TITLE
Recommendation to approve an amended repayment schedule for the amounts of Property Tax funds (formerly 20 Percent Tax Increment Set-Aside) the former Redevelopment Agency owes to the Low- and Moderate-Income Housing Fund. (Citywide)
DISCUSSION
On October 22, 2013, the Successor Agency reviewed and approved a repayment schedule for funds the former Redevelopment Agency (Agency) owes to the Low- and Moderate-Income Housing Fund (Exhibit A) related to the deferral of $16,361,451 from the Downtown Project Area. The Oversight Board of the City of Long Beach to the Successor Agency to the Redevelopment Agency of the City of Long Beach (Oversight Board) approved the same schedule on November 4, 2013. An amended repayment schedule is being considered for two reasons:
1. In a letter dated December 17, 2013, the California Department of Finance (DOF) requested that the Oversight Board reconsider the proposed repayment schedule.
2. The amount to be repaid to the Low- and Moderate-Income Housing Fund through the repayment schedule has increased because the DOF denied a loan agreement between the Agency and the former Long Beach Housing Development Company (LBHDC) as an existing enforceable obligation on Recognized Obligation Payment Schedule (ROPS) 13-14B. The total amount of debt outstanding to the Low- and Moderate-Income Housing Fund is $24,721,890.
The DOF requested that the Oversight Board reconsider the Low- and Moderate-Income Housing Fund repayment schedule because it wants the amount of the upcoming payment to be based on actual dollar amounts and not estimates. California Health and Safety Code Section 34171(d)(1)(G) prescribes the adoption of a repayment schedule but does not specify its format or content. This section also indicates that adoption of a repayment schedule is necessary before the Successor Agency can begin to repay the Low- and Moderate-Income Housing Fund. While Successor Agency staff interpreted the adoption of a repayment schedule as notification that funds would be repaid to the Low- and Moderate-Income Housing Fund, the DOF chose to use it as documentation for a ROPS request. As a result, the repayment schedule is to be based on actual residual proceeds rather than estimates. Specifically, the amount of low- and moderate-income housing funds that can be repaid annually is limited to 50 percent of the residual proceeds paid in the preceding fiscal year less the residuals paid in Fiscal Year 2012-13 (FY12-13).
As mentioned above, the amount of Low- and Moderate-Income funds that must be repaid via the repayment schedule has increased. During its review of ROPS 13-14B, the DOF denied a loan agreement between the Agency and the LBHDC. The Agency and LBHDC entered into this loan agreement in 2010 when the Agency borrowed the entire Fiscal Year 2009-2010 Low- and Moderate-Income Housing Set-Aside amount to assist the Agency with making its state-mandated Supplemental Education Revenue Augmentation Fund (SERAF) payment. Repayment of this SERAF loan agreement was not denied on ROPS I and II so Successor Agency staff anticipated its approval on ROPS 13-14B. Instead, DOF directed that the remaining SERAF loan balance be included in the Low- and Moderate-Income Housing Fund repayment schedule.
Repayment Schedule
The amount the Successor Agency must repay the Low- and Moderate-Income Housing Fund via the repayment schedule is $24,721,890. The $24,721,890 is comprised of the remaining SERAF loan balance of $8,360,439 and $16,361,451 deferred from the Downtown Redevelopment Project Area's low- and moderate-income housing set-aside. The deferral, described in detail in Exhibit A, was incurred when the Low- and Moderate-Income Housing Funds were established in the mid-1980s and the Downtown Project Area had pre-existing obligations that precluded making the annual set-aside payments.
The formula for the repayment amount in FY14-15 is as follows:
(FY13-14 residual proceeds - FY12-13 residual proceeds) X 50%
or
($62,714,877 - $45,018,614) X 50% = $8,848,132
The amount of residual Redevelopment Property Tax Trust Fund (RPTTF) proceeds paid to the affected taxing agencies is based on the Remittance Advice provided by the Los Angeles County Auditor-Controller.
The proposed repayment schedule is as follows:
City's Fiscal Year/ Payment Based Payment Based Balance
ROPS Period on Actual Residuals on Estimated Residuals
_______________________________________________________________________________________________________
Beginning Balance $24,721,890
_______________________________________________________________________________________________________
2013-14/ $8,848,132 $15,873,758
ROPS 14-15A
_______________________________________________________________________________________________________
2014-15/ $0 $15,873,758
ROPS 15-16A
_______________________________________________________________________________________________________
2015-16/ $9,410,093 $6,463,665
ROPS 15-17A
_______________________________________________________________________________________________________
2016-17/ $4,282,261 $2,181,404
ROPS 17-18A
_______________________________________________________________________________________________________
2017-18/
ROPS 18-19A $2,181,404 $0
____________________________________________________________________________________________
*Actual repayment amounts will be less than or equal to the maximum amount allowed pursuant to Health and Safety Code Section 34176(e)(6)(B).
Except for the ROPS 14-15A period, the above repayment amounts are estimates. The repayment amounts will be updated annually when the latest actual residual amount is available to calculate the payment amount for the upcoming ROPS period. Actual repayment amounts will not exceed the maximum amount allowed pursuant to Health and Safety Code Section 34176(e)(6)(B).
This matter was reviewed by Deputy City Attorney Richard F. Anthony on January 16, 2014 and Budget Management Officer Victoria Bell on January 24, 2014.
TIMING CONSIDERATIONS
Successor Agency approval is requested to allow for submittal to the Oversight Board on February 24, 2014, and to the DOF for final approval.
FISCAL IMPACT
Repayments of $24,271,890 will be funded from the residual proceeds in the RPTTF administered by the County Auditor-Controller, which will satisfy amounts owed to the Low- and Moderate-Income Housing Fund (SR 135) in the Department of Development Services (DV).
SUGGESTED ACTION
Approve recommendation.
Respectfully Submitted,
APPROVED:
PATRICK H. WEST
CITY MANAGER