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File Number: 15-512 <br />January-June 2015 ROPS was considerably less than what was needed to meet its <br />obligations for that period. <br />City Loan to Remedy the Shortfall <br />The Successor Agency’s Enforceable Obligations are not discretionary payments that can be <br />adjusted as needed to meet available funding. The bulk of the payments owed are debt <br />service on bonds and the payments due under the King settlement. Therefore, the Successor <br />Agency will make all payments owed through December 31, 2015 and attempt to recover the <br />shortfall on the next ROPS. The most effective means of doing this is by establishing a loan <br />from the City to cover the negative fund balance and list that loan on the ROPS as a new <br />enforceable obligation. <br />Based on a review of the current fund balances, upcoming payment obligations, and a limited <br />amount of interest and other revenue earned by the Successor Agency, staff believes that the <br />Successor Agency’s shortfall is $779,051. <br />If the loan is approved by the City Council and Successor Agency Board of Directors, the <br />funding will be transferred from the City’s General Fund reserves to the Successor Agency <br />and the loan will be listed on the ROPS for January-June 2016. Funding for that ROPS will be <br />remitted to the Successor Agency in early January 2016 from the RPTTF. Assuming the loan <br />is approved by the Department of Finance as an enforceable obligation, the loan will be repaid <br />in full upon receipt of the next RPTTF distribution. <br />Staff expects that the loan will be approved by DOF, since Section 34173 (h) of the California <br />Health and Safety Code specifically allows the City to loan money to the Successor Agency to <br />cover enforceable obligations and the ROPS is supposed to include such advances. If the <br />obligation is not approved by the DOF - an outcome that staff does not anticipate - the City <br />and Successor Agency will find themselves in essentially the same position they are in <br />currently. Eventually, if the shortfall is not remedied through the ROPS process, the City would <br />need to correct the negative balance in the Successor Agency accounts. Staff anticipates <br />working closely with the DOF to obtain their concurrence on this action prior to the transfer of <br />any funds. <br />Fiscal Impacts <br />This loan will require a transfer of $779,051 from General Fund reserves, which requires <br />increasing the FY 2015-16 Budget by the same amount. The loan is contingent on the DOF’s <br />approval of the next ROPS. Upon the DOF approval, the funds would be transferred from the <br />City to the Successor Agency to meet cash flow requirements. Although staff cannot <br />guarantee DOF approval, it is anticipated that the loan will be approved as an enforceable <br />obligation and repaid in January 2016. <br />Budget Authority <br />This action will require an appropriation of $779,051 from General Fund Unrestricted <br />Economic Uncertainty reserves. <br />Page 3 City of San Leandro Printed on 9/15/2015