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CC - Item 6D - Master Agreement for Excess Bond Proceeds Between the City of Rosemead and Rosemead Successor Agency and Approval of Resolution Authorizing Transfer and Acceptance of FundsROSEMEAD CITY COUNCIL STAFF REPORT TO: THE HONORABLE MAYOR AND CITY COUNCIL and CHAIR AND MEMBERS OF THE SUCCESSOR ENTITY TO THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION FROM: JEFF ALLRED, CITY MANAGER DATE: JUNE 11, 2013 SUBJECT: MASTER AGREEMENT FOR EXCESS BOND PROCEEDS BETWEEN THE CITY OF ROSEMEAD AND ROSEMEAD SUCCESSOR AGENCY AND APPROVAL OF RESOLUTION AUTHORIZING TRANSFER AND ACCEPTANCE OF FUNDS SUMMARY In order to permit the timely and cost efficient completion of the capital improvement projects funded by the July 2010 tax increment bond proceeds, staff has drafted a Master Agreement for Excess Bonds (Agreement) between the City of Rosemead and the Successor Agency to the Rosemead Community Development Commission. In order for the Successor Agency to fund any project, it must have an enforceable obligation with another party, and that obligation must be included on a Recognized Obligation Payment Schedule (ROPS) and submitted to the Department of Finance for consideration. Through the utilization of this agreement the City Council would approve all contracts related to the completion of the projects, and authority to review contracts to ensure compliance with the bond covenants would remain with the Oversight Board; however, it would eliminate the need to itemize every contract related to these projects on the ROPS. This would ensure that the funds are spent appropriately while allowing the City to move forward in a timely manner without having to wait for the Department of Finance to review and approve projects, which could potentially take several months. Assembly Bill 1484 enabled Successor Agencies to expend bond proceeds once a Finding of Completion is received; however, there continues to be ambiguity regarding the Department of Finance's role in the oversight of these projects. Under the current Health and Safety Code, the Successor Agency has very strict timelines in which it must submit a ROPS or amended ROPS. These strict timelines create a very real potential for a delay of at least 180 days between the issuance of a request for proposal, and the actual work being allowed during a ROPS period. This type of delay would cause significant problems for the completion of any of the proposed projects envisioned by the City and Community Development Commission when it issued bonds in 2010.. In order to clarify how the expense of bond proceeds may be spent, Assembly Bill 564 (AB 564) has been drafted, and is currently being considered by Legislators. AB 564 would transfer the approval authority of all bond proceed funded projects to the Oversight Board, eliminating the requirement of having the Department of Finance review and approve ITEM NUMBER: 19D City Council Meeting June 11, 2013 Paae 2 of 2 every contract related to a project. AB 564 has been unanimously approved by the Assembly and is awaiting approval in the Senate. Through the adoption of the Master Agreement for Excess Bond Proceeds, the Successor Agency will be establishing a system very similar to the intent of AB 564 in which the larger projects are provided on the ROPS, but the management of the contracts and oversight will be delegated to the Oversight Board. Staff Recommendation for Successor Entity Action Staff recommends that the Rosemead Successor Entity Adopt Resolution 2013 -01 approving the Successor Entity's execution of the Master Agreement for Excess Bond Proceeds between the Rosemead Successor Entity and City of Rosemead and agreeing to transfer the excess bond proceeds in the amount of $7,077,558.51 from the Rosemead Successor Entity to the City. Staff Recommendation for City Council Action Staff recommends that the City Council Adopt Resolution 2013 -32 approving the City's execution of the Master Agreement for Excess Bond Proceeds between the Rosemead Successor Entity and City of Rosemead and agreeing to receive and expend the Excess Bond Proceeds in the amount of $7,077,558.51 in accordance with the