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HomeMy WebLinkAboutStaff Report 1913City of Palo Alto (ID # 1913) City Council Staff Report Report Type: Action ItemsMeeting Date: 7/25/2011 July 25, 2011 Page 1 of 2 (ID # 1913) Summary Title: Adoption of an Ordinance to Dissolve the RDA Title: Adoption of an Ordinance Dissolving the Palo Alto Redevelopment Agency From:City Manager Lead Department: Administrative Services Recommendation Staff recommends that Council adopt the ordinance to dissolve the Redevelopment Agency by declaring that there is no further need for the RDA (Attachment 1). Executive Summary On June 20, 2011, the City Council discussed the budget for the Palo Alto Redevelopment Agency (RDA) for Fiscal Year 2012. Staff report #1859 provides information that addresses Council questions that were raised at the meeting (Attachment 2). The follow-up discussion was rescheduled from June 27 to July 18. In the interim, the budget for the State of California was approved and the Governor signed two trailer bills (ABX1 26 and ABX1 27) that impact redevelopment agencies. The trailer bills would automatically eliminate redevelopment agencies by October 1, unless the agency makes a voluntary payment to other taxing agencies. Staff had originally recommended that Council adopt the resolution to adopt the RDA budget for Fiscal Year 2012 pending the uncertainty of State legislation in this area. Now that the uncertainty regarding the scope of the state legislation has been eliminated, staff has changed its original recommendation to Council. The revised recommendation is to adopt an ordinance to dissolve the RDA. Background On July 9, 2001, the Palo Alto City Council adopted an ordinance declaring the need for a redevelopment agency. City Council also declared that it would act as the Agency Board and made the finding that the formation of a redevelopment agency “will serve the public interest and promote the public safety and welfare in an effective manner” in accordance with the Health and Safety Code Section 33200. On September 19, 2001, the Edgewood Redevelopment Project Area was designated as a Survey Area and the process for the adoption of the Redevelopment Plan was initiated. The Redevelopment Plan for Edgewood Plaza was not ultimately adopted by the City Council. The City has not designated any Redevelopment Project Areas for revitalization. July 25, 2011 Page 2 of 2 (ID # 1913) Discussion The 2011-12 California State Budget was signed into law on June 30, 2011. Two trailer bills were signed to deal with the elimination of redevelopment agencies. The first bill, ABX1 26, eliminates redevelopment agencies as of October 1, 2011. The bill further provides that the city authorizing the RDA in the first place are charged with wrapping up operations under an “oversight board” consisting largely of appointed education and county interests together with a representative of the affected city.The second bill, ABX1 27, establishes a voluntary alternative redevelopment program which would allow the RDA to continue provided that the City make specified annual payments into a special district fund and an educational fund created for each county. The amount of the payment would be based on the RDA’s share of the redevelopment property tax increment. The legality of this state legislation is in dispute and the League of California Cities intends to take an active role in challenging the bills. Currently, it appears that the only way to avoid automatic RDA dissolution is to make the voluntary payments specified in the second bill. As the City no longer has a need for the RDA and because the current state of the law provides no incentives for retaining an RDA, staff recommends that the Council take action to dissolve the RDA on its own without the intervention of the “oversight board”. In order to dissolve the RDA, the Council must make specific findings that there is no longer a need for the RDA to exist. This voluntary dissolution would be effective 31 days after the second reading of the ordinance. Environmental Review This is not a project for the purposes of the California Environmental Quality Act. Attachments: ·Attachment 1: Ordinance of the City of Palo Alto Dissolving The Palo Alto Redevelopment Agency (PDF) ·Attachment 2: Follow-up to Redevelopment Agency Discussion (PDF) Prepared By:Dale Wong, Senior Financial Analyst Department Head:Lalo Perez, Director City Manager Approval: James Keene, City Manager Not Yet Approved 110712 jb 0130808 1 Ordinance No. _____ Ordinance of the Council of the City of Palo Alto Dissolving The Palo Alto Redevelopment Agency The Council of the City of Palo Alto does ORDAIN as follows: SECTION 1. FINDINGS AND DECLARATIONS. The City Council herein finds and declares as follows: A. In July 2001, pursuant to Section 33101 of the Community Redevelopment Law, the City Council established the Redevelopment Agency of the City of Palo Alto (“Redevelopment Agency”). The Redevelopment Agency was authorized to transact business and exercise its powers under the provisions of the Community Redevelopment Law. B. The City Council declared itself to be the Redevelopment Agency of the City of Palo Alto. C. As part of