01-18-2011 - Assembly Bill (AB)X4-26 Compliance on Supplemental Education Revenue Augmentation Fund (SERAF) for FY 2010/2011City of West Covina
Memorandum
AGENDA
Item No.: 6
Date: January 18, 2011
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:
1. Adopt the following resolution:
RESOLUTION NO. t0 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
City Controller
Review d/ pproved by: Thomas Bachman
Finance Director
Reviewed & Approved by: Via E-Mail
General Counsel to CDC
er J. Chung
ty Development Commission
• 0
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. 149. § 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 18d' day of January2011
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