8H Consent 2015 1019 - Laserfiche WebLink

Home

File Number: 15-573 caused the dissolution of all redevelopment agencies and outlined the process and procedures for winding down their activities and finances. AB 26 included a provision that retroactively invalidated payments made on City -Agency loan agreements after January 1, 2011. After a legal challenge, the California Supreme Court upheld AB 26 and it went into effect on February 1, 2012. On January 11, 2013 the City, in its capacity as Successor Agency to the Redevelopment Agency, submitted a Due Diligence Review ("DDR") for the non -housing funds of the former Redevelopment Agency. The intent of the DDR was to determine the fund balance of the former Redevelopment Agency that was available for redistribution to the local taxing entities. The DDR, which was prepared by a licensed accounting firm, determined that the Agency had an unencumbered fund balance of $438,604. Consistent with the requirements of AB 26, the Successor Agency remitted that amount to the Alameda County Auditor -Controller on May 7, 2013. In its review of the DDR, the California Department of Finance ("DOF") demanded that the Successor Agency also remit an additional payment of $2,610,750. That amount constituted a demand to reverse the full repayment of the Plaza Project Loan, the regular debt service payment on the Plaza Loan made in January 2011, and an additional debt service payment on a separate Joint Project Loan made in January 2011. This demand was based on the "claw back" provision of AB 26 that retroactively invalidated these payments. On December 12, 2013, the Successor Agency initiated litigation asserting that the "claw back" provision violated the State Constitution. In the lawsuit, the Successor Agency also challenged the DOF's denial of approximately $11.1 million in enforceable obligations, comprised of the separate Joint Project Loan ($2.0 million) and $9.1 million in funding for capital projects that had been re -authorized by the Successor Agency Oversight Board. On September 23, 2014, the Superior Court of California, County of Sacramento issued a decision siding with the Successor Agency on the issue of the $11.1 million in enforceable obligations, but predominantly siding with the DOF on the issue of the "claw back." The court determined that the Successor Agency was obligated to remit the two payments made on the Plaza Project Loan in 2011; the $300,000 debt service payment and the subsequent full repayment of $2,137,273. In total, this demand is $2,437,273. Both the DOF and the Successor Agency filed appeals on the Superior Court's decision. On May 14, 2015, the Successor Agency received a letter from the DOF indicating that it would no longer oppose the $11.1 million in enforceable obligations and that it had instructed the Attorney General to cease litigation, including the appeal. In response, the Successor Agency agreed to drop its appeal of the "claw back" demand. On June 23, 2015 the Successor Agency received a revised DDR Determination letter from the DOF that included a revised payment demand for $2,437,273. Analysis In general, the Successor Agency received a favorable outcome from this litigation. A total of $13.5 million was disputed, and the Successor Agency prevailed on $11.1 of that amount. The re-entered Joint Project Loan was listed on the recently submitted Recognized Obligation Payment Schedule for January -June 2016 and almost $2 million in funding will be received in January and remitted to the City General Fund. The City will also start receiving funding for City of San Leandro Page 2 Printed on 10113/2015