HomeMy WebLinkAboutDept of Finance Ltrs - ROPS 1 & 2SUCCESSOR AGENCY TO THE
PALM DESERT REDEVELOPMENT AGENCY
INTEROFFICE MEMORANDUM
\ l�G��• �" `i3ro-r�I,.S�i�� �L3SCnf i�
5"°� BY OVERSIGHT BOARD
TO: John M. Wohlmuth, Executive Director ON—�- ��- 2�� 2-�
FIED BY � � "��ss,.�
FROM: Janet M. Moore, Director of Housi Origin�l on file wirh City Clerks Of�ce
DATE: May 29, 2012
SUBJECT: Department of Finance Letter to Palm Desert Regarding ROPS 1& 2
Attached are the letters from the Department of Finance (DOF) regarding our
Recognized Obligation Payment Schedules (ROPS) for the periods that cover January
2�12 through December 2012.
The DOF originally returned the schedules for reconsideration of several items:
1. Incorrect listing of Pass-Through Trust Obligations
2. Advances (loans) from the City to the Agency
3. Planned Projects
In the DOF's letter of approval dated May 26, 2012 for Palm Desert's ROPS indicates
they have further reviewed the Pass-Through Trust Obligations and accepted the line
items as enforceable obligations.
We are currently drafting our formal written response to the DOF on the remaining items
to be reconsidered. The response will include backup and related documentation for
the advances (loans) from the City for the acquisition of real property as well as
identifying the need for the upcoming planned projects funded by bond proceeds. There
are bond proceeds available to complete or participate in many of the planned projects
which cannot be used for any other purpose under the bond documents and tax
certificates.
The final issue identified in both letters from the DOF is related to the calculated
administrative cost allowance. The calculated allowance for January through June is
close to the estimate, however, the calculation for the period from July through
December is significantly reduced because it is based on the actual amount to be
disbursed by the County of Riverside to Palm Desert on June 1. Certain payments on
the approved ROPS for this period will be paid from monies on hand and therefore are
not subject to the administrative cost calculation which in turn reduced the allowance.
We are in the process of reviewing the effects of this change.
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� DEPARTMENT OF
C4ClFORr�P � 1 N A N C E�
M ay 26, 2012
Veranica Tapia, Accountant
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Ms. Tapia:
EDMUND G. BROWN �ifl. • G�VERNOR
91 5 L 6TRQCT ■ BAGRAM�NTO CA � 95H 14•3706 ■ WWW.00F.CA.pOV
Subject: Recognized Obligation Payment Schedule Approval Le#ter
Pursuant to Health and Safety Code (HSC) section 34177 {I) (2) (C), the City of Palm Qese�t
Successor Agency submitted Recognized Obligation Payment Schedules {ROPSj to the
California Department of Finance (Finance) on April 11, 2012 for the period January to
June 20'12 and April '17, 2012 for the period July #o December 2012. Finance is assuming
appropriate oversight board approval. Finance has completed its review of your ROPS, which
may have included obtaining clarification for various items.
In Finance's letter dated April 26, 2012, the following pass-thru trust account obligations from
both ROPS periods were denied as enforceable abligations (EOs); however, after further review
of documents, they have been accepted as EOs:
. Project Area 1, page 1, item 25
• Project Area 2, page 5, item 45
• Project Area 3, page 8, ikem 25
• Project Area 4, page 12, item 27
Additionally, after recalculating administrative cast a(lowance, we are no longer questioning the
January to June 2012 administrative expenses as they are within the allowable amoun#. For the
July to December 2012 administrative expenses, we recalculated and reduced the questioned
amount to $239,969 from $613,182 (as stated in the April 26, 2012 letter}.
Except for items disallowed in whole or in part as enforceable obligations noted in Finance's
Istter dated April 26, 2012, Finance is approving the remaining items listed in your ROPS for
both periods. This is our determination with respect to any items funded from the
Recievelopment Property Tax Trust Fund (RPTTF) for the June 1, 2012 property tax allocations.
If your oversight board disagrees with our determination with respect to any items not funded
with property tax, any future resolution of the disputed issue may be accommodated by
amending the ROPS for the appropriate time perioci. Items nat questioned during this review
are subject to a subsequent review, if they are included on a future ROPS. If an item included
on a future ROPS is not an enforceable obligation, Finance reserves the right to remove that
item from the future ROPS, even if it was not removed from the preceding RpPS.
1 �-{'
Ms. Tapia
May 26, 20'12
Page 2
Please refer #o Exhibit 12 at httv:/rwww.dof.ca.4ov/assembiv bills 26-27/view php for the
amount of Ftedevelopment Property Tax Trust Fund (RPTTF) that was approved by Finance
based on the schedule submitted.
