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HomeMy Public PortalAbout9E Amended and Restated Repayment Agreement Between City and Redevelopment AgencyAGENDA ITEM 9.E. MANAGEMENT SERVICES DEPARTMENT DATE: March 15, 2011 TO: MEMORANDUM The Honorable City Council The Board of Directors of the Community Redevelopment Agency FROM: Jose E. Pulido, City Manager and Executive Directo By: Erica L. Vega, Assistant City Attorney SUBJECT: AMENDED AND RESTATED REPAYMENT AGREEMENT BETWEEN THE CITY AND THE REDEVELOPMENT AGENCY RECOMMENDATION: 1. The City Council is requested to approve the Amended and Restated Repayment Agreement; and 2. The Community Redevelopment Agency is requested to approve the Amended and Restated Repayment Agreement BACKGROUND: At various times between 1989 and the present, the City loaned funds to the Agency for redevelopment purposes, as evidenced in promissory notes dated January 2, 1990, June 19, 1990, July 11, 1990, November 6, 1990, December 18, 1990, October 28, 1993, and February 7, 1995. 2. On October 8, 1998, the Agency and City agreed to a repayment schedule for the outstanding balance of the principal and interest due to the City. This agreement was evidenced by a promissory note that superseded all previous promissory notes. 3. Currently, the Agency owes the City $1,706,979 in unpaid principal and $2,366, 247 in unpaid accrued interest, for a total of $4,073,226. ANALYSIS: The 1998 repayment schedule lacks specificity, and City and Agency staff are of the opinion that it is desirable to set more definite terms for the repayment of the loans. The attached agreement clearly sets forth the terms and conditions of repayment by the City Council and Community Redevelopment Agency March 15, 2011 Page 2 Agency to the City. The agreement calls for the execution of a new promissory note that will supersede all previous notes. The note provides that the Agency will dedicate all of its funds to the City commencing in fiscal year 2011/2012, less any funds that are otherwise pledged to pay other Agency debts or are required to pay the Agency's reasonable operational and administrative expenses. The outstanding total amount of unpaid principal and accrued interest, $4,073,226, is the principal amount of the new note, and interest will accrue at a rate of 4% per annum. CONCLUSION: City and Agency staff recommends that the City Council and Board of the Agency enter into the attached Agreement. The Agreement clarifies the terms and conditions of the repayment of existing outstanding indebtedness. FISCAL IMPACT This action does not involve an expenditure of funds for Fiscal Year 2010-2011. As the agreement restates the terms and conditions of existing obligations, there is no long term fiscal impact associated with the Agreement. ATTACHMENT(S) A. Amended and Restated Repayment Agreement AMENDED AND RESTATED REPAYMENT AGREEMENT THIS AMENDED AND RESTATED REPAYMENT AGREEMENT ("Agreement") is entered into as of the day of March, 2011 ("Effective Date"), by and between the CITY OF TEMPLE CITY ("City") and the REDEVELOPMENT AGENCY OF THE CITY OF TEMPLE CITY ("Agency") Recitals WHEREAS, the Agency is a duly constituted Community Redevelopment Agency under the laws of the State of California and in accordance with such laws has duly proceeded with the redevelopment of Project within the City of Temple City, pursuant to the redevelopment plans, as amended, for the Rosemead Boulevard Redevelopment Project #1 ("Project"); and WHEREAS, at various times between 1989 and the present, the City loaned funds to the Agency for the purposes of redevelopment as provided for by the Community Redevelopment Law ("City Loans"); and WHEREAS, those various City Loans were evidenced by promissory notes dated January 2, 1990, June 19, 1990, July 11, 1990, November 6, 1990, December 18, 1990, October 28, 1993, and February 7, 1995; and WHEREAS, the Agency repaid portions of the various loans between 1997 and the present, but there remains an outstanding balance due the City; and WHEREAS, on October 6, 1998, the Agency and City agreed by and through Resolution No. 98-672 to a defined repayment schedule for the outstanding balance of principal and interest due the City ("October 1998 Agreement"), which agreement was documented by a Promissory Note With Interest ("1998 Note") and which Agreement and Noted superseded all previous notes evidencing the City Loans; and WHERAS, the Agency currently owes to the City the sum of One Million Seven Hundred Six Thousand Nine Hundred Seventy -Nine Dollars (51,706,979) in unpaid principal and Two Million Three Hundred Sixty -Six Thousand Two Hundred Forty -Seven Dollars (52,366,247) in unpaid accrued interest on the for City Loans, for a total due the City of Four Million Seventy -Three Thousand Two Hundred Twenty Six Dollars ($4,073,226); and