HomeMy WebLinkAboutDept of Finance Determination Ltr Re: ROPS3CITY OF PALM DESERT/
SUCCESSOR AGENCY TO THE
PALM DESERT REDEVELOPMENT AGENCY
JOINT CONSIDERATION
STAFF REPORT
REQUEST: RECEIVE AND FILE DEPARTMENT OF FINANCE DETERMINATION
LETTER RELATIVE TO THE THIRD RECOGNIZED OBLIGATION
PAYMENT SCHEDULE
SUBMITTED BY: Veronica Tapia, Accountant II
DATE: January 10, 2013
CONTENTS: Resolution No. OB- 030
10/8/12 Letter from Department of Finance
Request for Meet and Confer
12/18/12 Letter from Department of Finance
Recommendation
That Agency Board receive and file the Department of Finance Letter of Determination relative
to the third Recognized Obligation Payment Schedule (ROPS 3).
Executive Summary
Pursuant to Health and Safety Code Section 34177(m) the Oversight Board approved the
ROPS 3 on August 25, 2012. ROPS 3 covers the enforceable obligations due from January 1,
2013 through June 30, 2013. In their letter dated October 8, 2012 the DOF indicated that a
few of the items did not qualify as enforceable obligations. Following their decision, staff was
required to request a Meet and Confer Session in order to make adjustments to absorb the
amount being denied, and amend amounts being requested on approved obligations. On
December 18, 2012 the DOF issued a letter of determination indicating that there would be no
adjustment to the amount allowed from the Redevelopment Property Tax Trust Fund (RPTTF).
Backqround
Health and Safety Code Section 34177(m) requires that by September 1, 2012, the Successor
Agency submit the ROPS 3 covering the period of January 1, 2013 through June 30, 2013 to
the Oversight Board for approval and submittal to the DOF. The Oversight Board approved
ROPS 3 on August 25, 2012.
On October 8, 2012 the DOF issued a letter of determination based on the ROPS 3 submitted
indicating objection to the amounts being requested on several line items. Staff disagreed with
the determination and immediately requested a Meet and Confer Session with the DOF to
discuss the items that were noted as the reason for their objection.
G'vda\Veronica Tapia�Word Files\S[aff Repons\Successor AgencylSA_Ciry SR [o Receive and File DOF Letter of De[ertninatiun un ROPS 3 I-10-13.docx
Staff Report
Receive and File Letter from DOF relative to ROPS 3
January 10, 2013
Page 2 of 2
On November 2, 2012 staff, along with Agency Counsel, attended a Meet and Confer Session
with the DOF via teleconference. The items that were noted in DOF's determination letter
were discussed in more detail. DOF requested additional information be submitted supporting
the obligations and communicated that their determination would be forth coming.
On December 18, 2012, the DOF issued their determination on the ROPS 3 stating that
adjustments could be made with regard to the bond project overhead costs, but that no
additional adjustments would be permitted at this time. DOF did indicate that the Agency could
request these items on a subsequent ROPS period.
Fiscal Analvsis
The final approved amount for RPTTF distribution would be $18,492,802, compared to the
$20,287,210 requested on ROPS 3.
Su itted by: �
Veronica Tapia, Accou tant II J et . Moore, Director of Housing
Appr I:
Paul S. Gibson, Director of Finance
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RESOLUTION N0. OB - 030
A RESOLUTION OF THE OVERSIGHT BOARD OF THE SUCCESSOR
AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY
ACKNOWLEDGING THE RECEIPT OF THE DEPARTMENT OF FINANCE
DETERMINATION LETTER RELATIVE TO THE THIRD RECOGNIZED
OBLIGATION PAYMENT SCHEDULE
RECITALS:
A. Pursuant to Health and Safety Code Section 34179(3), all actions taken by
the oversight board for the Successor Agency to the Palm Desert Redevelopment Agency
(the "Oversight Board") shall be adopted by resolution.
B. There has been presented to this Oversight Board the Determination as
provided by the Department of Finance relative to the third Recognized Obligation Payment
Schedule pursuant to Health and Safety Code Section 34177(m).
NOW, THEREFORE, THE OVERSIGHT BOARD FOR THE SUCCESSOR
AGENCY TO THE PALM DESERT REDEVELOPMENT AGENCY, HEREBY FINDS,
DETERMINES, RESOLVES, AND ORDERS AS FOLLOWS:
Section 1. The above recitals are true and correct and are a substantive part of
this Resolution.
