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HomeMy WebLinkAbout09.A- Economic Development Agency RESOLUTION(ID# 1538) DOC ID: 1538 A CITY OF SAN BERNARDINO—REQUEST FOR COUNCIL ACTION n In Support/Opposition From: Emil A. Marzullo M/CC Meeting Date: 01/23/2012 Prepared by: Lorraine Wyche, (909) 663- 1044 Dept: Economic Development Agency Ward(s): All Subject: Resolution of the Mayor and Common Council of the City of San Bernardino Taking Certain Actions Pursuant to Health & Safety Code Section 34176(B)(2) Agreeing to Have the City of San Bernardino Serve as the Successor Housing Agency to the Redevelopment Agency of the City of San Bernardino for Housing Purposes. Financial Impact: None. Synopsis of Previous Council Action: None. Backeround• The California Supreme Court released its opinion in the challenge filed by the California Redevelopment Association ("CRA") versus Ana Matosantos, State Director of Finance, challenging the constitutionality of ABx1 26 and ABxl 27 as adopted by the State Legislature on June 29,2011. These two items of legislation had the effect of(i) dissolving redevelopment agencies that were formed by an ordinance, adopted by a city or a county as set forth in ABx1 26, and (ii)pursuant to ABxl 27, providing for a voluntary payment mechanism whereby a city or a county could effectively continue redevelopment activities through remittance of the payments required under ABx1 27. The CRA relied extensively upon the prior voter approval of Proposition 22 as the Constitutional safeguard in an effort to prevent this type of scheme from being adopted as devised by the State Legislature in the form of ABxl 26 and ABxl 27. The CRA argued that Proposition 22 thus required both ABxl 26 and ABxl 27 to be declared as unconstitutional. However, the Supreme Court used this very same Proposition 22 argument to the contrary and determined that (i) the Legislature had the authority to dissolve redevelopment agencies, (ii) local public agencies, redevelopment agencies and cities have no Constitutional right for continued existence except through the actions of the State Legislature to allow any broadly defined "political subdivision" to continue to exist in the State, and (iii) ABA 27 was unconstitutional because it did in fact violate Proposition 22 and was not truly a voluntary payment by cities and counties for the © continued reinstatement of their respective redevelopment agencies. a )/23 Z Updated: 1/19/2012 by Mayra Ochiqui A Page 1 3 1538 Revised Dates for Performance per Supreme Court Decision and Decision on Successor A enc : 1. Supreme Court reformed and revised each effective date or deadline for performance of an obligation under Health& Safety Code Section 34170 to 34191 arising before May 1,2012, to take effect four(4)months later. 2. Health & Safety Code Section 34176 -transfer of housing responsibilities; City of San Bernardino may elect to retain the housing assets and functions previously performed by the Agency; then all rights, powers, duties and obligations, excluding unencumbered amounts in the Low & Moderate Income Housing Fund, shall be transferred to the City of San Bernardino. If the City does not elect to become the successor housing agency, the Housing Authority of the City shall become the housing uccessor entity ntit 34176(b)(2). The Ho ' Y using Authority then would have the rights,powers, duties and obligations of the former redevelopment housing functions. The practical effect of this designation is that three (3) full-time employees within the Agency's current housing function and associated programs will transfer to the City effective February 1, 2012. The City has the authority to continue to enforce affordability covenants and perform related housing activities under Section 33418 of the Health & Safety Code. Although RDA's have been eliminated, the City's housing element objectives of providing decent, safe and sanitary housing remains for special needs households which include, but are not limited to the elderly, the disabled, single-parent households, large households and other eligible categories. In the future, the City may transfer these functions to its Housing Authority, which is a separate statutory legal entity governed by a Board composed of the Mayor and City Council ° members. Limitation on Liability of Successor Agency: Health & Safety Code Section 34173(e) provides the following assurances to a successor agency to limit the liability of a local agency such as the City of San Bernardino while serving in the capacity of the successor agency: The liability ofany successor agency, acting pursuant to the powers granted under the act adding this part, shall be limited to the extent of the total sum of property tax revenues it receives pursuant to this part and the value of assets transferred to it as a successor agency for a dissolved redevelopment agency. There have been concerns expressed by a number of cities (most notable Los Angeles) that the remaining tax increment is not sufficient to pay the enforceable obligations. However, there are specific provisions of ABxI 26 (although far from desirable) to address that concern. Health & Safety Code Section 34183(b) provides that if the successor agency determines that there is not sufficient tax increment to pay all enforceable obligations,there is a notification procedure to the State. Eventually, if there are not sufficient other funds available from the dissolved agency (through assets or otherwise), the funds come from tax increment which otherwise would be distributed to other taxing agencies. Alternatively, the County may make a loan. There is no requirement, authorization or provision for the City general fund to pay or loan such funds. Updated: 