AgdaPkt 2003-01-08 - Laserfiche WebLink

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REPORT To the City Council and Redevelopment Agency Board From the City Manager and Executive Oirectorl January 8, 2003 Subject State take away of local revenues. Loan from the City of Redwood City to the Redwood City Redevelopment Agency and Agreement for the Provision of Administrative Services by the City of Redwood City to the Redwood City Redevelopment Agency Recommendation 1) Approve a loan agreement between the City of Redwood City (City) and the Redwood City Redevelopment Agency (Agency) under which the City will loan the Redevelopment Agency $20 million; 2) Approve a long -term contract for the City to provide administrative services to the Agency. Background The State of California is considering various proposals to cure the State's $35 billion deficit. We have been made aware that among the various potential proposals is for the State to take away locally generated funds from local redevelopment agencies, such as the Redwood City Redevelopment Agency, unless those funds are already formally obligated. It is important to meet both our local obligations as well as to protect our local residents from having their money taken away by the State. On January 6, 2003, staff received a phone call from bond counsel, Jeff Stave of Nossaman Gunther Knox and Elliott, who indicated that there is a very real possibility that as early as January 10, 2003, the Governor will propose a confiscation of Redevelopment Agency funds as part of his attempt to balance the State budget. With a potential action on January 10, this has become an extremely time - sensitive issue that will have long -term effects on the City's redevelopment efforts. We understand that the proposal is to first preclude local redevelopment agencies from issuing debt on and after January 10, and funds that would otherwise go to local redevelopment agencies would be transferred to the State towards balancing their budget deficit. In order to provide some level of protection for redevelopment agency funds we have been advised by bond counsel that we may want to enter into a loan agreement between the City and Agency by which the Agency will be obligated to repay the debt to the City by the issuance of bonds, because the State cannot impair existing contract obligations by subsequent legislation.