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Date: To: From: Subject: AGENDA BILL Agenda Item No. 5(C) February 26, 2012 Oversight Board of the El Cerrito Redevelopment Agency Successor Agency Lori Trevifio, Economic Development Manager Independent Accountant's Reports on Applying Agreed-Upon Procedures on the Low and Moderate Income Housing Funds and on the Non- Housing Funds ACTION REQUESTED Receive public comments on the Independent Accountant's Reports on Applying Agreed-Upon Procedures on the Low and Moderate Income Housing Funds and on the Non-Housing Funds. BACKGROUND California Health & Safety Code Section 34179.5 requires each successor agency to employ a licensed accountant, approved by the county auditor-controller and with experience and expertise in local government accounting, to conduct a due diligence review to determine the unobligated balances available for transfer to taxing entities. The El Cerrito Redevelopment Agency Successor Agency ("Successor Agency") selected MGO Certified Public Accountants to perform the Agreed-Upon Procedures ("Due Diligence Review") and received approval by the County Auditor-Controller. AMENDED HOUSING DUE DILIGENCE REviEW The Due Diligence Review of the Low and Moderate Income Housing Fund ("LMIHF") was submitted to the Oversight Board, the County Auditor-Controller, the State Controller's Office and the Department of Finance ("DOF") in November, 2012. The Oversight Board held the required meeting for public review and comment on the Due Diligence Review of the LMIHF on November 7, 2012. On November 15, 2012, the Oversight Board took the actions required under Health and Safety Code Section 34179.6(c) to review, approve, and transmit the results of the Due Diligence Review of the LMIHF to the DOF and County Auditor-Controller, with a determination of the amount of cash and cash equivalents that are available for disbursement to taxing entities. The Oversight Board determined that $176,161 in cash held by the Successor Agency was required to pay enforceable obligations and therefore was not available for disbursement to taxing entities. The original source of the $17 6,161 was Tax Increment that had been distributed to the former Redevelopment Agency on December 16, 2011, prior to dissolution. As required by California Redevelopment Law at that time, the Redevelopment Agency deposited 20 percent of the tax increment received in its LMIHF. Upon dissolution, DOF instructed the redevelopment agencies being dissolved that any funds received on December 16, 2011 were to be considered Redevelopment Property Tax not Tax Increment, and 20 percent should not have been deposited into the LMIHF. The Redevelopment ---PAGE BREAK--- Agenda Item No. S(C) Agency had used portions of what it had then considered tax increment to pay both housing- and non-housing-related enforceable obligations prior to dissolution, and the cash balances in all of its funds on January 31, 2012, including LMIHF, were transferred to the Successor Agency's Redevelopment Obligation Retirement Fund ("RORF") on February 1, 2012. In June 2012, DOF determined that two of the Successor Agency's enforceable obligations on ROPS I should be paid from LMIHF, a fund which no longer existed. Due to this confusion, Successor Agency staff attempted to identify what portion of balance in the RORF had originated as the December 16, 2011 deposit to the LMIHF, when the Redevelopment Agency thought the funds should be treated as Tax Increment. This was the source of the $17 6, 161 amount listed in the Due Diligence Review of the LMIHF as necessary to pay enforceable obligations. However, this was inconsistent with the True Up Payment Demand provisions in Assembly Bill 1484 ("Trailer Bill"), which determined that those funds should be treated as RPT, and if not needed for approved items on ROPS I, must be returned to the A-C for distribution to taxing entities. During settlement discussions of the Successor Agency's True Up litigation with DOF and the A-C, it became clear that the Due Diligence Review of the LMIHF that the Oversight Board considered in November, 2012 was inaccurate as the $176,161 was not LMIHF, but rather it was RPT that needed to be spent on ROPS I approved items or be returned to the A-C. The Successor Agency had unpaid approved ROPS I items, so those items were paid, consistent with the settlement discussions, and Successor Agency staff requested to amend the Housing Due Diligence Review. Unfortunately, the timing was such that DOF issued a determination letter ordering return of the $176,161 to the A-C. Staff is working with DOF to resolve this conflicting information and therefore is providing the Oversight Board an amended Due Diligence Review for the LMIHF