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SALT LEANDRO REDEVELOPMENT AGENCY Dotes to the Financial Statements For the Year Ended dune 30, 2011 NOTE 11— SUBSEQUENT EVEN'T'S (Continued) In addition, the suspension provisions require the State Controller to review the activities of all redevelopi.nent agencies to determine whether an asset transfer between an agency and any public agency occurred on or after January 1, 2011. If an asset transfer did occur and the public agency that. received the asset is not contractually committed to a third party for the expenditure or encumbrance of the asset, the State Controller is required to order the asset returned to the redevelopment agency. The State Controller's Office has not yet provided any information about the timing or the process for this statewide asset transfer review. The Agency is currently subject to the suspension provisions as described above. These facts indicate that there is more than a remote possibility the Agency may not continue as a going concern beyond October 1, 2011. The continuation of the Agency beyond October 1, 2011 will initially depend upon whether the Supreme Court rules in favor of the petitioners. There are three possible consequences to the Agency from a decision of the Supreme Court, when it is rendered: If the Supreme Court determines that both ABxl 26 and AI3x1 27 are valid, then the City will consider whether it will enact an ordinance to opt -in to the alternative voluntary redevelopment program. If enacted, the City would be required to make annual payments to the County Auditor- Controller and the Agency would no longer be subject to the suspension provisions. The State Department of Finance calculated the City's Voluntary Program payment for fiscal year 2012 to be $7.6 million. The City filed an appeal of that amount in accordance with the provisions of Health and Safety Code Section 34194(b)(2)(L), however it is not known when the State Department of Finance wilt act on the appeal or what the actual remittance payment will be. In the opinion of the Agency's attorney, is anticipated that subsequent legislation will be brought forward that may provide some hardship relief to the City and Agency from the required remittance payments. 2. If the Supreme Court determines that both ABxl 26 and ABxl 27 are valid and the City decides not to participate in the alternative voluntary redevelopment program, or if the Supreme Court determines that ABxl 26 is valid, but ABxl 27 is not valid, the Agency will continue to be subject to the suspension provisions and would be dissolved in accordance with certain provisions of ABxl 26. Prior to dissolution, any transfers of Agency assets subsequent to January 1, 2011 to the City , including those discussed in :Note 6, that were not obligated to third parties or encumbered may be subject to the State Controller's review discussed above and required to be returned to the Agency. Upon dissolution, all assets and obligations of the Agency would be transferred to a successor agency. 3. If the Supreme Court determines that both ABxl 26 and ABxl 27 are invalid, the Agency would no longer be subject to the suspension provisions and would continue in existence under California Redevelopment Law as it existed prior to the enactment of ABx 126 and ABxl 27. As of October 28, 2011, the Supreme Court has not ruled on the case and the Agency is subject to the suspension provisions as discussed above. 45