HomeMy WebLinkAboutOB Item No 3 Asset Transfer Review Report 09-23-2014OVERSIGHT BOARD OF THE
SUCCESSOR AGENCY OF THE REDEVELOPMENT
AGENCY OF THE CITY OF LAKE ELSINORE
TO: CHAIRMAN OSTER AND
MEMBERS OF THE OVERSIGHT BOARD
FROM: BARBARA LEIBOLD, SUCCESSOR AGENCY COUNSEL
DATE: SEPTEMBER 23, 2014
SUBJECT: RECEIVE AND FILE LAKE ELSINORE REDEVELOPMENT AGENCY —
ASSET TRANSFER REVIEW REPORT
Recommendation
Receive and file the Lake Elsinore Redevelopment Agency ( "RDA ") Asset Transfer
Review Report for the period January 1, 2011 through January 31, 2012 issued be the
California State Controller's office.
Background
Pursuant to Health and Safety Code section 34167.5, the State Controller's Office
(SCO) reviewed all asset transfers made by the Lake Elsinore Redevelopment Agency
(RDA) to the City of Lake Elsinore (City) or any other public agency after January 1,
2011. This statutory provision states, "The Legislature hereby finds that a transfer of
assets by a redevelopment agency during the period covered in this section is deemed
not to be in furtherance of the Community Redevelopment Law and is thereby
unauthorized." Therefore, their review included an assessment of whether each asset
transfer was allowable and whether the asset should be turned over to the Successor
Agency. The review applied to all assets including but not limited to, real and personal
property, cash funds, accounts receivable, deeds of trust and mortgages, contract
rights, and rights to payment of any kind.
Discussion
Attached is the final report of the State Controller's Office with respect to the dissolution
of the former Redevelopment Agency of the City of Lake Elsinore.
The purpose of the State Controller's Office Asset Transfer Review was to determine
whether the former Redevelopment Agency made any transfers after January 1, 2011 in
violation of state law applicable to such transfers. The report finds that no transfers
were made in violation of applicable law, and therefore does not order any funds or
other assets returned.
Page 1
Lake Elsinore Redevelopment Agency — Asset Transfer Review
September 23, 2014
Page 2
This is very good news, and means that all loan and other payments made to the City
by the former Redevelopment Agency are no longer subject to return or forfeiture. As
you recall, both the Department of Finance and the State Controller's Office were
required to perform audits of transfers by the former Redevelopment Agency going
back to January 1, 2011. Lake Elsinore has now received final approval of the audits
from both the DOF and the SCO and no illegal transfers were found by either agency.
FISCAL IMPACT
None. The State Controller's review found that the RDA transferred $121,118,540 in
assets to the Successor Agency after January 1, 2011. The State Controller's office did
not identify any unallowable transfers that occurred during the review period between
the RDA, the City, and /or any other public agency.
Prepared by: Barbara Leibold, Successor Agency Counsel
Attachment:
Lake Elsinore Redevelopment Agency — Asset Transfer Review (PDF)
Page 2
LAKE ELSINORE
REDEVELOPMENT AGENCY
ASSET TRANSFER REVIEW
Review Report
January 1, 2011, through January 31, 2012
JOHN CHIANG
California State Controller
August 2014
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August 20, 2014
Nancy Lassey, Finance Manager
Lake Elsinore Successor Agency
130 S. Main Street
Lake Elsinore, CA 92530
Dear Ms. Lassey:
Pursuant to Health and Safety Code section 34167.5, the State Controller's Office (SCO)
reviewed all asset transfers made by the Lake Elsinore Redevelopment Agency (RDA) to the
City of Lake Elsinore (City) or any other public agency after January 1, 2011. This statutory
provision states, "The Legislature hereby finds that a transfer of assets by a redevelopment
agency during the period covered in this section is deemed not to be in furtherance of the
Community Redevelopment Law and is thereby unauthorized." Therefore, our review included
an assessment of whether each asset transfer was allowable and whether the asset should be
turned over to the Successor Agency.
Our review applied to all assets including but not limited to, real and personal property, cash
funds, accounts receivable, deeds of trust and mortgages, contract rights, and rights to payment
of any kind. We also reviewed and determined whether any unallowable transfers of assets to the
City or any other public agency have been reversed.
Our review found that the RDA transferred $121,118,540 in assets to the Successor Agency after
January 1, 2011. We did not identify any unallowable transfers that occurred during the review
period between the RDA, the City, and /or any other public agency.
If you have any questions, please contact Elizabeth Gonzalez, Chief, Local Government
Compliance Bureau, by telephone at (916) 324 -0622.
