RPVCCA_CC_SR_2011_09_20_F_Adoption_Tax_Increment_AgmtCITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
HONORABLE MAYOR AND MEMBERS OF THE CITY
COUNCIL
CAROL LYNCH,AGENCY ATTORNEY
ROBIN HARRIS,DEPUTY AGENCY ATTORNEY
SEPTEMBER 20,2011
ADOPTION OF TAX INCREMENT TRANSFER AGREEMENT
CAROLYN LEHR,CITY MANAGERc9-
RECOMMENDATION
Staff recommends that the City ADOPT RESOLUTION NO.2011-__, A
RESOLUTION OF CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES,
CALIFORNIA,AUTHORIZING AND APPROVING THE EXECUTION AND DELIVERY
OF A TRANSFER AGREEMENT PURSUANT TO HEALTH AND SAFETY CODE
SECTION 34194.2 AND TAKING CERTAIN OTHER ACTIONS IN CONNECTION
THEREWITH.
EXECUTIVE SUMMARY
Adoption of the attached Resolution and Transfer Agreement will enable the
Redevelopment Agency (Agency)to transfer tax increment to the City on an annual
basis,up to the amount of the Voluntary Alternative Redevelopm~nt Program (VARP)
annual payment.The tax increment transferred must only be used for redevelopment
activities within the Project Area.
BACKGROUND
AS X1 26,which was signed by the Governor of California on June,29,2011,added
Parts 1.8 and 1.85 to the Community Redevelopment Law.Part 1.8 immediately
suspends most redevelopment agency activities and,among other things,prohibits
redevelopment agencies from incurring indebtedness or entering into or modifying
contracts.Part 1.85 provides that on October 1,2011,all existing redevelopment
agencies and redevelopment agency components of community development agencies
are dissolved,and successor agencies are designated as successor entities to the
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ADOPTION OF TAX INCREMENT TRANSFER AGREEMENT
September 20,2011
Page 2 of3
former redevelopment agencies.Part 1.85 imposes numerous requirements on the
successor agencies and subjects successor agency actions to the review of oversight
boards established under Part 1.85.
AS X1 27 was signed by the Governor concurrently with AS X1 26 and added Part 1.9
to the Community Redevelopment Law.Part 1.9 establishes a Voluntary Alternative
Redevelopment Program (VARP)whereby a redevelopment agency will,
notwithstanding Parts 1.8 and 1.85,be authorized to continue to exist and carry out the
provisions of the Community Redevelopment Law.
On August 16,2011,the City adopted Ordinance No.524 to participate in the VARP,
thereby agreeing to make specified annual payments to the County Auditor-Controller
for allocation to special districts and educational entities and authorizing the Agency to
continue to exist pursuant to Part 1.9.
LEGAL ANALYSIS
The remittance amount to be paid by the City in fiscal year 2011-12 is the Agency's
proportionate share of $1.7 billion,as determined by the State Department of Finance
pursuant to a formula specified in AS X1 27.The Department of Finance has notified
the City that its fiscal year 2011-12 remittance amount is $91,320.The City appealed
its FY11-12 amount on August 10,2011 on the basis that AS X1 26 and AS X1 27 are
unconstitutional.
This payment obligation under AS X1 27 is an ongoing obligation of the City in
subsequent years.Commencing in fiscal year 2012-13,the City's remittance amounts
will be based on the Agency's proportionate share of $400 million (with adjustments
based on growth or decline in tax increment revenues.For fiscal year 2012-13 and
thereafter,the Agency estimates that the annual remittance amount will be about
$23,000.
In addition,AS X1 27 provides that agencies will pay additional pass through payments
to school entities ("Additional Pass-Through")on account of any "new debt."New debt
is indebtedness that is displayed on a statement of indebtedness ("SOl")filed after the
SOl that is required to be filed on October 1,2011 and that was not displayed on that
SOl.
Pursuant to AS X1 27(specifically,Health and Safety Code Section 34194.2)a city and
agency can enter into a transfer agreement to provide for the agency to transfer to the
city each year a portion of the agency's tax increment.The amount of the annual
transfer under this Agreement cannot exceed the amounts of the City's annual
remittances under the VARP.Entering into a transfer agreement and including it on the
SOl that must be filed by October 1,2011 should mean that the agency's indebtedness
pursuant to the transfer agreement would not be treated as new debt for purposes of
triggering the Additional Pass Through under AS X1 27.
