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Date: To: From: Subject: May 7, 2012 Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency Lori Trevifio, Economic Development Manager Mary Dodge, Administrative Services Director AGENDA BILL Agenda Item No. 4(8) Consideration of Corrected First Recognized Obligation Payment Schedule ("ROPS"), Draft Second ROPS, and Proposed FY 12-13 Administrative Budget for the Successor Agency to the El Cerrito Redevelopment Agency ACTION REQUESTED Adopt Oversight Board resolutions approving: 1} A corrected First Recognized Obligation Payment Schedule ("ROPS"), 2) The Draft Second ROPS, and 3) The Proposed FY 12-13 Administrative Budget for the Successor Agency to the El Cerrito Redevelopment Agency. BACKGROUND On June 30, 2011, activities of the El Cerrito Redevelopment Agency ("RDA") were suspended pursuant to AB1x26. On August 15, 2011, the RDA adopted an Enforceable Obligations Payment Schedule ("EOPS") for those payments due during its suspension. At the same time, the City of El Cerrito ("City") elected to serve as the Successor Agency to the El Cerrito Redevelopment Agency after the RDA's dissolution. While in extended suspension during the CRA v. Matosantos litigation, the RDA received its usual tax increment payment on December 16, 2011, rather than redevelopment property tax revenue a month later subject to the distribution process outlined in AB1x26. The EOPS was amended January 17, 2012, reflecting payments due on the RDA's obligations prior to its dissolution effective on February 1, 2012. The RDA paid its enforceable obligations and then transferred its remaining assets and liabilities to a SA fiduciary fund, including sufficient cash to pay the promissory note payment due prior to the first payment from the newly created Redevelopment Property Tax Trust Fund On February 21, 2012, the SA reviewed and authorized submittal of the draft First ROPS covering payments due between February and June, 2012. The Oversight Board to the SA held its first meeting on April 4, 2012, at which time it approved the FY 11-12 Administrative Budget for the SA that staff had prepared; and the draft first ROPS that the SA had reviewed and authorized. The first ROPS was submitted to the Department of Finance ("DOF") on April 5, 2012, prior to the requested submittal date of April 15, 2012. ---PAGE BREAK--- Agenda Item No. 4(8) CORRECTED FIRST RECOGNIZED OBLIGATIONS PAYMENT SCHEDULE On April 20, 2012 the DQ,F notified the SA that the First ROPS submitted was considered incomplete because it did not include payments for the month of January 2012 and therefore was being returned to the 0 B for reconsideration. Although the SA did not exist in January and therefore did not have any ROPS items payable in that month, City staff has revised the ROPS previously considered by the OB to include a column for the month of January and utilizing a form consistent with the DOF's preferred template. Additionally, the DOF is disputing the enforceability of the two Cooperation Agreements, despite no payments being due on either obligation during the first ROPS period. The corrected First ROPS being considered by the OB includes the Cooperation Agreements for informational purposes, while the SA attempts to resolve the disputed items. Additionally, the First ROPS has been revised to include pass-through payments for FY 2011-12. The County Auditor-Controller ("CAC") recently notified the SA of the obligation to pay the former RDA's pass-through payment obligations from the December 2011 tax increment payment. It also provided a methodology for how any residual funds in the SA's at the end of each ROPS period would be distributed to taxing entities. From the available balance in the SA's funds are allocated as follows: 1. County Administration Fee 2. Pass-Through Payments to Taxing Entities 3. Payments on the SA's ROPS; and 4. Successor Agency Administrative Cost Allowance. Any residual amount would be distributed to the taxing entities. However, if this calculation results in