Agreement. PUBLIC NOTICE PROCESS This item has been noticed through the regular agenda notification process. Prepared by: no 7 MATTHEW E. H KESWORTH ASSISTANT CITY MANAGER /FINANCE DIRECTOR Attachments: A - Master Agreement for Excess Bond Proceeds B — Successor Entity Resolution 2013 -01 C — City Council Resolution 2013 -32 AGREEMENT REGARDING EXPENDITURE OF EXCESS BOND PROCEEDS This Agreement Regarding Excess Bond Proceeds (this "Agreement ") is entered into effective as of June 12, 2013 ("Effective Date ") by and between the Successor Agency to the Community Development Commission of the City of Rosemead ( "Successor Agency ") and the City of Rosemead, a Municipal Corporation ( "City "). The Successor Agency and the City are hereinafter collectively referred to as the "Parties." RECITALS A. Pursuant to authority granted under Community Redevelopment Law (California health and Safety Code Section 33000 el seq.) ( " CRL "), the former Community Development Commission of the City of Rosemead ( "Redevelopment Agency ") had responsibility to implement the Merged Project Areas (the "Project Area "), originally approved by Ordinance Nos. 340 and 809 enacted by the City of Rosemead City Council (the "City Council') and subsequently merged by Ordinance No. 871 on February 10, 2009. B. Pursuant to an Indenture of Trust dated as of June 1, 2010, and executed by and between the Redevelopment Agency and U.S. Bank National Association as Trustee (the "Indenture "), the Agency issued Tax Allocation Bonds, Series 2010A Bonds in the original principal amount of $1 1,230,000 (the "Bonds "). C. Pursuant the Indenture, $9.629,060.80 of the Series 2010A Bonds were deposited into the Redevelopment Fund and are required to be used solely in the manner provided by the CRL to provide financing certain infrastructure improvements within the Project Area. D. Pursuant to Resolution No. 2012 -04 adopted by the City Council on January 10, 2012, the City agreed to serve as the Successor Agency to the Redevelopment Agency commencing upon dissolution of the Redevelopment Agency on February 1, 2012 pursuant to Assembly Bill x 26 ( "AB 26 "). E. On April 18, 2013 the Successor Agency to the Redevelopment Agency received its finding of completion from the Department of Finance. F. Health and Safety Code Section 34191.4(c) provides that once the finding of completion has been issued by the Department of Finance, the successor agency is authorized to use bond proceeds for the purposes for which the bonds where sold. Further, the Successor Agency may designate the use of and commit indebtedness obligation proceeds that were derived from indebtedness issued for redevelopment purposes on or before December 31, 2010, and that remain available after the satisfaction of enforceable obligations that have been approved on a Recognized Obligation Payment Schedule ( "ROPS ") and that are consistent with the indebtedness obligation covenants (hereafter, "Excess Bond Proceeds "). G. Health and Safety Code Section 34191.4(c) further provides that the expenditure of Excess Bond Proceeds must be listed separately on the BOPS. H. The Official Statement for the Bonds at page 5 "Plan of Finance" provides that the Bonds are being issued by the Commission to provide funds for certain infrastructure improvements. The projects include but are not limited to: the Rosemead Community Center and Parking Lot Expansion and City Park and Playground Facilities and other projects referenced or allowed pursuant to the bond covenants. 1. The oversight board for the Successor Agency ( "Oversight Board ") approved the ROPS submitted by the Successor Agency for the January — June 2013 period ( "ROPS Ill ") which included infrastructure projects consistent with the Bond issuance. They include: Rosemead Community Center Parking Lot Improvements, Rosemead Park Improvements, Zapopan Park Improvements, Sewer System Expansion, Rosemead Park Turf Improvements, Valley Blvd. Street Improvements, and New Park at Walnut Grove and Rush. J. Now that the Successor Agency has received its Finding of Completion the Parties desire to enter into this Agreement to use the Excess Bond Proceeds for the purposes identified in and consistent