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Background on Dissolution of the El Cerrito Redevelopment Agency Pursuant to AB1x26 Oversight Board of the Successor Agency to the El Cerrito RedevelopmentAgency to the El Cerrito Redevelopment Agency Special Meeting, April 4, 2012 Agenda Item No. 5(B) ---PAGE BREAK--- Background Background Historical and Legislative Overview Former El Cerrito Redevelopment Agency Dissolution Legislation Role and Actions Required of the Oversight Board Financial Overview Assets and Liabilities transferred to the City or the Successor Agency Successor Agency Obligations as of February 1 2012 Successor Agency Obligations as of February 1, 2012 Benefit of Approving Economic Development Obligations - Financial Projections f d Items for Consideration Oversight Board Rules; Procedures; Date, Time and Location for Meetings Successor Agency Administrative Budget g y g First Recognized Obligation Payment Schedule (ROPS) April 4, 2012 2 ---PAGE BREAK--- Former El Cerrito R d l t A Redevelopment Agency Facts and Project Area Map Cumulative Tax Increment Collected Through FY10/11 A i l 70M FY10/11: Approximately $70M FY11/12 Assessed Value: $573M (Prior to Expected $15M Correction) FY11/12 Incremental AssessedValue: 3 April 4, 2012 FY11/12 Incremental Assessed Value: Approximately $480M ($495M with Correction) ---PAGE BREAK--- El Cerrito Redevelopment Agency Goals and Objectives Goals and Objectives Facilitate commercial and residential transit-oriented development at El Cerrito’s two BART stations Strengthen the City’s economic base by increasing opportunities to purchase local goods services and opportunities to purchase local goods, services, and entertainment Improve El Cerrito’s image and strengthen the sense of p g g community, while enhancing property values Ensure a wide range of quality housing choices in El Cerrito, including mixed-use and affordable housing developments Improve the physical and natural environment and maintain h Ci ’ l i f i the City’s long-term infrastructure investment April 4, 2012 4 ---PAGE BREAK--- El Cerrito Redevelopment Agency Recent Projects and Programs Recent Projects and Programs Public Improvements San PabloAvenue Streetscape Encouraging Infill Development CerritoTheater San Pablo Avenue Streetscape Civic Center Plaza Library Economic Development Cerrito Theater Mayfair Acquisition San Pablo Avenue Specific Plan and Del Norte TOD Strategy p Business Recruitment and Retention URM Abatement (Technical Assistance to Nearly 30 Businesses) Target Option Negotiation Sale of Properties with Obligations to EC Municipal Services Corp. Aff d bl H i Video Equipment Loan Program (Over 50 Businesses) Funded Implementation of Economic Development Projects and Programs by Affordable Housing Loan to Resources for Community Development for Property Acquisition Acquisition of Tradeway Site, Developer p g y EC Municipal Services Corp. Commercial Loan Program (Elevation 66) Program and Project Staff Grant Program (First Grant to Fire Department q y p Solicitation, predevelopment loan and exclusive negotiating agreement Sale of Tradeway Property with Development Obligations to for Regional Radio System) p g City of El Cerrito April 4, 2012 5 ---PAGE BREAK--- Project Area Assessed Value FY1992/93 to FY2011/12 FY1992/93 to FY2011/12 $700 Market Peak $631.4M in FY08/09 $572.7M in FY11/12 $500 $600 llions) Down 9% from Peak $300 $400 sed Value (mil $92.9M in FY77/78 $100 $200 Assess Base Assessed Value $ $0 Historical AV (FY92/93-FY11/12) Base AV 6 April 4, 2012 ---PAGE BREAK--- Tax Increment FY1992/93 FY2011/12 FY1992/93 – FY2011/12 $5.4M in FY08/09 $6.0 $4.9M in FY11/12 $4.0 $5.0 ions) $3.0 $ crement (milli FY11/12 includes anticipated Prior Year Supplemental Payment for Anticipated AV Correction $1.0 $2.0 Tax Inc hl 20% fT d h h h $0.0 Roughly 20% of Tax Increment was passed through to taxing entities each year, with the split calculated by