WHEREAS, the parties agree that the repayment schedule outlined in the October 1998 Agreement lacks sufficient specificity to bind the parties to continued repayment and the parties desires to set more definite terms for the repayment of the City Loans; and WHEREAS, the City wishes to amend and restate the October 1998 Agreement and supersede the 1998 Note to expedite and more clearly set forth the terms for repayment of the City Loans, and Agency desires to set aside a reasonable amount in each fiscal year for payment of Agency's reasonably necessary operational and administrative costs before making required payments to City under the November 1998 Agreement; and WHEREAS, the Agency acknowledges and agrees that expeditious repayment of the City Loans will further the ability of the City to provide essential services within the geographic area encompassed by the Project ("Project Area") and other areas of the City, and that the provision of such services will in turn facilitate the Agency's goal of alleviating blighting conditions within the Project Area. Agreement NOW THEREFORE, in consideration of the mutual covenants herein contained, it is agreed by and between the City and Agency as follows: 1. Agency Obligations. 1.1 Agency Debt on City Loans. Agency and City agree that as of June 30, 2010, the total outstanding principal and interest balance of the City Loans under the October 1998 Agreement as amended and restated is Four Million Seventy -Three Thousand Two Hundred Twenty Six Dollars (54,073,226). The promissory note attached hereto as Attacl-n ent "A" ("Note") is intended by the parties to provide documentation for the specific terms of the Agency's repayment of its outstanding debt to the City. 1.2 City Loans Subordinate to Other Agency Indebtedness. The indebtedness of Agency to City under this Agreement shall be subordinate to the rights of the holder or holders of any existing bonds, notes or other instruments of indebtedness (all referred to herein as "indebtedness") of the Agency incurred or issued to finance redevelopment of the Project Area, including without limitation any pledge of tax increment revenues from the Project Area to pay any portion of the principal and interest (and otherwise comply with the obligations and covenants) of any bond or bonds heretofore issued or sold or issued or sold in the future by the Agency with respect to the Project Area. 2. Statement of Indebtedness and Interest Rate. 2.1 Obligations Are a Legal Debt of the Agency. The obligations of the Agency under this Agreement shall constitute an indebtedness of the Agency within the meaning of Section 33670 et seq. of the Community Redevelopment Law. 2.2 Preparation of Statement of Indebtedness. On or before September 30 of each year, Agency or its successor shall prepare a Statement of Indebtedness as required by the California Community Redevelopment Law identifying the City Loans as advances by the City to the Agency for the purpose of financing and refinancing the Project, for which the Agency is indebted to the City. 2.3 Interest Rate for Repayment. The City Loans shall continue to accrue interest from and after the Effective Date at the rate of four percent (4%) per annum, compounded annually, until repaid in full. 2 3. Repayment of City Loans. 3.1 Payment from Tax Revenues and Other Revenues. In the October 1998 Agreement, Agency agreed to repay the principal amounts owed and interest accrued on the City Loans from tax revenues received pursuant to provisions of the California Community Redevelopment Law. Agency reaffirms this commitment. Beginning June 30, 2012 and continuing each fiscal year thereafter, Agency shall utilize all tax revenues received pursuant to provisions of the California Community Redevelopment Law, or any successor statute, and all other monies available to the Agency first to repay existing indebtedness (as that term is defined in Section 1.2) according to the terms of such indebtedness and, second to pay necessary and reasonable operational and administrative expenses of the Agency. After payment of such existing indebtedness and necessary and reasonable operational and administrative expenses, Agency shall remit to City on June 30 of 2012 and each year thereafter all remaining unencumbered tax revenues and other monies available to Agency in repayment of the City Loans. Agency shall continue remitting such funds to City until such time as the City Loans, all accrued interest, and all future interest are paid in full. 3.2 Additional Cash Advances Rolled into City Loans. The parties acknowledge that it is unlikely that the City will make any additional cash advances or additional loans to the Agency. In the event the City does make additional cash advances or loans, or loans services, assets, or other items of value to the Agency, the amount of the funds advanced or other assets or services loaned will be added to the amount of the City Loans and repaid by Agency as soon as possible as provided herein. 