HomeMy WebLinkAboutItem 3b: Ordinance 2286: Continued Existence and Operation of Arcadia Redevelopment Agency A Of AR
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� of v. STAFF REPORT
Development Services Department
DATE: July 19, 2011
TO: Mayor and City Council
FROM: Jason Kruckeberg, Deputy City Manager /Development Services Director 7-- -
By: Jerry Schwartz, Economic Development Manager S _s
SUBJECT: AUTHORIZE ORDINANCE NO. 2286, AN ORDINANCE OF THE CITY
COUNCIL OF THE CITY OF ARCADIA, 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
ARCADIA REDEVELOPMENT AGENCY
Recommendation: Introduce
SUMMARY
As part of the approval of the California State budget for FY 2011 -2012, the State
Legislature approved, and the Governor signed, trailer bills AB X1 26 and AB X1 27
which impact redevelopment in Arcadia and throughout the State. AB X1 26 eliminates
redevelopment agencies as of October 1, 2011. AB X1 27 allows a redevelopment
agency to be reestablished if the City Council approves an Ordinance agreeing to make
payments each year that would be distributed to schools and special districts. The
recommended action would introduce an ordinance on first reading to have Arcadia
make the required payments and allow the continuation of normal operations of the
Arcadia Redevelopment Agency.
BACKGROUND
The Arcadia Redevelopment Agency (Agency) undertakes a variety of projects,
programs, and activities each fiscal year. There are commercial activities including
working with Rusnak Mercedes Benz on potential expansion, the fagade improvement
program, providing support to the Arcadia Downtown Business Association (ADBA), and
various marketing activities. Currently, the Agency has a consultant working with the
ADBA on planning for the future, including potentially establishing a Business
Improvement District. The Agency has also hired a consultant that is preparing a
comprehensive study of parking in the downtown. In addition, there are affordable
housing activities, including the current construction of the 43 -unit Campus Commons
senior apartments on Campus Drive, and the nine -unit Lucile Court low income
apartment project for families that will be located at 15 & 19 Lucile Street. Lastly, the
Ordinance No. 2286
July 19, 2011
Page 2 of 5
Agency funds public improvements in the Central Redevelopment Project Area,
including streets, sidewalks, and intersections. These various Agency activities help our
businesses, increase the supply of low and moderate income housing, and upgrade our
infrastructure.
DISCUSSION
AB 1X 26 dissolves all redevelopment agencies, including the Agency, as of October 1,
2011. It calls into question, and will potentially invalidate, any Agency agreements that
were made after January 1, 2011. This could include the Cooperation Agreements
between the City Council and Arcadia Redevelopment Agency by which the Agency
transferred funds to the City for priority public improvements in the project area. The
State Controller's Office would review these transactions and could force them to be
undone. The bill prohibits the Agency from any new financial obligations or contracts,
modifying any existing agreements or obligations, buying or selling property, or
engaging in most regular redevelopment activities unless required to enforce existing
obligations.
If the City does not adopt an Ordinance and the Agency dissolves per AB 1X 26, after
October 1, 2011, when its authority to transact business is withdrawn, a successor
agency is established. The City could be the successor agency. Its primary obligation
is to make debt payments (such as principal and interest on Agency bonds) of the
Agency based on a schedule of payments called a Recognized Obligation Payment
Schedule. This schedule must be updated for each six month period, and must be
forwarded to the Los Angeles County Auditor - Controller, the State Controller, and the
State Department of Finance. It must also be posted on the City's website.
The successor agency (potentially the City) is required to establish an Oversight Board
which will be composed of seven members. Two members of this Board are selected
by the mayor, one of which does not need to meet specific qualifications, and one must
represent the employees of the Agency from the recognized bargaining unit that
represents the most Agency employees who are part of the successor organization.
One member is selected by the largest non - enterprise special district (by property tax
share), one member is selected by the county superintendent of education to represent
schools, one member selected by the Chancellor of the California Community Colleges,
and the Los Angeles County Board of Supervisors appoints two members with one to
represent the public. If any position is not filled by January 15, 2012 or remains vacant
for more than 60 days, it is filled by the Governor. The purpose of the Oversight Board
is to review the actions of the successor agency. The Oversight Board may direct staff
of the successor agency in furtherance of their responsibilities under AB X1 26. The
successor agency must pay all of the costs of meetings of the Oversight Board; costs
may be included in the administrative budget. The Oversight Board's actions are
reviewed by the State Department of Finance. On July 1, 2016, individual oversight
boards are replaced by one Countywide oversight board.
Ordinance No. 2286
July 19, 2011
Page 3 of 5
The City can also elect to retain the affordable housing assets of the Agency. If it
chooses not to do this, the assets, funds, and functions would most likely be taken over
by the Los Angeles County Housing Authority.
The second Bill, AB X1 27 allows the City Council to choose to avoid the dissolution of
the Agency by passing an Ordinance that commits it to making specific payments each
year that would be distributed to the schools and special districts. These payments are
in addition to any Agency funds that are already routinely paid each year to these same
schools and special districts. Under the Ordinance, the City would agree to make these
payments, and could then work out an agreement with the Agency to provide the
funding for the payments.