As discussed below,however,the lawsuit filed by the California Redevelopment
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ADOPTION OF TAX INCREMENT TRANSFER AGREEMENT
September 20,2011
Page 3 of 3
Association and League of California Cities in the Supreme Court of California alleging
that AS X1 26 and 27 are unconstitutional have raised a number of issues.On August
11,2011,the Supreme Court of California decided to hear the case and set a briefing
schedule designed to allow the Court to decide the case before January 15,2012.On
August 11,2011,the Court also issued a stay order,which was subsequently modified
on August 17,2011.Pursuant to the modified stay order,the Supreme Court granted a
stay of all of AS X1 27 (i.e.,Part 1.9),except for Health and Safety Code Section
34194(b)(2)(relating to the determination of cities'fiscal year 2011-12 remittance
amounts),and a partial stay of AS X1 26.With respect to AS X1 26,Part 1.85 was
stayed in its entirety,but Part 1.8 was not stayed.
The granting of the stay means that all agencies are subject to the prohibitions in Part
1.8,including the prohibition against entering into new contracts,during the time the
stay is in effect.The Supreme Court will consider adjusting the dates and deadlines in
AS X1 26 and AS X1 27 if the Supreme Court ultimately upholds those statutes to take
into account the period of time the stay was in effect,but the Supreme Court's decision
is not likely to occur until January of 2012.In the meantime,the CRA has requested the
Court to modify or lift tRe stay,but it is unlikely that the Court will do so at this time.
Therefore,in the event the stay is lifted and the Supreme Court upholds AS X1 26 and
AS X1 27,staff recommends that the City and the Agency enter into a transfer
agreement to provide for the Agency to transfer to the City each year a portion of the
Agency's tax increment pursuant to Health and Safety Code Section 34194.2 in the
amounts of the City's annual remittances under the VARP.The transfer agreement
presented to the Agency and City Council provides that it will only become effective on
the date that the Supreme Court lifts or modifies the stay in connection with AS X1 26
and AS X1 27 in a manner such that the prohibitions in Part 1.8 do not apply to the
Agency.
FISCAL IMPACT
The Agency will use tax increment generated in the Project Area for each Transfer
pursuant to the Transfer Agreement.For FY11-12,the Transfer will be $91,320,based
upon the Department of Finance's original calculation of the City's FY11-12 remittance
amount.
Attachments:
Transfer Agreement between the Redevelopment Agency and the City
Resolution No.2011-_,Authorizing and Approving Execution and Delivery of Transfer
Agreement
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TRANSFER AGREEMENT
This TRANSFER AGREEMENT (this "Agreement")is dated as of the effective
date below,by and between the Rancho Palos Verdes Redevelopment Agency,a public
body,corporate and politic (the "Agency"),and the City of Rancho Palos Verdes,a
municipal corporation (the "City").
RECITALS
A.The Agency (the "Agency")is a redevelopment agency in the City,created
pursuant to the Community Redevelopment Law (Part 1 (commencing with Section
33000)of Division 24 of the California Health and Safety Code)(the "Redevelopment
Law").
B.The City Council of the City (the "City Council")adopted Ordinance No.
190,approving and adopting the redevelopment plan for Project Area No.1,and from
time to time,the City Council has amended such redevelopment plan.The Agency is
undertaking a program to redevelop the Project Area.
C.AS X1 26'was signed by the Governor of California on June,29,2011,
making certain changes to the Redevelopment Law,including adding Part 1.8
(commencing with Section 34161)and Part 1.85 (commencing with Section 34170)to
Division 24 of the California Health and Safety Code.Commencing upon the
effectiveness of AS X1 26,AS X1 26 suspends most redevelopment agency activities
and,among other things,prohibits redevelopment agencies from incurring indebtedness
or entering into or modifying contracts.Effective October 1,2011,AS X1 26 dissolves
all existing redevelopment agencies and redevelopment agency components of
community development agencies,designates successor agencies to the former
redevelopment agencies,and imposes numerous requirements on the successor
agencies and subjects successor agency actions to the review of oversight boards
established pursuant to the provisions of Part 1.85.
D.AS X1 27 was signed by the Governor of California on June 29,2011,
adding Part 1.9 (commencing with Section 34192)to Division 24 of the California Health
and Safety Code.Part 1.9 establishes an Alternative Voluntary Redevelopment
Program (the "AVRP")whereby,notwithstanding the provisions of Part 1.8 and Part
1.85,a redevelopment agency will be authorized to continue to exist and carry out the
provisions of the Redevelopment Law upon the enactment,prior to the applicable
deadline established in·Part 1.9,by the city council of the city which includes that
redevelopment agency (the "PartiCipating City"),of an ordinance to comply with Part
1.9.
