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8 - Redevelopment Agency Conditional Opt-In and And Agency Tranfer Payment AgreementDATE: TO: FROM: SUBJECT: MEETING DATE: 9/06/2011 ITEM NO: COUNCIL/AGENCY AGENDA REPORT AUGUST 30, 2011 MAYOR AND TOWN COUNCIL AND CHAIR AND MEMBERS OF THE REDEVELOPMENT AGENCY JUDITH PROPP, TOWN ATTORNEY REDEVELOPMENT AGENCY CONDITIONAL OPT -IN AND AGENCY TRANSFER PAYMENT AGREEMENT A. INTRODUCE AN ORDINANCE OF THE TOWN OF LOS GATOS TO CONDITIONALLY ELECT AND IMPLEMENT PARTICIPATION BY THE TOWN OF LOS GATOS AND TIIE TOWN OF LOS GATOS REDEVELOPMENT AGENCY IN THE ALTERNATIVE VOLUNTARY REDEVELOPMENT PROGRAM PURSUANT TO PART 1.9 OF THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW B. APPROVE A RESOLUTION OF THE TOWN OF LOS GATOS APPROVING AND AUTHORIZING EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE REDEVELOPMENT AGENCY OF LOS GATOS C. APPROVE A RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS APPROVING AND AUTHORIZING EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE TOWN OF LOS GATOS RECOMMENDATION: It is recommended that the Town Council take action on .Items 1 and 2 below and the Redevelopment Agency take action on Item 3 below: 1. Waive the reading of and introduce the attached ordinance to conditionally elect and implement participation by the Town of Los Gatos and the Town of Los PREPARED BY: Judith Propp, Town Attorney/RDA General Counsel Reviewed by: Town Manager/RDA Director and RDA Deputy Director Finance () Assistant Town Manager PAGE :2 MAYOR AND TOWN COUNCIL SUBJECT: REDEVELOPMENT AGENCY CONDITIONAL OPT -IN AND AGENCY TRANSFER PAYMENT AGREEMENT August 30, 2011 Gatos Redevelopment Agency in the Alternative Voluntary Redevelopment Program 2. Approve a Resolution of the Town of Los Gatos Approving and Authorizing Execution of the Agency Transfer Payment Agreement with the Redevelopment Agency of Los Gatos 3. Approve a Resolution of the Redevelopment Agency of the Town of Los Gatos Approving and Authorizing Execution of the Agency Transfer Payment Agreement with the Town of Los Gatos BACKGROUND: On June 15, 2011, the State Legislature adopted two budget "trailer" bills concerning redevelopment, AB1X 26 and AB1X 27. AB1X 26 (the "Dissolution Act") eliminates redevelopment agencies as of October 1, 2011, and essentially restricts redevelopment agencies from entering into agreements, borrowing or lending funds, or acquiring or disposing of real property prior to dissolution. AB1X 27 (the "Voluntary Program Act") allows redevelopment agencies to remain in existence and be exempt from AB 26 if certain "voluntary" payments are made to the State in FY 2012 and in each fiscal year thereafter. These bills were signed into law by the Governor on July 28, 2011. In order for a redevelopment agency to remain in existence and be exempt from dissolution under AB1X 26, the legislative body of the community must adopt an ordinance that obligates the community to comply with the provisions of AB1X 27, including the "voluntary" payments to the State. Upon enactment of the Voluntary Program Act, an ordinance must be adopted, making the redevelopment agency exempt from dissolution under AB1X 26. If the Town elects to participate in the Voluntary Program Act in order to continue the life of the Redevelopment Agency, its payment would be approximately, $2.5 million in FY 2011/12 and $600,000 in FY 2012/13. Under AB1X 26, subsequent payments anticipated to be in the range of $600,000 would be required indefinitely. On August 11, 2011, the California Supreme Court agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Alternative Voluntary Program Act. PAGE 3 MAYOR AND TOWN COUNCIL SUBJECT: REDEVELOPMENT AGENCY CONDITIONAL OPT -IN AND AGENCY TRANSFER PAYMENT AGREEMENT August 30, 2011 DISCUSSION: Even though the California Supreme Court issued a partial Stay in the pending Redevelopment lawsuit, the provisions of AB1X 26 were not stayed. For example, the Redevelopment Agency recently approved the Enforceable Obligation Payment Schedule ("EOPS") at the meeting on August 15, 2011 to comply with a requirement under AB 1 X 26 prior to August 29, 2011. In addition to the EOPS recently approved by the Town, AB 1 X 26 requires the preparation of two additional financial schedules. The Director of Finance will be preparing the Recognized Obligation Payment Schedule prior to September 29, 2011 and the Statement of Indebtedness ("SOI") for the Redevelopment Agency prior to October 1, 2011. In the event that the Court upholds the Voluntary Alternative Program (referred to as the "opt -in" provision), the SOI prepared and filed by October 1, 2011 will become the basis for calculations of future annual opt -in payments. The less the amount of the indebtedness shown on the 2011 SOI will likely result in a calculation of a higher annual opt -in payment. If the Town were to decide to participate in the Voluntary