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HomeMy WebLinkAboutOrdinance 1227 Alternative Voluntary Redevelopment Program AB X1 27 - Joint ConsiderationCITY OF PALM DESERT/ PALM DESERT REDEVELOPMENT AGENCY STAFF REPORT REQUEST: AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA APPROVING THE PARTICIPATION IN THE "ALTERNATIVE VOLUNTARY REDEVELOPMENT PROGRAM," MAKE THE REQUIRED PAYMENTS TO THE STATE OF CALIFORNIA AND CONTINUE REDEVELOPMENT ACTIVITIES UNDER AB X1 27 SUBMITTED BY: Justin McCarthy, ACM for Redevelopment DATE: August 25, 2011 CONTENTS: Ordinance No. 1227 Notice of Appeal Submitted to DOF Stay Notification Recommendation By Motion that the City Council: 1. Waive further reading of and introduce Ordinance No. 1227 approving the City of Palm Desert's participation in the Alternative Voluntary Program in compliance with Part 1.9 of Division 24 of the California Health and Safety Code; and 2. Direct staff to prepare and present at a future City Council meeting the agreement between the City and Agency to transfer Tax Increment in reimbursement of the annual remittance due per the calculation set forth by AB X1 27 and recommended adjustments to the City and Agency budgets necessary to make the required AB X1 27 payment for FY 2011- 12; and 3. Ratify the City Manager's filing to the State Department of Finance appealing the determination of the amount of the City's required AB X1 27 payment for FY 2011-12. Executive Summary Approval of Ordinance No. 1227 will allow the Palm Desert Redevelopment Agency (the "Agency") to continue to exist and perform redevelopment activities in all of the Project Areas and to commence the actions necessary to comply with AB X1 27 upon determination of the lawsuit filed against the State deeming all actions taken to cease redevelopment as unconstitutional. G1rdaWeronica Tapia\Word HeMStaff Reports\Revised AB X1 27 staff Report post Stay.docX Staff Report Adoption of Ordinance No. 1227 Page 2 of 5 August 25, 2011 Background The City and Agency have carried out an active and successful redevelopment program since the activation of the Agency in 1974. However, the continuing ability of the Agency to eliminate blight and create economic development opportunities has been threatened by the Legislature's adoption of the recent budget package which, in part, solves State budget problems by taking revenue from redevelopment agencies. AB X1 26, which was signed by the Governor of California on June, 29, 2011, added Parts 1.8 and 1.85 to the Community Redevelopment Law. Part 1.8 immediately suspends most redevelopment agency activities and, among other things, prohibits redevelopment agencies from incurring indebtedness or entering into or modifying contracts. Part 1.85 provides that on October 1, 2011, all existing redevelopment agencies and redevelopment agency components of community development agencies are dissolved, and successor agencies are designated as successor entities to the former redevelopment agencies. Part 1.85 imposes numerous requirements on the successor agencies and subjects successor agency actions to the review of oversight boards established under Part 1.85. Under Part 1.85, the assets of the dissolved agency will be disposed of and the State Controller has the authority to review, and potentially unwind, asset transfer transactions between the city and the agency which occurred after January 1, 2011. In addition, under Part 1.85 most loans from the city to the former agency could not be repaid to the city. AB X1 27 was signed by the Governor concurrently with AB X1 26 and added Part 1.9. Part 1.9 establishes an Alternative Voluntary Redevelopment Program whereby a redevelopment agency will, notwithstanding Parts 1.8 and 1.85, be authorized to continue to exist and carry out the provisions of the Community Redevelopment Law. To "opt into" this "voluntary" alternative program, the City must adopt an ordinance by which the city agrees to make specified annual payments to the county auditor - controller on a schedule for allocation to special districts and educational entities. The City's remittance amount for fiscal year 2011-12 is the Agency's proportionate share of $1.7 billion, as determined by the Department of Finance pursuant to a formula specified in AB X1 27. On August 1, 2011, the Department of Finance notified the City that its 2011-12 remittance amount is $20,515,651. The City filed an appeal of this amount with the Department of Finance, but the Department has not yet ruled on the appeal. The methodology to calculate that difference is unclear, and