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HomeMy WebLinkAboutRDA AG PKT 2011-06-27 #5REDEVELOPMENT AGENCY AGENDA STAFF REPORT DATE: June 27, 2011 TO: Honorable Chair and Board Members THRU: Jill Ingram, Executive Director FROM: Mark Persico, AICP, Director of Development Services SUBJECT: ADVANCE OF CITY FUNDS FOR REDEVELOPMENT AGENCY PROJECT SUMMARY OF REQUEST: That the Agency adopt Resolution No. 11 -10 authorizing payments by the Agency in connection with the acquisition of property. BACKGROUND AND ANALYSIS: In connection with the acquisition of a sewer easement from Bay City Partners ( "BCP ") pursuant to a settlement agreement, the City of Seal Beach incurred costs of $1,200,000. The total includes $900,000 to acquire the sewer easement and $300,000 for expenses related to acquisition. Such amount includes the value of the easement, attorneys' fees, expert witness and consultant fees and court and mediation costs. The City acquired the easement through a short-term borrowing from the City's sewer enterprise fund; however, pursuant to prior understandings of the Redevelopment Agency and City, the cost of acquiring the easement has been allocated to the Agency. Except for the funds advanced by the City from the sewer enterprise fund which must be repaid to the fund and used for the installation of capital improvements to the sewer system, no funds of the City were, are, or are reasonably expected to be, available on a long -term basis under the budget of the City to pay for the cost of acquiring the Easement. Traditional methods of financing such as the issuance of general obligation bonds by the City are unavailable as a practical matter because of the extraordinary majority voter approval requirements of two - thirds of the electorate. Assessment financing or special tax financing could overburden benefitting properties with assessments or special taxes which would be added to existing taxes and assessments, and, in addition, special taxes and assessments require voter or property owner approval. Agenda Item 5 Page 2 ' Another feature of the settlement agreement is that, in the event the City approves BCP's proposed project and the Coastal Commission issues a CDP to Bay City for the project, the City will pay Bay City $1,100,000 for fee title to (1) 6.412 acres of open space for future open space and park uses, (2) the access road to the 1 St Street parking lot, (3) the sewer parcel; and (4) the portions of the San Gabriel bike trail that cross BCP's property. The City is currently processing the application for BCP's project, and has undertaken a comprehensive analysis of the potential environmental impacts arising from the project. Pursuant to its city charter, municipal code and applicable state law, the City will conduct numerous public hearings to analyze the merits of the project and to provide the public with ample opportunity to provide input. If the Agency adopts the proposed resolution, the Agency will reimburse the City for this additional amount of $1,100,000, in the event the City becomes obligated to purchase the land. The resolution contains the following key features: 1. The Agency determines it will pay City the amount of $1,200,000, plus accrued interest, in three equal installments, commencing July 10, 2012, in connection with the sewer easement. 2. In the event the City approves BCP's proposed project and the Coastal Commission issues a CDP to Bay City for the project, the Agency determines it will pay the amount of $1,100,000 to acquire the open space and driveway, sewer and bike trail parcels. As you are aware, the City has no obligation to approve BCP's proposed project. If the Coastal Commission does not issue a CDP for BCP's project, or the City does not approve the project, the City has no obligation to purchase the property. Likewise, adoption of the proposed resolution does not impose any obligation on the Agency in such event. 3. The Agency makes certain findings required pursuant to provisions of the Community Redevelopment Law. The interest rate that can be charged for these types of loans is mostly a local decision. But under current Redevelopment law the maximum interest rate that can be charged to an Agency is 12 %. However, there is legislation pending that would lower the maximum interest rate an Agency can pay to the Treasury rate. For the week of July 15, 2011, a 10 year T -Bill rate is 3.0 %. Staff is suggesting a rate of 6 %, which is half the current maximum. The resolution is deemed to not be a project that is subject to the requirements of the California Environmental Quality Act (CEQA) under CEQA Guidelines Section 15378(b)(4) as a government funding mechanism which does not involve a