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Date: To: From: Subject: AGENDA BILL Agenda Item No. 7(8)(1) February 21, 2012 City Council of the City of El Cerrito acting as Successor Agency to the El Cerrito Redevelopment Agency Lori Trevifio, Redevelopment Manager Hilde Myall, Senior Project Manager, Housing Mary Dodge, Administrative Services Director Review and authorization to submit initial draft Recognized Obligations Payment Schedule ACTION REQUESTED Adopt a Successor Agency Resolution, reviewing and authorizing submittal of the initial draft Recognized Obligations Payment Schedule required under AB 1 x26. BACKGROUND In June 2011, the State of California enacted AB 1 x26 to dissolve all redevelopment agencies in the State of California and establish successor agencies to wind down the former redevelopment agencies' affairs. The legislation resulted in suspension of all activities of the El Cerrito Redevelopment Agency (the "RDA") on July 1, 2011. On August 15, 2011, the City of El Cerrito (the "City") elected to serve as the Successor Agency to the El Cerrito Redevelopment Agency (the At the same time, the RDA adopted an Enforceable Obligations Payment Schedule (the "EOPS") for those payments due before December 31, 2011. While in continued suspension during the CRA v. Matosantos litigation, the RDA received its usual tax increment payment on December 16, 2011, rather than revenue distribution being subject to the oversight board review that would have been required earlier, had dissolution occurred on October 1, 2011. The RDA made payments that were included on the EOPS. On December 29, 2011, the State Supreme Court issued a decision that dissolution of redevelopment agencies is constitutional and established a new timeline for agency dissolution under AB1x26. The RDA was dissolved on February 1, 2012 and the SA was established to settle the RDA's affairs. Under the new timeline, the RDA amended its EOPS to include obligations due through the end of FY11-12. This enabled the RDA to utilize its December 15, 2011 tax increment receipts to pay its remaining obligations during the month of January, leading up to dissolution on February 1, 2012. The RDA maintained sufficient cash to transfer to the SA to pay obligations due prior to the next scheduled revenue payment from the County. ---PAGE BREAK--- Agenda Item No. 7(8)(1) FIDUCIARY FUND In the adjusted timeline for AB1x26, funds remaining in the RDA's accounts as of February 1, 2012 must be transferred to the SA, and the necessary transfers will occur as a matter of law. A Fiduciary Fund is being established to receive the former RDA's assets and liabilities. The SA will not be a component unit of the City of El Cerrito and the City will not assume the Successor's assets and liabilities. The City Council's role as the SA is limited to taking actions necessary to facilitate completion and/or payment of the SA's recognized obligations. The SA does not have budget discretion, as it only has a fiduciary role, and therefore a budget is not being proposed. The initial draft Recognized Obligation Payment Schedule (the "ROPS") being prepared by the SA will serve as the spending plan during its operative period, starting with the SA's establishment in February and going through June, 2012. RECOGNIZED OBLIGATION PAYMENT SCHEDULE By March 1, 2012, the SA must prepare an initial draft of the ROPS, which will be subject to 1) review and certification as to accuracy by an external auditor commissioned by the County Auditor-Controller and 2) approval by an oversight board, whose members are appointed by various entities, which is charged with overseeing the SA's actions. Once prepared, certified, and approved, the ROPS is submitted to the County Auditor-Controller, State Controller and the Department of Finance and is to be posted on the SA's website. The Department of Finance has three days to review the ROPS after its approval and can challenge any payment on the ROPS. For any payment not challenged, the County will disburse funds to the SA for it to make the scheduled payments. Unfortunately, the dates set forth in the statute (as modified by the Supreme Court order) do not work in a logical sequence as the external audit is not required to be completed until after the Oversight Board may