HomeMy WebLinkAbout2/25/13 OVERSIGHT BOARD AGENDA SPECIALSPECIAL MEETING OF THE OVERSIGHT BOARD
TO THE SUCCESSOR AGENCY
OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY
AGENDA
Monday, February 25, 2013
2:00 p.m.
City Hall North - Conference Room A
1600 Truxtun Avenue
Bakersfield, CA 93301
1. ROLL CALL
2. PUBLIC STATEMENTS
3. NEW BUSINESS
a. Minutes of the October 15, 2012 special meeting
b. Update on the Meet and Confer Process with Department of Finance and Litigation
C. Recognized Obligation Payment Schedule (ROPS 13 -14 A) for the period from
July 1, 2013 through December 31, 2013
4. BOARD COMMENTS
5. ADJOURNMENT
OVERSIGHT BOARD TO THE SUCCESSOR AGENCY
OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY
AGENDA REPORT
MEETING DATE: February 25, 2013 AGENDA ITEM: 3.a
TO: Members of the Oversight Board
FROM: Successor Agency Staff
SUBJECT: Minutes of the October 15, 2012 special meeting
RECOMMENDATION: Staff recommends approval of the minutes.
BACKGROUND:
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OVERSIGHT BOARD TO THE SUCCESSOR AGENCY
OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY
AGENDA REPORT
MEETING DATE: February 25, 2013 1 AGENDA ITEM: 3 , b
TO: Members of the Oversight Board
FROM: Successor Agency Staff
SUBJECT: Update on the Meet and Confer Process with the Department of Finance and
Litigation
RECOMMENDATION:
Staff recommends receive and file staff report regarding current status of the Meet and Confer
process with the Department of Finance and Litigation.
BACKGROUND:
1. Meet and Confer Process with the Department of Finance
As part of the dissolution of redevelopment agencies pursuant to AB26 and as amended
by AB1484, the City of Bakersfield as the Successor Agency ( "BSA ") to the former Bakersfield
Redevelopment Agency ( "BRDA ") was required to submit to the Department of Finance ( "DOF ")
a Recognized Obligation Payment Schedule ( "ROPS ") covering a six -month period (January 1,
2013 -June 30, 2013) in order to receive taxes to pay for the "enforceable obligations" listed on
the ROPS III. The BSA has submitted three ROPS to DOF to date. In addition, the BSA was required
to submit a Due Diligence Review of Low and Moderate Income Housing Funds ( "Housing DDR "),
which is designed to determine the amount of "unencumbered" housing funds available to be
swept away to the taxing entities.
The DOF determined that the following listed items on the ROPS III submitted to the DOF on
August 17, 2012 were not enforceable obligations as defined in Health and Safety Code ( "HSC ")
section 34171(d):
• Item Nos. 7 and 19 - HUD Section 108 loans totaling $3.1 million.
• Item Nos. 15, 16, and 21 - Interagency Loans between the City and Agency
totaling $3.6 million.
• Item No. 24 - Park 20th Senior Housing project in the amount of $3 million.
• Item No. 25 - Arena Bonds in the amount of $17 million.
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• Item Nos. 35 and 36 - Millcreek Courtyard Senior Residence agreement in the
amount of $1.2 million.
Regarding the Housing DDR, the DOF challenged the $1.2 million that was held by the BSA
and set aside for the Millcreek Courtyard Senior Residence project (Item Nos. 35 and 36 on the
ROPS III), and the DOF swept away other funds, which consisted mainly of down payment
assistance for home buyers, that were approved as enforceable obligations, but the DOF
informed the BSA that it could put those obligations on future ROPS. The BSA requested and
attended two separate meet and confer meetings with the DOF concerning both
determinations. The DOF accepted some of the BSA's arguments, and denied the rest.
As a result of the DOF meet and confer process, it is our understanding that under AB 1484
Item Nos. 15, 16, and 21 - Interagency Loans between the City and Agency totaling $3.6 million
that were entered into in 2009 and 2010 are not considered enforceable obligations at this time,
but upon receiving a Finding of Completion from the DOF, HSC section 34191.4(b) may cause
these items to be enforceable in future ROPS periods.
