Title
RESOLUTION of the City Council of the City of San Leandro Authorizing the Execution of a Reinstated Loan Agreement Between the City and the Successor Agency to the Redevelopment Agency of the City of San Leandro and Authorizing Execution of an Amended and Restated Promissory Note for the Plaza Project Loan
Body
WHEREAS, pursuant to Resolution 2012-001, adopted by the City Council of the City of San Leandro (the “City Council”) on January 9, 2012, the City Council agreed to serve as the governing board to the Successor Agency to the Redevelopment Agency of the City of San Leandro (the “Successor Agency”) commencing upon dissolution of the Redevelopment Agency of the City of San Leandro (the “Former Agency”) on February 1, 2012, pursuant to Assembly Bill x1 26 (as further amended by AB 1484 and SB 107, the “Dissolution Law”); and
WHEREAS, prior to the dissolution of redevelopment agencies, city loans to redevelopment agencies with insufficient financing capacity were commonplace, and were not only expressly authorized but encouraged by Health and Safety Code Sections 33220, 33600, 33601 and 33610 and Government Code Section 53600 et seq.; and
WHEREAS, on December 5, 2002 the City of San Leandro (the “City”) made a loan from its general fund in the amount of $2,887,617.44 (the “Plaza Project Loan”) to the Former Agency to support redevelopment activities undertaken by the Former Agency in the Plaza Redevelopment Project Area, adopted pursuant to Ordinance No. 1295 - N.S., adopted December 28, 1960, (as amended, the “Plaza Project Area”); and
WHEREAS, by Resolution No. 2004-011 adopted June 21, 2004, the City ratified the Plaza Project Loan at which time the outstanding balance was $2,596,400.00; and
WHEREAS, to evidence its obligation to repay the Plaza Project Loan, the Redevelopment Agency executed and delivered to City a promissory note dated as of December 5, 2002 in the amount of the Plaza Project Loan (the “Original Note”); and
WHEREAS, the Original Note bears interest at the rate of six percent per annum; and
WHEREAS, the Original Note provides for interest-only payments, permits prepayment of the principal balance at any time, and matures on July 5, 2038; and
WHEREAS, the current principal balance due pursuant to the Original Note is $2,299,315 (the “Outstanding Balance”); and
WHEREAS, an Oversight Board for the Successor Agency was established pursuant to the Dissolution Law (the “Oversight Board”); and
WHEREAS, pursuant to the Dissolution Law, on October 28, 2015 the Successor Agency was granted a finding of completion from the California State Department of Finance (the “DOF”), allowing loan agreements between the former redevelopment agency and sponsoring entity to be placed on the ROPS; and
WHEREAS, pursuant to Section 34191.4(b) of the Dissolution Law, following the receipt of a finding of completion from the DOF, the Plaza Project Loan shall be deemed to be an enforceable obligation; subject to approval by the Oversight Board; and
WHEREAS, the City finds that the Plaza Project Loan was for legitimate redevelopment purposes and will present the Plaza Project Loan to the Oversight Board for such finding; and
WHEREAS, pursuant to Section 34191.4(b)(3) of the Dissolution Law, the outstanding interest shall be recalculated from the date of origination of the Plaza Project Loan on a quarterly basis, at a simple interest rate of three percent (3%); and
WHEREAS, staff has prepared a defined schedule for repayment of the recalculated loan over a reasonable amount of years with moneys repaid applied first to the principal and second to the interest, at an interest rate of three percent (3%); and
WHEREAS, Section 34191.4(b)(3)(A) of the Dissolution Law provides that, the maximum repayment amount authorized each fiscal year for repayments combined shall be equal to one-half of the increase between the amount distributed to the taxing entities in that fiscal year and the amount distributed to taxing entities pursuant to that paragraph in the 2012-13 base year, provided, however, that calculation of the amount distributed to taxing entities during the 2012-13 base year shall not include any amounts distributed to taxing entities pursuant to the due diligence review process; and
WHEREAS, Section 34191.4(b)(3)(C) of the Dissolution Law provides that, twenty percent of any loan payment made to the City shall be transferred to the Low and Moderate Income Housing Asset Fund, after all outstanding loans from the Low and Moderate Income Housing Fund for purposes of the Supplemental Educational Revenue Augmentation Fund have been paid; and
WHEREAS, the City and the Successor Agency have agreed to enter into a Reinstated Loan Agreement to effect a payment plan for the repayment from the Successor Agency to the City (the “Restated Loan Agreement”); and
WHEREAS, the Restated Loan Agreement includes terms that are consistent with the Dissolution Law; and
WHEREAS, the execution of the Restated Loan Agreement was approved by the governing board for the Successor Agency by resolution adopted on January, 19, 2016; and
WHEREAS, the Restated Loan Agreement will be presented to the Oversight Board for consideration.
NOW THEREFORE, IT IS RESOLVED by the City Council of the City of San Leandro that it hereby:
1. Finds that the above recitals are true and correct and a part of this Resolution.
2. Subject to the approval of the Oversight Board, authorizes the Execution of the Restated Loan Agreement, substantially in the form attached hereto as Exhibit A, and authorizes the City Manager to execute a restated note to evidence the loan attached hereto as Exhibit B.
3. Authorizes the City Manager or designee to execute such other documents and to take such other actions as necessary to carry out the intent of this Resolution.
4. This Resolution takes effect immediately upon its adoption.