Alternative Program, one of the potential mechanisms available to pay the annual opt -in payment is for the Town to adopt a reimbursement agreement between the Town and the Redevelopment Agency which would require the Agency to annually transfer the amount of the opt -in payment to the Town so the payment can be paid to the State of California as required under AB 1 X 27. There is statewide concern by Redevelopment agencies that if these types of Agency Transfer Payment Agreements ("Agreement") are not adopted prior to October 1, 2011, they cannot be included on the 2011 SOI. Not including the Agreement in this year's SOI may ultimately result in the calculation of an annual payment greater than $600,000 in future years. The issue has been called to the attention of the California Supreme Court, but it is not anticipated that they will respond prior to October 1, 2011. In order to minimize future potential financial risks, based on advice from the League of California Cities, the California.Redevelopment Agency, and legal advice from the Town's outside legal counsel for the Redevelopment Agency, it is recommended that Council consider conditional introduction and adoption of an Ordinance that would allow the Town to participate in the Voluntary Alternative Program, conditional upon the State Supreme Court's approval of AB 1 X 27 and a conditional approval of the Agency Transfer Payment Agreement at this time. Adoption of the Ordinance and approval of the Agreement would allow the Agency to include the Agreement on the 2011 SOI. Accordingly, the Town Council's intention to introduce and adopt this Ordinance is based on the understanding that it will be effective only upon the lifting of the Stay and PAGE 4 MAYOR AND TOWN COUNCIL SUBJECT: REDEVELOPMENT AGENCY CONDITIONAL OPT -IN AND AGENCY TRANSFER PAYMENT AGREEMENT August 30, 2011 the Court's determination that the Voluntary Program Act is constitutional and Council's ratification of the Ordinance. Approval of the Transfer Agreement is also based on the same understanding that it will be effective only after the Stay is lifted, the Court's determination in the lawsuit and, ratification by the Town. Town staff previously represented to the Council and Agency that after the California Supreme Court issues its ruling in the pending lawsuit, staff will present a thorough analysis of whether the Town should consider participation in the Voluntary Program Act or alternatively, dissolve the Redevelopment Agency. Staff still plans on bringing the matter forward in early 2012 after the Court decision. In the meantime, adoption of the Ordinance and approval of the Agreement on a conditional basis will allow the Town to keep all of its options available without taking a potential risk of incurring higher annual payments if the Town ultimately decides to participate in the Voluntary Program Act. CONCLUSION: It is recommended that the Town Council introduce the attached Ordinance (Attachment 1) to conditionally elect and implement the provisions of the Voluntary Program Act and conditionally adopt the attached resolution (Attachment 2) and further, that the Agency Board conditionally adopt the attached resolution (Attachment 3) to approve the Agency Payment Transfer Agreement (Attachment 4). ENVIRONMENTAL ASSESSMENT: Is not a project defined under CEQA, and no further action is required. FISCAL IMPACT: Approval of the recommended actions will ensure the continuation of the full range of options for the Town and Redevelopment Agency until such time as the Court rules on the pending litigation. The Department of Finance (the "DOF") has indicated that the community remittance payment due from the Town for the current fiscal year (Fiscal Year 2011-12) in order for the Town and the Agency to participate in the Voluntary Program is approximately $2.5 million dollars. The DOF has indicated that the community remittance payment due from the Town in Fiscal Year 2012-13 is estimated to be $600,000. This amount, and the payment amounts for succeeding fiscal years, will be a function, in part, of future changes in tax increment revenue allocated to the Agency, and cannot be predicted with certainty at this time. PAGE 5 MAYOR AND TOWN COUNCIL SUBJECT: REDEVELOPMENT AGENCY CONDITIONAL OPT -IN AND AGENCY TRANSFER PAYMENT AGREEMENT August 30, 2011 Attachments: Attachment 1: Ordinance of the Town of Los Gatos to Elect and Implement Participation by the Town of Los Gatos and the Town of Los Gatos Redevelopment Agency in the Alternative Voluntary Redevelopment Program Pursuant to Part 1.9 of the California Community Redevelopment Law Attachment 2: Resolution of the Town of Los Gatos Approving and Authorizing Execution of the Agency Transfer Payment Agreement with the Redevelopment Agency of Los Gatos Attachment 3: Resolution of the Redevelopment Agency of the Town of Los Gatos Approving and Authorizing Execution of the