HomeMy WebLinkAboutCity Council Successor Item No. SA4CITY OF
T� I CE LS1110R
DREAM EIXTPEME
REPORT TO CITY COUNCIL
AS SUCCESSOR AGENCY /SUCCESSOR HOUSING AGENCY OF THE
REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE
TO: HONORABLE MAYOR
AND MEMBERS OF THE CITY COUNCIL
FROM: THOMAS P. EVANS, INTERIM CITY MANAGER
DATE: SEPTEMBER 25, 2012
SUBJECT: DUE DILIGENCE REVIEWS; UPDATE RE COMMUNICATIONS
WITH DEPARTMENT OF FINANCE
Recommendation
That the Successor Agency /Successor Housing Agency confirm engagement of
White Nelson Diehl Evans LLP as the licensed accountant for the due diligence
reviews to be conducted pursuant to Section 34179.5; authorize the Administrative
Services Director to transmit the results of the reviews to the Oversight Board, the
County Auditor - Controller, the State Controller, and the Department of Finance
(DOF); and receive the report from Successor Agency staff regarding status of
dissolution procedures and communications with DOF.
Background
On June 27, 2012, AB 1484 was signed by Governor Brown and took immediate
effect. AB 1484 makes technical and substantive amendments to ABx1 26 (the
"Dissolution Act "), that was enacted in late June 2011 directing the dissolution and
unwinding of the affairs of California's redevelopment agencies. AB 1484 adds many
new or modified actions and deadlines. Attached to this report is a summary of the
critical dates under the Dissolution Act as amended by AB 1484 (Attachment 1).
Assembly Bill 1484, in particular new Section 34179.5, requires the Successor
Agency to select, and for the county auditor - controller to approve the selection of, a
licensed accountant with experience and expertise in local government accounting,
to conduct "due diligence reviews" to determine the unobligated balances relating to
housing and non - housing assets and obligations in order to ascertain unobligated
cash or cash equivalent balances that would be available for transfer to local taxing
entities.
AGENDA ITEM NO. SA4
Page 1 of 26
Due Diligence Reviews
September 25, 2012
Page 2
Discussion
Due Diligence Reviews
On August 27, 2012, Department of Finance posted the agreed upon Due Diligence
Review Procedures. These procedures were developed by the CPA Society with
input from the State Controller's Office and the Department of Finance. These
procedures outlined the scope of work required to complete the Due Diligence
Reviews.
The County Auditor - Controller has listed White Nelson Diehl Evans LLP ( "WNDE ") as
an approved audit firm to conduct the due diligence reviews. For the past several
years, WNDE has performed the City and former Redevelopment Agency audits in
Lake Elsinore and is familiar with the Successor Agency's accounting and financial
transactions. In an effort to meet all of the statutory deadlines, Successor Agency
staff has requested WNDE to commence and conduct the due diligence reviews in
accordance with the attached proposal (Attachment 2).
AB 1484 requires the review of the Low and Moderate Income Housing Funds
(LMIHF ") to be completed by October 1, 2012. The review for other funds must be
completed by December 15, 2012. The results of the review are submitted to the
Oversight Board for review and approval, with a concurrent submittal to the County
Auditor Controller, the State Controller and the Department of Finance. Insofar as
the Successor Agency /Successor Housing Agency does not have a regularly
scheduled meeting prior to October 1, staff is seeking authorization to submit the due
diligence review of the LMIHF prepared by WNDE in accordance with AB 1484
requirements.
Upon receipt of the review, the Oversight Board must convene a public comment
session to take place at least 5 business days before the Oversight Board votes on
approval of the review. The Oversight Board is to review, approve and transmit the
review to DOF and the County Auditor Controller by October 15, 2012 for the LMIHF
and January 15, 2013 for all other funds. The Oversight Board can adjust amounts in
the review and authorize the Successor Agency to retain restricted assets. The
public comment session and subsequent meeting schedule for the Oversight Board
has not yet been confirmed. Staff will provide available updates on the proposed
schedule during the September 25, 2012 meeting concurrent with the presentation of
this item.
DOF is to complete its review by November 9, 2012 for the LMIHF and April 1, 2013
for the remaining funds. DOF must provide a basis for any changes, and the
Successor Agency can request a meet and confer with DOF to address any issues
within 5 business days of DOF's determination, but in no event later than November
16, 2012 for the LMIHF portion of the review. DOF is required to meet and confer
and make a decision within 30 days of the request to meet and confer.
Page 2 of 26
Due Diligence Reviews
September 25, 2012
Page 3
Status of DOF Communications
In addition to the due diligence reviews discussed above, AB 1484 required all
successor housing agencies to submit to the DOF a list of all housing assets. By
Resolution adopted January 10, 2012, the City Council of the City of Lake Elsinore
designated itself to be the Successor Agency and the Successor Housing Agency
that assumed the assets and functions of the former Redevelopment Agency of the
City of Lake Elsinore. On August 2, 2012, the Administrative Services Director
submitted to the DOF the "housing assets" schedule and on August 28, 2012, staff
submitted supplemental materials requested by DOF. On September 17, 2012, the
DOF approved the Agency's housing asset list (Attachment 3).
As previously reported, the DOF has also approved the Successor Agency ROPS for
the periods January — June 2012 and July - December 2012. The ROPS III approved
by the Successor Agency and the Oversight Board was submitted to the DOF on
August 30, 2012 and supplemental information was submitted on September 12,
2012 in response to DOF's request. Staff is awaiting final approval by DOF of the
ROPS III and will provide the Successor Agency an update on communications of
importance with DOF and the County Auditor Controller at the September 25, 2012
meeting.
