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HomeMy WebLinkAboutCC AG PKT 2011-09-26 #Ery�F SEA( B'� AGENDA STAFF REPORT =, N. 4 /FORN\P: lr DATE: September 26, 2011 TO: Honorable Mayor and City Council THRU: Jill R. Ingram, City Manager FROM: Mark H. Persico, AICP, Director of Development Services SUBJECT: ADOPTION A RESOLUTION AUTHORIZING AND APPROVING EXECUTION OF A TRANSFER AGREEMENT PURSUANT TO HEALTH AND SAFETY CODE SECTION 34194.2 SUMMARY OF REQUEST: That the City Council adopt Resolution No. 6184 approving a transfer agreement between the City of Seal Beach and the Redevelopment Agency of the City of Seal Beach. BACKGROUND: AB X1 26, which was signed by the Governor of California on June, 29, 2011, added Parts 1.8 and 1.85 to the Community Redevelopment Law. Part 1.8 immediately suspends most redevelopment agency activities and, among other things, prohibits redevelopment agencies from incurring indebtedness or entering into or modifying contracts. Part 1.85 provides that on October 1, 2011, all existing redevelopment agencies and redevelopment agency components of community development agencies are dissolved, and successor agencies are designated as successor entities to the former redevelopment agencies. Part 1.85 imposes numerous requirements on the successor agencies and subjects successor agency actions to the review of oversight boards established under Part 1.85. AB X1 27 was signed by the Governor concurrently with AB X1 26 and added Part 1.9 to the Community Redevelopment Law. Part 1.9 establishes an Alternative Voluntary Redevelopment Program ( "AVRP ") whereby a redevelopment agency will, notwithstanding Parts 1.8 and 1.85, be authorized to continue to exist and carry out the provisions of the Community Redevelopment Law. On August 8, 2011, the City adopted Ordinance No. 1612 to participate in the AVRP, thereby agreeing to make specified annual payments to the County Agenda Item E Auditor - Controller for allocation to special districts and educational entities and authorizing the Agency to continue to exist pursuant to Part 1.9. ANALYSIS The remittance amount to be paid by the City in fiscal year 2011 -12 is the Agency's proportionate share of $1.7 billion, as determined by the State Department of Finance pursuant to a formula specified in AB X1 27. The Department of Finance has notified the City that its fiscal year 2011 -12 remittance amount is $937,868. Pursuant to City Council direct, an appeal was filed on August 15, 2011, contesting the payment of the fee to participate in the Alternative Voluntary Redevelopment Program. This payment obligation under AB X1 27 is an ongoing obligation of the City in subsequent years. Commencing in fiscal year 2012 -13, the City's remittance amounts will be based on the Agency's proportionate share of $400 million (with adjustments based on growth or decline in tax increment revenues. For fiscal year 2012 -13 and thereafter, the Agency estimates that the annual remittance amount will be $222,468. In addition, AB X1 27 provides that agencies will pay additional pass through payments to school entities ( "Additional Pass - Through ") on account of any "new debt." New debt is indebtedness that is displayed on a statement of indebtedness ( "SOI ") filed after the SOI that is required to be filed on October 1, 2011 and that was not displayed on that SOL Pursuant to AB X1 27(specifically, Health and Safety Code Section 34194.2) a city and agency can enter into a transfer agreement to provide for the agency to transfer to the city each year a portion of the agency's tax increment. The amount of the annual transfer under this Agreement cannot exceed the amounts of the City's annual remittances under the AVRP. Entering into a transfer agreement and including it on the SOI that must be filed by October 1, 2011 should mean that the agency's indebtedness pursuant to the transfer agreement would not be treated as new debt for purposes of triggering the Additional Pass Through under AB X1 27. As discussed below, however, the lawsuit filed by the California Redevelopment Association and League of California Cities in the Supreme Court of California alleging that AB X1 26 and 27 are unconstitutional have raised a number of issues. On August 11, 2011, the Supreme Court of California decided to hear the case and set a briefing schedule designed to allow the Court to decide the case before January 15, 2012. On August 11, 2011, the Court also issued a stay order, which was subsequently modified on August 17, 2011. Pursuant to the modified stay order, the Supreme Court granted a stay of all of AB X1 27 (i.e., Part 1.9), except for Health and Safety Code Section 34194(b) (2) (relating to the determination of cities' fiscal year 2011 -12 remittance amounts), and a partial stay of AB X1 26. With respect to AB X1 26, Part 1.85 was stayed in its entirety, but Part 