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CC - Minutes Adjourned Regular Meeting 06-13-00NOT OFFICIAL U/IJ77,L ADOPTED BY THE ROSE-MEAD MINUTES OF THE ADJOURNED REGULAR CITY COUNCIL MEETING OF THE ROSEMEAD CITY COUNCIL AND REGULAR MEETING OF THE ROSEMEAD REDEVELOPMENT AGENCY JUNE 13, 2000 The adjourned regular meeting of the Rosemead City Council and Regular meeting of the Rosemead Redevelopment Agency was called to order by Mayor Pro Tern Imperial at 7:09 p.m. in the Council Chambers of City Hall, 8838 E. Valley Boulevard, Rosemead, California. The Pledge to the Flag was led by Councilman/Agencymember Vasquez The Invocation was led by Mayor Pro Tem/Vice-Chairman Imperial ROLL CALL OF OFFICERS: Present: Councilmembers/Agencymembers Bruesch, Taylor, Vasquez, Mayor Pro TemNice-Chairman Imperial, and Mayor/Chairman Clark (arrived at 7:40 p.m.) Absent: None Frank Tripepi, City Manager/Agency Executive Director, explained that there are two Resolutions to be considered prior to the joint public hearing. I. AGENCY RESOLUTIONS A. RESOLUTION NO. 2000-13 - ADOPTING OWNER PARTICIPATION AND PREFERENCES RULES AND THE METHOD OF RELOCATION FOR ROSEMEAD REDEVELOPMENT PROJECT AREA NO. 2 The following resolution was presented to the Agency for adoption: RESOLUTION NO. 2000-13 A RESOLUTION OF THE ROSEMEAD REDEVELOPMENT AGENCY ADOPTING OWNER PARTICIPATION AND PREFERENCES RULES AND THE METHOD OF RELOCATION FOR ROSEMEAD REDEVELOPMENT PROJECT AREA NO. 2 Frank Tripepi, Executive Director explained that this Resolution is required by law if the Agency wishes to establish a project area which sets rules and state that the Agency will abide by those rules as set forth in State law. MOTION BY AGENCYMEMBER BRUESCH, SECOND BY AGENCYMEMBER VASQUEZ that the Agency adopt Resolution 2000-13. Before vote could arise, more discussion ensued. Agencymember Taylor asked if there were any changes to this resolution since Friday night in the event someone may have read it prior to the changes made. Steve Copenhaver, GRC Consultant, explained that this resolution had a typo in it and there was no change to the content whatsoever. Vote resulted: Yes: Bruesch, Vasquez, Imperial No: Taylor Absent: Clark Abstain: None The Vice-Chairman declared said motion duly carried and so ordered. CURRA JOINT MTG:6-13-00 Page 9 1 B. RESOLUTION NO. 2000-14 - APPROVING AND TRANSMITTING ITS REPORT ON THE REDEVELOPMENT PLAN FOR PROJECT AREA NO. 2 TO THE COUNCIL Frank Tripepi, City Manager, presented the staff report. The following resolution was presented to the Agency for adoption: RESOLUTION NO. 2000-14 A RESOLUTION OF THE ROSEMEAD REDEVELOPMENT AGENCY APPROVING AND TRANSMITTING ITS REPORT ON THE REDEVELOPMENT PLAN FOR THE ROSEMEAD REDEVELOPMENT PROJECT AREA NO. 2 TO THE CITY COUNCIL OF THE CITY OF ROSEMEAD MOTION BY AGENCYMEMBER BRUESCH, SECOND BY AGENCYMEMBER VASQUEZ that the Agency adopt Resolution No. 2000-14. Before vote could result, more discussion ensued. Agencymember Taylor asked for a clarification on this item. Steve Copenhaver explained that there was a misspelling and an incorrect number on a code section. Vote resulted: Yes: Bruesch, Vasquez, Imperial No: Taylor Absent: Clark Abstain: None The Vice-Chairman declared said motion duly carried and so ordered. H. JOINT CITY COUNCILIREDEVELOPM ENT AGENCY PUBLIC HEARING REGARDING PROPOSED REDEVELOPMENT PROJECT AREA #2 Robert Kress, City Attorney, explained that the Council/Agency authorized a joint public hearing to consider approval and adoption of the Redevelopment Plan for Rosemead Redevelopment Project Area No. 2, and for certification of the final Environmental Impact Report (EIR). Mr. Kress continued that the City Clerk notified him that the notice of the public hearing was published in the San Gabriel Valley Tribune on May 16, 23, 30, and June 6, 2000. Notice of the public hearing was mailed to the last known owner of each parcel of land in the project area and to each resident and business in the area. Mr. Kress said this is the time for any interested person wishing to speak for or against the project or adoption of the Redevelopment Plan or the EIR. Mayor Pro Tem/Vice-Chairman Imperial opened the joint public hearing for anyone in the audeince wishing to make any comments. Mr. Kress explained for the record that the administrative record contains the following documents: first,, the proposed Redevelopment Plan for Rosemead Redevelopment Project Area No. 2; the report to the City Council on the proposed Redevelopment Plan which includes the Agency's Implementation Plan; and the final FIR for the Project. Frank Tripepi, City Manager, stated that the procedure for tonight will be for the Council and Agency to receive verbal testimony in favor or opposition to the Project Area, or if there are any questions concerning the items discussed by the City Attorney. Jonnie Matsdorf, 4833 N. Willard Avenue, Rosemead, stated that she is here tonight on behalf of her neighbors and parents from the Rosemead School District and Shuey School who are pleased that this project is moving forward. CGRRA JOINT MTG:6-13-00 Page #2 Christian Paul, 25909 Pala, Mission Viejo, Attorney for Mission Viejo, is representing Weatherite Roofing, stated that the Plan has the potential for improving the overall quality and viability for the City. Mr. Paul asked if