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HomeMy WebLinkAboutOB Reso No 2013-006RESOLUTION NO. OB- 2013 -006 A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE APPROVING A FIRST AMENDMENT TO CONSOLIDATED AMENDED AND RESTATED REIMBURSEMENT AGREEMENT (LERA BONDS) WHEREAS, the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ( "Oversight Board ") has been established to direct the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ( "Successor Agency ") to take certain actions to wind down the affairs of the former Redevelopment Agency of the City of Lake Elsinore (the "Agency ") in accordance with the California Health and Safety Code; and WHEREAS, the Agency was a duly constituted redevelopment agency under the laws of the State of California and pursuant to such laws duly proceeded with the redevelopment of its Rancho Laguna Redevelopment Project Area No. I, Rancho Laguna Redevelopment Project Area No. II and Rancho Laguna Redevelopment Project Area No. III (the "Project Areas ") within the City; and WHEREAS, for the purpose of providing moneys to fund loans to the Agency for its Rancho Laguna Redevelopment Project Areas No. I, II and III, the Lake Elsinore Public Financing Authority (the "Financing Authority "), on November 3, 1993, issued its Lake Elsinore Public Financing Authority 1993 Series B Senior and Subordinate Taxable Tax Allocation Revenue Notes (Lake Elsinore Redevelopment Projects) in the aggregate principal amount of $9,250,000 (the "1993 Taxable Notes ") to finance a multi- purpose stadium (the "Project ") located in the Agency's Rancho Laguna Redevelopment Project Area No. III and of benefit to the Project Areas; and WHEREAS, the 1993 Taxable Notes were to mature on October 1, 1994 and the City Council of the City, in Resolution No. 93 -60 adopted on September 30, 1993, found and determined that the Agency would require the assistance of the City in refinancing the 1993 Taxable Notes at maturity and in said Resolution 93 -60 proposed to implement a refinancing plan for the Project pursuant to which the Financing Authority would issue its bonds to provide funds to acquire the Project from the Agency and the Financing Authority would then lease the Project to the City; and WHEREAS, to effectuate the foregoing, the Authority issued its Lake Elsinore Public Financing Authority 1994 Revenue Bonds (Lake Elsinore Redevelopment Projects), Series A in the aggregate principal amount of $10,000,000 (the "1994 Bonds "), pursuant to and secured by an Indenture, dated as of September 1, 1994, by and between the Financing Authority and Union Bank of California, N.A., as trustee (the "1994 Bonds Trustee "), and entered into a Lease Agreement, dated as of September 1, 1994 (the 1994 Lease Agreement ") with the City; and OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 2 WHEREAS, the 1994 Bonds were issued pursuant to Article 11 of Chapter 3 of Part 1 of Division 2 of the California Government Code (commencing with Section 53580) and Chapter 11 of Division 6 of Title 1 (commencing with Section 5900) of the Government Code of the State of California to refund the 1993 Taxable Notes; and WHEREAS, the Redevelopment Plans, as amended, for the Project Areas provide for tax increment financing in accordance with the provisions of Chapter 6, Part 1 or Division 24 of the Health and Safety Code of the State of California (the "Redevelopment Law ") and Section 16 of Article XVI of the Constitution of the State of California; and WHEREAS, pursuant to Section 33679 and Section 33445 of the Redevelopment Law, the City and the Agency duly held a noticed public hearing on the commitment of the Agency to use a portion of the tax increment revenues to finance the Project and, after such public hearing, such use of tax increment revenues was approved by Resolutions of the City and the Agency; and WHEREAS, concurrently with the issuance of the 1994 Bonds and entry into the 1994 Lease Agreement, the Agency entered into certain Reimbursement Agreements, each dated as of September 1, 1994 (the "Original Reimbursement Agreements "), with the City whereby the Agency pledged tax increment revenues from the respective Project Areas to reimburse the City for the cost of the Project, namely, the City's lease payments to the Financing Authority for the Project under the 1994 Lease Agreement; and WHEREAS, the City desired to prepay all of its obligations under the 1994 Lease Agreement; and WHEREAS, for the purpose of assisting the City to prepay all of its obligations under the 1994 Lease Agreement, the Lake Elsinore Recreation Authority (the "Recreation Authority ") issued its Revenue Bonds, 1997 Series A (Public Facilities Project) in the aggregate amount of $14,680,000 (the "1997 Bonds "), which refinanced the 1994 Bonds and prepaid the City's obligations under the 1994 Lease Agreement; and WHEREAS, pursuant to the Original Reimbursement Agreements, as a result of the prepayment by the City of its obligations under the 1994 Lease Agreement and the refunding of the 1994 Bonds, the repayment obligations of the Agency under the Original Reimbursement Agreements in the amount of the prepayment under the 1994 Lease Agreement became due and payable on the date of such prepayment under the 1994 Lease Agreement; and WHEREAS, the Agency did