An Ordinance agreeing to the Alternative Voluntary Redevelopment Program should be
adopted prior to the October 1, 2011 date that AB 1X 26 takes effect. Until the
Ordinance is adopted, the Agency is unable to enter into new agreements, issue any
new debt, modify any deal terms, and start any new projects. It can continue existing
activities and meet ongoing obligations, including agreements that were already in
place. Once the City adopts the Ordinance, it must notify the LA County Auditor -
Controller, the State Controller, and the Department of Finance that the City agrees to
comply with the requirements of the additional payment provisions of AB X1 27. Once
the ordinance is adopted, the City would be exempt from the provisions of AB X1 26. It
is important to recognize that, if after passing an Ordinance and notifying the
appropriate County and State agencies, the City misses one of these voluntary
payments at any time, the provisions of AB X1 26 would immediately take effect, ending
the activities of the Agency.
If the City adopts the Ordinance agreeing to the Alternative Voluntary Redevelopment
Program, it must make one -half of the total payment for each year on or before January
15 of the fiscal year, and the remaining one -half must be paid on or before May 15. The
actual amount due for fiscal year 2011 -2012 will be provided by the Department of
Finance by August 1, 2011. It will be based on the proportionate share of the total $1.7
billion that the State is attempting to collect during that year. Based on the formula, the
California Redevelopment Association (CRA) has estimated Arcadia's payment to be
$1,482,920 in 2011 -2012. AB X1 27 also allows redevelopment agencies that
participate in the Alternative Voluntary Redevelopment Program to be exempt from
making the full transfer to the low and moderate income housing fund during 2011 -2012
if the City is requiring payment from the Agency for the payments and the Agency
makes a finding that there are insufficient other funds to meet debt obligations and
current priorities. In fiscal year 2012 -2013, the State is taking $400 million from cities
for redevelopment. The Arcadia share for 2012 -2013 is estimated by the CRA to be
$348,922. For future years, there is a complex formula in the legislation to determine
the payment. The State may provide clearer information each year on the amount
owed. Also, worth noting, AB 1X 27 does not allow the Agency to extend the life of the
project area as a trade off for making the payments. In some years, legislation that
shifted redevelopment revenues to the State allowed time extensions. That is not the
case here.
Ordinance No. 2286
July 19, 2011
Page 4 of 5 .
As discussed above, for the Arcadia Redevelopment Agency to remain operating as it
currently does, the City Council must pass an Ordinance agreeing to the Alternative
Voluntary Redevelopment Program under AB X1 27. The proposed Ordinance no.
2286 would accomplish that step. Since the Ordinance is being introduced before the
Department of Finance (DOF) provides the Arcadia share on August 1, 2011, the
Ordinance preserves the right to appeal the share that the DOF assigns to Arcadia. In
addition, the CRA is filing a lawsuit to stop the implementation of AB X1 26 and AB X1
27 on constitutional grounds. As such, the Ordinance is being introduced under protest,
and language of the Ordinance indicates as much. If CRA is successful in its lawsuit, it
is possible that the Ordinance might not need to be implemented. It is important that
the City Council not wait for a Court decision before starting any action based on these
two bills.
The process for this Ordinance is the same as any other that is not introduced as an
urgency action. If this is introduced on first reading, it would be brought back for the
second reading and adoption at the August 2 meeting. At that time, the actual amount
of the payment will have been released by the DOF. After allowing for the 30 -day
period before the Ordinance is enacted, the Arcadia Redevelopment Agency would be
able to proceed with new activities beginning with the September 6 Council meeting.
CALIFORNIA ENVIRONMENTAL QUALITY ACT (CEQA)
The introduction of the proposed Ordinance is not a project per the CEQA guidelines
Section 15378 (b)(4). Any new projects of the Arcadia Redevelopment Agency would
be subject to the appropriate review under CEQA.
FISCAL IMPACT
The fiscal impact of introducing Ordinance No. 2286 is that if it is ultimately adopted, the
City would be committing to making special payments each year to schools and special
" districts per AB X1 27. In 2011 -2012, the payment is estimated to be $1,482,920. The
City can enter into an agreement with the Arcadia Redevelopment Agency to have it
make payments to the City to cover the cost of these special payments. Under AB X1
27, the Arcadia Redevelopment Agency would continue its normal operations, which
could include projects that would generate new revenues to the City's General Fund.
If the City does not proceed with the Ordinance, then per AB 1X 26, the Arcadia
Redevelopment Agency would be dissolved as of October 1, 2011. The impact would
be the immediate and permanent suspension of any activity by the Arcadia
Redevelopment Agency and the beginning of the process to unwind the Agency. The
elimination of ARA would impact future General Fund revenues that could be generated
from redevelopment projects.
Ordinance No. 2286
July 19, 2011
Page 5 of 5
RECOMMENDATION
Introduce Ordinance No. 2286 on first reading.