along with the Due Diligence Review of Non- Housing Funds. Attachment 1 to this report is the Report prepared by MGO, as prescribed in California Health & Safety Code Section 34179.5, for the Oversight Board's review. NON-HOUSING DUE DILIGENCE REviEW Health & Safety Code Section 34179.5 also requires a Due Diligence Review of all other funds of the former Redevelopment Agency. Attachment 2 to this report is the Report prepared by MGO for Non-Housing funds. Although the Trailer Bill required this to be completed by mid-December 2012, many successor agencies have experienced delays for various reasons. By completing the Report subsequent to completion of the City's Comprehensive Annual Financial Report for FY 2011-12, MGO was able to complete a more thorough Report for the Oversight Board's consideration. FORMAL CONSIDERATION The Oversight Board is scheduled to hold a special meeting on Wednesday, March 6 at 7 p.m. to take the actions required under Health and Safety Code Section 34179 c) to review, approve, and transmit the results of the Due Diligence Review of the LMIHF to the DOF and County Auditor-Controller, with a determination of the amount of cash and cash equivalents that are available for disbursement to taxing entities. You will note that Page2 ---PAGE BREAK--- Agenda Item No. 5(C) per the Reports, there are no cash or cash equivalents available for disbursement, as cash held is required for payment of enforceable obligations. Scott Hanin City Manager Attachments: 1. Independent Accountant's Report on Applying Agreed-Upon Procedures on the Low and Moderate Income Housing Funds of the Former El Cerrito Redevelopment Agency 2. Independent Accountant's Report on Applying Agreed-Upon Procedures on the Successor Agency to the El Cerrito Redevelopment Agency, excluding Low and Moderate Income Housing Funds Page 3 ---PAGE BREAK--- Agenda Item 5( c) Attachment 1 CITY OF EL CERRITO, CALIFORNIA Independent Accountant's Report on Applying Agreed-Upon Procedures on the Low and Moderate Income Housing Funds of the Former El Cerrito Redevelopment Agency As Prescribed in Section 34179.5 of the California Health and Safety Code CerUfled Public Accoaatants. ---PAGE BREAK--- Certifi.edPubHc Accountaats. Walnut Creek 2121 N. California Blvd_, Suite 750 Walnut Creek, CA 94596 [PHONE REDACTED] Sacramento Oakland LA/Century City City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency El Cerrito, California Independent Accountant's Report on Applying Agreed-Upon Procedures We have performed the procedures applied to the Low and Moderate Income Housing Funds of the former El Cerrito Redevelopment Agency (Agency) enumerated in Attachment A, which were agreed to by the City of El Cerrito (City), as Successor Agency to the Agency (Successor Agency), the California State Controller's Office, and the California State Department of Finance (DOF) (collectively referred to as the Specified Parties), solely to assist the Specified Parties in determining the balances available for transfer to taxing entities from assets transferred to the Successor Agency from the Low and Moderate Income Housing Funds of the former Agency, as prescribed in Section 34179.5 of the California Health and Safety Code (HSC). Management of the former Agency and the Successor Agency are responsible for the accounting records. This agreed-upon procedures engagement was conducted in accordance with attestation standards established by the American Institute of Certified Public Accountants. The sufficiency of these procedures is solely the responsibility of those parties specified in the report. Consequently, we make no representation regarding the sufficiency of the procedures described below, either for the purpose for which this report has been requested, or for any other purpose. The scope of this engagement was limited to performing the agreed-upon procedures applied to the Low and Moderate Income Housing Funds of the Agency as set forth in Attachment A. Attachment A also identifies the findings noted as a result of the procedures performed. We were not engaged to and did not conduct an audit, the objective of which would be the expression of an opinion on the balances available for transfer to taxing entities from assets transferred to the Successor Agency from the Low and Moderate Income Housing Funds of the former Agency or as to the appropriateness of the other financial information summarized in Attachments A, B, and C. Accordingly, we do not express such an opinion. Had we performed additional procedures, other matters might have come to our attention that would have been reported to you. In our previously issued independent accountant's report on applying agreed-upon procedures dated October 24, 2012, the City ofEl