HomeMy WebLinkAbout15 - Newport Beach-Santa Ana Heights Redevelopment Agency - RDACITY OF NEWPORT BEACH
CITY COUNCIL STAFF REPORT
Agenda Item No. 15
February 14, 2006
TO: HONORABLE MAYOR AND MEMBERS OF THE CITY COUNCIL
FROM: City Manager's Office
Dave Kiff, Assistant City Manager
949/644 -3002 or dkiff@city.newport-beach.ca.us
SUBJECT: Ordinance 2006 -- —Formation of the Newport Beach /Santa Ana
Heights Redevelopment Agency
ISSUE:
Should the City Council adopt an ordinance that begins formation of a redevelopment
agency in order to begin a transfer of responsibilities for the Santa Ana Heights
Redevelopment Project Area currently administered by the Orange County
Development Agency?
RECOMMENDATION:
Introduce Ordinance 2006 -_ and pass to 2nd Reading on February 28th, 2006.
DISCUSSION:
In California, Community Redevelopment Law (California Health and Safety Code,
§33300 et seq and the California Constitution, Article XVI, §16) is meant to provide
financial and planning resources to eliminate "blight' in a specific neighborhood and to
provide for housing for persons of low- or moderate - income. Blight is defined in state
law, and generally describes an area that cannot effectively overcome a characteristic
(unsafe or deteriorated buildings, pollution, noise, poor infrastructure, seismic hazards,
etc) without specific help. Blight was more loosely described at one time - then, in the
early 1990s, the Legislature (AB 1290, Isenberg) tightened up the definition following the
actions of jurisdictions to call open fields and entire towns "blighted."
Generally, redevelopment uses property tax increment revenue - generally the property
taxes received over the amount that was collected during the year that an agency was
formed - to pay the debt service on bonds issued to fund the improvements necessary in
a neighborhood to eliminate blight. As the property tax grows, those taxes are
dedicated to bond repayment. Eventually, the redevelopment project area is dismantled
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 2
when the area is no longer blighted. Table 1 attempts to show how tax increment
financing works:
Table I — How Tax Increment Financing works
$6.w0.DW
Lm 6 WU Musing Fund S5.600
_— ..._..__ . .... ... ... ..._...._.
T. l,c,e,renl (ncl of L. -Wd), 518.000
Base Yae, F,mun1 ' 5100.0001 5102001
Time in Years
Other common terms or acronyms used in redevelopment include:
• RDA = Redevelopment Agency. A public entity (usually a city, but sometimes a county)
that administers a redevelopment effort.
• Project Area = the geographic area declared blighted and planned for redevelopment.
• Redevelopment Plan = A document adopted by the RDA that identifies the
improvements to be funded inside a Project Area.
• PAC = Project Area Committee or Project Advisory Committee. The group of
stakeholders (may include residents and business owners) from a Project Area that
helps advise the RDA's governing board about the Redevelopment Plan, budget, etc.
The Redevelopment Plan is a critical document for any Project Area. The
Redevelopment Plan describes the public improvements (including land and
construction) that the Agency may fund as well as what land uses will be permitted in
the project area. The improvements can be inside or outside the project area, but the
Agency must show how the improvements benefit the project area. An agency cannot
construct improvements not described in the Plan, but the Plan can be amended (with
extensive public input and other jurisdictions' comments) to include desired projects
afterward.
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 3
In order to use redevelopment, a local government must find that there are no other
reasonable means of financing the necessary improvements. The improvements must
either alleviate blight or provide affordable housing. State law specifically prohibits the
use of tax increment revenue for City Halls and for paying for normal maintenance and
operations of capital projects.
Redevelopment agencies may purchase land, including using eminent domain if
eminent domain is specifically allowed in the Redevelopment Plan. An agency may sell
land for development, to a developer chosen by the agency, at or below fair market
value. An agency may make commercial rehabilitation loans and may provide
assistance for industrial or manufacturing uses. Recent changes to redevelopment law
have placed restrictions on agencies' assistance to "big box" retailers and auto dealers.