currently there are at least three interpretations of how that should be done; therefore staff is awaiting response from the DOF, or language that clarifies the exact methodology that should be used. Under Part 1.9 one half of the 2011-12 payment is due on January 15, 2012, and the second half is due on May 15, 2012. The payment obligation is an ongoing obligation of the City in subsequent years. For FY 2012-13 and thereafter, G. Vda\Veronica Tapia\Wcrd Files\Staff ReportslRevised AB X1 27 Staff Report Post Stay.docx Staff Report Adoption of Ordinance No. 1227 Page 3 of 5 August 25, 2011 calculate its own payment amount, subject to audit by the Department of Finance, with the payments based on the Agency's proportionate share of $400 million (with adjustments based on growth/decline of tax increment revenues, and with additional payments triggered if the Agency incurs new debt). It is estimated that the remittance for Palm Desert for FY 2012-13 will be $4,718,600. Thus, the Legislature has created a system where a city is liable for making continuing annual payments out of city funds in order for the agency to be able to continue its activities. AB X1 27 provides that a participating city and the redevelopment agency in that participating city may enter into an agreement whereby the agency will transfer a portion of its tax increment to the participating city in an amount not to exceed the annual remittance required that year. Any tax increment funds transferred from the agency to the city are required to be spent only "for the purpose of financing activities within the redevelopment area that are related to accomplishing the redevelopment agency project goals." The California Redevelopment Association and League of California Cities have filed a lawsuit in the Supreme Court of California alleging that AB X1 26 and 27 are unconstitutional. On August 11, 2011, the Supreme Court of California decided to hear the case and set a briefing schedule designed to allow the Court to decide the case before January 15, 2012. On August 11, 2011, the Court also issued a stay order, which was subsequently modified on August 17, 2011. Pursuant to the modified stay order, the Supreme Court granted a stay of all of AB X1 27 (i.e., Part 1.9), except for Health and Safety Code Section 34194(b) (2) (relating to the determination of cities' fiscal year 2011-12 remittance amounts), and a partial stay of AB X1 26. With respect to AB X1 26, Part 1.85 was stayed in its entirety, but Part 1.8 was not stayed. The granting of the stay has raised numerous questions and issues. Importantly, even if the Council adopts the opt in ordinance, the stay means that the Agency will still be subject to prohibitions during the time the stay is in effect. In addition, the stay raises the question of whether an opt in ordinance adopted during the period of the stay might need to be re -adopted or ratified after the stay is lifted. If AB X1 26 and 27 are ultimately upheld by the Supreme Court, it appears that cities will be given additional time to adopt an opt in ordinance following the Court's ruling and the lifting of the stay. However, at the present time it is unclear how much more time will be provided. The California Redevelopment Association has indicated that it is seeking clarification from the Supreme Court regarding the implications of the stay, but it is uncertain if or when any clarification will be forth coming. Therefore, if the Council determines that the City should opt into the Voluntary Alternative Redevelopment Program so that ultimately the Agency will be able to continue to operate if AB X1 26 and 27 are upheld by the Court, then the Council could determine to adopt an opt in ordinance at this time before the case is decided and the stay is lifted. The opt in ordinance attached to this staff Wrda\Veronica TapiaMord Files\Staff ReporlslRevised AB X1 27 Staff Report Post Stay.docx Staff Report Adoption of Ordinance No. 1227 Page 4 of 5 August 25, 2011 report provides that the ordinance will not be effective until the later of 30 days after adoption or the lifting of the stay. In addition, the ordinance provides that it will become null and void in the event that AB X1 26 or AB X1 27 are struck down by the Court. If the City Council determines that it will not opt into the AB X1 27 Alternative Voluntary Redevelopment Program, the redevelopment activities of the Agency will begin winding down immediately. The Agency will be dissolved as of October 1, 2011, and the "wind - down" activities must be undertaken by a successor entity over a five-year