SR 08-23-2011 3SRedevelopment Agency Meeting: August 23, 2011
Agenda Item:
To: Chairperson and Redevelopment Agency
From: Andy Agle, Director of Housing and Economic Development
Carol Swindell, Director of Finance
Subject: Redevelopment Agency Enforceable Obligation Payment Schedule
Recommended Action
Staff recommends that the Redevelopment Agency adopt the attached Resolution
approving the Redevelopment Agency's Enforceable Obligation Payment Schedule.
Executive Summary
This report recommends that the Redevelopment Agency, under protest and subject to
reservation, adopt -the attached resolution, approving the Enforceable Obligation
Payment Schedule, for the purpose of preserving all rights to make payments and
perform enforceable obligations associated with the Agency's Priority Projects and Five-
Year Implementation Plan. The report also provides an update on the status of the
lawsuit challenging the legality of ABX1 26 (AB 26) and ABX1 27 (AB 27).
Background
On August 9, 2011, the City Council took actions to ensure the continued existence of
the Redevelopment Agency. Specifically, Council introduced an ordinance to
participate in the Alternative Voluntary Redevelopment Program permitted under AB 27
and authorized a Remittance Agreement between the City and Agency to transfer funds
to the City for the City's payment of an annual remittance to the County Auditor-
controller.
Following this meeting, on August 11, 2011, the California Supreme Court issued a stay
(Stay) in the litigation action, California Redevelopment Association v. Matosantos
(S194861), which challenges the constitutionality. of AB 26 and AB 27. The Stay was
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granted on and on all provisions of AB 27, and on all provisions of AB 26, except that
the request to stay Division 24, Part 1.8 of the Health and Safety Code (Health & Safety
Code, §§ 34161-34167) was denied. In response, counsel for the California
Redevelopment Association (CRA) communicated to agencies concern that the wording
of the Stay was ambiguous as to AB 26, in that Part 1.8 also includes sections 34168-
34169.5. In particular, section 34169 imposes additional obligations on Redevelopment
Agencies, including the adoption of the Enforceable Obligation Payment Schedule (EOP
Schedule).
On August 17, 2011, the California Supreme Court modified the Stay. First, it clarified
that the exception to the Stay of AB 26 includes all of Part 1.8, including section 34169.
Second, the Court modified the Stay of AB 27 to except from it Health & Safety Code,
§§ 34194(b)(2), which provides the procedure for the Director of Finance to determine
the remittance amount due the county auditor-controller from those agencies
participating in the AB 27 "Voluntary Alternative Redevelopment Program."
The effect of the Stay is to preserve the status quo by authorizing redevelopment
agencies to perform under "existing obligations" as defined by the statute while
preventing agencies from undertaking new debt or making new commitments, among
other things, pending the Supreme Court's decision on the merits of petitioners' claims
that AB 26 and AB 27 violate the State Constitution and other laws. The August 17
modifications to the Stay have the effect of reviving portions of the previously stayed
statutory scheme that require actiohs be taken by agencies, cities and the state during
the period before January 15, 2012, by which time the Court intends to have rendered
its decision. These actions include the adoption of the EOP Schedule under AB 26 and
the determination of the remittance payment amount required by agencies opting in to
the Voluntary Alternative Redevelopment Program under AB 27.
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On August 15, 2011, the City submitted its appeal to the State Department of Finance
on its Remittance Payment. The appeal was filed subject to the City's right to augment
or amend the appeal based on changed circumstances or new information while not
waiving the rights of the City or Agency under the stay or to challenge the validity of the
provisions of ABX1 26 and ABX1 27. The appeal was timely filed under the Stay
modification that excepted Health & Safety Code, §§ 34194(b) (2) from the stay of AB
27.
Special Counsel for the Agency and the City has opined that the Agency should adopt a
resolution approving the EOP Schedule, subject to full reservation of rights under the
stay, to preserve all rights to make payments and perform enforceable obligations
associated with the Agency's projects until the Supreme Court makes further
modifications to the stay or makes its final determination in the underlying litigation.
action.
Discussion
Staff has prepared the EOP schedule to set forth all of the Agency's obligations
determined to be enforceable obligations under Section 34167(d). Staff recommends
that the Agency adopt the attached Resolution and the accompanying EOP Schedule in
Exhibit 1 to provide the Agency additional protection in performing its enforceable
obligations, including enforcing existing covenants and making payments thereunder.
Next Steps
After the EOP Schedule is adopted, staff will post the schedule on the Agency's website
and send notice to the State Department of Finance, State Controller and County
Auditor-Controller.