Fiscal Impact
The estimated cost of the due diligence reviews is $14,000 and will paid in
accordance with the attached proposal. Pending completion of the due diligence
reviews and determination by DOF, it is not known what amounts, if any, may be
required to be paid to the County Auditor Controller. For housing assets the transfer
must occur by November 28, 2012 and foT non - housing assets by April 10, 2013.
The penalty for failure to pay or transfer will result in the DOF causing the equivalent
amount(s) to be deducted from sales and use taxes and /or property taxes due to the
City, as the sponsoring community.
Prepared By: Barbara Leibold, City Attorney
Approved By: Thomas P. Evans, Interim City Manager 7 ' 9
Attachments:
1. AB 1484 Milestone Actions
2. WNDE Proposal
3. DOF Approval Letter (Housing Asset List)
Page 3 of 26
Page 4 of 26
ATTACHMENT 1
AB 1484 MILESTONE ACTIONS
Following is a checklist of upcoming key milestone actions under the Dissolution Act as
amended by AB 1484.
Date
Action
July 9, 2012
Successor Agency to receive from the CAC determination of
amount owed, if any, for distributions pursuant to the Section
34183(a)(4) for the initial ROPS period (Section 34183.5(b)(2)(A)).
July 12, 2012
Successor Agency to pay to the CAC any amounts identified as
owed to the taxing entities (Section 34183.5(b)(2XA)).
July 16, 2012
The CAC distributes to the taxing entities amounts received from
the Successor Agency on July 12, 2012 (Section 34183,5(b)(2)(A)).
July 18, 2012
The DOF can order offset of sales and use tax due to Sponsoring
Community if the Successor Agency has failed to make payments
due on July 12, 2012 (Section 34183.5(b)(2)(A)).
August 1, 2012
Housing Successor must submit to DOF list of all housing assets
transferred to it by the Dissolved RDA, with explanation of how
assets meet criteria set forth in law. DOF to prescribe format for
list (Section 34176(a)(2)).
August 10, 2012
Housing Successor provides notice to the Successor Agency of any
designations of use or commitments of funds specified in
34176(gxl)(A) that the Housing Successor empowers the
Successor Agency to retain Section 34179.6(c)).
September 1, 2012
The Successor Agency submits the ROPS for January 1, 2013
through June 30, 2013 to the DOF after Oversight Board approval
(Section 34177(m)). Note the Successor Agency will be assessed a
$10,000 per day penalty for failure to timely submit the ROPS
(Section 34177(m)(2)).
Page 5 of 26
Date
Action
September 11, 2012
If the Successor Agency has not submitted a ROPS, the maximum
administrative cost allowance for the fiscal year covered by the
ROPS will be reduced 25% (Section 34177(m)).
October 1, 2012
The Successor Agency to provide to the Oversight Board, the CAC,
the DOF, and the SCO results of the 34179.5 review for the LMIHF
balances of a Dissolved RDA conducted by a licensed accountant.
Accountant must be approved by the CAC (Section 34179.6(a)).
October d, 2012
The CAC to complete agreed -upon procedures audit of each
Dissolved RDA (Section 34182(a)(1)).
October 1, 2012
The CAC toprovide notice to the Successor Agency of any
objections to items included on the Third ROPS (Section 34182.5).
October 1, 2012
The CAC to prepare and provide estimates to the DOF and fund
recipients of amounts to be allocated and distributed from RPTM
on January 2, 2013 for Third ROPS period (Section 34182(c)(3)).
October 1, 2012
The CAC to report to the SCO and the DOF specified information
about property tax distributions (Section 34182(d)).
October 5, 2012
The CAC to provide to the SCO and the DOF results of agreed-
upon procedures audit of each Dissolved RDA (Section 34182(b)).
October 15, 2012
The Oversight Board to review, approve and transmit the results of
the 34179.5 Review for the LMIHF account balances of the
Dissolved RDA and notify the CAC and the DOF (Section
34179.6(c)). Note, that the Oversight Board must hold a public
session at least five business days in advance of the meeting to
consider approval of the Review (Section 34179.6(b)).
No later than
The DOF completes review of 34179.5 Review of LMIHF balances
November 9, 2012
and reports findings, determinations, and decisions to overturn
Oversight Board decision to allow retention of Successor Agency
assets (Section 34179.6(d)).
Page 6 of 26
Date
Action
Within 5 days of receipt of
Successor Agency/Sponsoring Community deadline to request meet
initial determination from
and confer with DOF over any dispute regarding amount of the
the DOF
LMJHF to be distributed to Taxing Entities under the 34179.5
Review process (Section 34179.6(e)). The DOF must meet and
confer with the Successor Agency and confirm or modify findings
within 30 days of request (Section 34179.6(e)).
Within 5 days of receipt of
The Successor Agency to transfer to the CAC the LM1HF balances
final determination from
determined to be available pursuant to Section 34179.5 Review of
the DOF
the LM1HF. Sponsoring Community sales and use tax may be
offset if funds are not transferred (Section 34179.6(f)).
December 1, 2012
The Successor Agency reports to the CAC if total amount of
available revenues (including RPM, other, revenues, proceeds
from sale of assets) will be insufficient to fund enforceable
obligations (Section 34183(b)).
December 1, 2012
The CAC provides the DOF report specifying amount remitted by
the Successor Agency pursuant to the 34179.5 Review ofLMIHF
balances (Section 34179.6(g)).
