Manteca City Council/Redevelopment Agency. Steven J. Pinkerton, City Manager/Exectuive Director

Transcription

1 City Council/RDA Agenda January 18, 2011 City Manager/Executive Director Agenda Item No. C.01 Reviewed by City Mgr s office: /SP/ Memo to: From: Manteca City Council/Redevelopment Agency Steven J. Pinkerton, City Manager/Exectuive Director Date: January 18, 2011 Subject: Advance and Reimbursements Agreements between the City of Manteca and the Manteca Redevelopment Agency for reimbursement of infrastructure improvements and administrative and overhead expenses; and formation of a Housing Authority. Recommendation: 1. Add the Advance and Reimbursement Agreements between the City of Manteca and the Manteca Redevelopment Agency for reimbursement of infrastructure improvements and administrative and overhead expenses; and formation of a Housing Authority to the City Council/Redevelopment Agency agenda for consideration. 2. The City Council hereby finds that the Advance and Reimbursement Agreement for the public improvements is not a project pursuant to the California Environmental Quality Act and adopts a resolution of the City Council approving an agreement with the Manteca Redevelopment Agency for the payment by the agency for the value of land and the cost of installing publicly owned improvements and making all necessary findings in connection therewith and approving an agreement with the Agency for the payment by the Agency of administrative and overhead expenses; and, 3. The Manteca Redevelopment Agency hereby finds that the Advance and Reimbursement for the public improvements is not a project pursuant to the California Environmental Quality Act and adopts a resolution of the Manteca Redevelopment Agency approving an agreement with the City of Manteca for the payment by the agency for the value of land and the cost of installing publicly owned improvements and making all necessary findings in connection therewith and approving an agreement with the City for the payment by the Agency of administrative and overhead expenses; and,

2 4. Adopt a resolution of the City Council declaring a need for a housing authority to function in the City, declaring that the members of the City Council shall be the Commissioners of the Housing Authority and designating the first interim Chairman of the Housing Authority. Background: Staff is requesting that Council/Agency include this item on the January 18, 2011 agenda for consideration and approval, as a provision of the Brown Act, Section (b) (2), allows for action by the Council/Agency on items not appearing on the posted agenda upon a determination by a two-thirds vote of the members of the Council/Agency and that the need for action came to the attention of the local agencies subsequent to the agenda being posted. Due to the Governor's January budget proposal for FY , staff recommends immediate action be taken by the Council/Agency. As part of his January budget proposal for FY , Governor Brown has proposed the elimination of redevelopment agencies and the redirection of the property tax increment currently directed to these agencies. The Governor s proposal will not affect any projects that are already under contract with redevelopment agencies; however, there would be no dedicated state-level funding for new redevelopment projects. The budget proposal also calls for the creation of a successor agency that will fulfill the current debt obligations of redevelopment agencies. The budget proposal estimates that the successor agency will operate for approximately 20 years in order to meet all of the current obligations. Information regarding the budget is fragmentary and developing over time. The current budget proposal is not fully articulated and there are many unanswered questions which will be dealt with through the legislative process. It is staff s intent to provide information and recommendations to the Council and to the Agency relative to our understanding of the current proposal. Under the Governor s recommendation to disestablish redevelopment agencies by July 1, 2011, the State would receive $1.7 billion in relief for the state s General Fund for FY to be used to offset the costs for Medi-Cal and trial courts. Tax increment would be provided to the successor agency to address outstanding bond and contractual obligations. Beginning in FY and beyond, the incremental funds would be distributed to local governments according to existing property tax allocations and would be intended to pay for additional services that are realigned to local governments as well as for other functions of local governments such as education, police and fire protection. Additionally, a portion of the tax increment would be provided to the successor agency

3 in order to continue to service the debt contracted by the former redevelopment agencies. The Governor s proposal to end redevelopment in its current form will have a devastating effect on the City of Manteca in general and the Manteca Redevelopment Agency in particular. Every possible effort needs to be made to avoid the elimination of redevelopment. However, until such action is undertaken, it is prudent to take any available steps to retain local control over local resources It should be noted that the Governor s proposal primarily affects nonhousing redevelopment funds. To that end, staff is recommending that the Council and the Agency enter an Advance and Reimbursement Agreement for the cost of land (including right of ways) and the installation and construction of certain public improvements as described in Exhibit A. The proposed Advance and Reimbursement Agreement for the public improvements is a governmental funding mechanism and does not involve the City's commitment to any specific improvement, thus the Agreement is not a project for purposes of the California Environmental Quality Act pursuant to CEQA Guidelines Section 15378(b)(4). The projects listed in Exhibit A (except for the Main Street/Hwy 120 Interchange project) were envisioned and included in the Series 2005 and Series 2006 Redevelopment Agency bond documents for use of bond proceeds. The need to fund the Main Street/Highway 120 project occurred subsequent to bond issuance but falls within the use of bond proceeds and is in-line with the aforementioned projects. Additionally, in 1986 an Agreement for the Advance and Reimbursement of Administrative Overhead Expenses was entered into between the Agency and the City via resolution R7758. Staff believes it is prudent to update this agreement and as such, is requesting that the Council and the Commission approve the new agreement. With respect to housing funds, the Governor has proposed that Low- and Moderate-Income ( LMI ) Housing Fund responsibilities be transferred to a local housing authority. The Governor s budget assumes that the local housing authority will use the LMI Housing Funds for activities that would otherwise have been eligible for funding from redevelopment agencies. Given the foregoing and in an effort to continue to achieve the goals established for the redevelopment agency and other housing policies established by the Housing Element of the general plan, it is recommended that the City Council consider the establishment of a housing authority (pursuant to Health and Safety Code 34240, et seq., the Housing Authority Law ). Exhibit B describes the purpose and

4 governance, activation procedure, powers and duties of a housing authority. The intent of the recommendation to create a housing authority is to maintain, to the extent feasible, local control over what are now Agency housing responsibilities and the financial resources that are related thereto. Once established, the Agency could enter into a contract with the Housing Authority wherein all or a portion of the Agency s LMI Housing Funds could be transferred to the Housing Authority to manage the Agency s existing and proposed affordable housing programs. If the Agency decides to transfer all or a portion of its LMI Housing Funds to the Housing Authority, then the transferred money, if any, would no longer be an asset of the Agency and instead would become an asset of the Housing Authority. As mentioned in Exhibit B, a housing authority already exists in every county and city in California. In order to activate the City s Housing Authority, the City Council needs to adopt a resolution containing findings required by the Housing Authority Law. The attached resolution contains all of the necessary findings and actions needed to form a housing authority. Conclusion In consideration of the Governor s proposal to end redevelopment in California and to transfer the LMI Housing Fund responsibilities of redevelopment agencies to a local housing authority, it is recommended that the City Council and the Agency enter into two Advance and Reimbursement Agreements and that the City Council create a housing authority under the California Housing Authority Law. The purpose of these actions is to maintain, to the extent feasible, local control over what are now Agency responsibilities and the financial resources that are related thereto. Fiscal Impact: It is anticipated that in the event that a budget measure is adopted as substantially proposed by the Governor, bond proceeds and increment originally envisioned for the reimbursement of infrastructure costs would be required to be used to pay down outstanding debt obligations. In turn, no funding would be available for the listed projects totaling $122.5 million. Without this funding, the viability of these projects is in question. The actions proposed will create a contractual obligation of the Agency to fund these projects, as originally envisioned at the time of bonding.

5 In respect to LMI housing, initial funding for the housing authority would be provided from any fund balance in the LMI Housing Fund. The formation of the housing authority in and of itself does not create a fiscal impact to either the City or to the Agency.