Loading...
HomeMy WebLinkAbout1997-12-09 - AGENDA REPORTS - PAYOFF LOAN (2)NEW BUSINESS SUBJECT: DEPARTMENT: AGENDA REPORT Executive Director Item to be presentE December 9, 1997 PAYOFF METHOD - LOAN FROM THE CITY OF SANTA CLARITA TO THE SANTA CLARITA REDEVELOPMENT AGENCY Santa Clarita Redevelopment Agency Approve the recommended payoff method for the loan to the Santa Clarita Redevelopment Agency and direct staff to prepare the formal documentation for Agency and Council consideration at the January 13, 1998 meeting. The recommended payoff method includes reducing the interest rate retroactive to 1994 with payments beginning in the year 2002. Since 1994, the City has loaned the Santa Clarita Redevelopment Agency $2,000,000 for costs associated with the creation of a project area. The City loaned the Agency $250,000 in 1994, $1,250,000 in 1995 and $500,000 in 1996 (funds from the 1996 loan are still being used to cover Agency costs for this fiscal year). In each case, the Agency executed a promissory note which established the interest rate for the loans at the prime rate plus one percent. At that time, this rate was consistent with rates being offered in the market. The understanding in each case was that the Agency would began to payoff the loan after a project area is created. Soon after adoption of the Newhall Project Area in July, the Newhall Redevelopment Committee began discussing methods in which to payoff the loan. This item was discussed at several Finance Sub -Committee and full Committee meetings between September and November. These meetings resulted in the Committee formalizing a recommendation to the Agency for consideration. This recommendation includes reducing the rate of interest on the loan from the prime rate plus one percent to the prime rate minus one percent, with loan payments beginning in the year 2002 (25% of tax increment received each year would be used to payoff the loan). This deferment would allow the Agency to utilize of all the increment received in the first five years for revitalization efforts in Newhall. Typically, tax increment received in the first few years of a redevelopment project is substantially less than that received in later years. The Redevelopment Committee and staff support this reduction in the interest rate as it will substantially reduce interest payments on the loan. This would provide the agency with more money to revitalize Newhall. Additionally, the payoff time would be reduced from 17 years to APPROVEDA?10'�'*n Iten.K- 1 ,: 13 years. The interest rate of prime minus one percent is also considered by staff and the Committee to be fair. The primary benefit of this interest rate and payoff method is that is allows the Agency to spend more money on revitalization projects rather than interest payments. Revitalization efforts are expected to increase property values in the project area thereby resulting in increase revenues for the taxing agencies. It also provides the City and Agency with a fair method that will payoff the loan in a reasonable time period. The Agency will also be requesting an additional loan in the future to cover costs associated with the operation of the Agency for the next three years. This loan is expected to be approximately $500,000 and will be requested during the budget process for fiscal year 97-98. At the end of three years it is expected that the anticipated tax increment will be able to cover administrative and operation costs. ALTERNATIVE ACTIONS 1) Direct staff and the Committee to research additional loan payoff methods including alternative interest rates. 