4. Previous Agreements. This Agreement amends and restates the October 1998 Agreement and the 1998 Note to the extent set forth herein and in the promissory note attached hereto. This Agreement does not affect any other agreement, contract, or understanding as between the parties. 5. General Terms. 5.1 Nonliability of Officials and Employees. No Agency Board member, City Council member, and no official, agent, or employee of the Agency or the City shall be personally liable to the other party, or any successor in interest, in the event of any default or breach by the Agency or the City, or for any amount which may become due to the City or Agency, or successor thereto, or on any obligations under the terms of this Agreement. 5.2 Law Governing. This Agreement is made in the State of California under the constitution and laws of the State of California, and is to be so construed. 5.3 Severability. Each and every provision of this Agreement is, and shall be construed to be, a separate and independent covenant and agreement. If any term or provision of this Agreement or the application thereof shall to any extent be held to be invalid or unenforceable, the remainder of this Agreement, or the application of such term or provision to circumstances other than those to which it is invalid or unenforceable, shall not be affected thereby, and each term and provision of this Agreement shall be valid and shall be enforced to the fullest extent permitted by law. 5.4 Entire Agreement,Waivers and Amendments. This Agreement, together with all attachments hereto, constitutes the entire understanding and agreement of the parties. No person is authorized to make, and by execution hereof the City and the Agency acknowledge that no person has made, any representation, warranty, guaranty or promise except as set forth herein; and no agreement, statement, representation or promise made by any such person which is not contained herein shall he valid or binding on the City or the Agency. 5.5 Future Cooperation. The City and the Agency agree to take all appropriate actions and prepare and execute and, if appropriate, record any documents which may reasonably be necessary or convenient to implement the intent of this Agreement. 5.6 Binding on Successors. The covenants established in this Agreement shall, without regard to technical classification and designation, be binding on the parties hereto and their respective successors and assigns. 5.7 No Third Party Beneficiaries. This Agreement is made and entered into for the sole protection and benefit of, and shall be binding upon, the parties and their respective successors and assigns. No other person shall have any right of action based upon any provision of this Agreement. 5.8 Counterparts. This Agreement may be executed simultaneously in one or more counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument. (Signatures on next page] 4 IN WI`T'NESS WHEREOF, the parties have executed this Agreement as of the date first above written CITY OF TEMPLE CITY A municipal corporation By: Fernando Vizcarra, Mayor REDEVELOPMENT AGENCY OF THE CITY OF TEMPLE CITY By: Jose Pulido, Executive Director ATTEST: Mary Flandrick, City Clerk and Agency Secretary APPROVED AS TO FORM: Eric S. Vail, City Attorney and Agency Counsel 5 ATTACHMENT A PROMISSORY NOTE $4,073,226 Temple City, California March , 2011 FOR VALUE RECEIVED, the undersigned, REDEVELOPMENT AGENCY OF THE CITY OF TEMPLE CITY, a public body, corporate and politic, organized and existing under the laws of the State of California ("Maker"), promises to pay to the CITY OF TEMPLE CITY, a municipal corporation (the "Holder"), or order at 9701 Las Tunas Drive, Temple City, California 91780 or at such other place as Holder may direct from time to time in writing, the principal sum of FOUR MILLION SEVENTY-THREE THOUSAND TWO HUNDRED TWENTY SIX DOLLARS ($4,073,226), as hereinafter described ("Loan"), together with any additional advances made by City under Section 3.2 of the Agreement, plus interest and other charges as set forth hereinbelow. All sums payable hereunder shall be payable in lawful money of the United States of America. Loan Agreement, This Promissory Note ("Note") is made and delivered pursuant to and in implementation of that certain Amended and Restated Repayment Agreement dated March , 2011, by and between the Holder and the Maker ("Agreement"). The terms and conditions of such Agreement are hereby incorporated by reference, Capitalized terms not defined herein are as defined in the Agreement. 