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2012 05 02 OBOVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY AGENDA La Quinta City Council Chambers 78-495 Calle Tampico, La Quinta, California Regular Meeting WEDNESDAY, MAY 2, 2012 2:00 p.m. Beginning Resolution No. 2012-011 CALL TO ORDER Roll Call: Board Members: Ellis, Marshall, Maysels, McDaniel, Nelson, Osborne and Chairperson Pena PLEDGE OF ALLEGIANCE PUBLIC COMMENT This is the time set aside for public comment on any matter not listed on the agenda. Please complete a "Request to Speak" form and limit your comments to three minutes. When addressing the Oversight Board, please state your name and address. CONFIRMATION OF AGENDA — None APPROVAL OF MINUTES 1. Approval of Oversight Board Minutes of Regular Meeting on April 18, 2012 WRITTEN COMMUNICATIONS 1. Correspondence dated April 19, 2012 from Chairperson Pena to the Department of Finance 0 CONSENT ITEMS - None BUSINESS ITEMS 1. Consideration of a Resolution Approving Amended Recognized Obligation Payment Schedules of the Former La Quinta Redevelopment Agency for the periods of January 2012 through June 2012 and July 2012 through December 2012 with the Revisions Requested by the Department of Finance 2. Consideration of Revised Successor Agency Administrative Budgets for the periods of January 2012 through June 2012 and July 2012 through December 2012 to Comply with Directions from Department of Finance 3. Consideration of a Resolution Making Certain Acknowledgments with Respect to Housing Assets of the Successor Agency to La Quinta Redevelopment Agency Specifically Related to Property Located Within the Watercolors Development STUDY SESSION — None REPORTS AND INFORMATIONAL ITEMS 1. List of Successor Agency Assets 2. Update on Department of Finance Review of Oversight Board Actions DEPARTMENT REPORTS - None CHAIR AND BOARD MEMBERS' ITEMS - None ADJOURNMENT DECLARATION OF POSTING I, Lori Lafond, Oversight Board Secretary, do hereby declare that the foregoing Agenda for Oversight Board for the Successor Agency to La Quinta Redevelopment Agency meeting of May 2, 2012, was posted on the outside entry to the Council Chamber, 78-495 Calle Tampico, the bulletin board at the La Quinta Post Office located at 51-321 Avenida Bermudas, La Quinta, California and 78-630 Highway 111, La Quinta, California on April 26, 2012. Dated: April 26, 2012 dRl6AFj0Nrr Oversight Board S etary Oversight Board Agenda May 2, 2012 2 Public Notices The La Quints City Hall Council Chambers is handicapped accessible. If special equipment is needed for the hearing impaired, please call the City Clerk's office at (760) 777-7123, twenty-four (24) hours in advance of the meeting and accommodations will be made. If special electronic equipment is needed to make presentations to the Oversight Board, arrangements should be made in advance by contacting the City Clerk's office at (760) 777- 7123. A one (1) week notice is required. If background material is to be presented to the Oversight Board during a Board meeting, please be advised that ten (10) copies of all documents, exhibits, etc., must be supplied to the Oversight Board Secretary for distribution. It is requested that this take place prior to the beginning of the meeting. Any writings or documents provided to a majority of the Oversight Board regarding any item on this agenda will be made available for public inspection at the City Clerk's counter at City Hall located at 78-495 Calle Tampico, La Quinta, CA 92253, during normal business hours. Oversight Board Agenda May 2, 2012 3 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY ROLL CALL — MINUTES Regular Meeting WEDNESDAY, APRIL 18, 2012 at 2:00 p.m. Present: Board Members Ellis, Marshall Maysels, Nelson, lutes from absent, 1 I) .ransfer of Agency to Staff presented staff report. Board Member Nelson asked staff what happens if the Board does not approve the transfer of the housing properties. Staff indicated that the assumption is that by operation of the law, the properties do belong to the La Quinta Housing Authority. Kathy Jenson, Rutan & Tucker, counsel for the Successor Agency, said that some of the foreclosed homes are in the process of sale and the title companies are asking for the approval. If the Board does not approve the transfer, Attorney Jenson does not know what happens in that case. She understood that the properties just automatically transfer because the redevelopment agency no longer exists and an asset cannot be held by an entity that is not in existence. Board Member Nelson indicated that his understanding is that the Successor Agency would then own the properties. Attorney Jenson answered yes but explained that the law also provides that the Succe 6c Agency can elect to have those properties go to their housing authority' Board Member Nelson asked what happens tt�, !the funds from the properties once the title is transferred to the HousingA'uthority+.,,_ Staff indicated that the funds belong to the Housing Authority, and any proceeds received from the sale of the homes were to fund the`siient second trust deed for the next sale. Board Member Nelson asked .if the Housing Authority =hes, a positive cash balance. Staff indicated that they, do. Board Member Nelson ask jf the Successor Agency owns the property and the property is transferred tt CF►e, Housing 'Authority, how are the other taxing entities losing out or`=fining 'from the transactions. Frank Spevacek, RSG, Inc., explained that when-ABx1 2,�vas.put info place, it was assumed and the legislation: calls for housing assets nofto be shared with the taxing agencies but instead tit:. be used fbr,�affordable housing. In this case, the taxing agencies;" would'nat get any income from the sale or disposal of those assets or from -any rental income tha`t;,those assets may accrue. ur4-Member Nelson was 'concerned about how the transfer of the pen es would affect the other 'agencies. He understood, by the law, that assets shouldbe disposed of and had no clarification as to whether the ets should gd`,to the Housing Authority. Boi'M& lylember Misrshall explained that there is a differentiation in the law with and to tLY� sssets and the housing assets. There is a differentiation also as in the; swccessor agency and what has come to be known as the housing subosor agency. There are two places in the law regarding the assets and where they go, including land. Further, by operation of law, the housing assets, except for the remaining funds in the "unspent balance" of the housing funds is the only thing that goes to the successor agency, not the assets. This is why the assumption initially was made that the assets would go straight to the housing successor agency - i n this case, th e housing authority. There is proposed legislation that also deals with that topic for further clarification. For the most part, most successor agencies OVERSIGHT BOARD MINUTES 2 APRIL 18, 2012 are taking the stand that the housing assets are going straight to the housing successor agency. Board Member Nelson asked if there is a differentiation between a built house and vacant land. Attorney Jenson responded that, according to the law, anything that was purchased with affordable housing funds is a housing asset. 34181(c) states that the oversight board is supposed to make sure that the housing responsibilities, powers, duties, assets and obligations are separated and to make sure they get to the appropriate entity. Pursuant to 34176, which states that the city that authorize the Redevelopment Agency ("RDA") may elect to retain housing assets _and functions previously performed by the RDA, if not, then it goes to the housing authority if the city has one and if not, to the county housing,,authority. This provision allows the successor agency to either keep_A, #` housing assets. (defined as all property purchased with affordable 66sing funds) or trarisfer;.the assets to r the housing successor. Board Member Nelson asked why this it is the City's choice as to where th that there are families waiting .0. buy until the transfers are approved by th of Finance ("DOF"). Comment e mitt ',,.would come before the Board if funds ,00. Attorney Jenson indicated these hr hi ", and escrow cannot close e oversight,lPard and the Department Calle Ms ` ,Nff asked about vacant lots in either residential or commersiaiy apos and�`fiuvanted to know whether the RDA --originally piailrted for aft6ndable houses to be built on those lots -in the future dr, to sell them off to generate money for the agency.-- She rn fttioned a particular interest in the large lot on the north of,the cod'irrlunity park, which is in a commercial area and whether'that property is going to be designated for housing or for parking'lots. Chairperson . Pena' stated that it was his understanding that there are affordable housing dollars that are spent on certain things and those funds would go to affordable housing as well as other redevelopment dollars that would go to other purchases. Frank Spevacek referred to the attachments in the staff report showing the vacant lots in the Cove. These properties have been acquired over time when La Quinta Redevelopment Agency ("Agency") was working with Habitat for Humanity and prior to that Building Horizons to purchase vacant lots so they could be developed into single family homes to be sold to very low- or low-income households. All of those vacant lots were purchased with the Agency's affordable housing funds, not with non - OVERSIGHT BOARD MINUTES 3 APRIL 18, 2012 housing funds. The parcels north of La Quinta Park were purchased in 2007 from the Ostrowsky estate and were purchased with affordable housing funds. The purpose was to do affordable housing on that site, not commercial development or parking lots. All of this has been put on hold due to the Governor's proposal to shut down redevelopment agencies. Further, the Coral Mountain property and the property at Dune Palms and Westward Ho, approximately 5.2 acres, were purchased with affordable housing funds to both remediate older dilapidated units; that were occupying the properties and to assemble the property , for affordable housing development. The Agency was in an exclusive negotiation agreement with Bridge Housing to move forward to start structuring a disposition and development agreement to develop the property and'then that was put on hold when the Governor's proposal came #ut last year. Regarding the Washington Street Apartments 5.7 acres of vacant property next to;`rt, the - substantial substantial rehabilitation on Washington ee was put on hold because of the Governor , Or to do additional senior and special. needs ht behind WSA. Both of those_',prerties,, were low- and moderate -income housing funds.' 1.SA") property -as well as Ngency was poised to start Apartments and that project iosal. Also, the thought was ;jng on the vacant property rf50-,purchased with Agency Board Member; Nelson eSked how the' Agency's low and moderate income funds were put'nto the redevelopment agency. Mr. Spevacek explained that after the red+Evelopmerftpro}ect area was established, the revenue that the RDA would reraelve Vmtfld b _ha difference between the base year and the subsequent yea Po values. Ond4r>,the law, the RDA was mandated to set aside'20o10 of that,°'ovenue to fund affordable housing development and substantial rehabilita`tlk#1 ,, Funds were put aside every year. In 2004 and 2011, the Agency eleotddito leverage those funds to support bonds that then allowed the RDA to do to more affordable housing activities. Board Member Maysels asked if the title companies will be comfortable with moving forward once they get the approval of the Board or do they have to wait for the D,OF to make final approval. Mr. Spevacek stated that, based on what the"title companies have said, in addition to having the Board's approval and waiting for the DOF review, the title companies are requesting a letter specifically from the DOF stating that they agree to allow the transfer or the use of the housing properties for affordable housing development. The next step is to make that request based upon the direction of the Board. A motion was made by Board Member Nelson to amend the resolution to approve for transfer to the Housing Authority all properties that currently OVERSIGHT BOARD MINUTES 4 APRIL 18, 2012 have developmental plans, and to hold in abeyance for legal counsel review any vacant land that does not have documented development plans. Motion failed for lack of second. Chairperson Pena indicated that he has a conflict with one of the properties on Exhibit "A" of the resolution due to proximity to a property he owns. It is Assessor's Parcel Number 773-234-015. Board Members McDaniel/Osborne amended the motion to exclude APN 773-234-015. RESOLUTION NO. OB 201 A RESOLUTION OF THE OVERSI SUCCESSOR AGENCY TO LA QUIP AGENCY MAKING CERTAIN ACKh APPROVALS WITH RESPECT,' >i PROPERTIES PREVIOUSLY OWNEI REDEVELOPMENT AGENCY MOTION: A motion was made by McDai 08 2012-008 authorizing tha"tterrsfer of La Quinta Redevelopment Aqqnci..tffj the exclusion of APN 773-234-P15 Mi nay (Board Member Nelson), 1\�b$ent, ',l OF THE CERTAIN HOUSING BY THE LA QUINTS alfOsborne to adopt Resolution No. musing properties from the Former La Quinta. Housing Authority with ion_ carried . by a vote of 5 ayes, 1 RESOLUTION NO'. OB 2012-009 A RESOLUTION OF THE OVERSIGHT BOARD OF THE Aq SUCCESSOR AGENCY T4 LA dUINTA REDEVELOPMENT (:NCY MAKING CERTAIN" ACKNOWLEDGMENTS AND APPFt -VALS WITH RESPECT TO ASSESSOR'S PARCEL NUMBEf#T73-234.015 PREVIOUSLY OWNED BY THE LA QUINTA IEDEVELOPMENT AGENCY MOTION: A mot!6q was made by McDaniel/Maysels to adopt Resolution No. OB 2042 b,09 authorizing the transfer of Assessor's Parcel Number 773-234- 015 from the `farmer La Quinta Redevelopment Agency to the La Quinta Housing Authority. Motion carried by a vote of 4 ayes, 1 nay (Board Member Nelson), 1 absent, 1 abstain (Chairperson Per1a). 