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HomeMy WebLinkAbout50A - ORDINANCE - VOLUNTARY REDEVELOPMENT PROGREQUEST FOR COUNCIL ACTION CITY COUNCIL MEETING DATE: SEPTEMBER 6, 2011 TITLE: ADOPTION OF ORDINANCE TO COMPLY WITH AND PARTICIPATE IN ALTERNATIVE VOLUNTARY REDEVELOPMENT PROGRAM PER PART 1.9 OF DIVISION 24 OF CALIFORNIA HEALTH & SAFETY CODE CITY MANAGER RECOMMENDED ACTION CLERK OF COUNCIL USE ONLY: APPROVED ? As Recommended ? As Amended ? Ordinance on 15t Reading ? Ordinance on 2"d Reading ? Implementing Resolution ? Set Public Hearing For_ CONTINUED TO FILE NUMBER Adopt an ordinance whereby the City shall elect to comply with and participate in the alternative voluntary redevelopment program contained in Part 1.9 of Division 24 of the California Health and Safety Code. DISCUSSION On August 24, 2011, the City Council and Redevelopment Agency ("Agency") took the necessary actions to comply with ABX1 26 & 27, the two recently enacted bills that impact redevelopment agencies throughout the State. ABX1 26, which is referred to as the "Dissolution Bill," suspends most redevelopment agency activities effective immediately and directs the dissolution of redevelopment agencies and the designation of successor agencies. The bill also required agencies to adopt a resolution establishing an Enforceable Obligation Payment Schedule (EOPS) by August 28, 2011, which Santa Ana has complied with. The second bill, ABX1 27, which is referred to as the "Continuation Bill," creates an alternative voluntary redevelopment program that allows the continued existence of redevelopment agencies if the legislative body of the city or county makes annual "community remittances" to school districts and special districts. The City adopted a resolution on August 24, initiating the process for the "Continuation Ordinance" to be enacted by November 1, 2011. As a result of the State's efforts to take $1.7 billion from redevelopment agencies through ABX1 27 in FY 2011-12 and an additional $400 million each subsequent year, it is recommended that the City Council consider the adoption of a "Continuation Ordinance" in order to participate in the alternative voluntary redevelopment program. This action would allow Santa Ana to avoid dissolution of the Agency and to continue to carry out provisions of the Redevelopment Law. The adoption of this ordinance will result in a continuation payment of $20,489,170 for FY 2011-2012 due in two equal payments on January 15, 2012 and May 15, 2012, and annual payments of approximately $5 million thereafter. Funds for the FY 2011-12 payments will be available through 5OA-1 Adopt Ordinance Per Part 1.9 of Division 24 of the California Health and Safety Code September 6, 2011 Page 2 a combination of sources. It is anticipated that as allowed by the legislation, a portion of the Low and Moderate Income Housing funds will be allocated to cover approximately half of the initial remittance payment. The remainder is anticipated to be funded from a combination of delaying or eliminating current projects and programs, debt service savings realized from refunding the 1998 bonds, and reducing the Agency's administrative budget. It is important to note that it is estimated the Agency will receive approximately $728.22 million ($376 million net present value) in net tax increment revenues over the remaining life of the merged project area by participating in the voluntary continuation program. Should the Agency dissolve, the community would only receive the City's share of property taxes and limited successor agency administrative funds estimated at $294.41 million ($159 million net present value). In addition, the Agency would lose all unencumbered assets including, but not limited to, cash, real property and loans, and bond proceeds (i.e., those dedicated to repair of Downtown garages). Given that Santa Ana's redevelopment efforts significantly contribute to much-needed economic and physical community revitalization, affordable housing development, and the general safety and enhancement of our city, staff recommends that the Agency adopt the Continuation Ordinance and continue to take the necessary steps to implement ABX1 27. Legal counsel is also recommending that the City preserve its options by proceeding with the adoption of the Continuation Ordinance. The ordinance does not waive the City's or Agency's right to challenge the legality of this legislation. This ordinance authorizes the City Manager or his designee to notify the appropriate State agencies before November 1, 2011 that the City agrees to comply with the provisions of the Continuation Bill. This is the first reading of this ordinance and the second will be on September 19. If not for the judicial stay described below, the ordinance would take effect 30 days after adoption. On August 11, 2011, the California Supreme Court agreed to review the petition filed by the California Redevelopment Association and League of California Cities and stayed specified portions of the legislation, indefinitely postponing certain provisions' effectiveness, including the Continuation Ordinance. While this matter is being considered in court, the Agency can continue to perform its "enforceable obligations;" however, no new agreements, amendments to existing agreements, disposition of assets (except per existing enforceable obligations), etc. are permitted. The stay will remain in effect until the court issues a decision, which is expected by January 15, 2012. Should ABX1 27 be validated and/or the stay or a portion thereof is lifted earlier as it pertains to the Continuance Ordinance, the ordinance will become effective thereafter. Having the Continuation Ordinance in place in anticipation of this event reduces the risk to the City and Agency of missing revised deadlines which the Court may