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HomeMy WebLinkAboutOB Agenda Item 4OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE TO: MEMBERS OF THE OVERSIGHT BOARD FROM: BARBARA LEIBOLD, SUCCESSOR AGENCY COUNSEL DATE: AUGUST 28, 2012 SUBJECT: APPROVAL OF 'RESOLUTION APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE FOR THE PERIOD OF JANUARY 2013 THROUGH JUNE 2013 Backaround On April 10, 2012 the Oversight Board ("OB ") approved the Recognized Obligation Payment Schedule ( "ROPS ") adopted by the Successor Agency on February 28, 2012 for expenditures of the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ( "Successor Agency") from January 1, 2012 to June 30, 2012. On that same day, the Successor Agency adopted and the OB approved a First Amended ROPS dated April 10, 2012. As required by Assembly Bill x1 26 ( "ABx1 26 "), the First Amended ROPS was submitted to the State Department of Finance ( "DOF ") and the County Auditor Controller ( "CAC ") by April 15, 2012. On April 19, 2012, the Director of Administrative Services received an email from the Department of Finance (DOF) indicating it was reviewing certain items listed on the Successor Agency's Recognized Obligation Payment Schedule (ROPS), as approved by the OB on April 10, 2012. On April 27, 2012, the Director of Administrative Services received a letter from the Department of Finance indicating that DOF determined the administrative cost budget for fiscal 2012 to exceed that permitted by statute and denying the excess administrative costs as enforceable obligations on the First Amended ROPS for January through June 2012. On May 8, 2012, the Oversight Board approved the ROPS for July through December 2012 with reduced amounts of project related legal fees on page 1 of the ROPS and revised descriptions for other project costs. A response was submitted to DOF on May 9, 2012 with the July through December ROPS in an effort to address DOF's comments. AGENDA ITEM 4 1 Page 1 Approval of Recognized Obligation Payment Schedule August 28, 2012 Page 2 I On May 17, 2012, after a telephone discussion with DOF, the Director of Administrative Services submitted hand - written changes on the ROPS for January through June 2012. The transmittal indicated that the changes had not been approved by the Successor Agency or the OB. The change' requested by DOF clarified that certain payments due to the Riverside County Flood Control are not to be made from current or future receipts of Real Property Tax Trust Fund monies. The Director of Administrative Services received a letter from DOF dated May 24, 2012 approving the ROPS for January through June 2012 submitted with hand- written changes and the ROPS for July through December 2012. On June '12, 2012 the Successor Agency and Oversight Board approved a Second Amended ROPS for January through June 2012 incorporating those handwritten changes previously approved by DOF, as well as a First Amended ROPS for July through December 2012 which corrected earlier mathematical errors. Discussion On June 27, 2012, the Legislature passed and the Governor signed AB 1484, a fiscal 2012 -13 budget trailer bill. AB 1484 makes technical and substantive amendments to ABx1 26 and took immediate effect upon signature by the Governor. AB 1484 requires that the January 1 — June 30, 2013 ROPS must be submitted. to DOF and the State Controller's office,! after approval by the Oversight Board, no later than September 4, 2012 (September 1, 2012, the submittal date specified in statute, falls on a Saturday and the next business day, September 3, 2012, is the Labor Day Holiday). The DOF now has five (5) days to request a review and forty -five (45) days to review the ROPS (previously it had three (3) and ten (10) days, respectively). If the ROPS is not submitted in the required timeframe, the host city is subject to a $10,000 fine for every day the ROPS is late and the administrative cost allowance for the successor agency is reduced by 25 %. Chances to the ROPS Changes Reguired by Statute. The attached ROPS varies in form from earlier 2012 ROPS. The proposed January to June 2013 ROPS is in a new format as required by the DOF. The new form includes the following changes: • Agencies must report actual amounts paid from Redevelopment Property Tax Trust Fund ( RPTTF) from the previous period (January to June 2012). • Agencies must report anticipated RPTTF funding for the current period (January to June 2013). • All enforceable obligations must now be listed on one form regardless of funding source or project area. ITEM 4 Page 2 Approval of Recognized Obligation Payment Schedule August 28, 2012 Page 3 • Agencies are no longer required to report monthly enforceable obligation estimates; only the six - month estimated amounts are required. • Funding source columns have been designated. • A column for contracttagreement termination date has been added. • A "Notes" form is now available for agencies to provide additional and necessary information relating to the enforceable obligations listed on the ROPS. Changes Related to the Stadiuml Additionally, the attached ROPS varies from earlier ROPS because of changes