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Resolution 1989-30 City of Gilroy and Community Development Agency , ' ~ ~ ... RESOLUTION NO. 89 _=--la_ A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF GILROY AUTHORIZING EXECUTION OF A FISCAL AGREEMENT BETWEEN THE CITY OF GILROY, THE COMMUNITY DEVELOPMENT AGENCY OF THE CITY OF GILROY, AND THE GILROY UNIFIED SCHOOL DISTRICT WHEREAS, the the City of Gilroy (the "City"), the Community Development Agency of the City of Gilroy (the "Agency"), and the Gilroy Unified School District (the "District") desire to enter into a Fiscal Agreement (the "Agreement") the terms of which are set forth in the Agreement attached hereto as Exhibit A and by this reference incorporated herein; and WHEREAS, the Agency has prepared the City of Gilroy Community Redevelopment Plan (the "Plan") and has submitted the Plan to the City for consideration and potential adoption in accordance with the procedures and requirements of the California Community Redevelopment Law (the "CRL") (Health and Safety Code Section 33000 et. sea.); and WHEREAS, the Plan calls for redevelopment of a designated project area (the "Project Area") within the City pursuant to the CRL; and WHEREAS, the parties have determined that the adoption by the City and implementation by the Agency of the Plan would, but for the agreements set forth in the Agreement, cause a financial burden or detriment to the District in that redevelopment of the Project Area will increase demand for services provided by the District to Project Area residents. BE IT NOW THEREFORE RESOLVED that: 1. The City Council hereby finds and determines, based on evidence provided at this meeting, that the adoption of the Plan by the City and implementation by the Agency would, but for the agreements set forth in the Agreement, cause a financial burden or detriment to the District in that RESOLUTION NO. 89 - 30 -1- ~ ~ redevelopment of the Project Area will increase demand for services provided by the District to Project Area residents. 2. The City Council hereby approves the Agreement described above and authorizes and directs the Mayor Protempore to execute, on behalf of the City, the Agreement in substantially the form set forth in the attached Exhibit A, with such changes therein as the Mayor Protempore may approve, such approval to be conclusively evidenced by the execution and delivery of the Agreement by the Mayor Protempore. Passed and adopted this 13th day of June, 1989, by the following vote: AYES: COUNCILMEMBERS: HALE, KLOECKER, MUSSALLEM, PALMERLEE and VALDEZ. COUNCILMEMBERS: None NOES: ABSENT: COUNCILMEMBERS: GAGE and HUGHAN APPROVED: ~1/u~~ Larry M ss llem, Mayor Protempore ATTEST: 06/09/89 #030EF/B49702 RESOLUTION NO. 89 - 30 -2- i' ~ EXHIBIT "A" ~ t " FISCAL AGREEMENT REGARDING GILROY COMMUNITY REDEVELOPMENT PROJECT THIS AGREEMENT (the "Agreement") is made and entered into thi s u..t.h.... day of June , 1989, by and among the COMMUNITY DEVELOPMENT AGENCY OF THE CITY OF GILROY (the "Agency"), the CITY OF GILROY (the "City"), and the GILROY UNIFIED SCHOOL DISTRICT (the "District"), on the basis of the following facts, understandings and intentions of the parties: RECITALS A. The Agency is in the process of preparing a proposed ( redevelopment plan (the "Redevelopment Plan") for adoption by the City Council of the City for the Gilroy Community Redevelopment Project (the "Project") pursuant to the California Community Redevelopment Law (Health and Safety Code, Section 33000, et seq.). B. The proposed Redevelopment Plan contains provisions for the distribution and allocation of property tax revenues derived from property located within the area covered by the Redevelopment Plan (the "Project Area") and allocated to the Agency pursuant to California Health and Safety Code Section 33670(b) (the "Tax Increment Revenue", as more fully defined in Section 1 below). -1- ( -- C. Secti~3401 of the Community Re~elopment Law provides that a redevelopment agency may pay to any taxing agency any amounts of money which, in the Agency's determination, are necessary and appropriate to alleviate any financial burden or detriment caused to such taxing agency by a redevelopment project. D. The Agency has determined that, based on certain reports and evidence submitted by the District, and in a spirit of mutual cooperation, certain actions as set forth below are necessary to alleviate the burden and detriment or potential burden and detriment identified by the District. E. Pursuant to Health and Safety Code Section- 33676(a)(1), the District, by appropriate resolution, has heretofore made the election to receive future property tax revenues generated in the Project Area