Exhibit CC 02-15-2011 Iten No. 18 Loan and Repayment Agreement REVISED "
�• ADMINISTRATIVE SERVICES DEPARTMENT
CITY HALL
10300 TORRE AVENUE • CUPERTINO, CA 95014 -3255
TELEPHONE: (408) 777-3227 www.cupertino.org
CUPERTINO
CITY COUNCIL/REDEVELOPMENT AGENCY STAFF REPORT
Meeting: February 15, 2011
Subject
Loan and Repayment Agreement between the City of Cupertino and the City of Cupertino
Redevelopment Agency
Recommended Action
A. Redevelopment Agency action - Adopt Resolution No. 11 -01
B. City Council action - Adopt Resolution No. 11 -023
Description
Adopt corresponding resolutions authorizing the City and Agency to enter into the Agreement.
Discussion
In order to receive property taxes, State law requires that the Cupertino Redevelopment Agency
(RDA) file an annual report showing the obligatons of the RDA. RDA obligations consists of
City advance funding of RDA expenditures, low and moderate income housing fund
contributions, State payments, property taxes passed- through to local jurisdictions, and tax
reassessments due back to taxpayers. The RDA can pay back the City after the property taxes
are received.
The RDA finances the Vallco project area's public improvements and administrative programs
described in the redevelopment implementation plan. The implementation plan includes public
infrastructure improvements such as construction and installation of street modifications, access
1 ramps, drainage facilities, and-street trees, and trash capture devices in the Vallco project area.
Vallco Shopping Mall or the City has not been able to move forward with the construction of
these improvements due mainly to the economic recession. These infrastructure improvements
are within the Cupertino Redevelopment Agency boundaries and meet redevelopment law
criteria regarding funding of public infrastructure. In order to provide a potential catalyst to
development in the Redevelopment area, the City and RDA could finance the public
improvements at the Mall with the RDA reimbursing the City for any advancement of funds.
improvements by Fcbruary-1-17-20-1-1.
REVISED
The City General Fund will advance X000 $713,000 toward public infrastructure
improvements in 2010 -11 with the RDA reimbursing the General Fund once the taxes are
received this fiscal year. The RDA has a $350,000 tax roll reassessment obligation which the
General Fund can carry until the RDA receives and pays back the tax by next year. Lastly, RDA
has $252,000 in 2010 -11 administrative costs (including contract and legal costs) that the
General Fund is fronting and which the RDA will reimburse with taxes later this year. The total
I of these is $1,252,000 $1,315,000.
To formally document the arrangement, staff recommends that the Redevelopment Agency and
the City execute a Loan and Repayment Agreement. Redevelopment counsel recommended this
routine procedure to support annual reporting requirements.
Fiscal Impact
1 Executing the Agreement allows the RDA to receive $1,252,000 $1,315,000 in property taxes in
fiscal year 2010 -11. The City General Fund currently budgeted $500,000 for RDA advances, but
can increase the advance to $1,252,000 $1,315,000 using undesignated reserves. It is anticipated
that the Agency will pay back the advances after the taxes are received.
Prepared by: David Woo, Finance Director
Reviewed by: Aarti Shrivastava, Director of Community Development
Approved for Submission by: David W. Knapp, City Manager and RDA Executive Director
Attachments: Redevelopment Agency Resolution
City Council Resolution
Loan and Repayment Agreement
REVISED
LOAN AND REPAYMENT AGREEMENT
The following is a Loan and Repayment Agreement, dated February 15, 2011, by and
between the City of Cupertino (the "City ") and the City of Cupertino Redevelopment Agency
(the "Agency ").
WITNESSETH
A. WHEREAS, the City and the Agency caused the adoption of the Redevelopment Plan for
the Cupertino Vallco Redevelopment Project (the "Redevelopment Plan"); and
B. WHEREAS, the Agency is vested with the responsibility for formulating and carrying
out necessary redevelopment projects within the City and implementing the
Redevelopment Plan; and
C. WHEREAS, the parties desire to contract for the City to provide staff services to the
Agency and to construct improvements of benefit to the redevelopment program under
specified circumstances, subject to reimbursement by the Agency as provided in this
Agreement; and
D. WHEREAS, the City and the Agency are each ready and willing to assume the
relationship described herein.