impose. Further, on August 15, 2011, in an effort to mitigate the impacts of the continuation payment on the Agency, an appeal of the remittance amount with the State Department of Finance pursuant to ABX1 27 was filed. It has been determined that there were 96 successful property tax assessment appeals that were filed and resolved for FY 2008-09, resulting in an estimated appeals refund 5OA-2 Adopt Ordinance Per Part 1.9 of Division 24 of the California Health and Safety Code September 6, 2011 Page 3 totaling $741,995. As the majority of the successful appeals were not resolved by the County of Orange until 2009 and 2010, this information was not available at the time the Agency was required to submit the 2008-09 State Controller's Report. Factoring this into the state's formula may result in a decrease in the initial base year remittance amount by as much as $350,000. Many cities/counties have also filed appeals; therefore, it cannot be assured that the state will not make further adjustments to the calculations that will affect the estimated remittances. The State Director of Finance has until September 15, 2011 to reject or approve the appeal, and may also extend the decision deadline until October 15, 2011. It is anticipated that the Redevelopment Agency will reimburse the City for the requisite initial and annual remittance payments based on the interpretation of the intent of the legislation. A Remittance Agreement and an appropriation adjustment will be forthcoming to the City Council and Agency Board for approval, pending adoption of the ordinance. Unless and until the stay is lifted, cities will not have to make the continuation payments. FISCAL IMPACT Following adoption of the ordinance, subsequent appropriation adjustments totaling $20,489,170 will be required in order for the City to make the payments in two installments for FY 2011-12. The annual continuation payments of approximately $5 million will also require action by the City and Agency. APPROVED AS TO FUNDS AND ACCOUNTS: ,cq Nancy T. E ards Francisco Gu ierrez W Interim Exe tive Director Executive Director Community Development Agency Finance & Management Services Agency NTE/SG/mlr Exhibit: 1. Ordinance 5OA-3 8/22/11 LES ORDINANCE NO. 2011- AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF SANTA ANA, CALIFORNIA, DETERMINING IT WILL COMPLY WITH THE VOLUNTARY ALTERNATIVE REDEVELOPMENT PROGRAM PURSUANT TO PART 1.9 OF DIVISION 24 OF THE CALIFORNIA HEALTH AND SAFETY CODE IN ORDER TO PERMIT THE CONTINUED EXISTENCE AND OPERATION OF THE COMMUNITY REDEVELOPMENT AGENCY OF THE CITY OF SANTA ANA TAKING CERTAIN ACTIONS IN CONNECTION THEREWITH 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. The City Council of the City of Santa Ana ("City") approved and adopted the Redevelopment Plan for the currently merged Redevelopment Project ("Redevelopment Plan") covering certain properties within the City (the "Project Area"). B. The Community Redevelopment Agency of the City of Santa Ana ("Agency") is engaged in activities to execute and implement the Redevelopment Plan pursuant to the provisions of the California Community Redevelopment Law (Health and Safety Code § 33000, et seq.) ("CRL"). C. Since adoption of the Redevelopment Plan, the Agency has undertaken redevelopment projects in the Project Area to eliminate blight, to improve public facilities and infrastructure, to renovate and construct affordable housing, and to enter into partnerships with private industries to create jobs and expand the local economy. D. The Agency plans to implement a variety of redevelopment projects and programs to continue to eliminate and prevent blight, to renovate and construct affordable housing, to stimulate and expand the Project Area's economic growth, create and develop local job opportunities and alleviate deficiencies in public infrastructure. E. As part of the 2011-12 State budget bill, the California Legislature has recently enacted and the Governor has signed, companion bills ABX1 26 and ABX1 27, requiring that each redevelopment agency be dissolved unless the community that created it enacts an ordinance committing it to making certain payments. F. Specifically, ABX1 26 prohibits agencies from taking numerous actions, effective immediately and purportedly retroactively, and additionally provides that agencies are EXHIBIT 1 1 5OA-4 8/22/11 LES deemed to be dissolved as of October 1, 2011. The City adopted a resolution on August 24, 2011, allowing for this ordinance to be enacted by November 1, 2011, as provided by the CRL. G. ABX1 27 provides that a community may participate in an "Alternative Voluntary Redevelopment Program," in order to enable a redevelopment agency within that community to remain in existence and carry out the provisions of the CRL, by enacting an ordinance agreeing to comply with Part 1.9 of Division 24 of the Health and Safety Code. H. The Alternative Voluntary Redevelopment Program requires that the community agree by ordinance to remit specified annual amounts to the county auditor-controller. 