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HomeMy WebLinkAboutRA Transfer Payment Agr. RDACITY OF AGENDA ITEM NO.: 3 SAN RAFAEL MEETING DATE: September 19, 2011 San Rafael Redevelopment Agency Agenda Report Department: Redevelopment Prepared by: Initials, Stephanie ovette, Acting Economic Development Director Nancy Mackle, Executive Director SUBJECT: RESOLUTION OF THE San Rafael REDEVELOPMENT AGENCY APPROVING AND AUTHORIZING THE EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE CITY OF SAN RAFAEL PURSUANT TO PART 1.9 OF THE REDEVELOPMENT LAW RECOMMENDATION: Staff recommends that the Agency Board adopt the attached resolution authorizing the execution of a Transfer Payment Agreement with the City of San Rafael. BACKGROUND AND ANALYSIS: On June 28, 2011, the Governor signed ABx1 26 & 27, budget trailer bills to implement the State Budget for FY 2011-2012. ABxl 26, the Dissolution Act, immediately suspended all new redevelopment activities and incurrence of indebtedness; and dissolves redevelopment agencies effective October 1, 2011. All redevelopment agency functions are assumed by a successor agency, expected to be the sponsoring city or county of each redevelopment agency. ABx1 27 creates an Alternative Voluntary Redevelopment Program that existing Redevelopment Agencies may choose to participate in, in order to avoid dissolution of the Agency, required under ABxl 26. In order to opt in to the Voluntary Program, the City must adopt an ordinance stating it will comply with the provisions of ABxl 27 and submit annual remittance payments to the County Auditor - Controller. ABxl 27 also allows an Agency to suspend its Fiscal Year (FY) 2011-2012 deposit to the Low- and Moderate -Income Housing Fund to pay the first year remittance payment if there are insufficient other monies to meet debt and other obligations. Previous San Rafael Citv Council Actions and effective dates On September 6, 2011, the City- Council adopted an ordinance opting in to the Voluntary Alternative program and acknowledged the use of the Agency's low and moderate income housing fund as the source for the payment. By opting into the Voluntary Alternative Program, the Agency is allowed to continue operations and retain existing funds and property as long as the required, annual remittance payments are made. The Voluntary Alternative Program does not take effect until the second reading of the ordinance on September 19, 2011 and new Agency initiatives have been suspended until that date. Therefore. the City Council was precluded from taking action on a Transfer Payment Agreement with the Agency at the September 6, 2011 meeting. FOR AGENCY SECRETARY ONLY File No.. -; Agency Meeting: Disposition: Source of A�4encv funds for the Proposed Transfer Pavment Agreement The terms of the proposed Transfer Payment Agreement are that the Agency will utilize a portion of the 2011-12 housing fund for the required payment because the Agency does not have any currently available or legally allowable funds for the remittance payment. The Fiscal Agreement with the County and Schools limits the Agency's annual tax increment to the payment on the outstanding bonds. The Agency is holding funds from previous bond issues but these funds can only be used for capital improvements in the Project Area. Federal Tax Law would not allow these funds to be expended on payments to the local school and special districts as required by ABxl 27. California Redevelopment A2encv Lawsuit On August 11, 2011, the California Supreme Court agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of provisions of the Voluntary Alternative Program Act. The City enacted the Continuation Ordinance prior to consideration of this Resolution, conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Alternative Program Act is constitutional. FISCAL IMPACT: The Agency's 2011-12 (first year) remittance payment is $299,490. The SRRDA remittance is one of the smallest in the State because the County and the school districts within the Redevelopment Project Area already receive the majority of the Agency's tax increment pursuant to the 1984 Fiscal Agreement. Agency cost in subsequent years is anticipated to be $ 70,000 annually. Staff will be working with the parties to the Fiscal Agreement to fund this $70,000 from tax increment from the Project Area; in the same manner has the previous payments to the Educational