Agency Transfer Payment Agreement with the Town of Los Gatos Attachment 4: Agency Transfer Payment Agreement THIS PAGE INTENTIONALLY LEFT BLANK ORDINANCE NO. AN ORDINANCE OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS ENACTED PURSUANT TO HEALTH AND SAFETY CODE SECTION 34193 TO CONDITIONALLY ELECT AND IMPLEMENT PARTICIPATION BY THE TOWN OF LOS GATOS AND THE TOWN OF LOS GATOS REDEVELOPMENT AGENCY IN THE ALTERNATIVE VOLUNTARY REDEVELOPMENT PROGRAM PURSUANT TO PART 1.9 OF THE CALIFORNIA COMMUNITY REDEVELOPMENT LAW THE TOWN COUNCIL OF THE TOWN OF LOS GATOS ORDAINS AS FOLLOWS: SECTION 1. RECITALS AND BACKGROUND INFORMATION a. Pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.; the "Redevelopment Law"), the Town Council (the "Council") of the Town of Los Gatos (the "Town") adopted Ordinance No. 1806 on December 4, 1989 declaring the need for the Town of Los Gatos Redevelopment Agency (the "Agency") to function in the Town. b. Also in accordance with the Redevelopment Law, the Town Council adopted Ordinance No. 1882 on November 25, 1991 adopting the Redevelopment Plan for the Central Los Gatos Redevelopment Project (the "Redevelopment Plan"), and the Agency is responsible for implementing the Redevelopment Plan pursuant to the Redevelopment Law. c. ABx1 26 (the "Dissolution Act") and ABx1 27 (the "Voluntary Program Act"; and together with the Dissolution Act, the "Redevelopment Restructuring Acts") have been enacted to significantly modify the Redevelopment Law generally as follows: 1. The Dissolution Act immediately suspends all new redevelopment activities and incurrence of indebtedness, and dissolves redevelopment agencies effective October 1, 2011; and 2. The Voluntary Program Act, through the addition of Part 1.9 to the Redevelopment Law (the "Alternative Voluntary Redevelopment Program"), allows a redevelopment agency to avoid dissolution under the Dissolution Act by opting into an alternative voluntary redevelopment program requiring specified annual contributions to local • school and special districts. d. Specifically, Section 34193(a) of the Redevelopment Law (as added to the Redevelopment Law by the Voluntary Program Act) authorizes the Council to enact an ordinance to comply with Part 1.9 of the Redevelopment Law, thereby exempting the Agency from the provisions of the Dissolution Act, and enabling the Agency to continue to exist and function under the Redevelopment Law, so long as the Town and the Agency comply with the Alternative Voluntary Redevelopment Program set forth in Part 1.9 of the Redevelopment Law. 1 ATTACHMENT 1 e. Through the adoption and enactment of this Ordinance, it is the intent of the Council to enact the ordinance described in Section 34193(a) of the Redevelopment Law and to participate for itself and on behalf of the Agency in the Alternative Voluntary Redevelopment Program set forth in Part 1.9 of the Redevelopment Law. f. Pursuant to Section 34193.2(b) of the Redevelopment Law, the Council understands that participation in the Alternative Voluntary Redevelopment Program requires remittance of certain payments as set forth in the Voluntary Program Act (as further described below), and also constitutes an agreement on the part of the Town, in the event the Town fails to make such remittance payments, to assign its rights -to any payments owed by the Agency, including, but not limited to, payments from loan agreements, to the State of California. g. The Council does not intend, by enactment of this Ordinance, to waive any rights of appeal regarding the amount of any remittance payments established by the California Department of Finance, as provided in the Voluntary Program Act. . h. On August 11, 2011, the California Supreme Court agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Voluntary Program Act. i. Accordingly, the Town Council intends to adopt this Ordinance understanding that it will be effective only upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional and Council's ratification of the Ordinance. SECTION 2. ENACTMENT OF ORDINANCE PURSUANT TO REDEVELOPMENT LAW SECTION 34193(a) To the extent required by law to maintain the existence and powers of the Agency under the Redevelopment Law (including the Redevelopment Restructuring Acts), the Council hereby enacts the ordinance authorized by Section 34193(a) of the Redevelopment Law, whereby the Town, on behalf of itself and the Agency, elects to and will comply with the provisions of Part 1.9 of the Redevelopment Law, including the making of the community remittance payments called for in Section 34194 of the Redevelopment Law (the "Remittance Payments"), and whereby the Agency will no longer be subject to dissolution or the other prohibitions and limitations of Parts 1.8 and 1.85 of the Redevelopment Law as added by the Dissolution Act. SECTION 3. ADDITIONAL UNDERSTANDINGS AND INTENT It is the understanding and intent of the Council that