OB - Item 3B - Consideration of a Loan Between the City and Successor AgencyROSEMEAD SUCCESSOR
AGENCY STAFF REPORT
TO: THE HONORABLE CHAIR AND BOARD MEMBERS
FROM: MATTHEW HAWKESWORTH, ASSISTANT CITY MANAGER
DATE: AUGUST 21, 2013
SUBJECT: CONSIDERATION OF A LOAN BETWEEN THE CITY AND SUCCESSOR
AGENCY
SUMMARY
At the June 12, 2013 Oversight Board meeting, the Board approved the Master Bond
Agreement along with several contracts in order to permit the Successor Agency to move
forward with bond funded projects. On August 9, 2013 the Successor Agency received
a letter, attached, from the Department of Finance (DOF) denying the request to
immediately include the contracts and Master Bond Agreement on the existing ROPS for
the July —December 2013 period. However, the DOF did specifically state that they were
not objecting to the Successor Agency's proposal to use the City as the contractor under
the Master Bond Agreement or the individual contracts with vendors for the various
projects. The DOF also noted in their letter that the City has the ability to utilize the
provisions of Health and Safety Code section 34173 (h) to provide a loan from the City to
the Successor Agency for the capital improvement projects, which would be repaid by the
existing bond proceeds.
Due to the necessity to expedite some of the projects, especially those such as the Public
Plaza that have been "shovel ready" for more than two years, the City Council will
consider a loan agreement at their regularly scheduled meeting on September 10, 2013.
Staff is seeking direction from the Oversight Board in anticipation of this loan agreement
to ensure that all questions and concerns may be adequately addressed prior to the
drafting of the agreement. It is the City's intent to award the contract for the construction
of the Public Plaza in September along with expediting the construction documents
necessary to complete the Rosemead Community Center expansion and improvements.
Staff Recommendation:
That the Oversight Board provide direction and guidance regarding the preparation of
loan documents between the City of Rosemead and the Successor Agency.
BACKGROUND
The DOF has indicated in their letter dated August 9, 2013 that the City and Successor Agency
could utilize the provisions of Health and Safety Code section 34173 (h) to move forward with
some of the pending bond proceed funded capital improvement projects. Section 34173 (h)
states:
ITEM M 3_�_
Rosemead Successor Agency Oversight Board
August 21, 2013
Page 2 of 3
The city, county, or city and county that authorized the creation of a redevelopment
agency may loan or grant funds to a successor agency for administrative costs,
enforceable obligations, or project - related expenses at the city's discretion, but the
receipt and use of these funds shall be reflected on the Recognized Obligation
Payment Schedule or the administrative budget and therefore are subject to the
oversight and approval of the oversight board. An enforceable obligation shall be
deemed to be created for the repayment of those loans.
The City Council will consider issuing a loan to fund project- related expenses until the Successor
Agency is able to obtain approval on the ROPS for the various capital improvement projects. The
project with specific time sensitive needs is the Rosemead Community Center and Public Plaza
expansion and construction.
Rosemead Community Center and Public Plaza Expansion and Construction
This project was developed in four phases. The City Council first took action to approve this
project as part of the Parks and Facilities Master Plan on February 23, 2010. This project was
subsequently approved by Commission resolution CDC 2010 -15 on May 11, 2010 as part of the
2010 bond issuance. The previous parking lot for the Community Center, Library and City Hall
was in great disrepair with significant drainage problems, insufficient ADA accessibility and
insufficient parking. While much of the parking lot is owned by the County of Los Angeles, the
City recognized that the County did not have the financial resources available to make the
necessary improvements. Therefore, the City took the lead in development a project that would
benefit both parties while requiring no funds from the County to complete.
Phases 1 and 2 include the removal of a block wall dividing the parking lot in half, the complete
demolition of the east and west sides of the parking lot and the reconstruction of a new parking
lot with additional parking, a public corridor connecting all the sites. These first two phases have
been completed and the City is prepared to continue with phases 3 and 4 of the project. Phase
3 includes the demolition of the parking lot between City Hall and the Library, and the construction
of a new public plaza, which will provide an outdoor space for residents and library patrons as
well as a center for numerous community events throughout the year. The lack of completion of
this phase has resulted in serious drainage problems due to the different grades between the
completed phases and existing areas.
