CC - Item 8B - Adopt and Ordinance to Determine It Will Comply With Voluntary Alternative Redevelopment ProgramR OSEMEAD CITY COUNCIL
t
6
TO: THE HONORABLE MAYOR AND CITY COUNCIL MEMBERS
FROM: JEFF ALLRED, CITY MANAGER
DATE: JULY 26, 2011
SUBJECT: ADOPT AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ROSEMEAD, CALIFORNIA, DETERMINING IT WILL COMPLY WITH
THE VOLUNTARY ALTERNATIVE REDEVELOPMENT PROGRAM
PURSUANT TO PART 1.9 OF DIVISION 24 OF THE CALIFORNIA
HEALTH AND SAFETY CODE IN ORDER TO PERMIT THE
CONTINUED EXISTENCE AND OPERATION OF THE ROSEMEAD
COMMUNITY DEVELOPMENT COMMISSION
SUMMARY
On June 29, 2011, as part of adopting the State of California Fiscal Year (FY) 2011 -12
budget, the Governor signed two trailer bills, AB X1 26 and AB X1 27, into law. The
legislation was effective on June 29, 2011. AB X1 26 eliminates redevelopment
agencies as of October 1, 2011. AB X1 27 provides an opportunity for redevelopment
agencies to "opt -in" and continue to operate and function if the sponsoring jurisdiction
(the City of Rosemead) adopts an ordinance by October 1, 2011.
Due to the vital role the Rosemead Community Development Commission (CDC) plays
in providing needed programs and projects in the City of Rosemead for the elimination
of blight and promoting economic revitalization and the City Council's and community's
strong desire to continue to implement the CDC's various beneficial programs upon
which the community relies, it is recommended that the City Council adopt the attached
ordinance to permit the continued existence and operation of the CDC (Exhibit 1).
Adopt an Ordinance of the City Council of the City of Rosemead, California; determining
it will comply with the Voluntary Alternative Redevelopment Program Pursuant to Part
1.9 of Division 24 of the California Health and Safety Code in Order to Permit the
Continued Existence and Operation of the Community Improvement Commission of the
City of Rosemead.
BACKGROUND /ANALYSIS
Without the adoption of an ordinance electing to participate in the voluntary alternative
redevelopment program, the CDC is operating under the requirements of AB X1 26. AB
�MI
APPROVED FOR CITY COUNCIL AGENDA:
City Council Meeting
July 26, 2011
Pape 2 of 3
X1 26 immediately suspended all new redevelopment activities and incurrence of debt
and dissolves redevelopment agencies effective October 1, 2011. The suspension and
prohibition of most redevelopment activities become permanent on the dissolution date
of October 1, 2011, for redevelopment agencies not participating in the voluntary
program. The suspension and prohibition of most redevelopment activities is lifted upon
enactment of the City's opt -in ordinance.
However, if a city intends to opt in and continue the CDC, but has not adopted an
ordinance by August 29, 2011, it must adopt an Enforceable Obligation Payment
Schedule before August 29, 2011, to continue to expend funds on permitted activities
between September 1, 2011, and adoption of its opt -in ordinance. Therefore, adopting
this ordinance now will eliminate the need to adopt an Enforceable Obligation Payment
Schedule and will allow the CDC to resume its normal operations as of the effective
date of the ordinance, on September 8, 2011.
The primary obligation incurred by the City in enacting this opt -in ordinance is the
obligation to make annual payments ( "remittances ") to the County Auditor - Controller
beginning in Fiscal Year (FY) 2011 -12, and in all succeeding years the CDC is in
existence. If the City opts in, it is agreeing to make the remittances on behalf of the
CDC. Remittances may be made from any available funds, including CDC funds. If a
City fails to make a remittance, the only sanction is dissolution of the CDC pursuant to
AB X1 26. Therefore, the general fund and other funds are not at risk if the City fails to
make a remittance. Prior to making the first remittance, it is recommended that the
CDC and City Council approve an agreement whereby the CDC will transfer a portion of
its tax increment to the City in an amount not -to- exceed the required annual remittance.
