HomeMy WebLinkAbout2012-07-24 OB Agenda Phillip B Greer APCPHILLIP B GREER APC
ATTORNEY AT LAW
ORANGE COUNTY
1300 Bristol Street North suite 100
Newport Beach, California
92660
(949) 640 -8911
Mr. Phil Williams
Via Email
Re= Lake Elsinore Oversight Board
Dear Mr. Williams:
INLAND EMPIRE
40035 Winchester Road E -165
Temecula, California
92591
(951)684 -1660
July 24, 2012
As we have discussed, after reviewing various documents, it is the
opinion of this office that the Oversight Bord of the Successor Agency to the
Redevelopment Agency of the City of Lake Elsinore retain independent
counsel.
I refer first to the Memorandum from Barbara Leibold to the Board
on April 24, 2012 wherein she states that she is representing the City of
Lake Elsinore in the proceedings. This is nothing short of an admission of
both an existing and potential conflict of interest. Ms. Leopold should be
commended for pointing this out to the Board. 1 have attached a copy of
her memo to this correspondence for your review.
As discussed in the minutes and reports from various cities around
the state, most, if not all successor agencies are retaining separate counsel.
The reason is quite clear; the manner in which the agencies have been
created and structured give rise to various, real and potential, conflicts between
the agency and its various members. It is important to put into place individuals
and mechanisms which will, from the start, eliminate those conflicts.
Phillip B Greer
Attorney at Law
surfiaw@aol.com
1300 Bristol Street north (949) 540 -8911
suite 100 (949) 955 -9069 (tax)
Newoort Beach. California
Phil Williams
Re: Successor Agencies
July 24, 2012
Page Two
The attached articles also demonstrate that the agencies are going to
face challenging and complex litigation as the various Successor Agencies begin
to deal with issues ranging from valuation to distribution to disbursement of proceeds
from distribution. I would suggest that it would be in the Agency's best interest to have
counsel already on staff when these issues arise.
Per our previous conversation, I would appreciate the opportunity
to meet with you and your fellow board members to discuss how my office
might be able to serve the Board and help it navigate what might potentially
be some very rough legal and political seas over the next two years.
Thank you for your time and attention.
cer ly
hi p B ( er
Fil
OVERSIGHT BOARD OF THE
SUCCESSOR AGENCY TO THE REDEVELOPMENT
AGENCY OF THE CITY OF LAKE ELSINORE
TO: MEMBERS OF THE OVERSIGHT BOARD
FROM: BARBARA LEIBOLD, SUCCESSOR AGENCY COUNSEL
DATE: APRIL 24, 2012
SUBJECT: LEGAL COUNSEL
On January 10, 2012, the City of Lake Elsinore elected to serve as the Successor
Agency to the Redevelopment Agency of the City of Lake Elsinore. The Successor
Agency is now responsible for the winding down of the Agency's obligations subject to
monitoring by, and approval of, the Oversight Board, The Successor Agency will have
its own oversight board until 2016, when all oversight boards will be consolidated into
one county -wide Oversight Board.
California Health & Safety Code Section 34179 requires (i) the formation of oversight
boards for each successor agency to the former redevelopment agencies; (ii) defines
the composition of the oversight board; (iii) defines what constitutes a quorum; (iv)
states that oversight boards must comply with the Ralph M. Brown Act, the California
Public Records Act, and the Political Reform Act of 1974; and (v) that oversight boards
have a fiduciary responsibility to holders of enforceable obligations and the taxing
entities that benefit from distributions of property tax and other revenue.
Discussion:
At the Oversight Board Meeting on April 10, 2012, a number of questions were asked
about the role of the Oversight Board and the staff members attending the meeting,
Including legal counsel. The purpose of this Report is to reiterate to the Board Members
and their respective appointing bodies that as the City Attorney of the City of Lake
Elsinore, I am attending the Board meetings as counsel to the City of Lake Elsinore,
both in its capacity as the City and in its capacity as the Successor Agency to the Lake
Elsinore Redevelopment Agency. As such, I represent the interests of the City and the
Successor Agency. I do not represent the Oversight Board.
Under the law, the Oversight Board is charged with governing the dissolution of the
former redevelopment agency while protecting the interests of the taxing entities. The
AGENDA ITEM 3 Page 1
Legal Counsel
April 24, 2012
Page 2
members of the Oversight Board act as fiduciaries with respect to the various taxing
entities that benefit from distributions of property tax and other revenue.
Though I do not represent the Oversight Board, I am available to answer procedural
questions and can refer the Board to relevant statutory or regulatory provisions during
the course of an Oversight Board meeting in my capacity as counsel to the Successor
Agency and City Attorney. In the event a conflict arises between the interests of the
City and /or the Successor Agency on the one hand, and the Oversight Board and taxing
entities on the other hand, Members are may consult with legal counsel to the entity that
appointed you.
Recommendation:
That the Oversight Board review and file this Report.
Prepared and approved by: Barbara Leibold,
City Attorney /Successor Agency Counsel
AGENDA ITEM 3 Page 2
IV
_. -- - January 30, 201
TO: Honorable Mayor and City Council
FROM: Economic Development, Office of the City Manager
SUBJECT: DISSOLUTION OF THE PASADENA COMMUNITY DEVELOPMENT
COMMISSION ( "PCDC ") PURSUANT TO AB X1 26.
RECOMMENDATION:
It is recommended that the City Council take the following actions:
1. Adopt a resolution confirming that the City will serve as the Successor Agency to
the Pasadena Community Development Commission ( "PCDC'), pursuant to
Assembly Bill X1 26; and
2. Adopt a resolution assuming all functions previously assigned to the Community
Development Committee in the Pasadena Municipal Code.
EXECUTIVE SUMMARY:
On December 29, 2011 the California Supreme Court issued a decision in the case
entitled Community Redevelopment Association et. al., v. Ana Matosantos. The Court
upheld Assembly Bill X1 26 ( "AB 26 "), the redevelopment elimination bill and struck
down Assembly Bill X1 27 ( "AB 27 "), the bill that would have allowed redevelopment
agencies to remain in operation as long as they made payments to the state. As a
result of this ruling, the redevelopment operations of the PCDC will be eliminated
effective February 1, 2012. This report outlines the impacts of this action on the City of
Pasadena.
BACKGROUND:
On December 29, 2011, the California Supreme Court ( "Court ") issued its final opinion
in the redevelopment related litigation action, California Redevelopment Association et
al. v. Ana Matosantas et al. ( "CRA Litigation "). Specifically, the Court upheld as
constitutional AB 26, the legislation that freezes redevelopment activities and dissolves
community redevelopment agencies throughout the State, and struck down as
unconstitutional AB 27, the legislation that would have allowed cities and counties to
continue to operate redevelopment agencies by making voluntary payments to the
MEETING OF 1/3 112012 AGENDA ITEM NO. - 12_.._.___..,._.
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 2 of 9
State, counties, school districts and other local government bodies. The Court found
that AB 26 was a proper exercise of the legislative power vested in the Legislature by
the California Constitution but found that AB 27 violated Proposition 22.
The Court's decision to uphold AB 26 and strike down AB 27 effectively eliminates
redevelopment in California which for the past 60 years enabled local governments to
address blight, produce affordable housing and facilitate economic development thereby
increasing the tax -base and producing jobs. Considering the legislative intent was not
the complete elimination of redevelopment, there is some hope that State lawmakers
will ultimately pursue the creation of a similar program to facilitate economic
development, affordable housing, brownfield mitigation, and sustainable development.
In the near term, however, it doesn't appear likely that efforts to breathe new life into
redevelopment, including a postponement of the effective date of elimination, will be
successful. Consequently, the City must move forward in a manner consistent with the
current state of the law.
As discussed above, AB 26 eliminates all redevelopment agencies effective February 1,
2012 and replaces them with Successor Agencies, which in turn are subject to review
by Oversight Boards, the Department of Finance ( "DOF ") and the State Controller's
Office ( "SCO ").
Successor Agencies
Pursuant to AB 26 "Successor Agencies" are designated as successor entities to the
former redevelopment agencies. The Successor Agencies possess "ail authority, rights,
powers, duties, and obligations previously vested with the former redevelopment
agencies under the Community Redevelopment Law." Successor Agencies are
responsible for:
• Paying for and performing Recognized Enforceable Obligations.
• Maintaining reserves in the amount required by tax allocation bonds or similar
documents.
