RPVCCA_RDA_SR_2010_11_04_B_Advance_And_Repayment_Between_City_And_RDACITY OF
MEMORANDUM
RANCHO PALOS VERDES
TO:
FROM:
DATE:
SUBJECT:
REVIEWED:
Staff Coordinator:
HONORABLE CHAIR &MEMBERS OF THE BOARD
DENNIS McLEAN,DIRECTOR OF FINANCE &INFORMATION ~
TECHNOLOGY
NOVEMBER 4,2010
ADVANCE AND REPAYMENT AGREEMENT BETWEEN CITY
AND REDEVELOPMENT AGENCY ",(1
CAROLYN LEHR,EXECUTIVE DIRECTOR ~
Kathryn Downs,Deputy Director of Finance &Information
Technology
RECOMMENDATION
Approve the attached Advance and Repayment Agreement between the City and
Redevelopment Agency (the "RDA").
BACKGROUND
Pursuant to a Disposition and Development Agreement between the RDA and AM CAL
Mirandela Fund,L.P.(the "Developer")dated March 20,2009,the RDA agreed to loan the
Developer $6,790,000.As reported to the City Council on February 16,2010,the loan was
to be financed as follows:
Value of Crestridge Real Property $2,990,000
Pre-Development Loan (from RDA Tax Increment)200,000
Construction Financing (from RDA Tax Increment)1,833,632
Construction Financing (from City's Affordable Housing Fund)1,766,368
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During FY09-10,the City's advance of $1,766,368 was transferred from the City's
Affordable Housing Fund to the RDA Housing Set-Aside Fund for disbursement to the
Developer.As reported to the City Council and RDA Board on March 17,2009,the loan is
to be paid back to both Fund programs by the Developer over the life of the project.
RDA B-1
ADVANCE AND REPAYMENT AGREEMENT BETWEEN CITY AND
REDEVELOPMENT AGENCY
November 4,2010
Page 2 of 2
DISCUSSION
The draft "Advance and Repayment Agreement"(see attached)was prepared by the City
Attorney's office to document that the City and RDA intended the City's contribution to be
an advance,rather than a permanent transfer offunds to the RDA (similarto a contribution
of equity or capital in a commercial business transaction).The Advance and Repayment
Agreement also serves to clarify the method for disbursing Developer repayments to the
City.The RDA's liability to the City is solely to pay the City a pro-rata share of amounts
repaid by the developer.The City's share of each repayment amount will be the same
proportion as the City's contribution to the total amount loaned.For example,if the entire
$6,790,000 is loaned to the Developer,the City's share of each repayment amount would
equal 26%($1,766,368 divided by $6,790,000)and the RDA's share would equal 74%.
The City's advance for this project will carry the same terms as the RDA loan to the
Developer;which means that it will accrue simple interest at the rate of 3%per year on
amounts outstanding from the dates of disbursement.This advance is not an addition to
the Consolidated Loan Agreement between the City and RDA dated December 1,2003.
FISCAL IMPACT
There is no fiscal impact as a result of approving the attached draft agreement.The City's
$1,766,368 contribution to the AM CAL project has been recorded as a Note Receivable in
the City's Affordable Housing Fund as of June 30,2010.The entire amount of the loan to
AMCAL has been recorded as a Note Receivable in the RDA's Housing Set-Aside Fund,
with an offsetting Advance Payable to the City's Affordable Housing Fund for the
$1,766,368 contribution.As of June 30,2010,the total amount loaned to AMCAL is
$6,173,035.Staff expects that the Developer will finalize its loan draws during 2011.
RDA B-2
ADVANCE AND REPAYMENT AGREEMENT
This Advance and Repayment Agreement,dated as of ,2010,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.
Section 1.Facts.This Advance and Repayment Agreement is entered into with
reference to the following facts:
A.In furtherance of the objectives of the Community Redevelopment Law
(California Health and Safety Code Section 33000,et seq.)(the "Redevelopment Law"),the
Agency has undertaken a program for the redevelopment of blighted areas in the City,and
toward this end,has undertaken and is now carrying out the responsibility for the redevelopment
of Redevelopment Project Area No.1 (the "Project Area")pursuant to the Redevelopment Plan
for the Project Area,adopted by City Ordinance No.190 (the "Redevelopment Plan").
B.In order to provide affordable housing and effectuate the provisions of the
Redevelopment Plan for the Project Area,the Agency entered into a Disposition and
Development Agreement ("DDA"),dated March 20,2009,with AMCAL Mirandela Fund,L.P.