with the Bond covenants and the requirements of the CRL, and to provide for the Successor Agency to transfer the Excess Bond Proceeds to the City for deposit into the City's General Fund to be used for such purposes. K. The execution of this Agreement was approved by the City Council acting in its capacity as the governing board of the City and in its capacity as the governing board of the Successor Agency by resolutions adopted on June 11, 2013. L. The execution of this Agreement by the Successor Agency was approved by the Oversight Board by resolution adopted on June 12, 2013. NOW, THEREFORE, in consideration of the mutual covenants, conditions and promises herein contained, the Parties hereby agree as follows. L Incorporation of Recitals. The Parties acknowledge the truth of the foregoing Recitals which by this reference are incorporated into this Agreement. 2. Term. The term of this Agreement shall commence on the Effective Date. and shall continue in effect until the date that all Excess Bond Proceeds are expended in accordance with the requirements of this Agreement. 3. Use of Available Tax Increment Bond Proceeds. The City agrees that it shall use the Excess Bond Proceeds within the City solely for the purposes identified in Recital J above. the projects identified in this Section 3, or for other infrastructure projects consistent with the Bond covenants and the provisions of the CRL that apply to the expenditure redevelopment funds. 4. Transfer of Available Tax Increment Bond Proceeds The Successor Agency shall transfer the remaining Excess Bond Proceeds to the City, and the City shall deposit such Funds into an Excess Bond Proceeds Fund for City's use in accordance with the terms, conditions, and purposes set forth in this Agreement. As of the Effective Date, the amount of Available Tax Increment Bond Proceeds equals the sum of seven million seventy -seven thousand five hundred fifty -eight dollars and fifty -one cents ($7,077,558.51). 5. Project Approvals; Environmental Review. This Agreement is not intended to limit in any manner the discretion of City in connection with the issuance of approvals and entitlements for the projects described in this Agreement, including without limitation, the undertaking and completion of any required environmental review pursuant to CEQA and NEPA, as applicable, and the review and approval of plans and specifications. 6. Oversight Board Authorization of Contracts Using Excess Bond Proceeds The City agrees to obtain Oversight Board authorization for all contracts utilizing Excess Bond Proceeds prior to authorizing a Notice to Proceed. 7. Severability If any term, provision, covenant, or condition set forth in this Agreement is held by the final judgment of a court of competent jurisdiction to be invalid, void, or unenforceable, the remaining provisions, covenants, and conditions shall continue in full force and effect to the extent that the basic intent of the Parties as expressed herein can be accomplished. In addition, the Parties shall cooperate in good faith in an effort to amend or modify this Agreement in a manner such that the purpose of any invalidated or voided provision, covenant, or condition can be accomplished to the maximum extent legally permissible. 8. No Third -Party Beneficiaries; Assignments. Nothing in this Agreement is intended to create any third -party beneficiaries to this Agreement, and no person or entity other than the Successor Agency and the City, and the permitted successors and assigns of either of them, shall be authorized to enforce the provisions of this Agreement. 9. Further Assurances. Each Party agrees to execute, acknowledge and deliver all additional documents and instruments, and to take such other actions as may be reasonably necessary to carry out the intent of the transactions contemplated by this Agreement. 10. Governing Law. This Agreement shall be governed by and construed in accordance with the laws of the State of California. H. Counterparts This Agreement may be executed in counterparts, each of which shall be deemed an original and all of which shall constitute but one and the same instrument. 