10B Action 2009 1221 - Laserfiche WebLink

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redevelopment agencies to pay into ERAF in Fiscal Year 2008-09, prior to May 10, 2009, an aggregate amount of $350 million, of which the Agency was to pay approximately $280,000. On April 30, 2009, a California Superior Court in California Redevelopment Association v. Genest (County of Sacramento) (Case No. 34-2008-00028334) held that the required payment by redevelopment agencies into ERAF in Fiscal Year 2008-09 pursuant to AB 1389 violated the California constitution and invalidated and enjoined the operation of the California Health and Safety Code section requiring such payment. On May 26, 2009, the State filed a notice that it would appeal the decision of the Superior Court. However, on September 28, 2009, the State noticed its withdrawal of its appeal of California Redevelopment Association v. Genest. Accordingly, the Superior Court holding of invalidity of the applicable portion of AB 1389 is final. In connection with various legislation related to the budget for the State for its Fiscal Year 2009-10, in late July 2009, the State legislature adopted, and the Governor of the State signed, Assembly Bill No. 26 (the "2009 SERAF Legislation"). The 2009 SERAF Legislation mandates that redevelopment agencies in the State make deposits to the Supplemental Educational Revenue Augmentation Fund ("SERAF") that is established in each county treasury throughout the State the aggregate amounts of $1.7 billion for Fiscal Year 2009-10, which are due by May 10, 2010, and $350 million for Fiscal Year 2010- 11,which are due by May 10, 2011. The Agency has preliminarily estimated that the total amount payable by it pursuant to the 2009 SERAF Legislation will be approximately $6.3 million for Fiscal Year 2009-10 and estimated at $1.3 million for Fiscal Year 2010-11. The Agency expects that, as with the ERAF payments, the SERAF payments will be paid timely by the Agency. The 2009 SERAF Legislation contains provisions that subordinate the obligation of redevelopment agencies to make the SERAF payments specified therein to certain indebtedness. Section 6 of AB 26, to be codified as California Health and Safety Code, § 33690 (a) (3), states: "The obligation of any agency to make the payments required pursuant to this subdivision shall be subordinate to the lien of any pledge of collateral securing, directly or indirectly, the payment of the principal, or interest on any bonds of the agency including, without limitation, bonds secured by a pledge of taxes allocated to the agency pursuant to Section 33670 of the California Health and Safety Code." The 2009 SERAF Legislation imposes various restrictions on redevelopment agencies that fail to timely make the required SERAF payments, including (i) a prohibition on adding or expanding project areas, (ii) a prohibition on the incurrence of additional debt, (iii) limitations on the encumbrance and expenditure of funds, including funds for operation and administration expenses, and (iv) commencing with the July 1 following the due date of a SERAF annual payment that is not timely made, a requirement that the applicable redevelopment agency allocate an additional five percent (5%) of all taxes that are allocated to the redevelopment agency under the Redevelopment Law for low and moderate income housing for the remainder of the time that the applicable redevelopment agency receives allocations of tax revenues under the Redevelopment Law. The five percent (5%) additional housing set-aside penalty provision referred to in the 2009 SERAF Legislation (the "Penalty Set-Aside Requirement") would be in addition to the twenty percent (20%) of such tax revenues already required to be used far low and moderate income housing purposes. A redevelopment agency that borrows from amounts required to be allocated to its housing set aside funds to make required SERAF payments but does not timely repay the funds, will also be subject to the Penalty Set-Aside Requirement. -46-