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2009 12 01 RDAeaf q4ad4a Redevelopment Agency agendas are available on the City' web page @ www.la-quinta.org REDEVELOPMENT AGENCY AGENDA CITY COUNCIL CHAMBERS 78-495 Calle Tampico La Quinta, California 92253 Regular Meeting TUESDAY, DECEMBER 1, 2009 DUE TO THERE BEING NO CLOSED SESSION SCHEDULED, THE REDEVELOPMENT AGENCY WILL CONVENE AT 4:00 P.M. Beginning Resolution No. RA 2009-009 CALL TO ORDER Roll Call: Agency Board Members: Adolph, Evans, Henderson, Sniff, Chairperson Franklin PUBLIC COMMENT CLOSED SESSION — NONE CONFIRMATION OF AGENDA APPROVAL OF MINUTES 1. APPROVAL OF MINUTES OF NOVEMBER 17, 2009. "• 0 Redevelopment Agency Agenda 1 December 1, 2009 CONSENT CALENDAR NOTE: Consent Calendar items are considered to be routine in nature and will be approved by one motion. 1. APPROVAL OF DEMAND REGISTER DATED DECEMBER 1, 2009. BUSINESS SESSION 1. CONSIDERATION OF A FINANCE AGREEMENT BETWEEN THE CITY OF LA QUINTA AND THE LA QUINTA REDEVELOPMENT AGENCY RELATING TO THE SUPPLEMENTAL EDUCATIONAL REVENUE AUGMENTATION FUND (SERAF) PAYMENT MANDATED PURSUANT TO STATE OF CALIFORNIA ASSEMBLY BILL 26 AND AN APPROPRIATION OF FUNDS. A. MINUTE ORDER ACTION STUDY SESSION — NONE CHAIR AND BOARD MEMBERS' ITEMS — NONE PUBLIC HEARINGS — NONE ADJOURNMENT The next regular meeting of the Redevelopment Agency will be held on December 15, 2009, commencing with closed session at 3:00 p.m. and open session at 4:00 p.m. in the City Council Chambers, 78-495 Calle Tampico, La Quinta, CA 92253. 002 Redevelopment Agency Agenda 2 December 1, 2009 DECLARATION OF POSTING I, Veronica Montecino, City Clerk of the City of La Quinta, do hereby declare that the foregoing agenda for the La Quinta Redevelopment Agency meeting of December 1, 2009, was posted on the outside entry to the Council Chamber at 78- 495 Calle Tampico and on the bulletin boards at 51-321 Avenida Bermudas and 78-630 Highway 111, on November 25, 2009. DATE November 5, 2009 VERONICA J ONTECINO, City Clerk City of La Quinta, California Public Notice Any writings or documents provided to a majority of the Redevelopment Agency regarding any item on this agenda will be made available for public inspection at the City Clerk counter at City Hall located at 78-495 Calle Tampico, La Quinta, California, 92253, during normal business hours. bs ^ 003 Redevelopment Agency Agenda 3 December 1, 2009 �a�4iry� �G945� �OF TSB RDA MEETING DATE: December 1, 2009 ITEM TITLE: Demand Register Dated December 1, 2009 RECOMMENDATION: It is recommended the Redevelopment Agency Board: Receive and File the Demand Register Dated December 1, 2009 of which $399,810.69 represents Redevelopment Agency Expenditures AGENDA CATEGORY: BUSINESS SESSION CONSENT CALENDAR STUDY SESSION PUBLIC HEARING PLEASE SEE CONSENT CALENDAR ITEM NUMBER 1 ON CITY COUNCIL AGENDA •0. 004 COZQ a 04 c&t"A"��� 4 4V aumm Z `N OF T� AGENDA CATEGORY: BUSINESS SESSION: COUNCIL/RDA MEETING DATE: December 1, 2009 CONSENT CALENDAR: _ ITEM TITLE: Consideration of a Finance Agreement Between the City of La Quinta and the La Quinta STUDY SESSION: Redevelopment Agency Relating to the Supplemental PUBLIC HEARING: Educational Revenue Augmentation Fund (SERAF) Payment Mandated Pursuant to State of California Assembly Bill 26 and an Appropriation of Funds RECOMMENDATION: Consideration of a Finance Agreement Between the City of La Quinta and the La Quinta Redevelopment Agency Relating to the Supplemental Educational Revenue Augmentation Fund (SERAF) Payment Mandated Pursuant to State of California Assembly Bill 26 of $10 million and an appropriation of $23,560,481 to make the payment. FISCAL IMPLICATIONS: The following table summarizes the fiscal implications: Description Amount Advance from General Fund 10,000,000 Reverse Previously Budgeted Transfer from Debt Service Fund 10,000,000 Transfer from RDA Project Area No. 1 Capital Projects Fund 3,560,481 Total 23,560,481 This Finance Agreement (Attachment 1) facilitates a $10,000,000 advance from General Fund Reserves to the La Quinta Redevelopment Agency Project Area No. 1 Debt Service Fund. Even after this advance, an additional $13,560,481 is required to fund the payment. $10,000,000 of the needed $13,560,481 is proposed to come from not making a previously budgeted transfer of $10,000,000 to the Project Area No. 1 Capital Projects Fund. The remaining $3,560,481 is proposed to come from reducing the Fiscal Year 2009-2010 SilverRock Infrastructure Project Budget from $24,856,940 to $21,296,459 and transferring these funds back to the Project Area No. 1 Debt Service Fund. ,.. 