AgdaPkt 2015-11-16 Closed and Special Joint SA and PFA

Browse Search

ANALYSIS On September 22, 2015, legislation initiated by the DOF was passed (SB107 enacted through the Health and Safety Code) with new provisions for the dissolution of redevelopment agencies. The legislation includes an enforcement provision related to the payment of obligations that the DOF had established through the DDR determination process as being owed by former redevelopment agencies (hereafter referred to as DDR obligations). Specifically, the new law states that if a successor agency does not, by December 31, 2015, either pay a DDR obligation in full or enter into an installment payment agreement with the DOF, the successor agency shall never receive a finding of completion. Health and Safety Code section 34179.7 further provides that if the payment is made or the installment agreement is entered into, and there is a subsequent court decision that reduces or eliminates the DDR obligation, the successor agency shall be able to recover the amount that was paid on its future Recognized Obligation Payment Schedule(s) (“ROPS”), the form used to claim allocations of property taxes to pay the successor agency’s remaining debts. Finding of Completion Benefits Having a finding of completion would allow for several beneficial outcomes as described below related to the repayment of loans owed to the City and the Low and Moderate Income Housing Fund as well as the disposition of property owned by the former RDA. · Repayment of $1,687,703 borrowed from the former RDA’s Low and Moderate Income Housing Asset Fund to make the required payments to the Supplemental Educational Revenue Augmentation Fund (“SERAF”). Once the SA receives a finding of completion, those amounts would be paid into the Housing Successor’s Low and Moderate Income Housing Asset Fund. · Repayment of a loan made by the City to the RDA pursuant to a Loan Agreement, dated January 1, 2005, to pay for capital improvements in the redevelopment project area. The outstanding balance on the loan is $2,269,543 plus interest. Although the SA Oversight Board had approved the inclusion of this loan as an enforceable obligation on the ROPS, the DOF denied the request for payment. The SA has intended to seek reinstatement of this loan pursuant to the finding of completion. SB 107 provides that certain loan agreements between a city and its former redevelopment agency, subject to a finding by the oversight board that the loan agreement was for legitimate redevelopment purposes, can be claimed on the ROPS. This loan agreement seems to fall squarely within the provisions of Section 34191.4(b)(2)(A) which states that a loan of money from the city to the former redevelopment agency for a lawful purpose and which had a required repayment schedule is an enforceable obligation. It is important to note that if and when this loan is repaid to the City, 20% would be allocated to the Low and Moderate Income Housing Asset Fund as required by SB107. 6.3.B. - Page 2