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02-07-2012 - Ordinance for Adoption - Ordinance Declaring Need for Community Development Commission to Function as City Housing Authority'ti • TO: Andrew G. Pasmant, City Manager and City Council FROM: Susan Rush Assistant City Clerk City of West Covina Memorandum AGENDA ITEM NO. 4 DATE: February 7, 2012 PRINTED ON RECYCLED PAPER SUBJECT: ORDINANCE FOR ADOPTION ORDINANCE DECLARING THE NEED FOR THE COMMUNITY DEVELOPMENT COMMISSION TO FUNCTION AS THE CITY HOUSING AUTHORITY RECOMMENDATION: It is recommended that the City Council adopt the following ordinance: ORDINANCE NO. �2 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DECLARING THE NEED FOR THE COMMUNITY DEVELOPMENT COMMISSION IN THE CITY OF WEST COVINA, TO FUNCTION AS THE CITY OF WEST COVINA HOUSING AUTHORITY AND TRANSFERRING ALL DUTIES, POWERS AND RESPONSIBILITIES OF THE WEST COVINA HOUSING AUTHORITY TO THE COMMUNITY DEVELOPMENT COMMISSION . DISCUSSION: This ordinance was introduced at the Joint Council/CDC meeting of January 17, 2012. The ordinance will make it possible for the West Covina Community Development Commission to retain housing functions as the "legal housing authority for the City of West Covina and assume the duties and responsibilities as the City's Housing Authority. The ordinance will become effective 30 days after adoption on March 9, 2012. Prepared bi Margaret Garcia Approved by Susan Rush Deputy Cit Clerk Assistant City Clerk Attachment: 1. Ordinance 2. January 17, 2012 Staff Report No. # 14 • Attachment #1 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DECLARING THE NEED FOR THE COMMUNITY DEVELOPMENT COMMISSION IN THE CITY OF WEST COVINA, TO FUNCTION AS THE CITY OF WEST COVINA HOUSING AUTHORITY AND TRANSFERRING ALL DUTIES, POWERS AND RESPONSIBILITIES OF THE WEST COVINA HOUSING AUTHORITY TO THE COMMUNITY DEVELOPMENT COMMISSION WHEREAS, the City of West Covina has established as one of it's primary goals the promotion and enhancement of economic, business, and redevelopment opportunities within the City, and in furtherance of this goal it is the policy of the City of West Covina to aggressively promote development and redevelopment activities in the areas of affordable housing, community development and community enhancement, while addressing the spread of blighted areas within the City, and WHEREAS, the City of West Covina has continually promoted the sound development of areas within the City for the general welfare of the inhabitants of the community and creating employment and affordable housing opportunities for its residents, and WHEREAS, the West Covina Redevelopment Agency currently owns and may continue to acquire properties that could be developed to enhance the affordable housing opportunities within the City of West Covina, and WHEREAS, City Council of the City of West Covina desires to maintain its position as a leader amongst communities of the San Gabriel Valley and Los Angeles County in the promotion and attraction of housing development and redevelopment opportunities, and WHEREAS, Health and Safety Code Sections 34100, et seq., created Community Development Commissions within all communities in the State of California, and provides that the City Council may vest the Community Development Commission with all duties, powers, and responsibilities of the members of a housing authority may delegate to said Commission other powers regarding community development and redevelopment, and WHEREAS, the Community Development Commission provides an effective and efficient means of identifying, designing, implementing, and managing affordable housing development, community enhancement, community development and other housing development and. redevelopment efforts, goals and objectives including providing for flexibility in identifying future housing developments. NOW, THEREFORE, the City Council of the City of West Covina does hereby ordain as follows: SECTION 1. The City Council of the City of West Covina, amends City Council Ordinance No. 2109 previously adopted December 16, 2003 to expand the duties of the Community Development Commission to include the functions of the West Covina Housing Authority pursuant to the provisions of California Health and Safety Code Sections 34112 and 34115.5. SECTION 2. Pursuant to Health and Safety Code Section 34115.5, the City Council does hereby declare the need for the Community Development Commission to function with respect to the powers, duties and obligations of a housing authority and to assume the powers, duties and obligations of the City of West Covina Housing Authority. In making this finding the City Council takes this action in furtherance of the goals, objectives and policies of enhancing housing development and redevelopment opportunities and in furtherance of the housing needs and objectives of the City. SECTION 3. The City Council finds that at the present time the City of West Covina Housing Authority does not have any tenants. However, within one year of the time that the housing authority has tenants, the City Council shall appoint two additional commissioners to the Community Development Commission in accordance with California Health and Safety Code Section 34120. SECTION 4. If any part of this Ordinance, or its application to any person or circumstance, is