there would be any explanations on owner-participation agreements and how people living and working in Rosemead, such as the Dearden family that owns Weatherite, can assist with this Plan. Councilman/Agencymember Taylor asked if Robert McCoy, developer of the proposed Eaton Village Shopping Center has contacted the Dearden's, and have they been offered or signed a participation agreement. Mr. Paul responded that Mr. McCoy made an oral offer to purchase the property. Mr. Paul continued that the Dearden's have discussed the feasibility of working with Mr. McCoy, with the possibility of moving to another location. But, they have not received an offer in writing that is acceptable yet. Council man/Agencymember Taylor stated that this will become a Redevelopment area subject to condemnation. Mr. Taylor requested an explation of the relocation benefits for single businesses. Steve Copenhaver, GRC Consultant, clarified that there is not an agreement between the Redevelopment Agency and Mr. McCoy, and that he is a private developer who is approaching property owners on his own. Councilman/Agencymember Taylor asked should that development not come forth, then can the Agency can condemn that property. Mr. Copenhaver responded that this Plan allows the Agency to acquire property through eminent domain, and that in the event the Agency participates in the development with Mr. McCoy, businesses such as Weatherite would receive extensive relocation benefits. Mr. Copenhaver continued that the Agency would help with replacement locations, all moving costs, and costs for putting them back in business, and should that location not be as profitable as their previous location, the business can submit a "Loss of Goodwill" claim to the Agency which requires the Agency to pay the difference that the value of their business decreased. Councilman/Agencymember Taylor asked how soon the Agency can sell bonds to acquire land. Mr. Copenhaver responded that the Agency can sell bonds once they have a revenue stream. Upon adoption of the Project Area, there will be no significant revenue stream until the assessed value in the Project Area increases. Mr. Copenhaver explained that if the assessed value increased $100 million, the Agency would receive 80% of 1% of that $100 million. Mr. Copenhaver stated that the Agency would receive $800,000 a year in revenue in the event the Project Area increased $100 million, and that it would take a very long time to increase that value and a long time before bonds can be sold. Mr. Tripepi asked Mr. Copenhaver to explain the assessed value difference as it relates to businesses if they move to an area with a higher assessed value. Mr. Copenhaver stated if the business wanted a larger facility than what they have today, they can arrange it so that the property tax base that. they have today would carry forward to the . replacement property and not have to pay additional taxes. Councilman/Agencymember Taylor asked what are the benefits for existing businesses that have multiple outlets, such as the Oroweat business? Mr. Copenhaver responded that the existing business will be allowed to relocate and are eligible for relocation benefits. Mr. Tripepi stated for the record that the Dearden's probably would fare better by working with the Agency under redevelopment laws, rather than dealing with a private developer without Agency involvement. CURRA JOINT MTG:6-13-00 Page H3 Councilman/Agencymember Bruesch asked when did the Agency begin working on Project Area No. 2? Mr. Copenhaver replied that community presentations were made to businesses on Valley Boulevard and to the Chamber many years ago, and approximately 18 months ago, the Council entered into a contract with GRC to draft the documents. Councilman/Agencymember Bruesch stated that there are 11 properties for sale within Mr. McCoy's scope of development. Mr. Bruesch continued that the Agency is dealing with a limited redevelopment area and that Mr. McCoy's project is a completely separate project. Mr. Copenhaver explained that Project Area No. 2 was initiated long before Mr. McCoy appeared and he has not asked the City or Agency for any assistance. Frank Dominguez, 4251 N. Rosemead Boulevard, Rosemead, of U-Haul requested clarification on how this project will affect his area and business and how can they help the Agency with this plan. Mayor/Chairman Clark arrives at this time. Juan Nunez, 2702 Del Mar, Rosemead, asked what incentives are afforded to the developer. Mr. Copenhaver explained that there are no fixed incentives and that each agency sets their own standards in working with developers, tenants, businesses. Mr. Copenhaver stated that the Agency could use its revenues for public improvements or to help renovate the existing building through commercial rehabilitation or public improvement loans. Mr. Copenhaver stated that the Agency receives 1% of the growth in property taxes caused by some improvement to the property and of that 1%, 20% is allocated to the existing taxing agencies, i.e. school districts; and another. 