insufficient funds for the SA's ROPS payments, the Successor Agency Administrative Allowance and then the Pass-Through Payments are reduced in the current ROPS period, so as to ensure that the SA's recognized obligations are paid. The legislation strongly implies that in this scenario pass-through payments would be reduced and not deferred, but it is not clear whether FY 11-12 payments will be treated in that manner. The CAC provided notice to the SA that any funds intended to cover payments on the First ROPS were distributed as tax increment to the RDA on December 16, 2011 and at that time indicated that no additional payments were anticipated to be made on May 16, 2012 from the However, subsequently the CAC also noted that funds for payments on the Second ROPS (covering July 1 to December 31, 2012) would be distributed on June 1, 2012 and could be advanced on May 16, 2012 from the if nectded to cover expenses on the first ROPS. ---PAGE BREAK--- Agenda Item No. 4(8) Based on discussions with the CAC, City staff estimated the funds that will be available-either as cash on, hand or payments from the the First and Second ROPS periods are as follows: Cash from former RDA May payment from June payment from _ Total $ 636,500 306,100 1,822,100 $2.764.700 This amount is sufficient to pay the bond debt and promissory note payments on both the First and Second ROPS, but the timing of other payments on the First ROPS will need to be adjusted to match the funds available. Additionally, the CAC noted that estimates provided to the SA are subject to change and new information is becoming available and legislation may be revised. SECOND RECOGNIZED OBLIGATIONS PAYMENT SCHEDULE At its April 17, 2012 meeting, the SA reviewed and authorized submittal of a draft Second ROPS, covering payments of obligations due between July and December, 2012. It was based largely on the informational version of the draft Second ROPS that had been provided to both the SA and OB when reviewing and/or approving the draft First ROPS. Based on the subsequent communications from the CAC and the DOF, City staff has made revisions to the draft Second ROPS authorized by the SA, as was necessary in order to submit it for review to the DOF in a timely fashion. In addition to consolidating bond debt into one line item for simplicity, the revisions to the draft Second ROPS authorized by the SA are as follows: • The Cooperation Agreements with the City of El Cerrito and the El Cerrito Municipal Services Corporation remain on the draft Second ROPS, including the payments due in July, 2012, but with a note that the SA requests establishment of a reserve for those payments while it pursues resolution of the disputed items. • Payments on the First ROPS for which there is likely not sufficient funding have been listed as obligations on the draft second ROPS. • Pass-Through Payments and the Successor Agency Administrative Allowance for FY 11-12 have been added as obligations. SUCCESSOR AGENCY ADMINISTRATIVE BUDGET A proposed FY12-13 Administrative Budget for the SA is Exhibit A to the attached OB Resolution. Regardless of the SA's actual administrative expenses, the SA is entitled to an administrative allowance of $250,000 annually. However, should there be insufficient funds available for obligations payable in any ROPS period, the administrative allowance for that ROPS period will be the first item to be reduced. ---PAGE BREAK--- Reviewed by: cott Han1n City Manager Attachments: Agenda Item No. 4(8) 1. Oversight Board Resolution 20 12-XX, approving the corrected draft First Recognized Obligation Payment Schedule Required under AB 1 x26 2. Oversight Board Resolution 2012-XX, approving the draft Second Recognized Obligation Payment Schedule Required under AB 1 x26 3. Oversight Board Resolution 2012-XX, approving the Successor Agency Administrative Budget for FY 12-13 ---PAGE BREAK--- Agenda Item No. 4(B) Attachment 1 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE EL CERRITO REDEVELOPMENT AGENCY RESOLUTION 2012-XX RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE