8E Consent 2012 0507 - Laserfiche WebLink

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File Number: 12 -211 recognize agreements between a redevelopment agency and the city that created it. This determination impacts the aforementioned loan from the City to the Joint Project Area and four cooperative agreements to fund capital improvement projects. Analysis Although the language of AB x1 26 is relatively clear regarding the treatment of City- Agency agreements as unenforceable, many cities throughout California have questioned the Legislature's authority to invalidate financial agreements that pre -dated the dissolution bill and had the full force of law. Multiple AB x1 26 "clean -up" bills have been proposed to provide recognition of comparable City- Agency loans, although the fate of those proposals is not clear at this time. Nevertheless, given the DOF's determination, the recommended course of action for the Successor Agency at this time is to take advantage of a clause in AB x1 26 that allows a Successor Agency to re -enter into an agreement with the City. This clause is contained in Health and Safety Code Section 34178 (a) and reads as follows: "Commencing on the operative date of this part, agreements, contracts, or arrangements between the city or county, or city and county that created the redevelopment agency and the redevelopment agency are invalid and shall not be binding on the successor agency; provided, however, that a successor entity wishing to enter or reenter into agreements with the city, county, or city and county that formed the redevelopment agency that it is succeeding may do so upon obtaining the approval of its oversight board." The original loan had an interest rate of 6 percent, however the rate in the Amended and Restated Promissory Note has been reduced to 3 percent, a rate more consistent with current yields. The goal of this action is to protect funds owed to the City, while also reducing the debt burden of the Successor Agency. The term has been set at five years, consistent with an Oversight Board interest in processing debt of the former Redevelopment Agency expeditiously. Annual debt payments will be approximately $445,000, commencing in 2013 and terminating in 2017. This Amended and Re- stated Promissory Note will also have to be approved by the Successor Agency Oversight Board, an action that is scheduled for May 10, 2012. If approved by both the Successor Agency (City Council) and the Oversight Board, staff believes that the remaining balance due on this loan will be restored as an enforceable obligation on the ROPS. Funds to pay the obligation will be provided to the Successor Agency by the Alameda County Auditor Controller via the Redevelopment Property Tax Trust Fund and then the Successor Agency can pay the City, consistent with the terms of the Agreement. Previous Actions • On April 8, 2004 the Redevelopment Agency executed a Promissory Note confirming a debt of $4,372,774 owed to the City of San Leandro. • On June 21, 2004, the Redevelopment Agency approved Resolution 2004 -011 memorializing the debt. City of San Leandro Page 2 Printed on 51112012