HomeMy WebLinkAboutRes OB-030 (2)OVERSIGHT BOARD TO THE SUCCESSOR AGENCY TO THE
PALM DESERT REDEVELOPMENT AGENCY
REQUEST:
SUBMITTED BY:
DATE:
CONTENTS:
Recommendation
Veronica Tapia, Accountant II
January 7, 2013
STAFF REPORT
RECEIVE AND FILE DEPARTMENT OF FINANCE
DETERMINATION LETTER RELATIVE TO THE THIRD
RECOGNIZED OBLIGATION PAYMENT SCHEDULE��
�pR ( LE BiY' OVERSIGHT BO D
VV
ON 1-'1-2 l3
VERIFIED BY r-.,—,
Resolution No. OB- 030 Original on file with City Clerk's Office
10/8/12 Letter from Department of Finance
Request for Meet and Confer
12/18/12 Letter from Department of Finance
That the Oversight Board approve Resolution No. OB-03oreceiving and filing
the Department of Finance (DOF) Letter of Determination relative to the
third Recognized Obligation Payment Schedule (ROPS 3).
Executive Summary
Pursuant to Health and Safety Code Section 34177(m) the Oversight Board approved
the ROPS 3 on August 25, 2012. ROPS 3 covers the enforceable obligations due from
January 1, 2013 through June 30, 2013. In their letter dated October 8, 2012 the DOF
indicated that a few of the items did not qualify as enforceable obligations. Following
their decision, staff was required to request a Meet and Confer Session in order to make
adjustments to absorb the amount being denied, and amend amounts being requested
on approved obligations. On December 18, 2012 the DOF issued a letter of
determination indicating that there would be no adjustment to the amount allowed from
the Redevelopment Property Tax Trust Fund (RPTTF).
Discussion
Health and Safety Code Section 34177(m) requires that by September 1, 2012, the
Successor Agency submit the ROPS 3 covering the period of January 1, 2013 through
June 30, 2013 to the Oversight Board for approval and submittal to the DOF. The
Oversight Board approved ROPS 3 on August 25, 2012.
On October 8, 2012 the DOF issued a letter of determination based on the ROPS 3
submitted indicating objection to the amounts being requested on several line items.
Staff disagreed with the determination and immediately requested a Meet and Confer
Staff Report
Receive and file DOF Determination relative to ROPS 3
January 7, 2013
Session with the DOF to discuss the items that were noted as the reason for their
objection.
On November 2, 2012 staff, along with Agency Counsel, attended a Meet and Confer
Session with the DOF via teleconference. The items that were noted in DOF's
determination letter were discussed in more detail. DOF requested additional
information be submitted supporting the obligations and communicated that their
determination would be forth coming.
On December 18, 2012, the DOF issued their determination on the ROPS 3 stating that
adjustments could be made with regard to the bond project overhead costs, but that no
additional adjustments would be permitted at this time. DOF did indicate that the
Agency could request these items on a subsequent ROPS period. The final approved
amount for RPTTF distribution would be $18,492,802, compared to the $20,287,210
requested on ROPS 3.
Submjtted by:
CC
Veronica Tapia, Accouihtant II 2G�+
ul Gibson, Director of Finance
royal:
teePA.
Wohlmuth, Executive Director
Moore, Director of Housing
G.\rda\Veronica Tapia\Word Files\Oversight Board\Staff Reports\OB SR for RECEIVING DOF Determination re ROPS3 1-7-13.docx2
RESOLUTION NO. OB - 030
A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR
AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY
ACKNOWLEDGING THE RECEIPT OF THE DEPARTMENT OF FINANCE
DETERMINATION LETTER RELATIVE TO THE THIRD RECOGNIZED
OBLIGATION PAYMENT SCHEDULE
RECITALS:
A. Pursuant to Health and Safety Code Section 34179(3), all actions taken by
the oversight board for the Successor Agency to the Palm Desert Redevelopment Agency
(the "Oversight Board") shall be adopted by resolution.
B. There has been presented to this Oversight Board the Determination as
provided by the Department of Finance relative to the third Recognized Obligation Payment
Schedule pursuant to Health and Safety Code Section 34177(m).
NOW, THEREFORE, THE OVERSIGHT BOARD FOR THE SUCCESSOR
AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY, HEREBY FINDS,
DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:
Section 1. The above recitals are true and correct and are a substantive part of
this Resolution.