held to be invalid; the remainder of the ordinance, including the application or provision to other persons or circumstances, shall not be affected and shall continue in full force and effect. To this end, the provisions of this ordinance are severable. SECTION 5: The proposed action is considered to be exempt from the provisions of the California Environmental Quality Act (CEQA), pursuant to Section 15061(b)(3) of the CEQA Guidelines, in that the proposed action consists of a transfer of existing governmental functions, and it can be seen with certainty that the proposed action will not have an adverse effect on the environment SECTION 6. The City Clerk shall certify to the passage of this ordinance by the City Council of the City of West Covina and cause it to be posted in three conspicuous places in the City of West Covina, and it shall take effect on the thirty-first (31) day after it is approved by the Mayor. APPROVED AND ADOPTED on this 7th day of February, 2012. Mayor Michael Touhey ATTEST: City Clerk Laurie Carrico I, LAURIE CARRICO, CITY CLERK of the City of West Covina, California, do hereby certify that the foregoing Ordinance was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the 171h day of January, 2012. That thereafter said Ordinance was duly adopted and passed at a regular meeting of the City Council on the 7`h day of February, 2012, by the following vote: AYES: NOES: ABSENT: ABSTAIN: City Clerk Laurie Carrico APPROVED AS TO FORM: City Attorney Arnold Alvarez-Glasman • • City of West Covina Memorandum AGENDA ITEM NO. 14 DATE January 17, 2012 TO: Andrew G. Pasmant, City Manager and, the City Council FROM: Christopher J. Chung Community Development Commission Director SUBJECT: DESIGNATING ; THE, COMMUNITY , DEVELOPMENT COMMISSION AS THE HOUSING SUCCESSOR AGENCY RECOMMENDATION: It is recommended that the City Council do the'following: 1. Adopt the following resolution: RESOLUTION NO. - A' RESOLUTION OF THE CITY COUNCIL OF THE CITY OF WEST tOVINA I DECLARING THE NEED, FOR A HOUSING AUTHORITY TO FUNCTION WITHIN TH E CITY OF WEST COVINA 2. Adopt the following urgency ordinance: ORDINANCE NO. - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DECLARING THE NEED FOR THE COMMUNITY DEVELOPMENT COMMISSION IN THE CITY OF WEST COVINA, TO FUNCTION AS THE CITY OF WEST COVINA HOUSING AUTHORITY AND TRANSFERRING`' 'ALL DUTIES, POWERS AND RESPONSIBILITIES OF THE WEST" COVINA HOUSING AUTHORITY TO THE COMMUNITY DEVELOPMENT COMMISSION AND DECLARING THIS ORDINANCE' TO BE AN URGENCY ORDINANCE 3. Introduce the following ordinance:' AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DECLARING `THE ` NEED "FOR THE COMMUNITY DEVELOPMENT. COMMISSION IN THE. CITY OF WEST COVINA, TO FUNCTION AS THE CITY OF WEST COVINAHOUSING AUTHORITY AND TRANSFERRING ALL DUTIES, POWERS AND RESPONSIBILITIES OF THE WEST COVINA HOUSING ` AUTHORITY: TO THE COMMUNITY DEVELOPMENT .COMMISSION 4. Adopt the "following resolution: RESOLUTION NO -.A RESOLUTION OF THE CITYCOUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, ELECTING TO TRANSFER HOUSING FUNCTIONS TO THE LOCAL HOUSING AUTHORITY PURSUANT TO PART 1.85 OF DIVISION 24 OF ° THE CALIFORNIA HEALTH AND SAFETY CODE DISCUSSION: In order to balance the State budget, the Governor 'signed several budget -related bills on June 29, 2011, including ABX1 26, which move to eliminate redevelopment agencies, and ABX1 27, which would have established ' a voluntary alternative redevelopment program whereby an, agency could continue to exist upon the enactment of an ordinance by the City to comply with the provisions of'ABX1 2T These two bills were passed as part of, the, 2011-12 state budget and work together to eliminate redevelopment agencies (ABX1 26) unless they agree to pay Ithe state $1'3 billioh' in this fiscal year and $400 million to schools and special districts in subsequent budget years (ABX1 27). Ecd1141ml Andrew G. Pasmant, City Manager and the City Council January 10, 2012 Page 2 In July 2011, California Redevelopment Agency v. Matosantos was filed in the California Supreme Court by CRA, the League of California Cities, and the cities of San Jose and Union City, challenging the constitutionality of ABX1 26 and ABX1 27. The CRA/League legal team argued these two budget bills directly violated Proposition IA (2004), Proposition 22, and Article 16 Section 16 of the California Constitution. On December 29, 2011, the California Supreme Court ruled in CRA v. Matosantos. The Court upheld ABXI 26 (the redevelopment elimination bill), but struck down ABX1 27. As a result of this court ruling, the Voluntary Alternative Redevelopment Program is no longer valid and all redevelopment agencies cease to exist as of February 1, 2012. Pursuant to ABX1 26 by February 1, 2012, all agency property and obligations would be transferred to a Successor Agency, which would continue to satisfy enforceable obligations of the former redevelopment agencies. The West Covina City Council, on January 10, 2012 adopted a Resolution to serve as the Successor Agency. The Successor Agency is charged with selling assets, repaying existing indebtedness; completing performance of existing contractual obligations, and otherwise winding down operations and preserving agency assets for the benefit of taxing agencies. The actions of the Successor Agency would be