the Town will enter into an agreement with the Agency as authorized pursuant to Section 34194.2 of the Redevelopment Law, whereby the Agency will transfer annual portions of its tax increment to the Town in amounts not to exceed the annual Remittance Payments (the "Agency Transfer Payments") to enable the Town, directly or indirectly, to make the annual Remittance Payments. Unless otherwise specified by resolution of the Council, it is the Council's intent that the Town's annual Remittance Payments shall be 2 made exclusively from the Agency Transfer Payments or from other funds that become available as a result of the Town's receipt of the Agency Transfer Payments. The Council does not intend, by enactment of this Ordinance, to pledge any of its general fund revenues or other assets to make the Remittance Payments, it being understood by the Council that any Remittance Payments will be funded solely from the Agency Transfer Payments and/or other assets transferred to the Town in accordance with the Voluntary Program Act. SECTION 4. CEQA The 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. The appropriate environmental review shall be completed in accordance with CEQA prior to the commencement of any future Agency - supported project or program. SECTION 5. SEVERABILITY If any section, subsection, sentence, clause or phrase of this ordinance is for any reason held to be unconstitutional and invalid, such decision shall not affect the validity of the remaining portion of this Ordinance. The Council hereby declares that it would have passed this Ordinance and every section, subsection, sentence, clause or phrase thereof, irrespective of the fact that any one or more sections, subsections, clauses or phrases be declared unconstitutional or invalid. SECTION 7. ENACTMENT AND EFFECTIVE DATES This Ordinance is deemed enacted as of September 6, 2011 for purposes of Section 34193(a) of the Redevelopment Law, and shall take effect and will be enforced thirty (30) days after its adoption, conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional, subject to ratification by Council. SECTION 8. PUBLICATION AND POSTING The Town Clerk is directed to post and/or publish this Ordinance (or summary thereof) as required by law. 3 The foregoing Ordinance was duly introduced at a regular meeting of the Town Council held on the September 6, 2011, and finally adopted at a regular meeting of the Town Council held on the day of , 2011, by the following votes to wit: TOWN OF LOS GATOS: AYES: NOES: ABSTAIN: ABSENT: ATTEST: Town of Los Gatos, Clerk Administrator MAYOR OF THE TOWN OF LOS GATOS 4 RESOLUTION NO. RESOLUTION OF THE TOWN COUNCIL OF THE TOWN OF LOS GATOS CONDITIONALLY APPROVING AND AUTHORIZING THE EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS PURSUANT TO PART 1.9 OF THE REDEVELOPMENT LAW WHEREAS, pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.; the "Redevelopment Law"), the Town Council (the "Town Council") of the Town of Los Gatos (the "Town") adopted in accordance with the Redevelopment Law, Ordinance No. 1882 on November 25, 1991 adopting the Redevelopment Plan For the Central Los Gatos Redevelopment Project (the "Redevelopment Plan"); and WHEREAS, the Redevelopment Agency of the Town of Los Gatos (the "Agency") is responsible for implementing the Redevelopment Plan pursuant to the Redevelopment Law; and WHEREAS, ABX1 27 (the "Voluntary Program Act") through the addition of Part 1.9 to the Redevelopment Law ("Part 1.9"), establishes a voluntary alternative redevelopment program whereby the Agency is authorized to continue to exist upon the enactment of an ordinance by the Town to comply with Part 1.9, including payment of an annual remittance to the County -Auditor Controller (the "Continuation Ordinance"); and WHEREAS, on August 11, 2011, the California Supreme Court (the "Court") agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Voluntary Program Act; and WHEREAS, the Town has enacted the Continuation Ordinance prior to consideration of this Resolution , conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional; and WHEREAS, Section 34194.2 of the California Redevelopment Law authorizes the Agency to enter into an agreement with the Town whereby the Agency agrees to transfer a portion of its tax increment to the Town, in an amount equal to the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law to the County Auditor -Controller; and WIIEREAS, for reasons further set forth in the staff report accompanying this Resolution (the "Staff Report"), the Town and the Agency desire to enter into an agreement, whereby the Agency will transfer to the Town sufficient funds to make the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law, and the Town will make the annual remittances to the County Auditor -Controller in satisfaction of the requirements under Chapter 3 of Part 1.9 of the Redevelopment Law (the "Agency Transfer