TITLE
Recommendation to adopt resolution approving the decision of the City of Long Beach, as the Successor Agency to the Redevelopment Agency of the City of Long Beach, to approve the draft Recognized Obligation Payment Schedule 14-15A, for the period of July 1, 2014 through December 31, 2014.
DISCUSSION
Section 34177(1)(2)(A) of the California Health and Safety Code, as adopted by AB 1 x 26 (the "Dissolution Act"), requires the Successor Agency to prepare a draft Recognized Obligation Payment Schedule forward looking to each six-month fiscal period. Each Recognized Obligation Payment Schedule must list dates, amounts, and payment sources of the former Redevelopment Agency's enforceable obligations. The attached draft Recognized Obligation Payment Schedule represents the anticipated enforceable obligations for the period of July 1 through December 31,2014 (Exhibit A).
The Recognized Obligation Payment Schedule is based on the Enforceable Obligation Payment Schedule, a list of the total outstanding debts and obligations of the former Long Beach Redevelopment Agency, which was certified by the California Department of Finance on March 30, 2012.
This Recognized Obligation Payment Schedule is the first to include an enforceable obligation as defined by Section 34171 (d)(1 )(G) of the California Health and Safety Code: the amounts borrowed from, or payments owing to, the Low- and Moderate-Income Housing Fund of a redevelopment agency that had been deferred as of the effective date of the Dissolution Act, provided that the repayment schedule is approved by the Oversight Board. This Recognized Obligation Payment Schedule requests a Low- and ModerateIncome Housing Fund repayment totaling $8,848,132.
The Recognized Obligation Payment Schedule must identify the source of payment for each obligation from among the following:
• The Redevelopment Property Tax Trust Fund - RPTTF (maintained by the County)
• Bond Proceeds
• Reserve Balances
• Administrative Cost Allowance
• Other revenue sources including rents, interest earnings, and asset sale proceeds
In accordance with Assembly Bill 1484, each Recognized Obligation Payment Schedule must be submitted to the California Department of Finance for review and certification no later than 90 days prior to the next scheduled property tax distribution date. The next distribution date is June 1, 2014, so the Recognized Obligation Payment Schedule 14-15A must be submitted to the Departmentof Finance prior to March 1,2014.
Upon certification, the Department of Finance will transmit a copy of the Recognized Obligation Payment Schedule to the Los Angeles County Auditor-Controller (AuditorController). On June 1, 2014, the Auditor-Controller will distribute property tax revenue to the Successor Agency from the Redevelopment Property Tax Trust Fund for approved payments listed on the Recognized Obligation Payment Schedule. This distribution will be from property taxes the Auditor-Controller received from former Long Beach redevelopment project areas from January 1 through April 30, 2014.
Additionally, pursuant to Section 341770) of the Dissolution Act, the Successor Agency is allowed an administrative allowance, subject to Oversight Board approval. The allowance is capped at three percent of the property tax from the Redevelopment Property Tax Trust Fund allotted to the Successor Agency for the period of July 1 through December 31,2014.
The administrative cost allowance includes items such as salaries, including citywide and departmental overhead costs for Successor Agency and other City staff carrying out the necessary actions to wind down the Agency's affairs; preparation of the Recognized Obligation Payment Schedule and Administrative Budgets; and operational costs associated with these actions. Exhibit B outlines the proposed Administrative Budget for the Successor Agency for the period of July 1 through December 31,2014.
The proposed Administrative Budget from July 1 through December 31, 2014, is approximately $999,877, or 2.9 percent of the $34,798,469 in RPTTF funds requested in the Recognized Obligation Payment Schedule. Challenges to the validity of any of the enforceable obligations by the Oversight Board or Department of Finance could reduce the amount of the administrative allowance paid by the Auditor-Controller.
The proposed Administrative Budget conforms to the administrative cost allowance prescribed by AB1x 26 and the Successor Agency's FY 14 budget. Due to the changing nature of the Department of Finance decisions, however, it is difficult to predict the administrative costs that will actually be allowed and reimbursed. In the event that all of the administrative costs on the attached budget are not reimbursed, other Successor Agency revenues are budgeted to help address the shortfall. If this is insufficient, administrative or staffing reductions will occur. Costs not covered by the administrative allocation or other potential sources may require funding from the General Fund to close the gap. Before that occurs, all efforts will be made to reduce administrative costs to minimize any impact to the General Fund. The adoption of the recommended actions allows the Successor Agency to meet its obligations to continue dissolution of the former Redevelopment Agency.
This matter was approved by the Successor Agency to the Redevelopment Agency of the City of Long Beach on February 11, 2014.
TIMING CONSIDERATIONS
Oversight Board action is requested on February 24, 2014. Upon the Oversight Board's approval, the July 1 through December 31, 2014 Recognized Obligation Payment Schedule will be transmitted to the California Department of Finance for certification prior to the March 1,2014 deadline for submission.
SUGGESTED ACTION
Approve recommendation.
BODY
A RESOLUTION OF THE OVERSIGHT BOARD OF THE CITY OF LONG BEACH AS THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF LONG BEACH APPROVING THE DECISION OF THE SUCCESSOR AGENCY TO APPROVE THE DRAFT RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD OF JULY 1, 2014 THROUGH DECEMBER 31,2014
Respectfully Submitted,
APPROVED:
PATRICK H. WEST
CITY MANAGER