be formed and the approved ROPS is required to be sent to the State. Should the ROPS not be certified and approved by April15, 2012, the SA will send the State, the County Auditor-Controller and the Oversight Board a copy of the draft ROPS, documentation of the SA's efforts toward the required certification and approval, and information regarding anticipated actions related to certification and approval. The initial draft ROPS, which is Exhibit A to the attached Resolution, is based on the RDA's EOPS as amended on January 17, 2012. It is to cover the period February to June, 2012, but also to project the dates and amounts of scheduled payments for each enforceable obligation for the remainder of the time period during which the RDA would have been authorized to obligate tax increment had the RDA not been dissolved. The RDA was authorized to obligate tax increment through November 2025. Additionally, the ROPS is to include a column describing the expected source of funds for each payment. Staff has also included a schedule of the payments for the second ROPS period on the initial draft ROPS. The second ROPS, covering July through December, 2012, will need to be prepared shortly. Note that those payments are not additional to annual Page 2 ---PAGE BREAK--- Agenda Item No. 7(8)(1) payments projected for FY2012-13. Payments due in the second ROPS period are included for reference and cash flow planning purposes. Obligations included on the initial draft ROPS are as follows: • Tax Allocation Bond Payments. Payments are due in the first of January and July each year, but the bond trustee requires funds to be transferred two weeks in advance. Therefore bond debt payments are reflected a month in advance to ensure that funds are available when required. • Valente Note. This note payment is due in March of each year. The SA is already authorized to make this payment, based on its inclusion on the RDA's amended EOPS. • Cooperation Agreement with the El Cerrito Municipal Services Corporation. This payment is due within ten days of demand by the Corporation and upon availability of funds. The schedule assumes half of the annual amount due is paid in both July and January. The total outstanding obligation as of January 31, 2012 represents the SA's maximum remaining liability, as it is the amount the Corporation is entitled to request. The annual payments represent the projected amounts to be requested, based on recent tax increment projections and currently anticipated projects and programs. • Cooperation Agreement with the City of El Cerrito. This payment is for affordable housing project-related costs, including staffing, consulting and loan or grants to affordable housing developers. The total outstanding obligation as of January 31, 2012 represents the SA's maximum remaining liability, as it is the amount the City is entitled to request. The annual payments represent the projected amounts to be requested, based on recent tax increment projections and currently anticipated projects anticipated. The Agreement is being included on the ROPS notwithstanding purported invalidity under AB1x26, pending legislative and litigation issues. Specific project obligations are also listed on the draft ROPS. Should this agreement be invalidated under AB1x26, those specific costs will continue to be listed separately on a subsequent ROPS. • ERAF and SERAF Loan Payments. These are obligations to repay the Housing Fund for prior advances. The payments can be used to fund affordable housing related costs. • Undisbursed Loan Commitments. The RDA had loan commitments to two affordable housing developers for housing projects that are currently underway and relying on those commitments to move forward. By listing these obligations, the SA is not waiving its right or the City's right to challenge the purported invalidity of the Cooperation Agreement with the City of El Cerrito under AB1x26. Page 3 ---PAGE BREAK--- Agenda Item No. 7(8)(1) • Administrative Budget. The SA is entitled to an administrative cost allowance of $250,000 per fiscal year. The SA has a separate obligation to prepare a budget for approval by the Oversight Board, but the amount of the allowance is $250,000 regardless. City staff will return with an administrative budget for the SA at a subsequent meeting