Sincerely,
Original signed by
JEFFREY V. BROWNFIELD, CPA
Chief, Division of Audits
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Nancy Lassey, Finance Manager -2-
cc: Paul Angulo, Auditor - Controller
Riverside County
David Botelho, Program Budget Manager
California Department of Finance
Richard J. Chivaro, Chief Legal Counsel
State Controller's Office
Elizabeth Gonzalez, Bureau Chief
Division of Audits, State Controller's Office
Betty Moya, Audit Manager
Division of Audits, State Controller's Office
Shadi Ahmadi, Auditor -in- Charge
Division of Audits, State Controller's Office
August 20, 2014
Lake Elsinore Redevelopment Agency Asset Transfer Review
Contents
Review Report
Summary............................................................................................. ............................... 1
Background......................................................................................... ............................... 1
Objective, Scope, and Methodology .................................................. ............................... 2
Conclusion........................................................................................... ............................... 2
Views of Responsible Official ............................................................ ............................... 2
RestrictedUse ..................................................................................... ............................... 2
Lake Elsinore Redevelopment Agency Asset Transfer Review
Asset Transfer Review Report
Summary The State Controller's Office (SCO) reviewed the asset transfers made
by the Lake Elsinore Redevelopment Agency (RDA) after January 1,
2011. Our review included, but was not limited to, real and personal
property, cash funds, accounts receivable, deeds of trust and mortgages,
contract rights, and rights to payments of any kind from any source.
Our review found that the RDA transferred $121,118,540 in assets to the
Successor Agency after January 1, 2011. We did not identify any
unallowable transfers that occurred during the review period between the
RDA, the City of Lake Elsinore (City), and /or any other public agency.
Background In January of 2011, the Governor of the State of California proposed
statewide elimination of redevelopment agencies (RDAs) beginning with
the fiscal year (FY) 2011 -12 State budget. The Governor's proposal was
incorporated into Assembly Bill 26 (ABXl 26, Chapter 5, Statutes of
2011, First Extraordinary Session), which was passed by the Legislature,
and signed into law by the Governor on June 28, 2011.
ABX1 26 prohibited RDAs from engaging in new business, established
mechanisms and timelines for dissolution of the RDAs, and created RDA
successor agencies and oversight boards to oversee dissolution of the
RDAs and redistribution of RDA assets.
A California Supreme Court decision on December 28, 2011 (California
Redevelopment Association et al. v. Matosantos), upheld ABX 1 26 and
the Legislature's constitutional authority to dissolve the RDAs.
ABX1 26 was codified in the Health and Safety (H &S) Code beginning
with section 34161.
H &S Code section 34167.5 states in part, "... the Controller shall review
the activities of redevelopment agencies in the state to determine whether
an asset transfer has occurred after January 1, 2011, between the city or
county, or city and county that created a redevelopment agency or any
other public agency, and the redevelopment agency."
The SCO identified asset transfers that occurred after January 1, 2011,
between the RDA, the City and /or any other public agency. By law, the
SCO is required to order that such assets, except those that already had
been committed to a third party prior to June 28, 2011, the effective date
of ABX1 26, be turned over to the Successor Agency. In addition, the
SCO may file a legal action to ensure compliance with this order.
-1-
Lake Elsinore Redevelopment Agency Asset Transfer Review
Objective, Scope, Our review objective was to determine whether asset transfers that
and Methodology occurred after January 1, 2011, and the date upon which the RDA ceased
to operate, or January 31, 2012, whichever was earlier, between the city
or county, or city and county that created an RDA, or any other public
agency, and the RDA, were appropriate.
We performed the following procedures:
• Interviewed Successor Agency personnel to gain an understanding of
the Successor Agency's operations and procedures.
• Reviewed meeting minutes, resolutions, and ordinances of the City,
the RDA, the Successor Agency, and the Oversight Board.
• Reviewed accounting records relating to the recording of assets.
• Verified the accuracy of the Asset Transfer Assessment Form. This
form was sent to all former RDAs to provide a list of all assets
transferred between January 1, 2011, and January 31, 2012.
• Reviewed applicable financial reports to verify assets (capital, cash,
property, etc.).
Conclusion Our review found that the Lake Elsinore Redevelopment Agency (RDA)
transferred $121,118,540 in assets to the Successor Agency after January
1, 2011. We did not identify any unallowable transfers that occurred
during the review period between the RDA, the City, and /or any other
public agency.
Views of At an exit conference on June 26, 2014, we discussed the review results
Responsible with Jason Simpson, Director of Administrative Services, who agreed
with the review results. Mr. Simpson further agreed that a draft review
Official report was not necessary and that the report could be issued as final.
Restricted Use This report is solely for the information and use of the City of Lake
Elsinore, the Successor Agency, the Oversight Board, and the SCO; it is
not intended to be and should not be used by anyone other than these
specified parties. This restriction is not intended to limit distribution of
this report, which is a matter of public record when issued final.
Original signed by
JEFFREY V. BROWNFIELD, CPA
Chief, Division of Audits
August 20, 2014
-2-
State Controller's Office
Division of Audits
Post Office Box 942850
Sacramento, CA 94250 -5874
http: / /www.sco.ca.gov
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