• Paying unencumbered balances of funds, including Low and Moderate Housing
funds to the County Auditor - Controller ( "CA -C ") for distribution to the taxing
entities.
• Disposing of assets and properties aimed in a manner at maximizing value as
directed by the Oversight Board. Proceeds from asset sales and related funds
that are no longer needed to close -out the affairs of redevelopment agencies, as
determined by the Oversight Board, shall be transferred to the CA -C for
distribution as property tax proceeds.
• Transferring all of the housing functions and assets to the appropriate entity.
• Collection of debts.
• Oversee the development activities of properties deemed to be enforceable
obligations by the Oversight Board and the California Department of Finance
( "DOF ").
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 3 of 9
Essentially, the main purpose of Successor Agencies is to wind down the operations of
redevelopment agencies through the extinguishing of Recognized Enforceable
Obligations, which are defined as payments for outstanding bonds and loans, payments
required by federal or state government or for employee pension obligations, judgments
and settlements, legally binding and enforceable agreements or contracts including
those for administration or operations, subject to the approval of Oversight Board,
discussed below, and the DOF.
Under the provisions of AB 26, cities and counties that established redevelopment
agencies would become the Successor Agency for the respective agency unless they
opted out by January 13, 2012. Some cities, including the cities of Los Angeles, Pico
Rivera, Merced and Pismo Beach have chosen to opt out. In the case of Los Angeles,
the two primary reasons for this decision are concerns regarding the cost of shifting
employees from the Community Redevelopment Agency of Los Angeles, which
operates as an independent entity, to the City of Los Angeles and potential liability from
lawsuits that are expected to arise as a result of that city's inability to complete projects.
For Pasadena, and the majority of other cities with redevelopment agencies, electing to
serve as the Successor Agency is considered the best way to ensure the City's interests
are maintained, albeit within the limited scope provided by AB 26. The PCDC is
currently not engaged in any development activity that should give rise to litigation
concerns such as those cited by Los Angeles and some other agencies. And while
there are significant fiscal impacts which must be addressed and are discussed further
in this report, this would be the case whether or not the City serves as the Successor
Agency.
While it is not necessary for the City Council to do so based on the language of AB 26,
legal counsel recommends the adoption of a resolution confirming the City's election to
serve as the successor agency to the Pasadena Community Development Commission.
Oversight Board
In addition to the creation of Successor Agencies, AB 26 increases the power of the
County Auditor - Controller, the State Controller, and the State Department of Finance
and establishes the creation of Oversight Boards. The Oversight Boards, which are to
be appointed by May 1, 2012 will report to the DOF, and will supervise the activities of
Successor Agencies. Oversight Boards will have "fiduciary responsibilities to holders of
enforceable obligations and the taxing entities that benefit from distributions of property
tax and other revenues." Each Board will consist of seven (7) members, four of which
are under the control of the County and to be appointed as follows:
• One member appointed by the county board of supervisors.
• One member appointed by the mayor for the city that formed the redevelopment
agency.
• One member appointed by the largest special district, by property tax share, with
territory in the territorial jurisdiction of the former redevelopment agency.
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 4 of 9
• One member appointed by the county superintendent of education to represent
schools if the superintendent is elected. If the county superintendent of
education is appointed, then the appointment shall be made by the county board
of supervisors.
• One member appointed by Chancellor of the California Community Colleges to
represent community college districts in the county.
• One member of the public appointed by the county board of supervisors.
• One member representing the employees of the former redevelopment agency
appointed by the mayor or chair of the board supervisors, as the case may be,
from the recognized employee organization representing the largest number of
former redevelopment agency employees employed by the successor agency at
that time.
AB 26 provides that if the Board positions are not filled by May 15, 2012, then the
Governor shall make the appointments.
The specific powers of the Board include, but are not limited to:
• Approving new repayment terms for outstanding loans.
• Issuance of refunding bonds in order to provide for savings or to finance debt
service.
• Maintaining reserves in the amount required by tax allocation bonds or similar
documents.
• Merging of project areas.
• Continuing the acceptance of grants if they require a match of more than five
percent.
• Approving the retention of certain projects as development projects by the
Successor Agency.
• Approving the Recognized Obligation Payment Schedule ( "ROPS "). The ROPS
will need to be submitted to the State Controller and Department of Finance by
April 15, 2012, which is prior to the May 1, 2012 date for Board formation.
• Approving requests by the City to hold portions of the moneys of the Low and
Moderate Income Housing Funds in reserve in order to provide cash to fund
recognized obligations.
• Approving disposal of all assets and properties not deemed part of approved
development projects. In the alternative, the Board may direct the Successor
Agency to transfer ownership of assets used for a governmental purpose, such
as roads, schools, parks and fire stations, to the appropriate public jurisdiction for
compensation as determined by the agreement relating to the construction or use
of the asset.
• Ceasing and terminating all existing agreements that do not qualify as
Enforceable Obligations.
• Transferring housing responsibilities and all rights, powers, duties and obligations
along with any amounts on deposit in the Low and Moderate Income Housing
Fund to the appropriate entity.
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 5 of 9
• Terminating any agreement between the former redevelopment agency and any
public entity that obligates funding for debt service obligations of the public entity
or for construction or operation of facilities of the public entity if that would be in
the best interest of the Property Tax Recipients.
• Re- negotiating or terminating contracts with third parties to reduce liabilities or
increase net revenues. This may include payments or remediation as necessary.
The Board may not enter into new contracts for any new economic development
projects that are not included on the approved Enforceable Obligations list. All actions
of the Board may be reviewed by the DOF. The DOF will have three days from the date
of Board actions to request a review and 10 days to approve an action or return it to the
Board for reconsideration. This final action must be approved by the DOF.
Administrative Budget
AB 26 requires the Successor Agency to prepare an Administrative Budget that is
subject to the approval of the Oversight Board. The bill provides for an Administrative
Cost Allowance (i.e., cap) equal to five percent of the debt service payments as listed
on the Enforceable Obligation Payment Schedule ( "EOPS ") for the remainder of FY
2012. Beginning in FY 2013, the cap is three percent of the debt service payments as
listed on the Recognized Obligations Payment Schedule, with a minimum amount of
$250,000. Additionally, certain administrative and general costs directly related to
Enforceable Obligations may be included on the Recognized Obligations Payment
Schedule for which property tax dollars will be provided over and above the
Administrative Cost Allowance.
Based on projections for both the Housing Department and the City Manager's Office of
Economic Development, which were both funded in part by Redevelopment, the
Administrative Cost Allowance should be sufficient to cover anticipated expenditures
through the remainder of the current fiscal year without any additional impact on the
General Fund. That this is the case is testament to Pasadena's conservative use of
redevelopment funds.
Nevertheless, on a go- forward basis, in order to remain within the three percent
limitt$250,000 minimum, significant budget reductions will be necessary. These
reductions, which will include staffing, will be made contemporaneously with other
budget reductions expected to occur in the City's General Fund within the next several
weeks.
Community Development Committee and the Municipal Code
With the elimination of the Pasadena Community Development Commission, it is no
longer possible for the Community Development Committee to carry out the purpose
and functions assigned to it in the Municipal Code which are to "review and make
recommendations on all matters to come before the community development
commission prior to commission action" (PMC Section 2.70.110). To the extent the
Municipal Code contains requirements calling upon the Community Development
Committee to take particular actions on matters prior to the time those matters are
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 6 of 9
brought before the City Council, staff recommends that the City Council adopt a
resolution assuming responsibility for carrying out those actions itself.
Next Steps
Effective February 1, 2012 the City of Pasadena will become the successor agency for
the Pasadena Community Development Commission. In its role as successor agency
there are a number of steps for the City to take. These items are outlined below and will
be presented during the month of February.
1. Appoint members to the Oversight Board as outlined above.
2. Make an Election with respect to Housing Assets and Functions of the Former
Redevelopment Agency. Pursuant to AB 26 a city may elect to retain the housing
assets and functions previously performed by the redevelopment agency.
Alternatively, the city may select either the city housing authority (if there is one) or
the county housing authority (if there is one) or the Department of Housing and
Community Development (only if there is no local housing authority) to receive the
housing assets and perform the housing functions.