not have sufficient surplus revenues to pay the outstanding amount due under the Original Reimbursement Agreements; and OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 3 WHEREAS, the Agency and the City intended at the time of prepayment by the City of the City's obligations under the 1994 Lease Agreement that the Agency's obligations under the Original Reimbursement Agreements were to continue by way of obligating the Agency to reimburse the City, from surplus tax increment revenues, for the City's lease payments under the Lease Agreement, dated December 1, 1996 (the "1996 Lease Agreement "), between the City and the Recreation Authority for the lease of certain recreational property and improvements commonly known as "Lake Elsinore," the payment of which secured the 1997 Bonds; and WHEREAS, concurrent with the issue of the 1997 Bonds, the Agency and the City amended and restated the Original Reimbursement Agreements (the "Amended and Restated Reimbursement Agreements ") in their entirety in order to clarify and document the Agency's pledge of tax increment revenues to reimburse the City for the lease payments made by the City under the 1996 Lease Agreement; and WHEREAS, for the purpose of assisting the City to prepay all of its obligations under the 1996 Lease Agreement, the Recreation Authority issued its Variable Rate Revenue Refunding Bonds, 2000 Series A (Public Facilities Project) (the "2000 Bonds ") in the aggregate amount of $15,660,000, the proceeds of which were used to finance the lease payment (the "2000 Lease Payment ") by the Recreation Authority to the City for the lease of Lake Elsinore; and WHEREAS, the City used the proceeds of the 2000 Lease Payment to prepay all of its obligations under the 1996 Lease Agreement; and WHEREAS, the Agency and the City intended at the time of prepayment by the City of the City's obligations under the 1996 Lease Agreement that the Agency's obligations under the Amended and Restated Reimbursement Agreements were to continue by way of obligating the Agency to reimburse, from surplus tax increment revenues, the City for the City's lease payments under the Lease Agreement, dated as of July 1, 2000 (the "2000 Lease Agreement "), by and between the City and the Recreation Authority, the payment of which secures the 2000 Bonds; and WHEREAS, the Agency and the City desired to consolidate, amend and restate the Amended and Restated Reimbursement Agreements in their entirety in order to clarify and consolidate into a single document the Agency's ongoing obligation to reimburse the City for the lease payments made by the City under the 2000 Lease Agreement securing debt service on the 2000 Bonds and entered into that certain Consolidated Amended and Restated Reimbursement Agreement, dated as of March 1, 2011 (the "Consolidated Reimbursement Agreement "); and WHEREAS, under the Consolidated Reimbursement Agreement, the Agency is obligated to reimburse the City the lease payments made by the City under the 2000 Lease Agreement from tax increment pledged therefor; and OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 4 WHEREAS, such lease payments secure the payment of debt service on the 2000 Bonds; and WHEREAS, on June 29, 2011, Assembly Bill No. 26 ( "AB X1 26 ") was enacted as Chapter 5, Statutes of 2011, together with a companion bill, Assembly Bill No. 27 ( "AB X1 27 "). A lawsuit was brought in the California Supreme Court, California Redevelopment Association, et al. v. Matosantos, et al., 53 Cal. 4th 231 (Cal. Dec. 29, 2011), challenging the constitutionality of AB X1 26 and AB X1 27. The California Supreme Court largely upheld AB X1 26, invalidated AB X1 27, and held that AB X1 26 may be severed from AB X1 27 and enforced independently. As a result of AB X1 26 and the decision of the California Supreme Court in the California Redevelopment Association case, as of February 1, 2012, all redevelopment agencies in the State were dissolved, including the Agency, and successor agencies were designated as successor -in- interest entities to the former redevelopment agencies to expeditiously wind down the affairs of the former redevelopment agencies; and WHEREAS, the primary provisions enacted by AB X1 26 relating to the dissolution and wind down of former redevelopment agency affairs are Parts 1.8 (commencing with Section 34161) and 1.85 (commencing with Section 34170) of Division 24 of the Health and Safety Code of the State, as amended on June 27, 2012 by Assembly Bill No. 1484, enacted as Chapter 26, Statutes of 2012 (as amended from time to time, the "Dissolution Act "); and WHEREAS, on January 10, 2012, pursuant to Resolution No. 2012 -001 and Sections 34171 Q) and 34173 of the Dissolution Act, the City Council of the City elected to serve as successor agency to the Agency and, on February 14, 2012, the City Council held its first meeting as the governing body of the Successor Agency. Subdivision (g) of Section 34173 of the Dissolution Act, added by AB 1484, expressly affirms that the Successor Agency is a separate public entity from the City, that the two entities shall not merge, and that the liabilities of the Agency will not be transferred to the City nor will the assets of the Agency become assets of the City; and WHEREAS, as a result of the foregoing, the Successor Agency