period with all wind -down activities reviewed by an Oversight Board and no longer under the authority of the City Council and Agency Board. No further redevelopment activities could be undertaken and the assets of the Agency would be immediately disposed of. The State Controller would have the authority to review, and potentially unwind, asset transfer transactions between the City and the Agency which occurred after January 1, 2011. In addition, AB X1 26 provides that except in very limited circumstances, the Agency could not repay amounts currently owed to the City. Furthermore, any amounts repaid to the City after January 1, 2011, may be required to be returned to the Agency. As part of the Agency's redevelopment activities, the Agency engages in projects that include the provision of safe and sanitary housing affordable to persons and families of low or moderate income in or of benefit to the Agency's redevelopment project areas. The Agency's on -going projects include providing down payment monetary assistance to persons and families of low or moderate income to purchase homes at an affordable housing cost, maintaining affordability covenants on such homes, subsidizing rental housing costs for low and moderate income families, and providing financial assistance to low and moderate income homeowners to correct existing code violations, health and safety hazards and substandard conditions in their homes. Additional delays in these projects would result in a significant loss of affordable safe and sanitary housing opportunities for persons and families that may not otherwise be able to afford safe and sanitary housing, a reduction in the City's stock of affordable housing units and prolong code violations, health and safety hazards and substandard conditions in the homes of persons and families that may not otherwise be able to afford improvements to correct such conditions. Under AB X1 26 and AB X1 27, unless and until the City adopts Ordinance No. 1227, the Agency is prohibited from taking many actions that are necessary for the Agency to provide these critical housing projects and persons and families of low and moderate income will be subject to substandard, unsafe or unsanitary housing. Staff recommends that the City Council consider the foregoing facts and analysis and determine that the City and Agency will participate in the Alternative Voluntary Redevelopment Program established by AB X1 27 by adoption of an ordinance to lift the suspension on the Agency's redevelopment activities for the preservation of public health and safety. G.\rda\Veronica Tapia\Word Files\Staff Reports\Revised AB X1 27 Staff Report Post Stay.docx Staff Report Adoption of Ordinance No. 1227 Page 5 of 5 August 25, 2011 Fiscal Analysis For FY 2011-2012, the State Director of Finance has determined the Voluntary Payment for the City of Palm Desert to be a maximum of $20,515,651. This amount has been appealed based on current economic factors and we are awaiting final determination of a revised amount. Future years are estimated at 23% of the current fiscal year (based on the formula provided by the statute) therefore 2012-13 payment is estimated to be $4,718,600. These amounts are the obligation of the City's General Fund, however can be reimbursed with Agency tax increment funds. The first year can also be offset by non -deposit to the Housing Set -Aside fund for the 2011-12 fiscal year, once certain findings are made. Submitted By: 1t Approval: Department Head: Paul S. Gibson, Director of Finance M. Wohlmuth, City Manager/Executive Director * Approved the recommendations, including CIT'YCOUNCMAOM" the amended Ordinance No. 1227 presented APPROVED DENtL►'D at the Study Session earlier today. 5-0MSEA M D7"�'""'"�""'""'„ ��I:•11L�#at,�l1#I#.w1.R�#1':.//ICY± t t, G1rda\Veronica Tapia\Word Files\Staff Reports\Revised AB X1 27 Staff Report Post Stay.docx ORDINANCE NO. 1227 AN ORDINANCE OF THE CITY COUNCIL OF THE CITY OF PALM DESERT TO COMPLY WITH PART 1.9 OF DIVISION 24 OF THE CALIFORNIA HEALTH AND SAFETY CODE AND TAKING CERTAIN ACTIONS IN CONNECTION THEREWITH RECITALS A. The Palm Desert Redevelopment Agency (the "Agency") is a redevelopment agency in the City of Palm Desert (the "City"), created pursuant to the Community Redevelopment Law (Part 1 (commencing with Section 33000) of Division 24 of the California Health and Safety Code) (the "Redevelopment Law"). B. The City Council of the City (the "City Council") adopted Ordinance No. 80, approving and adopting the redevelopment plan for Project Area No. 1, and from time to time, the City