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Financial Impacts & Budget Actions
There are no budgetary impacts associated with the adoption of the resolution and EOP
Schedule. The EOP Schedule simply sets forth the Agency's existing financial
obligations.
Prepared by: Nia Tang, Senior Development Analyst
Approved:
Andy Agle, Director
Housing and Economic Development
Director, Finance
Attachments:
Attachment A: Resolution
Forwarded to Council:
,~°-~
Rod Gould
City Manager
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The Retlevelopment Agency of the City of Santa Monica
All Project Areas
ENFORCEABLE OBLIGATION PAYMENT SCHEDULE
Per AB 26
inclutling but not bmRetl to the following affortlable housing prolec
• HigM1 Place West [aka: 1942-54 High Place 8234539 Virginia Ave.]
• HigM1 Place East [aka: 1940-59 High Place]
• FAME [aka: 95419th Sq 195819th St S 1924-30 Euclitl St]
• 2802 Pico Blvtl.
• 450-508 Pico Elvtl.
• 520 Coloratlo Ave.
• 1616 Ocean Avenue
}~~vi~~
~xh~(o~t- 11
~-~em 3 -S
P
t N Total Due During Pa ments b month
rotec
ame I Debt Project Area Payee Description Fiscal Year 11-t2 ug ep c ov ec o a
1 Arizona and 4th Notes Eadh wake S u in et al Pro ert ac uisitien 1 697440.00
2) Wells Fargo Term Loan Earthquake Wells Fargo Variety of public uses, including 5,258,871.00 81,096.42 81,096.42 81,096.42 81,096.42 81,096.42 405,482.10
a ale housino
3) 2017 Eanhquake RDA Earthquake Union Bank Variety of public uses, including 1,137,206.00 - - _ _ _
Ba a o d ousin
4) 2006 Eadhquake RDA Earthquake Mellon Bank Property acquisition antl 1,113,647.00 - - - _
e 'e Bo tls im rove ents
5) 2006 Earthquake RDA Eadhquake Mellon Bank Property acquisition antl 110,137.00 - - _ _
ies Bonds 'm ave a is
6) 2002 Ocean Park Bontls Ocean Park Mellon Bank Property acquisition antl 249,005.00 - - _
development, including
r
7) Bank of America Line. of
' Earthquake Bank of America Affordable Housing 610,016.00 50,834.67 50,834.67 50,834.67 50,834.67 50,334.67 254,173.35
E Low/MO Deve ent
e) Promissory notes Downtown City of Santa Downtown property acquisition 1,714,000.00 - - _ _
payable Monica and Agency atlministrative
P
9) Promissory notes Ocean Park City of Santa Advances for Agency - - _ _ -
avable Me ica atl inistra 'v enses
10) Master Cooperation Earthquake City of Santa Development of various public 76,488,000.00 _ _ _ _
Agreement Monica improvements and affortlable
11) Reimbumement All City of Santa fteimbursemenl for 302,504.00 25,208.67 25,208.67 25,208.67 25,208,67 25,208.67 126,043.35
Agreement LOw/MOtl Monica atlminisVative expenses of the
t2) Reimbursement Downtown CRy of Santa Reimbursement for 193,914.00 16,159.50 16,759.50 16,159.50 16,159.50 16,159.50 80,797.50
Agreement Monica atlministrative expenses of the
13) Reimbursement Earthquake City of Santa Reimbursement for 5,169,652.00 430,804.33 430,804.33 430,804.33 430,804.33 430,804.33 2
154
021.65
Agreement Monica administrative expenses of the ,
,
14) Reimbursement Ocean Park Cily of Santa Reimbursement for 262,913.00 21,909.42 21,909.42 21,90942 21,909.42 21,909.42 109
547.70
Agreement Monica administrative expenses of the ,
t5) Pass Through Agreement Earthquake Various Taxing Pass through payments to other 7,100,000.00 - 7,100,000.00 - - 7
100
000.00
Payments Entities agencies (Excluding the LA: ,
,
u v'
16) Civic Center Joint Use Earthquake Santa Monica Civic Center Joint Use Project 11,712,000.00 - 2,798,250.00 1,016,250.00 1,016,250.00 1,016,250.00 5,847,000.00
llhn I
77) Promissory Notes: 2003 Eanhquake Cily of Santa Promissory Notes 3,669,697.50 - - - _ _
Parking Structures 1-6 Monica
Acquisition
AUG 2 3 2011
PeAe t a! 1
Reference Resolution
No. 533 (RAS)