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HomeMy WebLinkAboutItem 3c: Due Diligence Review of Redevelopment Non-Housing Funds per AB 1484.M � y ti 9 dr V � '%orV..r ud Augu 1.1903 °'uhlly Ot0O�cb STAFF REPORT Development Services Department DATE: December 4, 2012 TO: Honorable Mayor and City Council, Acting as Successor Agency to the Redevelopment Agency FROM: Jason Kruckeberg, Assistant City Manager /Development Services Director,-Yr-k' By: Jerry Schwartz, Economic Development Manager SUBJECT: DUE DILIGENCE REVIEW OF REDEVELOPMENT NON - HOUSING FUNDS PER AB 1484 Recommended Action: Receive and File SUMMARY On June 27, 2012, the Governor signed into law Assembly Bill 1484 (AB 1484), which created new requirements and timeframes for the dissolution of redevelopment. One of the requirements is the completion of two reviews of redevelopment funds; the first examined the Low and Moderate Income Housing funds, and the second examines the non - housing funds. The review of the housing funds was presented at the October 2, 2012, City Council meeting. The review of the non - housing funds has been completed and is presented to be received and filed. The review found no irregularities in the handling of the non - housing funds and property assets, and concluded that approximately $3 million would be available to transfer to the Los Angeles County Auditor - Controller. BACKGROUND One of the main reasons that the Governor advocated the dissolution of redevelopment in California was to transfer the former tax increment funds to the various taxing entities, including K -12 school districts, counties, and special districts. AB 1484 slowed those processes down significantly and created a number of new requirements. One such requirement is that remaining redevelopment funds are subject to due diligence reviews by an outside audit firm. The Low and Moderate Income Housing funds were reviewed first and separately from the non - housing funds. Each due diligence review has to be approved by the Oversight Board after it has separately held a meeting to take testimony about the review. Those two meetings must be at least five business days apart. The due diligence review of the housing funds was e- mailed to the Department of Finance (DOF) on October 10, 2012, after 1 % is DDR of Redevelopment Non - Housing Funds December 4, 2012 Page 2of3 approval by the Oversight Board. This process will be repeated for the due diligence review of the non - housing funds, which must be submitted to the DOF by January 15, 2013. DISCUSSION The due diligence review of the Redevelopment non - housing funds was prepared for the City by its auditors, Pun & McGeady, based on the CPA Society CeThe proceduresdfo etheenony the DOF, the State Controller, housing funds were the same as those used for the already completed housing fund review. The non - housing funds were transferred to the Successor Agency since the City Council chose to become the Successor Agency to the Arcadia Redevelopment Agency. Overall, Pun & McGeady did not find any irregularities in the non - housing funds, the handling of the funds since the transition from Redevelopment to Successor Agency, or their use. Among the funds that were identified during the review was $1,950,093 that the Successor Agency received in June 2012 from the Los Angeles County Auditor - Controller for the Recognized Obligation Payment Schedule for the period of July 1 — December 31, 2012 (ROPS 2), and $1,511,915 in unspent proceeds from the 2010 taxable tax allocation bond issue. The funds received for ROPS 2 were used to pay Successor Agency administrative costs and to make principal and interest payments on the two outstanding redevelopment bond issues. The unspent bond proceeds can be used for any allowed purpose in the bond documents after the Successor Agency receives a finding of completion from the DOF. The finding of completion is anticipated to be issued in April or May, 2013. The review also identifies the "Land Held for Resale" the list of five commercial properties that were owned by Redevelopment when it was eliminated. The five properties include the four adjacent parcels that were purchased to facilitate the expansion of Rusnak Mercedes Benz (parcels at 101 -111 and 121 -159 North Santa Anita Avenue, 21 Morlan Place and the vacant Dahlgren parcel on Santa Clara Street), and the Arcadia Self Storage building at 35 Huntington Drive. The total amount shown in the Land Held for Resale column includes both the cost to purchase 21 Morlan Place from the Church in Arcadia and the cost to purchase 630 East Live Oak Avenue from the City to give to the Church as its replacement site. Since 630 East Live Oak Avenue is no longer owned by the City or Agency, the purchase amount has been noted to show the actual purchase price of the five properties. These same five properties were discussed in detail in the Long Range Property Management Plan, which was approved at the November 20, 2012, City Council meeting. The conclusion of the Due Diligence Review is that there is $3,033,177 in unencumbered Successor Agency funds that can be forwarded for distribution to the taxing entities. This