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SA_FULL PACKET_2012-10-01
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SA_FULL PACKET_2012-10-01
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11/4/2013 9:02:48 AM
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10/1/2012 8:56:51 AM
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City Clerk
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Agenda Packet
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Community Development
Date
10/1/2012
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improvements pursuant to the agreement. Specifically, in the event the Successor Agency's <br />obligation to pay the Fees is triggered, the Successor Agency will be required to pay one percent <br />(1 %) of the estimated cost of construction of the development for which the Fees are charged <br />directly to the City and the Developer will make a loan to the Successor Agency equal to the <br />remaining amount of the Fees ("Fee Loan"). The Fee Loan is required to be paid from and is <br />secured by a pledge of former tax increment accruing from the Site (defined in the S.A. Venture <br />Agreement). <br />Although the specific development to which the Fees and the Fee Loan relate has not yet <br />commenced, the Successor Agency's obligation to pay the Fees and to borrow and repay the Fee <br />Loan constitute one component of a broader, multifaceted contractual arrangement between the <br />Former Agency (now the Successor Agency) and the Developer. The Developer has expended <br />significant moneys and taken substantial actions in reliance on the Former Agency's/Successor <br />Agency's obligation to perform its obligations under the S.A. Venture Agreement, including <br />payment of the Fees and repayment of the Fee Loan. <br />The DOF has taken the position that "Section 34163 (b) prohibits a redevelopment <br />agency from incurring any obligations or making commitments after June 27, 2011." The DOF <br />further states, in the May 24 Letter, that the DOF believes "that commitments have not been <br />made for the $1.6 million [Fees/Fee Loan] and that this is an estimated amount for possible <br />future projects." <br />As an initial matter, Section 34163 is not applicable to the Successor Agency. <br />Section 34163, cited by the DOF, does not mention successor agencies at all; instead, this section <br />lists actions that former redevelopment a encies were prohibited from taking during the period <br />between the passage of ABIx 26 and February 1, 2012, the date all redevelopment agencies were <br />dissolved.b More fundamentally, the S.A. Venture Agreement and the Former Agency's <br />obligation to pay the Fees in connection with specified future development pursuant to that <br />agreement do not constitute new obligations or commitments of the Former Agency or the <br />Successor Agency. This obligation was set forth in the original Participation Agreement, <br />executed in 1984, and was amended in the Third Amendment to the Participation Agreement, <br />executed in 1992-Long before the passage of the Dissolution Act and AB 1484. <br />Even if Part 1.8 governed the obligations and authority of successor agencies, <br />Section 34167, subdivisions (d)(5) and (f) clarify the California legislature's intent that <br />obligations such as the S.A. Venture Agreement were intended to be honored in the dissolution <br />process. Section 34167(d)(5) defines "enforceable obligation" to include `[a]ny legally binding <br />and enforceable agreement or contract that is not otherwise void as violating the debt limit or <br />public policy." Section 34167(f) provides that "[n]othing in this part shall be construed to <br />interfere with a redevelopment agency's authority, pursuant to enforceable obligations as defined <br />in this chapter, to (1) make payments due, (2) enforce existing covenants and obligations, or <br />6 Specifically, Section 34163 states "Notwithstanding Part 1 (commencing with Section 33000), Part 1.5 <br />(commencing with Section 34000), Part 1.6 (commencing with Section 34050), and Part 1.7 (commencing with <br />Section 34100), or any other law, commencing on the effective date of [Part 1.8], an agency shall not have the <br />authority to, and shall not, do any of the following: ... (b) Enter into contracts with, incur obligations, or make <br />commitments to, any entity ... for any purpose...." Emphasis added. <br />Page 5 of 9 <br />3-23
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