Revenue Augmentation Fund ("ERAF"). OPTIONS: • Adopt the resolution approving execution of the Transfer Payment Agreement with the City of San Rafael. • Direct staff to alter the proposed Transfer Payment Agreement to reflect the desires of the Agency members. • Reject the Resolution and the Transfer Payment Agreement. ACTION REQUIRED: To continue operation of the Redevelopment Agency. staff recommends the Agency Board adopt the attached resolution, approving the Transfer Payment Agreement and authorizing the City Manager or her designee to take all actions necessary to effect the Agreement. ATTACHMENT: Transfer Payment Agreement. RESOLUTION NO. 2011-12 RESOLUTION OF THE SAN RAFAEL REDEVELOPMENT AGENCY APPROVING AND AUTHORIZING THE EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE CITY OF SAN RAFAEL PURSUANT TO PART 1.9 OF THE REDEVELOPMENT LAW MOVED BY: MEMBER BROCKBANK SECONDED BY: MEMBER LEVINE WHEREAS, pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et sem.; the "Redevelopment Law"), the City Council (the "City Council") of the City of San Rafael (the "City") adopted Ordinance No. 1055, on May 1, 1972, declaring the need for the San Rafael Redevelopment Agency (the "Agency") to function in the City; and WHEREAS, pursuant to the Redevelopment Law, the City Council adopted the Redevelopment Plan for the Central San Rafael Redevelopment Project Area by Ordinance No. 1079, adopted on November 20, 1972, as amended by Ordinance No. 1534, adopted on January 5, 1987, as amended and restated by Ordinance No. 1572, adopted on October 16, 1989, as further amended by Ordinance No. 1669, adopted on November 21, 1994, as further amended and restated by Ordinance No. 1732, adopted on October 5, 1998, as amended by Ordinance No. 1776, adopted on March 4, 2002, as amended by Ordinance No. 1786, adopted on August 19, 2002, as amended by Ordinance No. 1822, adopted on March 15, 2004, as amended by Ordinance No. 1850, adopted on June 4, 2007 and as further amended by Ordinance No. 1852 adopted on June 18, 2007 (the "Redevelopment Plan"); and WHEREAS, the Agency is responsible for implementing the Redevelopment Plans pursuant to the Redevelopment Law; and WHEREAS, as part of the 2011-12 State budget bill, ABXI 26 (the "Dissolution Act") and ABX 1 27 (the "Voluntary Program Act") (collectively, the "Redevelopment Restructuring Acts") have been enacted to significantly modify the Redevelopment Law generally as follows: The Dissolution Act immediately suspended all new redevelopment activities and incurrence of indebtedness, and dissolves redevelopment agencies effective October 1, 2011; and The Voluntary Program Act, trough the addition of Part 1.9 to the Redevelopment Law ("Part 1.9"), establishes a voluntary alternative redevelopment program whereby the Agency is authorized to continue to exist upon the enactment of an ordinance by the City to comply with Part 1.9, including payment of an annual remittance to the County Auditor- Controller (the "Continuation Ordinance"); and 141\01\1022932A WHEREAS, on August 11, 2011, the California Supreme Court (the "Court") agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Voluntary Program Act; and WHEREAS, the City has enacted the Continuation Ordinance prior to consideration of this Resolution, conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional; and WHEREAS, Section 34194.2 of the California Redevelopment Law authorizes the Agency to enter into an agreement with the City whereby the Agency agrees to transfer a portion of its tax increment to the City, in an amount equal to the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law to the County Auditor -Controller; and WHEREAS, for reasons further set forth in the staff report accompanying this Resolution (the "Staff Report"), the City and the Agency desire to enter into an agreement, whereby the Agency will transfer to the City sufficient funds to make the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law, and the City will make the annual remittances to the County Auditor -Controller in satisfaction of the requirements under Chapter 3 of Part 1.9 of the Redevelopment Law (the "Agency Transfer Payment Agreement"); and WHEREAS, as fully set forth in the Agency Transfer Payment Agreement, the Agency Transfer Payment Agreement will be immediately binding upon the parties, but the operation of its terms will be conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional; and WHEREAS, under Title 14 of the California Code of Regulations, Section 15378(b)(4) the approval of the Agency Transfer Payment Agreement is exempt from the requirements of the California Environmental Quality Act ("CEQA"), in that it is not a project, but instead consists of the creation and continuation of a governmental funding mechanism, and does not commit funds to any specific project or program; and WHEREAS, the Agency Board has reviewed and duly considered the Staff Report, documents and other written evidence presented at the meeting. NOW, THEREFORE, BE IT RESOLVED, that the Agency Board finds that the above Recitals are true and correct and have served, together with the supporting documents, as the basis for the findings and approvals set forth below. 141 \01' 1022932.1 BE IT FURTHER RESOLVED, that the Agency Board finds, under Title 14 of the California Code of Regulations, Section 15378(b)(4), that this ordinance is exempt from the requirements of the California Environmental Quality Act (CEQA) in that it is not a project, but instead consists of the creation and continuation of a governmental funding mechanism, and does not commit funds to any specific project or program. The Agency Board therefore directs that a Notice of Exemption be filed with the County Clerk of the County of Marin in accordance with the CEQA guidelines. BE IT FURTHER RESOLVED, that the Agency Board hereby approves the Agency Transfer Payment Agreement and authorizes the Agency Executive Director or the Executive Director's designee to execute on behalf of the Agency the Agency Transfer Payment Agreement, substantially in the form on file with the City Clerk and the Agency Secretary and with such revisions thereto as may be approved by the Agency Counsel. BE IT FURTHER RESOLVED, that the Agency Board authorizes the Agency's Executive Director or the Executive Director's designee to take such other actions and execute such other documents as are appropriate to effectuate the intent of this Resolution and to implement the Agency Transfer Payment Agreement on behalf of the Agency. BE IT FURTHER RESOLVED, that this Resolution shall take immediate effect upon adoption. I, ESTHER C. BEIRNE, Agency Secretary of the San Rafael Redevelopment Agency, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting of the San Rafael Redevelopment Agency of said City on Monday, the 19`" day of September, 2011, by the following vote, to wit: AYES: MEMBERS: Brockbank, Connolly, Heller, Levine & Chairman Boro NOES: MEMBERS: None ABSENT: MEMBERS: None Esther C. Beirne, Agency Secretary 141\01\1022932.1 AGENCY TRANSFER PAYMENT AGREEMENT This Agency Transfer Payment Agreement (the "Agreement"), is entered into as of the 20-o day of 2011, by and between San Rafael Redevelopment Agency, a public body, corporate and politic (the "Agency"), and the City of San Rafael, a municipal corporation (the "City"), with reference to the following facts, understandings and intentions of the parties: RECITALS A. Pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et sec.; the "Redevelopment Law"), the City Council (the "City Council") of the City of San Rafael (the "City") adopted Ordinance No. 1055, on May 1, 1972, declaring the need for the San Rafael Redevelopment Agency (the "Agency") to function in the City. B. Pursuant to the Redevelopment Law, the City Council adopted the Redevelopment Plan for the Central San Rafael Redevelopment Project Area by Ordinance No. 1079, adopted on November 20, 1972, as amended by Ordinance No. 1534, adopted on January 5, 1987, as amended and restated by Ordinance No. 1572, adopted on October 16, 1989, as further amended by Ordinance No. 1669, adopted on November 21, 1994, as further amended and restated by Ordinance No. 1732, adopted on October 5, 1998, as amended by Ordinance No. 1776, adopted on March 4, 2002, as amended by Ordinance No. 1786, adopted on August 19, 2002, as amended by Ordinance No. 1822, adopted on March 15, 2004, as amended by Ordinance No. 1850, adopted on June 4, 2007 and as further amended by Ordinance No. 1852 adopted on June 18, 2007 (the "Redevelopment Plan"). C. ABxl 26 (the "Dissolution Act") and ABxl 27 (the "Voluntary Program Act"; and together with the Dissolution Act, the "Redevelopment Restructuring Acts") have been enacted to significantly modify the Redevelopment