By: . 1
Donald Penman, City Manager
Attachment: Ordinance No. 2286
ORDINANCE NO. 2286
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ARCADIA, 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 ARCADIA REDEVELOPMENT
AGENCY
WHEREAS, the City Council of the City of Arcadia ( "City ") approved and adopted
the Redevelopment Plan for the Central Redevelopment Project ( "Redevelopment Plan ")
covering certain properties within the City (the "Project Area "); and
WHEREAS, the Arcadia Redevelopment Agency ( "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 "); and
WHEREAS, 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; and
WHEREAS, over the next few years, the Agency hopes to implement a variety of
redevelopment projects and programs to continue to eliminate and prevent blight, stimulate
and expand the Project Area's economic growth, create and develop local job opportunities
and alleviate deficiencies in public infrastructure, to name a few; and
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WHEREAS, as part of the 2011 -2012 State budget bill, the California Legislature
has recently enacted, and the Governor has signed, companion bills AB 1X 26 and AB 1X
27, requiring that each redevelopment agency be dissolved unless the community that
created it enacts an ordinance committing it to making certain payments; and
WHEREAS, specifically, AB 1X 26 prohibits agencies from taking numerous actions,
effective immediately and purportedly retroactively, and additionally provides that agencies
are deemed to be dissolved as of October 1, 2011; and
WHEREAS, AB 1X 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;
and
WHEREAS, the Alternative Voluntary Redevelopment Program requires that the
community agree by ordinance to remit specified annual amounts to the county auditor -
controller; and
WHEREAS, under the threat of dissolution pursuant to AB 1X 26, and upon the
contingencies and reservations set forth herein, the City shall make the Fiscal Year 2011-
2012 community remittance, currently estimated to be One Million Four Hundred Eighty -
Two Thousand Nine Hundred Twenty Dollars ($1,482,920), as well as the subsequent
annual community remittances as set forth in the CRL; and
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WHEREAS, the City reserves the right to appeal the California Director of Finance's
determination of the Fiscal Year 2011 -2012 community remittance, as provided in Health
and Safety Code Section 34194; and
WHEREAS, City understands and believes that an action challenging the
constitutionality of AB 1X 26 and AB 1X 27 will be filed on behalf of cities, counties and
redevelopment agencies; and
WHEREAS, 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 AB 1X 26 and
AB 1X 27 are unconstitutional; and
WHEREAS, the City reserves the right, regardless of any community remittance
made pursuant to this Ordinance, to challenge the legality of AB 1X 26 and AB 1X 27; and
WHEREAS, to the extent a court of competent jurisdiction enjoins, restrains, or
grants a stay on the effectiveness of the Alternative Voluntary Redevelopment Program's
payment obligation of AB 1X 26 and AB 1X 27, the City shall not be obligated to make any
community remittance for the duration of such injunction, restraint, or stay; and
WHEREAS, all other legal prerequisites to the adoption of this Ordinance have
occurred.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF ARCADIA,
CALIFORNIA, DOES ORDAIN AS FOLLOWS:
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SECTION 1. Recitals. The Recitals set forth above are true and correct and
incorporated herein by reference.
SECTION 2. Participation in the Alternative Voluntary Redevelopment Program. 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 AB 1X
27.
SECTION 3. Payment Under Protest. Except as set forth in Section 4, 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 4. Effect of Stay or Determination of Invalidity. City shall not make any
community remittance in the event a court of competent jurisdiction either grants a stay on
the enforcement of AB 1X 26 or AB 1X 27 or determines that AB 1X 26 or AB 1X 27 are
unconstitutional and therefore invalid, and all appeals therefrom are exhausted or
unsuccessful, or time for filing an appeal therefrom has lapsed. 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 that AB 1X 26
and AB 1X 27 are unconstitutional. if there is a final determination that AB 1X 26 and AB
1X 27 are invalid, this Ordinance shall be deemed to be null and void and of no further
force or effect.
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SECTION 5. Implementation. The City Council hereby authorizes and directs the
City Manager to take any action and execute any documents necessary to implement this
Ordinance, including but not limited to notifying the Los Angeles 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 set forth in AB 1X 27.
SECTION 6. Additional Understandings and Intent. 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. 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 7. CEQA. 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
or program. The City Council, therefore, directs that a Notice of Exemption be filed with
the County Clerk of the County of Los Angeles in accordance with CEQA Guidelines.
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SECTION 8. Custodian of Records. The documents and materials that constitute
the record of proceedings on which these findings are based are located at the City Clerk's
office located at 240 West Huntington Drive, P.O. Box 60021, Arcadia, California 91066.
The custodian for these records is the City Clerk.
SECTION 9. Severability. If any provision of this Ordinance or the application
thereof to any person or circumstance is held invalid, such invalidity shall not affect other
provisions or applications of this Ordinance which can be given effect without the invalid
provision or application, and to this end the provisions of this Ordinance are severable.
The City Council hereby declares that it would have adopted this Ordinance irrespective of
the invalidity of any particular portion thereof.
SECTION 10_ Certification; Publication. 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 Arcadia, 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. Effective Date. This Ordinance shall become effective on the thirty
first (31 after its adoption.
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Passed, approved and adopted this day of , 2011.
Mayor of the City of Arcadia
ATTEST:
City Clerk
APPROVED AS TO FORM:
e.174,e
Steph n P. Deitsch
City Attorney
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