2. Consideration of Adoption of a Resolution Approving the Sale of Homes to Income -Qualified Buyers That Were Purchased Under the Home Foreclosure Purchase Program. OVERSIGHT BOARD MINUTES 5 APRIL 18, 2012 Staff presented staff report. RESOLUTION NO. OB 2012-010 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO THE SALE OF CERTAIN SINGLE FAMILY HOMES BY THE LA QUINTA rHOUSING AUTHORITY MOTION: A motion was made by Nelson/McDaniel 'to,adopt Resolution No. OB 012-010 as submitted approving the sale of homes `to' income -qualified buyers that were purchased under the Home Foreclosure Pgri*ase Program. Motion carried by a vote of 6 ayes, 0 nays, 1`b'sent. STUDY SESSION — None REPORTS AND INFORMATIO regarding Board alternates, At law and appointment of alt appointing alternates for the indicated that the County of I no objection if any of tba_611 Jenson said she wiI istrib6 is available in ordar,:o assist to have alternates.'';fie sugg agency to see. if they felt t he' :MS — In t6sponse to the Board's question Jenson gave an,,Iiupdate to the Board as to the The, law does .,not say anything about 3ht Board. -;,, Currently, County Counsel has )_does,not,pian-to include alternates but has icier decide to' appoint alternates. Attorney ague, of California Cities "Q&A" as soon as it A in deciding whether or not they would like the Board Members to talk to their appointing to have an alternate. Board Member,Nelson inquired about legislation of the Oversight Board and the functions of the.Oversight Board. He understands that functions of the Board are to approve successor. agency actions and to direct successor agency activities. Board Member Nelson asked if the Board could obtain a copy of a list of assets. Staff indicated that the Successor Agency has a list of the assets and that list will be provided to the Board. Board Member Osborne asked Attorney Jenson if that means that this Oversight Board has authority over the Successor Agency. Attorney Jenson said that it can direct the Successor Agency to get rid of assets that the Successor Agency OVERSIGHT BOARD MINUTES 6 APRIL 18, 2012 succeeded to. With regard to real property, there is very limited real property that is on the list. Board Member Nelson mentioned that it would be helpful to the Board to receive communication once the three-day/ten-day notification periods have passed as to what the DOF has decided regarding the decisions made by the Board. Chairperson Pena agreed. Board Member Nelson asked about legal counsel for the Oversight Board indicating that Attorney Jenson represents the City and the Successor Agency and understands that she is there to assist through the"process. Attorney Jenson suggested that the Board members contact the legal;.counee l for their appointing authority if there are questions. She indicated that she cannot give legal advice to the Board because her interest is solely with ftHe City. Board,Member Nelson questioned whether legal representation for thBoard was listed imthe budget. He stated that he feels it may be helpful if the hoard had,a;counsel of its. orlon and that A the majority of other Boards have legal counsel Chejjierson Pena asked Nelson if he knows whether legal counsel on these other.?trali�ds has actually been retained. Nelson answered yes. k ' Board Member Osborne asked what Board Member Nelson indicated the administrative budget Osborne indical legal services and the vad0ri Gave bee Sacramento. Cha roidrson Pefla asked indicated that it wo',dn't be thOrR0 PS Board would have toamend the"adriri Audito ids would be, used to pay that position. it wvuld..be frem the Oversight Board I that there ate no funds in that budget for in the ROPS that has already been sent to taff if the BOPS can be amended. Staff ge part of the administrative budget so the rative budget, have the Successor Agency ;re -approve it then it would go back to the MarkVeiss, Interim Ccty,Managarstated that the challenge is that the Board has to live wltfiJW,-the confines;`. the 3% and 5% caps so the entire budget would have be revisited^to,reallocatet.he funds according to those cap restrictions. Board Member Wbkrsb11-'stated that on the other oversight boards that she is a member of, they ' decided to keep the city's attorney on board with the understanding that ,'it was just for general counsel. If there is conflict with a particular item, then they were advised to check with their own agency's counsel. She indicated that this was due to a matter of finance and most agencies have already used up the 3% that is allocated and it's not a luxury that many boards can afford at this point. OVERSIGHT BOARD MINUTES 7 APRIL 18, 2012 Board Member Ellis commented that he is a member of two other boards and they have also been advised to use their own agency attorney when necessary. Chairperson Pena indicated that if there is a question by the State or they return something back to the Board, maybe that would be the time that an item would go back to individual legal counsel. Board Member Maysels stated that her understanding of the legal fees on the budgets for Board approval were for development agreements, negotiations, not for Board representation. She suggested that after a Board' Member receives their agenda packet, perhaps they can pass it by their legal counsel to review as well. Board Member Ellis agreed however, that is impractical and:Gostly. Chairperson Pena stated that the communicatio !:matter regarding the three/ten day notice will be added as an agenda item Staff asked the Board if the next meeting, d ay 2, 01'2, can be canceled. The Board agreed to cancel the May 2, 2012 meeting, :chairperson Pena indicated that the next Board meeting will be May ,1,6, 2012. ADJOURNMENT — 2:45 p.m. There be no further but lness, it was moved„ by Board Members Osborne/Ellis to adjourn the meetingr: 1 L OVERSIGHT BOARD MINUTES 8 APRIL 18, 2012 WR-ITTEN COMMUNICATION NO. 11#1 Y.O. ]lox 1501 LA QEIVrA, CAIFORSIA 92217.1504 78.495 CALLE"lAVPiC0 (760) 777-7000 LA QCINIA, CALIFURSIA 92253 FAX (760) 777-7101 April 19, 2012 Ana J. Matasantos, Director California Department of Finance 915 L Street Sacramento, CA 95814-3706 Re: Action Taken by the Oversight Board to the Successor Agency of La Quinta Redevelopment Agency Dear Ms. Matasantos: The Oversight Board to the Successor Agency of La Quinta Redevelopment Agency held a regular meeting on April 4, 2012. An item the Oversight Board considered and took action on was the "Consideration of a Disposition and Development Agreement Between the Former La Quinta Redevelopment Agency and Coral Mountain Partners, LP." The purpose of this agenda item was to review the provisions of the above - mentioned Disposition and Development Agreement ("DDA") which facilitates the development of a 176-unit apartment community affordable to very low-, low-, and moderate -income households. The DDA and subject property are housing assets of the former La Quinta Redevelopment Agency, as the terms are used in Health & Safety Code Sections 34176(a) and 34177(g); and pursuant to Health & Safety Code Section 34176(b)(2), the La Quinta Housing Authority, via resolution number HA 2012-002, elected to retain the housing assets and functions previously performed by the La Quinta Redevelopment Agency. After careful consideration, the Oversight Board unanimously adopted resolution number OB 2012-007: A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO THE CORAL MOUNTAIN PROPERTY AND DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE CONTINUED ADMINISTRATION AND IMPLEMENTATION OF THE SAME Ana J. Matasantos, Director April 19, 2012 Page 2 The resolution contains the following actions: • The City of La Quinta is the "successor agency" to the former La Quinta Redevelopment Agency. • The La Quinta Housing Authority is the "housing successor" to the former La Quinta Redevelopment Agency. • The DDA and the Property are both "housing assets" of the former La Quinta Redevelopment Agency, as that term is used in Health and Safety Code Sections 34176(a) and 34177(g). • The Authority has the right and authority to administer and implement the DDA, including, without limitation, the leasing of the Property and the provision of financial assistance to the Developer pursuant to the terms thereof, and no further approvals or authorizations are required by the Oversight Board with respect to the same. • The Oversight Board has determined not to terminate or renegotiate the DDA pursuant to its authority under Health and Safety Code Section 34181(a), The former La Quinta Redevelopment Agency purchased the subject property in 2007. Since purchase, the former Redevelopment Agency has effectuated the environmental, entitlement, developer negotiation, design, and permit processes. All required environmental and entitlement approvals have been secured, design has been completed, and the City of La Quinta has issued building permits. The Developer has applied for mortgage revenue bond financing and 4% tax credits per the time period outlined in the Schedule of Performance contained in the DDA. In addition, in order to transfer the property to the Developer for construction of this development, the Authority, as the "housing successor," must secure title insurance. The passage of ABx1 26 has resulted in title companies refusing to issue title insurance for properties that were in the domain of former redevelopment agencies unless the title company is provided with proof that an oversight board, and subsequently the State Department of Finance, has sanctioned the transaction.. With this letter, the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency is formally requesting the Department of Finance provide written acknowledgement that it affirmatively authorizes the project to proceed. Further, we request concurrence that the DDA is an enforceable obligation per Health & Safety Code Section 34171(d)(1)(E) and the subject property is a housing asset per Health & Safety Code Section 34176(b). This acknowledgement from the Department of Finance will facilitate the issuance of title insurance from the title company, as well as provide assurance to the tax credit lenders that this project will be completed. Ana J. Matasantos, Director April 19, 2012 Page 3 Please contact Mark Weiss, Interim Executive Director of the Successor Agency, at (760) 777-7030 should you have any questions or require additional information We greatly appreciate your consideration of this request. v John P61l"ia,'Qhairperson Oversight Board of the Successor Agency to La Quinta Redevelopment Agency JP/Ijl Enclosures cc: Mark Weiss, Interim Executive Director M. Katherine Jenson, Successor Agency Counsel Debbie Powell, Economic Development/Housing Manager Frank Spevacek, RSG, Inc. M RESOLUTION NO. OB 2012-007 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO THE CORAL MOUNTAIN PROPERTY AND DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE