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

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

Agency Budget by Revenue Source

Agency Budget by Project Area

Tax Increment History by Project Area

Tax Increment History & Projections by Project Area

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

Overview of Legislation and Litigation AB x1 26 the Dissolution Act and AB x1 27 the Voluntary Redevelopment Program Act

Dissolution Act: Suspension Immediate suspension of Agency activities; Adoption of Enforceable Obligation Payment Schedule by 8/29/11; File Statement of Indebtedness by 10/1/11; and Dissolution effective 10/1/11, unless continuation ordinance adopted

Dissolution Act: Wind-down Contracts between Agency and County invalidated; Successor Agency liquidates assets and pays off Agency’s debts; and Oversight Board created to monitor Successor Agency activities, 3 of 7 members appointed by County

Dissolution Act: Wind-down Distribution of Property Taxes: Statutory and Contract Pass-thrus to taxing entities Enforceable Obligations Administrative Fees Taxing entities as property taxes

Dissolution Act: Wind-down Oversight Board has power to order Successor Agency to terminate or renegotiate enforceable obligations; and Oversight board has fiduciary responsibility to both holders of enforceable obligations and to taxing entities

Voluntary Redevelopment Program Adopt continuation ordinance prior 10/1/11 Make continuation payments to: County ERAF- school entities Special District Fund- fire and transportation districts

Opt-In Option FY Continuation Payment $5.3M Reallocating Funds/Delaying Projects Reducing Reserves Deferring Payments

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

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.

Overview of Cash Flow Analysis

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

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-Through Payments Housing Set Aside Bond debt service includes estimated impact of Debt Reduction Plan.

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.

“Opt-Out” Scenarios: vs RDA model scenarios reflect 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 substantial impact on net TI funds distributed to County GF.

Tax-Sharing Entity Payments Summary Under Section special districts retain a higher proportion of net TI.

Dissolution Benefits to special districts and schools varies greatly. Contra Costa County RDA Model – Example Distribution to Tax-Sharing Entities County Fire Protection District FYEOpt-InOpt-Out (34183)VS Opt-InOpt-Out (34188)VS Opt-In 2012$702,465$3,064,263$2,361,798$2,625,932$1,923, $858,118$1,153,520$295,402$750,254($107,864) 2014$926,077$1,306,933$380,856$868,846($57,231) 2015$995,377$1,457,042$461,666$983,441($11,935) 2016$1,061,327$1,580,556$519,230$1,070,793$9,467 Total:$4,543,364$8,562,315$4,018,951$6,299,267$1,755,904 Rodeo Hercules Fire Protection District FYEOpt-InOpt-Out (34183)VS Opt-InOpt-Out (34188)VS Opt-In 2012$247,801$791,448$543,647$606,600$358, $256,175$323,829$67,654$134,723($121,452) 2014$276,409$351,400$74,991$149,130($127,279) 2015$297,048$380,560$83,512$164,863($132,185) 2016$312,929$409,296$96,367$180,058($132,871) Total:$1,390,362$2,256,533$866,171$1,235,375($154,987)

Findings Agency can afford Voluntary Program and continue to remove blight. Opt-Out benefits to General Fund & Special Districts are not guaranteed. Action needed now to keep Bay Point and Montalvin Manor solvent.

Recommendations 1.Adopt Continuation Ordinance. 2.Authorize continuation payments. 3.Authorize agreements for Statement of Indebtedness by October 1. 4.Authorize study to restructure RDA and update 5-year plans. 5.Report on progress implementing the Voluntary Redevelopment Program