Phase 4 of the projects includes the expansion and renovation of the Rosemead Community
Center. This community center serves as a central hub for a variety of community programs
serving all ages. Due to the age of the facility, there are numerous problems with the roof and
HVAC systems along with ADA Accessibility issues. The City had received grant funds for the
HVAC system and roof repairs and those projects are complete. The City also received a grant
for many of the interior renovations, and recently awarded a contract for the completion of the
interior. These renovations are scheduled to be completed by October 1, 2013. The remaining
work for the community center includes the acquisitions of the furniture and equipment, including
the addition of a computer lab, renovation of the exterior fagade and landscaping, and the
construction of a new building directly to the east to provide additional space for meetings and
activities.
Rosemead Successor Agency Oversight Board
August 21, 2013
Page 3 of 3
PUBLIC NOTICE PROCESS
This item has been noticed through the regular agenda notification process in accordance with
the Brown Act.
Prepared by:
Matthew E. Hawkesworth
Assistant City Manager
Attachments: Department of Finance Letter Dated August 9, 2013
ENT oP
4 Z
W III n
O �
* DEPARTMENT OF
°•�,.oR� F I N A N C E
August 9, 2013
EDMUND G BROWN JR. • GOVERNOR
91 D l STREET ■ SACRAMENTO CA ■ 95M 1 4 - 3 706 S W WW.00r.0A.00V
Mr. Matthew Hawkesworth, Assistant City Manager
City of Rosemead
8836 East Valley Boulevard
Rosemead, CA 91770
Dear Mr. Hawkesworth:
Subject: Oversight Board Action Determinations
The City of Rosemead Successor Agency (Agency) notified the California Department of
Finance (Finance) of its June 12, 2013 oversight board (OB) Resolution Nos. 2013 -0005,
2013 -0006, 2013 -0007 and 2013 -0008 on July 1, 2013. Pursuant to Health and Safety Code
(HSC) section 34179 (h), Finance has completed its review of the OB actions.
Resolution 2013 -0005
This OB resolution confirming the Master Agreement for excess bond proceeds (Master
Agreement) between the City of Rosemead and the Agency for the completion of capital
improvement projects and approval of the transfer and expenditure of excess bond proceeds to
the City of Rosemead in accordance with the Master Agreement is not approved at this time.
It is our understanding the Agency is holding approximately $7.1 million in bond proceeds from
bonds issued prior to January 1, 2011. It is also our understanding, to alleviate the necessity to
report each individual contract on the Recognized Obligation Payment Schedule (ROPS); the
Master Agreement will serve as the enforceable obligation related to the proposed bond funded
projects. In addition, the OB directed the Agency staff to submit an amended ROPS for the July
through December 2013 period to include the Master Agreement.
While Finance does not object to the Agency's proposal to use the City as a general contractor
to carry out these bond funded projects, pursuant to HSC section 34177 (m), the ROPS for this
period was due no later than March 1, 2013 and in compliance with that section, the
ROPS 13 -14A was submitted to Finance on February 12, 2013. Finance issued its final
determination for this ROPS period on March 28, 2013, prior to the Agency receiving its Finding
of Completion on April 18, 2013. Finance is not accepting revised ROPS. Therefore, the
Agency will have to wait until ROPS 13 -14B to request funding for these bond funded projects.
As an alternative, pursuant to HSC section 34173 (h), the City may loan the Agency funds for
enforceable obligations and request repayment on a subsequent ROPS. In this situation, the
repayment should be requested with bond proceeds, and would be subject to the OB and
Finance approval once placed on a BOPS.
This is our determination with respect to the OB action taken.
Mr. Hawkesworth
August 9, 2013
Page 2
Resolutions 2013.0006, 2013 -0007, 2013 -0008
These OB Resolutions confirming the selection of various contractors to carry out bond funded
projects is approved. The Agency received its Finding of Completion on April 18, 2013, thereby,
allowing the Agency to utilize proceeds derived from bonds issued prior to
January 1, 2011 in a manner consistent with the original bond covenants per HSC section
34191.4 (c). While the Agency can negotiate contracts with various contractors for bond funded
projects, the expenditure authority for these obligations is subject to Finance's approval on a
ROPS. This is our determination with respect to the OB action taken.
As authorized by HSC section 34179 (h), Finance is returning OB action 2013 -0005 to the board
for reconsideration.
Please direct inquiries to Kylie Le, Supervisor, or Michael Barr, Lead Analyst at (916) 445 -1546
Sincerely,
TE E LAY
Local overnment Consultant
cc: Mr. Jeffry Allred, City Manager, City of Rosemead
Mr. Steven Mar, Bureau Chief, Local Government Audit Bureau, State Controller's Office
Ms. Kristine Burns, Manager, California State Controller's Office