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HomeMy WebLinkAboutResolution No. 6308229 RESOLUTION NO. 6308 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF CYPRESS APPROVING AND RATIFYING A RESTATED AND RE- ENTERED REPAYMENT AGREEMENT AS APPROVED BY THE OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE DISSOLVED CYPRESS REDEVELOPMENT AGENCY WHEREAS, pursuant to Health and Safety Code Section 34179(h), added by ABx1 26, the State of California Department of Finance ( "DOF ") reviewed and returned the Recognized Obligation Payment Schedule ( "ROPS ") for the period January 1, 2012 through June 30, 2012, and the ROPS to the Oversight Board to the Successor Agency to the dissolved Cypress Redevelopment Agency ( "Oversight Board ") for reconsideration, indicating that certain Repayment Agreement, dated March 23, 2009 ( "Repayment Agreement "), listed on the ROPS did not meet, DOF's opinion, the definition of an "enforceable obligation" under Health and Safety Code Section 34171(d); and WHEREAS, the City of Cypress ( "City ") is a charter city of the State California and a municipal corporation operating under the Constitutional of the State of California; and WHEREAS, under the Community Redevelopment Law of the State of California ( "CRL "), the City had the express authority to provide the Cypress Redevelopment Agency ( "RDA ") with financial assistance for purposes of implementing redevelopment activities (see, e.g., Health and Safety Code Sections 33220, 33600, 33601, 33610, 33614; see also Government Code Section 53600 et seq.); and WHEREAS, under ABx1 26, Health and Safety Code Section 34180 similarly authorizes the Oversight Board to approve a request by the successor agency to re- enter into an agreement with the city that formed the redevelopment agency that it is succeeding; and WHEREAS, pursuant to Health and Safety Code Sections 34178(a) and 34180(h), the City, in its capacity as the Successor Agency, requested Oversight Board approval to restate and re -enter into the Repayment Agreement; and WHEREAS, on May 15, 2012, by adoption of Resolution No. OB 4, the Oversight Board approved the Successor Agency's request to enter into that certain Restated and Re- Entered Repayment Agreement which is attached hereto as Exhibit "A" ( "Restated Agreement "); and WHEREAS, the Repayment Agreement was and is a proper and legally - authorized loan agreement under the CRL made by the City to the RDA for legitimate redevelopment purposes, including but not limited to the elimination of blight in the RDA's Merged Redevelopment Project Area and construction of public infrastructure and publicly owned improvements, all of which benefit the taxing entities providing services in the City; and WHEREAS, if the amounts due under the Repayment Agreement are not paid back to the City, then other public services provided by the City, such as public safety, fire protection, wet and dry utilities, and waste and water management, would be impacted, thereby negatively impacting the other taxing entities and their provision of services that use and benefit from these City services; and WHEREAS, the Restated and Re- Entered Repayment Agreement is a proper and legally authorized agreement which, with Oversight Board approval having been granted with the adoption of Oversight Board Resolution No. OB 4, is an enforceable obligation under ABx1 26; and WHEREAS, neither the approval granted by the Oversight Board by adoption of its Resolution No. OB 4, nor the adoption of this Resolution by the City Council approving and adopting the Restated and Re- Entered Repayment Agreement, voids the original Repayment Agreement and the City reserves, and does not waive, any and all rights it may have now or in the future, under any current or future law, administrative regulation, judicial determination, or otherwise, to dispute the DOF's determination that the original Repayment Agreement is not an enforceable obligation; NOW, THEREFORE, BE IT RESOLVED by the City Council as follows: Section 1. The above Recitals are true and correct and incorporated herein. Section 2. The City Council hereby finds and declares as follows: 1. The Repayment Agreement (which includes the Promissory Note attached thereto) was lawfully entered into by the City and RDA. The Community Redevelopment Law expressly authorized the City to provide financial assistance to the Agency (Health and Safety Code sections 33220,33600,33601,33614 and Government Code section 53600). Further, if instead of "internally" borrowing seed money from the City, the RDA had financed its activities with bonds issued to private third party lenders, there is no question such bonds would be "enforceable obligations" within the meaning of ABx1 26 and determined as such by DOF. Because the City was willing to invest its own surplus funds and took the financially prudent step of avoiding the need for the RDA to borrow money on the open market and pay interest to third parties, the City, as the Successor Agency, does not believe there is a fair rationale for DOF's determination the original Repayment Agreement is not an "enforceable obligation." 