County according to Property Tax Shares. April 4, 2012 7 ---PAGE BREAK--- Taxing Entities Serving Redevelopment Project Area* Redevelopment Project Area* Education Contra Costa County Superintendant of Schools Property Tax Shares Applicable West Contra Costa Unified School District Contra Costa Community College District ERAF City of El Cerrito C t C t C t CC ERAF 2% to Pass‐Through Payments Contra Costa County Special Districts East Bay Regional Park District Contra Costa Water Agency Mosquito Abatement District WCCUSD 29% Other 4% K‐12 ERAF 15% q Stege Sanitary District West Contra Costa Hospital District East Bay Municipal Utility District AC Transit BayArea RapidTransit District Sup of Schools 1% City 22% County 14% EBRPD 3% Districts 10% Bay Area Rapid Transit District Bay Area Air Quality Management District * Number in parentheses is the entity’s number of appointments to the Oversight Board. 8 April 4, 2012 ---PAGE BREAK--- Continued Goal: Revitalization Through Economic Development and Affordable Housing Funding Obligations for Economic Development & Housing Programs Policies Priority Development Area Adoption of New Zoning Based on Midtown URM Abatement Senior Housing/Mixed-Use Project San Pablo Avenue Specific Plan Del Norte TOD Parking and Feasibility Strategy D l N BART A M Adjacent to City Hall Multi-family/Special Needs Project on Portola Drive l Del Norte BART Area Master Planning El Cerrito Plaza Area T R i Del Norte Master Development in Partnership with Property Owners and BART l Tenant Recruitment Developer/Property Owner Facilitation Economic Development Programs Maintaining Existing Affordable Housing Stock April 4, 2012 9 ---PAGE BREAK--- Summary of AB1x26 Summary of AB1x26 Effect on public agencies Requires successor agencies to d d Dissolves redevelopment agency Transfers assets and liabilities to a successor agency use tax revenue, proceeds, and unencumbered reserves to pay: 1. County Auditor-Controller Creates oversight boards for successor agencies Impact on existing projects and administration costs 2. Enforceable obligations (including both debt service p g p j finances Allows projects to proceed and be funded if there is a financial and contractual obligations) 3. Administrative cost allowance to the successor agency funded if there is a financial commitment Invalidates property conveyances to and contracts with public agencies Remaining funds distributed to the taxing entities serving the project area and contracts with public agencies (occurring after Jan. 1, 2011) project area April 4, 2012 10 ---PAGE BREAK--- Legislative Provisions Related to Oversight Boards to Oversight Boards Representatives of city, county, community college district, county board of education, largest special district Unpaid position, serves at pleasure of appointing entity S b h B A P bl R d A d P l l Subject to the Brown Act, Public Records Act, and Political Reform Act of 1974 Personal immunity but not legal counsel provided Personal immunity, but not legal counsel provided Actions subject to review by Department of Finance Fiduciary duty to holders of enforceable obligations and Fiduciary duty to holders of enforceable obligations and taxing entities One county-wide Oversight Board starting in 2016 y g g April 4, 2012 11 ---PAGE BREAK--- Oversight Board Required Actions Oversight Board Required Actions Direct and/or approve actions of the Successor Agency to: Approve Successor Agency Administrative Budget Establish of new repayment schedules or refunding of debt S t id d d Set aside needed reserves Merge of project areas Continue acceptance of financial assistance Continue acceptance of financial assistance Make payments or perform obligations on recognized obligation payment schedules Dispose of property and assets Terminate unenforceable obligations or renegotiate contracts Transfer housing functions April 4, 2012 12 ---PAGE BREAK--- Process Process Successor Agency: prepares Recognized Obligations Payment Schedule (ROPS) with debt payments and contractual obligations by month with debt payments and contractual obligations by month County Auditor-Controller: uses independent auditor to certify obligations on ROPS are valid O h d d f f bl O S Oversight Board: approves payment and performance of obligations on ROPS Department of Finance: allowed three days to request review of any oversight board actions (actions are not effective for three-day period) Department of Finance: has ten days to approve the oversight board action being reviewed or return it to the oversight board County Auditor-Controller: disburses funds in January and June each year y y y Successor Agency: makes debt payments and ensures performance of contractual obligations April 4, 2012 13 ---PAGE BREAK--- Actions Already Taken for Dissolution: Cit El t d t A H i F ti City Elected to Assume Housing Functions Assets (as of February 1) A ’ b d h i f d t f d t Cit H i F d Agency s unencumbered housing funds transferred to new City Housing Fund Receivables for loans to Agency to pay prior funding takeaways by the State Loan portfolio of affordable housing projects Idaho Apartments Idaho Apartments El Cerrito Royale and St. John’s Land Partnership Land acquisition for Ohlone Gardens Project by Resources for Community Development Tradeway property (conveyed prior to dissolution legislation) y p p y ( y p g ) Contractual and Statutory Obligations Loan commitments to Ohlone Gardens and Eden Housing Exclusive NegotiatingAgreement with Eden Housing forTradeway property Exclusive Negotiating Agreement with Eden Housing for Tradeway property Monitoring existing housing projects for compliance with affordability restrictions AB1x26 provides no additional funding. If Housing obligations on ROPS are not approved current and future will be eliminated not approved, current and future will be eliminated. April 4, 2012 14 ---PAGE BREAK--- Actions Already Taken for Dissolution: Cit El t d t S S A City Elected to Serve as Successor Agency Assets as of February 1 Funds remaining in Redevelopment Capital Fund Real property (remnants of right-of-way from prior projects) Performance Deeds ofTrust by EC Municipal Services Corp Performance Deeds of Trust by EC Municipal Services Corp. to redevelop or operate properties conveyed EastshoreTriangle Mayfair Block Civic Center Parcel Cerrito Theater McMorgan DDA - Right to approve tenants (currently occupied by OSH) L i bl f Vid E i P (P i f Loan receivables for Video Equipment Program (Portion of balance forgiven annually) April 4, 2012 15 ---PAGE BREAK--- February 1: Enforceable Obligations and Li biliti T f d t S A Liabilities Transferred to Successor Agency Debt Payments Contracts Tax Allocation Bonds Valente Note (secured by third-party deed of trust) Coop Agmt with City for El Cerrito Redev Project Area (Housing) h f Payments to Housing Fund for loans to fund Educational Revenue Augmentation F d (ERAF) 2005 06 d Coop Agmt with EC MSC for El Cerrito Redev Project Area (Ec Dev) Fund (ERAF) 2005-06 and Supplemental ERAF 2009-10 Commitment to County for Project Commitments Ohlone Gardens Loan Agreement $5.1M facilities funding – enforceability is unclear SuccessorAgency Eden Housing Loan Agreement Project Related Costs Successor Agency Administrative Allowance j Affordable housing monitoring April 4, 2012 16 ---PAGE BREAK--- ROPS February-June 2012 Obligation (Payee) Description Total Obligation Feb Mar Apr May June Total ROPS 1997A Bonds (Union Bank) Redev Projs 4,662,048 470,868 $470,868 1998B Bonds (Union Bank) L&M Hsg Projs 1,071,038 195,200 $192,200 ( ) g j , , , $ , 2004A Bonds (Union Bank) Infrastructure Projs 13,636,426 213,114 $213,114 2004B Bonds (Union Bank) Redev Projs 481,045 481,045 $481,045 2004B Bonds (Union Bank) L&M Hsg Projs 5,419,513 171,533 $171,533 g Promissory Note (Valente) Land acquistion 3,746,801 288,215 $288,215 Coop Agreement (EC Mun