EL CERRITO REDEVELOPMENT AGENCY APPROVING THE CORRECTED DRAFT FIRST RECOGNIZED OBLIGATION PAYMENT SCHEDULE AS REQUIRED UNDER AB1X26 WHEREAS, as part of the 2011-12 State budget bill, AB 1 x26 (the "Dissolution Act") was enacted significantly modifying the Redevelopment Law to require the dissolution of redevelopment agencies throughout California and the establishment successor agencies to wind down the former redevelopment agencies' affairs; and WHEREAS, on August 15, 2011, pursuant to the Dissolution Act, the City elected to serve as the Successor Agency to the El Cerrito Redevelopment Agency (the "Successor Agency"); and WHEREAS, Section 34179(a) of the Health and Safety Code provides for the establishment of an Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency (the "Oversight Board"); and WHEREAS, the Dissolution Act requires the Successor to prepare a draft of the First Recognized Obligations Payment Schedule ("ROPS") by March 1, 2012, to be certified by the County Auditor-Controller, approved by an oversight board and reviewed by the California Department of Finance; and WHEREAS, once certified by the County Auditor-Controller and approved by the Oversight board, the approved ROPS will serve as the spending plan during its operative period; and WHEREAS, the City Council, acting in its role as governing board of the Successor Agency, reviewed and authorized a draft First ROPS that was prepared pursuant to the Dissolution Act, which was approved by Oversight Board of the Successor Agency on April 4, 2012, but returned by the State Department of Finance on April 20, 2012 for correction and reconsideration; and WHEREAS, a corrected draft First ROPS, revised consistent with the information provided by the State Department of Finance and the County Auditor-Controller, is Exhibit A to this Resolution, for reconsideration by the Oversight Board and re-submittal to the State Department of Finance and the County Auditor-Controller. ---PAGE BREAK--- Agenda Item No. 4(B) Attachment 1 NOW THEREFORE, BE IT RESOLVED that the Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency hereby approves the First Recognized Obligation Payment Schedule as required under the Dissolution Act and attached hereto as Exhibit A. BE IT FURTHER RESOLVED that the Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency authorizes the submittal of the approved initial Recognized Obligation Payment Schedule as required under the Dissolution Act. BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon its passage and adoption. ---PAGE BREAK--- DRAFT RECOGNIZED OBLIGATION PAYMENT SCHEDULE PER AB1X26 Of the Successor Agency to the El Cerrito Redevelopment Agency for the City of El Cerrito Redevelopment Project Area Project Name I Date of Payee Description Debt Obligation Agreement 1997 Tax Refunding of prior 1 ) Allocation Bonds, 12/17/1997 Union Bank Series A TAB for Redev Projs 1998 Tax Refunding of prior Project Area City of El Cerrito Redevelopment Project Area City of El Cerrito Total Total Due Outstanding During Obliaation FY2011-12 Jan 2012 4,748,728 557,548 !Agenda Item No. 4(8) '1 !Attachment 1, Exhibit A 1 Payable from the Redevelopment Property Tax Trust Fund Pa ments by month Feb 2012 Mar 2012 Apr 2012 May 2012 Jun 2012 Total 470,868 470,868 I 2) Allocation Bonds, 12/17/1997 Union Bank TAB for L&M Hsg Redevelopment 1,091,775 215,938 195,200 195,200 I Series B Projs Project Area 2004 Tax Tax-exempt TAB for City of El Cerrito 3) Allocation Bonds, 10/24/2004 Union Bank Redevelopment 13,849,540 426,228 213,114 213,114 Series A Infrastructure Projs Project Area 2004 Tax Portion of Taxable City of El Cerrito 4) Allocation Bonds, 10/24/2004 Union Bank TAB for Redev Projs Redevelopment 492,090 492,090 481,045 481,045 Series B (Non- Project Area 2004 Tax Portion of Taxable City of El Cerrito 5) Allocation Bonds, 10/24/2004 Union Bank TAB for L&M Hsg Redevelopment 5,521,045 273,065 171,533 171,533 Series B (Housing) Projs Project Area 6) Valente Promissory Loan for land City of El Cerrito 3/5/2009 