Cerrito (City) did not complete its financial statement audit as of and for the year ended June 30, 2012 and did not obtain the DOF's determination letter on its Low and Moderate Income Housing Fund Due Diligence Review dated January 23, 2013. Subsequent to the completion of the agreed-upon procedures engagement, the City informed us of significant audit adjustments and updated interpretations of this information and as such we updated Attachments A, Band C and removed Attachments D and E to reflect this additional information. This additional information changed the amount reported in the calculation of the amount to be remitted to the County for disbursement to taxing entities in our report on applying agreed-upon procedures dated October 24, 2012, and it is replaced by this report. www.mgocpa.com Newport Beach San Diego Seattle ---PAGE BREAK--- This report is intended solely for the information and use of the Successor Agency, the California State Controller's Office, and the California State Department of Finance, and is not intended to be, and should not be, used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. Walnut Creek, California February 22, 2013 2 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds The agreed-upon procedures, as it relates to the Low and Moderate Income Housing Funds of the former Agency and the Successor Agency, and findings are as follows: 1. Obtain from the Successor Agency a listing of all assets that were transferred from the former redevelopment agency to the Successor Agency on or about February 1, 2012. Agree the amounts on this listing to account balances established in the accounting records of the Successor Agency. Identify in the Agreed-Upon Procedures (AUP) report the amount of the assets transferred to the Successor Agency as of that date. Finding: We obtained from the Successor Agency a copy of the City's basic financial statements as of and for the year ended June 30, 2012. These financial statements were audited by other auditors whose report thereon has been furnished to us. These financial statements include a listing of all assets that were transferred from the former redevelopment agency to the Successor Agency on or about February 1, 2012, as described in Note 16 to the basic financial statements and as follows: Redevelopment Transferred to Transferred to Agency Successor Housing ~Erior to transfer) A~enc~ Successor Assets Cash and investments $ 953,756 $ 953,756 $ Cash and investments with fiscal agents 2 2 Notes receivable 3,629,928 3,629,928 Advance to other funds 1,663,091 1,663,091 Property held for resale 3,950,000 3,950,000 Capital assets -land and land improvements 52,851 52,851 Total assets $ 10,249,628 $ 1,006,609 $ 9,243,019 In summary, the low and moderate income housing assets that were transferred from the former redevelopment agency to the Housing Successor on or about February 1, 2012 was $9,243,019. The assets transferred to the Successor Agency in the amount of $1,006,609 are addressed in a separate the "non-housing" agreed upon procedures report. We also note that on December 17, 2012, the State Department of Finance disallowed the Successor Agency's request to retain what had been identified as a low and moderate income housing assets in the amount of$176,141 on the previously issued October 24, 2012 "housing" agreed upon procedures report. The City determined the balance to be redevelopment property tax and should have been transferred to the Successor Agency upon dissolution and could only be used on enforceable obligations on the ROPS. The balance was held by the Successor Agency at February 1, 2012 and is included in the $1,006,609 assets transferred to the Successor Agency and addressed separately in the "non-housing" agreed-upon procedures report. 2. If the State Controller's Office has completed its review of transfers required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. Finding: The State Controller's Office has not completed its review of transfers required under both Sections 34167.5 and 34178.8 nor issued its report regarding such review. If this has not yet occurred, perform the following procedures: 3 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to the city, county, or city and county that formed the redevelopment agency for the period from January 1, 2011 through January 31, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to the A UP report. Finding: We obtained a listing prepared by the Successor Agency of transfers from the former redevelopment agency to the City for the period from January 1, 2011 through January 31, 2012 to the City. See Attachment C for the listing of transfers with the description of the purpose and in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. In