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HomeMy WebLinkAboutMINUTES - 01231996 - C54 'ro: BOARD OF SUPERVISORS Contra 'f FROM: Phil Batchelor, County Administrator Costa County January 23 1996 DATE: � � SUBJECT: SUBORDINATION OF REVENUES FOR CITY OF CLAYTON SPECIFIC REQUEST(S)OR RECOMMENDATION(S)&BACKGROUND AND JUSTIFICATION RECOMMENDATION: 1. APPROVE agreement subordinating revenues due to the County,Library,and Flood Control District for tax allocation bonds, pursuant to a 1986 agreement with the Clayton Redevelopment Agency. Authorize execution of Agreement by Board Chair. BACKGROUND/REASON(S) FOR RECOMMENDATION: On July 14, 1987,the County approved a redevelopment pass through agreement with the Clayton Redevelopment Agency. Included in the agreement is a subordination clause which essentially allows the agency to put debt owed to the County lower in priority than debt owed to bond holders, as added assurance to bond holders that their investment will be returned. The County agreed to this provision based upon the commitment that the agency would have on hand adequate funds to pay back bond holders, thereby minimizing the real risk that subordination would be necessary. The County approved a prior subordination agreement with the agency in December, 1993. This request would assist the Agency to refinance $8.5 million in existing bonds at a lower cost. The agency has provided documents to staff which demonstrate that adequate revenue commitment has been met. Therefore, it is appropriate to agree to the subordination as called for in the 1987 agreement. CONTINUED ON ATTACHMENT: YES SIGNATURE: RECOMMENDATION OF COUNTY ADMINISTRATOR RECOMMENDATION OF BOARD COMMITTEE APPROVE OTHER SIGNATURE -(S): ACTION OF BOARD ON APPROVED AS RECOMMENDED OTHER VOTE OF SUPERVISORS I HEREBY CERTIFY THAT THIS IS A TRUE UNANIMOUS(ABSENT ) AND CORRECT COPY OF AN ACTION TAKEN AYES: NOES: AND ENTERED ON THE MINUTES OF THE BOARD ABSENT: ABSTAIN: OF SUPERV4BCHELOR, HE DATE SHOWN. ATTESTED 3 j Contact: CL OF THE BOARD OF CC: County Administrator SUPERVISORS AND COUNTY ADMINISTRATOR Jim Kennedy, Redevelopment City of Clayton County Counsel BY DEPUTY SUBORDINATION AGREEMENT This Subordination Agreement, dated as of January 23, 1996, is entered into by and among the Redevelopment Agency of the City of Clayton (the "Agency"), the County of Contra Costa (the "County"), the Contra Costa County Library District (the "Library District"), the Contra Costa County Flood Control and Water Conservation District (the "Flood Control District"), and the Contra Costa Consolidated Fire District (the "Fire District"). RECITALS The parties have entered into an agreement, dated as of July 14, 1987 ("Agreement"), providing, among other matters, for the allocation and payment of certain tax increment revenues from the Agency's Clayton Redevelopment Project Area ("Project Area") to the County, the Library District, the Flood Control District, and the Fire District (collectively the "Taxing Agencies"). The Agreement further provides that the Taxing Agencies will subordinate, under certain conditions, their rights to such tax increment revenue payments in order for the Agency to pledge such tax increment revenue to long term bonded indebtedness to be incurred by the Agency. In furtherance of the redevelopment plan for the Project Area, the Agency desires to issue long-term bonded indebtedness, and has requested that the Taxing Agencies subordinate their rights to receive tax increment revenue payments under the Agreement, in order for the Agency to be able to pledge such tax increment revenue to such long term bonded indebtedness. The Agency has provided the Taxing Agencies with a report showing that the Agency's anticipated ability to repay such bonded indebtedness can be made without demand being made on the aforementioned payments due the Taxing Agencies under the Agreement. The report shows that the aggregate of the tax increment revenue payments to be subordinated are contemplated to be used in the cash-flow of the bonded indebtedness only for additional security (debt service coverage) and that the Agency's tax increment revenues will be adequate, over the term of the bonded indebtedness, to pay 100% of the actual debt service thereon and to pay the Agency's obligations under the Agreement, and any other obligations of the Agency, whether statutory or contractual, which are or would be superior to the Agency's obligations under the Agreement. The report includes revenue forecasts and a debt service schedule. NOW, THEREFORE, the parties agree as follows: 1. The County, the Library District, the Flood Control District, and the Fire District, pursuant to Section 2 of the Agreement, hereby subordinate their rights to receive tax increment revenue payments under the Agreement, in order to allow the Agency to pledge such tax increment revenue to the proposed long term indebtedness (and any refunding obligations hereafter issued to refund such indebtedness) to be incurred by the Agency. 31940\00009\12790.2 1 0- �;Y This agreement to subordinate relates to the following proposed indebtedness of the Agency (and any refunding obligations hereafter issued to refund such indebtedness), as more particularly set forth in the report submitted to the Taxing Agencies: a) The principal amount of the bonds to be sold shall not exceed $8,500,000. b) The Agency shall issue the bonds by not later than June 30, 1996. 2. In accordance with Section 2 of the Agreement, in the event that payments to the Taxing Agencies are reduced below the amount otherwise payable to them pursuant to the Agreement as a result of such subordination, then such reductions shall be treated as advances by the respective Taxing Agencies and repaid by the Agency in accordance with the Agreement. 3. The Agency agrees to expend the proceeds of the bonded indebtedness to refund certain outstanding bonds issued in furtherance of its redevelopment plan for the Project Area. 31940\00009\12790.2 2 TAXING AGENCIES: AGENCY: COUNTY OF CONTRA COSTA REDEVELOPMENT AGENCY OF CONTRA COSTA COUNTY THE CITY OF CLAYTON LIBRARY DISTRICT CONTRA COSTA COUNTY FLOOD CONTROL AND WATER CONSERVATION DISTRICT By: CONTRA COSTA COUNTY Executive Director CONSOLIDATED FIRE DISTRICT By: Ch rp r n, Board of Supervisors ATTEST: PHIL BATCHELOR CLERK OF THE BOARD OF SUPERVISORS AND COUNTY ADMINISTRATOR f By: Teputy Clerk Approved as to Form: Victor J. Westman County Counsel By. puty 31940\00009\12790.2 3