CONTINUED ADMINISTRATION AND IMPLEMENTATION OF THE SAME WHEREAS, the Oversight Board of the Successor Agency to Le Quints Redevelopment Agency ("Oversight Board") has been established to direct the City of La Quints, In its capacity as "successor agency," to take certain actions to wind down the affairs of the former La Quinta Redevelopment Agency ("Agency") in accordance with the requirements of Assembly Bill 26, also known as chapter 6, Statutes 2011, First Extraordinary Session, which added Part 1.8 and Part 1.85 of Division 24 of the California Health and Safety Code ("ABx1 26"); and WHEREAS, the Agency and Coral Mountain Partners, L,P, (the "Developer"), entered into a Disposition and Development Agreement dated January 4, 2011 (the "DDA"), pursuant to which the Agency agreed to lease to the Developer certain real property owned by the Agency and located in the City of La Quinta (the "Property"), and to provide the Developer with certain financial assistance, and the Developer agreed to develop and operate on said real property an affordable housing rental project (the "Project"); and WHEREAS, on January 2, 2012, the City Council of the City of La Quinta ("City Council" or "City," as applicable) adopted City Council Resolution No. 2012- 002, affirmatively electing to be the "successor agency" to the former Agency; and WHEREAS, on January 17, 2012, the La Quints Housing Authority ("Authority") adopted Housing Authority Resolution No. 2012-02, electing to be the "housing successor" to the former Agency; and . WHEREAS, pursuant to Health and Safety Code section 34175(b), added by Part 1.85 of Division 24 of the California Health and Safety Code ("Part 1,85"), on February 1, 2012, the DDA and the Property were transferred to the control of the City, in its capacity as "successor agency" to the former Agency; and WHEREAS, pursuant to Health and Safety Code Section 34177(g), added by Part 1.85, on March 7, 2012, the City, in its capacity as the "successor agency" to the former Agency, (i) assigned all of its interests in the DDA to the Authority; Rewlvtion No. 08 2072-007 Approval of Coral Mountain DDA Adopted: April 4, 2012 Page 2 and (ii) quitclaimed all of its interests in the Property to the Authority; and NOW, THEREFORE, the Oversight Board of the Successor Agency to La Quints Redevelopment Agency does hereby resolve as follows: SECTION 1. The above Recitals are true and correct. SECTION 2. The City of La Quints is the "successor agency" to the former La Quints Redevelopment Agency. SECTION 3. The La Quinta Housing Authority is the "housing successor" to the former La Quinta Redevelopment Agency. SECTION 4. The DDA and the Property are both "housing assets" of the former La Quinta Redevelopment Agency, as that term is used in Health and Safety Code Sections 34176(a) and 34177(g), SECTION 5, The Authority has the right and authority to administer and implement the DDA, including, without limitation, the leasing of the Property and the provision of financial assistance to the Developer pursuant to the terms thereof, and no further approvals or authorizations are required by the Oversight Board with respect to the same. SECTION 6, The Oversight Board has determined not to terminate or renegotiate the DDA pursuant to its authority under Health and Safety Code Section 34181(a). PASSED, APPROVED and ADOPTED at a regular meeting of the Oversight Board of the Successor Agency to the La Quinta Redevelopment Agency held this 41a day of April, 2012 by the following vote, to wit: AYES: Board Members Ellis, Marshall, Maysels, McDaniel, Osborne and Chairperson Pefia NOES: None ABSENT: Board Member Nelson ABSTAIN: None Resolution No. OB 2012-007 Approval of Coral Mountain DDA Adopted: April 4, 2012 Page 3 JOHN R A, hairperson Oversight Board of the Successor Agency to La. Quinta Redevelopment Agency ATTEST: �ITLA' L&" Y0HI LAFOND Oversight Board Se r tary OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY OVERSIGHT BOARD MEETING DATE: Mav 2, 2012 AGENDA CATEGORY: B1 ITEM TITLE: Consideration of a Resolution Approving BUSINESS SESSION: _ Amended Recognized Obligation Payment Schedules of the Former La Quinta Redevelopment Agency for the CONSENT CALENDAR: periods of January 2012 through June 2012 and July STUDY SESSION: 2012 through December 2012 with the Revisions Requested by the Department of Finance - PUBLIC HEARING* RECOMMENDATION: Adopt a resolution approving amended Recognized Obligation Payment Schedules of the former La Quinta Redevelopment Agency for the periods of January 2012 through June 2012, and July 2012 through December 2012 with the revisions requested by the Department of Finance. FISCAL IMPLICATIONS: Pursuant to the written direction of the Department of Finance's ("DOF") direction, certain items relating to the administrative costs on the Recognized Obligation Payment Schedules ("ROPS") must be amended. The DOF has determined that certain items are administrative expenses, which must be paid from the administrative cost allowance. The previous ROPS approved by the Board on April 4, 2012 as Resolution No. 2012-005 (Attachment 1 - the specific items at issue are highlighted), showed these items as being paid from the "Redevelopment Property Tax Trust Fund/Tax Increment (i.e., property tax). Therefore, staff has removed these items from the ROPS and included them in the Successor Agency administrative budget. It should be noted that Project Area 1, Item 2, and Project Area 2, Item 2, referenced in the DOF's letter refers to affordable housing compliance monitoring performed by RSG under a consulting contract. This item has also been removed from the ROPS and will be transferred to the La Quinta Housing Authority's budget. The payments under that contract will no longer be from tax increment. This action has a direct effect on the Successor Agency administrative budget. Details are outlined in the Oversight Board's staff report item number B2. BACKGROUND AND OVERVIEW: Per the requirements of ABx1 26, on April 6, 2012, staff forwarded to the Department of Finance ("DOF") the Recognized Obligation Payment Schedules ("ROPS") for the periods of January through June 2012, and July through December 2012. Both BOPS had been previously approved by the Successor Agency and Oversight Board. On April 10, 2012, the DOF requested additional information on several agreements listed on the BOPS, including Habitat for Humanity, Coral Mountain, RBF (for SRR canal relocation), RSG (for Washington Street Apartments project management), and USDA and Provident Bank loans for Washington Street Apartments. (Attachment 2.) Staff forwarded the agreements along with a letter of explanation to the DOF. (Attachment 3). The DOF responded with a letter dated April 17, 2012 (Attachment 4), that did not address the agreements listed above, but did identify several line items that it considers to be administrative expenses to be paid from the administrative cost allowance, and therefore, are not enforceable obligations to be paid with tax increment. These items include Rutan & Tucker's contract for legal services relating to the implementation of ABx1 26 and Rosenow Spevacek Group's contract related to implementation of ABx1 26; agreements between the former RDA and City for staff, overhead, and rent expenses; computer record storage related to Successor Agency documents; and online municipal code costs related to the Successor Agency. These specific items were the only items questioned in the letter. The DOF returned the ROPS for reconsideration by the Oversight Board and resubmission to the DOF for review. The DOF stated the ROPS is ineffective until DOF approval, and that having these items listed as enforceable obligations will cause further scrutiny of future BOPS. Because the April 17t' letter did not address the DOF's initial concerns with the Habitat, Coral Mountain, RBF, and RSG/Washington Street Apartments agreements, and the USDA and Provident Bank loans, staff contacted the DOF for clarification. In an email dated April 19, 2012 (Attachment 5), the DOF stated they agreed with the supporting documentation provided by staff; therefore these items are enforceable obligations that can be listed on the BOPS. Therefore, in order to comply with the DOF's letter of April 17", staff has amended both BOPS accordingly, removing Rutan & Tucker's contract for legal services relating to ABx1 26 implementation and Rosenow Spevacek Group's contract related to implementation of ABx1 26; agreements between the former RDA and City for staff, overhead, and rent expenses; computer record storage related to Successor Agency documents; and online municipal code costs related to the Successor Agency from the BOPS. These items are now included in the Successor Agency's administrative budgets. The RSG contract for affordable housing compliance will be included in the Housing Authority's budget. Staff has also utilized the administrative cap as 2 recalculated by DOF and incorporated that figure into the revised BOPS. The revised BOPS are included in the attached resolution as Exhibits A and B. FINDINGS AND ALTERNATIVES: The alternatives available to the Oversight Board include: 1. Adopt a Resolution Approving the Amended Recognized Obligation Payment Schedules for the periods of January through June 2012, and July through December 2012 with the revisions requested by the Department of Finance; or 2. Do not adopt a Resolution Approving the Amended Recognized Obligation Payment Schedules for the periods of January through June 2012, and July through December 2012; or 3. Provide staff with alternative direction. Respectfully submitted, Debbie Powell Economic Development/Housing Manager Approved for submission by: Mark Weiss, Interim Executive Director Successor Agency to La Quinta Redevelopment Agency Attachments: 1. ROPS - previously approved on April 4, 2012 2. E-Mail from DOF dated April 10, 2012 3. SA's Response to DOF inquiry dated April 12, 2012 4. Letter from DOF dated April 17, 2012 5. 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Q d E d d = Y d cy7 0� a a d x C J iJ U d 7 b O d> >I Q= d O 4S E d � zl = K p c c E d d c W o d o m'�pZ Toi. e E m o ,`o �° d E d C C d L d O E a 0 o E Q c a o Q E ts �i Q o d m O N' x L dj' Nx ¢ 'o o o a coi a>di a(n �woa axc�� o_Q Ufn a,P da aa'xo_aa¢a A 0 N a ° \ � \ # \ / /=\kZ! }® !§\ ,f!@§£ a§ k2� Zo )0{_ \)# ( ® C=� ® J{#/} )([ a7£ 2§f �J|!0 0 f`J R BEE _ ■ ,!� f',af#�k� k�J *() °$! A\ A{) E=!)!f\2/_ fƒ $! I)!J /00 k k k- - e, /\\kkk \\/ \/\ \/ .20�2 \/)\ }{)k \§f» 0 . E) . - {) E {§ MO \ ) �_ ! ]k §k ■) 4k . - /: cli \JI { 0 }))/ \\ k\ kfk }) \ () \\�\ !)| k)k ! \# \[ £f,J® !29 ■l2it� �� ! _ 12 \ \ . § \ \ \ \ LD16 \- t»< () E S()i !. !{l,« #& \$ k!!!! 0 mts -f/|§; ff2 }$! ! 0 22$££ /�! \cli § # k. . . k ` { , # A t . / m m # § # § # m !!2� In # 7 k « 2 ^f \ \ I a k. & k ■ lg & § k $, �f !! !M§{| !`#| «�! .2 }��»2 J!# {§m !! !« Ja !! !i l�;� §7 /) rh § ! ) ■a# \ § e & { � k | - \ . 2 - 2 ■ \ . w w a 2 19r. m } # e \ - 221, / ! a J �\\ /ƒ\i \!Mo k] 2 {! /§ s } k_ \ k/ D \ 0 \! \ \ �e !■ { � `2J §;$ fkkLD o,,, § \ \\ /;| B coo k m ) f � � k k § {`|)2 w § ATTACHMENT 2 Lori Lafond From: Patterson, Mindy <Mindy.Patterson@dof.ca.gov> Sent: Tuesday, April 10, 2012 8:40 AM To: Deborah Powell Cc: Mark Weiss; Jenson, Kathy, Frank Spevacek; asmittle@webrsg.com; pelias@co.riverside.ca.us; Jbaechel@co.riverside.ca.us; anash@co.riverside.ca.us Subject: La Quinta ROPS Review Initiation Importance: High Dear Ms. Powell, On April 6, 2012, we received the Recognized Obligation Payment Schedule (ROPS) that was approved by your Oversight Board for the La Quinta Redevelopment Agency. Health and Safety Code section 34179 (h) allows the California Department of Finance (Finance) three business days to request a review of an Oversight Board action. This email serves as notice that we are requesting a review of one or more Enforceable Obligations contained in your ROPS. Pending the resolution of the questions we have on these Enforceable Obligations, your ROPS shall not be effective. Since Finance is statutorily obliged to operate within a 10-day review period, we will be contacting you shortly to obtain further clarification and supporting documentation for the Enforceable Obligations in question. We hope to work expeditiously with you to resolve these questions within the specified time frame. Here are the documents I'm requesting for review: Exhibit A Project Area 1 Line item 5 — Provide contract with Habitat for Humanity. Line item 6 — Provide contract with RBF Consulting Project Area 2 Line item 4— Provide 1) DDA contract with Coral Mountain Partners, LP, 2) any contracts that have been issued under this DDA, and 3) a status of this project. Line item 5 — Provide contract with Rosenow Spevacek Group Line items 6 and 7 — Provide loan agreements and repayment schedules with 1) USDA-RD and 2) Provident Savings Bank. Please provide these documents to me by Thursday the 12th. Thank you for your cooperation. Mindy Patterson Lead Analyst Department of Finance 916.322.2985 x 3117 ATTACHMENT 3 F,O. BON 1504 LA Qcnr%, CAr.IFOItNl.