E.Part 1.9 requires a Participating City to make specified annual remittances
to the applicable county auditor-controller,who shall allocate the remittances for deposit
into a Special District Allocation Fund,for allocation to specified special districts,and
into the county Educational Revenue Augmentation Fund,for allocation to educational
entities.
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F.To participate in the AVRP,in addition to adopting the ordinance
described in Recital 0,above,Part 1.9 provides that the Participating City must,by
November 1,2011,notify the applicable county auditor-controller,the Controller of the
State of California (the "State Controller"),and the Department of Finance of the State
of California (the "Department of Finance")that the Participating City agrees to comply
with the provisions of Part 1.9.The Participating City's agreement to make the
remittances provided for under Part 1.9 is a precondition to continue redevelopment
pursuant to Part 1.9.
G.Part 1.9 provides that for fiscal year 2011-12,a Participating City shall
make a remittance to the applicable county auditor-controller,in an amount determined
by the Director of Finance of the State of California (the "Director of Finance")pursuant
to a formula set forth in Part 1.9,based on the information contained in the State
Controller's redevelopment agency 2008-09 annual report.The amount of the
remittance represents the redevelopment agency's proportionate share of the sum of
$1,700,000,000.The initial amount of such remittance determined by the Director of
Finance is subject to recalculation and reduction if the Participating City timely files an
appeal in accordance with Health and Safety Code Section 34194(b)(2)(L).
H.For fiscal 'year 2012-13 and each fiscal year thereafter,a Participating
City's remittance shall be in an amount calculated by the Participating City in
accordance with the requirements of Part 1.9,subject to adjustment based on audit and
verification by the Director of Finance,the State Controller and the applicable county
auditor-controller.Part 1.9 provides that on or before November 15t of each year,
commencing November 1,2012,a Participating City shall notify the Department of
Finance,the State Controller,and the applicable county auditor-controller of the
remittance amount calculated by the Participating City.
1.Pursuant to the provisions of Part 1.9,for a fiscal year,a Participating City
shall pay one-half of the remittance on or before January 15 of that year and shall pay
the remaining one-half of the remittance on or before May 15 of that year.
J.A Participating City making remittances pursuant to Part 1.9 may use any
funds available to the City and not otherwise obligated for other uses.
K.Pursuant to Health and Safety Code Section 34194.2,a Participating City
and the redevelopment agency in that Participating City may enter into an agreement
whereby the agency will transfer a portion of its tax increment to the Participating City in
an amount not to exceed the annual remittance required that year pursuant to Part 1.9.
L.The City Council adopted Ordinance No.524,on August 16,2011,pursuant
to Health and Safety Code Section 34193,to become a Participating City in the AVRP for
the purpose of allowing the Agency to continue to exist and carry out the provisions of the
Redevelopment Law,notwithstanding the provisions of Part 1.8 and 1.85.
M.In order for the City to remain a Participating City in the AVRP,the City will
be required to make a Part 1.9 remittance (the "Annual Remittance")to the Los Angeles
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County Auditor-Controller (the "Auditor-Controller")each fiscal year,commencing with
fiscal year 2011-12.For each fiscal year commencing with fiscal year 2011-12,one-half
of the Annual Remittance will become due on each January 15,and the remaining half
of the Annual Remittance will become due on each May 15 (each such semi-annual
payment being referred to below as a "Semi-Annual Remittance Payment").
N.The Director of Finance has calculated the City's Annual Remittance for
fiscal year 2011-12 (the "2011-12 Remittance")to be $91,320.
O.For fiscal year 2012-13 and thereafter,the City is required to calculate the
Annual Remittance for each fiscal year as prescribed by Part 1.9.Each of the Director
of Finance,the State Controller,and the Auditor-Controller is authorized to audit and
verify the Annual Remittance that is calculated by the City.
