HomeMy WebLinkAboutContracts & Agreements_144-2013_CCv0001.pdf LOAN AGREEMENT
This Loan Agreement ("Agreement") is dated as of this 16th day of July, 2013, by and
between the Successor Agency to the Former Redevelopment Agency of the City of Redlands, a
public body corporate and politic ("Agency"), and the City of Redlands, a California municipal
corporation ("City"). Agency and City are sometimes individually referred to in this Agreement as
a "Party" and, together as the "Parties." This Agreement is entered into with reference to the
following recitals of fact ("Recitals") that Agency and City believe to be true, as of the Effective
Date (as hereinafter defined) of this Agreement:
RECITALS
A. Pursuant to the Community Redevelopment Law (Health and Safety Code section
33000 et seq.),the City Council of City created the Redevelopment Agency of the City of Redlands.
B. On June 28, 2011, the State of California enacted Health and Safety Code section
34161 et seq. as part of the State's enactment of Assembly Bill IX 26 ("AB IX 26"), immediately
prohibiting further redevelopment activity by redevelopment agencies and dissolving all
redevelopment agencies in the State of California on October 1, 2011.
C. On July 18, 2011, a Petition for Writ of Mandate was filed in the Supreme Court of
the State of California in the matter of California Redevelopment Association, et al. v. Ana
Matosantos, et al.,Case No. S 194861 which, among other things, challenged the constitutionality of
AB IX 26, on behalf of cities, counties and redevelopment agencies and requested a stay of
enforcement of AB IX 26, pending the Supreme Court's determination of the constitutionality of
AB IX 26.
D. On December 29, 2011, the Supreme Court issued its opinion in the above
referenced case which, among other things, upheld AB IX 26 and dissolved all redevelopment
agencies throughout the State of California, effective February 1, 2012.
E. Pursuant to Health and Safety Code section 34173(d), City elected to become the
successor agency to the dissolved Redevelopment Agency of the City of Redlands, confirmed by
Resolution No. 7089 adopted on November 1, 2011.
F. On June 27, 2012, Assembly Bill 1484 ("AB 1484") was signed by the Governor of
California which, among other things, significantly modifies AB 1X 26.
G. On July 11, 2012, Agency received a demand for payment in the amount of
52,601,269 (the "Payment") from the County of San Bernardino Auditor-Controller/Treasurer/Tax
Collector pursuant to Health and Safety Code section 34183.5(b)(2)(A), as added by AB 1484.
H. On July 12, 2012, Agency made the Payment to the County of San Bernardino
Auditor-Controller/Treasurer/Tax Collector, using the $2,535,662 balance held in its
Redevelopment Obligation Retirement Fund and a$65,607 loan from City.
1. After making the Payment, Agency no longer had any fund balance in its
Redevelopment Obligation Retirement Fund and had enforceable obligations from July through
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December 2012, as set forth in its Recognized Obligation Payment Schedule for July through
December 2012 ("ROPS") in the amount of Three Million One Hundred
Fifty Seven Thousand Four Hundred Dollars ($3,157,400).
J. Pursuant to Health and Safety Code section 34173(h), City may loan or grant funds
to Agency for administrative costs, enforceable obligations, or project-related expenses at City's
discretion.
K. City and Agency determined that it was in their respective best interests that Agency
pay the enforceable obligations, which included $2,880,794 in bond principal payments, as default
by Agency could potentially affect the creditworthiness of City and Agency.
L. Because Agency had insufficient funds to make the payments required pursuant to
the ROPS out of existing Agency funds, the City Council of City determined that City would
provide a loan to the Agency in the amount of$3,157,400 to make these payments.
M. Agency subsequently listed the loan as an enforceable obligation on its ROPS III
(January 2013 through June 2013).
N. On October 22, 2012, the State Department of Finance ("DOF") issued its
determination regarding Agency's ROPS III and identified several items that the DOF disputed as
enforceable obligations,including the loan from City to Agency in the amount of$65,607.
O. Agency subsequently participated in a "meet and confer" with the DOF to further
discuss the disputed items on Agency's ROPS 111. On December 18, 2012, and in a follow-up
contact on January 8, 2013, Agency was notified that the DOF completed its review of Agency's
ROPS 111, and that the DOF disallowed the $65,607 loan from City to Agency as an enforceable
obligation. City's loan to Agency in the amount of$3,157,400 was neither questioned by the DOF,
nor denied as an enforceable obligation as part of the DOF's review of Agency's ROPS 111.
P. On February 19, 2013, Agency submitted its ROPS 13-14A to the DOF using the
template provided by the DOF, and on April 6, 2013, the DOF issued its determination regarding
Agency's ROPS 13-14A and questioned Agency's repayment terms for City's $3,157,400 loan to
Agency.