1.8 was not stayed. Page 2 The granting of the stay means that all agencies are subject to the prohibitions in Part 1.8, including the prohibition against entering into new contracts, during the time the stay is in effect. The Supreme Court will consider adjusting the dates and deadlines in AB X1 26 and AB X1 27 if the Supreme Court ultimately upholds those statutes to take into account the period of time the stay was in effect, but the Supreme Court's decision is not likely to occur until January of 2012. In the meantime, the CRA has requested the Court to modify or lift the stay, but it is unlikely that the Court will do so at this time. Therefore, in the event the stay is lifted and the Supreme Court upholds AB X1 26 and AB X1 27, staff recommends that the City and the Agency enter into a transfer agreement to provide for the Agency to transfer to the City each year a portion of the Agency's tax increment pursuant to Health and Safety Code Section 34194.2 in the amounts of the City's annual remittances under the AVRP. The transfer agreement presented to the Agency and City Council provides that it will only become effective on the date that the Supreme Court lifts or modifies the stay in connection with AB X1 26 and AB X1 27 in a manner such that the prohibitions in Part 1.8 do not apply to the Agency. ENVIRONMENTAL IMPACT: This action is exempt from the California Environmental Quality Act, because it is not defined as a "project" under CEQA. LEGAL ANALYSIS: The City Attorney has reviewed and concurred with this report. FINANCIAL IMPACT: The City will be reimbursed for the annual payments pursuant to the Transfer Agreement. For fiscal year 2011 -12, the Transfer will be $937,868. RECOMMENDATION: Staff recommends that the City Council adopt Resolution No. 6184 authorizing the Agency and City, respectively, to execute and deliver the attached Transfer Agreement. SUB QED BY: NOTED AND APPROVED: Mark H. Persico, AICP *11 . Ingratmy Manager Director of Development Services Attachments: Resolution No. 6184 and Transfer Agreement Page 3 RESOLUTION NUMBER 6184 A RESOLUTION OF THE SEAL BEACH CITY COUNCIL AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY OF A TRANSFER AGREEMENT PURSUANT TO HEALTH AND SAFETY CODE SECTION 34194.2 AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION THEREWITH RECITALS A. The Redevelopment Agency of the City of Seal Beach (the "Agency ") is a redevelopment agency in the City, created pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the California Health and Safety Code) (the "Redevelopment Law "). B. The Seal Beach City Council (the "City Council ") adopted Ordinance No. 780, approving and adopting the redevelopment plan for the Riverfront Project Area, and from time to time, the City Council has amended such redevelopment plan. The Agency is undertaking a program to redevelop the Project Area. C. AB X1 26 was signed by the Governor of California on June, 29, 2011, making certain changes to the Redevelopment Law, including adding Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) to Division 24 of the California Health and Safety Code. Commencing upon the effectiveness of AB X1 26, AB X1 26 suspends most redevelopment agency activities and, among other things, prohibits redevelopment agencies from incurring indebtedness or entering into or modifying contracts. Effective October 1, 2011, AB X1 26 dissolves all existing redevelopment agencies and redevelopment agency components of community development agencies, designates successor agencies to the former redevelopment agencies, and imposes numerous requirements on the successor agencies and subjects successor agency actions to the review of oversight boards established pursuant to the provisions of Part 1.85. D. AB X1 27 was signed by the Governor of California on June 29, 2011, adding Part 1.9 (commencing with Section 34192) to Division 24 of the California Health and Safety Code. Part 1.9 establishes an Alternative Voluntary Redevelopment Program (the "AVRP ") whereby, notwithstanding the provisions of Part 1.8 and Part 1.85, a redevelopment agency will be authorized to continue to exist and carry out the provisions of the Redevelopment Law upon the enactment, prior to the applicable deadline established in Part 1.9, by the city council of the city which includes that redevelopment agency (the "Participating City"), of an ordinance to comply with Part 1.9. E. Part 1.9 requires a Participating City to make specified annual remittances to the applicable county auditor - controller, who shall allocate the remittances for deposit into a Special District Allocation Fund, for allocation to specified special districts, and into the county Educational Revenue Augmentation Fund, for allocation to educational entities. F. To participate in the AVRP, in addition to adopting the ordinance described in Recital D, above, Part 