2. The Repayment Agreement provided for repayment of a reasonable term and interest rate. The Repayment Agreement was also accepted as indebtedness by the State Controller over a number of years prior to ABx1 26. 3. The Repayment Agreement was approved prior to January 1, 2011 and was not a last minute response to Governor Brown's announcement on January 10, 2011 of his proposal to eliminate redevelopment agencies or any legislative proposal that followed. 4. ABx1 26, at Health and Safety Code Section 34178(a) expressly authorizes the Successor Agency to re -enter agreements with the City upon approval by the Oversight Board. The Oversight Board has approved the re- entering into the Repayment Agreement by adoption of its Resolution No. OB 4 which approves the Restated and Re- Entered Repayment Agreement. Section 3. The City Council approves and ratifies the Restated and Re- Entered Repayment Agreement, attached to this Resolution as Exhibit "A ". Section 4. The City Clerk shall certify to the adoption of this Resolution. PASSED AND ADOPTED by the City Council at a meeting held on the 22nd day of May, 2012. s! s ATTEST: ( CITY CLERK, CITY OF CYPRESS MA "i ' OF CITY OF CYPRESS 2 230 STATE OF CALIFORNIA COUNTY OF ORANGE ) SS CITY OF CYPRESS ) 231 I, Denise Basham, City Clerk of the City of Cypress, hereby certify that the foregoing resolution was duly adopted at a meeting of the City Council, held on the 22nd day of May, 2012, by the following roll call vote: AYES: 4 COUNCIL MEMBERS: Mills, Seymore, Narain and Bailey NOES: 0 COUNCIL MEMBERS: None ABSENT: 1 COUNCIL MEMBERS: Luebben CITY CLERK OF THE CITY OF CYPRESS 3 232 RESTATED AND RE- ENTERED REPAYMENT AGREEMENT This RESTATED AND RE- ENTERED REPAYMENT AGREEMENT ( "Restated Agreement ") is entered into this 22nd day of May, 2012, by and between the CITY OF CYPRESS, a charter city of the State of California and municipal corporation, existing and operating under the Constitution of the State of California ( "City "), and the CITY OF CYPRESS in its capacity as the Successor Agency ( "Successor Agency ") to the dissolved Cypress Redevelopment Agency ( "RDA "), and has been approved by the Oversight Board to the Successor Agency to the dissolved RDA ( "Oversight Board ") by adoption of Oversight Board Resolution No. OB 4. RECITALS A. City is a California charter city and municipal corporation operating under the Constitution of the State of California. B. RDA was a public body, corporate and politic, exercising governmental functions and powers under the Community Redevelopment Law, Health and Safety Code Section 33000 et seq. ( "CRL "). C. RDA was established to exercise and undertake redevelopment activities for purposes of implementing the Redevelopment Plan for the RDA's Redevelopment Project Areas. D. Under the CRL, the City had the express authority to provide RDA with financial assistance for purposes of implementing redevelopment activities (see, e.g., Health and Safety Code Sections 33220, 33600, 33601, 33610, 33614; see also Government Code Section 53600 et seq.). E. Pursuant to the authority granted under the CRL, the City and RDA entered into that certain Repayment Agreement, dated March 23, 2009, a copy of which is attached to this Restated Agreement as Exhibit "A" and incorporated herein by this reference ( "Repayment Agreement "). F. On or about January 10, 2011, the Governor of California first proposed as part of his 2011 -12 budget proposal the dissolution of redevelopment agencies. G. Pursuant to Assembly Bill 26 from the 2011 -12 First Extraordinary Session of the California Legislature ( "ABx1 26 "), enacted as a bill related to the 2011 -12 Budget Act in June 2011, as modified by the California Supreme Court Decision in California Redevelopment Association v. Matosantos (2011) 53 Ca1.4th 231, all redevelopment agencies in California were dissolved on February 1, 2012. H. Pursuant to Health and Safety Code Section 34173(a) and (b), added by ABx1 26, the City, as the Successor Agency to the RDA, assumed on February 1, 2012, all authority, rights, powers, duties, and obligations previously vested with the RDA, except for those provisions of the CRL that were repealed, restricted, or revised pursuant to Part 1.85 of