OBRES 2014-001RESOLUTION NO. OB 2014 - 001
A RESOLUTION OF THE OVERSIGHT BOARD OF THE
SUCCESSOR AGENCY TO LA QUINTA REDEVELOPMENT
AGENCY FINDING THAT EACH LOAN ENTERED INTO
BETWEEN THE CITY OF LA QUINTA AND THE FORMER
LA QUINTA REDEVELOPMENT AGENCY WAS FOR A
LEGITIMATE REDEVELOPMENT PURPOSE AND THAT
SUCH LOANS ARE ENFORCEABLE OBLIGATIONS
WHEREAS, the former La Quinta Redevelopment Agency ("Agency") was
"activated" and enabled to exercise the powers afforded under the Community
Redevelopment Law (Health and Safety Code § 33000, at seq.) ("CRL") on July 5,
1983, by Ordinance No. 34 of the City Council of the City of La Quinta ("City
Council"), and the filing of the requisite paperwork with the California Secretary of
State; and
WHEREAS, Section 33220 of the CRL provides that certain public bodies
may aid and cooperate in the planning, undertaking, construction or operation of
redevelopment projects; and
WHEREAS, pursuant to such authority, the City and the Agency worked
cooperatively to implement redevelopment projects and to provide funding
necessary to effectuate the completion of redevelopment projects in the Agency's
project area no. 1 ("Project Area 19 and project area no. 2 ("Project Area 2"); and
WHEREAS, the Agency was engaged in activities to implement the
redevelopment plan for the Project Area 1 and the redevelopment plan for Project
Area 2 (collectively, the "Redevelopment Plans") pursuant to the provisions of the
CRL; and
WHEREAS, on August 16, 1983, the City Council approved and adopted
Resolution 83-48, and the Agency Board of Directors ("Agency Board") approved
and adopted Resolution RA-83-5, approving a Cooperation Agreement entered into
on that date ("1983 Loan/Cooperation Agreement") between the City and Agency;
and
WHEREAS, the Agency and the City implemented the 1983
Loan/Cooperation Agreement as a line of credit, whereby the Agency committed
tax increment funds to repay all future City advances to the Agency that the
Agency then used in furtherance of the redevelopment activities in Project Area 1
and Project Area 2 (collectively, the Project Areas"), pursuant to the CRL; and
Resolution No. OB 2014-001
Enforceable Obligations
Adopted January 22, 2014
Page 2 of 7
WHEREAS, pursuant to the line of credit based on the 1983
Loan/Cooperation Agreement, the City provided to the Agency a series of advances
dating through December 1, 2009 ("Loan Advances"). The Loan Advances were
documented by way of individual promissory notes, financing agreements, and
other supplemental documentation ("Loan Advance Documents"); and
WHEREAS, pursuant to the Loan Advance Documents and the
Loan/Cooperation Agreement (collectively, the "Loan Documentation"), the City
authorized and loaned moneys from the City's General Fund for capital
improvement projects, property acquisition, "seed money," the Agency's required
payment to the Supplemental Educational Revenue Augmentation Fund ("SERAF"),
and other purposes in conformity with the CRL, in implementing redevelopment
programs and projects, and as an investment in the Project Areas; and
WHEREAS, the Loan Documentation expressly provides that funds loaned
from the City to the Agency were to be repaid during the life of the Agency, and
could be repaid in advance without penalty at the Agency's option. The Loan
Advances were supported by adequate consideration, and the interest rates
charged were reasonable. None of the terms of the Loan Documentation were
unconscionable, and none of the Loan Advances exceeded the revenue reasonably
projected to be received by the Agency and available to make the repayment; and
WHEREAS, the Loan Advances and Loan Advance Documents were
maintained in the City's and Agency's records, and generally fall into three
categories: The "Pre-2006 Loan Advance Documents," the "2006 Loan
Restructuring," and the "Post-2006 Loan Advance Documents;" and
WHEREAS, on March 7, 2006, the City and Agency approved the 2006
Loan Restructuring; which consisted of a full restructuring of all amounts, principal,
and interest remaining to be paid under the pre-2006 Loan Advances; and
WHEREAS, after the 2006 Loan Restructuring, the City made two additional
Loan Advances. The purposes of those Loan Advances were as follows:
a. On December 4, 2007, the City and Agency approved a Loan
Advance to fund the acquisition of real property in Project Area 2 (the "Coral
Mountain Property").
b. On December 1, 2009, the City and Agency approved a Loan
Advance to fund the Agency's obligation to make the SERAF payment.