2) Adopt the payoff method with the exception of the reduction in the interest rate. FISCAL IMPACT A reduction in accrued interest over the life of the loan. The principal and interest on the loan would be paid back to the City's General Fund, which was the lender of the funds. �1lVi�l.Iul ►Y � Payback of Loan Worksheet Agency Resolution Nos. RDA 94-4, 95-5 and 96-2 GEA: zvhLrdvNar12O997.2p I NHDA Page 1 Payback of City Loan to the Newhall Redevelopment Agency Prime Minus One Percent Prime Prime Plus One Percent Interest Rate 7.50% 8.50% 9.50% Total Interest $4,166,195 $5,602,421 $7,665,303 % of Tax Increment 25% 25% 25% Years to Payoff 13 15 17 Year Payback Begins 2002 2002 2002 Prime Rate as of November 3, 1997. Page 1 RESOLUTION NO. RDA 94-4 A RESOLUTION OF THE SANTA CIAB.iTA REDEVELOPMENT AGENCY ACCEPTING; THE OFFER OF A LOAN BY THE CITY OF SANTA CK-AWCTA AND AUTHORIZING THE EXECUTION OF A PROMISSORY NOTE The Board of the Santa Clarita Rede:v"Aopment Agency does resolve as.follows: SECTION 1. The Agency does hereby accept the offer of a loan in the amount of Two Hundred Fifty Thousand Dollars ($250,000.00) by the City of Santa Clarita, which loan is authorized pursuant to the Community Redevelopment.Law (Section 33000 et seg. of the Health and Safety Code). The Executive Director is hereby authorized and directed to execute a w Promissory Note evidencing such loan, in substantially.the form attached as Exhibit A to this ResoluV.ion and incorporated herein by this reference, in favor of the City of Santa Clarita. SECTION 2. The Assistant Secretetry Shall certify to the adoption of this Resolution and certify th;'• record to be a full, true, correct copy of the action taker:. PASSED, APPROVED AND ADOPTED by th S -Lard of the Santa Clarita Redevelopment Agency at a regulc-.r meeting held on the ,dry _ day.of March 1994. , C IRPERSON I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Board of the Santa Clarita Redevelopment Agency at a regular meeting thereof, held on the 8thday of March , 1994 , by the following vote of the Board: AYES: MEMBERS Boyer, Darcy, Heidt, Klajic, Pederson NOES: MEMBERS None ABSENT: MEMBERS None ABSTAIN: MEMBERS None xi C' - ASSISTANT SECRETARY 0174.z EXHIBIT A March 8, 1994 PROMISSORY NOTE The Santa Clartta Redevelopment Agency, a redevelopment agency ("Agency"), for a good and valuable consideration, receipt of which is hereby acknowledged, does hereby agree to pay, on or before maturity, to the City of Santa Clarlta, a municipal corporation ("City"), at Sarna Clarita, California 91355, the sum of Two Hundred Fifty Thousand Dollars ($250,000.00), together with Interest per annum thereon, at a rate equal to the prime rate plus one (1) point; "prime rate" as used herein shall mean the prime rate of interest quoted In the greater Los Angeles area as of July 1 st of each calendar year during the term thereof, by the First Interstate Bank, or Tt`s successor. Principal and Interest shall be payable in lawful monles of the United States. Said principal and Interest shall be paid at maturity; provided, at the option of the Agency, the entire balance of principal and Interest may be paid prior to said maturity date. Should litigation e provisions of this Note, the Agency shall pay, inae addition f other sums asonably due on this note, ry to enforce han amount equal to reasonable attorneys' fees as set by the court, plus court costs incurred therein. SANTA CLARITA REDEVELOPMENT AGENCY, REDEVELOPMENT AGENCY 8 Exia Iva Director ATTEST: i By Assistant Secretary _� RESOLUTION NO. RDA95-5 A RESOLUTION OF THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA, CALIFORNIA, AUTHORIZING THE BORROWING OF AN AMOUNT NOT TO EXCEED $1,250,000 FROM THE CITY OF SANTA CLARITA; AUTHORIZING THE EXECUTION AND DELIVERY OF A PROMISSORY NOTE IN FAVOR OF THE CITY OF SANTA CLARITA IN CONNECTION THEREWITH; AND AUTHORIZING AGENCY OFFICIALS, STAFF AND OTHER PARTIES TO TAKE CERTAIN ACTIONS NECESSARY TO ACCOMPLISH THE EXECUTION AND DELIVERY OF SAID PROMISSORY NOTE. W. WHEREAS, the Redevelopment Agency of the City of Santa .Clarity (the "Agency") is a redevelopment agency and public body, corporate and politic, duly created; established and authorized to transact business and exercise its powers, all under and pursuant to the Community