Division 24 of the Health and Safety Code. 698/017943 -0028 3405787.1 a05/17/12 I. Pursuant to Health and Safety Code Section 34179, added by ABx1 26, members of the Oversight Board of the Successor Agency to the former RDA have been duly appointed. J. Pursuant to Health and Safety Code Section 34178(a), added by ABx1 26, commencing on February 1, 2012, agreements between the city, county, or city and county that created the redevelopment agency and the redevelopment agency were deemed to be not binding on the successor agency; provided, however, that under Health and Safety Code Sections 34178(a) and 34180(h), the Oversight Board has the authority to approve, at the request of the Successor Agency, the entering or re- entering into agreements with the city, county, or city and county that formed the former redevelopment agency. K. Pursuant to Health and Safety Code Sections 34178(a) and 34180(h), the City, in its capacity as a municipal corporation and its capacity as the Successor Agency, seeks to restate and re -enter into the Repayment Agreement, as set forth in this Restated Agreement. L. Because sufficient cash flows of former property tax increment (now defined by AB 1 x 26 as property taxes) even if the Repayment Agreement were not rejected as an enforceable obligation by DOF, would not be available to pay off the debt evidenced by the Repayment Agreement when such debt is scheduled to mature on June 30, 2012, the Restated Agreement restates the outstanding principal balance [with interest accruing at the rate of return on investments in the Local Agency Investment Fund ( "LAIF ")] and a repayment schedule calling for an annual repayment of two million dollar ($2,000,000) plus applicable interest and continuing until June 30, 2024, and a final principal repayment of one million one hundred sixteen thousand dollars ($1,116,000) plus applicable interest on June 30, 2025. M. At its meeting of May 15, 2012, the Oversight Board adopted Resolution No. OB 4 approving the re- entering into the Repayment Agreement and the terms of this Restated Agreement. AGREEMENT Based upon the foregoing Recitals, which are incorporated herein by this reference, and for good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, City and Successor Agency agree as follows: 1. Restatement and Re -Entry Into Agreement. Subject to the terms and conditions in this Restated Agreement, City, in its capacity as a municipal corporation and as the Successor Agency, hereby restates and re- enters into the Repayment Agreement with the re- entered terms set forth in the Restated and Re- Entered Repayment Note attached hereto as Exhibit B and by this reference incorporated herein. Except as modified by this Restated Agreement, the terms and conditions of the Repayment Agreement shall remain in full force and effect. 2. Reservation of Rights. The City, in its capacity as a municipal corporation and as the Successor Agency, hereby reserves any and all rights, and does not waive any rights which it may now or in the future have, for repayment under the Repayment Agreement, including but not limited to the right to receive repayment under the existing Repayment Agreement as may be authorized pursuant to any current or future law, amendment to ABx1 26, administrative or judicial decision, or otherwise. 698/017943 -0028 3405787.1 a05/17/12 -2- 233 3. Effective Date. This Restated Agreement shall be effective only upon the approval of the Oversight Board. If the City, in its capacity as a municipal corporation and as the Successor Agency, has not approved this Restated Agreement prior to the approval of the Oversight Board, then the City may approve this Restated Agreement by ratification thereof at a duly noticed public meeting of the City Council. 4. City Manager Authorization. The City Manager shall have the authority to execute such other and further agreements and documents, and take such other and further actions, necessary to implement this Restated Agreement on behalf of the City, in its capacity as a charter city of the State of California and a municipal corporation, and on behalf of the City in its capacity as the Successor Agency. IN WITNESS WHEREOF, the City, in its capacity as a charter city of the State of California and a municipal corporation, and the City in its capacity as the Successor Agency, enters into this Restated Agreement as of the date first set forth above. ATTEST: City Clerk ATTEST: mac- 4- I Secretary of the Successor Agency 698/017943 -0028 3405787.1 a05/17/12 "City" CITY OF CYPRESS, in its capacity as charter city of the State of California and a municipal corporation By: "Successor Agency" CITY OF CYPRESS, in its capacity as the