and prior to consideration by the Oversight Board. The County Auditor-Controller recently requested that each obligation on the initial draft ROPS include the State statute establishing its validity as an enforceable obligation. While including this information is not required under AB 1 x26, City staff will provide any information that will assist the External Auditor in certifying the ROPS' accuracy. LEGAL CONSIDERATIONS The preparation of the ROPS fulfills the requirements of the SA under AB 1x26 regarding the ROPS. As noted above, the ROPS will not be final until it is certified by the external auditor hired by the County Auditor-Controller and approved by the Oversight Board. The ROPS is not final until three days after the Oversight Board approval, during which time the Department of Finance can request to review any items on the ROPS. Scott Hanin City Manager Attachments: 1. Successor Agency Resolution, reviewing and authorizing submittal of the initial draft Recognized Obligation Payment Schedule Required under AB1x26 Page4 ---PAGE BREAK--- Agenda Item No. 7(B)(l) Attachment 1 SUCCESSOR AGENCY RESOLUTION 2012-XX RESOLUTION OF THE CITY COUNCIL OF THE CITY OF EL CERRITO ACTING AS SUCCESSOR AGENCY TO THE EL CERRITO REDEVELOPMENT AGENCY AUTHORIZING SUBMITTAL OF THE INITIAL DRAFT RECOGNIZED OBLIGATION PAYMENT SCHEDULE AS REQUIRED UNDER AB 1X26 WHEREAS, pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.; the "Redevelopment Law"), the City Council (the "City Council") of the City of El Cerrito (the "City") adopted the Redevelopment Plan for the City of El Cerrito Redevelopment Project Area by Ordinance No. 77-17, adopted on November 28, 1977, as amended by Ordinance No. 80-13, adopted on December 15, 1980; as amended by Ordinance No. 89-5, adopted on July 10, 1989; as amended by Ordinance No. 94-4, adopted on July 25, 1994; as amended by Ordinance No. 2004-3, adopted March 1, 2004; as amended by Ordinance No. 2005-01, adopted March 21, 2005; and as further amended by Ordinance No. 2006-10, adopted November 6, 2006 (collectively, the "Redevelopment Plan"); and WHEREAS, the El Cerrito Redevelopment Agency (the "Agency") was responsible for implementation of the Redevelopment Plan; and WHEREAS, as part of the 2011-12 State budget bill, AB1x26 (the "Dissolution Act") was enacted significantly modifying the Redevelopment Law to require the dissolution of redevelopment agencies throughout California and the establishment of successor agencies to wind down the former redevelopment agencies' affairs; and WHEREAS, the Dissolution Act provides that the city sponsonng a dissolving redevelopment agency may elect to serve as its successor agency; and WHEREAS, on August 15, 2011, pursuant to the Dissolution Act, the City elected to serve as the Successor Agency to the El Cerrito Redevelopment Agency (the "Successor"), should it be dissolved; and WHEREAS, on December 29, 2011, the California Supreme Court ruled that the Dissolution Act is constitutional, resulting in the dissolution of all California redevelopment agencies on February 1, 2012; and WHEREAS, the Dissolution Act required the Agency to prepare an Enforceable Obligation Payment Schedule (the "EOPS") for Agency debts and obligations that were to be paid from the Agency's tax increment revenue and other resources during the period of suspension prior to the Agency's dissolution; and WHEREAS, the Agency adopted its EOPS on August 15, 2011 and amended it on January 17, 2012, so as to pay its obligations due during its suspension and prior to dissolution on February 1, 2012; and ---PAGE BREAK--- Agenda Item No. 7(B)(l) Attachment 1 WHEREAS, pursuant to the Dissolution Act, upon dissolution, the Agency transferred as a matter of law all remaining liabilities, debts and obligations to the Successor; and WHEREAS, pursuant to the Dissolution Act, upon dissolution the Agency transferred all unencumbered funds and assets to the Successor as a matter of law, for disposition and/or use by the Successor to retire Agency debt and pay for Agency obligations; and WHEREAS, the Successor is not a component unit of the City of El Cerrito and the City is not liable for the obligations of the Successor; and WHEREAS, the City's role as the Successor is limited to taking actions necessary to facilitate