Section 2. The Oversight Board hereby receives and files the Determination as
provided by the Department of Finance relative to the third Recognized Obligation Payment
Schedule pursuant to Health and Safety Code Section 34177(m).
Section 3. The officers of the Oversight Board and staff of the Successor Agency
are hereby authorized and directed, jointly and severally, to do any and all things which they
may deem necessary or advisable to effectuate this Resolution.
PASSED, APPROVED AND ADOPTED this 7th day of January, 2013.
AYES:
NOES:
ABSENT:
ABSTAIN:
ATTEST:
ROBERT A. SPIEGEL, CHAIR
RACHELLE D. KLASSEN, SECRETARY
OVERSIGHT BOARD FOR THE SUCCESSOR AGENCY TO THE
PALM DESERT REDEVELOPMENT AGENCY
81000-0172\1482371 vi .doc
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�c DEPARTMENT �F EDMUND O. BRowN JR. ■ C3OVERNOR
���R~�, F t N A N C E q 1 D L STAttT � SA�F7AMtNTO CA r G'Si 1 4'3706 � WWW.oOR.G.00V
October 8, 2012
Ms. Veronica Tapia, Accountant II
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Ms. Tapia:
Subject: Recognized Obligation Payment Schedule
Pursuant to Health and Safety Code (WSC) sectlon 34177 (m), the City of Palm Desert
Successor Agency submitted a Recognized Obligation Payment Schedule (ROPS III) to the
Califomia Department of Finance (Finance) on August 24, 2012 for the periods January through
June 2013. FinanCe has completed its review of your ROPS fll, which may have included
abtaining clarification for various it�ms.
HSC section 34171 (d) defines enforceable obligations. Based on a sample of line items
reviewed and application of the law, the following do not qualify as ertforceabte obligations:
� I#em Plos. 10, 62, 't09, and 143 - Low and Moderate Housing Fund Loans in the amount
of $13.3 million. HSC section 34176 (e) (6) (B) states that loan or deferral repayments
shall not be made prior to the 2013-14 fiscal year_ Therefore, these items are not an
enforceable obligations and not eligible for Redevelopmer�# Praperty Tax Trust Fund
(RPTTF) funding on this ROPS.
• Item Nos. 45, 102, 935 and 170 - Bond Project Overhead Costs in the amount of
$6.4 million funded by bond proceeds. HSC 34183 (b) prohibits an agency from errtenng
into contracts after June 27, 2011. Since the majority of the future bond projects do not
qual�fy as enfarceable obligations and the overhead costs are calculated based on future
bond work,.these items are not considered eriforceable obligations.
�(tem Nas. 46 through 50, 91 through 95, 103 through 106, 136 through 138, 171 through
175 - Various projects totaling $133.4 million €unded by bond proceeds. HSC section
34163 (b). prohibits a redevelopment agency from entering into a contrad with any entity
after June 27, 2011. Since no comracts are in place for these items, they are not
enforceable obligations.
• Item Nos, 59, 6U and 61- Contracts or agreemenfs between the City of Palm Desert and
the Palm Desert RedevelopmeM Agency in the amount of $13.5 million. HSC section
34171 (d) (2} states that agreements or contracts between the city that created the
redevelopment agency (RDA) and former RDA are not enforceatrle unless the
agceements were sntered into within the first two years of the date of the creation oi the
Ms, Veronica 7apia
October�8,'2012
Page 2
RDA. Therefare, these items are not enfarceable obligations and not eligible for RPITF
funding on this ROPS.
Except for items denied in whole or in part as enforceable obligaiions as noted above, Finance
is approving the remaining items listed in your ROPS III. if you disagree with the determination
with respect to any items on your ROPS Itl, you may reques# a Meet and Confer within five
business days of the date of this letter. The Meet and Confer process and guidelines are
available at Finance's website below:
htto://www.dof.ca.00vlredevelopmentlmeet and confer/
The Agency's maximum approved Redevelopment Praperty Tax Trust Fund (RP1TF)
distribution for the reporting period is: $18,492,802 as summarized below:
Approved RPTTF Dlstribution Amount
For the perlod of January through Juno 2013
otal RPTTF funding requesbed for obligations
sss: Six moMh total for item(s} denied or reclassified as administrative cost
Reim.10
ftem 59
Item 60
Item 61
Item 62
Rem 109
Item 143
$ 20,287,210
1,304,766
ss,7so
25,688
90,000
469,451
121,289
332,155
� To#al approved RPTTF for enforceable obligatians
Plu's::Requested RPTTF distributian for administrative cast for ROPS il1
Total RPTTF appr�
$ 17,875,'! 11
$ 1
617
Pursuant to HSC secti�n 34188 (a), successor agencies were required to report on the ROPS Ill
form ti�e estimated obligations and actual payments associated with the January through
June 2012 period. The amount af RPT"TF approved in the above table will be adjusted by the
county auditor-controEler to accour�t for differences befinreen actual payments and past
estimated obligatians. Additionally, these estimates and accourrts are subject to audit by the
count� auditor-contraller and the State Controller.
