Title
Staff Report for Resolution of the City Council of the City of San Leandro and the City Council of the City of San Leandro Acting in its Capacity as the Successor Agency to the Redevelopment Agency Authorizing the Execution of an Amended and Restated Cooperation Agreement Between the Successor Agency to the Redevelopment Agency of the City of San Leandro and the City of San Leandro Regarding the Construction and Funding of Public Improvements
Staffreport
SUMMARY AND RECOMMENDATIONS
Staff recommends that the City Council and the Successor Agency to the former Redevelopment Agency, approve the Resolutions Re-Entering into an Amended Cooperative Agreement, thereby re-affirming a 2011 Agency funding commitment of approximately $5.5 million for improvements to MacArthur Boulevard and Doolittle Drive.
BACKGROUND
On January 17, 2011, the Redevelopment Agency and City of San Leandro executed a Cooperative Agreement whereby the Agency pledged $8,967,754. At the time of the Agency's dissolution on February 1, 2012, the full balance of this obligation was still owed and that amount was added to the Agency's Enforceable Obligation Payment Schedule (EOPS) and Recognized Obligation Payment Schedule (ROPS).
After the approval of the ROPS by the City Council (serving as Successor Agency) on April 2, 2012 and the Successor Agency Oversight Board on April 6, 2012, the California Department of Finance (DOF) exercised its right to conduct a review of the list of Enforceable Obligations. Upon completion of that review, the DOF informed the City that it did not consider some items to be enforceable because, with very limited exceptions, Assembly Bill 1x 26 does not recognize agreements between a redevelopment agency and the city that created it. This determination impacts the aforementioned Cooperative Agreement and a loan from the City to the Joint Project Area.
On May 7, 2012, the City Council and the Successor Agency approved an Amended and Restated Cooperative Agreement, restoring funding for the Eden Road and Hays Street projects. The Amended and Restated Agreement was subsequently approved by the Successor Agency Oversight Board on May 10, 2012. At that meeting, the Oversight Board directed staff to further amend the Agreement to restore funding for the remaining projects, MacArthur Boulevard and Doolittle Drive. The action before the City Council and Successor Agency tonight would execute that request.
Analysis
Although the language of AB 1x 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. Nevertheless, given the DOF's determination, the most prudent course of action for the Successor Agency at this time is to take advantage of a clause in AB 1x 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."
Re-authorized agreements between the City and Successor Agency must also receive approval from the Successor Agency Oversight Board. If approved by both the Successor Agency (City Council) and the Oversight Board, staff believes that the Agency's debts under the Cooperative Agreement will be restored as enforceable obligations 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.
The original January 17, 2011 Cooperative Agreement pledged Agency funds for four projects:
1. Eden Road Construction: The estimated cost for this project is approximately $5,800,000, of which $800,000 represents land acquisitions costs already paid. The requested Agency contribution is $1,500,000. Remaining costs will be funded by an assessment district and other sources.
2. MacArthur Boulevard Streetscape Improvement: The estimated cost for this project is $1,274,143 all of which was to be funded by Redevelopment tax increment.
3. Doolittle Drive Streetscape Improvement: The estimated cost for this project is $4,193,611 all of which was to be funded by Redevelopment tax increment.
4. Hays Street Streetscape Improvement: The estimated cost for this project is $2,000,000 all of which was to be funded by Redevelopment tax increment.
For the first Amended and Restated Agreement approved in May, staff took a conservative approach and recommended that the City and the Successor Agency only re-enter in the portion of the Agreement covering Eden Road and Hays Street. This is because the City has already made a significant investment in these projects and that investment would be wasted if the committed redevelopment funding were lost.
At the May 10, 2012 Oversight Board meeting, the Board requested the inclusion of the remaining two projects. The MacArthur Boulevard and Doolittle Drive projects constitute the final phases of streetscape improvements that have already been completed along different segments of those roads. For MacArthur Boulevard, tonight's action will provide funding to make improvements between Lewis Avenue and Dutton Avenue. For Doolittle Drive, the funding will cover the segment between Davis Street and Fairway Drive. In recommending the re-establishment of funding for these projects, the Oversight Board cited the fact that the original plans for streetscape improvements were designed for specific portions of these key arterials and that failure to complete the projects would result in the remaining segments being left unimproved for the foreseeable future. The Board also noted that promises had been made to neighboring property owners when the streetscape improvements were initially designed.
As with the earlier version of the Amended and Restated Cooperative Agreement, this action will need to be approved by the Oversight Board. That action is scheduled for June 6, 2012.
The Department of Finance has yet to issue an official statement on whether it will recognize agreements that are re-entered or re-authorized under Health and Safety Code Section 34178 (a).
Additional detail on the planned improvement projects is included in Exhibit A of the Cooperative Agreement.
Previous Actions
· On January 17, 2011 the Redevelopment Agency and the City executed a Cooperative Agreement whereby the Agency pledged funds for certain Capital Improvement Projects.
· On May 7, 2012 the City and Successor Agency entered into an Amended and Restated Cooperative Agreement, restoring the funding commitment for Hays Street and Eden Road.
Fiscal Impacts
If this action is not approved, and the Department of Finance determination were to be upheld, the City would lose approximately $5.5 million in funds that had previously been committed by the Redevelopment Agency to the MacArthur Boulevard and Doolittle Drive projects.
ATTACHMENTS
None
PREPARED BY: Jeff Kay, Administrative Analyst, City Manager's Office