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Home My WebLink About9/4/2013 - STAFF REPORTS - 2.T. PALM SA4 iy u a R Cq�'IFO CITY COUNCIL STAFF REPORT /FO R�,P DATE: SEPTEMBER 4, 2013 CONSENT CALENDAR SUBJECT: AUTHORIZE THE PAYMENT OF $6,653,617 AS REQUIRED BY THE STATE OF CALIFORNIA, DEPARTMENT OF FINANCE, AS A RESULT OF THE REDEVELOPMENT DISSOLUTION ACT AND APPROVING RELATED BUDGETED AMENDMENTS. FROM: David H. Ready, City Manager BY: Community & Economic Development Department SUMMARY The City Council will consider approving the required payment by the State of California Redevelopment Dissolution Act, and approve budget amendments as necessary, to fund the payment of $6,653,617 for the Successor Agency's "Other Funds and Accounts Due Diligence Review," ordered by the California Department of Finance. RECOMMENDATION: 1. Adopt Resolution No. , "A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR FISCAL YEAR 2013-14 TO PROVIDE FUNDING FOR THE STATE OF CALIFORNIA REDEVELOPMENT DISSOLUTION ACT." 2. Direct and Authorize the Director of Finance to make the required payment of approximately $6,653,617 to the Riverside County Auditor-Controller's Office within five days, and to notify the California Department of Finance of the payment. BACKGROUND AND ANALYSIS: The Redevelopment Dissolution Act required that all transactions between the former Redevelopment Agency and the City that took place between January 1, 2011, through June 30, 2012, be reversed. As a result any funds paid to the City after January 1, 2011, shall be returned to the Successor Agency and added to any other fund balance of the Redevelopment Agency to be distributed among taxing agencies. The former Palm Springs Community Redevelopment Agency repaid certain City Loans in January 2011, prior to the State of California implementation of the Redevelopment Dissolution Act. The City Loans repaid were: 1) a General Fund administrative cost loan ITEnn NO. -- City Council Staff Report September 4, 2013-- Page 2 State-Required Due Diligence Payment plus interest of $2,132,492 relating to fiscal year 2009-10; 2) a project loan made from the Sustainability fund of $1,196,865, plus interest of $29,677; and 3) interest of $73,620 on two project loans made from the Wastewater Fund. These loans were all appropriate and legal at the time of repayment. The City Council acting in in its capacity as the Successor Agency to the Palm Springs Community Redevelopment Agency and the State mandated Oversight Board approved the Other Funds and Accounts Due Diligence Review with an amount due of $4,127,192. This amount was included in the Fiscal Year 2013-14 budget of the Successor Agency, and has already been authorized for payment by the Successor Agency. The City submitted the Due Diligence Review to the California Department of Finance, as required pursuant to Cal. Health and Safety Code Section 34179.6(c). The California Department of Finance determined the Agency owed an additional $2,496,425 above the City approved and recognized amount as follows: Wastewater Fund Loan Interest $ 73,620 Sustainability Principal and Interest $ 1,226,542 General Fund Repayment and Relending Loans $ 2,132,492 Misc. Lease Revenue $ 85,583 Additional Interest (on above) $ 30,000 Credit to Return to Bond Proceeds ($ 1,021,812) TOTAL ADDITIONAL AMOUNT DUE $ 2,526,425 Original Amount Due (as reported) $ 4,127,192 TOTAL AMOUNT DUE $ 6,653,617 A portion of the funds used to repay the loans originally came from 2007 bond proceeds that the Agency had available. Bond proceeds are legally restricted assets and cannot be redistributed. The Successor Agency may retain those funds and use them in the future for the purpose for which the bonds were issued under certain conditions. After the Agency has been issued a Finding of Completion by Department of Finance, it will be allowed to use excess proceeds from bonds for the purposes for which the bonds were issued. The amount due was required to be transmitted to the County Auditor-Controller within five working days of the letter. However, Department of Finance granted the City until September to make the payment to allow the City Council to approve the additional payment and budget amendment. Failure to transmit the identified funds could also prevent the Agency from being able to receive a Finding of Completion from