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TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: DENNIS McLEAN, DIRECTOR OF FINANCE AND INFORMATION TECHNOLOGY
SUBJECT: LOAN AGREEMENT BETWEEN THE CITY AND RDA
DATE: JULY 1, 2003
Staff Coordinator: Gary Gyves, Senior Administrative Analyst
Authorize the Mayor and City Clerk to execute the attached Loan Agreement between the City and the Rancho Palos Verdes Redevelopment Agency.
BACKGROUND AND ANALYSIS:
Portuguese Bend Fund Financing
While the Abalone Cove fund of the Redevelopment Agency (the "Agency") has relied on bond proceeds to finance landslide abatement projects, the Portuguese Bend fund of the Agency relies on the City to finance its landslide projects. A sufficient fund balance will exist at June 30, 2003 to pay for all budgeted FY 2003-04 expenditures within the Portuguese Bend project area. The FY 2003-04 budget does not provide for any additional loan principal amounts to the Portuguese Bend fund of the Agency.
The total principal loan owed the City by the Portuguese Bend fund is $4,320,552 as of June 30, 2003. Including accrued interest of $4,792,744, the total amount owed to the City by the Portuguese Bend fund is $9,113,296 as of June 30, 2003.
Abalone Cove Fund Financing
The Abalone Cove landslide abatement project of 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. An additional $12,000 loan was made from the City to the Abalone Cove fund in FY 2002-03 to complete sewer lateral installations for 3 properties, prepare as-built plans for the sewer system, and perform miscellaneous site restoration activities. The total principal loan owed the City by the Abalone Cove fund is $1,557,000 as of June 30, 2003. Including accrued interest of $790,986, the total amount owed to the City by the Abalone Cove fund is $2,347,986 as of June 30, 2003.
The proposed Loan Agreement includes a history of loan advances made by the City to the Abalone Cove fund and Portuguese Bend fund of the Agency. The interest rate charged on the loan is equal to the rate earned by the City on its LAIF deposits plus three percent. The interest rate for FY 2002-03 was estimated based on ten months of available LAIF data. The interest charge will be recalculated when LAIF rates for May and June are released. The loan is subordinate to the payment of the 1997 RDA Bonds issued to the County in 1997.
No additional principal loans are anticipated to be made to the Agency in FY 2003-04. The attached Loan Agreement merely provides for 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 each fiscal year.
This loan agreement, dated as of July 1, 2003 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 of $4,792,744 as of June 30, 2003 for a total outstanding balance of $9,113,296. 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 2003-2004.
E. Prior to execution of this Loan Agreement, the City previously advanced the Agency's Abalone Cove fund $1,557,000, plus accumulated interest of $790,986 as of June 30, 2003 for a total outstanding balance of $2,347,986. The history of the loans made by the City to the Abalone Cove fund of the Agency is as follows:
F. The City does not expect to make any loan advances to the Abalone Cove fund of the Agency during FY 2003-2004.
Section 1.01. Agency. "Agency" means the Rancho Palos Verdes Redevelopment Agency, a public body, 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, 2003 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 $9,113,296 as of June 30, 2003. This amount is in addition to the total unpaid principal and accrued interest balance of $2,347,986 advanced to the Abalone Cove fund of the Agency and still outstanding as of June 30, 2003. The total unpaid balance of $11,461,282 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 2003-2004 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
City Clerk RANCHO PALOS VERDES REDEVELOPMENT AGENCY