HomeMy WebLinkAboutBudget Revision for State's Pay-to-Play Alternative RedeveloCouncil/Agency Meeting Held:
Deferred/Continued to:
NkApprQyed ❑ Conditionally Approved ❑ Denied
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Council Meeting Date: December 19, 2011
Department 1D Number: FN 11-025
CITY OF HUNTINGTON BEACH
%,EQUEST FOR COU NCI L/REDEVELOPM ENT AGENCY ACTION
SUBMITTED TO: Honorable Mayor and City Council Members
SUBMITTED BY: Fred A. Wilson, City Manager/Executive Director
PREPARED BY: Bob Hall, Deputy City Manager/Economic Development Director
Lori Ann Farrell, Director of Finance
SUBJECT: Budget Revision for the State's Pay -to -Play Alternative
Redevelopment Program; Budget Revision for the Affordable Housing
Reimbursement Fund; and Repayment of Loan between the
Redevelopment Agency Merged and Southeast Coastal Project Areas
Statement of Issue:
City Council approval is requested to increase appropriations in the Fiscal Year 2011/2012
Budget to comply with the State's Pay -to -Play Alternative Redevelopment Program; to
reimburse the City's Housing Fund for legal and staff costs related to administering the
program; and to repay the loan between the Redevelopment Agency (RDA) Merged Project
Area and the Southeast Coastal Project Area.
Financial Impact:
1. Alternative Redevelopment Program (FY 2011/12) — Increase appropriations in the City's
General Fund (Non -Departmental Budget) in the amount of $6,234,136 to make the State
required payment under AB1X 27. The Redevelopment Agency will transfer the funds to
the General Fund from tax increment and other RDA revenues so that the City's General
Fund is kept whole. There is no net effect to the City's and Agency's fund balances
resulting from this action.
2. Affordable Housing Reimbursement Fund (FY 2011/2012) — Increase appropriations in
the City's Affordable Housing Reimbursement Fund (Fund 708) by $34,000 to reimburse
the City's Housing Fund (Fund 306) for legal and administrative costs incurred to
administer the program and related development agreements.
3. Southeast Coastal Project Area (FY 2010/11) - Appropriations requested in the Southeast
Coastal Project Area Debt Service Fund (account 40980999.88210.305) in the amount of
$302,489 to repay the loans made from the Merged Huntington Beach Project Area (Fund
305) to the Southeast Coastal Project Area.
Recommended Action: Motion to:
A) Increase General Fund appropriations by $6,234,136 to make the required pay -to -play
payment to the State required by AB1X 27; and,
xB -173- Item 10. - I
REQUEST FOR COUNCIL ACTION
MEETING DATE: 12/19/2011 DEPARTMENT ID NUMBER: FN 11-025
B) Increase Affordable Housirig Fund appropriations by $34,000 to pay for -legal and
administrative costs incurred to administer and enforce regulations associated with the
Housing program and certain development agreements; and,
C) Increase Southeast Coastal Project Area (Fund 409) appropriations by $302,489 to repay
loans from Merged Project Area (Fund 305).
Alternative Action(s):
Do not approve the above recommendations and provide direction to staff.
Analysis:
On August 1, 2011, the City Council and Redevelopment Agency approved to opt -in to the
new Alternative Redevelopment Program adopted by the State Legislature that requires a
pay -to -play payment to the State under AB1X 27. AB1X 27 requires the payment be made
by the City rather than the Agency. The Adopted FY 2011/12 Budget includes appropriations
for this payment in the Agency's budget. However, State law requires that the actual pay -to -
play payment be made by the City and not the Redevelopment Agency; hence City Council
approval is requested to: 1) Use existing Agency appropriations to transfer funds from the
Agency to the City; and, 2) Increase appropriations in the City's General Fund to make the
required payment to the State. These distinct and separate transactions will comply with
State law, ensure a discrete audit trail of the State payment, and identify how it was funded.
Please note that the final disposition of the State's new pay -to -play Alternative
Redevelopment Program is being challenged in the courts by the California Redevelopment
Association (CRA) and the League of California Cities. It is anticipated a final court ruling will
be made in advance of the required payment to the State currently scheduled for January 15,
2012. Staff will continue to monitor this lawsuit closely and keep the City Council abreast of
any further developments.
The Economic Development Department is requesting reimbursement from the Affordable
Housing Reimbursement Fund 708 in the amount of $34,000 for costs incurred to administer
and enforce the Housing program and the requirements in certain Development Agreements.
As administrative and legal costs are eligible costs for 'reimbursement pursuant to the
Development Agreements, these are appropriate expenses to be reimbursed. The increase
in appropriations in Fund 708 will allow for $34,000 to be transferred from Fund 708 to
reimburse costs incurred by the Housing Fund, Fund 306, in administering these programs
and agreements.
The Redevelopment Agency Merged Project Area advanced the Southeast Coastal Project
Area $302,489 for capital projects in FY 2004/05. An increase in appropriations is requested
in the Southeast Coastal Debt Service Fund (Fund 409) to repay this loan in FY 2011/12.
Environmental Status: Not Applicable
Strategic Plan Goal:
Maintain financial viability and our reserves and enhance economic development
Attachment(s): None
Item 10. - 2 xB -174-