Payment Agreement"); and 1 ATTACHMENT 2 WHEREAS, as fully set forth in the Agency Transfer Payment Agreement, the Agency Transfer Payment Agreement will be immediately binding upon the parties, but the operation of its terms will be conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional and ratification by the Town; and WHEREAS, under Title 14 of the California Code of Regulations, Section 15378(b)(4) the approval of the Agency Transfer Payment Agreement 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 and does not commit funds to any specific project or program; and WHEREAS, the Town Council has reviewed and duly considered the Staff Report, documents and other written evidence presented at the meeting. NOW, THEREFORE, BE IT RESOLVED, that the Town Council finds that the above Recitals are true and correct and have served, together with the supporting documents, as the basis for the findings and approvals set forth below. BE IT FURTHER RESOLVED, that the Town Council finds, under Title 14 of the California Code of Regulations, Section 15378(b)(4), that this resolution 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 and does not commit funds to any specific project or program. BE IT FURTHER RESOLVED, that the Town Council hereby approves the Agency Transfer Payment Agreement and authorizes the Town Manager or the Town Manager's designee to execute on behalf of the Town the Agency Transfer Payment Agreement, substantially in the form on file with the Town Clerk and the Agency Secretary and with such revisions thereto as may be approved by the Town Attorney. BE IT FURTHER RESOLVED, that the Town Council authorizes the Town Manager or the Town Manager's designee to take such other actions and execute such other documents as are appropriate to effectuate the intent of this Resolution and to implement the Agency Transfer Payment Agreement on behalf of the Town. BE IT FURTHER RESOLVED, that this Resolution shall take immediate effect upon adoption. 2 The above and foregoing resolution was duly and regularly passed and adopted at a regular meeting by the Redevelopment Agency of the Town of Los Gatos on the day of - September, 2011 by the following vote: TOWN COUNCIL MEMBERS: AYES: NOES: ABSENT: ABSTAIN: SIGNED: MAYOR TOWN OF LOS GATOS, CALIFORNIA ATTEST: CLERK ADMINISTRATOR TOWN OF LOS GATOS, CALIFORNIA 3 THIS PAGE INTENTIONALLY LEFT BLANK RESOLUTION NO. RESOLUTION OF THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS CONDITIONALLY APPROVING AND AUTHORIZING THE EXECUTION OF THE AGENCY TRANSFER PAYMENT AGREEMENT WITH THE TOWN OF LOS GATOS PURSUANT TO PART 1.9 OF THE REDEVELOPMENT LAW WHEREAS, pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.; the "Redevelopment Law"), the Town Council (the "Council") of the Town of Los Gatos (the "Town") adopted in accordance with the Redevelopment Law, Ordinance No. 1882 on November 25, 1991 adopting the Redevelopment Plan for the Central Los Gatos Redevelopment Project (the "Redevelopment Plan"); and WHEREAS, the Redevelopment Agency of the Town of Los Gatos (the "Agency") is responsible for implementing the Redevelopment Plan pursuant to the Redevelopment Law; and WHEREAS, ABX1 27 (the "Voluntary Program Act") through the addition of Part 1.9 to the Redevelopment Law ("Part 1.9"), establishes a voluntary alternative redevelopment program whereby the Agency is authorized to continue to exist upon the enactment of an ordinance by the Town to comply with Part 1.9, including payment of an annual remittance to the County -Auditor Controller (the "Continuation Ordinance"); and WHEREAS, on August 11, 2011, the California Supreme Court (the "Court") agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Voluntary Program Act; and WHEREAS, the Town has enacted the Continuation Ordinance prior to consideration of this Resolution , conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional and Council's ratification thereafter; .and WHEREAS, Section 34194.2 of the California Redevelopment Law authorizes the Agency to enter into an agreement with the Town whereby the Agency agrees to transfer a portion of its tax increment to the Town, in an amount equal to the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law to the County Auditor -Controller; and WHEREAS, for reasons further set forth in the staff report accompanying this Resolution (the "Staff Report"), the Town and the Agency desire to enter into an agreement, whereby the Agency will transfer to the Town sufficient funds to make the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law, and the Town will make the annual remittances to the County Auditor -Controller in satisfaction of the requirements under Chapter 3 of Part 1.9 of the Redevelopment Law (the "Agency Transfer Payment Agreement"); and 1 ATTACHMENT 3 WHEREAS, as fully set forth in the Agency Transfer Payment Agreement, the Agency Transfer Payment Agreement will