20000705 CC SR Loan Agreement between City of RPV and RDA a•
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MEMORANDUM RANCHO PALOS VERDES
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: DENNIS MCLEAN, FINANCE DIRECTOR
DATE: JULY 5, 2000
SUBJECT: LOAN AGREEMENT BETWEEN THE CITY AND RDA
RECOMMENDATION:
Authorize the Mayor and City Clerk to execute the attached Loan Agreement between the City
and the Rancho Palos Verdes Redevelopment Agency.
BACKGROUND AND ANALYSIS:
Abalone Cove Fund Financing
The Abalone Cove landslide abatement project of the Redevelopment Agency was initially
financed by the issuance of$10 million of County Improvement District Bonds (the "Bonds") in
1991. The Bonds were issued as part of the Reimbursement and Settlement(Horan)Agreement
entered into between the County, City, Agency and the Horan litigants in 1987. After payment
of amounts owed the County and the City, approximately$6.7 million of net bond proceeds were
transferred to the Agency's Abalone Cove fund in 1991 to finance landslide abatement projects.
Under the terms of the bond restructuring in 1997, the Bonds were repaid by the Agency's
issuance of $5,455,000 of tax allocation bonds (the "1997 RDA Bonds") and a lump sum
payment of $4,545,000 to the County. The lump sum payment was funded with $2 million of
accumulated tax increment, $1 million of fund reserves from the Abalone Cove fund and a loan
to the Abalone Cove fund by the City in the amount of$1,545,000.
The original RDA bond proceeds have financed landslide abatement projects in the Abalone
Cove area. It is anticipated that the Abalone Cove fund balance will be approximately $4.5
Million as of June 30, 2000, with the full amount expected to be expended during FY 2000-01.
However, no additional advances are anticipated to be made by the City to the Abalone Cove
fund during FY 2000-01 or anytime thereafter.
The City and the Agency previously entered into a Loan Agreement when the City advanced
$1,545,000 to the Abalone Cove fund as a part of the 1997 bond restructuring. The original loan
agreement was dated November 30, 1997 and has been amended annually to consolidate the
loan for accrued (unpaid) interest. With accrued interest of$365,462 through June 30, 2000,
the total amount owed to the City by the Abalone Cove fund of the Agency is $1,910,462 as of
June 30, 2000. If interest rates are consistent with the prior year, total accrued interest will be
$531,673 at June 30, 2001, and the total amount owed the City by the Abalone Cove fund will
be $2,076,673 at June 30, 2001.
. .
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Portuguese Bend Fund Financing Requirements •
While the Abalone Cove fund of the Agency has relied on bond proceeds to finance landslide
abatement projects, the Portuguese Bend fund of the Agency relies on the City to finance its
landslide projects. A sufficient fund balance existed at June 30, 2000 to cover all budgeted FY
2000-01 expenditures within the Portuguese Bend project area. The FY 2000-01 budget does
not provide for any additional loan principal amounts to the Portuguese Bend fund of the Agency.
The total principal loan owed the City by the Portuguese Bend fund was $4,320,552 as of June
30, 2000. Including accrued interest of $3,132,638, the total amount owed to the City by the
Portuguese Bend fund was $7,453,190 as of June 30, 2000. If interest rates are consistent with
the previous year, the total accrued interest will be $3,758,844 at June 30, 2001, and the total
amount owed to the City by the Portuguese Bend fund will be $8,101,618.
CONCLUSION:
The proposed Loan Agreement includes a history of loan advances made by the City to the
Abalone Cove fund and Portuguese Bend fund of the Agency. The interest rate charged on the
loan is equal to the rate earned by the City on its LAIF deposits plus three percent. For the past
year, the interest rate charged on the loans with the Agency was 8.67%. The loan is subordinate
to the payment of the 1997 RDA Bonds issued to the County in 1997.
No additional principal loans are anticipated to be made to the Agency in FY 2000-01. The
attached Loan Agreement merely provides for a consolidation of all previous years loan activities
in both the Abalone Cove and Portuguese Bend funds as required by the terms of the previous
Loan Agreement. The proposed Loan Agreement continues to require the maturity of the loan
with the close of the fiscal year.