Remittances are due on January 15 and May 15 of each year the CDC is in existence.
Based on preliminary calculations prepared by the California Redevelopment
Association (CRA), the City of Rosemead's share of the initial $1.7 billion payment to
the State will be $2,112,991. In subsequent years, the legislative intent is to raise $400
million annually from remittances. Unfortunately, the formula for raising those funds is
complex and dependent on future factors so it is not possible to know at this time what
the annual remittance will be after FY11 -12. However, the goal is to raise far less
money annually than the initial $1.7 billion. Therefore, staff anticipates that future
annual remittances will be substantially less than the initial payment. Funds to make
the required annual payment must come from the CDC's 80% (non- housing) fund.
However, the CDC will be exempt from making its full deposit into the 20% (Low- and
Moderate - Income Housing) fund in FY 11 -12, to the extent it makes a finding that there
are insufficient other funds, and using those funds is necessary to make all or a portion
of the FYI 1-12 remittance. Staff will be reviewing whether that is an option.
It should be noted that on July 18, 2011, the CRA and the California League of Cities
filed a law suit in the California Supreme Court challenging the constitutionality of AB X1
26 and AB X1 27. The suit asked for a stay and injunction while the merits of the case
City Council Meeting
July 26, 2011
Paqe 3 of 3
are evaluated. However, it is unknown if and when a stay will be granted and what the
scope of the stay will be (i.e., what are the elements of maintaining the status quo if, on
one side, the proposal is to dissolve redevelopment agencies and, on the other side, the
proposal is to allow redevelopment to continue in accordance with existing law). While
the case is being litigated, it is prudent to opt -in and continue to operate the CDC simply
to preserve the CDC authority in the event the CRA and League prevail in the litigation
and redevelopment agencies remain in place. If the CDC is dissolved, there is some
question as to how it would reconstitute itself if AB X1 26 and AB X1 27 are ultimately
ruled unconstitutional.
FINANCIAL IMPACT
Staff is identifying the exact allocation of CDC housing and non - housing funds for the
$2,112,991 that would need to be remitted to the County Auditor - Controller for FY11 -12,
as a requirement to continue to operate the CDC. The necessary budget adjustments
and appropriations will be presented to the CDC for its review and approval in the near
future. In addition, analysis is underway to estimate future years' required remittances
and that information will be provided to the CDC.
Prepared by:
r �
Rachel Ric an
City Attorney
Prepared by:
n od- r,4
Matthew E. Hawkesworth
Assistant City Manager
ORDINANCE NO. 917
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
ROSEMEAD CALIFORNIA, DETERMINING TO COMPLY WITH THE
ALTERNATIVE VOLUNTARY REDEVELOPMENT PROGRAM
PURSUANT TO PART 1.9 OF DIVISION 24 OF THE CALIFORNIA
HEALTH AND SAFETY CODE IN ORDER TO PERMIT THE
CONTINUED EXISTENCE AND OPERATION OF THE ROSEMEAD
COMMUNITY DEVELOPMENT COMMISSION
WHEREAS, the Rosemead Community Development Commission ( "CDC ") is a
community development commission organized and existing under the California Community
Redevelopment Law (Health & Safety Code § 33000 et seq.) ( " CRL ") and has been authorized
to transact business and exercise the powers of a redevelopment agency pursuant to action of the
City Council of the City of Rosemead ( "City Council" or "City," as applicable); and
WHEREAS, pursuant to the CRL, the City Council approved and adopted the
Redevelopment Plan ( "Redevelopment Plan ") for the Rosemead Redevelopment Project
( "Project') on June 27, 1972, by Ordinance No. 340, and the CDC is vested with the
responsibility for implementing and carrying out the Redevelopment Plan; and
WHEREAS, the CDC is currently in the process of carrying out the goals and objectives