WHEREAS, the total amount of principal owed as of March 2011, when all
the Loan Advances from the City were repaid by the Agency, was $41,378,966,
Resolution No. OB 2014-001
Enforceable Obligations
Adopted January 22, 2014
Page 3 of 7
comprised of: (a) For Project Area 1, $6,000,000 resulting from the 2006 Loan
Restructuring with the Loan Advances repayable at 10% interest, $6,000,000
resulting from the 2006 Loan Restructuring with the Loan Advances repayable at
7% interest, and $10,000,000 for the SERAF Payment; and (b) For Project Area 2,
$10,000,000 resulting from the 2006 Loan Restructuring (all Loan Advances were
at 10% interest), and $9,378,966 for the December 4, 2007 Financing Agreement
for the purchase of the approximately 9-10 acres of the Coral Mountain Property;
and
WHEREAS, all Loan Advance proceeds received by the Agency from the
City's General Fund were used for valid redevelopment purposes. When the City
advanced General Fund revenues for publicly owned improvements, to be repaid by
the Agency with tax increment, the City Council and Agency Board complied with
all applicable requirements of the CRL, including Health and Safety Code section
33445; and
WHEREAS, from the 2006 Loan Restructuring to the date that all of the Loan
Advances were repaid in February/March of 2011, the Agency made all of the
scheduled loan repayments; and
WHEREAS, on February 2, 2011, the Agency Board adopted a minute action
authorizing its Executive Director, on behalf of the Agency, to repay in whole the
outstanding balances owed to the City under the Loan Documentation; and
WHEREAS, in late February 2011, the Agency's Executive Director ordered
full repayment to the City of the routstanding balance of the Loan Advances used in
Project Area 1, and in the late February and early March 2011, the Agency's
Executive Director ordered the full repayment to the City of the outstanding
balance of the Loan Advances used in Project Area 2; and
WHEREAS, in June 2011, Assembly Bill 26 from the 2011-2012 First
Extraordinary Session of the California Legislature ("ABxl 26") was enacted as a
bill related to the 2011 Budget Act. In June 2012, Assembly Bill 1484 from the
2011-2012 Regular Session of the California Legislature ("AB 1484") was enacted
as a bill related to the 2011 Budget Act. ABx1 26, as modified by the California
Supreme Court Decision in California Redevelopment Association v. Matosantos
(2011) 53 Cal.4`" 231, dissolved all redevelopment agencies in California on
February 1, 2012; and
WHEREAS, pursuant to Health and Safety Code 34171, added by ABx1 26
and amended by AB 1484, and Resolution No. 2012-002, adopted by the City
Council on January 3, 2012, the Successor Agency to La Quinta Redevelopment
Agency (the "Successor Agency") is the successor agency to the Agency; and
Resolution No. OB 2014-001
Enforceable Obligations
Adopted January 22, 2014
Page 4 of 7
WHEREAS, the Oversight Board of the Successor Agency to La Quinta
Redevelopment Agency ("Oversight Board") has been established to direct the
Successor Agency to take certain actions to wind down the affairs of the Agency
in accordance with ABx1 26; and
WHEREAS, On October 29, 2013, as a result of the due diligence review
conducted of the Agency's non -housing fund and account balances pursuant to
Health and Safety Code section 34179.5 (the "DDR"), the City transferred the full
repaid amount (e.g., $41,378,966) to the Successor Agency, which then paid the
funds to the County Auditor -Controller, for allocation to taxing entities within the
project areas; and
WHEREAS, in December, 2013, the State Controller's Office ("SCO")
provided its final Review Report of the La Quinta Redevelopment Agency, Asset
Transfer Review, addressing all asset transfers made by the Agency between
January 1, 2011 through January 31, 2012 (the "SCO Report"). The SCO Report
orders the City to transfer to the Successor Agency the amount of $41,431,179.
The difference between the amount repaid pursuant to the DDR and the amount
ordered to be transferred pursuant to the SCO Report, which is $52,213, accounts
for payments of interest disallowed by the SCO. That amount has been transferred
to the Successor Agency; and
WHEREAS, pursuant to Section 34191.4 of the California Health and Safety
Code, enacted as part of AB 1484, after issuance of a "Finding of Completion"
("FOC") from the Department of Finance ("DOF"), loan agreements between the
former redevelopment agency and the city which established the agency shall be
deemed to be an enforceable obligation when the oversight board makes a finding
that the loans were for legitimate redevelopment purposes; and
WHEREAS, pursuant to Health and Safety Code Section 34180(a), added by
ABx1 26 and amended by AB 1484, an oversight board is authorized to approve a
request by a successor agency to reestablish loan agreements between the
successor agency and the city, county, or city and county that formed the
redevelopment agency in accordance with the provisions of Health and Safety
Code Section 34191.4; and
WHEREAS, if an oversight board finds that the loan is an enforceable
obligation, pursuant to Health and Safety Code Section 34191.4(b)(2) the loan
must be repaid to the city, county, or city and county pursuant to a statutory
repayment formula set forth therein, at an interest rate not to exceed the interest
rate earned by funds deposited into the Local Agency Investment Fund. Twenty
percent (20%) of each repayment must be transferred to the Low and Moderate
Income Housing Asset Fund and used for purposes authorized for the use of those
Resolution No. OB 2014-001
Enforceable Obligations
Adopted January 22, 2014
Page 5 of 7
funds. Based upon estimates prepared by the Successor Agency Staff, which are
attached hereto as Exhibit "A", the loans (including the $52,213 in interest
disallowed by the SCO) should be fully repaid by approximately 2030. The interest
rate for the loans will be the rate established for the Local Agency Investment Fund
(LAIF) as of the date of this Resolution, which is 0.264%.