The BSA was successful with getting the DOF to deem Items 7 and 19 concerning the HUD
Section 108 loans in the amount of $3.1 million as enforceable obligations. The BSA was also able
to convince the DOF that $12 million of the $17 million Arena Bond payments (Item 25) were
allowable enforceable obligations. Other than the $5 million shortfall of the Arena Bond debt
payments, the remaining items at issue are Item Nos. 24, 35 and 36, which are tax funds
allocated for the construction of the Prop 1 C housing projects: Park 20th Senior Housing project
in the amount of $3 million, and Millcreek Courtyard Senior Residence project in the amount of
$1.2 million listed above.
2. Litigation against the Department of Finance
On February 13, 2013, the City in its capacity as the successor agency to the former
dissolved Bakersfield Redevelopment Agency filed a lawsuit in the Sacramento Superior Court
challenging the Department of Finance's decisions rejecting certain items listed on the
Recognized Obligation Payment Schedule (ROPS). Specifically, the City disputes the DOF's
decision to invalidate payments that were authorized and necessary for the completion of two
affordable housing projects for seniors and veterans in an amount totaling $4.2 million, which
were required to be built as part of a $10.8 million State Prop 1C Grant for infrastructure
improvements in Mill Creek.
The lawsuit seeks a court order that property taxes be distributed to pay for each valid
enforceable obligation and further seeks a court order declaring that all of the Prop 1C Projects
and the payments are enforceable obligations within the meaning of the Dissolution Act on any
and all ROPS, now or in the future. The lawsuit also seeks an order allowing the distribution of
property taxes to cover the $5 Million shortfall in Rabobank Arena bond payments, which is a
debt that the former redevelopment agency has being making payments since 1997.
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OVERSIGHT BOARD TO THE SUCCESSOR AGENCY
OF THE DISSOLVED BAKERSFIELD REDEVELOPMENT AGENCY
AGENDA REPORT
MEETING DATE: February 25, 2013 AGENDA ITEM: 3,c,
TO: Members of the Oversight Board
FROM: Successor Agency Staff
SUBJECT: Recognized Obligation Payment Schedule (ROPS 13 -14 A) and administrative
budget for the period from July 1, 2013 through December 31, 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 (ROPS 13 -14 A) and administrative budget for the period July 1, 2013
through December 31, 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 to be approved by the
Oversight Board and submitted to the DOF three months in advance of the cash distribution
date (in this case, submit by March 1, 2013 for a June 1, 2013 disbursement date) to allow
them sufficient time to review and approve this schedule.
The DOF has again redesigned the forms and have implemented stricter controls on which
spreadsheet fields we are allowed to enter data. They have completely locked out any lines
that were disallowed on a previous ROPS.
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.
The attached schedule format is fairly similar to the most recent schedule approved by the
Oversight Board. The schedules include a listing of the obligations for the next six month period
as well as a reconciliation page identifying the variances between the estimated payments
for the ROPS II period (July 1, 2012 to December 31, 2012) and actual expenses paid during
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that some period. This reconciliation procedure has been designed to "adjust" tax
disbursements by variances calculated from prior schedules if we did not spend all of the
funds provided for that period. However, in our case we had several timing variances for
items listed on ROPS I that were actually paid in the ROPS II time period. We used the balance
of cash remaining prior to dissolution to pay what we could, but since the State cut off RDA
funding mid fiscal year in FY 2011 -12 we were not able to pay all items authorized in ROPS I
and II. Unfortunately, the newly revised forms do not allow the calculation of the
"reconciliation" to request additional funding for such circumstances; the forms only allow for
the reduction of future needed dollars.
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.
We continue to list the five items previously rejected by the DOF, which are the three Inter-
agency loans with the City and two of the Proposition 1 C housing projects. The forms have
been changed to the point where we cannot even enter data on these lines any longer, so
we are providing relevant comments for each item in the notes section. 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 we
have received a notice of completion, which is not anticipated until at least July 2013.
Health and Safety code section 34177(j) also requires the Oversight Board to approve the
Successor Agency's administrative budget. The proposed administrative budget of the
Successor Agency of the dissolved Bakersfield Redevelopment Agency for the six month
period is $125,000 and is shown on the ROPS 13 -14 A worksheet.
Staff is recommending adoption of the Resolution approving the ROPS 13 -14 A and
administrative budget. 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 March 1, 2013 due date.
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