P.The California Redevelopment Association and League of California Cities
have filed a lawsuit in the Supreme Court of California alleging that AB X1 26 and AB
X1 27 are unconstitutional.On August 11,2011,the Supreme Court of California
decided to hear the case and set a briefing schedule designed to allow the Supreme
Court to decide the case before January 15,2012.On August 11,2011,the Supreme
Court also issued a stay order (the "Stay Order"),which was subsequently modified on
August 17,2011.Pursuant to the modified Stay Order,the Supreme Court granted a
stay of all of AB X1 27 (Le.,Part 1.9),except for Health and Safety Code Section
34194(b)(2)(relating to the determination of cities'fiscal year 2011-12 remittance
,amounts)and a stay of a portion of AB X1 26.With respect to AB X1 26,Part 1.85 was
stayed in its entirety,but Part 1.8 was not stayed.
Q.In the event the stay is lifted and the Supreme Court upholds AB X1 26
and AB X1 27,the City desires to participate in the AVRP so that the Agency may
continue to exist and carry out the provisions of the Redevelopment Law.
R.In the event the stay is lifted and the Supreme Court upholds AB X1 26
and AB X1 27,the City and the Agency desire to provide for the Agency's transfers
(each,a "Transfer")of a portion of its tax increment to the City,pursuant to Health and
Safety Code Section 34194.2,such that the total amount of the Transfers in any fiscal
year shall be equal to be the Annual Remittance for that fiscal year.
NOW,THEREFORE,IN CONSIDERATION OF THE PREMISES HEREIN AND
FOR OTHER VALUABLE CONSIDERATION,THE SUFFICIENCY OF WHICH IS
HEREBY ACKNOWLEDGED,THE AGENCY AND THE CITY AGREE AS FOLLOWS:
Section 1.Semi-Annual Transfer by the Agency
Before January 15 and May 15 each year commencing with January 15,2012,
the Agency shall make a Transfer to the City in the amount of the Semi-Annual
Remittance Payment for that fiscal year.The amount of the Transfer pursuant to this
Section 1 shall not be subject to any deduction or offset,regardless of amounts that the
City may then be owing to the Agency under this Agreement or any other agreement or
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arrangement.To the fullest extent permitted by law,all amounts past due but not yet
paid to the City pursuant to this Section 1 (the "Delinquent Transfer Amount")shall
remain an outstanding obligation of the Agency until paid.
The Agency shall use tax increment generated in the Project Area and eligible to
be allocated to the Agency for each Transfer pursuant to this Agreement.The
obligations of the Agency under this Agreement shall constitute an indebtedness of the
Agency for the purpose of carrying out the redevelopment plan for the Project Area.In
all events,to the fullest extent permitted by law,all amounts due under this Agreement
shall be paid to the City by the date established in the redevelopment plan (as it exists
as of the date of this Agreement)for the Project Area as the time limit for the repayment
of indebtedness with respect to the Project Area.
The Agency's payment obligation under this Agreement shall,without the
necessity of further action by the Agency or the City,be junior and subordinate to all
other obligations or indebtedness heretofore or hereafter voluntarily incurred by the
Agency,inclUding bonds or loans secured by a pledge of tax increment revenues
derived from the Project Area No.1,and to all pre-existing statutory obligations of the
Agency pursuant to Section 33607.5 or 33606.7 of the Redevelopment Law..
Section 2.Mutual Cooperation
The Agency shall cooperate with the City and provide such information and
assistance as the City may request for the City to make the calcul'ations required pursuant
to Health and Safety Code Section 34194 to determine the amount of each Annual
Remittance.The City shall cooperate with the Agency to enable the Agency to reflect any
necessary changes to the Agency's annual Statements of Indebtedness (required to be
filed by the Agency pursuant to Health and Safety Code Section 34675(b))with respect
the estimated amounts of the Transfers under this Agreement.
Section 3.Additional Transfers in Event of Deficiency
After the Agency has made a Transfer pursuant to Section 1,if it is determined that
the City's Semi-Annual Remittance Payment for the immediately following January 15 or
May 15,as applicable,is greater than the Transfer for whatever reason,the City shall
notify the Agency of the difference between the amounts of the Semi-Annual Remittance
Payment and the Transfer.Upon the receipt of such notice by the City,the Agency shall
promptly make an additional Transfer to the City in the amount equal to such difference.
The Agency acknowledges that,for each fiscal year,the Agency shall make
Transfers to the City,such that the aggregate amount so transferred shall be equal to the
full amount of the Annual Remittance paid by the City to the Auditor-Controller.Neither
any failure by the City to provide notice pursuant to this Section 3 nor any defect of such
notice diminishes the Agency's obligations hereunder.