20% is reserved for housing purposes. Out of the every $1.00 that the Agency receives in tax increments, there is about $.60 that can be used on public improvements or on private property matters. Councilman/Agency Taylor requested an explanation of the write down procedure on the acquisition of land and writing it down to the developer. Mr. Copenhaver explained that that is when the Agency acquires property and writes down the cost of that property and sells it to a developer. Mr. Copenhaver stated that the redevelopment law now requires that the Agency sell the property at its fair market value or its fair reuse value. Councilman/Agencymember Taylor asked when did this law change? Mr. Copenhaver responded that this law was changed in 1994 in order to tighten up regulations as to what an Agency could sell the property for. Mr. Nunez stated that no one will want to purchase these properties under eminent domain and that there should be conditions placed whereby the developer does not profit from the sale of that land except for over and above any improvements. Mary Jo Maxwell, Executive Director, Rosemead Chamber of Commerce, stated that the Chamber is in support of Project Area No. 2 and that this project is critical to the City. Holly Knapp, 8367 Whitmore Street, Rosemead, stated that she supports the project and sees the need for doing something on Valley Boulevard. Ms. Knapp explained that her involvement with the City began 30 years ago with Project Area No. 1 and that she understands Councilman Taylor's questions and concerns. Councilman/Agencymember Taylor asked if she did not see the abuses 30 years ago. Ms. Knapp responded that she did, but she does not anticipate seeing those types of abuses this time. Ms. Knapp stated that there are very nice redevelopment areas throughout the Valley and wants to see Rosemead shine. CGRRA JOINT MTG:6-13-00 Page P4 Glenn Clanton, 3244 Leyburn Drive, Rosemead, stated that he has always been in favor of redevelopment and even more so now as there are better laws in place that will treat everyone fairly. Leslie Poiry, Charley Brown's Restaurant & Rosemead Chamber of Commerce, stated that many of the Chamber members are in support of Project Area No. 2, and that our businesses need this. David L. Sanders, 8635 W. Valley Boulevard, Stormore, asked if there will there be any change in the tax base of existing properties that do not make any changes. Steve Copenhaver responded that the basic tax rate is I% of the assessed value whether in or out of the project area. Mr. Sanders asked if a property owner can elect to stay outside of the project area. Steve Copenhaver stated that any property owner is entitled to request to be left out of the process. However, it is the decision of the Council or Agency to determine whether or not to leave that property out. Mr. Copenhaver explained that because a property is included in the redevelopment area does not necessarily mean there will be redevelopment activity on every single property. Because of the limited resources and many standard properties, most of the properties will not be impacted by the project area, but they were included in order to have a uniform area that can have commercial rehabilitation loans that apply to all of the properties. At this time, the meeting was recessed at 8:00 p.m. for the purpose of meeting as the Rosemead City Council. The Regular Meeting of the Rosemead City Council was called to order and immediately recessed for the purpose of continuing the joint meeting of the Rosemead City Council and Rosemead Redevelopment Agency. The Regular Meeting of the City Council was reconvened at 8:45 p.m. There were no further comments from the audience. Mr. Tripepi stated that one letter of opposition, dated June 5, 2000, was received from General Bank, which owns the real property at 4128 Temple City Boulevard. Mr. Tripepi stated he contacted G. Domenic Massei, signator of the letter, and Mr. Massei indicated that they do not oppose being in the project area. However, he does not wish to have the property listed as blighted nor have the property taken by eminent domain. Mr. Tripepi explained to Mr. Massei that the property is not listed as blighted. Mr. Massei stated that he will send the City a letter indicating that he is not opposed to being included in the project area; however, he does not want to participate in eminent domain, and does not want the property listed. as blighted. Mr. Tripepi stated that another letter was received from the El Monte Union High School District for submittal into the official public record to bring attention to certain matters pertaining to implementation of the AB 1290 payment process as it affects the District. Mr. Tripepi stated that these letters will be part of the permanent record. There being no one else in the audience wishing to speak, the Mayor Pro Tern closed the public hearing. Mr. Copenhaver presented an overview of the redevelopment process. There were no further comments from the Council. A. RESOLUTION NO. 2000-15 - FINDING THAT THE PROVISION OF LOW AND MODERATE INCOME HOUSING ASSISTANCE OUTSIDE PROJECT AREA NO. 2 IS OF BENEFIT TO TIIE PROJECT AREA The following resolution was presented to the Agency for adoption. CURRA JOINT MTG:6-13-00 Page a5 RESOLUTION NO. 2000-15 A RESOLUTION OF THE ROSEMEAD REDEVELOPMENT AGENCY FINDING THAT THE PROVISION OF LOW AND MODERATE INCOME HOUSING ASSISTANCE OUTSIDE THE ROSEMEAD REDEVELOPMENT PROJECT AREA NO. 2 IS OF BENEFIT TO THE PROJECT AREA MOTION BY AGENCYMEMBER BRUESCH, SECOND BY AGENCYMEMBER VASQUEZ that the Agency adopt Resolution No. 