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AHA-2014/09/09 ANAHEIM HOUSING AUTHORITY REGULAR MEETING OF SEPTEMBER 9, 2014 The Anaheim Housing Authority regular meeting was called to order on September 9, 2014 at 5:40 P.M. for a joint public comment session with the Anaheim City Council. The meeting notice, agenda and related materials were duly posted on September 5, 2014. Present: Chairman Tom Tait and Authority Members: Jordan Brandman, Gail Eastman, Lucille Kring and Kris Murray Staff Present: Paul Emery, Interim City Manager, City Attorney Michael Houston and Secretary Linda Andal ADDITIONS /DELETIONS TO THE AGENDA: None PUBLIC COMMENTS: Greg Diamond inquired why Council Member Murray resigned from the MWD board after five years and specifically what was the conflict of interest issue that was cited. He also requested that Item Nos. 25 through 30 be pulled for further clarification, asking if a loan of $2.5 million from the Housing Authority to the City of Anaheim who then turned around and loaned it to the Successor Agency (of the Redevelopment Agency) was an appropriate and legal action to take. CONSENT CALENDAR: At 7:13 P.M., Chairman Tait pulled Item Nos. 1, 2 and 3 from the consent calendar for further discussion. Housing Authority Member Kring then moved to approve the balance of the consent calendar as presented, seconded by Housing Authority Member Eastman. Roll Call Vote: Ayes — 5: (Chairman Tait and Authority Members: Brandman, Eastman, Kring and Murray). Noes — 0. Motion Carried. AHA177 Approve minutes of Housing Authority meetings of July 22, 2014 and August 12, 2014. OFF CONSENT ITEMS: Item Nos. 1, 2 and 3 were continued to September 23, 2014, per unanimous council action. The staff report addressed all three items collectively. 1. RESOLUTION NO. A RESOLUTION OF THE ANAHEIM HOUSING AUTHORITY approving a Cooperation Agreement (City /Housing Authority Loan Agreement — $2,537,362 ROPS III Period Excess Expenditure) by and between the City of Anaheim and the Anaheim Housing Authority and making certain findings in accordance therewith (related to Council Item No. 25) 2. RESOLUTION NO. A RESOLUTION OF THE ANAHEIM HOUSING AUTHORITY approving a Cooperation Agreement (City /Housing Authority Loan Agreement — ROPS II Prior Period Adjustment) by and between the City of Anaheim and the Anaheim Housing Authority and making certain findings in accordance therewith (related to Council Item No. 27). 3. RESOLUTION NO. A RESOLUTION OF THE ANAHEIM HOUSING AUTHORITY authorizing revisions to a Cooperation Agreement (Brookfield DDAs) by Anaheim Housing Authority Minutes of September 9, 2014 Page 2 of 4 and between the City of Anaheim and the Anaheim Housing Authority and making certain findings in accordance therewith (related to Council Item No. 29). John Woodhead, Director of Community Development announced that Items 1 and 2 consisted of resolutions authorizing loans from the Housing Authority to the City as a source of funds for city loans to the Successor Agency (the former Anaheim Redevelopment Agency) in the amount of $2,537,362 and $953,404 respectively. He added, as authorized by the Dissolution Act for purposes of funding expenditures in the recognized obligation payment schedules (ROPS) for 14 -15A period, the loan amounts represented the reduction of available proceeds from the Redevelopment Property Tax Trust Fund as authorized by the State Department of Finance for paying those approved enforceable obligations for the same period. Agenda Item No. 3, he stated, was a resolution amending a similar loan related to the Brookfield DDA, a loan that was approved by the Council in May of 2013 and was being amended to delete the interest from the repayment obligation in accordance with the State Department of Finance requirements. Chairman Tait stated he wanted to ensure that it was legal for the City of Anaheim to borrow funds from the Anaheim Housing Authority and lend them to the Successor Agency to cover obligations of that body. City Attorney Michael Houston responded that outside counsel with expertise in housing authority laws as well as redevelopment agency law was unavailable this evening for medical reasons, adding there were a number of actions /sequences occurring. Under redevelopment dissolution statutes, it was, without doubt, lawful for a city to determine to loan money to a successor agency for the payment of enforceable obligations under ROPS and that issue was not in question. With respect to the loan from the Housing Authority, after discussions with John Woodhead, Community Development Director, Mr. Houston stated while there was no specific statutory direct obligation for such a loan, this type of loan was common practice and had been done in Anaheim for years. In addition, there was no statutory prohibition against such type of a loan. He was not in a position to state whether there was statutory authorization for this because it was an area in which he had no personal expertise and relied on outside counsel for their input, emphasizing they had stated there was no prohibition against such action being taken. Mr. Woodhead remarked the law was very clear with respect to the City transaction as it related to the Successor Agency, and, in fact, when the Successor Agency had a cash flow issue brought on by the ROPS process, there were only two sources they could look to for funding; one was the county and the other was the host city and that had been made clear to staff. With respect to the