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SR 01-12-2016 3M Redevelopment Successor Agency Report City Council Regular Meeting: January 12, 2016 Agenda Item: 3.M 1 of 4 To: Redevelopment Successor Agency From: Andy Agle, Director, Housing Division, Housing and Economic Development Gigi Decavalles-Hughes, Director Subject: Recognized Obligation Payment Schedule: July 2016 through June 2017 and Administrative Budgets Recommended Action Staff recommends that the Redevelopment Successor Agency adopt the attached resolutions approving the Agency’s Draft Recognized Obligation Payment Schedule (“ROPS 16-17”) and administrative budget for July 1, 2016 through June 30, 2017. Executive Summary The Redevelopment Successor Agency is required to prepare Recognized Obligation Payment Schedules (ROPS) and corresponding administrative budgets to be implemented in yearly increments. The ROPS 16-17 includes Successor Agency enforceable obligations of $30,839,302 and an administrative budget of $1,034,021 covering July 1, 2016 to June 30, 2017. Background Under AB 1484 and SB 107 which implemented the dissolution of redevelopment agencies statewide, the Agency is required to prepare a Recognized Obligation Payment Schedule (ROPS) on a yearly basis starting July 1, 2016, 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, 2017 (ROPS 16-17) by February 1, 2016. In accordance with AB 1484 and SB107, the CAC has the opportunity to review ROPS and object to the inclusion of items and the proposed funding sources. Discussion Staff has prepared the ROPS 16-17 and corresponding administrative budget for the 2 of 4 period covering July 1, 2016 to June 30, 2017. The ROPS 16-17 covering July 1, 2016, to June 30, 2017, 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 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, 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 proposed ROPS 16-17 seeks repayment of loans made by the City to the former redevelopment agency, including two Parking Authority loans and one City loan associated with a 1978 acquisition note made prior to redevelopment dissolution. Under AB 26 and SB 107, the Agency may receive an administrative cost allowance of up to three percent of the property tax allocated to the Agency each fiscal year, reduced by City loan repayments, and 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 yearly period, commencing on July 1, 2016. The $688,523 administrative cost allowance is included as an enforceable obligation on the ROPS 16-17 (see Attachment A, Exhibit 1, Line Item 30). The $1,034,021 administrative budget has been prepared so that the $688,523 administrative cost allowance authorized under ROPS 16-17 will reimburse the Agency partially for expenses associated with implementing the Agency’s duties under AB 26, AB 1484, and SB 107. Next Steps In accordance with AB 1484 and SB 107, staff will forward the Agency-approved ROPS 16-17 to the CAC for review concurrently with the submission to the Oversight Board for consideration. The CAC review may occur prior to Oversight Board 3 of 4 submission or following Oversight Board action. Copies of ROPS 16-17, as approved by the Oversight Board, will be sent to the State Controller’s Office and the Department of Finance no later than February 1, 2016, and posted on the Agency’s website. DOF is required to make its determination of the enforceable obligations on the ROPS no later than April 15, 2016. Along with the Agency-approved ROPS 16-17, staff will also submit for approval a reconciliation statement that compares approved funding for it ems listed on ROPS 15-16A (covering payments authorized during July 1 through December 31, 2015) against actual payments made during the ROPS 15 -16A 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 16-17 period. In the event that actual costs were more than projected costs during the ROPS 15-16A 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. Once ROPS 16-17 is approved by the Oversight Board and DOF, the Successor Agency will be eligible to submit a "Last and Final Recognized Obligation Payment Schedule" to the Oversight Board and DOF for approval. If this final schedule is approved by the Oversight Board and DOF, the Successor Agency will no longer need to submit an annual Recognized Obligation Payment Schedule to the Oversight Board or the DOF. Therefore, Successor Agency staff will bring back a Last and Final Recognized Obligation Payment Schedule for Successor Agency approval after the Oversight Board and DOF approves ROPS 16-17. Financial Impacts and Budget Actions On June 1, 2016 and January 2, 2017, the CAC 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 approved ROPS 16-17 period. 4 of 4 There are no other budgetary impacts associated with the adoption of the resolutions approving the draft ROPS 16-17 and administrative budget, unless the Prior Period Adjustments Form covering the ROPS 15-16A period July 1, 2015 through December 31, 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 16-17 period. The ROPS 16-17 simply sets forth the Agency’s existing financial obligations and administrative costs for the period July 1, 2016, to June 30, 2017. Prepared By: Tina Rodriguez, Successor Agency Administrator Approved Forwarded to Council Attachments: A. Attachment A - Resolution SA ROPS Schedule (July 2016 - June 2017) B. Attachment B - Resolution SA Admin Budget FY 16-17 (July 2016 - June 2017)