1.9 provides that the Participating City must, by November 1, 2011, notify the applicable county auditor - controller, the Controller of the State of California (the "State Controller"), and the Department of Finance of the State of California (the "Department of Finance ") that the Participating City agrees to comply with the provisions of Part 1.9. The Participating City's agreement to make the remittances provided for under Part 1.9 is a precondition to continue redevelopment pursuant to Part 1.9. Resolution Number 6184 G. Part 1.9 provides that for fiscal year 2011 -12, a Participating City shall remit to the applicable county auditor - controller an amount equal to the amount determined by the Director of Finance of the State of California (the "Director of Finance ") for the redevelopment agency pursuant to a formula set forth in Part 1.9, which formula utilizes information contained in the State Controller's redevelopment agency 2008 -09 annual report. The amount represents the redevelopment agency's proportionate share of the sum of $1,700,000,000. The initial amount determined by the Director of Finance is subject to recalculation and reduction in the event the Participating City timely files an appeal in accordance with Health and Safety Code Section 34194(b)(2)(L). H. For fiscal year 2012 -13 and each fiscal year thereafter, a Participating City's remittance shall be in an amount calculated by the Participating City in accordance with the requirements of Part 1.9, subject to adjustment based on audit and verification by the Director of Finance, the State Controller and the applicable county auditor - controller. Part 1.9 provides that on or before November 1 of each year, commencing November 1, 2012, a Participating City shall notify the Department of Finance, the State Controller, and the applicable county auditor - controller of the remittance amount calculated by the Participating City. I. Pursuant to the provisions of Part 1.9, a Participating City shall pay one -half of the total remittance amount for a fiscal year on or before January 15 of that year and shall pay the remaining one -half of the remittance amount on or before May 15 of that year. J. A Participating City making remittances pursuant to Part 1.9 may use any funds available to the City and not otherwise obligated for other uses. K. Pursuant to Health and Safety Code Section 34194.2, a Participating City and the redevelopment agency in that Participating City may enter into an agreement whereby the agency will transfer a portion of its tax increment to the Participating City in an amount not to exceed the annual remittance required that year pursuant to Part 1.9. L. The City Council adopted Ordinance No. 1612, on August 8, 2011, pursuant to Health and Safety Code Section 34193, to become a Participating City in the AVRP for the purpose of allowing the Agency to continue to exist and carry out the provisions of the Redevelopment Law, notwithstanding the provisions of Part 1.8 and 1.85. M. The California Redevelopment Association and League of California Cities have filed a lawsuit in the Supreme Court of California alleging that AB X1 26 and AB X1 27 are unconstitutional. On August 11, 2011, the Supreme Court of California decided to hear the case and set a briefing schedule designed to allow the Supreme Court to decide the case before January 15, 2012. On August 11, 2011, the Supreme Court also issued a stay order (the "Stay Order"), which was subsequently modified on August 17, 2011. Pursuant to the modified Stay Order, the Supreme Court granted a stay of all of AB X1 27 (i.e., Part 1.9), except for Health and Safety Code Section 34194(b)(2) (relating to the determination of cities' fiscal year 2011 -12 remittance amounts) and a stay of a portion of AB X1 26. With respect to AB X1 26, Part 1.85 was stayed in its entirety, but Part 1.8 was not stayed. N. In the event the Stay Order is lifted and the Supreme Court upholds AB X1 26 and AB X1 27, the City desires to participate in the AVRP so that the Agency may continue to exist and carry out the provisions of the Redevelopment Law. O. In the event the Stay Order is lifted and the Supreme Court upholds AB X1 26 and AB X1 27, the City and the Agency desire to enter into an Resolution Number 6184 agreement (the "Transfer Agreement ") to provide for the Agency's transfers (each, a "Transfer ") of a portion of its tax increment to the City, pursuant to Health and Safety Code Section 34194.2, such that the total amount of the Transfers in any fiscal year shall be equal to be the Annual Remittance for that fiscal year. P. The Transfer Agreement will not have any effect unless and until the Supreme Court lifts or modifies the Stay Order in a manner such that the prohibitions in Part 1.8 do not apply to the Agency and the Agency is permitted to perform under the Transfer Agreement pursuant to Health and Safety Code Section 34194.2 or other provisions of law. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF SEAL BEACH HEREBY FINDS, DETERMINES, RESOLVES AND ORDERS AS FOLLOWS: Section 1. The above recitals are true and correct and are a substantive part of this Resolution. Section 2. The Transfer Agreement, in the form presented and on file with the City Clerk, is hereby approved. The Mayor, or in the Mayor's absence, the Mayor Pro -Tem, acting singly, is hereby authorized and directed to execute and deliver, for and in the name of the City, the Transfer Agreement in substantially that form, with such changes therein as the Mayor (or the Mayor Pro -Tem, as the case may be) may approve (such approval to be conclusively evidenced by the execution and delivery thereof). Section 3. The adoption of this Resolution is not intended and shall not constitute a waiver by the City of any right the City may have to challenge the legality of all or any portion of AB X1 26 or AB X1 27 through administrative or judicial proceedings. Section 4. This Resolution and the Transfer Agreement have been reviewed with respect to applicability of the California Environmental Quality Act ( "CEQA "), the State CEQA Guidelines (California Code of Regulations, Title 14, Sections 15000 et seq., hereafter the "Guidelines" ), and the City's environmental guidelines. The City Council has determined that neither this Resolution nor the Transfer Agreement Ordinance is a "project" for purposes of CEQA, as that term is defined by Guidelines Section 15378. Specifically, this Resolution and the Transfer Agreement constitute the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (Guidelines Section 15378(b)(4)). In addition, this Resolution and the Transfer Agreement constitute organizational or administrative activities that will not result in a direct or indirect physical change in the environment. (Guidelines Section 15378(b)(5)). Therefore, because neither the Resolution nor the Transfer Agreement is a "project," they are not subject to CEQA's requirements. Further, even if either this Resolution or the Transfer Agreement were deemed a "project" and therefore subject to CEQA, each would be covered by the general rule that CEQA applies only to projects that have the potential to cause a significant effect on the environment. (Guidelines Section 15061 (b)(3)). As an organizational or administrative activity or the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment, neither this Resolution nor the Transfer Agreement has the potential to cause a significant effect on the environment and is therefore exempt under this general rule. Further, it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, and thus neither this Resolution nor the Transfer Agreement is subject to CEQA. (Guidelines Section 15061(b)(3)). Resolution Number 6184 Section 5. The officers of the City are hereby authorized and directed, jointly and severally, to execute and deliver any and all necessary documents and instruments and to do all things which they may deem necessary or proper in order to consummate the transaction contemplated by, effectuate the purposes of this Resolution and the Transfer Agreement, and any such actions previously taken by such officers are hereby ratified, confirmed and approved. PASSED, APPROVED and ADOPTED by the Seal Beach City Council at a regular meeting held on the 26th day of September , 2011 by the following vote: AYES: Council Members NOES: Council Members ABSENT: Council Members ABSTAIN: Council Members Mayor ATTEST: City Clerk STATE OF CALIFORNIA } COUNTY OF ORANGE } SS CITY OF SEAL BEACH } I, Linda Devine, City Clerk of the City of Seal Beach, do hereby certify that the foregoing resolution is the original copy of Resolution Number 6184 on file in the office of the City Clerk, passed, approved, and adopted by the Seal Beach City Council at a regular meeting held on the 26th day of September , 2011. City Clerk TRANSFER AGREEMENT [HEALTH & SAFETY CODE SECTION 34194.2] This TRANSFER AGREEMENT (this "Agreement ") is dated as of the effective date below, by and between the Redevelopment Agency of the City of Seal Beach, a public body, corporate and politic (the "Agency "), and the City of Seal Beach, a municipal corporation (the "City "). RECITALS A. The Agency (the "Agency ") is a redevelopment agency in the City, created pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the California Health and Safety Code) (the "Redevelopment Law "). B. The City Council of the City (the "City Council ") adopted Ordinance No. 780, approving and adopting the redevelopment plan for the Riverfront Project Area, and from time to time, the City Council has amended such redevelopment plan. The Agency is undertaking a program to redevelop the Riverfront Project Area. C. AB X1 26 was signed by the Governor of California on June, 