Council has amended such redevelopment plan. C. The City Council of the City (the "City Council") adopted Ordinance No. 509, approving and adopting the redevelopment plan for Project Area No. 2, and from time to time, the City Council has amended such redevelopment plan. D. The City Council of the City (the "City Council") adopted Ordinance No. 652, approving and adopting the redevelopment plan for Project Area No. 3, and from time to time, the City Council has amended such redevelopment plan. E. The City Council of the City (the "City Council") adopted Ordinance No. 724, approving and adopting the redevelopment plan for Project Area No. 4, and from time to time, the City Council has amended such redevelopment plan. F. The Agency is undertaking a program to redevelop the Project Areas. G. AB X1 26 was signed by the Governor of California on June, 29, 2011, making certain changes to the Redevelopment Law, including adding Part 1.8 (commencing with Section 34161) and Part 1.85 (commencing with Section 34170) to Division 24 of the California Health and Safety Code. Commencing upon the effectiveness of AB X1 26, AB X1 26 suspends most redevelopment agency activities and, among other things, prohibits redevelopment agencies from incurring indebtedness or entering into or modifying contracts. Effective October 1, 2011, AB X1 26 dissolves all existing redevelopment agencies and redevelopment agency components of community development agencies, designates successor agencies to the former redevelopment agencies, and imposes numerous requirements on the successor agencies and subjects successor agency actions to the review of oversight boards established pursuant to the provisions of Part 1.85. H. AB X1 27 was signed by the Governor of California on June 29, 2011, adding Part 1.9 (commencing with Section 34192) to Division 24 of the California Health 81000-0163\ 13 733990. doc G:\rda\Veronica Tapia\Word Files\Staff Reports\City Council Ordinance Adopting Voluntary Program.doex ORDINANCE NO. 1227 and Safety Code. Part 1.9 establishes an Alternative Voluntary Redevelopment Program whereby, notwithstanding the provisions of Part 1.8 and Part 1.85, a redevelopment agency will be authorized to continue to exist and carry out the provisions of the Redevelopment Law upon the enactment, prior to the applicable deadline established in Part 1.9, by the city council of the city which includes that redevelopment agency (the "participating city") of an ordinance to comply with Part 1.9. I. . Part 1.9 requires a participating city to make specified annual remittances to the applicable county auditor -controller, who shall allocate the remittances for deposit into a Special District Allocation Fund, for allocation to specified special districts, and into the county Educational Revenue Augmentation Fund, for allocation to educational entities. J. To participate in the Alternative Voluntary Redevelopment Program, in addition to adopting the ordinance described in Recital D, above, the participating city must, by November 1, 2011, notify the applicable county auditor -controller, the State Controller, and the State of California Department of Finance (the "Department of Finance") that the participating city agrees to comply with the provisions of Part 1.9. The participating city's agreement to make the remittances provided for under Part 1.9 is a precondition to continue redevelopment pursuant to Part 1.9. K. Part 1.9 provides that for fiscal year 2011-12, a participating city shall remit to the applicable county auditor -controller an amount equal to the amount determined by the State of California Director of Finance (the "Director of Finance") for the redevelopment agency pursuant to a formula set forth in Part 1.9, which formula utilizes information contained in the State Controller's redevelopment agency 2008-09 annual report. The amount represents the redevelopment agency's proportionate share of the sum of $1,700,000,000. The initial amount determined by the Director of Finance is subject to recalculation and reduction in the event the participating city timely files an appeal in accordance with Health and Safety Code Section 34194(b)(2)(L). L. For fiscal year 2012-13 and each fiscal year thereafter, a participating city's remittance amount shall equal the amount determined pursuant to calculations performed by the participating city in accordance with the requirements of Part 1.9, subject to adjustment based on audit and verification by the Director of Finance, the State Controller and the applicable county auditor -controller. On or