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HomeMy WebLinkAbout08/17/12 OVERSIGHT BOARD AGENDA SPECIALSPECIAL MEETING OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY AGENDA Friday, August 17, 2012 10:00 a.m. City Hall North - Conference Room A 1600 Truxtun Avenue Bakersfield, CA 93301 1. ROIL CALL 2. PUBLIC STATEMENTS 3. NEW BUSINESS a. Minutes of the May 21, 2012 special meeting b. Overview of Redevelopment Trailer Bill AB 1484 C. Recognized Obligation Payment Schedule (ROPS) for the period from January 1, 2013 through June 30, 2013 4. BOARD COMMENTS 5. ADJOURNMENT OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY AGENDA REPORT MEETING DATE: August 17, 2012 I AGENDA ITEM: 3.a. TO: Members of the Oversight Board FROM: Successor Agency Staff SUBJECT: Minutes of the May 21, 2012 special meeting RECOMMENDATION: Staff recommends approval of the minutes. BACKGROUND: S: \OVERSIGHT BOARD OF SUCCESSOR AGENCY\Agenda Reports\Agenda Report MINUTES.docx 8/10/2012 2:23 PM OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY AGENDA REPORT MEETING DATE: August 17, 2012 AGENDA ITEM: 3.b. TO: Members of the Oversight Board FROM: Successor Agency Staff SUBJECT: Overview of Redevelopment Trailer Bill AB 1484 RECOMMENDATION: Receive and file overview report of the Redevelopment Trailer Bill Assembly Bill 1484. BACKGROUND: On June 27, 2012 the Legislature passed AB 1484. The Governor signed the legislation on June 28, 2012. The provisions in this legislation are intended to supplement and replace those contained in last year's ABxI -26. The draft legislation was expedited through the legislature and appeared in print form only 30 hours before the Legislation was formally acted upon by the Assembly. Analysis PURPOSE /GOALS OF THE LEGISLATION: The primary purpose of the legislation is to require Successor Agencies to remit certain funds for distribution to the taxing entities. To summarize, the legislation: 1. Requires Successor Agencies to remit the residual balance calculated to be due to taxing entities from the December 2011 tax increment distribution, net of ROPS obligations for January to June, 2012. This payment was due July 12, 2012. The City of Bakersfield, as Successor Agency, was not required to make that payment. 2. Requires Successor Agencies to remit unobligated fund balances following "Due Diligence Reviews" of housing and non - housing asset transfers that took place after January 1, 2011. These reviews will take place during the fall and winter, 2012. 3. Requires Successor Agencies to pay pass- through obligations due to taxing entities for Fiscal Year 2011 -12. If all of these payments are made, the legislation provides certain "safe harbors" relating to retention of land, use of bond proceeds and repayment of City- Agency loans, subject to specified restrictions. C:\ Users \jobert\AppData \Local \Microsoft \Windows \Temporary Internet Files\ Content. Outlook\ Y9GTHLY3 \OversightBoard- TrailerBill AB 1484 - final.dou 8/10/2012 2:21 PM ADMINISTRATIVE REPORT IMMEDIATE REQUIREMENTS: Page 2 1. Separate Legal Entity: The legislation establishes Successor Agencies as separate legal entities, distinct from the city, county or city and county that formed the redevelopment agency (the "Sponsoring Jurisdiction "). 2. Payment of January - June Residual Balance. By July 12, 2012, Successor Agencies were obligated to pay the amount that the County Auditor - Controller determines is owed to the taxing entities for the period January through June 2012, based upon the January 2012 distribution of tax increment and the January - June 2012 BOPS. Failure to pay amounts due may subject the Sponsoring Jurisdiction and the Successor Agency to penalties equal to 10% of the amount due plus 1.5% for each month the payment is late. In addition, the legislation provides that until the amount determined to be due is paid the Sponsoring Jurisdiction will not receive sales and use tax scheduled to be distributed on July 18, 2012 or any subsequent payment. As noted above, the City of Bakersfield as Successor Agency was not required to make that payment. 3. Housing Asset Inventory. By August 1, 2012, the City, serving as "Housing Successor," is required to submit to the Department of Finance ( "DOF ") a comprehensive listing of all housing assets that were transferred to the Housing Successor. The legislation provides an expanded definition of "housing assets" that includes properties acquired or restricted for use as affordable housing, loans and grants receivable, loan repayments, and rents and other income from operations. The City, serving as "Housing Successor" submitted the list of housing assets to the DOF by the August 1, 2012 deadline. NEW DEADLINES AND REQUIREMENTS FOR ROPS: By September 1, 2012, the January- June 2013 ROPS must be submitted to the State Controller and DOF in the form approved by the Oversight Board. Penalties apply if the ROPS is not timely submitted. A separate staff report presents a draft ROPS for the January - July 2013 period. PASSTHROUGH PAYMENTS FOR FY 2011 -12: AB 1484 provides that if any passthrough payment obligation has not yet been paid to the taxing entities for fiscal year 2011-12, the County Auditor - Controller shall make such payments and shall reduce property tax allocations to the Successor Agency by the amount of such payments. It is the understanding of staff that all passthrough payments due for the City Bakersfield were paid by the County Auditor - Controller and that this amount has already been reflected in the June distribution from the