RES-2013-028 RESOLUTION NO. 2013 -028
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF
ANAHEIM APPROVING A COOPERATION AGREEMENT
(LOAN AGREEMENT PURSUANT TO HEALTH & SAFETY
CODE SECTION 34173(h)) BY AND BETWEEN THE CITY OF
ANAHEIM AND THE SUCCESSOR AGENCY TO THE
ANAHEIM REDEVELOPMENT AGENCY, INCREASING THE
COMMUNITY DEVELOPMENT DEPARTMENT BUDGET
AND MAKING CERTAIN FINDINGS IN ACCORDANCE
THEREWITH
WHEREAS, the City is a municipal corporation and charter city organized and operating
under the laws of the State of California; and
WHEREAS, the Successor Agency is a public entity corporate and politic, organized and
operating under Part 1.85 of Division 24 of the Dissolution Act (as defined below); and
WHEREAS, the Anaheim Redevelopment Agency ( "former Agency ") previously was a
California public body, corporate and politic, duly formed by the City Council of the City
( "City Council ") and organized, existing and exercising the powers of a community
redevelopment agency under the California Community Redevelopment Law, Health & Safety
Code Section 33000, et seq.; and
WHEREAS, Assembly Bill xl 26 ( "AB xl 26 ") chaptered and effective on June 27, 2011
added Parts 1.8 and 1.85 to Division 24 of the California Health & Safety Code and which laws
were modified, in part, and determined constitutional by the California Supreme Court in the
petition California Redevelopment Association, et al. v. Ana Matosantos, et al., Case No.
S 194861 ( "Matosantos Decision "), which laws and court opinion caused the dissolution of all
redevelopment agencies and winding down of the affairs of former redevelopment agencies;
thereafter, such laws were amended further by Assembly Bill 1484 ( "AB 1484 ") that was
chaptered and effective on June 27, 2012 (together AB xl 26, the Matosantos Decision, and AB
1484 are referred to as the "Dissolution Act ")
WHEREAS, all statutory references herein are to the Dissolution Act unless otherwise
stated; and
WHEREAS, as of February 1, 2012, the former Agency became a dissolved community
redevelopment agency pursuant to the Dissolution Act; and
WHEREAS, as of and on and after February 1, 2012, the Successor Agency is
performing its functions as the successor agency under the Dissolution Act to administer the
enforceable obligations of the former Agency and is engaged in activities necessary and
appropriate to wind down the activities of the former Agency's Anaheim Merged
Redevelopment Project that was originally adopted and amended by ordinances of the City
Council, and otherwise unwind the former Agency's affairs, all subject to the review and
approval by a seven - member Oversight Board formed thereunder; and
WHEREAS, former Agency and LAB Holding, LLC ( "Developer ") entered into that
certain Disposition and Development Agreement ( "LAB DDA "), dated as of October 26, 2010,
prior to the effective date of the Dissolution Act; and
WHEREAS, Section 34171(d)(1)(E) of the Dissolution Act defines "enforceable
obligation" to include "any legally binding and enforceable agreement or contract that is not
otherwise void as violating the debt limit or public policy." The LAB DDA is a legally binding
and enforceable agreement that does not violate the debt limit or public policy and is therefore an
"enforceable obligation" properly included a recognized obligation payment schedule (each a
"ROPS "), in particular on the ROPS for the period January 1, 2013 to June 30, 2013 (herein,
ROPS III "); and
WHEREAS, by operation of law, the Successor Agency has assumed and is the successor
in interest to the former Agency under the LAB DDA and is subject to all performance and other
contractual obligations thereunder; and
WHEREAS, failure by the Successor Agency to perform its contractual obligations under
the LAB DDA would constitute a default under the LAB DDA, potentially subjecting the
Successor Agency to damages and liability to LAB Holding, LLC; and
WHEREAS, pursuant to Section 34177(a) of the Dissolution Act, the Successor Agency
is required to "continue to make payments due for enforceable obligations." Further, Section
34177(c) of the Dissolution Act requires the Successor Agency to "perform obligations required
pursuant to any enforceable obligation "; and
WHEREAS, Section 34171(d)(1)(E) of the Dissolution Act defines "enforceable
obligation" to include "any legally binding and enforceable agreement or contract that is not
otherwise void as violating the debt limit or public policy "; and
WHEREAS, Section 301 of the LAB DDA requires the Successor Agency to construct
certain "Agency Improvements" (at the Successor Agency's expense) on certain real property
now owned by the Successor Agency. The Agency Improvements are described in the Scope of
Development, Attachment No. 7 to the LAB DDA, and include buildings and all required
improvements to support the project and satisfy all conditions of approval imposed by the City of