Law generally as follows: 1. The Dissolution Act immediately suspends all new redevelopment activities and incurrence of indebtedness, and dissolves redevelopment agencies effective October 1, 2011; and 2. The Voluntary Program Act, through the addition of Part 1.9 to the Redevelopment Law (the "Voluntary Alternative Redevelopment Program"), allows a redevelopment agency to avoid dissolution under the Dissolution Act by opting into a voluntary alternative redevelopment program requiring specified annual contributions to local school and special districts. D. Specifically, Section 34193(a) of the Redevelopment Law (as added to the Redevelopment Law by the Voluntary Program Act) authorizes the City Council to enact an ordinance to comply with Part 1.9 of the Redevelopment Law, thereby exempting the Agency from the provisions of the Dissolution Act, and enabling the Agency to continue to exist and function under the Redevelopment Law, so long as the City and the Agency comply with the Voluntary Alternative Redevelopment Program set forth in Part 19 of the Redevelopment Law. 141\01 ,,1022929.1 E. On August 11, 2011, the California Supreme Court (the "Court") agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Voluntary Program Act. F. Through the adoption and enactment of Ordinance No. —, on September 19, 2011 (the "Continuation Ordinance"), the City Council, pursuant to Section 34193(a) of the Redevelopment Law, has elected to participate for itself and on behalf of the Agency in the Voluntary Alternative Redevelopment Program set forth in Part 1.9 of the Redevelopment Law, conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional. G. Pursuant to Sections 34193.2(b) and 34195(b) of the Redevelopment Law, the City Council understands that participation in the Voluntary Alternative Redevelopment Program requires remittance of certain payments as set forth in Chapter 3 of Part 1.9 of the Redevelopment Law, and also constitutes an agreement on the part of the City, in the event the City fails to make such remittance payments, to assign to the State of California its rights to any payments owed by the Agency, including, but not limited to, payments from loan agreements and this Agreement. H. Pursuant to Section 34194.2 of the Redevelopment Law, the City and Agency have elected to enter into this Agreement, whereby the Agency agrees to transfer a portion of the Agency's tax increment to the City, in an amount equal to the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law, for purposes of financing activities within the redevelopment areas that are related to accomplishing the redevelopment agency project goals. I. Pursuant to Section 34194.1 of the Redevelopment Law, the City may use any available funds not otherwise obligated for other uses to make the remittances to the County Auditor -Controller required pursuant Chapter 3 of Part 1.9 of the Redevelopment Law. J. The purpose of this Agreement is to provide for the transfer of tax increment and other funds from the Agency to the City in the amounts required to make each of the annual remittances mandated under Chapter 3 of Part 1.9 of the Redevelopment Law. K. The obligations of the Agency under this Agreement constitute an indebtedness of the Agency with respect to the redevelopment projects for the Redevelopment Plans within the meaning of Section 16 of Article XVI of the California Constitution. L. The City Council does not intend, by execution of this Agreement, to waive any rights of appeal regarding the amount of any remittance payments established by the California Department of Finance, as provided in the Voluntary Program Act. M. Under Title 14 of the California Code of Regulations, Section 15378(b)(4) this Agreement is exempt from the requirements of the California Environmental Quality Act ("CEQA"). in that it is not a project. but instead consists of the creation and continuation of a K 141\01\1022929J governmental funding mechanism, and does not commit funds to any specific project or program. N. Accordingly, the parties intend that, while this Agreement will be binding upon the parties as of the date set forth in the opening paragraph, the operation of the terms of this Agreement will be conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional. NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and covenants set forth in this Agreement, the Agency and the City agree as follows: ARTICLE 1. OBLIGATIONS OF THE PARTIES 1.1 General Purpose. To the extent required by law to maintain the existence and powers of the Agency under the Redevelopment Law County and conditioned as further provided in Section 2.9, the City and the Agency hereby enter into this Agreement whereby the Agency agrees to transfer a portion of its tax increment to the City, in an amount equal to the annual remittances required under Chapter 3 of Part 1.9 of the Redevelopment Law, for the purpose of financing activities within the redevelopment areas that are related to accomplishing the Agency's project goals for the Project Areas. 