(the "Developer")for the sale of Agency-owned real property located at the intersection of
Crestridge Road and Crenshaw Boulevard within the City of Rancho Palos Verdes (the "Site")
and the development on the Site by the Developer of a 34-unit senior affordable apartment
project ("the Project").
C.Pursuant to the DDA and in order to implement the financing plan for the
Proj ect,the Agency agreed to loan funds to the Developer in an amount not to exceed
$6,790,000 (the "Agency Loan").The Agency Loan is evidenced by a promissory note (the
"Agency Note")and secured by a trust deed.The outstanding balance of the Agency Loan
accrues interest at the rate of three percent (3%)per annum,simple interest,on the amount
disbursed from the date of disbursement.
D.The Agency Loan shall be repaid by the Developer from Net Available
Cash Flow (as defined in the DDA)in accordance with the terms set forth in the DDA.
Generally,the Agency Loan shall be repaid annually,commencing on the first May 1st at which
Net Available Cash Flow is available in accordance with the provisions of the DDA,and each
May 1st thereafter.The Agency Loan shall also be repaid in the event of a sale or refinancing of
the Project,in accordance with the terms of the Agency Loan.
E.The Agency Loan has been,or will be,funded,in part,from moneys
deposited,or to be deposited,in the Agency's Low and Moderate Income Housing Fund and,in
part,from the City's In-Lieu Affordable Housing Funds (the "City Advance").The City's In
Lieu Affordable Housing Funds,which constitute the City Advance,were paid to the City by
developers to satisfy the developers'respective obligations to provide affordable housing in
connection with their respective proj ects.
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R6874-0001 \1290501 v2.doc RDA B-3
F.At the time of entering into the DDA,the Agency and the City Council
contemplated that the Agency would repay the City the City Advance over the life of the Project
on the same basis that the Developer repays the Agency Loan to the Agency.
G.The City and the Agency desire to enter into this Advance and Repayment
Agreement to acknowledge the foregoing recitals and to provide for an appropriate method of
repayment by the Agency of the City Advance.
Section 2.Disbursements to City.Within a reasonable time after the Agency
receives from the Developer a repayment of the Agency Loan,the Agency shall disburse to the
City in repayment of the City Advance the City's share of the amount received by the Agency.
The City's share of each amount shall be in the same proportion as the proportion of the Agency
Loan which is funded from the City Advance.The parties agree that in lieu of the foregoing
arrangement,the Agency may direct the Developer to remit the City's share of each of its annual
repayment amounts directly to the City.
Section 3.Termination of DDA or Foreclosure of Trust Deed.In the event the
Agency exercises its right to terminate the DDA or foreclose on the trust deed securing the
Agency Note,or exercises its right to re-take title to the Site under its Right of Reverter,as
described in the DDA,then the Agency shall endeavor to sell the Site for redevelopment
purposes.Upon such sale,the Agency shall pay to the City the City's share of the amount of the
sale proceeds received by the Agency,with such share to be in the same proportion as the
proportion of the Agency Loan which is funded from the City Advance.
Section 4.No Other Obligations of Agency.The parties agree that except as set forth
in this Agreement,the Agency shall have no other obligation to reimburse the City for the City
Advance.
Section 5.Cooperation.The City and Agency agree to take all appropriate steps,
execute any documents and cooperate to establish such accounting and other procedures,all as
may be necessary, convenient,or desirable under the circumstances to accomplish the purposes
and intent of this Advance and Repayment Agreement.
Section 6.Records.Each party shall maintain books and records regarding its duties
pursuant to this Advance and Repayment Agreement.Such books and records shall be available
for inspection by the officers and agents of the other party at all reasonable times.
Section 7.Law Governing.This Advance and Repayment 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 8.Amendments.This Advance and Repayment Agreement may be amended
at any time,and from time to time,by an agreement executed by both parties to this Advance and
Repayment Agreement.
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R6874-0001\1290501v2.doc RDA B-4
Section 9.Non Liability of Officials and Employees.No Agency member,Council
member,and no official,agent,or employee of the Agency or the City shall be personally liable
to the other party,or any successor in interest,in the event of any default or breach by the
Agency or the City,or for any amount which may become due to the City or Agency,or
successor,or on any obligations under the terms of this Advance and Repayment Agreement.
IN WITNESS HEREOF THE PARTIES HAVE CAUSED THIS AGREEMENT TO BE
EXECUTED.
CITY OF RANCHO PALOS VERDES
By _
Mayor
ATTEST:
City Clerk
RANCHO PALOS VERDES
REDEVELOPMENT AGENCY
By _
Agency Chairperson
ATTEST:
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R6874-0001 \1290501 v2.doc RDA B-5