2000-15. Before vote could result, more discussion ensued. Agencymember Taylor requested clarification on the corrections made. Mr. Copenhaver responded that the corrections were typos and there were no changes that affects the outcome of this resolution. Vote resulted: Yes: Bruesch, Clark, Vasquez, Imperial No: Taylor Absent: None Abstain: None The Vice-Chairman declared said motion duly carried and so ordered. B. RESOLUTION NO. 2000-16 - APPROVING AND CERTIFYING THE FINAL ENVIRONMENTAL IMPACT REPORT Mr. Copenhaver stated that the changes in this resolution and the same one on the City side are the inclusion of references to specific sections in the FIR report rather thana general reference. Mr. Copenhaver clarified that it does not change the findings or the final EIR. Agencymember Taylor stated that while there may be changes for clarification purposes, his point is that he objects to changes being made the night before a meeting, then having to compare them with the originals to ascertain what is being corrected. MOTION BY AGENCYMEMBER BRUESCH, SECOND BY AGENCYMEMBER VASQUEZ that the Agency adopt Resolution No. 2000-16. Vote resulted: Yes: Bruesch, Clark, Vasquez, Imperial No: Taylor Absent: None Abstain: None The Chairman declared said motion duly carried and so ordered. C. RESOLUTION NO. 2000-31- FINDING THAT THE PROVISION OF LOW AND MODERATE INCOME HOUSING ASSISTANCE OUTSIDE THE AREA IS OF BENEFIT TO THE PROJECT AREA The following resolution was presented to the Agency for adoption: RESOLUTION NO. 2000-31 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD FINDING THAT THE PROVISION OF LOW AND MODERATE INCOME HOUSING ASSISTANCE OUTSIDE THE ROSEMEAD REDEVELOPMENT PROJECT AREA IS OF BENEFIT TO THE PROJECT AREA Mr. Copenhaver stated that there were no changes to this resolution. CCIRRA JOINT MTG:6-13-00 Page a6 MOTION BY COUNCILMAN BRUESCH, SECOND BY MAYOR CLARK that the Council adopt Resolution no. 2000-31. Vote resulted: Yes: Bruesch, Clark, Vasquez, Imperial No: Taylor Absent: None Abstain: None The Mayor Pro Tern declared said motion duly carried and so ordered. D. RESOLUTION NO. 2000-32 - CITY COUNCIL APPROVAL OF CERTIFYING THE FINAL ENVIRONMENTAL IMPACT REPORT MOTION BY COUNCILMAN BRUESCH, SECOND BY COUNCILMAN VASQUEZ that the Council adopt Resolution No. 2000-32. Vote resulted: Yes: Bruesch, Clark, Vasquez, Imperial No: Taylor Absent: None Abstain: None The Mayor declared said motion duly carried and so ordered. E. RESOLUTION NO. 2000-33 - ELECTING TO RECEIVE A SHARE OF THE TAX INCREMENTALLOCATED PURSUANT TO REDEVELOPMENT PROJECT AREA NO. 2. MOTION BY COUNCILMAN BRUESCH, SECOND BY COUNCILMAN VASQUEZ that the Council adopt Resolution No. 2000-33. Before vote could result, more discussion ensued. Councilman Taylor asked if there were any changes or clarifications to this Resolution. Mr. Copenhaver responded that there were no changes. Vote resulted: Yes: Bruesch, Clark, Vasquez, Imperial No: Taylor Absent: None Abstain: None The Mayor declared said motion duly carried and so ordered. F. ORDINANCE NO. 809 - APPROVING AND ADOPTING THE REDEVELOPMENT PLAN FOR PROJECT AREA NO. 2 - INTRODUCE MOTION BY COUNCILMAN BRUESCH, SECOND BY COUNCILMAN VASQUEZ that the Council introduce Ordinance No. 809, and waive reading in full. Vote resulted: Yes: Bruesch, Clark, Vasquez, Imperial No: Taylor Absent: None Abstain: None The Mayor declared said motion duly carried and so ordered. Councilman Taylor stated for the record that he is not against any improvements, but saw abuses in other project areas throughout the years and he continues to have objections to certain items. Mr. Taylor referred to the undergrounding project on Garvey Avenue, San Gabriel Boulevard, Del Mar Avenue, and Walnut Grove Avenue. That project cost $25 million and that the tax increments that the Agency receives from that are taxes taken away from school districts CC/RRA JOINT MTO:6-13-00 Page a7 that they would normally receive through flood control, sewer district, and library improvements. Mr. Taylor stated that he voted No on the aforementioned items to protect his right to vote No in the future. Mr. Taylor concluded that he wants to see improvements in Rosemead, but not the abuses that were done before and are still going on in other agencies to this day. Mayor Clark clarified that the laws were changed in 1994 and that the schools receive 20% pass through. Mayor Pro Tem Imperial stated that he wants to see Rosemead citizens walking and shopping on that street. Mr. Imperial continued that he has tried many times to encourage a supermarket to locate in this area. Councilman Taylor clarified that there is a new market being developed under private enterprise at the corner of Temple City and Valley Boulevards. Councilman Bruesch stated that there have been on-going discussions with the Chamber about the need to do something to Valley Boulevard. Many suggestions have been made to improve the street and to provide incentives for new businesses to come to the City. Mr. Bruesch stated that the goal of this project area is not to displace large numbers of people, nor to section off large pieces of property; but to help the small businesses. There being no further comments, the joint meeting was adjourned at 8:35 p.m. and the regular meeting of the Redevelopment Agency commenced. Respectfully submitted: APPROVED: City Clerk Agency Secretary MAYOR CHAIRMAN CGRRA JOINT MTG:6-13-00 Page N8 Public Finance Urban Economics Development Services ~Ev JUN iz 2000 CITY CLERK'S OFFICE June 9. 