completion and/or payment of the Successor's recognized obligations and therefore the City established a Fiduciary Fund to receive the Successor's assets and liabilities; and WHEREAS, the Dissolution Act requires the Successor to prepare an initial draft of a Recognized Obligations Payment Schedule ("ROPS") based on the Agency's EOPS by March 1, 2012, to be certified by the County Auditor-Controller, approved by an oversight board and reviewed by the California Department of Finance; and WHEREAS, once certified by the County Auditor-Controller and approved by the Oversight board, the approved ROPS will serve as the spending plan during its operative period; and WHEREAS, the City Council, acting in its role as Successor, has reviewed the initial draft ROPS that was prepared pursuant to the Dissolution Act, which is Exhibit A to this Resolution, for submittal to the County Auditor-Controller, the Oversight Board of the Successor once established, and the State Department of Finance. NOW THEREFORE, BE IT RESOLVED that the City Council of the City of El Cerrito acting as Successor Agency to the El Cerrito Redevelopment Agency hereby finds the above recitals to be true and accurate. BE IT FURTHER RESOLVED that the City Council of the City of El Cerrito acting as Successor Agency to the El Cerrito Redevelopment Agency authorizes the submittal of the initial draft Recognized Obligation Payment Schedule as required under the Dissolution Act. BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon its passage and adoption. * * * * * ---PAGE BREAK--- Agenda Item No. 7(B)(l) Attachment 1 I CERTIFY that at the regular meeting on February 21, 2012, the City Council of the City of El Cerrito as Successor Agency to the El Cerrito Redevelopment Agency passed this resolution by the following vote: A YES: COUNCILMEMBERS: NOES: COUNCILMEMBERS: ABSENT: COUNCILMEMBERS: ABSTAIN: COUNCILMEMBERS: IN WITNESS of this action, I sign this document and affix the corporate seal of the City ofEl Cerrito on February_, 2012. Cheryl Morse, City Clerk APPROVED: William C. Jones III, Mayor ---PAGE BREAK--- Successor Agency Resolution 2012‐01 Exhibit A Page 1 City of El Cerrito acting as the Successor Agency to the El Cerrito Redevelopment Agency Obligations of tax increment from the former City of El Cerrito Redevelopment Project Area RECOGNIZED OBLIGATION PAYMENT SCHEDULE Initial Draft February - June, 2012 Project Name / Debt Obligation Payee Description Total Outstanding 1/31/12 Feb Mar Apr May June Total Due in Period Source of Funds 1) 1997 Tax Allocation Bonds, Series A Union Bank Refunding of prior TAB for Redev Projs 4,662,048 470,868 470,868 Trust Fund 2) 1998 Tax Allocation Bonds, Series B Union Bank Refunding of prior TAB for L&M Hsg Projs 1,071,038 195,200 195,200 Trust Fund 3) 2004 Tax Allocation Bonds, Series A Union Bank Tax-exempt TAB for Infrastructure Projs 13,636,426 213,114 213,114 Trust Fund 4) 2004 Tax Allocation Bonds, Series B Union Bank Portion of Taxable TAB for Redev Projs 481,045 481,045 481,045 Trust Fund 5) 2004 Tax Allocation Bonds, Series B Union Bank Portion of Taxable TAB for L&M Hsg Projs 5,419,513 171,533 171,533 Trust Fund 6) Valente Promissory Note George Valente Loan for land acquistion 3,746,801 288,215 288,215 Successor Fund Balance 7) Cooperation Agreement El Cerrito Municipal Services Corporation Redevelopment Plan implementation (non-housing) 105,199,000 - Trust Fund 8) Cooperation Agreement City of El Cerrito Redevelopment Plan implementation (housing) 50,499,000 - Trust Fund 9) 2009-2010 SERAF Loan L&M Housing Fund Funds advanced for SERAF payment 1,327,655 331,914 331,914 Trust Fund 10) 2005-2006 ERAF Loan L&M Housing Fund Funds advanced for ERAF payment 335,436 83,859 83,859 Trust Fund 11) Ohlone Gardens Loan Agreement Ohlone Gardens LP Undisbursed loan commitment 471,152 471,152 471,152 Trust Fund 12) Eden Housing Loan Agreement Eden Housing Undisbursed loan commitment 310,000 310,000 310,000 Trust Fund 13) Administrative Budget City of El Cerrito Administrative Budget per AB1x26 3,500,000 50,000 50,000 50,000 50,000 50,000 250,000 Successor Fund Balance & Trust Fund Total 190,659,113 50,000 338,215 50,000 1,246,925 1,581,759 3,266,899 ---PAGE BREAK--- Successor Agency Resolution 2012‐01 Exhibit A Page 2 City of El Cerrito acting