29, 2011, making certain changes to the Redevelopment Law, including adding Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) to Division 24 of the California Health and Safety Code. Commencing upon the effectiveness of AB X1 26, AB X1 26 suspends most redevelopment agency activities and, among other things, prohibits redevelopment agencies from incurring indebtedness or entering into or modifying contracts. Effective October 1, 2011, AB X1 26 dissolves all existing redevelopment agencies and redevelopment agency components of community development agencies, designates successor agencies to the former redevelopment agencies, and imposes numerous requirements on the successor agencies and subjects successor agency actions to the review of oversight boards established pursuant to the provisions of Part 1.85. D. AB X1 27 was signed by the Governor of California on June 29, 2011, adding Part 1.9 (commencing with Section 34192) to Division 24 of the California Health and Safety Code. Part 1.9 establishes an Alternative Voluntary Redevelopment Program (the "AVRP ") whereby, notwithstanding the provisions of Part 1.8 and Part 1.85, a redevelopment agency will be authorized to continue to exist and carry out the provisions of the Redevelopment Law upon the enactment, prior to the applicable deadline established in Part 1.9, by the city council of the city which includes that redevelopment agency (the "Participating City "), of an ordinance to comply with Part 1.9. E. Part 1.9 requires a Participating City to make specified annual remittances to the applicable county auditor - controller, who shall allocate the remittances for deposit into a Special District Allocation Fund, for allocation to specified special districts, and -1- into the county Educational Revenue Augmentation Fund, for allocation to educational entities. F. To participate in the AVRP, in addition to adopting the ordinance described in Recital D, above, Part 1.9 provides that the Participating City must, by November 1, 2011, notify the applicable county auditor - controller, the Controller of the State of California (the "State Controller "), and the Department of Finance of the State of California (the "Department of Finance ") that the Participating City agrees to comply with the provisions of Part 1.9. The Participating City's agreement to make the remittances provided for under Part 1.9 is a precondition to continue redevelopment pursuant to Part 1.9. G. Part 1.9 provides that for fiscal year 2011 -12, a Participating City shall make a remittance to the applicable county auditor - controller, in an amount determined by the Director of Finance of the State of California (the "Director of Finance ") pursuant to a formula set forth in Part 1.9, based on the information contained in the State Controller's redevelopment agency 2008 -09 annual report. The amount of the remittance represents the redevelopment agency's proportionate share of the sum of $1,700,000,000. The initial amount of such remittance determined by the Director of Finance is subject to recalculation and reduction if the Participating City timely files an appeal in accordance with Health and Safety Code Section 34194(b)(2)(L). H. For fiscal year 2012 -13 and each fiscal year thereafter, a Participating City's remittance shall be in an amount calculated by the Participating City in accordance with the requirements of Part 1.9, subject to adjustment based on audit and verification by the Director of Finance, the State Controller and the applicable county auditor - controller. Part 1.9 provides that on or before November 1 St of each year, commencing November 1, 2012, a Participating City shall notify the Department of Finance, the State Controller, and the applicable county auditor - controller of the remittance amount calculated by the Participating City. I. Pursuant to the provisions of Part 1.9, for a fiscal year, a Participating City shall pay one -half of the remittance on or before January 15 of that year and shall pay the remaining one -half of the remittance on or before May 15 of that year. J. A Participating City making remittances pursuant to Part 1.9 may use any funds available to the City and not otherwise obligated for other uses. K. Pursuant to Health and Safety Code Section 34194.2, a Participating City and the redevelopment agency in that Participating City may enter into an agreement whereby the agency will transfer a portion of its tax increment to the Participating City in an amount not to exceed the annual remittance required that year pursuant to Part 1.9. L. The City Council adopted Ordinance No. 1612, on August 8, 2011, pursuant to Health and Safety Code Section 34193, to become a Participating City in the AVRP for the purpose of allowing the Agency to continue to exist and carry out the provisions of the Redevelopment Law, notwithstanding the provisions