AgdaPkt 2016-01-11 Closed and Joint SA PFA

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6.1.E. - Page 21 lost revenues. For FY 2013-14, there were insufficient funds in ERAF leading to a shortfall in Triple Flip revenue that was estimated to amount to $478,000 for Redwood City. A county-wide claim was submitted for the shortfall reimbursement and, in September 2015, this amount was received by Redwood City. The Economic Recovery Bonds were defeased in July 2015 and the final "Triple Flip" payment is expected in August 2016. Successor Agency to the Redevelopment Agency As Successor Agency, the City is focused on the disposition of the $10.3 million in funds that had been in the possession of the former Redevelopment Agency and which were encumbered for below-market housing through an agreement with the Legal Aid Society. The control of these funds has been in dispute with the State of California Department of Finance (DOE) since the Redevelopment Agency was dissolved in FY 2011-12. The City filed suit against the State challenging the DOF's position that these funds are unencumbered and must be remitted to the County Controller. Although the State prevailed in the Superior Court trial the City's legal team does not agree with the Court's decision and has filed an appeal. The appeal is fully briefed and the City is awaiting a court date. In the meantime, new State legislation (SB107) was passed in September 2015 requiring that all obligations determined by the DOF be paid in order for successor agencies to receive the benefits of a finding of completion. The City plans to remit these funds by the end of calendar year 2015 for distribution to the taxing entities while it continues to pursue its appeal. If the City prevails in this appeal, it will seek the restoration of these funds as allowed under SB107. Relevant Financial Policies In April 1999 the City Council adopted a policy targeting the unreserved portion of the general fund's fund balance designated for subsequent year's expenditures to fall within a range from 15% to 20% of anticipated general fund revenues. As a result of implementing GASB 54 these amounts are now reported under the category "Unassigned Fund Balances" under the subcategory "City Council directed minimum balance." In recent years,the City has used balances in excess of the reserve policy to pay down unfunded liabilities. In addition, the City has adopted a debt policy and investment policy and reviews these policies regularly and uses them to maintain sound fiscal practices. The City has also established cash management, accounting, budgetary and risk management policies and practices that are essential to the City's long-term fiscal health. These financial policies and practices also promote public confidence and increase the City's credibility in the eyes of bond rating agencies and potential investors. Such policies also provide the resources to react to financial needs in a prudent manner. Appropriation Limit Article XIIIB of the California State Constitution, which became effective in FY 1979-80, and which was modified (by Proposition 111) in November 1989, establishes, by formula, an appropriation limit for governmental agencies. Using the appropriations of FY 1978-79 as the base year, the limit is modified by the change in the composite consumer price index, population, and the value of commercial property development within the City limits during each fiscal year. Article XIIIB also sets the guidelines as to what is to be included in the appropriation limits. The appropriation limit for Redwood City for FY 2014-15 was at $573,095,639 while the actual appropriations subject to the limit amounted to $85,088,000. The 2014-15 appropriation limit has increased from FY 2013-14 due primarily to the increase (2.39%) in assessed valuation attributable to growth in non-residential new construction, one of the factors used in calculating the change in the appropriation limit. The following graph indicates the trend in appropriations subject to limitation: vi