1.2 Transfers to City. The Agency shall transfer to the City, in a timely manner, funds from sources described in Section 1.3, in an amount equal to the annual remittances required under Chapter 3 of Part 1.9 of the Redevelopment Law, as such may be adjusted (the "Agency Transfer Payments"). 1.3 Source of A�zencv Transfer Pavments. Any combination of the following shall constitute eligible sources for the Agency Transfer Payments: a. Any tax increment funds allocated to the Agency pursuant to Section 33670 of the Redevelopment Law net of existing debt service payments and existing third -party contractual obligations, and excluding: (1) amounts required to be allocated to the Low and Moderate Income Housing Fund, pursuant to Sections 33334.2, 33334.3, and 33334.6 of the Redevelopment Law; and (2) any funds on deposit in the Agency's Low and Moderate Income Housing Fund: b. Any other funds previously or subsequently made available to the City by the Agency, including any unencumbered funds previously pledged to the City by the Agency under an agreement for payment of public improvements and other redevelopment activities; C. Notwithstanding anything to the contrary, for the 2011-2012 fiscal year alone, any portion of the amount of tax increment required to be allocated to the Low and Moderate Income Housing Fund, pursuant to Sections 33334.2, 33334.3, and 33334.6 of the Redevelopment Law for the 2011-2012 fiscal year, to the extent the Agency makes the finding that there are insufficient other funds to meet its debt and other obligations, current priority 3 141\01\1022929.1 program needs, or its obligations to provide the Agency Transfer Payments under this Agreement. 1.4 Pavment of Remittances by City. Subject to the receipt of sufficient Agency Transfer Payments pursuant to Section 1.2 above, the City shall remit to the County Auditor - Controller the payments required pursuant to Chapter 3 of Part 1.9 of the Redevelopment Law on or before the dates prescribed in Section 34194(d)(1). The City's obligations to make the remittances required hereunder shall be a special limited obligation of the City payable solely from the Agency Transfer Payments provided to the City pursuant to the terms of this Agreement, and such remittances shall be made exclusively from the Agency Transfer Payments or from other funds that become available as a result of the City's receipt of the Agency Transfer Payments. Nothing in this Agreement shall be deemed to be a pledge of the City's general fund revenues or other assets for the purposes of funding the remittances required by Chapter 3 of Part 1.9 of the Redevelopment Law. 1.5 Subordination. The City shall consider in good faith any request by the Agency to subordinate the City's interest herein and to allow the Agency to pledge all or any portion of the tax increment revenue on a senior pledge basis to secure payments due on future indebtedness pledged with tax increment. ARTICLE 2. GENERAL PROVISIONS 2.1 No Third Partv Beneficiaries. No person or entity other than the Agency and the City and their permitted successors and assigns, shall have any right of action under this Agreement. 2.2 State Law. This Agreement, and the rights and obligations of the parties hereto, shall be construed and enforced in accordance with the laws of the State of California. 2.3 Additional Acts. The parties each agree to take such other and additional actions and execute and deliver such other and additional documents as may be reasonably requested by the other party for purposes of implementing the actions contemplated under this Agreement. 2.4 Litigation Re2ardin2 Agreement Validitv. In the event litigation is initiated attacking the validity of this Agreement, each party shall in good faith defend and seek to uphold the Agreement. 