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Home My WebLink AboutED Intent to Serve as Successor AgencyCITY OF SAN RAFAEL AGENDA ITEM NO.: 3 c MEETING DATE: January 3, 2012 SUBJECT: RESOLUTION OF THE CITY OF SAN RAFAEL TO EXPRESS ITS INTENT TO SERVE AS THE SUCCESSOR AGENCY OF THE SAN RAFAEL REDEVELOPMENT AGENCY, PURSUANT TO HEALTH AND SAFETY CODE SECTION 341710) AND SECTION 34173, AND TO ELECT TO RETAIN THE HOUSING ASSETS AND FUNCTIONS PREVIOUSLY PERFORMED BY THE SAN RAFAEL REDEVELOPMENT AGENCY, PURSUANT TO HEALTH AND SAFETY CODE SECTION 34176 SUBMITTED BY: ;AOA&j A�,dALJ&APPROVED BY:?t�i— Stephanie Lovette, Acti g Economic Development Director Nancy Mackie, City Manager RECOMMENDATION: Staff recommends that the City Council adopt the attached resolution to express its intent to serve as the Successor Agency and Successor Housing Agency upon dissolution of the San Rafael Redevelopment Agency. BACKGROUND: On December 29, 2011, the California Supreme Court delivered its decision in the California Redevelopment Association v. Matosantos case, finding ABx1 26 (the "Dissolution Act") largely constitutional and ABlx 27 (the "Alternative Redevelopment Program Act") unconstitutional. The Court's bifurcated decision means that all California redevelopment agencies, including the Redevelopment Agency of the City of San Rafael (the "Redevelopment Agency") will be dissolved under the constitutional Dissolution Act, and none will have the opportunity to opt into continued existence under the unconstitutional Alternative Redevelopment Program Act. The City of San Rafael had previously opted to continue the Agency pursuant the Alternative Redevelopment Program Act. As a result, the Redevelopment Agency will be dissolved on February 1, 2012. The Redevelopment Agency's non -housing funds and assets will then be turned over to a successor off agency (the "Successor Agency") charged with the responsibility of paying othe former Redevelopment Agency's existing debts, disposing of the former Redevelopment Agency's properties and assets to help pay off debts and return revenues to the local government entities that receive property taxes (the "Taxing Entities"), and winding up the affairs of the former Redevelopment Agency. The Redevelopment Agency's affordable housing assets, other than its FOR CITY CLERK ONLY File No.: 140 YQX City Council 11206c,12— Disposition:ition: 1 ! Page 2 existing housing fund balance, will be turned over to a successor housing agency (the "Successor Housing Agency") to continue performing affordable housing activities. (The former Redevelopment Agency's affordable housing fund balance will be remitted to the County Auditor -Controller for distribution to the Taxing Entities.) The Dissolution Act provides that the City of San Rafael (the "City") as the community that established the Redevelopment Agency, will be the Successor Agency to the former Redevelopment Agency unless the City elects not to serve as the Successor Agency, in which case the first other Taxing Entity making a proper election will be designated as the Successor Agency. If the City elects not to be the Successor Agency, it must adopt a resolution to that effect and notify the County Auditor -Controller by not later than January 13, 2012. Even if it elects to be the Successor Agency, the Agency's special redevelopment counsel recommends that a resolution to that effect and accompanying notice be provided by the County Auditor - Controller in order to have a clear record of the City's intention. The Dissolution Act also authorizes the City to elect to become the Successor Housing Agency of the former Redevelopment Agency and to retain the housing assets (other than any existing housing fund balance) and affordable housing functions of the former Redevelopment Agency. If the City does not elect to become the Successor Housing Agency, then the local Housing Authority (or if there is no local Housing Authority, the California Department of Housing and Community Development) will become the Successor Housing Agency. ANALYSIS: The Successor Agency and the Successor Housing Agency will play a key day-to- day role in assuring that the existing obligations of the former Redevelopment Agency are properly paid, and that the former Redevelopment Agency's properties and other assets are disposed of in an appropriate manner. While the Successor Agency will be overseen by an "Oversight Board" of seven representatives selected largely by the County and various local education districts, the staff of the Successor Agency will have a strong role in initiating and implementing actions in a way that achieves not only the requirements of the Dissolution Act but also is sensitive to the long-term development