of the Redevelopment Plan by continuing to: eliminate blight; increase, improve, and preserve
the supply of affordable housing in the community; stimulate and expand economic growth and
employment opportunities by revitalizing properties and businesses within the Project; and
alleviate deficiencies in public infrastructure; and
WHEREAS, in connection with approval and adoption of the State Budget for Fiscal
Year 2011 -12, the California Legislature has approved, and the Governor has signed
(i) ABX1 26 (Stats. 2011, chap. 5, "ABX1 26 "), which immediately, and purportedly
retroactively, suspends all otherwise legal redevelopment activities and incurrence of
indebtedness, and dissolves redevelopment agencies effective October 1, 2011 (the "Dissolution
Act'); and (ii) ABXl 27 ( Stats. 2011, chap. 6, "ABXl 27"), which allows communities to avoid
the consequences of the Dissolution Act and continue their redevelopment CDC if the
community enacts an ordinance agreeing to comply with the alternative voluntary redevelopment
program described in Section 2 of ABXl 27 adding Part 1.9 (commencing with section 34192)
of Division 24 of the Health and Safety Code (the "Alternative Redevelopment Program "); and
WHEREAS, the Alternative Redevelopment Program requires the participating
communities to remit specific annual payments to the county auditor - controller for allocation to
school entities and special districts; and
WHEREAS, in order to enable the continued operation and unrestricted activities of the
CDC to serve the essential role of implementing the goals and objectives of the Redevelopment
Plan, under the threat of dissolution pursuant to ABX1 26, and upon the contingencies and
OAK 44845- 1302 -2986 v31
reservations set forth herein, the City shall participate in the Alternative Redevelopment
Program and make the Fiscal Year 2011 -2012 community remittance, currently estimated to
be $2,112,991, as well as the subsequent annual community remittances as set forth in
ABX1 27; and
WHEREAS, the City reserves the right to appeal the California Director of
Finance's determination of the Fiscal Year 2011 -12 community remittance, as provided in
Health and Safety Code Section 34194; and
WHEREAS, City is aware that an action challenging the constitutionality of
ABXl 26 and ABX1 27 has been filed on behalf of cities, counties and redevelopment
agencies; and
WHEREAS, while the City currently intends to make these community remittances,
they shall be made under protest and without prejudice to the City's right to recover such
amounts and interest thereon, in the event that there is a final determination that ABXl 26
and ABX1 27 are unconstitutional; and
WHEREAS, the City reserves the right, regardless of any community remittance
made pursuant to this Ordinance, to challenge the legality ofABXI 26 and ABX1 27; and
WHEREAS, to the extent a court of competent jurisdiction enjoins, restrains, or
grants a stay on the effectiveness of the Alternative Redevelopment Program's payment
obligation of ABXl 26 and ABXl 27, the City shall not be obligated to make any
community remittance for the duration of such injunction, restraint, or stay; and
WHEREAS, the City is the lead agency concerning this Ordinance pursuant to the
California Environmental Quality Act (codified as Public Resources Code Section 21000 elseg)
( "CEQA") and the State CEQA Guidelines; and
WHEREAS, City staff has determined that this Ordinance is exempt from CEQA,
pursuant to CEQA Guidelines Section 15378(b)(4), because the community remittances
authorized hereunder are a government funding mechanism and fiscal activity, and do not
involve any commitment to any specific project that may result in a potentially significant
environmental impact; and
WHEREAS, all other legal prerequisites to the adoption of this Ordinance have
occurred.
OAK #4845- 1302 -2986 V32
NOW, THEREFORE, the City Council of the City of Rosemead does hereby ordain as
follows:
Section 1 . Recitals The Recitals set forth above are true and correct and
incorporated herein.