commitment to any specific project. Further, on April 13, 2009, the City issued a categorical exemption in connection with the eminent domain action to acquire the sewer and road parcels. On February 15, 2011, the City issued a Mitigated Negative Declaration in connection with the River's End project. Page 3 FINANCIAL IMPACT: A separate budget amendment is forthcoming as Budget Amendment No. RDA 11- 12 -01. RECOMMENDATION: That the Agency adopt Resolution No. 11 -10 authorizing payments by the Agency in connection with the acquisition of property. SUBMITTED BY: Mark Persico, AI Director of Development Services NOTED AND APPROVED: J' R. Ingram, E ecu 've Director Attachments: A. Resolution No. 11 -10 RESOLUTION NUMBER 11 -10 A RESOLUTION OF THE SEAL BEACH REDEVELOPMENT AGENCY APPROVING PAYMENTS BY THE AGENCY FOR THE VALUE OF A SEWER EASEMENT AND FEE TITLE TO CERTAIN PROPERTY FOR OPEN SPACE AND IN CONNECTION WITH THE CITY'S REFURBISHMENT AND IMPROVEMENT OF ITS RIVER'S END STAGING AREA AND SAN GABRIEL RIVER BIKE TRAIL RECITALS: A. Bay City Partners LLC, ( "Bay City ") owns vacant land (the "Property ") located between 1 sc Street and the San Gabriel River, and between Marina Drive and the City beach in the City of Seal Beach. Previously, the Los Angeles Department of Water and Power owned the property and operated a power plant thereon. The Property is located within the Riverfront Redevelopment Project Area and the DWP Specific Plan area. Bay City proposes to develop the Property with single - family homes (the "Proposed Residential Project ") on the northerly portion of the Property. State law and the City's Charter and Municipal Code require Bay City to obtain land use and other entitlements and permits from the City and other agencies including a coastal development permit ( "CDP ") from the California Coastal Commission in connection with its Project. The remaining portion of the Property lies generally and largely south of the westerly prolongation of the southern right -of -way boundary of Central Way and is referred to herein as the "Open Space." The City's Specific Plan for the Property defines the open space uses as "Public parks, green belts, bike trails, nature trails, hiking trails, and any passive recreational uses normally located in parks or open spaces." The Redevelopment Plan for the Riverfront Redevelopment Project designates the open space area as parkland. The Redevelopment Agency's 5 year implementation plan contains, inter alia, the goals that the Agency will "assist in the redevelopment of the former Los Angeles Department of Water and Power (DWP) site" and "Increase parks and recreation opportunities that leads to increased economic activity." B. The City of Seal Beach (the "City") seeks to refurbish and improve its River's End Staging Area and San Gabriel River Bike Trail (the "River's End Project "). Much of the River's End Project is located on property adjacent to the southwesterly and southerly boundaries of the Property. A segment of the bike trail that is part of the River's End Project crosses onto the Property along the San Gabriel River at the Property's westerly property line (the "Bike Trail Parcel "). C. The City and Bay City engaged in litigation including a complaint in eminent domain filed by the City seeking to acquire two portions of the Property: (1) The "Driveway," a public access roadway from First Street and Ocean Avenue to the public parking lot that serves the River's End Project and maintains public access to the public beach, the Pacific Ocean, Windsurfer Park, the First Street beach parking lot, and the River's End Cafe; and (2) The "Sewer Parcel," a sewer maintenance area to maintain an existing City sewer line. Pursuant to the California Environmental Quality Act, Bay City filed a writ of mandate challenging the City's issuance of a mitigated negative declaration for the River's End Project. The City incurred substantial litigation costs, including attorneys' fees, consultant and expert witness costs, mediation costs and court costs, in connection with the litigation. For the fiscal year 2010 -11, those costs are not less than $300,000. Resolution Number 11 -10 D. To resolve all disputes and litigation between the parties, Bay City, the City and the Redevelopment Agency of the City of Seal Beach (the "Agency "), entered into a Settlement Agreement and Mutual Release (the "Agreement "). E. Pursuant to the Agreement, the City paid $900,000 to Bay City and, in exchange, Bay City conveyed to the City an irrevocable easement for the Sewer Parcel for sewer access, construction and maintenance purposes. In addition, Bay City leased to the City the Driveway and the Bike Trail Parcel, which enables the City