Title
Staff Report for Resolution of the City Council of the City of San Leandro Acting in Its Capacity as the Successor Agency to the Redevelopment Agency of the City of San Leandro Approving the Recognized Obligation Payment Schedule for July through December 2012 for Enforceable Obligations of the Former Redevelopment Agency Pursuant to Health and Safety Code Section 34177
Staffreport
RECOMMENDATIONS
Staff recommends that the City Council, acting as the Successor Agency for the San Leandro Redevelopment Agency, adopt a Resolution approving a Recognized Obligation Payment Schedule for the period from July 1, 2012 through December 31, 2012.
BACKGROUND
On January 9, 2012, the City Council affirmed its decision to serve as the Successor Agency for the former Redevelopment Agency (Agency) and to retain the Agency’s housing assets and functions. Under AB x1 26, the Redevelopment Dissolution Bill, the City, acting as the Successor Agency, is obligated to prepare a Recognized Obligation Payment Schedule ("ROPS") every six months for as long as there are enforceable obligations of the former Redevelopment Agency. Approval of the ROPS by the Oversight Board is also required. The City, as Successor Agency, can only pay obligations that are listed on the ROPS.
Analysis
A primary component of the City’s responsibilities in its capacity as the Successor Agency is to oversee the payment of Enforceable Obligations. Enforceable Obligations are defined as:
• Bonds including debt service reserve set asides and any other required payments;
• Loans borrowed by the agency;
• Payments required by the federal or state governments;
• Pension and unemployment payments for Agency employees;
• Judgments, settlements or binding arbitration decisions; and
• Any legally binding and enforceable contract that does not violate the debt limit or
public policy.
The obligations listed on the ROPS for July through December 2012 are generally consistent with those in the previous ROPS, which covered payments due between February 1, 2012 and June 30, 2012. Some items have been removed from the list of Enforceable Obligations because they were paid off in their entirety during the previous six-month period. These retired obligations were contractual agreements for services provided on a limited time basis, such as the development of the Broadband Strategy and downtown cleaning services. At the request of the Successor Agency Oversight Board, the current ROPS has also been amended slightly to show the beginning and estimated end dates for each obligation.
After the approval of the previous ROPS by the City Council (serving as Successor Agency) on April 2, 2012 and the Successor Agency Oversight Board on April 6, 2012, the California Department of Finance (DOF) exercised its right to conduct a review of the list of Enforceable Obligations. Upon completion of that review, the DOF informed the City that it did not consider some items to be enforceable because AB x1 26 does not recognize agreements between a redevelopment agency and the city that created it. This determination impacts a loan from the City General Fund to the Joint Project Area and four cooperative agreements to fund capital improvement projects.
A separate action to re-authorize the General Fund loan and cooperative agreements for improvements on Eden Road and Hays Street will be brought to the City Council, Successor Agency and Oversight Board. The July through December 2012 ROPS assumes approval of the re-authorization of these agreements. The two remaining cooperative agreements, for streetscape improvements on Doolittle Drive ($4.2m) and MacArthur Boulevard ($1.3m) have been removed from the ROPS.
Pursuant to Health and Safety Code section 34177, the ROPS must also note the source of funds that will be used for payment. Whereas most obligations on the previous ROPS were funded using the remaining cash balance of the former Agency, most obligations on the current ROPS will be funded using a remittance from the County Auditor-Controller from the Redevelopment Property Tax Trust Fund (funds that formerly were tax increment revenue for the Agency). That remittance is expected by June 1, 2012. Costs related to the Estudillo-Callan Garage construction and the East 14th/Hesperian “Triangle” project will continue to be funded with proceeds from bonds issued by the Redevelopment Agency for those purposes.
The ROPS also contains an administrative budget for the Successor Agency. Based on direction from the California Department of Finance, the amount of the administrative allowance for Fiscal Year 2012-13 is the greater of 3% of funds received from the Redevelopment Property Tax Trust Fund or $250,000, annually. For San Leandro, the $250,000 minimum allowance is expected to apply. For this ROPS, covering six months of obligations, the administrative allowance equals $125,000, or half of the annual amount.
Previous Actions
• On January 9, 2012, the City Council affirmed its decision to serve as the Successor Agency for the former Redevelopment Agency and to retain the Agency’s housing assets and functions.
• On January 23, 2012, the Board of the Redevelopment Agency approved the amended EOPS.
• On April 2, 2012, the City Council, serving as Successor Agency, adopted the ROPS for the period of February 1, 2012 through June 30, 2012.
Fiscal Impacts
As noted above, payment of the Enforceable Obligations listed on the ROPS will be funded using funds disbursed by the County Auditor-Controller using former tax increment revenues from the Redevelopment Property Tax Trust Fund. Staff does not believe that the General Fund (or any other City fund) bears any responsibility for the payment of enforceable obligations of the former Redevelopment Agency.
ATTACHMENTS
None
PREPARED BY: Jeff Kay, Business Development Analyst, Community Development Department