George Valente acquistion Redevelopment 3,746,801 288,215 288,215 288,215 Note Project Area 7) Cooperation El Cerrito Municipal Redevelopment Plan City of El Cerrito 317/2011 implementation (non- Redevelopment 106,230,000 1~626,340 - Agreement Services Corporation housing) Project Area 8) Cooperation Redevelopment Plan City of El Cerrito 2/22/2011 City of El Cerrito implementation Redevelopment 50,700,000 208,670 - Agreement (housing) Project Area 9) 2009-201 0 SERAF Funds advanced for City of El Cerrito 2/16/2010 L&M Housing Fund SERAF payment Redevelopment 1,327,655 331,914 331,914 331,914 Loan Project Area 2005-2006 ERAF Funds advanced for City of El Cerrito 10) Loan 4/17/2006 L&M Housing Fund ERAF payment Redevelopment 335,436 83,859 83,859 83,859 Project Area Ohlone Gardens Undisbursed loan City of El Cerrito 11) Loan Agreement 6/24/2009 Ohlone Gardens LP commitment Redevelopment 477,821 477,821 471,152 471 '152 Project Area Eden Housing Undisbursed loan City of El Cerrito 12) 5/17/2011 Eden Housing Redevelopment 350,000 350,000 310,000 310,000 Loan Agreement commitment Project Area Administrative Administrative City of El Cerrito 13) Allowance Statutory City of El Cerrito Allowance per Redevelopment 3,500,000 250,000 50,000 50,000 50,000 50,000 50,000 250,000 AB1x26 Project Area Pass-Through 1993 Contracts Attributable to City of El Cerrito 14) & 1994 Taxing Entities 12/16/2011 Tax Redevelopment 507,493 507,493 - Payments Statutory Increment Payment Project Area Totals $ 192,878,384 $6,089,181 $ - $ 50,000 $ 338,215 $ 50,000 $ 1,246,925 $ 1,581,760 $ 3,266,900 Notes Items 7 & 8: During the review by the Department of Finance (DOF) of the draft first ROPS, approved by the Oversight Board on April 4, 2012, DOF objected to Items 7 & 8. The disputed items are displayed for reference purposes but can be considered removed from this draft First ROPS. The Successor Agency retains the right to pursue resolution of the disputed items and include them on subsequent ROPS. The Successor Agency is not requesting the establishment of a reserve on the current ROPS for payments on the disputed items, since no payments were due for the disputed items during the current ROPS period. Items 9 & 10: Should funds available for the first ROPS period be insufficient, the FY11-12 payments on the ERAF and SERAF loans will be listed as obligations on the next ROPS. I I I Items 11& 12: Amounts due for housing loan commitments are to fund payments disbursed in subsequent months, as demanded by payee. Should there be insufficient funding available, the obligations will be moved to the secon< ROPS. Item 13: payments for Administrative Allowance are estimates of expenses. As funding is insufficient, the FY11-12 allowance will be added as an obligation on the second ROPS. Item 14: Subsequent to the original consideration of the draft First ROPS by the Successor Agency and the Oversight Board, the Successor Agency was provided the amounts due from the tax increment paid to the Redevelopmen1 Agency on 12/16/11. As the balance of the is insufficient to pay these payments, they will be listed as obligations on the second ROPS. ---PAGE BREAK--- Agenda Item No. 4(B) Attachment 2 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE EL CERRITO REDEVELOPMENT AGENCY RESOLUTION 2012-XX RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE EL CERRITO REDEVELOPMENT AGENCY APPROVING THE SECOND RECOGNIZED OBLIGATION PAYMENT SCHEDULE AS REQUIRED UNDER AB1X26 WHEREAS, as part of the 2011-12 State budget bill, AB1x26 (the "Dissolution Act") was enacted significantly modifying the Redevelopment Law to require the dissolution of redevelopment agencies throughout California and the establishment successor agencies to wind down the former redevelopment agencies' affairs; and WHEREAS, on August 15, 2011, pursuant to the Dissolution Act, the City elected to serve as the Successor Agency to the El Cerrito Redevelopment Agency (the "Successor Agency"); and WHEREAS, Section 34179(a) of the Health and Safety Code provides for the establishment