attributable to increases in the rate of tax imposed for the benefit of the District after the tax year in which the ordinance adopting the Redevelopment Plan becomes effective. This Agreement is not intended in any way to affect the election made by the District pursuant to Health and Safety Code Section 33676(a)(I). F. As permitted by Health and Safety Code Section 33676, this Agreement is entered into by the District in lieu of the election described in Health and Safety Code Section 33676(a)(2), as more fully set forth in Section 10 below. -2- l THEREFORE~he Agency, the City and t~District agree as follows: AGREEMENTS Section 1. General Definitions In addition to the terms defined elsewhere in this Agreement, the terms set forth in this Section shall have the following meanings: (a) "Base Year Value" means the assessed valuation of the property within the Project Area as shown on the Fiscal Year 1988-89 assessment roll (Fiscal Year 1988-89 being the "base year" for the Redevelopment Plan pursuant to Health and Safety Code Section 33670). As of the date of this Agreement, the amount of the Base Year Value is $S04,807,177. (b) "District Fund" means the fund designated and maintained by the District into which all amounts to be paid by the Agency pursuant to Section 2 below shall be deposited for use as provided in Section 3 below. (c) "District Share" means the percentage of the One Percent TIR Amount that the District would have received if there were no provision in the Redevelopment Plan for the allocation of Tax Increment Revenue to the Agency. As of the date of this Agreement, the District Share is forty-seven and fifty-three one hundreths percent (47.S3%). (d) "Fiscal Year" means the period commencing on July 1 and ending on the following June 30. (e) "Normal Growth Revenue" means, for a given Fiscal Year, the portion of the One Percent TIR Amount that would be generated if the Base Year Value increased at the rate of -3- l two and sixty.'~en one hundreths percent ~67%) per annum from the Base Year through and including that Fiscal Year. By way of illustration, Column (4) of Exhibit A (which Exhibit is incorporated in this Agreement by this reference) sets forth the Normal Growth Revenue for each Fiscal Year assuming no change from the Base Year Value in effect as of the date of execution of this Agreement as set forth in Section l(a) above. (f) "One Percent TIRAmount" means, for a given Fiscal Year, that portion of Tax Increment Revenue allocated to and actually received by the Agency attributable to the one percent (1%) County-wide tax rate levied pursuant to California Constitution Article XIII A, Section l(a). (g) "Tax Increment Revenue" means those taxes allocated to and received by the Agency pursuant to Health and Safety Code Section 33670(b), from increases in the valuation of real property within the Project Area above the valuation shown on the assessed valuation roll last equalized prior to the date of adoption of the ordinance adopting the Redevelopment Plan. Section 2. Payment of a Portion of Tax Increment Revenue (a) Beginning in Fiscal Year 1990-91 and continuing through the term of this Agreement, the Agency shall pay to the District a portion of the Tax Increment Revenue received by the Agency for each Fiscal Year in an amount equal to the product of: (1) the District Share; times (2) the lesser of -4- e(A) ~ the One Percent TIR Amount for the Fiscal Year, or (B) the Normal Growth Revenue for the Fiscal Year. By way of illustration, Column (S) of the attached Exhibit A sets forth the amounts payable to the District for each Fiscal Year under this Section 2(a) assuming no change in Base Year Value and District Share from those in effect as of the date of execution of this Agreement (as set forth in Section l(a) and (c)), and further assuming that the amount described in subdivision 2(a)(2)(B) above is less than the amount described in subdivision 2(a)(2)(A) above in each Fiscal Year. The parties acknowledge and agree that, in the event the amount described in subdivision 2(a)(2)(A) turns out l- i ~~ to be less than the amount described in subdivision 2(a)(2)(B) for a given Fiscal Year, the amount payable to the District pursuant to this Section 2(a) for that Fiscal Year will be less than the amount shown in Column (S) of the attached Exhibit A. (b) It is anticipated that the Agency will receive its annual allocation of Tax Increment Revenue in two or three partial installments during the course of each Fiscal Year (each such partial installment is hereinafter referred to as a "Partial TIR Installment"). Within thirty (30) days of receipt of each such Partial TIR Installment, the Agency shall pay to the District