AGENDA AGENDA ITEM NO. ITEM 4.c(1) NO. REPORT TO MAYOR AND COUNCIL TO THE HONORABLE MAYOR AND COUNCIL DATE: December 10, 2013 SUBJECT: APPROVAL OF AN INTERFUND LOAN AGREEMENT BETWEEN THE CITY OF CONCORD (LENDER) AND THE LOCAL REUSE AUTHORITY (BORROWER) FOR THE TEMPORARY USE OF GENERAL FUND DOLLARS TO SUPPORT THE BASE REUSE PROJECT Report in Brief Staff is requesting the City Council approve Resolution No. 13-90 which approves an interfund loan between the City of Concord and the Local Reuse Authority (LRA). This would be a third interfund loan and would support ongoing efforts by the LRA staff to expedite transfer of the former Concord Naval Weapons Station to the City. Staff is requesting an appropriation of $300,000. The funds are necessary to support unexpected needs for outside legal counsel for transaction documentation ($100,000), specialized engineering studies associated with risk assessment of site contamination ($60,000), infrastructure requirements ($73,000), Environmental Impact Statement (EIS) /natural resource permitting ($20,000) and a contingency ($47,000). This brings the total amount of General Fund dollars loaned to the LRA to $1.27 Million. All loans will be repaid with interest through sale proceeds from raw land sales. Loan repayments are anticipated to commence in the last quarter of 2015 and be completed by 2017. Background The City Council has previously approved two interfund loans to the LRA; the first on February 5, 2013 ($117,000) and the second on June 25, 2013 ($800,000). The loans became necessary with the winding down of Federal grant support from the Office of Economic Adjustment (OEA), an arm of the Office of the Secretary of Defense. The loans have been used by the LRA Project Management Office to partially fund (80%) personnel labor and fringe costs through July 2014 and fund specialized legal counsel and engineering/science consultants through the same performance period. Unexpected requirements, necessary to keep the Navy on schedule for near term land transfers, have created a need for a third loan to be provided to the LRA in the amount of $300,000. All loans will be repaid with interest through proceeds from raw land sales commencing in late 2015. Discussion Staff has been working closely with the Navy BRAC office to advance the transfer of land in late 2014/early 2015. The responsiveness of BRAC personnel on a variety of issues including preparation of an EIS, Section 7 consultation with wildlife agencies, remediation of contaminated property, transfer terms and valuation
APPROVAL OF AN INTERFUND LOAN AGREEMENT BETWEEN THE CITY OF CONCORD (LENDER) AND THE LOCAL REUSE AUTHORITY (BORROWER) FOR THE TEMPORARY USE OF GENERAL FUND DOLLARS TO SUPPORT THE BASE REUSE PROJECT December 10, 2013 Page 2 have been significantly hampered by sequestration mandated by the U.S. Congress and the Federal government shut down earlier this year. In an effort to keep the overall transfer process on schedule the LRA staff, its outside counsel and consultants have a need to take on expanded work scope. Additionally, certain parts of the transfer work scope originally envisioned to occur later in 2014 have been accelerated, especially in the area of transaction document preparation, in order to support the selection of a master developer and complete the land valuation process with the Navy. For these reasons, the LRA staff is seeking approval of a third loan agreement to allow for securing addition legal support and engineering support to help expedite the Navy s transfer process. Staff believes that this support is key to avoiding delays in the transfer of property to the City, and capturing the benefits of an improvement cycle in the real estate market. Fiscal Impact Approval of Resolution No. 13-90 and the associated loan agreement will commit an additional $300,000 of General Fund dollars to support the transfer of the former Concord Naval Weapons Station property to the City. The loan will be repaid with interest from the proceeds of raw land sales. Interest will accrue at the rate earned by the City on its funds invested in the Local Agency Investment Fund (LAIF). Repayment is expected to commence in the last quarter of 2015 and be completed in the first quarter of 2017. Public Contact The agenda has been posted as required by law. Recommendation for Action Staff recommends approval of Resolution No. 13-90 establishing an interfund loan agreement between the City of Concord and the Local Reuse Authority for the temporary use of $300,000 General Fund dollars to support the Base Reuse Project. Prepared by: Michael W Wright Executive Director Local Reuse Authority Michael.Wright@cityofconcord.org Valerie J. Barone City Manager Valerie.Barone@cityofconcord.org Reviewed by: Mark S. Coon City Attorney Mark.Coon@cityofconcord.org Attachment No. 1: Resolution 13-90 Attachment No. 2: Interfund Loan Agreement
