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Item 4 - CONSIDERATION OF ADOPTION OF ORDINANCES REPEALING FORMER REDEVELOPMENT AGENCY'S SALES TAX ORDINANCE AND RELATED SECTION 21-32 OF THE WEST COVINA MUNICIPAL CODEAGENDA ITEM NO. 4 AGENDA STAFF REPORT City of West Covina I Office of the City Manager DATE: November 1, 2022 TO: Mayor and City Council FROM: David Carmany City Manager SUBJECT: CONSIDERATION OF ADOPTION OF ORDINANCES REPEALING FORMER REDEVELOPMENT AGENCY'S SALES TAX ORDINANCE AND RELATED SECTION 21-32 OF THE WEST COVINA MUNICIPAL CODE RECOMMENDATION: 1. It is recommended that the City Council, acting as the Successor Agency to the former West Covina Redevelopment Agency, adopt the following ordinance: ORDINANCE NO. 2504 - AN ORDINANCE OF THE SUCCESSOR AGENCY TO THE FORMER WEST COVINA REDEVELOPMENT AGENCY REPEALING ORDINANCE NO. 1 REGARDING SALES AND USE TAXES 2. It is recommended that the City Council adopt the following ordinance: ORDINANCE NO. 2505 - AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, REPEALING SECTION 21-32 (CREDIT FOR TAXES DUE TO REDEVELOPMENT AGENCY OF THE CITY OF WEST COVINA) OF ARTICLE II (SALES AND USE TAX) OF CHAPTER 21 (TAXATION) OF THE WEST COVINA MUNICIPAL CODE BACKGROUND: In 1989, the former Redevelopment Agency of the City West Covina took a number of actions related to the formation of the West Covina Fashion Plaza Community Facilities District ("CFD"). Those actions included establishing the CFD, determining the necessity to incur bonded indebtedness within the CFD, authorizing the levy of a special tax within the CFD and enacting Ordinance No. 1, a sales and use tax ordinance that allowed the Agency to receive sales tax generated from the expansion of the Fashion Plaza project. At the same time, the City enacted an ordinance (Ordinance No. 1818) providing a credit for its sales tax in the amount equal to the sales tax due to the Redevelopment Agency. Ordinance No. 1818 added Section 21-32 to the West Covina Municipal Code. This sales tax ordinance and related agreements between the City and the Agency essentially transferred the sales tax increment due to the Fashion Plaza expansion from the City to the Agency. After these actions, the former Redevelopment Agency issued bonds to facilitate the Fashion Plaza expansion in 1990 that were secured by property tax increments, the special tax and sales tax. These bonds were refunded in 1996. The pledge of sales tax increment revenue as security for the bonds remain in place until the bonds are retired. On October 18, 2022, the West Covina City Council, acting as the Successor Agency to the former West Covina Redevelopment Agency, by a 5-0 vote, introduced for first reading Ordinance No. 2504 repealing Ordinance No. 1 regarding sales and use taxes, and the City Council, by a 5-0 vote, introduced for first reading Ordinance No. 2505 repealing Section 21-32 of Chapter 21 of the West Covina Municipal Code. DISCUSSION: The refunding bonds matured in September 2022. Now that the sales tax from the Fashion Plaza expansion is no longer pledged to any debt, Ordinance No. 1 and Section 21-32 of the West Covina Municipal Code may be repealed. Once the ordinances are effective and the State Board of Equalization is notified, the sales tax will be reallocated to the General Fund. The proposed ordinances (Attachment No. 1 and Attachment No. 2) are provided for second reading and adoption. Staff recommends that the City Council, acting as the Successor Agency to the former West Covina Redevelopment Agency, conduct the second reading and adopt Ordinance No. 2504 and that the City Council conduct the second reading and adopt Ordinance No. 2505. The ordinances will take effect on the 31 st day following adoption, which is on or about December 2, 2022. LEGAL REVIEW: The City Attorney's Office has reviewed the ordinances and approved them as to form. Prepared by: Stephanie Sikkema, Finance Director Fiscal Impact FISCAL IMPACT: Based on prior year actuals, approximately $950,000 of average annual sales tax generated