Election to Serve as Successor Agency for Dissolving Redevelopment AgencyS OWN F MEETING DATE: 1/09/2012
ITEM NO:
i o Aioe COUNCIL /AGENCY AGENDA REPORT
DATE: January 5, 2012
TO: MAYOR AND TOWN COUNCIL /CHAIR AND MEMBERS OF THE /
REDEVELOPMENT AGENCY 9 —/
FROM: GREG LARSON, TOWN MANAGER/EXECUTIVE DIRECTOR
JUDITH PROPP, TOWN ATTORNEY /GENERAL COUNSEL
SUBJECT: CONSIDER ELECTION TO SERVE AS SUCCESSOR AGENCY D SUCCESSOR
HOUSING AGENCY FOR DISSOLVING REDEVELOPMENT AGENCY AND
ADOPTION OF A RESOLUTION AUTHORIZING THE ELECTION
RECOMMENDATION
Adopt a Resolution authorizing and electing Town of Los Gatos to serve as Successor Agency and
Successor Housing Agency for the dissolving Town of Los Gatos Redevelopment Agency.
BACKGROUND
On December 29, 2011, the California Supreme Court issued its decision in the California
Redevelopment Association v. Matosantos case, finding ABxl 26 (the "Dissolution Act ") largely
constitutional and ABlx 27 (the "Alternative Redevelopment Program Act ") unconstitutional.
The Court's bifurcated decision means that all California Redevelopment Agencies (RDA), including
the Redevelopment Agency of the Town of Los Gatos (the "Redevelopment Agency "), will be dissolved
under the constitutional Dissolution Act, and no RDAs will have the opportunity to opt into continued
existence under the unconstitutional Alternative Redevelopment Program Act. As a result, the
Redevelopment Agency will be dissolved as of February 1, 2012.
The Redevelopment Agency's non - housing funds and assets will then be turned over to a successor
agency (the "Successor Agency ") charged with the responsibility of paying off the former
Redevelopment Agency's existing debts, disposing of the former Redevelopment Agency's properties
and assets to help pay off debts and return revenues to the local government entities that receive
property taxes (the "Taxing Entities "), and winding up the affairs of the former Redevelopment Agency.
The Redevelopment Agency's affordable housing assets, other than its existing housing fund balance,
will be turned over to a successor housing agency (the "Successor Housing Agency ") to continue
performing affordable housing activities. The former Redevelopment Agency's affordable housing fund
PREPARED BY : Judith Propp, Town Attorney /General Counsel i
Reviewed by: j6j _Assistant Town Manager /Deputy Director
PAGE
MAYOR AND TOWN COUNCIL /CHAIR AND MEMBERS OF THE REDEVELOPMENT
AGENCY
SUBJECT: CONSIDER ELECTION TO SERVE AS SUCCESSOR AGENCY AND SUCCESSOR
HOUSING AGENCY FOR DISSOLVING REDEVELOPMENT AGENCY AND
ADOPTION OF A RESOLUTION AUTHORIZING THE ELECTION
January 5, 2012
balance will be used to repay existing housing fund debts and/or remitted to the County Auditor -
Controller for distribution to the Taxing Entities.
The Dissolution Act provides that the Town of Los Gatos (the "Town "), as the community that
established the Redevelopment Agency, will be the Successor Agency to the former Redevelopment
Agency unless the Town elects not to serve as the Successor Agency, in which case the first other
Taxing Entity making a proper election will be designated as the Successor Agency. If the Town elects
not to be the Successor Agency, it must adopt a resolution to that effect and notify the County Auditor -
Controller by not later than January 13, 2012. Even if it elects to be the Successor Agency, the Agency's
special redevelopment counsel recommends that a resolution to that effect and accompanying notice be
provided to the County Auditor - Controller in order to have a clear record of the Town's intention.
The Dissolution Act also authorizes the Town to elect to become the Successor Housing Agency of the
former Redevelopment Agency and to retain the housing assets (other than any existing housing fund
balance) and affordable housing functions of the former Redevelopment Agency. If the Town does not
elect to serve as the Successor Housing Agency, then the local Housing Authority (or if there is no local
Housing Authority, the California Department of Housing and Community Development) will become
the Successor Housing Agency.
DISCUSSION
The Successor Agency and the Successor Housing Agency will play key day -to -day roles in ensuring
that the existing obligations of the former Redevelopment Agency are properly paid, and that the former
Redevelopment Agency's properties and other assets are disposed of in an appropriate manner. While
the Successor Agency will be overseen by an "Oversight Board" of seven representatives selected
largely by the County and various local education districts, the staff of the Successor Agency will have a
strong role in initiating and implementing actions in a way that not only achieves the requirements of the
Dissolution Act, but also is sensitive to the long -term development and other needs of the Town and
local community, and that protects the good name of the Town in the financial markets by assuring
timely repayment of the former Redevelopment Agency's existing debts.
If the Town elects not to serve this role, the Successor Agency will be some other Taxing Entity that is
likely to have no experience in redevelopment financial and land disposition matters and that may not
necessarily take into account the interests of the Town and local community in performing its functions.
Similarly, if the Town elects not to serve as the Successor Housing Agency, then some other entity
outside the Town's control will perform various affordable housing functions in the Town using
affordable housing assets of the former Redevelopment Agency. On February 1, both the Dittos Lane
and Main Street (expanded lot 6) affordable housing properties will be transferred to the Successor
Housing Agency, whether or not that Agency is the Town, the County Housing Authority or the State
Department of Housing and Community Development.