Redevelopment Property Tax Trust Fund. DUE DILIGENCE REVIEW AND PAYMENT OBLIGATIONS: The Successor Agency must hire a licensed accountant to perform a "Due Diligence Review" of all housing and non - housing redevelopment agency and successor agency financial activities that took place between January 1, 2011 and June 30, 2012. The purpose of the review is to determine the unobligated fund balance that will be available for distribution to the taxing entities. C: \Users \jobert\HppData \Local \Microsoft \Windows \Temporary Internet Files\ Content. Outlook\ Y9GTHLY3 \OversightBoard- TrailerBill AB 1484 - final.docx 8/10/20122:21 PM ADMINISTRATIVE REPORT Page 3 The Due Diligence Review will establish the value of all assets transferred by the Redevelopment Agency to the Successor Agency and by either the Redevelopment Agency or the Successor Agency to the Sponsoring Jurisdiction or any other entity during the period January 1, 2011 through June 30, 2012. The review of the Housing Fund must be completed by October 1, 2012. The Oversight Board must hold a public hearing on the audit by October 15, 2012. The deadline for payment is five business days following the DOF's final determination which may follow a meet and confer if requested by the Successor Agency. The review of all other funds must be completed by December 15, 2012. The Oversight Board must hold a public hearing on the non - housing audit by January 15, 2013. The deadline for payment is also five days following the determination. If the Successor Agency does not remit the amounts determined to be payable as a result of the Due Diligence Review, and is unable to recover funds that were transferred to other public agencies without an enforceable obligation, any public agency to which funds were transferred without an enforceable obligation may be subject to an offset of its sales and use or property tax. FINDING OF COMPLETION ( "SAFE HARBOR" l: Issuance of Finding of Completion After the Successor Agency pays (i) the housing fund balance as determined by Due Diligence Review, (ii) the non - housing fund balance as determined by Due Diligence Review, and (iii) the balance of any outstanding passthrough obligations and residual payments, DOF will issue a Finding of Completion ( "FOC "). 1. City - Agency Loans. Upon issuance of a FOC, loans made by the City to the Agency may be repaid if the Oversight Board finds that the loan was for a legitimate redevelopment purpose. Repayment is subject to certain restrictions, including, a reduction of the interest rate to the LAIF rate, restrictions on the timing and amount of annual repayments, and a requirement that 20% of the repayment amount must be deposited into a restricted housing set -aside fund. 2. Use of Bond Proceeds. Upon issuance of an FOC, the proceeds of bonds issued prior to December 31, 2010 may be used for purposes consistent with the bond covenants. Obligations to be paid with bond proceeds are subject to review by the Oversight Board and the DOF. 3. Property Management Plan. Upon receiving an FOC, the Successor Agency may prepare a long range property management plan that addresses the disposition and use of real property assets. The plan must be submitted to the Oversight Board and DOF within six months after issuance of the FOC. The plan must address the use or disposition of all properties, which may include: (i) retention of property for governmental use, (ii) retention of the property for future development, (iii) sale of the property, (iv) use of the property to fulfill an enforceable obligation. ADDITIONAL PROVISIONS: 1. Annual Audit. An agreed upon procedures audit of the Successor Agency, commissioned by the County Auditor - Controller, is to be completed by October 1, 2012. This audit is in addition to the housing fund and non - housing Due Diligence Reviews. In addition, an audit of the C:\ Users \jobert\AppData \Local \Microsoft \Windows \Temporary Internet Files\ Content. Outlook\ Y9GTHLY3 \OversightBoard- TrailerBill AB 1484 - final.dou 8/10/20122:21 PM ADMINISTRATIVE REPORT Page 4 Successor Agency's financial transactions and records is to be conducted at least annually by a certified public accountant. 2. Public Purpose Properties. The Oversight Board may authorize the transfer of public purposes properties to the Successor Agency or other public entity for which a public facility was constructed. In addition, the Department of Finance may extend its review period for public purpose transfers to 60 days. 3. Land Disposition. AB 1484 suspends the "forced disposition" provisions of Section 34177(e) (which provides for disposition to be undertaken "expeditiously and in a manner aimed at maximizing value "). Instead, the legislation provides that upon issuance of an FOC, a Successor Agency may develop a property management plan, subject to Oversight Board and DOF approval as described above. Although AB 1484 includes some contradictory language, a reasonable interpretation is that a Successor Agency that wishes to voluntarily convey certain properties in advance of approval of a property management plan may do so if the Oversight Board approves and DOF does not object. 4. Amended and Restated Agreements. AB 1484 restricts the ability of a Successor Agency to re -enter into agreements with its Sponsoring Jurisdiction if DOF has previously rejected the items to be funded by such agreements, unless such obligations are permitted as a result of a meet and confer process with DOF. The legislation specifically prohibits reauthorization of Sponsoring Jurisdiction loan agreements except as permitted pursuant to the FOC process. 