Redevelopment Law (consisting of Part 1 of Division 24, commencing with Section 33000, as amended, of the California Health and Safety Code) ( the "Redevelopment Law") and the powers of the Agency include the power to borrow money from the City of Santa Clarita, California (the "City"), and to issue notes and other instruments necessary or convenient to the exercise of such power; and WHEREAS, a redevelopment plan for a redevelopment project known and designated as the "Project Area" has been adopted and approved by Ordinance No. 94-3 of the City adopted on February 22, 1994 (the "Plan"), and all requirements of law for and precedent to the adoption and approval of the Plan have been complied with; and WHEREAS, for the corporate purposes of the Agency, the Agency proposes to authorize the borrowing of an amount not to exceed $1,250,000 from the City and, in connection therewith, execute and deliver a Promissory Note dated as of June 27, 1995 (the "Note"), Exhibit A - in favor of the City, to finance a portion of the costs of implementing the Plan and to pay costs in connection with the execution and delivery of. the Note; r �r NOW, THEREFORE, THE BOARD OF DIRECTORS OF THE REDEVELOPMENT AGENCY OF THE CITY OF SANTA CLARITA DOES I HEREBY RESOLVE, DETERMINE AND DECLARE THAT: Section 1. Incurrence of Debt Authorized, The Agency is hereby authorized to borrow an amount not to.exceed $1,250,000 from the City for certain lawful and public purposes, including, without limitation, the purposes set forth in the foregoing recitals. Section 2. Promissory Note.. The Agency hereby approves the Note in substantially the form on file with the Secretary, together with any changes therein or additions.thereto.approved by the Chairperson or the Vice -Chairperson and subject to General Counsel approval. The Chairperson or Vice -Chairperson shall execute and deliver the Note, the Secretary shall attest to such signature, in the name and on behalf of the Agency, and execution and attestation thereof shall be conclusive evidence of approval of any such changes and additions. Section 3. Authorization to Proceed. All actions heretofore taken by the officers and agents of the Agency with respect to borrowing money from the City and the execution and delivery of the Note are hereby approved, confied and ratified. The Agency hereby authorizes ' and directs General Counsel to prepare all other documents in connection with the borrowing of money from the City; to advise the Agency in connection therewith; and to otherwise accomplish the lawful and expeditious execution and delivery of the Note. Agency officials and staff are hereby authorized and directed to assist and cooperate in connection with the execution and delivery of the Note and to take any and all actions which they, or any of them, may deem necessary or advisable in order to consummate the transactions described herein including, but not limited to, the execution and delivery of any and all agreements, certificates, instruments and other documents. Section 4. Effectiveness. This Resolution shall take effect from and after its adoption by the Board of Directors. PASSED AND ADOPTED by the Board of Directors of the Redevelopment Agency of the City of Santa Clarita at a regular meeting held on the 27th day of June , 1995. REDEVELOPMENT AGENCY OF THE CITY OF SANTA CL.ARITA CHAIRPERS ATTEST: ECRET Y STATE OF CALIFORNIA )ss COUNTY OF LOS ANGELES ) I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Board of Directors of the Redevelopment Agency of the City of Santa Clarita at a regular meeting thereof, held on the 77th day of ,lune 1995, by the following vote of the Board: AYES: BOARDMEMBERS Smyth, Pederson,.Heidt, Boyer, Darcy NOES: BOARDMEMBERS Mone ABSENT: BOARDMEMBERS None w ABSTAIN: BOARDMEMBERS Hone 17 �n " S CRETAR 1 EXHIBIT A June 27, 1995 PROMISSORY NOTE The Santa Clarita Redevelopment Agency, a redevelopment agency ("Agency"), for a good and valuable