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STAFF REPORT
Development Services Department
DATE: March 20, 2012
TO: Mayor and City Council
FROM: Jason Kruckeberg, Assistant City Manager/Development Services Director
By: Jerry Schwartz, Economic Development Manager 1s.
SUBJECT: CONSIDERATION OF AN ADMINISTRATIVE BUDGET FOR THE
SUCCESSOR AGENCY TO THE ARCADIA REDEVELOPMENT
AGENCY
Recommendation: Provide Direction
BACKGROUND
As part of the dissolution of redevelopment in California, Assembly Bill 26 (AB 26)
designates the amount that is available for the annual administrative budget for the wind
down of the Agency and the management of the Oversight Board. The budget is based
on the tax increment of the former redevelopment agency. The amount referenced in
AB 26 for administrative costs is 5% of the tax increment, with a minimum of $250,000
annually. Given the revenues of the Arcadia Redevelopment Agency, the Successor
Agency administrative budget will be approximately $250,000 for the 2012-2013 fiscal
year. This administrative budget begins once the Oversight Board meets. It is
anticipated that this administrative budget limit will also impact the final two months of
the 2011-2012 fiscal year, and it was already reflected in the Initial Recognized
Obligations Payment Schedule (IROPS) that was approved on February 21st. One of
the requirements is that the administrative budget be presented to the Successor
Agency before it is sent to the Oversight Board.
DISCUSSION
The expenses of the Successor Agency to the Arcadia Redevelopment Agency consist
of two elements, the Recognized Obligation Schedule (ROPS), and the administrative
budget. As a Successor Agency, the Council approved the Initial ROPS or (IROPS) at
the February 21st meeting. That covered the period from February 1st thru June 30th,
2012. At a future meeting, you will be asked to approve the ROPS for the July 1 —
December 31, 2012 period. As you know, the ROPS includes the existing obligations of
the Arcadia Redevelopment Agency when it was shut down, such as principal and
interest on redevelopment bonds.
The administrative budget represents the cost to run the Successor Agency and
expenses to operate the Oversight Board. The total available for this purpose is
$250,000 per fiscal year. The first full fiscal year that it takes effect is FY 2012-2013. It
will also impact May and June, 2012, the final two months of FY 2011-2012. The
reduced admin funds for those two months are already reflected in the IROPS (Exhibit
A). The proposed administrative budget for FY 2012-2013 is attached as Exhibit B.
Since the Successor Agency has received most of the tax increment that it would have
if redevelopment was still in existence, the impact on May and June, 2012 will be
relatively small. As was reflected in the approved IROPS, the Successor Agency will
basically fund all expenses that were included in the redevelopment budget for 2011-
2012.
In 2012-2013, the Successor Agency will be limited to a total of $250,000 in
administrative funds for the entire fiscal year. The expenses, as shown in Exhibit B,
include staff costs, office supplies, contract services, insurance, support of the
Oversight Board, etc. The $248,514 budget clearly does not cover the level of funding
formerly allocated to Redevelopment (approximately $682,000 in total costs for 2011-
12). This will leave a shortfall of approximately $433,500 which would need to be
incorporated into other portions of the City budget (example shown in Exhibit C). Of the
$248,514 proposed budget, staff costs account for approximately $175,000, and include
the time necessary to serve as staff to the Successor Agency and Oversight Board
along with managing the ongoing process to unwind the Arcadia Redevelopment
Agency on a day-to-day basis. The total full time equivalents paid from the
administrative budget is recommended at 1.2 FTE, which is 50% of the staffing level
when the redevelopment program was active. Staffing costs that are no longer to be
allocated to Redevelopment/Successor Agency are proposed to be allocated to the
General Fund, Transit, and Measure R. This includes portions of the City Manager,
Communications and Marketing Specialist, Assistant Planner, Economic Development
Manager, and Assistant City Manager/Development Services Director. The additional
costs will be in front of the Council during consideration of the 2012 — 2013 budget
Staff believes that the administrative budget described in this staff report and shown in
Exhibits A & B is the best method to allocate the limited resources available to the
Successor Agency during this dissolution process. This staff report and exhibit are
intended to provide an overview of the Successor Agency budget for the 2012 — 2013
fiscal year. The specific breakdown of the itemized budget, including the details of the
staffing costs will be included in the overall Development Services Department budget
package for the 2012-2013 fiscal year. If this administrative budget is acceptable to the
Successor Agency, it can direct that it be presented to the Oversight Board once the
board is formed and meeting.
Administrative Budget for Successor Agency
March 20, 2012
Page 2 of 3
FISCAL IMPACT
The Successor Agency costs do not impact the General Fund. These costs will be
provided by the Los Angeles County Auditor-Controller. However, reduction in staff
allocations to redevelopment will be borne by the General Fund and other Special
Funds such as Transit and Measure R. The expected impact to other funds in former
redevelopment costs is approximately $433,500 ($184,000 in staffing and $249,500 in
overhead, worker's comp, general liability, etc.) It is important to note that a decision on
the Successor Agency budget does not preclude the Council from making changes to
the General Fund budget and the other proposed allocations of former Redevelopment
charges during consideration of the 2012 —2013 budget.
RECOMMENDATION
Provide Direction.
Approved by:
Donald Penman, City Manager
Attachments:
Exhibit A - IROPS
Exhibit B - Successor Agency Costs— Fiscal Year 2012-2013
Exhibit C - Proposed Reallocation of Former Redevelopment Costs to Other Funds
Administrative Budget for Successor Agency
March 20, 2012
Page 3 of 3
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Exhibit B
Successor Agency Budget— Fiscal Year 2012-2013
Line Item Amount
Staff* $175,814
Legal Services/appraisal services $20,000
Office Supplies $1,500
General Liability Insurance $9,000
Workers Compensation Insurance $1,200
Vehicle Maintenance $500
Oversight Board administration,financial assistance, admin. $41,000
Total $248,514
*Staff Breakdown:
Title Percentage of Overall Salary
Assistant City Manager/Development Services Director (20%)
Economic Development Manager (60%)
Senior Administrative Assistant (20%)
Administrative Assistant (20%)
Total 1.2 (Full Time Equivalents)
Exhibit C
Proposed Reallocation of Former Redevelopment Costs
to Other Funds (FY 2012— 2013)*
Total Funds Formerly Allocated to Redevelopment (FY 2011-2012): $682,000
Proposed Successor Agency Budget (See Exhibit B): $248,514
TOTAL Budget to be Reallocated to Other Funds (rounded): $433,500
Staffing: $184,000 (1.2 FTE)
Overhead, Liability, Workers Comp, etc. $249,500
*All figures approximate and subject to change through budget process