needs of the City and local community, and that protects the good name of the City in the financial markets by assuring timely repayment of the former Redevelopment Agency's existing debts. This is especially true in San Rafael where the Agency is party to a Fiscal Agreement with the County of Marin and the local school districts. The issues involved in the unwinding of the Fiscal Agreement will be complex and the City will need to be very involved to assure that the City of San Rafael receives its fair share of the property taxes within the former San Rafael Redevelopment Project Area. If the City elects not to serve this role, the Successor Agency will be some other Taxing Entity that is likely to have no experience in redevelopment financial and land disposition matters and that may not necessarily take into account the interests of the City and local community in performing its functions. Similarly, if the City elects not to serve as the Successor Housing Agency, then some other entity outside the City's control will perform various affordable housing functions in the City using affordable housing assets of the former Redevelopment Agency. FISCAL IMPACT: The Dissolution Act provides that the liability of the Successor Agency is limited to the funds and assets it receives under the Dissolution Act to perform its functions. Thus, if it takes on the role of Successor Agency (and Successor Housing Agency), the City would not expose its General Fund to liability to discharge the obligations of the former Redevelopment Agency (unless it was found to have mismanaged or misappropriated the funds Page 3 and assets it does receive under the Dissolution Act). That said, it would be important for the City, if it becomes the Successor Agency (and Successor Housing Agency), to exercise the same care and prudence in the management and protection of the funds and assets that it receives from the former Redevelopment Agency as the City applies with its own funds and assets. Subject to the approval of the Oversight Board, the Dissolution Acts permits the Successor Agency to receive an annual operating budget amount up to five percent of the property tax allocated to the Successor Agency for FY 2011-12 to pay the former Redevelopment Agency's existing debts, and up to three percent of the property tax allocated to the Successor Agency each succeeding fiscal year•, provided, however, that the annual amount shall not be less than $250,000 for any fiscal year (or such lesser amount as agreed to by the Successor Agency). The amount of the property taxes allocated to the Agency in FY 2011-12 has not been calculated due to the complexities of unwinding the current Fiscal Agreement. Staff estimates the amount of funding available to the Successor Agency could range from $250,000 to $323,000 for the first year and $250,000 in subsequent years. It is possible, but not clear in the currently written Dissolution Act, that the City could receive a portion of this amount to perform its functions as the Successor Housing Agency. (Otherwise, the City would need to fund its Successor Housing Agency activities from asset -related revenues it receives (e.g., affordable housing loan repayments and other program income generated by the housing assets it inherits from the former Redevelopment Agency), or other revenue sources including the City General Fund. The Agency does receive some minimal amounts from affordable housing loan repayments. ACTION REQUIRED: For the reasons set forth above, staff recommends that the City Council adopt the resolution, a copy of which is attached and on file with the City Clerk electing to serve as both the Successor Agency and Successor Housing Agency to the former Redevelopment Agency, and directing staff to file the appropriate notification of these elections in accordance with the Dissolution Act. ATTACHMENT: Resolution and draft letter to County Auditor -Controller. RESOLUTION NO. 13279 RESOLUTION OF THE CITY OF SAN RAFAEL TO EXPRESS ITS INTENT TO SERVE AS THE SUCCESSOR AGENCY OF THE SAN RAFAEL REDEVELOPMENT AGENCY, PURSUANT TO HEALTH AND SAFETY CODE SECTION 341710) AND SECTION 34173, AND TO ELECT TO RETAIN THE HOUSING ASSETS AND FUNCTIONS PREVIOUSLY PERFORMED BY THE SAN RAFAEL REDEVELOPMENT AGENCY, PURSUANT TO HEALTH AND SAFETY CODE SECTION 34176 WHEREAS, Assembly Bill 1X 26 (the "Dissolution Act") and Assembly Bill 1X 27 (the "Alternative Redevelopment Program Act") were enacted on June 28, 2011, to significantly modify the Community Redevelopment Law (Health & Safety Code §33000, et seq.; the "Redevelopment Law"); and WHEREAS, 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 .WHEREAS, on December 29, 2011, the California Supreme Court ruled that the Dissolution