The provision of affordable housing is an important part of redevelopment. State law
says that 20% of all tax increment must be deposited into a Low & Moderate Income
Housing Fund (sometimes called "housing set - asides "). Housing set - asides can be
used for new construction, rehabilitation, mortgage assistance, or other housing
programs. The revenues can be used for housing activities outside of a specific project
area. As a local example, the County of Orange is allowed (via special legislation) to
use its housing set - asides generated in the Santa Ana Heights Project Area anywhere in
the county
About the Santa Ana Heights Redevelopment Project Area. The Santa Ana Heights
region is within a redevelopment project area administered by the County of Orange and
its Orange County Development Agency (OCDA). Like any redevelopment area, Santa
Ana Heights has zoning regulations (in this case a Specific Plan) and a Redevelopment
Plan (the broader document that tells what improvements will be constructed to remove
blight in the area). Newport Beach adopted the Santa Ana Heights Specific Plan when
the City annexed the eastern Santa Ana Heights area effective July 1, 2003. The
Redevelopment Plan yields to the General Plan of the County and of the City where
noted in the Redevelopment Plan. The Santa Ana Heights Project Area has a Project
Advisory Committee ( °PAC" - website is www.sahpac.com) that assists the Board of
Supervisors in deciding how and where to use tax increment revenue to construct
improvements. A PAC is not a requirement of a project area after the first three years.
A map of the SAH Project area follows on the next page:
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Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 5
The SAH Project Area consists of 1,096 acres and generates more tax increment
revenue than any of the OCDA's other project areas. It includes East Santa Ana
Heights, OCDA's most prolific Project Area. It includes East and West Santa Ana
Heights, the Anniversary Tract & the University Avenue YMCA, all of John Wayne
Airport, the Bayview area, including the Marriott Suites hotel, and the County -owned
Upper Newport Bay Nature Preserve and its Peter and Mary Muth Interpretive Center.
Almost half of the assessed valuation in the Project Area is at John Wayne Airport, but
the majority (51 %) is in East and West Santa Ana Heights. Table 2 shows these
percentages at the end of FY 2004 -05:
Table 2
I
Assessed Value - SAH Project Area
4%
�— ewporl Beach
47% MJWA
L®NUnincorporotaq nol JWA
The Santa Ana Heights Project Area's increment has a number of items that it funds,
including about $2.7 million of the County's bankruptcy recovery obligations (through
about 2016 unless the debt is paid earlier). Table 3 shows - generally - the annual
increment generated for the SAH Project Area and its expenses. It also shows the
anticipated costs of the list of "Priority Projects" that the PAC has identified.
Table 3
Annual Gross increment to the SAH Project Area
$ 10,252,340
Other Revenues (rent, interest, intergov't)
$ 2,101,900
less 20% set -aside for low -mod Housing
$ 2,050,000
less Debt Service payment
$ 3,000,000
less Bankruptcy Recovery payment
$ 2,700,000
less Pass - Through Payments
$ 300,000
less Administrative Costs
$ 300,000
Annual Net Increment for Projects
$ 1,902,340
Amount Available for Projects (200506)
$ 28,800,000
less anticipated expenses for PAC Priority Projects
$ 37,667,000
Surplus (Deficit)
$ (8,867,000)
add 10 -years of Net Increment (2006 -07 to 2016 -17)"
$ 19,023,400
Surplus (Deficit)
$ 10,156,400
*Estimate from 1 -1 8-06
Does not include inflation, and of BK payment, or change in AVs
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 6
The above - mentioned Priority Projects include:
• A View Park at the corner of Mesa Drive and Birch Street.
• Utility Undergrounding along Cypress Street and parts of Mesa Drive.
• A Horse Arena in the Santa Ana /Delhi Channel's flood control easement.
• The Community Center project at the YMCA on University.
• The Fire Station on Acacia and Mesa.
Please see the attached map (Attachment B) for the locations of these projects.