Q During April and May of 2013, Agency participated in a "meet and confer" with the
DOF, and on May 17, 2013, the DOF issued its final determination which denied as an enforceable
obligation a significant portion of City's $3,157,400 loan to Agency.
R. Agency disputes the determinations of the DOF that City's loans to Agency are not
enforceable obligations and has determined to pursue all legal remedies available to Agency.
Agency and City have further determined it is in their respective best interests for City to loan
Agency sufficient funds to enable Agency to pay the estimated costs of Agency's pursuit of such
remedies.
S. The Parties now desire to enter into this Agreement to memorialize the terms and
conditions of City's loan to Agency for the payment of enforceable obligations, administrative
expenses, and project-related expenses of Agency.
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NOW, THEREFORE, in consideration of the mutual promises set forth in this Agreement
and other good and valuable consideration, the receipt and sufficiency of which is acknowledged by
Agency and City,the Parties agree as follows:
1. EFFECTIVE DATE.
1.1 Effective Date of Agreement. This Agreement is dated this 161h day of July, 2013,
for reference purposes only. This Agreement shall not become legally effective or binding until the
date on which all of the following are true("Effective Date"):
1.1.1 This Agreement is ratified by the Board of Agency and the City Council of
City, and executed by the authorized representatives of Agency and City, respectively;
1.1.2 This Agreement is approved by the Oversight Board of Agency; and
1.1.3 Pursuant to Health and Safety Code section 34179(h), written notice and
information about the approval of this Agreement by the Oversight Board is provided to the State of
California Department of Finance and this Agreement becomes effective five (5)business days after
notice has been provided to the State of California Department of Finance, pending a request for
review by the State of California Department of Finance.
2. LOAN.
2.1 Loan Amount. No later than 12:00 p.m. August 1, 2013, City shall loan the amount
of Seventy Five Thousand Dollars ($75,000) ("Loan Amount") from the City Water Fund 501 to the
City General Fund, as evidenced by a Promissory Note in substantially the form attached hereto as
Exhibit "A." Upon execution of a Promissory Note and transfer of the Loan Amount from the City
Water Fund 501 to the City General Fund, Agency shall execute a Promissory Note in substantially
the form attached hereto as Exhibit "B" and City shall loan the Loan Amount to Agency in
immediately available funds.
2.2 Use of Loan Amount. The Loan Amount shall be used by Agency for the sole
purpose of paying Agency's enforceable obligations, administrative expenses, and project-related
expenses as set forth in the Agency's BOPS.
2.3 Repayment of Loan Amount. Agency agrees to repay the Loan Amount pursuant
to the terms and conditions of this Agreement and the Promissory Note executed by Agency in
substantially the form attached hereto as Exhibit"B."
2.4 Enforceable Obligation. Pursuant to Health and Safety Code section 34173(h), the
Loan Amount shall be reflected on the ROP S and, upon approval of this Agreement by the
Oversight Board to the Agency, the repayment of the Loan Amount shall be deemed to be an
enforceable obligation.
3. GENERAL TERMS.
3.1 Time Is Of The Essence. Time is of the essence in the performance of the Parties'
obligations under this Agreement.
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3.2 No Third Party Beneficiaries. This Agreement is expressly declared to be for the
sole benefit of the Parties. No other person or entity not a signatory to this Agreement shall have
any rights or causes of actions against any Party to this Agreement because of that Party's entry into
this Agreement.
3.3 Assignment. City may not assign any of its rights or obligations under this
Agreement without the prior express written consent of Agency, which may be given or withheld in
Agency's sole and absolute discretion.
3.4 Failure to Strictly Enforce Not a Waiver. Failure by any Party to this Agreement
to insist upon the strict performance of any provision of this Agreement or at any one or more times
shall not be deemed to constitute a waiver of that Party's right to insist upon strict performance of
that or any other provision of this Agreement on future occasions. No alleged waiver of any right
afforded to any Party under this Agreement shall be effective unless in writing.
3.5 Attorneys' Fees. In the event that any action or proceeding is commenced by either
Agency or City against the other to interpret or enforce any provision of this Agreement, the
prevailing Party in such action or proceeding shall be entitled to recover from the non-prevailing
Party, in addition to all other relief to which the prevailing Party may be entitled, the prevailing
Party's reasonable attorneys' fees and litigation costs, including fees for use of in-house legal
counsel by a Party, as established by a court of law. Recoverable costs and fees shall include those
incurred on appeal and in the enforcement of any judgment.
3.6 Amendments and Modifications, This Agreement may be amended only by
written agreement of the Parties.
