The URL can be used to link to this page

Home My WebLink About2010/05/04 Item 10 CHULA VISTA \~, r'-~"', I .Ii I -: 1- ~...... . ",-, REDEVELOPMENT AGENCY AGENDA STATEMENT MAY 4, 2010, Item 10 SUBMITTED BY: RESOLUTION OF THE CHULA VISTA REDEVELOPMENT AGENCY (A) AUTHORIZING AN INTERFUND LOAN OF APPROXIMATELY $4.1 MILLION FROM THE LOW AND MODERATE INCOME HOUSING FUND TO THE REDEVELOPMENT FUND FOR THE ST ATE REQUIRED SERAF PAYMENT; AND (B) AUTHORIZING NECESSARY BUDGET ADJUSTMENTS TO APPROPRIATE THE INTERFUND LOAN OF APPROXIMA TEL Y $4.1 MILLJ9~ DEPUTY CITY MANAGEtttG DEVELOPMENT SERVICES DIRECTOR ~ CITY MANAGERJ r ITEM TITLE: REVIEWED BY: 4/STHS VOTE: YES 0 NO D SUMMARY Assembly Bill ABX4-26 of 2009 requires redevelopment agencies to remit a prescribed share of a cumulative contribution to the Supplemental Educational Revenue Augmentation Fund (SERAF), over two years, with the first payment due by May 10,2010. The current calculation issued by the County of San Diego (County) requires a payment of $4.1 million for 20 I 0 and $900,000 for 2011 bringing the total outstanding obligation of the Chula Vista Redevelopment Agency (Agency) to approximately $5 million. The Redevelopment Agency does not have sufficient funds in the Redevelopment Fund to make the first SERAF payment. Therefore, staff is recommending that the Agency borrow $4.1 million from the Low and Moderate Income Housing Fund to make the first SERAF payment. ENVIRONMENTAL REVIEW The Environmental Review Coordinator has reviewed the proposed activity for compliance with the California Environmental Quality Act (CEQA) and has determined that the activity is not a "Project" as defined under Section 15378 of the State CEQA Guidelines because it involves a governmental fiscal action which will not result in direct or indirect physical changes or impacts 10-1 May 4, 2010 Item~ Page 2 of 3 to the environment; therefore, pursuant to Section 15060(c)(3) of the State CEQA Guidelines the activity is not subject to CEQA. Thus, no environmental review is necessary. RECOMMENDATION The Redevelopment Agency approves the resolution. BOARDS/COMMISSION RECOMMENDATION Not Applicable DISCUSSION Backe:round On July 24, 2009, the California State Legislature approved a 30-bill package that included ABX4-26 requiring redevelopment agencies to remit to their county SERAF a proportionate share of $1.7 billion for tiscal year 2009-10 and $350 million for fiscal year 2010-11 for a total take of $2.05 billion. Those payments are due May 10, 2010 and May 10, 2011, respectively. The current calculation issued by the County of San Diego (County) requires a payment of $4.1 million for 2010 and $900,000 for 2011 bringing the total outstanding obligation of the Chula Vista Redevelopment Agency (Agency) to $5 million. The SERAF payment is in addition to the $1.44 million the Agency has already remitted for Fiscal Year 2010. The bill also authorized redevelopment agencies, from July I, 2009 to June 30, 2010, to suspend or borrow all or part of its required allocation to the Low and Moderate Income Housing Fund from property tax increment revenues that are allocated to the agency in order to make the payment with provisions to repay by June 30, 2015. CRA Lawsuit CRA's lawsuit against the State of California for the take of $2.05 billion from redevelopment agencies was heard February 5, 2010 in Sacramento Superior Court. A similar case against the State brought by Los Angeles County was heard at the same time. The Court asked the attorneys representing all parties to prepare additional briefing material on cases having to do with use of tax increment funds to pay for regular operating expenses of city or county governments. Neither the Attorney General nor CRA's legal team found any significant cases on that issue, and the judge took the case under submission on March 2, 20 I O. The judge has 90 days from that date in which to rule. CRA expects the Court will decide the case in early May to give agencies notice whether payments due May 10, 2010 will have to be made. CRA will alert its members as soon as the Court rules. In the meantime, CRA recommends agencies not make payments before May 10,2010. Low and Moderate Income Housine: Fund Loan State regulations allow agencies to borrow up to 50% of the current year revenues from available Low