December 15, 2012
The Successor Agency submits to the Oversight Board, the CAC,
the DOF, and the SCO results of review required under 34179.5
with respect to all other fund and account balances of a Dissolved
RDA (Section 34179.6(a)).
January 2, 2013
The CAC to make distributions from the RPTTF for the Third
ROPS period (January-June 2012) (Section 34193(a)(2)).
January 12, 2013
The CAC to provide a report to the DOF regarding most recent
distributions from the RPT ff (Section 34283(e)).
January 15, 2013
The Oversight Board to review, approve and transmit the results of
the 34179.5 Review for all other fund and account balances of a
Dissolved RDA and notify the CAC and the DOF of determination
(Section 34179.6(c)). Note, that the Oversight Board must hold a
public session at least five business days in advance of the meeting
to consider approval of the Review (Section 34179.6(6).
March 3, 2013
Successor Agency submits ROPS for July 1, 2013 through
December 31, 2013 to DOF after Oversight Board approval
(Section 34177(m))
Page 7 of 26
Date
Action
No later than April 1,
The DOF completes reviews of 34179.5 Review of other fund
2013
balances and reports findings, determinations and decisions to
overturn Oversight Board decision to allow retention of Successor
Agency assets. (Section 34179.6(a)).
April 1, 2013
The CAC provides estimates to the DOF and all fund recipients of
amounts to be allocated and distributed from the RPM on June 1
for the July 1, 2013 through December 31, 2013 ROPS period
(Section 34182(cx3)).
Within 5 days of receipt of
Successor Agency /Sponsoring Community deadline to request meet
initial determination from
and confer with the DOF over any dispute regarding amount of
the DOF
other fund, balances to be distributed to the taxing entities under r
34179.5 Review process. The DOF must meet and confer with
Successor Agency and confirm or modify findings within 30 days
of request (Section 34179.6(e)).
Within 5 days of receipt of
The Successor Agency to transfer to the CAC cash and other assets
final determination from
determined to be available pursuant to Section 34179.5 Review of
the DOF
other funds (if meet and confer process is complete). Sponsoring
Community sales and use tax may be offset for unfunded amounts
(Section 34179.6(f)).
April 20, 2013
The CAC provides the DOF a report specifying the amount
remitted by Successor Agencies pursuant to the Section 34179.5
Review of other balances (Section 341796(g)).
May 1, 2013 `
The Successor Agency reports to the CAC if total amount of
available revenues (including RPTTF, other revenues, proceeds
from sale of assets) will be insufficient to fund enforceable
obligations (Section 34183(b)).
June 1, 2013
The CAC to make distributions from the RPM for the ROPS
period July - December 2013 (Section 34284(c)).
Page 8 of 26
rTACHMENT 2
September 10, 2012
Mr. James Riley
Director ofAdministrative Services
Successor Agency to the Lake Elsinore
Redevelopment Agency
130 South Main Street
Lake Elsinore, CA 92530
Dear Mr. Riley:
We are pleased to confirm our understanding of the nature and limitations of the services we are to
provide for the Successor Agency to the Lake Elsinore Redevelopment Agency.
We will apply the agreed -upon procedures which the California Department of Finance, the
California State Controller's Office, the Successor Agency to the Lake Elsinore Redevelopment
Agency, and the Riverside County Auditor Controller, (Specified Parties) have specified, listed in
Attachment A, for the period ended June 30, 2012 prepared in accordance the requirements of
Section 34179.5 of California Assembly Bill 1484. This engagement is solely to assist the Specified
Parties in meeting the requirements of Section 35179.5 of California Assembly Bill 1484. Our
engagement to apply agreed -upon procedures will be conducted in accordance with attestation
standards established by theAmerican Institute of Certified Public Accountants. The sufficiency of
the procedures is solelythe responsibility ofthose parties specified in the report. Consequently, we
make no representation regarding the sufficiency of the procedures described in the attached
schedule either for the purpose for which this report has been requested or for any other purpose. If
for any reason, we are unable to complete the procedures, we will describe any restrictions on the
performanceof the procedures in our report, or will not issue a report as a result ofthis engagement.
Because the agreed -upon procedures listed in the attached schedule do not constitute an
examination, we will not express an opinion on whether the Successor Agency has met the
requirements Section 34179.5 of California Assembly Bill 1484. In addition, we have no obligation
to perform any procedures beyond those listed in the attached schedule.
We will submit a report listing the procedures performed and our findings. This report is intended
solely for the use of the California Department of Finance, the California State Controller's Office,
the Successor Agency to the Lake Elsinore Redevelopment Agency, the Oversight Board of the
former Lake Elsinore Redevelopment Agency, and the Riverside County Auditor Controller, and
should not be used by anyone other than these specified parties. Our report will contain a paragraph
indicating that had we performed additional procedures, other matters might have come to our
attention that would have been reported to you.
2875 Michelle Drive, Suite 300, Irvine, CA 92606 • TeL' 714.978.1300 • Fax: 714.978.7893
Offras favrrd ir. Orange and San Diep C.nunfier
Page 9 of 26
Mr. James Riley, Director of Administrative Services
Successor Agency to the
Lake Elsinore Redevelopment Agency
September 10, 2012
Page 2
Your are responsible for the presentation whether the Successor Agency has met the requirements of
Section 34179.5 of CaliFomia Assembly Bill 1484 in accordance with the agreed upon procedures adopted
by the California Department of Finance; and for selecting the criteria and determining that such criteria
are appropriate for your purposes. You are also responsible for making all management decisions and
performing all management functions; for designating an individual with suitable skill, knowledge, and /or
experience to oversee and evaluating the adequacy and results of these services and accepting
responsibility for them.