from the Fashion Plaza expansion will be allocated back to the City's General Fund. Attachments Attachment No. 1 - Ordinance No. 2504 Attachment No. 2 - Ordinance No. 2505 CITY COUNCIL GOALS & OBJECTIVES: Achieve Fiscal Sustainability and Financial Stability ATTACHMENT NO. 1 ORDINANCE NO. 2504 AN ORDINANCE OF THE SUCCESSOR AGENCY TO THE FORMER WEST COVINA REDEVELOPMENT AGENCY REPEALING ORDINANCE NO.1 REGARDING SALES AND USE TAXES WHEREAS, on July 10, 1989, the former West Covina Redevelopment Agency ("Former Agency") adopted Ordinance No. 1, enacting a sales and use tax within the Fashion Plaza Redevelopment Project area (the "Sales and Use Tax Ordinance"); and WHEREAS, pursuant to ABX 1 26, enacted on June 28, 2011, and as subsequently amended by AB 1484, SB 341, and SB 107 ("Dissolution Act"), the Former Agency was dissolved as of February 1, 2012, and the City of West Covina elected to serve as the Successor Agency to the Former Agency; and WHEREAS, the Successor Agency has no obligations the payment of which is secured by a pledge of sales and use taxes levied pursuant to the Sales and Use Tax Ordinance, and the Successor Agency does not need any of such sales and use taxes to pay any of its obligations. and WHEREAS, the Successor Agency now desires to repeal Ordinance No. 1 in its entirety; WHEREAS, all legal prerequisites prior to the adoption of this Ordinance have occurred. NOW, THEREFORE, THE SUCCESSOR AGENCY TO THE FORMER WEST COVINA REDEVELOPMENT AGENCY DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Recitals. The Successor Agency finds that all of the recitals set forth herein are true and correct. SECTION 2. Repeal of Sales and Use Tax Ordinance. The Successor Agency hereby repeals Ordinance No. 1 in its entirety. SECTION 3. Environmental Compliance. Pursuant to the provisions of the California Environmental Quality Act ("CEQA") (California Public Resources Code Sections 21000 et seq.) and State CEQA Guidelines (Sections 15000 et seq.), the Successor Agency finds that this Ordinance is not a "project" and further, that it can be seen with certainty that there is no possibility that the Ordinance may have a significant effect on the environment, either directly or indirectly, and that therefore no environmental review under the CEQA is required, pursuant to CEQA Guidelines Section 15061(b)(3). SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The Successor Agency hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. SECTION 5. Effective Date. This Ordinance shall take effect thirty (30) days after its final passage. SECTION 6. Certification. The Secretary shall certify to the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner required by law. PASSED, APPROVED AND ADOPTED this 1st day of November, 2022. Dario Castellanos Chair APPROVED AS TO FORM ATTEST Thomas P. Duarte Counsel Lisa Sherrick Secretary I, LISA SHERRICK, Secretary to the Successor Agency to the former West Covina Redevelopment Agency, do hereby certify that the foregoing Ordinance No. 2504 was introduced at a regular meeting of the Successor Agency held on the 18th day of October, 2022, and adopted at a regular meeting of the Successor Agency on the 1 st day of November, 2022 by the following vote of the Successor Agency: AYES: NOES: ABSENT: ABSTAIN: Lisa Sherrick Secretary ATTACHMENT NO. 2 ORDINANCE NO. 2505 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA, REPEALING SECTION 21-32 (CREDIT FOR TAXES DUE TO REDEVELOPMENT AGENCY OF THE CITY OF WEST COVINA) OF ARTICLE II (SALES AND USE TAX) OF CHAPTER 21 (TAXATION) OF THE WEST COVINA MUNICIPAL CODE WHEREAS, in 1989, the former West Covina Redevelopment Agency took several actions related to the formation of the West Covina Fashion Plaza Community Facilities District ("CFD"), including establishing the CFD, determining the necessity to incur bonded indebtedness within the CFD, authorizing the levy of a special tax within the CFD and adopting an ordinance that allowed the Redevelopment Agency to receive sales tax generated from the expansion of the Fashion Plaza project; and WHEREAS, on July 10, 1989, the City Council adopted Ordinance No. 1818, adding a new Section 21-32 to Article II of Chapter 21 of the West Covina Municipal Code; and WHEREAS, Section 21-32 provides for a credit against the sales and use taxes due to the City in an amount equal to the amount of sales and use taxes due to the Redevelopment Agency pursuant to Section 7202.6 of the California Revenue and Taxation Code; and WHEREAS, Section 21-32 also provides that in the event the Redevelopment Agency issues obligations secured in whole or in part by taxes levied pursuant to Section 7202.6 of the California Revenue and Taxation Code, the City shall not revoke the credit in whole or in part, nor shall it reduce its sales and use tax rate, so long as such obligations are outstanding; and WHEREAS, in 1990, the former Redevelopment Agency issued bonds to facilitate the Fashion Plaza expansion. The bonds were secured by an annual special tax levy, incremental property taxes, and incremental sales taxes generated within the CFD; and WHEREAS, the bonds were refunded in 1996; and WHEREAS, the refunding bonds matured in September 2022; and WHEREAS, since the sales and use taxes generated from the Fashion Plaza expansion are no longer pledged to any debt, the City Council may repeal Section 21-32; and WHEREAS, the City Council now desires to repeal Section 21-32 in its entirety; and WHEREAS, all legal prerequisites prior to the adoption of this Ordinance have occurred. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF WEST COVINA, CALIFORNIA DOES HEREBY ORDAIN AS FOLLOWS: SECTION 1. Recitals. The City Council finds that all of the recitals set forth herein are true and correct. SECTION 2. Repeal of Section 21-32. The City Council hereby repeals Section 21-32 (Credit for Taxes Due to Redevelopment Agency of the City of West Covina) of Article 11 (Sales and Use Tax) of Chapter 21 (Taxation) of the West Covina Municipal Code in its entirety. SECTION 3. Environmental Compliance. Pursuant to the provisions of the California Environmental Quality Act ("CEQA") (California Public Resources Code Sections 21000 et seq.) and State CEQA Guidelines (Sections 15000 et seq.), the City Council finds that this Ordinance is not a "project" and further, that it can be seen with certainty that there is no possibility that the Ordinance may have a significant effect on the environment, either directly or indirectly, and that therefore no environmental review under the CEQA is required, pursuant to CEQA Guidelines Section 15061(b)(3). SECTION 4. Severability. If any section, subsection, sentence, clause, phrase, or portion of this Ordinance is for any reason held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, such decision shall not affect the validity of the remaining portions of this Ordinance. The City Council of the City of West Covina hereby declares that it would have adopted this Ordinance and each section, subsection, sentence, clause, phrase, or portion thereof, irrespective of the fact that any one or more sections, subsections, sentences, clauses, phrases, or portions be declared invalid or unconstitutional. SECTION 5. Effective Date. This Ordinance shall take effect thirty (30) days after its final passage. SECTION 6. Certification. The City Clerk shall certify to the passage and adoption of this Ordinance and shall cause the same to be published or posted in the manner required by law. PASSED, APPROVED AND ADOPTED this 1 st day of November, 2022. Dario Castellanos Mayor APPROVED AS TO FORM ATTEST Thomas P. Duarte City Attorney Lisa Sherrick Assistant City Clerk I, LISA SHERRICK, Assistant City Clerk of the City of West Covina, California, do hereby certify that the foregoing Ordinance No. 2505 was introduced at a regular meeting of the City Council held on the 18th day of October, 2022, and adopted at a regular meeting of the City Council on the 1st day of November, 2022 by the following vote of the City Council: AYES: NOES: ABSENT: ABSTAIN: Lisa Sherrick Assistant City Clerk