before November 1st of each year, commencing November 1, 2012, a participating city shall notify the Department of Finance, the State Controller, and the applicable county auditor - controller of the remittance amount calculated by the participating city. M. Pursuant to the provisions of Part 1.9, a participating city shall pay one- half of the total remittance amount for a fiscal year on or before January 15 of that year and shall pay the remaining one-half of the remittance amount on or before May 15 of that year. N. A participating city making remittances pursuant to Part 1.9 may use any available funds not otherwise obligated for other uses. -2- 81000-0163\1373399v5.doc GArda\Veronica Tapia\Word Files\Staff Reports\City Council Ordinance Adopting Voluntary Program.docx ORDINANCE NO. 1227 O. A participating city and the redevelopment agency in that participating city may enter into an agreement pursuant to Part 1.9 whereby the agency will transfer a portion of its tax increment to the participating city in an amount not to exceed the annual remittance required that year pursuant to Part 1.9. P. Pursuant to the provisions of Part 1.9, if a participating city fails to make a remittance payment, as calculated in accordance with the applicable provisions of Part 1.9 and according to the schedule set forth in Rectial I, above, the applicable county auditor -controller shall notify the Director of Finance of the failure to make the payment within 30 days. Upon receipt of the notification, the Director of Finance may determine that the redevelopment agency in the participating city shall be subject to the requirements of Part 1.8 and Part 1.85. Q. The State of California Director of Finance has notified the City that its 2011- 12 remittance amount under Part 1.9 is $20,515,651. The City has appealed the amount of the remittance to the Director of Finance, but the City has not yet been notified of the Director's decision on the appeal. R. The City desires to participate in the Alternative Voluntary Redevelopment Program so that the Agency may continue to exist and carry out the provisions of the Redevelopment Law. S. The City has, or will have, available funds not otherwise obligated for other uses with which to make the fiscal year 2011-12 remittance in an amount not to exceed $20,515,651, or such lesser amount recalculated by the Director of Finance, payable one-half by January 15, 2012, with the remaining one-half payable by May 15, 2012. NOW, THEREFORE, THE CITY COUNCIL OF THE CITY OF PALM DESERT, CALIFORNIA DOES ORDAIN AS FOLLOWS: Section 1. The above recitals are true and correct and are a substantive part of this Ordinance. Section 2. This Ordinance is adopted as required by Health and Safety Code Section 34193. Section 3. So that the Agency may continue to exist and carry out the provisions of the Redevelopment Law notwithstanding the provisions of Part 1.8 and Part 1.85, the City Council hereby determines and declares that it shall comply with the requirements and obligations contained in Part 1.9, as Part 1.9 exists on the date of adoption of this Ordinance. In adopting this Ordinance or agreeing to comply with the provisions of Part 1.9, the City does not intend to incur an indebtedness or liability within the meaning of any constitutional or statutory debt limitation or restriction. Section 4. Performance of actions under or pursuant to this Ordinance, including the making of payments by the City to the Riverside County Auditor -Controller (the "Auditor -Controller"), is made under protest. Neither the adoption of this Ordinance nor -3- 81000-0163\1373399v5.doc GArda\Veronica Tapia\Word Files\Staff Reports\City Council Ordinance Adopting Voluntary Program. docx ORDINANCE NO. 1227 the performance of actions under or pursuant to this Ordinance is intended by the City or Agency to waive any right either may have to challenge the legality of all or any portion of AB X1 26 or AB X1 27 through administrative or judicial proceedings, or to appeal the City's fiscal year 2011-12 remittance amount pursuant to Health and Safety Code Section 34194(b)(2)(L), or to otherwise contest the remittance amount for any year. Any payments hereunder are intended to be made without prejudice to the City's right to seek to recover reimbursement of such payments, plus interest, should the requirement of making such payments be stayed, enjoined, repealed, or held unconstitutional or unenforceable by any court of competent jurisdiction. This Ordinance shall be null and void and of no further force and effect in the event that AB X1 26 or AB