Mc Nitin P. Patel, CPA is the engagement partner and is responsible for supervising the engagement and
signing the report or authorizing another individual to sign it.
We plan to begin our procedures on approximately September 10, 2012 and, unless unforeseeable
problems are encountered, the engagement should be completed by October 1, 2012 forthc report required
for the Low and Moderate Income Housing Fund and by November 15, 2012 for the report required for all
other funds combined. At the conclusion of our engagement, we will require a representation letter from
management that, among other things, will confirm management's responsibility for the presentation of
whether the Successor Agency has met the requirements of Section 34179.5 of California Assembly
Bill 1484 in accordance with procedures adopted by the California Department of Finance.
Our fees for these services will is estimated to be $14,000 and is based on hourly rates and includes travel
and other out -of- pocket costs such as report production, word processing, postage, etc. The fee estimate is
based on anticipated cooperation from your personnel and the assumption that unexpected circumstances
will not be encountered during the engagement. If significant additional time is necessary, we will discuss
it with you and arrive at a new fee estimate before we incur the additional costs. Our invoices for these
fees will be rendered each month as work progresses and are payable on presentation. In accordance with
our firm policies, work may be suspended if your account becomes 45 days or more overdue and will not
be resumed until your account is paid in full. If we elect to terminate our services for nonpayment, our
engagement will be deemed to have been completed upon written notification of termination even if we
have not completed our report. You will be obligated to compensate us for all time expended and to
reimburse us for all lout of- pocket expenditures through the date of termination.
The workpapers for this engagement are the property of White Nelson Diehl Evans LLP and constitute
confidential information. However, we may be requested to make certain work papers available to other
governmental agencies pursuant to authority given to it -by law or regulation. If requested, access to such
workpapers will be. provided under the supervision of our personnel. Furlhermore, upon request, we may
provide photocopies of selected work papers to the governmental agencies. The governmental agencies
may intend, or decide, to distribute the photocopies or information contained therein to others, including
other governmental agencies.
Page 10 of 26
Mr. lames Riley, Director of Administrative Services
Successor Agency to the
Lake Elsinore Redevelopment Agency
September 10, 2012
Page 3
In accordance with our firm's current record retention policy, all ofyour original records will be returned
to you at the conclusion of this engagement. Our accounting workpaper files will be kept for a period of
seven years after the issuance of the audit report. All other files will be kept for as long as you retain us as
your accountants. However, upon termination of our service, all records will be destroyed after a period of
seven years. Physical deterioration or catastrophic events may further shorten the life of these records. The
working papers and files of our firm are not a substitute for your original records.
We appreciate the opportunity to assist you and believe this letter accurately summarizes the significant
terms of our engagement. If you have any questions, please let us know. Ifyou agree with the terms of
our engagement as described in this letter, please sign the enclosed copy and return it to us. Ifthe need for
additional procedures arises, our agreement with you will need to be revised. It is customary for us to
enumerate these revisions in an addendum to this letter. If additional specified parties of the report are
added, we will require that they acknowledge in writing their responsibility for the sufficiency of
procedures.
Very truly yours,
WHITE NELSON DIEHL EVANS LLP
B yd" --C� to P
Nitin P. Patel, CPA
Engagement Partner
RESPONSE:
This letter correctly sets forth the understanding
of the Successor Agency to the Lake Elsinore
Redevelopment Agency
Title Drreetrr rT /��Ivnrn s }ra tile— Se—rd1Ce--
Date
Page 11 of 26
Page 12 of 26
ATTACHMENT A
SCHEDULE OF PROCEDURES TO BE PERFORMED
Page 13 of 26
V. 8 -27 -12
List of Procedures for Due Diligence Review
General information regarding these procedures:
I . The procedures associated with Sections 34179.5(c)(1) through 34179.5(c)(3) and
Sections 34179.5(cx5) through 34179.5(c)(6) are to be applied separately to (a) the Low
and Moderate Income Housing Fund of the Successor Agency and to (b) all other funds
of the Successor Agency combined (excluding the Low and Moderate Income Housing
Fluid).
2. The due date for the report associated with the Low and Moderate Income Housing Fund
is October 1, 2012.
3. The due date for the report associated with all other funds of the Successor Agency
combined (excluding the Low and Moderate Income Housing Fund) is December 15,
2012.
4. Because the procedures required by Section 34179.5(c)(4) pertain to the Successor
Agency as a whole, these procedures should be addressed in the report that is due on
December 15, 2012.
Fiscal year references below refer to fiscal years ending on June 30. This language should be
modified for those agencies that have a different Fiscal year -end.
For purposes of the procedures below and the related exhibits, the amount of the assets presented
should be based upon generally accepted accounting principles (GAAP), unless otherwise noted.
To the extent the procedures listed below are duplicative to the agreed upon procedures that were
performed pursuant to HSC 34182 (a)(l), it is acceptable to obtain and use information from the
HSC 34182 (a)(1) procedures for purposes of this due diligence review without having to re-
perform the procedures. When this is done, the due diligence report should refer to the report that
was issued for the agreed upon procedures performed under HSC 34182 (a)(1).
Certain assets may qualify as a deduction under more than one category of deduction. In such
cases, care should be taken to ensure that such assets have been included as a deduction in the
summary schedule only once.
Citation:
34179.5(c)(1) Tic dollar vahte of LaseLS transferred from the former redevelopment agency
to the.succeseor agency on or ahoul Febrrtary 1. 2012.
