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City of San Leandro <br />Notes to Basic Financial Statements <br />For the year ended June 30, 2013 <br />NOTE 17 — SUCCESSOR AGENCY ACTIVITIES (Continued) <br />B. Advances from the City <br />Receivable Fund Payable Fund Amount <br />General Successor Agency $2,040,768 <br />$2,040,768 <br />Plaza Project Area General Fund Loan: <br />On March 7, 2011, the former San Leandro Redevelopment Agency made a scheduled debt service <br />payment of $171,761 in principal and $128,236 in interest for a loan due to the City of San Leandro <br />General Fund from the Plaza Project Area. Subsequently, on March 7, 2011, the Executive Board of the <br />former Agency authorized a payment of $2,137,273 to the City of San Leandro to retire the full remaining <br />balance of this loan. The loan had an initial balance of $2,887,617 and was secured by a Promissory Note <br />executed on December 5, 2002. Although the loan was made for legitimate redevelopment purposes and <br />the repayment was consistent with the requirements of the Promissory Note, the State Department of <br />Finance has asserted that these payments were not made for an approved enforceable obligation and that <br />the funds must be remitted to the Alameda County Auditor -Controller. The City disputes this finding and <br />is pursuing litigation to resolve this issue. If those efforts are unsuccessful, the possibility exists that the <br />City could be required to return these funds to the Successor Agency. If the payments are ultimately <br />reversed, the City, as a taxing entity itself, would receive approximately 12% of the funds. <br />Joint Project Area General Fund Loan: <br />On February 1, 2012, the date the former San Leandro Redevelopment Agency was dissolved, the <br />Agency owed the City of San Leandro a balance of $2,040,767 on a loan made to the City of San Leandro <br />— Alameda County (Joint ) Redevelopment Project Area. The loan had an initial balance of $4,372,774 <br />and was secured by a Promissory Note executed on April 8, 2004. The balance due was included as an <br />enforceable obligation on the Successor Agency's Enforceable Obligation Payment Schedule (EOPS) and <br />each subsequent Recognized Obligation Payment Schedule (ROPS). On April 11, 2012 the California <br />Department of Finance (DOF) informed the Successor Agency of its objection to this item, citing a <br />prohibition on agreements between RDA's and their sponsoring cities. On May 10, 2012 the Successor <br />Agency Oversight Board approved, by resolution, an Amended and Restated Promissory Note under the <br />authority provided under California Health and Safety Code Section 34781 (a). Notification of this action <br />was provided to the DOF on May 10, 2012. According to Health and Safety Code Section 34179 (h), the <br />DOF had three business day to notify the Successor Agency if it elected to review this action and no such <br />notification was provided. Nevertheless, the DOF has subsequently denied this loan. Therefore, it is not <br />clear at this time if the loan obligation can be enforced. The Successor Agency is pursing litigation. <br />80 <br />