Section 4.Refund by the City in Event of Reduction
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No later than June 30 of each fiscal year,to the extent that the sum of all of the
Transfers by the Agency during that fiscal year is greater than the Annual Remittance paid
by the City to the Auditor-Controller for that fiscal year,the City shall refund to the Agency
an amount equal to the difference between the sum of such Transfers and the Annual
Remittance for that fiscal year (the "Refund");provided,if at that time there is any
outstanding Delinquent Transfer Amount (defined in Section 1),then,at the City's
discretion and to the extent permitted by law,the Refund may be reduced by all or a
portion of the outstanding Delinquent Transfer Amount,as an offset.
Section 5.Used of Funds Transferred by the Agency
Solely to the extent required by Health and Safety Code Section 34194.2,the City
shall use the moneys transferred by the Agency pursuant to Section 1 and Section 3 of
this Agreement for the purpose of financing activities within the redevelopment area that
are related to accomplishing the Agency's project goals.
Section 6.Nonliability of Officials,Employees and Agents
No Agency member,City Councilmember,and no official,agent,or employee of the
Agency or the City sha~1 be personally liable to the other parties,or any successor in
interest,in the event of any default or breach by the Agency or the City under this
Agreement,or for any amount which may become due to the City or Agency,or successor
thereto,or on any obligations under the terms of this Agreement.
Section 7.Liability and Indemnification
In contemplation of the provisions of California Government Code Section 895.2
imposing certain tort liability jointly upon public entities solely by reason of such entities
being parties to an agreement as defined by Government Code Section 895,the parties
hereto,as between themselves,pursuant to the authorization contained in Government
Code Sections 895.4 and 895.6,shall each assume the full liability imposed upon it,or
any of its officers,agents or employees,by law for injury caused by negligent or wrongful
acts or omissions occurring in the performance of this Agreement to the same extent that
such liability would be imposed in the absence of Government Code Section 895.2.To
achieve the above-stated purpose,each party indemnifies,defends and holds harmless
the other party for any liability,losses,cost or expenses that may be incurred by such
other party solely by reason of Government Code Section 895.2.
Section 8.Default
If either party fails to perform or adequately perform an obligation required by this
Agreement within 30 calendar days of receiving written notice from the non-defaulting
party,the party failing to perform shall be in default hereunder.In the event of default,the
non-defaulting party will have all the rights and remedies available to it at law or in equity
to enforce the provisions of this Agreement,including without limitation the right to sue for
damages for breach of contract.The rights and remedies of the non-defaulting party
enumerated in this Section 8 are cumulative and shall not limit the non-defaulting party's
rights under any other provision of this Agreement,or otherwise waive or deny any right or
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remedy,at law or in equity,existing as of the date of the Agreement or hereinafter enacted
or established,that may be available to the non-defaulting party against the defaulting
party.Each notice of default shall clearly indicate that it is a notice of default under this
Agreement.
Section 9.Further Assurances
The parties hereto agree to take all appropriate steps and execute any documents
which may reasonably be necessary or convenient to implement the intent of this
Agreement.
Section 10.Law Governing
This Agreement is made in the State of California under the constitution and laws of
the State of California,and is to be so construed.
Section 11.Severability
If any provision of this Agreement should be prohibited,unenforceable or
become contrary to law,then such provision shall be null and void and shall be deemed
separable from the remaining provisions of this Agreement and shall in no way affect
the validity,enforceability or legality remaining provisions of this Agreement.
Section 12.No Third Party Beneficiaries
Notwithstanding any reference in this Agreement to persons or entities other than
the City or the Agency,there shall be no third-party beneficiaries under this Agreement.
Nothing in this Agreement,expressed or implied,is intended to give to any person other
than the City and the Agency any right,remedy or claim under or by reason of this
Agreement.
Section 13.Binding on Successors
This Agreement shall be binding upon and inure to the benefit of the Agency and
City and their respective successors and assigns,without regard to technical classification
and designation;provided,that the Agency shall not have the right to assign its rights
hereunder or any interest herein without the prior written consent of City.
Section 14.Duration;Survival
Subject to Section 20,this Agreement shall remain in full force and effect so long as
the Agency is authorized to continue its existence pursuant to Part 1.9 and shall terminate
immediately once the City is no longer a Participating City in the AVRP under Part 1.9;
provided,however,Sections 6 (no personal liability for officers,employees or other
persons),7 (indemnification)and 8 (rights of parties in the event of default)shall survive
any termination of this Agreement.