\ 92247-1504 78-:1.95 Cnri.r:-I...:kmvico (760) 7 77-7000 LA QLINIA, CALIFORNIA 92233 FAX (760) 777-7101 Via Electronic Mall April 12, 2012 Ms. Mindy Patterson Lead Analyst California Department of Finance 915 L Street Sacramento, CA 95814 RESPONSE TO DOF INQUIRY REGARDING THE LA QUINTA SUCCESSOR AGENCY RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR JANUARY TO JUNE 2012 Dear Ms. Patterson: The La Quinta Successor Agency received your April 10, 2012 e-mail seeking additional information related to several items on its Recognized Obligation Payment Schedule ("ROPS"), which was approved by the Oversight Board on April 4, 2012 and subsequently submitted to the Department of Finance on April 6, 2012. Transmitted with this cover letter, please find the contracts and other documentation you requested for the items identified in your e-mail. The specific items your e-mail identified from the January to June 2012 ROPS were as follows: Project Area 1 • Habitat for Humanity agreement for construction of mutual self help homes (line item 5) • RSF Consulting contract for SilverRock Resort Infrastructure design and engineering (line item 6) Project Area 2 • Coral Mountain Partners, LP Disposition and Development Agreement (line item 4) • Any contracts that have been issued under this DDA • Status of the Coral Mountain project • Rosenow Spevacek Group contract for development and implementation of the Washington Street Apartments rehabilitation project (line item 5) • Loan agreement and repayment schedule for United States Department of Agriculture for a Rural Development Loan (line items 6 and 7) • Loan agreement and repayment schedule for Provident Savings Bank loan We have formulated the rest of this letter to provide some basic explanation of these projects and contracts to assist you in your review. As described below, the former La Quinta Redevelopment Agency ("Agency") was very actively pursuing a number of important projects, largely related to implementation of affordable housing — a critical issue in . the rapidly growing Coachella Valley. All but one of your inquires relate to the Agency's effort to provide affordable housing. To date, the Agency has created 1,059 affordable units, and was mandated to create another 1,248 over the next 17 years. Habitat for Humanity agreement for construction of mutual self help homes The opportunity for residents to purchase a single family home, even on an average salary, is one of the true challenges Californians face. Thus, on August 23, 2010, the Agency and Habitat for Humanity entered into a public -private partnership to construct two, for -sale, single family homes available to low income families. Because of this successful partnership, the original agreement was amended on February 1, 2011 to develop an additional five homes to be built over a five year period between July 1, 2013 and June 30, 2018. Though it was the Agency's hope to develop these homes expediently, Habitat for Humanity is also engaged in the construction of homes in nearby communities and thus could not deploy its resources until 2013. We nonetheless believe that this is an enforceable obligation as defined in Health & Safety Code Section 34171(d)(1)(E). RBF Consulting contract for SiiverRock Resort Infrastructure design and engineering The Agency had been pursuing the development of the SilverRock property for recreation and economic development purposes since 2002. The contract with RBF Consulting was executed on August 16, 2006 to facilitate a variety of activities related to infrastructure needed to expand municipal services and preserve health and safety at the SilverRock property including a hydrology study, street improvement plans, and other engineering efforts. However, the services RBF Is currently engaged in are complementary to other related water facility projects in the area, specifically working with the Coachella Valley Water District ("CVWD") to study transmission and alignment options for the aging All American Canal. The Canal is a critical component in the domestic water system in the east Coachella Valley. it transports water from the Colorado River to ground water recharge basin, agricultural, and other users. The Canal has subsided throughout the Coachella Valley, but not as it travels through SilverRock; therefore, flows are severely restricted. RBF is working with CVWD to craft options to rebuild this segment of the Canal. The Canal alignment options study is underway and should be completed by July 2012. This contract is an enforceable obligation as defined in Health & Safety Code Section 34171(d)(1)(E). Coral Mountain Partners, LP Disposition and Development Agreement, Status, and Contracts The current Disposition and Development Agreement with Coral Mountain Partners ("DDA") was entered into on January 4, 2011. However, this is only the most recent in a series of agreements stemming back to 2007 necessary to develop 176 affordable multi -family units on approximately 10 acres. Extensive work has been performed to prepare for this development over the last five years including: • Purchase of the property by the Agency • Construction of a street 'providing access to the site • Realignment of an intersection to provide safe access to both the site and the adjoining school district facility • Several phase one and other environmental investigations • Preparation of a specific plan • Preparation and certification of an environmental impact report • Preparation and procurement of entitlements • Preparation of architecture and design work • Site engineering and grading • Public input process and outreach to neighboring property owners • Securing building permits On April 4, 2012, the Oversight Board to the Successor Agency to the Le Quints Redevelopment Agency unanimously approved the DDA, and the dedication of the property and the funding necessary to complete the implementation this development. The Oversight Board affirmatively concluded that the agreement should not be terminated pursuant to Health & Safety Code Section 34181(a). We note that this decision was not taken up for review by the DOF, and is now final. The developer, Coral Mountain Partners, is currently securing 4 percent tax market credits pursuant to the DDA. As you can see, this project is in full swing. Construction will begin in August 2012, When completed, it will provide housing to 36 very low, 138 low income households, and 2 moderate income households. This contract is an enforceable obligation as defined in Health & Safety Code Section 34171(d)(1)(E) The funding source for this line item is listed on the ROPS as a combination of Low and Moderate Income Housing Funds and Redevelopment Property Tax Trust Fund/Tax Increment. The Successor Agency believed at the time that being an enforceable obligation, this project would be eligible for funding from future tax increment. However, the Successor Agency is able to fund this project with accumulated Low and Moderate Income Housing Funds, If that is the preference of the DOF. The developer has included a letter which provides further information regarding this project, including a listing of their contracts under the DDA. To date, the developer has expended over $2.8 million. Rosenow Spevacek Group contract for development and Implementation of the Washington Street Apartments rehabilitation project The Agency went to great lengths to facilitate the rehabilitation of the Washington Street Apartment complex. The Agency first purchased this property in 2007 after assuring the Farmer's Home Administration, United States Department of Agriculture that the Agency would substantially rehabilitate the complex. The Department recently sent a letter indicating that its approval of the transfer was predicated on the commitment the Agency had made relating to the rehabilitation. Then, the City annexed this property into the City of La Quints, and the Agency subsequently amended a project area in 2010 to add this property. Seventy-two of the 73 units are currently restricted to very low income seniors and special needs residents pursuant to previous underwriting by the Farmer's Home Administration, United States Department of Agriculture. The complex is 32 years -old, and rapidly deteriorating. Planned improvements Include unit rehabilitation, a new recreation building and community amenities, updated appliances and fixtures, more energy efficient windows and HVAC systems, new carports to protect residents from extreme heat, and an improved noise barrier on Washington Street, The La Quints Housing Authority will then record 55-year affordability covenants to preserve the affordability of the units to very low and low Income senior and handicapped households. Performance on the contract entered into on March 30, 2011 with Rosenow Spevacek Group in order to facilitate the rehabilitation is well underway. A variety of tasks are already completed including: all preliminary design work, negotiation of an agreement with the US Department of Agriculture, demolition of certain structures, architectural design work, engineering plans, and civil engineering related to wastewater infrastructure. This contract is an enforceable obligation as defined in Health & Safety Code Section 34171(d)(1)(E). Loan agreement and repayment schedule for United States Department of Agriculture Rural Development Loan and Provident Savings Bank loan Both of these loans are associated with the Washington Street Apartments described above. The prior owner maintained significant debt on the property and as a part of the transaction to acquire the property, the Agency assumed two of the existing loans. The USDA loan originated in 1980 with the development of the complex. The Agency assumed the loan on October 14, 2008 as a part of the purchase of the property. The Provident Savings Bank loan originated in 2001, and was assumed by the Agency on October 28, 2008, also as a part of the purchase of the Washington Street Apartment complex and property. These loans are enforceable obligations as defined in Health & Safety Code Section 34171(d)(1)(B) and (E). We hope this letter and enclosed attachments satisfies your data request. We are happy to provide you anything further necessary for your review. Please contact Debbie Powell, Economic DevelopmenttHousing Manager at (760) 777-7073 should you have any questions. Thank you for your consideration. ISin^^c^^e`rely, n MY�� Mark Weiss Interim Executive Director Successor Agency to La Quinta Redevelopment Agency cc: M. Katherine Jenson, Successor Agency Counsel Frank Spevacek, Rosenow Spevacek Group Debbie Powell, Economic Development/Housing Manager Enclosures: Contract with Habitat for Humanity Contract with RBF Consulting Coral Mountain DDA Letter from Coral Mountain Partners, L.P. Loan Agreement with USDA Loan Agreement with Provident Bank ATTACHMENT 4 CP m e z W 1111 n O �R * DEPARTMENT OF Eomumo G. aROwN JR. - GOVERNOR �L)1O0.N1►FINANCE g 1 3 l BYACL ■ 6AV0. MCMTG CA Y 95814.3705 i w .Oo C.OA.OGv April 17, 2012 Debbie Powell, Economic Development/Housing Manager City Manager's Office City of La Quinta PO Box 1504 La Quinta, CA 92247-1504 Dear Ms. Powell: Pursuant to Health and Safety Code (HSC) section 34177 (1) (2) (C), the City of La Quinta (City) Successor Agency submitted a Recognized Obligation Payment Schedule (ROPS) to the California Department of Finance (Finance) on April 6, 2012, for the periods of January through June 2012 and July through December 2012. Finance staff contacted you for clarification of items listed in the ROPS. HSC section 34171 (d) lists enforceable obligation (ED) characteristics. Based on a sample of line items reviewed and application of the law, the following do not qualify as EOs: Administrative expenses totaling $1,870,639 for the January through June 2012 period. HSC section 34171 (b) limits administrative expenses for fiscal year 2011-12 to five percent of property tax allocated to the successor agency or $250,000, whichever is greater. Five percent of the property tax allocated is $835,495. Therefore, $1,870,639 of the claimed $2,706,134 in administrative expenses is not an ED. The following were considered administrative expenses: o Proj Area 1 — Items 1, 2, 3, 8, and 9 o Proj Area 2— Items 1, 2, 9, and 10 o Proj Areas 1 and 2 — Items 11 and 12 • Administrative expenses totaling $209,623 for the July through December 2012 period. HSC section 34171 (b) limits administrative expenses in fiscal years after 2011-12 to three percent of property tax allocated to the successor agency or $250,000, whichever is greater. Three percent of the property tax allocated is $384,357. Therefore, $209,623 of the claimed $593,980 in administrative expenses is not an ED. The following were considered administrative expenses: o Proj Area 1 — items 1, 2, and 3 o Proj Area 2 — Items 1 and 2 o Proj Areas 1 and 2 — Items l 1, 12, and 13 As authorized by HSC section 34179 (h), Finance is returning your ROPS for your reconsideration. This action will cause the specific ROPS items noted above to be ineffective until Finance approval. Furthermore, items listed on future ROPS will be subject to review and may be denied as EOs. If you believe we have reached this conclusion in error, please provide further evidence that the items questioned above meet the definition of an ED. Please direct inquiries to Evelyn Suess, Supervisor or Mindy Patterson, Lead Analyst at (916) 322-2985. Sincerely, At,.4 /40 MARK HILL Program Budget Manager cc: Ms. Pam Elias, Chief Accountant Property Tax Division, Riverside County Auditor -Controller Ms. Jennifer Baechel, Business Process Analyst II, Riverside County Auditor -Controller Ms. April Nash, Supervising Accountant, Riverside County Auditor -Controller ATTACHMENTS Tit�44Q" 11,0. Box I50•1 LA Qt INTA, CAL 1rORN[A 922-17-1504 78-493 C:v.LE TAMPICO (760) 777-7000 LA QCINI'A, GA1.IP0RXIA 9225'1 FAX (760) 777.7101 April 19, 2012 Ana J. Matasantos, Director California Department of Finance 915 L Street Sacramento, CA 95814-3706 Re: Action Taken by the Oversight Board to the Successor Agency of La Quinta Redevelopment Agency Dear Ms. Matasantos: The Oversight Board to the Successor Agency of La Quinta Redevelopment Agency held a regular meeting on April 4, 2012. An item the Oversight Board considered and took action on was the "Consideration of a Disposition and Development Agreement Between the Former La Quints Redevelopment Agency and Coral Mountain Partners, LP." The purpose of this agenda item was to review the provisions of the above. mentioned Disposition and Development Agreement ("DDA") which facilitates the development of a 176-unit apartment community affordable to very low-, low-, and moderate -income households. The DDA and subject property are housing assets of the former La Quinta Redevelopment Agency, as the terms are used in Health & Safety Code Sections 34176(a) and 34177(g); and pursuant to Health & Safety Code Section 34176(b)(2), the La Quinta Housing Authority, via resolution number HA 2012.002, elected to retain the housing assets and functions previously performed by the La Quinta Redevelopment Agency. - After careful consideration, the Oversight Board unanimously adopted resolution number OB 2012-007: A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO THE CORAL MOUNTAIN PROPERTY AND DISPOSITION AND DEVELOPMENT, AGREEMENT AND AUTHORIZING THE CONTINUED ADMINISTRATION AND IMPLEMENTATION OF THE SAME Ana J. Matasantos, Director April 19, 2012 Page 2 The resolution contains the following actions: • The City of La Quints is the "successor agency" to the former La Quints Redevelopment Agency. • The La Quinta Housing Authority is the "housing successor" to the former La Quinta Redevelopment Agency. • The DDA and the Property are both "housing assets" of the former La Quinta Redevelopment Agency, as that term is used in Health and Safety Code Sections 34176(a) and 34177(g). • The Authority has the right and authority to administer and implement the DDA, including, without limitation, the leasing of the Property and the provision of financial assistance to the Developer pursuant to the terms thereof, and no further approvals or authorizations are required by the Oversight Board with respect to the same. • The Oversight Board has determined not to terminate or renegotiate the DDA pursuant to its authority under Health and Safety Code Section 34181(a). The former La. Quinta Redevelopment Agency purchased the subject property in 2007. Since purchase, the former Redevelopment Agency has effectuated the environmental, entitlement, developer negotiation, design, and permit processes. All required environmental and entitlement approvals have been secured, design has been completed, and the City of La Quinta has issued building permits. The Developer has applied for mortgage revenue bond financing and 4% tax credits per the time period outlined in the Schedule of Performance contained in the DDA. In addition, in order to transfer the property to the Developer for construction of this development, the Authority, as the "housing successor," must secure title insurance. The passage of ABx1 26 has resulted in title companies refusing to issue title insurance for properties that were in the domain of former redevelopment agencies unless the title company is provided with proof that an oversight, board, and subsequently the State Department of Finance, has sanctioned the transaction. With this letter, the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency is formally requesting the Department of Finance provide written acknowledgement that it affirmatively authorizes the project to proceed. Further, we request concurrence that the DDA is an enforceable obligation per Health & Safety Code Section 34171(d)(1)(E) and the subject property is a housing asset per Health & Safety Code Section 34176(b). This acknowledgement from the Department of Finance will facilitate the issuance of title insurance from the title company, as well as provide assurance to the tax credit lenders that this project will be completed. Ana J. Matasantos, Director April 19, 2012 Page 3 Please contact Mark Weiss, Interim Executive Director of the Successor Agency, at, (760) 777-7030 should you have any questions or require additional information We greatly appreciate your consideration of this request. $lnE)el CIti Johna, Chairperson Oversight Board of the Successor Agency to Le Quinta Redevelopment Agency JP/Ijl Enclosures cc: Mark Weiss, Interim Executive Director M. Katherine Jenson, Successor Agency Counsel Debbie Powell, Economic Development/Housing Manager Frank Spevacek, RSG, Inc. RESOLUTION NO. OB 2012.007 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO THE CORAL MOUNTAIN PROPERTY AND DISPOSITION AND DEVELOPMENT AGREEMENT AND AUTHORIZING THE CONTINUED ADMINISTRATION AND IMPLEMENTATION OF THE SAME WHEREAS, the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency ("Oversight Board") has been established to direct the City of La Quinta, in Its capacity as "successor agency," to take certain actions to wind down the affairs of the former La Quinta Redevelopment Agency ("Agency") in accordance with the requirements of Assembly Bill 20, also known as chapter 5, Statutes 2011, First Extraordinary Session, which added Part 1,8 and Part 1.85 of Division 24 of the California Health and Safety Code ("ABX1 26")., and WHEREAS, the Agency and Coral Mountain Partners, L,P, (the "Developer"), entered into a Disposition and Development Agreement dated January 4, 2011 (the "DDA"), pursuant to which the Agency agreed to lease to the Developer certain real property owned by the Agency and located in the City of La Quinta (the "Property"), and to provide the Developer with certain financial assistance, and the Developer agreed to develop and operate on said real property an affordable housing rental project (the "Project"); and ' WHEREAS, on January 2, 2012, the City Council of the City of La Quinta ("City Council" or "City," as applicable) adopted City Council Resolution No. 2012- 002, affirmatively electing to be the "successor agency" to the former Agency; and WHEREAS, on January 17, 2012, the Le Quinta Housing Authority ("Authority") adopted Housing Authority Resolution No, 2012-02, electing to be the "housing successor" to the former Agency; and WHEREAS, pursuant to Health and Safety Code section 34175(b), added by Part 1.85 of Division 24 of the California Wealth and Safety Code ("Part 1.85"), on February 1, 2012, the DDA and the Property were transferred to the control of the City, in its capacity as "successor agency" to the former Agency; and WHEREAS, pursuant to Health and Safety Code Section 34177(g), added by Part 1,85, on March 7, 2012, the City, in Its capacity as the "successor agency" to the former Agency, (i) assigned all of its Interests in the DDA to the Authority; Resolmlon No. 0e 2012.007 Approval of Coral Moonlain DDA Adopted: April 4, 2012 Pape 2 and (11) quitclaimed all of its interests in the Property to the Authority; and NOW, THEREFORE, the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency does hereby resolve as follows: SECTION 1. The above Recitals are true and correct. SECTION 2. The City of La Quinta is the "successor agency" to the former La Quinta Redevelopment Agency. SECTION 3. The La Quinta Housing Authority is the "housing successor" to the former La Quinta Redevelopment Agency. SECTION 4. The DDA and the Property are both "housing assets" of the former Le Quinta Redevelopment Agency, as that term is used in Health and Safety Code Sections 34176(a) and 84177(g), SECTION 5. The Authority has the right and authority to administer and implement the DDA, including, without limitation, the leasing of the Property and the provision of financial assistance to the Developer pursuant to the terms thereof, and no further approvals or authorizations are required by the Oversight Board with respect to the same. SECTION 6, The Oversight Board has determined not to terminate or renegotiate the DDA pursuant to its authority under Health and Safety Code Section 34181(e). PASSED, APPROVED and ADOPTED at a regular meeting of the Oversight Board of the Successor Agency to the Le Quinta Redevelopment Agency held this 41' day of April, 2012 by the following vote, to wit: AYES: Board Members Ellis, Marshall, Mayseis, McDaniel, Osborne and Chairperson PeAa NOES: None ABSENT: Board Member Nelson ABSTAIN: None Resolution No. 09 2012.007 Approval of Coral Mountain DDA Adopted; April 4, 2012 Page 3 JOHN F JA, hairperson Oversight Board of the Successor Agency to La Quints Redevelopment Agency ATTEST; 8� I LAFOND Oversight Board Se •r tary RESOLUTION NO. OB 2012- A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY ADOPTING REVISED RECOGNIZED OBLIGATION PAYMENT SCHEDULES FOR THE PERIODS OF JANUARY 2012 THROUGH JUNE 2012 AND JULY 2012 THROUGH DECEMBER 2012 WHEREAS, the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency ("Oversight Board" as applicable) has been established to direct the Successor Agency to take certain actions to wind down the affairs of the Redevelopment Agency in accordance with the California Health and Safety Code; and WHEREAS, the La Quinta Redevelopment Agency ("Agency") was engaged in activities to execute and implement the Project Area No. 1 Redevelopment Plan and the Project Area No. 2 Redevelopment Plan (collectively, the "Redevelopment Plans") pursuant to the provisions of the California Community Redevelopment Law (Health and Safety Code § 33000, at seq.) ("CRL"); and WHEREAS, as part of the 2011-12 State budget bill, the California Legislature enacted and the Governor signed, companion bill ABx1 26 requiring that each redevelopment agency be dissolved; and WHEREAS, an action challenging the constitutionality of ABx1 26 and ABx1 27 was filed in the California Supreme Court by the California Redevelopment Association, the League of California Cities, and two individual cities; and WHEREAS, on December 29, 2011, the Court upheld ABx1 26; and WHEREAS, Health & Safety Code Section 34169 requires successor agencies to prepare and adopt a "Recognized, Obligation Payment Schedule" that lists all obligations of the former redevelopment