a partial payment of the amount payable to the District for the Fiscal Year pursuant to -S- subsection (a).ve (a "Partial District .ment"). The amount of each Partial District Payment shall be in the same proportion to the total amount payable to the District for the Fiscal Year as the proportion the applicable Agency TIR Installment is to the total amount of Tax Increment Revenue payable to the Agency for the Fiscal Year. Each Partial District Payment shall be accompanied by a statement setting forth in reasonable detail the basis on which the determination of the amount of the payment has been made. Section 3. Use of District Funds The monies deposited in the District Fund shall be used to finance projects for the benefit of the District for the following purposes: (a) Rehabilitation, construction or reconstruction of: \ " (1) Permanent or temporary classrooms; (2) Gyms, pools, athletic or recreational facilities; (3) Library, auditorium and school site administration facilities; (4) District administrative offices, maintenance and warehouse facilities; (S) On-site and off-site public improvements such as but not limited to, sidewalks, crosswalks, lights, curbs, gutters and streets; (6) Landscaping, irrigation and lighting; (7) Other ancillary facilities, equipment and -6- . ~ furnishings appurtenant to a school or District facility to make such facilities operable; and (8) Buses and transportation costs necessary to transport students to schools of the District. (b) Acquisition of property for public school facilities, District administrative and other support services. (c) Design, planning, administrative and engineering costs equal to not more than twenty percent (20%) of the acquisition, rehabilitation, construction or reconstruction cost of the projects undertaken by the District. Monies otherwise required by this Agreement to be paid into the District Fund shall be paid, instead, in whole or in (~ part, to a designee of the District (the "Designee") upon prior written direction of the District. Such funds paid to a Designee shall be used to pay, on behalf of the District, the principal of and interest on loans, construction projects, money advanced to or indebtedness incurred by such Designee to finance or refinance in whole or in part the projects set forth in this Section 3. Section 4. Limitations on Payment Notwithstanding any other provision of this Agreement, no payments shall be made to the District by the Agency: (a) which would exceed the amount, annually, that the District would have otherwise received from property taxes -7- ~ from the prOj~Area had the Redevelopme~Plan not been adopted; or (b) the receipt of which would cause the District to violate its expenditure limitations under Article XIII-B of California Constitution as certified by the District to the State of California pursuant to State law, regulations and State Department of Education Administrative procedurej or (c) which would be contrary to the provisions of Section 33401 of the Community Redevelopment Law or violate any other provision of the Community Redevelopment Law or the laws of the State of California. Any excess amounts under subsection (a), (b) or (c) above shall be retained by the Agency for distribution, in the Agency's sole discretion, to other taxing entities or for the purposes of paying indebtedness incurred by the Agency in carrying out the Project. Section S. Reduction in Payments Notwithstanding any other provision of this Agreement, if the amount the District would receive from the State of California would be reduced pursuant to Education Code Section 42238 or other similar or successor provision of law by reason of a payment made by the Agency to the District pursuant to Section 2, then the Agency may reduce its payments under this Agreement to the District by the amount that the amount the District would receive from the State of California would be reduced pursuant to Education Code Section 42238 or other -8- l- similar or suJlltsor provision of law by Jltson of a payment made by the Agency to the District pursuant to this Agreement. The parties understand and agree that the District will only derive benefit from the payments the Agency will make pursuant to this Agreement to the extent that such payments do not cause a reduction in payments to the District from the State pursuant to the Education Code and, for that reason, the parties have agreed to the provisions of this Section S. Section 6. Subordination The Agency may request the District to subordinate its right to twenty-four and fifty-three one hundreths percent (24.S3%) of the revenue payable to the District pursuant to Section 2 above (hereinafter referred to as the "Subordinated Revenue") to allow the Agency to pledge all or any portion of the Subordinated Revenue in order to secure repayment of Agency long-term indebtedness incurred for the Project. For the purpose of this Agreement "long-term" shall mean in excess of two(2) years, and "indebtedness" shall not include any indebtedness of the Agency to the City of Gilroy or other governmental agency controlled by the Agency or the City of Gilroy. The District agrees that its approval of such requests will not be unreasonably withheld provided that the Agency first demonstrates to its satisfaction the Agency's anticipated ability to repay such indebtedness incurred for the Project without demand being made on the payments due it under the terms of this Agreement. Such demonstration by the -9- Agency shall s~ that the Subordinated Re~ue will be used in the cash-flow of the financing only for additional security (debt service coverage) and that the Tax Increment Revenue payable to the Agency will be adequate, over the term of the indebtedness, to pay one hundred percent (100%) of actual debt service thereon, to pay the Agency's obligations under this Agreement, and to pay any other obligations of the Agency whether statutory or contractual which are or would be superior to the Agency's obligations under this Agreement. Any such demonstration shall include, without limitation, revenue forecasts and debt service schedules. If, as a result of the subordination provided for in this Section 6, the payments to the District are reduced below the amount otherwise payable to it pursuant to this Agreement, t " then such reductions shall be treated as an advance by the District which shall be repaid by the Agency. The unpaid principal balance thereof shall bear interest at the rate paid by the State of California Local Agency Investment Fund or its successor entity. The advances and accrued interest shall be repaid as promptly as possible, and in any event the Agency shall use all Tax Increment Revenue available to it, after payment of principal and interest on the indebtedness to which the subordination applies and payment of any other obligations which are superior to the Agency's obligations under this Agreement (including statutory obligations, such as the Agency's housing set-aside obligation under Health and Safety -10- Code Section 3~.2), to repay such advan~ and accrued interest. Section 7. Increase in Shares ~- The parties recognize that the District Share could be increased by amendment to existing State law, thus increasing the amount of revenue payable to the District under this Agreement. Therefore, it is agreed that, in the event the Agency desires to incur lQng-term indebtedness to be secured by Tax Increment Revenue, the Agency may project its Tax Increment Revenue and incur such long-term indebtedness based upon the District Share and the resulting amount of revenue payable to the District under this Agreement assuming the continuing effectiveness of State law in existence at the time such long-term indebtedness is incurred. In the event State law is amended after the Agency has incurred such long-term indebtedness to increase the District Share and the resulting amount of revenue payable to the District under this Agreement, then such additional amounts of revenue shall be payable to the District in accordance with this Agreement, unless the Agency needs such additional amounts to avoid a default or condition of default on such long-term indebtedness. The Agency's obligation to pay such additional amounts to the District shall be subordinate to the Agency's obligation to pay debt service on its long-term indebtedness. If, in any Fiscal Year, the subordination provided for in this Section 7 results in a reduction in the amount otherwise -11- payable to the~trict pursuant to this Alltement, then such reduction shall be treated as an advance by the District which shall be repaid by Agency. The unpaid principal balance thereof shall bear interest at the rate paid by the State of California Local Agency Investment Fund or its successor entity. The advances and accrued interest shall be repaid as promptly as possible, and in any event the Agency shall use all Tax Increment Revenue -available to it, after payment of principal and interest on the indebtedness to which the subordination applies and payment of any other obligations which are superior to the Agency's obligations under this Agreement (including statutory obligations, such as- the Agency's housing set-aside obligation under Health and Safety Code Section 33334.2), to repay such advances and accrued ( '\ interest. Section 8. Indebtedness of Agency The payments to be made pursuant to