HomeMy WebLinkAbout2011-08-23; City Council; 20666; ORDINANCE VOLUNTARY REDEVELOPMENT PROGRAMCITY OF CARLSBAD AND
HOUSING AND REDEVELOPMENT COMMISSION
AGENDA BILL
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AB#20.666
MTG. 8/23/11
DEPT.CA
An Ordinance Authorizing Participation
in the Alternative Voluntary
Redevelopment Program and a
Remittance Agreement Between the
Carlsbad Redevelopment Agency and
the City of Carlsbad
DEPT. DIRECTOR
CITY ATTORNEY
CITY MANAGER r ___
RECOMMENDED ACTION:
Introduce Ordinance No. r.R-isfi authorizing the City to participate in the alternative
voluntary redevelopment program subject to certain conditions and reservations; and approving
a remittance agreement to transfer a portion of the Redevelopment Agency's tax increment to
the City in an amount sufficient for the City to make the state required remittances to the
county, and authorizing the City Manager and Agency Executive Director to execute said
agreement.
ITEM EXPLANATION:
The State Legislature passed two related redevelopment bills on June 15, 2011, AB 26 and 27
which have been signed by the Governor and made effective June 29, 2011. The purpose of
these bills is to (1) dissolve redevelopment agencies and (2) provide for a "voluntary" alternative
redevelopment program, whereby a redevelopment agency will be exempted from the
legislation that dissolves redevelopment agencies if the City Council enacts an ordinance
before November 1, 2011 to comply with the new legislation and the City makes payments to
the county as required by the new legislation.
The City Council in its closed session of July 12, 2011 authorized the City Attorney to initiate
litigation challenging the constitutionality of the bills. The City Attorney will likely join in the
California Redevelopment Association/California League of Cities lawsuit challenging the
provisions of the redevelopment bills on the grounds that they violate the State Constitution and
other laws. On August 11, 2011, the California Supreme Court issued a stay of portions of AB
26 and AB 27. This means that the voluntary payments do not need to be made at this time.
Under that stay, the state is ordered to show cause why the stay should not be permanent and
these laws do not go into effect since they are alleged to be unconstitutional. The Ordinance
does not become operative until the Supreme Court stay is dissolved and the matter is finally
ruled upon. The court intends to issue a decision before January 12, 2012. A copy of the stay
is attached as Exhibit C. However, to maximize the City's options and allow its Redevelopment
Agency to continue operating while the legality of the legislation is being litigated, staff is
recommending that the City Council adopt the ordinance attached as Exhibit A, operative only if
the stay is dissolved and the matter is ruled upon, committing to comply and make the
payments required by the legislation. The legislation states that adoption of such an ordinance
DEPARTMENT CONTACT: Ron Ball 760-434-2891 ron.ball@carlsbadca.gov
FOR CITY CLERKS USE ONLY.
COUNCIL ACTION: APPROVED
DENIED
CONTINUED
WITHDRAWN
AMENDED
Dnnn
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CONTINUED TO DATE SPECIFIC
CONTINUED TO DATE UNKNOWN
RETURNED TO STAFF
OTHER -SEE MINUTES
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0 Introduced
Ord. CS-156
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and payment of the remittances (the first of which would be due on January 15, 2012) exempts
the Redevelopment Agency from the bill that purports to dissolve the redevelopment agencies.
The ordinance would limit the City's commitment to make these payments to net tax increment
funds and other funds or assets that the Agency transfers to the City for this purpose. The
City's General Fund will not be pledged to make these payments.
The attached ordinance further reserves all rights to challenge the validity of the legislation and
it also reserves the right of the City Council to repeal the ordinance at any time in the future, in
the City's sole discretion.
Second, staff also recommends that the City and the Agency enter into a "remittance
agreement" as contemplated by the legislation, by which the Agency would commit to transfer
sufficient funds to the City to make the required payments. Such an agreement would be
necessary for the Agency to transfer funds to the City to comply with the legislation. We have
prepared the attached proposed Remittance Agreement for this purpose, attached as Exhibit B.
FISCAL IMPACT:
The Carlsbad Redevelopment Agency currently receives approximately $3.5 million per year in
gross tax increment. The anticipated required redevelopment payment is estimated to be $1.4
million in 2011-12, and $350,000 in 2012-2013. At this time, staff is unable to estimate the fiscal
impact in future years. Non-housing tax increment funds will be made available by the Carlsbad
Redevelopment Agency to the City of Carlsbad in order to make the required payments. There
will be no impact on the City's General Fund.
