Presentation is loading. Please wait.

Presentation is loading. Please wait.

Redevelopment Dissolution: Key Finance Issues California Society of Municipal Finance Officers 2012 Annual Conference Anaheim, California March 1, 2012.

Similar presentations

Presentation on theme: "Redevelopment Dissolution: Key Finance Issues California Society of Municipal Finance Officers 2012 Annual Conference Anaheim, California March 1, 2012."— Presentation transcript:

1 Redevelopment Dissolution: Key Finance Issues California Society of Municipal Finance Officers 2012 Annual Conference Anaheim, California March 1, 2012 Jack Nagle Goldfarb & Lipman LLP 1300 Clay Street, 11 th Floor Oakland, CA 94612 510.836.6336

2 Key Finance Issues Successor Agency Start-Up Actions Recognized Obligation Payment Schedule The “New” Property Tax System For Dissolution Working With The Auditor-Controller Working With The Oversight Board Bond-Related Issues 2 goldfarb lipman attorneys

3 Successor Agency (SA) And Housing Successor Agency (HSA) Start-Up Actions 3 goldfarb lipman attorneys

4 Transfer of Former RDA Assets Effective February 1, 2012 By Operation Of Law (ABx1 26) All Former RDA Funds and Non-Housing Assets To SA Housing Assets (Other Than Housing Fund Balance) To HSA – Defining/Determining A “Housing Asset” RDA Exit Memos To Memorialize Transferred Assets Possible State Controller “Claw-backs” Of Assets Transferred By Former RDA To Host Community Or Other Local Entity After January 1, 2011 4 goldfarb lipman attorneys

5 Establishing SA Funds and Accounts Create SA Funds And Accounts Comparable To Former RDA Funds and Accounts (Including Housing Fund) Create Redevelopment Obligation Retirement Fund – To Receive Revenues To Pay Enforceable Obligations From Auditor- Controller’ Redevelopment Property Tax Trust Fund (Trust Fund) – Possible Sub-Accounts For Separate Project Areas Of Former RDA goldfarb lipman attorneys 5

6 Actions To Segregate SA Assets And Liabilities From Normal Host Community Assets and Liabilities SA Liabilities Are Limited To Funds And Assets Received By SA Hold Assets In Name Of “City As Successor Agency To Former RDA” Do Not Pool Or Comingle SA Funds With Other City Funds goldfarb lipman attorneys 6

7 Recognized Obligation Payment Schedule (ROPS) And Administrative Budget goldfarb lipman attorneys 7

8 ROPS Contents Initial ROPS Covers January – June 2012 Future ROPS’s Are Forward Looking For Succeeding Six-Month Periods List Enforceable Obligations And Show Monthly Expected Expenditures, Payee, Description/Purpose, Payment Source, And Affected Project Area Initial ROPS Also Shows “Lifetime” Expected Expenditures/Schedule For Enforceable Obligations goldfarb lipman attorneys 8

9 ROPS Enforceable Obligation Considerations ABx1 26 Invalidation Of Certain RDA/Host Community Contracts Show Affordable Housing Obligations Treating Unencumbered Bond Proceeds/Bond Covenants Former RDA Property Remediation, Management/Operation, and Disposition Costs SA Administrative Cost Allowance Project-Related Vs. General Dissolution Administration Staff And Consultant Costs goldfarb lipman attorneys 9

10 Administrative Budget Timing/Contents No Set Preparation Date, But Logical To Prepare Soon To Obtain Oversight Board Approval Should Contain – Estimated SA General Dissolution Administration Costs For Upcoming Six-Month Period – Proposed Payment Sources (Including Administrative Cost Allowance) – Proposed Arrangements For Obtaining Administrative Services goldfarb lipman attorneys 10

11 ROPS Procedural Steps March 1, 2012: Prepare/Post Draft of Initial ROPS April 15, 2012: Send Certified And Approved ROPS To State Controller And Department of Finance May, 1 2012: Deadline For Formation Of Oversight Board That Approves Certified ROPS July 1, 2012: Deadline For Completion Of External Audits As Basis For ROPS Certification Basic Flaw In ROPS Procedure Sequence As Contained in ABx1 26 Use Of Amended Enforceable Obligation Payment Schedule (EOPS) Prior To Operative Date Of ROPS goldfarb lipman attorneys 11