Section 2. The Oversight Board hereby receives and files the Determination as
provided by the Department of Finance relative to the third Recognized Obligation Payment
Schedule pursuant to Health and Safety Code Section 34177(m).
Section 3. The officers of the Oversight Board and staff of the Successor Agency
are hereby authorized and directed, jointly and severally, to do any and all things which they
may deem necessary or advisable to effectuate this Resolution.
PASSED, APPROVED AND ADOPTED this 7th day of January, 2013.
AYES:
NOES:
ABSENT:
ABSTAIN:
ROBERT A. SPIEGEL, CHAIR
ATTEST:
RACHELLE D. KLASSEN, SECRETARY
OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE
PALM DESERT REDEVELOPMENT AGENCY
81000-0172\1482371 v1.doc
(IIII.)
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* DEPARTMENT OF
441.1 w FI NAN C
October 8, 2012
Ms. Veronica Tapia, Accountant II
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Ms. Tapia:
EDMUND B. BROWN SIR. • GOVERNOR
91 6 L STREET ■ SACRAMENTO CA ■ 9561 4-3706 ■ WWW.DDF.CA.CCV
Subject: Recognized Obligation Payment Schedule
Pursuant to Health and Safety Code (HSC) section 34177 (m), the City of Palm Desert
Successor Agency submitted a Recognized Obligation Payment Schedule (ROPS III) to the
Califomia Department of Finance (Finance) on August 24, 2012 for the periods January through
June 2013. Finance has completed its review of your ROPS III, which may have included
obtaining clarification for various items.
HSC section 34171 (d) defines enforceable obligations. Based on a sample of line items
reviewed and application of the law, the following do not qualify as enforceable obligations:
• Item Nos. 10, 62, 109, and 143 — Low and Moderate Housing Fund Loans in the amount
of $13.3 million. HSC section 34176 (e) (6) (B) states that loan or deferral repayments
shall not be made prior to the 2013-14 fiscal year. Therefore, these items are not an
enforceable obligations and not eligible for Redevelopment Property Tax Trust Fund
(RPTTF) funding on this ROPS.
• Item Nos. 45, 102, 135 and 170 — Bond Project Overhead Costs in the amount of
$6.4 million funded by bond proceeds. HSC 34163 (b) prohibits an agency from entering
into contracts after June 27, 2011. Since the majority of the future bond projects do not
qualify as enforceable obligations and the overhead costs are calculated based on future
bond work, these items are not considered enforceable obligations.
• Item Nos. 46 through 50, 91 through 95, 103 through 106, 136 through 138, 171 through
175 — Various projects totaling $133.4 million funded by bond proceeds. HSC section
34163 (b). prohibits a redevelopment agency from entering into a contract with any entity
after June 27, 2011. Since no contracts are in place for these items, they are not
enforceable obligations.
• Item Nos. 59, 60 and 61- Contracts or agreements between the City of Palm Desert and
the Palm Desert Redevelopment Agency in the amount of $13.5 million. HSC section
34171 (d) (2) states that agreements or contracts between the city that created the
redevelopment agency (RDA) and former RDA are not enforceable unless the
agreements were entered into within the first two years of the date of the creation of the
Ms. Veronica Tapia
October 8,'2012
Page 2
RDA. Therefore, these items are not enforceable obligations and not eligible for RPTTF
funding on this ROPS.
Except for items denied in whole or in part as enforceable obligations as noted above, Finance
is approving the remaining items listed in your ROPS III. If you disagree with the determination
with respect to any items on your ROPS Ill, you may request a Meet and Confer within five
business days of the date of this letter. The Meet and Confer process and guidelines are
available at Finance's website below:
htto://www.dof.ca.aov/redeveloomentlmeet and confer/
The Agency's maximum approved Redevelopment Property Tax Trust Fund (RPTTF)
distribution for the reporting period is: $18,492,802 as summarized below:
Approved RPTTF Distribution Amount
For the period of January through June 2013
Total RPTTF funding requested for obligations
Less: Six month total for item(s) denied or reclassified as administrative cost
Item,10
Item 59
Item 60
item 61
Item 62
Item 109
Item 143
$ 20,287,210
Total :approved RPTTF for enforceable obligations $
Plus: Requested RPTTF distribution for administrative cost for ROPS HI
Total RPTTF approved: $
1,304,766
68,750
25,688
90,000
469,451
121,289
332,155
17,875,111
617,691
18,492,802
Pursuant to HSC section 34186 (a), successor agencies were required to report on the ROPS III
form the estimated obligations and actual payments associated with the January through
June 2012 period. The amount of RPTTF approved in the above table will be adjusted by the
county auditor -controller to account for differences between actual payments and past
estimated obligations. Additionally, these estimates and accounts are subject to audit by the
county auditor -controller and the State Controller.
