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Home My WebLink About75B - PH DEBT INCURRED IN THREE REDEVELOPMENT AREASREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: NOVEMBER 17, 2008 TITLE: PUBLIC HEARING - ORDINANCE ELIMINATING DEADLINES FOR DEBT INCURRED IN THREE REDEVELOPMENT PROJECT AREAS C Y MANAG R RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ^ As Recommended ^ As Amended ^ Ordinance on 1St Reading ^ Ordinance on 2"d Reading ^ Implementing Resolution ^ Set Public Hearing For CONTINUED TO FILE NUMBER Adopt an ordinance to eliminate the time limits on the establishment of loans, advances and indebtedness to allow the Agency to incur debt up to the plan effectiveness deadlines for the Central City, Inter City, and Bristol Project areas. DISCUSSION In 2001, the California State legislature adopted SB211 which allows the City to amend a pre-1994 redevelopment plan to eliminate the time limit on debt incurrence. The legislative body is required to adopt a summary ordinance, which will allow the Redevelopment Agency to eliminate the time limits to establish new loans, advances or indebtedness. Upon adoption of the ordinance, the Agency will be required to pay the statutory pass through payments pursuant to Health & Safety Code Section 33607.7 to each affected taxing entity with which the Redevelopment Agency does not already have a pre-1994 pass through agreement. In January of 2004, the debt incurrence deadlines for the North Harbor, South Harbor, and South Main Project areas were extended. At that time it was determined that the financial impacts of the statutory pass through payments for the Central City and Inter City Project areas did not warrant extending the debt incurrence limits. Staff has since been analyzing the benefits of a debt restructuring to lower annual debt service obligations and raise new capital for eligible projects. Such a refinancing would necessitate the extension of time limits to incur debt. Should the debt refinancing not occur within a certain time frame due to bond market conditions, then the proposed ordinance will not become effective and there will be no additional financial obligation on the part of the Agency to the taxing entities. Notice of this public hearing was published on November 7, 2008. 75B-1 P.H. Ordinance Eliminating Deadlines for Debt Incurred in Three Redevelopment Project Areas November 17, 2008 Page 2 FISCAL IMPACT The projected net present value of pass through payments over the remaining term of the three project areas is $22,361,000 as a result of the amendment. APPROVED AS TO FUNDS AND ACCOUNTS: Cynthia J. Ne son Deputy City Manager for Development Services Community Development Agency ~rancisco Gutierrez ~~ Executive Director Finance & Management Services Agency CJN/NTE/kcg 75B-2 JW F 11 /03/08 ORDINANCE NO. NS- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA AMENDING THE CENTRAL CITY, INTER-CITY AND BRISTOL REDEVELOPMENT PLANS OF THE CITY OF SANTA ANA TO ELIMINATE THE TIME LIMIT IN EACH PLAN FOR THE INCURRENCE OF DEBT. THE CITY COUNCIL OF THE CITY OF SANTA ANA DOES ORDAIN AS FOLLOWS: SECTION 1: The City Council of the City of Santa Ana hereby, finds, determines and declares as follows: A. California Health & Safety Code Section 33333.6(a) & (b), part of the Community Redevelopment Law, was amended by Assembly Bill 1290 in 1993 to impose time limits on incurring debt, receipt of tax increment and effectiveness of the plan. The outside time limit for incurring debt under AB 1290 for plans adopted prior to 1994 was the later of 20 years after plan adoption or January 1, 2004. B. Senate Bill 211 (effective January 2002) permits the amendment of a pre-1994 plan to completely delete the debt incurrence deadline, with the result that an agency can incur debt under such a plan up to the deadline for the effectiveness of the plan. C. The City of Santa Ana wishes to utilize the procedure set forth in California Health and Safety Code section 33333.6(e)(2)(B) to eliminate the date that debt can be incurred in three of its six redevelopment plans so that the Redevelopment Agency can incur new debt until the end of the active life of the each of these three project areas so that the Agency can continue to meet its long term goals and objectives. D. The City of Santa Ana is cognizant that under Health and Safety Code section 33607.7, by adopting this ordinance amending the redevelopment plans in order to eliminate the debt incurrence time limit, the Redevelopment Agency will be required to pay the statutory pass-through payments to each affected taxing entity with which the Agency does not already have apre-1994 pass-through agreement. E. The Community Redevelopment Agency of the City of Santa Ana (the "Agency") is considering issuing approximately $88,000,000 in tax allocation bonds in early 2009 to restructure existing debt of the 75B-3 Agency as well as to generate additional bonds proceeds for Agency activities (the "2009 Tax Allocation Bonds"). Elimination of the debt incurrence time limit for these redevelopment plans is necessary for the structuring of the 2009 Tax Allocation Bonds. SECTION 2: As used in this Ordinance, the following definitions shall apply: Agency shall mean the Community Redevelopment Agency of the City of Santa Ana. Community Redevelopment Law shall mean Part 1 (commencing with Section 33000) of Division 24 of the California Health & Safety Code, as amended from time to time. Central City Plan shall mean the City of Santa Ana Redevelopment Plan originally adopted by Ordinance No. NS-1173 on or about July 2, 1973, as amended. Inter City Plan shall mean the Inter City Commuter Station Redevelopment Plan originally adopted by Ordinance No. NS-1636 on or about July 6, 1982, as amended. Bristol Plan shall mean the Bristol Corridor Redevelopment Plan originally adopted by Ordinance No. NS-2039on or about December 4, 1989, as amended. Tax increment shall mean property tax revenues allocated to the Agency pursuant to Section 333670 of the Community Redevelopment Law. Time limit on incurring indebtedness, Time limit on plan effectiveness, Time limit on receipt of tax increment shall have those meanings as described in subdivisions (a), (b) and (c), respectively, of Section 33333.6 of the Community Redevelopment Law, subject to all exceptions specified in the Community Redevelopment Law. SECTION 3: The Central City, Inter City and Bristol Redevelopment Plans of the City of Santa Ana are hereby amended to repeal the existing debt incurrence time limit so that the Agency can incur debt for these respective project areas up to the redevelopment plan effectiveness dates, as set forth below. 2 75B-4 Redevelopment Plan Time Limit On Incurring Indebtedness revised Time Limit On Plan Effectiveness unchan ed Time Limit On Receipt of Tax Increment unchan ed Central Cit Plan Jul 2, 2016 Jul 2, 2016 Jul 2, 2026 Inter Cit Plan Jul 6, 2025 Jul 6, 2025 Jul 6, 2035 Bristol Plan Dec 4, 2030 Dec 4, 2030 Dec 4, 2040 SECTION 4: If any section, subsection, sentence, clause, phrase or word of this Ordinance is for any reason held to be invalid by a court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council hereby declares that it would have passed and adopted this Ordinance, and each and all provisions hereof, irrespective of the fact that one or more provisions may be declared invalid. SECTION 5: This ordinance shall become effective upon the issuance and sale of the 2009 Tax Allocation Bonds. ADOPTED this day of APPROVED AS TO FORM: Joseph W. Fletcher City Attorney AYES: NOES: Councilmembers Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers 2008. Miguel A. Pulido Mayor 75B-5 CERTIFICATE OF ATTESTATION AND ORIGINALITY I, PATRICIA E. HEALY, Clerk of the Council, do hereby attest to and certify the attached Ordinance No. NS- to be the original ordinance adopted by the City Council of the City of Santa Ana on ,and that said ordinance was published in accordance with the Charter of the City of Santa Ana. Date: Clerk of the Council City of Santa Ana 4 75B-6