goldfarb lipman attorneys Boomerang Funds: Residual property taxes distributions under the Redevelopment Dissolution Laws Karen Tiedemann Goldfarb & Lipman 1300 Clay Street, 11th Floor Oakland, CA 94612 510-836-6336 ktiedemann@goldfarblipman.com goldfarb lipman attorneys

Overview What are “boomerang funds”? How are boomerang funds distributed to taxing entities? Exploring opportunities and restraints on use of boomerang funds Open Dialogue

What Are “Boomerang Funds” Property taxes distributed to “affected taxing entities” under AB 1x 26 and AB 1484 that would formerly have been part of redevelopment “tax increment” system Potential sources of boomerang funds: July 12th True Up Payments (§34183.5); Due Diligence Review Payments (§34179.6); Land disposition under Long-Range Property Management Plan (§34191.3); and Semiannual Residual Distributions from Redevelopment Property Tax Trust Fund (RPTTF) (§34183).

LRPM Plan Land disposition Four Tranches of Property Distribution under LRPM Plan: Public Use Project described in Redevelopment Plan For Enforceable Obligation For Liquidation but plan can direct use of sales proceeds for: Enforceable obligations; For project identified in approved redevelopment plan; or Distribution to taxing entities Liquidation under AB 1x 26 was to be done “expeditiously and in a manner aimed at maximizing value” Liquidation under Long Range Property Management Plan allows for thoughtful distribution or development of property

Biannual RPTTF ROPS Distributions 1 Passthrough Obligations 2 Enforceable Obligations 3 Successor Agency Administrative Costs 4 34183(a)(4) Residual Distribution

Timing of potential Distributions Potential Source Date of Potential Distribution July 12th True Up Payment One time distribution made on or about July 16, 2012 Due Diligence Reviews Distributions made by Auditor- Controllers 5 days after receipt of DDR Payments from successor agency (Nov/Dec 2012 for Housing DDR and April 2013 for Non-Housing DDR) LRPM Plan Land Disposition- Distribution from sales proceeds but only if plan doesn’t provide for other use RPTTF Residual Distribution Subject to availability based on RPTTF Residual Distributions January 2 and June 1 of every year

Hypothetical distribution of property taxes in City “a” $495k will go to School Districts $295k will go to the County $95k will go City $95k will go to “Other Taxing Entities” $20k will go to “County ERAF”

Potential Opportunities Local Efforts: San Francisco Proposition C- Dedicated $50 million of residual distributions and unspent bond proceeds to fund affordable housing City of Fremont dedicated portions of residual from Housing Fund Due Diligence Review it received to fund economic development and affordable housing activities County of Los Angeles dedicated $11 million to affordable housing; exploring ways to invest $200 million of residual funds for economic development and affordable housing purposes Regional/State Efforts: No examples to date, but discussions on joint efforts

Considerations/Restraints Part of “general fund” revenues Authority to spend on affordable housing is clear for cities/counties but other taxing entities Subject to annual allocations and competition on general fund demands Residual distributions are property taxes- Issues arise in spending property taxes outside of jurisdiction Residual distributions to school districts reduce State subvention State realignment goals offsets amounts available to Counties Bonding Restrictions on multi-year pledge Subject to general obligation bond 2/3 voter approval

Discussion Local focus and advocacy in short-term Think about how the amounts and timing of potential residual distributions fit with affordable housing development processes and timelines Underscores need for state-wide permanent source financing