3.7 Severability. If any provision of this Agreement or the application of any such
provision to any person or circumstance is held invalid, such invalidity shall not affect other
provisions or applications of this Agreement that can be given effect without the invalid provision
or application, and to this end the provisions of this Agreement are severable.
[Signatures on Following Page]
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SIGNATURE PAGE
TO
LOAN AGREEMENT
AGENCY: CITY:
SUCCESSOR AGENCY TO THE CITY OF REDLANDS
FORMER REDEVELOPMENT AGENCY a California municipal corporation
OF THE CITY OF REDLANDS
a public body, corporate and politic
By: By:
Pete Agu ar, Chairman Pete Aguilar, Mayor
ATTEST: ATTEST:
By: By:
Sam Irwin, e etary Sam Irwin, City Clerk:
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EXHIBIT A
TO
LOAN AGREEMENT
City Promissory Note
[Attached Behind This Cover Page]
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CITY OF REDLANDS
UNSECURED PROMISSORY NOTE
FOR VALUE RECEIVED, this Unsecured Promissory Note is dated as of the 161h day of
July, 2013 ("Promissory Note") and evidences an indebtedness of the general fund of the City of
Redlands ("Maker") to the City of Redlands Water Fund 501 ("Holder'). For value received,
Maker hereby promises to pay to the order of Holder, at such address as Holder shall designate,
the amount Seventy Five Thousand Dollars ($75,000) ("Loan Amount"), with interest, in
accordance with the terms of this Promissory Note.
I. Unsecured Obligation. The Maker's obligations under this Promissory Note are
not secured by any instrument encumbering any property or asset of Maker.
2. Repayment of Promissory Note. Maker shall pay to the order of Holder the
Loan Amount, with interest accruing at the current Local Agency Investment Fund (LAIF)
interest rate of.28 percent per annum, as follows:
2.1 Maker promises to pay to the order of Holder the Loan Amount, with
interest, within ten years from the date of this Promissory Note. The first installment shall be
paid during the period of January 2014—June 2014, if sufficient tax allocation funds are available
from the Successor Agency to the former Redevelopment Agency of the City of Redlands.
Subsequent installments will be paid over multiple RODS cycles of such Successor Agency, as
sufficient funds are available, with the unpaid balance of the Loan Amount to be paid no later
than July 15, 2023 ("Maturity Date").
2.2 All payments due hereunder are payable in lawful money of the United
States in same day funds. The Loan Amount may be prepaid, in whole or in part, at any time and
from time to time without penalty or premium.
2.3 The entire unpaid balance of the Loan Amount shall be due and payable,
prior to the Maturity Date, upon Maker's material breach of any of the obligations of this
Promissory Note.
2.4 Maker's obligation to pay the unpaid principal balance of the Loan
Amount shall be limited to the available funds of Maker which are not otherwise encumbered as
of the date of this Promissory Note.
3. Assignment. Holder shall have no power to transfer or assign its right to
receive any payment under this Promissory Note, unless Maker has first granted written approval
to Holder for such a proposed assignment, in the Maker's sole and absolute discretion.
4. Severability. The unenforceability or invalidity of any provision or provisions of
this Promissory Note as to any persons or circumstances shall not render that provision or those
provisions unenforceable or invalid as to any other person or circumstances, and all provisions
hereof, in all other respects, shall remain valid and enforceable.
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5. Governing Law. The validity, interpretation and performance of this Promissory
Note shall be governed by and construed in accordance with the laws of the State of California,
without regard to conflicts of laws principles.
6. Jurisdiction and Venue. The Holder and the Maker acknowledge and stipulate
that the obligation hereunder was entered into in the County of San Bernardino, California. Any
legal action or proceeding to interpret, enforce, or which in any way arises out of this Promissory
Note shall be instituted and prosecuted in the appropriate court in the County of San Bernardino,
California. Holder and Maker expressly waive, to the maximum legal extent, any legal right
either Party may have to have such action or proceeding transferred to or prosecuted in any other
court or jurisdiction.
7. Amendments and Modifications. This Promissory Note may be amended or
modified only in writing signed by the Holder and the Maker.