Please refer to ;the ROPS 'III schedule that was used to calculate the approved RPTTF amount:
htto//www:dof.ca.aov/redevelooment/ROPS/ROPS III Forms by Successor Aaencv/.
All items listed on a future ROPS are subject to a subsequent review. An item included on a
future ROPS may be denied even if it was not questioned from the preceding ROPS.
The amount available from the RPTTF is the same as the property tax increment that was
available prior to enactment of ABx1 26 and AB 1484. This amount is not and never was an
unlimited funding source. Therefore, as a practical matter, the ability to fund the items on the
ROPS with property tax is limited to the amount of funding available to the successor agency in
the RPTTF,
Ms. Veronica Tapia
October 8, 2012
Page 3
Please direct inquiries to Beliz Chappuie, Supervisor or Mindy Patterson, Lead Analyst at
(916) 445-1546.
Sincerely,
•
STEVE SZALAY
Local Government Consultant
cc: Ms. Janet Moore, Director of Housing, City of Palm Desert
Ms. Pam Elias, Chief Accounting Property Tax Division, County of Riverside
Auditor Controller
MEET AND CONFER REQUEST FORM
Instructions: Please fill out this form in its entirety to initiate a Meet and Confer session. Additional supporting
documents may be included with the submittal of this form —as justification for the disputed item(s). Upon
completion, email a PDF version of this document (including any attachments) to:
Redevelopment_Administration@dof.ca.gov
The subject line should state "[Agency Name] Request to Meet and Confer". Upon receipt and determination
that the request is valid and complete, the Department of Finance (Finance) will contact the requesting agency
within ten business days to schedule a date and time for the Meet and Confer session.
To be valid, all Meet and Confer requests must be specifically related to a determination made by Finance and
submitted within the required statutory time frame. The requirements are as follows:
• Housing Asset Transfer Meet and Confer requests must be made within five business days of the date
of Finance's determination letter per HSC Section 34176 (a) (2).
• Due Diligence Review Meet and Confer requests must be made within five business days of the date of
Finance's determination letter, and no later than November 16, 2012 for the Low and Moderate Income
Housing Fund due diligence review per HSC Section 34179.6 (e).
• Recognized Obligation Payment Schedule (ROPS) Meet and Confer requests must be made within
five business days of the date of Finance's determination letter per HSC Section 34177 (m).
Agencies should become familiar with the Meet and Confer Guidelines located on Finance's website. Failure to
follow these guidelines could result in termination of the Meet and Confer session. Questions related to the
Meet and Confer process should be directed to Finance's Dispute Resolution Coordinator at (916) 445-1546 or
by email to Redevelopment_Administration@dof.ca.gov.
AGENCY (SELECT ONE):
® Successor Agency ❑ Housing Entity
AGENCY NAME: SUCCESSOR AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY
TYPE OF MEET AND CONFER REQUESTED (SELECT ONE):
❑ Housing Assets Transfers ❑ Due Diligence Reviews ® ROPS Period 3
DATE OF FINANCE'S DETERMINATION LETTER: October 8, 2012
REQUESTED FORMAT OF MEET AND CONFER SESSION (SELECT ONE):
❑ Meeting at Finance ® Conference Call
Page 1 of 3
DETAIL OF REQUEST
A. Summary of Disputed Issue(s) (Must be specific.)
1) DOF letter dated 10/8/12 indicates that Item Nos. 45,102.135 and 170 - Bond Proiect Overhead Costs do not Qualify
as enforceable obligations since the "maioritv" of the overhead costs were calculated based on future bond project work.
2) DOF letter dated 10/8/12 indicates that Item Nos. 10. 62. 109 and 143 - SERAF Reimbursement. as well as 59. 60
and 61 City Loan Repayment do not aualifv as enforceable obliaaitons as loan or deferral repayments shall not be made
prior to the 2013-14 fiscal year. In consideration of these items being disallowed by DOF on ROPS3. the Aaencv would like
to revise Item Nos. 32. 86. 119 and 160 which were deferred to ROPS4 due to a lack of available revenue to cover half of
the annual obligation.
