September 13, 2005

SUBJECT:    Set Date for a Joint Public Hearing of the City Council and the Redevelopment Agency to Consider Adoption of an Amended and Restated Plan for the Central Core Redevelopment Project Area to Update the Plan and to Increase the Tax Increment Collection Limit.

REPORT IN BRIEF

The attached resolutions sets October 25, 2005 as the date for a joint public hearing of the City Council and the Redevelopment Agency and authorizes proceeding with the plan amendment to restate the Redevelopment Plan to conform with current redevelopment law and to increase the limit on the total amount of tax increment that the Agency may receive over the term of the Plan. The proposed Amended Plan will provide for sufficient tax increment to make redevelopment of the Town Center Mall feasible, allow for necessary public improvement projects, and will increase the Redevelopment Agency’s ability to repay existing debt obligations. Agency staff will conduct a community meeting on October 3, 2005 with property owners, business owners and residents in the Redevelopment Project Area, and the Planning Commission will review the proposed Amended Plan at its meeting of October 10, 2005.

Staff recommends that the Agency Board adopt the attached resolutions setting October 25, 2005 as the date for a joint public hearing and authorizing the amended plan adoption process.

BACKGROUND

On May 17, 2005 the Redevelopment Agency (RDA 05-007) took the first step in a plan amendment process by adopting a resolution authorizing staff to distribute the Draft Amended and Restated Plan and Preliminary Report to all affected taxing entities, the City Council, and various other interested persons and entities as required by law. The Agency distributed the Preliminary Report on July 8, 2005 to allow for the mandatory 90 day review process. The Preliminary Report provided background information to the Agency and taxing entities affected by the proposed Plan Amendment. A subsequent and more extensive Final Report on the Amended Plan will be made available for public review and for consideration by the City Council and Redevelopment Agency as part of the final approval process on October 25, 2005.

EXISTING POLICY

The Redevelopment Implementation Plan states:

Goal 1 - Meet the Agency’s Existing Financial and Administrative Obligations.

Goal 2 – Establish the downtown as the cultural, retail, financial and entertainment center of the community, complemented by employment, housing and transit opportunities.

The Fiscal Management Sub-Element 7.1C.1C.4 states: Tax Increment – For improvements required to increase future tax base and where rehabilitation or redevelopment is required.

DISCUSSION

The Sunnyvale Redevelopment Agency is preparing an Amended and Restated Redevelopment Plan for the Central Core Redevelopment Project for consideration by the City Council and Redevelopment Agency at a joint public hearing on October 25, 2005. The proposed Amended Plan will restate the existing Plan, updating it to conform with current redevelopment law. It will also increase the limit on the total amount of tax increment that the Agency may receive over the term of the Redevelopment Plan. An Amended and Restated Plan is considered a “major” amendment. The amendment involves a mandated process designed to provide the legislative body with the necessary analysis and input to make informed decisions about the purpose, scope and content of the redevelopment plan amendment and, ultimately, about whether to adopt the amended plan.

California Redevelopment Law requires that a joint public hearing with the City Council and Redevelopment Agency Board be conducted. The attached resolutions authorize and set the date of the joint public hearing for October 25, 2005 at 7:00 PM in the Council Chambers, and authorize proceeding with the plan amendment adoption process for the purpose of considering the Amended and Restated Plan for the Redevelopment Project Area.

The resolutions further direct Agency staff to: 1) publish a Legal Notice of the joint public hearing not less than once a week for four successive weeks prior to the public hearing in The Sun newspaper; 2) mail, by first class mail, a copy of the Notice to the last known address of each property owner in the Redevelopment Project Area as shown on the last equalized assessment roll of Santa Clara County; 3) mail, by first class mail, a copy of the Notice to the occupants of each address in the Redevelopment Area, thereby providing additional notice to businesses and residents in the Project Area; and 4) mail, (by certified mail, return receipt requested) a copy of the Notice to the governing body of each of the taxing agencies which levies taxes upon any property in the Project.

If authorized, Agency Staff will mail out on September 14, 2005 first class letters to all property owners, business owners and tenants in the Redevelopment Area.  This will result in several hundred letters being mailed out to assure proper notification.

As required by Redevelopment Law, Agency staff will conduct a community meeting on October 3, 2005 at 6:00 PM in the West Conference Room, in order to explain the proposed amendment to concerned property owners, business owners and tenants and answer questions that they might have.

The Sunnyvale Planning Commission is scheduled to review and make recommendation to the City Council regarding the proposed Amended Plan at its regular meeting of October 10, 2005. 

FISCAL IMPACT

The Agency had previously appropriated $135,000 for the Redevelopment Plan Amendment project  for consulting fees, legal fees, noticing costs, and other related costs (August 12, 2003, RDA 03-007/Project No. 824430); $96,695 has been spent to date. The remaining budget of $38,305 will be carried over to FY 2005/2006 to complete the project.  Action by the Agency to set a date for a joint public hearing will have no further fiscal impact.

If the proposed amendment is ultimately adopted, it is estimated that the Agency will realize $98 million in additional tax increment revenue over the life of the project considering only the Mall development, and considerably more if the Town and Country and other projects are redeveloped. A portion of this additional tax increment generated by the Town Center Mall will be returned to the developer as part of the Disposition, Development and Owner Participation Agreement with Fourth Quarter Properties, XLVIII, LLC approved by the Redevelopment Agency on August 17, 2004 and executed on February 24, 2005. The additional tax increment will also be used to make debt service payments of approximately $47 million to the General Fund. If the tax increment cap is not raised, the Agency will not be legally able to make scheduled debt service payments after reaching the existing cap on or about FY 2014/2015. It is projected that approximately $80 million in outstanding loans to the City General Fund and approximately $5 million in outstanding bonded indebtedness would remain unpaid at that time.

It should be noted that even with the tax increment cap increase, the Agency’s outstanding debt obligations to the City General Fund are not expected to be fully repaid at the end of the project. This is due to the compounding of existing debt at 8% interest per year and ongoing debt accumulation to fund operating and other expenditures of the Agency. At the close of FY 2003/2004, The Agency’s outstanding debt to the City’s General Fund totaled approximately $48.7 million.

PUBLIC CONTACT

Public contact was made through posting of the 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. Adopt the attached resolutions setting October 25, 2005 as the date for a joint public hearing and authorizing the plan amendment adoption process.
2. Do not adopt the attached proposed resolutions.

RECOMMENDATION

Staff recommends Alternative 1.

The proposed Amended Plan will provide for sufficient tax increment to make redevelopment of the Town Center Mall feasible. In addition, it allows for future necessary public improvements, such as street improvements and public parking. It will also permit the Agency to repay approximately an additional $47 million of debt to the General Fund.

Reviewed by:

Robert Paternoster, Secretary, Redevelopment Agency

Prepared by: Brice McQueen, Manager, Redevelopment Agency

Reviewed by:

Mary Bradley

Treasurer, Redevelopment Agency

Approved by:

Amy Chan

Executive Director, Redevelopment Agency

Attachments

A.       Resolution of the Redevelopment Agency setting October 25, 2005 as the date for a joint public hearing.

B.       Resolution of the Redevelopment Agency authorizing the plan amendment adoption process.