Se.ction 15.No Waiver of Right to Challenge Legality of AB X1 26 or AB X1 27
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The Agency and the City hereby acknowledge,agree and declare that,by
executing and delivering this Agreement and complying with the covenants hereunder,
neither the City nor the Agency is waiving any right either may have to challenge the
legality of all or any portion of AS X1 26 or AS X1 27 through administrative or judicial
proceedings,or to appeal the amount of the City's 2011-12 Remittance pursuant to Health
and Safety Code Section 34194(b )(2)(L),or to otherwise contest the amount of the Annual
Remittance for any fiscal year.Should the requirement for the City to make the Annual
Remittance,or any portion thereof,be stayed,enjoined,repealed,or held unconstitutional
or unenforceable by any court of competent jurisdiction,the City may exercise its rights to
recover reimbursement of the amounts paid for the Annual Remittance,or any portion
thereof,plus interest.
Section 16.Integration
This Agreement integrates all of the terms and conditions mentioned in or incidental
to this Agreement,and supersedes all prior agreements or understandings between the
Agency and the City,regarding the subject matter of this Agreement.
Section 17.Amendments;Waivers
This Agreement may be amended at any time,and from time to time,by a written
agreement executed by both parties to this Agreement.No delay in exercising any rights
by a party under this Agreement shall operate as a waiver of any rights of by such party
hereunder.Any waiver or consent given hereunder shall be effective only in the specific
instance and for the specific purpose for which such waiver or consent was given,unless
otherwise specified in such waiver or consent.
Section 18.Duplicate Originals
This Agreement shall be executed in duplicate originals,each of which is deemed
to be an original.
Section 19.Statutory Dates for Compliance
To the extent that this Agreement sets forth dates prescribed by AS X1 26 and AS
X1 27,such dates shall automatically be adjusted in accordance with any adjustments
made by the Supreme Court of California in connection with the AS X1 26 and AS X1 27
litigation (or by the Legislature as the result of the Court's decision),without the necessity
of further action by the Agency or the City.
Section 20.Effectiveness of Agreement
Notwithstanding anything to contrary contained herein,this Agreement shall not be
of any force or effect or binding upon the parties hereto unless and until the Supreme
Court of California lifts or modifies the Stay Order in a manner such that the prohibitions in
Part 1.8 do not apply to the Agency and the Agency is permitted to perform under this
Agreement pursuant to Health and Safety Code Section 34194.2 or other provisions of
law.
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IN WITNESS WHEREOF,the Agency and the City have caused this Agreement to
be duly executed and delivered by their authorized officers as of the date first written
above.
RANCHO PALOS VERDES REDEVELOPMENT
AGENCY
By _
Chairperson
ATTEST:
Secretary
CITY OF RANCHO PALOS VERDES
By _
Mayor
ATTEST:
City Clerk
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RESOLUTION NO.2011-__
A RESOLUTION OF CITY COUNCIL OF THE CITY OF RANCHO PALOS VERDES,
CALIFORNIA,AUTHORIZING AND APPROVING THE EXECUTION AND
DELIVERY OF A TRANSFER AGREEMENT PURSUANT TO HEALTH AND
SAFETY CODE SECTION 34194.2 AND TAKING CERTAIN OTHER ACTIONS IN
CONNECTION THEREWITH.
RECITALS
A.The Rancho Palos Verdes Redevelopment Agency (the "Agency")is a
redevelopment agency in the City,created pursuant to the Community Redevelopment
Law (Part 1 (commencing with Section 33000)of Division 24 of the California Health
and Safety Code)(the "Redevelopment Law").
B.The City Council (the "City Council")of the City of Rancho Palos Verdes
adopted Ordinance No.190,approving and adopting the redevelopment plan for Project
Area No.1,and from time to time,the City Council has amended such redevelopment
plan.The Agency is undertaking a program to redevelop the Project Area ..
C.AS X1 26 was signed by the Governor of California on June,29,2011,
making certain changes to the Redevelopment Law,including adding Part 1.8
(commencing with Section 34161)and Part 1.85 (commencing with Section 34170)to
Division 24 of the California Health and Safety Code.Commencing upon the
effectiveness of AS X1 26,AS X1 26 suspends most redevelopment agency activities
and,among other things,prohibits redevelopment agencies from incurring indebtedness
or entering into or modifying contracts.Effective October 1,2011,AS X1 26 dissolves
all existing redevelopment agencies and redevelopment agency components of
community development agencies,designates successor agencies to the former
redevelopment agencies,and imposes numerous requirements on the successor
agencies and subjects successor agency actions to the review of oversight boards
established pursuant to the provisions of Part 1.85.