Successor Agency to the dissolved CYPRESS REDEVELOPMENT AGENCY By: -3- 234 235 EXHIBIT "A" REPAYMENT AGREEMENT This Repayment Agreement is entered into as of the 23rd day of March 2009, by and between the Cypress Redevelopment Agency, a public body corporate and politic (the "Agency") and the City of Cypress, a public body corporate and politic (the "City"). RECITALS A. Whereas, the City and Agency would like to consolidate all outstanding notes between the Agency and City to a single note as of July 1, 2009, and B. Sufficient cash flows will not be available to pay off the outstanding notes as of July 1, 2009, and C. All accrued interest associated with the seven notes currently outstanding will be paid by the Agency to the City on June 30, 2009, and D. Whereas, the City and Agency would like to formally reissue $42.5 million ($42,500,000) in notes on July 1, 2009 and establish an applicable interest rate of five percent (5 %), and E. The $42.5 million ($42,500,000) in notes are associated with the Agency's three project areas as follows: Civic Center Lincoln Avenue Los Alamitos Race Track $ 7,000,000 $ 3,000,000 $ 32,500,000 NOW, THEREFORE, in consideration of the foregoing mutual covenants and conditions set forth herein, the parties hereto agree as follows: Section 1. The Agency hereby agrees to pay the City as full consideration for the loan referred to in the recitals hereinabove, the total sum of Forty Two Million and Five Hundred Thousand Dollars ($42,500,000) with interest thereon calculated at a rate of five percent (5.0 %) per annum. The Agency's obligations hereunder shall be evidenced by a Promissory Note substantially in the form attached hereto and incorporated herein by reference (the "Purchase Money Promissory Note"). Payment of all accrued interest with respect to the Purchase Money Promissory Note shall be due annually on June 30th starting on June 30, 2010. Payment of the outstanding principal with respect to the Purchase Money Promissory Note shall be due on June 30, 2012 unless extended by mutual agreement of the parties hereto. However, a portion of the outstanding principal will be due at the time the approximately 13 acres of land currently owned by the Agency has been resold and if the Agency has sufficient monies to repay the City or at any other time during the term of the Purchase Money Promissory Note that sufficient monies become available based on staff's recommendations. 236 The Agency shall execute and deliver the Purchase Money Promissory Note as of the date of the execution of this Agreement. Section 2. The Agency's obligation to make payments to the City pursuant to the Purchase Money Promissory Note shall be payable solely from (a) property taxes allocated to the Agency from the Project Area in accordance with Health and Safety Codes Section 33670 (b) ("Tax Incremenr) but only if and to the extent Tax Increment is received, or (b) funds that the Agency receives from the sale of property located in any of the three project areas and determines in its sole discretion to use to repay said amounts. In the event that there are insufficient funds from the sources identified herein to make the required payments with respect to the Purchase Money Promissory Note in the year in which such payments are to be made, the City shall reasonably consider (but shall not be obligated to) extend the time for payment by adding such amounts to the principal balance evidenced by the Purchase Money Promissory Note and interest at the rate set forth in the Purchase Money Promissory Note. Section 3. The parties hereto acknowledge and agree that the Agency's obligation to pay the amounts evidenced by the Purchase Money Promissory Note shall be automatically subordinated to any other obligation of the Agency secured by Tax Increment or for which Tax Increment is otherwise pledged in connection with the issuance of bonds or certificates of participation as part of the implementation of the Redevelopment Plan for the Project Areas. Section 4. The Agency shall have the right at any time, from time to time, upon at least ten (10) days written notice to the City, to prepay without premium or penalty, the outstanding balance of the Purchase Money Promissory Note, or any portion thereof, with interest payable through the date of such prepayment. Section 5. This Agreement embodies the entire Agreement understanding between the parties hereto with respect to the matters set forth herein and supersedes all prior agreements and understandings related to the subject matter hereof. Section 6. This Agreement shall terminate when all obligations. of the Agency as evidenced by the Purchase Money Promissory Note shall have been