regulated by an Oversight Board. The Successor Agency is entitled to an annual administrative cost of up to five (5) percent of the property tax allocated to the Successor Agency for FY 2011-2012 and three (3) percent of the property tax each succeeding fiscal year. Under ABX1 26, the County Auditor -Controller would annually determine the amount of property tax increment that would have been allocated to an agency and deposit that amount in a Redevelopment Trust Fund. The Trust Fund would be administered by the County for the benefit of holders of former RDA debt, taxing entities that receive pass - through payments, Successor Agency to pay for enforceable obligations of the former RDA, including bonds, and to pay for administrative costs of the Successor Agency (subject to approval of the Oversight Board). Any remaining balances in the Trust Fund would be allocated to school entities and other local tax entities as property tax. Under ABX1 26, it also gives the option that the City or a local housing authority can serve as the successor housing agency of the former redevelopment agency. While the City can serve as the successor housing agency of the former redevelopment agency, the City Attorney's office is of .the opinion that program revenues may be subject to the administrative cost allowance threshold set forth under ABXI 26 and advise that a separate entity such as the Community Development Commission in its capacity as the West Covina Housing Authority serve as the successor housing agency to continue to receive the program revenues. Since the inception of the redevelopment agency in 1971, over 2,000 home improvement loans and 142 first time homebuyer loans have been issued. As many of these home loans have matured and repayment via payoff and mortgage repayment have been occurring throughout the past several years. In addition, the CDC has residual revenue sharing payments from previous housing development projects, these program revenues and residual payments may be utilized to pay for on -going administrative expense necessary to monitor and administer these loans in addition to the administrative fees referenced above. In FY 2010-2011, the CDC received. approximately $517,028 in housing program income from the existing loans and residual payments. In addition, the CDC has several housing agreements with affordability covenants, which would need to be monitored and enforced to ensure compliance with the affordability guidelines and maximum rent charged as set forth in .the various housing agreements and State requirements. Ecd1114ml Andrew G. Pasmant, City Manager and the City Council January 10, 2012 Page 3 Since the formation of the Community Development Commission in December 2003, it assumed the responsibility of the former West Covina Redevelopment Agency. However, at that time it did not assume the responsibility of becoming a "legal housing authority". Should the City Council concur with the recommendation to have the Community Development. Commission retain housing functions, the City Attorney's office is recommending adoption of said resolutions and ordinance to form the City of West Covina Housing Authority to be administered by the CDC in compliance with Community Development law and ABX1 26. ABX1 26 does not specifically indicate that the CDC, operating as the Housing Authority will be subject to the Administrative Cost Allowance limitations as opposed to the City. Due to unresolved interpretations of ABX1 26 and the pending deadline of February 1, 2012 for the dissolution of the all redevelopment agencies, an Urgency Ordinance is recommended at this time. In order to pass an Urgency Ordinance, a super majority affirmative vote of the Council is required. The introduction of a regular, non -urgency ordinance is also recommended • in case the necessity for the urgency ordinance is challenged. FISCAL IMPACT It is estimated that CDC can receive approximately $500,000 in annual program income and residual payments. v�_ Prepared by: Mike Lee Assistant CDC Director V11 [" �c ., �_,_ - Reviewed/Approved by: Christopher J. Chung CDC Director Approved via telephone Reviewed/Approved by: Arnold M. Alvarez-Glasman General ounsel to the CDC Fin e Attachments: No. 1 - A Resolution of the City Council of the City of West Covina declaring the need for a Housing Authority to function within the City of West Covina. No. 2 — An Ordinance of the City Council of the City of West Covina, California, declaring the need for the Community Development Commission in the City of West Covina, to function as the City of West Covina Housing Authority and transferring all duties, powers and responsibilities of the West Covina Housing Authority to the Community Development Commission and declaring this Ordinance to be an urgency Ordinance. No. 3 — An Ordinance of the City Council of the City of West Covina, California, declaring the need for the Community Development Commission in the City of West Covina, to function as the City of West Covina Housing Authority and transferring all duties, powers, and responsibilities of the West Covina Housing Authority to the Community Development Commission. No. 4 — A Resolution of the City Council of the City of West Covina, California, electing to transfer housing functions to the Local Housing Authority pursuant to Part 1.85 of