be immediately binding upon the parties, but the operation of its terms will be conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional; and WHEREAS, under Title 14 of the California Code of Regulations, Section 15378(b)(4) the approval of the Agency Transfer Payment Agreement 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 and does not commit funds to any specific project or program; and WHEREAS, the Agency Board has reviewed and duly considered the Staff Report, documents and other written evidence presented at the meeting. NOW; THEREFORE, BE IT RESOLVED, that the Agency Board finds that the above Recitals are true and correct and have served, together with the supporting documents, as the basis for the findings and approvals set forth below. BE IT FURTHER RESOLVED, that the Agency Board finds, under Title 14 of the California Code of Regulations, Section 15378(b)(4), that this resolution 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 and does not commit funds to any specific project or program. BE IT FURTHER RESOLVED, that the Agency Board hereby approves the Agency Transfer Payment Agreement and authorizes the Agency Executive Director or the Executive Director's designee to execute on behalf of the Agency the Agency Transfer Payment Agreement, substantially in the form on file with the Town Clerk and the Agency Secretary and with such revisions thereto as may be_ approved by the Agency Counsel. BE IT FURTHER RESOLVED, that the Agency Board authorizes the Agency's Executive Director or the Executive Director's designee to take such other actions and execute such other documents as are appropriate to effectuate the intent of this Resolution and to implement the Agency Transfer Payment Agreement on behalf of the Agency. BE IT FURTHER RESOLVED, that this Resolution shall take immediate effect upon adoption. 2 The above and foregoing resolution was duly and regularly passed and adopted at a regular meeting by the Redevelopment Agency of the Town of Los Gatos on the day of September, 2011 by the following vote: REDEVELOPMENT AGENCY MEMBERS: AYES: NOES: ABSENT: ABSTAIN: SIGNED: CHAIR OF THE REDEVELOPMENT AGENCY TOWN OF LOS GATOS, CALIFORNIA ATTEST: SECRETARY OF THE REDEVELOPMENT AGENCY TOWN OF LOS GATOS, CALIFORNIA 3 THIS PAGE INTENTIONALLY LEFT R1,ANK AGENCY TRANSFER PAYMENT AGREEMENT This Agency Transfer Payment Agreement (the "Agreement"), is entered into as of the day of , 2011, by and between Redevelopment Agency of the Town of Los Gatos, a public body, corporate and politic (the "Agency") and the Town of Los Gatos, a municipal corporation, (the "Town") with reference to the following facts, understandings and intentions of the parties: RECITALS A. Pursuant to the California Community Redevelopment Law (Health and Safety Code Section 33000 et seq.; the "Redevelopment Law"), the Town Council (the "Town Council") of the Town adopted Ordinance No. 1806 on December 4, 1989 declaring the need for the Agency to function in the Town. B. Also in accordance with the Redevelopment Law, the Town Council adopted Ordinance No. 1882 on November 25, 1991 adopting the Redevelopment Plan for the Central Los Gatos Redevelopment Project (the "Redevelopment Plan"), and the Agency is responsible for implementing the Redevelopment Plan pursuant to the Redevelopment Law. C. ABx1 26 (the "Dissolution Act") and ABx1 27 (the "Voluntary Program Act"; and together with the Dissolution Act, the "Redevelopment Restructuring Acts") have been enacted to significantly modify the Redevelopment Law generally as follows: 1. The Dissolution Act immediately suspends all new redevelopment activities and incurrence of indebtedness, and dissolves redevelopment agencies effective October 1, 2011; and 2. The Voluntary Program Act, through the addition of Part 1.9 to the Redevelopment Law (the "Voluntary Alternative Redevelopment Program"), allows a redevelopment agency to avoid dissolution under the Dissolution Act by opting into a voluntary alternative redevelopment program requiring specified annual contributions to local school and special districts. D. Specifically, Section 34193(a) of the Redevelopment Law (as added to the Redevelopment Law by the Voluntary Program Act) authorizes the Town Council to enact an ordinance to comply with Part 1.9 of the Redevelopment Law, thereby exempting the Agency from the provisions of the Dissolution Act, and enabling the Agency to continue to exist and function under the Redevelopment Law, so long as the Town and the Agency comply with the Voluntary Alternative Redevelopment Program set forth in Part 1.9 of the Redevelopment Law. E. On August 11, 2011, the California Supreme Court (the "Court") agreed to review the California Redevelopment Association and League of California Cities' petition challenging the constitutionality of the Redevelopment Restructuring Acts and issued an order granting a partial stay on specified