sr-011711-8a~ City Council and
~~tY °f Redevelopment Agency Repot
Santa Monica
City Council and Redevelopment Agency Meeting: January 17, 2011
Agenda Item:
To: Mayor and City Council
Chairperson and Redevelopment Agency
From: Andy Agle, Director of Housing and Economic Development
Carol Swindell; Director of Finance
Subject: Implementing Agreement for City/Agency Cooperation Agreement No.
9267, Amendments to four Agency Promissory Notes, and Amendment to
Cooperation Agreement No. 8180
Recommended Action
Staff recommends that the City Council (Council):
1) Authorize the City Manager to execute the Implementing Agreement between the
City and the Redevelopment Agency. for payment of costs associated. with
Cooperation Agreement No. 9267;
2) Authorize the Mayor to execute Amendments to four Agency Promissory Notes
converting them from demand to installment payment notes; and,
3) Authorize the City Manager to execute an Amendment to Cooperation
Agreement No. 8180.
Staff recommends that the Redevelopment Agency (Agency):
1) Authorize the Executive Director to execute the Implementing Agreement
between the Redevelopment Agency and the City for payment of costs
associated with Cooperation Agreement No. 9267;
2) Authorize the Agency Chairperson to execute Amendments to four Agency
Promissory Notes converting them from demand to installment payment notes;
and,
3) Authorize the Executive Director to execute the Amendment to Cooperation
Agreement No. 8180 to restate the obligation to pay for permitted affordable
housing activities.
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Executive Summary
Staff recommends that the Council and Agency authorize the City Manager and
Executive Director to enter into an Implementing. Agreement which sets forth the
schedule of payments from the Agency to the City for the City's implementation of the
projects contained. in Agency/City Cooperation Agreement No. 9267. Additionally, it is
recommended that the Council and Agency authorize amendments to four existing
Agency promissory notes and Cooperation Agreement No. 8180.
Background
On November 17, 2009, the Agency adopted its Five-Year Implementation Plan (the
"Plan") for the period of FY 2009-10 through FY 2013-14, with established goals to
support affordable housing, disaster prevention and mitigation, community revitalization,
commercial revitalization, and institutional revitalization. To implement the programs
and activities (the "Projects") associated with each goal, the Agency made
redevelopment fund allocations totaling approximately $283 million, based on a variety
of assumptions regarding growth in tax increment, borrowing costs, timing of borrowing,
State grabs of local funds, leveraging opportunities and State law.
On August 10, 2010, the Agency and City authorized the execution of Cooperation
Agreement No. 9267 (CCS/RAS) and adopted Resolutions 10519 (CCS) and 527 (RAS)
to ensure timely implementation and completion of the Agency's Five-Year
Implementation Plan Projects. Following this meeting, staff moved forward with an
analysis to update the inventory of the Agency's obligations, including review of existing
notes and agreements. In doing this study, staff recommends that the Council and
Agency convert the four promissory notes previously amended on June 21, 2005 from
demand to installment payment notes as these four notes are to repay the City, who
funded .improvements to the Agency's Downtown and Ocean Park Redevelopment
projects areas and because the work has since been completed. Additionally, an
amendment to Cooperation Agreement No. 8180 is necessary to update the required
payments to support affordable housing activities. On January 9, 2003, the Agency
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committed $30' million of redevelopment funds for the purpose of increasing, preserving
and improving affordable housing within the City. The existing Cooperation Agreement
provided for a minimum payment of $2 million per year over afifteen-year period,
commencing in fiscal year 2002-03.
Discussion
Implementing Aareement to Cooperation Agreement No. 9267
In accordance with the Cooperation Agreement,, staff has completed analysis regarding
the Agency's payments required to carry out the Agency obligations to the City for the
Projects outlined in the adopted resolutions and agreement. The Implementing
Agreement identifies the Agency's obligations to the City, including a schedule of
payments from Fiscal Year 2010-11 through 2041-42. Calculation of the payments is
based on the costs associated with implementation of the Projects identified in the
resolutions, agreement and plan, as well as updated tax increment projections. The first
scheduled payment to the City is due on June 29, 2011. The Agency will make its
payments to the City on an annual basis in accordance with the terms of the
Implementing Agreement.
Downtown and Ocean Park Promissory Notes
The Agency is obligated to reimburse the City for the loans to the Agency's Downtown
and Ocean Park redevelopment project areas. Combined, the four notes equal
$27,070,240 at June 30, 2010. The General Fund is due $20,334,950 from the
Agency's Downtown project area and CDBG is due $6,735,290 from the Ocean Park
project area. Currently, the notes are structured as demand notes. payable upon
demand by the City. The recommended amendments will include converting the notes
into payable installment notes, with a fixed schedule of payments to the City showing
principal and interest due. The Agency will make its first payment on the notes due to
the General Fund by June 29, 2011. And to allow the City sufficient time to develop
a strategy for the program income, the Agency's first payment on the notes due to
CDBG will be on June 29, 2015.
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Amendment to Cooperation Agreement No. 8180
Since its effective date, the Agency has paid nearly $5.8 million from 80% non-housing
Funds towards fulfilling the affordable housing obligation in Cooperation Agreement No.
8180. Given the remaining balance of $24.2 million, coupled with the Agency's existing
obligations for the non-housing funds, an amendment to extend the term through Fiscal
Year 2034-35 is recommended to provide the Agency sufficient time to satisfy the terms
of Cooperation Agreement No. 8180. The amendment will specify yearly payments, paid
with available funds in each fiscal year through 2034-2035, or until the remaining
balance is paid in full.
Financial and Budget Actions
This action does not create any additional projects, nor does it increase the amount of debt
owed by the Agency. Any budget action required as a result of this Amendment will be
brought forward at a later date.
Prepared by: Nia Tang, Senior Development Analyst
Approved:
Forwarded to Council:
~` .,
^' A ~ y Agle, Director ~ ~' od Gould
Housing and Economic Development City Manager
Approved:
f
Carol Swindell, Director
Finance
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Prepared by: Nia Tang, Senior Development Analyst
Approved:
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j/)//} l /j/f/)J}~ /fy/) t
~A Agle, [~i`rect ~
Housing and Economic Development
Forwarded to Council:
Rod Gould
City Manager
Approved:
.-,
. ~ l
Carol Swindell, Director
Finance
EXHIBIT 2
PAYMENT SCHEDULE
Year Schedule of Payments from Santa
Monica Redevelopment Agency to the
City of Santa Monica
2010-11 $72,247,000
2011-12 $76,488,000
2012-13 $80,880,000
2013-14 $85,451,000
2014-15 $90,206,000
2015-16 $95,150,000
2016-17 $100,292,000
2017-18 $105,643,000
2018-19 $111,203,000
2019-20 $116,988,000
2020-21 $123,004,000
2021-22 $129,263,000
2022-23 $135,770,000
2023-24 $142,536,000
2024-25 $ 149,575,000
2025-26 $ 156,893,000
2026-27 $ 164,507,000
2027-28 $ 172,424,000
2027-29 $ 167,975,000
2029-30 $ 380,090,000
2030-31 $ 184,395,000
2031-32 $ 193,101,000
2032-33 $ 202,156,000
2033-34 $ 211,572,000
2034-35 $ 221,365,000
2035-36 $ 231,550,000
2036-37 $ 242,142,000
2037-38 $ 253,158, 000
2038-39 $ 264,615,000
2039-40 $276,529,000
2040-41 $288,921,000
2041-42 $301,808,000
Reference Contract No.
9318 (CCS) and amended
Contract No. 8180 (CCS)