this Agreement shall constitute an indebtedness of the Agency incurred in carrying out the Project and a pledging of Tax Increment Revenue from the Project to repay such indebtedness under the provisions of Article XVI, Section 16 of the California Constitution and under the California Community Redevelopment Law (with reference to California Health and Safety Code Section 3367S). Section 9. Indebtedness and Lease Obligations of District Notwithstanding any other provisions of this Agreement, the Agency agrees to transfer to the District in each year of this Agreement the amount of Tax Increment Revenue it receives -12- (, in such year a~ result of taxes or tax 04llrides imposed Qy the District (as opposed to taxes collected by the County of Santa Clara for the benefit of and apportioned to the District and other taxing agencies pursuant to California Constitution Article XIII A, Section l(a)) on property in the Project Area (a) for the purpose of paying principal, interest and prepayment premiums, if any, on bonds issued by the District prior to the _date of execution of this Agreement, or (b) for the purpose of paying lease payments owed by the District and payable from such taxes or overrides imposed by the District which are evidenced and represented by certificates of participation executed and delivered on behalf of the District prior to the date of execution of this Agreement, or (c) which are used to secure bonds issued on behalf of the District prior to the date of execution of this Agreement by the Gilroy Unified School District School Building Corporation or any similar non-profit, public benefit corporation. The obligation of the Agency to make such payments shall be in addition to any other obligations of the Agency contained herein. Section 10. Waiver of Section 33676(a)(2) Election The parties agree that this Agreement supersedes any election heretofore or hereafter made or purported to be made by the District pursuant to Health and Safety Code Section 33676(a)(2); that any such election or purported election shall be null and void and of no further force or effect; and that the District shall receive no payment of Tax Increment -13- ~- Revenue other 4Itn as expressly provided itlthis Agreement or as authorized by the District's separate election to receive the amount specified in Health and Safety Code Section 33676(a)(1), which separate election shall not be modified by the terms of this Agreement. The District shall take such actions as are reasonably necessary to accomplish the waiver of its election under Health and Safety Code Section 33676(a)(2) and to notify the Auditor of the County of Santa Clara or such other responsible County officials as may be appropriate that the District has entered into this Agrement in lieu of its election to receive the amounts permitted by Health and Safety Code Section 33676(a)(2). In the event the County of Santa Clara by error or otherwise makes a payment to the Distr~ct of funds the District has waived under Section 33676(a)(2), the District shall receive and hold the funds in trust for the Agency. The District shall pay the funds to the Agency and notify the County of Santa Clara in writing that the funds have been paid to the Agency pursuant to this Section 10. Upon receipt of the funds, the Agency shall immediately notify the County of Santa Clara in writing of its receipt of the funds from the District pursuant to this Section 10. Section 11. Rezoning Excess School Property Upon receipt of an application from the District for rezoning meeting the then applicable requirements of the City of Gilroy Zoning Ordinance, the City shall conduct necessary -14- and usual prO~ingS relative to rezonin~strict properties which may from time to time become available for commercial, residential or industrial development. Section 12. Development of Excess School Property Upon request of the District, the Agency shall consider in good faith methods for disposition and development of identified excess District property within the Project Area (including methods for allocation of proceeds of any such disposition and development) in a manner mutually advantageous to the District and the Agency. Any mutually acceptable method for such disposition and development shall be evidenced by an amendment of this Agreement or by separate agreement of the District and the Agency. ~ Section 13. District and Agency Cooperation in Development of Project Area In accordance with their policies, rules, and regulations, the District and the Agency will expend the revenues payable as provided in this Agreement for the effective implementation of the projects, programs and services set forth in Section 3 above of