ENVIRONMENTAL IMPACT:
The proposed action is not subject to review under the California Environmental Quality Act
(CEQA) per State CEQA Guidelines Section 15061 as it can be seen with certainty that there is
no possibility that the activity in question may have a significant effect on the environment.
EXHIBITS:
A. Ordinance No. CS-156
B. Remittance Agreement
C. California Supreme Court Stay
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8 as Part 1.9 of the California Health and Safety Code ("Part 1.9"); and
9 WHEREAS, AB 27, with the concurrent enactment of Assembly Bill x1 26
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ORDINANCE NO. cs-156
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF
CARLSBAD, CALIFORNIA, AUTHORIZING THE CITY OF
CARLSBAD TO PARTICIPATE IN THE ALTERNATIVE
VOLUNTARY REDEVELOPMENT PROGRAM, SUBJECT TO
CERTAIN CONDITIONS AND RESERVATIONS
WHEREAS, Assembly Bill x1 27 ("AB 27") has been enacted and is codified
("AB 26"), establishes a voluntary alternative redevelopment program whereby the
Carlsbad Redevelopment Agency ("Agency") would be authorized to continue to
exist upon the enactment of an ordinance by the City to comply with the provisions
of Part 1.9; and
WHEREAS, AB 27 requires the City to notify the County Auditor-
Controller ("County"), the State Controller, and the State Department of Finance
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on or before November 1, 2011, that the City will comply with Part 1.9; and
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WHEREAS, AB 27 requires the City to make specified remittances to the
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County in order to continue the existence of the Agency, as prescribed in Part 1.9;
and
WHEREAS, AB 27 authorizes the City to enter into an agreement with the
Agency, whereby the Agency would transfer a portion of its tax increment to the
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City for the purpose of financing certain activities within the City's redevelopment
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areas, as specified in Part 1.9; and
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WHEREAS, AB 27 imposes specified sanctions on the City in the event
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Director of Finance; and
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2 exceed the reasonable costs to the County auditor-controller to implement the
3 provisions of Part 1.9; and
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WHEREAS, AB 27 authorizes the City to establish a new redevelopment
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agency if its former agency has been dissolved pursuant to SB 15 only after the6
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10 California League of Cities and the California Redevelopment Association have
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respectively opined that certain or all provisions of AB 26 and AB 27 violate the
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State Constitution and other laws (collectively, "Laws"); and
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WHEREAS, the City Council does not intend, by enactment of this14
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WHEREAS, AB 27 authorizes the County to charge a fee that does not
debt obligations of the Agency have been retired and the City satisfies the
provisions of Part 1.9; and
WHEREAS, it is hereby acknowledged by the City Council that the
Ordinance, to waive any constitutional and/or legal rights by virtue of the
enactment of this Ordinance and, therefore, reserves all of its rights under Laws to
challenge the validity of any or all provisions of AB 26 and AB 27 in any
1 ft administrative or judicial proceeding and/or repeal this ordinance, without
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prejudice to the City's right to recover any amounts remitted under Part 1.9; and
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WHEREAS, the City Council does not intend, by enactment of this
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Ordinance, to pledge any of its general fund revenues or other assets, to make the
remittance payments contemplated by Part 1.9, it being understood by the City
Council that any remittance payments will be funded solely from Agency funds
and/or assets transferred to the City in accordance with Part 1.9;
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WHEREAS, the City Council does not intend, by enactment of this
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Ordinance to waive any rights of appeal regarding the amount of any remittance
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established by the Department of Finance, as provided in Part 1.9.
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NOW, THEREFORE, the City Council of the City of Carlsbad, California
does o
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2 does ordain as follows:
SECTION 1. Authorization to Continue Agency. Subject to Sections 3 and
4, herein, the City hereby commits to comply with and make the remittances
required by Part 1.9, and authorize the continuation of the Agency after enactment
of AB 27. Any remittance payments required to be paid by the City by Part 1.9
shall be paid solely from Agency funds and/or assets transferred to the City in
6 accordance with Part 1.9.
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SECTION 2. Application. If any provisions of this Ordinance or the
application thereof is held to be invalid for any reason, the remainder of this
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Ordinance and the application of provisions thereof shall not be affected thereby.