12. Amendments. This Agreement may be modified or amended, in whole or in part, only by an instrument in writing, executed by the Parties. 3 IN WITNESS WHEREOF, the Parties have executed this Agreement effective as of the date first written above. CITY: CITY OF ROSEMEAD El POLLY LOW, Mayor Dated: SIGNED AND CERTIFIED THAT A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE MAYOR GLORIA MOLLEDA City Clerk By: APPROVED AS TO LEGAL FORM RACHEL RICHMAN CITY ATTORNEY Dated: SUCCESSOR AGENCY: SUCCESSOR AGENCY TO THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION By: POLLY LOW, Chair Board of Directors SIGNED AND CERTIFIED THAT A COPY OF THIS DOCUMENT HAS BEEN DELIVERED TO THE CHAIR OF THE BOARD GLORIA MOLLEDA Secretary Bv: APPROVED AS TO LEGAL FORM RACHEL RICHMAN , Counsel Dated: M RESOLUTION: 2013 -01 A RESOLUTION OF THE SUCCESSOR AGENCY TO THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION " ROSEMEAD SUCCESSOR AGENCY" APPROVING THE MASTER AGREEMENT FOR EXCESS BOND PROCEEDS BETWEEN THE CITY OF ROSEMEAD AND THE ROSEMEAD SUCCESSOR AGENCY FOR THE COMPLETION OF BOND ISSUED CAPITAL IMPROVEMENT PROJECTS AND THE TRANSFER OF EXCESS BOND PROCEEDS TO THE CITY OF ROSEMEAD WHEREAS, on April 25, 2012 the Oversight Board for the Rosemead Successor Agency approved the inclusion of Capital Improvement Projects to be funded with existing bond proceeds on the Recognized Obligation Payment Schedule; and WHEREAS, the approved Capital Improvement Projects have been included on each Recognized Obligation Payment Schedule filed by the Rosemead Successor Agency; and WHEREAS, the Rosemead Successor Agency received the Finding of Completion on April 18, 2013 from the Department of Finance; and WHEREAS, the Finding Completion states that the Rosemead Successor Agency may utilize proceeds derived from bonds issued prior to January 1, 2011 in a manner consistent with the original bond covenants per Health and Safety Code section 34191.4(c); and WHEREAS, the Rosemead Successor Agency is holding approximately $7.1 million in bond proceeds derived from bonds issued prior to January 1, 2011 for Capital Improvement Projects identified in the bond covenants; and WHEREAS, the City Council and the Successor Agency desire to in a Master Agreement for Excess Bond Proceeds ( "Agreement') transferring the responsibility for completing all of the capital improvement projects contemplated in the Tax Allocation Bond Series 2010A Issuance and all excess bond proceeds to the City of Rosemead WHEREAS, the completion of the Capital Improvement Projects will be complex in nature and require numerous contracts that are time sensitive to ensure that the projects move forward in a timely manner and according to budgeted figures; and WHEREAS, a delay in sending each individual contract to the Department of Finance through the Recognized Obligation Payment Schedule for oversight and approval will create unnecessary delays in the project that may result in cost increases or missed deadlines. WHEREAS, the City of Rosemead has the expertise and staff to oversee and complete the capital improvement projects contemplated in the Tax Allocation Bond Series 2010A Issuance and to do so in a manner consistent with the Agreement and the law. LA 84846 -8271 -7460 vl NOW THEREFORE, THE ROSEMEAD SUCCESSOR AGENCY DOES HEREBY RESOLVE: 1. The facts stated in the forgoing Recitals are hereby acknowledged and affirmed. 2. The Agreement is hereby incorporated into this Resolution at attached hereto as Exhibit A. 3. The Agreement is approved and the Chair is authorized to execute the Agreement substantially in the form presented to the Rosemead Successor Agency. 4. Successor Agency staff are authorized to transfer of the existing excess bond proceeds in the amount of $7,077,558.51 from the Successor Agency to the City of Rosemead to be used for purposes consistent with the Agreement and Law. The Rosemead Successor Agency requests the Oversight board to designate the Agreement as an enforceable obligation related to the bond proceed funded projects to be reported on the Recognized Obligation Payment Schedule; thereby removing the necessity to report each individual contract on the Recognized Obligation Payment Schedule and obtain Department of Finance Approval. 