total is on page 18 of the review. As mentioned above, the Oversight Board is required to take public testimony on the Due Diligence Review before it can be approved. The Oversight Board will hold that DDR of Redevelopment Non - Housing Funds December 4, 2012 Page 3 of 3 meeting on December 11, 2012. Subsequently, as required by law, a second meeting will be held on January 8, 2013, to consider approving the DDR. Once approved, it can be forwarded to the DOF by the January 15, 2013, deadline. FISCAL IMPACT Once the Department of Finance approves the Due Diligence Review, the Successor Agency will be required to forward $3,033,177, its available non - housing funds, to the Los Angeles County Auditor - Controller for distribution to the taxing entities. The review shows the Successor Agency retaining the $1,511,915 in unspent bond proceeds for potential use after the Agency receives a finding of completion from the DOF in April or May, 2013. Additionally, the Land Held for Resale will be eligible to be sold by the Successor Agency following the receipt of a finding of completion. RECOMMENDATION Receive and File. Approved by: Dominic Lau City Manager Attachment A: Draft Non - Housing Funds Due Diligence Review Attachment A Successor Agency to the Arcadia Redevelopment Agency Arcadia, California, 4'" Yv M� IndependentA.ccontant's Report on A ling Agree 4:Up4M Procedures relating to pp y . the Due Diligence ziew in accordance with AB 1484 applied ill Other Remaining Funds <) Or the year ended June 30, 2012 FM PUN & McGrADY ,� � . � y�, ���` � �� �v : � �� ^ �� 2 / � / §y = ^/ � d � « yam, !� ~« Successor Agency to the Arcadia Redevelopment Agency Table of Contents Page INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED -UPON PROCEDURES ................ ............................... ............................ 1 ATTACHMENT A - AGREED -UPON PROCEDURES AND RESULTS ............... ............................... 2 -20 `4 �. � \ f « /� (» �� �< � \��� z \ /� � x � ��\ � % � 2, /�J � %. � �* �f F- PUN & McGEADY INDEPENDENT ACCOUNTANT'S REPORT ON APPLYING AGREED -UPON PROCEDURES To the Oversight Board of the Successor Agency to the Arcadia Redevelopment Agency Arcadia, California 9 Corporate Park Suite 130 Irvine, California 92606 Phone: (949) 777 -8800 Fax: (949) 777 -8850 www.pm - llp.com We have performed the required agreed -upon procedures ( "AUP ") enyu%erated in Attachment A, which were agreed to by the California State Controller's Office and the Cali ria State Department of Finance solely to assist the Oversight Board of the Successor Agenc) q th 'Arcadia Redevelopment 5 Agency ( "Successor Agency ") that the dissolved Arcadia Redev o ell! Agency ( "Agency ") of the City of Arcadia, California ( "City ") is complying with its eta requirements with respect to Assembly Bill ( "AB ") 1484. Management of the City is res x)si le for the accounting records pertaining to statutory compliance pursuant to Californi ,I*alth id Safety Code section 34179.5(c)(1) through 34179.5(c)(6).4 This ree a g p d -u on procedures engagement was con uc in accordance with attestation standards established by the American Institute of Cefte Public Accountants. The sufficiency of these procedures is solely the responsibility of th par*'s specified in the report. Consequently, we make no representation regarding the sufficie9cy of 'tie procedures described below either for the purpose for which this report has been request$dgr for any other purpose. We were not engaged to and di no onduct an audit, the objective of which would be the expression of an opinion as to the appropri of the financial information summarized in Exhibits, as listed in the table of contents. Acco 1 we do not express such an opinion. Had we performed additional procedures, other matte i t ve come to our attention that would have been reported to you. This report is intended''veely for the information and use of the Oversight Board, the Successor Agency, the Agency, the City, California State Controller's Office and the California State Department of Finance, and is not intended to be, and should not be used by anyone other than these specified parties. This restriction is not intended to limit distribution of this report, which is a matter of public record. Irvine, California November 19, 2012 �~ \ � { � � ^ # � ATTACHMENT A -ACRE ./ PROCEDURES AND RESULTS «, w / \ \§ � Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 3 Citation: 34179.5(c)(1) The dollar value of assets transferred from the former redevelopment agency to the successor agency on or about February 1, 2012. Procedures Performed: 1. Obtain from the Successor Agency a listing of all assets that were transferred from the former redevelopment agency to the Successor Agency on February 1, 2012. Agree the amounts on this listing to account balances established in the accounting records of the Successor Agency. Identify in the Agreed -Upon Procedures (AUP) report the amount of the assets transferred to the Successor Agency as of that date. Results: ' ''* t On February 1, 2012, the dollar value of assets of the forme qedpvelopment agency that were transferred to the Successor Agency is as follows: `r Capital Projects Debt Service Redevelopment Project ARA Bads* e ARA Bonds Total Cash and investments $ 2,978,424 d t'$ 1,511,037 $ - $ 4,489,461 Cash with fiscal agent - 2,897,624 2,897,624 Interest Receivable, 61635 4 ., 869 - 7,504 Property held for resale }43 5,877 - - 14,855,877 84 , 36 $ 1,511,906 $ 2,897,624 $ 22,250,466 Note: The dollar value of as the low and moderate income housing fund was not included in this schedule. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 4 Citation: 34179.5(c)(2) The dollar value of assets and cash and cash equivalents transferred after January 1, 2011, through June 30, 2012, by the redevelopment agency or the successor agency to the city, county, or city and county that formed the redevelopment agency and the purpose of each transfer. The review shall provide documentation of any enforceable obligation that required the transfer. Procedures Performed: 2. If the State Controller's Office has completed its review of transfers required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the following procedures: A. Obtain a listing prepared by the Successor Agency of tr4i4fers jL4zcluding payments for goods and services) from the former redevelopment a ern to a city, county, or city and county that formed the redevelopment agency for t q, io from January 1, 2011 through January 31, 2012. For each transfer, the Successor Agent' s ould describe the purpose of the transfer and describe in what sense the tr er .wa required by one of the Agency's enforceable obligations or other legal requireroerp . Provide this listing as an attachment to the AUP report. f' a3" B. Obtain a listing prepared by the Successor ency of transfers (excluding payments for goods and services) from the Succes Aency to the city, county, or city and county that formed the redevelopment agen .. for)* period from February 1, 2012 through June 30, 2012. For each transfer, the Succ�' Ver ency should describe the purpose of the transfer and describe in what sens e trt was required by one of the Agency's enforceable obligations or other leg req ements. Provide this listing as an attachment to the AUP report. C. For each transfer, of a legal document that formed the basis for the enforceable obligation that r tyre any transfer. Note in the AUP report the absence of any such legal document or elkesence of language in the document that required the transfer. Results: The State Controller's Office has not completed its review of transfers required under California Health and Safety Code Sections 34167.5 and 34178.8. Reviewed general ledger detail reports and noted there were no asset transfers from the former redevelopment agency to the City of Arcadia for the period from February 1, 2012 through June 30, 2012. However, for the period from January 1, 2011 through January 31, 2012, we noted there were transfers of capital assets from the former redevelopment agency to the City of Arcadia. These assets were transferred pursuant to Cooperation Agreements between the former Agency and the City of Arcadia which have since been voided and the transfers reversed. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 5 Citation: 34179.5(c)(3) The dollar value of any cash or cash equivalents transferred after January 1, 2011, through June 30, 2012, by the redevelopment agency or the successor agency to any other public agency or private party and the purpose of each transfer. The review shall provide documentation of any enforceable obligation that required the transfer. Procedures Performed: 3. If the State Controller's Office has completed its review of transfers required under both Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy of that report as an exhibit to the AUP report. If this has not yet occurred, perform the follo ing procedures: A. Obtain a listing prepared by the Successor Agency of tr ers( excluding payments for goods and services) from the former redevelopment ag to y other public agency or to private parties for the period from January 1, 201 ,, ou h January 31, 2012. For each transfer, the Successor Agency should describe the pu poo of the transfer and describe in what sense the transfer was required by one of e Age 's enforceable obligations or other legal requirements. Provide this listing as an a ent to the AUP report. B. Obtain a listing prepared by the Success ge y of transfers (excluding payments for goods and services) from the Successor Agen ,'to any other public agency or private parties for the period from February 1, 2012 rough une 30, 2012. For each transfer, the Successor Agency should describe the pure se o transfer and describe in what sense the transfer was required by one of the Age orceable obligations or other legal requirements. Provide this listing as an att ment t the AUP report. C. For each transfer, obtai a gal document that formed the basis for the enforceable obligation that required transfer. Note in the AUP report the absence of any such legal document or the abs LOP nguage in the document that required the transfer. Results: There were no transf s the former redevelopment agency to any other public agency or to private parties for the p o from January 1, 2011 through June 30, 2012. Therefore, these procedures are not applicable. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 6 Citation: 34179.5(c)(4) The review shall provide expenditure and revenue accounting information and identify transfers and funding sources for the 2010 -11 and 2011 -12 fiscal years that reconciles balances, assets, and liabilities of the successor agency on June 30, 2012 to those reported to the Controller for the 2009 -10 fiscal year. Procedures Performed: 4. Perform the following procedures: A. Obtain from the Successor Agency a summary of the financial transactions of the Redevelopment Agency and the Successor Agency in the for t set forth in the attached schedule for the fiscal periods indicated in the schedule. For p r ' ses of this summary, the financial transactions should be presented using the modif aO ac gal basis of accounting. End of year balances for capital assets (in total) and to - mAbilities (in total) should be presented at the bottom of this summary schedule fox,' qrm lion purposes. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 7 Results: Successor Redevelopment Agency Agency 12 Months Ended 12 Months Ended 7 Months Ended 5 Months Ended 6/30/2010 6/30/2011 1/31/2012 6/30/2012 Assets (modified accrual basis) Cash and investments - Housing $ 5,485,382 $ 6,239,323 $ 6,776,367 $ 6,776,367 Cash and investments - Non - Housing 3,185,680 2,741,632 4,489,461 6,439,534 Cash and investments with fiscal agents 1,840,279 2,931,094 2,897,624 2,897,624 Accounts Receivable 8,370 Interest receivables 68,171 28,303 25,062 25,062 Due from County of Los Angeles 101,061 40,61 V, - 32,415 Prepaid items and deposits 100,000 - 14 Advances to other funds 4,045,715 Property held for resales - Housing 551,091 It 168,272 1,268,272 1,268,272 Property held for resales - Non - Housing 10,908,745 e14 5,877 14,855,877 14,855,877 Total Assets $ 26,286,, 28,105,141 $ 30,312,663 $ 32,303,535 Liabilities (modified accrual basis) Accounts P a Y able $ 441§16$ 47,568 $ - $ 35,339 Accrued salaries payable. 127 16,952 - - Advances from other funds ` 5,715 - ' Deposits - 24,940 - - Total Liabilities ,$ 1< 4,104,758 $ 89,460 $ $ 35,339 Equity i 22,181,366 28,015,681 30,312,663 32,268,196 Total Liabilities + E jffdl $ 26,286,124 $ 28,105,141 $ 30,312,663 $ 32,303,535 Total Revenues: $ 4,774,763 $ 5,378,065 $ 1,023,477 $ 3,415,462 Total Expenditures: $ 4,655,858 $ 14,900,054 $ 2,488,775 $ 1,763,668 Total Other Financing Sources (Uses) $ - $ 15,356,304 $ 3,762,280 $ 303,739 Net change in equity $ 118,905 $ 5,834,315 $ 2,296,982 $ 1,955,533 Beginning Equity: $ 22,062,461 $ 22,181,366 $ 28,015,681 $ 30,312,663 Ending Equity: $ 22,181,366 $ 28,015,681 $ 30,312,663 $ 32,268,196 Other Information (show year end balances for all four periods presented): Capital assets as of end of year $ - $ - $ - $ ' Bond issuance cost as of end of year $ 206,878 $ 199,000 $ 193,373 Long -term debt as of end of year $ 15,115,000 $ 27,110,000 $ 26,395,000 $ 25,850,000 Bond discount as of end of year $ - $ (403,161) $ (387,618) $ (376,516) Interest payable as of end of year $ 149,593 $ 422,388 $ 718,322 $ 407,127 Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 8 B. Ascertain that for each period presented, the total of revenues, expenditures, and transfers accounts fully for the changes in equity from the previous fiscal period. Result: No exceptions were noted. C. Compare amounts in the schedule relevant to the fiscal year ended June 30, 2010 to the state controller's report filed for the Redevelopment Agency for that period. Result: No exceptions were noted. D. Compare amounts in the schedule for the other fiscal Jierds presented to account balances in the accounting records or other supporting Jh ed es. Describe in the report the type of support provided for each fiscal period._" Result: The amount presented in Procedures 4A - m ar of Financial Transactions schedule �: p �' were agreed to supporting documentatic,44p- l'pllows: f Fiscal Period Suppor Documentation June 30, 2010 Arcadia Redevel ent Apicy's Basic Financial Statements - Audited June 30, 2011 Arcadia Redevelopm' gency's Basic Financial Statements - Audited January 31, 2012 City of a's Gen ral Ledger detail report June 30, 2012 City � cads Basic Financial Statements - Audited Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 9 Citation: 34179.5(c)(5) A separate accounting for the balance for the Low and Moderate Income Housing Fund for all other funds and accounts combined shall be made as follows: (A) A statement of the total value of each fund as of June 30, 2012 Procedures Performed: 5. Obtain from the Successor Agency a listing of all assets of the Low and Moderate Income Housing Fund as of June 30, 2012 for the report that is due October 1, 2012 and a listing of all assets of all other funds of the Successor Agency as of June 30, 2012 (excluding the eviously reported assets of the Low and Moderate Income Housing Fund) for the report that is ftun,Ae ecember 15, 2012. When this procedure is applied to the Low and Moderate Income Housin ` schedule attached as an exhibit will include only those assets of the