addition, we noted that Note 4 to the basic financial statements describes a transfer of $64,419 for indirect costs from the Redevelopment Low and Moderate Income Housing Special Revenue Fund to the City's General Fund made for the year ended June 30, 2012. The City excluded this from the listing because the City deemed this to be a payment of goods and services. In addition, per review of the fiscal year ended June 30, 2011 audited basic financial statements the Agency's Low and Moderate Income Housing Fund made a transfer of land held for resale in the amount of $2,130,000 to the General Fund which was subsequently returned to the former Agency during the year ended June 30, 2012 as described in Note 4 to the basic fmancial statements for the year ended June 30, 2012 and transferred to the City as Housing Successor. The remaining $1,820,000 included in the $3,950,000 of land held for resale transferred to the City as Housing Successor was addressed separately in the "non-housing" agreed-upon procedures report. B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to the city, county, or city and county that formed the redevelopment agency for the period from February 1, 2012 through June 30, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. Finding: We obtained a listing prepared by the Successor Agency of transfers from the Successor Agency to the City and noted that the City did not list any assets transferred for the period February 1, 2012 through June 30, 2012. In addition, as described in procedure 1, the former Redevelopment Agency upon dissolution transferred assets totaling $9,243,019 to the Housing Successor. C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required any transfer. Note in the A UP report the absence of any such legal document or the absence of language in the document that required the transfer. Finding: Except for the transfers not listed by the Successor Agency, we obtained the legal document that formed the basis for the enforceable obligation that required the transfer as described in Attachment C. 4 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds 3. If the State Controller's Office has completed its review of transfers required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. Finding: The State Controller's Office has not completed its review of transfers required under both Sections 34167.5 and 34178.8 nor issued its report regarding such review. If this has not yet occurred, perform the following procedures: A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the former redevelopment agency to any other public agency or to private parties for the period from January 1, 2011 through January 31, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to the AUP report. Finding: We obtained a listing prepared by the Successor Agency of transfers from the former redevelopment agency to any other public agency or to private parties and noted that the Successor Agency did not list any transfer during the period from January 1, 2011 through January 31, 2012. B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments for goods and services) from the Successor Agency to any other public agency or private parties for the period from February 1, 2012 through June 30, 2012. For each transfer, the Successor Agency should describe the purpose of the transfer and describe in what sense the transfer was required by one of the Agency's enforceable obligations or other legal requirements. Provide this listing as an attachment to the A UP report. Finding: We obtained a listing prepared by the Successor Agency of transfers from the Successor Agency to any other public agency or to private parties and noted that the Successor Agency did not list any transfers during the period from February 1, 2012 through June 30, 2012. C. For each transfer, obtain the legal document that formed the basis for the enforceable obligation that required any transfer. Note in the AUP report the absence of any such legal document or the absence of language in the document that required the transfer. Finding: The procedure is not applicable. The Successor Agency did not list any transfers of assets to any other public agency or to private parties during the period January 1, 2011 through June 30, 2012. 4. Perform the following procedures: A. Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment Agency and the Successor Agency in the format set forth in the attached schedule for the fiscal periods indicated in the schedule. For purposes of this summary, the financial transactions should be presented using the modified accrual basis of accounting. End of year balances for capital assets (in total) and long-term liabilities (in total) should be presented at the bottom of this summary schedule for information purposes. B. Ascertain that for each period presented, the total of revenues, expenditures, and transfers accounts fully for the changes in equity from the previous fiscal period. 