Suggested Procedure(s):
1. Obtain from the Successor Agency a listing of all assets that were transferred from the
former redevelopment agency to the Successor Agency on February 1, 2012. Agree the
amounts on this listing to account balances established in the accounting records of the
Successor Agency. Identify in the Agreed -Upon Procedures (AUP) report the amount of
tide assets transferred to the Successor Agency as of that date.
Page 14 of 26
V. 8 -27 -12
Citation:
34179.5(c)(2) the dollar value of ucscts and crash and cash equivalents transferrer/ ajita
January 1. 2011, through June 30. 2012, by the ridctie1vpment agency or the suecvgrsor-
agency to the ci0, coun(v, or cit and county that jn-naed the retlevelopnent agency and the
ptnpo.re of each transfer. The review- shall provide documentation any enforceable
obligation that required the transfer.
Suggested Procedure(s):
2. If the State Controller's OtTiee has completed its review of transfers required under both
Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy
of that report as an exhibit to the AUP report. If this has not yet occurred, perform the
following procedures:
A. Obtain a listing prepared by the Successor Agency of transfers ( excluding payments
for goods acid services) from the former redevelopment agency to the city, county, or
city and county that formed the redevelopment agency for the period from January 1,
2011 through January 31, 2012. For each transfer, the Successor Agency should
describe the purpose of the transfer and describe in what sense the transfer was
required by one of the Agency's enforceable obligations or other legal requirements.
Provide this listing as an attachment to the AUP report:
R. Obtain a listing prepared by the Successor Agency of transfers (excluding payments
for goods and services) from the Successor Agency to the city, county, or city and
county that farmed the redevelopment agency for the period from February 1, 2012
through June 30, 2012. For each transfer, the Successor Agency should describe the
purpose of the transfer and describe in what sense die transfer was required by one of
the Agency's enforceable obligations or other legal requirements. Provide this listing
as an attachment to the AUP report.
C. for each transfer, obtain the legal document that formed the basis for the enforceable
obligation that required any transfer. Note in the AUP report the absence of any such
legal document or the absence of language in the document that required the transfer.
Citation:
34179.5(c)(3) The dollar value of any cash or cash equivalents transferred after January 1.
2011, through June 30. 2012, by the redevelopment agency or the successor agency to any
other puhlic agency or private par7y and the purpose of each transjer. ne revieir shall
provide documentation of an) enforceable obligation that required the nvn#er.
Suggested Procedure(s):
3. If the State Controller's Office has completed its review of transfers required under both
Sections 34167.5 and 34178.8 and issued its report regarding such review, attach a copy
of that report as an exhibit to the AUP report. If this has not yet occurred, perform die
following procedures:
Page 15 of 26
V.8 -27 -12
A. Obtain a listing prepared by the Successor Agency of transfers (excluding payments
for goods and services) [from the former redevelopment agency to any other public
agency or to private parties for the period from January 1, 2011 through January 31,
2012. For each transfer, the Successor Agency should describe the purpose of the
transfer and describe in what sense the transfer was required by one of the Agency's
enforceable obligations or other legal requirements. Provide this listing as an
attachment to the AUP report.
B. Obtain a listing prepared by the Successor Agency of transfers (excluding payments
for goods and services) [from the Successor Agency to any other public agency or
private parties for the period from February 1, 2012 through June 30, 2012. For each
transfer, the Successor Agency should describe the purpose of the transfer and
describe in what sense the transfer was required by one of the Agency's enforceable
obligations or other legal requirements. Provide this listing as an attachment to the ;
AUP report.
C. For each transfer, obtain the legal document that formed the basis for the enforceable
obligation that required any transfer. Note in the AUP report the absence of any such
legal document or the absence of language in the document that required the transfer.
Citation:
34179.5(c)(4) The revien• .slatl( provide expenditure and revenue accounting inforaration and
identify transfers and (tiding .sources fur the 1010 11 and 1011 -12 Renal yeanv that
reconeilm halances, assets, and liabilities tf the successor agency on June 30. 2012 to those
reported to the Controllerfor the 2009-10 f rral year.
Suggested Procedure(s):
4. Perform the following procedures:
A. Obtain from the Successor Agency a summary of the financial transactions of the
Redevelopment Agency and the Successor Agency in the format set forth in the
attached schedule for the fiscal periods indicated in the schedule. For purposes of this
summary, the financial transactions should be presented using the modified accrual
basis of accounting. End of year balances for capital assets (in total) and long -term
liabilities (in total) should be presented at the bottom of this summary schedule for
information purposes.
B. Ascertain that for each period presented, the total of revenues, expenditures, and
transfers accounts fully for the changes in equity from the previous fiscal period.
C. Compare amounts in the schedule relevant to the fiscal year ended June 30, 2010 to
the stale controller's report filed for the Redevelopment Agency for that period.
D. Compare amounts in the schedule for the other fiscal periods presented to account
balances in the accounting records or other supporting schedules. Describe in the
report the type of support providers for each fiscal period.
Page 16 of 26
V. 5 -27 -12
Citation:
34J79.5("c)(5) A separate accounting for the balance .r the Low find Moderate Income
Housing Fund for all wherfunds and accounts combined shall be made us follow :
(A) A statement ofthe total value of each Jirnd as of June 31t, 21112.