Low and Moder nc a Housing Fund that were held by the Successor Agency as of June 30, 2012 and will e 1 e 1 assets held by the entity that assumed the housing function previously performed by e rm r redevelopment agency. Agree the assets so listed to recorded balances reflected in the ccopn g records of the Successor Agency. The listings should be attached as an exhibit to the apWo late AUP report. Results: The following is the listing all assets of the previously reported assets of the Low and Mac Cash and investments X Cash with fiscal agents Accounts Receivable Interest receivable Due from county of Los An es Prepaid items and deposits Land held for resale 14,855,877 - - 14,855,877 Total $ 17,840,936 $ 1,990,872 $ 1,511,906 $ 2,897,624 $ 24,241,338 6,635 Agency as of June 30, 2012, excluding the ie Housing Fund. IV ARA Bonds ARA Bonds Redevelopment Capital Debt Retirement Projects Service Total $ 1,950,073 $ 1,511,037 $ - $ 6,439,534 - - 2,897,624 2,897,624 8,370 - - 8,370 - 869 - 7,504 32,415 - - 32,415 14 - - 14 *The dollar amount shown in Redevelopment Retirement Fund reflects the amount received from the LA County Auditor - Controller to pay the existing obligations in Recognized Obligation Payment Schedule #2. It is not available to be transferred to the taxing entities. * *The dollar amount shown in ARA Bonds Capital Projects Fund reflects unspent proceeds from the 2010 tax allocation bonds. These funds can be spent for any lawful purpose once the DOF issues a Finding of Completion. The funds are not available to be transferred to the taxing entities. ** *Total Land held for resale includes a parcel of land located at 21 Morlan Place. The cost of 21 Morlan Place in the amount of $6.139 million includes cash paid in the amount of $3.612 million, contribution of land as part of the consideration in the amount of $2.247 million, and demolition costs in the amount of $0.28 million. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 10 Citation: 34179.5(c)(5)(B) An itemized statement listing any amounts that are legally restricted as to purpose and cannot be provided to taxing entities. This could include the proceeds of any bonds, grant funds, or funds provided by other governmental entities that place conditions on their use. Procedures Performed: 6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that are restricted for the following purposes: A. Unspent bond proceeds: 1. Obtain the Successor Agency's computation of the rest ".ted balances (e.g., total proceeds less eligible project expenditures, amounts set ftide far -debt service payments, etc.) . 2. Trace individual components of this computation o %la ed account balances in the accounting records, or to other supporting doc t" ton (specify in the AUP report a description of such documentation). 3. Obtain from the Successor Agency a co bf4he legal document that sets forth the restriction pertaining to these balances the AUP report the absence of language o restricting the use of the balances thatre identified by the Successor Agency as restricted. Nks Results:` s At June 30, 2012, there wer nspen and proceeds in the amount of $1,511,907 and bond reserve in the amount of ,89 24. Both are restricted and can only be used for the specific purposes identified in th ° nd issuance documents. B. Grant procee a gram income that are restricted by third parties: i. Obtain ccessor Agency's computation of the restricted balances (e.g., total proceeds le eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by the Successor Agency as restricted. Results: There were no grant proceeds and program income that are restricted by third parties at June 30, 2012. Therefore, these procedures are not applicable. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 11 C. Other assets considered to be legally restricted: i. Obtain the Successor Agency's computation of the restricted balances (e.g., total proceeds less eligible project expenditures). ii. Trace individual components of this computation to related account balances in the accounting records, or to other supporting documentation (specify in the AUP report a description of such documentation). iii. Obtain from the Successor Agency a copy of the legal document that sets forth the restriction pertaining to these balances. Note in the AUP report the absence of language restricting the use of the balances that were identified by Successor the Agency as restricted. Results: There were no other restricted assets at June 30, 2012. applicable. Attach the above mentioned Successor Agency pr p e schedule(s) as an exhibit to the AUP report. For each restriction identified o 4ep edules, indicate in the report the period of time for which the restrictions are idAt. If the restrictions are in effect until the related assets are expended for their in 4n d }purpose, this should be indicated in the report. W TherefoTre, h se procedures are not Results: Restricted Cash and Inv estme 0 N 2001 Tax Allocation Bond Ser A 2010 Tax Allocation Bon 2010 Tax Allocatio d V. Total Amount Purposes 912,462 Bond reserve 1,985,162 Bond reserve 1,511,906 Unspent Bond Proceeds $ 4,409,530 Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 