succeeded to the rights and obligations of the Agency, including, without limitation, all rights and obligations of the Agency under the Consolidated Reimbursement Agreement; and WHEREAS, the Consolidated Reimbursement Agreement constitutes an "enforceable obligation" under the Dissolution Act and has been listed on the Successor Agency's Recognized Obligation Payment Schedules ( "ROPS ") approved by the Oversight Board and the Department of Finance in accordance with the Dissolution Act; and WHEREAS, payments of principal and interest (but not any premium) on the 2000 Bonds are supported by an irrevocable direct -pay letter of credit (the "Letter of Credit ") issued by Union Bank of California, N.A. (the "Credit Entity ") in an amount equal OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 5 to the principal amount of the 2000 Bonds outstanding plus 56 days of interest calculated based on an assumed rate of 12 %; and WHEREAS, the Credit Entity has notified the Recreation Authority of its intent not to renew the Letter of Credit upon its expiration on August 8, 2013; and WHEREAS, such expiration will result in the conversion of the 2000 Bonds to "bank bonds" bearing variable interest at a rate currently estimated at 6.5 %; and WHEREAS, the interest rate change may significantly increase debt service payments on the 2000 Bonds from approximately $704,000 annually to as much as $1,420,000 annually, depending on the interest rate environment; and WHEREAS, the Successor Agency desires that the City refund the 2000 Bonds and amend the Consolidated Reimbursement Agreement so that the payments under the Consolidated Reimbursement Agreement are payable at a fixed rate of interest; and WHEREAS, in recognition of the pending conversion of the 2000 Bonds to bank bonds and anticipated refunding, the Successor Agency incorporated into its ROPS 13- 14A for the period of July 1, 2013 - December 31, 2013 its best estimate of its repayment obligations under the Consolidated Reimbursement Agreement based on a projected refunding of the 2000 Bonds at a fixed rate; and WHEREAS, without the refunding of the 2000 Bonds and a corresponding amendment to the Consolidated Reimbursement Agreement, the Successor Agency will be obligated to make payments under the existing Consolidated Reimbursement Agreement at the amounts resulting from the potentially higher, variable bank bond rate; and WHEREAS, the City and the Recreation Authority consider the approval of the refunding of the 2000 Bonds and the 2000 Lease Agreement whereby the Recreation Authority will issue Lease Revenue Refunding Bonds (Public Facilities Project) Series 2013 (the "2013 Bonds "), which 2013 Bonds will be secured by lease payments payable by the City under a Lease Agreement (the "2013 Lease Agreement ") by and between the City and the Recreation Authority; and WHEREAS, the 2013 Lease Agreement will require lease payments of approximately $1,200,000 annually based upon a fixed interest rate which will be less than the estimated $1,420,000 based upon the bank bond rate that would be triggered by the expiration of the Letter of Credit and subject to interest rate fluctuations; and WHEREAS, Section 9 of the Consolidated Reimbursement Agreement contemplates the refunding, refinancing or otherwise restructuring of the obligations of the City under the 2000 Lease Agreement; and OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 6 WHEREAS, the City's and the Recreation Authority's approval of the issuance of the 2013 Bonds and entry into the 2013 Lease Agreement is or will be contingent upon the effectiveness of an amendment to the Consolidated Reimbursement Agreement incorporating the 2013 Bonds and reimbursement of the 2013 Lease Payments; and WHEREAS, the Dissolution Act governs the Successor Agency's actions with respect to the amendment of the Consolidated Reimbursement Agreement; and WHEREAS, Health & Safety Code Section 34177.5(a)(3) permits the amendment of an existing enforceable obligation under which the successor agency is obligated to reimburse the City for the payment of debt service on a bond or other obligation of the City, or to pay all or a portion of the debt service on the bond or other obligation of the City to provide savings to the successor agency, provided that (A) the enforceable obligation is amended in connection with a refunding of the bonds or other obligations of the City so that the enforceable obligation will apply to the refunding bonds or other refunding indebtedness of the City, (B) the total interest cost to maturity on the refunding bonds or other indebtedness plus the principal amount of the refunding bonds or other indebtedness shall not exceed the total remaining interest cost to maturity on the bonds or other indebtedness to be refunded plus the remaining principal of the bonds or other indebtedness to be refunded, and (C) the principal amount of the refunding bonds or other indebtedness shall not exceed the amount required to defease the refunded bonds or other indebtedness, to establish customary debt service reserves and to pay related costs of issuance; and WHEREAS, the Consolidated Reimbursement Agreement constitutes an enforceable obligation under which the Successor Agency is obligated to reimburse the City for the payment of debt service