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CITY OF SAN LEANDRO <br />NOTES TO BASIC FINANCIAL STATEMENTS <br />For The Year Ended June 30, 2019 <br /> <br /> <br />NOTE 16 – SUCCESSOR AGENCY ACTIVITIES (Continued) <br /> <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 on <br />this matter and the Department of Finance ultimately issued a revised determination letter on June 23, <br />2015 that yielded to the City’s position on other issues but maintained the demand for the $2,437,273 <br />“claw back.” The City made that payment in October 2015, after which the City, as a taxing entity itself, <br />received approximately 12% of the funds. <br /> <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 on <br />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 /> <br />The current outstanding balance on the loan is $1,575,205. 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 of <br />other enforceable obligations on the ROPS and the yearly cap. Based upon this requirement, sufficient <br />funds are projected to be available to begin payments in fiscal year 2017-18 and complete loan payoff by <br />fiscal year 2022-23. <br /> <br />C. Capital Assets <br /> <br />The Successor Agency assumed the capital assets of the former Redevelopment Agency as of February 1, <br />2012. All capital assets are valued at historical cost or estimated historical cost if actual historical cost is <br />not available. Contributed capital assets are valued at their estimated fair market value on the date <br />contributed. The Successor Agency’s policy is to capitalize all assets with costs exceeding certain <br />minimum thresholds and with useful lives exceeding two years. <br /> <br />All capital assets with limited useful lives are depreciated over their estimated useful lives. The purpose <br />of depreciation is to spread the cost of capital assets equitably among all users over the life of these assets. <br />The amount charged to depreciation expense each year represents that year’s pro rata share of the cost of <br />capital assets. <br /> <br />87234