applicable provisions of the CRL. Among other projects, the City agrees to use the Excess Bond Proceeds for the following: The East Washington / Highway 101 Interchange and Old Redwood Highway / Highway 101 Interchange. 4. Transfer of Excess Bond Proceeds. Once the transfer of Excess Bond Proceeds has been listed on an approved ROPS, the Successor Agency shall transfer all remaining Excess Bond Proceeds to the City, and the City shall deposit such funds into an Excess Bond Proceeds Fund for City's use in accordance with the terms, conditions, and purposes set forth in this Agreement. As of the Effective Date, the amount of Excess Bond Proceeds is approximately Two Hundred Eight Thousand Dollars ($208,000). 5. Project Approvals; Environmental Review. This Agreement is not intended to limit in any manner the discretion of the City in connection with the issuance of approvals and entitlements for any projects funded with Excess Bond Proceeds, including without limitation, the undertaking and completion of any required environmental review pursuant to CEQA and NEPA, as applicable, and the review and approval of plans and specifications. 6. Severability. If any term, provision, covenant, or condition set forth in this Agreement is held by the final judgment of a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions, covenants, and conditions shall continue in full force and effect to the extent that the basic intent of the Parties as expressed herein can be accomplished. In addition, the Parties shall cooperate in good faith in an effort to amend or modify this Agreement in a manner such that the purpose of any invalidated or voided provision, covenant, or condition can be accomplished to the maximum extent legally permissible. 7. No Third -Party Beneficiaries; Assignments. Nothing in this Agreement is intended to create any third -parry beneficiaries to this Agreement, and no person or entity other than the Successor Agency and the City, and the permitted successors and assigns of either of them, shall be authorized to enforce the provisions of this Agreement. 8. Further Assurances. Each Party agrees to execute, acknowledge and deliver all additional documents and instruments, and to take such other actions as may be reasonably necessary to carry out the intent of the transactions contemplated by this Agreement. 9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 10. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. 11. Amendments. This Agreement may be modified or amended, in whole or in part, only by an instrument in writing, executed by the Parties. IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. CITY: CITY OF PETALUMA, a municipal corporation SUCCESSOR AGENCY: PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY By: By: ATTEST: City Clerk , City Manager APPROVED AS TO FORM City Attorney ATTEST: , Executive Director Secretary APPROVED AS TO FORM Successor Agency Counsel Attachment 2 RESOLUTION NO. RESOLUTION OF THE GOVERNING BOARD OF THE PETALUMA COMMUNITY DEVELOPMENT SUCCESSOR AGENCY APPROVING AN AGREEMENT REGARDING EXPENDITURE OF EXCESS BOND PROCEEDS AND AUTHORIZING THE TRANSFER OF EXCESS BOND PROCEEDS TO THE CITY OF PETALUMA WHEREAS, pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) ( "CRL "), the former Petaluma Community Development Commission ( "Redevelopment Agency ") had responsibility to implement the Redevelopment Plans for the Petaluma Community Development project area and the Central Business District project area (collectively, the "Project Areas "); and WHEREAS, pursuant to that certain Indenture of Trust dated as of April 1, 2007, and executed by and between the Redevelopment Agency and U.S. Bank Association as Trustee (the "Indenture "), the Redevelopment Agency issued Tax Allocation Bonds, Series 2007 in the original principal amount of $31,825,000 (the "Bonds "); and WHEREAS, pursuant to Resolution No. 2012 -007 N.C.S., adopted by the City Council on January 9, 2012, the City agreed to serve as the Successor Agency to the Redevelopment Agency ( "Successor Agency ") commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill xl 26 ( "AB 26 "); and WHEREAS, pursuant to Health and Safety Code Section 34179.7, the Successor Agency received its finding of completion from the Department of Finance on May 29, 2013; and WHEREAS, Health and Safety Code Section 34191.4(c) provides that once a successor agency has received a finding of completion, the successor agency is