8. Time of the Essence. Time is of the essence of this Promissory Note.
[Signatures on Following Page]
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SIGNATURE PAGE
TO
CITY OF REDLANDS
UNSECURED PROMISSORY NOTE
MAKER:
CITY OF REDLANDS,
a California municipal corporation
By:
A
Pete AguiUr, Mayor
Date: July 16, 2013
ATTEST:
By: —
Sam frwinVity Jerk
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EXHIBIT B
TO
LOAN AGREEMENT
Successor Agency Promissory Note
[Attached Behind This Cover Page]
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SUCCESSOR AGENCY TO THE FORMER REDEVELOPMENT AGENCY OF THE
CITY OF REDLANDS
UNSECURED PROMISSORY NOTE
FOR VALUE RECEIVED, this Unsecured Promissory Note is dated as of this 16th day of
July, 2013 ("Promissory Note") and evidences an indebtedness of the Successor Agency to the
former Redevelopment Agency of the City of Redlands, a public body, corporate and politic
("Maker"), to the City of Redlands, a California municipal corporation ("Holder"). For value
received, Maker hereby promises to pay to the order of Holder, at such address as Holder shall
designate, the Loan Amount (as defined in the Agreement), with interest, in accordance with the
terms of this Promissory Note.
1. Loan Agreement. The rights and obligations of Maker and Holder under this
Promissory Note are made with respect to that certain agreement entitled "Loan Agreement"
dated the 16th day of July, 2013 by and between Maker and Holder ("Agreement"), as approved
by Resolution Number 460 of Maker, dated July 16, 2013 and Resolution Number 7301 of
Holder, dated July 16, 2013. The terms and provisions of the Agreement are incorporated into
this Promissory Note by this reference. All initially capitalized terms used but not otherwise
defined in this Promissory Note shall have the meaning ascribed to them in the Agreement.
2. Unsecured Obligation. The Maker's obligations under this Promissory Note are
not secured by any instrument encumbering any property or asset of Maker.
3. Repayment of Promissory Note. Maker shall pay to the order of Holder the
Loan Amount, with interest accruing at the current Local Agency Investment Fund (LAIF)
interest rate of.28 percent per annum, as follows:
3.1 Maker promises to pay to the order of Holder the Loan Amount, with
interest, within ten years from the date of this Promissory Note. The first installment shall be
paid during the period of January 2014-June 2014, if sufficient tax allocation funds are available.
Subsequent installments will be paid over multiple ROPS cycles of Maker, as sufficient funds
are available, with the unpaid balance of the Loan Amount to be paid no later than July 15, 2023
("Maturity Date"). It is the express intent of Maker and Holder that the Loan Amount be paid by
Maker to Holder as soon as reasonably and fiscally practical within the ten year repayment
period, as tax allocation funds are made available to Maker.
3.2 All payments due hereunder are payable in lawful money of the United
States in same day funds. The Loan Amount may be prepaid, in whole or in part, at any time and
from time to time without penalty or premium.
3.3 The entire unpaid balance of the Loan Amount shall be due and payable,
prior to the Maturity Date, upon Maker's material breach of any of the obligations of this
Promissory Note or the Agreement.
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3.4 Maker's obligation to pay the unpaid principal balance of the Loan
Amount shall be limited to the available funds of Maker which are not otherwise encumbered as
of the date of this Promissory Note.
4. Assignment. Holder shall have no power to transfer or assign its tight to
receive any payment under this Promissory Note, unless Maker has first granted written approval
to Holder for such a proposed assignment, in the Maker's sole and absolute discretion.
5. Severability. The unenforceability or invalidity of any provision or provisions of
this Promissory Note as to any persons or circumstances shall not render that provision or those
provisions unenforceable or invalid as to any other person or circumstances, and all provisions
hereof, in all other respects, shall remain valid and enforceable.
6. Governing Law. The validity, interpretation and performance of this Promissory
Note shall be governed by and construed in accordance with the laws of the State of California,
without regard to conflicts of laws principles.
7. Jurisdiction and Venue. The Holder and the Maker acknowledge and stipulate
that the obligation hereunder was entered into in the County of San Bernardino, California. Any
legal action or proceeding to interpret, enforce, or which in any way arises out of this Promissory
Note shall be instituted and prosecuted in the appropriate court in the County of San Bernardino,
California. Holder and Maker expressly waive, to the maximum legal extent, any legal right
either Party may have to have such action or proceeding transferred to or prosecuted in any other
court or jurisdiction.
8. Amendments and Modifications. This Promissory Note may be amended or
modified only in writing signed by the Holder and the Maker.
9. Time of the Essence. Time is of the essence of this Promissory Note.
[Signatures on Following Page]
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SIGNATURE PAGE
TO
CITY OF REDLANDS, AS SUCCESSOR AGENCY TO THE FORMER
REDEVELOPMENT AGENCY OF THE CITY OF REDLANDS
UNSECURED PROMISSORY NOTE
MAKER:
CITY OF REDLANDS, AS SUCCESSOR AGENCY TO
THE FORMER REDEVELOPMENT AGENCY OF THE
CITY OF REDLANDS,
a public body, corporate and politic
By:
Pete Aguilar, Chairman
Date: .....-7116li-3
Z
ATTEST:
By:
Sam ecretary
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