D.AS X1 27 was signed by the Governor of California on June 29,2011,
adding Part 1.9 (commencing with Section 34192)to Division 24 of the California Health
and Safety Code.Part 1.9 establishes a Voluntary Alternative Redevelopment Program
(the "VARP")whereby,notwithstanding the provisions of Part 1.8 and Part 1.85,a
redevelopment agency will be authorized to continue to exist and carry out the
provisions of the Redevelopment Law upon the enactment,prior to the applicable
deadline established in Part 1.9,by the city council of the city which includes that
redevelopment agency (the "Participating City"),of an ordinance to comply with Part
1.9.
E.Part 1.9 requires a Participating City to make specified annual remittances
to the applicable county auditor-controller,who shall allocate the remittances for deposit
into a Special District Allocation Fund,for allocation to specified special districts,and
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into the county Educational Revenue Augmentation Fund,for allocation to educational
entities.
F.To participate in the VARP,in addition to adopting the ordinance
described in Recital D,above,Part 1.9 provides that the Participating City must,by
November 1,2011,notify the applicable county auditor-controller,the Controller of the
State of California (the "State Controller"),and the Department of Finance of the State
of California (the "Department of Finance")that the Participating City agrees to comply
with the provisions of Part 1.9.The Participating City's agreement to make the
remittances provided for under Part 1.9 is a precondition to continue redevelopment
pursuant to Part 1.9.
G.Part 1.9 provides thatfor fiscal year 2011-12,a Participating City shall
remit to the applicable county auditor-controller an amount equal to the amount
determined by the Director of Finance of the State of California (the "Director of
Finance")for the redevelopment agency pursuant to a formula set forth in Part 1.9,
which formula utilizes information contained in the State Controller's redevelopment
agency 2008-09 annual report.The amount represents the redevelopment agency's
proportionate share of the sum of $1 ,700,000,000.The initial amount determined by the
Director of Finance is subject to recalculation and reduction in the event the
Participating City timely files an appeal in accordance with Health and Safety Code
Section 34194(b )(2)(L).
H.For fiscal year 2012-13 and each fiscal year thereafter,a Participating
City's remittance shall be in an amount calculated by the Participating City in
accordance with the requirements of Part 1.9,subject to adjustment based on audit and
verification by the Director of Finance,the State Controller and the applicable county
auditor-controller.Part 1.9 provides that on or before November 1st of each year,
commencing November 1,2012,a Participating City shall notify the Department of
Finance,the State Controller,and the applicable county auditor-controller of the
remittance amount calculated by the Participating City.
I.Pursuant to the provisions of Part 1.9,a Participating City shall pay one-
half of the total remittance amount for a fiscal year on or before January 15 of that year
and shall pay the remaining one-half of the remittance amount on or before May 15 of
that year.
J.A Participating City making remittances pursuant to Part 1.9 may use any
funds available to the City and not otherwise obligated for other uses.
K.Pursuant to Health and Safety Code Section 34194.2,a Participating City
and the redevelopment agency in that Participating City may enter into an agreement
whereby the agency will transfer a portion of its tax increment to the Participating City in
an amount not to exceed the annual remittance required that year pursuant to Part 1.9.
L.The City Council adopted Ordinance No.524,on August 16,2011,pursuant
to Health and Safety Code Section 34193,to become a Participating City in the VARP for
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the purpose of allowing the Agency to continue to exist and carry out the provisions of the
Redevelopment Law,notwithstanding the provisions of Part 1.8 and 1.85.
M.The California Redevelopment Association and League of California Cities
have filed a lawsuit in the Supreme Court of California alleging that AB X1 26 and AB X1
27 are unconstitutional.On August 11,2011,the Supreme Court of California decided to
hear the case and set a briefing schedule designed to allow the Supreme Court to decide
the case before January 15,2012.On August 11,2011,the Supreme Court also issued a
stay order (the "Stay Order"),which was subsequently modified on August 17,2011.
