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2011 03 15 RDA MinutesLA QUINTA REDEVELOPMENT AGENCY MINUTES MARCH 15, 2011 A regular meeting of the La Quinta Redevelopment Agency was called to order by Chairperson Henderson. PRESENT: Agency Members Adolph, Evans, Franklin, Sniff, Chairperson Henderson ABSENT: None PUBLIC COMMENT — None CLOSED SESSION 1. CONFERENCE WITH THE AGENCY'S REAL PROPERTY NEGOTIATOR, DOUGLAS R. EVANS, PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL TERMS AND CONDITIONS OF ACQUISITION AND /OR DISPOSITION OF REAL PROPERTY LOCATED SOUTHWEST OF THE INTERSECTION OF HIGHWAY 111 AND LA QUINTA CENTRE DRIVE. PROPERTY OWNER / NEGOTIATOR: TORRE NISSAN, GEORGE VELARDE 2. CONFERENCE WITH THE AGENCY'S REAL PROPERTY NEGOTIATOR, DOUGLAS R. EVANS, PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL TERMS AND CONDITIONS OF ACQUISITION AND /OR DISPOSITION OF REAL PROPERTIES IDENTIFIED AS APNs / PROPERTY OWNERS / NEGOTIATORS: 770- 123 -010 AND 006 / NIS YIELD PARTNERS, LP, TED NEWELL; 770- 124 -009 / NISPERO PROPERTIES, BOB HILL; 770 - 123 -002, 003 AND 004 / VIRGINIA GARBUTT; 770 - 124 -002 AND 003 / JAMES F. KELLY TRUST; AND 770 - 124 -007 / MICHAEL FISCHER 3. CONFERENCE WITH THE AGENCY'S REAL PROPERTY NEGOTIATOR, DOUGLAS R. EVANS, PURSUANT TO GOVERNMENT CODE SECTION 54956.8 CONCERNING POTENTIAL TERMS AND CONDITIONS OF ACQUISITION AND /OR DISPOSITION OF A PORTION OF 335± ACRES LOCATED AT THE SOUTHWEST CORNER OF AVENUE 52 AND JEFFERSON STREET. PROPERTY OWNER / NEGOTIATOR: COACHELLA VALLEY WATER DISTRICT / STEVE ROBBINS Redevelopment Agency Minutes 2 MARCH 15, 2011 The Redevelopment Agency recessed to Closed Session to and until the hour of 4:00 p.m. 4:00 P.M. The Redevelopment Agency meeting was reconvened with no decisions being made in Closed Session which require reporting pursuant to Government Code Section 54957.1 (Brown Act). PUBLIC COMMENT — None CONFIRMATION OF AGENDA — Confirmed APPROVAL OF MINUTES MOTION — It was moved by Agency Members Sniff /Franklin to approve the Redevelopment Agency Minutes of March 1, 2011 as submitted. Motion carried by a vote of 4 -0 -1, with Agency Member Adolph abstaining. CONSENT CALENDAR 1. APPROVAL OF DEMAND REGISTER DATED MARCH 15, 2011 2. RECEIVE AND FILE TREASURER'S REPORT FOR JANUARY 31, 2011 3. RECEIVE AND FILE TRANSMITTAL OF REVENUE AND EXPENDITURE REPORT FOR JANUARY 31, 2011 4. APPROVAL OF THE TRANSFER OF WASHINGTON STREET APARTMENT ASSETS, OBLIGATIONS, RENTAL INCOME AND EXPENDITURES TO THE LA QUINTA HOUSING AUTHORITY 5. APPROVAL OF THE RATIFICATION OF ACTIONS TAKEN TO REPAY THE REDEVELOPMENT AGENCY LOANS 6. APPROVAL OF AN APPROPRIATION FOR THE WASHINGTON STREET APARTMENTS Redevelopment Agency Minutes 3 MARCH 15, 2011 7. ADOPTION OF A RESOLUTION AMENDING THE INVESTMENT POLICY OF THE CITY OF LA QUINTA FOR FISCAL YEAR 2010 -2011 (RESOLUTION NO. 2011 -008) S. APPROVAL OF A CONTRACT WITH THE ROSENOW SPEVACEK GROUP FOR DEVELOPMENT AND IMPLEMENTATION SERVICES FOR THE WASHINGTON STREET APARTMENTS REHABILITATION PROJECT 9. APPROVAL OF A RESOLUTION APPROVING A COST SHARING AGREEMENT AMONG THE LA QUINTA REDEVELOPMENT AGENCY, THE CITY OF LA QUINTA, AND THE COACHELLA VALLEY WATER DISTRICT FOR THE RECONSTRUCTION OF THE COACHELLA CANAL, A REGIONAL WATER CONVEYANCE SYSTEM, WITHIN THE SILVERROCK PROPERTY AND MAKING CERTAIN FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33445 WITH RESPECT TO THE AGENCY'S EXPENDITURE (RESOLUTION NO. 2011 -009) 10. APPROVAL OF AN AMENDMENT OF DOMESTIC WATER AND SANITATION SYSTEM INSTALLATION AND IRRIGATION SERVICE AGREEMENT WITH THE COACHELLA VALLEY WATER DISTRICT FOR WELLSITE MITIGATION REQUIREMENTS FOR