of Part 1.8 and 1.85. -2- M. In order for the City to remain a Participating City in the AVRP, the City will be required to make a Part 1.9 remittance (the "Annual Remittance ") to the Orange County Auditor - Controller (the "Auditor- Controller ") each fiscal year, commencing with fiscal year 2011 -12. For each fiscal year commencing with fiscal year 2011 -12, one -half of the Annual Remittance will become due on each January 15, and the remaining half of the Annual Remittance will become due on each May 15 (each such semi - annual payment being referred to below as a "Semi - Annual Remittance Payment "). N. The Director of Finance has calculated the City's Annual Remittance for fiscal year 2011 -12 (the "2011 -12 Remittance ") to be $937,868. O. For fiscal year 2012 -13 and thereafter, the City is required to calculate the Annual Remittance for each fiscal year as prescribed by Part 1.9. Each of the Director of Finance, the State Controller, and the Auditor - Controller is authorized to audit and verify the Annual Remittance that is calculated by the City. P. The California Redevelopment Association and League of California Cities have filed a lawsuit in the Supreme Court of California alleging that AB X1 26 and AB X1 27 are unconstitutional. On August 11, 2011, the Supreme Court of California decided to hear the case and set a briefing schedule designed to allow the Supreme Court to decide the case before January 15, 2012. On August 11, 2011, the Supreme Court also issued a stay order (the "Stay Order "), which was subsequently modified on August 17, 2011. Pursuant to the modified Stay Order, the Supreme Court granted a stay of all of AB X1 27 (i.e., Part 1.9), except for Health and Safety Code Section 34194(b)(2) (relating to the determination of cities' fiscal year 2011 -12 remittance amounts) and a stay of a portion of AB X1 26. With respect to AB X1 26, Part 1.85 was stayed in its entirety, but Part 1.8 was not stayed. Q. In the event the stay is lifted and the Supreme Court upholds AB X1 26 and AB X1 27, the City desires to participate in the AVRP so that the Agency may continue to exist and carry out the provisions of the Redevelopment Law. R. In the event the stay is lifted and the Supreme Court upholds AB X1 26 and AB X1 27, the City and the Agency desire to provide for the Agency's transfers (each, a "Transfer ") of a portion of its tax increment to the City, pursuant to Health and Safety Code Section 34194.2, such that the total amount of the Transfers in any fiscal year shall be equal to be the Annual Remittance for that fiscal year. NOW, THEREFORE, IN CONSIDERATION OF THE PREMISES HEREIN AND FOR OTHER VALUABLE CONSIDERATION, THE SUFFICIENCY OF WHICH IS HEREBY ACKNOWLEDGED, THE AGENCY AND THE CITY AGREE AS FOLLOWS: Section 1 Semi - Annual Transfer by the Agency Before January 15 and May 15 each year commencing with January 15, 2012, the Agency shall make a Transfer to the City in the amount of the Semi - Annual Remittance Payment for that fiscal year. The amount of the Transfer pursuant to this 110 Section 1 shall riot be subject to any deduction or offset, regardless of amounts that the City may then be owing to the Agency under this Agreement or any other agreement or arrangement. To the fullest extent permitted by law, all amounts past due but not yet paid to the City pursuant to this Section 1 (the "Delinquent Transfer Amount ") shall remain an outstanding obligation of the Agency until paid. The Agency shall use tax increment generated in the Project Area and eligible to be allocated to the Agency for each Transfer pursuant to this Agreement. The obligations of the Agency under this Agreement shall constitute an indebtedness of the Agency for the purpose of carrying out the redevelopment plan for the Project Area. In all events, to the fullest extent permitted by law, all amounts due under this Agreement shall be paid to the City by the date established in the redevelopment plan (as it exists as of the date of this Agreement) for the Project Area as the time limit for the repayment of indebtedness with respect to the Project Area.] The Agency's payment obligation under this Agreement 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 [applicable] Project Area, and to all pre- existing statutory obligations of the Agency pursuant to Section 33607.5 or 33606.7 of the Redevelopment Law. Section 2 Mutual Cooperation The Agency shall cooperate with the City and provide such information and assistance as the City may request for the City to make the calculations required pursuant to Health and Safety Code Section 34194 to determine the amount of each Annual Remittance. The City shall cooperate with the Agency to enable the Agency to reflect any necessary changes to the Agency's annual Statements of Indebtedness (required to be filed by the Agency pursuant to Health and Safety Code Section 