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Board of Supervisors Meeting September 13, 2011

Board of Supervisors Meeting September 13, 2011. Finance Committee Recommendations on Options for County Redevelopment Program. Report Organization. Overview of the Fiscal Challenges Overview of the new law “Opt-In” Option “Opt-Out” Option Cash Flow Analysis Findings and Recommendations.

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Board of Supervisors Meeting September 13, 2011

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  1. Board of Supervisors MeetingSeptember 13, 2011 Finance Committee Recommendations on Options for County Redevelopment Program

  2. Report Organization • Overview of the Fiscal Challenges • Overview of the new law • “Opt-In” Option • “Opt-Out” Option • Cash Flow Analysis • Findings and Recommendations

  3. Administration $1,838,000 Planning Pay to Others $664,547 $3,926,553 Debt Repayment Housing $8,956,000 $12,631,701 Future Debt Reserves $14,224,399 Economic Development $11,496,609 Community Improvement $3,582,095 Capital Projects $26,782,918 Agency Budget by Project Type

  4. Agency Budget by Revenue Source

  5. Agency Budget by Project Area

  6. Tax Increment History by Project Area

  7. Fiscal Pressures • Significant drop in assessed valuation • High debt • Payments to State • Future Continuation Payments

  8. Overview of Legislation and Litigation AB x1 26 - Dissolution Act AB x1 27 - Voluntary Redevelopment Program Act

  9. The Dissolution Act Immediate suspension of Agency activities (since June 28, 2011) Dissolution effective 10/1/11, unless continuation ordinance adopted

  10. If Agency Dissolves Contracts between Agency and County invalidated. Successor Agency (County) liquidates Agency’s assets and pays off Agency’s debts. Goal is to maximize funds available to distribute to taxing entities.

  11. Oversight Board • Oversight Board oversees Successor Agency • 3 of 7 members appointed by County. • Power to order Successor Agency to terminate or renegotiate enforceable obligations. • Oversight Board has fiduciary responsibility to both holders of enforceable obligations and to taxing entities. • State monitors Oversight Board

  12. After Agency is Dissolved • County Auditor creates Redevelopment Property Tax Fund. • Distribution of Property Taxes: • Statutory and Contract Pass-Thru to taxing entities • Enforceable Obligations of Agency • Administrative Fees • Taxing entities as property taxes

  13. Voluntary Redevelopment Program – Agency Continues • Adopt continuation ordinance prior to 10/1/11. • Agree to make annual continuation payments. • Continuation Payments go to: • County ERAF- school districts • Special District Fund- fire and transit districts • Agency regains full powers to operate.

  14. Litigation Underway • League of Cities filed suit July 19. • Supreme Court issued partial stay of Redevelopment Acts. • Suspension of agency activities not stayed. • Decision expected before Jan. 15, 2012.

  15. Opt-In Option • FY11-12 Continuation Payment $5.3M • Reallocating Funds/Delaying Projects • Reducing Reserves • Deferring Payments

  16. Opt-In Option • Ongoing annual payments $1.25M • Special Districts receiving funds: • CCFPD, Rodeo-Hercules FD • BART and AC Transit • WCCUSD, JSUSD, MDUSD, Acalanes • Community College District

  17. Opt-Out Option • Successor Agency takes over Oct. 1. • RDA contracts with County become unenforceable obligations. • Non-Housing assets sold. • Oversight Board reviews enforceable obligations. • Funding for blight removal ends.

  18. Overview ofCash Flow Analysis

  19. RDA Financial Model PFM built a cash-flow model to help the Agency evaluate: The near-term fiscal health of project areas given recent AV declines. The long-term impact of new state laws on net tax increment for redevelopment.

  20. Assumptions Tax increment (TI) projections prepared by Agency’s fiscal consultant: Gross TI Revenue (assumes 2% growth and 50% reduction in Prop 8 appeals) Pass-Thru Payments Housing Set Aside Bond debt service includes estimated impact of Debt Reduction Plan.

  21. RDA Model Scenarios Opt-In Scenario Agency makes Continuation Payment and operates normally. Opt-Out Scenarios (Agency dissolves) No Continuation Payments. No housing set-aside or non-contractual obligation payments. Net TI distributed to County and other tax-sharing entities.

  22. Opt-Out Scenarios:34183 vs 34188 Model reflects competing interpretations of AB x1 27. Section 34183: assumes normal pass-thru payments are made before net TI is distributed to County and other entities. Section 34188: assumes no pass-thru payments; all net TI is distributed. Interpretation has impact on net TI funds distributed to County GF.

  23. Tax-Sharing Entity Payments Summary

  24. Dissolution Benefits to special districts varies greatly.

  25. Findings • Agency can afford Voluntary Program and continue to remove blight. • Opt-Out benefits to General Fund, schools & special districts are not guaranteed. • Action needed now to keep Bay Point and Montalvin Manor solvent.

  26. Recommendations • Adopt Continuation Ordinance. • Authorize continuation payments. • Authorize agreements for Statement of Indebtedness by October 1. • Authorize study to restructure RDA. • Report on progress to Finance Committee.

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