California Society of Municipal Finance Officers OVERVIEW of ABx1 26 and ABx1 27 Changes to Redevelopment Law August 4, 2011 Presented by Stephanie Downs

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO SUMMARY OF LEGISLATION AB 26 – Dissolution Bill –Suspension of all Redevelopment Activities as of June 30, 2011 –Dissolves all redevelopment agencies on October 1, 2011 that don’t “opt-in” AB 27 – “Opt-In” Bill –City Council must adopt Ordinance agreeing to make certain payments to County –Redevelopment Agency stays in business

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO IMMEDIATE EFFECT OF LEGISLATION Suspension of New Redevelopment Activities (must pay enforceable obligations and employee contracts) Adopt a schedule of enforceable obligations within 60 days Statute of limitations extended to 2 years

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO IMMEDIATE EFFECT OF LEGISLATION State Controller to review all property transfers between agencies and cities –Required to order City to return assets not contractually committed to third party to Agency AB 26 Invalidates all contracts between City and Agency –Includes Agency-City Investment Contract

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO DISSOLUTION PROCEDURES Agency dissolves on October 1, 2011 City automatically becomes successor agency Successor agency limited to paying or carrying out enforceable obligations City may elect to retain housing assets and functions

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO DISSOLUTION PROCEDURES Oversight Board directs disposition of assets Proceed of asset disposition and tax increment distributed as follows: –Statutory and contractual pass-through payments –Payments for enforceable obligations –Limited administrative cost allowance to successor entity –Taxing Entities

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO DISTRIBUTION TO TAXING ENTITIES % of distribution of disposition of assets and remaining tax increment to Taxing Entities: School District City County Special Districts

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO OVERSIGHT BOARD Initially – 7 members chosen as follows: –Two members (one a “member of the public”) appointed by county board of supervisors –A member appointed by largest special district –A member appointed by Chancellor of Community Colleges –A member appointed by county superintendent of ed or county board of ed –Two appointed by mayor (one to represent former redevelopment employees)

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO OVERSIGHT BOARD RESPONSIBILITIES Dispose of all assets and properties Cease performance of and terminate all agreements other than “enforceable obligations” Transfer housing responsibilities Renegotiate agreements in the best interest of the taxing entities County-wide Board to be created in 2016

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO AB 27 – “OPT-IN” City must adopt ordinance committing City to make required payments City may enter into an agreement with Agency provide funds to City for payments City assigns all rights to receive funds from Agency to State Agency activity suspension ends on 2 nd reading of ordinance Deadline to adopt ordinance is Nov. 1

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO AB 27 – “OPT-IN” State Department of Finance required to publish amounts by August 1 –Appeals permitted for error or if debt service has increased 10% over level Payments due on January 15 and May 15 For only - Agency exempt from deposit to housing fund if funds needed to make AB 27 payment

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO ISSUES TO CONSIDER Does the Agency have sufficient funds to make the payments? What is the life of the Project Area? Affordable housing goals of the City Would future net tax increment be sufficient to fund redevelopment activities? What is the benefit or detriment to the City general fund if Agency dissolves?

©2011 MEYERS NAVE A PROFESSIONAL LAW CORPORATIONOAKLAND LOS ANGELES SACRAMENTO SAN FRANCISCO SANTA ROSA FRESNO ISSUES TO CONSIDER What assets (property and fund balances) will the agency lose if dissolved? –Consider potential Controller look-back at properties transferred from City to Agency –Lease and Loan repayments to Agency –Value of real property owned by Agency or transferred to City