WHEREAS, the DOF issued a FOC to the Successor Agency on November 6,
2013, and now the Successor Agency desires that the Oversight Board make the
necessary finding concerning the City of La Quinta and the former La Quinta
Redevelopment Agency debt; and
WHEREAS, Health and Safety Code Section 33020 defines redevelopment as
the "planning, development, replanning, redesign, clearance, reconstruction, or
rehabilitation, or any combination of these, of all or part of a survey area, and the
provision of those residential, commercial, industrial, public, or other structures or
spaces as may be appropriate or necessary in the interest of the general welfare,
including recreational and other facilities incidental or appurtenant to them...".
WHEREAS, the Loan Advance Documents were proper and legally -authorized
loan agreements under the CRL made by the City to the Agency for legitimate
redevelopment purposes; and
WHEREAS, if the amounts due under the Loan Advances were not paid back
to the City, then other public services provided by the City, such as public safety,
fire protection, wet and dry utilities, and water and waste management, would be
impacted, thereby negatively impacting the other taxing entities and their provision
of services that use and benefit from these City services.
NOW THEREFORE, BE IT RESOLVED, by the Oversight Board, as follows:
SECTION 1. The foregoing recitals are true and correct and are a substantive part
of this Resolution.
SECTION 2. The Oversight Board hereby finds and declares as follows:
A. Each Loan Advance was for legitimate redevelopment purposes,
including the following:
(i) The Agency was implementing the redevelopment of the Project
Areas under the duly adopted Redevelopment Plans and the CRL as referenced and
indentified in the specific Loan Advance Document.
(ii) The Redevelopment Plans for the Project Areas specifically
authorized the City to assist the Agency, and for the Agency to accept funding
Resolution No. OB 2014-001
Enforceable Obligations
Adopted January 22, 2014
Page 6 of 7
from any public or private agency, including the City, in furtherance of
redevelopment activities authorized under the CRL.
(iii) The CRL (Health and Safety Code Sections 33132, 33133, and
33600) specifically authorized the Agency to accept financial assistance from
public sources, including the City, and to expend those moneys for any
redevelopment project within the Agency's area of operation or for the Agency's
activities, powers, and duties.
(iv) The CRL (Health and Safety Code Section 33220) specifically
authorized the Agency to enter into agreements with any other public body,
including the City, for the purpose of aiding and cooperating in the planning,
undertaking, construction, or operation of redevelopment projects upon the terms
and with or without consideration as determined necessary by the Agency.
(v) The CRL (Health and Safety Code Sections 33445 and
33445.1) specifically authorized the Agency, with the consent of the City, to pay
all or a part of the value of the land for and the cost of the installation and
construction of any publicly owned building, facility, structure, or other
improvement.
(vi) The CRL (Health and Safety Code Sections 33601) specifically
authorized the Agency to borrow money from any public agency, including the
City, for any redevelopment project within its area of operation, and comply with
any conditions of such loan or grant/
(vii) The CRL (Health and Safety Code Sections 33610) specifically
authorized the City to appropriate to the Agency such amounts as the City deemed
necessary for -the administrative expenses and overhead of the Agency, with such
moneys appropriated by the City to be repaid by the Agency as a loan on such
terms and conditions as the City may have provided.
(viii) California law (Government Code sections 53600 at seq. and
53601(e)) specifically authorized the City to invest moneys not required for the
immediate needs in bonds, notes, warrants, and other evidences of indebtedness of
any local agency, including the Agency, within the State of California.
B. The Loan Advances are "enforceable obligations."
SECTION 3. This Resolution shall take effect upon the date of its adoption.
SECTION 4. The Executive Director of the Successor Agency is hereby instructed
to reflect the Loan Advances, which have an outstanding principal balance of
Resolution No. OB 2014-001
Enforceable Obligations
Adopted January 22, 2014
Page 7 of 7
$41,431,179, comprised of (i) the previously repaid Loan Advances, in the amount
of $41,378,966, and (ii) the interest payment disallowed by the SCO, in the
amount of $52,213, as enforceable obligations on all BOPS, beginning with BOPS
14-15A, with repayment amounts in the maximum amounts permitted pursuant to
the statutory formula set forth in Health and Safety Code Section 34191.4, and
with interest calculated on the outstanding balance at .264%. The Executive
Director of the Successor Agency is further instructed to transfer twenty percent
(20%) of each repayment to the Low and Moderate Income Housing Asset Fund to
be used for purposes authorized for the use of those funds.
PASSED, APPROVED, AND ADOPTED at the meeting of the Oversight Board
of the Successor Agency to the La Quinta Redevelopment Agency held this 22ed
day of January, 2014, by the following vote:
AYES: Board Members Marshall, Maysels, McDaniel, Osborne, Chair Pena
NOES: None
ABSENT: Board Members Howell and Nelson
ABSTAIN: None
JOHN Ch irperson
Oversight Board of the Successor Agency
to the La Quinta Redevelopment Agency
ATTEST:
Pam Nieto
Oversight Board Secretary
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