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TO:HONORABLE CHAIRMAN AND MEMBERS OF THE BOARD
DATE:FEBRUARY 4, 2003
SUBJECT:LOAN AGREEMENT BETWEEN THE CITY AND RDA
Staff Coordinator: Kathryn Downs, Accounting Manager
Authorize the Agency Chairman and the Agency Secretary to execute the attached Loan Agreement between the City and the Rancho Palos Verdes Redevelopment Agency.
BACKGROUND AND ANALYSIS:
The Abalone Cove landslide abatement project of the Redevelopment Agency (the "Agency") was initially financed by the issuance of $10 million of County Improvement District Bonds (the "Bonds") in 1991. The Bonds were issued as part of the Reimbursement and Settlement (Horan) Agreement entered into between the County, City, Agency and the Horan litigants in 1987. After payment of amounts owed the County and the City, approximately $6.7 million of net bond proceeds were transferred to the Agency's Abalone Cove fund in 1991 to finance landslide abatement projects.
Under the terms of the bond restructuring in 1997, the County Bonds were repaid through the Agency's issuance of $5,455,000 of tax allocation bonds and a lump sum payment of $4,545,000 to the County. The lump sum payment was funded with $2 million of accumulated tax increment, $1 million of fund reserves from the Abalone Cove fund and a loan to the Abalone Cove fund by the City in the amount of $1,545,000.
The City and the Agency previously entered into a Loan Agreement, dated November 30, 1997, when the City advanced the $1,545,000 to the Abalone Cove fund as a part of the 1997 bond restructuring. With accrued interest of $674,019 through June 30, 2002, the total amount owed to the City by the Abalone Cove fund of the Agency is $2,219,019 as of June 30, 2002.
Upon completion of various landslide abatement projects, including the Abalone Cove Sewer System, approximately $63,000 remains in the Agency’s Abalone Cove fund. Staff has estimated that approximately $75,000 is needed to complete sewer lateral installations for 3 properties, prepare as-built plans for the sewer system, and perform miscellaneous site restoration activities.
The attached Loan Agreement provides for the additional principal advance and a consolidation of all previous years loan activities in both the Abalone Cove and Portuguese Bend funds as required by the terms of the previous Loan Agreement. The proposed Loan Agreement continues to require the maturity of the loan with the close of the fiscal year.
This loan agreement, dated as of July 1, 2002 is made by and between the City of Rancho Palos Verdes (the "City") and the Rancho Palos Verdes Redevelopment Agency (the "Agency"). For and in consideration of the mutual covenants and promises set forth herein, the parties agree as follows:
R E C I T A L S
This loan agreement is entered into with reference to the following facts:
A. In furtherance of the objectives of the Redevelopment Law, the Agency has undertaken a program for the redevelopment of blighted areas in the City, and in this connection, has undertaken and is now carrying out the responsibility for the redevelopment of the Project Area pursuant to and in furtherance of the Redevelopment Plan.
B. The Agency and the City have adopted the Redevelopment Plan providing for the re-development of the Project Area by undertaking such actions as may be appropriate to abate the geologic hazards in the Project Area.
C. Prior to execution of this Loan Agreement, the City previously advanced the Agency's Portuguese Bend fund $4,320,552, plus accumulated interest for a total outstanding balance of $8,656,978 as of June 30, 2002. The history of the loans made by the City to the Portuguese Bend fund of the Agency is as follows:
D. The City does not expect to make any loan advances to the Portuguese Bend fund of the Agency during FY 2002-2003.
E. Prior to execution of this Loan Agreement, the City previously advanced the Agency's Abalone Cove fund $1,545,000 plus accumulated interest for a total outstanding balance of $2,219,019 as of June 30, 2002. The history of the loans made by the City to the Abalone Cove fund of the Agency is as follows:
F. Subject to authorization by the City Council, the City shall make an additional loan advance of $12,000 to the Abalone Cove fund of the Agency during FY 2002-2003.
Section 1.01. Agency. "Agency" means the Rancho Palos Verdes Redevelopment Agency, a body public, corporate, and politic, organized and existing pursuant to the Constitution and laws of the State of California.
Section 1.02. Abalone Cove fund. "Abalone Cove fund" means the accounting entity used to account for the activities of Abalone Cove projects of the Rancho Palos Verdes Redevelopment Agency.
Section 1.03. Portuguese Bend fund. "Portuguese Bend fund" means the accounting entity used to account for the activities of Portuguese Bend projects of the Rancho Palos Verdes Redevelopment Agency.