Anaheim, specifically including parking and alley improvements necessary to comply with the
approved Water Quality Management Plan for the development ( "Parking and Alley
Improvements "). Upon completion of construction of the Agency Improvements and satisfaction
of certain other conditions, the Successor Agency is required to lease specified real property to
LAB Holding, LLC; and
WHEREAS, Section 34177.3(a) of the Dissolution Act, which provides that "successor
agencies shall lack the authority to, and shall not, create new enforceable obligations ... or begin
new redevelopment work, except in compliance with an enforceable obligation that existed prior
to June 28, 2011," shows that the California legislature understood that successor agencies would
be required to, in some cases, execute new enforceable obligations and perform redevelopment
work in order to comply with and perform contractual duties under valid enforceable obligations
such as the LAB DDA; and
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WHEREAS, pursuant to Section 34177(m) of the Dissolution Act, the Successor Agency
prepared ROPS III and submitted such ROPS III to the Oversight Board, the County of Orange,
Auditor Controller, and the State of California, Department of Finance ( "DOF ") for approval.
The ROPS III, as submitted by the Successor Agency, contained a line item for an expenditure of
$1,200,000 for the construction of the Parking and Alley Improvements ( "Item No. 88 "); and
WHEREAS, Notwithstanding that the LAB DDA is an enforceable obligation and the
Successor Agency is required to construct the Agency Improvements thereunder, in a letter dated
December 18, 2012 from Mr. Steve Szalay, Local Government Consultant to the DOF, to the
Successor Agency, attention Ms. Sheryl Montgomery ( "December 18 Letter "), the DOF rejected
Item No. 88. However, by way of explanation for this rejection, the December 18 Letter from
the DOF states:
"Additional review of the [LAB DDA] indicates the parking and alley
construction were specifically intended as evidenced by Recital C of the DDA and
a Planning Commission Report dated June 21, 2010, demonstrating the need for
the parking construction. In addition, per Section 301.2 of the DDA, "Cost of
Construction," the former Redevelopment Agency (RDA) is responsible for the
costs related to the parking and alley construction. We note, however, no
contracts are in place for the construction and the Agency did not provide
documentation that supports the property has been transferred to the developer.
Unless and until the property has been transferred and a contract is awarded for
these costs, the Agency is not eligible for funding from Redevelopment Property
Tax Trust Fund (RPTTF) for this item."
WHEREAS, in the quoted language of the December 18 Letter, the DOF acknowledges
that the construction of the Parking and Alley Improvements constitutes an enforceable
obligation of the Successor Agency under the LAB DDA, but that DOF requires a contract for
construction of the Parking and Alley Improvements to be in place before DOF will approve the
expenditure for this work on a subsequent ROPS. This presents a logistical challenge for the
Successor Agency, by requiring the Successor Agency to enter into a construction contract
without prior authorization from the DOF to make the payments required by such contract; and
WHEREAS, Section 34173(h) of the Dissolution Act authorizes the City to "loan or grant
funds to [the 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 "; and
WHEREAS, as authorized by and pursuant to Section 34173(h) of the Dissolution Act,
the City desires to assist the Successor Agency by providing a loan to the Successor Agency
pursuant to the Agreement (defined in Section 2 below) in an amount not to exceed the Parking
and Alley Construction Amount (defined below), to enable the Successor Agency to enter into
the Parking and Alley Construction Contract (defined below) at this time and to pay for the
construction of the Parking and Alley Improvements, all as required by the LAB DDA; and
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WHEREAS, the Agreement shall be subject to approval by the Oversight Board to the
Successor Agency and shall be included on the ROPS for the period from July 1, 2013 to
December 31, 2013 ( "ROPS 13 -14A ") and, as such, shall be subject to the approval of the DOF;
and
WHEREAS, provided that the Agreement is approved as an enforceable obligation on
ROPS 13 -14A (also referred to as "ROPS IV "), the Successor Agency shall repay all amounts
disbursed by the City to or on behalf of the Successor Agency from Redevelopment Property
Tax Trust Fund ( "RPTTF ") moneys received by the Successor Agency pursuant to ROPS 13-
14A; and
WHEREAS, concurrently with the Agreement and at this meeting, the Successor Agency
and City, on one hand, desire to enter into a construction contract with Spiess Construction Co.