of an Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency (the "Oversight Board"); and WHEREAS, the Dissolution Act requires the Successor Agency to prepare a draft of the Second Recognized Obligations Payment Schedule ("ROPS") by May 15, 2012, to be certified by the County Auditor-Controller, approved by an oversight board and reviewed by the California Department of Finance; and WHEREAS, once certified by the County Auditor-Controller and approved by the Oversight Board, the approved ROPS will serve as the plan for the Successor Agency during its operative period; and WHEREAS, the City Council, acting in its role as governing board of the Successor Agency, has reviewed a draft Second ROPS that was prepared pursuant to the Dissolution Act, which is Exhibit A to this Resolution, for submittal to the County Auditor-Controller, the Oversight Board, and the State Department of Finance. NOW THEREFORE, BE IT RESOLVED that the Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency hereby approves the Second Recognized Obligation Payment Schedule as required under the Dissolution Act and attached hereto as Exhibit A. BE IT FURTHER RESOLVED that the Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency authorizes the submittal of the approved Second Recognized Obligation Payment Schedule as required under the Dissolution Act. ---PAGE BREAK--- Agenda Item No. 4(B) Attachment 2 BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon its passage and adoption. ---PAGE BREAK--- DRAFT RECOGNIZED OBLIGATION PAYMENT SCHEDULE PER AB1X2E Of the Successor Agency to the El Cerrito Redevelopment Agency City of El Cerrito Redevelopment Project Area IJ\genda Item No. 4(8) - 1 i !Attachment 2, Exhibit A Project Name I Date of Total Total Due Payable from the Redevelopment Property Tax Trust Fund Payee Description Project Area Outstanding During Pa ments by month Debt Obligation Agreement Obligation FY2012-13 Jul2012 Aug 2012 Sep 2012 Oct 2012 Nov 2012 Dec 2012 Total I 1 Tax Allocation 12/17/97 & Tax-exempt, City of El Cerrito I ) Bonds (Combined) 10/24/04 Union Bank Taxable, L&M Redevelopment 23,738,309 2,006,558 406,139 406,139 Housing, Redev & Project Area 2) Valente Promissory Loan for land City of El Cerrito 3/5/2009 George Valente acquistion Redevelopment 3,458,586 288,215 - Note Project Area 3) Cooperation El Cerrito Municipal Redevelopment Plan City of El Cerrito 317/2011 implementation (non- Redevelopment 105,198,660 1,287,000 643,000 643,000 Agreement Services Corporation housing) Project Area 4) Cooperation Redevelopment Plan City of El Cerrito 2/22/2011 City of El Cerrito implementation Redevelopment 50,498,839 458,000 229,000 229,000 Agreement (housing) Project Area 5) 2009-2010 SERAF Funds advanced for City of El Cerrito 2/16/2010 L&M Housing Fund SERAF payment Redevelopment 995,741 331,914 165,957 165,957 Loan Project Area 6) 2005-2006 ERAF Funds advanced for City of El Cerrito 4/17/2006 L&M Housing Fund ERAF payment Redevelopment 251,577 83,859 41,930 41,930 Loan Project Area 7) Administrative Administrative City of El Cerrito Statutory City of El Cerrito Allowance per Redevelopment 3,250,000 250,000 50,000 50,000 50,000 50,000 50,000 250,000 Allowance AB1x26 Project Area Un~ aid Obligations from Prior ROPS 8) Ohlone Gardens Undisbursed loan City of El Cerrito 6/24/2009 Ohlone Gardens LP commitment Redevelopment 477,821 477,821 477,821 477,821 Loan Agreement Project Area I 9) Eden Housing Loan Undisbursed loan City of El Cerrito 5/17/2011 Eden Housing commitment Redevelopment 310,000 310,000 310,000 310,000 Agreement Project Area 2009-201 0 SERAF July 2012 Funds advanced for City of El Cerrito 10) Loan Payment L&M Housing Fund SERAF payment Redevelopment 331,914 - - Project Area 2005-2006 ERAF July 2012 Funds advanced for City of El Cerrito 11) Loan Payment L&M Housing Fund ERAF payment Redevelopment 83,859 - - Project Area Pass-Through 1993 Contracts Attributable to City of El Cerrito - I 12) & 1994 Taxing Entities 12/16/2011 Tax Redevelopment 507,493 - Payments Statutory Increment Payment