consideration, receipt of which is hereby acknowledged, does hereby agree to pay, on or before maturity, to the City of Santa Clarita, a municipal corporation ("City"), at Santa Clarita, California 91355, a sum certain amount as specified from time to time and certified by the Finance Director, as designated on Attachment I, attached hereto, but in no event greater than the sum of $1,250,000, together with interest per annum thereon, at a rate equal to the prime rate plus one (1) point; "prime rate" as used herein shall mean the prime rate of interest quoted in the greater Los Angeles area as of July 1st of each calendar year during the term thereof, by the First Interstate Bank, or its successor. Principal and interest shall be payable in lawful monies of the United States. Said principal and interest shall be paid at maturity; provided, at the option of the Agency, the entire balance of principal and interest may be paid prior to said maturity date. Should litigation be reasonably necessary to enforce the provisions of this Note, the Agency shall pay, in addition to all other sums due on this note, an amount equal to reasonable attorneys' fees as set by the court, plus court costs incurred therein. SANTA CLARITA REDEVELOPMENT AGENCY ATTACHMENT I PROMISSORY NOTE SANTA CLARITA REDEVELOPMENT AGENCY, •REDEVELOPMENT AGENCY Sum certain amounts, as specified from time to time and certified by Finance Director for a sum amount not to exceed $1,250,000. DATE OF LOAN fin/wuucW95-75res AMOUNT CERTIFICATION RESOLUTION NO. RDA 96.2 A RESOLUTION OF THE SANTA CLARITA REDEVELOPMENT AGENCY ACCEPTING THE OFFER OF A LOAN BY THE CITY OF SANTA CLARITA AND AUTHORIZING THE EXECUTION OF A PROMISSORY NOTE The Board of the Santa Clarita Redevelopment Agency does resolve as follows: SECTION 1. The Agency does hereby accept the offer of a loan in the amount of Five Hundred Thousand Dollars ($500,000.00) by the City of Santa Clarita, which loan is authorized pursuant to the Community Redevelopment Law (Section 33000 CL=Q. of the Heath and Safety Code.) The Executive Director is hereby authorized and directed to execute a Promissory Note evidencing such loan, in substantially the form attached as Exhibit A to this Resolutioerand incorporated herein by this reference, in favor of the City of Santa Clarita. SECTION 2. The Secretary shall certify to the adoption of this Resolution and certify this record to be a full, true, correct copy of the action taken. PASSED, APPROVED AND ADOPTED by the Board of the Santa Clarita Redevelopment Agency at a regular meeting held on .the a r h day of .T„ i y ATTEST: S CRETARY RDA97.TMM REDEVELOPMENT AGENCY BUDGET PROPOSED 1996/97 PERSONNEL 85-8700-101 Salaries 85-8700-130 Heath and Welfare 85-8700.135 Life Insurance 85-8700-160 85-8700.165 TOTAL PERSONNEL 159,000 OPERATIONS AND MAINTENANCE 85-8700.201 Publications and Subscriptions 800 85.8700-202 Travel and Trainina 85-8700.211 Printing d 85-8700-212 Postage 15 85-8700.213 Advertising 11 85-8700-227 Contractual Services onn TOTAL OPERATIONS AND MAINTENANCE 341,000 TOTAL REDEVELOPMENT AGENCY 500,000 LIX Notes: .Salaries include a portion of the Economic Development Manager and Assistant Cpy Manager salaries. Commission stipend included. Contractuai services for redevelopment consultant services Attomeyservices based on estimates of prior usage Other items include funding for operations of staff and travel and training of -commission Budget to be reviewed given progress at mid year. Page 1 STATE OF CALIFORNIA ) COUNTY OF LOS ANGELES ) CITY OF SANTA CLARiTA ) I HEREBY CERTIFY that the foregoing Resolution was duly adopted by the Board of the Santa Clarita Redevelopment Agency at a regular meeting, thereof, held on the o,• h day of July , 1996 , by the following vote of the Board: AYES: DIRECTORS : Klajic, Smyth, Heidt, Darcy, Boyer NOES: DIRECTORS : None ABSENT: DIRECTORS : None ABSTAIN: DIRECTORS : None SECRETARY TlM:ma962.m Z w