HomeMy WebLinkAboutNotify County Auditor Agency's Intent to Pay Supplemental Educational Revenue Augmentation Fund (SERAF) - Joint Consideration•
CITY OF PALM DESERT/
PALM DESERT REDEVELOPMENT AGENCY
JOINT CONSIDERATION
STAFF REPORT
REQUEST: AUTHORIZATION TO NOTIFY THE COUNTY AUDITOR OF THE
AGENCY'S INTENT TO PAY SUPPLEMENTAL EDUCATIONAL
REVENUE AUGMENTATION FUND (SERAF) FROM AGENCY
FUNDING SOURCES
SUBMITTED BY: Veronica Tapia, Redevelopment Accountant
DATE: January 27, 2011
Recommendation
By Minute Motion, that the:
1) City Council directs the City Manager, or his designee, to notify the County
Auditor of the Agency's intent to pay 2010-11 SERAF from Agency
funding sources; and
2) Agency Board authorizes the Director of Finance to appropriate
$5,255,397 to the respective account numbers for each of the four project
areas from unobligated Project Area 1, 2, 3, and 4 funds.
Executive Summary
Approval provides authorization to notify the Auditor -Controller of the Agency's intent to
pay SERAF from any legally available funding sources of the Agency. The Agency will
not remit any SERAF payment to the County until it is required to do so.
Background
On July 28, 2009, the Governor signed Assembly Bill 26 4X (AB 26) to address the
fiscal emergency declared by the Governor on July 1. AB 26 amended Health and
Safety Code Sections 33334.2 and 33688, requiring redevelopment agencies to shift
$2.05 billion in property tax increment revenues to the SERAF for K-12 schools and
community colleges during the 2009-10 and 2010-11 fiscal years. Last year the
Redevelopment Agency was required to remit $25,526,215. By May 10 of this year, the
Agency is required to make the second SERAF payment in the amount of $5,255,397.
GArda\Veronica Tapia\Word Files\Staff Reports\Staff Report-SERAF 2010-11.doc
Staff Report
Approval of SERAF Funding Source
January 27, 2011
Page 2of3
Health and Safety Code Section 33681.9 (d) requires the legislative body (the City) to
report to the County Auditor by March 1, 2010, as to how the Agency intends to fund the
required SERAF payment, or if the legislative body intends to make the payments in lieu
of the Redevelopment Agency.
Previously, the California Redevelopment Association (CRA), on behalf of all
redevelopment agencies, prevailed in court when the State of California unsuccessfully
attempted to take a $350 million ERAF shift, which was ultimately deemed
unconstitutional by the judgment rendered in the Sacramento Supreme Court.
Last year, CRA again filed suit in an effort to thwart the new SERAF shift, as well as
future re -appropriations from Redevelopment under the same assertion that these shifts
of tax increment funds are unconstitutional based on California Redevelopment Law.
On May 4, 2010, the Superior Court of California ruled in favor of the State of California
denying CRA's claim that the shifts were unconstitutional.
On August 30, 2010, CRA filed for appeal of the decision of the Superior Court in the
Third District Court of Appeal. The Appeal seeks reimbursement of payments made in
2009-10 by the State, as well as a prohibition of the of the 2010-11 SERAF shift of $350
million. Additionally, CRA is considering potentially filing another lawsuit specific to the
2010-11 shift as the funding has not been appropriated by the State according to the
judgment, nor according to the specifications set forth in AB 26.
The 2010-11 SERAF payment is due to the County by May 10, 2010. The Agency will
not remit payment to the County until that time, pending the outcome of any legal
determination.
In order to meet the requirements as set forth in the Health and Safety Code, staff is
recommending that the City Council direct the City Manager, or his designee, to notify
the County Auditor that the Agency intends to make the required SERAF payment from
any legally available funding sources of the Agency. Staff is also recommending that the
Agency Board authorize the Director of Finance to appropriate funding, in order to cover
these costs, from Unobligated Project Area Funds from each of the four project areas as
follows:
Account No.