As you are aware the amount of available RPTTF is the same as the property tax increment that
was available prior to ABx1 26. This amount is not and never was an unlimited funding source.
Therefore as a practical matter, the abifity to fund the items on the RQPS with property tax is
limited to the amount of funding available in the RPTTF.
Please direct inquiries to Evelyn Suess, Supervisor or Mindy Patterson, Lead Analyst at
(916) 322-2985.
Sincerely,
��� �
MARK HILL
Program 8udget Manager
cc: Ms. Janet Moore, Director of Housing, City af Palm Qesert
Ms. Pam Elias, Chief Accounting Property Tax Division, Couniy of Riverside
Ms. April Nash, Supervising Accountant, County of Riverside
Ms. Jennifer Baechel, Business Process Analyst II; County of Riverside
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� DEPARTMENT OF EoMUNo G. Baowk JR. • GOVERNOR
C,���aN�' F I N A N C E q 1 9 L HTNCiT � SACMMENTO CA � iS9 7 4-37OB � W1MW.DG�.CA.�OV
April 26, 2012
Veronica 7apia, Accountant
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Ms. Tapia:
Pursuant to Health and Safety Code (HSC) section 34177 (I) {2) (C), the City of Pafm Desert
Successor Agency submitted a Recognized Obligation Payment Schedule (ROPS) to the
Califomia Department of Finance (Finance) on April 11, 2012 for the periods January through
June 2012 and July through December 2012. Finance staff contacted you for clar�cation of
items listed in the ROPS,
HSG section 34171 {d) lists enforceabJe obligation (EO) characteristics. Based on a sample of
line items reviewed and application of the law, the following do not qualify as EOs;
January throu�h June 2012 ROPS:
• The following line items were for pass-thni trust account obligations totaling
$6Q.5 million. HSC secti�n 34163 (b) prohibits a redevelopment agency (RDA) from
entering into a contract with any entity after June 27, 2011. ft is our understanding that
no contracts are in place for these line items.
�
The following line items are for agreements or contracts between the City of Palm Desert
and the Palm Desert Redevelopment �qency {RDA) totaling $13.5 million. HSC
section 34171 (d} (2) states that agreements or contracts between the city that created
the RDA and the 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.
Ms. Veronica Tapia
Aprif 26, 2012
Page 2
Item Project Page
Number Area Number Pro'ect Amount
5 2 4 No�th S here Hatel Land $5,500,004
North Sphere
6 2 4 Praperty Acquisition 2,055,0�0
Ciry Loan fo� formation of
7 2 4 Pro'ect Area No.2-1986 6,QOO,OQQ
Total $13,555,000
• The following line items are for projects that do not have contracts in pisce in the amount
totaling $123.3 million. HSC section 34163(b) prahibits a ROA from entering inta a
contract with any entiry after June 27, 2011. It is our understanding that contracts for
these line items were awarded after June 27. 2011.
Item Project Page
Number Area Number Pro' ct Amount
Alessandro Aliey Frontage
46 1 2 Rd Im s $5,000,000
Core Commercial Parking
47 i 2 Improvements i.Od0,000
President's Plaza Parking
48 1 2 Lot Im s 1,200,000
49 1 2 Under round Utilities 90 Q00,000
50 1 2 Portola Ave Widenin 3.000,000
49 2 5 North S here Fire Station 10,000,000
50 2 5 Monterey Ave On/Off Ramp 6,000,000
Im s
51 2 6 Portola I-101m s 16,800,000
52 2 6 Unde round Utilities 12,000,000
30 3 9 Portola Ave On/Off Ramp 6,200,OOd
Construction
31 3 9 Under round Utilities 2,000 000
32 3 9 Portola Avenue Widenin 5,000,000
32 4 12 Carios Orte a Vilias 16,500,OOQ
33 4 12 Desert Pointe Rehabilitation 6 000,000
34 4 12 Unde round Utilities 1 B 571,000
Total s123 271 000
• Administrative cost claimed exceeds allowance by $708,712 (see Attachment A). HSC
section 34171 (b) limits flscal year 2011-12 administrative expenses to five percent of
property tax altocated to the successor agency or $250,000, whichever is greater.