2000 Mr. Prank Tripepi, Executive Director City of Rosemead Redevelopment Agency CITY CLEF'l• S 0r 8838 E. Valley Boulevard, P. O. Box 399 Rosemead, California 91770 Subject: Letter for Public Record of June 13, 2000 Joint Public Hearing for the Adoption of Rosemead Redevelopment Project No. 2 on Behalf of El Monte Union High School District Dear Mr. Tripepi; On behalf of the El Monte Union High School District ("District"), an affected taxing entity within the proposed Rosemead Redevelopment Project Area No. 2 ("Project"), Public Economics, Inc. ('PEI") wishes to bring to the attention of the Rosemead Redevelopment Agency ("Agency") certain matters pertaining to implementation of the AB 1290 payment process as it affects the District. When the Project is adopted, the District and the Agency will enter into a 30 to 45-year relationship with respect to the payments. The District desires to clarify aspects on this long term relationship in advance. As soon as possible after adoption of the proposed Project, the District requests a written response to the payment implementation matters enumerated in this letter. The District will put the Agency's response on file and use it as a starting reference regarding any questions it may have with respect to the payments, after these payments commence, at earliest, in January or February of 2002. Note: This letter is not intended as a statement of concern or obiection to the proposed Rosemead Redevelopment Project No. 2 or its Redevelopment Plan. Furthermore, this letter is not intended to require a response from the Agency prior to the adoption of the plan. 11mvever, this letter is submitted to the Agency in order to be placed into the official public record of the joint public hearing for the adoption of the Project/Plan. The District does request Agency consideration of the payment implement matters described below and a written response to these matters as soon as possible subsequent to the adoption of the Project/Plan. 820 W. Town and Country Road • Orange, CA 92868-4712 (714) 647-6242 • FAX (714) 647-6232 World Wide Web: hhtpJ/wwwpub-econ.com PUBLIC ECONOMICS, INC. Mr. Prank Tripepi, Rosemead Redevelopment Agency June 9, 2000 Page 2 A. AB 1290 Payment issues Not Addressed in Communih' Redevelopment Law Tlie folio,. ping four basic items involving the making of AB 1290 payments to affected taxing entities are simply not addressed in the relevant sections of the Health and Safety Code ("HSC"). The District desires to know the Agency's intentions with respect to these four basic payment matters. 1. Responsibility for Calculating and Malting Payments. Based on the way HSC Section 33607.5 is framed, it is clear that the Agency is the entity intended to be responsible for calculating and making A13 1290 payments. In the future, the District will look first to the Agency, if it has questions relating to the payments. However, because county auditor-controllers are responsible for the allocation of property taxes within a county, many auditor-controllers provide annual information to redevelopment agencies regarding such items as the respective property tax shares of affected taxing entities within a redevelopment project area, for use by the agencies in computing AB 1290 payments. The District would appreciate being informed regarding what role, if any, the County is anticipated to play in calculating and making the payments. 2. Frequency and Dates of Payments. Since 14SC Section 33607.5 provides no guidance with respect to the timing of AB 1290 payments, the District wishes to determine what the Agency plans to do with respect to the matter. One possibility is for AB 1290 payments to be made within 30 to 60 days of the Agency's receipt of each installment of tax increment. Alternatively, AB 1290 payments could be made twice a year (e.g., to facilitate payment by the District of principal and interest on future debt financing repaid in full or in part with AB 1290 payments to the District). Whatever the timing agreed to, the District wishes to be informed of and to have a payment schedule on which it can reasonably rely. 3. Documentation of Payment Calculations. In order to avoid misunderstandings, the District requests that AB 1290 payments be accompanied by a worksheet and other documentation showing how the payment amounts were calculated. Because payment calculations may be quite complicated and extensive, depending on parameters such as the number of taxing entities, tax rate areas in the Project area, and basic aid payments, it may be that a summary worksheet will be sufficient for transmittal along with the payments, and that the more detailed calculations be made available upon request. 4. Interest on Late or Deferred Payments. The District believes that under certain conditions interest should accrue to the District on AB 1290 payments not made in a C 1 Docum O,~ AROSCmad WJAVI'll n mnsam Mr. Frank Tripepi, Rosemead Redevelopment Agency June 9. 