12 Citation: 34179.5(c)(5)(C) An itemized statement of the values of any assets that are not cash or cash equivalents. This may include physical assets, land, records, and equipment. For the purpose of this accounting, physical assets may be valued at purchase cost or at any recently estimated market value. The statement shall list separately housing - related assets. Procedures Performed: 7. Perform the following procedures: A. Obtain from the Successor Agency a listing of assets as of June 30, 2012 that are not liquid or otherwise available for distribution (such as capital assets, larf eld for resale, long -term receivables, etc.) and ascertain if the values are listed at either pu h se cost (based on book value reflected in the accounting records of the Success0;q g cy) or market value as recently estimated by the Successor Agency. Results: Amount Land Held for Resale:., t Self Storage, 33 W. Hunting 1r"Drive $ 4,770,232 21 Morlan Place , 6,138,514 101 -111 N. to Aru 1,717,548 121 -155 N. Sant to 1,617,558 Dah men on N, to Anita 612,025 $ 14 85 5,877 'Total Land hel4eiV le includes a parcel of land located at 21 Morlan Place. The cost of 21 Morlan Place in nt of $6.139 million includes cash paid in the amount of $3.612 million, con tribution a part of the consideration in the amount of $2.247 million, and demolition costs in the amoun $ .28 million. Note that all the non - liquid or otherwise unavailable assets of the Arcadia RDA are listed at purchase cost. B. If the assets listed at 7(A) are listed at purchase cost, trace the amounts to a previously audited financial statement (or to the accounting records of the Successor Agency) and note any differences. Results: No differences were noted. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 13 C. For any differences noted in 7(B), inspect evidence of disposal of the asset and ascertain that the proceeds were deposited into the Successor Agency trust fund. If the differences are due to additions (this generally is not expected to occur), inspect the supporting documentation and note the circumstances. Results: No differences were noted. D. If the assets listed at 7(A) are listed at recently estimated market value, inspect the evidence (if any) supporting the value and note the methodology used. If no evidence is available to support the value and \or methodology, note the lack of evidence. Results: a.2 The assets listed at 7(A) are not listed at recently estimated ThA*et value. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 14 Citation: 34179.5(c)(5)(D) An itemized listing of any current balances that are legally or contractually dedicated or restricted for the funding of an enforceable obligation that identifies the nature of the dedication or restriction and the specific enforceable obligation. In addition, the successor agency shall provide a listing of all approved enforceable obligations that includes a projection of annual spending requirements to satisfy each obligation and a projection of annual revenues available to fund those requirements. If a review finds that future revenues together with dedicated or restricted balances are insufficient to fund future obligations and thus retention of current balances is required, it shall identify the amount of current balances necessary for retention. The review shall also detail the projected property tax revenues and other general purpose revenues to be received by the successor agency, together with both the amount and timing of the bond debt service payments of the successor agency, for the period in which the oversight board anticipates the successor agency will have insufficient property tax revenue to pay the specified obligations. �. Procedures Performed: 8. Perform the following procedures: A. If the Successor Agency believes that asset balan' need to be retained to satisfy enforceable obligations, obtain from the SuccaesitAncy an itemized schedule of asset balances (resources) as of June 30, 2012th `1 dedicated or restricted for the funding of enforceable obligations and perform the follo ingKprocedures. The schedule should identify the amount dedicated or restricted, the rJuiyof the dedication or restriction, the specific enforceable obligation to which the &-d&ation or restriction relates, and the language in the legal document that is associ -'i the enforceable obligation that specifies the dedication of existing asset b ances . ward payment of that obligation. i. Compare all infor n on tfie schedule to the legal documents that form the basis for the dedicatio es 'ction of the resource balance in question. ii. Compare all rre r balances to the amounts reported in the accounting records of the Successor y or to an alternative computation. iii. Compar s cified enforceable obligations to those that were included in the final ed Obligation Payment Schedule approved by the California Dep Oe t of Finance. iv. Attacs an exhibit to the report the listing obtained from the Successor Agency. Identify in the report any listed balances for which the Successor Agency was unable to provide appropriate restricting language in the legal document associated with the enforceable