agency that are enforceable within the meaning of subdivision (d) of Section 34167 for six month periods including January 2012 through June 2012 and July 2012 through December 2012; and WHEREAS, on March 20, 2012, the City of La Quinta acting as the Successor Agency to the La Quinta Redevelopment Agency adopted by Resolution Number SA 2012-003 approving a Recognized Obligation Payment Schedule for the period of January 2012 through June 2012; and WHEREAS, on April 3, 2012, the City of La Quinta acting as the Successor Agency to the La Quinta Redevelopment Agency adopted by Resolution Number SA Resolution No. OB 2012- Adoption of Recognized Obligation Payment Schedules Adopted: May 2, 2012 Page 2 2012-004 approving a Recognized Obligation Payment Schedule for the period of July 2012 through December 2012; and WHEREAS, the California State Department of Finance has reviewed the Recognized Obligation Payment Schedules for the periods of January -June 2012 and July -December 2012, and has directed that certain items be reclassified as administrative expenses and further recalculated the administrative allowance for that those time periods; and WHEREAS, in order to comply with the California Department of Finance's direction, staff has duly revised the Recognized Obligations Payment Schedules referenced above; and WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred. NOW THEREFORE; BE IT RESOLVED, by the Oversight Board of Successor Agency to La Quinta Redevelopment Agency, does hereby resolve as follows: Section 1. Recitals. The Recitals set forth above are true and correct and incorporated herein by reference. Section 2. Adoption of Revised Recognized Obligation Payment Schedules. In order to enable the City of La Quinta as Successor Agency to strictly comply with ABx1 26, and based on the Recitals set forth above, the Oversight Board hereby adopts the revised Schedules attached hereto as Exhibits A and B as the Recognized Obligation Payment Schedule for the periods of January 2012 through June 2012; and for July 2012 through December 2012. Pursuant to Health & Safety Code Section 34173(e), the Successor Agency's liability, including, but not limited to, its liability for the obligations on the attached schedule is limited to the total sum of property tax revenues it receives pursuant to Part 1.85 of AB x1 26. Section 3. Implementation. The Oversight Board hereby establishes the Recognized Obligation Payment Schedules, pursuant to Health & Sa fety Code Section 34180(g), for the periods of January 2012 through June 2012 and July 2012 through December 2012. Section 4. Severability. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this Resolution are severable. The Oversight Board hereby declares that it would have Resolution No. OB 2012- Adoption of Recognized Obligation Payment Schedules Adopted: May 2, 2012 Page 3 adopted this Resolution irrespective of the invalidity of any particular portion thereof. Section 5. The Oversight Board Secretary shall certify to the adoption of this Resolution. PASSED, APPROVED, AND ADOPTED at the meeting of the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency held this 2no day of May, 2012, by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: JOHN PENA, Chairperson Oversight Board of the Successor Agency to La Quinta Redevelopment Agency ATTEST: LORI LAFOND Oversight Board Secretary EXHIBIT A [, - a s n- � a a 5yE W W W W 8 8 8 3 R m FF ➢O � a�$R o �e8 Nos h�yf w Em .. Pm �I spa 0 � n Eo E� QQa 25K 5� a n n a R a S a`x F 5xx �2 E e 4 w R'y YA o o 'r � pry s a5� � S y5 � � a §§ N i¢� � �o F g€g�5 LLrc� sgg G�Qn mill a� �e s �_� �O n O 1= EX� ��:°s s N E a 4 S W W W W W W W H 8 s o LP 0 PE S g n v 3 o N 3 E� U U v ci U E E E 1Og sea E E E a.4 Eo Sd E3 N€ .Tm•a .�''E Via'. E E E e 2 2 '=$"o4a az i a�i ci o az i aeii a 8 8 9 n¢ 9 v¢ 5 r e v a 3 J� J r 6 8a ¢ "�� ¢rn_ �+ `88 Pv g w Td -9 c 5E3 3 a a a S a yC_ 2 E C.-. E a.. 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Z �Q E � N p o» a m a N V) N_ Q o 0 T O O O M mO C a d d C Ev d W W W W W W W 'o d J O M n pi d Oct pm_ > ae w O ^ zo Odd G O f9 tl'E�LLNo O<DO �O �O OT.r 00 Eo ~ So �90 o8i c5 E F Q� p Z .O .Vvt N f9 V W N O }3 p p g dC9 70 s 30�= 3 �d�'�� mod O L U d U CN d C p yry p j pL�^.� YC a' p o �pLyU CC ZCU CN(n �i d a TS m m E '; Lopc m m $' 2 B d.Q a m t O E :g L daa o Z na m Ip !G m d f0p�!E 15 N N [p ry a� 'c a 3.2 D v a c L c a F a d� o m 1- .� K WW a OO � O m a o a .Q � o �_ C p G O 's C L 22 L L Z a V O¢ a d 2 = L a m ' n E __ m y m x m 2 m ry E N rn v ` d o+ o Q a E a a.8 ma. a a2'daa2dn.2¢U ¢ ¢ o ,E,pp E cTv ax�p¢ ¢ a2¢ a¢ �o C7 A O 12 ! § ; , ! 7 � � } § 7!!� § ® {! !! §!!§ »$& { f \ !\f! ) ) {r{\ i\ § !$ kk®k f§ \\ \k\}k i/ f i/ ! : 2|± ) k + )® ). . ) ■! )) \ I§ƒ & wA ? s J!. - /k\i /k\i / . � © \ \ } I § 2 F : / {) ( \ f( !` ! � \«§7 �! |§ 2.2go \�k7a%§i$ 6 it �)�i 2�k a ! 7cq Lri a & - - - - 2 . k ) k - ; \ - - $i/� . �2 _ - ; » ® ° `k^! r % \ / / { { ! ! ! ! ! ! ! ! In In In In �} )v ) e } } 77§§ k � { k ® E k n IM \ - ` It Lei ) $ if ; . ) Z_ ! ! {) tf CL( § °§ ! /\_ )) ( 21 ■) � )§ .�{ £� 0kk k k � ! OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY OVERSIGHT BOARD MEETING DATE: May 2, 2012 AGENDA CATEGORY: B2 ITEM TITLE: Consideration of Revised Successor Agency BUSINESS SESSION: Administrative Budgets for the periods of January 2012 through June 2012 and July 2012 through December CONSENT CALENDAR: 2012 to Comply with Directions from Department of STUDY SESSION: Finance PUBLIC HEARING - RECOMMENDATION: Approve the Successor Agency Administrative Budgets for the periods of January through June 2012 and July through December 2012 as revised in accordance with the direction from the Department of Finance. FISCAL IMPLICATIONS: Per ABx1 26, the Successor Agency will be reimbursed for administrative costs related to Successor Agency ("SA") and Oversight Board administration. The administrative allowance is calculated as a percentage of the total amount listed on the Recognized Obligation Payment Schedules ("ROPS"). For the period of January 2012 through June 2012, ABx1 26 provides for an administrative allowance of 5% of the total BOPS. The Department of Finance ("DOF"), upon review of the BOPS, has determined that certain line items must be reclassified from enforceable obligations to administrative expenses. The DOF also has recalculated the 5% administrative allowance and concluded that it is $835,495 for this time period. For the period of July 2012 through December 2012, ABx1 26 provides for an administrative allowance of 3% of the total listed on the BOPS. The DOF, upon review of the BOPS, has determined that certain line items must be reclassified from enforceable obligations to administrative expenses. The DOF has recalculated the 3% administrative allowance and concluded that it is $384,357 for this time period. In both cases, the DOF's figures are different from staff's calculation. Staff is working with DOF to ascertain why there is a difference. In the meantime, it is prudent to amend the budgets based on DOF's numbers. Amending the BOPS pursuant to DOF's conclusions changes the SA administrative budgets and therefore, the amended budgets must be reviewed and approved by the OB. BACKGROUND AND OVERVIEW: On April 3, 2012, the SA reviewed and approved administrative budgets for the time periods listed above. The following day, the Oversight Board approved the administrative budgets as well. It should be noted the DOF is not required to review administrative budgets, but it does review the BOPS. Staff submitted the BOPS to the DOF on April 6, 2012. The DOF requested additional information regarding several contracts listed on the BOPS, which staff provided. On April 17, 2012, the DOF contacted staff via letter, which is included as Attachment 1 . The DOF did not address the contracts it had identified for review, but instead required the reclassification of several items from enforceable obligations (which are paid from tax increment) to administrative expenses (which are paid from the administrative cost allowance). These items include legal and consulting costs related to ABx1 26 implementation; agreements between the former Redevelopment Agency and City for staff, overhead, and rent expenses; records storage costs for SA documents; and costs for on-line municipal code related to the SA. (Please see SA Department Report regarding ROPS for specifics.) Reclassifying these items to administrative expenses, and incorporating the DOF's administrative allowance calculations changed the SA administrative budgets. For the January 2012 through June 2012 SA administrative budget (Attachment 2), the higher administrative allowance provides for more staff and overhead costs to be covered. Conversely, the lower administrative allowance for the July 2012 through December 2012 SA budget (Attachment 3) translates into less money to cover staff and overhead costs, no coverage for rent, and less for other miscellaneous items. However, staff has added a footnote to this budget, that, at the end of December 2012, unused balances in other line items will be applied to rent. The SA budgets are not required to be submitted to the DOF. The budgets are forwarded to the County Auditor/Controller's office, so they can calculate the total property tax to be distributed to the Successor Agency in June 2012. FINDINGS AND ALTERNATIVES: The alternatives available to the Oversight Board include: 1. Approve the Successor Agency Administrative Budgets for the periods of 2 January through June 2012, and July through December 2012 as revised in accordance with the direction from the Department of Finance; or 2. Do not approve the Successor Agency Administrative Budgets for the periods of January through June 2012, and July through December 2012; or 3. Provide staff with alternative direction. Respectfully submitted, Debbie Powell Economic Development/Housing Manager Approved for submission by: � -L' �'� Mark Weiss, Interim Executive Director Successor Agency to La Quinta Redevelopment Agency Attachments: 1. Letter from DO dated April 17, 2012 2. Administrative Budget for January through June 2012 3. Administrative Budget for July through December 2012 3 ATTACHMENT 1 LL u�ii� Z w 1111 0 o e DEPARTMENT OF Eomumo G. BROWN JR. - GOVERNOR FINANCE91 s L BTNCCT ■ 9ACRAMENTO OA ■ 9651 4-9'/O6 NY .COF.CA.OGV April 17, 2012 Debbie Powell, Economic Development/Housing Manager City Manager's Office City of La Quinta PO Box 1504 La Quinta, CA 92247-1504 Dear Ms. Powell: Pursuant to Health and Safety Code (HSC) section 34177 (1) (2) (C), the City of La Quinta (City) Successor Agency submitted a Recognized Obligation Payment Schedule (ROPS) to the California Department of Finance (Finance) on April 6, 2012, for the periods of January through June 2012 and July through December 2012. Finance staff contacted you for clarification of items listed in the ROPS. HSC section 34171 (d) lists enforceable obligation (EO) characteristics. Based on a sample of line items reviewed and application of the law, the following do not qualify as EOs: • Administrative expenses totaling $1,870,639 for the January through June 2012 period. HSC section 34171 (b) limits administrative expenses for fiscal year 2011-12 to five percent of property tax allocated to the successor agency or $250,000, whichever is greater. Five percent of the property tax allocated is $835,495. Therefore, $1,870,639 of the claimed $2,706,134 in administrative expenses is not an EO. The following were considered administrative expenses: o Proj Area 1 — Items 1, 2, 3, 8, and 9 o Proj Area 2 — Items 1, 2, 9, and 10 o Proj Areas 1 and 2 — Items 11 and 12 Administrative expenses totaling $209,623 for the July through December 2012 period. HSC section 34171 (b) limits administrative expenses in fiscal years after 2011-12 to three percent of property tax allocated to the successor agency or $250,000, whichever is greater. Three percent of the property tax allocated is $384,357. Therefore, $209,623 of the claimed $593,980 in administrative expenses is not an EO. The following were considered administrative expenses: o Proj Area 1— Items 1, 2, and 3 o Proj Area 2 — Items 1 and 2 o Proj Areas 1 and 2 — Items 11, 12, and 13 As authorized by HSC section 34179 (h), Finance is returning your ROPS for your reconsideration. This action will cause the specific ROPS items noted above to be Ineffective until Finance approval. Furthermore, items