X1 27 is repealed, or held unconstitutional or unenforceable by any court of competent jurisdiction. Section 5. The City Manager, or the City Manager's designee, is hereby authorized and directed to notify the Auditor -Controller, the State Controller, and the Department of Finance, on or before November 1, 2011, that the City agrees to comply with the provisions of Part 1.9, as Part 1.9 exists on the date of adoption of this Ordinance, with such notification to be accompanied by a certified copy of this Ordinance. Section 6. This Ordinance has been reviewed with respect to applicability of the California Environmental Quality Act ("CEQA"), the State CEQA Guidelines (California Code of Regulations, Title 14, Sections 15000 et seq., hereafter the "Guidelines"), and the City's environmental guidelines. The City has determined that this Ordinance is not a "project" for purposes of CEQA, as that term is defined by Guidelines Section 15378. Specifically, this Ordinance constitutes the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment. (Guidelines Section 15378(b)(4)). In addition, this Ordinance is an organizational or administrative activity that will not result in a direct or indirect physical change in the environment. (Guidelines Section 15378(b)(5)). Therefore, because it is not a "project," this Ordinance is not subject to CEQA's requirements. Further, even if this Ordinance were deemed a "project" and therefore subject to CEQA, the Ordinance would be covered by the general rule that CEQA applies only to projects that have the potential to cause a significant effect on the environment. (Guidelines Section 15061 (b)(3)). As an organizational or administrative activity or the creation of government funding mechanisms or other government fiscal activities which do not involve any commitment to any specific project which may result in a potentially significant physical impact on the environment, this Ordinance does not have the potential to cause a significant effect on the environment and is therefore exempt under this general rule. Further, it can be seen with certainty that there is no possibility that the activity in question may have a significant effect on the environment, and thus this Ordinance is not subject to CEQA. (Guidelines Section 15061(b)(3)). Section 7. The City Clerk shall certify to the passage of this Ordinance and is hereby directed to publish or post this Ordinance, or a summary of this Ordinance, in accordance with law. -4- 81000-0163\1373399v5.doc Wrda\Veronica Tapia\Word Files\Staff Reports\City Council Ordinance Adopting Voluntary Program. docx ORDINANCE NO. 1227 Section 8. The City Clerk is hereby directed to send a certified copy of this Ordinance to the Agency. Section 9. The City Clerk is hereby directed to file a Notice of Exemption with the County Clerk pursuant to Section 15062 of the Guidelines within five days of the adoption of this Ordinance. Section 10. The officers and staff of the City are hereby authorized and directed, jointly and severally, to do any and all things which they may deem necessary or advisable to effectuate this Ordinance and any such actions previously taken by such officers are hereby ratified and confirmed. Section 11. If any part of this Ordinance is held to be invalid or unconstitutional by the decision of any court of competent jurisdiction, for any reason, such decision shall not affect the validity of the remaining portions of this Ordinance and this City Council hereby declares that it would have passed the remainder of this Ordinance if such invalid or unconstitutional portion thereof had been deleted. Section 12. This Ordinance shall take effect 30 days from adoption. PASSED, APPROVED, and ADOPTED this 25th day of August 2011 by the following vote, to wit: AYES: NOES: ABSENT: ABSTAI N: ATTEST: Rachelle D. Klassen, City Clerk Jean M. Benson, Mayor -5- 81000-0163\13733990.doc G:1rda\Veronica Tapia\Word Filcs\Staff Reports\City Council Ordinance Adopting Voluntary Program.docx August 12, 2011 Ana J. Matosantos Director of Finance Department of Finance State of California 915 L Street Sacramento, California 95814 - t--j I, FRED W✓ RING DRIVE P+TNi DE�IRT, CALIFORNIA 9:,i6r, ..'578 7I3..' 