division 24 of the California Health and Safety Code. Ecd1114ml • ATTACHMENT NO.3 ORDINANCE NO. AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, DECLARING THE NEED FOR THE COMMUNITY DEVELOPMENT COMMISSION IN THE CITY OF WEST COVINA, TO FUNCTION AS THE CITY OF 'WE ST COVINA HOUSING AUTHORITY AND TRANSFERRING ALL DUTIES, POWERS AND RESPONSIBILITIES OF THE WEST COVINA HOUSING AUTHORITY TO THE COMMUNITY DEVELOPMENT COMMISSION WHEREAS, the City of West Covinahas established as one of it's primary goals the promotion and enhancement of economic, business, and redevelopment opportunities within the City, and in furtherance of this goal it is the policy of the City of West Covina to aggressively promote development and redevelopment activities in the areas of affordable housing, community development and connnnunity enhancement, while addressing the spread of blighted areas within the City, and WHEREAS, the City of West Covina has continually promoted the sound development of areas within the City for the general welfare' of the inhabitants of the community and creating employment and affordable housing opportunities for its residents, and WHEREAS, the West Covina Redevelopment Agency currently owns and may continue to acquire properties that could be developed to enhance the affordable housing opportunities within the City of West Covina, and WHEREAS, City Council of the City of West Covina desires to maintain its position as a leader amongst communities of the San Gabriel Valley and Los Angeles County in the promotion and attraction of housing development and redevelopment opportunities, and WHEREAS, Health and Safety Code Sections 34100, et seq., . created Community Development Commissions within all communities in the State of California, and provides that the City Council may vest the Cointnunity Development Commission with all duties, powers, and responsibilities of the members of a housing authority may delegate to said Commission other powers regarding community development and redevelopment, and WHEREAS, the Community Development Commission provides an effective and efficient means of identifying, designing, implementing, and managing affordable housing development, community enhancement, community development and other housing development and redevelopment efforts, goals and objectives including providing for flexibility in identifying future housing developments. NOW, THEREFORE, the City Council of the City of West Covina does hereby ordain as follows: SECTION 1. The City Council of the City of West Covina, amends City Council Ordinance No. 2109 previously adopted December 16, 2003 to expand the duties of the Community Development Commission to include the functions of the West Covina Housing Authority pursuant to the provisions of California Health and Safety Code Sections 34112 and 34115.5. SECTION 2. Pursuant to Health and Safety Code Section 34115.5, the City Council does hereby declare the need for the Community Development Commission to function with respect to the powers, duties and obligations of a housing authority and to assume the powers, duties and obligations of the City of West Covina Housing Authority. In snaking this finding the City Council takes this action in furtherance of the goals, objectives and policies of enhancing housing development and redevelopment opportunities and in furtherance- of the housing needs and objectives of the City. SECTION 3. The City Council finds that at the present time the City of West Covina Housing Authority does not have any tenants. However, within one year of the time that the housing authority has tenants, the City Council shall appoint two additional commissioners to the Community Development Comnnission in accordance with California Health and Safety Code Section 34120. 0 SECTION 4. If any part of this Ordinance, or its application to any person or circumstance, is held to be invalid, the remainder of the ordinance, including the application or provision to other persons or circumstances, shall not be affected and shall continue in full force and effect. To this end, the provisions of this ordinance are severable. SECTION 5:. The proposed action is considered to be exempt from the provisions of the California Environmental Quality Act (CEQA), pursuant to Section 15061(b)(3) of the CEQA Guidelines, in that the proposed action consists of a transfer of existing governmental functions, and it can be seen with certainty that the proposed action will not have an adverse effect on the enviroiunent SECTION 6. The City Clerk shall certify to the passage of this ordinance by the City Council of the City of West Covina and cause it to be posted in three conspicuous places in the City of West Covina, and it shall take effect on the thirty-first (31) day after it is approved by the Mayor. APPROVED, PASSED AND ADOPTED THIS DAY OF , 2012. Mayor ATTEST: City Clerk I, LAURIE CARRICO, City Clerk of the City of West Covina, California, do hereby certify that the foregoing Ordinance No. was regularly introduced and placed upon its first reading at a regular meeting of the City Council on the _ day of , 2011. That thereafter said Ordinance was duly adopted and passed at a regular meeting of the City Council on the day of 2011 by the following vote. AYES: NOES: ABSENT: City Clerk APPROVED AS TO FORM: City Attoiney