5 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds C. Compare amounts in the schedule relevant to the fiscal year ended June 30, 2010, to the state controller's report filed for the Redevelopment Agency for that period. D. Compare amounts in the schedule for the other fiscal periods presented to account balances in the accounting records or other supporting schedules. Describe in the report the type of support provided for each fiscal period. Finding: This procedure pertains to the Successor Agency as a whole as such this procedure will be addressed in the agreed-upon procedures report that is due on December 15, 2012 pursuant to guidance provided by the DOF. 5. Obtain from the Successor Agency a listing of all assets of the Low and Moderate Income Housing Fund as of June 30, 2012 for the report that is due October 1, 2012 and a listing of all assets of all other funds of the Successor Agency as of June 30, 2012 (excluding the previously reported assets of the Low and Moderate Income Housing Fund) for the report that is due December 15, 2012. When this procedure is applied to the Low and Moderate Income Housing Fund, the schedule attached as an exhibit will include only those assets of the Low and Moderate Income Housing Fund that were held by the Successor Agency as of June 30, 2012 and will exclude all assets held by the entity that assumed the housing function previously performed by the former redevelopment agency. Agree the assets so listed to recorded balances reflected in the accounting records of the Successor Agency. The listings should be attached as an exhibit to the appropriate AUP report. Finding: We obtained from the Successor Agency a listing of all assets of the Low and Moderate Income Housing Fund as of June 30, 2012 and noted that the Successor Agency did not list any assets of the Low and Moderate Income Housing fund as of June 30,2012. 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: A. Unspent bond proceeds: i. Obtain the Successor Agency's computation of the restricted balances total proceeds less eligible project expenditures, amounts set aside for debt service payments, etc.) ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. B. Grant proceeds and program income that are restricted by third parties: i. Obtain the Successor Agency's computation of the restricted balances total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. 6 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds C. Other assets considered to be legally restricted: i. Obtain the Successor Agency's computation of the restricted balances total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the A UP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by Successor the Agency as restricted. D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to the AUP report. For each restriction identified on these schedules, indicate in the report the period of time for which the restrictions are in effect. If the restrictions are in effect until the related assets are expended for their intended purpose, this should be indicated in the report. Finding: We noted the Successor Agency did not have asset balances held on June 30, 2012 that are restricted. 7. Perform the following procedures: A. Obtain from the Successor Agency a listing of assets as of June 30, 2012 that are not liquid or otherwise available for distribution (such as capital assets, land held for resale, long-term receivables, etc.) and ascertain if the values are listed at either purchase cost (based on book value reflected in the accounting records of the Successor Agency) or market value as recently estimated by the Successor Agency. B. If the assets listed at 7 are listed at purchase cost, trace the amounts to a previously audited financial statement (or to the accounting records of the Successor Agency) and note any differences. C. For any differences noted in 7.B., inspect evidence of disposal of the asset and ascertain that the proceeds were deposited into the Successor Agency trust fund. If the differences are due to additions (this generally is not expected to occur), inspect the supporting documentation and note the circumstances. D. If the assets listed at 7 are listed at recently estimated market value, inspect the evidence (if any) supporting the value and note the methodology used. If no evidence is available to support the value and\or methodology, note the lack of evidence. Finding: We noted the Successor Agency did not have asset balances held on June 30, 2012 that are not liquid or otherwise available for distribution. 