AB 1484: AB 1484:

HOW IT WILL IMPACT CITIESHOW IT WILL IMPACT CITIES

OVERVIEWOVERVIEW

On June 27, 2012, the Governor On June 27, 2012, the Governor signed Assembly Bill 1484, which signed Assembly Bill 1484, which became effective immediately.became effective immediately.

AB 1484 makes substantive AB 1484 makes substantive amendments to ABx1 26, enacted on amendments to ABx1 26, enacted on June 28, 2011 that directed the June 28, 2011 that directed the dissolution of all California’s dissolution of all California’s redevelopment agencies. redevelopment agencies.

MAJOR PROVISIONSMAJOR PROVISIONS

True-Up Process True-Up Process

Due Diligence Review (DDR) to be Due Diligence Review (DDR) to be completed by October 1completed by October 1stst..

Annual AuditsAnnual Audits

MAJOR PROVISIONSMAJOR PROVISIONS

Findings of Completion Findings of Completion

Certain City Loans RecognizedCertain City Loans Recognized

Allows Auditor-Controllers (A-Cs) the Allows Auditor-Controllers (A-Cs) the opportunity to “object” to items on opportunity to “object” to items on ROPSROPS

Demand Letters issued July 9, 2012 for Demand Letters issued July 9, 2012 for “excess funds” distributed in ROPS 1“excess funds” distributed in ROPS 1

Successor Agencies (SAs) required to Successor Agencies (SAs) required to remit payments by July 12, 2012remit payments by July 12, 2012

A-C distributed excess funds collected A-C distributed excess funds collected on July 16, 2012 to taxing entitieson July 16, 2012 to taxing entities

TRUE-UP PROCESS

Pass-through reported on ROPS 1, but Pass-through reported on ROPS 1, but not paid will be recovered with January not paid will be recovered with January 22ndnd ROPS 3 payment ROPS 3 payment

A-C will distribute pass-through to A-C will distribute pass-through to taxing entities on January 2taxing entities on January 2ndnd with pass- with pass-through applicable to ROPS 3 through applicable to ROPS 3

TRUE-UP PROCESS

To be completed by October 1, 2012To be completed by October 1, 2012

SA responsible for hiring licensed SA responsible for hiring licensed accountantaccountant

Purpose of DDR is to determine Purpose of DDR is to determine unobligated balances available for unobligated balances available for transfer to taxing entitiestransfer to taxing entities

DUE DILIGENCE REVIEW

Unobligated Low and Moderate Unobligated Low and Moderate Housing Funds to be remitted to A-C in Housing Funds to be remitted to A-C in NovemberNovember

Other unobligated funds to be remitted Other unobligated funds to be remitted to A-C in Aprilto A-C in April

Delays in submitting DDRs may delay Delays in submitting DDRs may delay Finding of CompletionFinding of Completion

DUE DILIGENCE REVIEW

ANNUAL AUDITSANNUAL AUDITS

SA responsibility also hire a certified SA responsibility also hire a certified public accountant to conduct a post-public accountant to conduct a post-audit of a successor agency’s financial audit of a successor agency’s financial transactions and recordstransactions and records

The audit must be performed at least The audit must be performed at least once annually (Section 34177(n))once annually (Section 34177(n))

DOF will issue a finding of completion to a DOF will issue a finding of completion to a successor agency that pays the following successor agency that pays the following amounts:amounts:

The True-Up Amounts. (Section 34183.5).The True-Up Amounts. (Section 34183.5).

The amount determined in the audit of the LMIHF The amount determined in the audit of the LMIHF (Section 34179.6).(Section 34179.6).

The amount determined in the audit of all other The amount determined in the audit of all other funds (Section 34179.6)funds (Section 34179.6)

FINDING OF COMPLETION

SAs that receive a Finding of Completion SAs that receive a Finding of Completion can:can:

– Establish a long range plan to dispose of Establish a long range plan to dispose of assetsassets

– Have city loans recognized as enforceable Have city loans recognized as enforceable obligationsobligations

FINDING OF COMPLETION

Subject to Oversight Board and Subject to Oversight Board and DOF approval DOF approval

Cannot be repaid until 2013-14 or Cannot be repaid until 2013-14 or laterlater

Must be discounted at Local Must be discounted at Local Agency Investment Fund (LAIF) Agency Investment Fund (LAIF) raterate

CITY LOAN REPAYMENTS

Subject to limitations which Subject to limitations which encourage residual from SAs encourage residual from SAs (34191.4(b)(A))(34191.4(b)(A))

20% of repayment shall be deducted 20% of repayment shall be deducted and transferred to the Low and and transferred to the Low and Moderate Income Housing Asset Moderate Income Housing Asset FundFund

