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HomeMy WebLinkAbout2012-07-24 OB Agenda Item No. 5OVERSIGHT BOARD TO THE SUCCESSOR AGENCY TO THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE TO: MEMBERS OF THE OVERSIGHT BOARD FROM: BARBARA LEIBOLD, SUCCESSOR AGENCY COUNSEL DATE: JULY 24, 2012 SUBJECT: OVERSIGHT BOARD LEGAL COUNSEL Background: On January 10, 2012, the City of Lake Elsinore elected to serve as the Successor Agency to the Redevelopment Agency of the City of Lake Elsinore. The Successor Agency is now responsible for the winding down of the Agency's obligations subject to monitoring by, and approval of, the Oversight Board. The Successor Agency will have its own oversight board until 2016, when all oversight boards will be consolidated into one county -wide Oversight Board. California Health & Safety Code Section 34179 requires (i) the formation of oversight boards for each successor agency to the former redevelopment agencies; (ii) defines the composition of the oversight board; (iii) defines what constitutes a quorum; (iv) states that oversight boards must comply with the Ralph M. Brown Act, the California Public Records Act, and the Political Reform Act of 1974; and (v) that oversight boards have a fiduciary responsibility to holders of enforceable obligations and the taxing entities that benefit from distributions of property tax and other revenue. Discussion: At the Oversight Board Meeting on April 10, 2012, a number of questions were asked about the role of the Oversight Board and the staff members attending the meeting, including legal counsel. At the Oversight Board Meeting on April 24, 2012, the City Attorney reiterated to the Board Members and their respective appointing bodies that the City Attorney attends Board meetings in her capacity as Counsel to the Successor Agency. As such, the City Attorney represents the interests of the City and the Successor Agency and does not serve as counsel to the Oversight Board. Questions regarding the hiring of independent legal counsel to represent the Oversight Board have raised concerns by Agency staff about the financial impact of paying for such services given that the Successor Agency's administrative costs are limited by the statutory allowances. While establishing a cap on the Successor Agency's AGENDA ITEM 5 Page 1 Oversight Board Legal Counsel July 24, 2012 administrative cost allowance, ABx1 26 did not specify which costs must be paid from the administrative cost allowance and which costs could be separately placed on the ROPS. AB 1484 partially fills that void and does so in a manner generally consistent with the ROPS and administrative budgets adopted by the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore and the Oversight Board. Consequently, the availability and source of funds to pay for Oversight Board legal counsel remains uncertain. However, AB 1484 explicitly permits an oversight board to direct a successor agency to provide additional legal or financial advice independent from successor agency staff and authorizes the oversight board to contract with the county or other public or private agency for administrative support. The new legislation does not, however, prescribe the requirements, process or funding source for the provision of such outside legal services. The Oversight Board may consider whether it desires to engage independent counsel, and, if so, what the scope of those services might be and the budgeted cost for such services. Possible services include attendance at Oversight Board meetings, review of agenda and agenda items, provision of advisory services and review of legal documents, and participation in meetings with Successor Agency staff and legal counsel. The Oversight Board may also desire to work with the Successor Agency to determine how legal costs would affect the Successor Agency's budget. The Oversight Board could recommend to the Successor Agency that the ROPS be amended to include a separate line item for legal counsel services to the Oversight Board separate from the Successor Agency's capped administrative cost allowance. It is not certain whether the Department of Finance will approve or reject such an approach. If DOF rejects this approach, the funding limitations previously discussed will continue to pose significant obstacles. In the event the Oversight Board desires to hire legal counsel, it may request that staff prepare a Resolution for consideration by the Board at its next meeting that outlines potential costs and a recommended process of hiring legal counsel. The Board may also consider what options are available to it in the event funding limitations prohibit the Successor Agency from receiving RPTTF to pay for independent legal counsel for the Oversight Board. Recommendation: That the Oversight Board review this Report and instruct staff as to any next steps. Prepared and approved by: Barbara Leibold, City Attorney /Successor Agency Counsel AGENDA ITEM 4 Page 2