B. Background/History (Provide relevant background/history, if applicable.)
C. Justification (Provide additional attachments to this form, as necessary.)
1) While the Aaencv does not disaaree with the statement that the "maioritv" of the estimated overhead costs were
calculated based on future bond work, there are amounts within the calculation that are relevant to currently awarded
contracts/Droiects. The Aaencv would like those amounts to be included as enforceable obligations on ROPS3.
2) The removal of Item Nos. 10. 62. 109 and 143 as well as Item Nos. 59. 60 and 61 from ROPS3 by DOF. provides
$2.412.099 in RPTTF funding which can be re -allocated to enforceable obligations that were going to be deferred to
ROPS4. Excluded from ROPS3 due to unavailable revenue is half of the annual obligation reauired for the Item Nos.
32.86.119 and 160 which amounts to $3,487.622. The County of Riverside has recently delivered their estimates on
available RPTTF funding and it permits an additional $1.519.343 in obliaations. The total between these two provides
$3.913.442 in RPTTF funding. enough to cover half of the annual obligation. The Aaencv would like those amounts to
be included as enforceable obliaations on ROPS3. See attached worksheet for adiustment to RPTTF.
Page2of3
Agency Contact Information
Name: VERONICA TAPIA Name: JANET MOORE
Title: ACCT Title: DIRECTOR OF HOUSING
Phone: 760.346.0611 Phone: 760.346.0611
Email: VTAPIA@CITYOFPALMDESERT.ORG Email:
JMOORE @CITY OF PALMDESERT.ORG
Date: 10/10/12 Date: 10/10/12
Department of Finance Local Government Unit Use Only
REQUEST TO MEET AND CONFER DATE: ❑ APPROVED ❑ DENIED
REQUEST APPROVED/DENIED BY: DATE:
MEET AND CONFER DATE/TIME/LOCATION:
MEET AND CONFER SESSION CONFIRMED: ❑ YES DATE CONFIRMED:
DENIAL NOTICE PROVIDED: ❑ YES DATE AGENCY NOTIFIED:
Form DF-MC (Revised 9/10/12)
Page 3 of 3
iIIIII)
* DEPARTMENT OF
%.,..., PFI NAN CC
December 18, 2012
Ms. Veronica Tapia, Accountant II
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Ms. Tapia:
EDMUND G, BROWN JR. ■ GOVERNOR
915 L BTREET ■ (SACRAMENTC CA ■ 95B 1 4-3706 ■ WWW,DCF.CA.3CV
Subject: Recognized Obligation Payment Schedule
This letter supersedes Finance's Recognized Obligation Payment Schedule (ROPS) letter dated
October 8, 2012. Pursuant to Health and Safety Code (HSC) section 34177 (m), the City of
Palm Desert Successor Agency (Agency) submitted a Recognized Obligation Payment
Schedule (ROPS Ill) to the California Department of Finance (Finance) on August 24, 2012 for
the period of January 1 through June 30, 2013. Finance issued its determination related to
those enforceable obligations on October 8, 2012. Subsequently, the Agency requested a Meet
and Confer session on one or more of the items denied by Finance. The Meet and Confer
session was held on November 2, 2012.
Based on a review of additional information and documentation provided to Finance during the
Meet and Confer process, Finance has completed its review of the specific item being disputed.
• Item Nos. 45, 102, 135 and 170 — Bond Project Overhead Costs in the amount of
$6.4 million funded by bond proceeds. Finance no longer objects to the items as revised
by the Agency. Finance denied the items as HSC 34163 (b) prohibits an agency from
entering into contracts after June 27, 2011. Since the majority of the future bond
projects do not qualify as enforceable obligations and the overhead costs are calculated
based on future bond work, these items are not considered enforceable obligations. The
Agency contends the items are enforceable obligations because there are amounts
within the calculation that are relevant to currently awarded contracts/projects. The
Agency provided revised calculations including only the current projects and requested
the items be revised to the following amounts:
o Item 45 — $553
o Item 102 — $17,903
o Item 135 — $9,324
o Item 170 — $7,356
The amounts are related to the overhead costs for current bond projects. The revised
amounts are enforceable obligations.