Pursuant to the modified Stay Order,the Supreme Court granted a stay of all of AB X1 27
(Le.,Part 1.9),except for Health and Safety Code Section 34194(b)(2)(relating to the
determination of cities'fiscal year 2011-12 remittance amounts)and a stay of a portion of
AB X1 26.With respect to AB X1 26,Part 1.85 was stayed in its entirety,but Part 1.8 was
not stayed.
N.In the event the Stay Order is lifted and the Supreme Court upholds AB X1
26 and AB X1 27,the City desires to participate in the VARP so that the Agency may
continue to exist and carry out the provisions of the Redevelopment Law.
O.In the event the Stay Order is lifted and the Supreme Court upholds AB X1
26 and AB X1 27,the City and the Agency desire to enter into an agreement (the
"Transfer Agreement")to provide for the Agency's transfers (each,a "Transfer")of a
portion of its tax increment to the City,pursuant to Health and Safety Code Section
34194.2,such that the total amount of the Transfers in any fiscal year shall be equal to be
the Annual Remittance for that fiscal year.
P.The Transfer Agreement will not have any effect unless and until the
Supreme Court lifts or modifies the Stay Order in a manner such that the prohibitions in
Part 1.8 do not apply to the Agency and the Agency is permitted to perform under the
Transfer Agreement pursuant to Health and Safety Code Section 34194.2 or other
provisions of law.
NOW,THEREFORE,THE CITY COUNCIL OF THE CITY OF RANCHO PALOS
VERDES HEREBY FINDS,DETERMINES,RESOLVES AND ORDERS AS FOLLOWS:
Section 1.The above recitals are true and correct and are a substantive part
of this Resolution.
Section 2.The Transfer Agreement,in the form presented and on file with the
City Clerk,is hereby approved.The Mayor,or in the Mayor's absence,the Mayor Pro-
Tem,acting singly,is hereby authorized and directed to execute and deliver,for and in
the name of the City,the Transfer Agreement in substantially that form,with such
changes therein as the Mayor (or the Mayor Pro-Tem,as the case may be)may
approve (such approval to be conclusively evidenced by the execution and delivery
thereof).
Section 3.The adoption of this Resolution is not intended and shall not
constitute a waiver by the City of any right the City may have to challenge the legality of
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all or any portion of AS X1 26 or AS X1 27 through administrative or judicial
proceedings.
Section 4.This Resolution and the Transfer Agreement have been reviewed
with respect to applicability of the California Environmental Quality Act ("CEQA"),the
State CEQA Guidelines (California Code of Regulations,Title 14,Sections 15000 et
seq.,hereafter the "Guidelines"),and the City's environmental guidelines.The City
Council has determined that neither this Resolution nor the Transfer Agreement
Ordinance is a "project"for purposes of CEQA,as that term is defined by Guidelines
Section 15378.Specifically,this Resolution and the Transfer Agreement constitute the
creation of government funding mechanisms or other government fiscal activities which
do not involve any commitment to any specific project which may result in a potentially
significant physical impact on the environment.(Guidelines Section 15378(b)(4)).In
addition,this Resolution and the Transfer Agreement constitute organizational or
administrative activities that will not result in a direct or indirect physical change in the
environment.(Guidelines Section 15378(b)(5)).Therefore,because neither the
Resolution nor the Transfer Agreement is a "project,"they are not subject to CEQA's
requirements.Further,even if either this Resolution or the Transfer Agreement were
deemed a "project"and therefore subject to CEQA,each would be covered by the
general rule that CEQA applies only to projects that have the potential to cause a
significant effect on the environment.(Guidelines Section 15061 (b)(3)).As an
organizational or administrative activity or the creation of government funding
mechanisms or other government fiscal activities which do not involve any commitment
to any specific project which may result in a potentially significant physical impact on the
environment,neither this Resolution nor the Transfer Agreement has the potential to
cause a significant effect on the environment and is therefore exempt under this general
rule.Further,it can be seen with certainty that there is no possibility that the activity in
question may have a significant effect on the environment,and thus neither this
Resolution nor the Transfer Agreement is subject to CEQA.(Guidelines Section
15061 (b)(3)).
Section 5.The officers of the City are hereby authorized and directed,jointly
and severally,to execute and deliver any and all necessary documents and instruments
and to do all things which they may deem necessary or proper in order to consummate
the transaction contemplated by,effectuate the purposes of this Resolution and the
Transfer Agreement,and any such actions previously taken by such officers are hereby
ratified,confirmed and approved.
PASSED AND ADOPTED this 20th day of September,2011.
Mayor
ATTEST:
City Clerk
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