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Home My WebLink AboutDiscussion of Redevelopment Budget Trailer Bills ABX1 26 and i Discussion of Redeveloprn�e , ABX1 26� &. ABX1 27 (Signed by Governor 6-29-1 ) Preser�t�tio�n By • Murray O. Kane, Esq. Kane, Ba liner & Berkman ` Redevelopment Agency Special Counsel (NOTE: TN OUR OPINION THIS LEGISLATION IS UNCONSTITUTIONAL;THIS MATERIAL IS PRESENTED FOR "; DISCUSSION PURPOSES ONLY) F COMMUNICATION I 1 i I 1 ,. Date_ � r Agenda Item _ - - -- Discussion Topics: Outline of Legislation Redevelopment Impacts Without "Opting In Redevelopment Impacts With "'Opting In" e, Recommendations for Consideration ' Outline of Legislation ■ Senate and Assembly Passed TWO State Budget Trailer Bills on June 15, 2011 Bills signed by Governor on June 29, 2011 Purportedly Effective Immediately ■ Assembly B.i,l,l X1 26 Abolishes redevelopment agencies Suspends redevelopment powers ■ Assembly Bill X1 27 - Creates Alternative Redevelopment Agency Program - Imposes "voluntary payments" to avoid AB X1 26, impacts Assembly Bill X1 2 Until Oct. 1, 2011, redevelopment agencies are prohibited from taking any actions except the payment of existing indebtedness and performance of existing contractual and k statutory.- obligations - Redevelopment agencies eliminated as of October 1; 2011 y - Purports to undercut ability of Agency to make annual Cooperation Agreement payments to City - $4.9 million annual Payment to the City. General Fund and other, funds, -- Assembly Bli Xi 26 4 On Oct. 1, 2011, all redevelopment agencies are dissolved and all Agency authority, Agency property (cash, Land, etc.) and Agency obligations are transferred to successor agencies" and overseen by an oversight board', County Auditor-Controller E & State Dept_. of Finance (exception for housing assets/functions retained by City) S Assembly Bill X1 26 Unencumbered-funds. would be transferred to the County Auditor-Controller for distribution to taxing agencies (schools, counties, special districts) Successor agencies would be charged with repaying existing indebtedness, completing performance: of existing contractual obligations and winding down agency operations while preserving_ assets for benefit of taxing agencies 6 Assembly B °ll X1 27' -- Pay to Play Allows a redevelopment agency to stay, alive and continue to operate and function as business as usual and avoid the impacts of AB X1 26 IF the City enacts an Vkopt in ordinance by Nov. 1, 2011 to com.piy with AB, X1 27 j Assembly Bill X1 27, — Pay to Play - '�O'pt in ordinance would provide for the City making annual payments into a Special District Allocation Fund ("SDAF") (i.e. fire protection d,,istricts, transit districts) and` Educational Revenue Augmentation Fund (`kLRAV) (Le. schools) established for each County, and administered by the County Auditor-Controller g Assembly Bill XI 27 — Pay to Play Amount of payment to the SDAF and ERAF islcalculated by the State Dept. of Finance and communicated to the City not later than Aug. 1, 2011 E Fqual installment payments to be made on or before January 15 & May 15 of each fiscal year If payment not made, the redevelopment agency is subject to AB X1 26 and eliminated 9 Assembly Bil,"I X1, 27 Pay to Play For FY 2011-2012, the City would pay its proportionate share of $1.7 Billion Estimated at $6,851,687 For FY 2012-2013 and annually thereafter, the, City would pay (i) its proportionate -share of $400 Million and (ii) additional funds, equal to 80% of the School Districts share of tax increment needed to pay Agency indebtedness newly incurred after November 1, 2011 10 Estimated at $1.6 million annually Assembly Bill X1 2-7 Pay to Play The. City may enter into an agreement with the Redevelopment Agency for the Agency to annually transfer sufficient funds to the City, to allow the City to make all of the required payments to the SDAF and ERAF Agency exempt from 2011-12 affordable housing set-aside if funds needed to pay for existing obligations and priority programs Assembly Bills X1 26 and 27 POISON PILL If a. legal challenge to invalidate any provision of redevelopment elimination bills is successful, redevelopment,agencies are purportedly prohibited from issuing new bonds, notes, or other obligations ("Poison Pill") Impacts, if City is Forced to Eliminate Redevelopment ■ Redevelopment Powers Immediately Suspended Except to Wind Down and Repay Existing Obligations and Except for retained housing funds, and activities ■ Redevelopment Agency Eliminated as of October 1, 2014 ■ Cooperation Agreement Payments which is $85.5 million and Asset Transfers to City Questioned 13 Impacts if "Opt In" i ■ Redevelopment Powers Not Suspended Once Opt In Ordinance Enacted by the City ■ Redevelopment Agency not Eliminated ■ Cooperation Agreement Payments to the City continue without attack ■ Other Agency Business Continues 14 Proposed 2011/ 12 Agency Budget Cxpendilures Re mne Tax lncrerrient Revenue 11112 S 17,395,000 VJestmincter Sale of piopeny $ S60,(H)U Inane Revenue O goys Total Projected Revenue $ 18,355,000 Required Payments Bonds/Commitments $ 5,551,000 j Payments to schools/Districts $ 2,223,000 State Pay to Play $ 6,851,000 City Loan Repayment $ 4,914,000 r tm $ 19,539,000 Personnel/Operational $ 650,000 Total $ 20,189,000 $ (1,834,000) Options/Possibilitiesto meet Budget Refinance bonds $ 1,300,000 Year end Savings $ 280,000 $ (254,000) If not refinancing bonds—Inter-fund Loan,use of Reserves,Review of Agency is Contract Obligations on certain projects,MVB Grant Proposed 2012/ 13 Agency Budget Expenditures Revenue Tax Increment Revenue 12/13' $ 17,745,000 Total Projected Revenu e $ 17,745,000 Requied Payments Bonds/Commitments S 5,551,000 eay.ents to Schools/Districts$ 2,267,460 Sta re pay to play$ 1,600,000 City Loan Repayment$ 4,900,000 Sevaet loan Re pay.en[$ 166,000 Housing loan Repayment$ 1,050,000'" Totnl $ 15,534,460 Personnel/Operational S 700,000 Anticipated Fund Balance $ 1,510,540 (2%increase over 11/12) -Repayment of use of housing set-aside for 2009 and 2010 16 SSERAF.pay:" -$2:m illion outstanding �r Recommendations for Consideration • Join Litigation and Application for Stay • Enact Opt In Ordinance subject to the litigation with Reservation of Rights • Adopt Resolution re: Affordable Housing Funds • Approve City/Agency Agreement to Finance Payments Under Protest Using Agency Funds 17