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2012 04 18 OB MinutesOVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MINUTES Regular Meeting WEDNESDAY, APRIL 18, 2012 at 2:00 p.m. ROLL CALL - Present: Board Members Ellis, Marshall, Maysels, Nelson, Osborne and Chairperson Pena Absent: Board Member McDaniel PUBLIC COMMENT - None CONFIRMATION OF AGENDA - Confirmed PRESENTATIONS - None APPROVAL OF MINUTES MOTION: A motion was made by Osborne / Maysels to approve the minutes from the April 4, 2012 Oversight Board meeting. Motion carried 5 ayes, 1 absent, 1 abstain (Board Member Nelson - due to absence at April 4, 2012 meeting). WRITTEN COMMUNICATION - None CONSENT ITEMS - None BUSINESS ITEMS 1. Consideration of Adoption of a Resolution Authorizing the Transfer of Housing Properties from the Former La Quinta Redevelopment Agency to the La Quinta Housing Authority. 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 Successor Agency can elect to have those properties go to their housing authority. Board Member Nelson asked what happens to the funds from the properties once the title is transferred to the Housing Authority. Staff indicated that the funds belong to the Housing Authority and any proceeds received from the sale of the homes were to fund the silent second trust deed for the next sale. Board Member Nelson asked if the Housing Authority has a positive cash balance. Staff indicated that they do. Board Member Nelson asked if the Successor Agency owns the property and the property is transferred to the Housing Authority, how are the other taxing entities losing out or gaining from the transactions. Frank Spevacek, RSG, Inc., explained that when ABx1 26 was put into place, it was assumed and the legislation calls for housing assets not to be shared with the taxing agencies but instead to be used for affordable housing. In this case, the taxing agencies would not get any income from the sale or disposal of those assets or from any rental income that those assets may accrue. Board Member Nelson was concerned about how the transfer of the properties would affect the other agencies. He understood, by the law, that all assets should be disposed of and had no clarification as to whether the assets should go to the Housing Authority. Board Member Marshall explained that there is a differentiation in the law with regard to the assets and the housing assets. There is a differentiation also as to the successor agency and what has come to be known as the housing successor 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 the housing assets (defined as all property purchased with affordable housing funds) or transfer the assets to the housing successor. Board Member Nelson asked why this matter would come before the Board if it is the City's choice as to where the funds go. Attorney Jenson indicated that there are families waiting to buy these homes and escrow cannot close until the transfers are approved by the oversight board and the Department of Finance ( "DOF "). Comment from public: Kay Wolff, 77227 Calle Ensenada: Ms. Wolff asked about vacant lots in either residential or commercial areas and wanted to know whether the RDA originally planned for affordable houses to be built on those lots in the future or to sell them off to generate money for the agency. She mentioned a particular interest in the large lot on the north of the community 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 Quints 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 out last year. Regarding the Washington Street Apartments ( "WSA ") property as well as 5.7 acres of vacant property next to it, the Agency was poised to start substantial rehabilitation on Washington Street Apartments and that project was put on hold because of the Governor's proposal. Also, the thought was to do additional senior and special needs housing on the vacant property behind WSA. Both of those properties were also purchased with Agency low- and moderate - income housing funds. Board Member Nelson asked how the Agency's low- and moderate - income funds were put into the redevelopment agency. Mr. Spevacek explained that after the redevelopment project area was established, the revenue that the RDA would receive would be the difference between the base year and the subsequent year's values. Under the law, the RDA was mandated to set aside 20% of that revenue to fund affordable housing development and substantial rehabilitation. Funds were put aside every year. In 2004 and 2011, the Agency elected to 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 DOF 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 Marshall /Osborne amended the motion to exclude APN 773 - 234 -015. RESOLUTION NO. OB 2012 -008 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO CERTAIN HOUSING PROPERTIES PREVIOUSLY OWNED BY THE LA QUINTA REDEVELOPMENT AGENCY MOTION: A motion was made by Marshall /Osborne to adopt Resolution No. OB 2012 -008 authorizing the transfer of housing properties from the Former La Quinta Redevelopment Agency to the La Quinta Housing Authority with the exclusion of APN 773 - 234 -015. Motion carried by a vote of 5 ayes, 1 nay (Board Member Nelson), 1 absent. RESOLUTION NO. OB 2012 -009 A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT AGENCY MAKING CERTAIN ACKNOWLEDGMENTS AND APPROVALS WITH RESPECT TO ASSESSOR'S PARCEL NUMBER 773 - 234 -015 PREVIOUSLY OWNED BY THE LA QUINTA REDEVELOPMENT AGENCY MOTION: A motion was made by Marshall /Maysels to adopt Resolution No. OB 2012 -009 authorizing the transfer of Assessor's Parcel Number 773 -234- 015 from the former 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 Peru). 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 HOUSING AUTHORITY MOTION: A motion was made by Nelson /Marshall 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 Purchase Program. Motion carried by a vote of 6 ayes, 0 nays, 1 absent. STUDY SESSION - None REPORTS AND INFORMATIONAL ITEMS - In response to the Board's question regarding Board alternates, Attorney Jenson gave an update to the Board as to the law and appointment of alternates. The law does not say anything about appointing alternates for the Oversight Board. Currently, County Counsel has indicated that the County of Riverside does not plan to include alternates but has no objection if any of the other agencies decide to appoint alternates. Attorney Jenson said she will distribute the League of California Cities "Q &A" as soon as it is available in order to assist the Board in deciding whether or not they would like to have alternates. She suggested to the Board Members to talk to their appointing agency to see if they felt it necessary to have an alternate. DEPARTMENT REPORTS - None CHAIR AND BOARD MEMBERS' ITEMS - 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 counsel 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 the City. Board Member Nelson questioned whether legal representation for the Board was listed in the budget. He stated that he feels it may be helpful if the Board had counsel of its own and that the majority of other Boards have legal counsel. Chairperson Pena asked Nelson if he knows whether legal counsel on these other boards has actually been retained. Nelson answered yes. Board Member Osborne asked what funds would be used to pay that position. Board Member Nelson indicated that it would be from the Oversight Board administrative budget. Osborne indicated that there are no funds in that budget for legal services and that would have been in the ROPS that has already been sent to Sacramento. Chairperson Pena asked staff if the BOPS can be amended. Staff indicated that it wouldn't be the ROPS but part of the administrative budget so the Board would have to amend the administrative budget, have the Successor Agency re- approve it, the Oversight Board would re- approve it then it would go back to the Auditor /Controller. Mark Weiss, Interim City Manager stated that the challenge is that the Board has to live within the confines of the 3% and 5% caps so the entire budget would have be revisited to reallocate the funds according to those cap restrictions. Board Member Marshall 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 costly. Chairperson Pena stated that the communication matter regarding the three /ten day notice will be added as an agenda item. Staff asked the Board if the next meeting, May 2, 2012, can be canceled. The Board agreed to cancel the May 2, 2012 meeting. Chairperson Pena indicated that the next Board meeting will be May 16, 2012. ADJOURNMENT — 2:45 p.m There be no further business, it was moved by Board Members Osborne /Ellis to adjourn the meeting. Respectfully submitted, Oversight Board OVERSIGHT BOARD MINUTES 8 APRIL 18, 2012