Ms. Veronica Tapia
December 18, 2012
Page 2
• The Agency requested to adjust the requested Redevelopment Property Tax Trust Fund
(RPTTF) for the following items from $0 to the following amounts:
o Item 32 — $2,175,370
o Item 86 — $628,192
o Item 119 — $174,664
o Item 160 — $509,397
Finance did not select these items as part of the ROPS III review. The Agency did not
identify any specific projects or contracts to be funded; therefore, Finance denies the
Agency's request to revise the ROPS Ili amounts and will continue to list the items as $0
for the current period. However, the Agency may list these items in a subsequent ROPS
period and Finance will review the items at that time.
In addition, per Finance's ROPS letter dated October 8, 2012, the following items not disputed
by the Agency continue to be denied:
• Item Nos. 10, 62, 109, and 143 — Low and Moderate Housing Fund Loans in the amount
of $13.3 million. HSC section 34176 (e) (6) (B) states that loan or deferral repayments
shall not be made prior to the 2013-14 fiscal year. Therefore, these items are not an
enforceable obligations and not eligible for funding on this ROPS.
• Item Nos. 46 through 50, 91 through 95, 103 through 106, 136 through 138, 171 through
175 — Various projects totaling $133.4 million funded by bond proceeds. HSC section
34163 (b) prohibits a redevelopment agency from entering into a contract with any entity
after June 27, 2011. Since no contracts are in place for these items, they are not
enforceable obligations.
• Item Nos. 59, 60 and 61. Contracts or agreements between the City of Palm Desert and
the Palm Desert Redevelopment Agency in the amount of $13.5 million. HSC section
34171 (d) (2) states that agreements or contracts between the city that created the
redevelopment agency (RDA) and former RDA are not enforceable unless the
agreements were entered into within the first two years of the date of the creation of the
RDA. Therefore, these items are not enforceable obligations and not eligible for RPTTF
funding on this ROPS.
The Agency's maximum approved Redevelopment Property Tax Trust Fund (RPTTF)
distribution for the reporting period is: $18,492,802 as summarized below:
Ms. Veronica Tapia
December 18, 2012
Page 3
Total RPTTF funding
Less: Six-month total
Item 10
Item 59
Item 60
Item 61
Item 62
Item 109
Item 143
Approved RPTTF Distribution Amount
For the period of January through June 2013
requested for obligations $ 20,287,210
for item(s) denied or reclassified as administrative cost
1,304,766
68,750
25,688
90,000
469,451
121,289
332,155
Total approved RPTTF for enforceable obligations $ 17,875,111
Plus: Requested RPTTF distribution for administrative cost for ROPS Ill 617,691
Total RPTTF approved: $ 18,492,802
Pursuant to HSC section 34186 (a), successor agencies were required to report on the ROPS Ill
form the estimated obligations and actual payments associated with the January through June
2012 period. The amount of RPTTF approved in the above table will be adjusted by the county
auditor -controller to account for differences between actual payments and past estimated
obligations. Additionally, these estimates and accounts are subject to audit by the county
auditor -controller and the State Controller.
The amount available from the RPTTF is the same as the property tax increment that was
available prior to enactment of ABx1 26 and AB 1484. This amount is not and never was an
unlimited funding source. Therefore, as a practical matter, the ability to fund the items on the
ROPS with property tax is limited to the amount of funding available to the successor agency in
the RPTTF.
Except for items disallowed as noted above, Finance is not objecting to the remaining items
listed in your ROPS III. Obligations deemed not to be enforceable shall be removed from your
ROPS. This is Finance's final determination related to the enforceable obligations reported on
your ROPS for January 1 through June 30, 2013. Finance's determination is effective for this
time period only and should not be conclusively relied upon for future periods. All items listed
on a future ROPS are subject to a subsequent review and may be denied even if it was or was
not questioned on this ROPS or a preceding ROPS.
Please direct inquiries to Evelyn Suess, Dispute Resolution Supervisor, or Mary Halterman,
Analyst, at (916) 445-1546.
Sincerely,
STEVE SZALAY
Local Government Consultant
Cc on the following page
Ms. Veronica Tapia
December 18, 2012
Page 4
cc: Ms. Janet Moore, Director of Housing, City of Palm Desert
Ms. Pam Elias, Chief Accounting Property Tax Division, County of Riverside
Auditor Controller
California State Controller's Office