Resp-ctfully submitted,
•
/ !
Dennis McLean
Finance Director
Revi
es Evans
City Manager
n:rda\loandocs\20000705 staffreport city.doc
4b
LOAN AGREEMENT
•
This loan agreement, dated as of July 1, 2000 is made by and between the City of Rancho
Palos Verdes (the "City") and the Rancho Palos Verdes Redevelopment Agency (the
"Agency"). For and in consideration of the mutual covenants and promises set forth herein,
the parties agree as follows:
RECITALS
This loan agreement is entered into with reference to the following facts:
A. In furtherance of the objectives of the Redevelopment Law, the Agency has undertaken
a program for the redevelopment of blighted areas in the City, and in this connection, has
undertaken and is now carrying out the responsibility for the redevelopment of the Project
Area pursuant to and in furtherance of the Redevelopment Plan.
B. The Agency and the City have adopted the Redevelopment Plan providing for the
redevelopment of the Project Area by undertaking such actions as may be appropriate to
abate the geologic hazards in the Project Area.
C. Prior to execution of this Loan Agreement, the City previously advanced the Agency's
Portuguese Bend fund $4,320,552, plus accumulated interest for a total outstanding
balance of$7,453,190 as of June 30, 2000. The history of the loans made by the City to
40 the Portuguese Bend fund of the Agency is as follows:
D. The City does not expect to make any loan advances to the Portuguese Bend fund of
the Agency during FY 2000-01.
Portuguese Bend:
As of June 30 Accrued Total
for the years: Principal, Interest Outstanding
1990 $ 1,279,152 $ 0 $ 1,279,152
1991 318,400 148,229 1,745,781
1992 165,000 180,901 2,091,682
1993 133,000 215,264 2,439,946
1994 133,000 181,315 2,754,261
1995 457,000 252,805 3,464,066
1996 435,000 319,086 4,218,152
1997 250,000 366,703 4,834,855
1998 200,000 423,681 5,458,536
1999 700,000 465,223 6,623,759
2000 250,000 579,431 7,453,190
• Total Portuguese Bend $ 4,320,552 $ 3,132,638
E. Prior to execution of this Loan Agreement, the City previously advanced the Agency's
Abalone Cove fund $1,545,000 plus accumulated interest for a total outstanding balance •
of $1,910,462 as of June 30, 2000. The history of the loans made by the City to the
Abalone Cove fund of the Agency is as follows:
Abalone Cove:
As of June 30 Accrued Total
for the years: Principal Interest Outstanding
1998 $ 1,545,000 $ 77,510 $ 1,622,510
1999 0 135,595 1,758,105
2000 0 152,357 1,910,462
Total Abalone Cove $ 1,545,000 $ 365,462
F. The City does not expect to make any loan advances to the Abalone Cove fund of the
Agency during FY 2000-01.
ARTICLE I
DEFINITIONS
Section 1.01. Agency. "Agency" means the Rancho Palos Verdes Redevelopment
Agency, a body public, corporate, and politic, organized and existing pursuant to the
Constitution and laws of the State of California.
Section 1.02. Abalone Cove fund. "Abalone Cove fund" means the accounting entity
used to account for the activities of Abalone Cove projects of the Rancho Palos Verdes
Redevelopment Agency.
Section 1.03. Portuguese Bend fund. "Portuguese Bend fund" means the accounting
entity used to account for the activities of Portuguese Bend projects of the Rancho Palos
Verdes Redevelopment Agency.
Section 1.04. Bond. "Bond" means the CI 2651-M, 1915 Act Limited Obligation
Improvement Bonds (Abalone Cove) issued by the County in the principal amount of
$10,000,000 and repaid upon restructuring of the Bond on November 1, 1997, including the
issuance of the RDA Bond as described in Section 1.14 of this Loan Agreement.
Section 1.05. City. "City" means the City of Rancho Palos Verdes, a municipal
corporation, organized and existing pursuant to the Constitution and laws of the State of
California.
Section 1.06. County. "County" means the County of Los Angeles, California.
Section 1.07. Fiscal Year. "Fiscal Year" means the fiscal year beginning on July 1st4110
and ending on the next following June 30th.