2000 Page 3 timely fashion. Accrual of interest on late or deferred payments is a reasonable business practice under most circumstances. For example, if AB 1290 payments to the District have to be deferred as a result of the subordination of such payments to bond holders agreed to by the District, interest on deferred payments would be appropriate. (The matter of subordination is discussed below.) B. Issues Needing Further Clarification It has been the experience of PEI. the District's redevelopment consultant, that the following issues regarding the AB 1290 payment process can benefit from further clarification: 1. Years of First and Last AB 1290 Payments. Clarification of when AB 1290 payments begin and end is of benefit to the District and the Agency. The law states that payments commence "with the first fiscal year in which the Agency receives tax increments." if the Project is adopted prior to the end of June 2000, based on typical assessed valuation cycles and assuming continued positive assessed valuation growth in the Project area, then the Agency will be allocated tax increment for the first time during FY 2001-02. Therefore, initial payments will occur based on tax increment received by the Agency in FY 2001-02. When during that year payments will actually occur will be dependent on what is decided in Item A.2, above. By statute, the redevelopment plan will expire mid-year 2030, if the Project is adopted as currently scheduled. The Agency may continue to receive tax increment until 15 years after expiration of the redevelopment plan. This means the Agency may be allocated tax increment until as late as FY 2044-45 (15 years after the expiration of the redevelopment plan in 2030). Payments to the District will cease AvIien the Agency no longer receives tax increment from the Project. 2. Deductions for Low and Moderate Income ("LMI") Housing Set-asides. AB 1290 payment formulas are applied to tax increment allocated to the Agency after deducting the "amount required to be deposited in the [LMI] Housing Fund." It is within the powers of the Agency to cause this amount to be less than 20 percent, if the Agency makes certain findings. PEI wishes to note that if actual LMI set-asides are less than 20 percent, the lower set-aside amount should be deducted from (gross) tax increment, thereby increasing payments to the District. Stated another way, the District wishes to ensure that AB 1290 payments to the District are based on the statutory LMI set-aside amount (20 percent), or actual Project area LMI Housing Fund deductions, whichever is less. CA Uoeumnte\y IROSemcad. MAVFHm osem Mr. Frank Tripepi, Rosemead Redevelopment Agency June 9, 2000 Page 4 3. Tax Overrides. PEI wishes to remind the Agency that per HSC 33676(a) and 33670(e), the Auditor-Controller is required to allocate to the District, not the Agency, all current or future tax override amounts within the Project area for bonded indebtedness incurred by the District. No resolution by the District electing to receive such amounts is necessary. C. AB 129(1 Payment Issues Subject to Misinterpretation The following two items have a significant impact on the allocation of AB 1290 payments to the District and other taxing entities in the Project Area and should be subjected to careful and ongoing consideration by the Agency. 1. Allocation of AB 1290 Payments after Accounting for Impact of Educational Revenue Augmentation Fund ("ERAF")/"Tax Shift." Section 33607.5 of the Health and Safety Code, which describes the statutory payment process, states that the payments "shall be allocated among the affected taxing entities in proportion to the percentage share of property taxes each affected taxing entity receives during the fiscal year the funds are allocated." Since property taxes include adjustments for contributions to and from the Educational Revenue Augmentation Fund (Revenue and Taxation Code, Chapter 6, Article 3), the statutory payments trust be based on post-ERAF property tax shares. PEI believes that the payments should be allocated on a Post-ERAF/Tax Shift basis, and that the intent implied in the negotiations and the proposal which resulted in the redevelopment reform legislation which mandates these payments, AB 1290, supports the Post-ERAF position. However, some counties, particularly LA County, and to a lesser degree some cities, have resisted the Post-ERAF position because it significantly reduces their shares of the statutory payments. This issue is still unresolved and is treated differently by counties around the State. Even though LA County has been adamantly opposed to Post-ERAF allocations of statutory payments, we believe that the Agency should investigate this matter on its own, and, further, seek to stay in touch with this matter as it evolves over the next few years. 2. Sponsoring Community Share of Statutory Payments in Tiers 2 and 3. This interpretation issue will not affect the amount of AB 1290 payments to the District until the start of the second tier of payments, beginning the 1 lth year in which the Agency is allocated tax increment. According to HSC 33607.5, the community sponsoring the redevelopment project is not eligible to receive AB 1290 payments in payment tiers 2 or 3. The portion of the total statutory payment amount in tier 1 which goes to the community sponsoring the Project (if the community has so elected) should, in payment CA RDAUP + n..,m Mr. Frank Tripepi, Rosemead Redevelopment Agency June 9. 