`�
Ms. Verortica Tapia
Aprii 26, 2012
Page 3
Julv to December 2Q12 ROPS:
• The following line items were for pass-thru trust account obligations totaling
$12.4 million. HSC section 34183 (b) prohibits a RDA from entering into a contract with
any entity after June 27, 2011. It is our understanding that there are no contracts for
these line items.
item
Numb�
25
45
25
27
Project
1
2
3
4
Page
Number Project
1 Pass-Thru Trust Acct Obli aiion
5 Pass-Thru Trust Acct Obligation
8 Pass-Thru Trust Acct Ubli ation
12 Pass-Thru Trust Acct Obli ation
_ _ _ ___ -- --
Totai
Amount
$8,667,301
250,169
532,295
2,990,664
• Yhe following lina items are for agreements or contracts between the City of Palm Desert
and the Palm Desert RDA totaling $13.5 million. HSC section 34i71 (d) (2) states that
agreements or contracts between the city that created the RDA and the former RDA are
not enforceable unless ihe agreernents were entered into within the first two years of the
date of the creation of the RDA. Additionally, these line iterns were shown as payments
in the January io June 2012 ROPS.
• The following line items are for projects that do not have contracts in place in the amount
totaling $123.3 million. In addiaon, HSC section 34163(b) prohibits a redevelopment
agency from entering into a contract wifh any entity after June 28, 2011. It is our
understanding that contracts for these line items were awarded after June 27, 2011.
Item � Project Paga
Number Area Number Pra'ect Amount
i Alessandro Alley Frontage
46 'f 2 Rd Im s $5,000,000
Core Commercial Parking
47 1 2 (mprovements 1,000,000
PresidenYs Plaza Parking
48 1 2 Lot fm s 1,200,OQ0
49 1 2 Unde tound Utilities 10,000,000
50 1 2 Portola Ave Widenin 3 000 000
�9 ' 2 5 North S here Fire 5tafion 10,Q00,000
50 2 5 AAonterey Ave OnlOff Ramp 6,dOQ,000
Im s
�
Ms. Veronica Tapia
April 26, 2012
Page 4
As authorized by HSC section 34179 (h), Finance is returning your ROPS for your
reconsideration. This adion will cause the spec�c ROPS items noted above to be ineffective
until Finance approval. Furthermore, items lis#ed on future ROPS wili be subject to review and
may be denied as EOs.
If you believe we have reached this conclusio� in error, piease provide further evidence khat the
items questioned above meet the definition of an EO.
Please direct inquiries to Evefyn Suess, Supervisor or Mindy Patterson, Lead Analyst at
{916) 322-2985.
Since�ely,
��'�,�yT / /���
MARK HILL
Program Budget Manager
cc: Ms. Janet Moore, Director of Housing, City of Palm Desert
Ms. Pam Elias, Chief Accounting Property Tax Division, County of Riverside
Ms. April Nash, Supervising Accountant, County of Riverside
Ms. Jennifer Baechel, Business Process Analyst II, County of Riverside
�
Administrative expenses totaling $613,182 (Attachment B}. HSC section 34171 (b) limits
administrative expenses to three percent of property tax aliocated to the successor
agency or $250,000, whichever is greater.
ATTACHMENT A
ADMiNISTRATIVE COST CALCULATION
For the Pertod January — June 2012
Project Line Payment
Area item Pro'ect NamelDebt Obli ation Source Amount
1 4 2002 Tax Allocation Refunding Bond Issue RPTTF $1 114 S64
� 2 2003 Tax Allocation Bond Issue - S19,OQ0,000 RP1TF $950 000
� 3 2004 7ax AliocaUon Bond Issue -$24,945,Q00 RPTTF $1 502,588
1 4 2008 7au Aliocation 8ond Issue - 362,320,000 RPTTF �5,093,952
1 5 2007 Tax Allocation Bond Issue -$32,600,000 RPTfF $3 881,750
� 7 2002 Housing Tax Allocation Bond Issue -$12M RP7TF 5769 449
1 g 2007 Housing Tax Allocation Bond Issue -$87M RPTTF $B 418 137
1 g Indian Springs Stipulated Agreement __ RPTTF $89 834
� �p UM Housing Fund Laan RPTTF $1,304,76fi
� Zg� Pass-thru trust accou�t obligations RP7TF $39,862 122
� 26 Energy Independence Program RPTTF $200
� 32 Stipulated Judgment Case No. 51124 RPTTF $2,833 633
1 33 Replacement Reserve Fund F2PTTF $1 618199
1 39 PDHA Property Management RPl'fF $164 94fi