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SECTION 3. Reservation of Rights. It is the position of the City that certain
or all provisions of AB 26 and AB 27 violate the Laws, as referenced in the recitals,
above, and are invalid and unenforceable. Neither the adoption of this Ordinance,
nor the acknowledgment of or references to any provisions of AB 26 and AB 27,
nor the City's payment of any remittances contemplated by AB 27 shall be
deemed to be, nor are they intended as, an acknowledgment of the validity of AB
26 and AB 27, and the City reserves all rights in its sole discretion to challenge the
validity of any or all provisions of AB 26 and AB 27 in any administrative or judicial
proceeding and/or repeal this ordinance, without prejudice to the City's right to
recover any amounts remitted under Part 1.9.
SECTION 4. Enactment. This Ordinance shall only be deemed as "enacted"
within the meaning of Part 1.9 upon (i) adoption of this Ordinance and (ii) the legally
effective date of AB 26 and AB 27.
1R SECTION 5. Authorization of Implementing Actions. The City Manager is
19 hereby authorized to take any actions necessary to implement this Ordinance and
comply with Part 1.9, including without limitation, providing required notices to the
20 Auditor Controller, the State Controller, and the Department of Finance; entering into
any agreements with the Agency to make the remittance payments; or making any
21 remittance payments.
22 EFFECTIVE DATE: This ordinance shall be effective thirty days after its
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adoption; and the City Clerk shall certify the adoption of this ordinance and cause it
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to be published at least once in a newspaper of general circulation in the City of
Carlsbad within fifteen days after its adoption.
OPERATIVE DATE: The California Supreme Court has stayed portions of
AB 26 and AB 27 and this Ordinance shall not become operative until the California
1 Supreme Court dissolves the stay, determines that all of the provisions of AB 26 and AB
2 27 are lawful and confirmed in writing by the General Counsel of the Carlsbad
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Redevelopment Agency.
4 INTRODUCED AND FIRST READ at a Joint Special Meeting of the Carlsbad
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City Council and Housing and Redevelopment Commission on the day
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of , 2011, and thereafter.
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PASSED AND ADOPTED at a regular meeting of the City Council of the City of
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Carlsbad on the day of 2011, by the following vote, to wit:
10 AYES:
11 NOES:
12 ABSENT:
13 ABSTAIN:
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APPROVED AS TO FORM AND LEGALITY
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18 RONALD R. BALL, City Attorney
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MATT HALL, Mayor
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23 ATTEST:
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26 LORRAINE M. WOOD, City Clerk
27 (SEAL)
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If
REMITTANCE AGREEMENT
PURSUANT TO
CALIFORNIA HEALTH AND SAFETY CODE SECTION 34194.2
THIS REMITTANCE AGREEMENT (this "Agreement") is entered into this day
of , 2011, by and between the CITY OF CARLSBAD, a municipal corporation (the
"City") and the CARLSBAD REDEVELOPMENT AGENCY, a public body, corporate and
politic (the "Agency"), with reference to the following facts:
A. Assembly Bill No. XI 27 and Senate Bill XI 15 ("AB 27/SB 15") was passed by the
State Legislature on June 15, 2011 and signed by the Governor on June , 2011.
B. Upon enactment, AB 27/SB 15 is to be codified as Part 1.9 of the California Health and
Safety Code, commencing with Section 34192 ("Part 1.9").
C. AB 27/SB 15 establishes a voluntary alternative redevelopment program whereby the
City may choose to continue redevelopment pursuant to Part 1.9, upon the enactment of an
ordinance by the City to comply with the provisions of Part 1.9 and make certain remittances
described in Health and Safety Code Section 34194 to the county auditor-controller.
D. The City Council of the City of Carlsbad (the "City Council") has adopted or,
concurrently with this Agreement, is adopting, an ordinance to comply with Part 1.9 (the
"Ordinance").
E. Pursuant to the Part 1.9 Ordinance, the City Council has committed to comply with and
make the remittances required by Part 1.9 and authorize the continuation of the Agency after
enactment of AB 27/SB 15.
F. Pursuant to Section 34194.1, in making remittances to the county auditor-controller
pursuant to Section 34194 or 34194.5, the City may use any available funds not otherwise
obligated for other uses.
G. Pursuant to Section 34194.2, the City may enter into an agreement with the Agency,
whereby the Agency will transfer a portion of its tax increment to the City, in an amount not to
exceed the annual remittance required that year pursuant to Chapter 3 of Part 1.9, for the purpose
of financing activities within the redevelopment area that are related to accomplishing the
redevelopment agency project goals.
