HomeMy WebLinkAbout2016-094 I RESOLUTION NO. 2016-94
2 RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE FORMER
3 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
4 AUTHORIZING PAYMENT OF $1,003,178.34 TO THE UNITED STATES TREASURY
TO RESOLVE POTENTIAL TAX LIABILITY.
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WHEREAS, On February 1, 2012, the Redevelopment Agency of the City of San
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Bernardino (RDA) was dissolved by operation of law and the City became the RDA Successor
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Agency (Successor Agency); and
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WHEREAS, the RDA had a number of bond issues and similar obligations outstanding
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upon dissolution, and the Successor Agency is responsible for debt service on these obligations,
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and
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WHEREAS, the redevelopment dissolution laws allow successor agencies to refund
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(i.e., refinance) debt obligations of the former RDA if doing so will achieve a savings in debt
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service or finance debt service spikes (Cal. Health & Safety Code § 34177.5, effective
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September 22, 2015); and
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WHEREAS, in 2015, the Successor Agency determined that, due to low current market
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interest rates, it could save millions of dollars in debt service obligations by refunding certain
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RDA obligations; and
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WHEREAS, on May 18, 2015, the Mayor and Common Council, acting as Successor
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Agency, adopted Resolution No. 2015-104, authorizing the issuance of bonds to refund certain
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obligations of the former RDA to take advantage of reduced interest rates and avoid debt service
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spikes due to maturing obligations; and
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WHEREAS, among the obligations to be refunded were the $8,590,000 Subordinate
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Tax Allocation Refunding Bonds, Series 1998B (1998B bonds), issued by the San Bernardino
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Joint Powers Financing Authority (JPFA) on April 2, 1998; and
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WHEREAS, the JPFA is a joint powers authority formed by the City and the RDA in
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I August 1989 for the purpose of financing and refinancing public capital improvements of the
2 City and RDA; and
3 WHEREAS, The Mayor and Common Council act as the governing board of the JPFA;
4 and
5 WHEREAS, the 1998B bonds were issued at the request of the RDA and the RDA
6 agreed to pay the debt service on the bonds, making the debt service an enforceable obligation
7 of the Successor Agency; and
8 WHEREAS, the 1998B bonds were issued as tax-exempt obligations, based on a legal
9 opinion of bond counsel that interest on the bonds would be exempt from federal income
10 taxation; and
1 l WHEREAS,the Internal Revenue Code limits the number of times tax-exempt
12 obligations can be refunded in advance of their maturity date, and
13 WHEREAS, in the course of pursuing the refunding of the prior RDA obligations, it
14 was determined that about 84 percent of the obligations that were refunded by the 1998B bonds
15 - had previously been advance refunded twice and could not be advance refunded again; and
16 WHEREAS, the advance refunding of those obligations constituted a prohibited
17 advance refunding of prior tax exempt obligations and exposed the JPFA to potential tax
18 liability; and
19 WHEREAS, this potential liability needed to be resolved for the refunding transaction
20 to proceed; and
21 WHEREAS, to resolve the potential liability, the Council authorized staff to negotiate a
22 settlement agreement with the Internal Revenue Service (IRS); and
23 WHEREAS, an agreement has now been reached and a settlement agreement (Closing
24 Agreement) has been prepared by the IRS for execution by the Mayor on behalf of the JPFA;
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I WHEREAS, execution of the agreement by the IRS is contingent upon the payment of
2 $1,003,178.34; and
3 WHEREAS, the Successor Agency has sufficient funds to pay the settlement amount in
4 an escrow account relating to a 2005 Senior Loan Agreement secured by the former RDA's Tri-
5 City Project; and
6 WHEREAS, as a result of the Legislature's enactment of Senate Bill 107 late last year,
7 the escrowed funds are available to the Successor Agency for payment of the IRS settlement;
8 and
9 WHEREAS,the use of the escrowed funds for that purpose has been approved by the
10 State Department of Finance.
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NOW THEREFORE, BE IT RESOLVED BY THE MAYOR AND COMMON
12 COUNCIL OF THE CITY OF SAN BERNARDINO AS FOLLOWS:
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SECTION 1. The City Manager, as Executive Director of the Successor Agency, is
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hereby authorized and directed to execute to pay to the United States Treasury, via the
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Electronic Federal Tax Payment System as directed in the Closing Agreement, the sum of
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$1,003,178.34 using escrowed funds relating to the 2005 Senior Loan Agreement secured by the
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former RDA's Tri-City Project, and to take all other actions as may be necessary for the
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consummation of the Closing Agreement.
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SECTION 2. This Resolution shall take effect immediately upon its adoption.
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I RESOLUTION OF THE MAYOR AND COMMON COUNCIL OF THE CITY OF SAN
BERNARDINO ACTING AS THE SUCCESSOR AGENCY TO THE FORMER
2 REDEVELOPMENT AGENCY OF THE CITY OF SAN BERNARDINO
AUTHORIZING PAYMENT OF $1,003,178.34 TO THE INTERNAL REVENUE
3 SERVICE TO RESOLVE POTENTIAL TAX LIABILITY.
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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 joint regular meeting thereof, held on the
7 16th day of May, 2016, by the following vote, to wit:
8 Council Members: AYES NAYS ABSTAIN ABSENT
9 MARQUEZ X
10 BARRIOS X
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VALDIVIA X
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SHORETT X
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NICKEL X
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RICHARD X
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16 MULVIHILL X
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rgea City Clerk
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r
19 The foregoing resolution is hereby approved this 0 =ay, 2016.
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21 R. Carey D is, Mayor
City of Sa Bernardino
22 Approved as to form:
Gary D. Saenz, City Attorney
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