5. Administrative Budget Allowance. Litigation expenses, property management expenses incurred prior to disposition, and project- specific employee costs are excluded from the administrative budget cap. 6. Polanco Redevelopment Act. The new legislation clarifies that the Successor Agency may assume existing cleanup plans and liability limits under the Polanco Redevelopment Act. 7. New Powers. In addition to the above financial penalties, the State Department of Finance, the State Controller and the County Auditor - Controller have all been provided with new or increased powers of authority over the Dissolution process. Coupled with the new powers granted the State and County, correspondingly, new restrictions have been imposed on the Successor Agency. The Oversight Board has been provided with new operational provisions as set forth in Health & Safety Code Section 34179. These issues are all summarized in the attachments. ATTACHMENTS: A. League of California Cities Overview of AB 1484 B. Major Provisions of AB 1484 C. AB 1484: Important Dates D. Assembly Bill 1484 JHR /vl C: \Users \jobert\AppData \Local \Microsoft \Windows \Temporary Internet Files\ Content. Outlook\ Y9GTHLY3 \OversightBoard- TrailerBill AB 1484 - final.dou 8110/20122:21 PM OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY AGENDA REPORT MEETING DATE: August 17, 2012 AGENDA ITEM: 3.c. TO: Members of the Oversight Board FROM: Successor Agency Staff SUBJECT: Recognized Obligation Payment Schedule (ROPS) for the period from January 1, 2013 through June 30, 2013. RECOMMENDATION: Staff recommends adoption of a Resolution of the Oversight Board to the Successor Agency of the dissolved Bakersfield Redevelopment Agency approving the Recognized Obligation Payment Schedule (BOPS) for the period January 1, 2013 through June 30, 2013. BACKGROUND: State law AB 26 requires the Oversight Board to review and approve a Recognized Obligation Payment Schedule (ROPS) looking forward for each six month period from January to June and from July to December of each year. The adopted ROPS is then reviewed by the Department of Finance (DOF), the State Controllers' Office (SCO) and the Kern County Auditor Controllers Office. This law was further amended by AB 1484 to require the schedule be approved by the Oversight Board and submitted to the DOF by September 1, 2012 (four months in advance) to allow them sufficient time to review and approve this schedule. The new law provides a shorter 90 day review process for future ROPS schedules beginning with the 41h ROPS (the period ending 12/31/13). AB 1484 greatly expands both the review periods and the authority of the DOF powers. While these new powers may be challenged, AB 1484 appears to give the DOF authority to not only determine what constitutes an enforceable obligation, but also provides additional authority to determine the amount and funding source to meet enforceable obligations. Furthermore, AB 1484 amends the law to give the DOF authority to eliminate or modify any item on the ROPS being reviewed prior to DOF approval. The law also orders the County Auditor Controller to only disburse funds to cover Successor Agency enforceable obligations that are approved by the DOF. Once the DOF approves the ROPS, the document then becomes the basis for County disbursements of funds to the Successor Agency to make debt service payments and pay other enforceable obligations of the former Bakersfield Redevelopment Agency. C:\ Users \jobert\AppData \Local \Microsoft \Windows\Temporary Internet Files \Content.Outlook \Y9GTHLY3 \SA -013 -Admin ROPS Aug 17 mtg.docx 8/10/2012 2:22 PM AGENDA REPORT Page The attached schedule format is very different from previous schedules adopted by the Oversight Board. The schedules have been completely redesigned to provide greater detail regarding source of funds and to reconcile past ROP Schedules with DOF authorized funding amounts. This reconciliation procedure has been designed to "adjust" tax disbursements by variances calculated from prior schedules. The DOF format assumes former agencies had cash balances that exceeded the ROPS obligations listed. Bakersfield was not one of those agencies; we actually needed and expected to receive tax revenues to meet the obligations authorized, but implementation of the new law caused historically normal tax revenue to cease for about six months. Staff has made every effort to accurately reflect the true cash needs of the Successor Agency within the confines of the new report format. However, we expect the DOF review process to be challenging at best. We continue to list the five items previously rejected by the DOF, which are the two HUD Section 108 loans and the three Inter - agency loans with the City. We are again requesting funding for the Section 108 loans as an appeal effort to the prior determinations of the DOF. We are not requesting immediate funding of the inter - agency loans as AB 1484 outlines a potential avenue for future approval of these items, but the law provides no opportunity for potential funding until July 2013. Staff is recommending adoption of the Resolution approving the ROPS. The new law (AB 1484) potentially imposes severe penalties against the City of Bakersfield (up to $10,000 per day) should the Oversight Board not approve the ROPS prior to the September 1, 2012 due date. C:\ Users \jobert\AppData \Local \Microsoft \Windows \Temporary Internet Files \Content.Outlook \Y9GTHLY3 \SA -OB -Admin ROPS Aug 17 mtg.docx 8/10/20122:22 PM