005 The advance from the General Fund Reserves to the La Quinta Redevelopment Agency Project No. 1 Debt Service Fund would pay 7% interest annually and would be due no later than December 1, 2033. BACKGROUND AND OVERVIEW: The State Legislature adopted Assembly Bill 26 which required redevelopment agencies statewide pay over $2 billion dollars into a SERAF over a two year period beginning in May 2010. The La Quinta Redevelopment Agency Fiscal Year 2009- 2010 and 2010-2011 obligation is $23,560,481 and $4,850,687 respectively. Staff has included an analysis of the SERAF shift considerations (Attachment 2), prepared by the City's auditors Lance Soil and Lunghard LLP CPA's, which highlights the major program funding options and deadlines. One of the funding options that is allowed by the Legislation is the ability to suspend deposits into the low- and moderate income fund and/or borrow funds from the low- and moderate income fund to make SERAF the payment. Staff analyzed this option and does not recommend this as an option based upon the need to fund affordable housing units. This staff report will also serve to notify the County by the March 1, 2010 deadline as to how the SERAF payment will be funded and also meet the February 15, 2010 deadline to borrow funds from the City. This year's SERAF payment is due to the County of Riverside by May 10, 2010. Failure to make this payment by May 10 will significantly impact the agency as outlined on page 4 of Attachment 2. FINDINGS AND ALTERNATIVES: The alternatives available to the Agency Board include: 1. Approve a Finance Agreement Between the City of La Quinta and the La Quinta Redevelopment Agency Relating to the Supplemental Educational Revenue Augmentation Fund (SERAF) Payment Mandated Pursuant to State of California Assembly Bill 26 of $10 million and an appropriation of $23,560,481 to make the; or 2. Do not approve a Finance Agreement Between the City of La Quinta and the La Quinta Redevelopment Agency Relating to the Supplemental Educational Revenue Augmentation Fund (SERAF) Payment Mandated Pursuant to State of California Assembly Bill 26 of $10 million and an appropriation of $23,560,481 to make the; or .e46v .^ 006 3. Provide staff with alternative direction. Respectfully submitted, Wtat John M. Falcon r, Fi ance Director Approved for submission by: Thomas G. Genovese, Executive Director Attachments: 1. Finance Agreement 2. Supplemental ERAF Shift Considerations 007 A l l AU"WitIV 1 I FINANCING AGREEMENT THIS FINANCING AGREEMENT ("Agreement") is made and entered into this lst4th day of December, 20097, by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency"), and the CITY OF LA QUINTA, a charter city and municipal corporation ("City"). RECITALS WHEREAS, Agency is a public body, corporate and politic, organized under the California Community Redevelopment Law (Health & Safety Code § 33000 et seq.); and WHEREAS, City is a municipal corporation and a charter city of the State of California organized and existing under the Constitution of the State of California; and WHEREAS, the La Quinta Redevelopment Agency has determined that it does not have the entire Twenty Three Million Five Hundred Sixty Thousand Four Hundred Eighty One Dollars ($23,560,481) referred to as the Supplemental Educational Revenue Augmentation Fund (SERAF) payment in its debt service funds to remit to the County of Riverside by May 10, 2010 as required by Assembly Bill 26 and has identified a Ten Million Dollars ($10,000,000) shortfall that will be required to pay the entire amount; and WHEREAS, the City of La Quinta has agreed to loan Ten Million Dollars ($10,000,000) to cover this shortfall; and WHEREAS, the California