in the Stadium agreements, which have been incorporated into the attached ROPS. THIS WEEK. A draft ROPS wasldistributed to the Board via email on Monday, August 20, 2012. Following that initial distribution, staff held a follow -up meeting with Diamond Stadium representatives. Additional information was provided to staff regarding the Stadium electrical utilities and administrative costs. Accordingly, the ROPS attached to this staff report has been updated) to reflect the most recent expense numbers, adjusted for the six month reporting period! Recapping the numbers, we initially reported that the Agency's obligations under the "New Stadium Agreements" (discussed below) for ongoing operation and maintenance of the Stadium would result in a shortfall of $250,476 for the first six months of 2013. Based on the updated information, estimated Agency costs (in excess of the! costs covered by revenue generated by the New Stadium Agreements) to operate and maintain the stadium is $299,321 for the six months ended June 13, 2013 and 'is listed on line 32 of the updated RODS. Description of Stadium - related Changes. Effective December 31, 2012, the existing stadium tenant, Diamond Stadium Group, has exercised its right to terminate the Stadium Agreement referenced in line 16 of page 1 of the ROPS. The Stadium Agreement required that certain other agreements entered into before the date of the Stadium Agreement be tolled during the term of the Stadium Agreement. Those agreements (the Stadium License Agreement, Stadium Maintenance Agreement and Stadium Concession Agreement — collectively the "New Stadium Agreements ") spring back into operation by their terms upon the expiration or earlier termination of the Stadium Agreement. The New Stadium Agreements are listed in lines 29, 30, and 31 of page 1 of the ROPS. In addition, !the Agency will incur additional costs to operate and maintain the stadium as a result of the termination of the Stadium Agreement, such as utilities, materials, grounds maintenance, staff and stadium administration. The ongoing operation and maintenance of the Stadium is necessary for the Agency to fulfill its obligations under the New Stadium Agreements. The estimated additional Agency costs (in excess of the costs covered by revenue generated by the New Stadium Agreements) to operate and maintain the stadium of $299,321 for the six months ended June 13, 2013 are listed on 321, of ROPS. AGENDA ITEM 4 Page 3 i i Approval of Recognized Obligation Payment Schedule August 28, 2012 Page 4 The new Stadium License Agreement requires that the licensee pay a license fee to the Agency for its use of the stadium for baseball games and certain other events (estimated revenue for the six months ended June 30, 2013 of $235,474, the total of lines 29, 30 and 32 of $69,099,$109,929, and $56,446, respectively, listed in the "Other Funding Source" column), and the new Stadium Concession Agreement requires payment to the Agency of a percentage of concession revenue (estimated revenue for the six months ended June 30, 2613 of $17,000, listed on line 31 in the "Other Funding Source" column). The ROPS requires the Agency to use the proceeds of such fees to pay certain costs associated with the Stadium, and, accordingly, the income is used to pay the costs listed in the "Other Funding Source" column on page 1 of the ROPS. The costs to operate and maintain the', stadium in excess of the fee income ($299,321 for the six months ended June 30, 2013); are reflected in the column entitled "Funding Source - RPTTF." The City Director of Administrative Services and the Interim City Manager have prepared detailed estimates of future costs to operate and maintain the stadium based on the New Stadium Agreements and actual costs to operate and maintain the stadium provided by Diamond Stadium Group. The total cost estimate of $2,492,092 in excess of the revenue anticipated to be generated by the New Stadium Agreements is included in the ROPS through 2016. Given the uncertainties of the Property Management Plan required by AB 1484 in 2013, it it uncertain how long the Successor Agency will own the Stadium. On line 32 of page 1 of the ROPS, the amount of $2,492,042 in the column entitled "Total Outstanding Debt or Obligation," the Agency has estimated such amount through 2016 based on 2% annual increases through 2016. The actual costs will vary based on how long the Agency owns the', stadium, how much costs to operate and regularly maintain the stadium increase or decrease overtime, and what kind of capital outlay is required over time to maintain the stadium in its current condition. Capital expenses over time could be substantial and cannot be estimated at this time. Prepared and approved by: Barbara Leibold, City Attorney /Successor Agency Counsel Attachments: Resolution No. OB- 2012 -011 approving the Recognized Obligation Payment Schedule for the Period of January 2013 through June 2013 I i AGENDA ITEM 4 Page 4 1 RESO UTION NO. OB-2012-011 A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE APPROVING THE RECOGNIZED OBLIGATION PAYMENT SCHEDULE (ROPS) FOR THE PERIOD OF JANUARY 2013 THROUGH JUNE 2013, SUBJECT. TO