Attachment No. 1 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 BEFORE THE CITY COUNCIL OF THE CITY OF CONCORD COUNTY OF CONTRA COSTA, STATE OF CALIFORNIA A RESOLUTION APPROVING AN INTERFUND LOAN AGREEMENT BETWEEN THE CITY OF CONCORD (LENDER) AND THE LOCAL REUSE AUTHORITY (BORROWER) FOR THE TEMPORARY USE OF GENERAL FUND DOLLARS TO SUPPORT THE BASE REUSE PROJECT Resolution No. 13-90 / WHEREAS, on January 10, 2006, the City Council of the City of Concord adopted LRA Resolution No. 06-1 organizing itself as the Local Reuse Authority in accordance with federal law and adopting Rules of the Authority and establishing Fund 403, Concord Reuse Project, appropriating federal grant funds; and WHEREAS, on February 28, 2006, the City Council adopted LRA Resolution No. 06-2, establishing the process to coordinate activities under federal Base Realignment and Closure law with the Navy and state and federal environmental agencies to develop a Reuse Plan, a Disposition Strategy and a Specific Plan to be funded by the Office of Economic Adjustment (OEA); and WHEREAS, future funding from the Office of Economic Adjustment is winding down and the Local Reuse Authority requires a funding source to complete disposition studies, risk management evaluations, and general coordination with the Navy for the activities required to sell and develop the property; and WHEREAS, it is the desire of the City Council to provide a funding source by loaning the Local Reuse Authority monies from the General Fund with the commitment of repayment when raw land is sold and the funds become available; and WHEREAS, the commitment of this desire is memorialized in the form of an Interfund Loan Agreement in the amount of $300,000 incorporated herein as Exhibit A, and made a part hereof. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF CONCORD DOES RESOLVE AS FOLLOWS: Section 1. To provide funds for use by the Local Reuse Authority (LRA) or its designee, loan proceeds will be disbursed from the City of Concord General Fund in the amount of $300,000 and Res. No.13-90 1
Attachment No. 1 1 2 3 4 5 6 7 8 9 10 11 12 become an obligation of the LRA. Section 2. That any loans disbursed to the LRA will be reimbursed to the City of Concord General Fund as they become available. Section 3. This resolution shall become effective immediately upon its passage and adoption. PASSED AND ADOPTED by the City Council of the City of Concord on December 10, 2013, by the following vote: AYES: Councilmembers - NOES: Councilmembers - ABSTAIN: Councilmembers - ABSENT: Councilmembers - I HEREBY CERTIFY that the foregoing Resolution No. 13-90 was duly and regularly adopted at a regular meeting of the City Council of the City of Concord on December 10, 2013. 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 APPROVED AS TO FORM: Mark S. Coon City Attorney Mary Rae Lehman, CMC City Clerk Res. No.13-90 2
INTERFUND LOAN AGREEMENT 3 This Loan Agreement (the "Agreement") is executed as of December 10, 2013, between the City of Concord, General Fund ("Lender") and the Local Reuse Authority (Concord Community Reuse Redevelopment Project) ("Borrower"). Lender agrees to lend to Borrower, and Borrower agrees to repay to lender an amount not to exceed the Principal Amount and on the terms set forth in this Agreement, in accordance with the following: 1. Purpose of the Loan: To provide funds for use by the Borrower or its designee as follows: costs associated with the Base Reuse Project, including costs for legal fees related to negotiations with the U.S. Navy and securing necessary permits from the U.S. Army Corps and U.S. Fish and Wildlife Service; and expenses for professional services to assist with financial analysis, regulatory negotiations and risk management reviews. Borrower acknowledges that the loan proceeds will be disbursed by the City of Concord to the Concord Local Reuse Authority for this purpose and that, notwithstanding that Borrower shall not maintain custody or control of the loan proceeds, the loan shall become Borrower's obligation. 2. Principal Amount of the Loan: Not to exceed Three Hundred Thousand Dollars ($300,000) 3. Term of the Loan: The term of this Loan shall begin on December 10, 2013, and continue until paid in full. 4. Lender Fund: The loan proceeds under this Agreement shall be paid by the City of Concord out of the General Fund. The loan proceeds shall be recorded by the Lender in the general ledger of Fund No. 100. 5. Borrower Fund: The loan proceeds under this Agreement shall be received by the Concord Local Reuse Authority, but shall be recorded in the general ledger of the Borrower's Fund No. 400. 6. Interest: Interest shall accrue on the unpaid principal balance of the Loan at the rate earned by the Borrower from time to time during the term on its funds invested in the Local Agency Investment Fund ("LAIF") until paid in full. 7. Interest Payments: Payments as calculated in Section 6 above shall be made from time to time, from and to the extent that funds are available to the Borrower from the Community Reuse Project and approved by resolution for such purpose pursuant to Section 33670 of the Community Redevelopment Law, or from other sources available to the Agency. 8. Principal Payments: Principal Payments shall be paid by the Borrower to the Lender at the time that sale proceeds of raw land at the Community Reuse Project are available, which is expected in 2016, or from other sources available to the Borrower. Prepayment
of principal may be made at any time without penalty. 9. General Provisions: This Agreement constitutes the full Agreement by and between the parties and no other representations have been made regarding the contents of this Agreement. This Agreement shall not be amended, modified or altered in any respect unless such amendment, modification or alteration has been reduced to writing and executed by both parties. LENDER: City of Concord a public body corporate and politic Fund Name: General Fund Fund Number: _100 By: Valerie J. Barone Title: City Manager BORROWER: Local Reuse Authority of the City of Concord, a public body corporate and politic Fund Name: Local Reuse Authority Fund Number: 400 By: Michael W. Wright Title: Executive Director