Suggested Procedure(s):
5. Obtain from die Successor Agency a listing of all assets of the Low and Moderate
Income Housing Fund as of June 30, 2012 for the report that is due October 1, 2012 and a
listing of all assets of all other funds of the Successor Agency as of June 30, 2012
(excluding the previously reported assets of the Low and Moderate income Housing
Fund) for the report that is due December t5, 2012. When this procedure is applied to the
Low and Moderate Income Housing Fund, the schedule attached as an exhibit will
include only those assets of the low and Moderate Income Housing Fund that were held
by the Successor Agency as of June 30, 2012 and will exclude all assets held by the entity
that assumed the housing function previously performed by the former redevelopment
agency. Agree the assets so listed to recorded balances reflected in the accounting records
of the Successor Agency. The listings should be attached as an exhibit to the appropriate
AUP report.
Citation:
34179.5(c)(5)(Il) An itemized statement listing an) amounts Burt are legally restricted as to
purpose and cannot he provided to taring entities. This could include fire proceeds rf an'v
bonds, gaup funds, orffurds provided by other governmental entities that place conditions on
their fire
Suggested Procedure(s):
6. Obtain from the Successor Agency a listing of asset balances held on June 30, 2012 that
are restricted for the following purposes:
A. Unspent bond proceeds:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total
proceeds less eligible project expenditures, amounts set aside for debt service
payments, etc.)
ii. Trace . individual components of this computation to related account balances in
the accounting records, or to other supporting documentation (specify in the AUP
report a description of such documentation).
iii. Obtain from the Successor Agency a copy of the legal document that sets forth the
restriction pertaining to these balances. Note in the AUP report the absence of
language restricting the use of the balances that were identified by the Successor
Agency as restricted.
Page 17 of 26
V. 8-27-12
B. Grant proceeds and program income that are restricted by third parties:
i. Obtain the Successor Agency's computation of the restricted balances (c.g., total
proceeds less eligible project expenditures)_
ii. Trace individual components of this computation to related account balances in
the accounting records, or to other supporting documentation (specify in the AUP
report a description of such documentation).
iii. Obtain from the Successor Agency a copy of the grant agreement that sets forth
the restriction pertaining to these balances. Note in the AUP report the absence of
language restricting the use of the balances that were identified by the Successor
Agency as restricted.
C. Other assets considered to be legally restricted:
i. Obtain the Successor Agency's computation of the restricted balances (e.g., total
Proceeds less eligible project expenditures).
ii. Trace individual components of this computation to related account balances in
the accounting records, or to other supporting documentation (specify in the AUP
report a description of such documentation).
iii. Obtain from the Successor Agency a copy of the legal document that sets forth the
restriction pertaining to these balances. Note in the AUP report the absence of
language restricting the use of the balances that were identified by Successor the
Agency as restricted.
D. Attach the above mentioned Successor Agency prepared schedule(s) as an exhibit to
the AUP report. For each restriction identified on these schedules, indicate in the
report the period of time for which the restrictions are in effect. if the restrictions are
in effect until the related assets are expended for their intended purpose, this should
be indicated in the report.
Citation:
34179.5(c)(5)(C) An itemized statement aJ7he valum aJ any assets that arc not cash or cash
egatiralcius. This mats inciude pht ricul assets, land, records, and equipment. For the purpose ,
of this accounting, physical asycty nary be valued at purchase cost oi• at any receotly
estimated market value. Vie statement shall list separately housing- related ay.rets.
Suggested Procedure(s):
7. Perform the following procedures:
A. Obtain from the Successor Agency a listing of assets as of June 30, 2412 that are not
liquid or otherwise available for distribution (such as capital assets, land held for
resale, long -term receivables, etc.) and ascertain if the values are listed at either
purchase cost (based on book value reflected in the accounting records of the
Successor Agency) or market value as recently estimated by the Successor Agency.
B. If the assets listed at 7(A) are listed at purchase cosy trace the amounts to a
previously audited financial statement (or to the accounting records of the Successor
Agency) and note any differences.
Page 18 of 26
V. 8 -27 -12
C. For any differences noted in 7(B), inspect evidence of disposal or the asset and
ascertain that the proceeds were deposited into the Successor Agency trust fund. If die
differences are due to additions (this generally is not expected to ocmr), inspect the
supporting documentation and note the circumstances.
IX If the assets listed at 7(A) are listed at recently estimated market value, inspect the
evidence (if any) supporting the value and note the methodology used. If no evidence
is available to support the value andlor methodology, note the lack of evidence.
Citation:
34179.5(c)(5)(D) At; itemized listing of any current balances that are legally or contractually
dedicated or restricted for the funding of tan enforceable obligation that identifies the mature
gj'.tlie dedication at- restriction and the specific enforceable abligution. In addition. the
. succenor agency shall provide it listing afall approved eii/brccdble obligations that includes
a projection of annual spending requirements to satisfy each obligation and it projection of
annual revenues available to find those requirements. If a reviex' finds that future revenites
together with dedicated ar restricted balances are insufficient to fund jittare obligations and
thus retention al aw-rcnt balancer is required, it shall ideniifv the amount gl'aarrent bidances
nece9may for retention.. The review shall also detail the projected property tax revenues and
other general propose revenues to he received by the successor agency. together with both
the amount and timing of the bond debr service payments gf the successor agency, for the
period in which the oversight board anticipates the successor agcnev will have insujfcient
property tax revenue to pay the specfed obligations..