The provisions of AB 26 relating to housing assets and functions are vague and
ambiguous and it is likely that cleanup legislation will be adopted in the future. In the
meantime, AB 26 provides that moneys on deposit in the Low and Moderate Income
Housing Fund are to be turned over to the county auditor - controller for distribution to
the taxing entities. AB 26 does not appear to provide for any ongoing funding for
housing. Furthermore, it is unclear under AB 26 what constitutes a housing asset
and what rights, powers, duties, obligations, and liabilities are associated with the
housing assets and functions of former redevelopment agencies. Examples of
unresolved issues include the following:
• What constitutes a housing asset? Is vacant property acquired with moneys in
the Low and Moderate Income Housing Fund a housing asset to be retained by
the entity performing housing functions, or an asset that must be sold to raise
proceeds for the benefit of the taxing agencies?
• Will the entity performing housing functions be entitled to keep rents and other
income derived from housing assets or the proceeds from the repayment to the
Low and Moderate Income Housing Fund of loans previously made from the Low
and Moderate Income Housing Fund?
• Will the entity performing housing functions be obligated to comply with the
affordable housing requirements of the Redevelopment Law, such as housing
production and inclusionary requirements, replacement housing requirements,
and targeting requirements (by age and income)?
• Will the entity performing housing functions have all of the powers set forth in the
Redevelopment Law with respect to affordable housing, such as the authority to
provide rental subsidies to low and moderate income households?
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 7 of 9
3. Adopt a resolution of the City Council (acting as the Governing Body for the
Successor Agency) Establishing Basic Governance, Rules, and Regulations
for the Successor Agency. The language of AB 26 is not clear as to the legal
status of the successor agency and whether it is a different and separate legal entity
from the City. Some language in AB 26 supports the conclusion that the Legislature
intended that the successor agency and the City are separate legal entities. In
addition, a recent letter by the author of AB 26, Assembly member Blumenfeld, to
the California State Assembly supports the conclusion that when a city elects to act
as a successor agency, the successor agency is separate from the city and the
liabilities of the successor agency are not the liabilities of the city. Ultimately, this
issue may be one that the State Legislature or the courts are called on to clarify.
However, it is in the best interests of cities electing to serve as successor agencies
to proactively take steps within their power to support the position that the city and
the successor agency are separate legal entities under AB 26, including by treating
them as separate legal entities from the start.
4. Adopt a resolution of the Successor Agency -- Creating a Redevelopment
Obligation Retirement Fund. Each successor agency is required to create a
Redevelopment Obligation Retirement Fund. The purpose of this fund is to receive
moneys from the county auditor - controller for the payment of enforceable obligations
of the former redevelopment agency.
5. Adopt a resolution of the Successor Agency -- Adopting an Enforceable
Obligation Payment Schedule and Recognized Obligation Payment Schedule.
On September 26, 2011, PCDC adopted an EOPS from which the successor agency
will continue to make payments due for enforceable obligations of the former
redevelopment agency. However, AB 26 established the following schedule for
adopting certain documents:
Following establishment, the successor agency is required to adopt its
own FOPS. In the coming weeks, staff will present an EOPS to the
successor agency for review, and modification and readopt. The EOPS is
subject to review and approval by the Oversight Board. The successor
agency may only make payments for those obligations identified in the
EOPS.
2. By March 1- successor agency must adopt an ROPS. This is a
permanent schedule of obligations that replaces the interim EOPS once
the ROPS has been approved. The County Auditor - Controller will allocate
property tax to the successor agencies to pay debts listed on the ROPS.
3. By April 1 - successor agency reports to the County Auditor - Controller
whether the total amount of property tax available to the agency will be
sufficient to funds its ROPS obligations over the next six month fiscal
period.
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 8 of 9
4. By April 15 — successor agency must send the ROPS to the SCO and the
DOF for approval. The ROPS is also subject to approval of the Oversight
Board.
5. By May 1 — Oversight Boards begin operations, files report of membership
with DOF.
6. Starting May 1 — successor agency may only pay those obligations listed
in the approved ROPS. The approved ROPS replaces the EOPS.
7. On May 16 and June 1 and each Jan 16 and June 1 thereafter— the
County Auditor - Controller transfers property tax to the successor agency
in an amount equal to the cost of the obligations specified in the ROPS.
This amount is transferred into the successor agency's Redevelopment
Obligation Retirement Fund, and payments from this fund are used to
satisfy the obligations identified in the ROPS.
COUNCIL POLICY CONSIDERATION:
The loss of redevelopment will have a significant impact on the City's ability to further its
strategic plan goals to: improve, maintain and enhance public facilities and
infrastructure; increase conservation and sustainability; improve mobility and
accessibility throughout the city, and support and promote the quality of life and the
local economy.
ENVIRONMENTAL ANALYSIS:
Under the CEQA Guidelines Article 5 (Section 15061 (b) (3) describes the "general
rule." The general rule states that CEQA applies only to projects which have the
potential for causing a significant effect on the environment. In this case, electing to
become a Successor Agency," under AB X1 26 is a council policy decision that does not
have the potential of impacting the environment.
Dissolution of the PCDC pursuant to AB X1 26
January 30, 2012
Page 9 of 9
FISCAL IMPACT:
There are several fiscal impacts as a result of the elimination of redevelopment. It is
estimated that the lost opportunity cost in future tax allocation bonding capacity is
approximately $72 million. Second, under AB 26 successor agencies may only collect
tax increment needed to fulfill recognized enforceable obligations, and there is likelihood
that prior agreements between the redevelopment agency and City will not be
recognized as binding resulting in a loss of repayment to the General Fund. The
Housing Department will no longer receive approximately $3 million in tax increment
dollars used to support the development of affordable housing. And the amount of
funding available for economic development throughout the City will be measurably
reduced.
Respectfully submitted,
Steve Mermell
Assistant City Manager
Prepared by:
Qd
David A. Klug IT
Redevelopment _ nager
Approved
City
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2.
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a 't?
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Meeting Location
Council Chamber
Few Memorial Hall of Records
Monterey, California
Successor Agency of the
City of Monterey Redevelopment
Agency
Oversight Board
Agenda
Meeting: June 27, 2012
7:40 - 9:00 p.m.
Board Members:
Chip Rerig, Chair
Mitchel Winick, Vice -Chair
Harvey Kuffner
Chuck Della Sala
Stephen Ma
Dave Potter
Michael Adamson
PUBLIC APPEARANCE
PUBLIC APPEARANCE items are reports on non - routine issues that might stimulate public
discussion, but that do not require formal noticing as public hearings. You are welcome to offer
your comments after being recognized by the Chair. The Oversight Board may limit the time each !:
speaker is allocated
Receive Report to Update the Status of Legal Counsel Selection and Request Direction on
Final Selection Process
Receive Report on Status of Recognized Obligation Payment Schedule (ROPS)
Certification and Approval
Confirm Transfer of Former Redevelopment Agency Housing Assets from Successor
Agency to Successor Housing Agency and Removal of Two (2) Parkland Parcels from
Former Redevelopment Agency Properties List
PUBLIC COMMENTS
PUBLIC COMMENTS allows you, the public, to speak for a maximum of three minutes on any
subject which is within the jurisdiction of the Oversight Board and which is not on the agenda. Any
person or group desiring to bring an item to the attention of the Oversight Board may do so by
addressing the Oversight Board during Public Comments or by addressing a letter of explanation
to: Housing and Property Management Office, 669 Van Buren St, Monterey, CA 93940. The
anorooriate staff oerson will contact the sender concerning the details.
BOARD MEMBER COMMENTS
Boardmembers may ask a question for clarification, make a brief announcement or make a brief
report on his or her activities. In addition, Boardmembers may provide a referral to staff or other
resources for factual information, request staff to report back to the body at a subsequent meeting
concerning any City matter, or direct staff to place a request to agendize a matter of business on a
future agenda. (G.C. 54954.2).
Wednesday, June 27, 2012
ADJOURNMENT
Members of the public have the right to address the Oversight Board on pny item on the Agenda, before
or during Its consideration [G.C. §54954.3(a)]. The Chair will formally open the floor for public comment
on items such as "Public Appearance" and "Public Hearings." If you wish to speak to items in any other
categories, for example "Consent Agenda," please advise the Secretary to the Board or the Chair prior to
the Oversight Board's action on that item, and you will be recognized. Notification as much in advance as
possible is appreciated.