Health and Safety Code Section (d) (1) (A) allows that if any agency that determines that it will be unable in the 2009-10 fiscal year to allocate the full amount required by subdivision (a) of Section 33690 of this Code may enter into an agreement with the legislative body by February 15, 2010, to fund the payment of the difference between the full amount required to be paid and the amount available. in March 2007 the Agency purchased a 19.97 acre parcel located directly west of Costco in order to increase its affordable housing inventory and now Agency desires to secure a General Fund Reserves loan from the City, which will be repaid from Project Area No. 2 non -housing revenue; and WHEREAS, City and Agency mutually desire to enter into this Agreement to set forth their respective obligations with respect to the City's agreement to loan the Agency the sum of the Loan Principal (defined below) for the purpose of making the SERAF paymentreimbursing the Agency's Project Area No. 2 Housing Fund for direct costs and interest expenses associated with the Agency's purchase of 19.97 acres of real property located south of Highway 111, west of the Costco center, in Project Area No. 2; and WHEREAS, the loan financing set forth herein shall be repaid by the Agency fromwith a combination of land sale proceeds and Project Area No. 12 non -housing tax increment revenue; and WHEREAS, no portion of the loan funds are to used for any purpose not permitted by Health and Safety Code Section 33445 as such code section exists on the date of this Agreement. .„b, 008 AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter contained, Agency and City agree as follows: Section 1. City Loan; Interest; Use of Loan Principal City hereby loans to Agency the principal amount of TenNine Million, Three Hundred Seventy -Eight Thousand, Nine Hundred Sixty -Six Dollars ($109,000378,000966) ("Loan Principal") from General Fund Reserves. Interest shall accrue on the outstanding loan principalLoan Principal at the earning rate of seven percent (7%) per annum with principal and any unpaid interest due and payable on, or before, December 1, 2033the City's Local Agency Investment Fund rate, and shall be adjusted quarterly. The Loan Principal shall only be be used to make the Fiscal Year 2009-2010 Supplemental Educational Augmentation Fund (SERAF) paymentfor reimbursing the Agency's Project Area No. 2 Housing Fund for direct costs and interest expenses associated with the Agency's purchase of 19.97 acres of real property located south of Highway 111, west of the Costco center, in Project Area No. 2. No portion of the Loan Principal shall be used for any other purposes. Section 2. Repayment. The Loan Principal and the accrued interest shall be repaid by Agency. Repayments should be applied first to interest and second to principal.over an 11-year period in annual installments from a combination of land sale proceeds and Project Area No. 2 non -housing tax increment revenue. The first annual installment shall be prorated for the period from the date of this Agreement to June 30, 2008, and shall be paid to City not later than July 31, 2008. The amount of the annual installment shall be identified in the annual adoption of the budget or through a subsequent appropriation of the Agency Board of Directors. Subsequent annual installments shall cover succeeding fiscal year periods and shall be payable by the July 3151 following the end of a fiscal year (i.e., second annual installment shall be for the period July 1, 2008 through June 30, 2009, and shall be payable by July 31, 2009). Agency shall be entitled to repay all or part of the Loan Principal at any time with no other charges, fees, or penalties. All amounts due under this Agreement shall be payable at the offices of City. Section 3. Subordination. The repayment of the Loan Principal by Agency shall be junior and subordinate to all Agency obligations incurred prior to the date of this Agreement. Section 4. Non -Recourse Oblieation 2156/015610-0103 866407.01 al2/12/07al2/07/07 -2- .001.," 009 No officer, official, employee, agent, or representatives of Agency shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, employee, agent, or representative. Section 5. Entire Agreement; Amendments. This Agreement shall constitute the entire agreement of the parties. This Agreement may be amended or modified only by an agreement in writing signed by the parties. [end — signature page follows] 2156/015610-0103 866407 01 02/12/0702/07/07 -3- 010 �Hy. IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized representatives, as of the date first above written. "AGENCY" LA QUINTA REDEVELOPMENT AGENCY as Kristy Franklin, Chairpersonman ATTEST: Secretary APPROVED AS TO FORM: Agency Counsel "CITY" CITY OF LA QUINTA Don Adolph, Mayor ATTEST: City Clerk APPROVED AS TO FORM: City Attorney 21561015610-0103 Oil 866407.01 al2/12/07al2/07/07 -4- .Nq ATTACHMENT 2 CERTIFIED PUBLIC ACCOUNTANTS . Brandon W. Burrows, C.P.A Donald L Parker, CPA Michael K. Chu. C.PA r David E. Hale, C.P.A. C F R A Prolesslorul Cory aon * Donald G. Slater. C.P.A Richard K. Kikuchi, C.PA SUSaeF. Matz, C.P.A. Supplemental ERAF Shift Considerations As we all know, the legislature adopted AB 26 which established redevelopment agencies' obligations to pay over 2 billion dollars to the Supplemental Educational Revenue Augmentation Fund (SERAF). Obviously, we along with the California Redevelopment Association and many agencies believe that this in unconstitutional. Hopefully, the litigation which has been instituted, will ultimately prove that position out and eliminate these obligations. However, as that process continues, agencies must look at the dates and requirements of the legislation to make sure that they fully prepare themselves should that process not be successful. In order to assist agencies in understanding some key points of the legislation and its effect, we are presenting a brief discussion of it. Please keep in mind that we are not legal experts and this is not a legal opinion. Therefore, please consult with your legal counsel prior to implementing any of the concepts discussed. Paving the Oblieation The legislative body shall by March 1, 2010 (for the 2010 obligation) and March 1, 2011 (for the 2011 obligation), report to the county auditor as to how the agency intends to fund its obligation. Section 33690 (b) of the Health and Safety Code (Code) allows an agency to pay is SERAF obligation from any funds that are legally available and not legally obligated for other uses, including, but not limited to, reserve funds, proceeds of land sales, proceeds of bonds or other indebtedness, lease revenues, interest, and other earned income. Suspension of Low and Moderate Housing Set -Aside Section 33334.2. (k) of the Code allows for a suspension of all or a portion of the set -aside deposit to the Low and Moderate Income Housing Fund for fiscal year 2009-2010. This suspension could be done without adopting a finding; but it must be paid back to the Low and Moderate Income Housing Fund from July 1, 2010, to June 30, 2015, inclusive. Any agency that fails to repay or have repaid on its behalf the amount of revenue suspended shall, commencing July 1, 2015, be required to deposit to the Low and Moderate Income Housing Fund an additional 5 percent of all taxes that are allocated to that agency for the remainder of the time that the agency receives allocations of tax revenue. This could present some problems for agencies with regard to the provisions of the Code relating to Excess/Surplus housing monies. Specifically, when the law was modified, no recognition was last•, Sell & LooShad, UP 203 North Brea Boulevard • Suite 203 • Brea, CA 92821 • TEL: 714.672.0022 • Fax: 714.672.0331 www.lslcpas.com 41185Golden Gate Circle • Suite 103 • Murrieta, CA 92562 • TEL: 951.304.2728 • Fax: 951.304.3940 �� ' 012 0® LS � MIMED 10DUC CCCOOXI.101{ Supplemental ERAF Shift Considerations Page 2 given to the fact that for purposes of determining whether or not an Excess/Surplus situation exists, in the Low and Moderate Income Housing Fund, the available monies are compared against a threshold which involves deposits to that Fund. That threshold is defined in the Health and Safety Code Section 33334.12 (g) (1) which states: "Excess surplus" means any unexpended and unencumbered amount in an agency's Low and Moderate Income Housing Fund that exceeds the greater of one million dollars ($1,000,000) or the aggregate amount deposited into the Low and Moderate Income Housing Fund pursuant to Sections 33334.2 and 33334.6 during the agency's preceding four fiscal years. The suspension of that set -aside deposit for fiscal year 2009-2010 would mean that one year's set -aside would not be present in the threshold and an Excess/Surplus could result. Having an Excess/Surplus starts a three year compliance period running whereby an agency must either spend or obligate the Excess/Surplus, turn the monies over to the County Housing Authority or at the end of the period incur a 50% penalty to keep the monies. Obviously, care must be taken by agencies to ,insure that they do not inadvertently incur an Excess/Surplus or have non-compliance. Planning must be done to assess whether or not it is beneficial to suspend the set -aside in light of this computational effect. Borrowing of Low and Moderate Income Housing Monies Another possible means of funding the obligations comes from Section 33690 (c) (1) of the Code. This indicates that an agency may borrow the amount required to be allocated to the Low and Moderate Income Housing Fund; pursuant to Sections 33334.2, 33334.3, and 33334.6, unless, in a given fiscal year, executed contracts exist that would be impaired. This section is not precise on the amount available for this 'borrowing. The California Redevelopment Association's Legal Committee believes that this authorizes borrowing only from the current year's allocation to the Low and Moderate Income Housing Fund; however, others feel that the wording could allow for borrowing the entire available fund balance (as it was accumulated through allocations under Section 33334.2 of the Code). Therefore, before relying upon an amount larger than the current year's set -aside allocation, an agency should check with their legal counsel. As a condition of borrowing, an agency must make a finding that there are insufficient other monies to meet the SERAF obligation. As indicated above, any monies borrowed shall be repaid in full on or before June 30, 2015. Again, if an agency that fails to repay funds borrowed, it shall be required to allocate an additional be required to deposit to the Low and Moderate Income Housing Fund an additional 5 percent of all taxes that are allocated to that agency for the remainder of the time that the agency receives allocations of tax revenue. *",.^ 013 LSL�•� M11HCY AVACIC ACCOWAIIt Supplemental ERAF Shift Considerations Page If an agency can make the required finding it could prove more beneficial to borrow the monies required from Low and Moderate Income Housing as opposed to suspending the set -aside allocation discussed above. This could mean more monies available and the Excess/Surplus effect would not occur. Additionally, if an agency is already in an Excess/Surplus situation, or close to it, this could reduce or eliminate that situation through the borrowing. That occurs because borrowed amounts would be unavailable and subject to the limitation when they are repaid. Again, planning is going to be critical to the determination as to whether or not a borrowing may be more advantageous than suspending the set -aside. In that decision, all factors, including the required finding, will have to be considered. Agencies Unable to Pay Obligation Section 33691 of the Code covers when an agency might not be able to pay its obligation. This section states that any agency that intends to allocate, less than the amount required for the 2010 or 2011 SERAF shall adopt, prior to December 31, 2009 (for the 2010 obligation) and December 31, 2010 (for the 2011 obligation), after a noticed public hearing, a resolution that lists all of the following: • Each existing indebtedness incurred prior to the, effective date of this section. • Each indebtedness on which a payment is required to be made during the applicable fiscal year. The amount of each payment, the time when it is required to be paid, and the total of