CDC - Item 4B - City Council Renovation - Funding Amendment•
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ROSEMEAD COMMUNITY
DEVELOPMENT COMMISSION
STAFF REPORT
TO: HONORABLE CHAIRMAN AND COMMISSION MEMBERS
FROM: OLIVER CHI, EXECUTIVE DIRECTOR bQ-1-CJZ-:•
DATE: MARCH 25, 2008
SUBJECT: CITY COUNCIL CHAMBERS RENOVATION - FUNDING AMENDMENT
SUMMARY
On January 12, 2008, the City Council approved a construction contract with Caltech
Construction for renovating the Council Chambers. As approved by general counsel,
the entire project was budgeted in the Rosemead Community Development
Commission's (RCDC) Special Projects budget using tax exempt bond funds as the
funding source (Attachment 1). However, at a later time, based on Section 33445 of the
Health and Safety (H & S) Code (Redevelopment Law) Agency Bond Counsel advised
that City Hall renovations would not be an allowable use of tax exempt bond proceeds
except for bonds issued prior to January 1, 1994 (Attachment 2). This means that the
tax exempt bond proceeds received from the City's $34 million "1993 Series Bond"
issued in 1993 are exempt from the prohibition of City Hall renovations mandated by H
& S Code Section 33445, providing the City is able to account for any remaining
proceeds from the "1993 Series Bond".
Finance Department staff has identified approximately $200,000 of remaining "1993
Series Bond" proceeds which will be used to support the appropriation in the RCDC
Special Projects budget. Therefore, of the $643,000 total amount needed to renovate
the Council Chambers (architectural - $70,000, construction - $573,000), only $200,000
can be paid for with tax exempt bond proceeds. The $443,000 difference can be
funded partially with Community Development Block Grant funding ($10,000) and the
remainder ($433,000) with funds to be appropriated in the General Fund.
In November 2007, the Commission approved a $2.4 million loan from the City to pay
for administrative expenses incurred by the redevelopment agency for FY 2007-08.
Based upon unexpected increases in tax increment revenue and salary savings realized
through vacant positions during this fiscal year, a portion of the loan will not be needed
to fund expenses in the redevelopment agency. Therefore, the Agency will be able
refund the $433,000 cost to complete the Chambers remodel back to the City from this
initial loan and not require the City Council to appropriate any new additional funds for
the Council Chambers renovation project. Resolution No. 2008-08 (Attachment 3)
APPROVED FOR CITY COUNCIL AGENDA:
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Community Development Commission
March 25, 2008
Paae 2 of 2
authorizes an early partial repayment of the loan from the City to the Agency and is
attached for your consideration.
Staff Recommendation
Staff recommends that the Community Development Commission approve Resolution
No. 2008-08 authorizing a partial repayment ($433,000) of the loan from the City to the
Redevelopment Agency.
LEGAL REVIEW
This staff report has been reviewed and approved by the City Attorney.
Subm' by:
Brla aeki
Assistant City Manager
Attachment 1 -Email -Peter Wallin Opinion
Attachment 2 - Email - William Bothwell Opinion
Attachment 3 - Resolution No. 2008-08
Brian Saeki
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From:
Peter L. Wallin [peter@wkrklaw.com]
Sent:
Monday, August 21, 2006 1:25 PM
To:
BRIAN SAEKI
Cc: ANDY LAZZARETTO
Subject: RE: Test
It's a bit different than what I said, but works out the same. HSC 33445 exempts from the prohibition using the
proceeds of bonds issued prior to January1,1994 for the purpose of rehabing City Hall as evidenced by
documents approved at the time of the issuance of the indebtedness. In 1993 the RDA issued $34,275,000 in
bonds and the prospectus states that the proceeds will include "projects descibed in the Infrastructure
Management Report adopted by the City and the Agency, the remodeling, renovation and /or expansion of the
existing City Hall or construction of a new City Hall..."
While that issue has been refinanced several times the proceeds of the refinancing are still available for financing
the City Hall remodel.
From: BRIAN SAEKI [mailto:BSAEKI@cityofrosemead.org]
Sent: Monday, August 21, 2006 12:55 PM
To: Peter L. Wallin
Subject: Test
Hi Peter... hope this works. Thanks for taking the call this morning. Talk to you soon.
Brian
ATTACHMENT 1
3/20/2008
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Brian Saeki
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From: Bothwell, William [wbothwell@orrick.com]
Sent: Tuesday, February 19, 2008 4:59 PM
To: Brian Saeki
Cc: Bothwell, William
Subject: Expenditure of Bond Proceeds on City Hall
Dear Brain: The question has come up as to whether the Rosemead Redevelopment Agency can spend bond
proceeds to pay costs with respect to a city hall expansion and/or renovation. As you know AB 1290, effective
January 1, 1994, prohibits the direct or indirect use of tax increment to pay such costs. If bond proceeds remain
from a series of bonds issued before 1994, such proceeds would not be subject to this restriction. However, the
general rule is that proceeds should be spent within 3 years of the date of issuance, so it is hard to imagine any
proceeds remain from the 1993 financing. If there are proceeds remaining unspent, the Agency must be able to
clearly trace them to the 1993 financing, i.e. there must be a clear paper trail, if they are to be spent on city hall.
Hope this helps, Bill
William W. I{olhwell
1"" Iner
Ouick. Ilemoglnn R SulclilTc LLP
777 Souwh Figuana Sow
Suhc3200
Los Angeles, CA 901117-5855
tet'_'11-61'--2403
(n., 213-612-2-499
mobile 213-200-3066
wbolhwellgoffi&cont
www.orrick.com
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ATTACHMENT 2
3/20/2008
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RESOLUTION NO. 2008- 08
A RESOLUTION OF THE ROSEMEAD COMMUNITY DEVELOPMENT COMMISSION
TO PAY THE CITY A PRINCIPAL ONLY PAYMENT OF $433,000 AND REDUCE THE
BALANCE OF THE "ADVANCE FROM CITY" ACCOUNT
WHEREAS, At the November 20, 2007 Rosemead Community Development
Commission (RCDC) meeting commission members approved a loan from the City to the
RCDC dated September 28, 2007, and
WHEREAS, funds to pay loan principal to the City are available, and
WHEREAS, with early repayment of principal, interest expense savings will be
realized by RCDC, and
WHEREAS, the payment of principal is a reduction of a liability and not a
expenditure and therefore does not require an amendment to the budget.
NOW THEREFORE, City Council directs staff to pay an early principal reduction
payment of $433,000 to the City which will be accounted for as a reduction to the "Advance
From City" liability account.
PASSED, APPROVED and ADOPTED this 25`h day of March 2008.
, Mayor
ATTEST:
City Clerk
ATTACHMENT 31
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