1. Under the threat of dissolution pursuant to ABX1 26, and upon the contingencies and reservations set forth herein, the City shall make the Fiscal Year 2011-2012 community remittance, which is currently Twenty Million Four Hundred Eighty Nine Thousand One Hundred Seventy Dollars ($20,489,170.00) (subject to the appeal the City filed as referenced below), as well as the subsequent annual community remittances as set forth in the CRL. J. On August 15, 2011, the City filed an appeal with the California Director of Finance's determination of the Fiscal Year 2011-12 community remittance amount, as provided in Health and Safety Code Section 34194. K. The City is aware that an action challenging the constitutionality of ABX1 26 and ABX1 27 has been filed on behalf of cities, counties and redevelopment agencies. Further, on August 11, 2011, the California Supreme Court agreed to review the petition filed by the California Redevelopment Association and the League of California Cities and stayed specific portions of the legislation. L. While the City currently intends to make these community remittances, they shall be made under protest and without prejudice to the City's right to recover such amounts and interest thereon, to the extent there is a final determination that ABX1 26 and ABX1 27 are unconstitutional. M. The City reserves the right, regardless of any community remittance made pursuant to this Ordinance, to challenge the legality of ABX1 26 and ABX1 27. Further, the agreement referenced between the City and Agency shall be entered into conditionally, and shall be operative only if ABX1 26 and ABX1 27 are upheld and the stay is lifted. N. All legal prerequisites to the adoption of this Ordinance have occurred. THE CITY COUNCIL OF THE CITY OF SANTA ANA, CALIFORNIA, DOES ORDAIN AS FOLLOWS: EXHIBIT 1 2 5OA-5 8/22/11 LES Section 2. The Recitals set forth above are true and correct and incorporated herein by reference. Section 3. In accordance with Health and Safety?Code Section 34193, and based on the Recitals set forth above, the City Council hereby determines that the City shall comply with the provisions of Part 1.9 of Division 24 of the Health and Safety Code, as enacted by ABX1 27. Section 4. Except as set forth in Section 5, below, the City Council hereby determines that the City shall make the community remittances set forth in Health and Safety Code section 34194 et seq. Section 5. City shall not make any community remittance in the event (A) a court of competent jurisdiction determines that ABX1 26 and ABX1 27 are unconstitutional and therefore invalid, and all appeals therefrom are exhausted or unsuccessful, or time for filing an appeal therefrom has lapsed; or (B) during any judicial stay of ABX1 27. Any community remittance shall be made under protest and without prejudice to the City's right to recover such amount and interest thereon in the event that there is a final determination thatABX1 26 and ABX1 27 are unconstitutional. If there is a final determination thatABX1 26 and ABX1 27 are invalid, this Ordinance shall be deemed to be null and void and of no further force or effect. Section 6. The City Council hereby authorizes and directs the Interim City Manager, or his designees, to take any actions and execute any documents necessary to implement this Ordinance, including but not limited to notifying the Orange County Auditor- Controller, the Controller of the State of California, and the California Department of Finance of the adoption of this Ordinance and the City's agreement to comply with the provisions of Part 1.9 of Division 24 of the Health and Safety Code, as Part 1.9 exists on the date of adoption of this Ordinance, as set forth in ABX1 27, with such notification to be accompanied by a certified copy of this Ordinance. Section 7. It is the understanding and intent of the City Council that, once the Agency is again authorized to enter into agreements under the CRL, the City will enter into an agreement with the Agency as authorized pursuant to Section 34194.2, whereby the Agency will transfer annual portions of its tax increment to the City in amounts not to exceed the annual community remittance payments to enable the City, directly or indirectly, to make the annual remittance payments. Said agreement between the City and the Agency shall be conditional, to be operative only if ABX1 26 and ABX127 are upheld and the stay is lifted. The City Council does not intend, by enactment of this Ordinance, to pledge any of its general fund revenues or assets to make the remittance payments. Section 8. The City Council finds, under Title 14 of the California Code of Regulations, Section 15378(b)(4), that this Ordinance is exempt from the requirements of the California Environmental Quality Act ("CEQA") in that it is not a "project," but instead consists of the creation and continuation of a governmental funding mechanism for potential future projects and programs, and does not commit funds to any specific project EXHIBIT 1 3 50A-6 8/22/11 LES or program. The City Council, therefore, directs that a Notice of Exemption be filed with the County Clerk of the County of Orange in accordance with CEQA Guidelines. Section 9. If any section, subsection, sentence, clause, phrase, or portion of this ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this ordinance. The City Council of the City of Santa Ana hereby declares that it would have adopted this ordinance and each section, subsection, sentence, clause, phrase or portion thereof irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. Section 10. The City Clerk shall certify to the adoption of this Ordinance and cause it, or a summary of it, to be published once within 15 days of adoption in a newspaper of general circulation printed and published within the City of Santa Ana, and shall post a certified copy of this Ordinance, including the vote for and against the same, in the Office of the City Clerk in accordance with Government Code § 36933. Section 11. This Ordinance shall become effective thirty (30) days from and after the date of the final passage and adoption hereof. EXHIBIT 1 4 5OA-7 ADOPTED this day of , 2011. Miguel A. Pulido Mayor APPROVED AS TO FORM: Joseph Straka Interim City Attorney By: Lisa E. Storck Assistant City Attorney AYES: Councilmembers NOES: Councilmembers ABSTAIN: Councilmembers NOT PRESENT: Councilmembers CERTIFICATE OF ATTESTATION AND ORIGINALITY 8/22/11 LES I, MARIA D. HUIZAR, 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 September , 2011, 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 EXHIBIT 1 5 5OA-8