2011081510 - Dittos Lane - Planned Development WithdrawalMEETING DATE: 8/15/2011
ITEM NO: 16
AGENCY AGENDA REPORT
DATE: AUGUST 8, 2011
TO: CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
FROM: GREG LARSON, EXECUTIVE DIRECTOR
SUBJECT: 20 DITTOS LANE
WITHDRAW THE CURRENT PLANNED DEVELOPMENT APPLICATION
FOR 20 DIPI OS LANE
RECOMMENDATION:
The Dittos Lane ad hoc committee and Town staff recommend that Council approve
withdrawing the current planned development application for 20 Dittos Lane.
BACKGROUND:
On September 21, 2009, the Los Gatos Redevelopment Agency entered into an Exclusive Right
to Negotiate Agreement (ERNA) with ROEM Development Corporation (ROEM), a private
housing development firm, for the planning and construction of an affordable housing project at
20 Dittos Lane, which ROEM had under option to purchase at that time. The Redevelopment
Agency purchased the Dittos Lane property on December 23, 2009 with Redevelopment funds
that can only be used for affordable housing. Since that time, ROEM Development Corporation
has been working to secure land use entitlements for the development of affordable housing on
the property. The First Amendment to the First Amended and Restated ERNA expired on March
31, 2011 and further land use entitlement and development agreement work by the Town was
suspended pending review of proposed State legislation affecting Redevelopment Agencies and
the continuity of funding for affordable housing.
In June 2011, the Governor signed several budget related bills to implement the State Budget for Fiscal
Year 2011-2012 as approved by the State Legislature. Among those bills are two that significantly
modify existing California Community Redevelopment Law, including ABx1 26 (the "Dissolution Act")
and ABx1 27 (the "Voluntary Program Act"); together they are called the "Redevelopment Restructuring
Acts".
PREPARED BY: BUD LORTZ
Project Manager
Reviewed by: 96) Assistant Town Manager/Deputy Director Town Attorney/General Counsel
Clerk Administrator/Secretary _fp:Rance Community Development
N:\MGR\AdminWorkFiles\2011 Council Reports \8-15-11 Dittos Lane.doc
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CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
SUBJECT: 20 DITTOS LANE
AUGUST 8, 2011
In summary, the Acts include the following actions:
(1) The Dissolution Act immediately suspends all new redevelopment activities and incurrence of
indebtedness and will dissolve redevelopment agencies ("RDAs") effective October 1, 2011; and
(2) The Voluntary Program Act will allow RDAs to avoid termination under the Dissolution Act by
opting into an "altemative voluntary redevelopment program" that requires specified substantial
annual contributions to local school and special districts.
DISCUSSION:
Staff is reviewing and analyzing the complex legislation affecting local redevelopment agencies
and the current and continuing funding for both redevelopment activities and affordable housing.
Although there are many legal questions that remain, as well as pending financial analysis, it
appears that the Town will have several over -arching choices:
1. Retain the Redevelopment Agency essentially as it is by paying a so-called "voluntary
contribution" of approximately $2.5 m this year and approximately $600 k each year
thereafter; OR
2. Dissolve the Redevelopment Agency and let local Redevelopment property tax receipts
flow through to the underlying property tax recipients, after paying all previously
approved "pass thru" agreements to other local agencies as well as outstanding debt,
called "enforceable obligations," subject to two variations:
a. Retain or do not retain local authority and responsibility as the fiscal agent for the
pass through of redevelopment funds and payment of enforceable obligations; and
b. Retain or do not retain local authority and responsibility as the successor housing
agency responsible for management and utilization of affordable housing assets
and obligations.
If the Town does not take action to retain either of these local responsibilities, then other
agencies, including the county and the state, may have authority to do so.
Which choices the Town makes will directly affect the availability of affordable housing cash
balances and future tax receipts, as well as the Town's control of 20 Dittos Lane and other
affordable housing sites.
In addition, the California League of Cities has initiated litigation to challenge the
constitutionality of the Redevelopment Restructuring Acts as outlined above, including a
requested "stay" on the implementation of some or all aspects of those Acts. An accelerated
hearing on the requested stay could be heard as early as next week, although it is anticipated that
resolution of the underlying litigation itself could take months or even years.
Last, there are already several legislative proposals being proposed to clarify, modify and even
reverse substantive parts of the Redevelopment Restructuring Acts, particularly as they apply to
ongoing funding and support for affordable housing throughout California. Likely progress on
any of this legislation will not be known until after the State Legislature reconvenes next month,
and possibly much later.
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CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY
SUBJECT: 20 DITTOS LANE
AUGUST 8, 2011
Given all of these complexities, delays and unpredictable outcomes, staff recommended to the
Council ad hoc Dittos Lane committee, consisting of Mayor Joe Pirzynski and Council member
Barbara Spector, withdrawing the current 20 Dittos Lane affordable housing planned
development application. The ad hoc committee reviewed the status of the current application
and the information above and concluded that withdrawal of the current application was the
preferred decision at this time. This approach will eliminate additional work towards an
uncertain outcome based on subsequent State or local decisions, and will enable staff to focus on
the bigger challenges regarding the future of redevelopment locally and its impact on the broader
community. The ad hoc committee also directed no further work on potential Dittos Lane
projects or actions pending resolution of the State issues.
FISCAL IMPACT:
Withdrawal of the pending planned development application will require resolution of
outstanding obligations and requirements as outlined in the previously approved Exclusive Right
to Negotiate Agreement between the Town of Los Gatos and ROEM Development Corporation.
It is anticipated that any such net expenditure or receipt of funds will be within the Town
Manager's financial authority and allowable under current Redevelopment law.
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