8. Perform the following procedures: A. If the Successor Agency believes that asset balances need to be retained to satisfy enforceable obligations, obtain from the Successor Agency an itemized schedule of asset balances (resources) as of June 30, 2012 that are dedicated or restricted for the funding of enforceable obligations and perform the following procedures. The schedule should identify the amount dedicated or restricted, the nature of the dedication or restriction, the specific enforceable obligation to which the dedication or restriction relates, and the language in the legal document that is associated with the enforceable obligation that specifies the dedication of existing asset balances toward payment of that obligation. 7 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds i. Compare all information on the schedule to the legal documents that form the basis for the dedication or restriction of the resource balance in question. ii. Compare all current balances to the amounts reported in the accounting records of the Successor Agency or to an alternative computation. iii. Compare the specified enforceable obligations to those that were included in the fmal Recognized Obligation Payment Schedule approved by the California Department of Finance. iv. Attach as an exhibit to the report the listing obtained from the Successor Agency. Identify in the report any listed balances for which the Successor Agency was unable to provide appropriate restricting language in the legal document associated with the enforceable obligation. B. If the Successor Agency believes that future revenues together with balances dedicated or restricted to an enforceable obligation are insufficient to fund future obligation payments and thus retention of current balances is required, obtain from the Successor Agency a schedule of approved enforceable obligations that includes a projection of the annual spending requirements to satisfy each obligation and a projection of the annual revenues available to fund those requirements and perform the following procedures: i. Compare the enforceable obligations to those that were approved by the California Department of Finance. Procedures to accomplish this may include reviewing the letter from the California Department of Finance approving the Recognized Enforceable Obligation Payment Schedules for the six month period from January 1, 2012 through June 30, 2012 and for the six month period July 1, 2012 through December 31, 2012. ii. Compare the forecasted annual spending requirements to the legal document supporting each enforceable obligation. a. Obtain from the Successor Agency its assumptions relating to the forecasted annual spending requirements and disclose in the report major assumptions associated with the projections. iii. For the forecasted annual revenues: a. Obtain from the Successor Agency its assumptions for the forecasted annual revenues and disclose in the report major assumptions associated with the projections. C. If the Successor Agency believes that projected property tax revenues and other general purpose revenues to be received by the Successor Agency are insufficient to pay bond debt service payments (considering both the timing and amount of the related cash flows), obtain from the Successor Agency a schedule demonstrating this insufficiency and apply the following procedures to the information reflected in that schedule. i. Compare the timing and amounts of bond debt service payments to the related bond debt service schedules in the bond agreement. ii. Obtain the assumptions for the forecasted property tax revenues and disclose major assumptions associated with the projections. iii. Obtain the assumptions for the forecasted other general purpose revenues and disclose major assumptions associated with the projections. D. If procedures A, B, or C were performed, calculate the amount of current unrestricted balances necessary for retention in order to meet the enforceable obligations by performing the following procedures. i. Combine the amount of identified current dedicated or restricted balances and the amount of forecasted annual revenues to arrive at the amount of total resources available to fund enforceable obligations. 8 ---PAGE BREAK--- City of El Cerrito, Successor Agency to the El Cerrito Redevelopment Agency Attachment A- Agreed-Upon Procedures and Findings Low and Moderate Income Housing Funds ii. Reduce the amount of total resources available by the amount forecasted for the annual spending requirements. A negative result indicates the amount of current unrestricted balances that needs to be retained. iii. Include the calculation in the AUP report. Finding: We noted that the Successor Agency did not report any cash balances that needed to be retained as of June 30, 2012 under Procedures SA, 8B or 8C as such these procedures are not applicable. 