and Moderate Income Housing Funds in order to make the SERAF payment. The Redevelopment Agency does not have sufficient funds in the Redevelopment Fund to make the first SERAF payment. However, there are sufficient funds in the Low and Moderate Income 10-2 May 4, 2010 Item-112- Page 3 of3 Housing Fund. Staff is recommending that the Agency borrow $4.1 million from the Low and Moderate Income Housing Fund to make the first SERAF payment. In accordance with standard practice, this loan will accrue interest at the interest pool rate. Loan repayments will be budgeted through the normal budget process, based on available revenue. This loan must be repaid within five years. DECISION MAKER CONFLICT Staff has determined that the action contemplated by this item is ministerial, secretarial, manual, or clerical in nature and does not require the City Council members to make or participate in making a goverrunental decision, pursuant to California Code of Regulations section 18702.4(a). Consequently, this item does not present a conflict under the Political Reform Act (Cat. Gov't Code 9 87100, et seq.). CURRENT FISCAL IMP ACT The impact to Fiscal year 20 I 0 is a loan from the Low and Moderate Income Housing Fund of approximately $4.1 million to be repaid in full prior to June 30, 2015. The current fund balance in the Low and Moderate Income Housing Fund is approximately $10 million. This loan for payment of the SERAF will result in a remaining fund balance of approximately $6 million. It is anticipated there will still be sufficient fund balance to support future affordable housing development in the affected time period. This loan will be repaid within five years. ONGOING FISCAL IMPACT The SERAF obligation requires an additional payment in Fiscal Year 2011 of approximately $900,000. It is anticipated that the Agency may need to borrow additional funds from the Low and Moderate Income Housing Fund for this payment and will be brought forward for future consideration. Prepared by: Diem Do, Senior Project Coordinator, Development Services Department 10-3 AGENCY RESOLUTION NO. 20 I 0- RESOLUTION OF THE CHULA VISTA REDEVELOPMENT AGENCY (A) AUTHORIZING AN INTERFUND LOAN OF APPROXIMA TEL Y $4.1 MILLION FROM THE LOW AND MODERATE INCOME HOUSING FUND TO THE REDEVELOPMENT FUND FOR THE STATE REQUIRED SERAF PA YMENT; AND (B) AUTHORIZING NECESSARY BUDGET ADJUSTMENTS TO APPROPRIATE THE INTERFUND LOAN OF APPROXIMATELY $4.1 MILLION WHEREAS, Assembly Bill ABX4-26 of 2009 amended Sections 33334.2 and 33633 of the Health and Safety Code (H&S) requiring redevelopment agencies to remit an additional prescribed share to the Supplemental Educational Revenue Augmentation Fund (SERAF); and WHEREAS, Assembly Bill ABX4-26 of 2009 added Sections 33020.5, 33331.5, 33690, 33690.5, 33691 and 33692 to the Health and Safety Code (H&S) allowing agencies various options regarding the SERAF payment; and WHEREAS, the Redevelopment Agency of the City of Chula Vista (the Agency) has a prescribed SERAF share of$4.1 million due by May 10,2010; and WHEREAS, state regulations allow agencies to borrow from the Low and Moderate Income Housing Fund in order to make the SERAF payment; and WHEREAS, the Agency has insufficient funds in the Redevelopment Fund to make the SERAF payment and must borrow from the Low and Moderate Income Housing Fund; and WHEREAS, the funds borrowed from the Low and Moderate Income Housing Fund will be repaid within five years from the date the funds are remitted to the County Auditor; and WHEREAS, the Agency desires to borrow the amount of the SERAF payment ($4.1 million) from the Low and Moderate Income Housing Fund. NOW, THEREFORE, BE IT RESOLVED, by the Redevelopment Agency of the City of Chula Vista as follows: (A) The Chula Vista Redevelopment Agency does hereby authorize an interfund loan up to $4.1 million from the Low and Moderate Income Housing Fund to the Redevelopment Fund for the state required SERAF payment in the amount of $4.1 million; and (B) The Chula Vista Redevelopment Agency does hereby amend the FY 2010 Redevelopment Agency and Housing Authority budgets to appropriate the interfund loan and SERAF payment of $4.1 million. 10-4 Presented by: Gary Halbert Deputy City Manager/ Development Services Director Approved as to form by /~ Bart Miesfeld Agency Counsel 10-5 L ~