listed on future ROPS will be subject to review and may be denied as EOs. If you believe we have reached this conclusion in error, please provide further evidence that the items questioned above meet the definition of an EO. Please direct inquiries to Evelyn Suess, Supervisor or Mindy Patterson, Lead Analyst at (916) 322-2985. Sincerely, / MARK HILL Program Budget Manager cc: Ms. Pam Elias, Chief Accountant Property Tax Division, Riverside County Auditor -Controller Ms. Jennifer Baechel, Business Process Analyst II, Riverside County Auditor -Controller Ms. April Nash, Supervising Accountant, Riverside County Auditor -Controller ATTACHMENT 2 SUCCESSOR AGENCY/OVERSIGHT BOARD JANJUNE 2012 ADMINISTRATIVE BUDGET $483,441 Includes base salary plus benefits. Successor Agency Administration $345,580 Oversight Board Administration $137,861 SUPPLIES SERVICES CONTRACT SERVICES $1991000 This account provides for legal, consulting, and audit services plus a portion of League of California Cities and California Redevelopment Agency dues related to technical assistance and tranining for implementation of ABx1 26 Audits as required by ABx1 26 $8,000 League of California Cities Dues & Seminars/Webinam relat ad to ABxl 26 $1,500 2011-2012 CRA Dues & Seminars/Webinars related to ABxt 26 $4,500 Legal Services for Successor Agency $120,000 Consulting Services for Successor Agency $65,000 SUPPLIES AND PUBLICATIONS $2,100 This account provides for various once supplies and publicstions to be used by SA and OB staff and board members Successor Agency Supplies & Publications $1,350 Oversight Board Supplies & Publications $750 PRINTINGIMAILING/ADVERTISING $5,000 $5000 This account provides for required mailings, agenda printing, and legal advertising INFORMATION TECHNOLOGY $11,260 - This account provides for annual replacement charges for information technology items such as computers, printers, and computer related items attributable to SA/013; and support/hosting for SA/OB web pages, which are required by ABx1 26 $10,000 Computer Document Slora a related to Successor Agency $1,165 OnLine Muni Code related to Successor Agency $85 RENTAL OF SPACE IN CITY HALL (Per previous agreement between City of La Quinta and former RDA) $134,704 $134,704 TOTAL ADMINISTRATIVE BUDGET $836,495 FUNDING SOURCES: 5%ADMINISTRATIVE ALLOWANCE I 1 $835,495 as calculated by the Department of Finance in letter dated 4-17-12 ATTACHMENT 3 SUCCESSOR AGENCY/OVERSIGHT BOARD JULY-DEC 2012 ADMINISTRATIVE BUDGET PERSONNEL $212,507 Includes base salary plus benefits. Successor Agency Administration $139,158 Oversight Board Administration - $73,349 SUPPLIES & SERVICES CONTRACT SERVICES $163,000 This account provides for legal, consulting, and audit services plus a portion of League of California Cities and Calfomia Redevelopment Agency dues related to technical assistance and tranining for implementation of ABx1 26 Audits as required by ABx1 26 $6,000 League of California Cities Dues & Seminars/Webinars related to ABA 26 $500 Seminars/Webinars related to ABA 26 $500 Legal Services for Successor Agency $120,000 Consulting Services for Successor Agency $36,000 SUPPLIES AND PUBLICATIONS $2,100 This account provides for various office supplies and publimtions to be used by SA and OB staff and board members Successor Agency Supplies & Publications $1,350 Oversight Board Supplies & Publications $750 PRINTINGIMAILING/ADVERTISING $1.000 $1,000 This account provides for required mailings, agenda printing, and legal advertising INFORMATION TECHNOLOGY $6,250 - This account provides for annual replacement charges for information technology items such as computers, printers, and computer related items attributable to SA/OB; and supportthosting for SA/OB web pages, which are required by ABx1 26 $5,000 Computer Document Storage related to Successor Agency $1,165 OnLine Muni Code related to Successor Agency $85 RENTAL OF SPACE IN CITY HALL (Per previous agreement between City of La Quinta and former RDA)' $0 $0 TOTAL ADMINISTRATIVE BUDGET $384,857 FUNDING SOURCES: 3% ADMINISTRATIVE ALLOWANCE $384, 857 as calculated by the Department of Finance in letter dated 4-17-12 *Unused balances in other line items will be applied to Rent OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY OVERSIGHT BOARD MEETING DATE: Mav 2, 2012 AGENDA CATEGORY: B3 ITEM TITLE: Consideration of a Resolution Making BUSINESS SESSION: _ Certain Acknowledgments with Respect to Housing Assets of the Successor Agency to La Quinta CONSENT CALENDAR: Redevelopment Agency Specifically Related to Property STUDY SESSION: Located Within the Watercolors Development PUBLIC HEARING: RECOMMENDATION: Adopt a Resolution making certain acknowledgments with respect to Housing Assets of the Successor Agency to La Quinta Redevelopment Agency. FISCAL IMPLICATIONS: None for this action. Upon the closing of the transaction detailed below, the existing Housing Authority silent second trust deed will be transferred to the new owner of the property. BACKGROUND AND OVERVIEW: Due to redevelopment dissolution, the La Quinta Housing Authority now holds approximately 415 silent second trust deeds, which were previously held by the La Quinta Redevelopment Agency ("RDA"). The "Silent Second" program provides second trust deed mortgages to very -low, low-, and moderate -income households to allow for home ownership. (The program was active in the late 1990's /early 2000's. However, it was later scaled back and is now used only for the Cove foreclosed home sales.) The silent second trust deed funds the gap between an affordable home loan and the market price of the house. (For example, if the income -qualified buyer can afford a $75,000 loan and the market price of the house is $140,000, the silent second trust deed would be in the amount of $65,000.) The silent second places a 45-year affordability covenant on the home; therefore, the home must always be sold to an income -qualified buyer. The borrower does not make payments on this loan. If the home remains affordable for the entire 45 years, the second trust deed is forgiven. The Silent Second program is a key element of the Watercolors development, located on Avenue 48, east of Adams Street. The development, constructed under an Affordable Housing Agreement between the former La Quinta RDA and Santa Rosa Development, consists of 149 single-family homes, affordable to low- and moderate - income households, age 55 and over. Due to the current economy, homeowners have been refinancing and selling their homes. However, title companies are hesitant to issue title policies, and first mortgage lenders are concerned due to the uncertainty resulting from redevelopment dissolution. This item is before the Oversight Board today to address a particular Watercolors issue as detailed below: Resale of 78-289 Sign of Spring — Nancy Robbins to John Clifton Ms. Robbins received a silent second trust deed loan through the RDA for the home she purchased under the Watercolors Senior Housing Home Purchase Program in February 2007. Ms. Robbins has gone into default on her first trust deed loan and is scheduled to go to foreclosure sale on May 10, 2012. Ms. Robbins has been successful in securing a qualified buyer for her property, and on April 26, 2012 final loan approval was issued to Mr. Clifton and the necessary loan documents for both the new first trust deed mortgage and the assumption of the Housing Authority silent second trust deed have been drawn and executed by all parties. It is now necessary to receive the approval of the Oversight Board for the transfer of this property from Ms. Robbins to Mr. Clifton. It is important to move forward with this as quickly as possible in order to avoid the foreclosure sale. FINDINGS AND ALTERNATIVES: The alternatives available to the Oversight Board include: 1. Adopt a resolution making certain acknowledgments with respect to Housing Assets of the Successor Agency to La Quinta Redevelopment Agency; or 2. Do not adopt a resolution making certain acknowledgments with respect to Housing Assets of the Successor Agency to La Quinta Redevelopment Agency 3. Provide staff with alternative direction. Respectfully submitted, Debbie Powell \ Economic Development/Housing Manager 2 Approved for submission by: Mark Weiss, Interim Executive Director of the Successor Agency to La Quinta Redevelopment Agency 3 RESOLUTION NO. OB 2012- A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS WITH RESPECT TO HOUSING ASSETS OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY WHEREAS, the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency ("Oversight Board") has been established to direct the City of La Quinta, in its capacity as "successor agency," to take certain actions to wind down the affairs of the former La Quinta Redevelopment Agency ("Agency") in accordance with the requirements of Assembly Bill 26, also known as chapter 5, Statutes 2011, First Extraordinary Session, which added Part 1.8 and Part 1.85 of Division 24 of the California Health and Safety Code ("ABx1 26"); and WHEREAS, in fulfilling its purpose of expanding the supply of low- and moderate -income housing in the City of La Quinta, the former Agency, utilizing funds from its Low- and Moderate -Income Housing Fund, assisted the development of a senior affordable housing ownership project commonly known as "Watercolors"; and WHEREAS, to assist eligible seniors to purchase homes in the Watercolors development, the former Agency provided "silent second" loans to the buyers of the homes in the development; and WHEREAS, the former Agency provided a silent second loan to the owner of the home located at 78-289 Sign of Spring (the "Property"); and WHEREAS, the owner of the Property is in default on the primary mortgage for the Property, and has found an eligible senior buyer for the Property who wishes to assume the "silent second" loan provided by the former Agency, as well as all of the requirements, and obligations associated with said silent second loan (collectively, the Affordable Housing Documents and Obligations"); and WHEREAS, on January 2, 2012, the City Council of the City of La Quinta ("City Council" or "City," as applicable) adopted City Council Resolution No. 2012- 002, affirmatively electing to be the "successor agency" to the former Agency; and WHEREAS, on January 17, 2012, the La Quinta Housing Authority ("Authority") adopted Housing Authority Resolution No. 2012-02, electing to be the "housing successor" to the former Agency. NOW, THEREFORE, the Oversight Board of the Successor Agency to La Resolution No. OB 2012- Acknowledgement of Housing Assets Adopted: May 2, 2012 Page 2 Quinta Redevelopment Agency does hereby resolve as follows: SECTION 1. The above Recitals are true and correct. SECTION 2. The City of La Quinta is the "successor agency" to the former La Quinta Redevelopment Agency. SECTION 3. The La Quinta Housing Authority is the "housing successor" to the former La Quinta Redevelopment Agency. SECTION 4. The Affordable Housing Documents and Obligations are "housing assets" of the former La Quinta Redevelopment Agency, as that term is used in Health and Safety Code Sections 34176(a) and 34177(g). SECTION 5. The Oversight Board of the Successor Agency to La Quinta Redevelopment Agency approves the transfer and assumption of the Affordable Housing Documents and Obligations related to the home located at 78-289 Sign of Spring, La Quinta, California. PASSED, APPROVED and ADOPTED at a regular meeting of the Oversight Board of the Successor Agency to the La Quinta Redevelopment Agency held this 2Id day of May, 2012 by the following vote, to wit: AYES: NOES: ABSENT: ABSTAIN: JOHN PENA, Chairperson Oversight Board of the Successor Agency to La Quinta Redevelopment Agency ATTEST: LORI LAFOND Oversight Board Secretary R E-P O°R-T S& +N F-O / T E M-S NO R 1 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MEMORANDUM TO: Honorable Chairperson and Members of the Oversight Board FROM: Mark Weiss, Interim Executive Director of Successor Agency I�t� DATE: May 2, 2012 SUBJECT: List of Successor Agency Assets At the Oversight Board meeting of April 18, 2012, the Board requested a list of former La Quinta Redevelopment Agency ("RDA") assets currently being held by the Successor Agency. Staff is providing the list in narrative format to provide details about the assets. • Property Assets: Three Landscape Lots at Centre Pointe, SEC Washington/Miles, APNs 