7601i46-06I I FA-%: 70, i 4I-6372 Via Email and Certified Mail, Return Receipt Requested redevelopment_administration@dof.ca.gov Re: Notice of Appeal Pursuant to Health and Safety Code Section 34194 Dear Ms. Matosantos: On August 1, 2011, you notified the City of Palm Desert that the fiscal year 2011-12 remittance amount determined pursuant to Health and Safety Code Section 34194 for the Palm Desert Redevelopment Agency is $ 20,515,651. The City hereby appeals the amount of remittance as being too high on the basis that: The percentage of tax increment necessary to pay for tax allocation bonds and interest payments has increased by 10 percent or more over the percentage calculated pursuant to the State Controller's redevelopment agency 2008-09 annual report. Accompanying this letter is the completed Appeal of AB X1 27 Remittance Amount form provided by the Department of Finance, together with copies of supporting fiscal documents requested by the Department of Finance pursuant to the form. Based on the documents submitted to the Department of Finance, it is the City's position that the City's fiscal year 2011-12 remittance amount is $17,952,938. Notwithstanding the City's appeal, the City maintains that the provisions of AB X1 26 and AB X1 27 are unconstitutional, and that the Director of Finance accordingly lacks the authority to determine remittance amounts pursuant to Health and Safety Section 34194. The City contends that AB X1 26 and AB X1 27 violate, among other provisions of law, California Constitution Article I, Section 9, Article ll, Section 8(a), Article XIII, Section 24, Article XIII, Section 25.5, Article XIIIB, Section 6, and Article XVI, Section 16. The City contends that the Director of Finance has no authority to enforce unconstitutional statutes such as Health and Safety Code Section 34194. G:1rdaWeronica TapialWord FilesWB 27 XI Notice of Appeal.docx 81000-0163\ 13737300.doc Ana J. Matosantos, Director of Finance Page 2 August 12, 2011 As a result, the filing of the City's appeal is not intended by the City or Agency to waive any right either may have to challenge the legality of all or any portion of AB X1 26 or AB X1 27 through administrative or judicial proceedings or to prejudice the City's right to seek to recover reimbursement of payments made pursuant to AB X1 27, plus interest, should the requirement of making such payments be stayed, enjoined, repealed, or held unconstitutional or unenforceable by any court of competent jurisdiction. In addition, the City maintains that the remittance appeal provisions of AB X1 27 are vague and ambiguous and that the Department of Finance has provided insufficient guidance with respect to the Department's interpretation of such provisions. Section 34194(b)(2)(L) is vague and ambiguous for the following reasons, among others: i) It is unclear if the determination of whether the percentage of tax increment necessary to pay for tax allocation bonds and interest has increased by 10% or more over the percentage calculated pursuant to the Controller's redevelopment agency 2008-09 annual report is to be based on gross or net tax increment. ii) It is unclear whether the above determination is to be based on tax increment received by the Agency in 2010-11 or to be received in 2011-12. If 2011-12 is to be used, the City notes that the assessment roll is not equalized until after the City's appeal is required to be filed. iii) It is unclear what methodology is to be used in determining the percentage increase in the amount of tax increment necessary to pay for tax allocation bonds and interest. iv) It is unclear whether the recalculation of the City's 2011-12 remittance amount is to be based on the total increase in the percentage of tax increment necessary to pay for tax allocation bonds and interest or only the increase which is above 10%. Based on the foregoing, the City and Agency hereby expressly reserve any right either of them may have to further appeal the City's 2011-12 remittance amount, to challenge any denial by the Department of Finance of an appeal by the City, to appeal or otherwise challenge any recalculation of the City's 2011-12 remittance amount by the Department of Finance, andlor to challenge the establishment and implementation of the "community remittance" process set forth in Health and Safety Code Section 34194. If you have any questions or request any additional documentation, please contact Veronica Tapia at extension 344. Sl1i 1 cerely, 1` John Wohlmuth City Manager/Executive Director Enclosures: as noted CITY EP','YCRI 0 [ S [ R I 81000-D163\13737300 doc Appeal of ABxl 27 Remittance Amount Provide the requested information and remit the completed form to the following e-mail address: Redevelopment Administration(a)-dof.ca.gov Submit one form for each redevelopment agency whose remittance amount is being appealed. Include the name of the requesting city or county and the name of the redevelopment agency in