HomeMy WebLinkAbout0004_1_OB Staff Report Admin Shortfall Loan Agreement 012918Page 1 of 2
REPORT TO OVERSIGHT BOARD TO THE
SUCCESSOR AGENCY OF THE REDEVELOPMENT
AGENCY OF THE CITY OF LAKE ELSINORE
To:Chairperson Kelley and Members of the Oversight Board
From:Barbara Leibold, Successor Agency Counsel
Date:January 29, 2018
Subject:Loan Agreement between the City of Lake Elsinore and the Successor
Agency of the Redevelopment Agency of the City of Lake Elsinore in the
principal amount of $159,765 for Administrative Costs for the ROPS 17-18
Period
Recommendation
Adopt A RESOLUTION OF THE OVERSIGHT BOARD TO THE SUCCESSOR AGENCY OF
THE REDEVELOPMENT AGENCY OF THE CITY OF LAKE ELSINORE, CALIFORNIA
APPROVING A LOAN AGREEMENT BETWEEN THE CITY AND SUCCESSOR AGENCY
UNDER HEALTH & SAFETY CODE SECTION 34173(h)
Background
As part of the dissolution of the former Redevelopment Agency, Health and Safety Code
Section 34177 (added by AB 1X 26, as amended to date) requires the Successor Agency to
adopt a Recognized Obligation Payment Schedule (ROPS) that lists all obligations of the former
redevelopment agency that are enforceable within the meaning of subdivision (d) of Section
34167 for each twelve month period of each fiscal year. Each ROPS is a budgetary document
upon which the County auditor-controller distributes what was formally called tax increment to
the Successor Agency in order to allow it to pay approved enforceable obligations and
administrative costs. In short, the auditor-controller deposits what would previously have been
deemed tax increment into a new account, the Redevelopment Property Tax Fund (“RPTTF”).
Any RPTTF dollars not required to pay enforceable obligations and approved administrative
costs are distributed by the auditor-controller to the affected taxing entities in proportion to their
respective share of property taxes.
The Successor Agency previously adopted its ROPS 17-18B covering the period of January 1,
2018 through June 30, 2018 which was subsequently approved by the Oversight Board and the
California Department of Finance (DOF). The DOF approved ROPS 17-18B identified
$7,573,293 in obligations to be paid from the RPTTF. However, the Successor Agency only
received $7,099,712 in RPTTF funds for the ROPS 17-18B cycle, thus creating a $159,765
administrative cost shortfall and a $313,816 shortfall in enforceable obligations. The funding
shortfall in enforceable obligations is recaptured in the ROPS 18-19 Line Item 33 and will be
paid from available RPTTF. However, recapture of the shortfall in administrative costs requires
the Successor Agency adopt a resolution requesting RPTTF to reimburse the City for the
payment of the unfunded administrative allowance.
Loan Agreement Admin Shortfall
January 29, 2018
Page 2 of 2
Discussion
Health & Safety Code Section 34173(h) allows City – Successor Agency loans for the payment
of administrative costs when RPTTF and immediately available funds on deposit in the
Successor Agency’s Redevelopment Obligation Retirement Fund are not sufficient. In order to
meet the Successor Agency administrative costs, the city is able to advance funds to the
Successor Agency in the form of a loan in the amount of the $159,756 administrative shortfall.
The attached loan agreement establishes the terms of the loan subject to approval by the
Oversight Board and subsequent approval by DOF. The loan accrues interest at the LAIF rate
and repayment of both principal and interest are included in the ROPS 18-19 as Line Item 35.
Fiscal Impact
Approval of this Loan Agreement in the principal amount of $159,765 and the subsequent
approval by the DOF will ensure that the Successor Agency can fully meet all obligations
contained in ROPS 17-18B. It also ensures that the Successor Agency will be entitled to future
distributions from the RPTTF in order to fully repay both principal and interest of this loan.
Prepared by:Barbara Leibold, Successor Agency Counsel
Attachments:
Oversight Board Resolution No. OB-2018-_______
Loan Agreement