Please ref.er to t�ie ROPS III schedule that was used to calculate the appro�ed RPTTF amount:
htt�://www:dof.ca.flov/redevelapment/ROPS/ROPS III Form�t v Successor Aaencv/.
All items listed on a#uture ROPS are subject to a subsequerrt revlew. An item included on a
future �ROPS may be denied even if it was not questioned from the preceding ROPS.
The amount avaiiable fram the RPTTF is the same as the property tax increment that was
available prior to enactment of ABx1 26 and AB 1484. This amount is not and never was an
unfimited funding source. Therefore, as a practical matter, the ability to fund the ifsms on the
ROPS with property tax is limited to the amount of funding available to the successor agency in
the RPTTF.
Ms. Veronica Tapia
October 8, 2012
Page 3
Please direcx inquiries to Beliz Chappuie, Supervisor or Mindy Patterson, Lead Analyst at
(916) 445-1546.
Sincere�,
�'' �.. �.
�- '`�. �nA`
,-.�-�' STEVE �ZALAY
Loc�l Gov�mrrtent Consultant
cc: Ms, Jane� 11�loore, Director of Housing, City of Pakm Desert
Ms. Pam Elias, Chief Accouri#ing Property Tax Division, County of Riverside
Auditor Contraller
.
' ' MEET AND CONFER REQUEST FORM
Instructions: Please fill out this form in its entirety to initiate a Meet and Confer session. Additional supparting
docurnents may be included with the submittal of this form—as justification for the disputed item(s). Upon
completion, email a PDF version of this document (including any attachments) to:
Redevelopment Administration@dof.ca.gov
The subject line should state "[Agency Name] Request to Meet and Confe�". Upon receipt and determination
that the request is valid and complete, the Department of Finance (Finance) will contact the requesting agency
within ten business days to schedule a date and time for the Meet and Confer session.
Ta be valid, all Meet and Confer requests must be specifically related to a determination made by Finance and
submitted within the required statutory time frame. The requirements are as follows:
• Housing Asset Transfer Meet and Confer requests must be made within five business days of the date
of Finance's determination letter per HSC Section 34176 (a) (2).
. Due Diligence Review Meet and Confer requests must be made within five business days of the date of
Finance's determination letter, and no later than Novernber 16, 2012 for the Low and Moderate Income
Housing Fund due diligence review per HSC Section 34179.6 (e).
. Recagnized Obligation Payment Schedule (ROPS) Meet and Confer requests must be made within
five business days of the date of Finance's determination letter per HSC Section 34177 (m).
Agencies should become familiar with the Meet and Confer Guidelines located on Finance's website. Failure to
follow these guidelines could result in termination of the Meet and Confer session. Questions related ta the
Meet and Confer process should be directed to Finance's Dispute Resolution Coordinator at (916) 445-1546 or
by email to Redevelopment_Administration@dof.ca.gov.
AGENCY (SELECT ONE):
� Successor Agency ❑ Housing Entity
AGENCY NAME: SUCCESS�R AGENCY TO THE PALM DESERT REDEVEL�PMENT AGENCY
TYPE OF MEET AND CONFER REQUESTED (SELECT ONE):
❑ Housing Assets Transfers ❑ Due Diligence Reviews
DATE OF FINANCE'S DETERMINATION LETTER: October S, 2012
� ROPS Period 3
REQUESTED FORMAT OF MEET AND CONFER SESSION (SELECT ONE):
❑ Meeting at Finance � Conference Call
Page 1 of 3
DETAIL OF REQUEST
A. Summary of Disputed Issue(s) (Must be specific.)
11 D�F letter dated 10/8/12 indicates that Item Nos 45 102 135 and 170 - Bond Proiecl Overhead Costs do not Qualifv
as enforceable obliaations since the "maioritv" of the overhead costs were ca�ulated based on future bond �roiect work.