CITY LOAN REPAYMENTS

A-C has until October 1st (ROPS 3 only) to review ROPS and object to items that are not demonstrated to be Enforceable Obligations and funding sources

For subsequent ROPS, A-C has up to 60 days prior to payment distributions to object to items

DOF has final decision authority

A-C “OBJECTIONS”

IMPORTANT DATESIMPORTANT DATES

July 9:July 9: County A-C notifies SA of amount County A-C notifies SA of amount of funds owed to taxing entities based upon of funds owed to taxing entities based upon distribution for ROPS covering January 2012 to distribution for ROPS covering January 2012 to June 2012. (Section 34183.5(b)(2)(A)).June 2012. (Section 34183.5(b)(2)(A)).July 12:July 12: SA must make payment to A-C for SA must make payment to A-C for deposit into Redevelopment Property Tax Trust deposit into Redevelopment Property Tax Trust Fund and distribution to taxing entities. (Section Fund and distribution to taxing entities. (Section 34183.5(b)(2)(A).34183.5(b)(2)(A).July 16:July 16: County A-C distributes funds distributes funds received from SA to taxing entities. Monies received from SA to taxing entities. Monies received after July 12 date distributed within 5 received after July 12 date distributed within 5 days of receipt. (Section 34183.5(b)(2)(A)).days of receipt. (Section 34183.5(b)(2)(A)).

July 18July 18:: City sales tax payment suspended City sales tax payment suspended if successor agency doesn’t make July 12 if successor agency doesn’t make July 12 payment. (Section 34183.5(b)(2)(A)).payment. (Section 34183.5(b)(2)(A)).August 1August 1: Successor housing entity must : Successor housing entity must submit to DOF a list of housing assets that submit to DOF a list of housing assets that contains explanation of how assets meet contains explanation of how assets meet criteria set forth in the law. DOF may object to criteria set forth in the law. DOF may object to any of the assets within 30 days. If after meet any of the assets within 30 days. If after meet and confer, DOF continues to object, asset must and confer, DOF continues to object, asset must be returned to the SA. (Section 34176(a)(2). be returned to the SA. (Section 34176(a)(2). Definition of “housing asset” found at section Definition of “housing asset” found at section 34176(e)). Entity assuming the housing 34176(e)). Entity assuming the housing functions must create a separate Low and functions must create a separate Low and Moderate Income Housing Asset Fund (Section Moderate Income Housing Asset Fund (Section 34176(d)).34176(d)).

August 15 +/-: August 15 +/-: Oversight board meets to consider Oversight board meets to consider ROPS for January 1, 2013 through June 30, 2013 which ROPS for January 1, 2013 through June 30, 2013 which must be submitted to DOF by September 1.must be submitted to DOF by September 1.September 1September 1: ROPS for January 1 2013 through June : ROPS for January 1 2013 through June 30, 2013 must be submitted electronically to DOF 30, 2013 must be submitted electronically to DOF afterafter oversight board approval. DOF makes determinations oversight board approval. DOF makes determinations within 45 days. Within 5 days of determination, SA may within 45 days. Within 5 days of determination, SA may request additional review and meet and confer. (Section request additional review and meet and confer. (Section 34177(m)).34177(m)).– Future ROPS must be submitted to DOF 90 days prior to Future ROPS must be submitted to DOF 90 days prior to

property tax distribution. City subject to civil penalty of property tax distribution. City subject to civil penalty of $10,000 per day for successor agency’s failure to timely $10,000 per day for successor agency’s failure to timely submit ROPS (Section 34177(m)(2)).submit ROPS (Section 34177(m)(2)).

♦ As soon as possibleAs soon as possible: SA to hire licensed accountant to : SA to hire licensed accountant to conduct due diligence review of unobligated balances in conduct due diligence review of unobligated balances in LMIHF and other funds and submit for approval to OB.LMIHF and other funds and submit for approval to OB.

October 1October 1: County A-C may provide : County A-C may provide notice to SA of any “objections” to items notice to SA of any “objections” to items on January – June 2013 ROPS. (Section on January – June 2013 ROPS. (Section 34182.5).34182.5).

October 1October 1: : SA submits to oversight SA submits to oversight board, county A-C, State Controller, and board, county A-C, State Controller, and DOF results of the review of the LMIHF DOF results of the review of the LMIHF conducted by the licensed accountant conducted by the licensed accountant retained by SA. retained by SA.