The Oversight Board meeting packet may be reviewed by the public in the Library or the Housing and
Property Management Office. Any writings_or documents pertaining to an open session item provided to a
majority of the Oversight Board less than 72 hours prior to the meeting, shall be made available for public
inspection at the front counter of the Housing and Property Management Office, at 669 Van Buren Street,
Monterey, California 93940 during normal business hours
Information distributed to the Oversight Board at the meeting becomes part of the public record. A copy of
written material, pictures, etc. should be provided for this purpose.
CITY OF MONTEREY'S 24 -HOUR SUGGESTION HOTLINES:
Voicemail: 646 -3799
FAX: 646 -3793
Email: sueaest fti.monterey.ca.us
WebPage: http: / /www.monterey.or-a
The City of Monterey is committed to include the disabled in all of its services, programs and
activities. For disabled access to the City, dial 711 to use the California Relay Service (CRS) to
speak text-to-speech, -
... pe to City offices. CRS offers free text to speech, speech -to speech, and Spanish - language
services 24 hours a day, 7 days a week. If you require a hearing amplification device to attend
a meeting, dial 711 to use CRS to talk to the City Clerk's Office at (831) 646 -3935 to coordinate
use of a device or for information on an agenda.
Draft -- MINUTES
CITY OF MONTEREY
OVERSIGHT BOARD MEETING
Wednesday, May 9, 2012 — 4 - 6 p.m.
COUNCIL CHAMBER, FEW MEMORIAL HALL OF RECORDS
MONTEREY, CALIFORNIA
Oversight Board Members
Present Chip Rerig, Mitchel Winick, Harvey Kuffner, Chuck Della Sala,
Michael Adamson and Stephen Ma
Absent: Dave Potter
City Staff Present: Finance Director and Housing and ofopetty Manager, City Attorney, and
Secretary to Board
CALL TO ORDER Al
Chair Rerig called the meeting to order at 4:03 PM.
1. A Tour of the Redevelopment ProjectAreas;was conducted prior: to the regular meeting; board members
and staff leave for tour and the meeting'closed. brlefiy. Board members return at 4:55 p.m. and the meeting
resumes. Board member Ma joins meeting;,'
OPENING REMARKS
Chair Rerig asks that each troard;tnember introduce himself. `Mr. Adamson said he was nominated by
Monterey Peninsula Regional Patk'District where he --i0, a` `Birard srtaember for 5 years. It is the largest
beneficiary of tax dollars in the County;, and he currently works for`Monterey County Bank. He's also a
private consultant and `6wns an Antious shop with' his wife. Mr. Kuffner said he was appointed by
Superintendent of Schools ,for, Monterey County, He' 1;;, the representative for the area covering Carmel,
Monterey and ,Big Sure Mr. Delis Sala kl .des nominated by Chip Rerig; he's the Mayor of Monterey
and owns a commeroiglapr- perty,reaity businos5 =tor the p t 34 years. Mr. Ma said he was appointed by
the Statetha'ncellor's `r i -,and is the Dean of Admirisfrative of Services for Monterey Peninsula College.
He joined' MPC 18 months ago and `he "s, originally from San Diego. Mr. Winick said was appointed by
Monterey County Board of Supervisors and -he's the President and Dean of Monterey College of Law. He
moved from Texas in 2005 and he's beers heie 7 years. He stated that as a result of the Ft Ord Reuse, MCL
received 2.6 acres and a new faciiity,and center were built there. They are LEED buildings and were the first
redone as PlatiniA T EED. Mr. Rerig said he's the Chief of Planning, Engineering and Environmental
Compliance for the City of Monterey and manages a number of offices; said he was appointed by the Mayor
and confirmed by City CoGnGai and "represent the largest employee group that was formerly the RDA.
APPROVALSOF MINUTES
2. The Minutes of the April 25, 2012 meeting were approved by the following vote:
On a motion by Member Adamson and seconded by Member Della Sala. The motion carried unanimously
by the following vote:
PASSED AND ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY
SUCCESSOR AGENCY this 9th day of May, 2012, by the following vote:
AYES: MEMBERS: Rerig, Winick, Della Sala, Adamson, Kuffner, Ma
NOES: MEMBERS: None
ABSENT: MEMBERS: Potter
ABSTAIN: MEMBERS: None
PUBLIC APPEARANCE
3. Adopt By -Iaws for the Oversight Board for the City of Monterey Successor Agency
Staff Presentation /Board Member Questions
Staff member Marvin presented a report to the Board. He stated that City's counsel, Goldfarb & Lipman
assisted staff in the preparation of the Bylaws and that if Board members request any information, Goldfarb
& Lipman would be able to provide their legal assessment.
Board Comments:
Board member Delia Sala asked whom from Staff had reviewed the, By -taws. Staff member Marvin stated
that only him and no other staff member had reviewed the By- Laws
Board member Kuffner had a question about the language on Seettor 3(04) - Page 4 of the By -Laws being
proposed. City attorney Davi stated that she would double, cheek'but ihat be language Mr, Kuffer referred to
came out of the statute and that 6 the Superintendent 166 Monterey County Office of Education is elected,
then she could appoint. Staff member Marvin stated,! t" that section on page 4 could be modified but that a
motion to amend needs to be made.
Board member Winick questions Section 3(b) 'Duratlon." He asked "ii the Board completes its business
earlier, then Part 1 then would the Successor Agency be'placed:0!,a policy risk. City' attorney Davi stated
that those dates are pursuant to the statute and that as of 2016, Ah6se will all be gone and the winding down
mode for the SA would be to "institute" another board.
Board Member Kuffner moves to approve the , By4aws with corrections, referenced on page 4 of the By-
Laws.
Public Comments:
Chair Rerig opened discussion to members of public onthis item. Having no requests to speak, Chair
Rerig closed public comment,
MOTION:
PASSED AND ADOPTED B`Y,,T -{E OVERSIGHT BOARD TO THE CITY OF MONTEREY
SUCCESSOR"AGENCY this 0th clay of May, 2012, by the following vote:
AYES:
MEMB)q] St
Rerig, Winick, Della Sala, Ma, Adamson, Kuffner
NOES:
MpMHms:
None
ABSENT:
MEMB S:
Potter
ABSTAIN:
MEMBERS:
None
Solicitation of Legal Counsel for the Oversight Board
Staff Presentation/Board Member Questions:
City Attorney Davi presented the report and answered Board's questions. She stated that it is important to
seek outside legal counsel to avoid any conflict of interest between City and the Oversight Board. The
funding would be out of the Administrative Budget ($250,000). City Attorney office could send out a
request for proposals for any interested attorneys for this type of position. Her office would review
responses received and bring it back to Board for review /approval. The Board may choose not to have a
counsel, but there are FPPC, Brown Act and other laws applicable to running this Board;
Public Comments:
Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair
Rerig closed public comment.
Board Comments-
Board member Kuffner asked Ms, Davi if counsel is appointed, would that individual have to be present at
all meetings. City attorney Davi stated that other Oversight Boards have solicited counsel on a "As
Needed Basis." Other cities have obtained a conflict waiver, but she did not recommend this course of
action,
Board member Winick stated that unless there are items needing counsel, then the Board should select
someone and On -Call basis.
Board member Adamson stated that it would be okay to have an•Attorney present just to keep them "in
order."
Board member Delia Sala asked if City attorney Davi wou(d',be:returning to Oversight Board meetings.
City attorney Davi stated that she could return and provide�*formatlon on the Brown Act, but she is not
sure about being comfortable to answer Oversight Board+a.gbestions.
Board member Delia Sala asked if there is a list of attoriys available to work for Oversight Boards.
Board member Winick asked for City Attorney's recoomondatiom for those°attorneys R an RFP is going
out. He mentioned that the City of Fresno's Oversiobtl3oard was sued by their oWn city attorney.
Chair Rerig asked City Attorney Davi if she would be able to provide counsel on most,ilems. City Attorney
replied negatively. The request was made,to City Attomey lJjA,to prepare and bring information for the
Request For Proposals process soliciting counsel to the Oversight Board.
S. Approval of Initial Recognized Obligao6n 1'aYtnent Scltei'tule
Staff Pr entati n Bo r d Mertiber e ti n
Finance Director Rhodes_prescnted ia Power Point,presentatUn'14egarding the Initial ROPS and a second
ROPS. He stated that toe will be asked t6 ,,a ove theInitial Fit3PS, and then review and approve
the second ROPS. The'Second ROPS'fends the socor d six -month period of 2012. The Initial RODS is the
largest item on the list and It contains a list of Prrajects.;,.
Staff member;Marvin; stated that $9,2 Million dollars were Identified as funds to replace low income units.
These fords; `3rl6in4ed front the 'sale -;of 10 -deed `j`estricteid BMR units which were sold at market -rate.
They were purchased with, RDA funds; a $5.OM seawall needed to be put in place. The assessed HOA
fee did n fi make these Units affordable.arfd they need to be replaced with another 10 in the community.
These are obligations of affordable, housing and he recommended replacement of these conversion units
so that Successor Housing Agency (SHA) can continue to count the units and meet the City's low and
moderate income tfousing laws. Just,like the Monterey Hotel, these are housing assets and they need to
be transferred to th0SHA. In the future Successor Agency will be requested to transfer them to SHA.
i tZlk
Chair Rerig opened discus slon;to members of public on this item. Having no requests to speak, Chair
Rerig closed public comment.``'
Board Comments:
Chair Rerig restated that RDA law, as it relates to housing, has not been eliminated; City is still obligated
to provide affordable housing. Mr. Marvin said that if City redevelops an area and remove units of
affordable housing, the law requires that those units be replaced.
Board member Ma asked for clarification of the ownership of the Monterey Hotel and who owns it. Staff
member Marvin said that City (RDA) is in a second position in regard to its debt; Rabobank is in first
position; the Owner was never removed as the owner and that City is trying get into a better position and
anticipate that Rabobank will be renegotiating with Owner.
MOTION:
On a motion r member inick sects d b Member Kuffner th Board moved unanlmously to
approve the Initial BOPS.
PASSED AND ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY
SUCCESSOR AGENCY this 9th day of May, 2012, by the following vote:
AYES: MEMBERS: Rerig, Winick, Della Sala, Ma, Adamson, Kuffner
NOES: MEMBERS: None
ABSENT: MEMBERS: Potter
ABSTAIN: MEMBERS: None
6. Approval of Second Recognized Obligation Payment Schedule
Staff Pre §entationjBoard Member Questions:
Finance Director Rhoads presented the staff report and answdred;
that Board members would not be approving the reimbursementagrse
Public Comments:
Chair Rerig opened discussion to members of public on this item. Ir
Rerig closed public comment.
Board Comments:
None.
PASSED AND
SUCCESSOR
questions. He further stated
requests to speak, Chair
311TY OF MONTEREY
vote:
Rerig, Winick, Della Sala, Ma, Adamson, Kuffner
Noire
Potter
None
,elopment Agency Housing Assets from Successor Agency to
Staff member Marvin stated that due;to time constraints in clearing the City Council chambers for another
meeting shortly after the Oversight:Board's, he suggested that the Board take more time to deliberate and
review this item and suggested itto table it for next meeting.
Public Comments:
Chair Rerig opened discussion to members of public on this item. Having no requests to speak, Chair
Rerig closed public comment.
Board Qgmments:
None.
MOTION:
On a motion by Board member Dela Salla, segonded by Board Mem r &OMson, the Bo rd unanimo sl
moved to table this item for next meeting.
4
PASSED AND ADOPTED BY THE OVERSIGHT BOARD TO THE CITY OF MONTEREY
SUCCESSOR AGENCY this 9th day of May, 2012, by the following vote:
AYES: 6 MEMBERS: Rerig, Winick, Della Sala, Ma, Adamson, Kuffner
NOES: MEMBERS: None
ABSENT: 1 MEMBERS: Potter
ABSTAIN: MEMBERS: None
PUBLIC COMMENTS
No member of the public provided input. Public Comments closed
MEMBER COMMENTS
Member Kuffner asked why the Conflict of interest rules: were not revi6vwed,' Staff member Marvin stated
that City can adopt its own and that the City Council will' eview and appiave -those changes. No additional
comments from Board members.
ADJOURNMENT
There being no further business, the meeting adjourned 6t;6,�05 PM
Respectfully Submitted, Approved,
5
ed for June 27, 2012 at 7:00 p.m. The following
Wednesday, July 25, 2012 at 7 p.m.
. C7lxn}tzl�:
.x
Oversight Board to the
Successor Agency
Agenda Report
Date: 06.27 -2012
Item No: 2
FROM: Richard S. Marvin, Housing and Property Manager
SUBJECT: Receive Report to Update the Status of Legal Counsel Selection and
Request Direction on Final Selection Process
RECOMMENDATION:
That the Oversight Board for the City of Monterey Successor Agency receive a report on the
status of legal Counsel Selection and provide direction on the final selection process.
POLICY IMPLICATIONS:
On May 9, 2012 the Oversight Board authorized staff to solicit interested attorneys for the
purpose of providing legal counsel to the Board. Board approval of a selection process is
warranted to assure staff establishes an appropriate scope of work for the legal counsel and
follows an acceptable review process.
FISCAL IMPLICATIONS:
The cost of legal counsel would be paid out of the Oversight Board's Administration budget.
ENVIRONMENTAL DETERMINATION:
Not Applicable.
ALTERNATIVES:
The Board could decide not to retain legal counsel at this time or propose an alternative
selection process. These alternatives are not recommended. The Board had previously
directed staff to pursue legal counsel. The Request for Qualifications (RFQ) process that is
proposed is compliant with City of Monterey procedures for securing professional services
contracts.
DISCUSSION:
On May 9, 2012, the Oversight Board received a report outlining staff's recommendation that
the Board needs legal counsel to advise it on complex matters pertaining to AB 1X 26
implementation. After reviewing that report the Board agreed that legal counsel would be
needed and staff was directed to prepare an RFQ to solicit qualified legal services. Staff
prepared a RFQ (Attachment 1) and it was posted via the Monterey County Bar Association's
listsery on June 12, 2012 and mailed to five attorneys that had expressed an interest in the
position. The deadline for responses is Monday, June 25, 2012. Thus far two proposals have
N204/12
u
OVERSIGHT BOARD FOR CITY OF SAN DIEGO
REDEVELOPMENT SUCCESSOR AGENCY
MINUTES FOR
BOARD MEETING
OF
THURSDAY, MAY 31, 2012
AT 8:30 AM
IN THE COMMITTEE ROOM —12TH FLOOR
202 C STREET, SAN DIEGO, CA 92101
Table of Contents
CHRONOLOGY OF THE MEETING
ATTENDANCE DURING THE MEETING
CHAIR BOARD OVERSIGHT BOARD CONTACT COMMENT
APPROVAL OF COMMITTEE MINUTES
NON - AGENDA PUBLIC COMMENT
ADOPTION AGENDA, CONSENT ITEMS
ITEM 1. - Report from the Oversight Board legal selection sub - committee regarding RETENTION OF
INDEPENDENT LEGAL COUNSEL TO PROVIDE AS- NEEDED LEGAL SERVICES TO THE
3wy 21 i.YCi1CMl1:_��L\ I
ITEM 2 — Report from the Oversight Board Contact regarding UPDATE ON DEPARTMENT OF
FINANCE CONSIDERATION OF THE SUBMITTED INITIAL DRAFT RECOGNIZED
OBLIGATION PAYMENT SCHEDULE, SECOND RECOGNIZED OBLIGATION PAYMENT
SCHEDULE, AND THIRD AMENDED AND RESTATED ENFORCEABLE OBLIGATION
PAYMENT SCHEDULE
ITi M- — Report from the Successor Agency regarding ESTABLISHING A SCHEDULE FOR THE
DATE, TIME AND LOCATION OF FUTURE PUBLIC MEETINGS OF THE OVERSIGHT BOARD
11 [:',M 4 — Report from the Successor Agency regarding ADOPTION OF A RESOLUTION OF THE
OVERSIGHT BOARD FOR THE CITY OF SAN DIEGO REDEVELOPMENT SUCCESSOR
AGENCY APPROVING THE SETTLEMENT AGREEMENT AND RELEASE FOR ACQUISITION
OF THE PROPERTY LOCATED AT 528 -542 14'b STREET
COMMUNICATIONS RECEIVED
ADJOURNMENT
CHRONOLOGY OF THE MEETING:
The meeting was called to order by Chair Mark Nelson at 8:31a.m. The meeting was adjourned by Vice
Chair Peter Q. Davis at 10:00a.m.