the 2011-12 State budget bill, the California Legislature has recently enacted and the Governor has signed, companion bills AB 1X 26 and AB 1X 27, requiring that each redevelopment agency be dissolved unless the community that created it enacts an ordinance committing it to making certain payments to the State. D. In the approximate ten years since the City Council formed the Redevelopment Agency, the Redevelopment Agency has not identified a qualifying redevelopment area. E. The Redevelopment Agency has not conducted any redevelopment activities, including redeveloping or acquiring land, entering into a contract, issuing bonds or incurring housing obligations, since its formation. F. There is no further need for the Redevelopment Agency. SECTION 2. DISSOLUTION. Pursuant to Health & Safety Code Section 33140, the Redevelopment Agency of the City of Palo Alto is hereby dissolved. SECTION 3. FUTURE ACTIONS. The City Manager is hereby authorized to take any further actions necessary to effectuate this dissolution. SECTION 4. SECRETARY OF STATE. The City Clerk is hereby directed to cause a certified copy of this ordinance to be filed in the office of the Secretary of State pursuant to Health & Safety Code Section 33142. SECTION 5. SEVERABILITY. If any provision of this Ordinance or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Ordinance which can be given effect without the invalid Not Yet Approved 110712 jb 0130808 2 provision or application, and to this end the provisions of this Ordinance are severable. The City Council hereby declares that it would have adopted this Ordinance irrespective of the invalidity of any particular portion thereof. SECTION 6. This Ordinance is not a project under the California Environmental Quality Act. This ordinance shall be effective on the thirty-first day after the date of its adoption. PASSED AND ADOPTED this ___ day of July, 2011, by the following vote: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: _____________________________ _______________________________ City Clerk Mayor APPROVED AS TO FORM: APPROVED: _____________________________ ________________________________ Senior Asst. City Attorney City Manager City of Palo Alto (ID # 1859) Palo Alto Redevelopment Agency Staff Report Report Type:Meeting Date: 6/27/2011 June 27, 2011 Page 1 of 5 (ID # 1859) Summary Title: Follow-up to Redevelopment Agency Discussion Title: Adoption of the Resolution of the Redevelopment Agency Adopting the Budget for Fiscal Year 2012 and Response to Council’s Request for Additional Information From:City Manager Lead Department: Administrative Services Recommendation Adoption of the Resolution of the Redevelopment Agency Adopting the Budget for Fiscal Year 2012 and Response to Council's Request for Additional Information . Executive Summary On June 20, 2011, the City Council discussed the budget for the Palo Alto Redevelopment Agency (RDA) for Fiscal Year 2012 (Attachment 1). This report provides information that addresses Council questions that were raised at the meeting. Background On July 9, 2001, the Palo Alto City Council adopted an ordinance declaring the need for a redevelopment agency. City Council also declared that it would act as the Agency Board and made the finding that the formation of a redevelopment agency “will serve the public interest and promote the public safety and welfare in an effective manner” in accordance with the Health and Safety Code Section 33200. On September 19, 2001, the Edgewood Redevelopment Project Area was designated as a Survey Area and the process for the adoption of the Redevelopment Plan was initiated. The Redevelopment Plan for Edgewood Plaza was not ultimately adopted by the City Council. The City has not designated any Redevelopment Project Areas for revitalization. Discussion Information to Council questions about the RDA is presented below: 1) What steps are involved to dissolve the RDA? Answer: The City Council may adopt an ordinance to dissolve the RDA by declaring June 27, 2011 Page 2 of 5 (ID # 1859) that there is no further need for the RDA. This ordinance would require a first and second reading. A certified copy of the ordinance shall then be filed with the Secretary of State. The capacity of the RDA to exercise any powers is then suspended until the City Council adopts an ordinance declaring the need for the RDA to function. 2) How much would it cost to reestablish the RDA in the future if it were to be eliminated this year? Answer: As a threshold matter, the Governor has launched a major initiative to eliminate or significantly reform redevelopment legislation. As of the writing of this memo, the two major budget rider bills dealing with redevelopment have not yet been submitted to the Governor. At this point, it is not certain whether and to what extent legislative reforms will be adopted. The League of Cities is actively monitoring this situation and has been actively opposing the Governor’s plan. It is possible that new legislation could make it more difficult to re-activate a redevelopment agency once it has been dissolved and for this reason before dissolving the agency altogether, staff recommends waiting a few months in order to further assess the