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HomeMy WebLinkAboutItem No. 17 Loan Agreement City of Lake Elsinore 130 South Main Street Lake Elsinore,CA 92530 Cn1r L - LS www.lake-elsinore.org Di.,.. PKIU-1 Text File File Number: RES 2018- Agenda Date: 6/26/2018 Version: 2 Status:Approval Review In Control: City Council/Successor Agency/Public Financing Authority File Type: Resolution Agenda Number: 17) City of Lake Elsinore Page 1 Printed on 612112018 CITY OF LAKE LSMOKE ,v DItEAm EXTIkEME JOINT REPORT TO CITY COUNCIL AND SUCCESSOR AGENCY To: Honorable Mayor/Chair and City Council/Successor Agency Members From: Grant Yates, City Manager/Executive Director Prepared By: Barbara Leibold, City Attorney/Successor Agency Counsel Date: June 26, 2018 Subject: Loan Agreement between the City of Lake Elsinore and the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore Recommendation City Council: Approve a Loan Agreement Between the City and Successor Agency under Health & Safety Code Section 34173(h) in substantially the form attached and in such final form as approved by the City Attorney/Successor Agency Counsel Successor Agency: Approve a Loan Agreement Between the City and Successor Agency under Health & Safety Code Section 34173(h) in substantially the form attached and in such final form as approved by the City Attorney/Successor Agency Counsel Background As part of the dissolution of the former Redevelopment Agency, Health and Safety Code Section 34177 (added by AB 1X 26, as amended to date) requires the Successor Agency to adopt a Recognized Obligation Payment Schedule (ROPS) that lists all obligations of the former redevelopment agency that are enforceable within the meaning of subdivision (d) of Section 34167 for each twelve month period of each fiscal year. Each ROPS is a budgetary document upon which the County auditor-controller distributes what was formally called tax increment to the Successor Agency in order to allow it to pay approved enforceable obligations and administrative costs. In short, the auditor-controller deposits what would previously have been deemed tax increment into a new account, the Redevelopment Property Tax Fund ("RPTTF"). Any RPTTF dollars not required to pay enforceable obligations and approved administrative costs are distributed by the auditor-controller to the affected taxing entities in proportion to their respective share of property taxes. The Successor Agency previously adopted its ROPS 18-19 covering the period of July 1, 2018 through June 30, 2019 which was subsequently approved by the Oversight Board and submitted to the California Department of Finance (DOF). The DOF approved ROPS 18-19 subject to certain adjustments which resulted in an insufficient distribution Page 1 of 2 Loan Agreement (Unfunded Enforceable Obligations) June 26, 2018 of RPTTF necessary to fully fund the Successor Agency's enforceable obligations, including, the costs of maintaining Successor Agency assets, and project-related costs. Of particular concern is the shortfall of RPTTF to fully fund the ongoing operation, maintenance and management of the Lake Elsinore Diamond Stadium. The Fourth Amendment to the Interim Stadium Management Agreement expires June 30, 2018 and the Successor Agency is awaiting determination by DOF as to the proposed Restated Fifth Amendment. Expiration of the Interim Stadium Management Agreement in the middle of the 2018 baseball season would result in significant uncertainty, disruption and potential financial liabilities. Discussion Health & Safety Code Section 34173(h) of the Dissolution Act allows City — Successor Agency loans for the payment of enforceable obligations, including the costs of maintaining Successor Agency assets, and project-related costs identified on its Recognized Obligation Payment Schedule when RPTTF and immediately available funds on deposit in the Successor Agency's Redevelopment Obligation Retirement Fund are not sufficient. In order to meet the Successor Agency enforceable obligations, including costs of maintaining the Lake Elsinore Diamond Stadium, the City is able to advance funds to the Successor Agency in the form of a loan. The attached loan agreement establishes the terms of the loan. Fiscal Impact Approval of this Loan Agreement will ensure that the Successor Agency can fully meet its enforceable obligations. The Successor Agency will repay the loan only upon future distributions from the RPTTF sufficient to fully fund its enforceable obligations in the applicable ROPS period and to repay the loan. Prepared by: Barbara Leibold, Agency Counsel Approved by: Grant M. Yates, Executive Director Attachments: Loan Agreement Page 2of2 LOAN AGREEMENT BY AND BETWEEN THE CITY OF LAKE ELSINORE AND THE SUCCESSOR AGENCY OF THE CITY OF LAKE ELSINORE (UNFUNDED ENFORCEABLE OBLIGATIONS) This Loan Agreement is entered into as of July 1 , 2018 by and between the City of Lake Elsinore, a California general law city and municipal corporation ("City") and the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, formed and existing in accord with Section 34173 of the California Community Redevelopment Law ("CRL") (Health & Safety Code Section 33000, et seg.) ("Successor Agency"). RECITALS Whereas, under the provisions of the CRL, the City Council of the City of Lake Elsinore previously established the Redevelopment Agency of the City of Lake Elsinore, a public body, corporate and politic ("Agency"), to carry out the purposes of and exercise the powers granted to community redevelopment agencies under the CRL; Whereas, on February 1, 2012, the Agency was dissolved by operation of Assembly Bill 1 X26 (Stats. 