� 42 PDHA Property Maintenance _ RPTTF �44,536
1 43 A9encY 0`N�ed Properties RP1T� $25 000
1 44 Additional Disclosures on TAB's RPTTF $i 400
� �ti NSP Rehabilitation RPTTF $41 900
1 52 Santa Rosa Apartments _ RPTTF $30 000
2 1 20Q2 Tax Allocation Refundin Bond Issue -$17M RPTTF $1 324 83]
2 2 2003 Tax Ailocation Bond issue -$15M RPTTF $769 006
2 3 2006 Tax Atlocation Bond Issue -$67M RPTTF $3,920 987
2 4 County CIP Reimbursement tor 88/89 and 90t91 RPTTF $122 T07
2 5' North Sphere Hotel land RP7'fF $90 OQO
2 g* North Sphere Property Acquisition RPTTF $68 750
2 7' City Loan formation of Project Area No. 2-1886 RPTTF $25,688
y g UM Housing Loen RPTiF $375 581
2 32 Stipulated Judgment Case No. 51124 RP'fTF $882 60�
2 33 PDHA Property Managament RPTTF $18,488
2 36 Replacement Reserve Fund RPTTF $179 800
2 45* Pass-Thru Trust Account C3bligations RPTTF $3 665 266
2 qg Additionaf Disclosures on TAB's RPTTF $600
3 1 2003 Tax Allocation Bond Issue -$4,745,000 RPTTF $294 245
3 2 2006 Ta�c Allocation Bond lssue - 315,029,526 RPTTF $i57 475
3 3 VM Housing loan RPTTF $121 289
3 13 Stipulated Judgment Case Na. 51124 RPTTF $232 265
�
a-i
Line items Considered Administrative Costs
January - June 2012 ROPS
ProJect Li�e
Area item Descri tion Pa ment Source Amount
� �$ TrusteeServices RPTTF $1392
1 16 �sclosure Services RPTTF $1 152
� 17 legai Services RPTTF $8 224
1 18 Legai Services RPTTF $648
1 18 Professional Association RPTTF $2 530
� 2p Auditing Services RPTTF $1 U63
1 21 Reporting Services �- RPTTF $422
� 22 Banking Services RPTTF �99
1 23 Liability Insurance � RPTTF $1 160
1 24 Facilities Lease RPTTF $32,000
� 27 Carrying Costs - Agency Property RPTTF 1 944
� 28 Carrying Cosls - Agency Property RPTTF $15,000
1 30 ' Project Area AdministraGon RPTfF $1 247 855
� 31 Vested Emplayee Benefit Obligation RPTfF $332,195
2 21 Trustee Services RPTTF $7 974
Z � Disclasure Services RPTTF �6 602
2 23 Legat Services RPTTF $44 268
Z 44 Legat Serv)ces RPTTF $3 715
2 25 Professionai Association RPTTF S14 498
2 2g Audft3ng Services RPTTF $6 089
2 30 project Rrea Administradon RPTTF g388 676
2 31 Vested Employse Benefit obligation RPTTF $1Q3 470
2 43 Reporting Services RPTTF $2 416
2 44 Liabiliiy Insurance RPiTF $6 645
2 47 Banking Services RPITF g546
3 11 Project Area Administratlon RPTTF $102 283
3 ti2 Vested Employee Benefit Obligation RPTfF $27 229
3 j$ Trustee Services RPTTF $4 216
3 1g Disclosure Services RPTTF $3 491
3 2p Legal Services RPTTF $23 409
3 2� Legal Services RPTTF $1,965
3 ZZ Professional Association RPTTF $7,666
3 23 Auditing Services RPTTF $3,094
3 24 Reporting Services RPl?F $2,455
3 27 Liability insurance RPTTF $3 514
3 2g Banking Services RPTTF $300
4 g Trustee Services RpTTF $100
4 9 Disclosure Services RPTTF $83
��
ProJect Line
Area item Descri ton Pa ment Source Amount
4 10 legal Services RPTTF $557
4 � � Legal Services RP1TF �47
4 12 Professional Associalion RPTTF $175
4 13 Auditing Services ' RPTTF $74
4 14 aeporting Services RPTTF $29
4 15 Lfability insurance � RPITF g84
4 16 Banking Services RPTTF $7
4 �g Project Area Administration RPTTF $306,849
4 20 Vested Employee Benefit Obiigation RPTTF $68,073
Total $2,78fi 278
Less Admin Allowance $2,077 566
Total Dlsaliowed Administntive Costs E708 i12
2-3
ATTACHMENT B
ADMINISTRATIVE COST CALCULATtON
July - December 2012
Project Line
Area item Pro'ect Name/Debt Obtigation
1 1 2002 7ax Aliocation Refunding Bond Issue -$22M
1 2 20Q3 Tax Allocation Bond Issue -$i9,000,004
� 3 2004 Tax Allocation 6ond Issue -$24,945,00�
1 4 2006 Tax Allocation 8ond Issue -$62,320,000
1 5 2007 Tax Allocation 8ond Issue -$32,60Q,000
� 7 2002 Hausing Tax Ailocation Bond Issue -$12M
1 8 2007 Nousing Tax Ailocalion Bond Issue -$87M
� g Indian Springs Stipulated Agreernent
� �p LJM Housing Fund Loan
� 25� Pass-thru trust account obiigations
� 26 Energy Independence Program
