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was evidenced by a promissory note that superseded all previous promissory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.
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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]
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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
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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.
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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.
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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
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