9. If the Successor Agency believes that cash balances as of June 30, 2012 need to be retained to satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period of July 1, 2012 through December 31, 2012 and a copy of the final ROPS for the period January 1, 2013 through June 30, 2013. For each obligation listed on the ROPS, the Successor Agency should add columns identifying any dollar amounts of existing cash that are needed to satisfy that obligation and the Successor Agency's explanation as to why the Successor Agency believes that such balances are needed to satisfy the obligation. Include this schedule as an attachment to the AUP report. Finding: We noted the Successor Agency does not have cash balances as of June 30, 2012 that need to be retained to satisfy obligations on the Recognized Obligation Payment Schedule for the period of July 1, 2012 through June 30, 2013. 10. Include (or present) a schedule detailing the computation of the Balance Available for Allocation to Affected Taxing Entities. Amounts included in the calculation should agree to the results of the procedures performed in each section above. The schedule should also include a deduction to recognize amounts already paid to the County Auditor-Controller on July 12, 2012 as directed by the California Department of Finance. The amount of this deduction presented should be agreed to evidence of payment. The attached example summary schedule may be considered for this purpose. Separate schedules should be completed for the Low and Moderate Income Housing Fund and for all other funds combined (excluding the Low and Moderate Income Housing Fund). Finding: See Attachment B for the results of this procedure for the Low and Moderate Income Housing Fund. 11. Obtain a representation letter from Successor Agency management acknowledging their responsibility for the data provided to the practitioner and the data presented in the report or in any attachments to the report. Included in the representations should be an acknowledgment that management is not aware of any transfers (as defmed by Section 34179.5) from either the former redevelopment agency or the Successor Agency to other parties for the period from January 1, 2011 through June 30, 2012 that have not been properly identified in the AUP report and its related exhibits. Management's refusal to sign the representation letter should be noted in the AUP report as required by attestation standards. Finding: No exceptions noted as a result of this procedure. 9 ---PAGE BREAK--- El Cerrito Redevelopment Agency Attachment B - Low and Moderate Income Housing Funds Assets Transferred to the Successor Agency That Are Available to Distribute to Affected Taxing Entities SUMMARY OF BALANCES AVAILABLE FOR ALLOCATION TO AFFECTED TAXING ENTITIES Total amount of assets held by the successor agency as of June 30, 2012 (procedure 5) Add the amount of any assets transferred to the city or other parties for which an enforceable obligation with a third party requiring such transfer and obligating the use of the transferred assets did not exist (procedures 2 and 3) Less assets legally restricted for uses specified by debt covenants, grant restrictions, or restrictions imposed by other governments (procedure 6) Less assets that are not cash or cash equivalents physical assets) - (procedure 7) Less balances that are legally restricted for the funding of an enforceable obligation (net of projected annual revenues available to fund those obligations)- (procedure 8) Less balances needed to satisfy ROPS for the 2012-13 fiscal year (procedure 9) Less the amount of payments made on July 12,2012 to the County Auditor-Controller as directed by the California Department of Finance Amount to be remitted to county for disbursement to taxing entities 10 $ $ ---PAGE BREAK--- Asset Description Cash· 1 Cash - refundable deposits Land held for resale~ Real property for low-mod housing w/ commercial space at 10848 and 10860 San Pablo Avenue, El Cerrito. Assessor Parcel Numbers: 503-010-003, 503-101-Q14 Loans receivable· 1 Ohlone Gardens, L.P. 2 Idaho Apartments 3 Eden Housing, Inc. SERAF!ERAF Receivable· 1 SERAF2011 2 ERAF 2005 and 2006 Total asset transfers to the City ofEl Cerrito El Cerrito Redevelopment Agency Attachment C -Low and Moderate Income Housing Funds Asset Transfers to the City ofEI Cerrito for the Period January 1, 2011 Through January 31,2012 Name of the recipient City ofEl Cerrito Housing Fund City ofEl Cerrito General Fund CitY ofEl Cerrito Housiiig_ Fund CitY ofEl Cerrito Housing Fund City ofEl Cerrito Housing