� 32 Stlpulated Judgement Case No. 51124
1 33 Repiacement Reserve Fund �
1 39 PDHA Property Management
t 40 PDHA P�operties
1 41 PDHA Properties
� 42 PDHA Property Maintenance
1 43 Agency Owned Properties
� q4 Additional Disclosures on TA8's �
� 51 NSP Rehabilitabion
1 52 Santa Rosa Apartments
2 � 2002 Tax Ailocation Retunding Bond issue -$17M
2 Z 2003 Tatt Allocation Bond Issue -$15M
2 3 2006 T� Allocation Bond Issue -$67M
2 5� North Sphere Hotel land
2 g• North Sphere Property Acquisition
2 7' City Loan formallon of Project Area No. 2-1986
2 g L!M Housing �oan
3 26 Additionak DisGosures on TAB's
Z 32 Stipulated Judgement Case No. 51124
2 33 PDHA Property Managemenk
2 34 POHA Properties
2 35 PDHA Properties
2 3g Replacement Reserve Fund
2 45" Pass-Thru Trust Account Obligations
2 46 Additional Disclosures on TAB's
Payment
Source Ama
RPTTF $1,11
RPTTF $95
RPTTF $7,88
RPTTF $518
RPl?F $3.89
RPTTF
RPiTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
RPTTF
766
30i
1
783
$25,688
12.366
281
169
5
�'�
ProJect � Line
3
3
3
3
3
2
3
13
14
15
3 25'
3 26
4 1
4 2
4 3
4 4
4 21
4 23
4 24
Project NamelDebt Obligation
2003 Tax Allocation Bond Issue -$4,745,000+
2006 Tax Alloqtion Bond Issue -$15,029,526
UM Housing Loan
Stipulated Judgement Case No. 51124
Replacement Reserve Fund
PDHA Property Management
POHA Properties
POHA Properties
Pass-Thru Trust Account Obligations
Additional Disclosures on TAB's
1998 $11,020,Q00 Tax Allocation Bond issue
2001 $15,695,000 Tax Allocation Bond Issue
2006 $19,273,089 Tax Allocation Bond Issue
UM Housing Fund Loan
Stipulated Judgement Case No. 51124
PDHA Property Management
PbHA Property Management
PDHA Propetty Management
Additional Disclosures an TA8's
Pass-Thru Tnlst Account Obligations
NSP Rehabilitation
Less Amount Disaifowed
GT�iiTt'i7
Payment
Source
RPTTF
RPTTF
RP7TF
RPTTF
RPTTF
RPTTF
RPTTF
RPiTFiOther
line items with aste�is
Tota! RPTTF
121
i
1
70
133
�
�".�
Line Items Considend Administrative Costs
July - December 2012 ROPS
Project Line
Area item Descri tion Pa me�t Source Amount
� 15 Trustee Services RPTTF $1,419
1 16 Disclosure Services RPTTF �1,176
� 17 Legal Services RPT7F $7,8T8
� 18 Legal Services RPT7F $660
y 19 Professionai Association RPTTF $2,58�
� 20 Auditlng Services RPTTF $2 167
� 21 Reporting Services RPTTF $430
1 22 Banking Services RPTTF $102
� 23 Liability Insurance RPTTF $1 158
1 24 Facilities Lease RPTTF $31,998
1 27 Carrying Costs - Agency Property Rp� g � gqq
1 28 Carrying Costs - Agency Property RPTTF $11 224
� 3p Project Area Administration RPTTF $860 818
� 3� Vested Empbyee Benefit Obkgation RPTTF $352,053
2 21 Trustee Services RPTTF $7 812
2 22 Disclosure Services RPTTF $6,468
2 23 �-e9�� Sen►ices RPTTF $43,386
2 24 �egal Services RPTTF $3 642
2 25 PrMesslonal As�ociation RPTTF $14,208
Z 2g Auditing Services RPTT1= $5 968
2 30 Project Area Administration RPTTF $205,828
2 31 Vested Employee Beneflt �bligation RP1TF $109 656
2 43 Reporting Services RpTTF S2 368
2 44 Liability Insurance RP1TF $6 3B4
2 47 Banking Services RPTTF $558
3 � � Project Area Administration RPTTF $54165
3 12 Vested Emptoyee Benefit Obligation RPTTF $28,857
3 18 Trustee Services RP'TTF a4,134
3 19 Disctosure 5ervices RPTTF 33,420
3 20 Legal Services RPTTF S22 938
3 Z� Legal Services RPTfF ' $1 926
3 22 Professional Association RPTfF $7 513
3 23 Auditing Services RPTTF $3156
3 24 Reporting Services RPTTF $1 252
3 2� liability insurance RPTTF $3,378
3 28 eanking Services RPTt'F $294
4 8 Trustee Services RPTTF $96
4 g Disclosure Serviaes }�p� $gq
,,,� y
Moore, Janet
From:
Sent:
To:
Cc:
Subject:
Hi Mindy,
Tapia, Veronica
Thursday, May 03, 2012 10:39 AM
Patterson, Mindy
Suess, Evelyn; Moore, Janet
RE: Palm Desert ROPS Review Jan - June
We are stiil working.through our review/response to your letter regarding the ROPs for Palm Desert. In the interim, i
just wanted to address a couple of things that seemed easy.