1/19/2012 by Mayra Ochiqui A Page 2 1538 ENVIRONMENTAL IMPACT: This item does not meet the definition of a "project" under Section 15378 of the California Environmental Quality Act ("CEQA"), which states that a "Project" means the whole of an action, which has a potential for resulting in either a direct physical change in the environment, or a reasonably foreseeable indirect physical change in the environment. FISCAL IMPACT: The successor agency takes current encumbered low-mod funds (approximately $2,300,000). Much of the housing function is supported by federal funds and grants. In addition, ABx1 26 provides that any low-mod funds borrowed from or payments owing to the low-mod fund must be repaid when approved by the oversight board. SB654 (Steinberg) is an urgency bill which would transfer amounts in the low-mod fund to the successor agency. City Attorney Review: Supportine Documents: 01-23-12 Successor Housing Function MCC Reso (FINAL)(DOC) O Updated: 1/19/2012 by Mayra Ochiqui A Page 3 1 RESOLUTION NO. 2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY 3 OF SAN BERNARDINO TAKING CERTAIN ACTIONS PURSUANT TO HEALTH & SAFETY CODE SECTION 34176(b)(2) AGREEING TO HAVE 4 THE CITY OF SAN BERNARDINO SERVE AS THE SUCCESSOR 5 HOUSING AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO FOR HOUSING PURPOSES 6 WHEREAS, the Mayor and Common Council of the City of San Bernardino (the"Council") 7 S duly adopted an ordinance of the City of San Bernardino (the "City) to establish the 9 Redevelopment Agency of the City of San Bernardino (the "Agency) in accordance with the 10 requirements of the California Community Redevelopment Law C'CRL'), and the Agency has 11 continued to function since such time in the management and undertaking of redevelopment efforts 12 and activities within Council-adopted Redevelopment Project Areas within the City; and 13 WHEREAS, the Agency has existed since its establishment under the governance of the © 14 governing body known and identified as the Community Development Commission of the City of 15 16 San Bernardino (the "Commission") for the purpose of combining the redevelopment functions and 17 the housing functions of the Agency under a single governing body, and 18 WHEREAS, the California Legislature adopted ABx1 26 and ABxl 27 on June 29, 2011, 19 which legislation became effective upon the signing thereof by the Governor on said date which 20 items of legislation identified as ABxl 26 added certain provisions to the Health & Safety Code 21 identified at Part 1.85 of Division 24 of the Health & Safety Code commencing with Section 34170 22 through and including Section 34191; and 23 24 WHEREAS, a legal challenge to ABxl 26 and ABxl 27 was filed directly with the 25 California Supreme Court in the action generally known as CRA v. Ana Matosamos, State Director 26 of Finance, and a final decision was rendered by the California Supreme Court on December 29, O27 2011 declaring ABx1 26 to be constitutional and ABx1 27 to be void as 28 unconstitutional; and C\Oamiwa SMbWWCaeallo SBCAI aISMi s¢ T NinuleTrn\,,nM.....Ai.—;,ln.,.u......a: ..,.., i 1 WHEREAS, prior to the release of the Supreme Court decision, the Agency through the © 2 Commission was not able to enter into new agreements or to commit to actions in addition to those 3 prior contracts, obligations and other debts previously incurred or approved and entered into by the 4 5 Agency prior to the date that the California Supreme Court had issued a stay as to certain 6 implementation aspects of both ABx1 26 and ABx1 27; and 7 WHEREAS, ABxl 26 provides, as codified in Health & Safety Code Section 34176(6)(2) 8 and reformed by the California Supreme Court, that the city or county that adopted an ordinance to 9 establish a redevelopment agency may elect to retain the responsibility of performing housing 10 functions previously performed by the redevelopment agency the "successor housing agency" as 11 provided in said Section 34176 upon dissolution of the redevelopment agency on February 1, 2012; 12 and 13 Q14 WHEREAS, it is vital to the implementation of the provisions of ABxI 26 that the Council 15 decide at this time whether to have the City of San Bernardino serve as the successor housing 16 agency to the Agency. 17 NOW, THEREFORE, IT IS HEREBY RESOLVED, DETERMINED AND ORDERED BY 18 THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO, AS 19 FOLLOWS: 20 Section 1. The Council hereby agrees to have the City of San Bernardino City serve as the 21 successor housing agency to the Agency pursuant to Health & Safety Code Section 34176. The 22 23 Council further directs the filing of this Resolution by the City Clerk with the Auditor-Controller of the County San Bernardino forthwith. 24 25 Section 2. This Resolution shall take effect upon its adoption and execution in the manner 26 as required by the City Charter. 27 28 C\DO[ S and SmMVWCOOCM.SBCALLo i I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN BERNARDINO TAKING CERTAIN ACTIONS PURSUANT 2 TO HEALTH & SAFETY CODE SECTION 34176(6)(2) AGREEING TO 3 HAVE THE CITY OF SAN BERNARDINO SERVE AS THE SUCCESSOR HOUSING AGENCY TO THE REDEVELOPMENT AGENCY OF THE 4 CITY OF SAN BERNARDINO FOR HOUSING PURPOSES 5 I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Mayor and 6 Common Council of the City of San Bernardino at a meeting 7 thereof,held on the day of 2012,by the following vote, to wit: 8 Council Members: Ayes Nays Abstain Absent 9 MARQUEZ 10 JENKINS 11 BRINKER 12 SHORETT 13 KELLEY © 14 JOHNSON 15 MC CAMMACK 16 17 Rachel G. Clark, City Clerk 18 The foregoing Resolution is hereby approved this day of 2012. 19 20 21 Patrick J. Moms, Mayor City of San Bernardino 22 Approved as to Form: 23 24 By: 25 ames F. Penman, City Attorney 26 27 28 3