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File Number: 15-512 <br />·Any legally binding and enforceable contract. <br />After each ROPS is adopted, it is submitted to the State Department of Finance (“DOF”) for <br />review and approval. Once the ROPS receives approval from the DOF, the funds needed to <br />pay the Enforceable Obligations are remitted to the Successor Agency by the Alameda <br />County Auditor-Controller. The funding comes from the Redevelopment Property Tax Trust <br />Fund (“RPTTF”), which is the property tax increment that used to be allocated as revenue to <br />the Redevelopment Agency. <br />In addition to reviewing the validity of the obligations on the ROPS, the DOF also assesses <br />any difference between estimated and actual payments from previous ROPS periods. If any <br />actual payments were less than the amount requested on the ROPS, the DOF reduces the <br />amount of the next RPTTF remittance by an equivalent amount. The DOF also assesses all of <br />the Successor Agency’s fund balances to determine if funds are available to pay enforceable <br />obligations. If so, the RPTTF remittances are reduced accordingly. This system is designed to <br />ensure that Successor Agencies have enough funding on hand to meet their obligations, but <br />no more. <br />Analysis <br />In its review of the Successor Agency’s most recent ROPS, the DOF determined that the <br />Successor Agency had a substantial amount of funding on hand to pay enforceable <br />obligations. Therefore, the DOF made a significant reduction to the amount of RPTTF <br />remitted to the Successor Agency. The Successor Agency believes that the DOF <br />determination was erroneous, primarily due to the following issues: <br />1.Timing of the King Settlement Payment <br />The Successor Agency makes payments every six months pursuant to a legal settlement <br />related to the termination of a ground lease (the “King settlement”). The ROPS period from <br />July through December 2014 included a scheduled payment of $750,000 due on July 1, 2014. <br />To ensure timely payment, the Successor Agency wired the funds, in two installments on June <br />26 and June 27, 2014. In its review, the DOF looked only at expenditures made between July <br />1 and December 31. Because no payment was made during that precise period, the DOF <br />determined that the Successor Agency had been overpaid during the prior period and should <br />have funding on hand to make future enforceable obligation payments. <br />2.Use of Bond Proceeds for 2014 Refunding <br />In fall 2014, the Successor Agency and City issued refunding bonds to take advantage of <br />reduced interest rates. That action included a refunding of Redevelopment Agency bonds <br />issued in 2002 and 2004. The Successor Agency believes that the DOF did not take into <br />account the use of remaining bond proceeds from the 2002 and 2004 bonds as part of the <br />2014 bond refunding. A total of $2,784,111 in bond proceeds was used as part of the <br />refunding to reduce the amount of principal owed. As with the King Payment, this resulted in <br />the DOF determining that the Successor Agency had more funds on hand than it actually did. <br />As a result of these two issues, the Successor Agency’s RPTTF remittance for the <br />Page 2 City of San Leandro Printed on 9/15/2015