Section 2 Participation in the Alternative Redevelopment Proeram In
accordance with Health and Safety Code Section 34193, and based on the Recitals set forth
above, the City Council hereby determines that the City shall comply with the provisions of
Part 1.9 of Division 24 of the Health and Safety Code, as enacted by ABX 127.
Section 3 . Payment under Protest. Except as set forth in Section 4, below, the City
Council hereby determines that the City shall make the community remittances set forth in
Health and Safety Code section 34194 et seq.
Section 4 Effect of Stay or Determination of Invalidity City shall not make any
community remittance in the event a court of competent jurisdiction either grants a stay on the
enforcement of ABXI 26 and ABX1 27 or determines that ABXI 26 and ABXI 27 are
unconstitutional and therefore invalid, and all appeals therefrom are exhausted or unsuccessful,
or time for filing an appeal therefrom has lapsed. Any community remittance shall be made
under protest and without prejudice to the City's right to recover such amount and interest
thereon in the event that there is a final determination that ABXI 26 and ABXI 27 are
unconstitutional. If there is a final determination that ABX1 26 and ABXI 27 are invalid, this
Ordinance shall be deemed to be null and void and of no further force or effect.
Section 5 . Implementation The City Council hereby authorizes and directs the City
Manager to take any action and execute any documents necessary to implement this Ordinance,
including but not limited to notifying the Los Angeles County Auditor - Controller, the Controller
of the State of California, and the California Department of Finance of the adoption of this
Ordinance and the City's agreement to comply with the provisions of Part 1.9 of Division 24 of
the Health and Safety Code, as set forth in ABXI 27.
Section 6 Additional Understandings and Intent. It is the understanding and
intent of the City Council that, once the CDC is again authorized to enter into agreements under
the CRL, the City will enter into an agreement with the CDC as authorized pursuant to Section
34194.2, whereby the CDC will transfer annual portions of its tax increment to the City in
amounts not to exceed the annual community remittance payments to enable the City, directly or
indirectly, to make the annual remittance payments.
Section 7 . CEQ . The City Council finds, under Title 14 of the California Code of
Regulations, Section 15378(b)(4), that this Ordinance is exempt from the requirements of the
California Environmental Quality Act ( "CEQA ") in that it is not a "project," but instead consists
of the creation and continuation of a governmental funding mechanism for potential future
projects and programs, and does not commit funds to any specific project or program that may
result in a potentially significant environmental impact.
OAK 94845- 1302 -2986 V33
Section 8 . Notice of Exemption The City Council hereby authorizes and directs
that a Notice of Exemption be filed with the County Clerk of the County of Los Angeles,
California, in accordance with CEQA Guidelines.
Section 9 . Custodian of Records The documents and materials that constitute the
record of proceedings on which these findings are based are located at the City Clerk's office
located at City Hall, 8838 E. Valley Blvd., Rosemead California 91770. The custodian for these
records is the City Clerk.
Section 10 . Severability If any provision of this Ordinance or the application thereof
to any person or circumstance is held invalid, such invalidity shall not affect other provisions or
applications of this Ordinance which can be given effect without the invalid provision or
application, and to this end the provisions of this Ordinance are severable. The City Council
hereby declares that it would have adopted this Ordinance irrespective of the invalidity of any
particular portion thereof.
Section 11. Publication Within 15 days of adoption of this Ordinance, the City Clerk
shall certify to the adoption of this Ordinance and cause it to be published in a newspaper of
general circulation printed and published within the City of Rosemead, in accordance with
Government Code § 36933.
Section 12 . Effective Date This Ordinance shall become effective thirty (30) days
from its adoption.
OAK #4845 -1302 -2986 v34
PASSED AND ADOPTED by the City Council of the City of Rosemead, this 26 day
of July, 2011, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
STEVEN LY, MAYOR
ATTEST:
GLORIA MOLLEDA, CITY CLERK
APPROVED AS TO FORM:
RACHEL RICHMAN, CITY ATTORNEY
OAK#4845- 1302 -2986 05