2000 Page 5 tiers 2 and 3, be allocated on a pro rata basis among the other affected taxing entities in proportion to the affected taxing entities' property tax increment shares in the Project. (It is important to note here that the Redevelopment Agency is not au affected taxing entity.) D. Other Issues for Agency Consideration The following two issues are brought to the Agency's attention because of their potential long-run impact on the amount of AB 1290 payments to the District. AB 1290 Payments as a Debt of the Agency. Because of the tiered, back-loaded structure of the payment formulas embodied in the law, the payments are potentially at their greatest at the point when a redevelopment project's need for revenues mat' typically begin to wind down. or even conclude. If in the later years of receipt of tax increment ("TI") an Agency were able to utilize the full flow of TI, the statutory payments would grow considerably for the taxing entities. However, it is probable that from vears 30 to 45 of a project, if the Agency is receiving any TI, it is a flat, constant amount, serving only the purpose of paying-off bonded indebtedness incurred prior to the time when the Agency's ability to incur debt had terminated. With the flow of TI limited to repaying level or nearly level debt service in the later years, the growth of TI is constrained, and, therefore, so will be the growth in the statutory payments. This limitation on the back end of the statutory payment revenue stream to school districts acts as a significant inhibitor on the amount and the use of these funds for financing community/educational facilities. It would be a potentially significant commitment, if. at the appropriate time in a project, a redevelopment agency were to declare as its own indebtedness, for the purposes of financing agreed-upon community facilities, the maximum statutory payments to the District resulting from utilizing the full amount of each year's TI stream as the basis for calculating and making the statutory payments. The purpose of raising this issue now is to raise awareness on this matter and to suggest a future dialogue between the Agency and District regarding the most effective way to use the AB 1290 payment stream to benefit the Project, the Agency, and the District. 2. Subordination. "Prior to incurring loans, bonds, or other indebtedness, except loans or advances from the community," HSC 33607.5(e) allows the Agency to subordinate to such indebtedness its AB 1290 payments to the District, with the approval of the District. When requesting subordination, the Agency is required to provide "substantial evidence" that sufficient funds will be available to pay both debt service and AB 1290 payments to the District. The District may disapprove the subordination request "only if it finds, based on substantial evidence, that the Agency will not be able" to make AB C9 DmumnisXS ARnsemead RDAUPH m no sam Mr. Frank Tripepi, Rosemead Redevelopment Agency June 9. 2000 Paee 6 1290 payments to the District. However, if a District "does not act with 45 days after receipt of the Agency's request, the request shall be deemed approved." The District wishes to make the Agency aware of certain inherent problems involving the subordination provisions of HSC 33607.5(e), which allow the Agency to interrupt the flow of AB 1290 payments to the District. Interrupting these payments unduly handicaps the District in the efficient use of AB 1290 payments for debt financing to pay for their own facilities--especially in light of the potential reoccurrence of a real estate market contraction similar to that experienced in California during the early and mid 1990s. As a result of these concerns regarding subordination, the District is submitting, as Attachment 1 to this letter, "Guidelines Regarding Future Requests for Subordination" ("Guidelines") and requests that they also, along with this letter, be made a part of the public record of the Project adoption process. It is requested that the Guidelines be kept on file by the Agency for future reference. Among other things, these Guidelines describe what the District should consider "substantial evidence" when and if the Agency requests subordination from the District. The Guidelines also provide procedures to help ensure that subordination is not approved inadvertently or by default. PEI also is recommending to the District that they keep the Guidelines on file and apply them to any future requests for subordination from the Agency. District looks forward to correspondence from the Agency responding to the above matters, as soon as possible after adoption of the Project. This letter is written with the intent of establishing a clear and well-documented mutual understanding of the AB 1290 payment process. The District wishes the Agency success in achieving their goals for the Project, and also looks forward to the opportunity, to cooperate with the Agency to improve our community. Sincerely yours, Public Economics, Inc. By: Carl Goodwin, Consultant to the District cc: Mr. Steve Copenhaver, GRC Associates. Inc. Attachment CA Do mnts\y Mosemead. KDAUPH m ma sam ATTACHMENTI Rosemead Redevelopment Project No. 2 Guidelines Regarding Future Requests for Subordhiation 0 fA131290 Payments El Monte Union High School District The redevelopment agency ("Agency") is authorized pursuant to Health & Safety Code ("1-ISC") Section 33607.5(e) to request subordination of the District's AB 1290 payments to Agency bonds, loans, or other indebtedness. Subordination is good for the Agency, the District, and the community because it allows the Agency to issue bonds at lower interest rates and accomplish more with the available revenues. Subordination is bad for the District in the event that the Agency does not have adequate funds to pay the District. When requesting subordination, HSC 33607.5(e) requires the Agency to provide "substantial evidence" that sufficient funds will be available to pay both debt service and AB 1290 payments to the District. The District considers the following as constituting substantial evidence: I When requesting subordination from the District, the Agency should provide the following materials (most of which are typically produced as documentation for a tax allocation bond financing), at least 30 davs in advance of debt issuance: a. Copy of the Preliminary Official Statement and related documents b. Report explaining how RDA intends to.repay indebtedness and still meet its obligations to the District C. Annual tax increment projections, including annual assessed valuation growth assumptions d. Annual total debt service requirements of the RDA 2. In sizing its bonds. the Agency should utilize tax increment projections which assume an assessed valuation growth of no more than 2.0 percent in any year, unless clearly justified. 3. The Agency, should request subordination only if tax increment projections, net of payments to the District and other affected taxing entities, are equal to or greater than debt service requirements in each year. 4. The Agency should submit all documents to the District via certified mail, followed by phone contact. 5. Unless written consent is otherwise provided by District, the District will not accept subordination of its AB 1290 payments unless AB 1290 payments to all other affected taxing entities are also subordinated 6. Any pr{ynzents missed or deferred by the Agency clue to subordination will be considered by the District to be a loan to the Agency, which should be repaid to the District, with interest, from the first to increment available to the Agency. - C oucumm.~_WR.nm,.d.nun\SubRmde.sam General Bank QD X it 1~ 4~@ G. Domenic Massei JUN FXecutive Vice President June 5, 2000 CITY CLERK'S OFF=ICE City Clerk of the City of Rosemead and Secretary of the Rosemead Redevelopment Agency 8838 East Valley Blvd. ~ it!Cr P. O. Box 399 Rosemead, CA 91770 Re: Rosemead Redevelopment Project Area No. 2 Objection of Property Owner to Redevelopment Plan Dear Donald Wagner: General Bank is the owner of the real property commonly known as 4128 Temple City Blvd., Rosemead. California (the "Property"), which Property is located within. the proposed boundaries of the Rosemead Redevelopment Project No. 2. While General Bank appreciates the benefits that can result from redevelopment projects and is in general concurrence with the Redevelopment Agency's desire to renovate Valley and Rosemead Boulevards, General Bank objects to the inclusion of its Property within the proposed project area and so objects to the approval and adoption of the proposed Redevelopment Plan. General Bank is a California chartered Bank operating 17 Branch Offices in California, two Branches in Bellevue, WA and Kent, WA., and a Loan Production Office in New York, New York. The Property was acquired by General Bank in 1993, and after acquiring the Property General Bank made significant improvements to the Property an extensively renovated the building located on the Property. The building on the Property houses various Departments that provide essential support services to General Bank, including Auditing, Central Services, Credit Administration, Human Resources, Operations Administration, and Small Business Lending Department. Approximately 100 employees work on the Property. Should General Bank be forced to relocate from the Property as a result of being included in the redevelopment project area, the disruption to its operations would be extreme and the costs of any relocation would be exceedingly high. The Property is unblighted and we do not believe that it is necessary for the effective redevelopment of the Redevelopment Agency's project area. The building on the Property does not require structural alteration, improvement, modernization or rehabilitation, nor is the Property of an inadequate sized or irregular shape that prevents the Property from being properly useful. To the contrary and as stated above, the Property and the safe and well-maintained building located on the Property are being put to good use. ROSEMEAD CENTER • 4128 TEMPLE CITY BOULEVARD • ROSEMEAD, CA 91770 • (626) 582-7270 E-Mail: dmassei@generalbank.com Web Site: www.generalbank.com June 5, 2000 Page 2 It is General Bank's belief that the conditions that make it appropriate for a parcel of land to be included within a redevelopment agency project area do not exist with respect to the Property. Accordingly, General Bank objects to the proposed Redevelopment Plan and its inclusion of the Property within the proposed project area. Very truly yours, v G. Domenic Massei CC: Frank G. Tripepi, Rosemead City Manager Mr. Li-Pei Wu, Chairman/CEO Mr. Peter Wu, President/COO