as the Successor Agency to the El Cerrito Redevelopment Agency Obligations of tax increment from the former City of El Cerrito Redevelopment Project Area RECOGNIZED OBLIGATION PAYMENT SCHEDULE Projected Payments for July - December, 2012 (included for information only) Payments for this period are included for reference and cash flow planning purposes only. A subsequent ROPS will be adopted for this period. The payment amounts are included in the project annual payments for FY2012-13 shown in the following table. Project Name / Debt Obligation Payee Description Projected Total Outstanding 6/30/12 Jul Aug Sep Oct Nov Dec Total Due in Period Source of Funds 1) 1997 Tax Allocation Bonds, Series A Union Bank Refunding of prior TAB for Redev Projs 4,191,180 77,125 77,125 Trust Fund 2) 1998 Tax Allocation Bonds, Series B Union Bank Refunding of prior TAB for L&M Hsg Projs 875,838 16,013 16,013 Trust Fund 3) 2004 Tax Allocation Bonds, Series A Union Bank Tax-exempt TAB for Infrastructure Projs 13,423,313 213,114 213,114 Trust Fund 4) 2004 Tax Allocation Bonds, Series B Union Bank Portion of Taxable TAB for Redev Projs - - Trust Fund 5) 2004 Tax Allocation Bonds, Series B Union Bank Portion of Taxable TAB for L&M Hsg Projs 5,247,980 99,888 99,888 Trust Fund 6) Valente Promissory Note George Valente Loan for land acquistion 3,458,586 - Trust Fund 7) Cooperation Agreement El Cerrito Municipal Services Corporation Redevelopment Plan implementation (non-housing) 105,199,000 643,000 643,000 Trust Fund 8) Cooperation Agreement City of El Cerrito Redevelopment Plan implementation (housing) 50,499,000 229,000 229,000 Trust Fund 9) 2009-2010 SERAF Loan L&M Housing Fund Funds advanced for SERAF payment 995,741 165,957 165,957 Trust Fund 10) 2005-2006 ERAF Loan L&M Housing Fund Funds advanced for ERAF payment 251,577 41,930 41,930 Trust Fund 11) Ohlone Gardens Loan Agreement Ohlone Gardens LP Undisbursed loan commitment - - Trust Fund 12) Eden Housing Loan Agreement Eden Housing Undisbursed loan commitment - - Trust Fund 13) Administrative Budget City of El Cerrito Administrative Budget per AB1x26 3,250,000 50,000 50,000 50,000 50,000 50,000 250,000 Trust Fund Total 187,392,214 922,000 50,000 50,000 50,000 50,000 614,025 1,736,025 ---PAGE BREAK--- Successor Agency Resolution 2012‐01 Exhibit A Page 3 City of El Cerrito acting as the Successor Agency to the El Cerrito Redevelopment Agency Obligations of tax increment from the former City of El Cerrito Redevelopment Project Area RECOGNIZED OBLIGATION PAYMENT SCHEDULE Initial Draft Projected Annual Payments through the life of the Redevelopment Plan Project Name / Debt Obligation Total Outstanding 6/30/2012 2012-2013 2013-2014 2014-2015 2015-2016 2016-2017 2017-2018 2018-2019 2019-2020 2020-2021 2021-2022 2022-2023 2023-2024 2024-2025 Total 1) 1997 Tax Allocation Bonds, Series A 4,191,180 553,805 554,000 553,000 551,000 499,250 497,750 490,375 492,000 4,191,180 2) 1998 Tax Allocation Bonds, Series B 875,838 216,750 221,906 216,538 220,644 875,838 3) 2004 Tax Allocation Bonds, Series A 13,423,313 971,228 1,017,153 1,070,498 1,155,153 1,284,943 937,698 1,071,898 1,114,295 1,552,775 1,601,800 1,645,875 13,423,316 4) 2004 Tax Allocation Bonds, Series B - - 5) 2004 Tax Allocation Bonds, Series B 5,247,980 264,775 271,720 268,195 504,220 502,525 505,035 506,485 606,875 604,925 606,600 606,625 5,247,980 6) Valente Promissory Note 3,458,586 288,215 288,215 288,215 288,215 288,215 288,215 288,215 288,215 288,215 288,215 288,215 288,215 3,458,580 7) Cooperation Agreement 105,199,000 1,287,000 1,351,000 1,426,000 1,497,000 1,572,000 1,651,000 1,733,000 1,820,000 1,911,000 2,007,000 2,107,000 2,212,000 2,323,000 22,897,000 8) Cooperation Agreement 50,499,000 458,000 483,000 535,000 562,000 590,000 619,000 650,000 683,000 717,000 753,000 790,000 830,000 871,000 8,541,000 9) 2009-2010 SERAF Loan 995,741 331,914 331,914 331,914 995,742 10) 2005-2006 ERAF Loan 251,577 83,859 83,859 83,859 251,577 11) Ohlone Gardens Loan Agreement - - 12) Eden Housing Loan Agreement - - 13) Administrative Budget 3,250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 250,000 3,250,000 Total 187,392,214 4,705,546 4,852,767 5,023,219 5,028,232 4,986,933 4,748,698 4,989,973 5,254,385 5,323,915 5,506,615 3,435,215 5,832,715 3,444,000 63,132,213