2011, 1 st Ex. Sess., Ch. 5) ("AB 26"), and its rights, powers, duties and obligations were transferred to a "successor agency" (as defined in CRL Section 34171 Q) and Section 34173); Whereas, as provided by AB 26, the City Council took official action electing to become the Agency's successor agency ("Successor Agency") under CRL Section 34173; Whereas, on or about June 27, 2012, the provisions of Assembly Bill 1484 ("AB 1484") became law, and on or about September 22, 2015, the provisions of Senate Bill 107 ("SB 107") became law. AB 1484 and SB 107 modified the CRL and AB 26 in various ways. As used herein, the term "CRL" means Health & Safety Code Section 33000, et seq., as modified by AB 26, AB 1484 and SB 107. Specific terms used and not otherwise defined in this Agreement will have the meanings given to those terms in the CRL; Whereas CRL Section 34173(h) permits the City, as the former Agency's creating authority, to loan or grant funds to the Successor Agency to pay for enforceable obligations, administrative costs, and project-related expenses; Whereas, the Lake Elsinore Diamond Stadium is a Successor Agency asset which is operated, maintained and managed pursuant to a Stadium Interim Management Agreement, as amended by the Fourth Amendment thereto which will expire June 30, 2018; Whereas, in order to provide for continued efficient and cost effective management, maintenance and operation of the Lake Elsinore Diamond Stadium the Successor Agency and the Oversight Board approved a Restated Fifth Amendment and the Successor Agency is awaiting DOF's determination of the Restated Fifth Amendment; Whereas, if the Restated Fifth Amendment is not approved by DOF, the expiration of the Fourth Amendment on June 30, 2018 will result in significant uncertainty, disruption to the 2018 baseball season, interference with existing contracts, and potential financial liabilities; 1 Whereas, the Successor Agency is permitted to enter into a loan agreement with the City in the event of an insufficient distribution from the Redevelopment Property Tax Trust Fund (established pursuant to CRL Section 34170.5 and administered by the County Auditor- Controller in accord with CRL Sections 34182 and 34183) maintained by the Riverside County Auditor-Controller ("RPTTF") to fully fund certain enforceable obligations; Whereas, in order to avoid significant negative consequences, the Successor Agency has requested the City to loan the Successor Agency ("Loan") the funds necessary to continue the efficient and cost effective operation, maintenance and management of the Lake Elsinore Diamond Stadium pending allocation of a sufficient distribution from the RPTTF or other approved sources of funding so that the Successor Agency may pay its enforceable obligations, including the costs of maintaining the Successor Agency assets, and project- related costs set forth in the ROPS 18-19 and amended ROPS 18-19B; and Whereas, in compliance with applicable law, the Successor Agency considers the costs of maintaining Successor Agency assets, and project-related costs identified on its Recognized Obligation Payment Schedule for the period of July 1, 2018 through June 30, 2019 as approved by the Oversight Board and submitted to the State Department of Finance ("DOF") ("ROPS 18-19")to be enforceable obligations; Whereas, because DOF denied these costs in the ROPS 18-19A period, such costs will be submitted to the Oversight Board and DOF as part of the Successor Agency's amended ROPS 18-19B; Whereas, the City is willing to make the Loan under the authority of CRL Section 34173(h) on the terms set forth in this Agreement. AGREEMENT NOW THEREFORE, in consideration of the foregoing Recitals and the terms contained herein, and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties do hereby agree as follows: 1. Effective Date. This Agreement will become effective ("Effective Date") upon approval by the City Council as the City's governing body and by the Successor Agency and execution by the City's and the Successor Agency's authorized officials. 2. Loan Agreement. The City agrees to disburse the Loan to the Successor Agency upon the Successor Agency's request. The Loan will be disbursed to the Successor Agency to be held in its accounts and may be used to pay any of the Successor Agency's enforceable obligations, including the costs of maintaining Successor Agency assets, and project-related costs. 3. Use of the Loan. The Successor Agency shall utilize the proceeds of the Loan to pay for enforceable obligations, including the costs of maintaining Successor Agency assets and project-related costs, in the event RPTTF monies received by the Successor Agency for the period commencing July 1, 2018 are insufficient to fully pay for enforceable obligations, including the costs of maintaining Successor Agency assets and project-related costs. 2 4. Source of Repayment of the Loan. The Loan shall be repaid by the Successor Agency solely from future distributions of RPTTF sufficient to fully fund the Successor Agency's enforceable obligations in the applicable ROPS period, including repayment of the Loan. 5. Inclusion on Recognized Obligation Payment Schedule. The Successor Agency will prepare each ROPS as required by the CRL and submit it to the Oversight Board and such other governmental agencies as the CRL may require from time-to-time. The Successor Agency will take all other actions as required by the CRL or other applicable authority to ensure that the Successor Agency receives an allocation of taxes from RPTTF in the amounts necessary to satisfy the Successor Agency's payment obligations for its enforceable obligations. 6. Amendment or Modification. This Agreement and the Successor Agency's obligations under it may be amended or modified only in the following ways: 1. By the mutual written agreement of the City and the Successor Agency, following all notices, hearings and approvals required by then-applicable provisions of the CRL and other legal authority. 2. As required to conform to future changes in the CRL, other applicable legal authority, or pursuant to an order or judgment of a court of competent jurisdiction. 7. No Other Successor Agency Income or Assets Subject to Repayment Obligation. No funds or other assets of the Successor Agency other than property tax allocations from the RPTTF may be used for the repayment of the Successor Agency's obligations under this Agreement. 3 SIGNATURE PAGE TO LOAN AGREEMENT (UNFUNDED ENFORCEABLE OBLIGATIONS) CITY City of Lake Elsinore, a California municipal corporation By: Natasha Johnson, Mayor ATTEST: By: Susan M. Domen, MMC City Clerk SUCCESSOR AGENCY The Successor Agency to the Redevelopment Agency of the City of Lake Elsinore, a public entity created and existing under the authority of CRL Section 34173 By: Natasha Johnson, Chair ATTEST: SUCCESSOR AGENCY SECRETARY By: Susan M. Domen, MMC APPROVED AS TO FORM: By: Barbara Leibold, City Attorney/ Successor Agency Counsel 4