the payments required to be made during the applicable fiscal year. For indebtedness that bears interest at a variable rate, or for short-term indebtedness that is maturing during the fiscal year and that is expected to be refinanced, the amount of payments during the fiscal year shall be estimated by the agency. The information contained in the resolution required by this subdivision shall be reviewed for accuracy by the chief fiscal officer of the agency and the legislative body shall additionally adopt the resolution. Additionally, an agency may enter into an agreement with its legislative body to borrow the monies from the City (or its County if it is a County Redevelopment Agency) to fund the payment of the difference between the full amount required to be paid and the amount available for allocation by the agency. This must be done by February 15, 2010 (for the 2010 obligation) and February 15, 2011 (for the 2011 obligation). If an agency fails to provide to the County Auditor the full payment by May 10, 2010 (for the 2010 obligation), or by May 10, 2011 (for the 2011 obligation), as applicable, or fails to arrange •P,: 014 BE 00 CCPIMIED FUSM ACCOYMd Y1C Supplemental ERAF Shift Considerations Page 4 for full payment to be provided on the agency's behalf it will suffer what has been called "The Death Penalty" for which all of the following shall apply: (1) The agency shall be prohibited from adding new project areas or expanding existing project areas.. (2) The agency shall be prohibited from issuing new bonds, notes, interim certificates, debentures, or other obligations, whether funded, refunded, assumed, or otherwise. (3) The agency shall be prohibited from encumbering any funds or expending any moneys derived from any source, except that the agency may encumber funds and expend funds to pay, if any, all of the following: • Bonds, notes, interim certificates, debentures, or other obligations issued by an agency before the imposition of the prohibition described in the legislation whether funded, refunded, assumed, or otherwise. • Loans or moneys advanced to the agency, including, but not limited to, loans from federal, state, local agencies, or a private entity. _ • Contractual obligations that, if breached, could subject the agency to damages or other liabilities or remedies. • Obligations incurred pursuant to Section 33445. • Indebtedness incurred pursuant to Section 33334.2 or 33334.6. • Obligations incurred pursuant to Section 33401. • An amount, for the monthly operation and administration of the agency, that may not exceed 75 percent of the average monthly amount spent for those purposes in the fiscal year preceding the fiscal year in which the agency failed to make the payment of its obligation for the SERAF. Due to the current economy, etc. some agencies may find that they cannot pay this obligation and to borrow or use monies from their government is not feasible. If that is the case, the provisions above may take effect. Prior to that occurring, those agencies need to review their operations with legal counsel to make sure that all of their existing obligations have the documentation necessary to fall under the provisions above. If that is accomplished, they will be in a better position to comply with the Code and not have operational expenditures prohibited. As always, should you have any questions, regarding the above or in general, please do not hesitate to contact us. IVA •a...l 015 le.J-A. 13s ;k I T4ht 4 4 Q"Kro MEMORANDUM TO: Honorable Mayor and Members of the City Council FROM: John M. Falconer, Finance Director/ Treasurer VIA: Thomas P. Genovese, City Manager41 DATE: November 30, 2009 SUBJECT: Financing Agreement The purpose of this memorandum is to transmit a revised Finance Agreement to the City Council and the Agency for consideration in regards to the Supplemental Educational Relief Augmentation Fund (SERAF) payment due to the County of Riverside on May 10, 2010. A working draft on the document was inadvertently included in the Agenda packet. Thank you and please feel free to give me a call with any questions. 