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Agenda Item 5.

Oversight Board Successor Agency

Meeting Date:	04/14/2017
FROM:	David Crabtree

Subject:

Second Amendment to the Brea Mall Owner Participation Agreement OPA.

RECOMMENDATION

Adopt the Resolution Approving the Second Amendment to the Brea Mall Owner Participation Agreement.

BACKGROUND

As the Successor Agency prepares to market the 2011 Bonds for refunding, there is an opportunity to lower the amount of the future bond payments which would free up property tax revenue and thus increase the amount of property tax revenue to be paid to the taxing entities. An amendment to the Brea Mall Owner Participation Agreement to provide for fixed annual payments, with a true-up provision, is necessary to facilitate such bond refunding.

The Brea Redevelopment Merged Plan established an annual limit of $14 million as the maximum amount of tax increment revenues allocable to the former Redevelopment Agency (RDA) for Project Area AB, in which the Mall is located. In 1988, the former RDA entered into an Owner Participation Agreement with the owners of Brea Mall (Brea Mall OPA). That agreement was amended in 1995. Under the Brea Mall OPA and the amendment, the former RDA annually paid the Brea Mall 80% of net property tax revenues generated by the site plus $15,000. Net property tax revenues generated by the site is defined in the agreement to mean the tax increment revenue generated from the Brea Mall above the 1987-88 base year tax increment revenue.

The proposed Second Amendment to Brea Mall OPA will establish a fixed payment schedule for the OPA Annual Payments for the fiscal year beginning 2016-17 through the end of fiscal year 2021-22. The establishment of a fixed payment schedule for OPA Annual Payments will facilitate the Successor Agency’s preparation of the Last and Final Recognized Obligation Payment Schedule (LFROPS).

The Successor Agency will prepare and submit the LFROPS to the Oversight Board and DOF. The LFROPS is designed to save time and expenses in that the Successor Agency, the Oversight Board, and the DOF will no longer be required to expend the resources necessary to prepare and review periodic ROPS. A fixed payment schedule for the Successor Agency's enforceable obligations assures that the amounts listed on the LFROPS and approved for funding will be sufficient to pay each years' obligations. The LFROPS is required in order for the Successor Agency to apply to DOF for approval to access approximately $5.2 million in 2011 Series A Bonds to be used for the Downtown Parking Structure.

In consultation with DOF staff, it was recommended to request approval of the Second Amendment to the Brea Mall OPA as part of the processing of the Annual Recognized Obligation Payment Schedule (ROPS) 17-18. The amount noted on the fixed payment schedule for 2017-18 is the amount being requested on ROPS 17-18.

The Successor Agency adopted a resolution approving a Second Amendment to the Brea Mall OPA at their meeting of January 17. A similar resolution was also approved by the Oversight Board, however, both resolutions were rejected by the California Department of Finance (DOF). The Amendment has been revised and hopefully will now be accepted by DOF.

A similar resolution was approved by the Successor Agency at the City Council Meeting on April 4, 2017. Upon approval by the Oversight Board, the Successor Agency and Oversight Board resolutions along with the Second Amendment to Brea Mall OPA will be forwarded to DOF for their approval. DOF has up to forty days to review and approve the Oversight Board resolution and the Second Amendment to the Brea Mall OPA.

FISCAL IMPACT

The Second Amendment to the Brea Mall OPA establishes fixed payments for fiscal years 2016-17 to 2021-22 which range from $1,575,641 for 2016-17 to $1,770,673 for 2021-22. The total fixed payments for the six years are $9,955,605. The Amendment provides for a “true up” during fiscal year 2021-22 which will compare the total amount for the fixed payments to the total amounts of the actual calculated payments.

If the total calculated payments are less than the total fixed payments remitted to the Mall, then the difference is owed by the Brea Mall to the Successor Agency and would be a reduction to the final fixed payment for fiscal year 2021-22. However, if the total actual calculated payments are greater than the total fixed payments remitted to the Mall, the difference would be owed to the Brea Mall. In the scenario that a “true up” is due to the Mall, that payment will be subordinate to the bond payments.

This stipulation in the amendment improves the marketability of the refunding bonds and thus reduces annual bond payments, which benefits all of the taxing entities as they would receive their share of the property tax revenue not needed for the bond payment.

SIGNATURE BLOCK

David Crabtree, Community Development Director
Prepared by: Lee Squire, Financial Services Manager
Concurrence: Kathie DeRobbio, Economic Development Manager

Attachments
Resolution OB 2017-12
Amendment to OPA
Resolution SA 2017-06