sr-041012-3iSuccessor Agency Meeting: April 10, 2012
Agenda Item: -
To: Chairperson and Successor Agency
From: Andy Agle, Director of Housing and Economic Development
Gigi Decavalles- Hughes, Director of Finance
Subject: Amended Draft Recognized Obligation Payment Schedules and
Administrative Budgets
• •uu- I M .I -
Staff recommends that the Santa Monica Redevelopment Successor Agency (the
Successor Agency) adopt the attached Resolutions approving the Successor Agency's
Amended Draft Recognized Obligation Payment Schedules and administrative budgets
for the periods February through June 2012 and July through December 2012.
Executive Summary
This report summarizes the obligations of the Successor Agency under AB x1 26 to
draft Recognized Obligation Payment Schedules (ROPS) and corresponding
administrative budgets to be implemented in six -month periods. This report also
recommends that the Governing Board of the Successor Agency adopt the attached
resolutions, approving the amended draft ROPS and administrative budgets for the
periods February through June 2012 and July through December 2012.
Background
As a result of AB x1 26, the City's Redevelopment Agency dissolved on
February 1, 2012 and the City of Santa Monica became the Successor Agency
designated to implement the dissolution and management of the former Redevelopment
Agency's assets. As part of the dissolution procedure, AB x1 26 requires the Successor
Agency to prepare a Recognized Obligation Payment Schedule (ROPS), which
identifies the former Redevelopment Agency's enforceable obligations and sources of
payment of those obligations every six months. The ROPS must be approved by the
Oversight Board and the first ROPS certified by the County- Auditor Controller. AB x1 26
1
also provides that the Successor Agency may receive an administrative cost allowance
of up to five percent of the property tax allocated to the Successor Agency for the
2011 -12 fiscal year and up to three percent of the property tax allocated to the
Successor Agency for each year thereafter, based upon an approved administrative
budget which justifies the allocation of the administrative cost allowance. The amounts
of property taxes that are allocated to the Successor Agency are based on an approved
ROPS during each six -month period.
Discussion
On February 28 2012, the Successor Agency adopted its initial draft ROPS for the
periods between February 1, 2012 to June 30, 2012 and July 1, 2012 to
December 31, 2012. Since the adoption of these draft ROPS, staff attended two Town
Hall meetings presented by the County of Los Angeles. During these meetings, County
staff advised of its position that the enforceable obligations identified on the February
through June 2012 ROPS must be paid from property taxes allocated to the
Redevelopment Agency in November 2011 through January 2012 and enforceable
obligations identified on the July through December 2012 ROPS must be paid from the
property taxes to be allocated to the Successor Agency on June 1, 2012. To
accommodate these restrictions on payments and sources of payments, staff
recommends adopting an amended ROPS for the February through June 2012 and July
through December 2012 periods to optimize the availability of funds to pay all
enforceable obligations through January 16, 2013, which is the next scheduled date for
distribution of property taxes to the Successor Agency.
The proposed administrative budgets for these two periods have also been prepared so
that the Successor Agency can collect the Administrative Cost Allowance for each
period to the extent that there are sufficient funds to cover such costs. The City's
General Fund will initially fund the Successor Agency's administrative costs and will be
reimbursed by the administrative cost allowance. The purpose of the administrative
budget is to support receipt of property taxes to reimburse the City for costs associated
2
with carrying out Successor Agency responsibilities including administration,
compliance and financial reporting.
Under AB x1 26, the distribution of property tax revenues is structured as a waterfall of
payments in which Tier 1 obligations consisting of statutory pass- through payments and
administrative costs of the County of Los Angeles and Department of Finance are paid
first; obligations on the Successor Agency's ROPS will be paid in Tier 2 using any
remaining funds from Tier 1; and, the Successor Agency administrative costs will be
paid in Tier 3 using any remaining proceeds from Tier 2. At this time, staff anticipates
there will be insufficient proceeds from this payment waterfall to reimburse the
Successor Agency's administrative costs for the amended ROPS covering February 1,
2012 to June 30, 2012, resulting in a funding gap of approximately $1.2 million to the
General Fund. Moreover, since the County and State have yet to calculate or publish
their administrative costs, it is difficult to estimate how much is available to pay for the
Successor Agency's enforceable obligations in Tier 2 and whether there will be any
funds remaining to pay for the Successor Agency's administrative costs in Tier 3 for the
amended ROPS period of July 1, 2012 through December 31, 2012. Given the
uncertainties described with the County and State's administrative costs, the City may
not receive full reimbursement for its costs, potentially requiring the General Fund to
fund an additional gap. Staff will closely monitor the actions of the Oversight Board,
County and State to gauge potential impacts to Santa Monica, and will return to Council
to discuss the impacts to the General Fund and options to consider in the City's
FY 2012 -13 Budget.
Next Steps
Once approved, staff will forward the two amended initial draft ROPS and administrative
budgets to the Oversight Board for approval, with a copy sent to the State Controller's
Office and the Department of Finance by April 15, 2012, and a copy posted on the City's
website.
3
On June 1, 2012, and on each January 16 and June 1 thereafter, the County Auditor -
Controller will transfer property taxes into the Successor Agency's Redevelopment
Obligation Retirement Fund (RORF), from which the Successor Agency will pay
enforceable obligations listed on the certified BOPS.
Financial Impacts & Budget Actions
There are no budgetary impacts associated with the adoption of the resolutions
approving the amended draft ROPS and administrative budgets. The ROPS simply
sets forth the Successor Agency's existing financial obligations and administrative costs
for the periods between February 1, 2012 to June 30, 2012 and July 1, 2012 to
December 31, 2012.
Prepared by: Nia Tang, Acting Administrative Services Officer
Approved: Forwarded to Council:
Andy Agle, Director
Housing and Econo
Director, Finance
Attachments:
Rod Gould
City Manager
Attachment A: Resolution — Amended 1st ROPS (Feb — June 2012)
Attachment B: Resolution —Amended 2nd ROPS (July — December 2012)
Attachment C: Resolution — Admin Budget (Feb — June 2012)
Attachment D: Resolution — Admin Budget (July — December 2012)
11
Reference Resolution Nos.
4 (SAS), 5 (SAS), 6 (SAS),
and 7 (SAS).