21 DOF letter dated 10/8/12 indicates that Item Nos 10 62 109 and 143 - SERAF Reimbursement as well as 59 60
and 61 Citv Loan Renavment do nct aualifv as enforceable obliaaitons as loan or deferral re�avments shall not be made
pnor to the 2013 14 fiscalyear In consideration of these items beina disallowed bv DOF on ROPS3 the Aaenc�t would like
to revise Item Nos 32 86 119 and 160 which were deferred to ROPS4 due to a lack of available revenue to cover half of
the annual obligation.
B. Background/History (Provide relevant background/hisfory, if applicab/e.)
C. Justification (Provide additional attachmenfs to this form, as necessary.)
1) Wh'1e the Aaency does not disacLree with the statement that the "maioritv" of the estimated overhead costs were
calculated based on future bond work there are amounts within the calculation that are relevant to currentiv awarded
contracts/aroiects The Aqencv would like those amounts to be mcluded as enforceable obliQations on ROPS3.
�� � �� o,�,. �.,,. ..,,..,........._...- -- - �-� - —
vailable RPTTF fundina and it permits an additional $1 519 343 in obliqations The total between these two arovides
�3 913 442 in RPTTF fundina enouah to cover half of the annual obliQatron. The Acapncv would like those amounts to
be included as enforceable obliqations on ROPS3. See attached worksheet for adiustment to RPTfF.
Page 2 of 3
T� " �
Agency CoMact irdormat(on
Name: VERONICA TAPIA Name: JANET MOORE
Tit�e: ACCT Tit�e: DIRECTOR OF HOUSING
Phone: 760.346.0611 Phone: 760.346.0611
Emai�: VTAPIA@CITYOFPALMDESERT.ORG Email:
JMOORE @CITY OF PALMDESERT.ORG
�ate: 10/10/12 oate: 10/10/12
Decartment o1 Flnance Local f3ovemment Unit Use Onl�
REQUEST TO MEET AND CONFER DATE: ❑ APPROVED ❑ DENIED
REQUEST APPROVED/DENIED BY: DATE:
MEET AND CONFER DATEITIME/LOCATION:
MEET AND CONFER SESSION CONFIRMED: ❑ YES DATE CONFIRMED:
DENIAL NOTICE PROVIDED: ❑ YES DATE AGENCY NOTIFIED:
Form DF-MC (Revised 9/10l12)
Page 3 of 3
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� DEPARTMENT OF
�;,�AM�P F' I N A N C E
December 18, 2012
Ms. Veronica 7apia, Accountant II
City of Palm Desert
73-510 Fred Waring Drive
Palm Desert, CA 92260
Dear Ms. Tapia:
EDMUND Gi, 6ROWN JR. ■ OOVERNOR
91 �3 L BTRCCT � BACRAMENTO CA ■ 4561 4-3706 r WWW.00F.CA.00V
Subject: Recognized Obligation Payment Schedule
This letter supersedes Finance's Recognized Obligatian Payment Schedule (ROPS) letter dated
October 8, 2012. Pursuant to Health and Safety Code (HSC) section 34177 (m), the City of
Palm Desert Successor Agency (Agency) submitted a Recognized Obligation Payment
3chedu�e (ROPS lil) to the California Department of Finance (Finance) on August 24, 2012 for
the period of January 1 through June 30, 2013. Finance issued its determination related to
those enforceable obligations on Octaber S, 2012. Subsequently, the Agency requested a Meet
and Confer session an one or more of the items denied by Finance. 7he Meet and Confer
session was held on November 2, 2012.
Based on a review of additional information and documentatlon provided to Finance during the
Meet and Confer process, Finance has completed its� review of the specific item being disputed.
• Item Nos. 45, '102, 135 and 170 — Bond Project Overhead Costs in the amount of
$6.4 million funded by bond proceeds. Finance no longer objects to the items as revised
by the Agency. Finance denied the items as HSC 34163 (b) prohibits an agency ftom
entering inta contracts after June 27, 2411. Since the majority of the future bond
projects do not quafify as enforceable obligations and the overhead costs are calculated
based on future bond work, these items are not considered enforceable obligations. The
Agency contends the items are enforceable obligations because there are amounts
wiihin the calculation that are relevant to currently awarded contracts/projects. The
Agency provided revised calculations including only the current projects and requested
the items be revised to the following amounts:
o Item 45 — $553
o Item 102 — $17,9�3
o item 135 — $9,324
o Item 170 -- $7,356
The amounts are related to the overhead costs for current bond projects. The revised
amounts are enforceable obligations.