Greater City Involvement in the SAH Project Area. Following the City's annexation of
East Santa Ana Heights on July 1, 2003, the City Council has taken a more active role in
the development of the SAH Project Area, the SAH PAC, and public improvements. For
example, we are now managing projects like the Cypress -Mesa Utility Undergrounding,
the Mesa -Birch Park, Fire Station #7 at Mesa and Acacia, and the design of the
Regional Community Center. We have been cooperatively managing (with the Back
Bay Equestrians) the horse arena project. In light of this involvement, staff recommends
Council consider having the City form a redevelopment agency and taking over some
or all aspects of the Santa Ana Heights project area's management.
Importantly, members of the City Council's Sphere Opportunities subcommittee have
suggested that managing the SAH Project Area should NOT include any land use or
operational control over John Wayne Airport (JWA) and that the OCDA should continue
to administer the SAH Project Area's housing set -aside program.
Forming an Agency. If the City Council wants to take steps to administer the SAH
Project Area, special counsels David McEwen and Jon Goetz (of Stradling Yocca
Carlson & Rauth), have advised us to adopt a specific ordinance activating a separate
redevelopment agency for Newport Beach. The agency - once formed - could, after
taking other actions, manage some or all of the SAH Project Area, its Redevelopment
Plan, and the projects described in the Plan. Importantly, the new agency and its tax
increment revenue would also take on a share of the existing obligations (including
bankruptcy debt, debt service, and any future property tax shifts directed by the State of
California to RDAs (as the State did to RDAs, counties, and cities in the three Education
Revenue Augmentation Fund [ERAF] shifts of the 1990s and the early- and mid- 2000s).
More specifically, the ordinance proposed by Mr. McEwen (see Attachment A) would
declare or direct that (among other things):
• There is a need for community redevelopment in the area;
• A redevelopment agency be formed called the Newport Beach /Santa Ana Heights
Redevelopment Agency,
• The agency's governing body be (serving ex officio) the Newport Beach City Council;
and
• The City Manager and the City Clerk shall be the Agency's Executive Director and
Secretary, respectively (and exofb'cio).
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 7
Committee Action: The SAH PAC supports this action by the City Council.
Environmental Review: The City Council's approval of this Agenda Item is categorically
exempt under Class 20 of the California Environmental Quality Act (Section 15320 of
the CEQA Guidelines).
Submitted by:
Dav I iff
Assistant City Manager
Attachments: A — Proposed Ordinance No. 2006 -_
B — Map of Proposed Projects
Attachment A
ORDINANCE NO. 2006 -
AN ORDINANCE OF THE CITY COUNCIL OF THE CITY
OF NEWPORT BEACH, CALIFORNIA DECLARING THE
NEED FOR A COMMUNITY REDEVELOPMENT
AGENCY
WHEREAS, Section 33100 of the Community Redevelopment Law, California Health
and Safety Code Section 33000, et seq. (the "CRL "), has created in the City of Newport Beach a
public body, corporate and politic, known as the redevelopment agency of the community, for
the purpose of exercising the powers granted by Community Redevelopment Law; and
WHEREAS, pursuant to CRL Section 33101, the community redevelopment agency of
the City shall not transact any business or exercise any powers under said CRL unless, by
ordinance, the City Council, as the legislative body of the community (the "City Council "),
declares there is a need for such agency to function; and
WHEREAS, Section 33200 of the CRL provides that the City Council may declare its
members to be the members of the community redevelopment agency, and said appointment may
be made at the time of declaring the need of said community redevelopment agency; and
WHEREAS, the County of Orange has adopted a redevelopment plan for the Santa Ana
Heights area, which redevelopment plan is currently in effect; and
WHEREAS, the City has subsequently annexed into the territorial boundaries of the City
a portion of the Santa Ana Heights redevelopment project area; and
WHEREAS, the City Council desires to consider the transfer of authority of a portion of
the Santa Ana Heights redevelopment project from the County of Orange to the City and the
City's community redevelopment agency.
NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF NEWPORT
BEACH DOES HEREBY ORDAIN AS FOLLOWS:
SECTION 1: The City Council hereby finds and declares, pursuant to Section 33101 of
the CRL, that there is a need for the community redevelopment agency created by Section 33100
of the CRL to function in the City of Newport Beach.
SECTION 2: The City Council hereby finds and declares that the designation of the
members of the City Council as the members of the redevelopment agency of the City will serve
the public interest and promote the public health, safety and welfare in an effective manner, in
that the members of the City Council are best able to serve the needs of the community to
implement the purposes of the CRL.
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 9
SECTION 3: The City Council hereby approves the formation of the Newport
Beach/Santa Ana Heights Redevelopment Agency (the "Agency ") pursuant to the CRL. The
Agency shall have all of the duties and powers of a redevelopment agency under the CRL.
SECTION 4: Pursuant to the provisions of Section 33200 of the California Health and
Safety Code, the members of the City Council are hereby designated ex officio as the members of
the redevelopment agency of the City. The Mayor of the City is hereby designated ex officio as
the Chairman of the Agency. All of the functions, rights, powers, duties, privileges and
immunities vested by the CRL in the members of the Agency shall be vested in the members of
the City Council.
SECTION 5: The City Manager is hereby designated ex officio as the Executive
Director of the Agency. The Executive Director is hereby authorized and directed to take such
actions as are necessary and appropriate to carry out the powers and duties of the Agency.
SECTION 6: The City Clerk is hereby designated ex officio as the Secretary of the
Agency.
SECTION 7: The City Clerk is authorized and directed to forward a certified copy of
this Ordinance to the Secretary of State of the State of California and the County Clerk of the
County of Orange upon its adoption by the City Council.
SECTION 8: This Ordinance shall go into effect and be in full force and operation from
and after thirty (30) days after its final passage and adoption. The City Clerk is hereby
authorized and directed to certify to the passage of this Ordinance and to cause the same to be
published in a newspaper of general circulation which is published and circulated in the City, in
accordance with Government Code Section 36933.
This Ordinance was introduced at a regular meeting of the City Council of the City of
Newport Beach held on the 14th day of February, 2006, and thereafter adopted on the
day of 2006, by the following vote, to wit:
AYES, COUNCILMEMBERS
NOES, COUNCILMEMBERS
ABSENT, COUNCILMEMBERS
Don Webb, Mayor
LaVonne Harkless, City Clerk
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 10
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF NEWPORT BEACH )
1, LaVonne M. Harkless, City Clerk of the City of Newport Beach, California, do
hereby certify that the whole number of members of the City Council is seven; that the foregoing
Ordinance No. 2006- was duly and regularly introduced before and adopted by the City
Council of said City at a regular meeting of said Council; duly and regularly held on the _
day of 2006, and that the same was so passed and adopted by the
following vote, to wit:
Ayes:
Noes:
Absent:
Abstain:
IN WITNESS WHEREOF, 1 have hereunto subscribed my name affixed the official seal
of said City this day of 2006.
LaVonne M. Harkless, City Clerk
City of Newport Beach, California
(SEAL)
Ordinance Forming a Redevelopment Agency
February 14, 2006
Page 11
CERTIFICATE OF PUBLICATION
STATE OF CALIFORNIA )
COUNTY OF ORANGE ) ss.
CITY OF NEWPORT BEACH )
I, LAVONNE M. HARKLESS, City Clerk of the City of Newport Beach,
California, do hereby certify that Ordinance No. 2006- has been duly and regularly
published according to law and the order of the City Council of said City and that the same was
so published in the Daily Pilot, a daily newspaper of general circulation on the following date, to
wit: , 2006, and that the same was so passed and adopted by the
following vote, to wit:
IN WITNESS WHEREOF, I have hereunto subscribed my name this day of
.2006.
LaVonne M. Harkless, City Clerk
City of Newport Beach, California
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