ATTENDANCE DURING THE MEETING:
PRESENT:
Mark Nelson, City of San Diego appointee
Maureen Stapleton, Special District appointee
Dr. Bonnie Ann Dowd, California Community Colleges appointee
Andra Donovan, Esq., County Superintendent of Education appointee
Peter Q. Davis, County of San Diego appointee
Supervisor Ron Roberts, County of San Diego appointee
ABSENT:
None
CLERK:
Nancy Gudino
ROLL CALL:
(1) Ron Roberts- present
(2) Peter Q. Davis - present
(3) Mark Nelson- present
(4) Maureen Stapleton - present
(5) Bonnie Ann Dowd - present
(6) Andra Donovan- present
ITEM DESCRIPTION:
Approval of committee minutes from May 11, 2012 meeting.
BOARD ACTION: Action Time: 8:32 a.m.
MOTION BY BONNIE ANN DOWD TO APPROVE. Second by Andra Donovan.
Passed by the following vote:
Yea: Bonnie Ann Dowd, Andra Donovan, Maureen Stapleton, Mark Nelson, Ron Roberts, Peter Q. Davis
Nay: (None);
Recused: (None);
Not Present: (None).
Non - agenda public comment provided by Jim Varnadore and Katheryn Rhodes
Item 1, Report from the Oversight Board Legal Counsel Selection Committee regarding RETENTION
OF INDEPENDENT LEGAL COUNSEL TO PROVIDE AS- NEEDED LEGAL SERVICES TO THE
OVERSIGHT BOARD
ITEM DESCRIPTION:
Receive a report from the Oversight Board ad -hoc selection committee regarding the recommendations
on respondents to the Request for Qualifications for Legal Services for the Oversight Board of the
Successor Agency to the City of San Diego Redevelopment Agency.
Adopt a resolution including the following:
Select legal counsel through and including December 31, 2013;
Authorize the ad -hoc selection committee to negotiate and execute a contract with the selected legal
counsel not to exceed a Board determined amount; and
Authorize Successor Agency staff to prepare any and all amendments to the Recognized Obligation
Payment Schedules seeking to provide funding for legal services and transmit those amendments to the
appropriate agencies.
STAFF RECOMMENDATION:
Approve proposed action.
SUPPORTING INFORMATION:
The Oversight Board is seeking independent legal counsel to provide advice regarding activities to
implement AB 26. Consistent with the Board authorizing the Chair to seek legal counsel and later,
creating an ad -hoc selection committee to continue those efforts, this action includes review and
selection of legal counsel as well as provides a funding source for legal services.
On April 25, 2012 the Oversight Board authorized Chair Nelson to work to identify and contact legal
firms that could serve as legal counsel to the Oversight Board on an interim basis. Staff was asked to
work with the Chair to identify firms that had redevelopment experience and did not have conflicts
with the Successor Agency, the Centre City Development Corporation (CCDC) or the Southeastern
Economic Development Corporation (SEDC).
On May 11, 2012 Chair Nelson reported that the firm best qualified to provide interim legal services,
had chosen to not provide legal counsel to Oversight Boards. Subsequently, the Board approved the
creation of an ad -hoc selection committee and designated Chair Nelson and Board Member Donovan
to serve on the committee. The committee was tasked with coordinating with Successor Agency staff
to prepare and circulate a Request for Qualifications (RFQ) for Legal Services for the Oversight
Board of the Successor Agency to the City of San Diego Redevelopment Agency. The committee was
additionally tasked with reviewing responses to the RFQ and conducting any follow up necessary to
present a recommendation to the Oversight Board.
This action includes a presentation of the recommended legal counsel from the ad -hoc selection
committee. Consistent with previous Board actions, this action authorizes the ad -hoc selection
committee to negotiate and execute a contract with the selected firm. Further, this action directs
Successor Agency staff to prepare an amendment to the relevant Recognized Obligation Payment
Schedules in an amount commensurate with the expected costs for legal services.
BOARD ACTION: Action Time: 8:41 a.m..
MOTION BY ANDRA DONOVAN TO APPROVE RESOLUTION. Second by Peter Q. Davis.
Passed by the following vote:
Yea: Bonnie Ann Dowd, Andra Donovan, Maureen Stapleton, Mark Nelson, Ron Roberts, Peter Q. Davis
Nay: (None);
Recused: (None);
Not Present: (None).
ITEM 2 — Report from the Oversight Board Contact regarding DEPARTMENT OF FINANCE
CONSIDERATION OF RECOGNIZED OBLIGATION PAYMENT SCHEDULES AND OVERSIGHT
BOARD CONSIDERATION OF REVISED RECOGNIZED OBLIGATION PAYMENT SCHEDULE JULY
2012- DECEMBER 2012 (BOPS 2)
ITEM DESCRIPTION:
Receive a report from the Oversight Board Contact regarding communications with the Department of
Finance associated with the submitted Recognized Obligation Payment Schedules and Third
Amended and Restated Enforceable Obligation Payment Schedule.
Review and provide direction on revised Recognized Obligation Payment Schedule July 2012 -
December 2012 (BOPS 2).
STAFF RECOMMENDATION:
Approve recommended action.
SUPPORTING INFORMATION:
Pursuant to its duties to implement AB 26, the Oversight Board is tasked with the review and
approval of Recognized Obligation Payment Schedules, which serve as a 6 month schedule of
payments for enforceable obligations of the former City of San Diego Redevelopment Agency
(former RDA). These schedules are prepared by the Successor Agency to the City of San Diego
Redevelopment Agency (Successor Agency), reviewed by the Oversight Board, and submitted with
Oversight Board revisions to the California Department of Finance (DOF). This report outlines the
actions of the Board and any subsequent communications by the DOE
On April 25, 2012 the Oversight Board considered and approved the Initial Draft Recognized
Obligation Payment Schedule (ROPS 1 ), Second Recognized Obligation Payment Schedule (ROPS
2), and Third Amended and Restated Enforceable Obligations Payment Schedule (Third EOPS). On
May 2, 2012 the DOF exercised its right to review the submitted documents which began a 10 day
calendar review by the agency. On May 11, 2012 the DOF issued a letter (Attachment A). The general
nature of the letter did not provide a basis for the Board to consider revisions to the submitted
documents. Based upon subsequent communications with the DOF, the Board approved documents
were resubmitted for DOF review on May 15, 2012 and it is anticipated that the DOF will issue a
subsequent letter on May 25, 2012.
When the Board considered and approved ROPS 1 and ROPS 2, the disbursement from the County of
San Diego (County) from the Redevelopment Property Tax Trust Fund (RPTTF) to pay for
enforceable obligations on ROPS 2 was unknown. On May 1, 2012 the County provided all Successor
Agencies with the Estimated Redevelopment Property Tax Trust Fund Allocations & Distribution to
be distributed on June 1, 2012. Taking into account pass through payments to the respective taxing
entities, approximately $10.9 million dollars are estimated to be available to pay for enforceable
obligations on ROPS 2. During the DOF review staff has worked with the state to identify potential
funding sources for ROPS 2, provide documentation on ROPS line items, and answer any questions
regarding the operations of the foml er redevelopment agency. Based upon interactions with the DOF,
staff submitted a draft ROPS 2 (Attachment B) on May 23, 2012 to the DOF for comment.
Testimony in opposition of Item 2 by Linda Wilson
Testimony in favor of Item 2 by Joyce Summer, Janelle Riella, Katheryn Rhodes, Katie Rodriguez, Virginia
Angeles, Ivette Vega, Kris Michell, Kimberly Brewer, Gary Smith, Sean Wherley, Leane Marchese, Eric
Smith.
BOARD ACTION: Action Time: 9:35 a.m.
MOTION BY MAUREEN STAPLETON TO ADOPT WITH THE INCLUSION OF THE RESERVATION
OF RIGHTS LANGUAGE INCLUDED IN THE APRIL 25m RESOLUTION WITH AN
AMENDMENT IN ROPS 2 TO RECOGNIZE THE AMOUNT NEGOTIATED WITH LEGAL
COUNSEL. Second by Andra Donovan.
Passed by the following vote:
Yea: Bonnie Ann Dowd, Andra Donovan, Maureen Stapleton, Mark Nelson, Ron Roberts, Peter Q. Davis
Nay: (None);
Recused: (None);
Not Present: (None).
Chair Mark Nelson passed control of the meeting to Vice -Chair Peter Q. Davis.
ITEM 3 — Report from the Successor Agency ESTABLISHING A SCHEDULE FOR THE DATE, TIME
AND LOCATION OF FUTURE PUBLIC MEETINGS OF THE OVERSIGHT BOARD
ITEM DESCRIPTION:
Discuss potential meeting times and locations.
