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HomeMy WebLinkAboutRes OB-044 - Correspondence (2)ENT 0,e • T a v EL " i m IN n 0 try ¥ [DEPARTMENT''A�J�A'�1O �F eq,,,.. `'s�" 1 1 4 A N C E May 15, 2013 Ms. Veronica Tapia, Accountant II City of Palm Desert 73-510 Fred Waring Drive Palm Desert, CA 92260 Dear Ms. Tapia: Subject: Finding of Completion EDMUND G. BROWN JR. " GOVERNOR 91 5 l STREET ■ SACRAMENTO CA ■ 95814.37O5 • WWW.00r.CA.GOV The California Department of Finance (Finance) has completed the Finding of Completion for the City of Palm Desert Successor Agency. Finance has completed its review of your documentation, which may have included reviewing supporting documentation submitted to substantiate payment or obtaining confirmation from the county auditor - controller. Pursuant to Health and Safety Code (HSC) section 34179.7, we are pleased to inform you that Finance has verified that the Agency has made full payment of the amounts determined under HSC section 34179.6, subdivisions (d) or (e) and HSC section 34183.5. This letter serves as notification that a Finding of Completion has been granted. The Agency may now do the following: • Place loan agreements between the former redevelopment agency and sponsoring entity on the ROPS, as an enforceable obligation, provided the oversight board makes a finding that the loan was for legitimate redevelopment purposes per HSC section 34191.4 (b) (1). Loan repayments will be governed by criteria in HSC section 34191.4 (a) (2). • Utilize proceeds derived from bonds issued prior to January 1, 2011 in a manner consistent with the original bond covenants per HSC section 34191.4 (c). Additionally, the Agency is required to submit a Long -Range Property Management Plan to Finance for review and approval, per HSC section 34191.5 (b), within six months from the date of this letter. Please direct inquiries to Andrea Scharffer, Staff Finance Budget Analyst, or Chris Hill, Principal Program Budget 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 California State Controller's Office • COMMITTEES VICE CHAIR, GOVERNMENTAL ORGANIZATION INSURANCE BUDGET HEALTH REVENUE AND TAXATION SUBCOMMITTEES BUDGET, SUBCOMMITTEE NO. 2 ON EDUCATION FINANCE April 8, 2013 Ana J. Matosantos, Director Department of Finance 915 L Street Sacramento, California 95814 (A.ssi mbtv C xtffurni x lErgisinfurr BRIAN NESTANDE ASSEMBLYMEMBER, FORTY-SECOND DISTRICT Re: Concerns Regarding the Dissolution of Redevelopment Dear Ms. Matosantos: STATE CAPITOL P.O. BOX 942849 SACRAMENTO, CA 94249-0042 (916) 319-2042 FAX (916) 319-2142 DISTRICT OFFICE 73-710 FRED WARING DRIVE, SUITE 116 PALM DESERT, CA 92260 (760) 674-0164 SATELLITE OFFICE 2091 W. FLORIDA AVENUE, SUITE 125 HEMET, CA 92545 (951) 925-3306 RECEIVED APR 12 2013 321. -13 • CITY OF PALM DESERT = Housing Department .N. 0 -C fret �7rn0 rri73m :C 70Nm 10 0 The purpose of this letter is to share the outcome of recent meetings with representatives of the City of Palm Desert and other Coachella Valley cities to hear their concerns regarding the state's role in the process for the dissolution of redevelopment agencies. The cities were very pleased that the transfer of land to the University of California - Riverside (UCR) was approved, and they will be working with UCR to transfer the property as soon as possible. However, many voiced their concerns regarding the manner in which the dissolution process is being managed by the State. Of broad concern to the cities is DOF's interpretation of the provisions of Health and Safety Code (HSC) § 34181 (a), related to the definition of `governmental purpose'. Specifically, HSC 34181 (a) allows the successor agency to submit a request to its oversight board to allow a transfer of an asset due to its `governmental purpose' to the appropriate public jurisdiction. Although this section of the HSC gives several examples of governmental purpose transfers without specific limitatiuns, based on the feedback we are receiving from several of the cities in our districts, it appears that the DOF has narrowly interpreted the language in this section to mean only the examples given. Logic suggests that the meaning of "such as roads, school buildings, parks, police and fire stations, libraries, and local agency administrative buildings" within HSC § 34181 (a) is not limiting. Given that the DOF's current view of the matter has caused some concern among the cities that we represent, as well as many others across California, it seems that DOF may wish to seek legal guidance on this matter or, if necessary, consider supporting an amendment to the HSC to clarify the issue. From my view, either an expanded understanding of the meaning of governmental purpose via administrative interpretation or through an amendment to the HSC would assist in resolving most cities' concerns over the types of assets that should be considered a governmental purpose. With this in mind, we are enclosing an example of a more thorough definition of the types of governmental purpose that should be allowable under HSC § 34181 (a) that would be helpful in resolving the current uncertainty. We would appreciate your feedback on how best to resolve this matter. ri Printed on Recycled Paper Page 2 A second issue that concerns several of the cities in my district relates to the Recognized Obligation Payment Schedules (ROPS). Each successor agency must prepare and file a ROPS with DOF for each half of each fiscal year covering payments on enforceable obligations for which payment will be due