SILVERROCK AND ADOPTION OF A RESOLUTION MAKING CERTAIN FINDINGS PURSUANT TO HEALTH AND SAFETY CODE 33445 (RESOLUTION NO. 2011 -010) 11. ADOPTION OF A RESOLUTION MAKING FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33445 APPROVING AGENCY FUNDING OF THE ACQUISITION OF LAND IDENTIFIED AS APNs: 770- 123 -002, 003 AND 004, VIRGINIA EVANS GARBUTT; 770 - 123 -006 AND 010, NIS YIELD PARTNERS, LP, TED NEWELL; 770 - 124 -002 AND 003, JAMES F. KELLY; 770- 124 -009, NISPERO PROP, BOB HILL; AND 770 - 124 -007, MICHAEL A. FISCHER (RESOLUTION NO. 2011 -011) MOTION — It was moved by Agency Members Franklin /Adolph to approve the Consent Calendar as recommended and with Item Nos. 7, 9, 10, and 11 being approved by RESOLUTION NOS. RA 2011 -008 through 2011 -011 respectively. Motion carried unanimously. Redevelopment Agency Minutes 4 MARCH 15, 2011 BUSINESS SESSION — None STUDY SESSION — None CHAIR AND AGENCY MEMBERS' ITEMS — None BLIC HEARINGS 1. JOINT PUBLIC HEARING AMONG THE CITY AGENCYOF THE CITY OF LA QUINTA, THE LA QUINTA REDEVELOPMENT AGENCY AND THE LA QUINTA FINANCING AUTHORITY TO CONSIDER RESOLUTIONS REGARDING THE ISSUANCE OF REDEVELOPMENT PROJECT AREAS 1 AND 2 TAXABLE BONDS AND RELATED DOCUMENTS Chairman Adolph opened the Financing Authority meeting. Chairperson Henderson reconvened the Redevelopment Agency meeting. Finance Director Falconer presented the staff report. In response to Agency Member Sniff, Ms. Thomas, Wedbush Securities, explained Project Area No. 1 bond issues will expire in 2034 with Project Area No. 2 expiring in 2039; confirmed new debt cannot be acquired during the term of the bonds; explained there are four different bonds, two for housing, one for Project Area No. 1 and one for Project Area No. 2; stated the rate is unknown for all four bonds at this time; and stated the total amount for the new bond issues is $78 million. Ms. Thomas further explained the tax increment has been calculated with no growth the next year and it is customary to have a financing coverage amount built in with $1.30 revenue for every dollar spent for La Quinta. Agency Member Sniff asked how we pay these loans off if tax increment money continues to be reduced. Ms. Thomas explained there is enough built in the financing component the Agency can pro- rate several more years of reduced, assessed value before it becomes a problem. Redevelopment Agency Minutes 5 MARCH 15, 2011 Agency Member Sniff asked what the cost of bonds is. Ms. Thomas stated the interest rate today is just under 3% on an A rating, and the Agency may fall at an A+ rating with a low 1.5% rate. Finance Director Falconer stated the cost is $998,000. In response to Agency Member Sniff, Ms. Thomas stated the life span of the bonds for Project Area No. 1 goes to 2034 and Project Area No. 2 to 2039; explained the payment of the annual cost for the bonds come from tax increment funds; explained the Agency receives $15 million in tax increment annually in Project Area No. 1, with a debt service of $12.8 million, and Project Area No. 2 generates $2.2 million with a debt service of $1.4 million; and explained according to redevelopment law the Agency must have debt to receive tax increment funds. Agency Member Sniff asked what the cost in total for the life of the bond issues is. Ms. Thomas explained the total for Project Area No. 1 is $300,000,000, and to repay all debt and Project Area No. 2 is $34,000,000. Agency Member Sniff stated there is a limitation to the amount of debt the Agency should acquire; conveyed his concern on acquiring more than the Agency can bear; and with tax increment going down continually, there is a risk factor. Ms. Thomas