Adopt a resolution establishing a schedule for the date, time and location of future public meetings of the
Oversight Board.
STAFF RECOMMENDATION:
Adopt Resolution.
SUPPORTING INFORMATION:
On May 11, 2012 the Oversight Board designated May 31, 2012 as the next Oversight Board meeting and
requested an item be docketed for the discussion of future meeting dates.
Based upon coordination with Oversight Board members it has been determined there are generally two
options for the Board to consider for regular meetings. First, City facilities are generally available the
second and fourth Thursday of the month in the morning. Friday mornings are generally available if
booked in advance.
This action will set a schedule for the next several meetings based upon the availability of the board
members and will notify the public of those meetings.
BOARD ACTION: Action Time: 9:38 a.m.
MOTION BY ANDRA DONOVAN TO ADOPT RESOLUTION STATING THE FOLLOWING MEETING
WILL BE HELD JUNE 14`h AT Ipm AT City Hall. Second by Bonnie Ann Dowd.
Passed by the following vote:
Yea: Bonnie Ann Dowd, Andra Donovan, Maureen Stapleton, Ron Roberts, Peter Q. Davis
Nay: (None);
Recused: (None);
Not Present: Mark Nelson
ITEM 4 — Adoption of a Resolution to Approve the Settlement Agreement and Release for Acquisition of
the 528 -542 14th Street Property
ITEM DESCRIPTION:
Adoption of a resolution to approve the Settlement Agreement and Release ( "Settlement Agreement ")
between the City of San Diego ( "City "), the Successor Agency, and Hon, LLLP ( "Hon "), a Colorado
limited liability limited partnership, for the Successor Agency's acquisition of and settlement of
litigation related to the real property located at 528 -542 14th Street in San Diego, California 92101,
and to authorize the expenditure of an amount not to exceed Three Million Eight Hundred Fifty
Thousand Dollars ($3,850,000) for payments required by the Settlement Agreement and for
demolition needed to eliminate dilapidated and unsafe conditions on that property.
STAFF RECOMMENDATION:
Adopt resolution.
SUPPORTING INFORMATION:
In 2004 the former Redevelopment Agency of the City of San Diego ( "Former RDA ") began the
process of assembling a redevelopment site ( "Site ") of up to approximately 40,000 square feet on the
south side of Market Street between 13th and 14th streets in the East Village neighborhood of
downtown San Diego, for the purpose of constructing affordable housing units and possible mixed -
use development (see Attachment 1, Site Map).
One parcel associated with the assemblage of the Site is the real property located at 528 -542 14th
Street ( "Parcel "), comprised of approximately 10,000 square feet of land. When assembled with
adjacent properties previously acquired by the Former RDA, the Parcel's acquisition would create a
total assembly to date of approximately 37,000 square feet of land. The Parcel's existing structures are
in a substandard and dilapidated condition, thereby necessitating their demolition.
Similarly, the balance of the Site is in a substandard and dilapidated condition. The Former RDA had
been attempting to acquire the Parcel through voluntary negotiations with the owner, Hon. In 2005
and through a separate agreement, the Former RDA paid the Parcel's tenant, Healthcare Services Inc.
( "Tenant "), $600,000 for relocation, fixtures, furniture and equipment (FF &E), and goodwill benefits,
and the Tenant agreed to vacate the Parcel within one year. At that time, the Tenant assigned its
leasehold interest in the Parcel to the Former RDA, but continued to pay rent directly to Hon for a
period of time. Tenant has since ceased paying rent but remains on the Parcel, and City and Successor
Agency staff are working with legal counsel to determine an appropriate date for Tenant's eviction.
In May 2011 , the Former RDA and City were named as defendants in litigation (Case No.: 37-2011 -
00090762- CU- OR -CTL) brought by Hon, based on allegations of inverse condemnation/ pre -
condemnation damages, and for breach of contract (unpaid rent) resulting from a lease with the
Tenant.
In January 2012, the parties engaged in mediation, which resulted in agreement on terms whereby the
City or the Successor Agency would acquire the Parcel from Hon and settle all litigation in exchange
for a payment of$3,700,000 ( "Settlement Payment "). The Settlement Payment is allocated as follows:
$2,400,000 to real property acquisition and $1,300,000 to legal settlement. The Settlement Agreement
was authorized by the City Council and Board of Directors ofthe Former RDA in closed session on
January 31, 2012. Successor Agency staff determined that an additional $150,000 would be necessary
to cover closing and post acquisition costs associated with the demolition of the Parcel's existing
structures to improve the condition of the Parcel and prevent future liability to the City and Successor
Agency, for a total of $3,850,000 in Settlement Agreement - related costs.
The initial path for approval was for the City to approve and implement the Settlement Payment and
acquisition of the Parcel. Pursuant to the Cooperation Agreement for Payment of Costs Associated
With Certain Redevelopment Agency Funded Projects ( "Cooperation Agreement ") entered into
between the City and the Former RDA on February 28, 2011, the City is authorized to acquire the
Parcel utilizing Low and Moderate Income Housing Funds and Unrestricted Funds as provided in
Item #354 of Exhibit I of the Cooperation Agreement.
On April 10, 2012, in recognition of the City taking the lead to move forward with the Settlement
Agreement actions, the City Council authorized the Chief Financial Officer to expend the not -to-
exceed amount of$3,850,000 from Cooperation Agreement funds for the payment of the Settlement
Payment, closing costs, and costs of demolition. The Mayor executed the Settlement Agreement soon
thereafter (see Attachment 2, Settlement Agreement and Release). Also on April 10, 2012, the City
Council, in its capacity as the Board of the Successor Agency, approved an updated version of the
Initial Draft of the First Recognized Obligation Schedule ( "ROPS l "),reflecting payments toward
enforceable obligations from January 1, 2012 through June 30, 2012. The Settlement Payment,
closing costs, and costs of demolition are included as a project/debt obligation within ROPS 1 (see
Form A, page 9 of 73, item 6). The total amount of $3,850,000 would be funded as follows:
$2,550,000 (acquisition, closing and demolition) from FY20 12 20% Set -Aside Low and Moderate
Income Housing Bond Funds, and $1 ,300,000 (legal settlement) from FY2012 Unrestricted 80% Tax
Increment Funds of the Centre City Redevelopment Project. ROPS I was also approved conditionally
by the Oversight Board on April 25, 2012.
The City and Successor Agency received a letter dated April20, 2012, from the California State
Controller (CSC) demanding the immediate reversal of all asset transfers from the Former RDA to the
City that occurred after January 1, 2011. As the Cooperation Agreement was approved and entered
into in February 2011, the CSC order to reverse asset transfers adds uncertainty to the use of those
funds by the City to proceed with the Settlement Payment and acquisition of the Parcel. Therefore, it
is now more appropriate for the Successor Agency to take the lead in moving forward with the
Settlement Agreement actions.
Testimony in favor of Item 4 by Wendy DeWitt.
BOARD ACTION: Action Time: 10:00 a.m.
MOTION BY ANDRA DONOVAN TO APPROVE RESOLUTION WITH A RECOGNITION OF THE
FIRST AMENDMENT AS PART OF THE SETTLEMENT. Second by Bonnic Ann Dowd.
Passed by the following vote:
Yea: Bonnie Ann Dowd, Andra Donovan, Maureen Stapleton, Mark Nelson, Ron Roberts, Peter Q. Davis
Nay: (None);
Recused: (None);
Not Present: Mark Nelson.
ADJOURNMENT:
The meeting was adjourned by Vice -Chair Peter Q. Davis at 10:00 a.m.