Suggested Procedure(s):
8. Perform the following procedures:
A. If the Successor Agency believes that asset balances need to be retained to satisfy
enforceable obligations, obtain from the Successor Agency an itemized schedule of
asset balances (resources) as of June 30, 2012 that are dedicated or restricted for the
funding of enforceable obligations and perform the following procedures. The
schedule should identify the amount dedicated or restricted, the nature of the
dedication or restriction, the specific enforceable obligation to which the dedication
or restriction relates, and the language in the legal document that is associated with
the enforceable obligation that specifies the dedication of existing asset balances
toward payment of that obligation.
i. Compare all information on the schedule to the legal documents that form the
basis for the dedication or restriction of the resource balance in question.
ii. Compare all current balances to the amounts reported in the accounting records of
the Successor Agency or to an alternative computation.
iii. Compare the specified enforceable obligations to those that were included in the
final Recognized Obligation Payment Schedule approved by the California
Department of Finance.
iv: Attach as an exhibit to the report the listing obtained from the Successor Agency.
Identify in the report any listed balances for which the Successor Agency was
Page 19 of 26
V. 5 -27 -12
unable to provide appropriate restricting language in the legal document
associated with the enforceable obligation.
B. if the Successor Agency believes dial future revenues together with balances
dedicated or restricted to an enforceable obligation are insufficient to fund future
obligation payments and thus retention of current balances is required, obtain from
the Successor Agency a schedule of approved enforceable obligations that includes a
projection of the annual spending "ttirements to satisfy each obligation and a
projection of the annual revenues available to fund those requirements and perform
the following procedures:
i. Compare the enforceable obligations to those that were approved by the
California Department of Finance. procedures to accomplish this may include
reviewing the letter from the California Department of Finance approving the
Rowgnized Enforceable Obligation Payment Schedules for the six month period
from January 1, 2012 through June 30, 2012 and for the six month period July 1,
2012 through December 31, 2012. .
ii. Compare the forecasted annual spending requirements to the 'legal document
supporting each enforceable obligation.
a Obtain from the Successor Agency its assumptions relating to the forecasted
annual spending requirements and disclose in the report major assumptions
associated with the projections.
iii. For the forecasted annual revenues:
a. Obtain from the Successor Agency its assumptions for the forecasted annual
revenues and disclose in the report major assumptions associated with the
projections.
C. I£ the Successor Agency believes that projected property tax revenues and other
general propose revenues to be received by the Successor Agency are insufficient to
pay hand debt service payments (considering both the timing and amount of the
related cash flows), obtain from the Successor Agency a schedule demonstrating this
insufficiency and apply the following procedures to the information reflected in that
schedule.
L Compare the timing and amounts of bond debt service payments to the related
bond debt set schedules in the bond agreement.
ii. Obtain the assumptions for the forecasted property tax revenues and disclose
major assumptions associated with the projections.
iii. Obtain the assumptions for the forecasted usher general purpose revenues and
disclose major assumptions associated with the projections.
D. If procedures A, B, or C were performed, calculate the amount orcurrent unrestricted
balances necessary for retention in order to meet the enforceable obligations by
performing the following procedures.
i. Combine the amount of identified current dedicated or restricted balances and the
amount of forecasted annual revenues to arrive at the amount of total resources
available to fund enforceable obligations.
Page 20 of 26
V. 5 -27 -12
ii. Reduce the amount of total resources available by the amount forecasted for the
amoral spending requirements. A negative result indicates the amount of current
unrestricted balances that needs to be retained.
iii. Include the calculation in the AUP report.
Citation:
34179.5(c)(5)(F.) An itemized list and anahois of any auunmts of current balances that are
needed to satisfy obligations that will he placed on the Recognized Obligation Payment
Schedules for the current f+scal j cac
Suggested Procedure(s):
9. if the Successor Agency believes that cash balances as of June 30, 2012 need to be
retained to satisfy obligations on the Recognized Obligation Payment ,Schedule (ROPS)
for the period of July 1, 2012 through June 30, 2013, obtain a copy of the final ROPS for
the period of July 1, 2012 through December 31, 2012 and a copy of the final ROPS for
the period January 1, 2013 through June 30, 2013. For each obligation listed on the
ROPS, the Successor Agency should add columns identifying (1) any dollar amounts of
existing cash that are needed to satisfy that obligation and (2) the Successor Agency's
explanation as to why the Successor Agency believes that such balances are needed to
satisfy the obligation. Include this schedule as an attachment to the AUP report.
Citation:
34179.5(c)(6) The reviam shall total the net hakrnces atrailable after deducting the total
amounts deserihed in subparagraphs (B) to (F.), inclusive, of paragraph (5). Vic review shall
add anv autmud rr
s that were trasferred as identified in paragraphs (2) and (3) of subdivision
(c) if an enforceable obligation hr make that transfer did not exist. The resulting sung shall be
available (or allocation to affected taxing entities• pursuant to Secrion 34179.6. 11.shall he a
rebuttable presumption that cash and casit equivalent balances available to the successor
agency are tvailable and sufficient to disburse the arrtouni detcrinined in this paragraph to
taxing entities. If the review finds that there are insufficient cash balances to transfer or that
cash or cast equivalents are specifically obligated to the purposes described in
suhpuragrophs (B), (n), Laid ( E) gf paragraph (5) in such amounts that there is insufficient
cash to provide the ftdl amount delerrttined pursnanr to this paragraph, that atnount .shall he
demonstrated in an additional itemized schedule.
Suggested Procedure(s):
10. Include (or present) a schedule detailing the computation of the Balance Available for
Allocation to Affected Taxing Entities. Amounts included in the calculation should agree
to the results of the procedures performed in each section above. The schedule should
also include a deduction to recognize amounts already paid to the County Auditor -
Controller on July 12, 2012 as directed by the California Department of Finance. The
amount of this deduction presented should be agreed to evidence of payment. The
attached example summary schedule may be considered for this purpose. Separate
schedules should be completed for the Low and Moderate Income Housing Fund and for
all other funds combined (excluding the Low and Moderate Income Housing Fund).