ramifications of immediate dissolution. Assuming no change in law, the cost would include estimated filing fees of $2,000 as well as staff time required to prepare an ordinance to reestablish the RDA. Additional costs would be incurred should the RDA Board opt to hire a consultant to prepare an analysis of a proposed redevelopment area. This is not a required step. In 2001/2002 consultants worked to evaluated a proposed redevelopment area at a cost of approximately $151,000. Short of eliminating the RDA the Council could decide to not approve the RDA budget by taking no action. This would be in violation of RDA state reporting guidelines, which require annual RDA financial reports to be filed with the state. It is possible that the City would be subject to fines for not filing a annual RDA financial report. 3) What is a “blighted area”? Answer: In order for a Redevelopment Agency to designate a “redevelopment area” the area must meet the statutory definition of “blight.” Since 1993, there have been a series of legislative reforms which have progressively narrowed and tightened the definition of “blight.” Currently, in order to qualify as “blighted” the area must satisfy four criteria. First, the area must be “predominantly urbanized.” Second, the area must be characterized by one or more conditions of physical blight. These conditions are statutorily defined as: June 27, 2011 Page 3 of 5 (ID # 1859) (1) Buildings in which it is unsafe or unhealthy for persons to live or work. These conditions may be caused by serious building code violations, serious dilapidation and deterioration caused by long-term neglect, construction that is vulnerable to serious damage from seismic or geologic hazards, and faulty or inadequate water or sewer utilities. (2) Conditions that prevent or substantially hinder the viable use or capacity of buildings or lots. These conditions may be caused by buildings of substandard, defective, or obsolete design or construction given the present general plan, zoning, or other development standards. (3) Adjacent or nearby incompatible land uses that prevent the development of those parcels or other portions of the project area. (4) The existence of subdivided lots that are in multiple ownership and whose physical development has been impaired by their irregular shapes and inadequate sizes, given present general plan and zoning standards and present market conditions. Third, the area must be characterized by one or more conditions of economic blight. These conditions are statutorily defined as: (1) Depreciated or stagnant property values. (2) Impaired property values, due in significant part, to hazardous wastes on property; (3) Abnormally high business vacancies, abnormally low lease rates, or an abnormally high number of abandoned buildings. (4) A serious lack of necessary commercial facilities that are normally found in neighborhoods, including grocery stores, drug stores, and banks and other lending institutions. (5) Serious residential overcrowding that has resulted in significant public health or safety problems. (6) An excess of bars, liquor stores, or adult-oriented businesses that has resulted in significant public health, safety, or welfare problems. (7) A high crime rate that constitutes a serious threat to the public safety and welfare. June 27, 2011 Page 4 of 5 (ID # 1859) Fourth, these blighting conditions must predominate in such a way as to affect the utilization of the area, causing a physical and economic burden on the community. 4) What are the arguments for maintaining the RDA as a benefit in the case of a disaster? Answer: The RDA may form a project area specifically to aid recovery from a natural disaster. Section 34001 of the California Community Redevelopment Disaster Project Law states: A community may establish a redevelopment agency, and adopt and implement a redevelopment plan pursuant to this part, within a disaster area if the community has commenced the adoption of the redevelopment plan within six months after the President of the United States has determined the disaster to be a major disaster. Designation of a project area may allow focused attention on recovery. Redevelopment activities associated with a disaster recovery project area are subject to a ten-year time limit. In San Bernardino County, the Cedar Glen Disaster Recovery Project Area was established to help rebuild the community of Cedar Glen after firestorms devastated the area in 2003. Further, given the uncertainty surrounding the Governor’s proposal to dissolve all redevelopment agencies, there may be additional benefits in compromise legislation that staff cannot predict at this time. Another aspect to consider is the use of RDA funding for public infrastructure facilities. Staff is looking into this further, but the possibility exists that the RDA could support the City’s infrastructure objectives. Attachments: ·Attachment 1: Adoption of the Resolution of the Redevelopment Agency Adopting the Budget for Fiscal Year 2012 (Staff Report #1765)(PDF) ·Attachment 2: Redevelopment Agency Minutes (PDF) Prepared By:Dale Wong, Senior Financial Analyst Department Head:Lalo Perez, Director June 27, 2011 Page 5 of 5 (ID # 1859) City