Fund Subtotal City_ ofEl Cerrito Housing_Fund City ofEl Cerrito Housing Fund Subtotal Date of Transfer Book value of asset Describe the purpose of the transfer and specifY the enforceable obligation or other at date of transfer legal requirement requiring such transfer and the date of such requirement. Transfer of developer deposit pursuant to EOPS Enforceable Obligation # 16. Per AB1X 26 and City Council's Resolution No. 2012-04, the City elected to become the Housing Successor of the former redevelopment agency. Transfer of housing assets held as refundable deposits under terms of the Predevelopment Loan Agreement by and between the El Cerrito Redevelopment Agency and Eden Housing, Inc. (10860 and 10848 San Pablo Avenue) dated May 17,2011 for the 1/31/2012 . 25,000 develoj)lllent of approximately 64 units of affordable housing. On March 22, 2011, under the provisions of Health and Safety Code Section 33433, the Agency entered into a property conveyance agreement with the City to transfer one property in exchange for an agreement to cause its development with an affordable housing project consistent with the Redevelopment Plan and pay the Agency any value received. The value of the land held for resale transferred was $3,950,000, of which $1,820,000 was funded by 2004 Bond Series A bond proceeds and $2,130,000 was funded by the Low and Moderate Income Housing Fund. Per ABIX 26 and City Council's Resolution No. 2012-03, the City elected to become the Housing Successor of the former redevelopment agency. Transfer 3/22/2011 $ 2,130,000 ofhousing assets as approved by the State Department of Finance. Per AB1X 26 and City Council's Resolution No. 2012-04, the City elected to become the Housing Successor of the former redevelopment agency. Transfer of 2/1/2012 $ 3,210,178 housing assets as approved by the State Department of Finance. Per AB IX 26 and City Council's Resolution No. 2012-04, the City elected to become the Housing Successor of the former redevelopment agency. Transfer of 2/112012 379,750 housing assets as approved by the State Department ofFinance. Per AB1X 26 and City Council's Resolution No. 2012-04, the City elected to become the Housing Successor of the former redevelopment agency. Transfer of 2/1/2012 40,000 housing assets as approved by the State Department of Finance. 3,629,928 Per ABIX 26 and City Council's Resolution No. 2012-04, the City elected to become the Housing Successor of the former redevelopment agency. Transfer of 211/2012 1,327,655 housing assets as approved by the State Department ofFinance. Per AB1X 26 and City Council's Resolution No. 2012-04, the City elected to become the Housing Successor of the former redevelopment agency. Transfer of 21112o_g~ 335,436 ~assets as 11pprovedjJy the State J?epartment of Finance. 1,663,091 $ 7,448,019 11 Finding No exceptions were noted as a result of this procedure. The asset balance has been transferred back to the former Agency and then transferred to the City as Housing Successor during the year ended June 30, 2012. No exceptions were noted as a result of this procedure. No exceptions were noted as a result ofthi~ocedure. No exceptions weren~ted as a result of this procedure. No exceptions were noted as a result of this procedure. No exceptions were noted as a result of this procedure. ---PAGE BREAK--- Agenda Item 5(C) Attachment 2 CITY OF EL CERRITO, CALIFORNIA Independent Accountant's Report on Applying Agreed-Upon Procedures on the Successor Agency to the El Cerrito Redevelopment Agency, excluding Low and Moderate Income Housing Funds As Prescribed in Section 34179.5 of the California Health and Safety Code Certified Public Accoaatants. ---PAGE BREAK--- Certified. Public AccoUDtants. Walnut Creek 2121 N. California Blvd,, Suite 750 Walnut Creek, CA 94596 925 • .27~ct Area I . L To~t.OutStanding ()bligatlonas·of $/3~112 Total Due During Pr201t43 Jtd2012 I Aut~ 20121 S~p.2012 I 0Ct2012 I :Nov2012l Dec2012 I Total I I i.t~A~ti3i5i2:oos: J~i'QeVlilleot~ Note T*-E~.TaxabJE!.U.M Housing~· Redev & CftyefJ;:JCe@O RfideveiQj:lment f'roJ8etA~· I ~!IYI)lE,l~ L~fPr Ag~eme!lt Wl2tt1f ~17¢.~ML!JiiCIP~l.JRe City QfEI C:~.iTft? IA~trl~eAJowance:p~r 1 Redtweiopment AB1'<2E:h Pt&jec:t Area ~;zso.(loo 2$,606 tl)IOh.· ·.lb. :G&id e n. Jloan Agreement tit24120o9 !Ohbnet3afl:tens 1Uridl$&Ut;S~ IDM c:ommilment Onyilt~ RE!d8velopment PI'Qject.Area. 471;152 471.,152 t 9)11:~ H~~:mg lOan Agreement 5tr712o11" led~ 8ott$tl'lg I 10. >r.~~~1!l~~fV.f J . ·.i~~t:OJ,r IIAMH~U$ingFunc. lLoan · · ROPS. .11)f2R~"?oo~ri~f Lo~ 1.0\IP~J"llft)~~ 13.\IAdm.. lni$ttat.· {Ve ·l AIJI:1Watjte . New Item J.lnpaidJ~n- . J.uo~ort I~MH®$inSF!.ln~ l1~~~raets · IJ8:K~Q-I:I:IJJtte~· .$fattitoi)f 1 ··fY11:~a. . 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