Svcs Corp) Redev Plan Impl. (Ec Dev) 105,199,000 $0 Coop Agreement Redev Plan Impl (Hsg) 50 499 000 $0 (City of El Cerrito) Redev Plan Impl. (Hsg) 50,499,000 $0 2009-10 SERAF Loan (L&M Hsg Fund) Advance for SERAF payment 1,327,655 331,914 $[PHONE REDACTED]-06 ERAF Loan (L&M Hsg Fund) Advance for ERAF payment 335,436 83,859 $83,859 Ohlone Gardens Loan Agmt Loan commitment 471,152 471,152 $471,152 Eden Housing Loan Agmt Loan commitment 310,000 310,000 $310,000 Administrative Budget (City as Successor Agency) Administrative Allowance 3,500,000 50,000 50,000 50,000 50,000 50,000 $250,000 Total $190,659,113 $50,000 $338,215 $50,000 $1,246,925 $1,581,759 $3,266,899 April 4, 2012 17 ---PAGE BREAK--- Draft ROPS July-December 2012 Obligation (Payee) Description Jul Aug Sep Oct Nov Dec Total ROPS 1997A Bonds (Union Bank) Redev Projs $77,125 $77,125 1998B Bonds (Union Bank) L&M Hsg Projs $16,013 $16,013 g 2004A Bonds (Union Bank) Infrastructure Projs $213,114 $213,114 2004B Bonds (Union Bank) Redev Projs $0 2004B Bonds (Union Bank) L&M Hsg Projs $99,888 $99,888 Promissory Note (Valente) Land acquistion Coop Agreement (EC Mun Svcs Corp) Redev Plan Impl. (Ec Dev) $643,000 $643,000 Coop Agreement (City of El Cerrito) Redev Plan Impl. (Hsg) $229,000 $229,000 ( y ) 2009-10 SERAF Loan (L&M Hsg Fund) Advance for SERAF payment $165,957 $165,957 2005-06 ERAF Loan (L&M Hsg Fund) Advance for ERAF payment $41,930 $41,930 Ohlone Gardens Loan Agmt Loan commitment $0 g $ Eden Housing Loan Agmt Loan commitment $0 Administrative Budget (City as Successor Agency) Administrative Allowance $25,000 $25,000 $25,000 $25,000 $25,000 $125,000 l Total $897,000 $25,000 $25,000 $25,000 $25,000 $614,025 $1,611,025 April 4, 2012 18 ---PAGE BREAK--- Timing Issues for First and Second ROPS Created by Stay on AB1x26 ROPS Created by Stay on AB1x26 Required Action Timing CountyAuditor Controller to certify obligations Delayed by Supreme Court Stay to June 30 after first and County Auditor-Controller to certify obligations Delayed by Supreme Court Stay to June 30, after first and second ROPS Successor Agency to authorize first ROPS (Feb-Jun 2012) Completed February 21 (delayed by Stay) Oversight Board to approve first ROPS Due by April 15 (delayed by Stay) County to disburse funds for first ROPS Due on May 15 (however, no funds will be disbursed as they were disbursed in December, during Stay and used for expenses due prior to May 15) Successor Agency to consider second ROPS (Jul-Dec 2012) Due by May 1 (Scheduled for April 17, initial draft of second ROPS to be adjusted for June payments on first ROPS) Oversight Board will approve second ROPS Due by May 11 County to disburse funds for second ROPS Due on June 1 April 4, 2012 19 ---PAGE BREAK--- Successor Agency Administrative Budget FY2011 12 Administrative Budget FY2011-12 Entity/Activity Successor Agency Oversight Board Staffing Functions (Total Compensation Start-up costs are high plus Overhead for Indirect Costs) City Management $ 51,674 $ 33,910 Finance $ 60,532 $ 29,335 Risk Management $ 4,126 $ 2,063 Economic Development $ 37,014 $ 18,507 Setting up a new agency requires numerous one- time actions City Clerk $ 13,674 $ 8,204 Information Systems $ 4,536 $ 2,268 Legal Services $ 60,000 Financial & Audit Services $ 15,000 Legislation provides very little and sometimes fli i di i Financial & Audit Services $ 15,000 Bond‐related Costs $ 7,500 Supplies $ 1,500 $ 500 Postage $ 100 $ 100 Copies $ 500 $ 500 Website $ 2 000 $ 500 conflicting direction Learning curve Website $ 2,000 $ 500 Advertising/Legal Notices $ 1,500 $ 1,500 Property Management $ 1,000 Total $ 260,656 $ 97,387 Combined Total $ 358,043 F di S Funding Source Redev Property Tax Trust Fund $ 250,000 Unfunded $ 108,043 April 4, 2012 20 ---PAGE BREAK--- Fiscal Impact of Oversight Boards Decisions Boards Decisions Through the ability to approve a successor agency’s contractual bli i f j i h b d i fl h h d obligations for