December 18, 2003

SUBJECT: Outside Counsel Services Agreement for Redevelopment and Related Real Estate Matters and Budget Modification No. 22

REPORT IN BRIEF

This report requests special project funding in the amount of $86,000 for an outside counsel services agreement with the law firm of Goldfarb & Lipman for legal expertise associated with downtown redevelopment matters.  Funding is currently available from the November 2003 refunding of the Redevelopment Agency’s Series 1992 Tax Allocation Bonds (TABs).  Staff recommends that the Redevelopment Agency (Agency) approve Alternative 1 and Budget Modification No. 22 to create a special project to fund the outside counsel services agreement for downtown redevelopment matters.  

BACKGROUND

Customarily, outside legal services are procured through the City Attorney/General Counsel’s office, and funded through that department’s program budget.  Occasionally, staff will seek an alternative method if significant legal or other extraordinary assistance is needed for a particular matter.  Because of the increasingly complex nature of negotiations surrounding the downtown redevelopment, the City Attorney/General Counsel has suggested that a special project be created to fund and account for outside counsel services related to these matters.  Staff is recommending this project be funded from savings associated with the 2003 Tax Allocation Refunding Bonds (bonds).

DISCUSSION

When the bonds were sold in November 2003, the Agency obtained a slightly more favorable interest rate than initially thought.  This has created a total net debt service savings of approximately $1.2 million over the life of the bonds.  The current year savings is approximately $234,000 and the FY 2004/2005 savings is approximately $106,000 for a two year total of $340,000.  Thereafter, net yearly debt service savings level off to a range of about $54,000 to $59,000.  The Agency previously approved several special projects utilizing $254,000 of the $340,000, leaving a remaining balance of $86,000.  Staff proposes that the remaining $86,000 be utilized to fund an outside services agreement through FY 2004/2005 to assist the City Attorney with critical legal expertise pertaining to the downtown redevelopment.

FISCAL IMPACT

The Agency’s TABs are paid from tax increment revenues.  As the Agency Board is aware, this revenue is derived from property taxes generated by the Agency through development activities.  At the time a development project is undertaken, the base property tax levy on the property is frozen and the full amount of incremental taxes due to increased value of the property becomes the Agency’s revenue.  The Agency’s tax increment revenue is based on development activity in the project area, which is the downtown area of the City.

This Budget Modification would utilize the remaining $86,000 in up-front savings, as identified above, to fund the outside counsel services described in the attached agreement.

Budget Modification No. 22

FY 2003/2004

PUBLIC CONTACT

Public Contact was made through posting of the Agency agenda on the City’s official notice bulletin board, posting of the agenda and report on the City’s web page and the availability of the report in the Library and the City Clerk’s Office.

ALTERNATIVES

1. Approve an agreement for services with the law firm of Goldfarb & Lipman for outside counsel services for redevelopment and related matters in substantially the attached form, and approve Budget Modification No. 22.

2. Do not approve an agreement for services with Golfarb & Lipman for outside counsel services for redevelopment and related matters.

RECOMMENDATION

Staff recommends that the Agency approve Alternative 1.

Prepared by:

Pete Gonda
Senior Management Analyst, Finance

Reviewed by:

Mary J. Bradley
Agency Treasurer

Reviewed by:

Robert Paternoster
Director, Community Development

Approved by:

Robert S. LaSala
Executive Director – Secretary 

Attachments

A. Outside Counsel Services Agreement