to install its improvements to the Driveway and the Bike Trail. F. Pursuant to the Agreement, in the event the City approves the Proposed Residential Project and the Coastal Commission issues a CDP to Bay City for the Proposed Residential Project, the City will pay to Bay City the amount of $1,100,000 and Bay City, in exchange, will convey to the City fee title to (1) Open Space for future open space and park uses, which consists of all of the land south of the westerly prolongation of the southern right -of -way boundary of Central Way, except ±1,200 square feet of land within the Proposed Residential Project area south of the westerly prolongation of the southern right -of -way boundary of Central Way; (2) the Driveway; (3) the Sewer Parcel; and (4) the Bike Trail Parcel. G. If the Coastal Commission does not issue a CDP to Bay City for the Proposed Residential Project, or the City does not approve the Proposed Residential Project, the parties shall have no obligations as described in paragraph F, above. NOW, THEREFORE, THE SEAL BEACH REDEVELOPMENT AGENCY HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS: Section 1 . Pursuant to provisions of the Community Redevelopment Law (California Health and Safety Code Section 33000, et seq.) (the "Redevelopment Law "), and in particular Section 33445 thereof. A. The Agency shall reimburse the City $1,200,000 for the cost of acquiring the irrevocable easement for the Sewer Parcel as described in Recitals C -E, above (the "Easement "); and B. In the event the City becomes obligated under the Agreement to pay Bay City $1,100,000 for the cost of acquiring fee title to: the Open Space; the Driveway; the Sewer Parcel; and the Bike Trail Parcel, as described in Recital F above (collectively, the "Parcels "), the Agency shall reimburse the City for such payment, or make such payment on behalf of the City. Section 2 . The City acquired the Easement through a short -term borrowing from the City's sewer enterprise fund; however, pursuant to prior understandings of the Agency and City, the cost of acquiring the Easement has been allocated to the Agency. Except for the funds advanced by the City from the sewer enterprise fund (which must be repaid and used for the installation of capital improvements to the sewer system), no funds of the City were, are, or are reasonably expected to be, available on a long -term basis under the budget of the City to pay for the cost of acquiring the Easement or the Parcels. Traditional methods of financing such as the issuance of general obligation bonds by the City are unavailable as a practical matter because of the extraordinary majority voter approval requirements of two- thirds of the electorate. Assessment financing or special tax financing could overburden benefitting properties with assessments or special taxes which would be added to existing taxes and assessments, and, in addition, special taxes and assessments require voter or property owner approval. Resolution Number 11 -10 In April 2005, the City successfully applied to the Rivers and Mountain Conservancy for a grant to help fund the River's End Project. However, this grant will be used to finance the improvements to the River's End Project and is not available to fund any costs associated with the acquisition of the Easement or the Parcels. Section 3. The Property, including the Open Space, Driveway, the Sewer and Bike Trail Parcels, and portions of the River's End Project are located within the Riverfront Redevelopment Project Area (the "Project Area "). Acquisition of the Sewer Easement is necessary to provide service to property within the Project Area. The Bike Trail Parcel is required to complete the San Gabriel River bike trail. The Driveway is required to maintain public access to the public beach, the Pacific Ocean, Windsurfer Park, the First Street parking lot, and the River's End Cafe. The sewer within the Sewer Parcel provides service to the buildings within the River's End Project and will provide service to buildings and facilities within the Project Area. The Open Space is located within the Project Area and is designated as parkland in the applicable Specific Plan and the Redevelopment Plan. The River's End Project and the proposed park will serve the residents and taxpayers of the City, including the Project Area. The Project Area is an area in which the combination of conditions of blight is so prevalent and so substantial that it causes a reduction of, or lack of, proper utilization of the area to such an extent that it constitutes a serious physical and economic burden on the City which cannot reasonably be expected to be reversed or alleviated by private enterprise or governmental action, or