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HomeMy WebLinkAbout0007_1_SA SR- Repmt of Housing Fund Loan 062816REPORT TO SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE To:Honorable Chairman and the Successor Agency From:Grant Yates, Executive Director Prepared By: Barbara Leibold, Successor Agency Counsel Date:June 28, 2016 Subject:Repayment of Housing Fund Loan in accordance with Health & Safety Code Section 34171(d)(1)(G) Recommendation: Adopt A RESOLUTION OF THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE SETTING FORTH CERTAIN FINDINGS WITH RESPECT TO A LOAN FROM THE LOW AND MODERATE INCOME HOUSING FUND TO THE PROJECT AREAS OF THE FORMER REDEVELOPMENT AGENCY IN ACCORDANCE WITH HEALTH & SAFETY CODE SECTION 34171(D)(1)(G) AND APPROVING A REPAYMENT SCHEDULE FOR THE LOAN IN ACCORDANCE WITH HEALTH & SAFETY CODE SECTION 34176(e)(6)(B) Background: In 1995, the Lake Elsinore Public Financing Authority (PFA) issued its 1995 Series A Tax Allocation Bonds and its 1995 Series B Subordinate Tax Allocation Revenue Bonds to repay a portion of certain 1993 prior loans and 1995 prior loans and to finance low and moderate income housing and other redevelopment activities all within or of benefit to the Rancho Laguna Redevelopment Project Areas Nos. I, II and III. The PFA loaned the proceeds of the bonds to the Redevelopment Agency of the City of Lake Elsinore (“Agency”) and the Agency made certain Interfund Loans between the Low and Moderate Income Housing Fund (“LMIHF”) and the Project Areas pursuant to that certain Housing Fund Loan Agreement ("Loan Agreement") dated as of December 1, 1995, by and between the Lake Elsinore Public Financing Authority and the Agency. Two separate loans were made pursuant to the Loan Agreement: (1) The first loan was the "Housing Loan": Pursuant to Section 2.01 of the Loan Agreement, the bond proceeds were loaned by the PFA to the Agency and deposited into the Agency’s LMIHF. Housing Loan Repayment June 28, 2016 Page 2 of 3 (2) The second loan consists of the "Interfund Loans": Pursuant to Section 2.05(a) of the Loan Agreement, the bond proceeds were loaned from the LMIHF to each of the three Project Areas as interfund loans. For purposes of the Recognized Obligation Payment Schedules (ROPS), it is the Interfund Loans that are listed as item 20 and referred to as the "Housing Fund Loan". The 1995 Housing Loan between the PFA and the Agency and the 1995 Interfund Loans between the LMIHF and the Project Areas are repayable from two separate sources of funds: (a) In accordance with Section 2.01 of the attached Loan Agreement, repayment of the Housing Loan is required to be made from future allocations of housing set-aside (e.g. the 20% of tax increment set aside for housing projects in accordance with applicable law at that time); and (b) Section 2.05(a) of the Loan Agreement requires that each Project Area repay the Interfund Loans from 80% tax increment monies allocated to each Project Area (e.g. tax increment net of the 20% set-aside monies). The 2010 Series B Bonds listed as Item 2 on the ROPS refunded the the Housing Loan between the PFA and the Agency made in connection with the 1995 Series A Bonds, and therefore the 1995 Housing Loan is no longer outstanding. The 1995 Interfund Loans between the LMIHF and the Project Areas remain outstanding and are listed in ROPS Item 20 as the "Housing Fund Loan". Payments on the Interfund Loans in any given year are calculated and disbursed based on available property tax revenues after deductions for payment of all other debts and obligations of the Project Area in accordance with Section 2.05(c) of the Loan Agreement. The PFA sought court validation of the actions taken in connection with the 1995 Bonds under Code of Civil Procedure section 869, et seq. The Validation Judgment also acknowledges and validates the two separate loans. On November 14, 1995, the Superior Court of the State of California in and for the County of Riverside validated the 1995 bond issue, and both the Housing Loan and the Interfund Loans made pursuant to the Housing Fund Loan Agreement were found to be enforceable in accordance with the terms of the Loan Agreement. Discussion: The Interfund Loans have been reported on the Successor Agency’s ROPS since the first ROPS. In compliance with the statutes governing the dissolution of the Agency, the Interfund Loans were reported as housing assets transferred to the City as housing successor on the Housing Asset Transfer report filed with the Department of Finance (“DOF”). DOF approved the Interfund Loans as housing assets transferred to the City as housing successor. In connection with its audit of transfers from the Agency prior to and after the dissolution of the Agency, the State Controller’s Office reviewed payments made by the Agency and the Successor Agency on the Interfund Loans. The State Controller’s Office approved the payments made on the Interfund Loans. DOF approved all payments on the Interfund Loans requested on the ROPS until ROPS 14- 15B. DOF subsequently denied the Successor Agency’s request for funding for payment on the Interfund Loans on ROPS 14-15B, ROPS 15-16A and ROPS 16-17. The Successor Agency Housing Loan Repayment June 28, 2016 Page 3 of 3 attended a Meet & Confer with DOF regarding each of its denials, and was unsuccessful in obtaining DOF’s approval. Though the Successor Agency believes that the Interfund Loans constitute enforceable obligations under several sections of the Health & Safety Code, and notwithstanding DOF’s denial of the repayment of the loan on the ROPS the Successor Agency desires to clarify that it has complied with the statutory requirements for repaying a loan from the LMIHF. Further, though the Successor Agency approves the repayment of the Interfund Loans in accordance with the repayment terms set forth in the Housing Fund Loan Agreement when it approves each ROPS, the Successor Agency has not adopted a separate resolution approving repayment terms in accordance with subdivision (d)(1)(G) of Health & Safety Code section 34171 and subdivision(e)(6)(B) of Health & Safety Code section 34176. Accordingly, the attached Resolution approves such a repayment schedule and makes certain findings with respect to the Interfund Loans. Attachments:Resolution No. SA 2016-0