34675(b)) with respect the estimated amounts of the Transfers under this Agreement. Section 3 Additional Transfers in Event of Deficiency After the Agency has made a Transfer pursuant to Section 1, if it is determined that the City's Semi - Annual Remittance Payment for the immediately following January 15 or May 15, as applicable, is greater than the Transfer for whatever reason, the City shall notify the Agency of the difference between the amounts of the Semi - Annual Remittance Payment and the Transfer. Upon the receipt of such notice by the City, the Agency shall promptly make an additional Transfer to the City in the amount equal to such difference. The Agency acknowledges that, for each fiscal year, the Agency shall make Transfers to the City, such that the aggregate amount so transferred shall be equal to the full amount of the Annual Remittance paid by the City to the Auditor - Controller. Neither any failure by the City to provide notice pursuant to this Section 3 nor any defect of such notice diminishes the Agency's obligations hereunder. -4- Section 4 Refund by the City in Event of Reduction No later than June 30 of each fiscal year, to the extent that the sum of all of the Transfers by the Agency during that fiscal year is greater than the Annual Remittance paid by the City to the Auditor - Controller for that fiscal year, the City shall refund to the Agency an amount equal to the difference between the sum of such Transfers and the Annual Remittance for that fiscal year (the "Refund "); provided if at that time there is any outstanding Delinquent Transfer Amount (defined in Section 1), then, at the City's discretion and to the extent permitted by law, the Refund may be reduced by all or a portion of the outstanding Delinquent Transfer Amount, as an offset. Section 5 Used of Funds Transferred by the Agency Solely to the extent required by Health and Safety Code Section 34194.2, the City shall use the moneys transferred by the Agency pursuant to Section 1 and Section 3 of this Agreement for the purpose of financing activities within the redevelopment area that are related to accomplishing the Agency's project goals. Section 6 Nonliability of Officials, Employees and Agents No Agency member, City Councilmember, and no official, agent, or employee of the Agency or the City shall be personally liable to the other parties, or any successor in interest, in the event of any default or breach by the Agency or the City under this Agreement, or for any amount which may become due to the City or Agency, or successor thereto, or on any obligations under the terms of this Agreement. Section 7 Liability and Indemnification In contemplation of the provisions of California Government Code Section 895.2 imposing certain tort liability jointly upon public entities solely by reason of such entities being parties to an agreement as defined by Government Code Section 895, the parties hereto, as between themselves, pursuant to the authorization contained in Government Code Sections 895.4 and 895.6, shall each assume the full liability imposed upon it, or any of its officers, agents or employees, by law for injury caused by negligent or wrongful acts or omissions occurring in the performance of this Agreement to the same extent that such liability would be imposed in the absence of Government Code Section 895.2. To achieve the above - stated purpose, each party indemnifies, defends and holds harmless the other party for any liability, losses, cost or expenses that may be incurred by such other party solely by reason of Government Code Section 895.2. Section 8 Default If either party fails to perform or adequately perform an obligation required by this Agreement within 30 calendar days of receiving written notice from the non - defaulting party, the party failing to perform shall be in default hereunder. In the event of default, the non - defaulting party will have all the rights and remedies available to it at law or in equity to enforce the provisions of this Agreement, including without limitation the right to sue for damages for breach of contract. The rights and remedies of the non - defaulting party -5- enumerated in this Section 8 are cumulative and shall not limit the non - defaulting party's rights under any other provision of this Agreement, or otherwise waive or deny any right or remedy, at law or in equity, existing as of the date of the Agreement or hereinafter enacted or established, that may be available to the non - defaulting party against the defaulting party. Each notice of default shall clearly indicate that it is a notice of default under this Agreement. Section 9 Further Assurances The parties hereto agree to take all appropriate steps and execute any documents which may reasonably be necessary or convenient to implement the intent of this Agreement. Section 10 Law Governing This Agreement is