6. The Rosemead Successor Agency staff shall follow the Agreement for the completion of all the approved projects, including providing the Oversight Board with an opportunity to review all contracts prior to issuing a Notice to Proceed. 7. Successor Agency staff is directed to submit amended ROPS for the July to December 2013 period to include the Master Agreement for Excess Bond Proceeds. 8. Successor Agency staff is directed to provide a copy of this Resolution to the County Auditor - Controller, the State Controller's Office and the State Department of Finance. H PASSED, APPROVED AND ADOPTED this 11 day of June 2013. POLLY LOW Chair Rosemead Successor Agency ATTEST: Gloria Molleda Agency Clerk APPROVED AS TO FORM: RACHEL RICHMAN Successor Agency Counsel LA 44846-9271-7460 v I RESOLUTION: 2013 -32 A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF ROSEMEAD APPROVING THE MASTER AGREEMENT FOR EXCESS BOND PROCEEDS BETWEEN THE CITY OF ROSEMEAD AND THE ROSEMEAD SUCCESSOR AGENCY FOR THE COMPLETION OF BOND ISSUED CAPITAL IMPROVEMENT PROJECTS AND THE ACCEPTANCE OF EXCESS BOND PROCEEDS FROM THE ROSEMEAD SUCCESSOR AGENCY WHEREAS, on April 25, 2012 the Oversight Board for the Rosemead Successor Agency approved the inclusion of Capital Improvement Projects to be funded with existing bond proceeds on the Recognized Obligation Payment Schedule; and WHEREAS, the approved Capital Improvement Projects have been included on each Recognized Obligation Payment Schedule filed by the Rosemead Successor Agency; and WHEREAS, the Rosemead Successor Agency received the Finding of Completion on April 18, 2013 from the Department of Finance; and WHEREAS, the Finding Completion states that the Rosemead Successor Agency may utilize proceeds derived from bonds issued prior to January 1, 2011 in a manner consistent with the original bond covenants per Health and Safety Code section 34191.4(c); and WHEREAS, the Rosemead Successor Agency is holding approximately $7.1 million in bond proceeds derived from bonds issued prior to January 1, 2011 for Capital Improvement Projects identified in the bond covenants; and WHEREAS, the City Council and the Successor Agency desire to enter into a Master Agreement for Excess Bond Proceeds ( "Agreement') transferring the responsibility for completing all of the capital improvement projects contemplated in the Tax Allocation Bond Series 2010A Issuance and all excess bond proceeds to the City of Rosemead WHEREAS, the completion of the Capital Improvement Projects will be complex in nature and require numerous contracts that are time sensitive to ensure that the projects move forward in a timely manner and according to budgeted figures; and WHEREAS, a delay in sending each individual contract to the Department of Finance through the Recognized Obligation Payment Schedule for oversight and approval will create unnecessary delays in the project that may result in cost increases or missed deadlines. WHEREAS, the City of Rosemead has the expertise and staff to oversee and complete the capital improvement projects contemplated in the Tax Allocation Bond Series 2010A Issuance and to do so in a manner consistent with the Agreement and the law. 1A 44841-5 161-3716 v l NOW THEREFORE, THE CITY COUNCIL OF THE CITY OF ROSEMEAD DOES HEREBY RESOLVE: 1. The facts stated in the forgoing Recitals are hereby acknowledged and affirmed. 2. The Agreement is hereby incorporated into this Resolution at attached hereto as Exhibit A. 3. The Agreement is approved and the Mayor is authorized to execute the Agreement substantially in the form presented to the City Council. 4. The City hereby agrees to receive and expend existing excess bond proceeds in the amount of $7,077,558.51 from the Successor Agency to be used for purposes consistent with the Agreement and Law. 5. The City of Rosemead shall follow the Agreement for the completion of all the approved projects, including providing the Oversight Board with an opportunity to review all contracts prior to issuing a Notice to Proceed. PASSED, APPROVED AND ADOPTED this 11thday of June 2013. POLLY LOW, Mayor Mayor, City of Rosemead ATTEST: Gloria Molleda City Clerk APPROVED AS TO FORM: RACHEL RICHMAN City Attorney