stated the issuance of bonds has been approached conservatively with staff's input, and would not put the Agency at risk. Agency Member Franklin asked how staff came to the amount of the four bonds. Ms. Thomas explained staff tried to issue as much debt as can be obtained and still leave enough funding for administrative costs. Agency Member Franklin conveyed her concern of the amount of debt issued and the little amount of funds left over. Agency Member Evans concurred with the concern of Agency Member Franklin; stated the Agency was built by taking risks; stated it may or may not need to happen right away and empowering the Executive Director will give flexibility to issuing the bonds; and stated she will support the recommendation. Redevelopment Agency Minutes 6 MARCH 15, 2011 Chairperson Henderson stated the bond consulting firm technically has a fiduciary responsibility to the Agency. Ms. Thomas confirmed, and stated the success of her firm and competitors is to provide excellent customer service. Chairperson Henderson stated the Agency has previously insured bonds. Ms. Thomas confirmed and explained the current insurer filed bankruptcy two months ago, but was required to set aside reserves to cover the bonds insured. Agency Member Henderson asked if the holders of the bond issues would get paid. Ms. Thomas confirmed. Chairperson Member Henderson asked if the Agency continues to maintain insurance on the Transient Occupation Tax (TOT). Finance Director Falconer explained the Agency continues to carry catastrophic insurance for the La Quinta Hotel. Chairperson Henderson stated she does not believe the market will recover in five years but will take longer; stated the resetting of the mortgages will put homes back on the market and there is no formula for moving forward; understands why the Agency must protect these funds; and stated there is a need to have operating costs established and feels staff has done the best job they can at this time. Agency Member Adolph agreed with the comments made by the Agency Members; the housing market was at its peak in 2006 and 2007; and asked if it is necessary to move forward on the housing bonds and hold on the other bond issues depending on the governor's actions. Finance Director Falconer explained there is $2.3 million of estimated excess in Project Area No. 1 and $1.4 million in Project Area No. 2, and an estimated amount of $3.7 million excess for housing; explained the $78 million in bond issues will substitute the $40 million used to pay -off the General Fund. Agency Member Adolph stated that all we are doing is protecting ourselves. Finance Director Falconer stated staff will set aside 10% for debt service and the Treasurer will maintain the $7.8 million as a reserve in case of a shortfall. Executive Director Genovese stated that in light of the concern of the margin, staff can run numbers at 135 coverage or 140 coverage ratio; and stated the Agency currently has bond insurance on a couple of current bond issues. Executive Director Genovese questioned Ms. Thomas if the Agency is able to be selective on which debt service it pays. Ms. Thomas stated the Agency cannot be selective and the Redevelopment Agency Minutes 7 MARCH 15, 2011 bonds are written where the Agency must meet a parity tax which makes all the bonds equal. Agency Member Sniff asked what the legal risk in issuing the bonds is and will it be challenged by the State. City Attorney Jenson stated she does not see a basis for the State to challenge the bond issue; does think the State recognizes the existing bonded indebtedness; there will be issues and if the legislation goes through, and the