the e-mail's subject line. Forms must be received by the Department of Finance no later than August 15, 2011. Name of city or county: CITY OF PALM DESERT Name of redevelopment agency whose remittance amount is being appealed: CITY OF PALM DESERT RDA Basis for appeal (check those that apply): 1. Information in the 2008-09 Controller's Report was in error: 2. Percentage of tax increment needed to pay tax allocation bonds and interest payments has increased by 10 percent or more over the percentage calculated in the 2008-09 Controller's Report: X If you checked Number One as the basis for appeal, provide the following information What information in the Controller's Report was in error (check those that apply): • Tax allocation bond amount: If checking the above, provide the following information (use whole dollars): Amount reported in 2008-09 Controller's Report: Correct amount: • Interest payment amount: If checking the above, provide the following information (use whole dollars): Amount reported in 2008-09 Controller's Report: Correct amount: Passthrough payment amount(s): If checking the above, provide the following information for each passthrough payment that was incorrectly reported (use whole dollars): Cities: Amount(s) reported in 2008-09 Controller's Report: Correct amount(s): County: Amount(s) reported in 2008-09 Controller's Report: Correct amount(s): Special Districts: Amount(s) reported in 2008-09 Controller's Report: Correct amount(s): School Districts: Amount(s) reported in 2008-09 Controller's Report: Correct amount(s): Community College Districts: Amount(s) reported in 2008-09 Controller's Report: Correct amount(s): • Other (provide specific information, using additional space if necessary): If you checked Number Two as the basis for appeal, provide the following information (use whole dollars) • Amount of tax increment reported as necessary to pay tax allocation bonds and interest in the 31,898,436 2008-09 Controller's Report: Actual amount of tax increment used to pay tax allocation bonds and interest in 2010-11. Include a scanned copy of supporting fiscal document(s): 32,437,994 • The actual amount of tax increment needed to make the minimum required tax allocation bond and interest payments in 2011-12: • Total tax increment in 2011-12. 'As posted by Auditor -Controller 6128111 • Tax allocation bond debt reported in the 2008-09 Controller's Report: • Current tax allocation bond debt. Include a scanned copy of supporting fiscal document(s): 32, 304, 848 75 294.778" 401 601,475 365, 781, 367 Provide the name, title, phone number, and e-mail address of at least two people authorized to answer questions concerning your appeal: First contact's name and title: VERONICA TAPIA RDA ACCOUNTANT First contact's phone number and e-mail address: VTAEIAOE�CITYOFPALM DES ERT.ORG Second contact's name and title: PAUL GIBSON DIRECTOR OF FINANCE Second contact phone number & e-mail address. PGIBSON(c_CITYOFPALMDESERT.ORG ��CIL OF O E kEk� �1 gob yr 0 r.7 �.. NEWS RELEASE Release Number: 39 Release Date: August 11, 2011 JUDICIAL COUNCIL OF CALIFORNIA ADMINIS'IRATIVEOFFICE California Supreme Court OF THE COURTS To Decide Redevelopment Case Public Information Office 455 Golden Gate Avenue San Francisco, CA 94102-3688 Court sets expedited briefing schedule, and www.courtinfo.ca.gov Targets an opinion before mid -January 2012 415-865-7740 Lynn Holton San Francisco —The California Supreme Court today issued an order in Public Information officer California Redevelopment Assn. v. Matosantos (S 194861), directing the parties to show cause why the relief sought in the petition for a writ of mandate should not be granted. This case involves the validity of recent legislation (Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 5 [Assem. Bill No. 26 X1)]; Stats. 2011, 1st Ex. Sess. 2011-2012, ch. 6 [Assem. Bill No. 27 XI]), dissolving and reenacting with changes the statutory framework for redevelopment agencies throughout California. The court allowed the first statute to remain in effect insofar as it precludes existing redevelopment agencies from incurring new indebtedness, transferring assets, acquiring real property, entering into new contracts or modifying existing contracts, entering into new partnerships, adopting or amending redevelopment plans, etc., but it stayed enforcement of both statutes in all other respects. The court established an expedited briefing schedule designed to facilitate oral argument as early as possible in 2011, and a decision before January 15, 2012. A copy of the court's order is attached. (over)