Ms. Veronica Tapia
December 18, 2012
Page 2
. The Agency requested to adjust fhe requested Redevelopment Property Tax 7rust Fund
(RPTTF) for the following items from $0 to the following amounts:
o Itern 32 — $2,175,370
o Item 86 — $62$,192
o Item 119 — $174,664
o Item 160 — $509,397
Finance did not select these items as part of the ROPS II1 review. The Agency did not
identify any speciflc projects or contracts to be funded; therefore, Finance denies the
Agency's request to revise the ROPS II! arnounts and will continue to fist the items as $0
for the current period. However, the Agency may list these items in a subsequent ROPS
period and Finance will review the items at that time.
ln additlon, per Finance's ROPS letter dated October 8, 2012; the following items not disputed
by the Agency continue to be denied:
• Item Nos. 10, 62, 109, and 143 — Low and Moderate Housing Fund Loans in the amount
of $13.3 miliion. HSC section 34176 (e) (6) {B) states that loan or deferral repayments
shall not be made prior ta the 2013-14 fiscal year. 7herefore, these items are not an
enforceable obiigations and not eligibfe for funding on this ROPS.
. Item Nos. 4� through 50, 91 through 95, 103 through 106, 136 through 138, 171 through
175 — Various projects totaling $133.4 mllilon funded by bond proceeds. HSC section
34163 (b) prohib9ts a redevefopment agency from entering into a contract with any entity
after June 27, 2011, Since no contracts are in place for these items, they are not
enforceable obfigations.
• Item Nos. 59, 60 and 61- Coniracts or agreements between the City of Palm Desert and
the Palm Desert Redevelopment Agency in the amount of $13.5 million. HSC section
34171 (d) (2) states thaf agreements or contracts between the city that crea#ed the
redevelopment agency (RDA) and former RDA are not enforceable unless fhe
agreements were entered into within the first two years of the daie of the creation of the
RDA. Therefore, these items are not enforceable obligations and not eligible for RPTTF
funding on this ROPS.
The Agency's maximum approved Redevelopment Property Tax Trust Fund (RPTTF)
distribution for the reporting period is: $18,492,802 as summarized below:
m
Ms. Veronica Tapia
December 18, 2012
Page 3
Approved RPTTF Distributlon Amount
For the perlod of Januarythrough June 2013
Total RPTTF ftanding requested for obligations
Less: Six-month total for item(s} denied or reclassifled as administraUve cost
Item 10
ftem 59
Item 60
Item 61
Item 62
Item 109
Item 143
Total approved RPTTF for enforceable obligations
Plus: Requested RPTTF distribution for administrative cost for ROPS IIl
Total RPTTF apprc
S 20,287,210
1,304,766
fi8,750
25,688
90,Ob0
469,451
121,289
332,155
$ 17,875,111
617,691
d: � �e,492,sa�
Pursuan# to HSC section 34186 (a}, successor agencies were required to report on the R�PS IIl
form the estimated abligations and actual payments associated with the January through June
2012 period. The amount of RPITF approved in the above table will be adjusted by the county
auditor-controlfer to account for differences between acEual payments and past estimated
obiigations. Additionally, these estimates and accounts are subject to audit by the county
auditor-controller and the State Controller.
The amount available from the RPTTF is the same as the property tax increment that was
available prior to enactment of ABx1 26 and AB 1484. This amount is not and never was an
unlimited funding source, Therefore, as a practical matter, the ability to fund the items on the
ROPS with property tax is limited to the amount of funding available to the successor agency in
the RPTTF.
Except for items disallowed as noted above, Fnance is not objecting to the remaining items
listed in your ROPS III. Obligations deemed not to be enforceable shall be removed from your
ROPS. This is Finance's final determinatio� related to the enfarceable abligations reported on
your ROPS for January 1 thraugh June 30, 2013. Finance's determination is effective for thls
time period only and shoutd not be conclusively relied upon for future periods. All items listed
on a future ROPS are subject to a subsequent review and may be denied even if it was or was
not questioned on this ROPS or a preceding ROPS.
Please direct inquiries to Evelyn Suess, Dispute Resolution Supervisor, or Mary Halterman,
Analyst, at (916) 445-1546.
Sincerely,
��,,�
f
v�-
� STEVE SZALAY
Local Government Consultant
Cc on the following page
.. �
Ms. Veronica Tapia
December 1 S, 2012
Page 4
cc: Ms. Janet Moore, Director of Housing, City af Palm Desert
Ms. Pam Elias, Chief Accounting Property Tax Division, County of Riverside
Auditar Controller
Califomia State Controller's Office