City Council and
Redevelopment Agency Report
City Council and Redevelopment Agency Meeting: August 10, 2010
Agenda Item: 8-E
To: Mayor and City Council
Chairperson and Redevelopment Agency
From: Andy Agle, Director of Housing and Economic Development
Carol Swindell, Director of Finance
Subject: Cooperation Agreement for the Agency’s Five-Year Implementation Plan Projects
Staff recommends that the City Council (Council):
1) Adopt a resolution (Attachment A) finding the use of funds from the Redevelopment Agency for the Projects to be of benefit to the Earthquake Recovery Redevelopment Project, Downtown Redevelopment Project, and Ocean Park 1A and 1B Redevelopment Projects (collectively, “the Project Areas”); and
2) Authorize the City Manager to execute a Cooperation Agreement between the City and the Redevelopment Agency for payment of the costs associated with the Projects.
Staff recommends that the Redevelopment Agency (Agency):
1) Adopt a Resolution (Attachment B) finding the use of funds from the Redevelopment Agency for the Projects to be of benefit to the Earthquake Recovery Redevelopment Project (ERRPA), Downtown Redevelopment Project, and Ocean Park 1A and 1B Redevelopment Projects; and,
2) Authorize the Executive Director to execute a Cooperation Agreement between the Redevelopment Agency and the City for payment of the costs associated with the Projects.
This staff report recommends the completion of certain actions by the Council and Agency, as required by California Redevelopment Law, in order to finance the Projects as described within this report with redevelopment funds. Specifically, the Council and Agency must execute a cooperation agreement and adopt resolutions making certain findings of benefit. The Cooperation Agreement will provide for the implementation of redevelopment activities associated with the Projects, and will allow the Agency to make payments to the City for certain costs related to undertaking the redevelopment activities on behalf of the Agency.
On November 17, 2009, the Agency adopted its Five-Year Implementation Plan (the “Plan”) for the period of FY 2009-10 through FY 2013-14, with established goals to support affordable housing, disaster prevention and mitigation, community revitalization, commercial revitalization, and institutional revitalization.. To implement the programs and activities (the “Projects”) associated with each goal, the Agency made redevelopment fund allocations totaling approximately $283 million, based on a variety of assumptions regarding growth in tax increment, borrowing costs, timing of borrowing, State grabs of local funds, leveraging opportunities and State law.
The capital improvements and affordable housing activities associated with the Projects are considerable undertakings. Specifically, the Projects are comprised, but not limited to, the following efforts:
· Affordable Housing: In addition to the Project Areas’ anticipated 20 percent housing set-aside increment revenues, invest non-housing funds toward the preservation and production of affordable housing.
· Disaster Prevention and Mitigation: To fund disaster prevention and mitigation programs to meet the City’s seismic retrofit needs and mitigate against effects of future disasters. Funds will be used for rehabilitation of the Santa Monica Civic Auditorium, implementation of the Traffic Signal Master Plan and property acquisition to support the reconstruction and expansion of parking resources called for in the Downtown Parking Strategic Plan.
· Community Revitalization: To improve, repair, rebuild and provide parks and community facilities including: the Palisades Garden Walk and Town Square parks, open space and facilities in the Civic Auditorium District, the Civic Center early childhood education center, the Pico Neighborhood Library, planning and design for the Civic Center parks and facilities, and the Memorial Park expansion.
· Commercial Revitalization: To revitalize and promote economic investment and business expansion in the Project Areas or of benefit to the Project Areas, and preserve the area’s existing employment base by supporting improved access to the Project Areas by employees and customers, primarily by supporting enhancements to the Exposition Light Rail Station Areas.
· Institutional Revitalization: To help achieve community goals associated with the Santa Monica-Malibu School District’s master plan for the Santa Monica High School campus, including designing and constructing facilities for joint-use between the school and the broader community.
In considering the Agency’s desire to ensure the timely implementation and completion of the Projects, the Agency wishes to enter into a cooperation agreement with the City for the pledge of net available tax increment to finance the public improvements and affordable housing programs outlined in the Agency’s current and prospective implementation plans. The Projects outlined above will constitute the first tier of improvements the Agency wishes the City to carry out. In the event there are sufficient net available tax increment funds to finance additional improvements, the Agency wishes the City to carry out the second tier of improvements listed in the attached resolutions.
Under California Redevelopment Law, section 33220(e), certain public bodies, including the City, may aid and cooperate in the planning, undertaking, construction, or operation of redevelopment projects. To carry out the Projects in accordance with the objectives and purposes of the Plan, the Agency desires assistance and cooperation in administering the development, construction, improvement, infrastructure, occupancy, and use requirements applicable to the Projects. The City agrees to aid the Agency and cooperate with the Agency to expeditiously implement the Projects in accordance with the Plan and undertake and complete all actions necessary or appropriate to ensure that the objectives of the Plan are fulfilled within the time effectiveness of the Project Areas.
Collectively, the purpose of the Agreement is to facilitate the implementation of the Projects and to provide funding necessary to effectuate the completion of the Projects with net available tax increment in this current fiscal year and forthcoming fiscal years, until the expiration of the Earthquake Recovery Redevelopment Project area in 2042, the Downtown Redevelopment Project area in 2029 and the Ocean Park 1A and 1B Redevelopment Project areas in 2022. Net available tax increment is defined as any available tax increment, net of statutory pass-through payments, set-asides for affordable housing, debt service payments, and existing contractual obligations. The pledge of net available tax increment will constitute obligations to make payments authorized and incurred pursuant to Section 33445. The obligations to be set forth in the Agreement, as recommended in this report, will be contractual obligations that, if breached, could subject the Agency to damages or other liabilities or remedies. In this regard, the Agreement will provide that actual payment for the Projects will be contingent upon their preparation in accordance with the applicable provisions of federal, state and local laws, including the obligation to comply with environmental laws such as CEQA.
The first component of the financing plan associated with the Agreement will come back to Council for consideration in the Fall. It is anticipated that among various options to finance the obligations of the Projects, the financing plan will include pledge of tax increment from the Earthquake Recovery Redevelopment Project Area to issue bonds. The proceeds of the bonds secured by a pledge of tax increment will be utilized to make payments on indebtedness of the Agency or to directly pay the costs of public infrastructure and other public improvements and activities associated with the Projects or to refinance the Agency’s contractual obligations in the Agreement.
The Agreement will allow the Agency to record the financial obligations as indebtedness. The resolutions must be adopted in order to make the appropriate findings as required by the Health and Safety Code Section 33445. The attached resolutions find that: 1) the use of these funds is a benefit to the Earthquake Recovery Redevelopment Project, Downtown Redevelopment Project, and Ocean Park 1A and 1B Redevelopment Project areas; 2) no other reasonable means of financing for the improvements is available; 3) the payment of funds for the Projects will assist in the elimination of one or more of the conditions resulting from the Earthquake Recovery Redevelopment Project, Downtown Redevelopment Project, and Ocean Park 1A and 1B Redevelopment Project Areas; and, 4) the Projects are consistent with the Redevelopment Agency’s Five-Year Implementation Plan.
In accordance with Health and Safety Code Section 33679, the Agency published two public hearing notices, on July 27 and August 3, 2010, in the Santa Monica Daily Press, informing the public about this meeting and the availability of a summary report for review and input. A copy of the summary report is provided in this report as Attachment C.
There are no immediate budgetary impacts associated with the actions recommended in this report. The Agreement is not intended to, and does not, create any commitment of the City’s General Fund in any manner that would violate the debt limitations under article XVI, section 18 of the State Constitution or the fiscal provisions of the City’s Charter.