I think we have managed to figure out how our pass thru payments were not meeting the requirements under the DOF's
guideline. We have spoken with the County of Riverside and understand that we should be listing the previously earned
payments due to the taxing entities as "held in reserve" as opposed to coming from the "RPTfF fund". These funds,
currently held in trust (or reserved) for the taxing entities are then to be paid directly by the successor agency from cash
on hand. I think there was just some confusion with the timing of the payments and whether or not the funds would in
fact be with the successor agency or have already been turned over with the assets to the County of Riverside (the
chicken and the egg sort of dispute).
Can you please confirm for me that if we make this adjustment we would meet the satisfaction of the DOF, by changing
the source from "E" (RPTTF) to "C' (Reserve Balances) for the following items:
As listed under ROPS 1
Item Page
Number Pro'ect Area Number Pro'ect Amount
25 l 1 Pass-Thru Trust Acct Obli ation $39,862,122
45 2 5 Pass-Thru Trust Acct Obligation 3,665,266
25 3 8 Pass-Thru Trust Acct Obligation 6,549,775
27 4 12 Pass-Thru Trust Acct Obli ation 10,435,341
Total $60,5 I 2,504
Balances remaining under ROPS 2
Item
Number
25
45
25
27
ect Area
1
4
Page
Number Pro'ect
1 Pass-Thru Trust Acct Obligation
5 Pass-Thru Trust Acct Obligation
8 Pass-Thru Trust Acct Obligation
12 Pass-Thru Trust Acct Obligation
Total
Amount
$8,667,301
250,169
532,295
2,990,664
$12,440,429
Also, in your review of ROPS 2(July — December), I noticed that there was a duplicate item counted, as well as one
omitted from the list of the Administrative Costs Calculation.
On page 5 and page 6, you have included Additional Disclosures on TAB's for Project Area No. 3/Item 26 two times
($400/ea). And then on page 6, Project Area No. 4/Item 22 Replacement Reserve Fund for $273,489 is omitted (but
included for all other project areas and on the prior ROPS).
0 � +
A formal response to the review is forthcoming. As aiways, thank you so much for your time and assistance with this
matter.
Veronica
From: Patterson, Mindy [mailto:Mindy.PattersonC�dof.ca.gov]
Sent: Thursday, April 26, 2012 12:35 PM
To: Tapia, Veronica
Cc: Suess, Evelyn
Subject: Palm Desert ROPS Review Jan - June
Hi Veronica,
We have reviewed the two ROPS. Here are our results that will be provided in a letter coming to you later today. The
attachments for the administrative calculation are shown in attachments that will be provided in the letter.
If you have further support for these questioned items, please send them our way.
Thank you,
Mindy Patterson
Lead Analyst
lanuary through June 2012:
HSC section 34171 (d) lists enforceable obligation (EO) characteristics. Based on a sample of line items reviewed and
application of the law, the following do not qualify as EOs:
The following line items were for pass-thru trust account obligations totaling $60.5 million. HSC section 34163
(b) prohibits a redevelopment agency from entering into a contract with any entity after June 28, 2011. It is our
understanding that no contracts are in place for these line items.
Item Page
Number Project Area Number Pro ect Amount
25 ] 1 Pass-Thru Trust Acct Obli ation $39,862,122
45 2 5 Pass-Thru Trust Acct Obligation 3,665,266
25 3 8 Pass-Thru Trust Acct Obligation 6,549,775
27 4 12 Pass-Thru Trust Acct Obli ation 10,435,341
Total $60,512,504
? The following line items are for agreements or contracts between the City of Palm Desert and the Palm Desert
Redevelopment Agency (RDA) totaling $13.5 million. HSC section 34171 (d) (2) states that agreements or
contracts between the city that created the RDA and the 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.
Item Page Number
Number Pro'ect Area Pro'ect Amount
5 2 4 North S here Hotel Land $5,500,000
North Sphere
6 2 4 Property Acquisition 2,055,000
City Loan for formation of
� 2 q Project Area No.2-1986 6,000,000
.���
�---- l I I Ta�l � $i3,sss,oao (
? The following line items are for projects that do not have contracts in place in the amount totaling
$123.3 million. HSC section 34163(b) prohibits a RDA from entering into a contract with any entity after
June 28, 2011. It is our understanding that contracts for these line items were awarded after June 28,
2011.