604-630-018, 023, 024; value at 2/1/12 - $4,668 In 2003, the RDA entered into a Disposition and Development Agreement with CP Development (Richard Oliphant, Principal) to sell 55+/- acres of RDA -owned property at the southeast corner of Washington Street and Miles Avenue. The property is now known as Centre Pointe, and includes the Homewood Suites Hotel, casitas units, Applebee's Restaurant, and the Eisenhower/Argyros Medical Center. When the property was sold to CP Development, the RDA retained ownership of several landscape parcels to complete grant -funded landscape improvements; once the improvements were complete, the RDA was to deed the lots to the Centre Pointe Property Owners Association. Staff had begun this process when redevelopment was. abolished; therefore, the lots were not transferred to Centre Pointe and became the property of the Successor Agency. • RDA Loan to the Transportation Development Fund, Balance of $502,775 In June 2011, an advance of $1,276,516 was made from the RDA Project Area No. 2 Capital Projects Fund ("PA 2") to the Transportation Development Fund to provide funding for the Highway 111 median public improvements. The advance accrues interest at 7%. As of March 31, 2012, the remaining balance of the advance is $502,775. This loan was eventually to be repaid from fees paid into the Transportation Development Fund. There is no set schedule for the repayment. • RDA Loan to the Park Development Fund, Balance of $1,195,016 In July 2002, an advance of $4,167,912 was made from the RDA Project Area No. 1 Capital Projects Fund ("PA 1") to provide funding for the development of the publicly owned improvements to the La Quinta Community Park. The advance accrues interest at the earnings rate of the City's investment pool fund. As of March 31, 2012, the remaining balance of the advance for the La Quinta Community Park is $1,195,016 This loan was eventually to be repaid from fees paid into the Park Development Fund. There is no set schedule for the repayment. • RDA Loan to the Library Development Fund, Balance of $1,863,293 In April 2005, another advance of $2,490,273 was made from the RDA PA1 Capital Projects Fund to provide funding for the construction of the public library. The advance accrues interest at the earnings rate of the City's investment pool fund. The remaining balance of this advance at March 31, 2012, is $1,863,293. This loan was eventually to be repaid from fees paid into the Library Development Fund. There is no set schedule for the repayment. • Loan relating to Disposition and Development Agreement with Coral Mountain Partners, L.P. In January 2011, the La Quinta Redevelopment Agency entered into Disposition and Development Agreement with Coral Mountain Partners L.P. ("Coral Mountain") to fund up to $29,000,000 for the construction of a low - and moderate -income apartment complex with an estimated completion date of the apartment complex of March 2015. The Agency's $29,000,000 loan is evidenced by a Promissory Note executed by Coral Mountain ("Note"). Interest on the outstanding note amount will bear simple interest of 1 %. 'r] Principal and interest will be repaid on or before May 1st of each year from annual residual receipts as defined in the Note once the project is completed and may be repaid early if the property is refinanced, or if the property is transferred to another entity. As of March 31, 2012, the outstanding principal portion on the Note is $3,068,760 and the outstanding interest portion is $14,325. Pursuant to the terms of the DDA, we do not anticipate any payments being made under this Note until approximately 2018. Because this loan relates to a housing asset, it is unclear whether the proceeds would go to the Successor Agency and then be distributed to other taxing agencies, or whether the proceeds would stay with the Housing Authority and be used for affordable housing. There is much debate at the moment in Sacramento regarding the disposition of such proceeds. The DOF has taken the position that such proceeds are to be redistributed to taxing agencies. There is substantial objection to that interpretation of ABx1 26. For example, the LA Housing Authority just submitted a detailed analysis to the DOF that suggests the DOF interpretation is incorrect. We will continue to monitor the debate and report back when there is a definitive determination. • Loan relating to Owner Participation Agreement with Torre Nissan In June 2011, the La Quinta Redevelopment Agency entered into an Owner Participation Agreement (OPA) with an auto dealer, Mega Dealer, LLC ("Torre Nissan") that provides for the Agency to provide a rehabilitation loan to Torre Nissan of up to $1,500,000 for the remodeling of the existing dealership and an expansion of the dealership facility to accommodate a new line of electric and commercial vehicles. The new expansion will also include service and parts sales facilitates. In connection with the OPA, Torre Nissan has executed a promissory note, which is secured by a subordinated deed of trust and an operating covenant. Interest on the note shall accrue on the outstanding principal balance at the 1-year LIBOR Rate, adjusted annually on each June 30". The loan principal gets reduced over time by crediting future sales and property tax increment taxes generated on the site above certain benchmarks until the cumulative taxes collected equals the outstanding loan amount. At that time, the note will be cancelled and the operating covenant will terminate. If at any time during the term of the note Nissan Motor Company ceases to exist, the note will be cancelled and the operating covenant will terminate. At the end of the ten-year operating covenant, the 3 operating covenant will terminate and the note will be cancelled, and any outstanding loan balance will be forgiven. As of March 31, 2012, $159,579 in payments has been made under this agreement. • Loan relating to Owner Participation Agreement with Garff Properties -La Quinta, LLC In July 2010, the La Quinta Redevelopment Agency entered into an Owner Participation Agreement (OPA) with an auto dealer, Garff Properties -La Quinta, LLC ("Garff") that provides for the Agency to provide a rehabilitation loan to Garff of up to $2,300,000 for the construction of a new dealership facility and rehabilitation of an existing dealership facility. In connection with the OPA, Garff has executed a promissory note which is secured by a deed of trust, and an operating covenant. The principal of the loan will be reduced over time by crediting future sales and property tax increment taxes generated on the site above certain bench marks until the cumulative taxes collected equals the loan amount. At that time, the note will be cancelled and the operating covenant will terminate. If, after ten years of operation, a shortfall exists between the revenues collected and the outstanding loan amount, the note will be cancelled and the operating covenant will terminate. Further, if at any time through no fault of the dealership, certain future events outside of the dealership control occur the note will be cancelled and the operating covenant will terminate. As of March 31, 2012, no further amounts are due. • The La Quinta Redevelopment Agency has three (3) outstanding home rehabilitation loans totaling $32,171 as of March 31, 2012. • As of March 31, 2012, the La Quinta Redevelopment Agency has outstanding loans totaling $21,000 made to residents in the Westward Ho area for sewer improvements. The loans will be repaid when the residents, who are currently on a septic system, hook up to the sewer. • Cash and Bond Proceeds — Staff will present this information at the next Oversight Board meeting, as we are awaiting the Department of Finance's final approval of the BOPS, which will affect the cash balances. M 7-R-E-P-O`R-T-e—&=f-NzFzoQ i,-T E A4=S=M O R 2 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MEMORANDUM TO: Honorable Chairperson and Members of the Oversight Board FROM: Debbie Powell, Economic Development/Housing Manager-3)�asz_f DATE: May 2, 2012 SUBJECT: Update on Department of Finance Review of Oversight Board Actions Per the Oversight Board's request, staff will provide regular updates on the Department of Finance ("DOF") review of Oversight Board actions. The Oversight Board held its first meeting on March 7, 2012. The action items included: Election of Chair and Vice -Chair; Designation of Contact Person for Department of Finance Inquiries; Adoption of a Resolution Establishing the Date, Time and Location for Meetings of the Oversight Board of Successor Agency to La Quinta Redevelopment Agency; and Adoption of a Resolution Adopting Bylaws and a Resolution Adopting Rules of Procedure of the Oversight Board of Successor Agency to La Quinta Redevelopment Agency. Staff submitted these action items to the Department of Finance on March 8, 2012. The DOF's three-day review period, passed; no inquiries or notice of review were received. On April.4, 2012, the Oversight Board took action on the following items: Adoption of a Conflict of Interest Code for the Oversight Board of the Successor Agency to La Quinta Redevelopment Agency; Adoption of a Resolution Approving Recognized Obligation Payment Schedules of the Former La Quinta Redevelopment Agency for the periods of January 2012 through June 2012 and July 2012 through December 2012; Approval of Successor Agency Administrative Budgets for the periods of February 2012 through June 2012 and. July 2012 through December 2012; Adoption of a Resolution Approving a Cha'I ge to the Schedule of Performance to an Owner Participation Agreement between, the Former La Quinta Redevelopment Agency, Mega Dealer, LLC, and Robert N. La Torre, Inc., and authorizing the continued administration and implementation of the same; and Adoption of a Resolution Making Certain Acknowledgments and Approvals with Respect to the Coral Mountain Property and Disposition and Development Agreement and authorizing the continued administration and implementation of the same. The DOF was notified of the Oversight Board's actions on April 4, 2012, immediately after the Oversight Board meeting. The DOF's three-day review period passed; no inquiries or notice of review were received. At the April 18, 2012 Oversight Board meeting, the Oversight Board took action on the following items: Adoption of a Resolution Authorizing the Transfer of Housing Properties from the Former La Quinta Redevelopment Agency to the La Quinta Housing Authority; and Adoption of a Resolution Approving the Sale of Homes to Income -Qualified Buyers That Were Purchased Under the Home Foreclosure Purchase Program. The DOF was notified of the Oversight Board's actions on April 18, 2012, immediately following the Oversight Board meeting. The DOF's three-day review period passed; no inquiries or notice of review were received. On a related note, ABx1 26 requires the Recognized Obligation Payment Schedules ("ROPS") be submitted separately to the DOF once they have been approved by the Oversight Board. The BOPS were submitted to the DOF on April 6, 2012, and the DOF, within its three-day window, requested additional documentation for several items listed on the BOPS, including: the Habitat for Humanity agreement for construction of future affordable houses; the RBF agreement (related to canal relocation at SilverRock); the Coral Mountain Disposition and Development Agreement for 176 affordable apartments; the Washington Street Apartment rehabilitation project management agreement with RSG, Inc.; and the USDA and Provident Bank loan agreements for Washington Street Apartments. (See Attachment 2 to Business Item B1.) Staff provided the agreement and loan documents, along with a letter of explanation (see Attachment 3 to Business Item B1). On April 18, 2012 (after the Oversight Board meeting), staff received a letter attached to an email from the DOF (see Attachment 4 to Business Item 61), which did not directly address the above -listed items, but did redesignate certain ROPS items as administrative expenses. (Further detail is contained within the ROPS staff report in this agenda packet.) Staff contacted the DOF for clarification, and the DOF responded via email (see Attachment 5 to Business Item 61) that the above -listed agreements and loans were reviewed and the DOF agreed that these are enforceable obligations. Attachments: See Attachments to Oversight Board Business Item 61 2