sale has not been done, the Agency would not be able to proceed. Ms. Thomas explained the bond contract has a cancellation clause if the bond does not go through, the Agency can cancel at no cost. City Attorney Jenson stated the only thing that is pledged is the tax increment, no other funding sources can be taken. Agency Member Franklin asked where the $7.8 million would be placed. Finance Director Falconer explained the funds will be invested with US Bank Trustee, and on parity basis, will invest in Treasury Bonds with up to a five year maximum to have quick access to the funds. Chairperson Henderson asked if the interest will be reinvested into the account. Ms. Thomas explained usually interest earnings get transferred into an interest account to reduce the next debt service payment. Chairperson Henderson, and Mayor /Chairman Adolph declared the PUBLIC HEARING OPEN at 7:49 p.m. There being no requests to speak, the Chairperson and Mayor /Chairman declared the PUBLIC HEARING CLOSED at 7:49 p.m. RESOLUTION NO. RA 2011 -012 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF LA QUINTA, CALIFORNIA, AUTHORIZING THE ISSUANCE OF TAXABLE TAX ALLOCATION BONDS OF SAID AGENCY IN A PRINCIPAL AMOUNT OF NOT TO EXCEED THIRTY -THREE MILLION DOLLARS ($33,000,000) TO FINANCE A PORTION OF THE COSTS OF A REDEVELOPMENT PROJECT AREA NO. 1 AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH Redevelopment Agency Minutes 8 MARCH 15, 2011 It was moved by Agency Members Evans /Franklin to adopt Resolution No. RA 2011 -012 as submitted. Motion carried by a vote of 4 -1, with Agency Member Sniff dissenting. RESOLUTION NO. RA 2011 -013 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF LA QUINTA, CALIFORNIA, AUTHORIZING THE ISSUANCE OF TAXABLE TAX ALLOCATION BONDS OF SAID AGENCY IN A PRINCIPAL AMOUNT OF NOT TO EXCEED SIX MILLION DOLLARS ($6,000,000) TO FINANCE A PORTION OF THE COSTS OF REDEVELOPMENT PROJECT KNOWN AS THE LA QUINTA REDEVELOPMENT PROJECT AREA NO. 2 AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH It was moved by Agency Members Franklin /Adolph to adopt Resolution No. RA 2011 -013 as submitted. Motion carried by a vote of 4 -1, with Agency Member Sniff dissenting. RESOLUTION NO. RA 2011 -014 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF LA QUINTA, CALIFORNIA, AUTHORIZING THE ISSUANCE OF TAXABLE TAX ALLOCATION HOUSING BONDS OF SAID AGENCY IN A PRINCIPAL AMOUNT OF NOT TO EXCEED TWELVE MILLION FIVE HUNDRED THOUSAND DOLLARS ($12,500,000) TO FINANCE A PORTION OF THE LOW AND MODERATE HOUSING COSTS OF REDEVELOPMENT PROJECTS AND APPROVING CERTAIN DOCUMENTS AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH It was moved by Agency Members Adolph /Evans to adopt Resolution No. RA 2011 -014 as submitted. Motion carried by a vote of 4 -1, with Agency Member Sniff dissenting. RESOLUTION NO. RA 2011 -015 A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE CITY OF LA QUINTA, CALIFORNIA, APPROVING ITS SECOND SUPPLEMENTAL LOAN AGREEMENT, OFFICIAL STATEMENT, PURCHASE CONTRACT, AUTHORIZING THE EXECUTIVE DIRECTOR TO SET THE FINAL TERMS OF THE APPROVAL OF THE AGENCY LOAN, APPROVING Redevelopment Agency Minutes 9 MARCH 15, 2011 THE PAYMENT OF COSTS OF ISSUING THE AGENCY LOAN AND MAKING CERTAIN DETERMINATIONS RELATING THERETO It was moved by Agency Members Franklin /Evans to adopt Resolution No. RA 2011 -015 as submitted. Motion carried by a vote of 4 -1, with Agency Member Sniff dissenting. ADJOURNMENT There being no further business, it was moved by Agency Members Sniff /Franklin to adjourn. Motion carried unanimously. Respect Ily submitted, VERONICA MONTECINO, Secretary City of La uinta, California