Manager Approval: James Keene, City Manager City of Palo Alto (ID # 1765) Palo Alto Redevelopment Agency Staff Report Report Type:Meeting Date: 6/20/2011 June 20, 2011 Page 1 of 2 (ID # 1765) Summary Title: FY 2012 Redevelopment Agency Budget Title: Adoption of the Resolution of the Redevelopment Agency Adopting the Budget for Fiscal Year 2012 From:City Manager Lead Department: Administrative Services Recommendation Staff recommends that the Council, acting in its capacity as the City of Palo Alto Redevelopment Agency Board, adopt the resolution adopting the budget for the Palo Alto Redevelopment Agency for Fiscal Year 2012 (Attachment 1). Executive Summary The Palo Alto Redevelopment Agency (RDA) is legally required to produce an annual budget. Although there are no activities to be reported, the RDA is required to complete an annual audit. The estimated cost for the audit is $8,500 and is the only item in the FY 2012 budget. Background On July 9, 2001, the Palo Alto City Council adopted an ordinance declaring the need for a redevelopment agency. City Council also declared that it would act as the Agency Board and made the finding that the formation of a redevelopment agency “will serve the public interest and promote the public safety and welfare in an effective manner” in accordance with the Health and Safety Code Section 33200. On September 19, 2001, the Edgewood Redevelopment Project Area was designated as a Survey Area and the process for the adoption of the Redevelopment Plan was initiated. The Redevelopment Plan for Edgewood Plaza was not ultimately adopted by the City Council. The City has not designated any Redevelopment Project Areas for revitalization. Discussion Redevelopment law requires that each agency adopt an annual budget that contains the activities to be financed by the Low and Moderate Income Housing Fund, proposed expenditures and indebtedness, anticipated revenues, a work program and a comparison between the previous year’s achievements and goals. Since Palo Alto does not have a Redevelopment Project Area, there are no activities to be reported. However, the RDA is required by law to complete an annual audit. The estimated cost for the audit is $8,500 and 1 Packet Pg. 2 June 20, 2011 Page 2 of 2 (ID # 1765) remains the only item in the FY 2012 budget. The expenditures and indebtedness of the Agency must be in conformance with the proposed budget, and the City Council, acting as the Agency Board, must approve the annual budget. Resource Impact Funding in the amount of $8,500 for the Palo Alto Redevelopment Agency is advanced by the City of Palo Alto and is considered a loan from the City to the Agency to cover expenses related to annual audit activities. The loans are to be re-paid from tax-increment revenues that will be collected in future years if the City were to adopt a Project Area. In accordance with City procedures, a corporate agreement has been established between the City and the Agency. Expenses incurred on behalf of the Redevelopment Agency will be incorporated into the loan agreement for prior years. Policy Implications This recommendation does not represent any change to existing City policies. Environmental Review This is not a project under the California Environmental Quality Act and therefore environmental review is not required. Attachments: ·a:Attachment 1 -Resolution Adopting Agency Budget for 2012 (PDF) ·b:Exhibit A -Proposed Redevelopment Agency Budget for 2012 (PDF) Prepared By:Dale Wong, Senior Financial Analyst Department Head:Lalo Perez, Director City Manager Approval: ____________________________________ James Keene, City Manager 1 Packet Pg. 3 Not Yet Approved 110523 jb 0130747 Resolution No. RDA_____ Resolution of the Redevelopment Agency of the City of Palo Alto Adopting the Budget for Fiscal Year 2012 WHEREAS, Section 33606 of the California Health and Safety Code requires that a redevelopment agency shall adopt an annual budget, which may be amended from time to time as determined by the agency; and WHEREAS, the Redevelopment Agency of the City of Palo Alto (Agency) desires to adopt the annual budget for fiscal year 2012. NOW, THEREFORE, the Agency does hereby RESOLVE as follows: SECTION 1. The Agency does hereby adopt the annual budget for fiscal year 2012 in the form set forth in Exhibit “A,” which is attached hereto and incorporated herein by reference. SECTION 2. The annual budget hereby adopted, and future adopted budgets, may be amended from time to time by resolution. SECTION 3. The Agency finds that this Resolution is not a project under the California Environmental Quality Act ("CEQA"), therefore, no environmental assessment is required. INTRODUCED AND PASSED: AYES: NOES: ABSENT: ABSTENTIONS: ATTEST: APPROVED: ______________________________ _____________________________ Secretary Chairperson APPROVED AS TO FORM: ______________________________ General Counsel 1.a Packet Pg. 4 At t a c h m e n t : A t t a c h m e n t 1 - R e s o l u t i o n A d o p t i n g A g e n c y B u d g e t f o r 2 0 1 2 ( 1 7 6 5 : F Y 2 0 1 2 R e d e v e l o p m e n t A g e n c y B u d g e t ) Not Yet Approved 110523 jb 0130747 1.a Packet Pg. 5 At t a c h m e n t : A t t a c h m e n t 1 - R e s