Item Page Number
Number Yro'ect Area Pro�ect Amount
Alessandro Alley Frontage Rd
46 1 2 Imps $5,000,000
Care Couunercial Parking
47 1 2 Improvements 1,000,000
President's Plaza Parking Lot
48 1 2 Imps 1,200,000
49 1 2 Under round Utilities 10,000,000
50 1 2 Portola Ave Widenin 3,000,000
49 2 5 North S here Fire Station 10,000,000
50 2 5 Monterey Ave On/Off Ramp 6,000,000
im s
51 2 6 Portola cL I-10 Im s 16,800,000
52 2 6 Under round Utilities 12,000,000
30 3 9 Portola Ave On/Off Ramp 8,200,000
Construction
31 3 9 Under round Utilities 2,000,000
32 3 9 Portola Avenue Widenin 5,000,000
32 4 12 Carlos Orte a Villas 18,500,000
33 4 12 Desert Pointe Rehabilitation 6,000,000
34 4 12 Under round Utilities 18,571,000
Total $123,271,000
? Administrative expenses totaling $788,712. HSC section 34171 (b) limits administrative expenses to five percent
of property tax allocated to the successor agency or $250,000, whichever is greater. Five percent of the
property tax allocated is $1,997,516. Therefore, $788,712 of the claimed $2,786,278 is not an EO. The
calculation for administrative expenses is shown in Attachment A.
3
�
July to December 2012:
Based on a sample of line items reviewed and application of the law, the following do not qualify as EOs for the July
through December 2012 period:
The following line items were for pass-thru trust account obligations totaling $12.4 million. HSC section 34163
(b) prohibits a RDA from entering into a contract with any entity after June 28, 2011. It is our understanding
that there are no contracts for these line items.
Item Page
Number Pro'ect Area Number Pro�ect Amount
25 1 1 Pass-Thru Trust Acct Obligation $8,667,301
45 2 5 Pass-Thru Trust Acct Obligation 250,169
25 3 8 Pass-Thru Trust Acct Obligation 532,295
27 4 12 Pass-Thru Trust Acct Obligation 2,990,664
Total $12,440,429
? The following line items are for agreements or contracts between the City of Palm Desert and the Palm Desert
RDA totaling $13.5 million. HSC section 34171(d) (2} states that agreements or contracts between the city that
created the RDA and the 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. Additionally, these line items were shown as payments in
the January to lune 2012 ROPS.
Item Page Number
Number Pro'ect Area Pro'ect Amount
5 2 4 North S here Hotel Land $5,500,000
North Sphere
6 2 4 Property Acquisition 2,055,000
City Loan for formation of
'7 2 4 Project Area No.2-1986 6,000,000
Total $13,555,000
? The following line items are for projects that do not have contracts in place in the amount totaling
$123.3 million. In addition, HSC section 34163(b) prohibits a redevelopment agency from entering into
a contract with any entity after June 28, 2011. It is our understanding that contracts for these line items
were awarded after June 28, 2011.
Item Page Number
Number Pro'ect Area Pro'ect Amount
Alessandro Alley Frontage Rd
46 1 2 Imps $5,000,000
Core Commercial Parking
47 1 2 Improvements 1,000,000
President's Plaza Parking Lot
48 1 2 Imps 1,200,000
49 1 2 Under ound Utilities 10,000,000
50 1 2 Portola Ave Widenin 3,000,000
49 2 5 North S here Fire Station 10,000,000
50 2 5 Monterey Ave On/Off Ramp 6,000,000
Im s
51 2 6 Portola a� 1-lO lm s 16,800,000
4
� J'
52
30
31
32
32
33
34
2
3
3
3
4
4
4
6
9
9
9
12
l2
12
Underground Utilities
Portola Ave On/Off Ramp
Construction
Underground Utilities
Portola Avenue Widening
Carlos Ortega Viilas
Desert Pointe Rehabilitation
Underground Utilities
Total
12,000,000
8,200,000
2,000,000
5,000,000
15,500,000
6,000,000
l 8,571,000
$123,271,000
? Administrative expenses totaling $613,182. HSC section 34171 (b) limits administrative expenses to three
percent of property tax allocated to the successor agency or $250,000, whichever is greater. Three percent of
the property tax allocated is $1,249,954. Therefore, $613,182 of the claimed $1,863,136 is not an E0. The
calculation for administrative expenses is shown in Attachment B.
