2013-14 RESOLUTION 2013 - 14
A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GRAND
TERRACE IN SUPPORT OF ASSEMBLY BILL 981, RELATING TO THE
USE OF BOND PROCEEDS ISSUED IN 2011 BY FORMER
REDEVELOPMENT AGENCIES.
WHEREAS, the State Legislature dissolved redevelopment agencies by enacting
Assembly Bill Nos. 1x 26 and 1484, relating to redevelopment dissolution, ("Dissolution
Statutes") which became effective on June 28, 2011 and June 27, 2012, respectively;
WHEREAS, the Community Redevelopment Agency of the City of Grand Terrace
("former-RDA") issued bonds for the purpose of redevelopment on June 17, 2011
pursuant to existing law at the time of issuance ("2011 Bonds");
WHEREAS, the covenants relating to the 2011 Bonds required the bond proceeds
received therefrom to be used for the specific purpose of any or all of the following
public infrastructure projects:
Southwest area: infrastructure study and design
Southwest area: infrastructure construction
Barton Road: infrastructure improvements
Michigan Street improvements: design and right-of-way acquisition
Michigan Street improvements: construction
Union Pacific/Barton Road bridge: construction
Van Buren, Pico, and Main Streets: storm drain and street rehabilitation
Mt. Vernon Avenue: slope stabilization
Vista Grande Park: construction
WHEREAS, the California Department of Finance ("DOF") has incorrectly interpreted
the Dissolution Statutes to prohibit the use of those proceeds derived from the 2011
Bonds for the purposes for which- they were issued and has improperly directed the
Successor Agency for the Grand Terrace Redevelopment Agency ("Successor Agency")
to defease or repurchase the 2011 Bonds on the open market ("Directive");
WHEREAS, even if the DOF's interpretation did not expressly conflict with Dissolution
Statutes, the DOF has not provided any meaningful guidance on how to adequately
follow the Directive;
WHEREAS, compliance with the Directive could result in the default by the Successor
Agency on its legal obligations under the 2011 Bonds;
WHEREAS, complying with the Directive will result in harm to holders of the bonds, and
_ particularly those who purchased tax exempt bonds, because compliance with the
Directive will cause interest payments to become taxable to bondholders;
WHEREAS, the City of Grand Terrace ("City") and Successor Agency disagree with the
Directive and continues to assert that the use of proceeds derived from the 2011 Bonds
is permissible under current law;
WHEREAS, the City and Successor Agency therefore continues to assert that the 2011
Bonds issued prior to June 28, 2011 are enforceable obligations, as defined by the
Dissolution Statutes, and the proceeds derived therefrom must be used pursuant to the
2011 Bond covenants;
WHEREAS, the City Council believes that Assembly Bill Number 981 could alleviate
concerns of downgrading of the State's and local municipalities' bond credit ratings by
various bond rating companies;
WHEREAS, the Successor Agency defaulting on the 2011 Bonds is not beneficial to the
Taxing Entities, which include, but is not limited to, the City of Grand Terrace and other
local agencies, as defined under the Dissolution Statutes;
WHEREAS, the Taxing Entities will not benefit in any way by the Directive or by the
defeasance or repurchase of the 2011 bonds because interest payments on those
bonds will continue to accrue for many years before defeasance can occur and will far
exceed any interest earnings on unused proceeds;
WHEREAS, allowing the bonds to be expended for the purposes for which they were
issued will benefit all the Taxing Entities by creating or improving infrastructure,
affordable housing, and other essential projects that will in turn increase property tax
values and revenues available to all Taxing Entities;
WHEREAS, the expenditure of the proceeds derived from the 2011 Bonds for the
purposes for which they were issued is beneficial to the community that formed the
former-RDA, the Taxing Entities as defined under the Dissolution Statutes, and to the
State of California as a whole;
WHEREAS, the City Council supports Assembly Bill No. 981 ("AB 981") because it
would clarify the Legislature's intent to allow the Successor Agency to use the proceeds
derived from the 2011 Bonds for the purposes for which they were issued and resolve
the dispute between the DOF and Successor Agency regarding the 2011 Bonds to the
benefit of the State and the Taxing Entities;
WHEREAS, the City Council desires to express its support of AB 981 and urge its
passage by the State Legislature and approval by the Governor.
NOW THEREFORE,,BE IT RESOLVED THAT THE CITY COUNCIL OF THE CITY OF
GRAND TERRACE DOES RESOLVE, DETERMINE, FIND AND, ORDER AS
FOLLOWS:
Section 1. The City Council hereby finds that all of the above recitals are true and
correct and are incorporated herein by reference.
Section 2. The City Council hereby determines and resolves to support and
encourage the passage of AB 981, which would operate to clarify the Legislature's
intent to allow the Successor Agency to expend those proceeds derived from the 2011
Bonds for the purpose they were issued, under the Dissolution Statutes.
Section 3. The City Council hereby determines and resolves to support and
encourage the Governor to sign AB 981 into law.
Section 4. The City Council hereby authorizes the City Manager to take all actions
necessary and required to carry out this Resolution. This authorization includes, but is
not limited to, sending a letter in support of AB 981 to the State Legislature, its
members, and committees; sending a letter in support of AB 981 to the Governor;
contacting the relevant Taxing Entities for the purpose of seeking their support; and
contacting other affected successor agencies to coordinate efforts to support AB 981.
PASSED, APPROVED AND ADOPTED by the City Council of the City of Grand
Terrace at a regular meeting held on the 26th day of March, 2013.
(A�
Mayor of the City of Grand Terrace
and of the City Council thereof.
ATTEST:
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City Clerk o hetity of Grand brrace
I TRACEY R. MARTINEZ, CITY CLERK of the City of Grand Terrace, do hereby certify
that the foregoing Resolution was introduced and adopted at a regular meeting of the
City Council of the City of Grand Terrace held on the 26th day of March, 2013 by the
following vote:
AYES: Councilmembers McNaboe, Mitchell and Robles; Mayor Pro Tem Sandoval and
Mayor Stanckiewitz
NOES: None
ABSENT: None
ABSTAIN: None
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Tracey R. artinez, City Clekb
APPROVED AS TO FORM
City Attorney