Page 21 of 26
V.8 -27 -12
Suggested Procedure(s):
11. Obtain a representation letter from Successor Agency management acknowledging their
responsibility for the data provided to the practitioner and the data presented in the report
or in any attachments to the report. Included in the representations should be an
acknowledgment that management is not aware of any transfers (as defined by Section
34179.5) from either the former redevelopment agency or the Successor Agency to other
parties for the period from January 1, 2011 through June 30, 2012 [hat have not been
properly identified in the AUP report and its related exhibits. Management's refusal to
sign the representation letter should be noted in the AUP report as required by attestation
standards.
9
Page 22 of 26
Proposal for A81484 AUP
Report for Successor Agency tow and Moderate Housing Fund
City of take Elsinore
AUP Planning
AUP Procedures:
$I Agree list of assets as of 2/1/12 to GL
p2A & 3A Review list of transfers 1/1/11-6/30/12
4128 & 30 Review list of transfers 2/1112 -6/30/12
774 Compare amt to SCO report 6/30/10
Compare amt to P &L schedules 6/30/11
k5 Obtain list of assets for all funds
716 Obtain fist of -bal for all restricted assets,
Review support for restrictions for:
Unspent bond proceeds
Grant proceeds and program income
Other assets
97 Review values of assets available for
distribution and examine support
for values
as Review schedule of assets dedicated
for funding enforceable obligations
and examine support for obligations,
compare to last ROPS approved by
the State.
Compare forecasted annual obligations
to forecasted annual revenues
Calculate unrestricted balance needed
to meet enforceable obligations.
t!5 Obtain schedule of cash balance to
be retained for future obligations.
k10 Review schedule of the balance available
for allocation to affect ted taxing entities.
AUP Report draft
AUP Report Review
Clerical time
Conference
Completion
standard Hourly Hate
Staff Time
Out -of- pocket Costs
Proposal Amount
Partner Manager Clerical Total
1 2 3
1 1
1 1
1 1
1 1
1 1
1 1
2 2
1 1
2 2
1 1
1 1
Igo
$ 6,300
Page 23 of 26
3
3
2
2
15
1.5
1
1
2
2
2
4
6
21
1.5
28.5
300
200
80
1,800
4,200
120
6,120
Igo
$ 6,300
Page 23 of 26
Proposal for AB 1484 AUP
Report for Successor Agency Other Funds
City of Lake Elsinore
Page 24 of 26
Partner
Manager
Clerical
Total
AUP Planning
1
2
3
AUP Procedures:
#2 Agree list of assets as of 2/1/12 to GL
1
1
p2A &3A Review list of transfers 1/1/11 -6/30/12
1
1
#28 & 30 Review list of transfers 2/1/126/30112
1
1
94 Compare amt to SCO report 6/30/10
2
2
Compare amt to P &L schedules 6/30/11
1
1
85 Obtain fist of assets for all funds
I
1
B6 Obtain Gst of bal for all restricted assets,
- 2.5
2.5 _
Review support for restrictions for:
Unspent bond proceeds
Grant proceeds and program income
Other assets
k7 Review values of assets available for
1
I
distribution and examine support
for values
#8 Review schedule of assets dedicated
- 2
2
for funding enforceable obligations
and examine support for obligations,
compare to last BOPS approved by
the State.
Compare forecasted annual obligations
to forecasted annual revenues
Calculate unrestricted balance needed
to meet enforceable obligations.
#9 Obtain schedule of cash balance to
I
1
be retained for future obligations.
#10 Review schedule of the balance available
1
-
1
for allocation to affec led taxing entltk s.
AUP Report draft
3
3
AUP Report Review
4
4
Clerical time
1.5
1.5
Conference
2
2
4
Completions
2
2
4
9
23.5
1.5
34
Standard hourly rate
300
200
8o
Staff Tune
2,700
4,700
120
7,520
Out -of- pocket Costs
180
Proposal Amount
$
7,70
Page 24 of 26
A
z
u •.II n
° F I
4 CISyRN
September 17, 2012
EDMUND G. BROWN JR. - GOVERNOR
91 a L B,.e SAt WHC GA N 95814'-7-- t WWW.COF.GA.OQV
Mr.James R. Riley, Director of Administrative Services
City of Lake Elsinore
130 S. Main Street
Lake Elsinore, CA 92530
Dear Mr. Riley:
Subject: Housing Assets Transfer Form
Pursuant to Health and Safety Code (HSC) section 34176 (a) (2), the City of Lake Elsinore
submitted a Housing Assets Transfer Fort (Form) to the California Department of Finance
(Finance) on August 2, 2012 for the period February 1, 2012 through August 2, 2012.
Finance has completed its review of your Form, which may have included obtaining clarification
for various items. Based on a sample of line items reviewed and the application of law, Finance
is not objecting to any assets or transfers of assets identified on your Form.
Please direct inquiries to Befiz Chappuie, Supervisor or Mindy Patterson, Lead Analyst at
(916) 445 -1546.
Sincerely,
� P
i STEVE SZALAY
Local Government Consultant
cc: Ms. Barbara Leibold, City Attomey /Agency Counsel, Leibold McClendon & Mann
Ms. Pam Elias, Chief Accountant Property Tax Division, Riverside County
Auditor - Controller
Ms. April Nash, Supervising Accountant, Riverside County Auditor - Controller
Ms. Jennifer Baechel, Business Process Analyst II, Riverside County Auditor - Controller
California State Controller's Office
ATTACHMENT 3
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