Project Area Administrative FY11-12 Administrative City of El Cerrito 13) Allowance Payment City of El Cerrito Allowance per Redevelopment 250,000 - - AB1x26 Project Area Totals $189,352,799 $5,493,367 $1,709,821 $ 50,000 $ 50,000 $ 50,000 $ 50,000 $ 614,026 $2,523,847 Notes Items 3 & 4: During the review by the Department of Finance (DOF) of the First ROPS, the DOF objected to the Cooperation Agreements with the El Cerrito Municipal Services Corporation and with the City of El Cerrito. The items are included on this Second ROPS in order to request establishment of reserves for the disputed items, while the Successor Agency pursues resolution of the dispute. Items 5 & 6: Should funds available for the Second ROPS period be insufficient, the December 2012 payments on the ERAF and SERAF loans will be listed as obligations on the next ROPS. Item 7: Should there be insufficient funding available for the Successor Agency Administrative Allowance, it will be included as an obligation on the next ROPS. Items 8 & 9: Amounts due for housing loan commitments are to fund payments disbursed in subsequent months, as demanded by payee. Should there be insufficient funding available, the obligations may be moved to the next ROPS. Items 12 & 13: If the balance of the is insufficient to pay the FY11-12 Pass-Through Payments and Successor Agency Administrative Allowance, they will continue to be listed as obligations on future ROPS until paid off. I ---PAGE BREAK--- Agenda Item No. 4(B) Attachment 3 OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THEEL CERRITO REDEVELOPMENT AGENCY RESOLUTION 2012-XX RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR AGENCY TO THE EL CERRITO REDEVELOPMENT AGENCY APPROVING THE SUCCESSOR AGENCY FY 2012-13 ADMINISTRATIVE BUDGET AS REQUIRED UNDER AB1X26 WHEREAS, as part of the 2011-12 State budget bill, AB 1 x26 (the "Dissolution Act") was enacted significantly modifying the Redevelopment Law to require the dissolution of redevelopment agencies throughout California and the establishment successor agencies to wind down the former redevelopment agencies' affairs; and WHEREAS, on August 15, 2011, pursuant to the Dissolution Act, the City elected to serve as the Successor Agency to the El Cerrito Redevelopment Agency (the "Successor Agency"); and WHEREAS, Section 34179(a) of the Health and Safety Code provides for the establishment of an Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency (the "Oversight Board"); and WHEREAS, the Dissolution Act requires the Successor Agency to prepare a proposed administrative budget for each upcoming six-month period of the fiscal year and submit it to the Oversight Board for its approval; and WHEREAS, the Successor Agency has prepared a proposed administrative budget for the 2012-13 Fiscal Year and is hereby submitting it to the Oversight Board as Exhibit A to this Resolution. NOW THEREFORE, BE IT RESOLVED that the Oversight Board of the Successor Agency to the El Cerrito Redevelopment Agency hereby approves the Successor Agency Administrative Budget for the Fiscal Year 2012-13, attached hereto as Exhibit A. BE IT FURTHER RESOLVED that this Resolution shall become effective immediately upon its passage and adoption. ---PAGE BREAK--- Exhibit A Successor Agency to the El Cerrito Redevelopment Agency Fiscal Year 2012-13 Administrative Budget Agenda Item No. 4(8) J Attachment 3, Exhibit A Entity I Activity Successor Agency Oversight Board Staffing Functions (Total Compensation plus Overhead for Indirect Costs) City Management Finance Risk Management Economic Development City Clerk Information Systems Legal Services Financial & Audit Services Bond-related Costs Supplies Postage Copies Website Advertising/Legal Notices Property Management Total Combined Total Funding Source Redevelopment Property Tax Trust Fund Unfunded $50,000 $50,000 $4,000 $25,000 $15,000 $4,000 $75,000 $25,000 $10,000 $1,500 $250 $500 $3,000 $3,000 $1,000 $267,250 $30,000 $30,000 $2,000 $10,000 $10,000 $4,000 $500 $250 $500 $1,500 $3,000 $91,750 $359,000 $250,000 $109,000