Inc. ( "Contractor "), as the lowest responsible bidder, on the other hand, for the Parking and
Alley Improvements, specifically including construction of three parking lots (including a total
of 117 new parking stalls and security lighting) and reconstruction of the public alley directly
adjacent to the Citrus Packinghouse and Farmers Park facility, which are currently under
construction, all as required by the LAB DDA ( "Parking and Alley Construction Contract "); and
WHEREAS, the Parking and Alley Construction Contract will be for a total price of
$925,918.50. In addition, pursuant to Resolution No. 88R -124 approved by the City Council on
March 29, 1988, the Director of Public Works has the authority to approve change orders up to a
total, cumulative amount of $185,183.70 (being 20% of the contract price of $925,918.50).
Thus, the total potential expenditure authorized for the Parking and Alley Construction Contract
shall be $1,111,102.20 ( "Parking and Alley Construction Amount "); and
WHEREAS, the City Council desires to approve the Agreement and the Successor
Agency desires to transmit such Agreement to the Oversight Board and the DOF.
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY
OF ANAHEIM AS FOLLOWS:
Section 1. The foregoing recitals are incorporated into this Resolution by this
reference, and constitute a material part of this Resolution.
Section 2. The City Council hereby approves the Cooperation Agreement (Loan
Agreement pursuant to Health & Safety Code Section 34173(h)) by and between the City and the
Successor Agency ( "Agreement "), with such changes as may be mutually agreed upon by the
Community Development Director (or his duly authorized representative), the Executive
Director of the Successor Agency and the City Attorney, as are minor and in substantial
conformance with the form of the Agreement which has been submitted herewith. The
Community Development Director and the City Clerk are hereby authorized to execute and attest
the Agreement on behalf of the City. In such regard, the Community Development Director (or
his duly authorized representative) is authorized to sign the final version of the Agreement after
completion of any such non - substantive, minor revisions. Copies of the final form of the
Agreement, when duly executed and attested, shall be placed on file in the office of the City
Clerk. Further, the Community Development Director (or his duly authorized representative) is
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authorized to implement the Agreement and take all further actions and execute all documents
referenced therein and /or necessary and appropriate to make the City Loan (defined in the
Agreement) and otherwise carry out the transaction contemplated by the Agreement. The
Community Development Director (or his duly authorized representative) is hereby authorized to
the extent necessary during the implementation of the Agreement to make technical or minor
changes and interpretations thereto after execution, as necessary to properly implement and carry
out the Agreement, provided any and all such changes shall not in any manner materially affect
the rights and obligations of the City or the maximum City Loan amount provided under the
Agreement approved hereby.
Section 3. In addition to the authorization of Section 2 above, the Community
Development Director is hereby authorized, on behalf of the City, to sign all other documents
necessary or appropriate to carry out and implement the Agreement, including causing the
issuance of warrants in implementation thereto, and to administer the City's obligations,
responsibilities and duties to be performed under the Agreement.
Section 4. The City Council recognizes that the Agreement is and will be subject to
review and approval by the Oversight Board to the Successor Agency and the State of California,
Department of Finance pursuant to the Dissolution Act, in this regard the City Council authorizes
transmittal of the Agreement and any other related documentation required and the posting of a
true copy of Agreement on the Successor Agency website a copy pursuant thereto.
Section 5. The City Council hereby provides for a one -time increase in the current fiscal
year budget of the Community Development Department in the amount of the Parking and Alley
Construction Amount, which shall be the source of the proceeds of the City Loan.
Section 6. The City Clerk shall certify to the adoption of this Resolution.
(Remainder of page intentionally left blank; signatures on next page)
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THE FOREGOING RESOLUTION is approved and adopted by the City Council of the
City of Anaheim this 5th day of February , 2013, by the following roll call vote:
AYES: Mayor Tait, Council Members Eastman, Brandman, Kring and Murray
NOES: None
ABSENT: None
ABSTAIN: None
By:
MAYO OF THE CI OF ANAHEIM
ATTEST:
LAI OLilltioth,4
CITY CLERK OF THE CITY OF NAHEIM
93529 /TReynolds
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