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CITY OF SAN LEANDRO
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />For The Year Ended June 30, 2015
<br />
<br />
<br />NOTE 17 – SUCCESSOR AGENCY ACTIVITIES (Continued)
<br />
<br />B. Advances from the City
<br />
<br />
<br />Receivable Fund Amount
<br />General Successor Agency 2,040,768$
<br />2,040,768$
<br />Payable Fund
<br />
<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 $171,764 in principal and $128,236 in interest for a loan due to the City of San
<br />Leandro General Fund from the Plaza Project Area. Subsequently, on March 7, 2011, the Executive
<br />Board of the former Agency authorized a payment of $2,137,273 to the City of San Leandro to retire
<br />the full remaining balance of this loan. The loan had an initial balance of $2,887,617 and was secured
<br />by a Promissory Note executed on December 5, 2002. Although the loan was made for legitimate
<br />redevelopment purposes and the repayment was consistent with the requirements of the Promissory
<br />Note, the State Department of Finance has asserted that these payments were not made for an
<br />approved enforceable obligation and that the funds must be remitted to the Alameda County Auditor-
<br />Controller. The City disputed this finding and initiated litigation to resolve this issue. A ruling issued
<br />by the Superior Court of California on September 23, 2014 sided with the State Department of Finance
<br />on this issue and indicates that the City will be required to remit a payment of $2,437,273 as a “claw
<br />back” of General Fund loan payments made after January 1, 2011. While an appeal was pending, the
<br />City and the Department of Finance agreed to abide by the initial court ruling on this matter and the
<br />Department of Finance ultimately issued a revised determination letter on June 23, 2015 that yielded to
<br />the City’s position on other issues but maintained the demand for the $2,437,273 “claw back.” The
<br />City intends to make that payment in September 2015. Once the payment is made, the City, as a taxing
<br />entity itself, will receive approximately 12% of the funds.
<br />
<br />Joint Project Area General Fund Loan:
<br />On February 1, 2012, the date the former San Leandro Redevelopment Agency was dissolved, the Agency
<br />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 and
<br />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). Nevertheless, the
<br />DOF subsequently denied this loan. The Successor Agency pursued litigation and a ruling issued by
<br />the Superior Court of California on September 23, 2014 sided with the City on this issue, agreeing that
<br />the amount owed constitutes a legitimate enforceable obligation that can be listed on the ROPS. While an
<br />appeal was pending, the City and the Department of Finance agreed to abide by the initial court ruling. In
<br />a May 14, 2015 letter, the Department of Finance stated that it will no longer deny this loan on the ROPS.
<br />All but one of the loan payments are already due and payable, therefore the Successor Agency has
<br />requested $1,782,444 in funding for payments due under this loan on the ROPS for January through June
<br />2016. Upon receipt of ROPS funding in January 2016, this amount will be remitted to the City. The
<br />remaining balance due will be funded under the next ROPS.
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