from Redevelopment Property Tax Trust Fund (RPTTF) revenues received by the successor agency from the applicable county auditor -controller. Based on our review of example letters issued by the DOF for the purpose of confirming its decision as to the approved enforceable obligations on a particular ROPS, which your department posts on its website, the DOF informs each successor agency that DOF's determination is effective for only the applicable ROPS period and should not be relied upon for future ROPS periods. Further, DOF informs each successor agency that all items listed on the future ROPS are subject to a subsequent review and may be denied even if it was or was not questioned on a current or preceding ROPS. It appears that DOF considers each ROPS a "zero -based" six-month budget for redevelopment dissolution purposes. Unfortunately, this interpretation does not consider the effect that DOF's policies may have on project activities that require more than one ROPS period to complete. Imagine, for instance, the havoc that would be caused if a ROPS-approved project under construction and half way completed were to be denied on a future ROPS. DOF's policy in this regard has caused great trepidation among many cities because capital projects nearly always take longer than one six-month ROPS period to complete. Cities operate on the basis of good faith that once they have approval to move forward on their projects they can complete them. Any later DOF denial of an approved project would be disastrous. With that in mind, we bring to your attention AB 564 (Mullin), which addresses the finality of a successor agency's oversight board's actions as well as the DOF reviews. This bill will help resolve the current concern that cities have with respect to the foregoing uncertainties. We hope that DOF will consider supporting this legislation. Finally, some cities are concerned about their ability to use proceeds from bonds issued after 2010. For example, the City of La Quinta issued debt in early 2011 for affordable housing purposes; similarly, the City of Blythe issued debt to build critical infrastructure projects necessary to protect the health and safety of its residents. Both cities are now unable to use the proceeds because of the issue date conflicting with the applicable provisions of the HSC. As you undoubtedly know, tax exempt bond proceeds must be committed to projects within three years of the issuance of the bonds or the bond issue is subject to being determined taxable by the IRS, which could cause litigation by bond owners and result in both fines and increases in the interest rate applicable to the bond issue. All of those types of costs would have to be borne by the tax payers through the use of RPTTF funding. We are hopeful that you will agree that such an outcome would be a waste of public resources. Fortunately, there is legislation pending (i.e., AB 981 [Bloom]) that would authorize the successor housing entity to designate the use of, and commit, indebtedness obligations proceeds that were issued prior to June 28, 2011 (instead of January 1, 2011), and further authorize a successor agency to expend excess bond proceeds derived from bonds issued on or before June 28, 2011 (instead of January 1, 2011). We would appreciate it if DOF would be supportive of this legislation. We thank you for your consideration of these matters. In addition, we encourage DOF to work cooperatively and collaboratively with cities and their successor agencies to efficiently and Page 3 effectively wind down their redevelopment programs. If you have any questions, please contact Asm. Nestande's Chief of Staff, Mr. Robert Flanigan, at (916) 319-2042. Sincerely, BRIAN NESTANDE V. MANUEL PEREZ Assemblymember, 42nd District Assemblymember, 56th District cc: Debbie Franklin, Mayor for the City of Banning Andy Takata, Banning City Manager Roger Berg, Mayor for the City of Beaumont Alan Kapanicas, Beaumont City Manager Oscar Galvan, Mayor for the City of Blythe Dave Lane, Blythe City Manager Elsa Benedict, Mayor for the City of Brawley Rosanna Bayon Moore, Brawley City Manager Maritza Hurtado, Mayor for the City of Calexico Oscar G. Rodruiguez, Calexico City Manager Eduardo Garcia, Mayor for the City of Coachella David Garcia, Coachella City Manager William Davis, Mayor for the City of Calimesa Randy Anstine, Calimesa City Manager Kathleen DeRosa, Mayor for the City of Cathedral City Andy Hall, City Manager of Cathedral City Yvonne Parks, Mayor for the City of Desert Hot Springs Rick Daniels, Desert Hot Springs City Manager Robert Youssef, Mayor for the City of Hemet Ronald Bradley, Hemet Interim City Manager Mary Roche, Mayor for the City of Indian Wells Roderick Wood, Indian Wells Interim City Manager Elaine Holmes, Mayor for the City of Indio Dan Martinez, Indio City Manager Don Adolph, Mayor for the City of La Quinta Frank Spevacek, La Quinta City Manager Jan Harnik, Mayor for the City of Palm Desert John Wohlmuth, Palm Desert City Manager Steve Pougnet, Mayor for the City of Palm Springs David Ready, Palm Springs City Manager Scott Hines, Mayor for the City of Rancho Mirage Randal Bynder, Rancho Mirage City Manager Mark Bartel, Mayor for the City of San Jacinto Page 4 Tim Hults, San Jacinto City Manager Joel Klink, Mayor for the City of 29 Palms Richard Warne, 29 Palms City Manager Denise Hoyt, Mayor for the City of Yucaipa Raymond Casey, Yucaipa City Manager Merl Abel, Mayor for the City of Yucca Valley Mark Nuaimi, Yucca Valley Town Manager Enclosure: Proposed draft of modifications to `governmental purpose' definition Page 5 Current wording of HSC § 34181 (a): 34181. The oversight board shall direct the successor agency to do all of the following: (a) Dispose of all assets and properties of the former redevelopment agency; provided, however, that the oversight board may instead direct the successor agency to transfer ownership of those assets that were constructed and used for a governmental purpose, such as roads, school buildings, parks, police and fire stations, libraries, and local agency administrative buildings, to the appropriate public jurisdiction pursuant to any existing agreements relating to the construction or use of such an asset. Any compensation to be provided to the successor agency for the transfer of the asset shall be governed by the agreements relating to the construction or use of that asset. Disposal shall be done expeditiously and in a manner aimed at maximizing value. Asset disposition may be accomplished by a distribution of income to taxing entities proportionate to their property tax share from one or more properties that may be transferred to a public or private agency for management pursuant to the direction of the oversight board. Proposed wording for HSC § 34181 (a): 34181. The oversight board shall direct the successor agency to do all of the following: (a) Dispose of all assets and properties of the former redevelopment agency; provided, however, that the oversight board may instead direct the successor agency to transfer ownership of those assets that were constructed, used and/or are planned or intended to be constructed and/or used for a governmental or public benefitting purpose to the appropriate public jurisdiction pursuant to an agreement relating to the transfer of an asset. Governmental or public benefitting purposes shall include, but not be limited to land, buildings, and facilities that are directly related to the functions of government, and/or will benefit a governmental use or public purpose, as exemplified by the following: i) Governmental buildings shall include, but not be limited to local agency administrative offices, city halls, county administrative buildings, post offices, chamber of commerce buildings, military facilities, and court buildings. ii) Educational facilities shall include, but not be limited to publicly funded early childhood education, K-12 schools, museums, libraries, cultural resource centers, colleges, and universities. iii) Community care and support centers shall include, but not be limited to subsidized hospitals, health care facilities and substance abuse treatment facilities, social service facilities, homeless shelters, senior centers, teen centers, subsidized childcare facilities, cemeteries, and animal shelters. iv) Housing shall include, but not be limited to single or multi -family projects that will increase, improve or preserve the community's supply of low- and moderate -income housing that is available at an affordable housing cost as defined by HSC § 50052.5. Page 6 v) Public safety shall include, but not be limited to fire facilities, police facilities, public safety training facilities, emergency response centers, jails, detention centers, and prisons. vi) Parks and recreation shall include, but not be limited to land preservation for a public or community purpose (dedicated for open space, protection of ecological environments or endangered species or habitat protection or restoration lands), playgrounds, parks, sports fields, public aquatic centers, community gardens, trails (hiking, biking, and walking), recreation centers and boardwalks open to the general public. vii) Infrastructure shall include, but not be limited to streets, roads (includes curbs, gutters, medians, sidewalks, and parkways), highways, interchanges, ramps, bridges, flood control channels, levees, bypasses, dams, right-of-ways, water retention, drainage, well -sites, piers, docks, and wharfs open to the general public. viii) Utilities shall include, but not be limited to including water treatment plants, watershed lands, reclaimed water facilities, interceptor pipes, facilities for the transfer and disposal of solid waste, waste disposal sites or transfer stations, waste recycling plants, transmission and distribution facilities, sub -stations, and generation plants and facilities whether publically owned or for the benefit of the public. ix) Maintenance facilities shall include, but not be limited to facilities that provide service or storage for any of the aforementioned governmental purposes. x) Parking shall include, but not be limited to facilities to provide parking for any of the aforementioned governmental purposes as well as parking provided on land owned by a public entity for the public's use inclusive of public parking easements. xi) Transportation shall include, but not be limited to airports and airfields for use by the general public, bus stations, bus shelters, train stations/terminals, and transit stations Any compensation to be provided to the successor agency for the transfer of the asset shall be governed by the agreement relating to the transfer of that asset. Disposal shall be done expeditiously and in a manner aimed at maximizing value. Asset disposition may be accomplished by a distribution of income to taxing entities proportionate to their property tax share from one or more properties that may be transferred to a public or private agency for management pursuant to the direction of the oversight board.