Housing Authority loaning funds to the City so that the City could then make that transaction, Anaheim had done that in the past and it had been a past practice among the three entities, pooling resources and gifting money from one entity to the other to accomplish projects that were beneficial to the city. He added there were several instances in redevelopment law in which Anaheim was explicitly authorized to transfer housing monies to the Redevelopment Agency so they could satisfy obligations if they did not have the cash on hand, with Mr. Woodhead emphasizing he was specifically referring to ERAF and SERAF payments that the Agency was required to remit to the state to solve their budget crisis over the last ten years. He added the Agency had transmitted close to $40 million in that manner under express authorization and in implicit authorization with a number of transactions similar to tonight's request involving all three entities or any combination thereof to fund a number of projects. Chairman Tait remarked for him to be able to give approval, he would require confirmation that the actions to be taken were legal. He asked what would happen if the Housing Authority was not repaid. Mr. Woodhead responded that this was a gray area of the law and that he believed outside counsel was relying on the fact there had been a past practice that had not been Anaheim Housing Authority Minutes of September 9, 2014 Page 3 of 4 challenged and in May 2013, the city took a similar action regarding the Brookfield DDA to provide monies to make a similar loan to solve the Successor Agency cash flow problem and the DOF specifically told staff that this was a methodology the city could employ. He added that the DOF was at that time looking primarily at the transaction involving the City and the Successor Agency and was not concerned about the Housing Authority's involvement or the source of the City's funds. Mr. Houston added that the Health and Safety Code Section 34173h specifically authorized a transaction of a loan between the City and the Successor Agency although with respect to the Housing Authority loan to the City, he was not qualified to give an opinion, although outside counsel basically opined that in this gray area, there was no statutory prohibition against it nor was there a statutory grant of that authority either. He stated a direct opinion of outside counsel could be requested. Chairman Tait remarked he was not comfortable voting on this matter until an expert opinion was rendered. Authority Member Kring reaffirmed that staff was willing to take the risk because it was felt that risk was de minimums with Mr. Woodhead adding that the risk of funds not coming from the State Trust fund back to the Successor Agency was small as well as the risk of litigation for a process that had been undertaken repeatedly. She asked if it was possible to get an opinion from outside council in time to take action because there was some time sensitivity for this action. Mr. Woodhead replied that his deadline was in making sure the ROPS had been approved by the oversight board so that these cooperation agreements could be included in the ROPS and the funds received to make the city whole. Authority Member Kring then moved to approve Item Nos. 1, 2 and 3, seconded by Authority Member Eastman for purposes of discussion. Discussion: Authority Member Eastman requested clarification on the Successor Agency cash flow problem. Mr. Woodhead responded the city requested an allocation of funds from the trust fund, semi - annually, estimating how much was needed for projects. The estimations would not be entirely accurate and as a result, the State performed a true -up in every ROPS period and calculated what was asked for versus what was expended, and to the extent there were funds left over, when the city requested an allocation for a subsequent period, the state deducted that money from the funds they would otherwise provide. In fact, he stated, the State believed the city was sitting on $3.5 million, although that was not the case, and was always going to withhold that $3.5 million that was needed to satisfy obligations in a subsequent period. This all came about, he explained because the state changed a series of forms on cities again, when cities had been truing things up in the aggregate and not on a line by line basis. After continued discussion, Authority Member Brandman offered a subsidiary motion to continue Item Nos. 1, 2 and 3 to September 23, 2014 and to request a written opinion as to the legality of these actions from outside counsel and to assemble the oversight committee contingent on the Authority's vote on the 23 seconded by Authority Member Murray. Discussion: Authority Member Murray stated she would be available for a special meeting if that was necessary in order to address this complex situation and to have clear and precise direction before considering the matter; Authority Member Eastman was also available for a special meeting if needed. Roll CaII Vote: AYES — 5: (Chairman Tait and Authority Members: Brandman, Eastman, Kring and Murray.) NOES — 0. Motion carried to continue Items No. 1, 2 and 3 to September 23 including the related City Council items, (25 through 30). Anaheim Housing Authority Minutes of September 9, 2014 Page 4 of 4 ADJOURNMENT: With no other business to conduct, Chairman Tait recessed the Housing Authority agenda at 7:15 P.M. R specfully submitted, /-� Linda N. Andal, MC Secretary, Anaheim Housing Authority