projects, an oversight board influences the short- and long-term fiscal impact on taxing entities and the economic development of the community. Oversight boards can: y g Support new development, increasing tax base and resulting in greater property tax revenue to taxing entities over time f bl bl k Limit enforceable obligations, making property tax revenue available to taxing entities now, but also constraining its growth Note that any increased revenue from successor agencies to school districts would replace revenue from the State General Fund, freeing it up for other State obligations, potentially resulting in no fiscal benefit for education, regardless of oversight board actions. g f f f , g f g April 4, 2012 21 ---PAGE BREAK--- T All ti B d Tax Allocation Bonds Payment (to be moved to Issue Balance Purpose ( second ROPS) 1997 A $4,662,048 Refinancing of 1991 Bonds (Projects in the Del Norte Area) $470,868 1998 B $1,071,038 Refinancing of 1993 Bonds (Del Norte Place Project) $195,200 2004 A $13,636,426 Public Improvements (Tax-Exempt) $213,114 2004 B $481,045 Economic Development & Affordable Housing Projects (Taxable) $481,045 Note: Payments due July 1, but funds to be delivered to Trustee June 15 and therefore can be moved to second ROPS April 4, 2012 22 ---PAGE BREAK--- Valente Promissory Note Valente Promissory Note Principal Balance: $2.3M Payment of $288,215 was made on March 5, 2012 Purpose: Land at 11600 San Pablo Avenue—Property is a key catalyst for revitalization of the Del Norte BART area with transit catalyst for revitalization of the Del Norte BART area with transit- oriented development Purchased in March 2009 for $3.3M with a $2.7M seller carry back note Note is secured by a third-party deed of trust on the property, now owned by the El Cerrito Municipal Services Corporation now owned by the El Cerrito Municipal Services Corporation Current value of the property is less than balance due on the note April 4, 2012 23 ---PAGE BREAK--- ERAF and SERAF Loans ERAF and SERAF Loans Combined Balance Remaining: $1,663,091 Combined Payment due in May: $415,773 Purpose: Housing Fund loans to pay prior State takeaways – 2005 06 Ed l R A F d (ERAF) 2005-06 Educational Revenue Augmentation Fund (ERAF) and 2009-10 Supplemental ERAF Statute requires repayment in full by June 2015 for use on Statute requires repayment in full by June 2015 for use on affordable housing April 4, 2012 24 ---PAGE BREAK--- Undisbursed Loan Commitments Undisbursed Loan Commitments Contracts with affordable housing developers for housing projects already underway Eden Housing Remaining commitment: $310 000 Remaining commitment: $310,000 Senior Housing/Mixed-Use Project Adjacent to City Hall Property subject to transfer through future disposition and development agreement agreement Resources for Community Development Remaining commitment: $471,152 Multi-family/Special Needs Project on Portola Drive RCD owns property and has project entitlements April 4, 2012 25 ---PAGE BREAK--- Successor Agency Administrative Allowance Administrative Allowance Minimum administrative cost allowance of $250,000 annually Separate obligation to prepare a budget for approval by the Oversight Board regardless of funding sources Oversight Board, regardless of funding sources April 4, 2012 26 ---PAGE BREAK--- Cooperation Agreement with the City of El Cerrito (Housing) City of El Cerrito (Housing) Balance: $50M (equals the contract value) Annual payments thru 2025 are based on previously projected tax increment available and project needs N f f ROPS No payment request for first ROPS Ongoing housing activities can be funded through Coop Agreement Agreement Should this agreement be invalidated under AB1x26, specific project commitments are also listed on the ROPS p j April 4, 2012 27 ---PAGE BREAK--- Cooperation Agreement with Municipal Services Corp (Ec Dev) Municipal Services Corp (Ec Dev) MSC is a separate nonprofit, public benefit