on bonds of the City, or to pay all or a portion of the debt service on the bonds of the City; and WHEREAS, the requirements of Health & Safety Code Section 34177.5(a)(3) will be met in connection with the certain amendments to the Consolidated Reimbursement Agreement that are necessary to accommodate the refunding of the 2000 Bonds and the 2000 Lease Agreement because (i) the amendment to the Consolidated Reimbursement Agreement will be entered into concurrently with the refunding of the bonds and will apply to the 2013 Bonds, (ii) the total interest cost to maturity on the 2013 Bonds plus the principal amount of the 2013 Bonds does not exceed the total remaining interest cost to maturity on the 2000 Bonds plus the remaining principal of the 2000 Bonds, and (iii) the principal amount of the 2013 Bonds does not exceed the amount required to defease the 2000 Bonds, establish customary debt service reserves and pay related costs of issuance; and WHEREAS, the City made diligent efforts to ensure that the lowest long -term cost financing was obtained and that the proposed 2013 Bonds do not provide for any bullets or spikes and do not use variable rates; and OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 7 WHEREAS, in accordance with the Dissolution Act, the pledge set forth in the amendment to the Consolidated Reimbursement Agreement, because it is made in connection with the issuance of the 2013 Bonds, has the same lien priority as the pledge in the Consolidated Reimbursement Agreement prior to its amendment and is valid, binding, and enforceable against the Successor Agency in accordance with its terms; and WHEREAS, the City will consider the approval of all matters relating to the issuance and sale of the 2013 Bonds and corresponding entry by the parties into the First Amendment to Consolidated Reimbursement Agreement, which such approval of the issuance and sale of the 2013 Bonds will be contingent upon the effectiveness of the First Amendment to Consolidated Amended and Restated Reimbursement Agreement; and WHEREAS, the Oversight Board desires to approve all matters relating to the entry by the Successor Agency into the First Amendment to Consolidated Amended and Restated Reimbursement Agreement as required by Health & Safety Code Sections 34177.5(f) and 34180. NOW, THEREFORE, THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The Recitals set forth above are true and correct and incorporated herein by reference. SECTION 2. Based on the Recitals set forth above and consistent with the legislative authority contained in AB 1484, specifically Health & Safety Code Section 34177.5(a)(3), permitting the amendment of an existing enforceable obligation under which the Successor Agency is obligated to reimburse the City for the payment of debt service on a bond, the Oversight Board hereby approves and authorizes the Successor Agency to execute the First Amendment to Consolidated Amended and Restated Reimbursement Agreement in substantially the form on file with the City Clerk and presented to the Oversight Board at this meeting. SECTION 3. The Oversight Board authorizes and directs the Successor Agency to execute any and all documents necessary to implement the foregoing and authorizes and directs the Successor Agency to take any and all actions necessary to implement the foregoing, including, without limitation, submission of this Resolution and supporting documentation to the California Department of Finance and to execute such other assignments, agreements, certificates, receipts, endorsements, orders, opinions and other documents in connection therewith, and all actions heretofore taken by the officers, employees and agents of the Successor Agency in connection therewith are hereby ratified, approved and confirmed in every respect. OVERSIGHT BOARD RESOLUTION NO. OB 2013 -006 Page 8 SECTION 4. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The Oversight Board hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof. SECTION 5. This Resolution shall take effect from and after the date of its passage and adoption in accordance with, and subject to, all applicable requirements of the Dissolution Act including, without limitation, failure of the California Department of Finance to object to the entry by the Successor Agency into the First Amendment to Consolidated Amended and Restated Reimbursement Agreement after exercising or failing to exercise, as the case may be, its right to review the actions described herein. PASSED, APPROVED AND ADOPTED at a regular meeting of the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, held this 25th day of June, 2013. 0 Virginia J;: ¢loom, Clerk of the Oversight Board YZIMMMIK411 "Of E ll_ Phil Williams, Chairperson Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF LAKE ELSINORE ) I, Virginia J. Bloom, Clerk of the Oversight Board and City Clerk of the City of Lake Elsinore, California, hereby certify that Resolution No. OB- 2013 -006 was adopted by the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, California, at a regular meeting held on the 25th day of June 2013, and that the same was adopted by the following vote: AYES: Board Members Tisdale, Kelley, Landon, Lassey, Schultz, Vice -Chair Oster and Chairman Williams NOES: None ABSENT: None ABSTAIN: None Virginia Clerk of