2.5 Severabilitv. If any provisions of this Agreement, or the application thereof to any person, party, transaction, or circumstance. is held invalid, the remainder of this Agreement, or the application of such provision to other persons, parties. transactions. or circumstances, shall not be affected thereby. 2.6 Entire Amement: Modification and Amendment. This Agreement contains all of the agreements and understandings of the parties pertaining to the subject matter contained herein and supersedes all prior or contemporaneous agreements. representations and 4 141\01\1022929.1 understandings of the parties. This Agreement cannot be amended or modified except by written agreement of the parties. 2.7 Binding Upon Successors. This Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest and assigns of each of the parties to this Agreement, whether by agreement or operation of law, and including, without limitation, any successor to the Agency. Any reference in this Agreement to a specifically named party shall be deemed to apply to any successor, heir, administrator, executor or assign of such party who has acquired an interest in compliance with the terms of this Agreement, or under law. 2.8 Time of the Essence. Time is of the essence in the performance of all duties and obligations under this Agreement. 2.9 Binding Effect; Operation of Aueement. This Agreement shall be binding upon the parties as of the date set forth in the opening paragraph of this Agreement. The operation of the terms of this Agreement shall be conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional. [Signature Page Follows] 5 141 M \1022929.1 IN WITNESS WHEREOF, this Agreement has been executed as of the date set forth in the opening paragraph of this Agreement. SAN RAFAEL REDEVELOPMENT AGENCY By: Nancy Mackie, Executive Director AA Rob Epstein, Agency � ounsief ATTEST: Esther C. Beirne, Agency Secretary CITY OF SAN RAFAEL By: Nancy Mackie, City Manager APPROVED AS TO FORM: f IU Rob Epstein, City Attor ev ATTEST: Esther C. Beirne, City Clerk 6 Transfer Agreement Signature Page 141 \01',1022929.1 CITY OF SAN RAFAEL INSTRUCTIONS: USE THIS FORM WITH EACH SUBMITTAL OF A CONTRACT, AGREEMENT, ORDINANCE OR RESOLUTION BEFORE APPROVAL BY COUNCIL / AGENCY. SRRA / SRCC AGENDA ITEM NO. DATE OF MEETING: 9/19/2011 FROM: Stephanie Lovette DEPARTMENT: Economic Development DATE: 8/22/2011 TITLE OF DOCUMENT: RESOLUTION OF THE SAN RAFAEL REDEVELOPMENT AGENCY APPROVING AND AUTHORIZING THE EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE CITY OF SAN RAFAEL PURSUANT TO PART 1.9 OF THE REDEVELOPMENT LAW M - - (LOWER HALF OF FORM FOR APPROVALS ONLY) APPROVED AS COUNCIL / AGENCY AGENDA ITEM: City Manager (signature) NOT APPROVED REMARKS: Prepared by Goldfarb APPROVED AS TO FORM: 0 City Attorney (signature) PROFESSIONAL SERVICES AGREEMENT/CONTRACT COMPLETION CHECKLIST AND ROUTING SLIP Below is the process for getting your professional services agreements/contracts finalized and executed. Please attach this "Completion Checklist and Routing Slip" to the front of your contract as you circulate it for review and signatures. Please use this form for all professional services aLyreements/contracts (not just those requiring City Council approval). This process should occur in the order presented below. Step Responsible Description Completion Department Date 1 City Attorney Review, revise, and comment on draft agreement. 2 Contracting Department Forward final agreement to contractor for their signature. Obtain at least two signed originals from contractor. 3 Contracting Department Agendize contractor -signed agreement for Council approval, if Council approval necessary (as defined by City Attorney/City Ordinance*). 4 City Attorney Review and approve form of agreement;_ bonds, and insurance certificates and endorsements. 5 City Manager / Mayor / or Agreement executed by Council authorized Department Head official. 6 City Clerk City Clerk attests signatures, retains original _. agreement and forwards copies to the contracting department. f =' To be completed by Contracting Department: Project Manager: Agendized for City Council Meeting of (if necessary): _ = If you have questions on this process, please contact the City Attorney's Office at 485-3080. Council approval is required if contract is over $20,000 on a cumulative basis.