MEETING DATE:
SEPTEMBER 23, 2014
SUBJECT:
Title
RESOLUTION NOS. SA 2014-011 & 2014-7983 - AGREEMENT BETWEEN THE CITY AND SUCCESSOR AGNECY TO EXPEND EXCESS BOND PROCEEDS
Body
Recommendation
Recommendation
1. As Successor Agency to the former San Marcos Redevelopment Agency (Successor Agency), adopt the attached resolution approving an agreement between the City of San Marcos (City) and the Successor Agency to expend Excess bond proceeds.
2. As City Council, adopt the attached resolution approving an agreement between the City and the Successor Agency to expend excess bond proceeds.
Body
Board or Commission Action
Not applicable
Relevant Council Strategic Theme
Good Governance
Relevant Department Goal
Continue to maintain the fiscal health of the City and ensure appropriate fiscal policies and procedures are in place
Introduction
In June 2011, AB x1 26 was signed into law, dissolving all 400 redevelopment agencies in California. The California Supreme Court upheld the State legislation and the dissolution became effective February 1, 2012. In order to perform the legal obligations of the redevelopment agencies and to wind down agency affairs, each redevelopment agency required a Successor Agency. On January 10, 2012, the City Council approved the City serving as the Successor Agency to the former San Marcos Redevelopment Agency (Agency).
Dissolution legislation AB x1 26 was amended by AB 1484 on June 27, 2012. AB 1484 made several changes to AB x1 26 including enabling successor agencies to use unspent bond proceeds for the purposes for which the bonds were sold.
Two bond issues related to the former Agency still have unexpended bond proceeds, namely the San Marcos Public Facilities Authority 2005 Tax Allocation Revenue Bonds Series C and the San Marcos Public Facilities Authority 2006 Tax Allocation Revenue Bonds Series A. The Agency planned various redevelopment projects to be financed in whole or in part from these bond proceeds including streets, drainage and related public infrastructure improvements. Currently, there are approximately $40.1 million in unspent bond proceeds.
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Discussion
The Successor Agency is authorized to utilize bond proceeds in a manner consistent with the original bond covenants. However, before a successor agency can use bond proceeds to fund a project, it must have an enforceable obligation with another party, that obligation must be included on a Recognized Obligation Payment Schedule (ROPS) approved by the Oversight Board, and that obligation must be approved by the Department of Finance. The Health and Safety Code dictates strict timelines in which a successor agency may submit a ROPS, creating the potential for a delay of more than 180 days between the issuance of a request for proposal and the start of the project. This type of delay would cause significant issues in completing any proposed projects envisioned at the time the bonds were issued.
In order to resolve the timing delays caused by the ROPS process, staff has drafted the attached agreement between the City and the Successor Agency to expend excess bond proceeds (the "Agreement"). The Agreement creates the enforceable obligation necessary for the ROPS and eliminates the need to itemize every contract related to the use of bond proceeds on the ROPS.
The Oversight Board will consider the Agreement and ROPS 14-15B at its meeting on October 3, 2014. If the Agreement is approved by City Council and the Oversight Board, the obligation will be included on ROPS 14-15B covering January 2015 through June 2015. Once ROPS 14-15B is approved by the Department of Finance, the bond proceeds can then be transferred to the City for expenditure on individual projects.
Fiscal Impact
Approval of the attached resolution will have no fiscal impact on the City's General Fund. Approval of the Agreement will facilitate the expenditure of bond proceeds for the purposes for which the bonds were issued and sold.
Attachment(s)
Resolution
Agreement between the City and the Successor Agency to expend excess bond proceeds
Prepared by: Laura Rocha, Finance Director
Submitted by: Laura Rocha, Finance Director
Reviewed by: Helen Peak, City Attorney
Approved by: Jack Griffin, City Manager