ADOPTION BY THE SUCCESSOR AGENCY WHEREAS, the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ( ".Oversight Board ") has been established to direct the Successor Agency to take certain actions to wind down the affairs of the former Redevelopment Agency of the City of Lake Elsinore in accordance with the California Health and Safety Code; and WHEREAS, Health and Safety Code Section 34169 requires the Successor Agency to prepare and adopt a 'Recognized Obligation Payment Schedule" that lists all obligations of the former redevelopment agency that are enforceable within the meaning of subdivision (d) of Section 34167 for six month periods including January 2013 through June 2013; and WHEREAS, on April 10, 2012, the Oversight Board adopted Resolution No. OB 2012 -005 approving a Recognized Obligation Payment Schedule for the period of January 2012 through June 2012 and a First Amended Recognized Obligation Payment Schedule for the period of January 2012 through June 2012; and WHEREAS; on May 8, 2012, the Oversight Board adopted Resolution No. OB 2012 -008 approving a Recognized) Obligation Payment Schedule for the period of July 2012 through December 2012; and WHEREAS, on May 24, 2012, the Department of Finance approved both the Recognized Obligation Payment: Schedule for the period January 2012 through June 2012 including hand - written corrections submitted by the Director of Administrative Services and the Recognized Obligation Payment Schedule for the period of July 2012 through December 2012; and WHEREAS, on June 12, 12012 the Oversight Board approved a Second Amended Recognized Obligation 1 Payment Schedule for the period January 2012 through June 2012 incorporating I the corrections approved by the Department of Finance and a First Amended Recognized Obligation Payment Schedule for the period of July 2012 through December 2012 correcting earlier mathematical errors; and WHEREAS, on June 27, 2012, the Legislature passed and the Governor signed AB 1484, a fiscal 2012 -13 budget) trailer bill, which makes technical and substantive amendments to ABx1 26 and took immediate effect upon signature by the Governor; and AGENDA ITEM 4 Page 5 OVERSIGHT BOARD RESOLUTION NO.OB 2012 -011 Page 2 WHEREAS, AB 1484 requires that the January 2013 through June 30, 2013 ROPS must be submitted to the' Department of Finance and the State Controller's office, after approval by the Oversight Board, no later than September 4, 2012 (September 1, 2012, the submittall date specified in statute, falls on a Saturday and the next business day, September 3! 2012, is the Labor Day Holiday) or be subject to penalties; and WHEREAS, on August 28, 2012, the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore will consider adoption of the Recognized Obligation Payment Schedule for the period of January 2013 through June 2013; and WHEREAS, all other legal prerequisites to the adoption of this Resolution have occurred. I NOW, THEREFORE, THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE DOES HEREBY RESOLVE, DETERMINE AND ORDER AS FOLLOWS: SECTION 1. The Recitals set forth above are true and correct and incorporated herein by reference. SECTION 2. In order to enable the City of Lake Elsinore, as Successor Agency to strictly comply with AB X1 26 and AB 1484, and based on the Recitals set forth above, the Oversight Board hereby approves the Schedule attached hereto as Exhibit A as the Recognized Obligation Payment Schedule for January 2013 through June 2013, which such version is approved subject to the adoption thereof by the Successor Agency. Pursuant to Health & Safety Code Section 34173, the Successor Agency's liability, including, but not limited to, its liability for the obligations on the attached schedule is limited to the total sum 'of property tax revenues it receives pursuant to Part 1.85 of AB X1 26. SECTION 3. Pursuant to Health & Safety Code Section 34180(g), the Oversight Board hereby establishes the Recognized Obligation Payment Schedule (ROPS) for the period of January 2013 through June 2013 attached hereto as Exhibit A, as the Recognized Obligation Payment Sc i hedule for such period. SECTION 4. If any provision of this Resolution or the application thereof to any person or circumstance is held invalid, such invalidity shall not affect other provisions or applications of this Resolution which can be given effect without the invalid provision or application, and to this end the provisions of this resolution are severable. The Oversight Board hereby declares that it would have adopted this Resolution irrespective of the invalidity of any particular portion thereof. AGENDA ITEM 4 Page 6 i OVERSIGHT BOARD RESOLUTION NO. OB 2012 -011 Page 2 SECTION 6. This Resolution shall take effect from and after the date of its passage and adoption. PASSED, APPROVED AND ADOPTED at a regular meeting of the Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore, held this 28"' day of August, 2012 by the following vote: AYES: NOES: ABSENT: ABSTAIN: Chairperson, Oversight Board to the Successor Agency of the Redevelopment Agency of the City of Lake Elsinore ATTEST: Oversight Board Secretary AGENDA ITEM 4 1 Page 7