NOW, THEREFORE, BE IT RESOLVED that the City and the Agency, for and in
consideration of the mutual promises and agreements herein contained do agree as follows:
1. PURPOSES
The purposes of this Agreement are:
a. To establish a mechanism for reimbursement of specified future administrative costs
incurred by the City in furtherance of the redevelopment program for the Cupertino Vallco
Redevelopment Project Area (the "Project Area "), as more fully set forth in Section 3.
b. To provide a mechanism for reimbursement of specified future public works
improvement costs or other costs related to implementing the Redevelopment Plan incurred by
the City in furtherance of the redevelopment program for the Project Area or related to tax roll
actions by the County, as more fully set forth in Section 4.
2. TERM OF AGREEMENT
This Agreement shall be in full force and effect for a period beginning as of the date first
above written and continuing until all repayment and reimbursement obligations of the Agency
to the City are satisfied in full in accordance with the terms of this Agreement.
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REVISED
3. REIMBURSEMENT OF CITY ADMINISTRATIVE COSTS
The Agency agrees to reimburse the City for all administrative costs incurred by the City
in furtherance of the redevelopment program for the Project Area (the "Administrative Costs ").
Such Administrative Costs may include, but are not limited to, costs to the City for consulting
services, legal services, City staff time and other related administrative expenses. The City and
Agency shall, at the end of each fiscal year, set forth in a schedule to be attached to this
Agreement as Exhibit A the amount of such Administrative Costs incurred by the City for the
applicable fiscal year. The Agency shall thereupon become indebted to reimburse the City for
such Administrative Costs. This debt shall bear no interest, and shall be repayable as provided in
Section 5.
4. REIMBURSEMENT TO CITY FOR PUBLIC IMPROVEMENTS AND OTHER COSTS
The City may incur costs for public improvements in the Project Area on behalf of the
Agency. In addition, the City may incur costs for other activities related to implementation of
the Redevelopment Plan or related to tax roll actions by the County. These costs shall become a
debt of the Agency and shall be set forth in an Exhibit B, which shall be attached to this
Agreement and made a part hereof as if fully set forth herein. These costs shall bear no interest,
and shall be repayable as provided in Section 5. Such Exhibit B shall specify the date from
which the Agency's reimbursement obligation to the City shall begin to bear interest.
5. REPAYMENT TERMS; SUBORDINATION
Each repayment or reimbursement obligation of the Agency pursuant to this Agreement
shall be repayable solely from tax increment funds, if any, generated within the Project Area. It
is understood that if tax increment funds from the Project Area fail to yield sufficient revenue to
pay the repayment or reimbursement obligations of the Agency under this Agreement, the
Agency is under no obligation to make such repayment or reimbursement to the extent tax
increment funds are insufficient.
It is agreed by the parties hereto that all repayments and reimbursements to the City
pursuant to this Agreement are hereby subordinated to any and all payments necessary to satisfy
existing debt of the Agency and to any and all payments necessary to satisfy the Agency's
obligations in connection with any existing or future bonded indebtedness or obligation which
may be incurred by the Agency for the benefit of the redevelopment program or to the extent
necessary for any bonded indebtedness for which the Agency has pledged as a security or source
of repayment tax increment generated within the Project Area.
6. VALIDITY OF AGREEMENT
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.
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REVISED
CITY OF CUPERTINO CITY OF CUPERTINO
REDEVELOPMENT AGENCY
By: B
Chairperson City Manager
City of Cupertino City of Cupertino
Redevelopment Agency
Approved as to form:
By:
City Attorney
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REVISED
EXHIBIT A
TO LOAN AND REPAYMENT AGREEMENT
BETWEEN CITY OF CUPERTINO AND
CITY OF CUPERTINO REDEVELOPMENT AGENCY:
LOAN FOR ADMINISTRATIVE COSTS
Fiscal Year Loan Proceeds Interest Due Payments Made Loan Balance
2010/11 252,000 - - 252,000
EXHIBIT B
TO LOAN AND REPAYMENT AGREEMENT
BETWEEN CITY OF CUPERTINO AND
CITY OF CUPERTINO REDEVELOPMENT AGENCY:
LOAN FOR PUBLIC IMPROVEMENTS AND OTHER COSTS
Fiscal Year Loan Proceeds Purpose Interest Due Payments Made Loan Balance
650,000 Public 650000
2010/11 713,000 Improvements - - 713,000
Tax roll
2010/11 350,000 reassessment 350,000
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