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SR 01-09-2018 3H City Council Redevelopment Successor Agency Report City Council Meeting: January 9, 2018 Agenda Item: 3.H 1 of 3 To: Redevelopment Successor Agency, Mayor and City Council From: Andy Agle, Director, Housing and Economic Development Subject: Adoption of the 2018-19 Annual Recognized Obligation Payment Schedule Recommended Action Staff recommends that the Redevelopment Successor Agency adopt resolutions approving the Agency’s draft recognized obligation payment schedule and administrative budget for July 1, 2018 through June 30, 2019. Executive Summary In compliance with the statewide elimination of all Redevelopment Agencies in 2012, the Redevelopment Successor Agency is required to prepare a recognized obligation payment schedule (ROPS) and corresponding administrative budgets to be implemented in yearly increments. The ROPS ensures that all of the obligations of the former redevelopment agency are fulfilled. The ROPS 2018-19 includes Successor Agency enforceable obligations of $29,301,630 and an administrative budget of $639,873 covering July 1, 2018 to June 30, 2019. Background Under the governing statutes that implemented the dissolution of redevelopment agencies statewide, each redevelopment successor agency is required to prepare a recognized obligation payment schedule (ROPS) on a yearly basis. The ROPS identifies a former redevelopment agency’s enforceable obligations within 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 an agency; and 4) an allowance for an agency’s administrative costs. The ROPS also identifies the sources of payment for the obligations, including bond proceeds, interest income, and distributions of tax increment revenue from the State’s Redevelopment Property Tax Trust Fund (RPTTF). Each 2 of 3 successor agency is required to submit an approved ROPS to the California Department of Finance and the relevant county auditor-controller for the period ending June 30, 2019 (ROPS 18-19) by February 1, 2018. Discussion The ROPS 2018-19 for the period of July 1, 2018 through June 30, 2019 includes all Successor Agency enforceable obligations. All proposed ROPS 2018-19 enforceable obligations have been previously listed and approved for payment on a previous ROPS. 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, based upon an approved administrative budget which justifies the administrative cost allowance. Based on estimated property tax allocation to the Agency for fiscal year 2017-18, the administrative cost allowance cap would be $222,201. As a result, $417,672 of the Agency’s administrative costs would not be reimbursed. The administrative budget is included as an enforceable obligation on the ROPS 2018- 19 (see Attachment A, Exhibit 1, Line Item 30). Next Steps Copies of the ROPS 2018-19, as approved by the Oversight Board, must be sent to the State Controller’s Office and the Department of Finance and posted on the Agency’s website no later than February 1, 2018. The Department of Finance must make its determination regarding the ROPS 2018-19 no later than April 15, 2018. Financial Impacts and Budget Actions On June 1, 2018 and January 2, 2019, the Los Angeles County Auditor-Controller will transfer property taxes into the Agency’s cash account from which the Agency will pay enforceable obligations listed on the approved ROPS 2018-19. Before the distributions take place, the DOF must issue a determination letter with the total RPTTF revenues to be disbursed for enforceable obligations along with a final administrative cost allowance 3 of 3 cap amount. The administrative cost allowance, estimated at $222,201, would then be transferred to the General Fund. It is staff’s practice to share a draft ROPS with DOF staff prior to final submittal to ensure that all DOF questions are answered prior to formal review and approval. There are no other budgetary impacts associated with the adoption of the resolutions approving the ROPS 2018-19 and administrative budget. The ROPS 2018-19 simply sets forth the Agency’s existing financial obligations and administrative costs for the period July 1, 2018, to June 30, 2019. Prepared By: Steven Hull, Principal Administrative Analyst Approved Forwarded to Council Attachments: A. Administrative Budget Resolution B. ROPS Resolution