o l u t i o n A d o p t i n g A g e n c y B u d g e t f o r 2 0 1 2 ( 1 7 6 5 : F Y 2 0 1 2 R e d e v e l o p m e n t A g e n c y B u d g e t ) EXHIBIT A Palo Alto Redevelopment Agency Fund Summary 2012 Proposed Budget Revenues Interest Income -$ Loan Interest - Other Income - Subtotal - Operating Transfers 8,500 Total Source of Funds 8,500$ Expenses Adminstrative Cost -$ Professional Services Cost (1)8,500 Interest Expense - Total Use of Funds 8,500$ Net To/(From) Reserves -$ (1) Cost of Annual Audit and State Controllers Report 1.b Packet Pg. 6 At t a c h m e n t : E x h i b i t A - P r o p o s e d R e d e v e l o p m e n t A g e n c y B u d g e t f o r 2 0 1 2 ( 1 7 6 5 : F Y 2 0 1 2 R e d e v e l o p m e n t A g e n c y B u d g e t ) 1 06/28/10 PALO ALTO REDEVELOPMENT AGENCY Special Meeting June 20, 2011 The Redevelopment Agency of the City of Palo Alto met on this date in the Council Chambers at 11:09 P.M. Present: Burt, Espinosa, Holman, Klein, Price, Scharff, Schmid, Yeh Absent: Shepherd Oral Communications None 1. Adoption of the Resolution of the Redevelopment Agency (RDA) Adopting the Budget for Fiscal Year 2012. Mayor Espinosa asked if Staff had a presentation. Mr. Keene stated no, that the Resolution is perfunctory. Herb Borock stated his belief was that the Redevelopment Agency should be dissolved, and gave the history behind the City’s Redevelopment Agency. The money the RDA is being asked to approve is for the same staff. Agency Member Klein stated that if there is a Resolution to vote on, he would vote no. He stated that there was no need for the RDA and tried 5 years ago to dissolve it, but was unsuccessful. Agency Member Scharff asked how long the RDA has been in affect. Mr. Keene stated approximately a decade. Mayor Espinosa stated since 2001. Agency Member Scharff asked if it has ever been used. Mr. Keene stated no. MM/DD/YY 2 Agency Member Scharff asked what the current definition of blight was and if the City had an blighted areas. City Attorney, Molly Stump stated she did not have the current technical definition of blight however, there is a wide desparity of the use. Agency Member Price asked if there are any difficulties in moving along the lines to dissolve the RDA. She stated she realizes there has been no use of it, and asked if any other Charter Cities with similar socioecononmic status as Palo Alto had used it. Mr. Keene stated it was unknown as to the last part of Council Member Price’s question, but there is no impediment to dissolve it. There is also no compelling argument to keep it. In has been in existence for 10 years and has never been used. Although RDA’s have been good for other cities around the state, in our situation it doesn’t make sense. Agency Member Price asked if we eliminated it, how easy would it be to recreate it in the future. Ms. Stump stated there is great uncertainty at the State level. If Council chooses to not approve the Resolution and decides to dissolve it tonight, Staff will bring back to Council the steps necessary to dissolve it. Agency Member Yeh stated that knowing we haven’t used it is helpful, and if we are not in a time crunch, it would be helpful for Staff to bring back the information on how to dissolve it. Agency Member Schmid stated he remembered that one of the reasons for the RDA was for use during an emergency. It was a legal framework to get assistance to rebuild a part of the community that may have been adversely affected by a disaster. Ms. Stump stated that her understanding was that there was one jurisdiction in the State that did use it to respond to emergency situation, and it was an unusual use of the RDA. Agency Member Schmid stated that when the new Emergency Services Manager is appointed that they could check into this topic. Agency Member Burt stated that the RDA was created around the Edgewood Plaza, and the only other area of town that was talked about was Charleston/San Antonio section. Additionally, there was a discussion around using the RDA in response to an emergency disaster. He stated that if that is the only value, he would not be inclined to keep it. Based on current MM/DD/YY 3 status for setting up an RDA, he asked if Staff had any sense of costs to resurrect the RDA and how long it would take in the event of emergency. Mr. Keene stated no, not at this time. Agency Member Burt asked if Agency Member Klein would be agreeable to hold this discussion over for further discussion. Agency Member Klein stated that there was not a Motion, he was in favor of bringing this back and asked if the City would be incurring additional costs by delaying the decision. Assistant Director of Administrative Services, David Ramberg stated no. Agency Member Holman stated she would like to know how much ait would cost and how long it would take to reinstitute the RDA if they chose to dissolve it now. MOTION: Agency Member Holman moved, seconded by Agency Member Schmid to continue this item to the next feasible Council Meeting to allow for Staff to return with answers. Mr. Keene stated that Staff could probably come back as early as next week with responses to the questions. MOTION PASSED: 8-0 Shepherd absent ADJOURNMENT: The meeting was adjourned at 11:27 P.M.