Section 1.04. Bond. "Bond" means the CI 2651-M, 1915 Act Limited Obligation Improvement Bonds (Abalone Cove) issued by the County in the principal amount of $10,000,000 and repaid upon restructuring of the Bond on November 1, 1997, including the issuance of the RDA Bond as described in Section 1.14 of this Loan Agreement.
Section 1.05. City. "City" means the City of Rancho Palos Verdes, a municipal corporation, organized and existing pursuant to the Constitution and laws of the State of California.
Section 1.06. County. "County" means the County of Los Angeles, California.
Section 1.07. Fiscal Year. "Fiscal Year" means the fiscal year beginning on July 1st and ending on the next following June 30th.
Section 1.08. Housing Fund. "Housing Fund" means the Project Area Low and Moderate Income Housing Fund established pursuant to section 33334.3 of the Redevelopment Law and held by the Agency.
Section 1.09. Loan Agreement. "Loan Agreement" means this loan agreement entered into July 1, 2002 between the City and Agency.
Section 1.010. MOU. "MOU" means the Memorandum of Understanding, dated November 1, 1997, between the County, the City and the Agency.
Section 1.11. Net Tax Increment. "Net Tax Increment" means, for each Fiscal Year, the taxes (including all payments, reimbursements and subventions, if any, specifically attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations) eligible for allocation to the Agency pursuant to the Redevelopment Law in connection with the Project Area (excluding (a) amounts, if any, received by the Agency pursuant to Section 16111 of the Government Code; (b) amounts payable to the Consolidated Fire Protection District of Los Angeles County pursuant to Section 8B of that certain Reimbursement and Settlement Agreement dated October 13, 1987 among the County, the Agency and the City; and (c) amounts deposited by the Agency in the Housing Fund pursuant to Section 33334.2 of the Redevelopment Law, as provided in the Redevelopment Plan.
Section 1.12. Party. "Party" means any party to this Agreement.
Section 1.13. Project Area. "Project Area" means the territory included within Project Area No. 1 of the Agency.
Section 1.14. RDA Bond. "RDA Bond" means the tax allocation Bond of the Agency in the principal amount of $5,455,000 issued by the Agency for the corporate purposes of the Agency to aid in the financing and refinancing of redevelopment activities of the Agency.
Section 1.15. Redevelopment Law. "Redevelopment Law" means the Community Redevelopment Law (California Health and Safety Code Sections 33000, et. seq.)
Section 1.16. Redevelopment Plan. "Redevelopment Plan" means the Redevelopment Plan for the Project Area.
Section 2.01. Loan. The unpaid principal and accrued interest balance advanced by the City to the Agency's Portuguese Bend fund totals $8,656,978 at June 30, 2002. This amount is in addition to the total unpaid principal and accrued interest balance of $2,219,019 advanced to the Abalone Cove fund of the Agency and still outstanding as of June 30, 2002. The total unpaid balance of $10,875,997 shall constitute the balance owed under the Loan Agreement.
Section 2.02. Interest Payable. Interest shall be payable on the unpaid principal of such new loan and all prior loans incorporated herein, shall draw interest, compounded annually on a 360 day year, at a rate calculated as the rate earned on the City's LAIF deposits plus three percent per annum commencing on the date or dates said funds are transferred, and continuing until principal and interest are paid in full.
Section 2.03. Terms of Repayment. Agency shall repay the loan from Net Tax Increment and any other legally available monies of the Agency. The loan will mature concurrently with the close of the City's 2002-2003 fiscal year, provided, however, that the maturity date will be extended to the degree that the Agency has insufficient funds to repay the loan. To the extent that the Agency is able to repay any portion of the outstanding principal or interest and fails to do so, the City may exercise any appropriate remedy to enforce payment by the Agency hereunder. The obligation of the Agency to repay this loan is subordinate to the payment of the RDA Bond and the unpaid interest on the Bond as of the Settlement Date, all in accordance with the MOU. In addition, the obligation of the Agency to repay this loan may be subordinated to any other bonds, notes or other obligations of the Agency to the extent that the City agrees.
Section 2.04. Previous Loans Consolidated. All previous loans made to the Agency by the City are now consolidated and incorporated within this Loan Agreement. This Loan Agreement supersedes all previous loan agreements between the City and Agency.
IN WITNESS HEREOF THE PARTIES HAVE CAUSED THIS LOAN AGREEMENT TO BE EXECUTED.
CITY OF RANCHO PALOS VERDES
RANCHO PALOS VERDES REDEVELOPMENT AGENCY