2. Terms of Payment. a. The Loan shall continue to bear interest at the rate of four percent (4%) per annum, compounded annually, from the effective date of this Note until repaid in full. b. Maker or its successor shall repay the Loan through the use of tax revenues received pursuant to provisions of the California Community Redevelopment Law, or any successor statute, as well as any other funds available to Maker. Maker agrees to dedicate to repayment of the Loan in each fiscal year commencing with the 2011/12 fiscal year, all tax revenues and other funds available to Maker which are not otherwise pledged to pay Maker's debts under any existing bonds, notes or other instruments of indebtedness or required to pay Maker's necessary and reasonable operational and administrative expenses. c. Maker or its successor shall make payments on the Loan on or before June 30 of each fiscal year, commencing June 30, 2012 and continuing each fiscal year thereafter, until the entire principal and interest balance of the Loan has been repaid in full. 6 3. Prepayment. Maker may prepay this Note at any time, without penalty. Within thirty (30) days following Maker's payment of the Loan in full, Holder shall return this Promissory Note to Maker marked "cancelled." 4. Default. Maker will be in default under this Note upon the occurrence of any one or more of the following events (each, an "Event of Default"): a. Maker fails to make any payment due under this Note within ten (10) days after the date when due; or b. Maker fails to comply with any provision contained in this Note or the Agreement, and does not cure that failure within thirty (30) days after written notice from Holder; or c. An event of default under the Agreement occurs. If an Event of Default occurs, Holder may exercise any right or remedy which it has under this Note or the Agreement, or which is otherwise available at raw or in equity or by statute, and all of Holder's rights and remedies shall be cumulative. Upon the occurrence of any Event of Default, all of Maker's obligations under this Note and the Agreement may become immediately due and payable without notice of default, presentment or demand for payment, protest or notice of nonpayment or dishonor, or other notices or demands of any kind or character, all at Holder's option, exercisable in its sole discretion. Holder's failure to exercise such option shall not constitute a waiver of such option with respect to any subsequent event. Holder's failure in the exercise of any other right or remedy hereunder or under any agreement or other instrument which secures the indebtedness or is related thereto shall not affect any right or remedy and no single or partial exercise of any such right or remedy shall preclude any further exercise thereof. 6. Waivers. Maker expressly waives: (a) any defense based upon any legal disability or other defense of Maker, or other person, or by reason of the cessation or limitation of the liability of Maker from any cause other than full payment and performance of those obligations of Maker which are provided for hereunder; directors, partners or agents purporting to act on behalf of Maker or any defect in the formation of Maker; (b) any defense based upon Holder's election of any remedy against Maker; (c) any right of subrogation, any right to enforce any remedy which Holder may have against Maker; and (d) presentment, demand, protest and all notices other than any notice expressly provided for in this Note and/or the Agreement. 7 Costs. Upon the occurrence of an Event of Default, Maker promises to pay all costs, expenses and attorneys' fees incurred by the Holder in connection with the collection or enforcement of this Note or any part of it, whether or not suit is filed, including but not limited to, all costs, expenses and attorneys' fees incurred by the Holder in connection with any insolvency, bankruptcy, reorganization, arrangement or similar proceedings involving Maker. 7 8. Amendments and Modifications. This Note may not be changed orally, and may be amended only by an agreement in writing. 9. Governing Law. This Note shall be construed and enforced in accordance with the laws of the State of California. 10. Successors. The terms "Maker" and "Holder" shall be construed to include the parties' respective successors and assigns. Severability. If any provision of this Note shall be invalid, illegal or unenforceable, the validity, legality and enforceability of the remaining provisions hereof shall not in any way be affected or impaired thereby. 12. Conflicts. In the event of any conflict between the provisions of this Note and the Agreement, the terms of this Note shall control. IN WITNESS WHEREOF, the undersigned Maker has executed and delivered this Note as of the date first set forth above. MAKER: REDEVELOPMENT AGENCY OF THE CITY OF TEMPLE CITY, a public body, corporate and politic By: Jose Pulido, Executive Director LA g4814-3832-9352 vi 8