Act is largely constitutional and the Alternative Redevelopment Program Act is unconstitutional; and WHEREAS, the Court's decision means that all California redevelopment agencies will dissolve on February 1, 2012 pursuant to the Dissolution Act; and WHEREAS, the Dissolution Act provides that the city that authorized the creation of the redevelopment agency shall be the "successor agency" to the dissolved redevelopment agency unless the city elects not to serve as the successor agency under Section 34173(d)(1) of the Redevelopment Law; and WHEREAS, Section 34176(a) of the Redevelopment Law provides that the city that authorized the creation of a redevelopment agency may elect to retain the housing assets and functions previously performed by the former redevelopment agency; and WHEREAS, the City intends to, and shall serve as, the successor agency for the San Rafael Redevelopment Agency (the "Agency") in accordance with Section 341710) and Section 34173 of the Redevelopment Law; and WHEREAS, the City desires to elect to retain the housing assets and functions previously performed by the Agency in accordance with Section 34176 of the Redevelopment Law. NOW, THEREFORE, BE IT RESOLVED, that the City hereby accepts the designation, and hereby declares its intent, to serve as the successor agency for the Agency in accordance with Section 341710) and Section 34173 of the Redevelopment Law. BE IT FURTHER RESOLVED, the City hereby elects to retain the housing assets and functions previously performed by the Agency in accordance with Section 34176 of the Redevelopment Law. BE IT FURTHER RESOLVED, that the City Manager, or her designee, is hereby directed to file a copy of this resolution with the County Auditor -Controller, BE IT FURTHER RESOLVED, that the City Manager, or her designee, is hereby authorized to take such additional actions, and to execute all documents necessary and appropriate, for the City to transfer the assets of the Agency to the City, in its capacity as successor agency to the Agency, pursuant to Sections 34175 and 34176 of the Redevelopment Law. 1, ESTHER BEIRNE, Clerk of the City of San Rafael, hereby certify that the foregoing resolution was duly and regularly introduced and adopted at a regular meeting by the City Council of the City of San Rafael on the 3rd day of January, 2012 by the following vote, to wit: AYES: COUNCILMEMBERS: Connolly, Heller, Levine, McCullough & Mayor Phillips NOES: COUNCILMEMBERS: None ABSENT: COUNCILMEMBERS: None A=X2W 4tc_k Esther Beirne, City Clerk January 6, 2012 Roy Given Director of Finance Auditor -Controller, County of Marin 3501 Civic Center Drive, Room 225 San Rafael, California 94903 MAYOR GARY Q PHILLIPS COUNCILMEMBER DAMON CONNOLLY COUNCILMEMBER BARBARA HELLEB COUNCILMEMBER MARC LEVINE ER ANDREW CUYUGAN MCCULLOUGN CITY MANAGER'S OFFICE PHONE: 415-485-3070 FAX: 415-459-2242 Via Electronic Mail and U.S. Mail Subject: Notification Regarding Successor Agency for the San Rafael Redevelopment Agency Dear Mr. Given: This letter serves as the formal notification that the City of San Rafael (the "City") has adopted Resolution No. 13279 on January 3, 2012 (the "Resolution"), to accept the designation, and to declare its intent, to serve as the "successor agency" for the San Rafael Redevelopment Agency (the "Agency") in accordance with Health & Safety Code Section 341710) and Health & Safety Code Section 34173. In addition, pursuant to the Resolution, the City has elected to retain the housing assets and functions previously performed by the Agency in accordance with Health & Safety Code Section 34176. A copy of the Resolution is attached to this letter. Thank you for your attention to this matter. Should you have any questions, please contact Stephanie Lovette at (415) 485-3460 or stephanie.lovette@cityofsanrafael.org. Sincerely, Nancy Mackle City Manager t 1400 FIFTH ,AVENUE - PO Box 151560 • SAN RAFAEL, CA 94915-1560 W W W.CITYOFSANRAFAEL.ORG 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: 1/3/2012 FROM: Stephanie Lovette DEPARTMENT: Economic Development DATE: TITLE OF DOCUMENT: RESOLUTION OF THE CITY OF SAN RAFAEL TO EXPRESS ITS INTENT TO SERVE AS THE SUCCESSOR AGENCY OF THE SAN RAFAEL REDEVELOPMENT AGENCY, PURSUANT TO HEALTH AND SAFETY CODE SECTION 341710) AND SECTION 34173, AND TO ELECT TO RETAIN THE HOUSING ASSETS AND FUNCTIONS PREVIOUSLY PERFORMED BY THE SAN RAFAEL REDEVELOPMENT AGENCY, PURSUANT TO HEALTH AND SAFETY CODE SECTION 34176 FA L0-.. - .. *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** *** (LOWER HALF OF FORM FOR APPROVALS ONLY) APPROVED AS COUNCIL / AGENCY AGENDA ITEM: City Manager (signature) REMARKS: Resolution prepared by Goldfarb APPROVED AS TO FORM: L �� 2,� / -L City Attorney (signature)