mutual benefit to the District, the Agency, and the City consistent with the goals and objectives of the Redevelopment Plan. Section 14. No Contest of Redevelopment Plan (a) The District acknowledges and agrees that the payments to be provided and the other fiscal mitigation measures to be undertaken by the Agency and the City pursuant to this Agreement will effectively eliminate any financial -IS- burden or detr~t to the District that m~t otherwise be caused by the adoption and implementation of the Redevelopment Plan. In consideration of the undertakings of the Agency and the City described in this Agreement, the District shall forego any right or remedy it may have in law or equity to contest the preparation, adoption or validity of the Redevelopment Plan (including without limitation any right or remedy pursuant to the California Environmental Quality Act), and the redevelopment program to be undertaken pursuant to the Redevelopment Plan. The District further declares its support for the efforts of the Agency and the City in connection with preparation, adoption and implementation of the Redevelopment Plan. (b) The Agency and the City recognize the District's agreement not to contest the Redevelopment Plan, as described in subsection (a) above, as good and legal consideration. Section IS. Term of Agreement This Agreement shall be effective as of the date that the ordinance enacted by the City Council of the City adopting the Redevelopment Plan for the Project becomes effective and shall terminate upon the earlier of (a) the payment in full of all Agency debts incurred pursuant to the Redevelopment Plan, or (b) the filing of an action in a court of competent jurisdiction or an administrative action by any person or entity challenging the adoption of the Redevelopment Plan or any of the proceedings in connection therewith. In the event such a lawsuit is filed or such an administrative action -16- commences or i4lJaken, the Agency shall n~e required to pay the District any amounts due under this Agreement until resolution of such lawsuit or administrative action; provided, however, that in the event such lawsuit or administrative action is finally determined to uphold the validity of the Redevelopment Plan, the Agency shall pay to the District any amounts due to the District pursuant to this Agreement (including interest accrued thereon, if any) which become due during the pendency of such lawsuit or administrative action. Such payment shall be due to the District as soon as possible after such determination. Following termination, neither of the parties shall have any rights or obligations under this Agreement. Section 16. Obligation to Defend Agreement ( ~ In the event litigation is initiated attacking the validity of this Agreement, each party shall in good faith defend and seek to uphold the Agreement. The District further agrees to indemnify and hold the Agency harmless in the event that any person or entity not a party to this Agreement (a "third party") seeks to recover from the Agency funds that such third party claims were unlawfully paid to the District pursuant to this Agreement. Section 17. State Law This Agreement, and the rights and obligations of the parties hereto, shall be constructed and enforced in accordance with the laws of the State of California. Section 18. Attorneys' Fees -17- In any ac~n which the Agency, or t~ity, the District brings to enforce its rights hereunder, the unsuccessful party shall pay all costs incurred by the prevailing party, including reasonable attorneys' fees. Section 19. Successors and Assigns This Agreement shall be binding upon and inure to the benefit of the parties hereto and their respective heirs, successors and assigns. Section 20. Entire Agreement This Agreement constitutes the entire agreement of the parties with respect to the subjects covered herein. ( -18- IN WITNES~EREOF, the parties have ~cu~ed this Agreement as of the date first above written. Attest: COMMUNITY DEVELOPMENT AGENCY OF THE CITY OF GILROY Susanne Steinmetz, Agency Secretary By: Larry Mussallem, Agency Vice Chair Attest: CITY OF GILROY By: Susanne Steinmetz, City Clerk Larry Mussallem, Mayor Pro Tempore Attest: GILROY UNIFIED SCHOOL DISTRICT By: l 06/07/89 #B027/B49702 -19- ~ ~ I, SUSANNE E. STEINMETZ, City Clerk of the City of Gilroy, do hereby certify that the attached Resolution No. 89-30 is an original resolution, duly adopted by the Council of the City of Gilroy at a regular meeting of said Council held on the 13th day of June , 19~, at which meeting a quorum was present. IN WITNESS WHEREOF, I have hereunto set my hand and affixed the Official Seal of the City of Gilroy this 16th day of June 19 89. (Seal)