Amount
Project Area 1
860-4195-466-3649
$ 3,167,836
Project Area 2
861-4195-466-3649
$ 1,106,470
Project Area 3
863-4195-466-3649
$ 213,370
Project Area 4
864-4195-466-3649
$ 767,722
Total
$ 5,255,397
GArda\Veronica Tapia\Word Files\Staff Reports\Staff Report-SERAF 2010-11.doc
Staff Report
Approval of SERAF Funding Source
January 27, 2011
Page 3 of 3
Fiscal Analysis
The costs associated with the 2010-11 SERAF payment would be borne by the
Redevelopment Agency from each of the respective project areas. Therefore, there will
be no impact to the General Fund.
Submi ed By:
Veronica Tapia, Redevelop ent Accountant
Department Head:
Janet Moore, Director of Housing
Paul S. Gibson, Director of Finance
e
Johr,Y4. Wohlmuth, City Manager/Executive Director
CITY COUNCIL ACTION
APPROVED +/ DENIED
RECEIVED O'rl-l[?R.
McCarthy, AQM--Roevelopment
MEETING DATE _ / -0 7- </
AYES: �Jf .. t i //► i K�'n \p n ��� �f•,'
NOES:
ABSENT:
ABSTAIN: 012,2L
VERIFIED BY:
Original on File with City Clerk's 011ice
BY RDA
ON - - r rc
VERIFIED BY- L) k r
Original on file with City Clerk's Office
GArda\Veronica Tapia\Word Files\Staff Reports\Staff Report-SERAF 2010-11.doc
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DEPARTMENT" OF
'FI*N A N C E ARNpLO SCHWARZ ENEGCSERI GOVERNOR
OFFICE OF THE DIRECTOR STATE CAPITOL ■ RooM 1 145 ■ SA---___TD CA / gglp 14-4ggg 0 WWW DO F.CA_gOV
November 12, 2010
TO ALL COUNTY AUDITORS, REDEVELOPMENT AGENCIES, AND THEIR LEGISLATIVE
BODIES:
Chapter 21, Statutes of 2009, requires redevelopment agencies to shift $350 million in property
tax revenues to K-12 schools during the 2010-11 fiscal year via the Supplemental Educational
Revenue Augmentation Funds (SERAF) that the Chapter created in each county. The Director
of Finance is required to determine the amount each redevelopment agency shall transfer to the
SERAF, and is further required to notify each redevelopment agency and legislative body of
those amounts.
In accordance with the above requirements, the attached document provides the amount
determined for your redevelopment agency.
Each redevelopment agency must allocate the specified amount to the county auditor -controller
for deposit into the SERAF on or before May 10, 2011. By March 1, 2011 the legislative body
shall either report to the county auditor -controller how the redevelopment agency intends to fund
its SERAF obligation, or report that the legislative body intends to fund the SERAF obligation on
behalf of the redevelopment agency pursuant to Section 33692 of the Health and Safety Code
(HSC).
If a redevelopment agency determines that it will not be able to allocate to the SERAF the full
amount required, it may enter into an agreement with its legislative body by February 15, 2011,
for the legislative body to fund either the full SERAF obligation, or a portion thereof.
Alternatively, pursuant to HSC Section 33690 (c), a redevelopment agency that makes a finding
that insufficient monies are available to fund its SERAF obligation may borrow from monies
contained in its Low and Moderate Income Housing Fund. Redevelopment agencies also may
borrow from the amount otherwise required to be remitted in 2010-11 to its Low and Moderate
Income Housing Fund..All borrowed funds must be fully repaid by June 30, 2016.
If you have any questions regarding this matter, please contact Chris Hill, Principal Program
Budget Analyst, at (916) 322-2263.
ANA ATOSANTOS
Director
Attachment RECEI'VED
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