obligation. Results: The Successor Agency believes that the asset balances reflected below need to be retained to meet the enforceable obligations listed in Recognized Obligation Payment Schedule #2 for the period of July 1, 2012 to December 31, 2012. Actual debt obligation according to bond debt service schedules 2001A Tax Allocation Bonds $ 1,460,124 2010 Tax Allocation Bonds 1,793,825 Payments made /to be made for other enforceable obligations 176,668 $ 3,430,617 Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 15 B. If the Successor Agency believes that future revenues together with balances dedicated or restricted to an enforceable obligation are insufficient to fund future obligation payments and thus retention of current balances is required, obtain from the Successor Agency a schedule of approved enforceable obligations that includes a projection of the annual spending requirements to satisfy each obligation and a projection of the annual revenues available to fund those requirements and perform the following procedures: i. Compare the enforceable obligations to those that were approved by the California Department of Finance. Procedures to accomplish this may include reviewing the letter from the California Department of Finance approving the Recognized Enforceable Obligation Payment Schedules for the six month period from January 1, 2012 through June 30, 2012 and for the six month period July 1, 2012 through December 31, 2012. ii. Compare the forecasted annual spending requiremer ,, to the legal document supporting each enforceable obligation. a. Obtain from the Successor Agency its assumrs1�ating to the forecasted annual spending requirements and disclos ii�the report major assumptions associated with the projections. (04:' iii. For the forecasted annual revenues: a. Obtain from the Successor Agenc ' ass `mptions for the forecasted annual revenues and disclose in the art major assumptions associated with the projections. Results: The Successor Agency believes th iuiuu revenues together with balances dedicated or restricted to enforceable obligati s arefficient to fund future obligation payments and thus retention of current balances i required. C. If the Successor Agenc ieves that projected property tax revenues and other general purpose revenues r eived by the Successor Agency are insufficient to pay bond debt service paymen ring both the timing and amount of the related cash flows), obtain from the Succes r ency a schedule demonstrating this insufficiency and apply the following procedures to the ormation reflected in that schedule. i. Compare the timing and amounts of bond debt service payments to the related bond debt service schedules in the bond agreement. ii. Obtain the assumptions for the forecasted property tax revenues and disclose major assumptions associated with the projections. iii. Obtain the assumptions for the forecasted other general purpose revenues and disclose major assumptions associated with the projections. Results: The successor Agency believes that projected property tax revenues and other general purpose revenues to be received by the Successor Agency are sufficient to pay bond debt service payments; therefore, this procedure is not applicable. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 16 D. If procedures A, B, or C were performed, calculate the amount of current unrestricted balances necessary for retention in order to meet the enforceable obligations by performing the following procedures. i. Combine the amount of identified current dedicated or restricted balances and the amount of forecasted annual revenues to arrive at the amount of total resources available to fund enforceable obligations. ii. Reduce the amount of total resources available by the amount forecasted for the annual spending requirements. A negative result indicates the amount of current unrestricted balances that needs to be retained. iii. Include the calculation in the AUP report. Results: See procedure 8A for the calculation of the amount of current nres ' i ted balances necessary for retention in order to meet the enforceable obligations. i Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 17 Citation: 34179.5(c)(5)(E) An itemized list and analysis of any amounts of current balances that are needed to satisfy obligations that will be placed on the Recognized Obligation Payment Schedules for the current fiscal year. Procedures Performed: 9. If the Successor Agency believes that cash balances as of June 30, 2012 need to be retained to satisfy obligations on the Recognized Obligation Payment Schedule (ROPS) for the period of July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for the period of July 1, 2012 through December 31, 2012 and a copy of the final ROPS for the period January 1, 2013 through June 30, 2013. For each obligation listed on the ROPS, the Successor Agency shoidd add columns identifying (1) any dollar amounts of existing cash that are needed to satisfy" th t bligation and (2) the Successor Agency's explanation as to why the Successor Agencyie�v that such balances are needed to satisfy the obligation. Include this schedule as an att igeno the AUP report. a` Results: The Successor Agency believe that cash balances as of uke AK 2012 need to be retained to satisfy obligations on the Recognized Obligation Payment Sch tflf (BOPS) for the period of July 1, 2012 through June 30, 2013 as noted in Procedures 8A. Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 18 Citation: 34179.5(c)(6) The review shall total the net balances available after deducting the total amounts described in subparagraphs (B) to (E), inclusive, of paragraph (5). The review shall add any amounts that were transferred as identified in paragraphs (2) and (3) of subdivision (c) if an enforceable obligation to make that transfer did not exist. The resulting sum shall be available for allocation to affected taxing entities pursuant to Section 34179.6. It shall be a rebuttable presumption that cash and cash equivalent balances available to the successor agency are available and sufficient to disburse the amount determined in this paragraph to taxing entities. If the review finds that there are insufficient cash balances to transfer or that cash or cash equivalents are specifically obligated to the purposes described in subparagraphs (B), (D), and (E) of paragraph (5) in such amounts that there is insufficient cash to provide the full amount determined pursuant to this paragraph, that amount shall be demonstrated in an additional itemized schedule. Procedures Performed: 3 10. Include (or present) a schedule detailing the computation of thBalnce Available for Allocation to Affected Taxing Entities. Amounts included in the calculp * &, i©uld agree to the results of the procedures performed in each section above. The schedule should also include a deduction to recognize amounts already paid to the County Audi�°r- Controller on July 12, 2012 as directed by the California Department of Finance. The amount, gt'thfs deduction presented should be agreed to evidence of payment. The attached example 5� ary schedule may be considered for this purpose. Separate schedules should be comp eted ,fo�he Low and Moderate Income Housing Fund and for all other funds combined (excluding Low and Moderate Income Housing Fund). d: Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 19 Results: The following is the schedule detailing the computation of the Balance Available for Allocation to Affected Taxing Entities. SUMMARY OF BALANCES AVAILABLE FOR ALLOCATION TO AFFECTED TAXING ENTITIES Total amount of assets held by the successor agency as of June 30, 2012 (procedure 5) Add the amount of any assets transferred to the city or other parties for which an enforceable obligation with a third party requiring such transfer and obligating the use of the transferred assets did not exist (procedures 2 and 3) Less assets legally restricted for uses specified by debt covenants, grant restrictions, or restrictions imposed by other governments (procedure 6) re not cash or cash a ., physical assets (propO 7) Less assets that a equivalents ( q g Less balances that are legally restricted for the funding of an entorc ble obligation (net of projected annual revenues available to fund too ligations) - (procedure 8) Less balances needed to satisfy RODS for the 2012 -13 V aNye.6rocedure 9) Less the amount of payments made on July 1 12 to th County Auditor - Controller as directed by the California Department of EA,ance Amount to be remitted to county rsement to taxing entities Note that separate computations r ire for the Low and Moderate Income Housing Fund held by the Successor Agency and for her n s held by the Successor Agency. $ 24,241,338 (4,409,530) (14,855,877) (3,430,617) $ 1,545,314 NOTES: For each line shown above, an exhibit should be attached showing the composition of the summarized amount. If the review finds that there are insufficient funds available to provide the full amount due, the cause of the insufficiency should be demonstrated in a separate schedule. ** *Total Land held for resale includes a parcel of land located at 21 Morlan Plance. The cost of 21 Morlan Place in the amount of $6.139 million includes cash paid in the amount of $3.612 million, contribution of land as part of the consideration in the amount of $2.247 million, and demolition costs in the amount of $0.28 million Successor Agency to the Arcadia Redevelopment Agency Agreed Upon Procedures - AB 1484 Due Diligence Review Page 20 Management Representation Letter 11. Obtain a representation letter from Successor Agency management acknowledging their responsibility for the data provided to the practitioner and th e data presented in the report or in any attachments to the report. Included in the representations should be an acknowledgment that management is not aware of any transfers (as defined by Section 34179.5) from either the former redevelopment agency or the Successor Agency to other parties for the period from January 1, 2011 through June 30, 2012 that have not been properly identified in the AUP report and its related exhibits. Management's refusal to sign the representation letter should be noted in the AUP report as required by attestation standards. Results: See attached for the Management Representation Letter. AO fg4�'