PREPARED BY: J. KELLY SESSIONS DATE OF MEETING: 01/22/19
SUBJECT:
TITLE
RESOLUTION OF THE LOCAL SUCCESSOR AGENCY OF THE FORMER REDEVELOPMENT AGENCY OF THE CITY OF SAN PABLO APPROVING AN ADMINISTRATIVE BUDGET AND ADOPTING THE RECOGNIZED OBLIGATIONS PAYMENT SCHEDULE FOR FISCAL YEAR 2019-20 (“ROPS 19-20”)
Label
CITY MANAGER RECOMMENDATION
Recommendation
Adopt Resolution
Body
Compliance statements
Implementation of Long-Range Property Management Program (City Manager, Economic Development) and Budget Spending Controls (All) are adopted policy items under the adopted FY 2018-21 City Council Priority Workplan, effective November 1, 2017.
CEQA Compliance Statement
This is not a project as defined by CEQA.
BACKGROUND
The San Pablo Local Successor Agency (“LSA”) is responsible for winding down the activities of the former Redevelopment Agency of the City of San Pablo (the “former Redevelopment Agency”) pursuant to the requirements of Part 1.85 of Division 24 of the California Health and Safety Code (Health and Safety Code Section 34170 et seq.; the “Dissolution Act”).
Section 34177(o) of the Dissolution Act requires the LSA to adopt an annual ROPS each fiscal year, which is then presented to the Countywide Oversight Board. The ROPS functions as the LSA’s claim for tax increment, and general authorization, to pay enforceable obligations. The ROPS lists the outstanding obligations of the former Redevelopment Agency and the funding source for each obligation. The LSA may only pay, and will only be allocated tax increment by the County Auditor-Controller, for payments of obligations listed on the ROPS. Obligations that will be funded by other sources, such as existing fund balances, must also be listed on the ROPS.
The San Pablo LSA’s ROPS 19-20 is attached to the resolution accompanying this staff report.
Administrative Cost Allowance and Administrative Budget
Pursuant to Section 34171(b), the LSA is to receive an administrative cost allowance (“ACA”) for the staff costs to administer the wind down of the former Redevelopment Agency. These costs include staff time in preparing for and attending Countywide Oversight Board meetings and staff costs related to preparing reports and documents required by the Dissolution Act. The ACA is the greater of $250,000 or 3% of the property tax revenues allocated to the LSA in the preceding fiscal year to pay approved enforceable obligations (after first deducting from said allocated property tax revenues the amount of the LSA’s ACA for the preceding fiscal year and any loan repayments to the City during said preceding fiscal year).
Each ROPS is to include the amount of the ACA for the LSA. In addition, Section 34177(j) of the Dissolution Act requires the LSA to prepare an administrative budget for each six-month fiscal period, and to submit the budget to the Countywide Oversight Board for its approval. The budget shall include:
• Estimated amounts for LSA administrative costs;
• Proposed sources of payment for the LSA administrative costs; and
• Proposals for arrangements for administrative and operations services provided by a city or other entity.
The LSA’s ACA for ROPS 19-20 will be $250,000, which is the minimum amount. These funds will be the sole source of payment for the LSA’s administrative costs. City staff serves as the staff for the LSA.
The proposed administrative budget for the San Pablo LSA is attached to the resolution for this item and covers all of Fiscal Year 2019-20. It shows the estimated breakdown of the ACA for staff and consultant costs.
City/LSA Loan and Repayment Agreement
Section 34173(h) of the Dissolution Act provides that the City of San Pablo (the “City”) may loan funds to the LSA for administrative costs, enforceable obligations, or project-related expenses, subject to approval of the Countywide Oversight Board, and that an enforceable obligation shall be deemed to be created for the repayment of those loans. In August 2012, the City and LSA entered into a Loan and Repayment Agreement (“Agreement”) to provide a formal mechanism for loans by the City to the LSA and repayment by the LSA to the City.
Under the Agreement, the City agreed to loan funds to the LSA in any ROPS period up to the portion of the LSA’s ACA that is not paid to the LSA from the RPTTF, with interest to be charged at the annual rate provided for the California State Treasurer’s Local Agency Investment Fund on the date of the respective loan. The City may also loan, to the extent that City funds are available, amounts necessary to pay any enforceable obligations listed on the ROPS that will not be funded from the RPTTF revenues available for that ROPS period.
No loan is being requested for ROPS 19-20 as the LSA expects that there will be sufficient RPTTF.
ROPS Approval Procedure
Following the Countywide Oversight Board’s approval of a ROPS, the LSA must submit it to the County Auditor-Controller, the State Controller and the State Department of Finance (“DOF”), and post it on the LSA’s website.
Section 34177(o) states that the LSA must submit a ROPS to DOF, after approval by the Countywide Oversight Board, no later than February 1, 2019.
DOF shall make its determinations regarding the enforceable obligations and the amounts and funding sources of the enforceable obligations no later than April 15, 2019. Section 34177(o) provides for a meet and confer period if the LSA disputes DOF’s determinations.
Section 34177(o) also provides for significant penalties if a ROPS is submitted late. The City of San Pablo could be subject to a civil penalty of $10,000 per day for each day a ROPS is not submitted to the DOF, and if a ROPS is not submitted within 10 days of the deadline, the maximum ACA of the LSA for the ROPS period could be reduced by 25%.
FISCAL IMPACT
The approval of ROPS 19-20 by the Countywide Oversight Board is part of the procedure of adopting a valid ROPS for Fiscal Year 2019-20 pursuant to Section 34177(o), and obtaining the funds to make payments on obligations listed on that ROPS. The approval of the LSA’s administrative budget provides the supporting detail for the LSA’s claim for ACA on ROPS 19-20.
Attachments:
Exhibit A Local Successor Agency Resolution LSA2019-___, with Administrative Budget and ROPS 19-20 attached.