TITLE
Recommendation to authorize City Manager to notify the Los Angeles County Auditor-Controller that the City of Long Beach and its Redevelopment Agency (Agency) intend to fund the payment required by Section 33685(d) of the California Health and Safety Code using the Agency’s tax increment revenue and housing set-aside in the amount of $6,070,996. (Citywide)
DISCUSSION
On September 30, 2008, Governor Schwarzenegger signed Assembly Bill (AB) 1389, a budget trailer bill requiring redevelopment agencies statewide to pay a collective $350 million into the Educational Revenue Augmentation Fund (ERAF). The bill directed the California Director of Finance (DOF) to allocate the $350 million amongst the State's redevelopment agencies based on a formula of gross and net tax increment. On November 12, 2008, the DOF provided the Agency with its required Fiscal Year 2008-09 (FY09) ERAF payment: $6,070,996. This payment is due to be made by May 10, 2009. However, AB 1389 also set a deadline of March 1, 2009 for all agencies to state their intentions on making this payment.
Redevelopment agencies have options for making the ERAF payment if certain findings are made. AB 1389 allows a redevelopment agency's host government (i.e., a city or county) to make the ERAF payment. Or, redevelopment agencies may use up to 50 percent of the current fiscal year's low- and moderate-income housing set-aside funds to make the ERAF payment if the Agency finds that there are insufficient funds to meet the ERAF obligation. The housing set-aside funds used to make the ERAF payment would need to be repaid within ten-years.
In the event that a redevelopment agency, or its host government, cannot or does not make its full ERAF payment by the May 10, 2009 deadline, that agency is subject to what is referred to as the "death penalty" until those payments are made. Specifically, an agency cannot encumber funds or expend money derived from any source except to pay previously issued bonds or o...
Click here for full text