both, without redevelopment. Among other things, the Project Area contains vacant and underutilized properties and properties which suffer from economic dislocation, deterioration or disuse, including depreciated or stagnant property values and impaired investments, and deteriorated, aged and obsolete buildings. In addition, the Project Area is characterized by the existence of inadequate open space and public improvements and public facilities, including recreational facilities, which cannot be remedied by private or governmental action, or both, without redevelopment. The lack of adequate open space and public improvements and facilities hinders economic development opportunities and contributes to the existence of depreciated and stagnant property values and impaired investments in the Project Area. The River's End Project and the proposed park will assist in remedying a lack of adequate open space and public improvements and facilities and will thereby encourage private sector investment in the Project Area, thereby facilitating and accelerating the redevelopment of the Project Area. The River's End Project will assist in eliminating factors which prevent or substantially hinder the economically viable use or capacity of buildings or lots, assist the revitalization of the Project Area, help to reverse depreciated or stagnant property values and impaired investments, encourage private sector investment, create job opportunities, promote the economic viability of businesses in the Project Area, attract new businesses, assist in retaining existing businesses, and encourage business expansion, thereby facilitating the redevelopment of the Project Area, all for the health, safety and welfare of the residents, businesses, and taxpayers of the Project Area. The River's End Project and proposed park will serve a basic purpose of redevelopment; which includes the provision of structures as may be appropriate or necessary in the interest of the general welfare, including recreational and other facilities. In addition, a fundamental purpose of redevelopment is to provide an environment for the social, economic and psychological growth and well -being of all citizens. The River's End Project and the proposed park will serve the human need for fresh air, sunlight, physical exercise, recreation and social interaction and psychological release, contributing to the well -being of the community. Resolution Number 11 -10 Section 4 . The Agency hereby finds and determines that based upon the foregoing and other information presented to the Agency (i) the acquisition of the Easement and the Parcels are of benefit to the Project Area by helping to eliminate blight within the Project Area; (ii) the payment of funds by the Agency for the acquisition of the Easement and the Parcels is consistent with the Agency's implementation plan adopted pursuant to Health and Safety Code Section 33490; and (iii) no other reasonable means of financing the acquisition of the Easement or the Parcels are available to the City. Section 5 . The Agency hereby agrees to be bound by the terms set forth in City Council Resolution No. 6151. Accordingly, pursuant to Section 1A, the Agency hereby determines and agrees that the Agency shall pay to the City the sum of $1,200,000 ( "City Advance ") together with interest accruing thereon at the compound annual rate of 6% from the date of adoption of this Resolution to the date of such payment from (i) tax increment generated in the Project Area and eligible to be allocated to the Agency pursuant to the Redevelopment Law, or to any successor agency or entity of the Agency and /or any entity established by law to carry out the redevelopment plan for the Project Area and /or expend tax increment or pay indebtedness of the Agency; (ii) available proceeds of tax allocation bonds or other obligations of the Agency; (iii) available proceeds from loans or other obligations which constitute indebtedness of the Agency repayable from tax increment (as described in the foregoing clause (i); or (iv) any other available funds of the Agency. The Agency shall make such payments, including compounded annual interest accrued on the City Advance from the date of adoption of this Resolution pursuant to the Loan Amortization Schedule attached hereto as Attachment A and incorporated by this reference. Payments shall be applied first to accrued interest and then to principal. In any event, the Agency hereby agrees that all amounts due hereunder, including all outstanding principal and accrued interest, shall be due and payable to the City by the date established in the redevelopment plan for the Project Area as the time limit for the repayment of indebtedness. Section 6 . The Agency hereby agrees to be bound by the terms set forth in City Council Resolution No. 6151. Accordingly, pursuant to Section 1B, in the event the City becomes obligated under the Agreement to pay Bay City $1,100,000 for the cost of acquiring fee title to the Parcels, the Agency hereby determines and agrees that within a reasonable time after receipt of an invoice by the City seeking reimbursement or payment by the Agency pursuant to this Resolution, the Agency shall pay to or on behalf of the City all amounts due thereunder from (i) tax increment generated in the Project Area and eligible to be allocated to the Agency pursuant to the Redevelopment Law, or to any successor agency or entity of the Agency and /or any entity established by law to carry out the redevelopment plan for the Project Area and /or expend tax increment or pay indebtedness of the Agency; (ii) available proceeds of tax allocation bonds or other obligations of the Agency; (iii) available proceeds from loans or other obligations which constitute indebtedness of the Agency repayable from tax increment (as described in the foregoing clause (i)); or (iv) any other available funds of the Agency. Amounts not paid by the Agency to the City within 30 days of receipt of an invoice therefor shall bear interest at the rate then paid to the City on its funds invested in the Local Agency Investment Fund ( "LAIF "), plus one and one -half percent per annum from the date of such invoice to the date of repayment. Payments shall be applied first to accrued interest and then to principal. In any event, the Agency hereby agrees that all amounts due hereunder, including all outstanding principal and accrued interest, shall be due and payable to the City by the date established in the redevelopment plan for the Project Area as the time limit for the repayment of indebtedness. Resolution Number 11 -10 Section 7 . The obligations of the Agency pursuant to this Resolution shall constitute an indebtedness of the Agency for the purpose of carrying out the redevelopment plan for the Project Area. The Agency hereby determines and declares that the Agency's obligation to pay to or for the benefit of the City all amounts due hereunder, shall, without the necessity of further action by the Agency or the City, be junior and subordinate to all other obligations or indebtedness heretofore or hereafter voluntarily incurred by the Agency, including bonds or loans secured by a pledge of tax increment revenues derived from the Project Area, and to all pre- existing statutory obligations of the Agency pursuant to Sections 33607.5, 33607.7 or 33676 of the Redevelopment Law. Section 8 . The Agency hereby directs its Executive Director and /or other authorized officers to take such actions, perform such deeds and execute, acknowledge and deliver such instruments and documents as such officer deems necessary in connection with the payments required pursuant to this Resolution. Any such previous payments, actions, deeds, execution, acknowledgment or delivery are hereby ratified. Any moneys paid or to be paid initially by the City for the costs described herein will constitute loans of such moneys by the City to the Agency. PASSED, APPROVED AND ADOPTED by the Redevelopment Agency of the City of Seal Beach this 27th day of June , 2011 by the following vote: AYES: Agency Members NOES: Agency Members ABSENT: Agency Members ABSTAIN: Agency Members Chair ATTEST: Secretary/City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Linda Devine, City Clerk of the City of Seal Beach, California, do hereby certify that the foregoing Resolution is the original copy of Resolution Number 11 -10 on file in the office of the City Clerk, passed, approved, and adopted by the Redevelopment Agency of the City of Seal Beach at a meeting held thereof on the 27th day of June -1 2011 Secretary/City Clerk Resolution Number 11 -10 Exhibit A Loan Amortization Schedule Loan Amortization Schedule Enter values Loan amount Annual interest rate Loan period in years Number of payments per year Start date of loan Optional extra payments $ 1,200,000.00 6.00 % 3 1 7/1/2011 $ - Lender name: Loan summary Scheduled payment Scheduled number of payments Actual number of payments Total early payments Total interest $ 448,931.78 3 3 $ - $ 146,795.33 Pmt Beginning Scheduled Extra Ending Cumulative No. Payment Date Balance Payment Payment Total Payment Principal Interest Balance Interest 1 7/1/2012 $ 1,200,000.00 $ 448,931.78 $ - $ 448,931.78 $ 376,931.78 $ 72,000.00 $ -823,068.22 $ 72,000.00 2 7/1/2013 823,068.22 448,931.78 - 448,931.78 399,547.68 49,384.09 423,520.54 121,384.09 3 7/1/2014 423,520.54 448,931.78 - 423,520.54 398,109.31 25,411.23 0.00 146,795.33