corporation Balance: $105M (equals the contract value) Annual payments thru 2025 are based on previously d l bl d d projected tax increment available and project needs No payment request for first ROPS P j t t b f d d i l d i d l t Projects to be funded include economic development activities, development of MSC-owned land, coordination with City and other taxing entities (transit agencies) on y g ( g ) sustainable transit-oriented development efforts Cooperation Agreement is key to increasing the property tax base, benefiting all taxing entities in the long term April 4, 2012 28 ---PAGE BREAK--- Maximize Future Revenue Through Economic Development and Increased Tax Base Funding the Coop Agmts and/or project obligations will create i d fi l b fi f ll i i i community and fiscal benefit for all taxing entities MSC Focus Funding and staffing for economic development programs (important to u g a sta g o eco o c eve op e t p og a s ( po ta t to fiscal impact, but less direct) Investment in development of vacant land it owns and facilitating development of other land (key to having a significant impact on the tax p ( y g g p base) Example: One 180-unit project could be valued at $60M and fit on the Mayfair Block y Creation of affordable housing has an indirect fiscal impact but is crucial to equitable and sustainable revitalization of San Pablo A b i i id i l d i d li d l Avenue by increasing residential density and quality development April 4, 2012 29 ---PAGE BREAK--- Projected Tax Increment Thru FY24-25 U d V i G th S i Under Various Growth Scenarios 11 0 $12.0 M $9.0 $10.0 $11.0 millions) ock $60M 7 Additional $60M Dev FY18-19 $7.0 $8.0 Increment (m rket Peak 8-09 et Low 2 c. Correction -13 Mayfair Blo Dev FY16-17 $4.0 $5.0 $6.0 Tax Mar FY08 Marke FY11-1 Antic FY12 $4.0 Historical TI 2% Growth After FY12/13 5% Growth After FY12/13 Plus $60M Development Plus $120M Development $ p $ p April 4, 2012 30 ---PAGE BREAK--- Potential Annual New Revenue to T i E titi U d G th S i Taxing Entities Under Growth Scenarios $9 0 $10.0 ions) M kip 22-23 $6 0 $7.0 $8.0 $9.0 ayments (Milli id Off FY15-16 d Off FY16-17 $60M Mayfair ment FY17-18 act of Add’l $60M FY18-19 2004 TABs Sk Payment FY2 $3 0 $4.0 $5.0 $6.0 xing Entity Pa ERAF Loans Pai TAB 1998B Paid Impact of Developm Impa Dev F $0.0 $1.0 $2.0 $3.0 Total New Tax Debts Paid in Full, Redev. Plan Ends FY24-25 $0.0 T No Funding 2% AV Growth Partial Funding, 5% AV Growth Full Funding, Add $60M Mayfair Full Funding, Add'l $60M in Dev April 4, 2012 31 g, $ y g, $ Note: due to AB1x26 cash flow timing for first ROPS, no taxing entity payments are anticipated for FY11-12. ---PAGE BREAK--- First Year Cash Flow Issue First Year Cash Flow Issue Legislation does not work with common redevelopment agency funding cycles, particularly for large and irregular debt service payments (AB1585 recently particularly for large and irregular debt service payments (AB1585 recently approved by Assembly and Senate addresses this problem, not signed by governor as of March 29) Supreme Court Stay onAB1x26 complicated and compressed the timing of Supreme Court Stay on AB1x26 complicated and compressed the timing of payments for the first and second ROPS County notification of no additional May 15 payment after ROPS’ authorization ff ll k h d ll d l h h fl Staff will work with County Auditor-Controller to deal with cash flow issue Debt Service Payments can be funded from second ROPS payment on June 1 Successor Agency will authorize second ROPS on April 17, adjusted for cash g y p j flow Oversight Board approval of second ROPS needed before May 11 April 4, 2012 32 ---PAGE BREAK--- Consideration of Resolutions Consideration of Resolutions Establishing Rules; Procedures; Date, Time and Location for Meetings of the Oversight Board Approving the Successor Agency Administrative Budget A h f R d Obl P S h d l Approving the first Recognized Obligation Payment Schedule 33 April 4, 2012