01-18-2011 - Assembly Bill (AB)X4-26 Compliance on Supplemental - Item 6 (2).doc
DATE: January 18, 2011
TO: Andrew G. Pasmant, Executive Director
and the Community Development Commission
FROM: Thomas Bachman, Finance Department
Director
SUBJECT: ASSEMBLY BILL (AB)X4-26 COMPLIANCE ON SUPPLEMENTAL EDUCATION REVENUE AUGMENTATION FUND (SERAF) FOR FISCAL YEAR 2010-11
RECOMMENDATION:
It is recommended that the Community Development Commission Board (“CDC Board”) take the following actions:
Adopt the following resolution:
RESOLUTION NO._____ - A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF WEST COVINA, CALIFORNIA APPROVING THE USE OF LOW AND MODERATE INCOME FUNDS TO SATISFY THE SUPPLEMENTAL
EDUCATION REVENUE AUGMENTATION FUND ALLOCATION AND MAKING FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33690(c), and
2. Appropriate $1,344,269 from the Redevelopment Housing Fund.
DISCUSSION:
Assembly Bill ABX4-26 created a new “Supplemental Educational Revenue Augmentation Fund” (SERAF) and mandated California Redevelopment Agencies to pay $2.05 billion in tax increment
over the next two fiscal years - $1.7 billion in fiscal year 2009-10, and $350 million in 2010-11. Per this legislation, the West Covina Community Development Commission had to pay
$6.5 million last year and must make an additional $1,344,269 payment this year. The California Redevelopment Association (CRA) continues to be actively engaged in litigation in the
Third District Court of Appeal in order to invalidate these State takeaways. If the decision is not made prior to May, 2011, or the CRA litigation is unsuccessful, the CDC will have
to pay this year’s allocation of $1.3 million to the Los Angeles County Auditor-Controller by May 10, 2011.
Health and Safety Code Section 33690(c) allows a redevelopment agency, which makes a finding that insufficient monies are available to fund its SERAF obligation, to borrow the required
sum from its Low and Moderate Income Housing Fund. This action requires the adoption of a resolution confirming the findings. While the individual project areas do not have sufficient
funds to make the payment at this time, the Housing Fund has approximately $3 million in available funds, which could be loaned for this purpose. Amounts borrowed for 2010-11 must
be repaid by June 30, 2016.
FISCAL IMPACT:
By creating a finding, the CDC Board will allow a loan from the Low-Moderate Housing Fund in the amount of $1,344,269 to fulfill the mandatory SERAF payment. There is no requirement
to pay interest on this loan. The loan will have to be repaid no later than June 30, 2016.
___________
Prepared by: Dennis Swink Reviewed by: Christopher J. Chung
City Controller Community Development Commission Director
Reviewed/Approved by: Thomas Bachman
Finance Director
Reviewed & Approved by: Via E-Mail
General Counsel to CDC
RESOLUTION NO. ___
A RESOLUTION OF THE COMMUNITY DEVELOPMENT COMMISSION OF THE CITY OF WEST COVINA, CALIFORNIA APPROVING THE USE OF LOW AND MODERATE INCOME FUNDS TO SATISFY THE SUPPLEMENTAL EDUCATION REVENUE
AUGMENTATION FUND ALLOCATION AND MAKING FINDINGS PURSUANT TO HEALTH AND SAFETY CODE SECTION 33690(c)
WHEREAS, pursuant to California Redevelopment Law (“CRL”), at Health & Safety Code Sections 33334.2, 33334.3 and 33334.6, twenty percent (20%) of the tax increment allocated to the
Community Development Commission of the City of West Covina (“Commission”) each year from the Project Areas must be used by the Commission to increase, improve and preserve the supply
of affordable housing for the persons and families of low or moderate income (“Low-Mod Fund”);
WHEREAS, pursuant to Health & Safety Code Section 33690, during the 2010-2011 fiscal year, the Commission must deposit $1,344,269 (“Allocation Amount”) in Los Angeles County’s Supplemental
Educational Revenue Augmentation Fund (“SERAF”) prior to May 10, 2011;
WHEREAS, pursuant to Health & Safety Code 33690(c), the Commission is authorized to borrow this amount from the Low-Mod Fund during the 2010-2011 fiscal year in order to satisfy the
SERAF Allocation Amount upon the Commission’s determination that there are insufficient other monies available to Commission to satisfy the SERAF Allocation Amount;
WHEREAS, the Commission has determined that there are insufficient other monies to satisfy the SERAF Allocation Amount and the Commission desires to borrow from its Low-Moderate Fund
to satisfy the SERAF Allocation Amount and in a manner consistent with Health & Safety Code Section 33690;
WHEREAS, a loan of the amount required to be allocated to the Low-Mod Fund during the 2010-2011 fiscal year does not impair any executed Commission contracts resulting from the reduction
of the amount allocated to the Low-Mod Fund; and
WHEREAS, the Commission has further determined that borrowing from its Low-Mod Fund is exempt from review under the California Environmental Quality Act (California Public Resources
Code Section 21000 et seq.) (“CEQA”) because pursuant to State CEQA Guidelines Section 15061, it can be seen with certainty that there is no possibility that the borrowing from its
Low-Mod Fund will have any physical effect on the environment because such borrowing is merely a funding mechanism and governmental fiscal activity (Cal. Code Regs., tit. 14, § 15061,
subdivision (b)(3)).
NOW, THEREFORE, BE IT RESOLVED by the Community Development Commission of the City of West Covina as follows:
Section 1. Based upon the above recitals, the staff report accompanying this Resolution, and such other oral and written evidence as presented to the Commission, the Commission hereby
finds and determines that the borrowing of housing funds during the 2010-2011 fiscal year for the purpose of satisfying the SERAF Allocation Amount is necessary because there are insufficient
other monies to meet the requirements of Health & Safety Code Section 33690.
Section 2. The Commission hereby approves the borrowing of housing funds during the 2010-2011 fiscal year to satisfy the SERAF Allocation Amount. Such loan shall be repaid to Commission’s
Low-Moderate Fund not later than June 30, 2016.
Section 3. The Executive Director is hereby authorized and directed to undertake such actions and execute such documents that may be reasonably necessary or convenient to the carrying
out and administration of the actions authorized by this Resolution.
Section 4. The Commission Secretary shall certify to the passage and adoption of this Resolution and the same shall thereupon take effect and be in force immediately upon its adoption.
APPROVED AND ADOPTED this 18th day of January 2011
Chairman Steve Herfert
ATTEST:
Commission Secretary Laurie Carrico
I, LAURIE CARRICO, COMMISSION SECRETARY, of the City of West Covina, California, do hereby certify that the foregoing resolution was duly adopted by the Community Development Commission
of West Covina, California, at a regular meeting held thereof on the 18th day of January, 2011, by the following vote:
AYES:
NOES:
ABSENT:
ABSTAIN:
Commission Secretary Laurie Carrico
APPROVED AS TO FORM:
General Counsel Arnold Alvarez-Glasman