Mindy Patterson
Lead Analyst
Department of Finance
916.322.2985 x 3117
5
��
THE SUC(ESSOR AGENCY TO THE
Pfll(Cl DESERI �EDEVELOPff1EN1 AGENCY
73-5io FxF.t� W�kwc; DHi���
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F.as: 760 34i-637�
in toC�palm-d,serc.org
May 21, 2012
Paul Angulo, CPA, MA
C�unty Auditor-Controlier
County of Riverside
Mail Stop 1050
4080 Lemon Street, 11th floor
Riverside, CA 92502
Dear Mr. Angulo:
Recently, the Department of Finance ("DOF") has provided confusing communications
regarding the manner in which county auditor-controllers should be distributing property
tax revenues pursuant to a successor agency's Recognized Obligation Payment
Schedule ("ROPS"). These communications suggest that possibly successor agencies
will not be receiving the revenues they need to timely meet their enforceable
obligations. This would be contrary to the duty imposed by AB X1 26 and other laws
upon successor agencies, county auditor-controllers, and DOF to ensure that all
enforceable obligations are timely met. Moreover, we are concerned about statements
from DOF suggesting that funds withheld from successor agencies in connection with
disputed items on the ROPS should be treated as surplus and distributed to the taxing
entities. This would effectivety result in an unlawful forfeiture of funds that the
successor agency is entitled to receive under AB X1 26.
Under Health & Safety Code Section 34182(c)(2), "each county auditor-controller shall
administer the Redevelopment Property Tax Trust Fund for the benefit of the holders of
former redevelopment agency enforceable obligations and the taxing entities that
receive pass through payments and distributions of property taxes pursuant to [Part
1.85 of AB X1 26]." Under Health & Safety Code Section 34174(a), the Legislature has
stated its clear intent that nothing in AB X1 26 "is intended to be construed as an action
or circumstance that may give rise to an event of default under any of the documents
governing the enforceable obligations."
Health 8� Safety Code Section 34175(a) further sets forth the Legislature's clear intent
"that pledges of revenues associated with enforceable obligations of the former
redevelopment agencies are to be honored. It is intended that the cessation of any
redevelopment agency shall not affect either the pledge, fhe legal existence of that
pledge, or the stream of revenues available to meet the requirements of that pledge."
G: rda Vcronica Tapia Word Filcs Succcssor Agrncc i•:Id: I.ata m Coumy Audimr re RPTTEDOCX.doc
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�
Paul Angulo, CPA, MA, County Auditor-Controller
County of Riverside
May 21, 2012
Page 2 of 2
Accordingly, it is our position that DOF has no authority under AB X1 26 to prevent the
payment of obligations on a successor agency's ROPS as a result of certain disputed
items when those disputes have not yet been resolved between DOF, the successor
agency and its oversight board. Further, there is no legal authority for DOF to direct the
county auditor-controller to not disburse property tax revenues to a successor agency
for the July through December 2012 period if DOF has not provided an approval letter to
the county auditor-controller by June 1 or the lock-down date, whichever is earlier. This
direction may cause the successor agency to default on enforceable obligations to the
fi�ancial detriment of the holders of enforceable obligations. As described above, a
primary purpose of AB X1 26 is to ensure that this disastrous result does not occur.
Therefore, it is our position that if DOF disputes items listed on the ROPS for the
Successor Agency to the Palm Desert Redevelopment Agency (the "Successor
Agency") that its Oversight Board approved, or fails to timely inform you of the
undisputed enforceable obligations that should be paid from the Redevelopment
Property Tax Trust Fund, at the minimum you are required by Health & Safety Code
Sections 34182(c)(2), 34174(a) and 34175(a) to distribute property tax revenues to the
Successor Agency in the amounts needed to satisfy all but the obligations in dispute
and to retain the revenues needed to satisfy the disputed items and place them in a
separate escrow or fund pending the outcome of these disputes. Since the Successor
Agency and its Oversight Board have not fully exhausted their administrative remedies
with respect to any disputed items, the funds related to the disputed items cann�t be
treated as surplus for distribution to the taxing entities on June 1, but instead must be
held by your office pending the final determination of these disputes.
We request that you send electronic confirmation to me, at
jwohlmuth(a�citvofpalmdesert.orq , by no later than May 25, 2012 describing the manner
in which you will distribute property tax revenues on June 1, 2012 so that the Successor
Agency can take appropriate actions in response.
ly,
i
���I r:
John M. Wohlmuth
Executive Director
� cc: Ms. Janet M. Moore, Director of Housing
Mr. Paul Gibson, Director of Finance
Ms. Veronica Tapia, Accountant II
Ms. Pam Elias, Chief Accountant, Property Tax Division County of Riverside
Ms. Evelyn Suess, Supervisor, Department of Finance
Ms. Mindy Patterson, Lead Analyst, Department of Finance
SU(CESSOR AGENCY TO THE
PH��I DESERi REOEVE�OPMERI AGENCV
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