portions of the Redevelopment Restructuring Acts, as modified on August 17, 2011 (the "Stay"), including a stay of the provisions of the Voluntary Program Act. 1 ATTACHMENT 4 F. Through the adoption and enactment of Ordinance No. (the "Continuation Ordinance"), the Town Council, pursuant to Section 34193(a) of the Redevelopment Law, has elected to participate for itself and on behalf of the Agency in the Voluntary Alternative Redevelopment Program set forth in Part 1.9 of the Redevelopment Law, conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional. G. Pursuant to Sections 34193.2(b) and 34195(b) of the Redevelopment Law, the Town Council understands that participation in the Voluntary Alternative Redevelopment Program requires remittance of certain payments as set forth in Chapter 3 of Part 1.9 of the Redevelopment Law, and also constitutes an agreement on the part of the Town, in the event the Town fails to make such remittance payments, to assign to the State of California its rights to any payments owed by the Agency, including, but not limited to, payments from loan agreements and this Agreement. H. Pursuant to Section 34194.2 of the Redevelopment Law, the Town and Agency have elected to enter into this Agreement, whereby the Agency agrees to transfer a portion of the Agency's tax increment to the Town, in an amount equal to the annual remittance required under Chapter 3 of Part 1.9 of the Redevelopment Law, for purposes of financing activities.within the redevelopment area that are related to accomplishing the redevelopment agency project goals. I. Pursuant to Section 34194.1 of the Redevelopment Law, the Town may use any available funds not otherwise obligated for other uses to make the remittances to the County Auditor -Controller required pursuant Chapter 3 of Part 1.9 of the Redevelopment Law. J. The purpose of this Agreement is to provide for the transfer of tax increment and other funds from the Agency to the Town in the amounts required to make each of the annual remittances mandated under Chapter 3 of Part 1.9 of the Redevelopment Law, K. The obligations of the Agency under this Agreement constitute an indebtedness of the Agency with respect to the redevelopment project for the Plan within the meaning of Section 16 of Article XVI of the California Constitution. L. The Town Council does not intend, by execution of this Agreement, to waive any rights of appeal regarding the amount of any remittance payments established by the California Department of Finance, as provided in the Voluntary Program Act. M. Under Title 14 of the California Code of Regulations, Section 15378(b)(4) this Agreement 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, and does not commit funds to any specific project or program. N. The parties intend that, while this Agreement will be binding upon the parties as of the date set forth in the opening paragraph, the operation of the terms of this Agreement will 2 be conditioned upon the lifting of the Stay and the Court's determination that the Voluntary Program Act is constitutional. NOW, THEREFORE, in consideration of the recitals hereof and the mutual promises and covenants set forth in this Agreement, the Agency and the Town agree as follows: ARTICLE 1. OBLIGATIONS OF THE PARTIES 1.1 General Purpose. To the extent required by law to maintain the existence and powers of the Agency under the Redevelopment Law, and conditioned as further provided in Section 2.9, the Town and the Agency hereby enter into this Agreement whereby the Agency agrees to transfer a portion of its tax increment to the Town, in an amount equal to the annual remittances required under Chapter 3 of Part 1.9 of the Redevelopment Law, for the purpose of financing activities within the redevelopment area that are related to accomplishing the Agency's project goals for the Project Area. 1.2 Transfers to Town. The Agency shall transfer to the Town, in a timely manner, funds from sources described in Section 1.3, in an amount equal to the annual remittances required under Chapter 3 of Part 1.9 of the Redevelopment Law, as such may be adjusted (the "Agency Transfer Payments"). 1.3 Source of Agency Transfer Payments. Any combination of the following shall constitute eligible sources for the Agency Transfer Payments: a. Any tax increment funds allocated to the Agency pursuant to Section 33670 of the Redevelopment Law net of existing debt service payments and existing third -party contractual obligations, and excluding: (1) amounts required to be allocated to the Low and Moderate Income Housing Fund, pursuant to Sections 33334.2, 33334.3, and 33334.6 of the Redevelopment Law; and (2) any funds on deposit in the Agency's Low and Moderate Income Housing Fund; b; Any other funds previously or subsequently made available to the Town by the Agency, including any unencumbered funds previously pledged to the Town by the Agency under an agreement for payment of public improvements and other redevelopment activities; c. Notwithstanding anything to the contrary, for the 2011-2012 fiscal year alone, any portion of the amount of tax increment required to be allocated to the Low and Moderate Income Housing Fund, pursuant to Sections 33334.2, 33334.3, and 33334.6 of the Redevelopment Law for the 2011-2012 fiscal year, to the extent the Agency makes the finding that there are insufficient other funds to meet its debt and other obligations, current priority program needs, or its obligations to provide the Agency Transfer Payments under this Agreement. 