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Item 2c: ARA Resolution 250: Draft of Recognized Obligation Payment Schedule per AB 1X 26
• , „ Po' Pli STAFF REPORT Arcadia Redevelopment Agency DATE: September 20, 2011 TO: Chair and Members of the Agency Board FROM: 5F, iJason Kruckeberg, Assistant City Manager/Development Services Director SUBJECT: ARCADIA REDEVELOPMENT AGENCY RESOLUTION NO. ARA 250 APPROVING AND ADOPTING THE PRELIMINARY DRAFT OF THE INITIAL RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS) PURSUANT TO AB 1X 26 Recommendation: Adopt SUMMARY On June 29, 2011, the Governor signed into law Assembly Bill 1X 26 and Assembly Bill 1X 27 as part of the State budget package which have the combined effect of abolishing every redevelopment agency unless the community that created the agency elects to participate in the "Alternative Voluntary Redevelopment Program" ("Program") by ordinance. Participation in the Program includes an agreement to pay a "community remittance". The Arcadia City Council made the choice to participate with the adoption of Ordinance No. 2286. A Petition for Writ of Mandate challenging the constitutionality of AB 1X 26 and AB 1X 27 was filed on July 18, 2011 in the Supreme Court of the State of California. The Supreme Court agreed to take the case and issued an order for the partial stay of enforcement of AB 1X 26 and AB 1X 27. The Supreme Court's order does not stay the effectiveness of Health and Safety Code Section 34169(h), (part of AB 1X 26) which requires agencies to prepare a preliminary draft of the initial Recognized Obligation Payment Schedule ("ROPS") by September 30, 2011. Resolution No. ARA 250, attached hereto, approves and adopts the preliminary draft of the initial ROPS. Depending on the outcome of the litigation, the ROPS may eventually serve as the basis for the payment of the Agency's outstanding financial obligations by the Agency's successor agency. It could also never be needed. DISCUSSION The Arcadia Redevelopment Agency was created by the City Council for the purposes of implementing redevelopment activities in the City. The City Council adopted the Redevelopment Plan for the Central Redevelopment Project(s) in accordance with the Community Redevelopment Law (Health and Safety Code § 33000 et seq.) ("CRL"). The Central Redevelopment Project Area was found to have a significant number of physical and economic blighting conditions that necessitated adoption of the Redevelopment Plan. The Redevelopment Plan authorizes the Agency to receive tax increment revenue to pay for programs and projects that address these conditions consistent with the CRL. The Legislature enacted companion bills AB 1X 26 and AB 1X 27 which have the effect of eliminating every redevelopment agency unless the community that created it adopts an ordinance agreeing to make community remittance payments. These bills took effect on June 29, 2011. The constitutionality of these bills was challenged on behalf of cities, counties and redevelopment agencies in a Petition for Writ of Mandate, filed in the Supreme Court of the State of California on July 18, 2011 (California Redevelopment Association, et al. v. Ana Matosantos, et al., Case No. 5194861). On August 11, 2011, the Supreme Court agreed to take the case and issued an order for the immediate stay of enforcement of AB 1X 26 in part and AB 1X 27 in its entirety. On August 17, 2011, the Supreme Court modified its stay to clarify that Health and Safety Code Sections 34161 through 34169.5, enacted by AB 1X 26, and Health and Safety Code Section 34194(b)(2), enacted by AB 1X 27, are not stayed ("Court's Stay"). The Court's Stay did not stay the enforcement of Health and Safety Code Section 34169(h), which requires agencies to prepare a preliminary draft of the initial ROPS by September 30, 2011. Depending on the outcome of the litigation, the ROPS may eventually serve as the basis for the payment of the Agency's outstanding financial obligations by the Agency's successor agency. It could also never be used. The ROPS must list all of the "enforceable obligations" of the Agency and the minimum amounts and due dates of payments required by each enforceable obligation for six month periods beginning with January 1, 2012 through June 30, 2012, and is subject to approval by an oversight board, the county auditor-controller, the State Controller, and the Department of Finance. "Enforceable obligations" include: bonds; loans legally required to be repaid pursuant to a payment schedule with mandatory repayment terms; payments required by the federal government, preexisting obligations to the state or obligations imposed by state law; judgments, settlements or binding arbitration decisions that bind the agency; legally binding and enforceable agreements or contracts; contracts or agreements necessary for the continued administration or operation of the agency, including agreements to purchase or rent office space, equipment and supplies. "Enforceable obligations" do not include agreements or arrangements between the Agency and the City, except those entered into on or before December 31, 2010 solely for the purpose of securing or repaying indebtedness obligations. The ROPS is also required to identify one or more of the following sources of payment for each enforceable obligation: the Low and Moderate Income Housing Fund; bond