discharged in full. Section 7. In case any one or more of the provisions contained in this Agreement should be invalid, illegal or unenforceable in any respect, the validity, legality and enforceability of the remaining provisions contained herein shall not in any way be effected or impaired thereby. Section 8. No member, officer, agent or employee of the Agency shall be individually or personally liable for the payment of, the principal of or interest on the Purchase Money Promissory Note. Section 9. The parties hereto acknowledge and agree that the obligations of the Agency evidenced by the Purchase Money Promissory Note constitute an "indebtedness" within the meaning of Health and Safety Code Section 33670 (b). IN WITNESS WHEREOF, the parties have executed this Repayment Agreement as of the date first above written. By g ��ayor ATTEST: City Clerk CITY OF CYPRESS CYPRESS REDEVELOPMENT AGENCY By ��-i /■ 416"/'rairm" t gency Board ATTEST tive Director 237 $42,500,000 PURCHASE MONEY PROMISSORY NOTE (RDA 1) Cypress, CA July 1, 2009 The Cypress Redevelopment Agency, a public body corporate and politic (the "Agency "), for value received, hereby promises to pay to the City of Cypress, public body corporate and politic (the "City"), the principal sum of Forty Two Million and Five Hundred Thousand ($42,500,000), in lawful money of the United States of America together with interest thereon on the unpaid balance thereof from the date hereof at a rate equal to five percent (5.0 %) per annum. With respect to this Purchase Money Promissory Note, the Agency shall pay all interest annually on June 30th and the principal on or before June 30, 2012. Interest shall be computed upon the basis of a three hundred sixty (360) day year and a thirty (30) day month. This Note is the Purchase Money Promissory Note referred to in the Repayment Agreement dated as of July 1, 2009, between the City and the Agency and is entitled to all the benefits and is subject to all the limitations provided for therein. Reference is made to said Agreement for, inter alia, the rights of prepayment and the sources of payment of the principal of and interest on this Purchase Money Promissory Note. By ATTEST: CYPRESS REDEVELOPMENT AGENCY airma o t ' gency Board 238 RESTATED AND RE- ENTERED REPAYMENT NOTE $23,920,000 plus accrued interest Cypress, CA May 22, 2012 The Successor Agency of the Cypress Redevelopment Agency, a public body corporate and politic (the "Successor Agency "), for value received, hereby promises to pay to the City of Cypress, public body corporate and politic (the "City "), the principal sum of Twenty Three Million Nine Hundred Twenty Thousand Dollars ($23,920,000.00) plus accrued interest through June 30, 2012 of One Million One Hundred Ninety -Six Thousand Dollars ($1,196,000), in lawful money of the United States of America together with interest thereon on the unpaid balance thereof commencing July 1, 2012, at a rate equal to amount earned on the State's Local Agency Investment Fund (LAIF) per annum. With respect to this Restated and Re- Entered Repayment Note, the Successor Agency shall pay Two Million Dollars ($2,000,000) of principal (which includes the accrued interest as of June 30, 2012 amortized over the term of this Note), plus interest thereon at the LAIF rate, annually on June 30th for the period June 30, 2013 through June 30, 2024. The remaining One Million One Hundred Sixteen Thousand ($1,116,000) of principal and interest will be paid on June 30, 2025. Interest shall be computed upon the basis of a three hundred sixty (360) day year and a thirty (30) day month. This Note is the Restated and Re- Entered Repayment Note referred to in the Repayment Agreement dated as of May 22, 2012, between the City and the Successor Agency and is entitled to all the benefits and is subject to all the limitations provided for therein. Reference is made to said Agreement for, inter alia, the rights of prepayment and the sources of payment of the principal of and interest on this Restated and Re- Entered Repayment Note. The Successor Agency shall not be liable for any payment hereunder except from property taxes disbursed to the Successor Agency by the County Auditor - Controller as a result of the indebtedness evidenced by this Note having been approved or deemed approved as an "enforceable obligation" as set forth in Health & Safety Code Section 34177 and other applicable provision of law, including Part 1.85 of the Community Redevelopment Law. CITY OF CYPRESS AS SUCCESSOR AGENCY TO THE DISSOLVED CYPRESS REDEVELOPMENT AGENCY By Mayor, y of Cypress As Successor Agency to the Dissolved Cypress Redevelopment Agency 698/017943 -0028 3405787.1 a05/17/12 239