made in the State of California under the constitution and laws of the State of California, and is to be so construed. Section 11 Severability If any provision of this Agreement should be prohibited, unenforceable or become contrary to law, then such provision shall be null and void and shall be deemed separable from the remaining provisions of this Agreement and shall in no way affect the validity, enforceability or legality remaining provisions of this Agreement. Section 12 No Third Party Beneficiaries Notwithstanding any reference in this Agreement to persons or entities other than the City or the Agency, there shall be no third -party beneficiaries under this Agreement. Nothing in this Agreement, expressed or implied, is intended to give to any person other than the City and the Agency any right, remedy or claim under or by reason of this Agreement. Section 13 Binding on Successors This Agreement shall be binding upon and inure to the benefit of the Agency and City and their respective successors and assigns, without regard to technical classification and designation; provided, that the Agency shall not have the right to assign its rights hereunder or any interest herein without the prior written consent of City. Section '14 Duration; Survival Subject to Section 20, this Agreement shall remain in full force and effect so long as the Agency is authorized to continue its existence pursuant to Part 1.9 and shall terminate immediately once the City is no longer a Participating City in the AVRP under Part 1.9; provided, however, Sections 6 (no personal liability for officers, employees or other persons), 7 (indemnification) and 8 (rights of parties in the event of default) shall survive any termination of this Agreement. M Section 15 No Waiver of Right to Challenge Legality of AB X1 26 or AB X1 27 The Agency and the City hereby acknowledge, agree and declare that, by executing and delivering this Agreement and complying with the covenants hereunder, neither the City nor the Agency is waiving any right either may have to challenge the legality of all or any portion of AB X1 26 or AB X1 27 through administrative or judicial proceedings, or to appeal the amount of the City's 2011 -12 Remittance pursuant to Health and Safety Code Section 34194(b)(2)(L), or to otherwise contest the amount of the Annual Remittance for any fiscal year. Should the requirement for the City to make the Annual Remittance, or any portion thereof, be stayed, enjoined, repealed, or held unconstitutional or unenforceable by any court of competent jurisdiction, the City may exercise its rights to recover reimbursement of the amounts paid for the Annual Remittance, or any portion thereof, plus interest. Section 16 Integration This Agreement integrates all of the terms and conditions mentioned in or incidental to this Agreement, and supersedes all prior agreements or understandings between the Agency and the City, regarding the subject matter of this Agreement. Section 17 Amendments; Waivers This Agreement may be amended at any time, and from time to time, by a written agreement executed by both parties to this Agreement. No delay in exercising any rights by a party under this Agreement shall operate as a waiver of any rights of by such party hereunder. Any waiver or consent given hereunder shall be effective only in the specific instance and for the specific purpose for which such waiver or consent was given, unless otherwise specified in such waiver or consent. Section 18 Duplicate Originals This Agreement shall be executed in duplicate originals, each of which is deemed to be an original. Section 19. Statutory Dates for Compliance To the extent that this Agreement sets forth dates prescribed by AB X1 26 and AB X1 27, such dates shall automatically be adjusted in accordance with any adjustments made by the Supreme Court of California in connection with the AB X1 26 and AB X1 27 litigation (or by the Legislature as the result of the Court's decision), without the necessity of further action by the Agency or the City. Section 20 Effectiveness of Agreement Notwithstanding anything to contrary contained herein, this Agreement shall not be of any force or effect or binding upon the parties hereto unless and until the Supreme Court of California lifts or modifies the Stay Order in a manner such that the prohibitions in Part 1.8 do not apply to the Agency and the Agency is permitted to perform under this -7- Agreement pursuant to Health and Safety Code Section 34194.2 or other provisions of law. IN WITNESS WHEREOF, the Agency and the City have caused this Agreement to be duly executed and delivered by their authorized officers as of the date first written above. REDEVELOPMENT AGENCY OF THE CITY OF SEAL BEACH David W. Sloan, Chair ATTEST: Linda Devine, Secretary CITY OF SEAL BEACH LIM Michael P. Levitt, Mayor ATTEST: Linda Devine, City Clerk 10