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To: Memo to Successor Agency Clients From: Susan E. Bloch Re: AB 1484— Redevelopment Budget Trailer Bill Date: July 5, 2012 Page: 5 DUE DILIGENCE REVIEW AND PAYMENT OBLIGATIONS The Successor Agency must hire a licensed accountant, approved by the County auditor - controller, to perform a "Due Diligence Review" of all housing and non - housing redevelopment agency and successor agency financial activities that took place between January 1, 2011 and June 30, 2012. The purpose of the review is to determine the unobligated fund balance that will be available for distribution to the taxing entities. An audit conducted by the County auditor - controller that complies with all of the new requirements imposed by AB 1484 may be used . 21 2. The Due Diligence Review will establish the value of all assets transferred by the redevelopment agency to the Successor Agency and by either the redevelopment agency or the Successor Agency to the Sponsoring Jurisdiction, any other public entity, and any private parry during the period January 1, 2011 through June 30, 2012. Evidence demonstrating the purpose of, and requirement for, each transfer will be required to document that each transfer was made pursuant to an enforceable obligation. For the purposes of the Due Diligence Review, the legislation defines "transfer" to mean "the transmission of money to another party that is not in payment for goods or services or an investment or where the payment is de minimus. ,24 Funds that are legally restricted (e.g. grant funds, bond proceeds), contractually committed to enforceable obligations, necessary to pay current year ROPS obligations, and non -cash assets (e.g., land) are deducted from the total asset valuation in determining the amount available for distribution to the taxing entities . 25 Amounts that were transferred by the redevelopment agency or the Successor Agency to the Sponsoring Jurisdiction or to any other public or private party are added back if the transfer was not made pursuant to an enforceable obligation. It should be noted that for the purpose of the Due Diligence Review, AB 1484 modifies the definition of "enforceable obligation" to exclude (with limited exceptions) agreements executed between a redevelopment agency and its Sponsoring 21 Secrion 34179.5(a). 22 Secrion 34179.5(c). 23 Secrion 34179.5(6)(2). 24 Secrion 34179.5(6)(3). 25 Secrions 34179.5(c)(5), 34179.5(c)(6). 26 Secrion 34179.5(c)(6). A PROFESSIONAL LAW CORPORATION OAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO