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CC:SA - Adoption of Respective Resolutions Approving a Loan Agreement between the City of Culver City and the Successor Agency to the Culver City Redevelopment Agency to Address Temporary Cash Flow Needs in an Amount Not-to-Exceed $206,750.
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Contact Person/Dept: Jeff Muir/Finance
Phone Number: (310) 253-5865
Fiscal Impact: Yes [X] No [] General Fund: Yes [X] No []
Public Hearing: [] Action Item: [] Attachments: Yes [X] No []
Commission Action Required: Yes [] No [X]
Commission Name:
Public Notification: (E-Mail) Meetings and Agendas - City Council (08/19/15); (E-Mail) Meetings and Agendas - Successor Agency (08/19/15)
Department Approval: Jeff Muir, Chief Financial Officer (08/17/15)
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RECOMMENDATION
Staff recommends the City Council and Successor Agency Board adopt respective resolutions approving a Loan Agreement for a loan of up to $206,750 (Loan) from the City to the Successor Agency to the Culver City Redevelopment Agency (Successor Agency) to address temporary cash flow needs of the Successor Agency. (Note: Should the City Council and Successor Agency Board approve this evening’s item, the Successor Agency Board’s approval is subject to the approval of the Oversight Board and the State Department of Finance).
BACKGROUND / DISCUSSION
The Successor Agency is currently responsible for making payments of “enforceable obligations” of the former Culver City Redevelopment Agency (Former CCRA). Successor Agency staff has prepared a Recognized Obligations Payment Schedule (ROPS) for the period covering January 1, 2016 through June 30, 2016 (ROPS 15-16B). During the January through June ROPS period, all Redevelopment Property Tax Trust Fund (RPTTF) monies received are first pledged to pay annual debt service on outstanding Former CCRA tax allocations bonds prior to other obligations. Based on prior year RPTTF allocations received in January, staff is confident the amount of RPTTF received on January 2, 2016 will not be sufficient to pay the full amount of annual debt service. In order to pay some other known obligations that will come due during this period for bond arbitrage analysis and legal services, the Loan from the City to the Successor Agency would be required. The City has twice previously provided such cash flow loans to the Successor Agency and been repaid. The requested Loan of up to $206,750 would fund the following items for ROPS 15-16B:
Line 8 Bond Logistix LLC $ 6,750
Line 10 Kane Ballmer and Berkman $200,000
The City Council and the Successor Agency Board are asked to adopt resolutions which approve the proposed loan agreement, attached as Exhibit A, which, if ultimately approved by the Oversight Board and the State Department of Finance, would be an enforceable obligation and be repaid from future RPTTF revenues received by the Successor Agency in accordance with the Redevelopment Dissolution Act.
Section 34173(h) of the California Health and Safety Code provides:
“The city, county, or city and county that authorized the creation of a redevelopment agency may loan or grant funds to a successor agency for administrative costs, enforceable obligations, or project-related expenses at the city’s discretion, but the receipt and use of these funds shall be reflected on the Recognized Obligation Payment Schedule or the administrative budget and therefore are subject to the oversight and approval of the oversight board. An enforceable obligation shall be deemed to be created for the repayment of those loans.”
Pursuant to the above Section, should the City Council and Successor Agency Board take the recommended actions, the loan agreement will be presented to the Oversight Board for consideration. Should the Oversight Board approve, the action of the Oversight Board will be submitted to the State Department of Finance for approval. Should the State Department of Finance provide its approval (or allow the time period for its review to expire without action), then the Successor Agency will include the loan repayment on future ROPS(s).
FISCAL ANALYSIS
As previously mentioned, the Successor Agency has a need for certain legal and consulting services and will not have sufficient RPTTF available in the upcoming ROPS period. To meet this need, staff is recommending the City provide the Successor Agency with a short-term loan under the following terms:
Principal: Up to $206,250
Interest: Equal to the Local Agency Investment Fund (LAIF) rate, compounded annually
Terms: Principal and interest due and payable in full following the June 1, 2016 payment to the Successor Agency from the RPTTF. However, should the Successor Agency receive insufficient funds from the RPTTF to pay all costs shown on ROPS 16-17A, then the balance of any principal and interest due on the Loan shall be due and payable in full on the next ROPS.
Repayment of the Loan to the City will be secured by future RPTTF receipts by the Successor Agency.
ATTACHMENTS
1. Proposed City Resolution
2. Proposed Successor Agency Resolution
3. Exhibit A - Loan Agreement
RECOMMENDED MOTIONS
That the City Council:
1. Adopt a Resolution approving an Agreement for a loan from the City to the Successor Agency to the Culver City Redevelopment Agency in a principal amount up to $206,750 with interest equal to the Local Agency Investment Fund, with principal and interest due and payable in full following the June 1, 2016 payment to the Successor Agency; and,
2. Authorize the City Attorney and City Special Counsel to review/prepare the necessary documents; and,
3. Authorize the City Manager to execute such documents on behalf of the City; and,
4. Authorize the Chief Financial Officer to draw down funds from the Loan as necessary.
That the Successor Agency Board:
1. Adopt a Resolution approving a Loan Agreement between the City and the Successor Agency to the Culver City Redevelopment Agency in a principal amount up to $206,750 with interest equal to the Local Agency Investment Fund due and payable in full following the June 1, 2016 payment to the Successor Agency (with such approval being subject to the approval of the Oversight Board and the State Department of Finance); and,
2. Authorize the Successor Agency General Counsel and Successor Agency Special Counsel to review/prepare the necessary documents; and,
3. Authorize the Executive Director to execute such documents on behalf of the Agency; and,
4. Authorize the Chief Financial Officer to draw down and repay funds from the Loan as necessary.