AgdaPkt 2017-01-09 Closed and Joint

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6.1.D. - Page 18 Equalization for the collection of our UUT on prepaid wireless services. We began collecting revenue on prepaid wireless in January 2016 and will continue until AB 1717 sunsets in 2020. This revenue source amounted to $67,600 for FY 2015-16. While traditional UUT revenue has been dedicated on an annual basis to support the City's capital improvement program, the City has committed this new source of UUT revenue to affordable housing. Educational Revenue Augmentation Fund Refunds In FY 1992-93 and FY 1993-94, the State shifted property taxes from cities, counties, and special districts to school districts to supplant funding that the State was providing to school districts. The funds shifted from these local governments are placed into the Educational Revenue Augmentation Fund (ERAF) by the County Controller. The Controller then disburses these funds to school districts based upon the formula prescribed by State law. Any funds remaining in ERAF (after the distribution to the school districts) are returned to the cities, county, and special districts in proportion to the amount they contributed to ERAF. This return of property tax revenue is difficult to anticipate due to complicated State school funding formulas and at risk of reduction or elimination by State action. In FYs 2014-15 and 2015-16, the City received $5.1 million and $4.8 million annually respectively. This level of funding was higher than can be expected in the future due to various one-time factors and recent and potential changes in school financing, which the County Controller has indicated could significantly reduce this revenue source in FY 2015-16 and future years. The City's policy is to budget what reasonably can be estimated, which is approximately $2.5 million or about 52%. Any additional funds will be committed to one time uses and to reduce long term liabilities, per City Council direction. In Lieu Sales Tax Triple Flip The "Triple Flip" was part of the State's 2004 budget in which sales and use taxes that previously went to cities and counties were diverted to the State to be used to repay the State's Economic Recovery Bonds. The Economic Recovery Bonds were defeased in July 2015 and the final "Triple Flip" payment was received in August 2016. Successor Agency to the Redevelopment Agency As Successor Agency, the City continues the focus on the disposition of the $10.3 million in funds that had been in the former Redevelopment Agency's possession 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 (DOF) 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 remitted the funds prior to the end of calendar year 2015 for distribution to the taxing entities while it continues to pursue its appeal. The City advised the taxing entities to hold the funds in case the City prevails in this appeal. The City also continues to work with the State of California regarding the disposition of several former Redevelopment Agency land parcels. 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 v