authorized to use the proceeds of bonds issued on or before December 31, 2010 for the purposes for which the bonds were sold and is further authorized to expend bond proceeds in excess of amounts needed to satisfy previously approved enforceable obligations ( "Excess Bond Proceeds ") in a manner consistent with the original bond covenants; and WHEREAS, Health and Safety Code Section 34191.4(c) further provides that the expenditure of Excess Bond Proceeds must be listed separately on the Recognized Obligation Payment Schedule ( "ROPS "); and WHEREAS, Successor Agency staff have prepared an Agreement Regarding Expenditure of Excess Bond Proceeds ( "Agreement ") that provides for the transfer of Excess Bond Proceeds to the City and commits the City to use the Excess Bond Proceeds for purposes consistent with the Bond covenants; and WHEREAS, The Agreement is attached to this Resolution as Exhibit 1 and incorporated herein; and WHEREAS, the execution of the Agreement and the acceptance of Excess Bond Proceeds were approved by the City Council by Resolution adopted on , 2015; and WHEREAS, the execution of the Agreement and the transfer of Excess Bond Proceeds to the City were approved by the Oversight Board to the Successor Agency by resolution adopted on , 2015; and WHEREAS, the Oversight Board directed the Successor Agency to include the Agreement on the Successor Agency's ROPS for the period January through June, 2016. NOW, THEREFORE, BE IT RESOLVED by the Governing Board of the Petaluma Community Development Successor Agency: The facts stated in the foregoing Recitals are hereby acknowledged and affirmed. 2. The Agreement is approved, and the Executive Director or his designee is authorized to execute the Agreement on behalf of the Successor Agency substantially in the form presented to this Board. 3. The Successor Agency is authorized and directed to transfer the Excess Bond Proceeds to the City for use for purposes consistent with the Agreement, the Bond covenants and the applicable provisions of the CRL. 4. The Executive Director and his designees are authorized to take such further actions as may be necessary to carry out the intent of this Resolution, including without limitation, the listing of the Agreement and the transfer of the Excess Bond Proceeds to the City on the Recognized Obligation Payment Schedule for the January — June 2016 period. PASSED AND ADOPTED by the Governing Board of the Petaluma Community Development Successor Agency by the following vote: AYES: NOES: ABSENT: AGREEMENT REGARDING EXPENDITURE OF EXCESS BOND PROCEEDS Exhibit 1 This Agreement Regarding Expenditure of Excess Bond Proceeds (this "Agreement ") is entered into effective as of , 2015 ( "Effective Date ") by and between the Petaluma Community Development Successor Agency ( "Successor Agency ") and the City of Petaluma, a municipal corporation ( "City "). The Successor Agency and the City are hereinafter collectively referred to as the "Parties." RECITALS A. Pursuant to authority granted under Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) ( "CRL "), the former Petaluma Community Development Commission ( "Redevelopment Agency ") had responsibility to implement the Redevelopment Plans for the Petaluma Community Development Project and Central Business District Project (collectively, the "Project Areas "). B. Pursuant to that certain Indenture of Trust dated as of April 1, 2007 executed by and between the Redevelopment Agency and US National Bank Association as Trustee (the "Indenture "), the Redevelopment Agency issued Tax Allocation Bonds, Series 2007 in the original principal amount of $31,825,000 (the "Bonds "). C. Pursuant to Resolution No. 2012 -007 N.C.S., adopted by the City Council on January 9, 2012, the City agreed to serve as the successor agency to the Redevelopment Agency commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill xl 26 ( "AB 26 "); D. Pursuant to Health and Safety Code Section 34179.7, the Successor Agency received its finding of completion from the Department of Finance on May 29, 2013; E. Health and Safety Code Section 34191.4(c) provides that once a successor agency has received a finding of completion, the successor agency is authorized to use the proceeds of bonds issued on or before December 31, 2010 for the purposes for which the bonds were sold, and is further authorized to expend bond proceeds in excess of amounts needed to satisfy previously approved enforceable obligations ( "Excess Bond Proceeds ") in a manner consistent with the original bond covenants; F. Health and Safety Code Section 34191.4(c) further provides that the expenditure of Excess Bond Proceeds must be listed separately on the Recognized Obligation Payment Schedule (11ROPS11). G. The Parties desire to enter into this Agreement to address the use of Excess Bond Proceeds for the purposes identified herein and consistent with the Bond covenants, and to provide for the transfer of Excess Bond Proceeds to the City to be used for such purposes. H. The execution of this Agreement was approved by the City Council and by the governing board of the Successor Agency by resolutions adopted on , 2015. I. The execution of this Agreement by the Successor Agency was approved by the Oversight Board by resolution adopted on )2015. NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises herein contained, the Parties hereby agree as follows. 1. Incorporation of Recitals. The Parties acknowledge the truth of the foregoing Recitals which by this reference are incorporated into this Agreement. 2. Term. The term of this Agreement shall commence on the Effective Date, and shall continue in effect until the date that all Excess Bond Proceeds are expended in accordance with the requirements of this Agreement. 3. Use of Excess Bond Proceeds. The City agrees that it shall use the Excess Bond Proceeds solely for the purposes identified in this Section 3, or for other public improvement projects consistent with the Bond covenants and applicable provisions of the CRL. Among other projects, the City agrees to use the Excess Bond Proceeds for the following: The East Washington / Highway 101 Interchange and Old Redwood Highway / Highway 101 Interchange. 4. Transfer of Excess Bond Proceeds. Once the transfer of Excess Bond Proceeds has been listed on an approved ROPS, the Successor Agency shall transfer all remaining Excess Bond Proceeds to the City, and the City shall deposit such funds into an Excess Bond Proceeds Fund for City's use in accordance with the terms, conditions, and purposes set forth in this Agreement. As of the Effective Date, the amount of Excess Bond Proceeds is approximately Two Hundred Eight Thousand Dollars ($208,000). 5. Project Approvals; Environmental Review. This Agreement is not intended to limit in any manner the discretion of the City in connection with the issuance of approvals and entitlements for any projects funded with Excess Bond Proceeds, including without limitation, the undertaking and completion of any required environmental review pursuant to CEQA and NEPA, as applicable, and the review and approval of plans and specifications. 6. Severability. If any term, provision, covenant, or condition set forth in this Agreement is held by the final judgment of a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions, covenants, and conditions shall continue in full force and effect to the extent that the basic intent of the Parties as expressed herein can be accomplished. In addition, the Parties shall cooperate in good faith in an effort to amend or modify this Agreement in a manner such that the purpose of any invalidated or voided provision, covenant, or condition can be accomplished to the maximum extent legally permissible. 7. No Third -Party Beneficiaries; Assignments. Nothing in this Agreement is intended to create any third -party beneficiaries to this Agreement, and no person or entity other than the Successor Agency and the City, and the permitted successors and assigns of either of them, shall be authorized to enforce the provisions of this Agreement. 8. Further Assurances. Each Party agrees to execute, acknowledge and deliver all additional documents and instruments, and to take such other actions as may be reasonably necessary to carry out the intent of the transactions contemplated by this Agreement. 9. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. 10. Counterparts. This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. 11. Amendments. This Agreement may be modified or amended, in whole or in part, only by an instrument in writing, executed by the Parties. IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. CITY: SUCCESSOR AGENCY: CITY OF PETALUMA, a PETALUMA COMMUNITY municipal corporation DEVELOPMENT SUCCESSOR AGENCY C ATTEST: City Clerk , City Manager m. ATTEST: , Executive Director Secretary APPROVED AS TO FORM APPROVED AS TO FORM IC City Attorney IC Successor Agency Counsel