Department of Finance. Without a Finding of 02 City Council Staff Report September 4, 2013 -- Page 3 State-Required Due Diligence Payment Completion, the Agency would be unable to take advantage of the provisions detailed in Health and Safety Code Section 34191.4, specifically those provisions that allow certain loan agreements between the former RDA and the City to be considered enforceable obligations. These provisions also allow the bond proceeds to be used for the purposes in which they were sold and allows for the transfer of real property and interests into the Community Redevelopment Property Trust Fund once Department of Finance approves the Agency's Long-Range Property Management Plan. FISCAL IMPACT: A budget amendment is required for the three City funds to transfer the funds plus estimated accrued interest back to the Successor Agency. Of the additional amount due: $2,218,075 is from the General Fund, $1,226,492 is from the Sustainability Fund and $73,620 is from the Wastewater Fund. In addition, there will be an estimated $30,000 of accrued interest payable on the balance due to be allocated to the three funds. The net impact on the General Fund balance for this transaction is $863,075, calculated as follows: o Balance due from General Fund $2,218,075 o Interest accrued 20,000 o Reserved Fund Balance in General Fund (800,000) o City share of distribution (revenue returned to City) (575,000) Net impact on the General Fund $863,075 Once the Successor Agency receives a Finding of Completion the General Fund loan, the Sustainability Fund loan and the Wastewater Fund loans may be reinstated under certain conditions, and eventually repaid from tax increment deposited into the RPTTF these loans may be placed on future ROPS for repayment. /� - J hn S. R m n , Director of Geoffrey S. Kiehl omm y & onomic Development Director of Finance/City Treasurer David H. Ready, City.90999F Attachments: Budget Resolution 03 RESOLUTION NO. A RESOLUTION OF THE CITY COUNCIL OF THE CITY OF PALM SPRINGS, CALIFORNIA, AMENDING THE BUDGET FOR FISCAL YEAR 2013-14. WHEREAS, Resolution No. 23341 approving the Budget for the Fiscal Year 2013-2014 was adopted on May 15, 2013; and WHEREAS the City Manager has recommended, and the City Council desires to approve, certain amendments to said budget. NOW THEREFORE THE CITY COUNCIL DETERMINES, RESOLVES AND APPROVES AS FOLLOWS: that the Director of Finance is authorized to record inter- fund cash transfers as required in accordance with this Resolution, and Resolution No. 23341, adopting the Budget for Fiscal Year 2013-14 is hereby amended as follows: SECTION 1. ADDITIONS Fund Activity Account Amount 870 8501 65023 $963,709 Merged #1 Merged #1 DOF Demand Plus Accrued Capital Successor Capital Successor Payment Interest as of Date of Payment 871 8502 65023 $147,845 Merged #2 Merged #2 DOF Demand Plus Accrued Capital Successor Capital Successor Payment Interest as of Date of Payment 872 8511 65023 $3,486,933 Merged #1 Successor Debt#1 DOF Demand Plus Accrued Debt Service Payment Interest as of Date of Payment 873 8518 65023 $2,025,130 Merged #2 Successor Debt#2 DOF Demand Plus Accrued Debt Service Payment Interest as of Date of Payment Purpose: Establish funding for State-Required Payment of Successor Agency's Other Funds and Accounts Due Diligence Review (OFA-DDR). 04 Resolution No. Page 2 SECTION 2. SOURCE Fund Activity Account Amount 870 29301 $963,709 Merged #1 Fund Balance Plus Accrued Capital Successor Interest as of Date of Payment 871 29301 $147,845 Merged #2 Fund Balance Plus Accrued Capital Successor Interest as of Date of Payment 872 29301 $3,486,933 Merged #1 Fund Balance Plus Accrued Debt Service Interest as of Date of Payment 873 29301 $2,025,130 Merged #2 Fund Balance Plus Accrued Debt Service Interest as of Date of Payment ADOPTED THIS 4TH DAY OF SEPTEMBER, 2013. David H. Ready, City Manager ATTEST: James Thompson, City Clerk 05 Resolution No. Page 3 CERTIFICATION STATE OF CALIFORNIA ) COUNTY OF RIVERSIDE ) ss. CITY OF PALM SPRINGS ) I, JAMES THOMPSON, City Clerk of the City of Palm Springs, hereby certify that Resolution No. is a full, true and correct copy, and was duly adopted at a regular meeting of the City Council of the City of Palm Springs on by the following vote: AYES: NOES: ABSENT: ABSTAIN: James Thompson, City Clerk City of Palm Springs, California 06