14 FINANCING AGREEMENT THIS FINANCING AGREEMENT ("Agreement") is made and entered into this 1st day of December, 2009, by and between the LA QUINTA REDEVELOPMENT AGENCY, a public body corporate and politic ("Agency"), and the CITY OF LA QUINTA, a charter city and municipal corporation ("City"). RECITALS WHEREAS, Agency is a public body, corporate and politic, organized under the California Community Redevelopment Law (Health & Safety Code § 33000 et seq.); and WHEREAS, City is a municipal corporation and a charter city of the State of California organized and existing under the Constitution of the State of California; and WHEREAS, the La Quinta Redevelopment Agency has determined that it does not have the entire Twenty Three Million Five Hundred Sixty Thousand Four Hundred Eighty One Dollars ($23,560,481) referred to as the Supplemental Educational Revenue Augmentation Fund (SERAF) payment in its debt service funds to remit to the County of Riverside by May 10, 2010 as required by Assembly Bill 26 and has identified a Ten Million Dollars ($10,000,000) shortfall that will be required to pay the entire amount; and WHEREAS, the City of La Quinta has agreed to loan Ten Million Dollars ($10,000,000) to cover this shortfall; and WHEREAS, the California Health and Safety Code Section (d) (1) (A) allows that if any agency that determines that it will be unable in the 2009-10 fiscal year to allocate the full amount required by subdivision (a) of Section 33690 of this Code may enter into an agreement with the legislative body by February 15, 2010, to fund the payment of the difference between the full amount required to be paid and the amount available. WHEREAS, City and Agency mutually desire to enter into this Agreement to set forth their respective obligations with respect to the City's agreement to loan the Agency the sum of the Loan Principal (defined below) for the purpose of making the SERAF payment; and WHEREAS, the loan financing set forth herein shall be repaid by the Agency from Project Area No. 1 non -housing tax increment revenue; and AGREEMENT NOW, THEREFORE, in consideration of the mutual covenants and promises hereinafter contained, Agency and City agree as follows: ». 017 Section 1. City Loan; Interest; Use of Loan Principal. City hereby loans to Agency the principal amount of Ten Million Dollars ($10,000,000) ("Loan Principal") from General Fund Reserves. Interest shall accrue on the outstanding loan principal at the earning rate of seven percent (7%) per annum with principal and any unpaid interest due and payable on, or before, December 1, 2033. The Loan Principal shall only be used to make the Fiscal Year 2009-2010 Supplemental Educational Augmentation Fund (SERAF) payment. Section 2. Repayment. The Loan Principal and the accrued interest shall be repaid by Agency. Repayments should be applied first to interest and second to principal. Agency shall be entitled to repay all or part of the Loan Principal at any time with no other charges, fees, or penalties. All amounts due under this Agreement shall be payable at the offices of City. Section 3. Subordination. The repayment of the. Loan Principal by Agency shall be junior and subordinate to all Agency obligations incurred prior to the date of this Agreement. Section 4. Non -Recourse Obligation. No officer, official, employee, agent, or representatives of Agency shall be liable for any amounts due hereunder, and no judgment or execution thereon entered in any action hereon shall be personally enforced against any such officer, official, employee, agent, or representative. Section 5. Entire Agreement; Amendments. This Agreement shall constitute the entire agreement of the parties. This Agreement may be amended or modified only by an agreement in writing signed by the parties. [end — signature page follows] 2 00. " 018 IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their authorized representatives, as of the date first above written. ATTEST: Secretary APPROVED AS TO FORM: Agency Counsel ATTEST: City Clerk APPROVED AS TO FORM: City Attorney BE "AGENCY" LA QUINTA REDEVELOPMENT AGENCY : Kristy Franklin, Chairperson "CITY" CITY OF LA QUINTA am Don Adolph, Mayor •"..� 019