2013-06 RESOLUTION 2013 - 06
A RESOLUTION OF THE OVERSIGHT BOARD FOR THE SUCCESSOR
AGENCY TO THE COMMUNITY REDEVELOPMENT AGENCY 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;
r 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 Successor Agency 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 legal obligations of 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,
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 Oversight Board for the Successor Agency supports Assembly Bill No.
_ 981 ("AB 981") because it would clarify the Legislature's intent to allow the Successor
i 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 Oversight Board for the Successor Agency ("Oversight Board") has met
and duly considered its support of AB 981 and urges its passage by the State
Legislature and approval by the Governor.
NOW THEREFORE, BE IT RESOLVED THAT THE OVERSIGHT BOARD, DOES
RESOLVE, DETERMINE, FIND AND ORDER AS FOLLOWS:
Section 1. The Oversight Board hereby finds that all of the above recitals are true
and correct and are incorporated herein by reference.
Section 2. The Oversight Board 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 Oversight Board hereby determines and resolves to support and
encourage the Governor to sign AB 981 into law.
Section 4. The Oversight Board hereby authorizes the Executive Director of the
Successor Agency to take all actions necessary and required to carry out this
Resolution. This authorization includes, but is not limited to, sending this Resolution in
support of AB 981 to the State Legislature, its members, and committees; sending this
Resolution 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.
Section 6. This Resolution shall be effective five business days after its passage or in
accordance with applicable law.
Section 6. The Oversight Board Secretary shall certify to the adoption of this
Resolution.
PASSED, APPROVED AND ADOPTED by this 17th day of April, 2013 by the following
vote:
ALES: Board Members Miranda, Shields and Ferracone; Vice Chairman Sacks {
� 1 and Chairman Stanckiewitz
� v
i
NOES: Nbhoe
ABSENT: sblWr$L member Morghl._.
ABSTAIN: None
v
Walt Stanckiewitz,
Oversight Board Chair
ATTEST:
Tracey R. artinez,
Oversight Board Secretary