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SR-09-08-2015-3R Redevelopment Successor Agency Report City Council Regular Meeting: September 8, 2015 Agenda Item: 3.R 1 of 4 To: Redevelopment Successor Agency From: Andy Agle, Director, Housing Division, Housing and Economic Development Subject: Recognized Obligation Payment Schedule: January through June 2016 Recommended Action Staff recommends that the Redevelopment Succe ssor Agency adopt the attached resolutions approving the Agency’s Draft Recognized Obligation Payment Schedule and administrative budget for January 2016 through June 2016. Executive Summary The Redevelopment Successor Agency is required to prepare Recognized Obligation Payment Schedules (ROPS) and corresponding administrative budgets to be implemented in six-month increments. The ROPS 15-16B includes Successor Agency enforceable obligations of $15,628,464 and an administrative budget of $253,882 covering January 1, 2016 to June 30, 2016. Background Under AB 1484, the Agency is required to prepare a Recognized Obligation Payment Schedule (ROPS) every six months, which identifies the former Redevelopment Agency’s enforceable obligations and sources of payment for those obligations. The Agency is required to submit an approved ROPS to the Department of Finance (DOF) and Los Angeles County Auditor-Controller (CAC) for the period ending June 30, 2016 (ROPS 15-16B) by no fewer than 90 days before the date of the property tax distribution, scheduled on January 2, 2016. Discussion Staff has prepared the ROPS 15-16B and corresponding administrative budget for the period covering January 1, 2016 to June 30, 2016. 2 of 4 The ROPS 15-16B covering January 1, 2016 to June 30, 2016 includes Successor Agency legally binding and enforceable obligations covering the following categories: 1) bond payments 2) indebtedness obligations (including loans, housing agreements, and similar obligations); 3) contracts or agreements necessary for continued administration or operation of the Agency; and 4) Agency administrative cost allowance. The Agency has made its final payment in the amount of $28.39 million to the Los Angeles County Auditor-Controller per the terms of the Stipulated Judgment on Case No. 34-2013-80001382. As a result, DOF has issued a Finding of Completion and the Agency may now seek repayments of loans made by the City to the former redevelopment agency prior to the effective date of the State dissolution laws. The DOF has taken a very narrow view that these loans must be “for money.” Consequently, the DOF has categorically rejected former RDA-City loans that are either in the form of reimbursement agreements, property transfers, or any transfers other than direct transfers of cash from the City to the RDA. While two cities have prevailed in litigation filed against the DOF, seeking recovery of loans based upon reimbursement agreements, the DOF is now seeking to narrow the statutory definition of “loan” in pending legislation (AB 113) to make recovery of these loan proceeds more difficult. The Successor Agency requested reimbursement of one of its loans for the July-December 2015 period (ROPS 15-16A). The DOF rejected the requested repayment on the grounds that the loan was not “for money.” The City of Glendale has recently filed a petition for writ of mandate on the issue of whether the DOF has the authority to reject loans on the grounds that they are not direct cash transfers. As a result, staff does not recommend seeking repayment of any other former RDA-City loans until the pending litigation is resolved or the State legislature clarifies or redefines the meaning of “loan.” Under AB 26, the Agency may receive an administrative cost allowance of up to three percent of the property tax allocated to the Agency each fiscal year, based upon an approved administrative budget which justifies the administrative cost allowance. The amounts of property taxes that are allocated to the Agency are based on an approved ROPS during each six-month period. The administrative cost allowance is 3 of 4 included as an enforceable obligation on the ROPS 15 -16B (see Attachment A, Exhibit 1 Line Item 30). The $253,882 administrative budget has been prepared so that the administrative cost allowance authorized under ROPS 15-16B will reimburse the Agency for expenses associated with implementing the Agency’s duties under AB 26 and AB 1484. Next Steps In accordance with AB 1484, staff will forward the Agency-approved ROPS 15-16B to the CAC for review concurrently with the submission to the Oversight Board for consideration. The CAC review may occur prior to Oversight Board submission or following Oversight Board action. Copies of ROPS 15-16B, as approved by the Oversight Board, will be sent to the State Controller’s Office and the Department of Finance no later than October 5, 2015 and posted on the Agency’s website. DOF is required to make its determination regarding the enforceable obligations on the ROPS no later than 45 days thereafter. Along with the Agency-approved ROPS 15-16B, staff will also submit for approval a reconciliation statement that compares approved funding for items listed on ROPS 14-15B (covering payments authorized during January 1 through June 30, 2015) against actual payments made during the ROPS 14-15B period to the CAC and the Oversight Board. If actual costs were less than authorized costs, the CAC will deduct the difference from the allocations requested by the Successor Agency during the ROPS 15-16B period. In the event that actual costs were greater than projected costs during the ROPS 14-15B period, the CAC will not compensate the Successor Agency or the City for any overpayments because the Department of Finance has instructed the CAC to deny any reimbursements for payments made above previously authorized amounts. On January 2, 2016, the CAC will transfer property taxes into the Agency’s Redevelopment Obligation Retirement Fund (RORF) from which the Agency will pay enforceable obligations listed on the approved ROPS 15-16B. 4 of 4 Financial Impacts & Budget Actions There are no budgetary impacts associated with the adoption of the resolutions approving the draft ROPS 15-16B and administrative budget, unless the Prior Period Adjustments Form covering the ROPS 14-15B period January 1 through June 30, 2015, identifies unallocated and available prior-period Redevelopment Property Tax Trust Fund (RPTTF) funds. If there is an available balance, it will offset the total amount of RPTTF requested by the Successor Agency during the ROPS 15-16B period. The ROPS 15-16B simply sets forth the Agency’s existing financial obligations and administrative costs for the period January 1, 2016 to June 30, 2016. Prepared By: Tina Rodriguez, Successor Agency Administrator Approved Forwarded to Council Attachments: A. Resolution - ROPS 15-16B (January - June 2016) B. Resolution Successor Agency Admin Budget January-June 2016 Ex h i b i t 1 6 6