H. The purpose of this Agreement is to provide for the transfer of funds by the
Agency to the City in an amount sufficient for the City to make the remittances required by Part
1.9., with net available tax increment in this current fiscal year and forthcoming fiscal years.
I. The term "Net Available Tax Increment" is defined as any tax increment funds allocated
to the Agency, net of existing debt service payments and existing third-party contractual
obligations, not including any funds on deposit in the Agency's Low and Moderate Income
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Housing Fund, and also not including any portion of tax increment funds to be allocated to the
Low and Moderate Income Housing Fund pursuant to Health and Safety Code Section 33334.2,
33334.4 and 33334.6 for the 2011-12 fiscal year only, to the extent the Agency makes a finding
that there are insufficient other moneys to meet its debt and other obligations, current priority
program needs or its obligation to transfer funds to the City under Section 34194.2 as provided in
this Agreement.
J. The obligations of the Agency under this Agreement shall constitute an indebtedness of
the Agency for the purpose of carrying out the redevelopment plan for each of the Agency's
redevelopment project areas.
NOW, THEREFORE, the parties hereto do mutually agree as follows:
I. INTRODUCTORY PROVISIONS
The recitals above are an integral part of this Agreement and set forth the intentions of
the parties and the premises on which the parties have decided to enter into this Agreement.
II. OBLIGATIONS OF THE PARTIES
1. The Agency shall transfer to the City in a timely manner Net Tax Increment or
other funds in an amount sufficient for the City to make the remittance payments required by
Part 1.9. The amounts to be transferred to the City shall be sufficient for the City to pay the
remittance amount determined by the State Director of Finance pursuant to Part 1.9, subject to
the City's right to appeal the amount of remittance to the director pursuant to Part 1.9.
2. Subject to receipt of sufficient Net Tax Increment or other funds from the
Agency, the City shall timely remit to the county auditor-controller the payments required by
Part 1.9 as provided in the Ordinance. The City's obligation to make such remittances shall be a
special limited obligation of the City payable solely from Net Available Tax Increment or any
other funds made available to the City by the Agency, including but not limited to amounts
previously or subsequently pledged to the City for payment of redevelopment expenses that
remain unencumbered. Nothing contained in this Agreement shall be deemed to be a pledge of
the City's general fund revenues or other assets to make the remittance payments contemplated
by Part 1.9, it being understood that the any remittance payments shall be funded solely from
Agency funds and/or assets.
3. The obligations of Agency under this Agreement shall be payable out of Net
Available Tax Increment, as defined in the above recitals and/or as defined or provided for in
any applicable constitutional provision, statute or other provision of law now existing or adopted
in the future, levied by or for the benefit of taxing agencies in the Agency's redevelopment
project area(s), and allocated to the Agency and/or any lawful successor entity of the Agency
and/or any entity established by law to carry out the redevelopment plan for the redevelopment
project area(s) and/or expend tax increment or pay indebtedness of the Agency to be repaid with
tax increment, pursuant to Health and Safety Code Section 33670 or any applicable
constitutional provision, statute or other provision of law now existing or adopted in the future.
In the event that additional funds are required in order to make the Agency payments to the City
required by this Agreement, the Agency shall make such payments from income received by the
Agency from its projects and programs or any other additional funds available to it.
III. LIABILITY AND INDEMNIFICATION
In contemplation of the provisions of California Government Code section 895.2
imposing certain tort liability jointly upon public entities solely by reason of such entities being
parties to an agreement as defined by Government Code section 895, the parties hereto, as
between themselves, pursuant to the authorization contained in Government Code sections 895.4
and 895.6, shall each assume the full liability imposed upon it, or any of its officers, agents or
employees, by law for injury caused by negligent or wrongful acts or omissions occurring in the
performance of this Agreement to the same extent that such liability would be imposed in the
absence of Government Code section 895.2. To achieve the above-stated purpose, each party
indemnifies, defends and holds harmless the other party for any liability, losses, cost or expenses
that may be incurred by such other party solely by reason of Government Code section 895.2.
IV. ENTIRE AGREEMENT; WAIVERS; AND AMENDMENTS
1. This Agreement shall be executed in duplicate originals, each of which is deemed
to be an original. This Agreement consists of five (5) pages which constitute the entire
understanding and agreement of the parties.
2. This Agreement integrates all of the terms and conditions mentioned herein or
incidental hereto, and supersedes all negotiations or previous agreements between the parties
with respect to the subject matter of this Agreement.
3. This Agreement is intended solely for the benefit of the City and the Agency.
Notwithstanding any reference in this Agreement to persons or entities other than the City and
the Agency, there shall be no third party beneficiaries under this Agreement.
