HomeMy WebLinkAbout04-20-1983 RDAMINUTES
REDE�ELOP�ENT AGENCY
CITY OF LAKE ELSINORE
730 SOUTH MAIN STREET
LAKE ELSINORE, CALIFORNIA
WEDNESDAY, APRIL 20, 1983
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1. CALL TO ORDER
The Adjourned Meeting of the Redevelopment Agency was called to order at
7:44 P.M. by Chairman Torn.
2. ROLL CALL
PRESENT: BOARDMEMBERS: KNIGHT, MAC MURRAY, UNSWORTH, VALENZUELA, 70RN
ABSENT: BOARDMEMBERS: NONE
Also present were: Interim Executive Director/Interim City Manager Trevino,
Attorney Nazarek and Recording Secretary Money
3. BUSINESS ITEM
Butterfield School Construction/Cooperation wi_th Elsinore Union School District
Mr. Nazarek reported that, pursuant to the request of the Redevelopment Agency,
he has reviewed the various documents prepared by the School District pertaining
to the financing of school facilities. Fundamentally, this is a lease revenue
mechanism wnich will allow the school facilities to be financed, whereby the
City's and Agency's involvement is necessary but whose only function will be
to act as a conduit. The ultimate obligation for payment of the funds which
will be used to secure the obligation will be payments made by the School
District, collected from developers through developer fees, and other available
revenues. This is not an extraordinary method of financing. The concept of
lease, sub-lease or lease-back financing is used widely in California and other
parts of the United States.
The principal concern Mr. Nazarek had with the Agency's involvement was that
if and when the Agency was bound to undertake any financing with tax increment,
that perhaps the Agency's involvement in this transaction could be construed
in some fashion to impair their ability in future transactions. h1r. Nazarek
stated he spoke to the attorney for the School District, Mr. John Brown, and
he is in complete accord that provisions will be inserted into the documents
specifically exempting any tax increment received by the Redevelopment Agency
for any payment of any costs in this transaction. Thus, the increment re-
ceived by the Redevelopment Agency will be completely excluded from any
potential or contingent liability in this transaction. This transaction will
not in any way impair the Agency's ability to bond. Mr. Nazarek is satisfied
that the Agency's interests are well protected. furthermore, with regard to
the City's involvement in this transaction, Mr. Nazarek assured that this
type of a financing vehicle will not and cannot result in a committment of
the full faith and credit of the City. It is a contingent obligation, limited
only, if at all, to one year. The City's interests are equally well protected.
Mr. James Bartholomew, District Facilities Manager for the Elsinore Union School
District, stated that the District is looking for mechanisms which would
insure that the State continues their obligation to fund schools in this area
and therefore to potentially reduce the use of developer fees.
Mr. Bartholomew explained further that, although the Redevelopment Agency is
the 6asic carrier of the note with the lending agency, the District has a sub-
lease which reads 'a transferable payment'. In other words, the School District
makes payments directly on behalf of the RDA, who is involved in name only.
The District invests all initial capital and will make all lease payments.
At the time the District chooses to exercise their option to purchase the
facilities, the District informs RDA and gives the Agency the cash to transact
the purchase. The District then contacts the State and the State arranges to
pay full cash value for the facilities to RDA. At that time, RDA reimburses
the School District all the money paid in lease and interest payments. Any
additional value over and above the original investment is shared equally
between the District and RDA. By recycling any profit money back into the
school building fund, the District hopes to reduce developer fees in the future.
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