October 1:October 1: County A-C completes agreed-upon County A-C completes agreed-upon procedures audit of each former redevelopment agency. procedures audit of each former redevelopment agency. (Section 34182(a)(1)). County A-C provides estimate of (Section 34182(a)(1)). County A-C provides estimate of property tax payments to SA for upcoming six-month property tax payments to SA for upcoming six-month period. (Section 34182(c)(3)).period. (Section 34182(c)(3)).October 15October 15: Oversight Board must review, approve, and : Oversight Board must review, approve, and transmit LMIHF audit to DOF, auditor-controller. Note transmit LMIHF audit to DOF, auditor-controller. Note that oversight board must hold a public session to that oversight board must hold a public session to consider audit at least five business days prior to the consider audit at least five business days prior to the meeting of oversight board in which LMIHF audit is meeting of oversight board in which LMIHF audit is considered for approval. (Section 34179.6(b) and (c)).considered for approval. (Section 34179.6(b) and (c)).November 9November 9:: Last day for DOF to complete review of Last day for DOF to complete review of LMIHF audit and report findings, determinations, and LMIHF audit and report findings, determinations, and decision to overturn oversight board decision to allow decision to overturn oversight board decision to allow retention of successor agency assets to the OB and SA. retention of successor agency assets to the OB and SA. (Section 34179.6(d).(Section 34179.6(d).

Within 5 business days of receipt of DOF final audit Within 5 business days of receipt of DOF final audit determinationdetermination: Successor agency may request meet : Successor agency may request meet and confer to resolve disputes with DOF findings on and confer to resolve disputes with DOF findings on LMIHF audit. (Section 34179.6(e)). DOF must confirm LMIHF audit. (Section 34179.6(e)). DOF must confirm or modify its determination and decisions within 30 days. or modify its determination and decisions within 30 days. Within 5 business days of receipt of DOF final audit Within 5 business days of receipt of DOF final audit determinationdetermination: Successor agency to transfer LMIHF : Successor agency to transfer LMIHF funds to county A-C. (Section 34179.6(f)). funds to county A-C. (Section 34179.6(f)). Penalties for non-payment: Penalties for non-payment: DOF may order an offset DOF may order an offset of sales and use tax or property tax allocations. of sales and use tax or property tax allocations. December 1:December 1: SA may report to county A-C that total SA may report to county A-C that total amount of available revenues will be insufficient to fund amount of available revenues will be insufficient to fund enforceable obligations. (Section 34183(b)).enforceable obligations. (Section 34183(b)).December 15: December 15: SA submits to oversight board, county A-SA submits to oversight board, county A-C, State Controller and DOF results of the review of all C, State Controller and DOF results of the review of all other fund and account balances by licensed accountant. other fund and account balances by licensed accountant. (Section 34179.6(a)). (Section 34179.6(a)).

20132013January 2:January 2: County A-C makes distributions of property County A-C makes distributions of property tax for January – June 2013 ROPS. (Section 34183(b)).tax for January – June 2013 ROPS. (Section 34183(b)).

January 15January 15: : Oversight board must review, approve, and Oversight board must review, approve, and transmit other funds audit to DOF, county A-C. (Section transmit other funds audit to DOF, county A-C. (Section 34179.6(a)).34179.6(a)).

March 3March 3: : SA submits ROPS for July 1, 2013 through SA submits ROPS for July 1, 2013 through December 31, 2013 to DOF after oversight board December 31, 2013 to DOF after oversight board approval. (Section 34177(m)).approval. (Section 34177(m)).

April 1: April 1: County auditor-controller provides estimate of County auditor-controller provides estimate of property tax payments to SA for upcoming six-month property tax payments to SA for upcoming six-month period. (Section 34182(c)3)).period. (Section 34182(c)3)).

April 1April 1: DOF completes review of other funds audit and : DOF completes review of other funds audit and reports findings, determinations, and decision to overturn reports findings, determinations, and decision to overturn oversight board decision to allow retention of successor oversight board decision to allow retention of successor agency assets to OB and SA. (Section 34179.6(a)).agency assets to OB and SA. (Section 34179.6(a)).

April 6+/-: April 6+/-: No later than 5 days after receiving DOF No later than 5 days after receiving DOF determination on other funds audit, SA may request determination on other funds audit, SA may request meet and confer to resolve disputes with DOF findings. meet and confer to resolve disputes with DOF findings. DOF must confirm or modify its determination and DOF must confirm or modify its determination and decisions within 30 days. decisions within 30 days.

April 10+/-: April 10+/-: SA to transfer other “cash and assets” SA to transfer other “cash and assets” audit payment to A-C if meet and confer process audit payment to A-C if meet and confer process complete. (Section 34179.6(f)). City sales tax/property complete. (Section 34179.6(f)). City sales tax/property tax may be offset for unfunded amounts.tax may be offset for unfunded amounts.

May 1:May 1: SA reports to A-C if total amount of SA reports to A-C if total amount of available revenues will be insufficient to fund available revenues will be insufficient to fund enforceable obligations. (Section 34183(b)).enforceable obligations. (Section 34183(b)).

QUESTIONSQUESTIONS