4. Any waiver or amendment of the provisions of this Agreement must be in writing
and signed by the authorized representatives of the parties.
V. SEVERABILITY
If any term, provisions, covenant or condition of this Agreement is held by a court of
competent jurisdiction to be invalid, void or unenforceable, the remainder of the provisions shall
continue in full force and effect unless the rights and obligations of the parties have been
materially altered or abridged by such invalidation, voiding or unenforceability.
VI. BINDING ON SUCCESSORS
This Agreement shall be binding on and shall inure to the benefit of all successors and
assigns of the parties, whether by agreement or operation of law. This Agreement shall survive
any full or partial merger of the City and the Agency and shall remain in effect and be fully
enforceable according to its terms.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first
set forth above.
CITY OF CARLSBAD
By:
City Manager
Attest:
By:
[Name, Title]
Approved as to form:
City Attorney
By:
Ronald Ball
CARLSBAD REDEVELOPMENT AGENCY
By:
Executive Director
Attest:
By:
[Name, Title]
Approved as to form:
Agency General Counsel
By:_
Ronald Ball
Approved as to form:
KANE, BALLMER & BERKMAN
Agency Special Counsel
By:
Attachment 1
Stay Issued (August 11, 2011)
California Supreme Court
The request for a stay of chapter 5, Statutes 2011, First
Extraordinary Session (Assembly Bill No. 26 XI) is granted,
except that the request to stay Division 24, Part 1.8 of
the Health and Safety Code (Health & Saf. Code, Sees.
34161-34167) is denied. The request for a stay of chapter
6, Statutes 2011, First Extraordinary Session (Assembly
Bill No. 27 XI) is granted. Ana Matosantos, Director of the
California Department of Finance, John Chiang, Controller
of the State of California, and Patrick O'Connell, Auditor-
Controller of the County of Alameda, are ORDERED TO SHOW
CAUSE before this court, when the above matter is called on
calendar, why the relief sought by petitioners should not
be granted. The return is to be served and filed by
respondents on or before September 9, 2011. A reply may be
served and filed by petitioners on or before September 24,
2011. Any application to file an amicus curiae brief,
accompanied by the proposed brief, may be served and filed
on or before September 30, 2011. Any reply to an amicus
brief may be served and filed on or before October 7, 2011.
The court does not contemplate extending any time set out
above. The briefing schedule is designed to facilitate oral
argument as early as possible in 2011, and a decision
before January 15, 2012. Kennard, J., is of the opinion a
stay should not be issued. Votes: Cantil-Sakauye, C.J.,
Kennard, Baxter, Werdegar, Chin and Corrigan, JJ.
} I
VOLUNTARY PROGRAM ACTREDEVELOPMENTDebbie FountainAugust 23, 2011
Redevelopment Legislation•AB26 and AB27; effective June 29th.•Dissolve redevelopment agencies; and•Provide for “voluntary” alternative redevelopment program•Agency may participate in “voluntary” program if an Ordinance is enacted by November 1, 2011 to “Opt‐In”
Voluntary Program Ordinance•Avoid dissolution by making a substantial payment; $1.4 million for 2011‐12•Adoption of the Ordinance allows for Agency to commence with normal redevelopment activities•Payments due in January and May, 2012•General fund and other funds not at risk3
California Supreme Court •Stay issued on August 11thon portions of AB26 & 27•Voluntary payments not made until decision made by Supreme Court•State must show cause as to why the stay should not be permanent and the laws not made effective since they are alleged to be unconstitutional.4
Supreme Court & the Ordinance•Ordinance does not become operative until the Supreme Court stay is dissolved and the matter is finally ruled upon.•Court decision expected before January 12, 2012•Maximize Agency/City options & continue operations with adoption of Ordinance.5
Supreme Court Stay•Stay issued for both statutes, with exception:–No new debt incurred–No transfer of assets–No acquisition of real property–No new contracts or modifications–No new partnerships–No new redevelopment plans or amendments6
Redevelopment•State of flux•Need to continue to monitor and respond accordingly•Prepare an “Enforcement Obligations Payment Schedule”; submit by August 29th•Continue redevelopment operations with some restrictions until Court decision7
Recommendation•City Attorney to Introduce Ordinance No. CS‐156, authorizing the City to participate in the alternative voluntary redevelopment program; and approving a remittance agreement for the City to make the required payments on behalf of the Agency.8