12 The “New” Property Tax System For Redevelopment Dissolution goldfarb lipman attorneys 12

13 Overview of New System County Auditor-Controller (A-C) Determines Amount Of Property Taxes That Formerly Would Have Constituted Tax Increment and Deposits In Trust Fund A-C Makes Semi-Annual Distributions From Trust Fund As Described In Subsequent Slide A-C Receives From SA The Unencumbered Fund Balances Inherited From Former RDA And The Net Sales Proceeds From Former RDA Property Disposition – These Fund Balances and Land Sale Proceeds Are Distributed By A-C Like Normal Property Taxes goldfarb lipman attorneys 13

14 Redevelopment Property Tax Trust Fund Distributions By Auditor-Controller First, To Pay A-C Administrative Costs Second, To Pay Contract And Statutory Pass-Through Obligations Of Former RDA Third, To SA So That SA Can Pay Enforceable Obligations On Approved ROPS (SA Places This Amount In Its Redevelopment Obligation Retirement Fund) Fourth, To Pay SA Administrative Cost Allowance Fifth, To Pay Any Residual Balance To Local Taxing Entities goldfarb lipman attorneys 14

15 Special Trust Fund Distribution Issues Dealing With A Shortfall In Amount Available To Pay Enforceable Obligations – SA Informs A-C of Potential Shortfall – A-C And State Controller Verify Shortfall – Distribution Priorities Are Modified To Assure Adequate Funds To Pay Enforceable Obligations Calculation And “True-Up” of Trust Funds Allocated By A-C To Taxing Entities For Pass-Through Payments and From Residual Property Tax Receipts To Assure Appropriate Shares To Each Taxing Entity goldfarb lipman attorneys 15

16 Cash Flow Concerns From New System The New System May Create Cash Flow Issues For Some SA’s Due To – Transition From Current Annual Funding System To Forward Looking Six-Month Period Funding System – Inability/Disincentives For Host Community To Provide Cash Flow Advances For SA Obligations – Timing Quirks Caused By Mid-Year Supreme Court Ruling And Court’s Setting of Revised Operational Dates goldfarb lipman attorneys 16

17 The Cash Flow Conundrum 17 Source: California Redevelopment Association Dissolution Implementation Committee goldfarb lipman attorneys

18 Issues For Working With Auditor-Controller goldfarb lipman attorneys 18

19 Audit-Related Issue Cooperation With A-C In Preparation Of “Agreed Upon Procedures” Audit By External Auditor Will There Be An SA Close-Out Audit For Former RDA? Obtaining External Auditor “Certification” Of Initial ROPS goldfarb lipman attorneys 19

20 Other Auditor-Controller Cooperation Issues Remitting To A-C Any Unencumbered Fund Balances Received By SA From Former RDA On February 1, 2012 Transferring Responsibility/Knowledge For Pass- Through Calculations And Payments Assuring Priority Of Payments For Bonds Secured By Pledge From Particular Project Area goldfarb lipman attorneys 20

21 Other Auditor-Controller Cooperation Issues (Continued) Reporting/Verifying Funding Shortfalls For Enforceable Obligations Reporting/Adjusting Actual Vs. Estimated Enforceable Obligation Payment Amounts – SA To Report Differences From One Period In Subsequent ROPS – A-C May Audit Differences and Will Adjust Future Amounts Paid To SA Accordingly Preparing/Processing the Second ROPS For July – December 2012 Period goldfarb lipman attorneys 21

22 Issues For Working With Oversight Board Concurrence On Enforceable Obligations And Approval Of Initial and Succeeding ROPS’s Approval For Continuation Of Certain Mid-Stream Projects (Including Re-Entry To Certain Agreements With Host Community) Approval Of SA Expenditures Of Unencumbered Bond Proceeds Strategy For Refunding Bonds Or Prepaying Other Obligations To Generate Net Savings Disposition Strategy For Former RDA Properties goldfarb lipman attorneys 22

23 Some Key Bond-Related Issues Assuring Sufficient Funds To SA To Pay Subsequent Period Bond Debt Service – Dealing With Uneven Spring/Fall Debt Service Through The Semi-Annual ROPS System Assuring Priority Of Funds To Secure Each Bond Series – Dealing With System That Has Only One Trust Fund For Each Former RDA Addressing Ability For SA To Spend Unencumbered Bond Proceeds For Intended Purpose goldfarb lipman attorneys 23

Download ppt "Redevelopment Dissolution: Key Finance Issues California Society of Municipal Finance Officers 2012 Annual Conference Anaheim, California March 1, 2012."

Similar presentations

Ads by Google