proceeds; reserve balances; administrative cost allowance; the Redevelopment Property Tax Trust Fund, but only to the extent no other funding source is available or when payment is required from property tax revenues; and other revenue sources, including rents, concessions, asset sale proceeds, interest earnings, and other revenues approved by an oversight board. Resolution No. ARA 250 approves and adopts the preliminary draft of the initial ROPS, which is attached to the staff report. Preliminary ROPS September 20, 2011 Page 2 of 3 Although the Agency is responsible for preparing the preliminary draft of the ROPS, the final version is to be prepared by the Agency's successor agency, which will be necessary if the stay is lifted and the Agency is dissolved. The successor agency will not be able to make any payment unless they are set forth in the ROPS. The State Supreme Court has announced its intent to decide the case by January 15, 2012. FISCAL IMPACT There is no fiscal impact from the preparation of the initial ROPS. RECOMMENDATION Adopt Resolution No. ARA 250. By: �e Donald Penman, Executive Director Attachments: Agency Resolution No. ARA 250 Preliminary Draft of Initial Recognized Obligation Payment Schedule Preliminary ROPS September 20, 2011 Page 3 of 3 333 1 111111111e11111111101 n 3i 3i 0 tVr pr�Vr p p C G p G G C G C p p p p p p a S N 8 8 O O $ 8 8 8 8 0 0 0 0 $ $ $ $ 8. 8 . , R n O Ml g , 1"1 ry $ g r 8 R$ - 10 Y - ..",./ k �3 N {V 1100 ry N .t808 8 8 8 8 888 8 I ! 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ARA-250 A RESOLUTION OF THE ARCADIA REDEVELOPMENT AGENCY APPROVING AND ADOPTING THE PRELIMINARY DRAFT OF THE INITIAL RECOGNIZED OBLIGATION PAYMENT SCHEDULE PURSUANT TO AB 1X 26 WHEREAS, pursuant to the Community Redevelopment Law (Health and Safety Code sections 33000 et seq.), the City Council of the City of Arcadia ("City") created the Arcadia Redevelopment Agency ("Agency") to serve as the redevelopment agency within the City; and WHEREAS, the Agency has been responsible for implementing the Redevelopment Plan for the Central Redevelopment Project covering certain properties within the City ("Project Area"); and WHEREAS, as part of the 2011-2012 State budget bill, the California State Legislature recently enacted, and the Governor signed, companion bills AB 1X 26 and AB 1X 27, which eliminate every redevelopment agency unless the community that created it adopts an ordinance agreeing to participate in an Alternative Voluntary Redevelopment Program which requires the payment of an annual "community remittance" payment; and WHEREAS, on July 18, 2011, the League of California Cities and the California Redevelopment Association filed suit in the Supreme Court of the State of California challenging the constitutionality of and requesting a stay of enforcement of AB 1X 26 and AB 1X 27; and 1 WHEREAS, on August 11, 2011, the Supreme Court agreed to take the case and issued and order for the immediate stay of the enforcement of AB 1X 26 in part and AB 1X 27 in its entirety; and WHEREAS, on August 17, 2011, the Court modified its stay to clarify that Health and Safety Code Sections 34161 through 34169.5, enacted by AB 1X 26, are not subject to the stay; and WHEREAS, Health and Safety Code Section 34169(h), enacted by AB 1X 26, requires redevelopment agencies to prepare, by September 30, 2011, a preliminary draft of the initial Recognized Obligation Payment Schedule ("ROPS"). NOW, THEREFORE, THE ARCADIA REDEVELOPMENT AGENCY DOES HEREBY FIND, DETERMINE AND RESOLVE AS FOLLOWS: SECTION 1. The facts set forth in the recitals above are true and correct and are incorporated into the Governing Board of the Agency's findings and determinations. SECTION 2. The Agency's Governing Board ("Governing Board") hereby approves and adopts the preliminary draft of the initial ROPS, in substantially the form attached hereto as Exhibit "A", as required by Health and Safety Code Section 34169(h). SECTION 3. The Governing Board hereby authorizes the Agency Executive Director, or his or her designee, to provide the preliminary draft of the initial ROPS to the Agency's successor agency, if the Supreme Court's stay is lifted or modified in a manner that permits a successor agency to be established for the Agency pursuant to Part 1.85 to Division 24 of the Health and Safety Code, enacted by AB 1X 26. 2 SECTION 4. This Resolution shall take effect immediately upon its adoption. SECTION 5. The Agency Secretary shall certify to the adoption of this Resolution. Passed, approved and adopted this 20th day of September 20, 2011. Agency Chairman ATTEST: Agency Secretary APPROVED AS TO FORM: 6e1CW-e4&tql/LeA, , Stephen P. Deitsch Agency Attorney 3 EXHIBIT "A" RECOGNIZED OBLIGATION PAYMENT SCHEDULE 4 82282 8 8 8 8 8 8 88888888 88 , 8 , 8 Qpym� C�pp(Cg o 2 0p8 8 8 8 $88888210 .- N. 0 O ^ N N t) N aD • l7 N N A M N N (p Q In O N N N o ' f .- O N - 0 S 8 S 8 8 8 88 8 0 d8 V 8 8 8 8 8 8m8 § N "'i g 1° N - A - 8 N N O m 8 N M m N OCI 8 .t nI's 8 8 8 8 8 8 88 88 , N N <8 " s 8 8 p 8 8 8 Fig 88 a Q p N 2 a0 O ° O O N 8 i° ('CO m m w N n 7 N N N O C rn a 6 1 X22 8 8 8 8 88 8 88 88 = , , T _ N Pa�l ip Op S § § 8 8 O 8 8 N N ' ' "4" Y as aD P h O O § �p m fp 0 A N 10 5 g '° N - A N 8 0 8 8 N N N CT. , ° N � Mm 8 8 88 8 888 8 QV ma 8m § 88 8 8m8 FA 0 N O "p N '- N Pl Yf N t7 N t. 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