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CITY OF SAN LEANDRO
<br />NOTES TO BASIC FINANCIAL STATEMENTS
<br />For The Year Ended June 30, 2016
<br />NOTE 16 – SUCCESSOR AGENCY ACTIVITIES (Continued)
<br />B. Advances from the City
<br />Receivable Fund Amount
<br />General Successor Agency 2,731,947$
<br />2,731,947$
<br />Payable Fund
<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.
<br />A ruling issued by the Superior Court of California on September 23, 2014 sided with the State
<br />Department of Finance on this issue and indicates that the City will be required to remit a payment of
<br />$2,437,273 as a “claw back” of General Fund loan payments made after January 1, 2011. While an
<br />appeal was pending, the City and the Department of Finance agreed to abide by the initial court ruling
<br />on this matter and the Department of Finance ultimately issued a revised determination letter on June
<br />23, 2015 that yielded to the City’s position on other issues but maintained the demand for the
<br />$2,437,273 “claw back.” The City made that payment in October 2015, after which the City, as a
<br />taxing entity itself, received approximately 12% of the funds.
<br />On October 28, 2015, the Successor Agency was issued a finding of Completion, which permits the
<br />agency to place loan agreements between the former redevelopment agency and its sponsoring entity
<br />on the Recognized Obligation Payment Schedule (ROPS), as an enforceable obligation, provided the
<br />oversight board makes a finding that the loan was made for legitimate redevelopment purposes. On
<br />January 27, 2016, the Oversight Board made such finding, which was approved by the Department of
<br />Finance, and the loan was placed on the 2016-17 ROPS.
<br />The current outstanding balance on the loan is $2,299,315. Including interest, the City will receive
<br />approximately $3,369,000 in payments towards the loan. Of this, approximately $2,695,000 will be
<br />remitted to the General Fund and $674,000 (20%) will be remitted to the Low and Moderate Income
<br />Housing Asset Fund. In keeping with State law, a defined repayment schedule was developed with
<br />annual payments of $574,829. Payments will be made based upon availability of funds after payment
<br />of other enforceable obligations on the ROPS and the yearly cap. Based upon this requirement,
<br />sufficient funds are projected to be available to begin payments in fiscal year 2017-18 and complete
<br />loan payoff by fiscal year 2022-23.
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