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20010703 Loan Agreement between the City of RPV and RDA • e)e, MEMORANDUM ANCHO PALOS VERDES TO: HONORABLE CHAIRMAN AND MEMBERS OF THE BOARD FROM: DENNIS McLEAN, FINANCE DIRECTOR SUBJECT: LOAN AGREEMENT BETWEEN THE CITY AND RDA DATE: JULY 3, 2001 RECOMMENDATION: Authorize the Agency Chairman and the Agency Secretary 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 $280,000 as of June 30, 2001, with an additional $230,000 expected to be expended during FY 2001-02. 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$546,956 through June 30, 2001, the total amount owed to the City by the Abalone Cove fund of the Agency is $2,091,956 as of June 30, 2001. If interest rates are consistent with the prior year, total Loan Agreement betwe the City and RDA • July 3, 2001 Page 2 interest will be $745,692 at June 30 2002, and the total amount owed the City by the 410 accrued Abalone Cove fund will be $2,290,692 at June 30, 2002. Portuguese Bend Fund Financing Requirements While the Abalone Cove fund of the Agency has relied on bond proceeds to finance landslide g Y abatement projects, the Portuguese Bend fund of the Agency relies on the City to finance its landslide projects. A sufficient fund balance will exist at June 30, 2001 to pay for all budgeted FY 2001-02 expenditures within the Portuguese Bend project area. The FY 2001-02 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 will be $4,320,552 as of June 30, 2001. Including accrued interest of$3,845,152, the total amount owed to the City by the Portuguese Bend fund will be $8,165,704 as of June 30, 2001. If interest rates are consistent with the previous year, the total accrued interest will be $4,620,894 at June 30, 2002, and the total amount owed to the City by the Portuguese Bend fund will be $8,941,446. 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 410 the past year, the interest rate charged on the loans with the Agency was 9.5%. 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 2001-02. 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. Respe tfully subm' ted, t • WI% Dennis McLean Finance Director Rev i wr Les Evans City Manager n:rda\Ioandocs\20010703_staffreport__rda.doc • 1110 LOAN AGREEMENT This loan agreement, dated as of July 1, 2001 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$8,165,704 as of June 30, 2001. The history of the loans made by the City to 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 2001-02. 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 2001 0 712,514 8,165,704 • Total Portuguese Bend $ 4,320,552 $ 3,845,152 4110 • . 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 $2,091,956 as of June 30, 2001. 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 2001 0 181,494 2,091,956 Total Abalone Cove $ 1,545,000 $ 546,956 F. The City does not expect to make any loan advances to the Abalone Cove fund of the Agency during FY 2001-02. 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 1st and ending on the next following June 30th. • w 1111 Section 1.08. Housing Fund. "Housing Fund" means the Project Area Low and 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, 2001 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 Countypursuant to Section 8B of that certain Reimbursement and g 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. Section 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 $8,165,704 at June 30, 2001. This amount is in addition to the total unpaid principal and accrued interest balance of $2,091,956 advanced to the Abalone Cove fund of the Agency and still outstanding as of June 30, 2001. The total unpaid balance of$10,257,660 shall constitute the balance owed • under the Loan Agreement. A • • e' ti Section 2.02. Interest Payable. Interest shall be payable on the unpaid principal of such new Ivan and allp rior 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 4111 depositsplus three percent per annum commencing on the date or dates said funds are p 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 2001-02 fiscal year, provided, however, that the maturitydate will be extended to the degree that the Agency has insufficient funds to repay the loan. To the extent that the Agency is able to repay any portion of the outstanding or interest and fails to do so, the City may exercise any appropriate remedy to principal enforce payment bythe Agency hereunder. The obligation of the Agency to repay this loan is subordinate to thea ment of the RDA Bond and the unpaid interest on the Bond as of p Y the Settlement Date, all in accordance with the MOU. In addition, the obligation of the Agency to repay this loan maybe subordinated to any other bonds, notes àr other Ag y p y obligations of the Agency to the extent that the City agrees. Section 2.04. Previous Loans Consolidated. All previous loans made to the Agency byCity the are now consolidated and incorporated within this Loan Agreement. All 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. 411 CITY OF RANCHO PALOS VERDES ATTEST: By Mayor City Clerk RANCHO PALOS VERDES REDEVELOPMENT AGENCY ATTEST: By Agency Chairman Agency Secretary w:\Ioandocs\20010703 Joandocument.doc •