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2 March 7, 2011 Staff recommends authorization of a Public Improvement Agreement between the Redevelopment Agency and City of San Leandro and approval of findings pursuant to Section 33445 of the California Community Redevelopment Law regarding use of redevelopment tax increment funds for the construction of Eden Road ( "the Project "). 13ACKGROUND The California Governor proposed a budget to disband redevelopment agencies as of July I, 2011, and use tax increment to fund state obligations. Draft legislation released on February 23, 2011 details the proposed mechanics of this process. Under that legislation, redevelopment agencies will lose their ability to commit funds as of the effective date (potentially as early as March 10, 2011). Additionally, agencies will be required to forfeit their fund balances on July 1, 2011. The purpose of the proposed Public Improvement Agreement is to obligate the Agency to fund the construction of Eden Road in order to protect these funds from being taken by the state. The specified project and staffing to support the project would be funded with redevelopment tax increment funds from the West San Leandro - MacArthur Boulevard (West San Leandro) Project Area. Given that the City and /or Agency has already made a substantial investment, described more fully below, failure to complete the improvements would negatively impact the value of the previous investment and impede ongoing efforts to eliminate blight. A Cooperative Agreement executed on January 17, 2011 obligated Agency funds for this project and others. Although staff believes that this obligation is still valid and enforceable, the text of the draft legislation threatens our ability to complete those projects in a timely manner. If the Agency were forced to forfeit its entire fund balances on July 1, 2011, the projects would only receive funding as future revenues, resented for RDA debt, become available. The distribution of the future funds is uncertain, so staff recommends transferring some available revenues at this time. Section 33445 of the California Community Redevelopment Law (California Health and Safety Code Section 33000 et seq.) (the "Redevelopment Law ") requires that a redevelopment agency may, with the consent of the legislative body, pay for all or a portion of the value of land for and the cost of the installation and construction of public improvements located within a project area if the Agency and the legislative body determine that: 1) The acquisition of land or the installation or construction of the buildings, facilities, structures, or other improvements that are publicly owned are of benefit to the project area by helping to eliminate blight within the project area or providing housing for low - or moderate- income persons; and 2) No other reasonable means of financing the acquisition of the land or installation or construction of the buildings, facilities, structures, or other improvements that are publicly owned, are available to the community; 3) The payment of funds for the acquisition of land or the cost of buildings, facilities, structures, or other improvements that are publicly owned is consistent with the implementation plan adopted pursuant to Section 33490;