1,4 Payment of Remittances by Town. Subject to the receipt of sufficient Agency Transfer Payments pursuant to Section 1.2 above, the Town shall remit to the County Auditor - Controller the payments required pursuant to Chapter 3 of Part 1.9 of the Redevelopment Law on or before the dates prescribed in Section 34194(d)(1). The Town's obligations to make the remittances required hereunder shall be a special limited obligation of the Town payable solely from the Agency Transfer Payments provided to the Town pursuant to the terms of this Agreement, and such remittances shall be made exclusively from the Agency Transfer Payments or from other funds that become available as a result of the Town's receipt of the Agency Transfer Payments. Nothing in this Agreement shall be deemed to be a pledge of the Town's general fund revenues or other assets for the purposes of funding the remittances required by Chapter 3 of Part 1.9 of the Redevelopment Law. 1.5 Subordination. The Town shall consider in good faith any request by the Agency to subordinate the Town's interest herein and to allow the Agency to pledge all or any portion of the tax increment revenue on a senior pledge basis to secure payments due on future indebtedness pledged with tax increment. ARTICLE 2. GENERAL PROVISIONS 2.1 No Third Party Beneficiaries. No person or entity other than the Agency and the Town and their permitted successors and assigns, shall have any right of action under this Agreement. 2.2 State Law. This Agreement, and the rights and obligations of the parties hereto, shall be construed and enforced in accordance with the laws of the State of California. 2.3 Additional Acts. The parties each agree to take such other and additional actions and execute and deliver such other and additional documents as may be reasonably requested by the other party for purposes of implementing the actions contemplated under this Agreement. 2.4 Litigation Regarding Agreement Validity. In the event litigation is initiated attacking the validity of this Agreement, each party shall in good faith defend and seek to uphold the Agreement. 2.5 Severability. If any provisions of this Agreement, or the application thereof to any person, party, transaction, or circumstance, is held invalid, the remainder of this Agreement, or the application of such provision to other persons, parties, transactions, or circumstances, shall not be affected thereby. 2.6 Entire Agreement; Modification and Amendment. This Agreement contains all of the agreements and understandings of the parties pertaining to the subject matter contained herein and supersedes all prior or contemporaneous agreements,. representations and understandings of the parties. This Agreement cannot be amended or modified except by written agreement of the parties. 2.7 Binding Upon Successors. This Agreement shall be binding upon and inure to the benefit of the heirs, administrators, executors, successors in interest and assigns of each of the 4 parties to this Agreement, whether by agreement or operation of law, and including, without limitation, any successor to the Agency. Any reference in this Agreement to a specifically named party shall be deemed to apply to any successor, heir, administrator, executor or assign of such party who has acquired an interest in compliance with the terms of this Agreement, or under law. • 2.8 Time of the Essence. Time is of the essence in the performance of all duties and obligations under this Agreement. 2.9 Binding Effect; Operation of Agreement. This Agreement shall be binding upon the parties as of the date set forth in the opening paragraph of this Agreement. The operation of the terms of this Agreement shall be conditioned upon the lifting of the Stay and 'the Court's determination that the Voluntary Program Act is constitutional. [Signature Page Follows] 5 IN WITNESS WHEREOF, this Agreement has been executed as of the date set forth in the opening paragraph of this Agreement. APPROVED AS TO FORM: Judith J. Propp, Agency Counsel ATTEST: REDEVELOPMENT'AGENCY OF THE TOWN OF LOS GATOS By: Name: GREG LARSON' Executive Director Mazarin Vakharia, Agency Secretary TOWN OF LOS GATOS By: APPROVED AS TO FORM: Judith J. Propp, Town Attorney ATTEST: Name: GREG LARSON Town Manager Mazarin Vakharia Town Clerk Administrator 6