PAGE
MAYOR AND TOWN COUNCIUCHAIR AND MEMBERS OF THE REDEVELOPMENT
AGENCY
SUBJECT: CONSIDER ELECTION TO SERVE AS SUCCESSOR AGENCY AND SUCCESSOR
HOUSING AGENCY FOR DISSOLVING REDEVELOPMENT AGENCY AND
ADOPTION OF A RESOLUTION AUTHORIZING THE ELECTION
January 5, 2012
The Dissolution Act provides that the liability of the Successor Agency is limited to the funds and assets
it receives under the Dissolution Act to perform its functions. Even if the Town takes on the role of
Successor Agency and Successor Housing Agency, the Town would not expose its General Fund to
liability to discharge the obligations of the former Redevelopment Agency (unless it was found to have
mismanaged or misappropriated the funds and assets it does receive under the Dissolution Act). It
would be important for the Town, if it becomes the Successor Agency and Successor Housing Agency,
to exercise the same care and prudence in the management and protection of the funds and assets that it
receives from the former Redevelopment Agency as the Town applies with its own funds and assets.
Subject to the approval of the Oversight Board and to specified reductions if other funds are available
for administration, the Dissolution Act permits the Successor Agency to receive an annual operating
budget to defray its administrative costs. The Town anticipates that based on the formula allowed, the
allocation for the administrative costs would be approximately $250,000 annually.
CONCLUSION
Staff recommends that Council adopt a Resolution authorizing and electing Town of Los Gatos to serve
as Successor Agency and Successor Housing Agency for the Town of Los Gatos Redevelopment
Agency which will be dissolved and cease to exist on February 1, 2012.
ENVIRONMENTAL ASSESSMENT
This action is not a project as defined under CEQA, and no further action is required.
FISCAL IMPACT
If the Town elects to serve as Successor Agency for the former Town Redevelopment Agency, then the
Town would be eligible to receive at least $250,000 to defray its administrative costs to wind -up the
obligations of the Redevelopment Agency. The Town will no longer receive either the 80% or the 20%
tax increment previously received through the Redevelopment Agency.
Attachment:
Resolution Electing to Serve as the Successor Agency and Successor Housing Agency
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INTENTIONALLY
LEFT BLANK
RESOLUTION NO.
RESOLUTION OF THE TOWN COUNCIL/REDEVELOPMENT AGENCY OF THE TOWN
OF LOS GATOS TO EXPRESS ITS INTENT TO SERVE AS THE SUCCESSOR AGENCY
OF THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS PURSUANT TO
HEALTH AND SAFETY CODE SECTION 341710) AND SECTION 34173, AND TO ELECT
TO RETAIN THE HOUSING ASSETS AND FUNCTIONS PREVIOUSLY PERFORMED BY
THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS PURSUANT TO
HEALTH AND SAFETY CODE SECTION 34176
WHEREAS, Assembly Bill 1X 26 (the "Dissolution Act ") and Assembly Bill 1X 27 (the
"Alternative Redevelopment Program Act ") were enacted on June 28, 2011, to significantly
modify the Community Redevelopment Law (Health & Safety Code §33000, et sea .; the
"Redevelopment Law "); and
WHEREAS, 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
WHEREAS, on December 29, 2011, the California Supreme Court ruled that the
Dissolution Act is largely constitutional and the Alternative Redevelopment Program Act is
unconstitutional; and
WHEREAS, the Court's decision means that all California redevelopment agencies will
dissolve on February 1, 2012 pursuant to the Dissolution Act; and
WHEREAS, the Dissolution Act provides that the community that authorized the creation
of the redevelopment agency shall be the "successor agency" to the dissolved redevelopment agency
unless the community elects not to serve as the successor agency under Section 34173(d)(1) of the
Redevelopment Law; and
WHEREAS, Section 34176(a) of the Redevelopment Law provides that the community
that authorized the creation of a redevelopment agency may elect to retain the housing assets and
functions previously performed by the former redevelopment agency; and
WHEREAS, the Town of Los Gatos (the 'Town ") intends to, and shall serve as, the
successor agency for the Redevelopment Agency of the Town of Los Gatos (the "Agency ") in
accordance with Section 3417 10) and Section 34173 of the Redevelopment Law; and
WHEREAS, the Town desires to elect to retain the housing assets and functions previously
performed by the Agency in accordance with Section 34176 of the Redevelopment Law.
NOW, THEREFORE, BE IT RESOLVED, that the Town hereby accepts the
designation, and hereby declares its intent, to serve as the successor agency for the Agency in
accordance with Section 341710) and Section 34173 of the Redevelopment Law.
BE IT FURTHER RESOLVED, the Town hereby elects to retain the housing assets and
functions previously performed by the Agency in accordance with Section 34176 of the
Redevelopment Law.
BE IT FURTHER RESOLVED, that the Town Manager or the Town Manager's
designee is hereby directed to file a copy of this resolution with the County Auditor - Controller.
BE IT FURTHER RESOLVED, that the Town Manager or the Town Manager's
designee is hereby authorized to take such additional actions, and to execute all documents
necessary and appropriate, for the Town to transfer the assets of the Agency to the Town in its
capacity as successor agency to the Agency, pursuant to Sections 34175 and 34176 of the
Redevelopment Law.
PASSED AND ADOPTED at a special meeting of the Town Council/Redevelopment
Agency of the Town of Los Gatos held on the day of January, 2012 by the following vote:
COUNCIL /AGENCY MEMBERS:
AYES:
NOES:
ABSENT:
ABSTAIN:
SIGNED:
MAYOR/CHAIR OF THE TOWN OF LOS
GATOS
LOS GATOS, CALIFORNIA
ATTEST:
CLERK ADMMSTRATOR/SECRETARY OF
THE REDEVELOPMENT AGENCY OF THE TOWN OF LOS GATOS
LOS GATOS, CALIFORNIA