Section 1.08. Housing Fund. "Housing Fund" means the Project Area Low and
411 Moderate Income Housing Fund established pursuant to section 33334.3 of the
Redevelopment Law and held by the Agency.
Section 1.09. Loan Agreement. "Loan Agreement" means this loan agreement
entered into July 1, 2000 between the City and Agency.
Section 1.010. MOU. "MOU" means the Memorandum of Understanding, dated
November 1, 1997, between the County, the City and the Agency.
Section 1.11. Net Tax Increment. "Net Tax Increment" means, for each Fiscal Year,
the taxes (including all payments, reimbursements and subventions, if any, specifically
attributable to ad valorem taxes lost by reason of tax exemptions and tax rate limitations)
eligible for allocation to the Agency pursuant to the Redevelopment Law in connection with
the Project Area (excluding (a) amounts, if any, received by the Agency pursuant to Section
16111 of the Government Code; (b) amounts payable to the Consolidated Fire Protection
District of Los Angeles County pursuant to Section 8B of that certain Reimbursement and
Settlement Agreement dated October 13, 1987 among the County, the Agency and the
City; and (c) amounts deposited by the Agency in the Housing Fund pursuant to Section
33334.2 of the Redevelopment Law, as provided in the Redevelopment Plan.
Section 1.12. Party. "Party" means any party to this Agreement.
10Section 1.13. Project Area. "Project Area" means the territory included within Project
Area No. 1 of the Agency.
Section 1.14. RDA Bond. "RDA Bond" means the tax allocation Bond of the Agency
in the principal amount of$5,455,000 issued by the Agency for the corporate purposes of
the Agency to aid in the financing and refinancing of redevelopment activities of the
Agency.
Section 1.15. Redevelopment Law. "Redevelopment Law" means the Community
Redevelopment Law (California Health and Safety Code Sections 33000, et. seq.)
Section 1.16. Redevelopment Plan. "Redevelopment Plan" means the
Redevelopment Plan for the Project Area.
ARTICLE II
LOAN
Section 2.01. Loan. The unpaid principal and accrued interest balance advanced by
the City to the Agency's Portuguese Bend fund totals $7,453,190 at June 30, 2000. This
amount is in addition to the total unpaid principal and accrued interest balance of
$1,910,462 advanced to the Abalone Cove fund of the Agency and still outstanding as of
June 30, 2000. The total unpaid balance of$9,363,652 shall constitute the balance owed
• under the Loan Agreement.
f r ry
Section 2.02. Interest Payable. Interest shall be payable on the unpaid principal of
such new loan and all prior loans incorporated herein, shall draw interest, compounded •
annually on a 360 day year, at a rate calculated as the rate earned on the City's LAIF
deposits plus three percent per annum commencing on the date or dates said funds are
transferred, and continuing until principal and interest are paid in full.
Section 2.03. Terms of Repayment. Agency shall repay the loan from Net Tax
Increment and any other legally available monies of the Agency. The loan will mature
concurrently with the close of the City's 2000-01 fiscal year, provided, however, that the
maturity date will be extended to the degree that the Agency has insufficient funds to repay
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the loan. To the extent that the Agency is able to repay any portion of the outstanding
principal or interest and fails to do so, the City may exercise any appropriate remedy to
enforce payment by the Agency hereunder. The obligation of the Agency repay this loan
is subordinate to the payment of the RDA Bond and the unpaid interest on the Bond as of
the Settlement Date, all in accordance with the MOU. In addition, the obligation of the
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Agency to repay this loan may be subordinated to any other bonds, notes or other
obligations of the Agency to the extent that the City agrees.
Section 2.04. Previous Loans Consolidated. All previous loans made to the Agency
by the City are now consolidated and incorporated within this Loan Agreement. All
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previous loan agreements between the City and Agency are superseded by this Loan
Agreement.
IN WITNESS HEREOF THE PARTIES HAVE CAUSED THIS LOAN AGREEMENT TO BE •
EXECUTED.
CITY OF RANCHO PALOS VERDES
ATTEST: By
Mayor
City Clerk
RANCHO PALOS VERDES
REDEVELOPMENT AGENCY
ATTEST: By
Agency Chairman
Agency Secretary
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