E
State and Cities Clash Over Dissolution of Redevelopment Agencies I K. Greg's Blog Page 1 of 3
K. Greg's Blocs
Low Offices of K. Grey f'emr'st»e
State and Cities Clash Over Dissolution of Redevelopment Agencies
fc:ste:at a?rE Jure c. '.'t�':'L
Last year, California's legislature passed ABxl 26, which dissolved California's 40o redevelopment agencies
(RDAs). The rationale for the legislation was to redirect the estimated $5 billion tax revenues collected annually
by RDAs to school districts that have faced reductions in funding and to local governments struggling to provide
core governmental services, such as fire and police protection. ABx126 dissolved the RDAs, prohibited the RDAs
from entering into any new obligations, required the RDAs to "wind down" existing affairs by providing guidelines
for paying off existing indebtedness prior to dissolution, and established an Oversight Board process to make
decisions as to how to wind down. RDA affairs, including selling off assets. The new legislation immediately met
opposition from cities, affordable housing interest groups, and the RDAs. The legislation's constitutionality was
also instantly challenged by the California Redevelopment Agency, the League of California Cities, and the cities of
San Jose and Union City. In the case of California RedevelopmentAssociation v. Matosantos, California's
Supreme Court ultimately found that the legislature had the authority to dissolve the RDAs since it had created
them years earlier. In the same case, the Supreme Court also struck down a companion bill that allowed RDAs to
continue operating in exchange for payments to the state. Consequently, the redevelopment situation has
worsened. There is a lack of funding to finish projects, and competing interests debate on which projects to
complete.
Cities and counties across the state have begun grappling with the dissolution process. By June 18, 2011, the RDAs
were not permitted to participate in any new projects. On February 1, 2012, California RDAs were to be completely
dissolved, and the Successor Agencies (Agencies) inherited the rights and responsibilities of the former RDAs.
Under ABx126, the Agencies are mandated to assemble a list of the former RDAs' enforceable obligations in a
Recognized Obligation Payment Schedule (BOPS). There are two BOPS reports assembled per year. Each Agency
submits its BOPS report to its respective Oversight Board for approval, which, in turn, submits it to California's
Department of Finance (DOF). Both the Oversight Board and the DOF oversee and have to approve the
enforceable obligations the Agency listed. The DOF has the option to review the Oversight Board's approval of the
ROPS within three business days after the Board's decision, and it can either approve or reject the listed items.
Each County Auditor - Controller creates a Redevelopment Property Tax Trust Fund (Trust Fund), where the
former RDA's tax increment is kept for the Agency's use to make payments. When the former RDA's indebtedness
is paid off, the Oversight Boards and Agencies dissolve.
Because of the new procedure implemented by ABx126, uncertainties have developed that the legislation does not
adequately address. An attorney representing a group of cities in litigation against the State calls ABx126 "a giant
mess." Significant litigation is anticipated that will involve special interestgrouos and local governments, and
some related litigation has already been filed in the Sacramento Superior Court.
In Affordable Ilousing Coalition of San Diego County v. Sandoval, filed on April 26, 2012, the Affordable
Housing Coalition filed suit to ensure that ABx126 would be enforced constitutionally. At their dissolution, the
RDAs had not fulfilled enforceable obligations to build and develop low income housing under the Community
Redevelopment Law (CRI.). The petitioner argues that these housing obligations are implied contracts between
Fallow
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the State and the RDAs. As a result, the RDAs and their successors will be in breach of a legal obligation
designated to them by the California Constitution if the low income housing projects are not completed. However,
in this particular case, the ROPS submitted to the Auditor - Controller of the City of San Diego did not list any low
income housing projects. Since they were not identified as enforceable obligations in the ROPS, the Agencies
would not be able to make payments for the development or construction of such projects. On May, go, 2012, the
petitioner filed an ex parte application for temporary stay and OSC on this very point. The Sacramento Superior
Court did not grant the petitioner's request for a TRO, finding that the issue can be resolved by a trial on the
merits.
In City of Palmdale v. Matosantos, filed on May 22, 2012, nine city governments in Southern California, acting as
Agencies, filed a complaint against the Director of the State of California Department of Finance as well as several
County Auditor - Controllers. The cities argue that the DOF is unlawfully restraining their abilities to act on ABx1
26 and, furthermore, is fabricating additional procedures that the legislation does not authorize. The initial ROPS
disbursement from the Trust Fund was supposed to take place on May 16, 2012. However, the DOF indicated that
it would divert the funds to property tax entities instead, and it threatened to do the same for the June i
disbursement. In that case, the funds would become inaccessible for the cities to use. The cities claim they will
have no choice but to default on their contractual obligations without the funds needed to make payments on the
BOPS items that had been approved or deemed enforceable through the appropriate legal process under ABx126.
Several Agencies also argue that defaulting on their bond payments will have a major impact on the budgets and
credit ratings of all government entities.
The cities in City of Palmdale also argue that the DOF has created unauthorized procedures associated with its
approvals. After the Successor Agencies submit their respective ROPS for each term, the DOF issues a "Notice of
Approval ". If the County Auditor - Controllers do not receive such a notice as to a particular line item on the ROPS,
the DOF instructs that no funds are to be conveyed to the Agencies, even though the enforceable obligation had
been approved by the Agency's Oversight Board. In this particular case, the cities claim that the DOF unlawfully
rejected ROPS documents because the DOF required the entire ROPS to be accepted in order to issue a "Notice of
Approval" for the disbursement of funds. In addition, the DOF is alleged to have imposed unauthorized penalties
under ABxi 26, which reduce the amount of funds the cities would otherwise be allowed to use. Proponents of this
argument claim that ABx126 in no way authorizes or allows the DOF to create such penalties.
In City of Irvine v. llfatosantos, filed on May 25, 2012, the City of Irvine, acting as a Successor Agency, also filed
suit against the Director of the State of California Department of Finance because the DOF rejected the
redevelopment of the former Marine Corps Air Station, El Toro, (MCAS El Toro) as an enforceable obligation. The
City of Irvine contends that the former RDA entered into a commitment and a written agreement to construct the
Orange County Great Park in December 201o. The City of Irvine listed the park project as an enforceable
obligation in the ROPS report. The project was approved by the Oversight Board, but the DOF insisted it be
resubmitted with additional information regarding the estimation of the requested funds. The Agency complied
with the DOF's request, asserting that the project was an enforceable obligation under ABx126 because a contract
had been entered into prior to the cutoff date. However, the DOF ended up rejecting the project because it
believed the contract did not commit tax increment for developing the park. Without the funding, the City of
Irvine will not satisfy the former RDA's contractual obligations and has no other financial means to fund the
project.
F NIoo,
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How AB lx 26 Will Pick the RDA Carcass I California Planning & Development Report Page 2 of 2
memberships. This is supposed to be representative of all the agencies that share property tax, but it should be
obvious that counties and schools will run this show.
And run the show the do - up to a point. The city prepares a debt and obligation schedule, which is reviewed
by an auditor selected by the auditor- controller, as well as an administrative budget. The Oversight Board
approves both. The Oversight Board is also charged with disposing of RDA assets. Government buildings get
turned over to the appropriate government agency. The proceeds of other asset sales are divided among the
taxing agencies proportionally. And they decide whether RDA affordable housing money will go back to the
cities or go to the housing authorities instead.
But the Oversight Committee is not the final word - and this is a really important point in seeing how the state
is truly taking control of RDA funds. Both the State Controller and the Department of Finance play an
important role in overseeing the Oversight Committees, as follows:
* The "Redevelopment Obligation Repayment Schedule" prepared by every city must be approved not only by
the Oversight Committee but also by both the Department of Finance and the State Controller.
* The Department of Finance has the power to overturn any action by any Oversight Committee.
You can see all the different messy situations that could arise:
* Cities could start paying off obligations they see as binding, only to be overturned by somebody else when
the repayment schedule is reviewed by the Oversight Committee or by the state, which means the cities would
have to get the money back or cover the cost.
*No matter where the cities land on the repayment obligations, the three review entities -- the Oversight
Committee, the Department of Finance, and the State Controller -- could get into big fights over which
repayments should be made. The State Controller will be more independent of short-term revenue concerns
than the other two entities. And if this holds up decisions on who get repaid, this could cause concern about
California in the bond market.
* The other taxing entities could start suing the cities on some of the asset transfers they made away from
RDAs (this is almost certain to happen).
* Naive oversight committees could go into "fire sale" mode on former RDA assets, which could have a
significant impact on urban property values in the whole state.
* The Oversight Comittees and the Department of Finance could get into protracted, ugly battles - even
litigation - over the question of whether and how to dispose of assets.
And in case you're wondering, this whole process starts ... now. Yes, the redevelopment establishment will be
back in Sacramento on Tuesday trying to get a new bill passed. But in the meantime, surely the Department of
Finance and the counties - the two big financial losers in redevelopment - will start pushing to create the
Oversight Committees immediately, and they're start leaning on county auditor - controllers to start the RDA
audits right away.
Stay tuned -- we will stay on this story as much as we can.
2011 California Planning & Development Report
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